Date: 1950-01-01T07:00:00+00:00
Keywords: liberty

The Freeman 1967

Foundation for Economic Education

THE FREEMAN JANUARY 1967 Vol. 17, No.1 ~ Premier W. Ross Thatcher of Sas katchewan describes the unscrambling of twenty years of socialism in that province p. 3 ~ The best we can do for the rookies, suggests John Sparks, is to let them earn their way . p. 9 ,., Though none can accurately time the economic crisis that inflation breeds, Lawrence Fertig predicts with certainty that freedom will be lost in the process p. 11 ~ Internationally famed economist, Karl Brandt, shows that food supply can outpace population growth if coercive controls are avoided p. 18 ~ A company bulletin board affords a study in miniature of the way the mar ket works - sometimes p. 23 ~ It's not so much the Cost of Living as the minor regulations and controls that prove so irritating to Dr. W. A. Paton . p. 25 ", Leonard Read finds in current Post Office jams a further argument for getting government out of our business affairs p. 32 ~ Give us relief, pleads William Henry Chamberlin, from the "multitude of New Offices [and] swarms of Officers to harass our people, and eat out their substance" p. 34 ~ Until a man has his own house in order, it ill behooves him to worry for the whole world p. 42 ~ Dr. Roche reviews in this issue the historical record of Federalism in the United States of America p. 45 Y' Though other freedoms wane, a thoughtful man is still - perhaps, es pecially - bound to exercise his freedom to think p. 57 Y' John Chamberlain commends The Politics of Surrender, critically ana lyzed by Stanton Evans, to those who would know the world of 1967 . p. 60 Y' Clinton Rossiter's 1787: The Grand.

Convention refreshes reviewer Thorn ton's faith in the wisdom of the Founders p. 63 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

JANUARY 1967 LEONARD E. READ PAUL L. POIROT Vol. 17, No.1 President, Foundation for Econonlic Education ill anag'ingEdilol' 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 system, and limited goYernment, founded in 1946, with offices at Irvington-on-Hudson, New York. Tel.: (914) 591 7230. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are in vited in any amount-$5.00 to $10,000-as the means of maintaining and extending the Foundation's work. Copyright, 1967, 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. Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

THE HONORABLE W. Ross THATCHER, Premier of Saskatchewan SASKATCHEWAN,with a population of slightly under one million peo ple, for 20 years from 1944 to 1964 had a socialist government about the only one in North America, except Castro's. Two years ago, we defeated that gov ernment. Saskatchewan is primarily agri cultural. We have many well-to do and efficient farmers. We have one of the higher standards of living in the world. The questions frequently are asked: "How did socialism take over? How did it last for 20 years?" Photograph: Aerial view of Riceton. National Film Board. To find an answer, one must go back to the dark days of the de pression. In the 1930's a terrible drought struck. Year after year, crop failure followed crop failure. At ~he same time, the world price of wheat dropped to less than 35 cents per bushel. These two fac tors brought our prairie economy to its knees. Unemployment was everywhere. Men lost their dignity and their self-respect.

Of course, the government and the economic system of the day were blamed. Out of the depths of the depression, the Socialist Party, which glibly promised to solve these terrible problems, was born.

4 THE FREEMAN January Among other things, the social ists proposed: 1. To end unemployment; 2. To provide jobs by building so cialist factories; 3. To provide free medical and health services; 4. To g-ive a new deal to the farmer. Thus, as a protest to depression conditions, in 1944 Saskatchewan elected a socialist government. For 20 long years, our people \vere subjected to a leather-lunged propaganda machine, paid for from public funds, which filled the air with plausible platitudes and cliches. You have heard some of them"Tax the rich to help the poor"; "The capitalist is an exploiter of the masses"; "Only a planned economy is the answer to unemployment"; and so on. They had all the answers. How Did They Succeed? In 1944, the socialists said they would solve the unemployment problem by building government factories. Not only this, they prom ised to use the profits from these socialist enterprises to build high ways, schools, hospitals, and to finance better social welfare meas ures generally. Over the years they set up 22 so-called Crown Corpora tions. By the time we had taken over the government, 24 months ago, 12 of the Crown Cor porations had gone bankrupt or been disposed of. Others were kept operating by repeated and sub stantial government grants. Vir tually without exception, those which have had to compete with private enterprise on equal terms lost huge sums of money regularly and consistently. The whole Crown Corporation program became bogged down in a morass of bun gling, red tape, and inefficiencies.

The experiment cost the taxpayers of Saska tchewan millions of dollars. War on Business During the whole period, the socialists waged war against pri vate business. They passed legisla tion giving the government power to expropriate and operate any in dustry or business in the province. The making of profits was con demned as an unforgivable sin. The public and avowed objective of the socialist government was to "eradicate capitalism." What was the result? Investors from Eastern Canada, from Europe, from the States, simply turned their back on the socialists. Industry after industry looked over sites in our province, only to by-pass Saskatchewan and locate elsewhere in Canada. Dozens 1967 SOCIALISM IN SASKATCHEWAN 5 of oil companies pulled up 'stakes lock, stock, and barrel and moved out of the province because of dis criminatory legislation. Gas ex ploration ground to a complete halt. Prospecting in our vast north became almost nonexistent. Dur ing the period, while Canada was experiencing the greatest economic boom in her history, Saskatchewan received only a handful of new factories.

From 1945 to 1963, more than a million new industrial jobs were created across Canada. Yet in Sas katchewan, after 18 years of so cialism, there were fewer jobs in manufacturing than existed in 1945 - this despite the investment of $500 million in Crown Corpora tions. Social Services As I said earlier, prior to tak ing office the· socialists promised a greatly expanded program of so cial welfare measures. There was to be "free" medical care, "free" hospitalization care, "free" drugs, and so on. The money to finance these projects was to come from the profits of the Crown Corpora tions. Of course, in the overall picture, there were no profits; rather, there were colossal losses. Thus, the welfare program had to be financed from taxation. Most people in Saskatchewan like the principle of our hospitalization plan - all hospital bills are paid by the government, from tax revenue. However, in 16 years, costs have gone from $7lh million to $57 million.· Three years ago, a medical care scheme was intro duced - under which all medical bills are paid. The same pattern of skyrocketing costs is evident also in this field. Our people have found that medicare and hospitalization are anything but "free." On the contrary, they will cost our people $110 million this year - and are still rising 10 per cent annually.

Taxes Under the socialist government, our provincial debt went from $150 million to $600 million. Dur ing the period more than 600 com pletely new taxes were introduced; 650 other taxes were increased. "Per capita" taxes in Saskatche wan were soon substantially out of line with our sister provinces - one more reason why industry located elsewhere. Compulsion Throughout their regime, the socialists tended to use compul sion. Repeatedly, their boards and agencies were manned by some so cial theorists, who told business men how their businesses should be run. Everyone in the north was forced by law to sell his timber to the government-monopolized tim6 THE FREEMAN January bel" board, every trapper, his fur through the government fur mar keting board. Every fisherman who caught a fish was forced by law to sell it through the govern ment fish board. Every purchaser of an automobile license was forced to take his insurance from the Government Insurance Com pany. Two years ago, they intro duced a medical· plan where every doctor would have been forced to receive his remuneration from the government. Only an aroused pub lic opinion forGed them to with draw this contentious legislation.

Drivers of government cars and trucks were instructed to buy their gasoline from Co-ops. Population Twenty years ago, the socialists promised to make Saskatchewan a Mecca for the working man. In stead, we saw the greatest mass exodus of people out of an area since Moses led the Jews out of Egypt more than 3,000 years ago. Each of the other nine provinces which had a "private enterprise" government increased in popula tion by leaps and· bounds after 1945. On the other hand, Saskatche wan virtually stood still. Her pop ulation increased 12 per cent while the nation's increased 60 per cent. Since the war, 270,000 of our citi zens left Saskatchewan to find em ployment elsewhere. Socialist Defeat Finally, two years ago, Ollr peo ple decided they had been the Ca nadian guinea pig for socialism long enough. They threw the so cialists out. The Saskatchewan Liberal Party campaigned on a straight program of private enter prise. We made no extrava.gant social welfare promises. Instead, we committed ourselves to reduced government spending, reduced taxes, incentive programs for in dustry, and so on. The people gave us the job of cleaning up the mess.

Lesson Is there a lesson to be learned from Saskatchewan's experiences? I think there is - a rather horrible lesson. If there are any Americans who think that socialism is the an swer, I wish they would come to Saskatchewan and study what has happened to our province. Twenty years of socialism gave us ind us trial stagnation, retarded develop ment, oppressive taxation, major depopulation. At this moment, you are doubt less saying to yourself, "It can't happen here." Yet, people all over the world are finding, "It can." We know, as you do, that the private enterprise system is not perfect - but it is still the best system devised for progress. Un der the system, Americans and 1967 SOCIALISM IN SASKATCHEWAN 7 Canadians have enjoyed the high est living standards in the world. It is our task· to prove in the next few years that the private enter prise system can do more for our D~oDI~ than gociaJigm.

I would like to tell you some of the actions we have taken to get Saskatchewan moving again eco nomically. Timber Board Monopoly Ended, Private Interests at Work One-third of the land in Sas katchewan is covered by timber. We are told there is sufficient lum ber for three or four major pulp mills. During the socialist regime, the government had assumed a complete monopoly in the produc tion of lumber. Producers could not sell a toothpick unless it went through the Timber Board. The new· administration has discon tinued this monopoly. We are en couraging private enterprise to come into our timber limits. We are providing incentives for them to do so. Already three lumber complexes have moved into our north-employing an average of 250 men each. Four months ago, we persuaded a New York com pany to invest $65 million in a huge pulp mill, which will employ, when in operation, 3,500 men. We are hopeful that a second mill may also locate in our province within a year.

Minerals The northern half of Saskatch ewan lies in the Pre-Cambrian Shield. When we assumed office, we were concerned by the almost compl~te lack of new mineral de velopment in our north. By 1964 prospecting in Saskatchewan had almost come to a halt. We found that royalty rates sometimes were out of line with rates applied else where in Canada. We called repre senta ti ves of the mining ind ustry and discussed the problem with them. From those discussions emerged a new formula for min ing incentives. Already, we are seeing results. Prospecting activ ity throughout the whole north has gone ahead spectacularly. Fifty new companies are doing exploration work in northern Sas katchewan at this time. Three new mines have commenced opera tions, including a major copper mine at Lac La Ronge. Potash Potash is a field which offers tremendous prospects for future development. We believe that pot ash will do for Saskatchewan what oil has done for the province of Alberta. World demand is increas ing at a rate that doubles every 10 years. The overwhelming bulk of this demand will be met by Sas katchewan in the years ahead. At the present time, three potash 8 THE FREEMAN January mills are in production. Six addi tional mills are now under con struction. We are negotiating with at least four other potash pro ducers, which are now seriously looking at the potential of Sas katchewan's reserves. Investment and commitments now total more than $500 million. When it is real ized that each of these mines costs from $50 to $80 million and em ploys from 500 to 800 people, you can realize the impetus the indus try is giving Saskatchewan.

Oil Saskatchewan, in 1964, pro duced 20 per cent of the total Ca nadian petroleum demand. Right ly, or wrongly, many of the oil people felt that Saskatchewan had not been friendly to the oil indus try. We found keen resentment at some of Saskatchewan's rules and regulations. Upon taking office, we found that drilling activity in Sas katchewan was just holding its own with the previous year, and· was lagging far behind Alberta's. No new fields had been found for a number of years. We immediately sought the ad vice of the industry as to how the situation could be improved. We asked them what we could do to encourage greater development in Saskatchewan. Having received the advice, the government adopted a new major incentive program. The results have been spectacular. Dozens and dozens and dozens of new companies have moved in. Eight new pools were discovered during 1965. Our royalties and bonus bids in the past year reached $40 million as compared to $18 million in the last year of socialist administration. Our op ponents have accused us of selling out our resources to big business.

But, the oil resources of Saskatch ewan are not much use to our peo ple when they are buried a mile underground. Gas Saskatchewan is blessed with substantial gas fields. Under the previous government, the Sas katchewan Power Corporation was given a complete monopoly, and paid the producer a price which was substantially below market value. As a result, gas exploration last year came virtually to a halt. The new administration canceled the Power Corporation monopoly and opened the gas industry to competition. Again, the results have been most gratifying. Dozens of gas exploration crews have moved into our province in recent months. Secondary manufacturing has also made encouraging strides, since the socialists left office. These are only a few of the excit ing developments which have 1967 SOCIALISM IN SASKATCHEWAN 9 taken place recently in Saskatche wan. Instead of exporting thou sands of our people, as we did year after year under the social ists, this year our population is again headed upward. Our prov ince is one of the booming areas in all Canada.

In short, we think our "experi ment in private enterprise" is working. In our province, we know social ism not from textbooks but from hard, bitter experience. We have found that there is nothing wrong with socialism, except that it doesn't work. I am sure you have heard some people say : "We don't agree with socialism - we wouldn't support it generally - but a little bit of socialism might be all right." We found in Saskatchewan that once it begins to develop, it is pretty hard to stop. I think we can all be proud of the private enterprise system. But, I also think we must be vigilant. The danger from socialists, far too frequently, is not what they can do directly, but what they can ac complish indirectly. Far too often we find political parties which pay lip service to the principles of private enter prise but at the same time, for the sake of political expediency, en deavor to neutralize the socialists by adopting large segments of their programs. Such a course can only be disastrous. ~ DON'T PAMPER THE ROOKIES JOHN C. SPARKS THE PERENNIAL COMPLAINT among many of the current younger generation is that adults do not understand them. Perhaps it is really a counter complaint stemming from criticism by a few of .

their elders that the younger generation is "going to the dogs." Whether their compJaints are well-founded or not, an erroneous attitude can develop among the youth that could be detrimental to their progress. And this erroneous attitude can be fed and fostered Mr. Sparks is an executive of an Ohio manufacturing company.

10 THE FREEMAN January by oversolicitous adults who at tempt to bring about understand ing by too much listening and too little teaching. This part of the problem is of· concern to me, but not the attempts of youngsters to win understanding from adults by an airing of "grievances." Imagine the reaction by the veteran major league ballplayers if the season's crop of rookies were to file complaints that they, the rookies, are being misunder stood by the old pros! Or the new tenderfoot Boy Scouts complaining that the first-class scouts do not understand them! Or college fresh men lamenting their "unfair" status before the college board of trustees! All have this common charac teristic: They are the "Johnnies come-lately." They are "green". in the presence of those who traveled the same road some years before and "learned the ropes" through experience. So it is with the bud ding adults of the younger genera tion, just beginning to discover their physical emergence into man hood and womanhood. Their chron ological age proclaims this amaz ing change. There is a headiness about becoming one's own boss as parents gradually relinquish the reins. Only a .year or two earlier, father and mother had made al most all the decisions, or at least exercised veto power. Now - a short time later - circumstances have changed. The youth is away froIn home - attending college or learning on a new job. Without that familiar parental supervision, it is not surprising that he should make some mistakes and commit some embarrassing blunders in his decisions as a tenderfoot in an adult world. And will adults then illogically show excessive sympa thy for the whimperings of the inexperienced? Thus, to aid and abet any young adult's prolonga tion of childhood would be a sad disservice to him.

A young person has to earn the right to be called an adult. He alone can earn such recognition for himself, by acting grown-up in situations calling for self-respon sibility and self-reliance. This may be easier to say than to achieve. Deep and abiding self-responsibil ity does not come from merely wishing it. It can only be gained by learning and building, surely and steadily, on a firm foundation of moral values and principles. It is here that elders have the responsibility to teach, rather than listen to trivia. As adults, our duty is to usher into the world a' younger generation pre pared to behave as responsible adults - not irresponsible children. Reasonable patience, yes. But don't pamper the rookies as they reach for maturity ! ~ RIGHT PREMISEWRONGCONCLUSJON LAWRENCE FERTIG "A DEPRESSION will undoubtedly take place beginning in 1967," de clared the speaker, a staunch liber tarian who has ably· defended the freedom philosophy in public forums. "This is it," he asserted.

"This nation has engaged in an in flationary spree and now we must pay the piper. A crushing liquida tion of debt will take place - a de pression." I had known this distinguished gentleman for several decades. He had· made similar statements on many occasions during the past decade. It occurred to me that a public figure could not continue to make predictions of immedia te economic disaster which do not materialize - and still retain some Mr. Fertig, syndicated· newspaper columnist on economic affairs, is author of the book, Prosperity Through Freedom (Rcgnery, 1961) , available from the Foundation for Economic Education, Irvington, N. Y. $3.95. vestige of public confidence in his statements. This is especially true of a writer who must state his opinions each week to a large au dience of newspaper or magazine readers. The record he makes can not be erased. There it is in .. black and white, to be pointed at in the future. The ancients understood this problem, for it is written in the Book of Job, "Oh ... that mine adversary had written a book"!

The premise of my friend, .the speaker, is undoubtedly correct. We have had monetary inflation. As a res ult we have seen the steady upward march of prices. In flation distorts markets, causes malinvestments, and has many other serious effects on the econ omy. Inflation robs millions of poor people in favor of others who are fortunate enough to protect themselves. This has been going 11 12 THE FREEMAN January on in the United States for many years, in varying degree. But although the speaker's premise (that this country has had monetary inflation) is correct, is his conclusion right? Can one logically predict the coming of a crushing depression - soon? That is the first question to be raised. There is a second, corollary question which believers in the free-market economy must answer. If the prediction of immediate de pression is wrong, precisely what is the consequence of continued inflation? For surely it cannot be maintained with any degree of consistency that inflation is bad, but that inflation has no serious consequences.

Giving a correct answer to the above question is vital to every ad 'Tocate· of the freedom philosophy who influences public opinion in any way. Libertarians are always subject to violent attack by mod ern liberals who eagerly seize upon any excuse to discredit lead ers of the freedom movement. Nothing pleases them more than to point the accusing finger and say, "They are prophets of doom. Their predictions are worthless." Unfortunately, some of these ac cusations are made to sound plau~ sible because there are leaders of the freedom movement who per sist in making predictions which turn out to be.' wrong. Above all, exponents of the freedom philoso phy should not appear to have a vested interest in the coming of depression. In my opinion it is wrong to predict a shattering, economic de pression in the immediate future. First of all, forecasting the eco nomic future is not a science. It is really an art. There are too many unknown factors for predictions of the future to be scientific - in cluding the psychology of a hun dred million adults, the expecta tions and actions of millions of businessmen, and political forces which cannot be gauged. So a fore cast is really a guess, even though it may be the guess of an informed observer.

Many other guesses about the immediate future - instead of the coming of a depression - could have just as much validity as that of the extremely pessimistic de pression forecast. As a matter of fact, if I were to hazard a guess, I would say that the chances are strongly against depression begin ning this coming' year. I shall shortly offer some facts and ideas to support this guess. Inflation Destroys Freedom The danger of continued infla tion - and there is a grave danger -lies in a totally different direc..., tion. The danger is not that the price of bread, of milk, of shoes, 1967 RIGHT PREMISE - WRONG CONCLUSION 13 of clothing, and of everything else will plummet downward over a period of many years. What will go down is not the paper-dollar price of things. What will go down is the freedom of the individual. InfZaMon as a way of life leads to the loss of freedonL That is the lesson of history. In flation leads in the direction of dictatorship. It means reversion to some of the terrors of a by-gone age. It leads to the loss of the most precious possession which man has gained over the centuries - the right to choose freely and to live like a free man.

If this deduction is logical, shouldn't the defenders of the freedom philosophy concentrate on explaining the dangers of inflation in these terms rather than by fore casting an unpredictable depres sion? Governmental Controls Evidence· is abundant in the United States as well as in every other country in the world that the sure consequence of inflation is loss of freedom. A man's right to earn his living according to the rules of the free market is the most basic of all freedoms. But as soon as monetary inflation causes prices' to rise, governments have a tendency to control people's lives. For instance, this is what is hap pening in Britain today, where wage rises have become illegal for a period of time. To a limited ex tent it is happening in the United States, although here the Adminis tration tries to enforce "guide lines," which are not spelled out in the law. They are "voluntary"

- but everyone knows that they are real controls because they are backed by the coercive power of government agencies. In South America, where inflation has been rapid, wage increases are subject to strict government veto. Control of prices asked by pro ducers is much more effective than wage controls. Politically, price control is more appealing to any Administration than wage control because there are many more wage-earners than businessmen who vote. Still more controls are possible, such as restrictions on travel in other countries or investment of one's savings abroad. It is even possible that the mobility of labor will be enforced by governmen t when the effects of monetary in flation make themselves fully evi dent. This means that some work ers might be compelled to move to other cities where labor is scarce. The government might guarantee a man a living, but it need not guarantee where he will earn that living.

It should be remembered that when· a government controls a 14 THE FREEMAN January man's living, it practically controls his life. This being so, it is plain that the danger to individual free dom is not merely a vague concept. It is a very real danger which af fects the everyday life of every ·citizen. Deficit financing It is curious how the sequence of events leading to the loss of freedom through inflation is simi lar in practically every country in the world. First the government, through its central bank, creates conditions of easy bank credit. Also, over a period of years gov ernment spends more than it takes in, and the resulting Federal deficit is financed by creating more paper money in the banking system. This influx of new money and credit forces prices upward. Hav ing tried to create "prosperity" by monetary inflation; and then find ing that prices rise steeply, the government usually claims that it needs controls to curb the price increases which it has caused. It needs controls, it asserts, in order to curb the inflation which it cre ated.

This has been the case in Grea t Britain. Monetary expansion cre ated conditions whereby wage rates were pushed up at the rate of 9 per cent annually for several years. Prices increased 6 per cent annually. Productivity of industry showed no increase at all. Natu rally enough, British goods be came less competitive in foreign markets. British consumers used their money to buy foreign goods. So Britain's exports fell, her im ports increased, and she created tremendous deficits month by month in her payments to other nations. Dictators Gain Power In South America and the Near East there has been runaway in flation. Prices increased in some instances as much as 90 per cent a year. Wage increases chased prices upward. Gold and foreign ex change flowed out from their cen tral banks, as in Brazil and Ar gentina, to other countries of the world. A social and economic crisis loomed. The result? In each case a dictator gained power. Leaders in these countries realized that only a dictator could enforce the meas uresnecessary after the cata strophic results of a hyper-infla tionary spree.

In the United States, as I have pointed out, we also have the be ginning of controls. In addition to "voluntary" wage and price con trols, there are restrictions on in vestments of corporations abroad and the loans made by American banks abroad. Soon, it has been hinted by Washington officials,. there may be more "drastic" re1967 RIGHT PREMISE - WRONG CONCLUSION 15 strictions. There may be a curb on individuals traveling abroad, and even tighter control on the eco nomic activities of individuals and corporations in foreign countries. Furthermore, Washington has hinted that it will convert volun tary into legal wage and price con trols, to be enforced whenever of ficials find it necessary. All these present and potential erosions of freedom have come about as a re sult of inflation created by gov ernment policy. No need to prolong the record. The evidence is clear. Controls, and possibly dictatorship, follow inflation as day follows night. This is the kernel of truth which must be stressed by libertarians.

But now to treat the point about the coming of a depression in 1967. Frankly, I do not think it is reasonable to expect this. Let us define our terms. Depression Defined, and Current Prospects A depression, by definition, is a severe downturn in the business cycle which lasts more than two years. It would mean perhaps 10 to 15 million people unemployed, the index of production of facto ries and mines would fall by about a third. Commercial banks would try to become more liquid and call business and personal loans - the result being the liquidation of $30 to $40 billion of bank deposits. In dustrial activity in the United States would slowly grind to a halt. The very statement of the ef fects of a deflationary spiral would suggest that no administration could survive it, and the country would be in danger of a social upheaval. Political pressures be ing what they are, we can assume that the administration in power would take steps to prevent such a cataclysm if it could. It w'ould move to stop the downward spiral and prevent the shattering experi ence of a deep depression provid ing it had any power to do so.

Note that we are not discussing here a recession that would carry business down only 5 or 10 per cent. It is ridiculous to think that any government can prevent a cy clical downturn, called a recession. Governments are always late in realizing that the peak of an ex pansion has been reached and that a readjustment is already taking place. We are discussing a depres sion - a series of recessions which feed on themselves and carry a country down to the depths. At this juncture in history I believe the Federal government has the power to prevent economic catastrophe, even though it can not prevent a recession. Washing ton possesses vast powers and techniques of manipulation of the 16 THE FREEMAN January economy which it never had in the past. These would undoubtedly be used to the limit to prevent the nation going on the rocks~ One powerful economic weapon in the hands of the government is spending for the war in Vietnam.

If war in Vietnam continues, or is expanded, it will make demands upon all the economic resources of the country. Depressions never oc cur in wartime among modern na tions. If, on the other hand, there should be peace in Vietnam, Wash ington has blueprints for turning the Federal spending stream toward domestic uses. It has plans, if you will, for further inflation. Will Controls Be Used by the Government? The question in the minds of many is: "Can the government continue to use the weapon of inflation to prevent depression? Does it have the power to turn the depression around by monetary manipulation?" There are reasons for believing that at this partic ular time it can do so - providing it is willing to use totalitarian devices to control people's actions. This is an unhappy prospect. But it is a realistic appraisal of the situation. It must be remembered that we no longer have an automatically functioning economy. To a great extent, especially in the monetary field, it is a managed economy.

As a practical matter, we are no longer on the gold standard. When we inflate our currency, gold does not automatically flow out and cause the government to reverse its course. Instead, this govern ment, like every other in the world today, tends to employ strict con troIs in order to avoid the market consequences of its inflationary actions. Such controls can be effective in papering over deficiences for a long, long time. In many coun tries dictators have proved that they can buy time by monetary and market controls. Hjalmar Schacht did it for Germany under Hitler for many years. To be sure, there has to be a day of reckon ing. But the point is, that day can be postponed for years. The theory has been advanced that our government may be pow erless to prevent a depression be cause of international pressure on the dollar. Since no modern nation wants to lose all of its gold, they say, we would be forced to deflate.

Here again, there is little doubt that the U.S. Government would embargo the shipment of gold in addition to placing controls on the outflow of· dollars. In other words, in order to prevent a depression it would, so to speak, erect a Chi nese wall around the U.S. All of this would be in violation of our 1967 RIGHT PREMISE - WRONG CONCLUSION 17 stated principles and objectives, but there is little doubt that these measures would be taken. The history of inflation is that it goes forward three steps and back one. We are now in process of retracing that one step. The fact that authorities in Washing ton did not wait for signs of run away inflation, the fact' that they moved (albeit slowly) toward curbing monetary expansion be fore prices began' to rise at a steep rate - these are small pieces of evidence that the inflation can still be brought under some con trol. Thus, it would seem there is a good chance that the present "slowdown" - "leveling off" or "re cession," call it what you will need not necessarily turn into a deep depression.

Whether this conclusion is cor rect or not remains to be seen. Actually, it is not pertinent to my main argument. The main point is that whether a depression ar.. rives now or ten years from now is unpredictable. What is predict able is that inflation undermines the moral foundations of the coun try because it robs some to enrich others. It undermines the economic foundations of the country, too. John Maynard Keynes said, "Lenin is said to have declared that the best way to destroy the capitalist system was to debauch bhe cur rency. Lenin was certa,inly right. The process engages all the hid den forces of economic law on the side of destruction, and does it in a manner which one man in a million is able to diagnose." What is predictable, beyond doubt, is that inflation leads to more and more government con trols and to less of the indi vid ual' s pr.ecious freedom. This is the nexus that must be stressed by advocates of the freedom philosophy - not the coming of a depression tomor row or next year. ~ Reprints available, 10 cents each.

Character THE SOLID FOUNDATIONS of liberty must rest upon individual character; which is also the only sure guaranty for social security and national progress. John Stuart Mill truly observes that "even despotism does not produce its worst effects so "long as individuality exists under it; and whatever crushes indi viduality is despotism, by whatever name it be called." SAM U E L S MIL E S, Self-Help (1859) Can p MANY PRACTICAL, logical, ethical, and moral arguments can legiti mately be advanced in support of more responsible use of man's power of procreation through planned p'arenthood by voluntary individual decision. However, I re ject as illegitimate and invalid the argument that the accelerating pace of population growth is over taking the rate of growth of food production and that therefore disastrous famine of abhorrent proportions is almost inevitable unless population growth is throttled.

As I shall prove, the famine pro jections are neither a sound nor a This article is from a statement presented by Dr. Karl Brandt, Senior Research Fellow, Hoover Institution on War, Revolution, and Peace, Stanford University, at the Fiftieth Anniversary Conference on Planned Parent hood and World Population on October 18, 1966 at the Roosevelt Hotel in New York City. Dr. Brandt was a member of the Presi dent's Council of Economic Advisers, 1958 1961, and is the author of many books and articles on economic and agricultural policy issues. 18 ly ith ,ctJwth? KARL BRANDT legitimate argument for popula tion control because the world's existing agricultural capac ity gives abundant leeway to produce adequate food supplies for the growing population. Therefore, using famine alarm to justify sup port of government action toward birth control can only weaken the initiative to promote recognition of the importance of responsible parenthood.

I also believe that even if world wide famine were, indeed, an otherwise inescapable imminent calamity, it could not be avoided by planned parenthood because this complex cultural change in mores and modes of living does not lend itself to successful prog ress by a crash program but re quires, on the contrary, a steady long pull. Furthermore, by offering the false hope of quick relief of al1967 CAN FOOD SUPPLY KEEP PACE WITH POPULATION GROWTH? 19 legedly imminent food shortage through a planned parenthood crash program, this argument evades the real issue. All govern ments have the duty to adopt and administer policies which give farmers the freedom and incen tive to expand food production. If governments of developing coun tries accept such responsibility, they will accomplish what planned parenthood cannot do. Finally, global generalization about the extremely diverse dy namics of food supplies distorts the facts. In recent years some of the most densely populated areas of the world have increased food production beyond all expectations and against the worst odds.

The judgment that famine is un avoidable is demonstrabl.y false so far as the availability of all needed resources and the feasi bility of their use are concerned. The Director General of the F AO, B. R. Sen, and all agricultural ex perts agree on this. Food Potential Unlimited Since the end of World War II the world's technically and econ omically feasible food production potential has expanded at more than geometrical rate. This is the result of a combination of factors which Malthus, Ricardo, Justus von Liebig, Marx, Engels, Lenin, Gregor Mendel, Alfred Marshall, Pigou, Walras, Keynes, Henry Wallace, or even Lord Orr in ·1944, could not have anticipated. In spite of disastrously false projections of the 1930's and 40's, \vhat has ultimately expanded the growth of the world's food produc tion capacity beyond all bound aries is the most recent emergence of overabundant sources of energy like water, wind, or tidal power, coal, lignite, petroleum, oilshale, natural gas, uranium, plutonium.

Combined with diminishing costs of pipeline transportation of min erals, liquids, and gases across whole continents, this overabun dance has made energy in any de sired quantity available anywhere in the world - in remote agricul tural regions as well as metro politan areas - at declining costs. Overabundance of energy has opened the gates to replace human and-animal power by mechanical power - in horticulture, livestock farming, orcharding, grazing, fish eries, and forestry. The replace ment of beasts of burden and draft animals sets free for food produc tion the land needed to feed them. (One working horse consumes the food of 8 to 12 people.) Agriculture is the world's great est transport industry. It moves imDlements up to 35 times a year over every square foot of 350 mil lion acres in the U .S.The ·cDln.hus tion engine, particularly the Diesel 20 THE FREEMAN January engine, made tractors, trucks, and automobiles available to farms.

But the development of smaller and smaller 2-cycle engines and the availability of liquid fuel at declining costs has given small farmers motor scooters, motor tri cycles, small trucks, and rototiI lers, multiplying the productivity of farm labor. Abundance of Nitrogen Overabundance of energy has made the most crucial and scarcest of all plant and animal nutrients, nitrogen, potentially abundant everywhere in the world at declin ing costs. One ton of pure N mined from the air requires the energy equivalent of 4 to 5 tons of bitu minous coal. Used properly as fer tilizer for crops one ton of pure N will yield from 15 to 20 tons of grain equivalent, provided the nec essary moisture is or can be made seasonally available or its excess drained off. Farmers can mine nitrogen from the air by legumi nous green manure plants. Factor ies can mine nitrogen fertilizer wherever energy is available in any form. Such fertilizer factories are increasing in number. Where they are missing, international and national farm supply trade will bring nitrogen fertilizer to farmers at even IQwlW-prtces.

J\![oisture, another crop prod uc tion factor in seasonally or ann ually limited supply, has now also become available in many areas at declining costs by the new abundance of energy, by little 2 cycle engine-driven irrigation pumps, and aluminum sprinkler pipes. Since they are mutually in terdependent, less expensive and abundant plant nutrients and ir rigation water are jacking up the population-carrying potential of land. The same small pump and pipe units drain swamps and open wet land in humid climates to in tensive cultivation. While decreasing costs of nitro gen and of irrigation water make it a paying proposition to increase the yields of crops, the petro chemical industries also provide powerful means to curtail the high losses of food in the field and in storage. Highly effective weed killers eliminate brush and a flora of voracious thieves of precious plant nutrients and moisture.

Pesticides destroy predators, wild ruminants, birds, rats, mice, and other rodents, and control insect pests and bacterial or fungus diseases. The overabundance of energy, the automation of loading and un loading of food commodities in bulk, the increased size of ocean going vessels, the perfection of storing staples and preserving perishables have revolutionized the mobility of agricultural produc1967 CAN FOOD SUPPLY KEEP PACE WITH POPULATION GROWTH? 21 tion factors, as well as of agricul tural products. Hence the interna tional exchange of farm needs, such as engine fuel, fertilizer, feed, pesticides, machinery and implements, and of farm products involves less time and less cost per unit than ever before - unless gov ernments prevent their citizens from benefiting from this. Knowledge about the entire up to-date technology of food pro duction, processing, and distribu tion is available in any part of the "world, free of charge wherever na tions are willing to get and use it.

Moreover, nearly all countries have within their own boundaries nlodern, up-to-date, large-scale ag ricultural enterprises which are geared to the domestic as well as the 'iVorld market. Needed: f,.eedom fo Improve Irrespective of its degree of lit eracy, the agricultural population of technically retarded countries is capable of applying better tech niques wherever the market grants it freedom to improve. If new production factors become available at remunerative prices and if prices of farm products of fer an incentive, farm people will increase production, provided there is a reasonable degree of se curity and stability of income and savings. If famine should occur, neither scarcity of natural or man-made resources nor the rate of popula tion growth offer valid excuses. Even natural calamities like drought, floods, or pests do not necessarily cause famine in any properly organized society.

If famine should occur in some countries - as it well. may - it will be primarily "government made" by policies similar to those that initially resulted in the starvation of 5 million people and have pre vented for nearly 40 years any proper expansion of food produc tion in Soviet Russia and have cost uncounted millions of lives in Red China. Such policies squeeze a ma jor part of the capital for indus trialization out of farm income by the wide-open scissors of high prices for all manufactured goods and low prices for farm products. In too many agrarian countries, radical industrial protectionism exploits farmers by raising to pro hibitive levels the prices of farm ers' needs (including high-grade seed,· fertilizer, pesticides, fuel, machinery, and spare parts) and by fixing food prices in industrial cities at the expense of the farm ers for political rather than econ omic reasons. (The Japanese farmer buys 1 pound of nitrogen fertilizer with 11/3 pounds of rice.

A farmer in India who wants to buy it has to pay the outrageous price of 5 pounds of rice.) The 22 THE FREEMAN January government's discrimination against private suppliers of pro duction credit and the trade in farm commodities stymies farm production by bureaucratic red tape. Currency inflation caused by reckless public deficit spending creates additional insecurity and dries up investment capital for ag riculture, while leaving no funds for commercial imports to close the widening food deficit. Policies prone to contribute to "government-made famine" in many countries also include inces sant propaganda for "agrarian re form" with neither a definition of precise measures to be taken nor a time table for the beginning and end of such "reform." The general assumption of the wealthy and the poor alike that it will amount to confiscation of property in land and farm inventories destroys con fidence in any capital investment in agriculture. The threat of agrarian reform creates such inse curity that all parties concerned convert their assets into liquid form. The result is general capi tal flight from agriculture, which inevitably further diminishes farm production.

Curbing Population May Also Interfere with Production Many Latin American and Afri can countries have enormous un used land resources for food, feed, and fibers, and their development will require more farm people. It makes no sense to generalize and say that population growth must be stopped. The warm heart of the Ameri can people endorses enormous gifts of food to countries like In dia, where 83 per cent of the peo ple - or 400 million - live as farm ers or craftsmen in villages. But, most regrettably, such generosity has the detrimental effect of con tributing unwittingly to the pros pect of real famine there while weakening the U.S. dollar. Such gifts allow the Indian govern ment further leeway to continue ill-advised policies which suffocate in bureaucratic red tape the initia tive of their farmers, their whole sale and retail food trade, and their auxiliary farm supply trade.

Those absentee bureaucracies at federal and state levels sit tight on an enormously long end of the see saw. The order of magnitude of food deficits they continue to create is so enormous that with all charity and foreign aid we and the other industrial nations can not possibly compensate for them. If we really want to prevent famine, we had better use a cool head in dealing with governments that press us for food relief - and ass ume a hard trading stance on behalf of their majority of farm people. The American people have 1967 CAN FOOD SUPPLY KEEP PACE WITH POPULATION GROWTH? 23 a keen interest in getting valid assurances that "birth control" is applied effectively to mice, rats, birds, locusts, and a score of other pests and that they are not per mitted to devour the indigenous food faster than American "Food for Peace" can be shipped in at very high expense. Beyond that we should use our warm hearts when, by privately administered charity, we can reach the invalid, the sick, the orphans, and the hungriest among the poor. ~ "- / THE CASE OF THE E~E~ GORDON B. BLEIL / '\.

FAITH, like success, thrives on those real experiences which con firm and reinforce the belief. As an instructor of Economics to an evening adult class, I have con stantly sought examples to confirm my faith in the free market - ex amples in which the students could participate. The ordinary bulletin board provided an almost perfect study of a free market contrasted with a controlled market. Most of the supermarkets in ,this part of the world (California) and I suppose almost everywhere - have bulletin boards for the con venience of their shoppers. Here, willing buyers and willing sellers meet in a unique market place. My Mr. Bleil is a San Francisco banker, via the University of Maryland with his M.B.A. in Finance from the University of Southern California. wife and I have sold a boat, bought a cat, rented a garage, and located domestic help in this market. Most of my students had similar experi ences, and all of them admitted to habitual shopping at the bulletin board market. We concluded that the bulletin boards were interest ing, convenient, and effective.

None of us had ever seen an offen si ve word or an impropriety of any kind. The sellers were often ingenious and imaginative in at tracting attention, and somehow they managed to restore their mes sages if they were covered over by newer ones. Mysteriously, the notices disappeared when the sales were consummated. (When I went to rent the garage, I took the no tice with me!) This seemed to me to be an ex24 THE FREEMAN January ample of a really free market in operation - and I wondered how free it had to be to function. Some inquiry revealed that indeed a few of the stores required the man ager's approval for posting, or dating, so that old notices could be cleaned off periodically; but, by and large, rules as such were casual, flexible, and devoted to some nebulous standard of pro priety, imprecise as it might be. It is clear that whatever rules of conduct were imposed on the par ticipants, they were not so onerous as to restrict the market, but were practical enough to enhance its functioning.

Shortly after I had come to ap precia te this unusual bulletin board market place, the company for which I work - and for which about one-half of my students worked - installed a bulletin board at one of the entrances to our cafe teria. An ideal spot, one would conclude, as hundreds of prospects flow past the point daily. How ever, after several months it was still virtually unused. At the close of class one evening, I asked the students to figure out - as home work - and report why the com pany bulletin board had not suc ceeded. The students found the answer in the 0 jJicial Rules of the Bulle tin Board, conspicuously posted and appropriately signed by "an authority." "This bulletin board," it said, "is for your convenience. All notices will be submitted to Department X for approval." Spe cial cards had been printed and Department X prepared all entries so they would be "uniform" and "proper."

Benevolent control of the mar ket place had imposed so much au thority on it that it ceased to function. It lost its appeal as a free market and was not able to attract willing sellers and willing buyers. The class had made an impor tant discovery. The Controller of the Bulletin Board was apparently less successful in discerning the reason for the failure of his mar ket place, for a few weeks later another bulletin board was in stalled· at the other entrance to the cafeteria. It, too, carries the "Rules" - and has been no more successful than the first. I have wondered about the width of the line that divides an absolutely free market place with out any rules from the point where the market essentially ceases to function. When does con trol become stifling? The answer, of course, does not exist. But ~~hen I see a bulletin board, I am reminded of the hazards of con trol, however well-intended they might be. My faith remains with the free market. ~ W. A. PATON No, this piece doesn't deal with the High Cost of Living, at least not directly. I am concerned here \vith a less familiar and important HCl, hydrochloric acid.

A few months ago, while doing a bit of traveling, I developed a troublesome canker - "a corroding and sloughing ulcer," often called "canker of the mouth." This is a difficulty that has bothered me from time to time for some sev enty-five years, but I long ago learned how to deal with it effec tively. The remedy: drench a com pact dab of cotton with a 10 per cent solution of HCI and apply same to the canker spot, being Dr. Paton is Professor Emeritus of Accounting and of Economics, University of Michigan, and is known throughout the world for his outstand ing work in these fields. His current comments on American attitudes and behavior are worthy of everyone's attention. careful to avoid contact with other membrane areas or the teeth. One application, for a few seconds, is usually sufficient to effect a com plete cure. Preferably, of course, the treatment should be applied early. This time, not having my H Cl bottle with me, I carelessly let the canker grow substantially before taking action. Finally, prodded by the soreness, .I went to the drug department of a big chain store, in the capital city of an important state, and asked for an ounce of 10 per cent HCI. To my astonish ment and disgust. I was not al lowed to make the purchase, even after seeing and talking to the chief pharmacist. The gentleman explained that I would have to present a doctor's prescription be25 26 THE FREEMAN January fore he could sell me an ounce, or any other quantity, of dilute hy drochloric. He also explained that his refusal to serve me was re quired by Federal regulation, not by any local or state statute or ruling. He added that he recently had been plagued by a "govern ment snooper" and didn't propose to take any chances - even to ac commodate a white-haired and harmless-a ppearing out-of -stater.

VVas there ever anything more ridiculous? It would be no more absurd to require a prescription in order to buy a can of shoe polish, or a container of "Soaky" for n1Y granddaughter's bath, or any of a hundred other commonplace prod ucts of everyday use. Doubtless, some I don't know about are on the restricted list. And what do you think I had to do to get around this senseless ef fort to interfere in my personal affairs, to limit my freedom of ac tion in my own private realm? I didn't want to take time to hunt a doctor, and I had a strong urge not to knuckle under. A couple of blocks down the street I found a builders' supply store, well stocked with muriatic acid. The proprietor wanted to sell me a full carboy of the stuff but I persuaded him to let me have a much smaller amount - a pint (enough to last me for a couple of centuries). As everyone knows, "muriatic" and hydrochloric acid are the same thing, although commercial muri atic may be somewhat less pure than the HCI of the drug stores.

Here is truly a kettle of fish! I can't buy an ounce of 10 per cent hydrochloric acid without a pre scription, but I can go down the street a block or two and buy gal lons of the same thing, but several times as strong, without any in terference. This is - for me - a fresh example of the foolish rul ings by government agencies that are increasingly encountered on every hand. More Harm than Good Years ago I heard Professor Ludwig von Mises, an outstand ing, if not the greatest, living economist-philosopher, suggest that the Federal "Food and Drug" control program had probably done more harm than good. At the time - still under the spell of the as sumption that government inspec tion had helped to clean up the meat business - I was inclined to question the Professor's position; but long before my HCI experience I had become sympathetic with his pessimistic view of the impact of this government activity.

For some time the Food and Drug people have been feeling their oats, becomIng noticeably more tyrannical, and at least a few of us have been disturbed by this 1967 CONTROLLING HCL 27 development. Among the publi cized activities that have im pressed me unfavorably was the fuss made a while back when two women out my way died of botu lism, including the closing for months of a West Coast cannery employing 800 people. In my state about 300 persons perished by drowning in the first nine months of 1966, and in my county alone during the same period 50 persons \vere killed on the highways and many hundreds injured; but no one has proposed closing our lakes and rivers to boating and swim ming, and there has been no cur tailment to date of motor vehicle traffic. A case of fatal food poison ing is unfortunate, but let's not lose our heads completely over a very minor disaster in the face of much more serious problems. And it· might be a blessing if our regu lators would leave more of the control job to the discipline of the keenly competitive production standards and marketing methods prevailing in the food and drug fields.

I understand that a mass of new requirements and rules have been drafted by Food and Drug, to go into effect at an early date; and I note that this proposed increment to the heavy burden of existing controls and interferences is viewed with alarm and actively opposed by some pharmaceutical manufacturers and freedom-loving consumer groups. More power to them! One Interference Begins an Endless Chain of Others Advocates of the merits of a free-market economy have often pointed out that any interference with the intricate m.arket mechan ism and the consumers' wishes leads to other interferences, in an almost endless chain, if the initial requirement or restriction is to be made completely effective. This tendency may be illustrated by reference to the regulation that makes it unlawful for me to buy a spoonful of dilute HCI at a drug store without a doctor's prescrip tion. Obviously, to fully implement this rule, the sale of the same prod uct under another name should be restricted. Moreover, this step would still leave open the possibility that an especially obstinate consumer might acquire some common salt and sulphuric acid, and the necessary materials to construct a small facility for making hydrochloric acid ("spirits of salt"), for his own - and per haps others' -use. To block such an endeavor the government must step in again with special controls which will cut off the supply of salt and sulphuric acid, both staple products, from the recalcitrant; and perhaps also institute restric28 THE FREEMAN January tions which will deny him the op portunity to acquire the pans, brick, and other m,aterials needed to construct a suitable acid-mak ing still.

Invitation to Lawlessness Experience shows that there are two main directions in which ordi nary folks are affected by having their freedom to assume respon sibility and make choices curtailed or destroyed by government. One is an increased leaning toward lawlessness, a growing disrespect for all restraints, rules, and regu lations imposed by the state, at all levels. In the case of the mine-run citizen inclined to be law-abiding, this rebellious' attitude develops as he contemplates the verbotens and controls that have no moral sig nificance, do not conform to his basic concepts of justice and equity, and perhaps fly in the face of what he regards as plain com mon sense. For example, you can scarcely expect Joe Doakes to have much sympathy for a law or ruling that makes it illegal for a farmer to grow wheat on his own land to feed his own chickens, and subjects the violator to penalties more severe, very likely, than those ordinarily applied to persons found guilty of purse snatching. (A long standing example, world wide, is found in the tolerant view of smuggling. To many, the professional smuggler is more of a hero than a criminal, unless he in dulges unnecessarily in violence and deals in wares that are highly objectionable; and apparently few of those who travel abroad feel that it is a sin to get the better of "Customs.") Today the array of such legal ized but obnoxious interventions, in virtually all lines of activity, in cluding personal affairs, is almost unbelievably lengthy; and there is literally no possibility of behaving in such a way as to avoid all taint of being lawless. This state of af fairs was repeatedly noted - and criticized - a decade ago by a re tiring member of the Federal Trade Commission; and the point has increased validity now, in view of the mass of additional legisla tion and the growth of bureauc racy, in areas old and new, to which we have been subjected in recent years.

It is not a very long step from annoyance with laws and rules en countered which appear to tres pass beyond constitutional and traditional limits to a willingness to violate the "rule of law" gen erally. This is especially true of persons with a relatively low threshold when it comes to urges to ignore restraints. Just as at tempts by government to fix prices always bring black markets, so do inroads on inherent rights in 1967 CONTROLLING HCL 29 other areas bring resistance and loss of respect for law. Most peo ple - to give another example feel that they have a right to rent or sen their own land or buildings to someone of their own choosing; and when government at any level outlaws this right, many will not comply if they can find a way around the law without going to jail. Resentment regarding a par ticular ruling readily crystallizes into continuing antagonism, and when the institution of govern ment finally becomes an enemy, in the individual's view, he is well on the way to habitual lawbreaking at every opportunity.

Apathetic Acceptance and Learning to Live with It The second kind of attitude that may develop or be fortified by in creasing encroachment of govern ment power on the domain of the individual citizen is one of apa thetic acquiescence, supine accept ance of a dependent status. This result of expanding government, for the long pull, is likely to be more widespread than increased rebellion and lawlessness. Even persons endowed with a dash of spunk tend to be baffled when it comes to finding ways and means of resisting the pressures of legis lative and administrative require ments and restrictions imposed by a complex central government. And the many who have a wide streak of dependence in their make-ups find it relatively easy to let Big Brother take charge. I believe a general observation is warranted with respect to pre vailing opinions as to the relative merits and disadvantages of gov ernment operation and private business. We all know, at least at the subconscious level, that when a government monopoly provides postal service, water, or any other product, the consumer is seldom if ever consulted about anything and usually gets nowhere by complain ing. Hence, we learn to accept, without much criticism or chal lenge, the level of performance by government enterprise with which we are familiar.

We all also know, at least in the backs of our minds, that in mak ing purchases on the competitive market our desires and complaints are usually promptly and carefully considered and often result in changes, and that if we continue to be dissatisfied with the job done by a particular producer, we can turn to one of his competitors with the assurance that we will be welcome customers. What is often lacking, however, is clear recognition of these differences. We are not always actively aware of the limitations of government service, or of the blessings af forded by a competitive market.

30 THE FREEMAN Jan1uary Roadblock to Progress On second thought, perhaps my HCI story does have a slight bear ing on the High Cost of Living. If the phrase "cost of living" means anything specific from a group or community standpoint, it presumably refers to the volume or level of per-capita consumption of economic goods, including serv ices. This volume, of course, de pends on the per-capita accom plishment of those who are en gaged in the production and dis tribution processes throughout the economic pipeline. It follows that any development that impairs or discourages efficiency in the em ployment of human energy, as well as in the use of available physical resources, will have an adverse in fluence on output and hence on consumption per person. I submit that the massive and growing weight of government in tervention, penetrating nowadays into almost every nook and cranny of our affairs, is a substantial roadblock in the way of getting \vorth-while things done. If the citizen decides to resist one or more interferences, he will use up a lot of time and energy studying the problem and trying to find a safe way around the roadblock. If he decides to comply, he still will consume much time and energy trying to find out just what the legal requirements are and what procedures must be followed in the process of conforming. A com bination of maximum practicable resistance plus minimum compli ance will be no .less burdensome.

The brunt of this ever-changing and waxing control program falls on business managements, includ ing their lawyers, accountants, en gineers, chemists, and other ex pert professional advisers; and at a top management meeting these days it is often necessary to de vote so much time to relations with government (including tax matters) that only cursory atten tion can be given to the technical problems of operation. The crucial fact is that talent, such as that required in executive and professional activities, is cur rently a scarce article. (Despite views to the contrary, the U.S. population includes a lot of folks with very ,ordinary native abili ties and potential.) The acute shortage of high-grade personnel is evidenced by the intensity of the recruiting efforts on college campuses by accounting firms, business corporations, and other employers of people of managerial and professional caliber, and the starting salary scales prevailing ($750 to $1,000 per month) for promising graduates from the technical programs.

An important element of the demand side of this active market 1967 CONTROLLING HCL 31 for talent is of course rooted in the pressures of government in terferences and controls, and if these pressures vvere removed lor substantially abated, a host of able ,persons would become available for the basic tasks of innovation, improvement of methods, and gen eral development of the economy. In other words, we are using up, frittering avvay, a major part of one of our important resources talented people - in trying to live with our governmental colossus and its crews of cockalorums. There are many other wastes in our system, and by no means all of them may be laid at govern ment's door; but the wheel-spin ning to which many of our most able people are currently commit ted, in trying to make headway in a web of governmental interventions, is one of the most discouraging as pects of the "mixed" economy in vvhich vve are novv living.

Almost every day I see a news paper report of a grant by some foundation of several hundred thousand dollars to support a "re search" project that strikes me as trivial or silly. I wish one of these organizations vvould encourage some group of capable account ants and statisticians to launch a study of the cost of governmental intervention in the economic proc esses, including the direct costs incurred by the government agen cies so engaged as well as the costs of compliance (and resist ance) incurred by private busi nesses. ~ Reprints avai1~ble, 3 cents each. Controls Affect People A POINT which the well-intentioned advocates of more Govern ment "protection" for the buyers of goods and services seem to miss entirely is that controls do not affect things. Controls affect people - the very people they are intended to "help." As Govern ment controls wax, personal freedoms wane. When the Govern ment proposes, for example, that packaging be standardized, the result is that the controls will he on people. Business people will be deprived of much of their freedom and incentive to innovate.

But more important, there will be an unwarranted diminution of free choice for all our people - the very consumers such addi tional regulation is intended to help .... c. w. coo K, President, General Foods Corporation, 1966 annual meeting of stockholders 32 SOCIETY during the past few dec ades has come more and more un der the spell of what is sometimes known as the "new economics." This reversion to historic mer cantilism tends to ignore or reject free market economics. It empha.;. sizes government ownership and con trol of capita 1, prod uction, prices, wages, exchange. The only industry in the United States that is nationalized, that is, the one in which the new econom ics attains its fullest realization, is mail deli very. Capital is acquired not by volun tary but by coercive and, thus, noncompetitive means: taxation. Pricing of services is arri ved at not by supply and demand but by bureaucratic determination. A sealed, personal message is "first class"; the price by land is 5¢ per ounce and by air 8¢. The rate is the same whether the delivery is across the street· or across· the na tion. Competition for this poten tially profitable class of service is outlawed.

Some classes of mail, "library materials," for instance, will be de livered anywhere in the country for as little as 1/15 of a cent per ounce. Other classes call for other rates, but generally far below cost. Beyond this is the franked and other mail that goes "free." And the clamor of the mail-order houses and other beneficiaries, through powerful Washington lobbies, al ways is for more service and big ger subsidies. This, of course, pre cludes effective competition in mail delivery. The employees of this postal service - nearly 600,000 of them are largely unionized, which means that wages and hours of work are fixed arbitrarily rather than by competi tion. How is the new economics work ing in practice? The postal deficit gets larger each year, currently running about $1 billion. The service gets worse, not better. On occasion, delivery is so long de layed that it becomes· expedient to destroy the outdated parcels.

Why is the new economics ineffi cient in practice? Noone bureau crat-in-charge knows any more how to deliver mail than anyone person knows how to make a jet, an auto, a pencil. The remedy? Let anyone deliver mail - without subsidy! Rely on the market as we do with the de livery of groceries, or drugs, or the human voice, or people. If the new economics as applied to mail delivery is disturbing, wait till medicare runs its full course. What are we going to do with the "third-class" patients who will be backed up in long queues awaiting medical attention? Destroy them? The free market, willing ex change, voluntary economy creates no such problems of artificial short age or surplus. Supply and demand, manifested in thousands and thousands of daily choices and transactions, are always moving toward balance and equilibrium. Monopolists - government or private - are self-serving. Com petitors,on the other hand, are im pelled by their own interest to serve consumers as they serve themselves. When one competitor can't handle the business, others will. Why not .let mail delivery be handled by the market, as is freight? We never hear of these carriers destroying jam-ups. They deliver, not destroy. • 33 Blight WILLIAM HENRY CHAMBERLIN ALEXIS DE TOCQUEVILLE, brilliant French political scientist of the nineteenth century, was equally skilled in drawing lessons from the past and foreseeing the shape of the future. He is able to com press all the tragic frustration of the French Revolution, which began with cries of "Liberty" and ended with Napoleon's military despotism, in a single incisive sen tence: "The last generation in France showed how a people might organ ize a stupendous tyranny in the community, at the very time when they were baffling the authority of the nobles and braving the power of all kings - at once teaching the 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 riumerous magazines.

34 wor ld the way to win freedom, and the way to lose it." And here is one of Tocqueville's visions that is turning into a night mare before our eyes, the antici pation of the welfare state, man aged by faceless bureaucrats: "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 absolute, minute, regular, provident, and mild. It would be like the authority of a parent, if, like that authority, its object was to .prepare men for manhood; but it seeks on the contrary to keep them in perpetual childhood: it is well content that the people should rej oice, provided they think of nothing but rejoicing. For their happiness such a government will1967 BUREAUCRATIC BLIGHT 35 ingly labors, but it chooses to be the sole agent and only arbiter of that happiness: it provides for their security, foresees and sup plies their necessities, facilitates their pleasures, manages their principal concerns, directs their in dustry, regulates the descent of property, and subdivides their in heritances - what remains, but to spare them all the care of thinking and all the trouble of living? ....

"The will of man is not shat tered, 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 destroy, but it pre vents existence; it does not tyran nize, but it compresses, enervates, extinguishes, and stupefies a peo ple, 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 described, might be combined more easily than is commonly believed with some of the outward forms of freedom; and that it might even establish itself under the wing of the sovereignty of the people." This was written more than 130 years ago, but it sounds amazingly applicable to the steady supplant ing of the indi vid ual by the state bureaucrat - one of the ominous symptoms of the disease that is eating at the vitals of those socie ties in North America and Western Europe which have escaped the ravages of communism. This dis ease may properly be called bu reaucratic blight.

Signs of Decay To listen to the hosannas from "liberal" circles whenever some new government appropriation takes billions of dollars out of the pockets of private taxpayers for some new state project employing thousands or tens of thousands or hundreds of thousands of govern ment functionaries, it might be imagined that a welfare state, run by bureaucrats, was the last word in human happiness and well-be ing. But the lessons of history point clearly in an opposite direc tion. The proliferation of bureau crats and its invariable accompani ment, much heavier tax levies on the prod ucti ve part of the popu 1ation' are the recognizable signs, not of a great, but of a decaying society. Historians know that both phe nomena were especially marked in the declining eras of the Roman Empire in the West and of its suc cessor state, the Eastern or Byzan tine Empire. Bureaucrats are an expensive breed, in two ways.

They are maintained at public ex36 THE FREEMAN January pense and they are uncommonly fertile in thinking up schemes to spend more public funds and mul tiply their number. Sparsely Staffed Not the least important factor in the successful growth and de velopment of the American Repub lic was its noteworthy sparingness in staffing state agencies and in founding bureaucratic empires for the production of various kinds·· of red tape. The early spirit of dis trust of an entrenched bureauc racy is exemplified by the provi sion that citizens of the city of Washington - a large proportion of whom, it was foreseen, would be government employees - should not possess the right to vote. Or consider the contrast in the diplomatic service between the present time and the periods of the Revolutionary War and the Civil War, which certainly posed equally serious problems for Amer ican statecraft. Every embassy in a large capital now numbers its employees in the hundreds, while the builders employed by the State Department in Washington are hard pressed to add new offices for the hordes of officials who write memoranda to each other and to their opposite numbers in other branches·of the government and fulfill Parkinson's Law in many ways.

But when America's independ ence hung in the balance and de pended in considerable degree on the three United States Commis sioners, Benjamin Franklin,J ohn Adams, and John Jay, stationed in Paris, these men had no huge staffs of supposedly expert ad visers to call on. For one thing, the young Republic was chronically short of sound money and was sometimes hard put to it to main tain the Commissioners them selves, to say nothing of a host of secretaries and attaches. Franklin, Adams, and Jay were obliged to practice "do-it-yourself" diplo macy. And the results, for ama teurs, were surprisingly good. The American diplomats chose just the right moment, when England was prepared to make maximum con cessions, to disengage themselves gently but firmly from the protec tive embrace of France, which was pursuing some aims not altogether compatible with American inter ests. Charles Francis Adams, Ameri can Minister to Great Britain at the time of the Civil War, faced an equally severe challenge. It Was of primary importance to the gov ernment in Washington to keep Britain, where upperclass senti ment was generally sympathetic with the South, from intervening in the war by granting recognition to the Confederacy. As helpers in 1967 BVREA VCRA TIC BLIGHT 37 this very difficult assignment which today would doubtless have engaged the services of a regiment of propagandists, publicity men, and assorted image makers Adams had his son Henry, who gives a vivid picture of the ex perience in his Education, and one government clerk. But, measured by success, Adams passed his test admirably.

In fact, it would be difficult to name in this age, when diplomacy at home and abroad can call on the services of a small army of professional agents, any two such victories in foreign affairs as were achieved by Franklin, Adams, and Jay, on their own, in Paris and by Charles Francis Adams, pretty much on his own in Lon don. This is a striking example of the truth that quantity and quality do not always go together. The Spending Spree During the past two years the United States has been spending money for so-called welfare ends like the traditional sailor in port and on a binge. In the first 174 years of its existence the United States Congress voted $5.8 billion in Federal funds for education; the sum appropriated in 1965-66 alone for this purpose was $9.6 billion. There is a similar picture in health. The first 88 Congresses spent $10 billion. for health purposes; the 89th nearly matched this figure with $8.2 billion in di rect spending and in Medicare.

which reaches into the pockets of the majority of Americans with Social Security cards. Countless billions are going down the drain of the futile anti poverty campaign, a swampland of bureaucracy, waste, and favors to deserving politicians. The futility of all this well-advertised motion is rooted in the fact that the only reasonable prospect of eliminating or alleviating poverty (a highly relative and debatable term) is to make people willing and eager to work. This is not likely to happen under a policy of extravagant wel fare payments (a positive incen tive to the lazy and incompetent not to take jobs), ever rising minimum wage laws (the surest possible means of creating more unemployment, especially among younger people whose employers are required to pay more than they are economically worth), and a vast multiplication of paper projects by the enormous self-pro liferating bureaucracy in Wash ington.

The same Chief Executive who makes a show of economy by care fully snapping off light bulbs in the White House urges a reluctant Congress to spend another $1.2 billion for a highly expendable "cities demonstration bill," in38 THE FREEMAN January spired apparently by the exploded fallacy that slums make people, in stead of people making slums. At Our Own Expense Now all these multiple billion dollars of appropriations are not and cannot be manufactured by the government out of thin air or picked off some magic tree. They are your dollars, and mine, and the fellow's who lives next door. Na fallacy is older, more harmful, and more stubbornly held than the belief that a government can give its citizens something for nothing. The squandering spree of the past two years, which has gone far to turn the United States into a bureaucrat's paradise (what the bureaucrat loves, next to delaying, frustrating, tormenting, and ha rassing the unfortunate citizen who must deal with him, is spend ing money he never earned him self) must be paid for in one of two ways. Either there must be higher levies on individual income, or this income will be steadily diminished by the inflation that is the inevitable result of a govern ment policy of living beyond its means.

A person who is even slightly known is likely to receive an aver age of at least one appeal a day for funds for more or less worthy causes. Most of these go into con venient wastebaskets; for only an individual 'with the legendary wealth of Croesus could keep up with the unending flow of appeals for sharecroppers, competing "civil rights" organizations, Spanish and other refugees, delinquent youth camps, birds, dogs, cats, and heaven knows what else besides. But the individual cannot, without disastrous consequences, tear up the orders to pay up taxes from Federal, state, and local authori ties; nor is there any means by which he can prevent the dollar he may have saved from growing smaller and smaller, in terms of purchasing power. There would be a tremendous gain for realism and fiscal sanity if every indi vid ual citizen could understand that every additional billion dollars of Federal expendi ture comes out of his personal pocketbook. If this simple truth 'were understood, prodigal Admin istrations and prodigal congress men would encounter a suitable re action at the polls.

And Loss of Liberty It is not only the pocketbook of the ordinary working citizen that is inj ured by spendthrift welfare programs; it is something more important: his liberty. The follow ing equation invariably works out: huge Federal spending, now taking at least one-"fifth of the Gross National Product, equals 1967 BUREAUCRATIC BLIGHT 39 more centralization of power in Washington equals less oppor tunity for solving local problems at the grassroots level. Think of the possibilities for Harold Howe II, Federal Commis sioner of Education, who during the last two years has had almost ten billion dollars to play around with. This is an enormous means of leverage and pressure on local school boards and Mr. Howe has not been sparing in the use of it, especially in forcing certain so called guidelines for integration on Southern school boards. Of these guidelines a. representative Southern newspaper, the Charles ton News and Courier, writes edi torially. as follows: "From trustworthy sources we learn they go far beyond statutory law and decisions of the courts in robbing local school boards of their authority. Unless somebody puts a stop to this usurpation of authority, harm to the public school system may be irreparable.

One of the sinister aspects of the guidelines, we have been told, is that the hardest pressure comes verbally - either in visits from government agents or in hard nosed orders over the telephone rather than in written directives." Judging from the bitter com plaints of some Southern con gressmen, Mr. Howe has been in clined to act not as a Commissioner of Education but as a Com missar for Integration. There is a world of difference between ruling out segregation of school pupils by race or color and trying to set artificial quotas, with busing of children, as a means of "correct ing racial imbalance." The first is just, reasonable, and the law of the land; the second does not fall into any of these categories. Medicare in Britain Wherever the palsied hand of bureaucratic blight extends, free dom withers. Take a recent illus tration from Great Britain. The system of socialized medicine \\7hich has prevailed in that coun try for two decades has been so disadvantageous, from the stand point of the doctors, that large numbers of the more gifted younger practitioners are emi grating to the United States, Can ada, Australia, wherever the pas tures seem greener. The Minister of Health in the present Labor Government, Mr. Kenneth Robin son, sounded off with a bitter re proach that conveyed at least the hint of a threat to the doctors' freedom of movement. It was very ungrateful and downright cyni cal, he declared, for a young doc tor on whose training some $20, 000 had been spent to take off for foreign parts in search of better living conditions for himself and 40 THE FREEMAN January his family. This is precisely the line of argument used by the com munist East German authorities in defense of the erection of the Berlin Wall and its shoot-to-kill guards. Too many educated and technically trained young people had been fleeing to the West.

A Case History There is nothing like a personal experience, a case history, to show how ugly bureaucratic blight is in operation, how it can harass and torment the individual who falls within its range. I have a friend who, with his wife, is eligible by some years margin for Medicare. Although he disapproved of the princi pIe, he and his wife applied for its benefits in March, 1966. In his innocence he imagined that, under the provisions of the law, he and his wife would merely estab ish their ages and .recei ve the necessary certificates. But he soon learned that this is not in line ,with the first law of bureaucracy: never to make easy and simple what can, with per verted ingenuity, be made hard and complicated. His enlighten mentbegan when an enormous bulging envelope with the dire initials HEW (Health, Education and Welfare) arrived with huge questionnaires, filled with imper tinent and irrelevant questions, for instance, about income and earnings, although these have no bear ing on the legal qualifications for Medicare. The questionnaires were duly filled out and dispatched to the designated address. The response was silence.

A personal visit to HEW about the end of July brought a con frontation with a female bureau crat. With ill-concealed joy she re jected the passports which were presented as sworn evidence of the dates of birth of my friend and his wife on the ground that they were not old enough. Her advice was to ask the Board of Elections for proof that they voted in the town, although,' from the standpoint of establishing age this seemed about as sensible as requiring them to whistle like canary birds. This formality was also complied with and the couple left for a trip in Europe. On returning about the middle of September they found not the Medicare documents but three more bulging envelopes with re peat performances of the original questionnaire. At this point pa tience began to wear a little thin and the couple decided to wait for something more positive to hap pen. It didn't. About the end of September a telephone call was made to HEW and a female voice replied that two weeks would be needed for "investigation" - of an application that had been filed 1967 BUREAUCRATIC BLIGHT 41 more than six months earlier. Two weeks later another bulging en velope turned up, with the typed answers to some of the questions in the original questionnaire, but no certificates.

Another personal call at the of fice of HEW was as futile and frustrating as the first. This time it was a male bureaucrat who pointed out that whatever his pre decessor, the female bureaucrat, had demanded was wrong and laid down a new set of requirements. My friend experienced a fairly serious illness during the time when male and female bureaucrats were sh uffiing around and taking no action on his application, and paid out of his own pocket hun dreds of dollars for which Medi care was supposedly responsible. To the faceless bureaucrats, male and female, whose object evidently was to obstruct and delay, not to help, this was a matter of no con cern. They couldn't care less. It was as useless to appeal to their sense of reason and compassion as to argue with a computer or an adding machine. So, seven months, six bulky questionnaires, and two maddeningly futile visits to the HEW of fice after the application was filed, my friend is without the Medicare to which he is entitled according to the law. Maybe it stamps him as a dreadfully reactionary old fogy. But there could be some un derstanding for his weary ex clamation: "Oh, for the bad old days, when this kind of bureaucratic inquisi tion was unknown and the com bined snatches at your pocketbook by Federal, state, city, and other assorted tax vultures left you enough money to pay your own medical bills."

There was a time when Ameri cans did not put up so sheepishly \vith inbred official bureaucratic arrogance, obstructionism, and deliberately planned delay. There is a most relevant passage in the Declaration of Independence: "He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their sub stance." The time for a Declaration of Independence from bureaucratic blight and its legion of accom panying evils is long overdue. ~ Property Precede's Charity BUT if nothing is mine, then is there not only no justice, but no possibility of benevolence. P. E. DOVE, The Theory of Human Progression ROBERT M. THORNTON Let's NOT worry about the World VERMONT ROYSTER, editor of The Wall Street Journal, has recently questioned the idea that it is the mark of a good citizen "to ,vorry about world events. . . . The world's woes number some that aren't worth worrying about at all," he opines, and even if some are "worth worrying about, wor rying doesn't get you anywhere."

But these are especially terrible times, many will complain, to which Royster replies: "If ours are the worst of times, so were they all," for "wars, riots, up hea vals, and worrisome matters of all sorts are not new to the world. What's new is the constant dinning of them into our brains. . . . The question is not whether black doubt lies ahead," Royster concludes, "but how men at dif ferent times meet their different doubts, whether with courage and K Mr. '1"hornton is a businessman in Covington, entu,,~v. 42 ironic laughter or with whimper ing." Some years ago Albert Jay N ock remarked that there is "sound Christian doctrine" in the old saying: "There are two classes of things one should not worry about: the things one can help, and the things one can't help. If you can help a thing, don't worry about it; help it. If you can't help it, don't worry about it for you do no good, and only wear yourself down below par." A huge deal of nonsense is talked about "the woes of society, the sorrows of the world," said N ock, but "there is no such thing as the woes of so ciety, and the world has no sor rows. Only individuals have woes and sorrows." Some persons "speak of being overcome by the sorrows of the world" and "borro.w the ,vorld's troubles in the conviction that they are great altruists, when in fact they are only bilious and 1967 LET'S NOT WORRY ABOUT THE WORLD 43 would be benefited by some liversity may seem a virtue to those medicine and hard work in the who take certain attitudes, but it open air." is perhaps not impertinent to While not wishing to "encour-point out that it has not always age hardness of heart," continued been so considered; that indeed, Nock, "one must allow something to Catholic theology it once was, ... for a possible light touch of and for all I know still is, a sin morbidness in one's sentiment to-the sin of melancholy which has ward human sorrows, both indi-been carefully defined as a stub vidual and social. It is easy to get born refusal to be grateful for the a bit too much worked up over good gifts of God."

distresses lying in one's purview The late Dean lnge was another - distresses, I mean, which ,vith· -··who reminded us that in Christian the best will in the world one can-doctrine melancholy - "a compound not possibly alleviate, and with of dejection, sloth, and irritability, which perhaps one cannot even which makes a man feel that no sympathize intelligently, since one good is worth doing" - is a moral has never experienced the like fault. "St. Paul," writes the Dean, oneself." "warns the Corinthians against Implicit in the demand that we 'the sorrow of the world,' ,vhich worry about the woes of the world 'worketh death.' The sorrow of the is a rebuke to those who enjoy world is contrasted with godly good fortune while many do not. sorrow, or repentance for sin." Joseph Wood Krutch has ably ex-Then Inge quotes Chaucer: "This plained why he does not believe rotten sin maketh a man heavy, that "anyone who finds himself wrathful, and raw. Thence com fortunate is morally obliged to meth somnolence, that is, a sluggy refuse to enjoy his good fortune slumbering, which maketh a man because all are not equally for-heavy and dull in body and soul; tunate. It might be argued," he negligence or recklessness that says, "that to refuse to accept hap-recketh of nothing whether he do piness if everyone is not equally it well or badly; and idleness, that happy would not be a way of se-is at the gate of all harms."

curing, even ultimately, happiness lnge recommends the advice of for everybody, but merely a way the Psalmist in our attitude to of making sure that misery be-ward things which are not in o].(t comes universal, since even the power: "Fret not thyself else lucky will not permit themselves shalt thou be moved to drevil. ... to enjoy their luck. Such perver-We are not responsible' he writes, 44 THE FREEMAN January "where we have no power, and we have the divine promise that all things shall work together for good to those who love God." The Dean tells a good story about a British Ambassador to the Hague who was "tossing about through the night in anxiety about the condition of his country. An old servant, lying in the same room, addressed him: 'Sir, may I ask you a question?' 'Certainly,' replied the ambassador. 'Sir, did God govern the world well before you came into it'?' 'Undoubtedly.' 'And will He rule the world well when you have gone out of it?' 'Undoubtedly.' 'Then, Sir, can you not trust Him to rule the world well while you are in it?' The tired ambassador turned on his side and fell asleep." ~ Progress Through Freedom BUT STILL, while man in freedom makes his way, Some good develops oft from day to day; Secures advancement in the field of strife While dipping oars upon the stream of life.

While under ban we only see the dwarf, As men seem pigmies on the distant wharf. But give full scope to man's unshackled soul, To think and speak and judge without control; And great development of mind will rise, And great achievements will the world surprise. Then will the mind throughout creation soar, And wonders of the universe explore; Inventions make, to aid the human race In things substantial and aesthetic grace. Religion gains its utmost purity, When its development is wholly free. REV. EDW ARD CLEVELAND, Bible Sketches (1875) AMERICANFEDERALISM:.HISTORY GEORGE CHARLES ROCHE III A NUMBER of years ago, Richard Hofstadter made the point that the differences among key Ameri can political figures have been overemphasized, thus often dis guising a wide area of agreement. As American federalism has been demonstrated in action during the past 180 years, it has been shaped and modified by our political con flicts, but the real essence of our American political tradition has been revealed quite as much by the area of agreement about ends and means underlying those conflicts.

The immediate attempts at ex planation and definition of our new federalism published by thinking Americans in the early years of the Republic demonstrate this consensus. The Federalist, Dr. Roche, who has taught history and philos ophy at the Colorado School of Mines, now is a member of the staff of the Foundation for Economic Education. written by Hamilton, Madison, and Jay; Defense of the Constitutions, Thoughts on Government, and Dis courses on Davila, all written by John Adams; Letters of PubUcola, written by John Quincy Adams; and the Farewell Address of Wash ington - all emphasize defense of minority rights against majority dictatorship. They outline an American liberty based upon his torical precedent and limited gov ernment. Yet, the seeds of dissent were also present in the early Republic, with Americans of good will on both sides of the developing argu ments. One of these arguments is best seen in the controversy be tween the Hamiltonian and the Jeffersonian view of the new-lia. tion. Hamilton was the prQyliet of a new order, a rising ~neration of capitalism and thpburgeoning 45 46 THE FREEMAN January industrial revolution. Jefferson was the defender of the older agrarian order whose interests often seemed to conflict with an indus trial America. The dispute be tween Hamilton and Jefferson is common knowledge and is exten sively treated in virtually every history of our early years. What is more important, but frequently overlooked, is that Hamilton was a consistent advocate of the limi tation of political power as the best safeguard of liberty, in the sense that he shared with Jefferson a distrust of excessive popular con trol. Our history books are often so busy telling us of the differ ences between Hamilton and· J ef ferson that they overlook the Hamiltonian fear of unchecked ma jorities and overlook the J effer sonian acceptance of capitalism and the new industrial order that occurred after Jefferson became President.

Another classic quarrel of our early years also involved Jefferson. He and John Adams, both key figures in so many of the forma tive actions of the Republic, car ried on a dialogue that embraced all facets of the new federalism. This was a bitter debate. The testy, irascible, blunt Adams wrote SCffile letters to Jefferson that must have '.:l.corched the paper. J effer son' s re~onse was characteristic of the sage ~f Monticello. He took his revenge by understating his case and by pretending that the barbs of Adams had gone un noticed. Jefferson described Adams in a letter to a friend as "always an honest man, sometimes a great one, but sometimes absolutely mad." At the end of a friendship and feud covering well over half a century, it is symbolic of their re lationship that both men w,ere to die on the same day in 1826. It is even more symbolic that that day should have been July Fourth.

Checks and Balances The system of checks and bal ances praised by Adams in 1789 in his Defense of the A1nerican Const,itutions is largely an enun ciation of our American political tradition. At the time of the French Revolution, Adams de fended the American system and implied how different the Ameri can federalism was from the new system then developing in France: A despotism is a government in which the three divisions of power, the legislative, executive, and judi cial, are all vested in one man .... How did such despotisms come about? Helvetius and Rousseau preached to the French nation liberty, till they made them the most mechanical slaves; equality till they destroyed all 1967 AMERICAN FEDERALISM: HISTORY 47 equity; humanity till they became weasels and African panthers; and fratwt'nity till they cut one another's throats like Roman gladiators. 1 The doughty New England lawyer, like the rest of the Found ers of the American federalism, always strongly emphasized prac tical concepts, based on history, common law, and a basic distrust of self-proclaimed saviors of the world. In a letter to John Taylor of Caroline he outlined his faith in human nature as he saw it: That all men are born to equal rights is clear. Every being has a right of his own, as moral, as sacred, as any other has. This is as indubit able asa moral government in the universe. But to teach that all men are born with equal powers and facul ties, to equal influence in society, to equal property and advantages through life, is as gross a fraud, as glaring an imposition on the credul ity of the people as ever practiced by ... the self-styled philosophers of the French Revolution. For honor's sake, Mr. Taylor, for truth and vir tue's sake, let American philosophers and politicians despise it. 2 Liberty Under Law If America remains a nation where property and liberty are reasonably secure, if America re1 John Adams, Letters to Jefferson, 1817.

2 John Adams, Works, VI, 454. mains a government of laws, not of men, much of the credit for the development and defense of such a system is due to John Adams, whose concept of "Liberty under Law" presupposes a system of constitutionally limited govern ment, decentralized political power, and a deep and abiding faith in the American tradition of federalism, which in Adams' time was already approaching its two-hundredth birthday. Adams once wrote J efferson, "Whether you or I were right, Posterity must judge .... " He re ferred, of course, to the political differences that had developed be tween the Federalist party with which Adams had been associated and the Republican party of Jef ferson. Here again the bitter dis pute that took place in domestic American politics during the Na poleonic wars is a common subject of our history books. What is neg lected is the wide area of consen sus shared concerning American government even in the midst of these arguments. Adams and Jef ferson both favored local govern ment and institutions and sus pected· that good government often seemed to decline in exactly the same proportion as it moved fur ther from the people being gov erned.

Our history books sometimes neglect to tell us that Jefferson as 48 THE FREEMAN January well as Adams approved a balance of power between the national and sta te governments, that he spoke approvingly of The FederaiZist and was sympathetic to the· Constitu tion, even writing to Adams in praise of his Defense of the Con stitutions.Jefferson also feared an unchecked majority rule: "An elective despotism was not the government we fought for, but one which should not only be founded on free principles, but in ,vhich the powers of government should be so divided and balanced among several bodies of magistracy, as that no one could transcend their legal limits without being effectu ally checked and restrained by the others/'3 Kentucky and Virginia Resolutions After the passage of the Alien and Sedition Acts by the Federal ists during the difficult days of the French Revolution, Jefferson and his close friend, Madison, developed the Kentucky and Virginia Reso lutions, landmarks in United States federalism and. in. the de velopment of the compact theory of the Constitution. In the Ken tucky Resolution Jefferson insisted that the Federal Constitution had created a limited national govern3 As quoted by Richard Hofstadter, T he American Political Tradition and the Men Who Made It (New York: Vintage Books, 1948),p. 29.

ment of certain definite and enu mera ted powers, reserving all other powers to the people and the states. In his lifetime, Jefferson repeatedly emphasized the close connection between decentraliza tion and liberty. He placed his faith in a qualitative rather than quantitative democracy, urging that a body of informed and cap able citizens, an aristocracy in the best possible sense of the word, was infinitely superior to a mere nose count that delegated all au thority to some political potentate. The American tradition of fed eralism was th us soundly launched. There were differences among our statesmen and think ers: agrarian capitalism versus industrial capitalism, Southern aristocrats versus New England professional men. Yet North and South, agrarian and industrialist, aristocrat and middle class, our Founding Fathers shared an abid ing distrust of excessively central ized authority and a basic faith in the American people, with their diverse interests and attitudes, as the true vitality of the growing tradition of American federalism.

Capitalism Encouraged One of the dominant historical forces at work almost from the in ception of the new Republic was the rapid expansion of a capitalist economy. The Industrial Revolu1967 AMERICAN FEDERALISM: HISTORY 49 tion and the unique opportunities available to an America with great room to grow were coupled with an aggressive and optimistic American spirit of individual re sponsibility and initiative. The de cisions of Chief Justice Marshall and the arguments of his contem poraries, such men as Justice Story and Daniel Webster, built upon the Hamiltonian vision of America as enunciated in The Federalist. Great stress was laid upon the sanctity of contract and of private property. It appeared vital to provide sufficiently central ized power to prevent the abuses of any of these concepts within the separate state governments. Thus, capitalism received great support from the political system. What centralization was neces.sary to preserve the sanctity of contract and of private property did not, however, conflict with the Ameri can tradition of federalism as it had developed. A government of separated, limited powers, a close adherence to the principles of Eng lish common law and tradition re mained very much in evidence.

Jackson's Role Of course, Americans were still having their political arguments. The entrenched localized capital ism represented by the Charles River Bridge, or by the Southern agrarians, did not always approve of the sweeping social changes which a rapidly expanding capital ism brough~ to America. Some scholars of the Jacksonian era, notably Arthur M. Schlesinger, Jr. in his Age of Jackson, have des scribed these domestic political and economic arguments of the time as though the Jacksonian movement were some sort of anti capitalistic New Deal crusade against the powers of entrenched wealth. This is most emphatically not the case. It is much more nearly correct to see the political conflicts of the era as a sort of "new" capitalism versus "old" capitalism struggle. The Bank of the United States, for example, was attacked not in an assault upon capitalism, but as a com plaint by a rising middle class against a monopoly situation that limited their own opportunities within a burgeoning capitalistic system.

Jackson himself was a western aristocrat whose primary appeal to a rising middle class was equal ity before the law and resistance to unwarranted centralization, whether in economics or politics. Nothing could make it clearer that the Jacksonian movement ,vas well within the dominant American tradition than the fact that upon John Marshall's death, Andrew Jackson appointed to the Supreme Court Chief Justice Taney to fill 50 THE FREEMAN January the vacancy, whereupon Taney served for nearly thirty years, from 1835 to 1864, producing a series of decisions steadily strengthening the contract clause of the Constitution. Jackson's chief opponent in the political arena, Henry Clay, was a consistent advocate of extensive capitalistic development. Daniel Webster also advocated such de velopments, and yet found no diffi culty in remaining close to the tra ditions of American federalism. As a rising young politician in the West, not too many years later, Abraham Lincoln consistently em phasized self-help, the growing West of his times, and the great social mobility of capitalism. All of these men, Jacksonian or Whig, consistently urged greater eco nomic opportunity for the individ ual and the sanctity of property and contract as the best safeguard of that opportunity. They envi sioned a government that enforced the rules of the game while leav ing open the widest possible aven ues for individual initiative and varied capitalistic development in a thoroughly decentralized frame work. As rising capitalists build ing toward modern America, the generations of pre-Civil War American political and economic thinkers continued to place their faith in the growing tradition of American federalism.

Southern Agrarianism While the North and the West went the way of industrial capital ism, the South, tied to the land and to its "peculiar institution" of slavery, went the way of agrar ian capitalism. A different strain of political thinking, southern agrarianism is also one of the formative elements of American political thought before the Civil War. Perhaps a no more simon-pure spokesman for the Southern agrar ian viewpoint could be found than John Randolph of Roanoke, an eccentric genius, unwilling to admit the slightest compromise with the new order. Randolph feared the results of excessive cen tralization and the impersonality of a government too far removed from the varieties of local experi ence. Discussing the House of Rep resentatives, he asked: "But, Sir, how shall a man from Mackinaw or the Yellow Stone River respond to the sentiments of the people who live in New Hampshire? It is as great a mockery - a greater mockery, than it was to talk to those colonies about their virtual representation in the British par liament. I have no hesitation in saying that the liberties of the colonies were safer in the custody of the British parliament than they will be in any portion of this country ,if all the powers of the 1967 AMERICAN FEDERALiSM: HISTORY 51 states as well as those of the gen eral government are devolved upon this House."4 Russell Kirk makes Randolph's attitude completely clear when he writes, "For Randolph, the real people of a country were its sub stantial citizenry, its men of some property, its farmers and mer chants and men of skill and learn ing; upon their shoulders rested a country's duties, and in their hands should repose its govern ment."5 It is John Randolph who developed much of the political framework later brought to frui tion by John Calhoun. The primary emphasis in that framework as it developed rested upon the doctrine of states' rights, a position not without validity. Indeed, an ear lier biographer of John Randolph, the almost equally eccentric and irascible Henry Adams, has sug gested that the doctrine of states' rights was in itself a sound and true doctrine: "As a starting point of, American history and constitu tional law, there is no other which will bear a moment's examination."

Randolph was especially critical of the commerce clause and the general welfare clause of the Con stitution. He predicted that the 4 Annals of Congress, (18th Congress, 1st Sess.), p. 1304. 5 Russell Kirk, Randolph of Roanoke (Chicago: Henry Regnery Co., 1964), pp.34-35. great extension of the power of centralized government would someday occur through these legal avenues. Time has proven ,him correct. Equality or Liberty Calhoun built upon these sup positions.The "Iron Man," pres sured by the necessity of the grow ing crisis that was to produce the Civil War, early came to grips with the problem of what consti tuted genuine equality and liberty. He warned that true liberty was compatible only with equality of opportunity and indeed was impos sible if an equality of condition were to be enforced: "N ow as individuals differ greatly from each other in intelli gence, sagacity, energy, persever ance, skill, habits of industry and economy, physical power, position and opportunity, - the necessary effect of leaving all free to exert themselves, to better their posi tion, must be a corresponding in equality, between those who may possess these qualities and advan tages in a high degree, and those who may be deficient in them. The only means, by which this result can be prevented are, eitber to im pose such restrictions on the ex ertions of ,those who may possess them in a high degree, as will place them on a level with those who do not; or to deprive them of 52 THE FREEMAN January the fruits of their exertions. But to impose such restrictions on them would be restrictive of lib erty,- while to deprive them of the fruits of their exertions, would be to destroy the desire of bettering their condition. It is, indeed, this inequality of condition between the front and rear ranks, in the march of progress, which gives so strong an impulse to the former to maintain their position, and to the latter to press forward into their files. This gives to progress its greatest impulse. To push the front rank back to the rear, or at tempt to push forward the rear into line with the front, by.the interposition of the government, would put an end to the impulse, and effectually arrest the march of progress."li Liberty, equality of opportunity, progress ... these are John Cal houn's· words, yet might just· as easily be the words of a J ackson ian entrepreneur. And how is the government to be kept from inter fering with· this· balance ?Cal houn's answer,well within the spirit of American federalism, was his "theory of the concurrent ma jority." Under other names, Cal houn's idea has long been the way we have actually run the American Republic .. and made our decisions.

Power is to be diffused through so 6 John Calhoun, Disquisition on Gov e'rnn~ent, Works, I, pp. 56-57. many separate entities that local and regional principles, programs, and interests, representing the tre mendous diversity of American society, are able to work together at some times and yet check one another at other times, allowing national business to go forward, and yet avoiding suppression of anyone's legitimate action for the benefit of anyone else. The Civil War Admittedly, a wide gulf existed in some instances between the in dustrial capitalism of the North and West and the agrarian capi talism of the South. Yet, in a num ber of ways the political values to which both North and South ap pealed before the Civil War had much in common. Both espoused limiting the sphere of governmen tal action, both favored diffusion of power, both favored wide oppor tunities for individual differences and individual opportunities. In a word, both continued to do their thinking within the tradition of American federalism.

Yet, there remained a difficult road ahead for American federal ism: the Civil War. The problem of slavery was being driven so far into the foreground that it could not much longer be ignored. The Southern agrarians were being dri ven by a small but intractable Northern abolitionist minority in1967 AMERICAN FEDERALISM: HISTORY 53 to wrapping the institution of slavery in the protective cloak of American federalism. Most North erners were also concerned with slavery, but in a very different way. The threat of the expansion of slavery into the new territories as this nation grew seemed to the average Northerner to menace his free institutions, both economic and political. When the war finally came, the abolitionists who had done so much to bring it about were no .longer in the forefront. The struggle came to be between Northerners set on maintaining their federal system as it had ex isted and Southerners who wished to set up an almost identical fed eral system within which the in stitution of slavery would be pro tected. The underlying concepts of American federalism were thus espoused by both North and South, even as the struggle of section against section was carried out.

The statements of Lincoln be fore and during the war epitomize the Northern insistence upon the traditional American attitude to ward limited government and in dividual opportunity. In 1858 he commented, "As I would not be a slave, so I would not be a master. This expresses my idea of democ racy." In 1861, he defined democ racy as "a government of the peo ple, by the· same people." Nothing in such sentiments conflicts with the basic intent of Calhoun's con current majority. The great ques tion that needed to be answered, again in Lincoln's words, was, "Must a government, of necessity, be too strong for the liberties of its people, or too weak to maintain its own existence?" States'Rights The history books often don't emphasize the fact that states' rights had a history of great strength in the North as well as in the South, as for example in the Hartford Convention of 1814. Meanwhile, the South maintained a strong sentimental and intellec tual attachment to the Constitu tion until the very eve of the Civil War. Both sides espoused the same tradition in political theory; the trouble came rather from a sec tional conflict over differing socio logical concepts. As Daniel .Boor stin has phrased it: "The North and the South each considered that it was fighting primarily for its legal rights under the sacred Fed eral Constitution ... As. often in American history, a great political conflict was taking the form not of a struggle between essentially dif ferent political theories, but be tween differences of Constitutional emphasis .... The Civil War seces sionist argument -like that of the Revolution, could be carried on in such a conservative vocabulary, 54 THE FREEMAN January because both events were, theo eetically speaking, only surface breaches in a firm federal frame work. Because of this, they both implied, win or lose, the continued acceptance of the existing struc ture of local government."7 The Reconstruction era, for all its senseless crimes and abuses by both the North and the South, demonstrated a remarkable reinte gration of the South into the American Constitutional system.

The Civil War had to be fought, perhaps, but both sides remained so much within the American tra dition of federalism that the basic concepts of the American political fabric remained largely intact. Racial Problems Remain Since the American Civil War, the racial problem left as a legacy of slavery continues to. plague both the South and the. American fed eraL system. In a case before the Supreme Court several years ago, Justice Frankfurter attacked "some recent suggestions that the Constitution was in reality a deft device for establishing a central ized government. . . ." Recalling Louis Brandeis' remark that the separation of powers was adopted "not to promote efficiency, but to preclude the exercise of arbitrary 7 Daniel Boorstin, The Genius of Amer ican Politics (Chicago: University of Chicago Press, 1953), pp. 122; 124-25. power," Frankfurter concluded with a suggestion we might all re member: "Time has not lessened the concern of the founders in devis ing a federal system which would likewise be a .safeguard against arbitrary government. The great est self-restraint is necessary when that federal system yields results with which a court is in little sympathy."8 The racial problem is still with us (as are innumerable other prob lems as well) but it ill-behooves us to destroy the American tradition of federalism in the course of at tempted "solutions" to our prob lems. After all, that American tra dition of federalism has itself proven to be the greatest problem solver the American Republic has ever found.

Since the Civil War, a large part of American economic· and polit ical success has been the result of the wide social diffusion of power traditional in America. The churches, business, labor, agricul ture, and political parties, have all exercised a measure of authority within the system, outside of gov ernmental control. State and local governments also serve to limit centralizing tendencies as they ex ercise their authority. Congress is composed of Senators and Repre sentatives elected by localities and states and often representing na8 Bartkus v. Illinois, March 30, 1959.

1967 AMERICAN FEDERALISM: HISTORY 55 tional interest only in the sense that all.of their separate and wide ly varied regional interests pro duce a national amalgam of opin ion. It is behind this protective shelter of diffused and dispersed political power constituting the American federal system that the private individual has operated. It is this basic American tradition of an individual citizen freed from undue centralization of power that has provided the tremendous pro ductivity and social mobility of the nation. The Melting. Pot Another example of this social mobility achieved through the de centralization. of political power would be the record of the Ameri can immigrant. America is often referred to as a "Melting Pot," yet many of the various nationalities that make up our national popula tion retain a wide variety of cul tural differences with great pride. This cultural diversity is protected by the American federal system.

On the other hand,· in a political sense America has been a "Melting Pot." Many of the Europeans com ing to these shores have brought with them some of the more radi cal political beliefs of their home land, yet upon arriving here have been absorbed into moderate polit ical life. America has shown the world that the "consensus through diversity" of political life possible under federalism opens so many social and economic doors to so many people that radical political answers are no longer either nec essary or desirable. This blend of political stability and economic and social progress made possible through the diffu sion and localization of power was noted as a basic American institu tion by Tocqueville well over 100 years ago. He pointed out that state and local governments had come first in America and that the national government had been de signed later for special purposes.

In his careful study of local gov ernment institutions in the United States he found that "municipal institutions constitute the strength of free nations . . . [because] a nation may establish a free gov ernment, but without municipal in stitutions it cannot have the spirit of liberty .... However enlight ened and skillful a central power may be, it cannot of itself embrace all the details of the life of a great nation. Such vigilance exceeds the powers of man."9 The papers of the Founding Fathers, especially The Federal ist, are filled with approval of pop ular rule, so long as that popular rule is locally oriented. Even the ~) Alexis de Tocqueville, Democracy in America (New York: Vintage Books, 1958), pp. 63; 93.

56 THE FREEMAN January national government in its Con gressional wing was to be a series of popularly elected senators and congressmen, each representing a small segment of the total political body. This heterogeneous repre sentation is still with us and has produced what Willmoore Kendall describes as the "Two Majorities" within national politics. Even though the Presidential majority produces a single executive author ity, the congressional majority puts up the money and passes the laws that allow that Presidential authority to be exercised, thus giv ing regional and local representa tion in all its diversity a powerful voice on the national scene. A Changing Pattern Just as regional diversity and the political authority accorded it were seen by Tocqueville as the very root and branch of American self-reliance and therefore of American greatness, it has also been productive of such senti ments as that epitomized by the moral rectitude of Grover Cleve land in his assertion that "the les son should be constantly enforced that though the people support the Government, the Government should not support the people."lo Somehow in our own time a stu dent of contemporary society can not help but wonder whether or not there may be quite a number of Americans who no longer seem to espouse such attitudes. It some times appears that all too many citizens seem more interested in what the government can do for them than in their own self-reli ance. Certain elements within our society, especially in the late nine teenth and twentieth centuries, have gradually developed a philos ophy of government quite different from the American tradition of federalism. ~ 10 Grover Cleveland, Veto Message, February 16, 18870 An atoticle to appeat· next month will deal with the erosion of American F ede'ralisnt.

The Impregnable Freedom LOIS H. SARGENT EVERY fresh economic restriction or control of an expanding bu reaucratic government encroaches another degree upon individual freedom. But, no matter how much freedom of enterprise and action men may lose, there is one free dom that is absolutely impregna ble: a man's freedom to think for himself. This freedom assumes a singu lar importance today because of two opposing viewpoints contend ing for public acceptance. On the one hand, there is the political hu manitarianism which would have us believe that· a benign govern ment should solve the problems of its citizens and create for them the ideal environment and society. On the other hand are the conserv atives, or the libertarians, who beMrs. Sargent, active for many years in the field of personal counseling, is a freelance author from Springfield, Missouri. lieve that people produce and achieve more if placed upon their own responsibility and left free to carve out their destinies, each in his own way.

This controversy raises another question: Do individuals really de termine their own destinies, or are they inevitably the product of en vironment and sociological condi tions? Now, no modern, well-read per son will discount the influence of environment - the family, then the broader environment of friend ships, educational background, community, working environment - upon the development of person ality. As most psychologists ex plain it, they are interrelated and interacting. But logic andreason, when the subject is reduced to its basic principle, accord dominant influence to individual thinking and effort. 57 58 THE FREEMAN January In support of this contention, I offer the following pertinent facts. Everything that has been dis covered, designed, or invented for the improvement or comfort of man has originated in some man's mind. Aside from its physical (na ture) components, the environ ment of man has been created by man himself. And, as men have learned more and more about na ture, they have learned how to adapt, adjust, and to a great ex tent, control it. And this, too, was initiated by mental effort.

Everything that has contributed to the advancement of civilization, and likewise, everything that has brought about its decay, has first been a thought in some man's mind. Some persons may accept this generality, yet fail to apply the principle to/themselves, thus fail ing to realize the extent to which their thinking determines the con ditionsof life. If a man wishes to believe, as the proponents of the social gospel or socialists imply, that environ ment and circumstances direct his path in life, he is mentally free to accept this idea. If he thinks that vvay, the idea takes on reality and the environment looms as some thing that acts upon him, as a mold shapes metal. The opposite viewpoint holds that environment and circumstances are something a man r-e acts to,. he can decide for himself if he wants to accept it as it is, resist it, or change it, as his urges and aims may dictate.

Suppose Abraham Lincoln, con templating in his childhood the utter poverty and limitation of his surroundings, had believed that his future would be shaped by his environment. His desire for learn ing and determination to get it, which paved the road he was to travel, might never have been awakened. Suppose George Washington Carver had thought as a young boy: "I am justa poor black boy, child of slaves. How can I hope to rise out of such circumstances and make something of myself?" Without the vision which im pelled ambition and effort to over come obstacles and alertness to make the most of help that circum stances did occasionally provide, the world would never have heard of either of them. The records of business, ind us try, and the professions abound with biographies of self-made men and women who used their God given freedom to think for them selves, and with will, faith, and labor, rose from humble begin nings to make their dreams come true.

They had to think in that direc tion before they could travel it.

1967 THE IMPREGNABLE FREEDOM 59 Fortunately for them, their na tional environment then presented no insurmountable obstacles, but allowed them maximum freedom to pursue the goals they envi sioned. This can still be done to day, if the initiative and will are strong enough, but the odds are greater than they once were. The fact that this nation has en joyed the fastest progress, and has had the highest standard of living in the world, seems proof enough that individuals are quite capable of working out their own desti nies, and will have better oppor tunity if they live in an atmos phere of political and economic freedom. Further, it seems logical, as a corollary, that sociological prob lems will be solved easier and with less expense within that frame work, where the conditions of each community can be accurately studied and appraised. Many and varied are the causes of the present blight upon our freedom, and so complex and in terwoven are they that it would be impossible to single out the lead ing one.

But we can keep before us this one truth: a city or civilization is but the outward projection of the ideas of men. What men visualize, they will eventually produce, for better .or worse. Free enterprise, republicanism, democracy, social ism, soc ia 1-welf are, sub sid ies , price controls, deficit spending, and all the rest were once just ideas. If we are dissatisfied with what ideas produce, we can re-examine the ideas. Not all ideas that sound good in theory prove worthy in practice, and unfortunately, the originators of inefficacious ideas are ever loath to revise their view points. But this· need not bind the minds of their critics. If we find that economic and other freedoms are slipping away from us, we should regard this as a challenge to discover why and where ideas went astray. Ideas can bring about the decay of a civili zation; ideas can save or rebuild it. Freedom of thought is impreg nable; the one freedom that does not have to be legally protected nor fought for - it has but to be cherished and used. ~ Alexis de Tocqueville MEN THINK they manifest their greatness by simplifying the means they use; but it is the purpose of God which is simple - his means are infinitely varied.

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN M. STANTON EVANS believes that chickens come home to roost. Or, in the words of the late Richard Weaver, that "ideas have conse quences." The consequences of pseudo liberal ideas for the West, as they are set forth in Mr. Evans' vol uminous but tightly argued The Politics of Surrender (Devin Adair,$6.95), are likely to be pretty horrendous. The root as sumption of pseudo liberalism, as Mr. Evans sees it, is that con vergence of western capitalism and communism is more or less ordained by "history," and that there is no use fighting it. This "liberal" assumption isn't pure Marxist determinism, for the pure Marxists believe that capitalism is destined to go down in a series of catastrophic convulsions. The "liberal" assumes that as the West moves toward socialism, the Com munist East must move toward democracy, with a peaceful em brace in a world state looming as the culminating destiny of man60 kind. It never occurs to the "liberal" that socialism, which im plies state compulsion in dealing with the energies of men, is, if pressed beyond a certain point, utterly incompatible with demo cratic politics. The "merger" of West and East which the "liberal"

hopes to see accomplished depends on the surrender of one set of ideas or another - and it is the thesis of M. Stanton Evans that the West is in process of doing the surrendering. It is, of course, a straggly proc ess, for humanity balks at "clean" solutions, and ideas beget counterideas. However, the pseudo liberal has away of achiev ing bureaucratic power that is somewhat frightening. Mr. Evans begins by analyzing some of the important pseudoliberal docu ments which, even when they are officially denounced, manage to affect the speeches of important statesmen and the course of action of administrators. There are The Liberal Papers, 1967 THE POLITICS OF SURRENDER 61 with a revealing preface by James Roosevelt, for example. And there is Study Phoenix, prepared by Vincent Rock, a "senior research analyst" at something called the Institute for Defense Analysis. The ideas expressed in these and other "liberal" documents all re volve around the theory that the intentions of Moscow and Peking must be ultimately peaceful. The consequences of this theory will be devastating if it is wrong.

Mr. Evans is encyclopedic in tracing out the connections be tween idea and "happening." Study Phoenix talks about an "in terdependence" between Moscow and Washington. To Vincent Rock "interdependence" means that a "balance of terror" can be main tained by the two great powers through simultaneous cuts in arma.ment. Picking up from the Phoenix assumption, Dr. Seymour Melman of Columbia University and Dr. Jerome Wiesner of Mas.,.. sachusetts Institute of Technology have been telling recent Washing ton administrations that if the U.S. refrains from "provocative" arms building, Russia will follow suit. Hence a decision, taken in the Kennedy Administration, not to go ahead with the deployment of a Nike-Zeus or Nike-X antimissile missile system. Wiesner con sidered that such deployment might convince the Russians that we were getting ready for an atomic blowoff. The result of "scaring"· the Soviets would be to provoke them into speeding up the development of an effective anti missile grid on their own.

Alas for the Melman-Wiesner way of thinking, the Russians have gone ahead with antimissile research and development even without being "scared." Mr. Evans can take it as an ironic justification for his book that its publication practically coincided with Secretary of Defense Me Namara's announcement that the Russians have an antimissile mis sile and are proceeding to deploy it in a way that makes it neces sary for the U.S. to come up with a more potent offensive atomic weapon than can currently be fired by our forty Polaris sub marines. For libertarians, Mr. Evans' long discussion of the foreign policy ideas disseminated by "ex perts" who wrote for the publica tions of the Institute of Pacific Relations is particularly perti nent. The IPR has been denounced by a. Senate subcommittee as "a vehicle used by the communists to orientate American Far Eastern policies toward communist ob jectives." (The quote is from a 1952--report of the Senate Judi ciary Committee.) Whether or not 62 THE FREEMAN January there was conscious collusion be tween the communists and the IPR, the IPR publications encour aged the idea that Mao Tse-tung's Chinese Communism wasn't really communism, but just an Oriental version of Jeffersonian agrarian ism. The IPR writers accused Chiang Kai -shek .of heading a "corrupt" and "reactionary" gov ernment, and sold the notion to General George Marshall that there should be a "coalition" re gime in Peking. When Chiang Kai-shek refused to make a coali tionwith his Marxist enemies, the U.S. withdrew military support from the nationalist Chinese. And, after the dust had settled, the communists had taken over the mainland and Chiang had been driven to the offshore island of Formosa.

The percolation of IPR ideas did not end with the de facto creation of "two Chinas." For, as Mr. Evans points out, the IPR theories are surfacing again with the drive to throw the Formosa Chinese out of the UN and to seat Red China. This drive is of peculiar signifi cance to libertarians for the sim ple reason that it threatens an island that has become a most heartening example of what men can do in freedom. Unable to put his ideas across on the mainland because of twenty years of war and revolution, Chiang Kai-shek has had a peaceful island inter lude during which he has solved the agrarian question that still bedevils his great rival, Mao Tse tung. Instead of expropriating absentee landlords on Formosa, the Chiang government bought them out by offering them shares in the big national cement com panies. Then it proceeded to de nationalize the companies, which forthwith became very prosper ous. Thus the old landlords became the new capitalists on Formosa.

And the peasants, now in posses sion of their own rice paddies, have had an incentive that has made Formosa self-sufficient in food. Indeed, it is far more than that. Not only does the island, which is less than three hundred miles long, feed its thirteen million in habitants; it is also managing to develop a big export surplus of canned pineapple, bananas, sugar, mushrooms, and even rice. The relative economic freedom that pertains on Formosa has given Free China the second highest standard of living in the Far East. By contrast, Mao Tse-tung's Red China is the worst of slums. Since these are ascertainable facts, it is doubly amazing that the "politicians of surrender" should even dare to talk about handing Free China's seat in the 1967 THE POLITICS OF SURRENDER 63 UN to Red China, or even to pro mote a "two China policy" that would weaken Formosa's defenses in a world that shows no signs of forswearing violence.

Virtually a library in itself, Stanton Evans' book provides de tailed histories of all the impor tant East-West confrontations since 1945. In its pages you can find all you need to know about the Bay of Pigs, the Cuban mis sile crisis, the Dominican Republic affair, the war in Katanga, the Diem murder, the partition of Laos, and the communist drives in Africa. This is a "must" book for anyone who wants to know the world of 1967. ~ ~ 1787: THE GRAND CONVEN TION by Clinton Rossiter (New York: The Macmillan Company, 1966) $7.95, 443 pp. Reviewed by Robert M. Thornton THIS is a fine handbook for any one interested in the making of our Constitution. The information about the framers, like the docu ments in the appendices, is, of course, helpful, but the most valu able passages in the book are those devoted to the leading ideas in the air during the summer of 1787. As another reviewer, M. Stanton Evans, has remarked, one could hardly ask for a better expression of the "key ideas in the consensus Isn't it time you really startedgetting ALL THE NEWS THAT'S FIT TO PRINT?

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(REFUND GUARANTEED) o Paymentenclosed* 0 Bill me later *Thank you. We'lladd 2 extra issues FREE! Name _ (PleasePrint) Address _ City _ State_~ ZIP _ 1.- -1 64 THE FREEMAN January of political thought in the new re public" than appears on pages 60 64. As is well known, the Constitu tion is a "bundle of compromises." While most of the delegates to the Convention wished to build a new nation, shared the goal of "or dered liberty," and agreed as to the general form of government best for Americans, theirdeliber ations represented a clash of in terests, each one jealous of powers granted to the others. But the framers, although representing op posing interests, never suggested resolving their differences by an appeal to arms. Nor did they ex press any desire to bring about unity in the form of a dictator ship. Most of these men had ear lier risked their lives, their for tunes, and their sacred honor for the cause of liberty, and they wanted nothing to do with any form of despotism, either dictator ial or democratic.

Vital to success was the privacy of the convention's proceedings. In our age of "instant publicity" it is difficult to imagine such an event taking place with hardly any leaks of information by the par ticipants and little pressure from outsiders to learn what was tak ing place behind closed doors in the State House (Independence Hall) in Philadelphia. In the glare of publicity such as we have today, the necessary frankness in debate and the flexibility to compromise '\\70uld have been impossible. The framers, although not with out confidence in their abilities and in the use of reason tested by years of political experience, did, nevertheless, hold to a humble view of their limitations. Their goal was not a perfect society but a tolerable one. They did not deny the shortcomings of their finished work but asked its critics if a sec ond convention could produce any thing better that would be accept able to the people of the several states.

Although these men deliberated in privacy, the fruit.of their la bors had to be submitted to the people for approval and then, if accepted, it would have to prove itself in actual use. The framers did not intend their document to be a lecture room exercise in polit ical theory; they aimed to produce a Constitution which would work. Throughout the book Rossiter challenges those who have accused the framers of acting solely fron1 selfish motives or of bringing off a bloodless counterrevolution. On the contrary, the fifty or so men who labored from May to Septem ber, 1787, were disinterested to a remarkable degree and their splendid efforts represented a nec essary and proper culmination of what had begun in 1774-1776. ~ THE FREEMAN FEBRUARY 1967 Vol. 17 No.2 Y' A serious problem, suggests Gary North, stems from the fact that a policy of domestic inflation results in an irredeemable money unacceptable for settling balances due in international trade p. 67 Y' Henry Hazlitt further pursues the monetary question through the impli cations of price controls, antitrust pol icies, and other interventions, to the conclusion that an unhampered mar ket best finds the right price ...... p. 73 1;1' Some fishermen may be surprised to discover, with Professor Carson's help; that men, too, can be baited and hooked' on promises of something for nothing p. 83 Y' Judge William· Palmer, long devoted to the defense of property as the key to human rights, traces the history of private property over the centuries and points up the seriousness of modern invasions of privacy...... ....... p. 92 Y' Is it the duty of the government to reveal, or the obligation of citizens to find out and understand, what the gov ernors are doing to the governed?

.. p. 108 Y' In this third article of his series on American Federalism, Dr. Roche iden tifies a number of today's most devas tating departures from the basic prin ciples and design p. 112 Y' Losi ng has its merits, suggests John Chamberlain as he reviews Wil liam Buckley's The Unmaking of a Mayor p. 125 Y' And George Roche finds worthy of note The Fabian Way and The Democrat's Dilemma p. 128 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

FEBRUARY 1967 LEONARD E. READ PAUL L. POIROT Vol. 17, 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. Tel.: (914) 591 7230. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are in vitedin any amount-$5.00 to $10,OOO-as the means of maintaining and extending the Foundation's work. Copyright, 1967, 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. Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

GARY NORTH DOMESTIC INI'LA.TION ---------------versus INTERNA.TIONA.L SOLVENCY IN RECENT MONTHS there has been an increasing amount of discussion concerning "international liquid ity," "balance of payments," "dol lar glut," gold outflow, and mone tary stability. Economists, even when they agree on the nature of the problems involved, seldom are unanimous on the solutions. The debates that are going on among economists, bankers, and politi cians are frequently phrased in highly technical and abstruse lan guage, but the basic issue is simply this: how can nations continue to infla te their domestic currency and credit systems, and at the same time preserve mutual trust in each other's solvency? The "ideal" economic world, in the view of many of our leading economists, is one in which we would have "freedom for each Gary North teaches at the University of Cali fornia at Riverside while working on a doc torate in economic history.

country to pursue its own inde pendent economic policy unhamp ered by balance-of-payments con siderations; and stability of [mone tary] exchange rates to encourage international relations."I Unfor tunately, as the author hastens to add, "the two are incompatible .... " The goal of today's international finance experts, therefore, is to dis cover the best compromise possible, the most workable balance between the two alternatives. In the context of contemporary economic theory and practice, the phrase, "freedom to pursue domes tic economic policy," invariably means the freedom of the monetary authorities to inflate a nation's cir culating media (currency, coins, and credit). The motivations be1 Tibor Scitovsky, "Requirements of an International Reserve System," in Essays in International Finance, #49, November, 1965 (Princeton University's International Finance Section), p. 3. 67 68 THE FREEMAN February hind domestic inflation are varied; an important one is that the state can raise its level of expenditure without imposing a corresponding increase in the visible tax rate. In flation, in short, is a form of in visible taxation, and those on rela ti vely fixed incomes are the ones who pay the tax; they must de crease their purchases of cons umer products and services when the level of prices rises.

Inflation for Full Employment But the primary economic argu ment which is used today to defend an expansion of the domestic mon ey supply is that inflation keeps "effective demand" at high levels, that people with the newly created money will buy more goods, and that businesses as a direct result will be stimulated to increase pro duction. Consequently, more peo ple will be employed by these firms. Fundamental to this argument is the idea that the operation of the free market is insufficient to insure employment for all those who desire to work. Somehow, the market fails to dispose of all goods offered for sale (through the un hampered action of the pricing mechanism), and therefore the de mand registered by purchases is unable to encourage greater pro duction. This perspective has been common to most socialist parties, but it became a basic presupposition of modern nonsocialist thought through the teachings of John Maynard Keynes in his General Theory of Employment, Interest and Money (1936). Keynes real ized that a downward revision of the level of wages would be op posed vigorously by labor unions, and the governments of most west ern democracies would find such a downward revision politically inex pedient. Money wages must not be permitted to fall. However, if in flation were allowed to raise costs and prices, real wages would fall without the organized opposition of labor. 2 It was clear that if real wages did not fall, the result would be unemployment; the least pro ductive workers would have to be dismissed.

Keynes wrote during the de pression, but an analogous situa tion exists today. The structure of minimum wage laws creates a simi lar problem: the low production worker would lose his job were it not for the fact that governments are permitting real wages to fall (at least in comparison to what the wages would be in the absence of inflation). Minimum wage laws have, in effect, made inflation a political necessity. Eventually, the misallocation of scarce resources promoted by the inflation will 2 See the analysis of Keynes's posi tion by Murray N. Rothbard, Man, Econ omy and State (Princeton: Van Nos trand, 1962), II, pp. 683-87.

1967 DOMESTIC INFLATION VS. INTERNATIONAL SOLVENCY 69 harm both the laborers and the manufacturers, as prices soar be yond the means of all but the most influential companies (politically) and the members of the strongest labor unions. In order to keep businesses go ing at full production, according to the "new economics," thus keep ing labor fully employed, ever-in creasing doses of inflation are re quired. As Wilhelm Roepke has pointed out, it was precisely this philosophy of inflationary full em ployment which motivated the peacetime economic planning of Nazi Germany, with the resulting system of "repressed inflation" rationing, shortages, and misallo cation of resources. 3 The nation which indulges itself with an inflationary "boom" inev itably faces the economic conse quences: either runaway inflation or a serious recession-depression. If the inflation should cease, unem ploymen t will increase, and the earlier forecasts of the nation's entrepreneurs (which were based on the assumption of continuing infla3 Roepke, "The Economics of Full Em ployment," in Henry Hazlitt (ed.), The Critics of Keynesian Economics (Prince ton: Van Nostrand, 1960), p. 374. For a full discussion of "repressed inflation,"

see Roepke, A Humane Economy (Chi cago: Regnery, 1960), pp. 151-221. My own pamphlet, Inflation: the Economics of Addiction (San Carlos, Cal.: The Pamphleteers, 1965), also deals with the issue of chronic inflation. tion) will be destroyed. 4 Since no political party is anxious to face the consequences at the polls of a depression, there is a tendency for inflations, once begun, to become permanent phenomena. Tax in creases are postponed as long as possible, "tight" money (i.e., high er interest rates) is unpopular, and cuts in governmental expenditures are not welcomed by those special interest groups which have been profiting by the state's purchases. The inflation continues. As Jacques Rueff has put it: "I know that these [monetary] authorities are not. able, they have not the power - the human possibility, at least in our regime - to follow the policy which they ought to."5 International Complications This should serve as an intro duction to the domestic problem which faces the various western democracies. From an internation alstandpoint, the situation is re versed. The primary need for in ternational trade is a common means of payment which is not subject to violent upward surges, 4 Cf. Ludwig von Mises, Hunwn Action (New Haven, Conn.: Yale University Press, 1949, 1963), chapter 20. Also, see Rothbard, America's Great Depression (Princeton: Van Nostrand, 1963).

5 Jacques Rueff and Fred Hirsch, "The Role and Rule of Gold: A Discussion," in Essays in International Finance, #47, June, 1965 (Princeton University's In ternational Finance Section), p. 6.

70 THE FREEMAN February a money free from most inflation ary tendencies. Foreign govern ments and central banks want to be able to trust their neighbors' currencies. The best means of insuring in ternational responsibility in mone tary affairs is the gold standard. This has always been true. Since gold cannot be mined rapidly enough to create mass inflation, it retains its value over long periods of time. For example, the stability of British wholesale prices between 1821 and 1914 was remarkable. G Central banks can demand pay ment of debts in gold, or in cur rencies which are (supposedly) 100 per. cent redeemable in gold. The banks can then use these f or eign securities as a base on which to expand their own credit systems, on the assumption that the debtors' promises are as good as gold. At present, central banks hold Ameri can dollars and British pounds sterling in lieu of gold - or more accurately, they hold interest-bear ing bonds and securities that are supposedly convertible into gold at any time.

The Dilemma Here is the basis of the conflict between domestic and internation6 Arthur Kemp, "The Gold Standard: A Reappraisal," in Leland B. Yeager (ed.), In Search of a Monetary Constitu tion (Cambridge, Mass.: Harvard U ni versity Press, 1962), p. 148. al economic policies. Gold is pres ently necessary to support inter national trade and to maintain in ternational trust in the two key currencies, the dollar and the pound. On the other hand, both Britain and the United States have printed more paper and credit IOU's to gold than they have to redeem all outstanding claims. The domestic inflations have kept their postwar booms going, but now the trust abroad in both currencies is weakened. It is becoming clear that either the domestic inflations must stop, or else' the key currencies are going to experience an internation al "bank run" on their gold re serves. Domestic inflation, in short, is the sole cause of the gold out flow in both the United States and Britain. Since 1960, the U. S.

Treasury's stock of gold has been cut in half, and at the present time, there are foreign claims outstand ing for over twice the amount of gold than the United States has in reserve (including that gold which is supposed to support our domestic credit and currency). Jacques Rueff, a French econo mist, certainly cannot be, criticized for these words: "How can you ex pect a creditor to remain passive when he sees every day an increase in monetary liabilities and a de crease of the gold available to re pay them? That is where you get a 'scissors phenomenon.' The U. S.

1967 DOMESTIC INFLATION VS. INTERNATIONAL SOLVENCY 71 is caught between the blades of the scissors."7 Yet Rueff is sneered at as France's "palace economist," as if the truth of a principle were the monopoly of the French. De Gaulle is castigated as economically in sane for his attempt to claim what is legally his, the gold to which his country holds legal claims. The United States has contracted debts; it now is faced with the prospect of not being able to meet its debts. The issue is really very simple. If higher interest rates are not offered in the United States and in Britain, then foreign investors and central banks will cash in their in vestments and demand payment in gold. On the other hand, if interest rates are permitted to climb high er, the domestic rate of growth will be drastically affected. Money will be "too tight," too expensive for the prospective borrowers. Hence, the "scissors effect." There is no simple solution to the problem.

In 1964, the United States lost some $385 million in gold; in 1965, the loss tripled, amounting to over $1.1 billion. In the first six months of 1966, the outflow was almost $300 million. 8 The costs of the war in Viet Nam are increasing the 7 Interview with Rueff in U. S. News & World Report (Oct. 17, 1966), p. 61. 8 Computed from the tables in Mineral Industry Surveys (Washington, D. C.: Bureau of Mines, Aug., 1966), p. 3. deficit in the budget. In Britain, Prime Minister Wilson has been forced to declare a price and wage freeze in order to halt the infla tionary rise in prices; this, of course, is repressed inflation - the hampering of the market by gov ernment controls - and not a cure. But at least political leaders in the two nations have come to the reali zation that continued deficits and continued increases in the money supply (apart from increases in gold and silver) cannot go on much longer without serious repercus sions in the world money market, and hence, in the world's trading community.

The Search for Substitutes Thus, we can understand the frantic search for a non gold inter national medium of payment. The economic isolationism which al ways results from domestic inft.a tions cannot be permitted to dis rupt the fabric of international in tegration and trade. Devaluation (charging more dollars or pounds for a given quantity of gold) could easily destroy the confidence in both currencies, and thus result in international economic chaos. Mu tual distrust would then be the or der of the day in aU international transactions. The problem is that no substitute for gold has yet been discovered (or created) by man kind; and gold, because of its re72 THE FREEMAN February sistance to "full employment" in flationary policies, is taboo. What is needed, we are told, is some thing "as good as gold," yet which permits domestic inflation. There are numerous suggestions for such an international money, probably under the control of the Interna tional Monetary Fund, but no sin gle plan has reached even partial acceptance by the economists and officials of the nations involved. 9 A fundamental obstacle to be over come is the basic division between the central banks and the govern ments: certain policies which are favorable for one group are harm ful for the other. Paul H. Douglas, in his recent study of world trade, attempts to find a synthesis of these various schemes, but even his powers of exposition fail him. to The solution· to the dilemma has not been· found, and time (and gold) is running out.

Why Gold? A full gold coin standard would unquestionably solve the problem of international acceptance and solvency. Gold has always func9 For a summary of these positions, or at least of the leading ones, see Arthur Kemp, The Role of Gold (Washington, D. C. : American Enterprise Institute, 1963 ). 10 Paul H. Douglas, America in the Market Place (New York: Holt, Rine hart and Winston, 1966). tioned as the means of internation al payment, and there is no reason to suppose that it will not in the future (assuming that prices and wages are permitted to adjust on an international free market). The opposition to gold in international trade is based upon ideological as sumptions which are hostile to the idea of the free market economy. Gold would insure monetary sta bility, if that were what the econ omists and legislators really want ed. It would insure too much sta bility to suit them, and this is the point of contention. As the late Professor Charles Rist once wrote: In reality, those theoreticians dis like monetary stability, because they dislike the fact that by means of money the individual may escape the arbitrariness of the government.

Stable money is one of the last arms at the disposal of the individual to direct his own affairs, whether it be an enterprise or a household. It is certain that nothing so facilitates the seizure of all activities by the gov ernment as its liberty of action in monetary matters. If the partisans of [unbackedJ paper money really de sire monetary stability, they would not oppose so vehemently the reintro duction of the only system that has ever insured it, which is the system of the gold standard. ll ~ 11 Charles Rist, The Triumph of Gold (N ew York: Philosophical Library, 1960), p. 139.

DETERMINED? :"Q .~.. -. :7J~"t.. '. • 0 •- -'. ........ " ..... HOW SHOULD BE PRICES HENRY HAZLITT "How should prices be deter mined?" To this question we could make a short and simple answer: Prices should be determined by the market. The answer is correct enough, but some elaboration is necessary to answer the practical problem concerning the wisdom of govern ment price control. Let us begin on the elementary level and say that prices are de termined by supply and demand~ If the relative demand for a prod uct increases, consumers will be willing to pay more for it. Their competitive bids will both oblige them individually to pay more for Mr. Hazlitt is the well-known economic and financial analyst, columnist, lecturer, and au thor of numerous books. This article is from a paper presented be fore a special meeting of the Mont Pelerin Society in Tokyo, September, 1966. it and enable producers to get more for it. This will raise the profit margins of the producers of that product. This, in turn, will tend to attract more firms into the Inanufacture of that product, and ind uce existing firms to invest more capital into making it. The increased production will tend to red uce the price of the product again, and to reduce the profit margin in making it. The in creased investment in new manu facturing equipment may lower the cost of production. Or - par ticularly if we are concerned with some extractive industry such as petroleum, gold, silver, or copper - the increased demand and out put may raise the cost of produc tion. In any case, the price will have a definite effect on demand, 73 74 THE FREEMAN February output, and cost of production just as these in turn will affect price. All four - demand, supply, cost, and price - are interrelated.

A change in one will bring changes in the others. Dired and Indired Price Interrelationships Just as the demand, supply, cost, and price of any single com modity are all interrelated, so are the prices of all commodities re lated to each other. These rela tionships are both direct and in direct. Copper mines may yield silver as a by-product. This is connexity of production. If the price of cop,per goes too high, con sumers may substitute aluminum for many uses. This is a connexity of substitution. Dacron and cotton are both used in drip-dry shirts; this is a connexity of consumption. In addition to these relatively direct connections among prices, there is an inescapable intercon nexity of all prices. One general factor of production, labor, can be diverted, in the short run or in the long run, directly or indirectly, from one line into any other line. If one commodity goes up in price, and consumers are unwilling or unable to substitute another, they will be forced to consume a little less of something else. All prod ucts are in competition for the consumer's dollar; and a change in anyone price will affect an in definite number of other prices.

No single price, therefore, can be considered an isolated object in itself. It is interrelated with all other prices. It is precisely through these interrelationships t'hat society is able to solve the immensely difficult and always changing problem of how to allo cate production among thousands of different commodities and serv ices so that each may be supplied as nearly as possible in relation to the comparative urgency of the need or desire for it. Because the desire and need for, and the supply and cost of, every individual commodity or service are constantly changing, prices and price relationships are con stantly changing. They are chang ing yearly, monthly, weekly, daily, hourly. People who think that prices normally rest at some fixed point, or can be easily held to some "right" level, could profitably spend an hour watching the ticker tape of the stock market, or read ing the daily report in the news papers of what happened yester day in the foreign exchange mar ket, and in the markets for coffee, cocoa, sugar, wheat, corn, rice, and eggs; cotton, hides, wool, and rub bel"'; copper, silver, lead, and zinc.

They will find that none of these prices ever stands still. This is why the constant attempts of gov1967 HOW SHOULD PRICES BE DETERMINED? 75 ernments to lower, raise, or freeze a particular price, or to freeze the interrelationship of wages and prices just where it was on a given date ("holding the line") are bound to be disruptive wherever they are not futile. Price Supports for Export Items Let us begin by considering governmental efforts to keep prices up, or to raise them. Governments most frequently try to do this for commodities that constitute a prin cipal item of export from their countries. Thus Japan once did it for silk and the British Empire for natural rubber; Brazil has done it and still periodically does it for coffee; and the United States has done it and still does it for cotton and wheat. The theory is that raising the price of these ex port commodities can only do good and no harm domestically because it will raise the incomes of do mestic producers and do it almost wholly at the expense of the for eign consumers.

All of these schemes follow a typical course. It is soon dis covered that the price of the com modity cannot be raised unless the supply is first reduced. This may lead in the beginning· to the imposition of acreage restrictions. But the higher price gives an in centive to producers to increase their average yield per acre by planting the supported product only on their most productive acres, and by more intensive em ployment of fertilizers, irrigation, and labor. When the government discovers that this is happening, it turns to imposing absolute quantitative controls on each pro ducer. This is usually based on each producer's previous produc tion over a series of years. The result of this quota system is to keep out all new competition; to lock all existing producers into their previous relative position, and therefore to keep production costs high by removing the chief mechanisms and incentives for reducing such costs. The necessary readjustments are therefore pre vented from taking place.

Meanwhile, however, market forces are still functioning in for eign countries. Foreigners object to paying the higher price. They cut down their purchases of the valorized commodity from the val orizing country ,and search for other sources of supply. The higher price gives an incentive to other countries to start producing the valorized commodity. Thus, the British rubber scheme led Dutch producers to increase rubber pro duction in Dutch dependencies. This not only lowered rubber prices, but caused the British to lose permanently their previous monopolistic position. In addition, 76 THE FREEMAN February the British scheme aroused resent ment in the United States, the chief consumer, and stimulated the eventually successful develop ment of synthetic rubber. In the same way, without going into de tail, Brazil's coffee schemes and America's cotton schemes gave both a political and a price in centive to other countries to ini tiate or increase production of coffee and' cotton, and both Brazil and the United States lost their previous monopolistic positions.

Meanwhile, at home, all these schemes require the setting up of an elaborate system of controls and an elaborate bureaucracy to formulate and enforce them. This has to be elaborate, because each individual producer must be con trolled. An illustration of what happens may be found in the United States Department of Ag riculture. In 1929, before most of the crop control schemes came into being, there were 24,000 persons employed in the Department of Agriculture. Today there are 109, 000. These enormous bureaucra cies, of course, always have a vested interest in finding reasons why the controls they were hired to enforce should be continued and expanded. And of course these con trols restrict the individual's lib erty and set precedents for still further restrictions. None of these consequences seem to discourage government efforts to boost prices of certain products above what would otherwise be their competitive market levels.

We still have international coffee agreements and international wheat agreements. A particular irony is that the United States was among the sponsors in orga nizing the international coffee agreement, though its people are the chief consumers of coffee and therefore the most immediate vic tims of the agreement. Another irony is that the United States imposes irnport quotas on sugar, which necessarily discriminate in favor of some sugar exporting na tions and therefore against others. These quotas force all American consumers to pay higher prices for sugar in order that a tiny minority of American sugar cane producers can get higher prices. I need not point out that these attempts to "stabilize" or raise prices of primary agricultural products politicalize every price and prod uction decision and cre ate friction among nations. Holding Prices Down Now let US turn to governmental efforts to lower prices or at least to keep them from rising. These efforts occur repeatedly in most nations, not only in wartime, but in any time of inflation. The typi cal process is something like this.

1967 HOW SHOULD PRICES BE DETERMINED? 77 The government, for whatever reason, follows policies that in crease the quantity of money and credit. This inevitably starts push ing up prices. But this is not pop ular with consumers. Therefore, the government promises that it will "hold the line" against fur ther price increases. Let us say it begins with bread and milk and other necessities. The first thing that happens, as suming that it can enforce its decrees, is that the profit margin in producing necessities falls, or is eliminated, for marginal pro ducers, while the profit margin in producing luxuries is unchanged or goes higher. This reduces and discourages the production of the controlled necessities and rela tively encourages the increased production of luxuries. But this is exactly the opposite result from what the price controllers had in mind. If the government then tries to prevent this discouragement to the production of the controlled commodities by keeping down the cost of the raw materials, labor and other factors of production that go into them, it must start controlling prices and wages in ever-widening circles until it is finally trying to control the price of everything.

But if it tries to do this thor oughly and consistently, it will find itself trying to control literally millions of prices and trillions of price cross-relationships. It will be fixing rigid allocations and quotas for each producer and for each consumer. Of course these controls will have to extend in de tail to both importers and ex porters. Necessary Price Flexibility If a government continues to create more currency on the one hand while rigidly holding down prices with the other, it will do im mense harm. And let us note also that even if the government is not inflating the currency, but tries to hold either absolute or relative prices just where they were, or has instituted an "incomes policy" or "wage policy" drafted in ac cordance with some mechanical formula, it will do increasingly serious harm. For in a free mar ket, even when the so-called price "level" is not changing, all prices are constantly changing in rela tion to each other. They are re sponding to changes in costs of production, of supply, and of de mand for each commodity or service.

And these price changes, both absolute and relative, are in the overwhelming main both necessary and desirable. For they are draw ing capital, labor, and other re sources out of the production of goods and services that are less 78 THE FREEMAN February wanted and into the production of goods and services that are more wanted. They are adj usting the balance of production to the un ceasing changes in demand. They are producing thousands of goods and services in the relative amounts in which they are socially wanted. These relative amounts are changing every day. Therefore the market adj ustments and price and wage incentives that lead to these adjustments must be chang ing every day. Price Control Distorts Production Price control always reduces, unbalances, distorts, and discoordi nates production. Price control be comes progr~ssively harmful with the :passage of time. Even a fixed price or price relationship that may be ."right" or "reasonable"

on the day it is set can become increasingly unreasonable or un workable. What governments never realize is that, so far as any individual commodi ty is concerned, the cure for high prices is high prices. High prices lead to economy in consumption and stimulate and increase production. Both of these results increase supply and tend to bring prices down again. Very well, someone may say; so government price control in many cases is harmful. But so far you have been talking as if the market were governed by perfect compe tition. But what of monopolistic markets? What of markets in which prices are controlled or fixed by huge corporations? Must not the government intervene here, if only to enforce competition or to bring about the price that real competition would bring if it ex isted? Unwarranted Fears of Monopoly The fears of most economists concerning the evils of "monopoly" have been unwarranted and cer tainly excessive. In the first place, it is very difficult to frame a satis factory definition of economic monopoly. If there is only a single drug store, barber shop, or grocery in a small isolated town (and this is a typical situation), this store may be said to be enj oying a monopoly in that town. Again, everybody may be said to enjoy a monopoly of his own particular qualities or talents. Yehudi Menu hin has a monopoly of Menuhin's violin playing; Picasso of produc ing Picasso paintings; Elizabeth Taylor of her particular beauty and sex appeal; and so for lesser qualities and talents in every line.

On the other hand, nearly all economic monopolies are limited by the· possibility of substitution. If copper piping is priced too high, consumers can substitute steel or plastic; if beef is too high, 1967 HOW SHOULD PRICES BE DETERMINED? 79 consumers can substitute lamb; if the original girl of your dreams rejects you, you can always marry somebody else. Thus, nearly every person, producer, or seller may en joy a quasi monopoly within cer tain inner limits, but very few sell ers are able to exploit that mo~ nopoly beyond certain outer limits. There has been a tremendous lit erature within recent years de ploring the absence of perfect competition; there could have been equal emphasis on the absence of perfect monopoly. In real life com petition is never perfect, but neither is monopoly. Unable to find many examples of perfect monopoly, some econo mists have frightened themselves in recent years by conjuring up the specter of "oligopoly," the competition of the few. But they have come to their alarming con clusions only by inserting in their own hypotheses all sorts of im aginary secret agreements or tacit understandings between large pro ducing units, and deducing what the results could be.

Now the mere number of com petitors in a particular industry may have very little to do with the existence of effective competi tion. If General Electric and Westinghouse effectively compete, if General Motors and Ford and Chrysler effectively compete, if the Chase Manhattan and the First National City Bank effectively compete, and so on (and no person who has had direct experience with these great companies can doubt that they dominantly do), then the result for consumers, not only in price, but in quality of product or service, is not only as good as that which would be brought about by atomistic com petition but much better, because consumers have the advantage of large-scale economies, and of large-scale research and develop ment that small companies could not afford. A Strange Numbers Game The oligopoly theorists have had a baneful influence on the Ameri can antitrust division and on court decisions. The prosecutors and the courts have recently been playing a strange numbers game. In 1965, for example, a Federal district court held that a merger that had taken place between two New York City banks four years previously had been illegal, and must now be dissolved. The combined bank was not the largest in the city, but only the third largest; the merger had in fact enabled the bank to compete more effectively with its two larger competitors; its com bined assets were still only one eighth of those represented by all the banks of the city; and the merger itself had reduced the 80 THE FREEMAN February number of separate banks in New York from 71 to 70. (I should add that in the four years since the merger the number of branch bank offices in New York City had increased from 645 to 698.) The court agreed with the bank's lawyers that "the general public and small business have benefited"

from bank mergers in the city. Nevertheless, the court continued, "practices harmless in themselves, or even those conferring benefits upon the community, cannot be tolerated when they tend to create a monopoly; those which restrict competition are unlawful no mat ter how beneficent they may be." It is a strange thing, inciden tally, that though politicians and the courts think it necessary to forbid an existing merger in order to increase the number of banks ina city from 70 to 71, they have no such insistence on big numbers in competition when it comes to political parties. The dominant American theory is that just two political parties are enough to gi ve the American voter a real choice; that when there are more than this it merely causes confu sion, and the people are not really served. There is this much truth in this political theory as applied in the economic realm. If they are really competing, only two firms in an industry are enough to create effective competition.

Monopolistic Pricing The real problem is not whether or not there is "monopoly" in a market, but whether there is mo nopolistic pricing. A monopoly price can arise when the respon siveness of demand is such that the monopolist can obtain a high er net income by selling a smaller quantity of his product at a higher price than by selling a larger quantity at a lower price. It is as sumed that in this way the mo nopolist can realize a higher price than would have prevailed under "pure competition." The theory that there can be such a thing as a monopoly· price, higher than a competitive price 'would have been, is certainly valid. The real question is, how useful is this theory either to the supposed monopolist in deciding his price policies or to the legislator, prose cutor, or court in framing anti monopoly policies? The monopo list, to be able to exploit his posi tion, must know what the "de mand curve" is for his product.

He does not know; he can only guess; he must try to find out by trial and error. And it is not merely the unemotional price re sponse of the consumers that the monopolist must keep in mind; it is what the effect of his pricing policies will probably be in gaining the goodwill or arousing the re sentment of the consumer. More 1967 HOW SHOULD PRICES BE DETERMINED? 81 importantly, the monopolist must consider the effect of his pricing policies in either encouraging or discouraging the entrance of com'7 petitors into the field. He may ac tually decide that his wisest policy in the long run would be to fix a price no higher than he thinks pure competition would set,and perhaps even a·li ttle .lower. In any case, in the absence of competition, no one knows what the "competitive" price would be if it existed. Therefore, no one knows exactly how much higher an ex isting "monopoly" price is than a "competitive" price would be, and no one can be sure whether it is higher at all !

Yet antitrust policy, in the United States, at least, assumes that the courts can know how much an alleged monopoly or "con spiracy" price is above the com petitive price that might-have been. For when there is an alleged conspiracy to fix prices, purchasers are encouraged to sue to recover three times the amount they were allegedly forced to "overpay." Avoid Price-Fixing Our analysis leads us to the con clusion that governments should refrain, wherever possible, from trying to fix either maxim urn or minimum prices for anything. Where they have nationalized any service - the post office or the railroads, the telephone or electric power - they will of course .have to establish pricing policies. And where they have granted monopo listic franchises -for subways, railroads, telephone or power com panies - they will of course have to consider what price restrictions they will impose. As to antimonopoly policy, what ever the present condition may be in other countries, I can testify that in the United· States this policy shows hardly a trace of con sistency . It is uncertain, discrimi natory' retroactive, capricious, and shot through with contradictions.

No company today, even a mod erate sized company, can know when it will be held to have vio lated the antitrust laws, or why. It all depends on the economic bias of a particular court or judge. There is immense hypocrisy about the subject. Politicians make eloquent speeches against "mo nopoly." Then they will impose tariffs and import quotas intended to protect monopoly and keep out competition; they will· grant mo nopolistic franchises to bus com panies or telephone companies; they will approve monopolistic patents and copyrights; they will try to control agricultural produc tion to permit monopolistic farm prices. Above all, they will not only permit but impose labor monopo lies on employers, and legally com82 THE FREEMAN February pel employers to "bargain" with these monopolies; and they will even allow these monopolies to impose their conditions by physi cal intimidation and coercion.

I suspect that the intellectual situation and the political climate in this respect is not much differ ent in other countries. To work our way out of this existing legal chaos is, of course, a task for jurists as well as for economists. I have one modest suggestion: We can get a great deal of help from the old common law, which forbids fraud, misrepresentation, and all physical intimidation and coercion. "The end of the law," as John Locke reminded us in the seven teenth century, "is not to abolish or restrain, but to preserve and enlarge freedom." And so we can say today that in the economic realm, the aim of the law should not be to constrict, but to maxi mize price freedom and market freedom. ~ Rule of Law ARBITRARYPOWER, enforcing its edicts to the injury of the persons and property of its subjects, is not law, whether manifested as the decree of a personal monarch or of an impersonal multitude. And the limitations imposed by our constitutional law upon the action of the government, both State and national, are essential to the preservation of public and private rights, notwithstanding the representative character of our political institutions. The enforce ment of these limitations by judicial process is the device of self governing communities to protect the rights of individuals and minorities, as well against the power of numbers, as against the violence of public agents transcending the limits of lawful author ity, even when acting in the name and wielding the force of government.

JUSTICE MATHEW in Hurtado v. California, 110 u.s. p. 535 CLARENCEB. CARSON THE BAIT&THE HOOK MAN'S DOMINION over the animal kingdom is often precariously maintained. Most animals have some one trait or more which makes them superior in that re spect to man. They can run, fly, or swim faster, can inject a venom, can bite, are large and powerful, are small and difficult to locate, can go through places which men avoid, or have some other capacity which makes them difficult for man to dominate. Moreover, most animals do not submit readily to man's dominion; they attempt to elude him when he tries to capture them and try to escape once cap tured. In a sense, it is valid to say that animals relish their freedom - that is, like to follow their in stincts, to go where they will, to Dr. Carson is Professor of American History at Grove City College, Pennsylvania. roam in that niche of nature that is particularly suited to them.

First and last, men have de voted a great deal of energy and ingenuity in order to snare, catch, land, capture, trap, hook, corral, pen, and fence animals. Some of these methods have become stereo typed and are virtually universal. They frequently involve efforts to conceal from the animal what is being done. A runaway hog may be captured by laying down a trail of corn that will lead him back to the pen. It may be necessary when he gets in sight of the pen to drive him in with sticks. Mice are ap prehended by setting a trap. with cheese. Larger animals are cap tured by baiting a steel trap, or a box, with some delicacy prized by the animal sought. Perhaps more people in our era 83 84 THE FREEMAN February devote more ingen uity and effort to catching fish than to the cap ture of any other animal. It is a game which many find endlessly fascinating. The classic device for catching a fish is to bait a hook with a worm and dangle it in the water. Ideally, the worm is stretched over the hook in such a way that the fish will swallow the hook before he knows he has. any thing but the worIl).. Once the hook is set, the more' the fish pulls to try to get away, the deeper the hook fastens into him. Much more sophisticated equipment is now common, including artificiallu.res, rods and reels,. and so· on.. Fisher men pride themselves on the tech niques by which they lure the fish to his. death.

Gaining Dominion. Over Men Some men have devoted a great deal of energy and ingen:uity, too, to. gaining. dominion over other men. Strangely enough, it appears that men are more susceptible to domination by force or .the threat of. force than are many animals. Since men are more intelligent than . animals,' .. they recognize a broader spectrum of dangers; their efforts to avoid injury often allow them to be dominated by the presence of force. At any rate, force. usually has been .used to some extent by those who would gain dominion over men. Quite often, this use of force· has been accompanied by a rationale and religious or social sanctions. In America in the twentieth century, very subtle stratagems have been used to gain and extend control over men, the instrument of control being government. The necessity for stratagems can be found in the American outlook and the system of . government. Ac cording to the general belief, Americans are free and are de voted to keeping and extending that freedom. Those who govern are not supposed to seek power over their fellow Americans, do not profess to want it, and would be loath to exercise it if they had it. ·Our lore has it that those in government are our servants and we their masters. Yet, govern ment has vastly extended its con trolover the lives of the citizenry in the twentieth century .. Those who have to face the assorted bureaucrats who exercise political power should have little doubt that the bureaucrats are the mas ters and we· the servants.

This extension of government power has been subtly advanced, acquired, and exercised in ways analogous to capturing animals. The· hook has been baited, the trap set with goodies, and the path to the pen strewn with morsels. The figure of speech commonly used to describe such tactics - one as1967 THE BAIT AND THE HOOK 85 sociated with English Fabian so cialists - is the carrot and the stick. This. suggests that we are led and driven along the way to subjection to the state - or to some collectivity - by alternate and judicious uses of the carrot and the stick. The phrase is graph ic and appropriate, but the bait and the hook may be even more apt. The bait by which people have been led to take the hook' of gov ernment power has often concealed the hook much better than a car rot conceals a stick. Noma tter what figure is used, the important point is that subtle stratagems have helped politicians and their spokesmen gain control over Amer icans.

A Case of Urban Renewal For example, the political leaders of the community where I live are trying to get an Urban Re newal project underway. The in habitants were surveyed to find out what they thought of Urban Renewal, among other things. A majority of respondents favored the participation of the community in Urban Renewal. Some, though opposed to such programs asUr ban Renewal,said that since-it was in operation, this community might as well get its share. The newspaper report· of the survey gave no indication that those who felt this way were looking beyond what they took to be the benefits of the program. They took the bait, apparently unaware of the hook it concealed. Of course, the hook was there; a hook by which the citizens could be reeled in and brought under governmental power in new ways. Already the power is being wielded here, as in so many other com munities. In order to participate in Urban Renewal, it is necessary for a municipality to have a build ing code, among other things. The code must be the one recommended by the appropriate agency of the Federal government, or one com parable! to it. A permit must be obtained before projected con struction can begin. A new struc ture must be a minimum distance from the boundary of adjoining land, must conform to various structural requirements, must have a certain minimum of electrical outlets, and so on. An official, or officials, of the local government is empowered to inspect struc tures and obtain their conformity to his interpretation of the code.

Thus, what was once private prop erty and the affair of the owner is brought under the control of political power which reaches back to Washington. In this case, the hook was not baited with a live worm ;anar tificial lure was used. The notion that it is desirable for a commun86 THE FREEMAN February ity to get its "share" of the Fed eral bounty passed out in Urban Rene,val is not based upon any thing substantial so far as the in dividual members of the commun ity are concerned. That people would want their share would be understandable, even if deplorable, if the Federal largess were di vided equally among the citizens. Artificial Lures When a hook is baited with a worm, the fish that swallows it gets something. It is not so for most people with Urban Renewal. All taxpayers contribute to the support of it, but few reap any direct benefits. Someone who covets another's land may be able to in duce the powers that be to confis cate it and sell it to him. Some of those in the construction business may be provided with building op portunities. Most of the citizenry get nothing, however. Some of them have their dwellings and businesses taken from them and torn down. They will be displaced from their neighborhoods and places where they do business.

Many will suffer the inconvenience of not having familiar stores in which to shop, or the pressure of overcrowding that will occur. If new buildings are ever built to replace the old ones, all will, of course, receive the "social benefit" of viewing what some bureaucrat has decided is architecturally con gruous for that neighborhood. The government of the community· in which I live does not pay divi dends; "shares" of Federal bounty are not distributed among the cit izens. In the Transport Field Sometimes the bait is real, sometimes not, but the bait and the hook is a well-established prac tice of governments in the United States. It has been used for nearly a hundred years now. It may well be that the first uses were not in tended as bases for extending gov ernment power, but those intent upon such extension have found the grant of any government favor a handy excuse for their purposes.

One of the first major forays of the Federal government into the field was the granting of land and the making of loans for the con struction of transcontinental rail roads during and after the Civil War. States and local governments also granted various favors to railroad builders. These grants and loans were not originally tied to any regulation of the railroads. But by the 1870's pressure was mounting for regu lation, particularly in the Mid west. Initially, states began lay ing down rules for the operation of railroads within their borders. The 1880's brought Federal inter1967 THE BAIT AND THE HOOK 87 vention by way of the Interstate Commerce Act. Since that time, the railroads have been seriously regulated and interfered with by governments. They have been the subject of rate fixing, antitrust legislation, merger control, special legislation for employees, Inter state Commerce Commission and court decisions as to what services to provide, provisions regarding the issuance of passes, and so on.

The justification for this regu lation has not been based pri marily upon the special favors initially granted to railroads; this has been a subsidiary point in the argument for control. Instead, the main argument has been that rail roads provide an important "pub lic" service, that they are a sort of public utility. Yet, this is linked to the original justification for making the grants and loans, that is, that it was in the public inter est to have the railroads built. The bait and the hook were joined to gether through this "public in terest" justification. Another bait used in transpor tation was (and is) the charter or franchise. The franchise is an old mercantilistic device for granting a monopoly, but in recent times it has served as the basis for ex tensive regulation. Street railways usually were developed by private companies which had franchises to do so. In the course of time, these companies, which later supple mented or replaced streetcars with )Uses, were so intricately con trolled that they could no longer make sufficient profit to stay in business. In many large cities to day, the franchises have been taken over by agencies of the municipal governments, such as port authorities, and are operated at a loss. The bait was the fran chise; the hook was the regulation.

Other Modern Interventions In the twentieth century, of course, this technique of extending government power has become a fine art. Labor unions are granted exemptions and special privileges, farmers are granted subsidies and special concessions, and businesses get government contracts. Banks get charters, the deposits of their clientele insured, and guaranteed mortgages. Schools get state aid and then Federal aid. Manufac turers are enabled to maintain high prices by selling their "sur plus" to government for stockpil ing. The aged get pensions and the young get aid to dependent children. Special loans are made available to those in certain cate gories who want to buy a home. Shipping companies and airlines are subsidized. Hospitals are built with the aid of government sub sidies. Grants-in-aid are provided for states and municipalities.

88 THE FREEMAN February Those of various skills and pro fessions get licenses which entitle them to practice or perform and exclude those who do not possess such authorization. The bait is tantalizing indeed. The force of government is used to attain for men and groups what they might not be able to obtain if they relied on voluntary meth ods. However well it may be con cealed, the hook is always there. The bait may be nearly consumed before the hook is felt. Farm sub sidies carry with them crop re strictions, allotments, and, on oc casion, quality controls. Farmers lose significant control over the use of their land. Banks are sub jected to government audits, the fixing of interest rates, and to var ious pressures from government agencies. In many ways, banks have become an arm of the gov ernment. Labor unions have to submit to "cooling off" periods before they can strike, are sub ject to the National Labor Rela.;.

tions Board, are generally forbid den to strike against government, and the day appears to be ap proaching when many of them will be .forbidden by law to strike against private employers. Em ployers are subjected· to arbitrary rulings by the courts and the Na tional Labor Relations Board, and have, in many instances, lost au thority over their employees. At any rate, an individual employee may have to join a union to work at the job for which he is trained, may have to accept the decision of the majority of those in his in dustry as to whether he will work or strike, is subject to the courts and National Labor Relations Board as to 'what his "rights" are, and may be forced by government to work or lose his employment. Recently, some aluminum com panies decided to raise their prices. This conflicted, with gov ernment policy; and, when the companies appeared to be deter mined upon their course, the Fed eral government announced that it would sell part of the aluminum in its stockpile. If this were chil dren playing games, it would be appropriate to say that turn about is fair play. After all, the com panies had been favored by the government purchase of aluminum in the first place. But this was an irresponsible use by government of money taken from the citizenry.

Even so, it is an example of taking the bait and then getting the hook. Subsidized and Controlled Public schools have received the favor of monies from sta teand Federal government. In conse quence, they have been subjected to progressively greater control by these governments. Not much has been made of the progressive 1967 THE BAIT AND THE HOOK 89 centralization of control over local schools by state governments, though it has gone on apace. Now, Federal control is following in this path. A magazine article pointed out the slipshod way in which those holding out the bait of Federal aid attempt to conceal the hook: Those who favor federal interven tion generally claim it is not intended to usurp the power of local school authorities to run their schools as they see fit. Federal aid legislation is almost always prefaced by such a disclaimer, as was the National De fense Education Act when it became law in 1958. Despite its statement that nothing in the Act "shall be con strued to authorize any department, agency, officer or employe of the United States to exercise any direc tion, supervision or control over the curriculum, program of instruction, administration, or personnel of any education institution or school sys tem" this Act goes on to set forth numerous regulations and standards which local schools must meet to qual ify for federal assistance!

As one teacher said: To get this money we have to accept and adopt the course of study out lined and specified by the federal government through the state de partment. We have to permit inspec tion trips by state employees who re ceive part of their money from the federal government. We have to hire teachers whose qualifications are approved by the same groups. We have to send our teachers to conferences designated by these authorities. 1 Examples are too numerous to go into in detail. There is the in trusion into the lives of recipients of welfare checks by social work ers. There is the portending con trol of medicine by the Federal government. There are the intri cate regulations of radio, televi sion, airlines, and shipping. There is talk of compulsory steriliza tion of repeaters among unwed mothers. There is the ubiquitous spread of government power into virtually every area into which it is preceded by favors.

The Will to Resist Just as the fish drives the barbs deeper when he struggles against the hook, so, quite often, do those who resist government control find themselves subjected to greater force. Many businessmen have long since ceased to fight the ex tension of government power over them. Just as a wary fish might do, they try by gentle tugs on the line to get more leeway within which to operate, unaware that they are being worn down by their efforts and made ready for land ing. Many businessmen have learned that if they resist, they 1 "The Real Crisis in Our Schools: Federal Domination," Nation's Business, XLVIII (March, 1960), 59.

90 THE FRliEMAN February will be subjected to harassment, to threatened prosecution under the antitrust laws, to close ex amination of their income tax re turns, to loss of government con tracts, and to new regulations more onerous than the ones now applicable. Labor union leaders are beginning to feel the hook subject to threats that they either do voluntarily what government wants or be forced to do it. Any resistance by the medical profes sion is likely to be interpreted as an excuse for tightening control. Businessmen who read the hand wri ting on the wall may know that if they do not "voluntarily" accept government guidelines for prices they will be subject to government-fixed prices. Of course, there are aspects of the government's extension of favors and force to which the analogy of the fisherman with his bait and hook is not appropriate. The fisherman provides his own bait and tackle as well as his boat.

The government, by contrast, pro vides its favors from money taken from the taxpayer by force or the threat of force. That is., our goods are first taken from us by govern ment which then uses them to entice us into its orbit of control. Some do, of course, receive favors who paid no taxes; others receive more than they paid in. But the redistribution features do not altel" the nature of what is being done. Weare getting hooked when we reach for the bait that was taken from ~lS in the first place. The Gradual Approach to Full-Blown Tyranny The above tactics are the Amer ican version of Fabian socialism. They .are the ·means by which Americans are drawn step by step into ,what would be billed as socialism "if we were being se mantically honest. More precisely, it is the gradual development of statism. Each time some sucker reaches for the bait and is hooked, the power of government is increased. Each extension of government power by regulation, control, restriction, and so on is at the expense of the control by in divid uals of their own Iives. This power is usually vested in the assorted members of an expanded and expanding bureaucracy, in in dependent commissions, in bureaus headed by cabinet members, in experts, in that numerous clan who make their living by deciding what prices others shall charge for their services, how many acres farmers can plant to what crop, whether train services shall be continued, what union shall be recognized by what company, the proper length for commercials on television, and so on ad nauseum.

These bureaucrats are tyrants, 1967 THE BAIT AND THE HOOK 91 but, oh, such petty tyrants! Men might fight a Genghis Khan, but it is difficult to know what weap ons to use against men whose tyranny consists of arbitrary de cisions about whether a railroad shall be permitted to discontinue a freight station in a hamlet of 200 people, or· not, whether each bathroom in a house must be vented or whether one vent can serve all of them, whether a new product shall be subjected to an other round of testing· or not, and so on. Prudent men hesitate to rush to arms to make war on mos quitos. Yet, when all the bits of petty tyranny are added, the total is a monumental tyranny which filters into every area of life. According to the lore of fisher men - not always the most reliable - some fish become unusually canny. There are stories, at least, of very large fish who survive in a limited area the attempts of fisherm,en to catch them. At most, they only nibble at the bait; they cannot be snared by the hook.

Whether or not there are such fish, I do not know, but the stories offer a valuable lesson for men. The best way - the only sure way - to avoid the· hook is to refuse the bait. No sensible man today has any reason to doubt that Federal control will follow Federal aid, that govern ment subsidies will be followed by government restrictions, that be hind the attractive bait there are the ugly barbs of political power. Even the nibbler can be caught by the crafty fisherman, for such a fisherman tugs gently at the line to get the fish to jump at the bait and get himself hung on the hook. Men who seek dominion over other men in our day have become crafty fishermen. Only those fish are safe who refuse the bait. Only those people remain free who renounce governmental favors. ~ A. ConsequellC~ of Compulsion WHEN THE LAW, by means of its necessary agent, force, imposes upon men a regulation of labor, a method or a subject of educa tion, a religious faith or creed - then the law is no longer nega tive; it acts positively upon-people. It substitutes the will of the legislator for their own wills; the initiative of the legislator for their own initiatives. When this happens, the people no longer need to discuss, to compare, to plan ahead; the law does all this for them. Intelligence becomes a useless prop for the people; they cease to be men; they lose their personality, their liberty, their property.

FREDERIC BASTIAT, The Law 1850 PROP ETS, JU ISTS, AND ROB RTY WILLIAM J. PALMER THE MOST distinguishing charac teristic of the human being is his urge to amplify the natural. pow ers of his body and mind by in venting and creating devices and by the acquisition, ownership, and dealing with property. Through both of these activities he enters into relationships with other per sons, into the realm of negotia tions, agreements, and contracts, into the status of bearing personal obligations and responsibility, and into the demands of management. He increases his understanding of other humans and his foresight; he develops a capacity for per sonal, independent judgment; he Mr. Palmer is a retired Judge of the Superior Court of California for Los Angeles County. This article is slightly condensed from a paper prepared for a Conference on the Humane Economy at The Institute of Paper Chemistry, Appleton, Wisconsin, August 1966.

92 learns the inevitable penalties for mistaken judgment and dishon esty and the equally inevitable re wards for good judgment and in tegrity. In summary, he grows in stature as a constructive, trust worthy being. Out of this extension and en largement of the person through the ownership of property and the related contractual activities come men and women qualified to do the big jobs, to carry the heavyre sponsibilities of our economic re gime. For them we reserve one of the highest encomiums of our work-a-daylives and associations, namely, "His word is as good as his bond." To cut off from the individual person the medium of self-exten sion and development provided by freedom to acquire and own prop1967 PROPHETS, JURISTS, AND PROPERTY 93 erty is to do damage to his person in analagous manner as cutting off an arm or a leg or destroying the sense of sight or of hearjng \vould do to his body. It is an in evitable, logical result that to a mind that has suffered such dam age, a mind molded in thephiloso phy and practices of communism, even a solemn treaty-contract car ries no binding obligation, is only a device by which to buy time, to deceive or to gain some other ad vantage, a mere contractual form to be broken whenever to honor it would appear to be fraught with some disadvantage to the signing communist body.

The Law of Usefulness and Returns When we turn to the larger, composite, social aspects of pri vate ownership of property, as ex hibited in our business. corpora tions,we are compelled, if we would be true,. to acknowledge this fact: In the long pull, such pri vately owned property can and does serve its owners only and commensurately as it serves all the people. Even as to personal hold ings, basic data compiled by· the Internal Revenue Service justify the conclusion that at least 85 per cent of the personal wealth of our wealthiest citizens is in the active service of the general, total econ omy in the form of corporation capital, government bonds, investments in insurance,bank accounts and loans, paying wages, creating tools, building homes, andprovid ing security for others. These facts are joined by an other: the natural and particular concern that thecprivate owner has for the care, improvement, and usefulness of his own property.

The· brevity .of that observation should not obscure the· far-reach .. ingvitality and effectiveness of its truth. When we substitute the politician ·dealing with. otherpeo pIe's money for the businessman dealing with his own, the result is certain to be extravagance· and waste and often corruption and failure. A thousand and more ex amples of this truth, from our own governments and from around the world,· could· be cited if neces sary. But no knowledgeable person needs such. proof. These conjoined facts give to private ownership and manage ment an exclusively distinctive en dowment for benefiting the whole economic and social structure. They constitute what Adam Smith referred to as an "invisible hand" serving .the best interests of· so ciety. To use a metaphor that con forms with modern science, these factors might be called the genes that have determined the magnifi cent posture and performance of our organisms of private property and private adventure, and the ab94 THE FREEMAN February sence of which has determined the numerous failures of socialism and totalitarianism.

Modern Mythology This is a unique period in human history for thoughtful people to spend a while focusing their thoughts on the concepts of pri vate property and ownership. Cur rent in the world is the notion which, stated with the samegen erality as it usually is expressed, assumes that an intrinsic antag onism exists between property rights and human rights. The con flicting factors intended to be de noted by the slogans and shibbo leths are, on the one hand, the ownership of property by individ ual persons, and, on the other , the well-being of all members of a so ciety. Not only are large national groupings of the world's peoples under the absolute domination of autocrats who profess to believe that this notion is true, but in our own country the shibboleth is comtnonly used, or truth is im plied in it, by seekers and holders of public office, demagogues, so. cialists, and communists. Into the minds of thousands of school and college students the notion has been implanted by teachers and by influences organized and directed from outside the school grounds and campuses.

Perhaps we ought promptly to dispatch this proposition that property rights are inimical to human rights by pointing to the illogicality and/or the insincerity of its proclaimers and apologists. What they seek to obtain is prop erty, either directly for themselves or to hold or control, with auto cratic power of distribution and dissipation. Property delivered to them, property controlled by or for them, is their own barked guaran tee of human rights and their one cure for a real or alleged absence of such rights. They, themselves, are the arch proponents of the fan tasy that property is the panacea for the ills, ignorance, indolence, evils, confusion, and muddles of mankind. Although it is quite proper in controversial dialogue to thus dis miss a current myth or fallacy, it is for us, rather, to think construc tively and to try, at least, to ex press truths that can flow into the mental vacuum wherever it may exist. Let us examine anew cer tain premises that we usually as sume a priori. What are the genu ine human values in which we are or ought to be concerned?

These are Human Values The basic one, of course, is free dom. Lest there be misinterpreta tion or misrepresentation, let us substitute a term evolved in en1967 PROPHETS, JURISTS, AND PROPERTY 95 lightened political and juristic phi losophy, namely, "civil liberty." This term embraces all the famil iar inalienable rights of man. No fact has been more convincingly proved by history and no conclu sion is logically more unavoidable than this: civil liberty is impossi ble without the right and freedom of individual persons through their own efforts ,to ac,quire and own property and to have all authority in the management of the same as will not infringe upon the equal rights of others and as will con form with a reasonable exercise of police power by government. When, by some governing pow er, individual persons are deprived of opportunity to acquire and to own property, they necessarily are dependent' upon and are the liege men of the power that claims to own all property and, having means of violence to enforce its claims, exercises the prerogatives of ownership - whether that pow er be king, feudal lord, or ruling persons bearing any vestment of authority. All are vassals of the king, be he robed, crowned, and on a throne, or a coterie of commis sars or an· assembly or bureau of government officials, when the con trol of all property has been usurped by that king through myth, general ignorance, custom, deception, violence, or election.

The destiny of liberty is the destiny of the private ownership of property. "A Man's Castle" Another human value of inesti mable significance is the home, the house-home which, upheld by en lightened Anglo-American juris prudence, is a man's castle, a place of refuge, and a place for privacy. But a man's home cannot be his castle, a personal fortress, unless he, himself, owns the right of pos session, a right that he acquires through ownership of either the fee title or a leasehold. A pater nalistic, allowning government might provide him revocable shel ter, but whether that be in a hovel, a crowded room, apartment, or a palace, he never can receive from it the gratifications and the human values, nor the security, that de rive from himself being the owner and master of a home. Probably no human value sur passes that of the man who loves the fertile soil and the useful and beautiful creations that grow from it, who presides over an area of ground of which he can say: "This is my own," and on which he can labor in the near-God enterprises of tilling, planting, harvesting, and animal husbandry, knowing that the fruits of his toil and the earth's fertility will belong to him.

He is the lord of what has been called "a corner of tranquillity,"

96 THE FREEMAN February wherein he knows the spiritual satisfactions of being a self-directed, free man. But no "corner of tranquillity" exists after preda tors, by violence· or the inoculation of deceiving ideas, have stolen from individual persons their own and, through sneaking and violent devices of suppression, have closed the avenues for private ownership of property. Control of Cultural Environment Another human value is one which no intelligent person, hav ing once enjoyed, will surrender willingly: the value derived from being free to create the cultural environment to which he and his family will be exposed and within which, patterns of thought, taste, and character will be formed. This value derives not alone from re specting his own thinking and judgment, but from being free to pursue them in the selection of books, newspapers, magazines, fur nishings and decor, works of art, radio and television programs, other forms of entertainment, re ligious institutions, and methods of education.

But this immeasurable human value can be had only when nu merous individual persons are the respective private owners of nu merous properties: newspapers, publishing houses, churches, schools, factories, radio and television stations, theaters, mercan tile establishments, banks and other financial institutions, and countless items of machinery and equipment. The destiny of culture is the destiny of the private ownership of property ~ The Means of Benevolence l No attempt is being made here to inventory all the human values that are made possible by and are dependent upon the private owner ship of property. Yet another ought to be mentioned, because, although not the most fundamen tal, it is the crowning, irradiating capstone of the structure. It con sists of the coexistence of benevo lent impulses in the psyche of the individual person and his private ownership of the means by which to materialize those impulses in charitable giving. It is doubtful if many of us have a fitting appre ciation of the manifold, far-reach ing fruitfulness of that human value, although its personal grati fications have been widely experi enced.

A reliable estimate based on various records is that in 1963 gifts made by citizens and insti tutions of the United States to 1 The data used in this section is taken from Senior Scholastic, December 9, 1964, p. 8 et seq. and 1966 Reader's Digest Al manac.

1967 PROPHETS, JURISTS, AND PROPERTY 97 philanthropic causes amounted to more than ten billion dollars. The varied purposes of those gifts em braced immediate help to the needy; religious activities; educa tion in many areas; projects in art, literature, and other phases of culture; health, medical, and hos pital care; scholarships, fellow ships, advanced studies and re search, and explorations in science. Out beyond the realm of records and statistics, in those areas where countless kind persons ask no credit and no acclaim, are the continuing, numerous, silent gifts of money and valuable things from one to another. Of the more than ten billion dol lars in traceable charity, gifts to taling nearly eight billion dollars were those of individual persons. More than 50 million volunteer, unpaid persons, including three million of America's business and professional leaders, gave of their time and energy to carryon the benevolent services involved and to do the soliciting and gathering in of the gifts.

Near ly half of all this giving of private property was done for the support of churches and church related activities, including church-affiliated hospitals. Anoth er 15 per cent of the gifts made possible such welfare and educa tional activities as youth organiza tions, Boy Scouts, Girl Scouts, and similar programs, community planning for various phases of bet terment, and projects for the pre vention of juvenile delinquency. Fifteen thousand foundations, endowed by gifts of private prop erty, made possible major .philan thropic enterprises by their contri butions of 819 million dollars. Twenty-four of those foundations, the ones best known, having no purpose other than to promote through their benefactions the well-being and progress of human beings around the world, have as sets of over six billion dollars. The existence of numerous pri vate schools and colleges, where independence of political controls and pressure groups can be re tained, and religious and cultural ideals and disciplines can be main tained, is made possible only by gifts of pri vate property. In the fiscal year, 1963-1964, 35 of the better known c9lleges and univer sities of our country received gifts totaling 343 million dollars. But numerous other colleges and uni versities received gifts. The total of all gifts of private property to education in one form or another in the year 1963 has been esti mated to have been over one bil lion, seven hundred million dollars.

The contorted mind of the com munist can only sneer at all this fruitage of human values from the private ownership of property. He 98 THE FREEMAN Februar'Y would, if he could, destroy all the benevolent foundations. He tells you that under his system no charity is needed, because the sta te, claiming to own all prop erty, renders to each of its prole tariat according to his needs. He does not tell you that a handful of tyrants decide what everyone needs. He does not tell you that in their philosophy and absolutism, the greater portion of what is ac complished by our private charity is deemed to be not needed, is poison and hallucinatory to minds conditioned and regimented by the tyrants. And he does not tell you that no socialist society ever has been able to satisfy the reasonable heeds of its people. The Sum of Human Values All the human values which rea sonably can be expected to benefit the race can be summed up in these words: a valuable human.

Use of this term requires us to confront two antithetic ideas of value. To the power-hungry or glory-seeking despot, a person is valuable only if he is useful to the ruler's ambition. He is an en meshed part of an apparatus. But to the enduring wisdom of reality, the valuable human is an individ ual, an honest, self -reliant, self thinking, working individual, pro ductive of useful things, useful ideas, or useful service. It has been demonstrated time and time again that the incentives, opportunities, disciplines, and necessities provided by a regime of law-protected private property have no rival in producing valua ble humans, no enduring rival in paternalism, socialism, or any kind of absolutism. If we needed more proof of this fact than exists in our own history, especially mod ern proof, we would find it in the prodigious recovery of West Ger many from the ruins of World War II and in the seemingly mi raculous achievements of the free Chinese of Formosa in rising from a war-caused desolation.

We are long overdue in the gen eral indignation certain to result when we recognize the buncombe of the political medicine man and the swindle of the political gang ster in their preachments and in nuendo that an intrinsic conflict exists between human rights and property rights. Law, Scholars, and Kings The concept of private property and the laws that have been de signed to implement and safeguard it were born of an instinct that manifests itself even in some areas of animal life, presumably below the level of humans. The relation ship in this respect is like that which exists between the instinct of self-preservation and the many 1967 PROPHETS, JURISTS, AND PROPERTY 99 laws designed to protect human life. These instincts are an expres sion of the wisdom and purpose of the intelligence behind all the phe nomena of nature. One of the most brilliant orna ments of man's efforts and achievements on our planet has been the considerable number of extraordinary minds who, as jur ists and scholars of the law, helped to create the great legal systems wherein, among other achieve ments, the rights of private prop erty in its numerous aspects were defined, classified, and protected.

Not one of these preeminent legal scholars proposed the abolition of private property. The idea would have been anathema to them all. Law in its inherent nature has profound depth and an affiliation with truth. It is not exclusive, but rather is universal, and it under lies and feeds the intuitive minds of the great who sincerely seek to know it. In medieval Germany a theory was prevalent among schol ars of law that the whole body of the law had latent existence in the consciousness of the people.2 Theo retically this concept is true if we think of law in its only justifiable function, and if we regard as tem porary and counterfeit the mis guided dictates of authoritarian holders of political power. And if 2 Englemann, History of Continental Civil Procedure, p. 145. this true concept were self-execut ing, if it had any means of en forcement, no people in the world today would be governed by com munists, and none would be be guiled by those who would destroy the rights logically incident to the private ownership of property.

Yet a majority of the world's people today do live under totali tarian regimes wherein any rights of private property that may ap parently or actually exist do so only precariously and without firm fixation in dependable law. This state of affairs is not modern, ex cept only that it now exists. It is older than recorded history. The earliest legal system which, in juristic thinking, can be recog nized as a system, was that of Egypt, established about 6,000 years ago and surviving for about 4,000 years. 3 An underlying theory of this system was tha t every square yard of land and every person within the kingdom were the property of the king. The king was also the sole legislator. But overlying that foundational princi ple was a superstructure of pri vate rights, including contractual rights and private ownership, con ferred from above, with laws gov erning marriage contracts, deeds of lands and houses, leases, sales, 3 John Henry Wigmore, A Panorama of the World's Legal Systems, Vol. 1, pp.

11-41. This work is authority for other historic data stated in the essay.

100 THE FREEMAN February wills, and numerous other transac tional instruments such a.s are fa miliar in an advanced society. To enforce these rights and the king's laws a judicial system existed. It embodied high ideals of judicial qualification and some enlightened principles of justice. We should take thoughtful note of this Egyptian principle of uni versal ownership residing in the king, for in probably the most ex traordinary atavistic regression in history, we are headed and have gone a long way in that direction - we, ·a .people whose government was founded on the principle that certain inalienable rights, includ ing the private ownership of prop erty, were vested in each of us by our Creator. No one can be quite sure who today's king is, whether the people, the President, Con gress, the Supreme Court, the po litical party in power, the mon archs of labor unions, the theorists of totalitarianism, or a verbalized society.

The Meaning of Ownership At this point one example will suffice. But first we should ask ourselves what we mean, and what have constitutions and laws meant, by the term ownership. Certainly two essentials of the concept are dominion and exclu siveness - at least in some sub stantial measure. Without these factors the private ownership of property would hea delusion, .its prime function being tq place a mask of justice upon the collection of taxes. Over 100 years ago, 100 years nearer the concepts of the Fed eral Constitution, a law dictionary quoted by the highest court of New York defined property as "the highest right a man can have to anything," as a term "used for that right which one hath in lands and tenements, goods and chat tels, which in no way depends on another man's courtesy."4 Nearly 100 years· ago, the Cali fornia Legislature dictated this typical definition into its Civil Code (sec. 654) : The ownership of a thing is the right of one or more persons to pos sess and use it to the exclusion of others.

That enactment was supple mented by another law (Civil Code, sees. 678. 669): The ownership of property is either absolute or qualified. The ownership of property is abso lute when a single person has the ab solute dominion over it, and may use it or dispose of it according to his pleasure, subject only to general laws. 4 Jacob's Law Dictionary, quoted in Stief v. Hart, 1 N. Y. Reports, (Com stock), pp. 20, 24 (1847), New York Court of Appeals.

1967 PROPHETS, JURISTS, AND PROPERTY 101 Both of those laws are normal expressions of an enlightened jurisprudence and neither of them ever has been modified, repealed, declared unconstitutional, or di rectly adulterated. Another typical pronouncement of an advanced sovereign is this edict of the California Constitu tion (Art. 1, Sec. 1) : All men are by nature free and in dependent, and have certain inalien able rights, among which are those of .... acquiring, possessing, and pro tecting property .... It never has been even hinted that this avouchment violates the Constitution of the United States. In 1944 four of the ablest jus ticesever to serve on the Supreme Court of California joined in this official pronouncement: It is a principle of universal law that wherever the right to own 'prop erty is recognized in a free govern ment, .practically all other rights be come worthless if the government possesses an uncontrollable power over the property of the citizen. 5 Government, as referred to in this lucid statement, of course, inIi House v. Los Angeles County Flood Control District, 25 Cal. 2d 384; 153 P2d 950 (1944); Supreme Court of California.

Opinion written by Justice Jesse W. Cur tis, concurred in by Justices John W. Shenk, Phil S. Gibson, and B. Rey Schauer. eluded the courts. The pronounce ment never has been repudiated or adulterated. Brothers in Bond Having thus reminded ourselves of the meaning of ownership, we can better appraise the example of regression previously men tioned. A judicial decision momentous and epochal in United States his tory was that of the Supreme Court in the case of Wickard, Secretary of Agriculture v. Fil burn, delivered in 1942 and re ported in 317 United States Re ports at page 111. The decision dealt with an Ohio farmer who maintained a herd of dairy cattle and raised poultry. His. income was deri ved from selling milk, poultry, and eggs in the local market. It was his practice to grow a small acreage of winter wheat mainly to use on his own farm for feed, for homemade flour and seedings for the next crop. It would appear from the story that in some past year or years he had sold a. portion of his small wheat crop not needed,on his own farm; but no evidence existed that any of the crop in question was sold or intended to be sold or in any way to be placed on the wheat market.

Acting pursuant to the Agri cultural Adjustment Act, the gov102 THE FREEMAN February ernment ordered that he plant only 11.1 acres in wheat, to pro duce 20.1 bushels an acre. He planted 23 acres in wheat, and from the forbidden use of 11.9 acres he harvested 239 bushels. For that crime he was fined 49 cents for each forbidden bushel, a total fine of $117.11. The penalty was upheld by the United States Supreme Court as being perfectly in harmony with the Constitution. With that decision came one of the most truthful and potential confessions ever made by govern ment, the court saying (page 131 of 317, United States Reports): "It is hardly lack of due process for the government to regulate that which it subsidizes." Summing up the juristic effect of that and other court decisions, an eminent encyclopedic legal work, American Jurisprudence, says :6 There is authority for the rule that one taking the benefit of a farm aid statute, or anyone· claiming under him with actual notice, is estopped to deny the validity of the statute, the applicability' of its benefits to him, or the regularity of the procedure in granting him aid thereunder.

And so it has come to pass that the American farmer, although his deed purports to grant him fee title to his farm, actually is vested 6 American Jurisprudence 2d, Vol. 3, pp. 773, 774. with no greater degree of owner ship, and probably less, than was held by his Egyptian counterpart of 6,000 years ago. As it was with the ancient Egyptian, so it is with him: his "bundle of privileges" are in the superficial, not the basic, area of ownership. But lest sympathy be wasted, it should be noted that this American farmer compositely, although with indi vidual exceptions, voluntarily and happily relinquished his owner ship for profit. On second thought, however, perhaps we should have both sym pathy and concern for him be cause of the disappointments that have come to him and the danger of his position in the long pendu lum swings of time. We are told that his debts have increased in the last five years from ?7 to 41 billion dollars, some portion of which, no doubt, reflects capital investments; and that in the same period 3,200,000 farm families have renounced their farms and farming.

Timeless Lawgivers Commencing with -the ancient civilization of Mesopotamia, the land between the watersheds of the Tigris and the Euphrates rivers and centered in the city of Babylon, we can follow an inter mittent chain of lawmaking which, in its intent to define, 1967 PROPHETS, JURISTS, AND PROPERTY 103 direct, and protect the rights of private property, denies to us of today any just sense of pride in our own juristic performances. The legal system of Mesopota mia dates back about 6,000 years, and, about 4,000 years ago, reached an apex in the reign of King Hammurabi, whose code of laws still stands as a monument of intelligent, extraordinary achievement in law and the con cepts of private property. In this land, commerce, banking, and ju dicial proceedings were highly de veloped, and laws existed that rec ognized in detail, guided, and protected private contractual and property rights, relating to deeds, leases, loans, promissory notes, sales, bank deposits, bills of lading, agency, partnership, and the many transactional instruments and pri vate rights involved in an active, communicating, competitive so ciety.

The most concise and most fa mous law recognizing, and designed to protect, the rights of private property was delivered about 3,000 years ago. It was one of the Ten Commandments, a founda tion stone in Hebrew history and Hebrew law: Thou shalt not steal. But knowing that laws do not enforce themselves, that> if they are to have life and impetus, they must abide in the conscience of the people, the author of the Deca logue, whether prophet or God, supplemented that terse command ment with another: Thou shalt not covet thy neighbor's house, thou shalt not covet thy neigh bor's wife, nor his manservant, nor his maidservant, nor his ox, nor his ass, nor any thing that is thy neigh bor's. And when the enlightened and powerful teacher from Nazareth deli vered his message to the peo ple of his land, he clearly sanc tioned those laws in these words: Think not that I am come to destroy the law, or the prophets: I am not come to destroy, but to fulfill. For verily I say unto you, Till heaven and earth pass, one jot or one tittle shall in no wise pass from the law, till all be fulfilled. (Matthew 5 :17,18) In addition to the plain, specific statements of that utterance, it carries two implied truths, with out the knowledge of which there can be no wisdom in the business of law. One has been stated: that laws do not enforce themselves.

The second is that government al ways is of men, never of law. As tonishing as the fact may be to us, this truth was an articulated prin ciple of Chinese law in regimes that began 4,500 years or more ago and continued in similar legal frame\vork for more than 4,000 104 THE FREEMAN February years, always recognizing the rights of private ownership, and providing rules, methods, and moral principles for contractual transactions. _The Classical Respect for Private Ownership Among the many contributions of the Greeks to our culture were patterns of legislation in which were clear, precise recognition of private property rights, provisions for their protection, laws govern ing inheritance and defining the methods of numerous transac tional instruments and the rights involved. The most noted of the lawmakers was Solon, Athenian statesman who lived about 600 years before Christ. One of his laws concerning theft reflects the conscience of the age and place in relation to the rights of owner ship. It provided that if the owner of a stolen article recovered it, the thief was condemned to pay twice its value; if the article was not recovered by the owner, the thief's penalty was to 'pay tenfold the value and, -if the jury so deter mined, to be confined in the stocks for five days.

Over a thousand years later, the achievements of the Greeks in de fining and protecting private property and contractual rights were equalled, if not surpassed, by Mohammedans, whose creed and legal system, within about a hun dred years after the Arabian prophet's death, had spread across an area from India to Spain. The law of this Islamic empire was de rived from the Koran, the words and conduct of Mohammed, and the writings of jurists who be longed to the faith. One of the re ported sayings of Mohammed was this: I swear by God that if Fatima my daughter were to be found guilty of theft, then I would have her hands cut off. Before turning our attention to the greatest la,vmakers of all, the Romans, let us skip ahead in time to have a look at one of the stran gest dichotomous characters of history, the Mongolian conqueror, Tamerlane, known also as Timour. By about the beginning of the fif teenth century, he had become the ruler of much of Asia, India, and all Asia Minor. As cruel and mur derous in war as communists are in pursuit of their aims, he was an able and even a kindly ruler in peace, doing much to promote art, science, and intelligent law in his dominions. Of him the noted Eng lish historian, Edward Gibbon, wrote: Timour might boast that, at his ac cession to the throne, Asia was the prey of anarchy and rapine; whilst 1967 PROPHETS, JURISTS, AND PROPERTY 105 under his prosperous monarchy, a child, fearless and unhurt, might carry a purse of gold from east to the west.

Such an experience would be a supreme test today of law in its protection not only of private property, but of children. The Everlasting Contribution of Rome The story of Rome is known at least in a general and fuzzy way to every well-educated person. But few appreciate the magnitude and penetration into many lands of the Roman contribution to jurispru dence, which, among other accom plishments, defined, guided, and protected private rights in prop erty and contracts in the various activities and transactions of an energetic people. Let it suffice here to mention only a few of the Roman jurists \vhose names never will be forgot ten by genuine sages of the law~ Gaius wrote his treatise, The Institutes, in the second century, A.D. The work was· then original in its method· of classification and generalization whereby he con structed a comprehensive system of juristic principles. It· was used as a textbook for students of law in a number of countries for three centuries after the author's death, about 200 A.D. This is an example of his style and concepts: Things subject to human dominion are either public or private.

Things public belong to no individ ual, but to a society or corporation; things private are subject to individ ual dominion. It was Ulpian, the Counselor, \vho at about the beginning of the third century wrote 23 treatises on law and gave us a definition of justice which never has been im proved: Justice is the constant and per petual will to allot every man his due. Justinian I, at Byzantium, Em peror .of the Eastern Roman Em pire, in the sixth century under took direction of the task of or ganizing and greatly reducing in wordage the ROlnan law, employ ing a commission of seventeen jurists headed by one said to be the most .learned man of his time, Tribonian. Three works were pro duced, the Digest, the Code, and the Institutes, of which the Digest was the most famous and the most influential through many different eras and cultures. Although with the fall of the Roman Empire, the Digest disappeared for five cen turies, one complete and reliable copy then was found, and it has influenced the jurisprudence of n1any lands and centuries. These words from· the first chapter of the D'igest have been translated into various languages: 106 THE FREEMAN February Three things the law enjoins upon all: to live honestly; to cause no vexa tion or harm to another; and to ren der to everyone his due.

No more just, practical, 'and ex pedient principles to govern the private ownership of property ever have been conceived. The Trail of One Great Work of Law We can follow the development of modern law in Western Europe and the British Isles, before the blackouts by totalitarian despots, by following the trail of Justini an's Digest, one of the best-selling books for some years after the art of printing was mastered. This is so not because the Digest was the sole influence and pattern, but be cause it was amalgamated with lo cal customs and systems, always recognizing, defining, and protect ing rights of private contracts and property. Disregarding the chronology, the trail would lead us to France and the Code of Napoleon, a work that has been translated into al most every language and has in fluenced the world. Concerning it, Napoleon, in exile at St. Helena, said: My glory is not to have won forty battles; for Waterloo's defeat will destroy the memory of many vic tories. But what nothing will destroy, what will live eternally, is my Civil Code.

The trail, with legal scholars from Italy often leading or follow ing, would take us to Austria, Bo hemia, Serbia, Germany, Poland, and the British Isles, and finally to America and all the English settlements insofar as Justinian's Digest played a role in the design of the English Common Law, mainly through the studies and writings of such prodigious schol ars of law as Bracton, Chief J us tice Littleton, Coke, Bacon, Selden, Mansfield, and Blackstone. Modern Destroyers of Private Property It would seem that one of the most difficult or unattractive or disagreeable things for human be ings to do, even in the presence of history's judgments, is to heed the advice of the Apostle Paul: "Prove all things; hold fast to that which is good." Among the destroyers of private property and the privileges of pri vate ownership, two of the wreck ers do not here call for our con cern. They are (1) acts of fortuity and (2) negligence. Although either can be disastrous to the in dividual, in their general conse quences they are of minor signifi cance compared with two others.

Our brilliant, comprehensive pro grams of insurance, privately con ceived and executed, and our per sonal accomplishments in mechan ics, engineering, and all realms of 1967 PROPHETS, JURISTS, AND PROPERTY 107 science, have been alert to and dili gently encountering· these minor destroyers. But two others, crime and gov ernment, of which the latter is the more dangerous, do demand our thought and vigilance, lest private ownership of property becomes only a nominal superficiality while continuing to carry the responsi bility for management and care, and the burden of financing the government. It is reasonable to conclude that a relation exists between the in crease in crime, now a menace to every person, and the govern ment's increasing attacks upon and subversion of private rights in property. When government does not respect, and ceases to have concern for, those rights, the atmosphere thus created is in ac cord with and supports the crimi naI's philosophy.

The reported fact that in one year's time 10,000 trays, 2,000 salt and pepper shakers, and near ly 1,200 sugar dispensers disap peared from the Pentagon's cafe terias and snack bars, is, no doubt, a minor indication of an atmos phere created by government not fearfully charged with integrity and discipline. It does not seem possible to ar rive at an accurate estimate of the total property losses suffered by our people resulting from crime: from robbery, burglary, embezzle ment, fraud, confidence-trickery, vandalism, malicious mischief, ar son, and theft of all kinds and dimensions: from a woman's purse and a store's merchandise to costly jewelry, furs, money, bank robberies, trade secrets, drug cultures, secret formulas, and life time savings. An .estimate probably well sup ported by facts is that crimes against the ownership of property have been increasing at a rate four times as great as the rate of population increase. But crime takes vastly more from the citi zenry than the immediate losses.

Money needed for law enforce nlent, investigation, courts, court proceedings, institutions of con finement, punishment, and treat ment is derived from private prop erty. The Alert Citizen's Three Questions But the potentials of private crime for separating .property from its owners and for destroy ing property and the privileges of ownership are piddling com pared with the potentials of gov ernment for like effects. An alert citizenry will ask these questions of its public officials: 1. Is there a point beyond which, when public ~fficials take your money through the entrusted pow er of taxation and hand it over to 108 THE FREEMAN Februar'y others without consideration, 'without justice, and without in telligent mercy, they violate the eighth commandment: "Thou shalt not steal"? The answer to that question, of course, is "yes," unless through miseducation, suppression of news and guileful propaganda, or just being dull, we .have retrogressed to the ancient belief that the king can do no. wrong.

2. Is there a point beyond which public officials cannot go· in caus ing inflation through their fiscal, money, paternal, and foreign poli cies, their extravagances, subsidies, gifts, and favoritisms, thus destroying substantial value in everyone's money and in the life time savings of industrious, thrifty, and exemplary citizens, without committing theft and without violating the elemental commandment of justice: "Thou shalt render to every person his due"? 3. What are the authoritative decisions of our government of ficials - legislative, judicial, and executive - doing to the oncerec ognized rights of private owner ship, and. on what fateful course are we bent? ~ THE PRESS and THE PEOPLE'S RIGHT TO KNOW JOHN C.MERRILL THE ~DEA is prevalent todaY,at least among journalists, that the people of the United States have a rig ht to know· government busi ness. Although there are various segments of our society, including many in the government apparat us, which seemingly do not en dorse this "people's right to know,"

Dr. Merrill is Professor of Journalism at the University of Missouri. it has been generally accepted as a basic concept in our democratic Republic. If the people rule through their representatives,· then it nat urally follows that if they are to be well~informed, intelligent rulers, they must know what their gov ernment is doing. In this sense, "the people's right to know" is on solid theoretical ground. What is rather disturbing about J967 THE PRESS AND THE "PEOPLE'S RIGHT TO KNOW" 109 the whole matter of the "people's right to know" is the idea that the government apparatus is solely or largely.....;responsible for re stricting this right. There is no doubt, of course, that government is secretive, is over-sensitive, and is restrictive of information. It is also clear that government "man ages" the news, making sure cer tain releases are made at the right time to achieve a desired effect and de-emphasizing (or eliminating) certain other information about which it is not· enthusiastic. Ev eryone who can read in this coun try should know about this gov ernment secrecy, sensitivity, and management. The mass media of communication, with a certain sen sitivity of their own, periodically draw the public's attention to it.

The concept of "the people's right to know" has mainly been promoted since World War II; books such as Kent Cooper's The Right to Know and Harold Cross' The People's Right to Know and numerous articles have been print ed declaring such a "right" and castigating government for in fringing on it. No libertarian can but admire and applaud such anti government broadsides, but the problem is much larger than this. And it cries out for.a solution which is not so simplistic as blam ing the government - or even "re forming" it. Do People Care? Two other important factors are involved in this business of letting the people know: the people, and the press. How often they are over looked in a discussion of this area! Quite frankly, the people either don't know they have such a right, or they don't take it seriously. It appears that they simply don't care. Such a right to know is cer tainlyone of great importance - a civil right if there ever was one.

But where is public concern? Where are the "demonstrations," the letters to congressmen -even the letters to newspapers and mag azines? Why has not the Supreme Court, under popular pressure, dealt with this infringement of a civil right? Why, indeed, do not the· citizens (the people who have this theoretical right) insist upon it? The only segment of our society which seems really concerned about the right is the press - the editors and publishers chiefly. They criti cize, agitate, and fret about the "people's right to know" being in fringed on by government. In ef fect, they imply that government alone keeps the people from "know ing"· government business. But this is not really true. What about the news. media themselves? What are they doing in this respect? Any person familiar with the typical news operation must recognize 110 THE FREEMAN February that only a very small portion of government-related information gets to the average citizen's eye or ear. So in effect, the news media are guilty themselves of the same sins of omission and commission they point to in government.

The editors select and reject government information. They leave out this story, that picture, this viewpoint. They play up this speech, trim that one and put it on page 44, leave that one out completely. In effect, they act as censors - perhaps with the best of motives - but censors neverthe less. They "manage" the news, also, just as government officials do. They play their parts, too, in the restriction of the people's right to know. Of course, they would not put it so bluntly, pre ferring to call it "exercising their editorial prerogative." They are "editing"; the gov'ernment people are "managing" and "restricting." Much News Is Wasted While the editors and publishers are bemoaning the fact that they cannot get enough news from government, their underlings (or they themselves) are filling waste baskets in the newsrooms with government news of all types. For years I have been trying to get one of my graduate students to do a content a.nalysis of the news room. wastebaskets instead of the newspaper's pages. Such a study should be illuminating, and I am sure would show that the news papers do have abundant informa tion about government, but which is not being printed. Admittedly, much of this material is not "news worthy" (and this is as subjec tive as what a government man might label "classified") and should not be used, but the fact remains that it is not being given to the people who have a right to know it. (Loud cries of "space limitations!" at this point.) In spite of· various rationalizations, it does appear that if the press is seriously concerned about the right of the people to know about government, it will increasingly point its finger at itself. And in stead of complaining in a multi tude of books and articles about the news that is not forthcoming from government, it might be well for the press leaders to concen trate on giving their readers a larger and more realistic sample of the news which has been ob tained from government.

One who observes the editing operations of a newspaper is struck by the swiftness with which government news is dis carded and selected. And, when the wastebaskets fill with thein formation which the people should be reading, it will be noted that there are few tears and practically 1967 THE PRESS AND THE "PEOPLE'S RIGHT TO KNOW" 111 no gnashing of teeth. It is as if these practitioners of journalism dissipate the communication out put relative to government with out even realizing that they, like the government officials they often criticize, are "managing the news" and keeping back informa tion vvhich, in their own words, "the public has a right to know." Room for Improvement To avoid being misunderstood here, let me emphasize that the government is far from guiltless in this matter, and its villainry is undoubtedly more sinister than its critics believe. But it has its day in court; if its sins are legion, its accusers are certainly as numer ous. The press, however, the main critic of government, usually throws rocks with impunity from its sanctified glass house. My con tention is, I suppose, that the press should stop throwing so many rocks at government and start throwing more government information at the public.

Although the government is guilty in this area, so is the press. It is time for the press to recog nize that it is as much obligated to get government information for the people and to print it when it's gotten as the government would be obligated to give it out. Per haps if some press critics of gov ernment recognize that they in dulge in the same practices they condemn in government, they will change their ways - or will at least revamp their one-sided and unrealistic definition of "the peo ple's right to know." ~ Reward or Punishment (A LESSON IN RELATIVITY) IN A SOCIETY where the highest reward for good citizenship is to be government care from cradle to grave, should not the penalty for bad citizenship require the criminal to stand on his two feet and assume responsibility for his own welfare as a free man? PAUL L. FISHER Redondo Beach. California AMERICANFEDERALISM:EROSION GEORGE CHARLES ROCHE III ALBERT J. NOCK once commented, "There must be as many different kinds of democracy in this country as there are of Baptists. Eve'ry time one of our first-string publi cists opens his mouth a 'democ racy' falls out; and every time he shuts it, he bites one in two that was trying to get out." One of the difficulties that has arisen to aid and abet the erosion of our Ameri can tradition of federalism is this very problem concerning the defi nition of democracy. Since we are all "the people," it is not surpris ing that we all think that the "rule of the people" is a good idea. But when we come to discussing what we mean by the "rule of the peoDr. Roche, who has taught history and phUos ophy at the Colorado School of Mines, now is a member of the staff of the Foundation for Economic Education.

112 pIe," we find it a little harder to agree. This is a problem of definition deeply rooted in the American po litical past. Thomas Paine stated one side of the case quite simply in The Rights of Man when he said, "That which a whole nation chooses to do, it has a right to do." John Quincy Adams answered this attitude drawn from the French Revolution when he replied to Paine in a series of articles pub lished in a Boston newspaper in the summer of 1791. Defending the American tradition of federal ism and limited government as it had developed, Adams warned in his Letters of Publicola: "This principle, that a whole nation has a right to do whatever it pleases, cannot in any sense whatever be 1967 AMERICAN FEDERALISM:· EROSION 113 admitted as true. The eternal and immutable laws of justice and morality are paramount to all hu man legislation. The violation of those laws is certainly within the power, but it is not among the rights of nations. The power of a nation is the collected power of all the individuals which compose it.

... If, therefore, a majority ... are bound by no law, human or di vine, and have no other rule but their sovereign will and pleasure to direct them, what possible se curity could any citizen of a na tion have for the protection of his unalienable rights? The principles of liberty must still be the sport of arbitrary power, and the hideous form of despotism must lay aside the diadem and the scepter only to assume the party-colored garments of democracy." As Edmund Opitz put it several years ago in THE FREEMAN, the problem of political power is con tained in the answer to not one question, but two. What shall be the government's scope? And who shall rule?l We have long since de cided in this country that the an swer to the second question is that the majority of the people shall rule. But this still doesn't answer the first question as to what the scope of that authority should be.

1 The Rev. Edmund A. Opitz, "The American System and Majority Rule," THE FREEMAN, November 1962, pp. 28-39. The confusion in categories be tween these two separate questions has served to obscure the fact that the exercise of excessive power is objectionable not only when per petra ted by a king-directed gov ernment, but also when perpe trated by a people-directed gov ernment. Despotism. becomes des potism because of the nature .of the act rather than the nature of the actor. Equal in Slavery One of the early analysts of the American experiment in self-gov ernment, who saw much to approve in the system as it unfolded, warned Americans that a maj ori ty could be even more tyrannical than the most absolute of European monarchs. Tocqueville speculated that if Americans ever confused equality of opportunity with equal ity of condition and then used their new found political power to enforce equality of condition, the tyranny of the majority would in deed become a reality. He warned, "Americans are so enamoured of equality they would rather be equal in slavery than unequal in freedom." Tocqueville had in mind the unchecked "general will" view of democracy espoused by Rous seau and implemented in the French Revolution. The modern totalitarian states have carried this tendency to its ultimate con114 THE FREEMAN February clusion by exercising their despot ism in the name of "the people"

and clothing their institutions in the fullest democratic trappings; for example, "democratic central ism" in the Soviet Union, presum ably democratic. since it is done in the name of the people, and central in the sense that the government tells the people what to do. In the words of C. S. Lewis' Screwtape, "'Democracy' is the word with which you must lead them by the nose." Screwtape goes on to sug gest that mankind must never be allowed to ask Aristotle's ques tion: "Is 'democratic behavior' be havior democracies like, or be havior that will preserve a democ racy?" Screwtape suggests that the final triumph over man will come when the meaning of democ racy has been perverted to mean "I'm as good as yoU."2 If "I'm as good as you" is to be enforced as a principle of political authority, then, indeed, right and wrong are what the maj ority says they are. In the words of Edmund Opitz, "the antithesis of majority rule is not minority rule but liberty." Liberty presupposes an individual self-rule based upon the assumption of human dignity derived from man's identity as a creature of God. It is when this 2 C. S. Lewis, The SC1'ewtape Letters (New York: Macmillan Co., 1962), pp.

161-62. principle of human dignity is vio lated that democracy merges into socialism. What need is there of God or heaven or individual self rule if the government is to .be omnipotent and to provide a heaven on earth? Socialism as Hegel defined it is quite literally "the kingdom of God without a kingdom and without a God." Totalitarian Controls "Ior the Good 01 the People" Once the basic error is made that anything is all right so long as the people want it, it is a small step to believing that anything is desirable so long as it's "good for the people." "Of the people" very quickly becomes "for the people" whether they like it or not. The twentieth century has seen the de velopment of the completely totali tarian state that justifies any bar barism in the name of the ulti mate good of the people. But it has also seen the development of the same idea in the mainstream of Western civilization where we have prided ourselves on being, so we thought, most completely non totali tarian.

Robert Michels, Graham WalIas, and Walter Lippmann, all prod ncts of the enlightened twentieth century and all eager to announce how antitotalitarian they are, have also emphasized what they call the "irrationalism" of democracy, ex1967 AMERICAN FEDERALISM: EROSION 115 pressing a preference for an elite corps to run things in the name of the people. It need scarcely be pointed out that such a view of democracy is anything but the rule of the people, that on the con trary the wisdom of the people and their self-rule consists in making decisions on a level close enough to them, to retain perspec tive, firsthand knowledge, and con trol of their own affairs. As we have seen, it is precisely the dif fusion of decision-making power inherent in the tradition of Amer ican federalism that has most nearly achieved a genuine rule of the people. Here again, Tocqueville early saw the nature of the problem and warned that "democratic so cialism" was a contradiction in terms. Democracy is an essen tially individualistic institution and therefore in irreconcilable con flict with socialism: "Democracy extends the sphere of individual freedom; socialism restricts it. De mocracy attaches all possible value to each man; socialism makes each man a mere agent, a mere num bel". Democracy and socialism have nothing in common but one word: equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality· in restraint and servitude."3 3 Complete Works of Alexis de Toc queville (1866), IX, 546.

The State Absorbs Society If the distinction may be made between the state and a society, that society is a composite of the actions and institutions of individ uals in areas where the state is not concerned, then it may be said that it is the vice of the Rousseau, French Revolution, "general will" approach to democracy that ulti mately the state absorbs society. At the same time, it is the virtue of the American tradition of fed eralism that it erects barriers to prevent that absorption. The absorption of society by the state may be measured within our own Republic in the history of the centralization of power that has occurred. The late eighteenth and early nineteenth centuries were a consistent demonstration of the strong determination of the Amer ican people and its leadership to avoid undue centralization of po litical authority. Whatever politi cal infighting occurred during the presidencies of Washington, Adams, Jefferson, Madison, Mon roe, and John Quincy Adams, a common agreement on this point was tacitly observed. Some histo rians have suggested that a break in this continuity came in the age of Jacksonian democracy. But in actuality, the Jacksonian, middle class entrepreneurs were inter ested not in the limitation but rather in the extension of social 116 THE FREEMAN February mobility and economic opportun ity. They resented monopoly power wherever it might appear, but es pecially in government.

Sacrificing Principles Yet between North and South, an issue was building that some men foresaw as a danger to this American concept of limited and diffused power. Long before the Civil War, John Randolph warned: "The people of this country, if ever they lose their liberties, will do it by sacrificing some great principle of government to tem porary passion. There are certain great principles, which if they be not held inviolate, at all seasons, our liberty is gone. If we give them up, it is perfectly immate rial what is the character of our sovereign; whether he be King or President, elective or hereditary, - it is perfectly immaterial what is his character - we shall be slaves - it is not an elective gov ernment which will preserve US."4 Randolph spent his life insisting that power must be limited, and that the surrender of power to a centralized administration was all too often a one-way street. As he once commented, "Asking one of the states to surrender part of her sovereignty is like asking a lady to surrender part of her chastity."

4 Annals of Congress, 12th Congress, 2nd Session, pp. 184-85. Northern opponents of the insti tution of slavery, such as John Quincy Adams, also recognized that even such a moral evil as slavery must be allowed to die from its own economic weaknesses rather than be killed with a weap on forged by a great centraliza tion of national power. But with the passing of the older generation, a new breed, the direct ancestor of the modern so cial reformer, appeared on the scene. Such abolitionists as Sen ator Sumner, Wendell Phillips, and William Lloyd Garrison were so assured of their own moral recti tude and their capacity for run ning the affairs of all mankind, that they were willing to gather and exercise any amount of power to pursue their goal. Perhaps it is such men that Ambrose Bierce had in mind in The Devil's Dic tionary when he defined a con servative as "a statesman who is enamoured of existing evils, as distinguished from the liberal who wishes to replace them with others."

Even the coming of the Civil War demonstrated a basic accept ance of the American federal tra dition on the part of most Ameri cans, both North and South. Yet, there can be little doubt that some "progress" was being made toward the kind of centralization that could ultimately prove harmful to 1967 AMERICAN FEDERALISM: EROSION 117 the American federal tradition. Some advocates of states' rights have a valid point when they sug gest that the passage of the Four teenth Amendment opened the door to changes in our federal system. Yet the greatest impact upon the American tradition of federal ism that occurred in post-Civil War nineteenth century America probably sprung from the one party domination that was in ef fect almost without interruption until the twentieth century. Na tionally, the Civil War had pro duced a monopoly situation for the Republican party. In the re pressed and resentful South, local politics came to be a monopoly of the Democratic party. Even some places in the North (for example, Boss Tweed's New York City) came also to be Democratic back waters due, in large part, to the reaction against the monopoly sit uation of the Republican party in national politics. The age of ma chine politics thus stemmed from an undue centralization of politi cal control.

Monopoly in Political Power One-party domination of Amer ican political life, of course, robbed the Republic of that flexibility and variety that had traditionally been its strength, producing in effect the very sort of monopoly situation in political power that our tradition tries so hard to avoid. A time of tremendous build ing in industry, communication, and transportation across our rich American continent followed the war. ,Yet something else came with this building. The story of the spoilsmen in politics and the ex ploiters in economic life working hand in glove to take the Ameri can people for a ride is so well known as to be a commonplace. Advocates of centralized au thority and economic control in the twentieth century look back to the so-called era of Reconstruc tion and Big Business to point out its evils with great glee and to suggest that those evils are a prim,a facie case for the necessity of more political control of busi ness. The very reverse is actually the case. It was a monopoly of political power, and an exercise of that power by one element of so ciety, that did the damage.

A half-century of abuses stemmed from this monopoly situa tion. Boss Tweed and Jim Fiske were all too symbolic of their era. The people began to grow restless in the face of a repressed South and an all-too-often exploited North and West. A generation of reformers began to grow up who misread the problem as one of too little political power rather than one of too much political power.

118 THE FREEMAN February The late nineteenth century saw the rise of more and more politi cal protest in the Granger Move ment, the Farmers' Alliances, and the Populist Party. The candidacy of William Jennings Bryan in 1896 caught up this protest in a single great crusade composed of all sorts of dissident elements. Even then, most Americans held back from espousing the centrali zation of political power to achieve social reform. Middle-class Amer ica had one of its great strengths in its common sense and remained more than a bit suspicious of the "boy orator of the Platte." The Progressive Backlash As we moved into our present century, however, yet a further change in American attitude was about to occur. As a plutocracy grew ever fatter in its monopoly control of political power, it came to dominate more and more of the American social structure as well. This always happens as power is centralized and the state begins to swallow society. But the old traditional leaders of American society, the middle-class business man, professional man, and clergy man, were increasingly unwilling to allow this to happen. They de cided to fight back. Thus, the Pro gressive movement came into be ing. The· underlying rationale of this middle-class protest movement was an attempt to break up a monopoly of power and to rein stitute the American tradition of diversity, social mobility, and eco nomic opportunity. The goals were tradi tional, the means to achieve the goals were not. Political power was to be taken from the plutoc racy by giving it to tlie 1niddle class. The Progressives were hop ing to break up a power monopoly by creating a power monopoly.

This dichotomy explains the peculiarly Janus-like quality of the Progressive movement. With in both Theodore Roosevelt's New Nationalism and Woodrow Wil son's New Freedom we find the conflicting demand for greatly in creased and centralized political power as the means by which a decentralized, traditional, individ ualistic system might be reinstated and preserved. The tragedy of Progressivism is that these well;., intended people were ·to learn that such ends cannot be achieved through such means. As the state grows bigger, the individual must grow smaller. No more graphic demonstration of this could be made than the example of the legislation of the Progressive era itself. Woodrow Wilson epitomized the Progressive dilemma in a speech to the New York Press Club during the presi dential campaign of 1912: "When we resist the concentration of 1967 AMERICAN FEDERALISM: EROSION 119 power, we are resisting the powers of death, for concentrated power is what always precedes the de struction of human liberties." A fine sentiment and a correct ob servation, but Wilson and the other Progressives were doomed to failure because their vveapon against the concentration of power was the concentration of power.

A Bias Among Historians Once launched upon the central izing road during the Progressive era, America has seemed unable to reverse the process. The crisis of the First World War, the futil ity of attempting to dictate moral ity to a nation with the new com mandment, "Thou shalt not drink," the crisis of depression and the aftermath of economic distress, the great new burst of centraliza tion and social planning of the 1930's, the renewed crisis of the Second World War, and the Cold War of the past twenty years all form part of a continuing pat tern of centralized political au thority. This tendency has been aided and abetted by a new philosophy of government running in a con trary direction to traditional American political life. The Pro gressive era saw the rise of a group of academic figures and so cial thinkers of all disciplines who attempted to re-examine the American past in terms of this new bias favorable to centralization.

Our colonial history and constitu tional era have been re-examined by such historians as J. Allen Smith and Charles Beard and one of their most outspoken current disciples, Merrill Jensen, to reach the extremely present-minded con clusion that the Founding Fathers were a group of economic bandits on the make who suppressed the strivings of the common man. The remainder of American history is similarly utilized to make Jeffer son, Jackson, and a number of others well within the scope of the American federal tradition ap pear as political centralizers and economic protectors of "the peo ple" in a view of history that re verses historical continuity, be gins with the New Deal, and reaches backward in time to prove that it was ever thus and so. As Forrest MacDonald, Robert Brown, Bray Hammond, and any number of other competent historical au thorities have made clear, such was not the case.

Crusade lor Centralization This fact has not deterred the continuing development of the ra tionale for further centralization of political power. The intellectual journey from the milder collec tivism of the Progressive era to the steadily increasing collectiv120 THE FREEMAN February ism of our own time is clearly evident in the evolution of a num ber of thinkers. Walter Lippmann serves as a good case in point. In 1913, Lippmann's A Preface to Politics referred to the state as "the supreme instrument of civili zation." By the time of the early New Deal, Lippmann had come to believe that the state must keep people "economically secure" to preserve democracy. Lippmann's prose is filled with sympathetic ref erences to the people and to tradition. However, the earlier Progressive Lippmann's assump tion that the exercise of state power was justified through popu 1ar participation in government had given way by the mid-50's, as for example in The Public Philoso phy, to the belief that the people could not do the job and had to be limited to a franchise that gave all power to a chief executive and only retained an after-the-fact right to approve or disapprove the executive performance.

The list of those urging such a centralization of authority and re sponsibility is a long one, and the progress of the idea has been rapid. Yet, occasionally, the Amer ican people have resisted this usurpation of their authority, as for example in Franklin D. Roose velt's resounding defeat in the 1937 "Court packing" scheme. The people, with Congress as their representative, made quite clear their belief in the principle of consti tutionally limited and dispersed powers. The nature of this suc cessful revolt against Roosevelt seems all the more important when we recall that it followed on the heels of a great victory in the 1936 elections that had demon strated not only his personal popu larity but that had given him a large majority in both houses of Congress. The report made at the time by the Senate Judiciary Com mittee remains a ringing affirma tion of the American principle of freedom under law.

W here It Leads Such temporary revolts against centralization should not disguise how steadily the concept has de veloped. Any number of horrible examples of the fruits of this tendency come readily to mind in the history of NRA or AAA. The Constitutional violations produc ing the power centralization that occurred during the 1930's were noted by the Supreme Court in both NRA and AAA,. The impact of this centralization upon individ ual freedom is equally apparent. Tailors arrested, indicted, con victed, and sentenced because their price for pressing a pair of pants was a nickel below the NRA blan ket code; farmers fined for plant ing wheat that was consumed 1967 AMERICAN FEDERALISM: EROSION 121 entirely on their own farm; such examples make abundantly clear the sort of thing that happened to the American tradition of fed eralism. In 1905, George Santayana viewed the tide of "centralization and reform" then just beginning to rise in this country and warned, "A reformer hewing so near to the tree's root never knows how much he might be felling." He predicted the course of subsequent events with great accuracy. In Russell Kirk's summary of the Santayana position, the future is outlined with awful clarity: Liberalism, once· professing to ad vocate liberty, now is a movement for control over property, trade, work, amusements, education, and religion; only the marriage bond is relaxed by modern liberals. "The philanthropists are now preparing an absolute sub jection of the individual in soul and body, to the instincts of the majority - the most cruel and unprogressive of masters .... "5 Congressional Attrition The traditional balance of power within the federal government has placed Congress in a role of great authority, well capable of limiting executive centralization. Ameri can history is filled with examples 5 Russell Kirk, The Conservative Mind (Chicago: Henry Regnery· Co., 1960), pp. 508-509.

of that limiting role, a role well suited to Congress since its com position and.· method of election makes it the natural and direct representative of the wide diver sity present within the American federal system. The same period of recent American history which has seen the decline of the Amer ican tradition of federalism has therefore naturally witnessed a steady decline in the importance of Congress and ,a widespread Presidential and burea ucra tic usurpation of congressional pre rogatives. Control of the purse and the ability to make war are perhaps the most outstanding keys to power and thus to sovereignty that .the Founding Fathers cen tered primarily in Congress. The growth of the Presidential office as the tribune of the· people and a steadily burgeoning bureaucracy have come increasingly to subvert that original intention. Alleged "need of· reform" and .the crises of war and depression have pro vided the excuse.

If such a key representative of the American tradition of fed eralism as Congress has suffered such a steady attrition, the con ceptof· states' rights has fared little better. According to the well known authors of a widely used American history survey, "states' rights are now an historical ex hibit, maintained by the Republi122 THE FREEMAN February can party." Things may not be all that bad, but the role of central government as the sole arbiter of men's fortunes does seem to have fewer and fewer obstacles in its path. The "Four Freedoms" It is said that a Scottish na tionalist who refused to support the English war effort during the Second World War was incarcer ated for the duration. When re leased, he was asked how he had fared during his jail term. He replied, "Well, I had the four free doms." As you recall, the first two of those four freedoms, which Roosevelt envisioned for the entire world were freedom of speech and freedom of worship. Both these items are specific guarantees writ ten into our own Constitution. Yet the Second World War changed the nature of these guarantees.

The Constitution treated these rights as derived from a superior power and thus not to be violated by any agency, government in cluded. By the time of the Second World War, such rights had apparently become a grant to the people from a beneficent government. What of the other two "freedoms"? Free dom from want and freedom from fear, of course, are not natural rights at all; and, until our own materialistic, reformist, supercentralizing age that somehow ex pects government to take over all facets of life, they would never have been regarded as any of the government's business at any pre vious point throughout our long heri tage and exercise of American liberty. In any event, the Scottish nationalist was right. He did have the four freedoms available to him in jail. So might we all. The Consequences Mean\vhile, how do such guar antees of governmental largess work out in action? One of the most deeply entrenched items in the new centralization of all au thority and responsibility in Wash ington is the Social Security sys tem. In our own enlightened times of the mid-twentieth century, this nation saw fit to penalize a group of peaceful and frugal Amish farmers, who were forbidden by their religion to participate in such a system, and who therefore had not paid the appropriate so cial security taxes. The govern ment seized the livestock of these simple people for sale at public auction.

Felix Morley quotes a news item pertaining to this event in the new American view of liberty: As the sale began, a young Oberlin College student turned up wearing on his back a crudely hand-lettered sign 1.967 AMERICAN FEDERALISM: EROSION 123 that read, "If government can take these horses today, it can take yours tomorrow - Don't bid!" He had hardly walked a dozen steps before two burly sheriff's deputies grabbed him and hustled him off to their car. The gestapo couldn't have done it more efficiently. The sale went on. G Surely in our system of divided powers the courts would provide relief from such arbitrary exer cise of power, a student of Ameri can government might conclude if he were familiar with the Ameri can tradition of federalism. That is, he would hold some such ideal istic hope until he began to read the discussions of what might be called the judicial "relativity" so common in our age. We now find that even the courts frequently boast of reaching their decisions on the basis of "sociological" evi dence, without being "hampered"

by legal precedent or traditional interpretations of the Constitu tion. It would be difficult to imag ine an attitude more directly cor rosive of the American constitu tional tradition of liberty under law than such a view of judicial processes. Local Governments Diminished This tremendous interference in the affairs of individuals and 10 ~elix Morley, Freedom and Federal ism (Chicago: Henry Regnery Co., 1959), p.151. calities is both cause and effect of another phenomenon of our time, the frequent failure of state and local governments to do their job properly. Federal interference, of course, is itself a great cause of such a collapse of state and local ability and responsibility. But many of the various localities and subunits of the nation are not without blame. Whether a local irresponsibility or a national usurpation occurs first is not the point. What is important is that the people com posing the membership of the state and local governments and private institutions that must pro vide the vitality of the American federalist tradition have both the desire and the courage. to reassert their liberties and the responsibil ities that accompany them. As power has drained from the pri vate sector into the public sector, from the nation at large into Washington, and from Congress into the Presidency, private rights have proven increasingly difficult to maintain. We are told that such a trend is productive of "effi ciency" or "modernization," but it might pay to remember that the most notable examples of a thor oughgoing political centralization that the twentieth century offers are the totali tarian experiments in which "efficiency" and "mod ernization" in the suppression of 124 THE FREEMAN February all human liberty have been the primary results.

The "Service State" Dean Roscoe Pound of the Har vard Law School coined the phrase "Service State" to describe the as sumption of all political and eco nomic functions by centralized government. In such a "Service State" a subtle change has occurred in the meaning of the word free dom. As Professor Hayek phrases it: "To the great apostles of po litical freedom the word had meant freedom from coercion, freedom from the arbitrary power of other men, release from the ties which left the individual no choice but obedience to the orders of a superior to whom he was attached. The new freedom prom ised, however, was to be freedom from necessity, release from the compulsion of the circumstances which inevitably limit the range of choice' of all of us.... "7 If this definition of the Service State seems hard, let a new-styled "Liberal" of impeccable creden tials state the case for us. Sen ator Joseph Clark of Pennsylvania 7 Frederick Hayek, The Road to Serf dom (Chicago: University of Chicago Press, 1944), pp. 25-26.

puts it plainly: "To lay a ghost at the outset and dismiss seman tics, a Liberal is here defined as one who believes in utilizing the full force of government for the advancement of social, political, and economic justice at the mu nicipal, state, national, and inter national level."8 No - wonder the federal system \seems so limited in its objectives and, its means to people with such ambitions! A member of the Atlee cabinet in the socialist government of England a few years ago, Mr. P. C. Gordon Walker, published a book entitled, Restaternent of Lib erty. It epitomizes much of the present thinking that has received wide acceptance on both sides of the Atlantic: "The new State will also directly augment authority and social pressure by new powers of punishment and compulsion. So far from withering away, as in theory both the individualist and the total State should, the new State, if it is to bring into being and serve a better society, must create new offenses and punish them." A restatement of liberty, indeed! ~ 8 Joseph Clark, "Can the Liberals Rally 7" AtlanticM onthly, July, 1953, p.27.

A concluding article to appear}" next month will deal with the future of A merican Federalism.

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN The Buckley Campaign IN 1886 HENRY GEORGE, the Single Taxer, ran for Mayor of New York. He lost. But to this day that partic ular election year in New York City history is known as the year of the "Henry George campaign." Only the most historically learned of men will recall at this date that the win ner in 1886 was a man named Ab ram Hewitt. The reason why George is re membered and Hewitt forgotten is that Henry George, right or wrong, stood for something. Prophecies are chancy, but I would be willing to bet a good sum, with a view to collecting or paying off in Heaven, that the 1965 New York mayoral campaign will be more or less bracketed with that of 1886. The third-place loser, William F. Buck ley, Jr., will be remembered because he stood for something. John Lind say, the winner, will be a name for the more esoteric historians. And these historians will have to look him up in Bill Buckley's own story of the 1965 campaign, The Unmak ing of a Mayor (Viking, $6.95).

Bill Buckley, of course, has nev er written a Progress and Po'verty. But he, as much as anybody else, has recreated conservative journalism in the United States as a force. When modern "liberalism" has finally revealed its impotence to solve the pressing problems of the modern world, Mr. Buckley will stand out as a leader among those who really knew what was the mat ter. So 1965 will be recalled in New York as the year of the "Buckley campaign." Lindsay, like Abram Hewitt, will tend to fade into the shadows. Buckley's book about his cam paign is interesting because the au thor talked sense to the voters and now writes about his experience with the same witty aplomb that characterized his political fencing. But the really astounding thing about Bill Buckley is not so much that he talked sense but that he ac tually made it fashionable to bring intelligence to bear on the prob lems he threw in John Lindsay's face.

This matter of making a cause fashionable is of crucial impor tance. For what is it that makes modern "liberalism" hang on? "Liberalism" can't feed people, for it knows nothing about the individ ual vvellsprings of plenty. It can't stop wars, for it hasn't the least 125 126 THE FREEMAN February idea about what it takes to keep power in the world limited and bal anced. It can't solve the "race" question, for it fails to see that people rise or fall as separate enti ties - given, of course, the equal protection of laws. So what is it that makes the dead corpus of "lib eral" ideas persist? Fashion is what does it, and only a counter fashion will oust the "liberals." What Bill Buckley did in his campaign was to sneak into the af fections of men in subordinate but important mass communication po sitions. He didn't win the top· edi tors of the big journals or the bosses of the networks. But, by being one jump ahead of anybody else in his all-around verbal flair and in his control of his various subject matters, Bill literally forced the political scribes to abandon their stereotypes of what a con servative candidate must say and do.

He Clearly Stood for Something The tip-off on the campaign to come was Bill's experience at the famous Holy Name Society Com munion Breakfast, where he made a speech to some 6,000 New York policemen. A reporter, sure in his mind that Buckley must have said what any stereotyped right-winger would have said, missed the true in wardness of the Buckley talk, and what the reporter turned in to his city desk got "escalated" into a de fense of the Selma, Alabama, police after it had been passed through a few headlines·· and been copied by other newspapers. Luckily a tape of the talk existed, and Bill Buckley exploited the tape. The corrections never did catch up with the distor tions, but the reporters began to get the idea: Bill Buckley could be a danger to anyone who might trifle with his utterances. Only once be fore in the history of modern con troversy had the "liberals" encoun tered someone who could fight back from the record. This was when Whi ttaker Chambers flummoxed his fashionable opposition by actu ally producing the so-called Pump kin Papers.

So Bill Buckley went into the mayoral campaign with a growing reputation for effectiven~ss. He was someone to be feared. When it turned out that he could also be fun, he began to steal the show from John Lindsay (who talked plati tudes) and Abe Beame (who spout ed statistics) . The campaign ended with the tail wagging the dog, which, for headline purposes, was almost as good as a man biting a dog. Once he had achieved a fashion able breakthrough, Bill showed to an increasing audience that good prose could be used to set forth good ideas. The Conservative po sition papers, reprinted as part of 1967 THE BUCKLEY CAMPAIGN 127 the text of The Unmaking of a Mayor, will be mined for many months to come by people who are serious about schools and housing and smog and the water supply and welfare and narcotics control and crime prevention and all the other subjects that bedevil our big urban conglomerations.

A Growing Political Force The conservatives and the lib ertarians are still fashionably written off when it comes to talk ing about the future of U. S. pol itics. Buckley, so it is pointed out, missed his primary objective, which was to keep. Lindsay from winning. In the New York State elections of 1966 the Conservative Party, running an upstate college dean, Paul Adams, for governor, failed to defeat Governor Nelson Rockefeller. And, in elections throughout the nation, "liberal" Republicans won in Pennsylvania, in Michigan, and in Illinois. But the movement of ideas goes on. In both the Buckley 1965 cam paign for mayor of New York City and in the 1966 campaign for gov ernor of New York the Conserva tive Party finished ahead of the Liberal Party, which means that the Conservative swing vote is be coming more important than the "liberal" swing vote. And, in the nation as a whole, so-called lib erals such as Governor George Romney of Michigan and Senator Chuck Percy of Illinois are turn ing to supporters of "independent sector" thinking such as Richard Cornuelle for practical solutions to welfare and home ownership problems. From the standpoint of economic theory, there is only a hairline difference between a Romney in Michigan (an inordi nate admirer of the first Henry Ford) and a Ronald Reagan in California. Both are advocating an approach to economics that would tend to get the State off people's backs.

A Changing Trend The measure of Bill Buckley's success both as an editor and as a political candidate is that very re cent events have made the last pages of his book sound entirely too pessimistic. "I greatly regret the prospecti ve decline of the GOP," writes Mr. Buckley, "be cause the alternative is likely to be a congeries of third parties, adamantly doctrinaire, inade quately led, insufficiently thought ful, improvidently angry, self-de feating sectarian." But need it turn out that way? Isn't it more likely that the next two years will demonstrate the complete sterility of the Great Society? Money from Washington won't solve John Lindsay's problems in New York City. Rent control won't build 128 THE FREEMAN February more apartments in that city. Bus ing children across school district lines won't improve education. Better ideas than these can be found in Buckley's position pa pers, and, out of desperation, the "liberal" opposition will begin to purloin them.

It has already begun to happen. Noone has been more critical of the Conservative attitude toward big city problems than columnist Joseph Alsop, for example. Yet Al sop is now writing that it is the quality of education dispensed in the schools that counts, not the racial ratios. Well, what have the Conservatives been saying all along? Mr. Buckley's book could tell Joe Alsop a thing or two. ~ ~ FABIAN .FREEW AY by Rose L. Martin, (Belmont, Massachusetts: Western Islands Publishing Co., 566 pp., $9.65) and THE DEMO CRAT'S DILEMMA by PhillipM. Crane, (Chicago: Henry Regnery Co., 383 pp., $.75). Reviewed by GeoJ'ge Charles Roche 111 To THOSE AMERICANS .perceptive enough to recognize the dangers of our present collectivist course, one of the questions of consider able interest is: "Who did it, and how was it accomplished ?"Surely the traditional values of this na tion and the attitudes of the American people were not in them selves socialistically oriented.

Thus, some analysis of the person nel and the methods producing the present sad state of affairs would be a definite addition to the im proved understanding of our situ ation, as at least one preliminary step toward reversing the trend. Mrs. Martin and Professor Crane are the authors of two. such analyses, both well-researched, complete, and offering a detailed answer to the "Who?" and the "How?" of America's turn down the mistaken road paralleling European collectivism. To the reader searching for the names, dates,organizations, and activities of the prime movers in the proc ess, these two studies offer a we~lth of information, reaching from the origins ... in the late nine~ tee nth century to the events of the 1960's. ~ THE FREEMAN MARCH 1967 VOL. 17, NO. 3 '" Robert Newell, from his farmstead in Michigan, sees the best hope for better government to be in the self control exercised by better individuals ........ p. 131 '" Nor does author-journalist William Henry Chamberlin expect any allevia tion of poverty from the political jug gling of funds by persons isolated from the problem p. 135 '" A careful student of political affairs in Britain tabs their new Selective Em ployment Tax a major regression toward mercantilism p. 141 '" Those who understand and practice freedom· may breathe new life into the forms of American Federalism, sug gests Dr. Roche, and revitalize the gov ernment as an instrument of justice rather than forced equality ...... p. 144 '" How can we hope to bring freedom to other lands, or even our own, until each of us frees himself from the fears and prejudices of his animal nature?

.......... p. 155 '" For Junior Achievers, Tom Rose points up some of the basic principles and challenges of business life that may be helpful to businessmen of all ages p. 158 '" Bad enough that individuals some times act irresponsibly on their own, thinks Professor Carson, but alas to the society that adopts the welfare formula of organized irresponsibility! ......... p. 164 '" Perhaps no one is better able than Harold Fleming to draw from the com plexities of the pricing of gasoline the true miracle of the market that it is .......... p. 175 '" Professor Walter Gellhorn's When Americans Complain arouses a note of protest from John Chamberlain. .......... p. 185 .'" For somewhat different approaches to the same thing, see Ayn Rand's Capitalism: the Unknown Ideal re viewed by Elizabeth Gillett (p. 189) and Irving Howard's The Christian Al ternative to Socialism reviewed by Norman Ream p. 190 "" And now from his reviewer's chair, George Roche commends Our Western Heritage and The. Scriptural Standard in Economics and Government, both by Edward Coleson p. 191 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

MARCH 1967 LEONARD E. READ PAUL L. POIROT Vol. 17, No.3 President, Foundation for Economic Education Manag'ing Edit01' THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit educational chanlpion of private property, the free market, the profit and loss system, and linlited goYernment, founded in 1946, with offices at Irvington-on-H udson, New York. Tel.: (914) 591 7230. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are in vited in any amount-$5.00 to $10,000-as the means of maintaining and extending' the Foundation's work. Copyright, 1967, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 centsj 3 for $1.00; 10 for $2.50; 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 Pricing of Gasoline." Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

SINCE THE dawn of history men have willingly allowed themselves to be governed by an;imposed au thority· in preference to accepting the responsibility for governing themselves. Consequently, history abounds with men contending for power to rule· others, and all marching under banners of gov ernmental reform and declarations that better governors ultimately produce more desirable social or ganizations. But, if there is one lesson to be learned from history, it is that, regardless of noble ap pearances and lofty claims of idealism, human limitations are such that no human being can safely be entrusted with authority to govern the lives and fortunes of others. The basic philosophy of· consti tutional government above all else expresses public suspicion of the human frailties of those who gov ern.Constitutional philosophy has learned well from history that hu man beings invested with any po litical authority must have such authority precisely defined and constantly limited by counterbal ancing forces. But, constitutional process erroneously presumes that majority consensus automatically 131 132 THE FREEMAN March provides an adequate counterbal ance to restrict the political ambi tions of potential autocrats and insure the civil liberties of soci eties so governed. Authoritarian ism is quick to accept whatever governmental powers a free soci ety is willing to abandon.

The United States outwardly has remained a stanch advocate ·of individual· political responsibility. However, like so many historical predecessors, the citizenry in wardly has been overly and in creasingly generous in bestowing gifts of centralized power and in vesting ever-strengthening author ity in public office. The wisdom of such generosity is subject to de bate in' a society that has placed its faith in popular consensus. But, obviously, human freedom suffers when men abandon the personal responsibility of govern ment and allow themselves to be governed by imposed authority. It is argued by popular consen sus that the complexities of mod ern society have so completely out grown the individual's capacity to understand them that strong cen tralized government by skillful politicians is now needed to ad minister social justice and deal effectively with human problems. Proceeding logically from this premise,. centralized government has experienced little difficulty in effecting periodic increases of already vast authority under pre tense of necessity to cope with contrived emergencies. But, any systematic destruction of human freedom, no matter how quietly and peacefully it is accomplished, ultimately is no less tyrannical simply because the tyranny devel oped by degrees within the politi cal framework of a society that under all circumstances has imag ined itself to be free.

Gradual Encroachment Evolutionary constitutional oli garchiesapparently founded on sound principles of freedom are far more insidious than authori tarian governments that come to power by violence. For unlike vio lent usurpations, gradual proc esses of governmental growth al low the citizenry to retain a false sense of well-being stemming from the belief that they are ac tively participating in government through public elections and there by exercising adequate restraint on governmental excesses. Ironi cally, it is the societies th;lt most ardently extol personal freedom and are the most resilient adver saries of crude forms of political usurpation that are most easily deluded and subjugated by subtle concentrations of governmental power. When an autocrat comes to power through usurpation, he es1967 GOVERNMENT BY BETTER MEN 133 tablishes a government and arbi trarily decides how much author ity he will exercise. However, his governmental policies continue only as long as he retains absolute power of enforcement. Fortunate ly,political· power implemented by force is seldom of long duration, for the tremendous counterbalanc ing force of human dignity in sures that those subjugated will eventually depose the tyrant and with him· all authority associated with his regime.

No such dramatic course is open to victims of constitutional tyran: ny for constitutional process takes no direct interest in the personali ties involved in governmental au thority. Rather, the constitutional system, and its periodic corrup tion,concentrates vast powers in political office and hopefully chal lenges the voting public to fill the authoritarian power structure with wisely chosen politicians. One candidate might declare his intention to use the vested author ity of political office with some what more discretion than an other. This provides the voting public with motivation in the delusion that· by supporting such a candi date they are casting a ballot for human freedom. But whatever the outcome of a given election, the constituted political power in herent to the contested office is in no way diminished by any tempo rary lack of use, and in due course, such authority not only is fully utilized but extended by more am bitious office seekers.

Despotism can never subjugate a people who responsibly under take to govern themselves; and conversely, nothing can save a society from despotism if, in the name of self-government, the peo ple willingly impose elective au thoritarianism on themselves. When one considers the incredible extent to which the powers of elective and appointive public of fices have grown, and are continu ing to grow with· the full consent of the American people, we are in deed fortunate that a more calam itous despotism has not yet en gulfed the Republic. A Degenerate Form of Freedom Everyone is well aware of the size, scope, and increasing author ity that political government has gained at the expense of individ ual liberty. Few seem overly con cerned. ~ost prefer to trust the adage that better governors ulti mately produce more desirable so cieties and logically assume that bigger government simply re quires a more competent political oligarchy. The electorate has come to feel that individual responsi bility· begins and ends with voting for candidates that seem best 134 THE FREEMAN March qualified to utilize effectively the tremendous power that unwitting ly has been concentrated in politi cal office. The concept of personal freedom has degenerated to such a low ebb that liberty is now con sidered to be synonymous with su perficial processes that attempt to place better men in an insatiably authoritarian government.

It would be a disheartening commentary on the· social and moral progress·· of any nation to find a governmental structure that confiscated one-third of the na tional income; that diverted for political purposes one-fifth of the gross national product; and that directly, indirectly, or through conscription, provided employment for one-fourth of the citizenry. But it is doubly disheartening to find that a nation with its tradi tions firmly rooted in the respon sibility of personal freedom, has deliberately installed such a gov ernment. Placing better men in that government might appear to be a worthy objective but free so cieties are completely dependent upon better government in men. An Air of Respectability Political freedom can exist only where men. conscientiously accept the responsibility for governing themselves. When consensus no longer expresses a desire to retain the responsibility of solving human problems within the frame work of free social intercourse, constitutional process simply lends an air of respectability to govern mental tyranny. Political cam paigns, by the very nature of the totalitarian offices the aspirants seek to fill, are resolved by transi tory majorities skillfully gathered by demagogic promises to use the vested powers of political office to favor certain segments of a soci ety at the expense of others.

If a man rules himself wisely, it is all that can be expected of him, for no man is morally capable of doing more. But if men are not morally qualified to govern others, nei ther are they morally released from the responsibility of govern ing themselves. The degeneration of moral government and subse quent increase of formal political government precisely measures the degree to which the self -reli ance, self-respect, and human dig nity of a society has eroded. Rather than zealously searching for more capable politicians, those who seek liberty must instead un dertake the prerogatives of self sufficiency and the moral responsi bilities of self-government. The functions of formal political gov ernment will then automatically be restricted and systematically reduced until at last government is confined within the moral capa bilities of human limitation. ~ WILLIAM HENRY CHAMBERLIN Men, Not Money, Will Overcome Poverty IT IS A COMMON DELUSION that any problem, however deeply rooted in human psychological weakness es and frailties, can be satisfac torily solved by a sufficiently large appropriation of public funds. This is especially true as regards the so-called war on pov erty. Not content with the huge sums already appropriated or in dicated by the lavish spending programs of the 89th Congress, some ardent crusaders in this field want to go much farther, regardless of the effects on the shrinking value of the dollar or the fortunes of the majority of Americans who work for a living.

A group of men identified with "civil rights" and "labor" causes, including a few clergymen and economists, headed by A.Philip Randolph, president of the Broth erhood of Sleeping Car Porters, recently came out with a proposal 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. for the' government to spend the modest sum of $185 billion for a drive to "end poverty in the next ten years," mostly by vastly in creased contributions to existing items in the antipoverty program plus assuring a guaranteed annual wage, earned or not. This guar anteed annual income, on top of lavish welfare outlays, would re move the last serious incentive to work for the less skilled, while its cost would help to depress the standard of living of those who do work closer to the poverty level.

Yet, the proposal also is favorably mentioned in a recent book by, Walter W. Heller, chief of the Council of Economic Advisers in the Kennedy and Johnson admin istrations. Another ex-chief of the Council of Economic Advisers, Mr. Leon Keyserling, went along heartily with the $185 billion spending budget. Somewhat in the spirit of the dentist who assures his patient that the next turn of the drill in his molars will not hurt, 135 136 THE FREEMAN March he confidently asserts that the outlay of $185 billion will not hurt anyone because it will come out of the natural growth of na tional income. This is the spirit of Dickens' character, Micawber, ap plied to finance. But, suppose the national income· turns down in stead of up; this has been kpown to happen. A columnist who is noted for his freehanded attitude toward spending public funds, either for wars and expensive defense proj ects or for huge schemes of ur ban rehabilitation, warns that our cities are headed for a hopeless future unless tens of billions are somehow mobilized to rehabilitate them. The view is often expressed that the poor are being short changed by the war in Vietnam, not because they are contributing much to its cost, but because they are missing the bigger handouts that would otherwise come their way. This is used as. an argument for higher individual and cor porate taxes, though such taxes would automatically dry up much of the consumer and investment spending which, together, are largely responsible for maintain ing present jobs and creating new ones.

Before this hasty assumption that big government is both able and obligated to abolish poverty by writing more and bigger checks becomes firmly embedded in the national consciousness, some les sons of experience about poverty, its causes and cures, should be considered. The Relativity of Poverty First of all, the word poverty is relative. What is considered poverty in the United States would be almost unimagined wealth to a large part of the population in Africa, Asia, and Latin America. One doesn't find cars or television sets in the city slums of peasant villages of India, Nigeria, or Bra zil; but cars and TV sets are by no means unusual possessions of wel fare recipients in the United States. Pure water, electricity, and other public services are taken for granted in North America and Western Europe; not so, however, in culturally and economically re tarded areas of the world. Second, economic progress, even economic movement, has always been associated with economic sys tems employing material incen tives, such as differential pay for work of higher skill and responsi bility. The nineteenth century Eu ropean explorers who penetrated the interior of Africa found soci eties of almost incredible· back wardness, unfamiliar even with such a simple device as the wheel, societies which had stagnated for centuries. Without condoning any 1967 MEN, NOT MONEY, WILL OVERCOME POVERTY 137 sins of Western and Arab new comers, especially in connection with the slave trade and some cases of gross exploitation of na tive labor,it may fairly be said that every step of African prog ress, in economic development, in education, in the building of a system of communications, was due to contact with the dynamic Western methods of civilization.

Even in communist-ruled states, the utopian ideal of paying every one equally and sharing the prod ucts of general labor equally has long· been discarded as hopelessly unworkable. Wage and salary scales and perquisites of office are at least as rigidly graded, on an ascending and descending scale, in communist as in noncommunist states. ·The difference is that the industrial noncommunist states produce a much larger and more varied output of quality goods for everyday consumption, and are far ahead in agricultural productivity. Communists have tried· in recent years to· maintain inequalities in reward,and to mix some ele mentsof the market system with their planned economies, but their efforts have been fumbling and ineffective. Rigid centralized over all planning, and the free market with its swift adjustment to changing consumer tastes and preferences, are like oil and water. They do not mix.

Now, if payment is unequal, some people· obviously· will be bet ter off than others. Modern in dustrial society has been' described as affluent; and in many ways it is. Invention, technology, manage ment organization along stream lined efficiency lines, the use·· of computers and other up-to-date equipment, automation.....;. all these and other modern developments, when free to function, make it possible to produce more goods for more people than the industrial system could turn out at· any time in the past. But no society, not even Ameri ca's, is sufficiently affluent to pro vide for everyone the best of everything.- There are, and prob ably always,vill be, a few ex tremely costly luxuries, yachts, mansions, jewelry valued in thou sands of dollars, which are' only within the reach of an economic top layer of the very rich. A large and enlarging middle class, in the economic sense of the term, a group that includes increasing numbers of manual workers, has access to a wide variety of minor luxuries and solid comforts.

Variability Among Individuals Under any workable system of differential incentives there will always be a bottom tenth, or a bottom third, or whatever fraction may be chosen, that will bema138 THE FREEMAN March terially less well off than the aver age. It is not only inequality of recompense that creates this situ ation. It is the infinite inequality to be found in human character, human ability, human traits of all kinds. Two men may start out with the sameeapital, the same amount of land, th:e same type of small manufacturing or trade establish ment. The more competent of the two will forge ahead of the other. It is as ,simple and inevitable as ,vater running downhill. One of the great illusions of modern times is that some impersonal foree-government, society, or whatnot-is responsible for .pov erty and that this same force has the power and obligation to cure it. The favored remedies are huge handouts of public funds or at tempts to force up money wages out of line with market conditions by way of minimum wage laws or through the exactions of monopo listic trade-union organizations.

Even more drastic measures have been advocated, such as the nega tive income tax, under which the state would arbitrarily raise the incomes of all families that had failed to achieve a certain income level. What is overlooked is that pov erty usually stems from personal inadequacies of one kind or another, which no amount of outside subsidies will correct. Poor hous ing is often denounced as a breed ing ground of crime, vice, and poverty, and is not to be defended on any ground. But here, the evil is easier to identify than the remedy. For, when modern, tax payer-subsidized housing becomes available to slum dwellers, the re sult all too often is quick degen eration into a new slum, with elevators made unsafe by thugs, facilities damaged or destroyed by vandals. In other words, it is people as they are who make slums what they are. Why Remedies fail Because money cannot buy those traits of individual character and initiative, many of the remedies for poverty which have been en acted or proposed; from sincerely humanitarian motives, miss the mark or lead to results the very reverse of what is expected. Mini Inurn wage legislation is the surest known device to stimulate unem ployment, especially in the adoles cent age group, where work would be a most desirable antidote to juvenile delinquency. It is no mere coincidence that unemploy ment, especially among Negro teen-agers, has risen in a period of sharp boosts of the minimum wage level. No employer can pay help more than its economic worth 1967 MEN, NOT MONEY, WILL OVERCOME POVERTY 139 and stay in business. Yet, that is what the minimum wage law in many cases requires.

Extravagant welfare payments are a potent cause of unemploy ment, when they approach· the wage levels paid for unskilled work. If the choice is between a life of subsidized idleness on relief or· earning a few dollars a week more by putting in a day of regu lar work, there are bound to be people who will opt for the check that comes without work. International Ramifications It is becoming an accepted dog ma that the richer nations of North America and Europe owe an annual contribution in "foreign aid" to the poorer countries of the southern hemisphere. But experi ence has shown that there are the same variations among nations as among people, with the more ener getic managing to do without this aid or quickly outgrowing the need for it and others absorbing large handouts year after year without any visible improvement in their status. Finland is a striking example of a country that proved able, after two unsuccessful wars, to pay a substantial indemnity to the So viet Union and regain a fairly satisfactory standard of living without foreign subsidies from any source. Hong Kong, the British colony on the southwest coast of China, is an even more vivid object lesson in the .. virtues and possibilities of self-help. Hong Kong is a picturesque rocky island with a small adjacent hinterland, both island and hinterland devoid of natural resources, apart from a fine natural harbor.

Commercial, banking, and ship ping enterprises, attracted by the financial and political stability as sociated with a government lim ited primarily to police protection, transformed Hong Kong from a barren rock into one of the world's great international ports. And since the communist take-over on the Chinese mainland, Hong Kong has experienced another transfor mation. The city is bursting at the seams with industrious Chinese who voted against communism with their feet-by running away. And these Chinese, finding work at the lowest wages and under the hardest conditions preferable to their lot under communism, have enormously expanded Hong I{ong's trade and industry. The city has become the cosmopolitan shopping center of the Far East, with suits of the finest quality and expertly tailored available at short notice to the traveling for eigner. And this recent significant expansion of Hong Kong was achieved without foreign help of any kind. It was just a matter of 140 THE FREEMAN March people with long experience in trade and ·handict'afts, denied a fair return for their labor at home, pulling up their sleeves and work inghard in a new environment of freedom.

Success and failurf! American aid to Western Eu rope is now a· matter of ancient history. Here it was mainly a mat ter of starting again at full speed economies which had been stalled by war damage. And there are non European countries-Israel and Taiwan are good examples-which have freed themselves from de pendenceon outside help. On the other· hand, India, Indonesia, and the Congo, among other nations of Asia and Africa, furnish a depress ing spectacle of inability to make both ends meet no matter how much foreign aid is poured into them. The pioneer settlers of the United States received no foreign development aid and expected none. All they wanted from foreign powers was independence and from their own government to be let alone to go as far as their indus;., try and ability would carry them. They were unconsciously putting into effect the only kind of anti poverty campaign that is guar anteed to produce results: intel ligent, efficiently-directed, hard work.

The Human Factor in the Problem of Poverty The human being, not the dol.;. lar, is at the heart of the prob~em of poverty, domestic and interna tional. There are individuals who will succeed with little or no out side help, because they seize every opportunity to help themselves. There are others who will founder no matter how many benevolent helping hands are extended to them, because the inner drive· to move ahead in a competitive world is lacking~ Poverty will never be conquered, although it may be universalized, by putting on it a huge price tag, payable in public funds~· Indeed, the whole· idea of imposing on the productive' part of the community an ever heavier burden of sup porting the unproductive is fore doomed to failure. The best prospect-not of abol ishing poverty, an unrealistic· goal, but of diminishing and alleviating it-is to throw the fewest possible roadblocks in the way of thrift and industry. A given amount of capital, saved and invested in job producing' enterprises, will do far more to help· the poor who can be helped than the same amount of capital seized by Federal, state, and local governments as taxes and distributed through bumbling bureaucratic agencies for supposed welfare projects. + -Latest in Britain's trend to~vard. socialism GEORGE WINDER A TOTALITARIAN .REGIME never ac quires power in a democratic state as suddenly or as completely as communism conquered Russia, but Britain, nevertheless, is driven to ward total socialism by a terrible inevitability which follows con tinuous inflation. If this strikes a note of despair, it must be put down to the loss of freedom· from which the British people have long suffered.

The latest manifestation of·· so cialistic drift is the Selective Em ployment Tax which is levied against wages to provide subsidies for export industries, a unique de parture from the long-standing practice of taking from the rich to give to the poor. The alleged justification for this discriminatMr. 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. ing tax is that those· who (lay it produce only services, but those who receive it produce tangible products ,vhich add to our real wealth and can be exported. Thus, we renew in the twen tieth century the old mercantilist notion that some industries are better for the nation than others: and perhaps they are - if the na tion is hopelessly committed to inflation. This latest step in Brit ain may serve as warning to other peoples dedicated to inflation as a way of life.

All employers in Britain, al ready required to withhold from wage payments the National In surance Tax and the Pay-As-You Earn Income Tax,must now· also pay a weekly Selective Employ ment Tax of 25 shillings ($3.50) for men and half that rate for women. That is the end of the 141 142 THE FREEMAN March matter for any employer in a serv ice industry. But the employer who is manufacturing commodi ties, at the end of the accounting period, will receive his selective employment tax payment back in full plus a bonus of 7s. 6d. a week per employee. Also, the govern ment expects to retain some £200, 000,000 annually from the pro ceeds of this imposition. This tax violates the basic can ons of taxation. It is not equal or convenient or efficient; but revenue is not its primary pur pose, that being,' to correct an economy grown steadily more wasteful and chaotic over the past twenty years or more .. It is sup posed to shake laborers out. of the industries which the govern ment considers nonessential and move them to "essential" indus tries.

Consumers Give Direction In a. free market economy with a sound. monetary system all in dustries arrange their production in response to the way individuals choose to spend their money. In other words, workers are em ployed in industries in accordance with the demands of the consumer. Every penny spent is a·. vote as to which industry should expand and which shall slow down its output. But with the kind of full em ployment •.achieved and sustained only by continuous inflation, this monetary guide tends to fail. Hid ing the first hints of unemploy ment in any industry under a fresh supply of irredeerrlable currency leaves the entrepreneur with no reliable guide as to where it is most desirable to employ labor, or any other scarce resource. The economy, under such conditions, produces many things that are absolutely wasteful and neglects the production of those that are most needed. Consequently, the government further intervenes to correct the harmful consequences of its infla tionary policy, and we have such measures as the SelectiveEmploy~ ment Tax. The result is. an ag gravation of the hardships stem ming from inflation and a post poning of the necessary correc ti ves that can only come as prices and wages are freed to reflect accurately the true market situa tion.

In Sussex where I live, for ex ample, there are few manufactur ing industries. The shopkeepers, the hotelkeepers, the lawyers, the doctors, the dentists, the. hair dressers, the gardeners, the. do mestics, and numerous others who render services to the community must pay this tax. Some employers doubtless will be squeezed and obliged by the tax to dismiss less efficient employees -especially the 1967 THE SELECTIVE EMPLOYMENT TAX 143 very young and the very old. But instead of leaving their homes and migrating to the Midlands in search of a job, these persons are more likely to take unemployment pay under the National Insurance scheme. If the factories of the IVIidlands are to attract additional workmen, they must expand their investments. But here again, in flation discourages saving and in vestment, and government spend ing has created this additional problem that it now must try to solve.

The new tax law provides that charities such as the Salvation Army must pay the tax, but it will eventually be returned to them, so that the government is taking nothing from charity but a forced loan which pays no interest. Farm ing, fisheries, and transport work ers are placed upon a similar foot ing. We can safely say that, in the hope of forcing labor into the necessary jobs, about half the country is being taxed for the benefit of the other half. Discriminatory Powers But the greatest danger from this tax lies in its potentiality for discrimination. By it, every industry in the country is placed at the absolute mercy of the gov ernment. The well-known financial cor respondent, George Schwartz, writ ing in the Sunday Times, puts the matter this way, "I have not the spirit or the build of a dictator, but give me the power inherent in this tax, and I would engage to make the whole economy dance to my tune. I could expand or con tract industry at my will. I could alter the economic balance between regions, sexes, and ages; I wouldn't care who owned what. All private property would be under my sway."

Mr. Schwartz is quite right. Any government which can im pose a tax of 25 shillings on one industry and a subsidy of 7s. 6d. for the benefit of another can easily quadruple the penalties and benefits and do what it likes with industry. This much is certain, that wherever you have money which can lose its value by inflation you will eventually get a chaotic econ omy with nothing to guide its production. Sooner or later, the government is likely to intervene with corrective weapons which be long to a socialist dictatorship the inevitable consequence of con tinued inflation. The only appro pria te corrective is a sound mone tary and fiscal policy - plus faith in freedom. ~ AMERICANFEDERALISM:FUTURE GEORGE C. ROCHE III A SOCIETY is free only to the ex tent that its individual members are free. In short, if men are to remain free, self -government be ing a very important freedom, they must scrupulously maintain con trol of government. That is the essence of the American tradition of federalism. The assumption that a good cause allows govern ment to do anything needed and that the government should decide what constitutes a good cause is the totalitarian mentality in ac tion.

When· these totali tarians are well intended, they are no less dangerous. We are all to become equal, not in our traditional Amer ican equality of opportunity but in the new sense, featuring equalDr. Roch~, who has taught history and philos ophy at the Colorado School of Mines, now is a member of the staff of the Foundation for Economic Education. 144 ity' of condition. This is the es sence of the new paternalism. In the words of Willmoore Kendall: "The equality of the DeClaration is the equality to which, say, Abra ham Lincoln was born-an equal ity that conferred upon him mere ly an equal right to compete with his fellow men in the race, as we run it here in America, for what ever prize he in his equality chose to go after. Not so the egalitarian ism of the Liberals. It must pick Lincoln up at dawn in a yellow bus with flashing lights, so sav ing him shoe leather, whisk him off to a remote consolidated school (financed, in all probability by inflationary bonds), feed him a free lunch, educate him for de mocracy, protect him from so...

called concentration of social and economic power, eke out his in come by soaking the rich, doctor 1967 AMERICAN· FEDERALISM: FUTURE 145 him, hospitalize him, and finally, social work him...:-if, as he prob ably will now, he turns into a juvenile delinquent. Equality, by offering him ·the rewards of self reliance, encourages·· him to be come, above all, self-reliant; egal itarianism encourages· him to play the angles."! With remarkable foresight, Toc queville foresaw the planner's state which would leave no room for diversity, creativity, or indi vidual difference; and he warned repeatedly that the only safe guards against such a road were free institutions and private and decentralized forms immune from the planner's touch. He told a France soon to be ground beneath the heel of a Napoleon III that the local institutions he had seen in America were their last best hope. He warned that unlimited power is in itself a dangerous thing because God alone is com petent to exercise such power.

France did not listen; let us hope America will. Then everything includes itself in power, Power into will, will into appetite. In these words, Shakespeare de scribes the unenviable progression of human beings who would play God. The problems of power and 1 Willmoore Kendall, The Conservative Affirmation (Chicago: Henry Regnery Co., 1963), pp. 17-18. appetite are· indeed closely related to our situation in America. As Franklin emerged from the Con stitutional Convention, a woman tugged on his, sleeve and·· asked what system of government had been proposed for the American people. His famous reply remains timely after nearly two··centuries: "A Republic, if you can keep it." Later amplifying his remarks, he predicted that the new nation would be well administered for a number of years, "but only end in despotism, as other forms have done before, when the people shall become so corrupted as to need despotic government,being incap able of any other."

The Appetite for Power In the problem of power and ap"" petite we have another of those chicken and egg difficulties. Does the excessive centralization of power produce such an appetite to be satisfied that all desire for self help is destroyed? Or is it appetite that so weakens moral fiber as to make centralization of power in evitable? No matter which comes first, the individual citizens of this nation must make the moral choice to control appetite if the trend to ward centralization is to be re versed. This is the problem posed by Irving Babbitt forty years ago in his book entitled Democracy and Leadership, when he warned that 146 THE FREEMAN March "Americans must learn to talk less of their rights, more of their duties." Socialism-through-welfarism is much harder to combat because of its humanitarian and democratic vocabulary than is socialism through-nationalization, yet one is quite as deadly to liberty as the other. The collectivist, of course, takes full advantage of the mis leading semantics available to the advocate of the welfare state, mak ing his intent as innocuous as pos sible. Writing at the turn of the century, George Bernard Shaw em phasized this Fabian approach in his book, The Intelligent Woman's Guide to Soc'ialh;m and Capital ism: "I also made it quite clear that under socialism you would not be allowed to be poor. You would be forcibly fed, clothed, lodged, taught, and employed, whether you liked it or not. If it were discovered that you had not character and industry enough to be worth this trouble, you might possibly be executed in a kindly manner; but whilst you were per mitted to live, you would have to live welL"

All of the advocates of such a system seem to believe that human nature can be molded if the plan ner has enough control. A distin guished American historian has made the remark that "no man who is as well abreast of modern science as the Fathers were of eighteenth century science, be lieves any longer in unchanging human nature." He goes on to say that the solution of modern prob lems, supposedly by "modern sci ence," must not be hampered by constitutional limitations. 2 Such men usually also place emphasis upon an exclusively "economic basis of politics" as the sole moti vating force of man's actions. They are fond of calling those who do not approve of their reforming schemes materialists, yet the true materialists are these men who see man only as a belly to be filled and in the process ignore the institu tional and individual varieties of human nature that demonstrate man's dignity. As has often been suggested, political life will tend to absolutize itself unless there are some values outside the system values not subject to change ac cording to man's political whims.

A Need for Better Democracy The answer given to all prob lems in our time is "more democ racy." The real problem, of course, will hardly be solved by more of the same, that is, more democracy, but might well be solved by better democracy. Better democracy would 2 Richard Hofstadter, The American Political Tradition and the Men Who Made it (New York: Vintage Books, 1948), p. 16.

1967 AMERICAN FEDERALISM: FUTURE 147 be defined not as a greater em phasis upon the lack of human dignity, but as re-emphasis of the concept of individual Godgiven in tegrity, dignity, and human vari ety, protected through man's insti tutional framework, as, for exam ple, in his right to private prop erty. Professor C. Northcote Parkin son, in The Evolution of Political Thought, has traced the direction of democracy throughout the world in the past 200 years toward such an extension of human appetite to be satisfied by political processes that the original democracy has turned to socialism, with its inev itable centralization ultimately re sulting either in out-and-out dic tatorship or in Hilaire Belloc's "Servile State." Professor Parkin son, however, admits that Amer ica, though it has not gone in a different direction than the rest of the world, has at least lagged be hind on the disastrous timetable he describes. The very diversity, decentralization, and limitation of power inherent within the Ameri can tradition of federalism is pre cisely the reason that we have done as well as we have in resisting such a trend.

Equality by Force A socialist has little to contrib ute-in the realm of genuine polit ical ideas. Instead, he often merely insists that the liberal notion of political equality present in democ racy is meaningless unless coupled with an enforced economic equal ity. As soon as it is decided that economic equality must be en forced through political processes, socialism and the welfare state be come two peas in a pod with cen tralization and a collective ethic as the central facts of both systems. Such assumptions soon lead to such preposterous distinctions as the attempt to draw the line be tween human rights and property rights. Of course, no such distinc tion can be made. The Founding Fathers grasped a fact that the modern collectivist apparently can not see: A man without property rights is a man without the right to the product of his own labor and is therefore not a free man.

Property rights are human rights. So, the welfare state assault upon property leaves man neither his material welfare nor his freedom. Governmental subsidies and· inter ventions of every kind, no matter how wrapped in semantic nonsense about "democracy" and "humani tarianism," are essentially coer cive and therefore an assault upon voluntary actions of society and an assault upon freedom. Ultimately, society's loss of free dom becomes the individual's loss. More and more, the conflict has become a struggle of the individ148 THE FREEMAN March ual versus the· state in an attempt to answer the question· of whether the individual exists for the state or the state exists for the benefit of the individual. Lessons We Might Learn from the Fall of Rome Cyclical theories of history , of the rise and fall of civilizations, are popular in our time. The paral lel is often made, with consider able validity, between the fall of the Roman Empire and what may prove to be the decline of our own civilization. It might be recalled that the greatest strength and vitality of the Roman Republic stemmed militarily, economically, and socially from the sturdy mid dle-class yeoman farmer who strongly valued his own dignity and the institutions surrounding it-above all, family and property.

These are the men who made Rome's legions unbeatable and Rome's economy sound. It is to state a truism to ;repeat the tale of Rome's decline: the great absentee-owned estates -cen tralizing all economic power. in a few hands and driving the yeoman farmer from the soil, the vast bu reaucracy and crushing taxation that literally destroyed the Roman middle class, the great mob of un employed, without profession, dig nity, or purpose, who filled the streets to clamor for bread and circuses. It is the very collapse of the old Roman character, the de struction of the sense of human dignity, the elimination of the middle class, and the tremendous centralization of economic and po litical power that produced these effects that ultimately destroyed one of the most enduring and suc cessful experiments in government in the history of the world. The destruction of human dig nity and personal freedom brought about by centralized political con trol and the assault upon private property is hardly conducive to the variety and vitality of individ ual personality and private social institutions that are necessary to preserve a free society.. The name less, faceless, mass man increas ingly produced by modern society is the greatest possible threat to purposeful human existence.

Screwta pe gets the message across quite plainly: "You remem ber how one of the Greek dictators (they called them tyrants then) sent an envoy to another. dictator to ask his advice about the prin ciples of government. The sec ond dictator led the envoy into a field of grain, and there he snicked off with his cane the top of every stalk that rose an inch or so above the general level. The moral was plain. Allow no preeminence among your subjects. Let no man live who is wiser or better, or 1967 AMERICAN FEDERALISM: FUTURE 149 more famous, or even handsomer than the mass. Cut, them all down to a level: .all slaves, all ciphers, aU nobodies. All equals. Thus ty rants could, practice, in a sense, 'democracy.' But now 'democracy' can do the same work without any other tyranny than her own. "No one. need now go through the field with a cane. The little stalks will now of themselves bite the tops off the big ones. The big ones are beginning to bite off their own in their desire to Be Like Stalks."3 Ample Warnings 01 Excesses Have Gone Unheeded Standardized ciphers produced by such a system are scarcely quali fied for the high degree of self ..

government required by the Amer ican tradition of federalism. Toc queville warned that the quantity of information, interest, and dis cernment necessary to make our system work was great indeed, and warned that should that dis cernment ever languish, Ameri cans would fall beneath the yoke of a centralized administration. We still have many freedoms and many individual and institutional differences left to us by our leg acy. But, as David Hume once wrote, "It is seldom that liberty of any kind is lost all at once." Daniel Webster warned long ago 3 c. S. Lewis, The Screw tape Letters (New York: Macmillan Co., 1962), p.165: that if this nation, with all of its unique opportunities, should ever prove unable to preserve repre sentative government, then the world's hope of achieving lasting liberty would be .slight indeed. Half a century after Webster, Lord Acton speculated upon the possibility of maintaining a sys tem of representative government and genuine .• liberty·and found the key to that system in the limita tion and diffusion. of .power exem plified by American fede·ralism.

In our .times, that system is under heavy attack. What makes this attack often doubly danger ous is presented in, the words of Dean lnge : "History seems to show that the powers of evil have won their greatest triumphs by capturing the organizations which were formed to defeat them, and that when the devil has thus changed the contents of the bot tles, he never alters the labels. The fort may have been captured by the enemy, but it still flies the flag of the defenders."4 As a case in point, consider the misnomer of "Creative Federalism," the label given to',. the grants-in-aid pro gram, whereby centralized spend ing and centralized decision-mak ing is undercutting state and local government. What such a system 4 Dean lnge, Christian Ethics and Modern Problems (London: Hodder and Stoughton, 1930), p. 138.

150 THEFREEMAN March might be creating is open to dis cussion, but it surely isn't fed eralism. The Tradition Re-examined and Steps· Toward Restoration In the face of such semantic erosion, it is necessary to under stand· thoroughly our American tradition of federalism in all of its historical continuity. Such an understanding is the first step in the resuscitation of the tradition. The second step is to realize the great vitality that the tradition retains in our time despite the attacks upon it. The electoral col lege, with its emphasis upon block voting for states, is clearly not in the nose-count pattern of democ,.. racy espoused today, yet the in numerable proposals for "reform" of the system have remained in the planning stage. Despite all the talk about direct, unlimited de mocracy, this nation has never in its entire history had a single direct all-national vote on any elected official or issue, not even on the adoption of the Constitu tion itself. American political parties continue to demonstrate the vitality of American federal ism. Our parties are unique. Un like the doctrinaire political parties of other nations, ours are ex tremely flexible and contain with in their ranks room for all sorts of local and regional attitudes and interests in both the social and economic spheres.

Democratic reform is often best conducted on local or state levels, notwithstanding views to the con trary by the central planners (who apparently feel that nothing worth while ever gets done unless they do it). In the words of Felix Mor ley: "Indeed, one of the great virtues of federalism is the power given to the constituent units to adopt experimental measures in accordance with the wishes of local majorities, without imposing such developments on sections not ready or willing to go along ... political democracy is thus localized or qualified, but in no sense denied under the American system."5 This is what William Penn called keeping "the power in the people," and encourages the individual cit izen to exertions for his· own sake without the stultifying effects of centralized control. The can of beans which the grocer exchanges for the house wife's thirty cents, because he would rather have the thirty cents and the housewife would rather have the can of beans, epitomizes the billions of transactions that constantly occur in this country without centralized planning or control. The multiplicity of such 5 Felix Morley, Freedom and Federal ism (Chicago: Henry Regnery Co., 1959) , p.54.

1967 AMERICAN FEDERALISM: FUTURE 151 individualized decision-making in the economic and social realm re flects the genius of the typical American for running his own business better than the central planners can do it for him. Signs of Strength and Recovery Not only is there a lot of vitality left in the old system, but there are signs as well of a developing pressure for increased decentrali zation in American political life. In recent years, the state Chief Jus tices Conferences and the Amer ican Bar Association, both organi zations of tremendous influence in American legal and political life, have been insisting with increas ing intensity that the time has come for the Supreme Court to begin to exercise judicial restraint and to return to a more strict interpretation of Constitutional law. The value of the federal con cept is becoming increasingly pop ular in other places as well. Peter Drucker,in his Concept of a Cor poration, has demonstrated the tremendous success of the federal principle when it is applied in American big business. It seems that decentralization of decision making and the growth of individ ual responsibility which this pro duces ·is a very effective way of getting things done in the busi ness world. Well, it should be; Americans have a lot of experience with that approach. We've been doing it for 350 years.

Another sign of the continuing vitality of the American tradition of federalism is the strong local and institutional loyalty which persists among the American peo ple. Private schools, church or ganizations, geographic areas, and ethnic groupings have resisted the attempt to make one big "great society" out of them. Defining community as a "union of men, through love and common interest for the common welfare," Russell Kirk has spoken in defense of such diversity: "Community and collectivism are at opposite poles. Community is the product of voli tion; collectivism of compulsion. Community stands for variety and intricacy; collectivism, for uni formity and arid simplicity."6 Americans have also continued to insist that the church and not the state is the center of morality. It is one of the founding fathers of the modern totalitarian state, Nikolai Lenin, who re·garded re ligion as "the opiate of the peo ple," but it is one of the founders of our American tradition of fed eralism, George Washington, who insisted that religion is the "in dispensable support of political prosperity." As T. S. Eliot suc6 Russell Kirk, Prospects for Conserv atives (Chicago: Henry Regnery Co., 1956), p. 129.

152 THE·FREEMAN March cinctly phrased it in The Idea ofa Christian Society, "Reject God and you might as well pay your re spects to Hitler or Stalin." If Wil liam Penn's warning that "man ultimately will be governed by God or by tyrants" is correct, the American insistence upon the con tinuing diversity and vitality of American religion suggests that the people of this nation are un willing to accept·· the tyranny of centralized control. Self-Discipline by Free Men If the federal system is to stand as a barrier against the expansion of the state into more and more of American life, the self-disci pline of free men must be exer cised; and self-discipline is a moral question· that depends upon the character of the indi vid ual. People ultimately get the· govern ment they deserve ; and whether the control by the national gov ernment is the cause or the effect of a decline in the American be lief in .self-help, the best defense against a further extension . of governmental authority and the best means of rolling back the tide is a reassertion of the individual moral ethic. In a word, if we would preserve liberty, let us begin at home. The point of the federal system, as the Founding Fathers, Tocqueville, and any number .of other political thinkers have made clear, is the protection of the franlework within which these in dividual choices may be made.

While deciding where we go from here, we might also recall that the collective idea has suf fered its reversals as well in mod ern times. The economic and po litical troubles plaguing the Marx ists have persisted now for enough years to alert the wor ld that· there might be something wrong with such a system. Here .in our own country no American politician with any serious ambition for public office would dare to call himself a·· socialist ... The Constitu tion with its balance of powers and interests remains very much on the books ; the concept of pri vateproperty is so strong among the American people that even the most ardent collectivist is careful always to phrase his attacks on that institution in the most mis leading and innocuous terms. And we remain a religious nation and a· nation with considerable sense of respect for the institution of the family. Look to More Freedom, Not Less Our problem then, is not the creation of a genuine rule of the people, but· a conservation of the institutions and ideas that are already deeply rooted among us.

If the problem of slavery and its latter-day offshoot, civil rights, 1967 AMERICAN FEDERALISM: FUTURE 153 together with .some. of the. adjust ments that have been brought about by industrial .capitalism, have placed. strains upon this tra ditional system, at least ~he sys tem remains in operation with a federal union and a wide range of personal and institutional liberty that has produced a greater social mobility and wider material pros perity than any other system in the history of the world. Throughout American history our people have maintained a con stant sqspicion toward power en croachment on the part of the state. And while crises such as war and depression, or some sort of sectional, class, or racial strife, have tended to centralize power, we have met these crises and still retain much of that healthy Amer ican prejudice against unlimited governmental power. If our system has had problems, we might spec ulate as to how a greater faith in individual liberty could have solved them. For example, is it possible that the free market might have averted the Civil War?

If the abolitionist do-gooders had not built political pressure into war, might not slavery have be come such a costly anachronism in an increasingly industrialized America as to have died a natural death? Similarly, a persuasive case by such men as Professor Benjamin Rogge and Professor Milton Fried man· has been made to .suggest that the free .market. could well provide the best answer in the solution of racial prejudice. They have been making quite clear the negative, repressive effects of coercive political interventions, in terventions which. have their most destructive effect. on the very ele ments within· society they are sup posedly designed to help. If. the Negro can't get a job, he owes much of his difficulty to minimum wage legislation and to the mo nopoly situation produced by the labor legislation now on the hooks in this country. If theN egro can't get a place to live, he owes much of his difficulty to the whims of urban. renewal. It is not· the free society that has hurt the Negro, but rather the political interven tions interfering with the free society.

Faith in Ourselves Our political heritage should have taught us by now that some problems of society are not cap able of solution by the mere pas sage of a law; the greater the diversity allowed within the sys tem to let problems work them selves out, the more likely it is that the solution will fit the prob lem. If we need faith in our system to allow it to work, we also need 154 THE FREEMAN March faith in ourselves to be able to say "No!" If the states would come to understand how expensive a Federal handout proves to be, they could say "No!" If Congress, as the branch of the national gov ernment most representative of the diversity of American inter ests, really comes to understand the dangers inherent in centrali zation of all power within the executive branch, it can say "No!" most effectively to the presidency and the bureaucracy. Federal pro grams without congressionally ap propriated funds to operate them are nothing more than castles in the sand. Above all, the individual American in the exercise of his political franchise, as well as in his economic and social decisions, still has the power to come up with the biggest "No!" of all.

It is the totalitarian thinker who prides himself upon being "monolithic." But Stephen Spender has remarked: "They are congrat ulating themselves on being dead: and it is for us to see that they do not turn the whole world into their cemetery." A Vital and Honorable Heritage to Be Preserved Our tradition of American fed eralism has a long and honorable heritage and is perhaps the· great est success story in the world's history. It retains great vitality in our own times and the means are readily available to Americans to further invigorate the concept: As Lincoln suggested in his Cooper Union address: "Let us be diverted by none of those sophistical con trivances wherewith we are so in dustriously plied and belabored contrivances such as groping for some middle ground between the right and the wrong." That in sistence upon choosing between right and wrong is a matter ulti mately of individual moral re sponsibility. And as this nation and its heritage constitute free dom's last, best hope,· the neces sity for individual moral respon sibility was never greater. It is as true today as when Dante said it centuries ago: "The hottest places in hell are reserved for those who, in a period of moral crisis, main tained their neutrality." + Maxwell A.nderson THE GREATEST ENEMIES of democracy, the most violent reac tionaries, are those who have lost faith in the capacity of a free people to manage their own affairs and wish to set up the government as a political and social guardian, running their business and making their decisions for them.

FRE ED OM OUR •• DILEMMA W. WATTS BIGGERS IF WE ARE FREE MEN and if free dom is the cornerstone of our ide ology, have we not already achieved ideological perfection and thus be come a nation of people without an aim? In short, is the ideological road to freedom nothing more than a dead-end street? No! If some of us are people without an aim, this is because we have failed to recognize a simple yet most important fact: Weare not free. So long as a single man is bound by the chains of prejudice, igno rance, or fear, we are not a free people. The fact that ,ve are not surrounded by concrete walls or steel bars blinds us to the fact that barriers just as real and just as im portant prevent us from being free. One man may be struggling to free himself .from ignorance, another Mr. Biggers heads· the Biggers and Stover firm of· advertising consultants in Massachu setts and also is President of Total Tele Vision Productions.

from prej udice, another from fear - but they are all prisoners. And each of us has a responsibility to these men and to ourselves to join in the battle for freedom. Could we really be free and still hate each other? Am I free if some prej udice instilled in me as a child prevents me from judging all men on the basis of their individual merits rather than race or creed? Are any of us really free when, in moments of stress or panic, we are guided by twisted fears or primi tive instincts rather than sane common sense? We are not free. The brave men of this country who give their lives in wartime do so in order that we, the living, may be outwardly free to work toward a far greater freedom. It is our failure to live up to this responsibility - our failure to understand the true dimensions of freedom - which has made many of us lose our way. 155 156 THE FREEMAN March We have failed to see our respon sibility; to recognize that it is our duty to struggle for greater free dom both for ourselves and our neighbors. Make no mistake about this: If a man is truly searching for freedom - struggling to untie the knotted cords within himself then he cannot be crass and materi alistic; he cannot be solely con cerned with fame and fortune.

If a man is struggling for free dom, he will not devote all his non working hours to the pursuit of flimsy, meaningless "entertain ment."Rather, he will recognize that increased knowledge means in creased understanding of ourselves and of others,. and only through such understanding. can freedom be gained. The man who struggles for free domwill not confuse freedom with license.· He will recognize that only through full regard for the rights of others can he hope to keep even the degree of freedom he has now; that any crime he might commit, however large or small,· would vio late his own right to this freedom. And so, he will be law-abiding out of understanding, not out of fear of penalties prescribed by law. The man in search of true free~ dom is a man attempting to find himself. Each job he undertakes he will attempt to approach in a new way - his own way, in the \vay best for him - and, in this manner, he will attempt to fully utilize his own particular. talents.

He will try to see and think for himself, to free himself from con formity and, thereby, bring to the forefront his own individual ity. Each Advance Affords New Opportunities-and Responsibilities Man moves toward freedom slowly - one step at a time. If he achieves physical freedom or re ligious freedom or political free dom, he simply opens up another frontier of freedom - the fight against the enemy within himself. And he must recognize that each new freedom gained places addi tional responsibility on his shoul ders. The continuation of his own search for freedom demands a society in which all men are free to work out their own destiny; and so, along with his individual struggle, he has the responsibility to work toward attainment or preservation of outward freedom for all men everywhere. The man struggling for free dom will understand that revo lutions may be fought because men are not physically, politically, or spiritually free, but that wars are fought because men are not free from the animal within; that the assured continuation of our free society by· way of perma nent peace will be possible only 1967 FREEDOM: OUR DILEMMA 157 when all men everywhere are on the road which leads to complete fr~edom.

But this road is no four-lane highway. It is a narrow· road filled with pain and suffering, a road with treacherous conditions: wet with the blood of men en slaved; darkened by the shadow of gallows; filled with rubble from wars of revolution; made a night mare by the conflicting wants, passions, hatreds of every indi vidual; made almost endless by the steel-like grip of man's power ful animal heritage. No man can travel this road for another. No man can. give to another the rewards which lie thereon. No man can force another onto the road to freedom nor force him to leave it except by death. There are no shortcuts to the end, nor any special modes of transportation to quicken the journey or make it more comfort able. It is a long road, but it is the only one which can lead to the fulfillment of mankind's great potentiali ty. We, as individuals, can best protect· the degree of freedom we now have by joining in the strug gle for still greater freedom - by working to rid ourselves of hate and fear; by understanding that each man is a participant in this struggle and therefore our brother; by fighting against con formity, and struggling to realize our own true individuality, and helping others to do the same; by recognizing the power of our still primitive instincts and struggling to Qvercome them; by fighting against poverty and ignorance and hatred and prejudice where ever we meet them; and, finally, by helping ourselves and others to understand that .only in the fight for greater freedom can we possibly find self -fulfillment.

No, the road to freedom is no dead-end street. We have simply stopped moving. It is time we started again. ~ John Stuart Mill IT IS AN ABUSE of the principle of equality to demand that no in dividual be permitted to be better off than the rest, when his being so makes none of the others worse off than they otherwise would be.

The Challenge of BUSINESS TOM ROSE CONGRATULATIONS on the success ful liquidation of your Junior Achievement Companies. That none of your companies ended up its fiscal year with a loss in a way disappoints me, because losing money can provide a very instructi ve lesson: Our American enterprise system isn't only a profit system - it is a profit and l088 system. As a Junior Achiever, these are some of the things you might have learned about business in general: 1. A business corporation is not a cold, impersonal, legal entity. Rather, it is a living and dynamic association of people. And each person in it has his own mixture of strengths and weaknesses, hopes and fears. Each corporate From a speech delivered at the Future Un limited Banquet, May 5, 1966, Junior Achieve ment, Fort Madison, Iowa. Mr. Rose is Di rector of Economic Education, Associated In dustries of Missouri. 158 member has a worthwhile con tribution to make. Each is a sacred creature of God - who, as such, merits your respect and coopera tion, even your brotherly love.

2. If there is one word that de notes the essence of our modern business world, it is the word "voluntarism." Or, if we want to use two words to signify this es sence, we would use the words "voluntary cooperation." A company - whether it is a small one-owner organization, a partnership, or a large interna tional corporation - is, above all, a voluntary association of in dividuals. Each participant is free to terminate his association when~ ever he chooses. And the mastic which is used to. cement each in dividual to this voluntary associa tion is his hope to gain personal profit from it. For some, this profit or benefit is received in the form of wages; others receive it 1967 THE CHALLENGE OF BUSINESS 159 in the form of dividends. And to many, the benefit is received as both wages and dividends. Many employees in modern corporations play a dual role of worker and owner. In this respect, they are self-employed.

The point I want to make is this: the catalyst of all voluntary cooperation between individuals is the hope of mutually benefiting through such cooperation, Le., mutual profit. This is what makes big companies and little companies beneficial to· all. 3. Now, a word about problems. A problem is an opportunity in work clothes. N ever complain about problems in the business world; because without problems to be solved, a business isn't a business at all. It's an extinct fos sil; it is dead. Business problems - and they come in all sizes, shapes, and dis guises - are simply opportunities for personal growth. In talking about problems, let's recognize that no one solves all of them successfully. At times, every one pulls a boner; and at such times, it's wise to remember the difference between failure and stumbling. Failure is what hap pens when a person quits. It is final. Stumbling - i.e., falling down and picking yourself up to go on is turning temporary failures into profitable experiences. This happens when you use the stumbling blocks you encounter as building blocks for a stairway to success.

J ames Russell Lowell said, "Mis haps are like knives, that either serve us or cut us, as we grasp them by the blade or handle." 4. Let's back away from this word "business" and take a look at it. What is business? Isn't it simply the cooperative process of anticipating and responding to consumer needs in hope of making a profit? And wasn't the efficiency with which your own J. A. Com pany met consumer needs meas ured by the profits it earned, or by the losses it sustained? Your Company provided you with a two-part lesson about our free enterprise system that some people never seem to learn. And I hope you have learned it well. A. First, that everyone bene fits from a profitable business in a free market economy. And why is this? Because, in the free market, every aspect of business is voluntary. Business owners and business workers voluntarily cooperate in the process of selling goods and services to consumers. In doing this, they can't help but benefit each other. Consumers, on the other hand, are free to buy or not to buy what producers offer for sale. Since no one volun tarily continues an unprofitable 160 THE FREEMAN March relationship, the continuing co operation of consumers, work ers, and owners isproof in itself that each group benefits from the role it plays.

B.. Second, that losse·s in the free, market are limited, to risk takers. Losses are limited to those dynamic entrepreneurs who are always seeking new ways to maximize profits. They personally stand all losses be cause, in the free market, there is no way for them to impose their losses on the public. A'nd this is good ! It is one of the essential differences between free enterprise and socialism. In a socialist state, the public is forced to share business losses through payment of government subsidies and taxes. Specific Lessons Now, to touch upon some specific lessons from your own J. A. Com pany which you can apply later on to real life situations: 1. Investrnent: When you ven tured out to sell shares of stock in your Company, you learned that investment in businesses doesn't "just happen." The tools, facilities, and materials you used to produce your products didn't materialize out of thin air. They had to be rented or purchased.

This took investment moneymoney that. first had to be saved. From your personal e,fforts in raising capital, you, should have learned this basic" economic fact: Investment money to buy tools ,of production. reslJ.lts from saving, Le., from postponing current con~ sumption. In ,other words, in ,order to create a surplus Jor investment purposes, "each investor had to re: frain from., currently consuming the amount he invested. And the incentive for people to fqrego spending in order to accumulate risk capital is the hope for profit. Remember this lesson for later in life. Some day you,. may want to start a business of your own. 2. Profit. The legitimate pur pose of all business' enterprise is to earn a profit. If it were not for profit, your J. A. Company would not have been formed in the first place. The same holds true for the companies where your fathers are employed. Therefore, the realiza tion of profit calls for no apologies.

Rather, the absence of profit can't long, be tolerated in any business. Samuel Gompers, the founder of the American Federation of La bor, said: The 'greatest crime against the workingman is a company without profits because a company without profits means workers without jobs. Profit isn't a cost borne ,and 1967 THE CHALLENGE OF BUSINESS 161 paid for by consumers. Profit isn't added on to the market·. price of·· what we buy"" It is residual. Profits are earned by companies which ,are successful in reducing and keeping .production '. costs un der market prices .. Because .profits are so hard to come by, some busi nessmenoccasionally say some thing to the effect that "every company is· entitled to a fair prof it." If so, who is to determine what "fair" is ?The owners of a company? . . . certainly not. The workers? no, again. The government?, heaven forbid! N.o, only. consumers can fairly determine what rate of profit a company should earn. They do this through buying or refusing to buy the company's products on the competitive market. Sometimes this rate of profit will be very high. Other times it will be very low-or even nonexistent. What ~ver it is, if consumers determine profit by free choice, it is ·sure to be fair .. When allowed to function freely, the free market is abso lutely fair to· all concerned~ 3. Losses: We've been talking about profit. How apout the nega tive aspect of profits, that is, losses?

The fear of financial loss isa good thing .. It is a necessary .part of .our free market system. The fear of losing money, like the hope for profit, acts as. a powerful. spur in stimulating businessmen to serve consumers more efficiently. In shqrt, profits and losses serve as traffic signals to. businessmen: The red signal of loss says "Stop! You're not doing too well." The green signal says "You're doing fine! .Keep up the good work!" With the red light of. loss, con sumers signal. a businessman to reduce investment and employ ment.,. With the green signal of profit, they invite him to increase investment and employment where he is meeting consumer needs most efficiently. Thus, losses as well as profits serve a useful pur pose in directing production to benefit consumers. 4. Wages: Wages depend on productivity. And high productiv ity takes good tools, good tech nology, and willing cooperation with manage:rnent.

An increase in real wages goes hand-in-hand with increasing pro ductivity. A good wage" structure needs a solid foundation of pro ductive effort to support it. 5. Costs and Prices: Many peo ple have the mistaken idea that there isa direct relationship be tween production costs and prices. They think that businessmen can compensate for increased :p,roduc tion costs by. boosting prices to consumers. People· who. hold this 162 THE FREEMAN March mistaken idea forget about the voluntary role of consumers in our free market system. They forget that consumers are free to find cheaper substitutes or, in many cases, to do without. Prod uction costs don't deter mine market prices. Rather, it's the other way around: market prices limit the total amount of costs a businessman can· allow to go into the product he sells. The fun and challenge of producing something for use in the free mar ket is to· determine what consum ers will pay for it, and then to man age your company so .that produc tion costs will be less than this figure. This~thechallengeofthe free market.

6. Business-Workers and Busi ness-Owners: There are elements in our society that strive to create dissension between business owners and business-workers. They divide society into little compart ments called "labor" and "manage ment." Then they try to foment "war" between the groups they themselves have created. The well-being of employee and employer cannot be separated. They are two sides of the same coin. What is good for one is good for the other. The mutual interest of employees and employer far outweighs any artificial differences that might be created between them by others. This common in terest is to serve consumers, a company's only source of income and to serve them at a profit. This calls for helpful cooperation in stead of harmful strife. Class warfare is a Marxist idea. If workers and owners serve con sumers efficiently, a competitive labor market will assure fair dis tribution of the consumer dollar.

The reason a free market so ciety will outproduce any other society is individual freedom; Le., the right and freedom of each person to uS,e his property and talents as he sees fit, with a min imum of interference from others (and especially from government) . The reason why individual free dom works to the advantage of all is that the owners of land and capital can't get much benefit from their wealth unless they use it to serve the needs of consumers. And, in considering the challenge of business, may we remember that the difference between mediocrity and outstanding success is seldom very great. The difference is not found in brilliant flashes of genius. Rather, it lies in a small degree of extra performance and hard work put out over an extended period of time. This also applies to organizations. Thus, a com pany's economic success depends on the number of individuals who understand and cooperatively ap1967 THE CHALLENGE OF BUSINESS 163 ply this secret at all levels of the organization.

I would close with this inscription, dated 1692, from the wall of Old St. Paul's Church in Baltimore: Organized Irresponsibility CLARENCE B. CARSON MUCH of the criticisrnof govern ment officials, bureaucrats, and politicians is beside the point. Stories are legion of attempts to contact the appropriate bureau crat to deal with some matter, particularly in Washington, and getting the run-around instead shunted from one person to an other, told that the proper official is in conference, that he is on leave, that he cannot be reached at present, and so on. The diffi culty may well become insur mountable if there is an attempt to place the blame for some ac tion. Such experiences may build pressure for yet another commis sion to be appointed, in the man ner of the old Hoover Commis sions, to investigate the bureauc racy and recommend change. A new President may become so exDr. Carson is Professor of American History at Grove City College, Pennsylvania.

164 asperated trying to establish clear-cut lines of authority and responsibility that he will press vigorously for reorganization. These are attempts to treat the symptoms, however, not the dis ease. In like manner, businessmen will say of some government bu reaucrat : "He never met a payroll in his life." The thou,ght behind this caustic remark is that if the official had employed men, if he had been responsible for accumu lating the money to pay them, if he had to provide goods and serv ices to get the money, he would understand the problems of the businessman. And if he under stood, he would be more lenient, would modify the rules, would make more tolerable decisions in the area of his authority .. There are many variations on this theme. Has the building inspector ever 1967 ORGANIZED IRRESPONSIBILITY 165 built a house? Has the sanitation inspector ever done any plumb ing? Has the. labor arbitrator ever employed .men? Has the Inter state Commerce Commissioner ever run· a railroad? The answerS seem quite important to those who find themselves harassed in one way or another by government officials. Yet,. they do not matter much. The underlying flaw of the system would still be there, though .each of the above ques tions .was answered in the affirma tive.

"Let George Be Responsible" Superficial attempts to improve the situation have followed upon the superficial analyses of the problem. Most notably, there has been much talk in recent years about men behaving responsibly. Businessmen are exhorted to act "responsibly" to avoid the "ne cessity" of government interven tion. Labor union officials are begged to be ."responsible" in their demands upon industry. Newspapers are expected to be "responsible" in what they report. College professors should be "re sponsible" in their pronounce ments. It is widely held that rights and pri vileges have corresponding responsibilities and that even "civil rights" advocates should be "responsible" in their advocacy. While such exhortation may· have some effect on the behavior of men, it is more likely to impress children. It is a confidence game, an attempt to sway men to be have contrary to the way they are impelled and encouraged to act by the established system.

In fact, we have widespread and pervasive· organized irrespon sibility in America. It makes little difference whether government bureaucrats have met a payroll, whether Interstate Commerce Commissioners have run a rail road, whether labor arbitrators have employed men, and so on. No reorganization of the bureaucracy under the present system will go very far in making government officials accountable for what they do. In numerous cases the exer cise of power has been cut off from the consequences of the ac tion, and the use of authority has been disjoined from responsibility for results. To understand this, it will be useful to get clearly in mind the nature of responsibility. The fol lowing ideas are closely associated with responsibility: obligation, chargeable, accountable, liable, amenable, and answerable. Phil osophically, the meaning of the word is derived from the idea that individuals respond to that which confronts them; they make choices and act; by choosing and acting, they become responsible for the 166 THE FREEMAN March results. For example, a man fathers a child; by so doing, he becomes responsible (is obligated) for the rearing of the child. Re sponsibility is personal and indi vidual; it has to do with cause and effect, with the relationship behveen what one has done and the consequences of it.

Individual, Social, Legal There are three elements which, when taken together, reinforce one another and make for full .. fledged responsibility. First, there is the individual's sense of obliga tion to meet his responsibilities. For example, a man buys some thing for which he contracts to pay over a period of time. He has willingly entered into an agree ment; he has obligated himself to make payments when they fall due. His sense of responsibility may lead him to meet the terms of his contract. Second, there is social responsibility. As to the particular debt in question, soci ety would appear to have no inter est.. Yet it does. The individual in question has dealings with others. They. are interested in knowing whether he pays his debts or not. If he does not meet his obligations promptly, this fail ure will affect his credit rating (a social instrument), and men may cease dealing with .him in any matter· that involves time considerations. Thus does society hold men responsible. Third, there is legal responsibility. A creditor may go into court to get a j udg ment against the debtor. To en force this judgment, the creditor may, in the final analysis, attach the debtor's possessions, gar nishee his wages, or throw him into bankruptcy (have him pro claim his irresponsibility to the world). Analogous procedures must be in effect in all areas of life for full-fledged responsibility to exist.

A Slow Erosion A generation has been brought up to believe that men .are not responsible for their acts. This is an overstatement of the case, of course. Children are still taught that they are responsible - some times and in certain areas - for their actions. Adults, some of them, still have a sense of respon sibility and can be held socially and legally accountable for ac tions. The truth is, however, that this responsibility is being eroded away. The erosion has occurred gradually and piecemeal in Amer ica, for the most part. We are seldom told anything so general and all embracing as that men are not responsible for their acts. To do so would raise the question of the philosophical implications of such a position.

1967 ORGANIZED IRRESPONSIBILITY 167 Rather, subtle doctrines of ir responsibility have been spread over a period of several decades. Men are the products of their en vironment, we are told. Responsi bility is collective, another version goes; society is to blame. For more than a century the doctrine that institutions have corrupted men has had its advocates. Others hold that men are factors of their class or economic situation. So cialists, following the lead of Marx, generally have held some variation of the doctrine that changes in technology produce tensions in society which result in the different views and actions. In particular, we are told that criminals are the products of bad envi ronment, infantile frustra tions, social maladjustments, and so on. Labor violence is supposed to be the product of exploitation. Race riots, even an Attorney Gen eral may proclaim, are the results of deprivation. Revolts, whether of college students or of would-be nations, are the consequences of oppression.

In short, weare led to believe by subtle explanations - and in particular instances which, when taken together, include almost all cases - that men are not respon sible for what they do. It is not possible, of course, literally and consistently to apply these doc trines in a society. Society cannot feel a sense of responsibility or guilt (for that matter, it cannot feel anything, for it is not sen tient). The environment cannot be locked up. Technology cannot be reformed by a period in reform school. To say that entities of this character are responsible is the practical equivalent of saying that no one is responsible and nothing can be done about it. Those of the naturalistic persua sion (popular among some intel lectuals in the latter part of the nineteenth century) quite often drew just that conclusion from the doctrines. Destroy and Rebuild But the doctrines of individual nonresponsibility can be and have been applied selectively for attain ing certain objectives. They are most effective ideas for destroying the social system of responsi bility' and, for that matter, civili zation itself. Such doctrines are effective in destroying the indi vidual's sense of responsibility (called guilt feelings in the argot of certain psychologists). If be lieved, these doctrines inhibit the practice in society of men holding others· responsible. And, of course, these doctrines of nonresponsi bility can be used to remove legal responsibility. In short, they can be and have been used for destruc ti ve purposes.

168 THE FREEMAN They have also been used as the basis for attempting to construct a new social system. That is, these doctrines have served as argu ments.for using· government power to change the environment. Ef forts at remolding institutions·. are spurred by those who believe such ideas. Collective practices have been advanced· to replace the sys tem of individual initiative and individual responsibility. The re sult, however, is· not a new system of responsibility. It is, instead, or ganized irresponsibility, that is, irresponsibility in~titutionalized and made a part of the way of life of a people. Exhortations to peo ple to be responsible are replacing' the system of responsibility. Some examples will demonstrate how this has occurred. It has been going on· for several decades now and is gradually extended into more and more areas of life. One of the most conspicuous instances of organized irresponsibility is that of the so-called independent boards and agencies of the Fed eral government, though those of many of the states are equally so.

Among such organizations of the Federal government are: Inter state Commerce Commission, .Se curities and Exchange Commis sion, Federal Reserve Board, Na tional Labor Relations Board, Fed eral Power Commission, and so on. Of a similar character so far as responsibility is concerned are the government corporations such as the Tennessee Valley Authority. Powerful Agencies There are several angles from which to view the· irresponsibility of those within these organiza tions. First, they are government agencies. Those who exer.cise the powers of government appropriate monies most of .which are not their own. They pass laws which apply to the population generally, not just to themselves. They make war and peace, make treaties of alliance and commerce, employ workers, have charge of an exten sive constabulary, and may use force to obtain obedience to their commands. All of these powers af fect the lives of many more than those few who actually exercise them.

In the United States,. many de vices were adopted to make those in government responsible or to give them as Iittle leeway as pos sible to act irresponsibly. Perhaps the most important of these. was a written constitution in which the powers of government are enumerated and government is specifically forbidden to enter cer tain fields of operation. The pow ers of government were divided among three branches so tha t quest for power by any person or branch would be supposed to be 1967 ORGANIZED· IRRESPONSIBILITY 169 negated by the jealousy of other branches. Those who appropriated monies were made responsible to the people from whom the monies came by being made subject to election at frequent intervals. Those in government were sup posed· to be subject to the laws passed, and those who execute the laws and spend the monies were to be accountable for their stew ardship to Congress and to the courts.

Interstate Commerce The Interstate Commerce Com mission was the first of the "in dependent" agencies organized to evade many of the devices for holding responsible those who govern. Since its founding in the 1880's, its power has been in creased to include setting mini mum and maximum transporta tion rates, deciding what services must be performed or may be dis continued, approving or disapprov ing mergers, and so forth. Legis lative, executive, and judicial pow ers, rather than being separated, have been blended in one body, so that the quest for additional power by this organization is not at the expense of other political branches but of the owners of transport facilities. Congress au thorized the Commission, but it operates "independently" of Con gress. The Executive appoints the members,but they serve for a pe riod of years and are therefore "independent" of the Executive.

In short, the· Commission - and others like it - is not responsible to the electorate. No election has ever been held where the actions of boards and commissions were sufficiently at issue to say that they have been either popularly approved or disapproved. Nor· is one likely to be. These agencies are "independent," independent of the people - that is, politically ir responsible. In the final analysis, though, the· Interstate Commerce Commis sion - and all who exercise like powers - would be irresponsible even if it were a committee of Congress or a department of the Executive. The actions themselves are irresponsible. When the Com mission sets a rail rate, its mem bers are not responsible for op erating a railroad on the revenue derived. When it prescribes that services must be rendered at a particular station, it is not respon sible for providing these services. If the regulated company goes bankrupt, the Commission does not have to pay the bills. The mem bers of the Commission can make decisions with virtual financial and legal impunity. They are not responsible - even when they cir cumspectly refrain from harmful decisions; the transport compa170 THE FREEMAN March nies, in such case, have only es caped by chance.

Degrees of Irresponsibility Among Various Agencies The same charge of irresponsi bility is valid against other gov ernment boards, commissions, and corporations in varying degrees. The members of the Federal Re serve Board cannot be sued, in consequence of their monetary manipulations, for the loss of value of the money· which people hold or have owed to them. The Securities and Exchange Commis sion will not make good losses suf fered on the stock market as a result of its action or inaction. The National Labor Relations Board does not pay those workers to whom it awards back pay. The board which controls the Tennes see Valley Authority neither pays for the work it hires to be per formed nor does it make good any losses incurred by the Authority. It should be pointed out, how ever, that the boards which con trol government corporations do have some responsibilities. If there are degrees of irresponsi bility, the board which directs the Tennessee Valley Authority is not as irresponsible as the Interstate Commerce Commission. The mem bers of the board, or their agents, do undertake to provide services, do meet payrolls, do enter into contracts, and are in some ways accountable for their actions.

Governmental irresponsibility is widespread, and does not neces sarily involve violations of the principle of the separation of powers. The enactment and rais ing of the minimum wage has been irresponsible. By this action, Congress compels employers to pay a certain wage, but it takes no responsibility for this. That is, Congress does not raise the money to meet the payroll. If men lose their jobs because the employers cannot pay these wages, the in dividual members of Congress do not undertake to provide thenl with employment by paying them out of pocket. Nor, if the em ployer goes out of business, can he sue Congress for damages. Equally irresponsible are Congressional rulings regarding hours of labor. Who Pays for Mistakes? Something should be said un der the heading of government financial responsibility for what its agents do. The United States government and the governments of states do engage in numerous business undertakings such as building roads, maintaining post offices, providing education, set ting up corporations, and so forth.

Government agencies are not lia ble for payment of damages in the same way that private corpora1967 ORGANIZED IRRESPONSIBILITY 171 tions, partnerships, and individu als are. Governments can be sued, of course, with their permission. The winner of a suit against some government may recover damages. But there the similarity with pri vate suits ends. Congress may ap propriate money to pay damages, but the individual members of Congress do not pay for this; at least, they pay no more than any other taxpayer. This is another way of saying that the govern ment is not responsible for injury done to others. It merely passes on the claim to the taxpayers. By contrast, private companies! and individuals are responsible fot in juries done. Federal Aid Uncontrolled Government responsibility is often attenuated, at best, i but many of those who have labiored to get government involved in more and more things have; also worked to remove the last vestiges of responsibility. The public schools afford an example. It is a common· saying that politics ought to be kept out of the schools. If those who say this meant that gov ernment should get out of the business of education, it would make sense. But that is not their meaning. They favor government support of education but do not 1Vish political intrusion in the management or control of the schools. They would have the pop ulace support the schools but deny the people a voice in the manage ment of the schools. For politics is the means by which popular consent is given and denied in America. Those who want to keep politics out of the schools \vant government support without gov ernment control, whether they know it or not. In short, they pro pose to make the public schools completely irresponsible.

Long strides have been taken toward making those who teach in schools and colleges responsible to no one. This has been accom plished to considerable extent un der the doctrine of academic free dom and the practice of tenure. These two things combined are supposed to leave the teacher free to say and teach what he will (theoretically, though not prac tically, bounded by a restriction that it be within the area of his competency). He is responsible to no one for what he teaches. Other Abuses of .Privilege Irresponsibility abounds in America today. Aid to Dependent Children permits men to father children and women to give birth to them without assuming the full responsibilities of rearing them. Various government agencies re... lieve children of the responsi bility for caring for aged or in172 THE FREEMAN March firm parents. So-called civil rights leaders preach hatred of men, practice trespass, and encourage the destruction of property with out being held responsible for what they do. Those dependent upon government for a livelihood are permitted to vote, and thus to vote themselves benefits at some one else's expense.U nion leaders press for wage increases which they· do not have to pay. Congress votes increase after increase in the Federal debt, wi th no provi sion for paying it. It has been years since any reduction of the debt· has been made. Policemen are not held responsible for vio lating the· rights of the accused; instead, criminals are turned loose by higher courts when their rights are said to have been vio lated.Thus, irresponsibility is compounded. Movements are afoot to subvert established political processes by granting to groups power unrestricted by popular consent. Examples of this are ci vilian review boards and civil rights groups and organizations being given Federal monies to dispense. Irresponsibility is high ly organized, vociferous, and ram pant in the land.

There is a saying that goes like this: "What you do speaks so loud that I cannot hear what you say." This certainly applies to those who admonish us to· be 1'esponsible today. We have been busily removing the .supports to responsibility· while shouting ever more loudly that men should be responsible. Responsibility de pends upon a very real nexus be tween cause .and effect,between actions and consequences, between accomplishments and rewards, be tween what we do and our ac countability for it, not upon a spurious indoctrination of a sense of responsibility. "Independent" boards and commissions cannot be made responsible by proclamation, nor labor leaders by acclamation, nor civil rights workers by as severation, nor teachers by incul cation, nor parents by vocalizing about it. Penalties Removed A confusion of terminology hides the truth from us. In a vague sort of way, the admoni,;.

tions to boards and commissions are to be circumspect in what they do, to labor leaders to be moderate in their demands, to civil rights advocates to be gentle in their ac tions. It would be as logical to admonish thieves to take only a moderate amount of money or goods, to admonish assaulters to exert gentle persuasions, or to ad monish extortionists to be circum spect in their demands - while removing. all penalties for crimi nal behavior. For we have made 1967 ORGANIZED IRRESPONSIBILITY 173 long strides· toward separating cause from effect, power from re sponsibility, and actions from their consequences.W e are trying to make the individual's spurious sense of responsibility do the work formerly done by individual con science, social responsibility, and legal accountability. The Consequences of the Irresponsible Way of Life It requires no maj or gift of prophecy to foresee the outcome of organized irresponsibility. In deed, some of the consequences are alre~dywith us, and it is nec essary only to extend them in other cases. Boards and commis sions establish inflexibility in the economy, on the one hand, and produce uncertainty on the other, making businesses difficult to op erate, resulting in high prices and poor service. Labor unions para lyze industrial centers and are re strained from extending this to the country as a whole only by a dubious sense of responsibility or the threat of force and involun tary servi tude. Academicians fill children's minds with notions that have been tested by neither reason nor evidence. Government action produces unemployment by mini mum wages and tries to correct this by heavy doses of inflation.

Violence and destruction in the cities, particularly in summer, makes life increasingly perilous and property insecure. Freedom becomes license with out responsibility. To put it an other way, there can be no free dom without responsibility. No man is free when he can have his life taken by murderers who will not be held responsible by the courts, when his ownership of property is vitiated by the control of those who do not receive the consequences of their actions, when his children may be taught any doctrine without his approval or consent, when the actions of others are restrained only by their inward determination to restrain them. Free men are responsible men, else every man's freedom is potentially a trespass upon every other man's. Nor can civilization survive the constant strain put upon it by or ganized irresponsibility. The de sire to exercise power without re sponsibility may not be the oldest sin, but it is one of the earliest according to the Bible. After Cain had slain Abel, he wished to avoid the responsibility for it. The de sire is there, but the nation that succors it wills its own destruc tion. Men lose their integrity and are corrupted by organized irres ponsibility. Policemen lose their zeal to apprehend criminals when those whom they catch are turned loose. Businessmen turn to lobby174 THE FREEMAN March ing, to influence buying, to the quest for special privilege when their survival depends upon it.

Men devise subtle ways to live off the labor of others when govern ment becomes the bounty giver. Workers are seduced into slipshod work and malingering when· they can use the threat of violence to hold their jobs. Men gather in mobs to hand out rough and un even justice when the courts no longer serve society. When men become acclimated to irresponsi bility, they do so by becoming weak-willed and irresolute. As children, they fall prey to the strong man who will restore order by intemperate but widespread use of force. The remedy for this distemper is what it has always been. It lies, first, in the recognition that men are responsible for their acts. Second, it can be developed by inculcating a sense of per sonal responsibility in individuals. Third, society sustains it by re wards and punishments handed out accordingly as one has been responsible or irresponsible. Last ly, men must be held legally ac countable for what they do, and must not be permitted to engage in actions for which there can be no accounting. ~ A Paradox MANY PERSONS are so reluctant to become involved in other peo ple's affairs that they will stand by and see· a fellow man beaten or even killed without intervening. Yet those very same non Samaritans readily join in great numbers to make other people's decisions for them, meddle in their business, force them to act "for their own good."

JAMES C. PATRICK, Decatur, Illinois THE PRICING OF GASOLINE HAROLD M. FLEMIN'G GASOLINE PRICES, like the prices of many other commodities, are not easy to understand. Some times gasoline price wars seem to spell intense competition. At other times motorists, seeing the same prices to the decimal at nearby stations, may think they are up against conspiracy. Or again they may see across the street a price difference between a familiar and an unfamiliar brand and wonder what it means. This is understandable. The whys and wherefores of gasoline pricing are of almost infinite vaMr. Fleming is a well-known journalist and author, specializing in business and financial analysis. This article is reprinted by permission from Chapter IV of Gasoline Prices and Competi tion. (Copyright 1966, Appelton-Century Crofts, Division of Meredith Publishing Company. 96 pp. $3.75). Other chapters in clude "The Geography of Gasoline," "Who's Who in Gasoline Marketing," "Estimating the Costs of Gasoline," "Gasoline Price Wars," and "Regulating the Market Place."

riety. And they keep changing. They involve behavior patterns be yond the powers of the most fer tile imagination. Despite the diffi culty of comprehension, it is be yond doubt that the intense com petition in the business has brought about a record of reason able prices. In 1964 the average price of gasoline, not including taxes, was 7 per cent less than it was ten years before. And the 1964 variety was much improved. I. The General Price Structure The United States gasoline busi ness has a going structure of prices. And these prices, as will be explained, relate only partially to manufacturing and handling costs. To begin with, there are the base wholesale prices of gasoline 175 176 THE FltEEMAN March in large quantities at refineries in the key regions. Then there is a second level of wholesale prices: prices at termi nals, before the final fan-out. These are sometimes still called tank-car prices, from the original medium of delivery out of these terminals.

The final and perhaps most im portant wholesale price is the tank wagon price, from the supplier or jobber to the retail gasoline dealer, on delivery to the service station. As to the retail price, there are; with few exceptions, no "manu facturer's retail list prices" in gasoline. The supplier's ownership of the gasoline generally ends at the service-station tanks, and the dealer is then free to set his pump at whatever retail price he chooses. An important exception occurs when, as in New Jersey since the middle 1950's, some suppliers avail themselves of state "fair trade" laws that permit the manufacturer to set a specific retail price as the minimum to be charged for his branded product. But major-brand suppliers by no means lose interest in the price of their gasoline when they sell it to the service-station man. The supplier's interest is natural. He wants his brands to be competi tive. Most suppliers counsel with their dealers about staying com petitive; but, in the absence of "fair trade" or other exceptional circumstances, the decision is strictly the dealer's.

Independent chains operate dif ferently for the most part. Their station operators are usually on salary. They don't sell to the sta tion operator, but through him. They don't suggest the retail price. They set it. To a small degree, major sup pliers are engaged in direct retail ing, too. At a station where. any supplier is itself the retailer, it, of course, establishes the price. All the prices mentioned above wholesale and retail-- are so in terrelated that they are constantly pulling each other up and down, so what is generally called a price structure for the gasoline business might better be called a fabric of prices. Private Brand Differentials: Lesser-known brands of gasoline often sell at a price below that of better-known brands. The differ ential-a frequent bone of con tention - may run to several cents a gallon. It is not necessarily due to a difference in quality; but often it is due to a difference in famil iarity to the automobile driver or to a difference between stations in services available. Lesser-known brands range in quality from me diocre to the best. They are· some times said to be sold "on price"

while major brands are said to be 1967 THE PRICING. OF GASOLINE 177 sold "on reputation." However, the private .brander is naturally in terested in building a reputation. In some instances these lesser known private brands. are actually owned and promoted by maj or suppliers. Bulk Sales: There is a category of gasoline sales whose prices hardly fit into the above-mentioned structure or fabric of gasoline prices at all. These are sales to large-scale buyers such as bus lines, truck fleets, . highway con tractors, cab fleets, the .federal government, states, cities, and so on.. In the trade, these are gen erally called "consumer sales," be cause the buyers consume the gas oline themselves; they do not re: sell it. Prices on such sales are . often low - sometimes.. below those. to jobbers or dealers. Some of the reasons are obvious. These are quantity sales .. Costs are low and credit risks small. No advertising or merchandising is required. And they frequently are once-,in-a while sales. There is sometimes a further reason for. them - distress surplus of product. This wilL be discussed later.

The Living Price Structure: Gasoline prices are even more than a fabric, with flexibility and stretch. The gasoline price· "struc ture" is a living, changing thing, to which thousands of men contrib ute their thinking. As a result, it is constantly responding to all kinds of changes in such things as business conditions, weather, traf fic, and customers' habits and in come. II. Logistic and Other Problems The daily forwarding of more than 175 million gallons . of gaso line from refineries by varied chan nels to 211,000 service stations, and from there to millions of cus tomers, recalls what lexicographer Dr. Samuel Johnson once said of a woman preaching or of· a dog walking on its hind legs : "The wonder is not that it is done well, but that it is done at alL" For it is not enough merely to have the supply lines. The gasoline must be dispatched· to the right places, at the right time, in the right· vol ume, all the way from the refinery.

For such·· movement, suppliers must prepare well in advance, clear· back to· the refinery. In the spring they must start increasing gasoline output for the summer months; but in the late summer they must start cutting back on gasoline to make more heating oils available for the winter. Suppliers, however, must· do more than· merely try to have enoug h gasoline for expected de mand at the right outlets at the right time. They must also be sure 178 THE FREEMAN March of being able to meet any unex pected additional demand. In this respect they are like fresh milk suppliers, or power companies, which must always have spare capacity on hand. Conversely, if they guess wrong and overproduce at any given time, they may find themselves with a troublesome ex cess of products to get rid of. All this requires careful ad vance estimates of a host of di verse influences on the gasoline market. These include general busi ness conditions and consumer buy ing power; population trends; changes in the public's highway travel preferences; changes in con sumption of oil products in compe tition with other lures for the con sumer dollar; and above all, the weather. And these must be worked down into the details within areas, countries, and cities.

Mistakes Are Bound to Occur: Suppliers will use anything from a small market-forecasting depart ment to a computer to figure this all out. But with competitors in all areas, of all sizes, all market ing methods, and all competitive moods, each supplier faces one more large-scale question mark: "How much of a market can we hold, or gain, in the face of con stantly changing competitive con ditions ?" Now let us sit in with a supplier's marketing manager, and see an unavoidable mistake about to be made. He and his company have just estimated that during the following March, three months away, they will be able to sell 5 per cent more gasoline in his area than during the previous March. He is making the arrangements for movement of the proper amount of gasoline to his termin als and stations. But when March arrives, it rains and it snows. Motorists stay home by the· thousands. When the month is over, they have bought 5 per cent less of his company's gasoline than in the previous March. And to complicate his problem - since it was cold, cus tomers bought more heating oil than he had anticipated. Thus, he faced the headache of bringing in additional quantities of that prod uct even though his storage fa cilities were already overburdened with unneeded gasoline.

Weather is the most unforesee able force that can bring about market miscalculation. And it is a constant hazard to the refiner as well as to the marketer. The refiner may count on a cold winter and find by February that he has made too much heating oil and not enough gasoline. In the spring he may count on a good driving sum mer and find by August that he has made too much gasoline.

1967 THE PRICING OF GASOLINE 179 But other factors can also up set the best-laid plans. An aggres sive competitor may take away business. Depressed prices' in an adjacent area may drain away gallonage. Or the local crop may fail, or the local mills shut down. What toDa with the, Surplus?: Our unlucky supplier now has ex cess gasoline. on his hands. What shall he do about it? He has three choices - basically those available to all sellers in the gasoline business when they find themselves with extra gasoline. He can: 1. store the excess gasoline; 2. dispose of it through regular marketing channels; or 3. find a fast outlet. Now let us consider his choices. For this is essentially a typical situation. It is a dramatization of the general problems involved in gasoline pricing. The Costs of Storage: Let us now suppose that our marketing manager with excess gasoline on hand decides to hold it in storage until he can gradually work it off.

It isn't a very satisfactory choice. To begin with, gasoline storage is expensive in relation to gaso line's price, which essentially can be kept low only by a timely .flow to market. Stoppage in the movement of gasoline immediately be gins to cost. For storage costs money. But Jar more serious than the storage cost is the back-up effect. New 'product cannot be delivered to terminals until there is room for it. If storage space is short, refinery output may have to be cut back. The effect can be felt clear back to' the oil field. If the refiner is part of a crude ...oil-pro ducing company, then the com pany's crude-oil output may have to be cut. If the refiner gets his crude from outside his own· com pany, he .. may" run the risk of losing some of his regular crude oil sources. So the flow of gasoline may be compared to a river. If too much comes down the river, then the excess must be drained off into reservoirs or it will break the levee somewhere.

If, for instance, the refinery has already scheduled full runs for April, and now its outlet in our marketing manager's area is re duced by the carry -over stored from March, it may be decided to run full anyway. But where to sell the extra? It will probably go either into the "spot market," as "distress gasoline," or be sold to another refiner who has a market for the product. The pressure is now off our marketing manager-- but not off his company. No doubt 180 THE FREEMAN March the extra gasoline will show up somewhere in the business, and result in a downward pressure on prices. But it probably won't show up in his area. Thus, time is forever·pressuring the supplier.N ot only is gasoline costly to store,but the equipment to produce and move it is expen sive to keep idle. In some supply demand situations he may have to throw original cost estimates to the wind and consider primarily the cost of not selling promptly.

Disposing of Gasoline through Regular Channels: Now let us sup pose our marketer elects to take the second way out of his gasoline surplus - that is, to dispose of it through regular trade channels. Apart from marketing gim micks ~ special promotions, flying flags, prizes, and giveaways - there is only one way to do this, and that is to cut· the price. Dnha ppily, however, .one of the most notable things about gaso line is that demand is relatively constant. The gasoline market is not like the market for television sets, stereo recordings, fresh straw ... berries, or trips to Europe, where a 50 per cent price cut can bring in large .numbers of new,addi tional customers - or induce exist ing· customers to· increase their buying substantially. This is not to say that motorists don't read price signs. Some are highly price-conscious, look for cut-rate stations, and· will con verge on depressed price areas.

But in doing this, they do not increase their total purchases. They merely switch them from one station, or area, to another. They do not appreciably drive any farther, nor burn any·· more gaso line. Even the most drastic price wars do not increase total mileage in the affected areas. This is called short-term Hin_ elastic demand" - demand that does not stretch and expand with lower prices. It is quite different with gaso line's long ...term demand, over years and decades. If the product weren't so reasonably priced and conveniently available, people wouldn't take so many trips· nor even buy so many cars - as the European experience with extremely high-taxed, and so extremely high-priced gasoline has shown. But it is a fact, unhappily, that a marketer's customers won't im~ mediately increase their driving even when the price of gasoline is cut sharply. So if the marketer cuts his price, the only added sales he can make are sales to his com petitors' customers.

And his competitors know this as well as he.

1967 THE PRICING OF GASOLINE 181 They can match his price-- and more than likely will· do so if they suspect that his lowered tank wagon price is merely an effort to shrug off an overload of gasoline at their expense. In fact, some of them may· have made the same miscalculation of demand and have the same surplus problem. So by trying the price route out of his current inventory trouble, our marketer may, in effect, do a Samson and pull down the whole area price structure around his own ears. Finding a Fast Outlet: For our manager and his company, there is a third and final choice of how to dispose of the excess gasoline caused by weather . It is to find· an outside, nonregular market and there to sell the gasoline for what ever it will bring. The most notable of such outlets is sale on the .open market - to brokers, "independent marketers," or other large buyers. Often such sales are in hundreds of thousands of gallons· and sometimes they are made on sealed bids.

To turn to such a third selling choice, our supplier must take a deep breath and remind himself of the disadvantages of the two other courses. As was mentioned earlier, such sales are often at low prices. But they are somewhat offset by comparatively low costs (due to quan tity, credit, and other economies). Sales under distress conditions are usually at prices lower than normal bulk sale prices. The basic reasons for such often-profitless sales have been implied above. The supplier presumably has more gasoline on .his hands than he wants to try pushing into. regular channels, or storing. He has been "caught long." And as a result he is, in his own interest and after careful calculation, acting to avoid what might possibly be avery great loss under one of the· other two alterna tives. II'. Loss Today; Profit (1) Tomorrow In some circumstances, for good and sufficient though .temporary reasons, a .refiner .may be. willing to produce and sell gasoline at prices well below the most opti mistic estimate of last-barrel· cost.

The start of this dismal story may be when he finds he must lower his price to a certain level in order to hold his own against· com petition, and his accountants tell him that, at that price, "no matter how we figure it," there will be a loss on every barrel of output. His natural first thought would be to curtail production or even to shut down. But neither will save him much money. His fixed costs will keep on.

182 THE FREEMAN March So it may be more economical to keep running and lose only a little money every day, rather than to slow down or shut down· and lose even ntore money everyday. Besides, our refiner wouldn't want to add to his other· troubles the substantial costs of refinery shut-down and start-up, nor the disruptions of laying off labor, dropping crude-oil "connections" (sources of crude oil), and cutting off regular jobbers and dealers. So he keeps refining, selling for whatever he can get, and hoping that the market may soon recover. A marketer can find himself in a situation analogous to that of our refiner. He can find himself in a depressed market that he feels is only temporarily so. Assuming things will get better and knowing that he may lose his established marketing position if he closes up, he keeps opera ting in the· area even though it may mean months without profit. There is at least one other cir cumstance in which a gasoline re finer or marketer may for a time sell at a profitless price or even, where it is legal, at a price below the lowest possible· estimate of his particular costs.

The circumstance might occur when he tries to break into a new market that to him looks lu crative for the future. As a new entrant in the market his costs are probably high for· he lacks the lo cal facilities necessary for efficient operation; yet he sets his price low· to ,attract customers. He may figure that he will have to forego profits for a time, in the hope of getting established .and making money later. Some economists would regard such losses as an in vestment. UPredatory" Pricing: One form of taking business losses for fu ture profit is only a historical memory: selling below. cost in a particular area in the specific hope of ruining a weak or small com peti tor and then taking over his business and his customers. This, called a upreda tory practice," was fairly common in the old days when the oil business was young and uncrowded. It is illegal now, but even if it were not, there would be very little chance in the gasoline business of so calling one's competitive shots today. In any market there are too many eager competitors, major and minor, branded and unbranded all ready to fight to preserve their own positions, and ready, too, to move into any market vacuum created by the demise of one in their ranks. Today, anybody in the gasoline business foolhardy enough to wage a predatory cam paign would find its successful completion no simple matter.

1967 THE PRICING OF GASOLINE 183 In this age of gasoline market ing, a firm's moving into a new area does not forebode less com petition. It means more of it. The Profit Is the Pay-off: Whether sellers taking a loss on a sale do so to avoid a greater loss, or to gain a future profit, it is a sometimes forgotten truism that profit is inevitably the ultimate motive. While in the short run price must both meet competition and move the goods, in the long run it must more than cover costs. It is a certainty that no one can afford to handle gasoline in any branch of the business at a loss, knowingly and continuously. In sound, profit-seeking busi ness practice, every type of sale and every offering price must jus tify itself either by contributing to a profit, immediate or eventual, or by minimizing a loss. IV. Some Premises of Gasoline Priclng The value of a bulky commodity like gasoline varies "all over the place." Gasoline of the same spec ifications may be worth so much today, more tomorrow, and less the next day; so much here, and more there, or vice versa. Gasoline is not like diamonds or gold, the value of which varies little from San Francisco to London or from this year to next year. Its value is more like the value of such bulky staples as firewood, which may cost $20 a cord in New Eng land near the woods, and· 50 cents a stick in New York City. Per haps the best analogy is with water - worth less than nothing in flood, but worth a great deal in the desert.

The Flexibility of Gasoline Prices: Due to the almost infinite variety of circumstances in which gasoline finds itself from market to market and from time to time, it is hard to figure any fixed form ulas for pricing it. Yet there is always the impera tive profit-seeking command that prices must be arrived at that will move the goods most economically to wherever they are most wanted at the moment. Gasoline prices are never in equilibrium with all the supply and-demand forces that affect them. They are chronically in need of adjustment. Pricing decisions must be made without delay. These decisions may be wrong half the time. (If they are wrong too often the maker leaves the scene.) But they have to be made by those closest to the circumstances. To learn everything about the hows and whys of gasoline pricing at any particular moment, you would have to talk with about everybody in the business. I 184 THE FREEMAN March The Art of Guessing Right Prices: The quoting or bidding of gasoline prices cannot be a science.

It has to bea day-to-day art a matter of trial-and-error de pendent basically on judgment. The factors that go into the pric ing of gasoline will always be hard to figure. Prices are always ex perimental. On the supply side, the seller must figure on costs that are argu able to start with and that may vary inversely with a volume that is unpredictable. And on the de mand side, he faces changing weather, business conditions, and competition. Overall estimates of national consumption can tell him lamentably little about the next few months in· City X, County Y, or State Z. The gasoline marketer has no slide rule to tell him how far, in a good market, he can afford to expand; nor how far, in a poor market, he can figure to keep sell ing at a loss to avoid a greater loss. This is what has given the busi nef?s,through its price system, its remarkable flexibility, pliability, challenge, and life. ~ Borrower SPEAKING of his early experiences as a borrower, John D.

Rockefeller once said: "In the early days there was often much discussion as to what should be paid for the use of money. Many people protested that the rate of 10 per cent was out rageous, and none but a wicked man would exact such a charge. I was accustomed to argue that money was worth what it would bring - no one. would pay 10 per cent, or 5 per cent, or 3 per cent, unless the borrower believed that at this rate it was profitable to employ it. As I was always the borrower at that tirrle I certainly did not argue for paying more than was necessary. " Wasn't old John D. about right? The best and quickest cure for high prices is high prices, and by the same token, the best cure for low prices is low prices. If there is a shortage of anything, the quickest way to get more of it produced is to let the producers take a good profit. This will encourage competition and the price will soon fall, along with the margin of profit.

From The William Feather Magazine, November, 1965 A REVIEWER1S NOTEBOOK JOHN CHAMBERLAIN Governmental Griel'ance Procedures WHEN Bertrand Russell was a younger and more philosophical philosopher than he has since be come, he asked a Chinese peasant woman why she was so careful to avoid state officials. The wom an's answer was that "govern ment is more terrible than tigers." We still can't believe that gov ernment might .become tigerish in America, where the Madisonian tradition of checks and balances lives on. And so, while govern mental behemoths take on more and more responsibilities for the young, the sick, the aged, the slum dwellers, the farmers, the unemployed, the inhabitants of depressed areas, et cetera, et cetera, men hopefully rack their brains in the effort to make all the new interferences bearable by adapting the check-and-balance system to new situations. The idea of "review boards" spreads; a Nassau County executive on Long Island in New York State (Eugene Nickerson) appoints an Ombudsman (the word is Swed ish) to investigate citizens' com plaints against public officials; and committees of Congress keep up a steady running fire of in vestigations. And still the criti cism swells; government, if not more terrible than tigers, seems to provoke an adversary for every advocate.

To document the situation, Pro fessor Walter Gellhorn of the Columbia Law School has written a small book called When A meri cans Cornplain: Govern'mental Grievance Procedures (Harvard, $3.95). My trouble with reading the book is that I kept bristling all through its 232 pages' at the author's assumption that the march of government to a million and-one social service goals can not be halted. "Organized power," says Gell horn, "makes the wheels of life go round, makes modernity feas ible. Restraint and coercion can destroy citizens' freedoms, but can 185 186 THE FREEMAN March also enlarge them - as they do when government acts affirma tively to protect physical well-be ing, to maintain social services that diminish life's pains and pressures, to ensure against the devastations of unemployment, ill ness, and old age, to provide ed ucational facilities and cultural amenities." The entirely valid complaint that, when a government tries to become "affirmative" about prac tically everything, it must end by provoking a universal destruction of values (with the currency be ing one of the important things to go), is not the sort of griev ance that Professor Gellhorn has in mind. He assumes that we must have an ever-increasing tribe of public servants, and that voluntary organizations aren't capable of supplying enough hos pitals, or art centers, or medical insurance, to take care of our needs. But it is probably churlish to mention the matter of Profes sor Gellhorn's basic political phi losophy, for it arp.ounts tocriti cizing him for not having written an entirely different book.

For the Salce 01 Argument Granting for the sake of argu ment the assumption that "mo dernity" is only "feasible" with a vast multiplication of govern ment-directed energy, Professor Gellhorn makes out a good case for developing "external" .critics of public administration. When citizens complain, the complaints all too often wind up on the desks of those wbo are being complained against. L.egislatures try to de fine the exact scope of adminis trative agencies, but it is impos sible to detail in advance the ap plication of law. Moreover, by fol lowing the absolute letter of the law, an obnoxious public servant can sometimes defeat the inten tion of it. Complaints can get lost in a run-around, and appeals outside the system to the courts can take forever and cost entirely too much. Since it is impossible to get administrators to give adequate satisfaction in meeting criticis~s of malfeasance and misfeasance in their own agencies, the Amer ican people have tended to treat their legislative representatives as their defenders against bureau cratic wrong-doing. Professor Gellhorn says that it is a good guess that well over 200,000 com plaints about administration reach Congressional offices·in the course of a year. Since congressmen are convinced that the way to win elections is to handle grievances themselves, they and their staffs get involved in never-ending case work. Very often the complaining citizen establishes his point. But 1967 GOVERNMENTAL GRIEVANCE PROCEDURES 187 tiny victories rarely lead to ge neric improvement over a broad front. The patterns of adminis trative policies or behavior do not change. Constituents' cases are disposed of episodically in individual congressmen's offices and, since neither the Congress as a whole nor its standing com mittees are aware of what has happened, nothing is done to keep it from happening all over again with different principals being in volved.

AI/Citizen's Protectorl/ Professor Gellhorn is enamoured of the Scandinavian concept of the Ombudsman. In Sweden, N01" way, Denmark, Finland, and New Zealand, the idea of a "citizen's protector" has taken firm root. It is even being tried in Japan and in the Soviet Union. But no single "citizen's protector" could pos sibly take 200,000 cases off the hands of 536 congressmen. Admitting the difficulties which deri ve from the size and com plexity of the United States, Pro fessor Gellhorn sees great merit in the national adaptation of the ombudsman system that has been proposed by Representative Henry S. Reuss of Wisconsin. What Reuss suggests is that an "Administra tive Counsel of the Congress" be appointed by the Speaker of the House and the President pro tempore of the Senate to review citi zens' complaint cases. The Ad nlinistrative Counsel would un dertake revie\vsonly when mem bers of Congress requested them.

And the outcome of each case would be reported to the consti tuentby the congressman him self. Thus Senators and Represen tatives would continue to get creditfor casework. But the work load on Congressional offices would be reduced, and there would be a better overall focus on defects in statutes or administrative meth ods that generated the complaints in the first place. Police Review Board In U. S. county and municipal areas the idea of single ombuds men, or citizens' protectors, might be counted on to succeed. But an ombudsman must be impartial as between complainants and city or county officials. When New York City made a partial gesture to wards accepting the ombudsman idea by setting up a civilian police review board, the police felt they were being singled out among public servants for·discrimination. Gossip soon had it that they were dragging their heels. The taxi drivers began saying that police in Harlem or in the Bedford Stuyvesant section of Brooklyn tended to look the other way when help was needed to deal with un188 THE FREEMAN March ruly cab fares. The police, so the taximen insisted, wanted to stay out of trouble lest the citizens' re view board might second-guess them.

Professor ·Gellhorn steps rather gingerly around the subject of the citizens' review board as it is limited to the performance of single bureaus. But it would seem obvious that if New York City had had an Ombudsman to listen to any and all complaints about any office or department from that of the Mayor on down, the police would have accepted surveillance from him without murmur. And the taxicab drivers might have gone to the Ombudsman instead of cynically· talking to themselves. Professor Gellhorn'sprose suf fers from the constant staccato interruption of innumerable and frequently turgid footnotes. Of course, the reader is free to skip them, but some of them are essen tial to the unfolding of the argu ment. The· book would. have been a better artistic unit if the neces sary material had been incorpo rated into the text and the rest segregated in an appendix. ~ The Greatest Evil I like bats much better than bureaucrats. I live in the Mana gerial Age, in a world of "Admin." The greatest evil is not now done in those sordid "dens of crime" that Dickens loved to paint.

It is not done even in concentration camps and labour camps. In those we see its final result. But it is conceived and ordered (moved, seconded, carried, and minuted) in clean, carpeted, warmed, and well-lighted offices, by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voice. Hence, naturally enough, my symbol for Hell is something like the bureaucracy of a police state or the offices of a thoroughly nasty business concern. c. S. LEW IS, The Screw tape Letters 1967 OTHER BOOKS 189 ~ CAPITALISM: THE UNKNOWN ID EAL by Ayn .Rand with Alan Greenspan, economist; Nathaniel Branden, psychologist;· and· Robert Hessen, economic' historian. (New York; New American Library, 1966, 309 pp., $6.50) Rev,iewed by Elizabeth Gillett IN HER NOVELS as well as in two re cent nonfiction books, Miss Rand has slashed through many cher ished cliches with radical new ideas.

Here, she and her fellow authors focus on the phenomenon that be sets both antagonists and support ers of capitalism, including busi nessmen: the fact that almost no one understands it. This book dev astates the anticapitalists and forcefully expands the arsenal of pro-free-enterprisers by consis tent, sophisticated deployment of novel idea weapons - especially the concept of laissez-faire. Many of capitalism's professed defenders have partly or fully swallowed the smear spread by its avowed enemies: that capitalism absolutely requires governmental regulation to assure any measure of justice to all concerned-and the more controls the better. Miss Rand and company show what a perversion of basic facts this widely held estimate is. They argue further that only laissez faire capitalism, with state' and economics totally separated, can naturally assure the greatest pos sible justice by providing an ob jective standard in a free market, determined by the voluntary choices of participants from among goods and services pro duced for profit to meet people's needs and desires. Force and fraud do get punished - when they oc cur; they are not pa~atioically an ticipated by imposed regulations.

The book covers many crucial economic and governmental insti tutions, myths, and labels. Among these, in that order, are: antitrust laws, regulatory agencies, foreign aid, patents and copyrights, and the gold standard; the alleged in evitability of monopolies and de pressions and the presumed accom plishments of labor unions and public schools; "self~determina tion," "extremism," "consensus," and "conservatism." Especially memorable, besides "The Nature of Government" and "The Roots of War," both of which appeared in THE FREEMAN, is Miss Rand's "Notes on the History of American Free Enterprise." In it she argues that the villains of transcontinental railroads were power-hungry legislators and their greedy parasites, not independent 190 THE FREEMAN March entrepreneurs. The old leftist bro mide about how cruelly women and children were exploited under early capitalism is exploded in an essay. by Robert Hessen.

The two final essays make an impressive climax. Miss Rand's "The Cashing In: The Student Re bellion" identifies· the Berkeley riots, point by point, as a cultural abscess fed by several fallacious trends calculated to distort or dis credit free enterprise. Nathaniel Branden's piece on "Alienation" brilliantly traces the psychological premises that must operate in a collectivist's mind. At the core of the book's theme rest the Objectivist views of man and morality. Among their revolu tionary aspects· are: reason as an absolute, an objective standard of value, and the rejection of altru ism for rational self-interest. The book also offers a precise index of topics, individuals, and publications, and a "Recommended Bibliography" of many works that contain relevant material. Readers mayor may not agree with all the book's basic premises. Yet anyone who believes he favors capitalism owes himself the ex perience of becoming acquainted with the unique arguments pre sented in Capitalism: The Un known Ideal. Whether or not he accepts them all, he will come away better armed than ever before.

~ THE CHRISTIAN ALTERNA TIVE TO SOCIALISM by. Irving E. Howard, (Arlington, Virginia : Better Books, 1966. 153 pp., $2.50) Reviewed by Nor1nan S. Rea'm THERE ARE TWO separate but related arguments supporting a free enterprise, limited govern ment economic system. One· is the pragmatic argument; the other the moral argument. Both arrive at the same conclusion. Consider ing the ends which the majority of men have considered most wor thy, capitalism is always in the long run more effective than so cialism. The present volume by the well qualified assistant editor of Chris tian Economics presents the moral argument from a strictly Chris tian point of view. "It is not by accident that communism assumes an atheistic view of the universe and a materialistic view of man. It is no accident that the Ameri can system grew out of a strong faith in God and a spiritual view of the nature of man."

Christianity insists on certain basic moral principles. Each indi vidual is of supreme worth. Every normal man has and ought to have freedom of the will. Every man has a responsibility to help his less fortunate neighbor. The use of force and violence by one man 1967 OTHER BOOKS 191 against another is immoral. Steal ing is wrong. , Irving Howard documents the socialist's denial of each of these moral principles. In reality, the socialist scorns the common man and talks only about "lower class es." He denies that man, using his free will, can make wise de cisions, and therefore the socialist planners must make decisions for him. If men will not do voluntarily what the planners think wise, then they must be forced to do so even though this means the plunder of private property in the form of taxes and the coerced redistribu tion of wealth. Socialism thus be comes the complete antithesis of Christiani ty.

The author defends the idea of "Christian economics" by insist ing that what one believes deter mines how he acts, and only the fundamental principles of Chris tianity can give an adequate moral foundation to capitalism, while they invalidate the fundamental principles of socialism. Such fac tors as land, labor , money, and government are all discussed from this basic point of view. Running through the whole book is a strong passion for freedom coupled with a strongly orthodox religious philosophy. "Freedom is not primarily a political concern, it is a religious one. Freedom is a quality of life that has its· roots in the worship of God, a worship which produces a man with a high sense of moral responsibility, who does not need external restraints and who will, therefore, make a society in which external re straints are reduced to a minimum and freedom enlarged to a maxi mum." ~ ~ OUR WESTERN HERITAGE and THE SCRIPTURAL STAND ARD IN ECONOMICS AND GOVERNMENT. Both by Edward P. Coleson, Ph.D. (Privately printed and available from the author, Spring Arbor College, Spring Ar bor, Michigan, 49283. $1.25 each, postpaid) Reviewed by George Charles Roche III As A COLLEGE TEACHER of history and philosophy, this reviewer re peatedly found himself confronted with a problem which many teach ers of "Western Civilization"

courses have faced: most of the in troductory texts and readings available for undergraduate survey courses in the heritage of Western Man fail to present a complete and meaningful picture of their sub ject. The Judeo-Christian roots of our· past, founded upon faith in God, belief in an objective stand ard of right and wrong, and an af firmation of the dignity of the in dividual, often are submerged in a 192 THE FREEMAN March sea of "modern" cultural relativ ism, behaviorism, moral subjectiv ism, and· the rest of the ideology which dominates the textbooks of our superscientistic age. Professor Coleson's books are en couragingly different. Clearly and simply written, well-documented, and containing a helpful list of suggested readings, these paper back volumes offer, within the com pass of approximately 200 pages each, a straightforward and sound introduction to many aspects of the religious, historic, and moral heri tage of Western Man. Throughout, the author relates that heritage to the problems we face today and lays a foundation for the reader to do some fundamental thinking of his own in·contemporary economic, political, and ethical questions.

Either or both books would make a genuine addition to many courses. in introductory "social science" on the college level. They would be· es pecially valuable as supplementary readingsfor courses already estab lished, but would also make good reading for anyone interested in the restoration of the values of Western Civilization. ~ Binders with Issues inserted for Calendar Years 1963 and 1964: HANDSOME BLUELEATHERLEX FREEMAN BINDERS Either year Both $ 5.00 10.00 Binder only, $2.50 each THE FREEMAN Y' George Roche looks carefully at some of the proposals for the youth of America and warns of the dangers of such regimentation p. 195 Y An Illinois businessman turns to The Law of Bastiat (1850) for guidance back toward liberty in 1967 ....p. 203 Y' The President of Rockford (Illinois) College deplores the power-seeki ng ef forts of many groups in our time and suggests a search for a moral alternative p. 207 ,J" Granville Wilson (no relation to the Prime Minister) seems to understand the flight from Britain of talent stifled under socialism p. 215 Y' Harold Fleming, author of Ten Thousand Commandments, affords a preview here of some ideas to be cov ered by him in an expanded and up dated study of antitrust laws and 'their impact p. 221 ~ Back to Britain, briefly, as George Winder focuses on the latest bureaucratic bungling of "wages and incomes" policies p. 231 ~ But, as William Henry Chamberlin readily perceives, not all such bun gling is foreign; we have our own wid ening "public sector" - at public expense '" p. 235 Y' Check again the opening article by George Roche, and then see how Rob ert Tyson, finance chairman of U.S.

Steel, would advise American youth ............ p. 243 ~ Drury's Capable of Honor and Alex ander's The Spirit of '76 boost John Chamberlain's hopes for a libertarian revival p. 250 ~ And W. H. Chamberlin shares his enthusiasm for The Inside Story of the U. N. by Hernane Tavares de Sa ............ p. 2'53 ,~ Mary Jean Bennett compliments Raymond Moley for his latter-day un derstanding of The First New Deal, in which he played a part p. 255 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

APRIL 1967 LEONARD E. READ PAUL L. POIROT Vol. 17, No.4 President, Foundation for Economic Education Manag'ing Edit01' 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. Tel.: (914) 591 7230. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are in vited in any amount-$5.00 to $10,000---.as the means of maintaining and extending the Foundation's work. Copyright, 1967, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 centsj 3 for $1.00j 10 for $2.50; 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. Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

A Youth Corps for America? GEORGE CHARLES ROCHE III WITHIN the past two years there have been several signs pointing toward the resurgence of an idea which the American people tradi tionally have refused to accept. The warmed-over idea centers on compulsory service for all young Americans. The pressures of the war in Vietnam, the growing pro tests over the draft, the problem of unemployment, especially among young people, and the tragi-comic results of Great Society experi ments in the "War on Poverty" have combined to make compul sory youth service a topic of dis cussion once again. President Johnson reopened the {····.. cllln.'n' ..r in a speech at the Univerof Kentucky in 1965, propos "to search for new ways [whereby I every young American will have the opportunity - and feel the obligation - to give at Dr. Roche is a member of the staff of the Foundation for Economic Education.

195 196 THE FREEMAN April least a few years of his or her life to the service of others in this nation and in the world." As draft protest, unemployment, and the rest of the problems dog ging the footsteps of the Great Society continued to mount in in tensity, other more specific refer ences to "public service" for young people began to be heard as well. In May, 1966, Secretary of De fense McNamara delivered an ad dress at Montreal in which he ad mitted that the existing Selective Service System was unfair and largely unworkable: "It seems to me that we could move toward remedying that inequity by asking every young person in the United States to give two years of serv ice to his country - whether in one of the military services, in the Peace Corps, or in some other vol unteer developmental work at home or abroad." Secretary of Labor Wirtz en tered the field during November, 1966, with a "policy for youth"

along the same lines. The Wash ington Post reported enthusiasti cally, "It could become a major weapon in the War on Poverty, is designed to remove inequities in the educational system and is an implicit deterrent to juvenile de li'nquency."l Specifically, Secretary 1 Frank C. Porter, "Wirtz Broadens Youth Service Plan," Washington Post, Nov. 20, 1966. Wirtz outlined a plan in which every eighteen-year-old American boy and girl would be compelled to register in a program which re ... quired two years of education, military service, community serv ice, or employment. Universal Military Training Meanwhile, others were offering youth proposals of their own. Former President Eisenhower in September, 1966, told the nation that, while Chief of Staff of the Army, he had made every effort to establish a system of Universal Military Training for the United States, and suggested that UMT would not only solve the problems of the draft but would achieve a necessary degree of fitness and discipline among American youth.

He stressed the disciplinary fea tures of such a program: "... al though I certainly do not contend that UMT would be a cure for ju venile delinquency, I do think it could do much to stem the grow ing tide of irresponsible behavior and outright crime in the United States. To expose all our young men for a year to discipline in the correct attitude of living, inevita bly would straighten out a lot of potential troublemakers."2 While the former President felt 2 Dwight Eisenhower, "This Country Needs Universal Military Training," Reader's Digest, Sept., 1966.

1967 A YOUTH CORPS FOR AMERICA? 197 that such a program should be made compulsory for virtually all American boys, he made it clear that he would limit this compul sory training to formal military discipline and related matters, since he did not approve of offer ing an alternative such as the Peace Corps or a conservation corps. A Droit Without Guns Though the former Commander in Chief proposed to allow compul sion of all American youth only for purposes of military training, it soon became evident that other social planners had far more in mind for America's young people. Writing in Saturday Review, a Peace Corps official outlined the great social changes that might result from such a program: The young men and women coming out of high school are themselves a maj or undeveloped resource. They represent America's future. They need to be asked to give some kind of active national service. They need "to get the childishness knocked out of them, and to come back into society with healthier sympathies and so berer ideas," wrote [William] James.

... They need to cross cultural fron tiers, experience the outside world, and become world citizens, says Mary Bunting. 3 3 Harris Wofford, "Toward a Draft Without Guns," Saturday RevieuJ, Oct. 15, 1966. As the public discussion of such compulsory youth programs pro gressed, it soon became evident that many of those advocating such programs had far more in mind than the mere solution of such problems as the draft and teen-age unemployment. When questioned concerning his pro posal, Secretary Wirtz expressed a doubt that present inequities in the draft were any worse "than the unfairness of the way one boy or girl out of every two gets to college and the other one doesn't." Clearly, great social changes of a sweeping nature were being con templated by the advocates of com pulsory youth programs. IIEvery Area of National Need" While former President Eisen hower was willing to limit his pro posal for a compulsory youth pro gram to mili tary training and such side-benefits in health or dis cipline as might accrue to Ameri can youth, his program was scarcely an opening wedge for more ambitious social planners: "Former President Eisenhower to the contrary notwithstanding, the Pentagon says it opposes Univer sal Military Training. What, then, are the nation's needs for non military service by young' volun teers? The President says that volunteers are .. required in 'every area of national need,' especially 198 THE FREEMAN April in teaching, alleviating poverty, and conservation." Thus, Harris Wofford, a Peace Corps adminis trator, described what he termed an "historic opportunity." He went on to describe enthusiastically the day of compulsory national serv ice which had already dawned 'in Israel and Ethiopia. "But it re mains to be seen whether America - which, through the Peace Corps, has brought the idea of volunteer ing to world-wide attention - will now respond and turn to the Ethi 0pian innovation and the example of Israel. ... Will Lyndon J ohn son now tap it on a much larger scale? Will the administration that established 'escalate' as a word of war find ways to escalate volunteering for works of peace to a new level of practically uni versal participation ?"

Urging that constructive peace time assignments should be de manded of all, Wofford inquired, "Who is too tall to teach? Whose feet are too flat to be a tutor? Why shouldn't almost everyone be I-A for national service?" Mr. Wof ford pointed to the desirability of an expanded Head Start project, new educational programs of the Office of Economic Opportunity, new programs stemming from the V{hite House Conference on Civil Rights, and an expansion of pub lic education to four-and five-year olds. 'Vhere would the new teachers come from in this vastly ex panded program? "With special training and supervision, hun dreds of thousands of volunteers, supported by a Peace Corps-like subsistence allowance, could be the answer. To move toward universal early childhood education, we may need to move toward uni versal service." Is education the only need which could be filled by a new program for American youth? If some Americans are too immature to fill a teaching position" there are, however, needs which younger volunteers could help meet. One of them might even in volve washing dishes and clothes.

Millions of working mothers, es pecially in poverty-stricken fami lies, desperately need some system of day-care for their children. Volunteers just out of high school could be trained to provide this on assignments in homes or special day-care centers." A Program with Teeth in It It seems that once the exercise of political power is viewed as ac ceptable, the logic of social plan ning requires the exercise of that power over a larger and larger area of human affairs. As the Sec retary of Labor remarked: "This country is probably more disposed right now to move ahead on the 'social welfare' front with stern1967 A YOUTH CORPS FOR AMERICA? 199 ness than with sympathy. The fact, whether attractive or not, is that concern about juvenile de linquency looms larger today in a good many people's minds. than their concern about poverty - even though that may well be the cause of the delinquency. There is a can cer here, and the country is ready for surgery."4 Proponents of these youth pro grams have been referring to the process of "volunteering." Yet, the "voluntary" aspect of the plan always proves difficult to discover in practice. Secretary Wirtz ad mitted that serious thought was being given to making such a pro gram compulsory: "It would be precisely those who present the most serious problems, both for themselves and for the commu nity, who would fail to take ad vantage of any or all of the options which were offered them and their continuing derelictions and mis demeanors would make a new sys tem seem not to be working even if it were in fact improving the general situation materially." Yes, America's young people would be "free to choose" among the op tions, but would be required to follow one of the alternatives out lined in the plan.

Once such "opportunities" are provided, it is a short step to in sisting upon everyone's benefiting 4 Porter, op cit. from the plan, whether he wishes to do so or not. Wirtz told an au dience at Catholic University, "If I read the current national mood, and guess at your own reaction, it is that there has been too little done about people's not using the opportunity they already have." The Washington Post thought those words "presaged a possible shift of emphasis in the Johnson administration's whole social phi losophy, regarded by some critics as overly solicitous and permis sive, toward a hard-boiled insist ence that the intended benefici aries of governmental help make good use of it." The exercise of power seems to breed an appetite for the further exercise of power. The potential dimensions of such a youth program are stag gering. All young people, girls as well as boys, would be registered on their eighteenth birthday, or earlier if they have left school.

Physical, mental, and psychologi cal tests would be administered and used to help decide which of the various channels of "national service" every American youth would be compelled to enter. No one could be exempt; and in all probability many youngsters would find themselves directed on a course other than they might have chosen. What parent wants to see his child compulsorily en rolled in such a program?

200 THE FREEMAN April What Will It Cost? One question that must be raised in any discussion of com pulsory programs designed to en roll all American youth is the staggering cost of such a plan. Where is the money to come from? In recommending Universal Mili tary Training, former President Eisenhower admitted, "I have no ready-made plan for financing UMT. I wish only to say that a big, powerful country such as ours could surely find a way to pay the bill." Nor did Mr. Wofford provide direct answers concerning the fi nancing of his nonmilitary com pulsory youth program: "How much would such a volunteer serv ice program cost? Not as much in a year as one month of the war in Vietnam. Not as much as doing nothing - as failing to mobilize the talents and labor of the younger generation. Not as much as hiring professional teachers or social workers or construction men - if we could find enough of them - to do what these volun teers could also do."

In other words, however expen sive the program, its desirable goals would justify that expense. This is the plea always advanced by the advocates of any new ex tension of statist authority. How would such a program be staffed? President Eisenhower's solution: "We could call in reserve officers for a time if needed, and I am confident that we could find the other necessary people if we had to - just as we did during World War II." Just as we did during World War II! A more total involvement of the national government in the private affairs of its citizens could hardly be imagined. Before America embarks on such a gigantic raid on the treas ury - and even more important, such a major intervention into the private lives of its citizens - the nation might ask itself how the present "youth programs," already under political direction, have prospered. For example, what of the Job Corps? One camp in the Midwest had 450 men as enrollees and more than 450 employees.

Seventy employees worked directly with the Job Corpsmen, meaning that over 380 governmental em ployees were devoting their time to the "administration" of the work actually performed by the other 70.5 This same camp treated the American taxpayer who was footing the bills for the entire af fair to the spectacle of seven young Job Corpsmen committing sodomy against a fellow enrollee. Apparently, this is a simple mis5 Don E. Cope, "It's What's Happen ing, Baby," National Review, Oct. 19, 1965.

1967 A YOUTH CORPS FOR AMERICA? 201 demeanor in the Job Corps, since five of the boys were allowed to return to their homes and the others to re-enter the program at the Job Corps camp. The state ment of one of the hired coun selors at the camp makes clear that thievery was common and discipline virtually nonexistent. IVrany of the young men ran away from the camp rather than par ticipate further in what one of them described as a "man-made hell." Meanwhile, the Neighborhood Youth Corps in the nation's capi tal reported that 75 per cent of the teen-age girls who had been members of the program became pregnant while enrolled. Officials of the program swung into action almost immediately after this item became public knowledge. One of the administrators announced that girls in the future would be urged to visit District Health Depart ment Family Planning Clinics. He speculated, "Maybe we can't cut the physiological action, but we can cut the pregnancies."6 How much money does it take to produce such results? In the Job Corps, more than $7,300 has been spent to date for each man enrolled in the program! As many parents well know, that would go a long way toward putting a young man or woman through college.

6 America's Future, Dec. 12, 1966. Seeming Lack of Concern How does it happen that such proposals can be publicized in our society, proposals with such dis astrous results in the pilot proj ects, proposals of such fantastic cost, proposals with such totali tarian implications for our young people, and yet cause little if any public outcry? The answer is a painful one for believers in limited government. An erosion of faith in constitu tional limitations and personal freedom has so long continued that all proposed governmental ac tions are considered, not in terms of principle, but in terms of the solution of some "problem" or another. There are protests against the inequities of the draft? Then make the draft equitable by im posing service on all boys! There are "social problems" to be solved? Then extend the system to impress all of our young girls into service as well! Some parents and private organizations are "mis-directing"

the accomplishments and training of our youth? Then remove that responsibility from parents and private organizations! Such is the prevailing thinking of our age. The universal conscription of our young people for "social" goals may be so raw and blunt a foray into the private sector that it will not reach fruition at this time. But the trial balloons are up and 202 THE FREEMAN April such "social planning" surely lies ahead unless the direction of our thinking, not as a group, but as individual citizens and parents, is reversed. Try freedom The disastrous record of coer cion when it has been tried is well known. The productive and en nobling capacities of a society pervaded by freedom are equally well known. But there are none so blind as those who will not see. We must first train ourselves to think the problem through and apply the evidence already before us if any lasting changes are to be produced. The point is simple: Freedom works, if we will but al low it. Is teen-age unemployment a problem? Then remove the coer cion of the minimum wage law and afford businessmen a chance to profit by hiring and training younger people. Protest against the draft is a problem? Then stim ulate enlistment by hiking mili tary pay and benefits enough to be competitive with the private sector.

Yet, such solutions seem beyond the planner's comprehension. When coercive legislation creates prob lems within a society, as eventu ally it must, the coercionist an swer is always the same: apply more coercion. This is exactly what is proposed in the compul sory "social service" impressment of America's. young people. After urging a universal serv ice program for youth, Secretary of Defense McNamara concluded his Montreal address with words far more appropriate to the free dom alternative than to the posi tion he was advocating: "I, for one, would not count a global free society out. Coercion, after all, nlerely captures man. Freedom captivates him." ~ KEITH WOOD MANY thoughtful people have be come alarmed about the rapidly growing power of government. Those who have advocated govern ment interventions have thought they had all the answers. Now their socialist chickens are coming home to roost. Every such scheme of government intervention has been tried and tried again - and almost without exception the fail ure has been a dismal one.

It has often been noted that a problem is close to solution once it has been clearly and adequately de fined. As I have observed the prob lem from the vantage point of a free enterpriser, it seems to me that it can be expressed this way. People want to do things to uplift themselves or others. This alto gether commendable desire has been widely encouraged by the teachings of our religious leaders. But as soon as we decide to do things for ourselves or others, we Mr. Wood is President of Wood Brothers Manufacturing Company of Oregon, Illinois. This article, condensed from a recent speech, expresses his concern over the growing tend ency of organizations and groups to turn from voluntary to coercive methods. bump into a limitation of resourc es. Although some people have more resources than others, every one has his limitations. Thought less or careless dissipation will soon exhaust the material means of anyone.

Now, finding ourselves in this situation, there are two things we can do: Each of us can do what he is able to do within his own limita tions orhe can seek to augment his resources by those of others. There is nothing necessarily wrong with the combining of resources to do a job. A great deal can be accom plished in this way; examples are all around us. The physical facili ties of a church organization are a good example. However, when we decide to mobilize the resources of others to assist in carrying out our plans, there is one other choic~ we have to make. This is whether or not to rely on the voluntary help of other people. The rawest forms of coercion are rejected by almost everyone. There are very few who think they should take a gun and hold up the 203 204 THE FREEMAN April local bank in order to get the re sources they think they need. But there is a way to do the same thing that has long been sanctioned by our society. This way is to levy a tax and hire a policeman to enforce its collection.

This, in my opinion, constitutes a perversion of the police power. Policemen and courts should pro tect us in our lives and the enjoy ment of our private properties. Our private property is the fruit of our labor and it should be ours to enjoy as we see fit so long as we injure no other peaceful person. The police men and courts should not be used to take from some to give to others or to take from all of us for the benefit of a privileged few. This may seem like a radical doc trine, and it is today! However, it was well understood by the authors of our Constitution and the prin ciple was quite well observed for the first century and a half of our country's existence. There are no doubt many rea sons for our failure to successfully support and defend the limited gov ernment our forefathers so wisely created. It seems to me that one of the main reasons for our failure has been the popular glorification of the idea of majority vote.

It is true that there are many things which must be decided by majority vote. There appears to be no other satisfactory way. But just because majority vote is a good way to decide some things doesn't mean that it is a satisfactory way to decide all things. A typewriter may be excellent for writing let ters, but that doesn't make it a good adding machine! The limi ta tion that should be put on majority vote is a moral principle. We should refrain from doing anything by majority vote that we would not have a moral right to do as individ ual people. When this idea is taught, all kinds of practical objections occur to everyone. This is simply because violations of the principle are so widespread that we find it hard to imagine any other way of doing things. A good example is a public swimming pool as has been financed by taxes in many communities. Now a swimming pool is a won derful thing. Our family has one.

It has been a source of enj oyment to the neighbor's children as well as our own. It is fine for a com munity to have an adequate swim ming pool. Still, it must be admit ted that many children have suc cessfully reached adulthood and many adults have successfully lived out their lives without ever going near a swimming pool. If exercise is desired, it can be had in other ways. If recreation is needed, the children can play baseball or foot ball. There is nothing essential, then, about a swimming pool.

1967 LIBERTY AND LAW 205 However, in spite of its being nonessential, given the present frame of mind of the American people, there is little problem about getting a majority vote and levying the subsequent taxes to finance a swimming pool. By so doing, we require the elderly per son who lives on a pension to pay part of the cost of the swimming pool. The widow who may hardly be able to support herself finds the taxes on her home increased. This is usually accomplished by a simple majority vote of those voting - a very small minority of those who will pay the price. This is a process which seems to me to be immoral and unj ust. Are there alternative ways by which these things can be done? Of course, there are! Many com munities raise funds by popular subscription for swimming pools. This method has been very suc cessful and the promoters are not then burdened by any question as to the morality of their actions.

Many country clubs provide swim ming pools. In some communities, small groups of people get to gether to finance a pool for their mutual enjoyment. It is difficult to convince people that this principle should be ad hered to so rigidly. However, it is likewise hard to convince people that they should always be honest! Or that they should never steal! The laws of God are violated every day and many times. A principle, however, is not invalidated by our failure to observe it. The sound principles of a moral order are in dependent of our observing them. It is similar to the law of gravity - if we jump off a cliff, we'll land just as hard whether or not we believe in the law of gravity! It is easy, of course, to be dis couraged when actual society is compared to any ideal. How can we do things differently when par ticular ways have become woven into the pattern of our lives? This is not an easy question to answer except in one respect: each one, as an individual, can easily quit ad vocating the extension of govern ment into any areas where gov ernment action is questionable.

We should have a well-financed police department for the suppres sion of crime. Our courts should be provided with adequate facili ties for judging the cases which come before them. All citizens should cooperate with government in its legitimate function of pre venting injustice. This work has nothing to do with swimming pools, parking lots, airports, re newal of blighted business areas, or the thousand and one other government interventions that dis rupt our lives, destroy our secur ity, and limit our opportunities.

206 THE FREEMAN April Frederic Bastiat, a French economist, statesman, and author who died in 1850, wrote a remark able book called The Law. As a deputy to the legislative assembly, Mr. Bastiat opposed the socialism to which France was xapidly turn ing at the time. In the course of his opposition, he explained each socialist fallacy as it appeared: This question of legal plunder must be settled once and for all, and there are only three ways to settle it: 1) The few plunder the many. 2) Everybody plunders everybody. 3) Nobody plunders anybody. It is impossible to introduce into society a greater change and a greater evil than this: A conversion of the law into an instrument of plunder. What are the consequences of such a perversion? It would re quire volumes to describe them all. Thus we must content ourselves with pointing out the most striking. In the first place, it erases from everyone's conscience the distinction between justice and injustice.

No society can exist unless the laws are respected to a certain degree. The safest way to make laws respected is to make them respectable. When law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law. These two evils are of equal con sequence, and it would be difficult for a person to choose between them. The nature of law is to maintain justice. This is so much the case that, in the minds of the people, law and justice are one and the same thing. There is in all of us a strong disposi tion to believe that anything lawful is also legitimate. This belief is so wide spread that many persons have er roneously held that things are "just" because law makes them so. Thus, in order to make plunder appear just and sacred to many consciences, it is only necessary for the law to decree and sanction it....

Law is justice. And it is under the law of justice - under the reign of right; under the influence of liberty, safety, stability, and responsibility tha t every person will attain his real worth and the true dignity of his being. It is only under this law of justice that mankind will achieve slowly no doubt, but certainly - God's design for the orderly and peaceful progress of humanity. It seems to me that this is theoreti cally right, for whatever the question under discussion - whether religious, philosophical, political, or economic; whether it concerns prosperity, mo rality, equality, right, justice, prog ress, responsibility, cooperation, prop erty, labor, trade, capital, wages, taxes, population, finance, or govern ment - at whatever point on the scientific horizon I begin my re searches, I invariably reach this one conclusion: The solution to the prob lems of human relationships is to be found in liberty. ~ Frederic Bastiat's The Law, translated by Dean Russell, is available from the Foundation for Economic Education, Irvington - on - Hudson, New York, 10533. $1.00 paper; $1.75 cloth; quantity rates on request.

The Moral Equi\lalent of Power JOHN A. HOWARD SOME twenty-five years ago a man died and bequeathed a small for tune to be spent in helping the peo ple of other nations to understand the American way of life. The agents chosen to .administer the funds were bright, conscientious folk and they went to work to carry out the intentions of the deceased. The task sounds simple enough when it goes by the first time, but it is an elusive object when one tries to apprehend it. After all, what is the American way of life, and how can it be explained? After many months of seeking advice from experts and weighing carefully one project after another, the executors concluded that the more elaborate or grandiose the plan, the less likely it was to fulfill the purpose. Ultimately, they deDr. Howard is President of Rockford College, Rockford, Illinois. This is a condensation of his Convocation Address of September 21, 1966.

cided to make some movies about the everyday life of inconspicuous citizens, with the commentary available in many· different lan guages. The film follo'wed a paper boy on his early morning .route, and a milkman on his, as they left their deliveries on front porches and at apartment doors. A small town banker was shown at his desk dis cussing loans with farmers, and later, in his overalls, painting his front fence. There was a committee meeting of a service agency and some firemen playing baseball with the neighborhood kids. Such scenes scarcely seem des tined to nUlke the blood boil with undying "....,,~J.llsiasm for the Amer ican waJ of life, but there are some messages here which you and I cannot read. We are blind to what we take for granted. We attach no special significance to 207 208 THE FREEMAN April whatever is commonplace in our own lives. However, in many na tions, nobody would' dream of leaving anything outside a front door, especially anything as de sirable and as swipeable as fresh milk or today's paper. The readi ness with which an American dirt farmer can obtain a loan for seeds, fertilizer, and machinery is a surprise to many peoples, but not half as astonishing as the vision of a banker doing manual labor. A view of public servants engaged in a children's ball game is likewise a jaw-dropper in those nations where a status position requires a rigid formality of be havior. But the real shocker in many foreign cultures today, as it was to the Frenchman, ·Alexis de Tocqueville, one hundred and thirty years ago, is the voluntary banding together of common citi zens in a service agency to help their neighbors.

The films portrayed simple ac tions in the lives of trusting, help ful, friendly, unpretentious peo ple. It was a benevolent society in the precise meaning of that word - benevolent~ well-wishing. Today many of us might see these films as the creation of a naive P-ollyanna~ or at least as the presentation of a distortedly fa vorable and falsely healthy Amer ican community. The festering sores-of poverlYI prudery, hypocrisy, human exploitation, and un fulfilled civil rights have been unbandaged and revealed in all their raw ugliness, and the public has come to look upon the general American as something less than healthy, if not outright sick. Ac tually, the executors of the be quests were not all that insensi tive or indifferent to our social problems, but their charge was to convey what was unique about life in this country, and in that, I be lieve their work is still remark ably valid.

However, the qualities of Amer ican life which they highlighted are, it seems, waning. And it is to this point that I think we must attend today. Trustfulness, friend liness, helpfulness, and unpreten tiousness seem to be yielding to suspicion, arrogance, aggression, and defiance. Power is becoming the dominant motive of our do mestic relationships as well as our international ones - power sought and power wielded and power feared. We observe on all sides people trying to force others to behave differently. Alternate tech niques of human interaction are being cast aside in favor of muscle and might. flnion Abuses of Power In'recent months we have seen union phalanxes running rough shod over the opposition, exerting 1967 THE MORAL EQUIVALENT OF POWER 209 brute power with apparent indif ference to the consequences for the general public or even for the \velfare of their own membership.

A self-defeating newspaper strike in New York City eventually wrested some concessions, princi pally for severance pay,from those employer newspapers which sur vived the strike. In the same city, the public transport workers forced a new wage scale which the city officials confess they cannot pay without subsidy from other levels of government. The ground ing ofa number of major airlines extracted precedent-setting pay increases. Wholly apart from the millions of people whose livelihood was directly, and in many cases, very seriously curtailed by these work stoppages, the effects upon the nation were damaging beyond any possible justification. The right to· strike has been wholly accepted as a technique of the conduct of life in America. And yet this right has fostered the concentration of power to such an extent that a relatively small segment of the population can disrupt the entire economy.

The Federal government has likewise come into greater and greater power which it applies with increasing frequency. It has, in re cent months, publicly threatened the banks and the Chicago schools and the producers of tobacco and aluminum and steel with the hea vy guns of its economic arse nal to the point that the officers of an increasing range of enter prisescandidly admit they can no longer express public opposition to the policies of the Washington Administration. When power is concentrated, freedom is threat ened. When power is used, free dom is curtailed. A diminishing atmosphere of freedom would nor mally arouse the intellectual com munity to the defense of the vic tims, but, so far, the government has used its coercive weapons in behalf of objectives dictated by the intellectual community and the freedoms that have been abridged were those of Hthe enemy." The traditional defenders of freedom have either cheered or sat silent.

One Violation Becomes the Justification for a Chain of Others This attitude on their part is, I am convinced, woefully short sighted, for aggression begets ag gression and feeds on itself. Suc cessful strong-arm techniques used on one battlefield are quickly adapted by the storm troopers on another. The intellectuals who have been so willing to have the government overpower those who think otherwise are finding their own academic centers victimized by powerful assailants. If there is 210 THE FREEMAN April any truth to Professor Feuer's article entitled "The Decline of Freedom at Berkeley" in the current issue of The Atlantic Monthly, last year's student as sault has already brought sub stantial devastation to one of the world's most renowned academic centers. Force cannot be a legitimate weapon in my hands and an im proper one in yours, if we are equals. Once force becomes the main instrument of public policy, all aspirants to anything are auto matically licensed to intimidate and brutalize, if they can. One is reminded of an illustration used re cently by Barbara Ward. "I would even go further and say in New Guinea, it is attractive to live in a village because every time you leave that village, you change your language and that gives you a perfect right to head-hunt in the next village. Well, obviously this is a very attractive way of run ning human affairs and this is what some people want to restore in Europe. What after all was 1914 and 1939 but the idea that your tribe can head-hunt in the next village?" We haven't yet re turned to actual head-hunting, but we are aimed in that direction.

Civil Rights Plus Power The civil rights movement has caught the disease, and has made the predictable progression from an original basis of limited, ap plied pressure to a spectrum of coercive action that includes out right terrorist tactics, leaving many of its most genuine and ac tive participants confused and dismayed at the beast they have helped to nourish. Perhaps you saw the article in Look Magazine reporting an in terview with Lillian Smith, the author of Strange Fruit, who was one of the best-known backers of the Student Non-Violent Coordi nating Committee. Miss Smith, gravely weakened by cancer, talked about her resignation from SNCC when it embraced the Black Power concept. She recalled an early warning she had made to the officers of that organization. "You're going to have the same temptation that Jesus and Gandhi had - the temptation of personal political power. You will want to get power in your own hands . . .

You will want to stir people's hatreds." As in the case of. anybody that starts down the path of power tactics, the civil rights leaders have had to run faster and faster to keep ahead of their troops, pro curing more devastating arms and making more sweeping demands to satisfy the power appetite they have generated. Napoleon and Hit ler and Stalin, indeed, all tyrants, 1967 THE MORAL EQUIVALENT OF POWER 211 have been destroyed by the same self-accelerating pace of aggres sion. In the Name of the Church The national acceptance of force as the main technique for change is nowhere so startlingly manifest as in a statement printed in the July 31st issue of the New York Times signed by forty-eight mem bers of the National Committee of Negro Churchmen. Their purpose is to help people comprehend the reasons behind the thrust for Black Power and to justify Black Power within a certain framework of un derstanding. The entire text is based on an assumption that "pow erlessness breeds a race of beg gars," and that it is only as power is placed in the hands of Negroes that they can achieve the actual role of complete citizens and the full dignity of human beings.

There is some reason to believe that instead of powerlessness breeding a race of beggars, power breeds a race of tyrants, but my point here is that these are Chris tian clergymen who declare that power in its coercive, leverage, in timidating sense, is essential to the full life of a citizen. It is my recol lection that Christ at no time rec ommended or endorsed the use of force to accomplish any of his as pirations for mankind. His doc trine was a self-policing one. He did not urge that prostitution be prevented by law and stamped out by a constabulary. He directed the individual offender to go and sin no more. That half a hundred of Christ's prominent ministers would proclaim a human right to power in his name is, I should think, dra matic evidence of the degree to which coercive power is coming to dominate the hopes as well as the actions of all segments of our pop ulation. The Process of Corruption Now, there are some fundamen tal problems that may arise when force becomes the instrument of social interaction. I shall indicate only two. One is that however lofty the original motives of any power wielding group, human nature is such that that power eventually seems to fall into the hands either of self-serving or self-righteous officers. On the one hand, the origi nal slogans become hypocritical justifications for plundering the community and for gathering more power. On the other, the officers seek additional power in order to force their "enlightened" views on more and more people.

Perhaps you heard of the com pany president who called in an employee who had refused to sign up for the pension plan. "You sign or be fired," he declared. "I'll sign," was the quick response. "Well, why 212 THE FREEMAN April in blazes didn't you sign before 1" demanded the boss. "Nobody ex plained it to me like this before." Any person can readily compile his own list of corporate profiteers, or labor leaders, or government of ficials, or college executives, whose commendable motives, which brought them to positions of lead ership, have yielded to the empire building impulse and whose con cern for their constituency has giv en way to the grinding and inhu mane techniques of tyranny. The degree to which the press for power leads to corruption of word and deed is dramatically il lustrated in the Berkeley upris ings, and has been incisively ana lyzed by Ayn Rand in an essay en titled "The Cashing In." She ob serves: To facilitate the acceptance of force, the Berkeley rebels at tempted to establish a special distinction between force and violence: force they claimed ex plicitly, is a proper form of so cial action, but violence is not.

Their definition of the terms were as follows: coercion by means of a literal physical con tact is "violence" and is repre hensible; any other way of vio lating rights is merely "force" and is a legitimate peaceful method of dealing with oppo nents. For instance, if the rebels occupy the administration build ing, that is "force" ; if the police men drag them out, that is "vio lence." If Savio seizes a micro phone he has no right to use, that is "force"; if a policeman drags him away from it, that is "violence. " Consider the implications of that distinction as a rule of so cial conduct: if you come home one evening, find a stranger oc cupying your house and throw him out bodily, he has merely committed a peaceful act of "force," but you are guilty of "violence" and you are to be pun ished. The theoretical purpose of that grotesque absurdity is to estab lish a moral inversion: to make the initiation of force moral, and resistance to force immoral and thus to obliterate the right of self-defense. The immediate practical purpose is to foster the activities of the lowest political breed: the provocateurs, who commit acts of force and place the blame on their victims.

force and Counterforce The first problem inherent in the use of coercive power as a social in strument - the abuse of power by its agents - is a problem of human tendencies, albeit regUlarly recur rent tendencies. The second diffi culty is an absolute and is always 1967 THE MORAL EQUIVALENT OF POWER 213 available to those who would use it in the situations where power is used to produce change. If any ac tion is taken because of applied force, then the logical means for bringing about a counteraction is to amass an even greater counter force. We watch with well-justified squeamishness as the thrust for Black Power provokes the counter thrust to quash Black Power. Ag gression begets aggression and feeds on itself. Unless there is a massive and convincing repudia tion of the strong-arm tactics in the field of civil rights, and in the arena of student demands, we can expect to see civil disorder spread ing to every other point where is sues are joined. When the accepted vehicle for social change is coer cion, the destination is ultimately either absolute despotism or prim itive, savage anarchy. In either case strength prevails, reason is superfluous and compassion an im pediment. The rallying cry of the Berkeley Free Speech Movement, "Strike now, analyze later," is a monument to power gone berserk.

Let us remember that in the his tory of man, the usual condition of his life has been one of oppression. Tyranny has reigned over most peoples most of the time. We in this country have been blessed with a period of liberty and security and domestic tranquillity. It may be that our luck has run out - that it was only luck - that reason and good will are recessive human qual ities and aggression the dominant one. It appears as if our society is not only tolerating force as the means of social change but encour aging and even demanding it. let Government Do It What can be done about a tend ency of society to rely on force to accomplish its ends? Man has long sought a moral equivalent of war. Our problem here is to move that target a little closer with, perhaps, a better chance of hitting it. What we need now is a moral equivalent of power. In the first place, most civilized men have a natural reluctance, in dividually, to jam something down somebody else's throat. The use of force seems to grow in acceptabil ity as it becomes the instrument of a committee or a group, or better yet, an even more impersonal agen cy, the law. It would be a strange paradox, but I suspect one could make a good case for the proposi tion that the law has become a sub stitute for morality. In any event, to avoid the circumstances which invite the use of more force, the efforts to produce social change must be undertaken by individ uals or by the smallest possible group of human beings. Change undertaken by large groups or by government decree seems to neu214 THE FREEMAN April tralize moral impulses, to para lyze compassion and to evoke re sentment and resistance. If it is possible to create within a society a moral equivalent of power, it must emerge from a decentraliza tion, really an individualization of action. It will require what might be termed voluntary amelioration.

There is still much of the trust ing, the helpful, the friendly, and the unpretentious in the American people, but it is being upstaged by the rioters and the power-seekers and the promisers and the mis chief-makers who feed on unrest, and by the hysteria they create. .Many well-intentioned people have been swept along by seductive slo gans and have, perhaps thought lessly, lent themselves to new coer cion and new aggression. We seem to be moving further and further toward a public reliance on force. History tells us unmistakably that that is folly. The Challenge What is needed is a new breed of young leadership which will find answers that do not create new tyrannies in eliminating old, which will apply the immensely satisfying human qualities of invention and compassion and stamina in attend ing to needed change and which will have the raw courage to damn the demagogues and the intelli gence to discredit them.

Schweitzer said, "The tragedy of life is what dies inside a man while he lives." The same can be said of a civilization. Much of what has been best in our society seems to be dying in the process of trying to cure what has been worst. If we heal the sores and lose the soul, the zombie we will have left won't be worthy of survival. The irony is that those qualities of American living which have been our great est glories can, I am certain, be directed to the successful elimina tion of the qualities of American living which have been our great est trials. The moral equivalent of coercive power is already ours, at work in all those voluntary, trust ful, benevolent acts and operations which have characterized the best in the American way of life. The task is to multiply the number of responsible centers of local initia tive so that the needed changes can be effected with benevolent rather than brutal means and with in creased understanding and coop eration rather than fear, resent ment, and retaliation as the end result.

The Secretary of Health, Educa tion, and Welfare, John Gardner, has noted that we are faced with a number of great opportunities bril liantly disguised as insoluble prob lems. The discovery of creative al ternatives for coercion is certainly one of them. + LIBERTY'S DECLINE IN BRITAIN GRANVILLE WILSON NOONE who loves liberty can afford to disregard what is hap pening in Britain today as basic freedoms succumb to socialism and an insatiable bureaucracy. The British people have learned the basic lesson of socialism since the socialist government was elected in October, 1964. It is simply that socialism means con trols, and controls grow by what they feed on. However much they may try to disguise the fact when they are seeking votes at an election, socialists believe in controls. To them, a life without controls is a vacuum, an intolerable limbo to be filled by handsomely remuner ated bureaucratic know-it-alls.

Mr. Wilson of England for many years has written on economic and political affairs for British and overseas newspapers and magazines. At the center of the socialists' creed is their conviction that not only market forces but human na ture itself can be altered by what the government calls its "prices and incomes policy." It is widely believed, in both Britain and the United States, that the prices and incomes policy became necessary solely because of Britain's financial crisis, which occurred immediately the social ists took office in 1964. This is a mistake. The financial crisis helped to prepare the ground for the attempt to control prices and incomes, but the policy was worked out as long ago as 1958. At that time, when the social ists were in opposition, they drafted a document called "A Plan for Progress." Of course, the plan 215 216 THE FREEMAN April did not call for a financial crisis; but everything else that has hap pened since 1964 dates back to that ambitious blueprint for the new socialist order.

The document pointed out that from 1955 to 1958 Britain's out put growth virtually came to a stop, and that higher wages led to higher labor costs. The assump tion which the socialists drew from this was that labor costs and prices rose not because of the de mand for higher wages but be cause output growth was so small. In other words, restriction in pro duction had increased prices. The same result, the document said, could be created by excessive spending power. The broad conclusion which the socialists drew from these premises was that the growth of money incomes must be kept broadly in step with higher pro ductivity. The best laid plans began to go awry, however, as soon as the so cialists came to power. To counter act the flight from the pound sterling the government borrowed $3 billion from the American Fed eral Reserve Bank and nine other central banks. The loan has to be repaid by 1970.

After more than two years of socialism the British people stub bornly refuse to increase produc tivity. It had been assumed that they would respond magnificently to the election of a "workers' government" by working harder, but they did not do so. Anyone but a doctrinaire socialist would have understood why: they were disillusioned by the fact that so cialism meant bigger taxes and less take-home pay. This refusal to make socialism work as the planners had hoped led to the bit ter comment by Britain's socialist prime minister, Harold Wilson, that many British workmen are afflicted by "sheer damn laziness." Revolt Against Planners The refusal of the British peo ple to work harder for less, and the need to reassure Britain's creditors in the United States and Europe, were reasons why Brit ain's socialist planners decided to give the nation a massive dose of deflation and even more oner ous controls.

Social historians will probably look back on the socialists' annual conference in October, 1966, as the five days which changed the British way of life forever. In those five days the planners killed off so many sacred political cows that the socialist movement re.. sembled a Chicago stockyard de picted by the youthful Upton Sin clair. To a background of angry shouts from workless men of 1967 LIBERTY'S DECLINE IN BRITAIN 217 "Traitor!" and "You are a dis grace to the party!" the planners remorselessly did to death in Brit ain: • full employment, • collective wage bargaining between trade unions and em ployers, • the right of an employer vol untarily to increase the pay of any worker or group of workers. The basic freedom of a worker to negotiate his pay with his em ployer has gone. Under the Prices and Incomes Act, trade unionists can be fined up to $1,500 or even sent to prison for striking.

Many trade union leaders are convinced that collective wage bar gaining has been abolished in Britain for all time. It is widely assumed that in July, 1967, a Na tional Wages Board will be set up to decide who, if anyone, qualifies for a pay rise, and the only func tion of the trade unions will be to cooperate in recommending a scale of priorities. If that happens, the British trade union movement under so cialism will have been reduced to a status not much more important than that of the trade union move ment in Russia. It win have be come a creature of the state. Meanwhile, prices in Britain continue to rise while wages are virtually frozen. Some socialist intellectuals who applauded the government's prices and incomes policy have begun to have second thoughts. The policy, they claimed, was justified because it halted wage inflation, and price control would tame the capitalists.

Unfortunately, the intellectuals forgot to read the small print. In their enthusiasm for a measure designed to prevent wages and dividends from rising, they over looked the fact that the govern ment said that prices could rise if . price increases were the result of the government's own measures in putting up taxes and increasing interest rates. Thus, everyone is poorer at the same time that his freedom is diminished. Criticism Unwelcome Some British socialists have al ready begun to dissent from the measures taken in pursuit of so cialism. They have no illusions left. The Tories claim that the government will have to set up concentration camps to accommo date all its opponents. That may be deliberate political exaggera tion, and yet the history of so cialism is full of persecution of former comrades who opposed au thoritarianism. Dissent may be the lifeblood of socialism when the party is in op position, but it quickly loses its at218 THE FREEMAN April traction when the party comes to power.

When that happens, dissenters become a danger to the socialist idea, and their freedom to criti cize is described as heresy. By imposing the highest-ever taxes and the worst-ever credit restrictions, the socialist planners have begun to kill the private cap ital investment goose which lays the golden eggs. The Confedera tion of British Industry expects that private investment will fall 15 to 25 per cent during the next 12 months. During the same peri 0d profits are expected to fall 12Y2 per cent. The Selective Employment (payroll) Tax alone is taking $2 billion a year out of private indus try. This is about a quarter of the sum normally spent in private cap ital investment. At the same. time that private investment is drying up, public capital investment is soaring. Pri vate businessmen have lost confi dence, but the socialists are going ahead in finding more and more money out of taxes for the nation alized industries. By the middle of 1967, for the first time in British history, nationalized industries will be increasing their capital in vestment at a higher rate than privately-owned industries.

The significance of this is that by supporting nationalized industries liberally out of the taxpay ers' money, the socialists will have succeeded in their aim of altering the whole basis of the British economy in favor of state-con trolled concerns. For, as the Brit ish taxpayers know to their sor row, a nationalized industry does not need to make a profit. Its loss es can always be met by the impo sition of bigger taxes. Curbing the Press Keeping step with the individ ual's loss of freedom is the threat which the credit squeeze poses to the whole of the British press. The nation's newspapers and magazines are already in serious trouble. By the end of 1966, when consumer spending had been se verely reduced and unemployment had soared to well over half a mil lion, newspaper advertising appro priations had been sharply cut. Some small newspapers and magazines have ceased publica tion because they lacked the capi tal to stand losses caused by the withdrawal of advertising, and even the bigger and wealthier newspapers are so reduced in size that they have become shadows of their former selves.

If the credit freeze lasts for an other 12 months, it will hit Brit ain's press so hard that the re striction of choice will make a mockery of democratic freedom to 1967 LIBERTY'S DECLINE IN BRITAIN 219 read minority opinion. If that hap pens, financial stringency will have achieved what Nazi Germany's bombers failed to accomplish dur six years of war. At stake is nothing less than what John Milton, one of Eng land's greatest poets, described more than 300 years ago as "the liberty to know, to utter and to argue freely." We are being reminded forcibly in Britain today of Milton's fa mous words about what would happen if freedom of publication were to be lost. He warned : "We can grow ignorant again, brutish, formal, and slavish." There are eleven major national newspapers in Britain, and seven of them are said to be running at a loss. According to Lord Thomson, Britain's multimillionaire news paper proprietor, who also owns newspapers in the United States and Canada, the economics of the newspaper business dictates that only four, or possibly five, of Brit ain's big newspapers will survive.

If that happens, millions of readers will be denied access to the kind of material they want to read. It is not a situation likely to make for a healthy and informed democracy. The socialists seem quite uncon cerned by the drying up of the sources of free expression. They have no particular love for the press, and they actively dislike the advertising industry, which they describe as parasitic and waste ful of money and effort. If the advertising industry disappears down the drain, there will be few tears shed among socialist plan ners. Men of Outstanding Ability Flee the Socialist State Britain's socialist government is, however, acutely worried by the rate at which so many eminent scientists and medical men are disappearing down the "brain drain." One-third of the annual output from British medical schools is now emigrating to North America, Australia, and New Zealand, and even that high proportion could rise this year.

There is no doubt at all why Britain's scientific and medical brains are deserting their native country. They are fed up - with their pay, their working condi tions, their diminished status un der socialism, and their prospects. British government spokesmen describe the emigrating brains as unpatriotic. Those who are going, however, urge that they should be free to sell their brains to the highest bidder. They also consider it a basic freedom that a person 220 THE FREEMAN April should be able to move in search of better conditions. That freedom may be dimin ished during the next few months. The British government is said to be considering a ban on foreign firms advertising in British news papers and magazines for scientif ic and technical staff. This would cut off American scientific agen cies, both government sponsored and privately owned, from their most promising source of ma terial.

Just what this would mean to American aerospace and electronic companies has been described by Mr. William Douglass, a recruit ing agent for big American and Canadian firms. He says: "There is no doubt that the scientifically trained man in Britain is vastly superior to his American equivalent. He has a much more special ized expertise which is most valu able." The proposed ban will not only disappoint American scientific agencies, but it will infuriate all those British scientists who are desperately anxious to find free dom outside their native land. British scientists concede that such a ban would slow' down the brain drain, but they doubt whether, by itself, it would effec tively block it. Unless the social ists ban emigration altogether, scientists say, a determined man or woman will always find away. The British fight for freedom has been going on for centuries. It is unthinkable that the spirit which animates it will ever be extinguished. + The Ranks oj Bureaucracy IF EVERY PART of the business of society which required organ ized concert, or large and comprehensive views, were in the hands of the government, and if government offices were uni versally filled by the ablest men, all the enlarged culture and practiced intelligence in the country, except the purely specula tive, would be concentrated in a numerous bureaucracy, to whom alone the rest of the community would look for all things: the multitude for direction and dictation in all they had to do; the able and aspiring for personal advancement. To be admitted into the ranks of this bureaucracy, and when admitted, to rise therein, would be the sole objects of ambition .

.lOHN STU ART MILL, On Liberty The PURPOSES of ANTITRUST HAROLD M. FLEMING THE BASIC PURPOSES involved in the enforcement of the antitrust laws of the United States -like those behind many other activi ties of the U.S. government - are obscure and in some cases con tradictory. These regulatory activities of "the Government," might be ex pected to reflect an emotionally integrated Higher Personality, at peace with itself and without serious inner conflict. But certainly in the antitrust activities, this is not so. The aims of the two enforce ment agencies-the Federal Trade Commission and the Antitrust Di vision of the U.S. Department of Justice - are palpably confused. So are the laws. So is Congress. And so are businessmen. There are broad reasons for looking into those purposes. The Mr. Fleming, for many years New York Busi ness Correspondent of the Christian Science Monitor, is a prominent freelance writer on business and economics.

Sherman Antitrust Act has been called a part of the American "economic constitution." The en forcement agencies and the courts have vastly enlarged its meaning from the fairly simple and brief act of 1890 whose drafters were chiefly concerned with federaliz ing the common law about con spiracies and monopolies. So un ambitious seemed the original con cept that the House of Represent atives passed the final version unanimously, 270 to 0; for some years after 1890 "the Sherman Act" meant the illfated Silver Purchase Act of 1890; the orig inal drafters of the Antitrust Act seemed unconcerned when it re mained virtually a dead letter through the speculative merger mania of 1901; and the present an titrust laws, as interpreted, would horrify Senator Sherman. For the genealogy of today's antitrust (as interpreted) runs back, not to Sen221 222 THE FREEMAN April ator Sherman, but to Ida Tarbell, Teddy Roosevelt, Woodrow Wil son, Louis Brandeis, Wright Pat man, and Thurman Arnold, not to mention Edward Bellamy and Thorstein Veblen. And many of their purposes were confused, con flicting, and confusing.

Today, the man-in-the-street may still think that "the Sherman Act" consisted of marching through Georgia, but not the busi nessman. The law, as interpreted, now touches almost every nerve of American business. It is a thicket, an obstacle race, a slalom, a mined field through which a corporation's lawyers must guide it. It is hard to tell what business transaction next may be found illicit. One reason for this is the vague ness of the law today, as inter preted. Here is an example, as the Supreme Court sees it: A merger which produces a firm controlling an undue percentage share of the relevant market, and results in a significant increase in the concentration of firms in that market, is so inherently likely to lessen competition substantially that it must be enjoined .... (italics added) u. s. v. Philadelphia National Bank, 374 U. S. 321 (1963) The underlined words have no pre cise meaning; nor can anyone define them legally except the Su preme Court.

The "Relevant Market" The definition of the relevant market is a particular teaser. Whether one is charged with con spiring, monopolizing, excluding, foreclosing, or illegally merging, the question automatically comes up, "in relation to what market 1" In the important Cellophane case (U. S. v. du Pont, 351 U. S. 377, [1956]) the du Pont lawyers, rebutting a charge of monopoliz ing, argued that the relevant mar ket was not cellophane, of which du Pont sold 75 per cent, but "flex ible packaging materials" in gen eral, of which du Pont sold less than 20 per cent. And the Supreme Court majority agreed. But three Justices (Warren, Black, and Douglas) dissented, saying that cellophane was the relevant market and condemning the formulas both of "reasonable interchangeability" and of "inter industry competition." Had they been a majority, this would have made du Pont guilty of monopo lizing.

However, eight years later they 'were part of a Court majority which said that "we must rec ognise meaningful competition where it is found to exist .... Where the area of effective com petition cut across industry lines, 1967 THE PURPOSES OF ANTITRUST 223 so must the relevant line of com merce .... " (U. S. v. Continental Can Co. et al., 378 U. S. 441, [1964]) This decision broke up the merger of a large metal container maker and a large glass container maker. The "Incipiency" Doctrine Perhaps the broadest hunting license the antitrust laws give the enforcement agencies is the so called "incipiency" doctrine. It consists in the two little words "may be," well known in courtship and politics. The Clayton Act of 1914 was written to "nip monopo lies in the bud," that is, in their incipiency. So it banned quantity discounts, tying clauses, and the buying of competitors' stock "where the effect may be to sub stantially lessen competition." The legal nleaning of "substantially"

has in the last 30 years been ,vhittled to almost nothing, but the "may be" has proved a little giant. It has even been com pounded, in the current antimerg er drives, to "incipient incipi ency," proscribing acts the effect of which "may be" to produce re sults the effects of which "may be ... ," and so on. To "incipiency" the antitrust enforcers imaginatively have added a "potential competition" concept. The idea is that if, for instance, two firms join in a new venture, they substantially lessen competition because one might have gone in and the other have stayed out and so constituted po tential competition. Thus said the Supreme Court in 1964: . . . a finding should have been made (by the trial court) as to the reasonable probability that either one of the corporations would have entered the market by building a plant, while the other would have remained a significant potential competitor .... (italics added) \ u. S. v. Penn-Olin Chemical Co., 378 U. S. 158 (1964) : Promotion of Competition?

With all this weaponry avail able, what are the purposes of the antitrust laws? The first sentence of the Report of the Attorney General's National Committee to Study the Antitrust Laws had an answer: The general objective of the antitrust laws is promotion of com petition in open markets. This Report, dated March 31, 1955, is the last word in an am bitious effort to appraise, review, and make recommendations on the antitrust laws. There has been nothing since of the sort. Sixty members, chosen from the leaders of the anti trust bar. and aided by the heads of Antitrust and the 224 THE FREEMAN April FTC, worked nearly two years on the report, "to prepare the way for modernizing and strengthen .. ing our (antitrust) laws," as the President wrote at the time. Strange to say, perhaps, the word "competition" is not in the Sherman Act of 1890. Supreme Court Justice Holmes so noted in his Northern Securities (1904) dissent: The court below argued as if competition were the expressed object of the act. The act says nothing about competition. I stick to the exact words used. . . .

And if, by "competition," as in the Attorney-General's Report, is meant "hard competition," there is probably good reason for the word's absence from the Sherman Act. In those days many people considered competition an almost unmi tiga ted evil, to be coped with by price agreements, pools, trusts, mergers, combinations - and laws. Thousands of firms were put out of business by the industrial transformation brought by rail and wrought by steel. Edward Bel lamy, perhaps the most influential writer of his day, in his Looking Backward, remarked that ... competition, which is the in stinct of selfishness, is another 'word for dissipation of energy, while combination is the secret of efficient production. Senator Hoar, a year after help ing draft the Sherman Act, opined that a common sales agency could quite legally maintain a reason able price if its object was "mere ly saving the parties from destruc tive competition with each other."

The Clayton Act (1914), urged by President Wilson along with the Federal Trade Commission Act, certainly wasn't written to enforce hard competition; and the Robinson-Patman Anti-Price Dis crimination Act of 1936, aimed at the new grocery chains, all but outspokenly was intended to soften competition and has been so used. The trend since then was neatly summed up a few years ago by an astute British observer who noted that "there is an element of un derdoggery in the (American) antitrust laws .... " (A. D. Neale, The Antitrust Laws of the U.S.A., Cambridge University Press, 1962. p. 461) A Handicapping Process Evidence of the law's being used for the purpose of blunting competition is increasing in the 1960's. Inherently, it is a process of handicapping larger competi tors in favor of smaller ones. It appears, for instance, in the FTC's newly fashionable "deep pocket" theory, which frowns on the entrance (by merger or ac quisition) of a large firm into an 1967 -THE PURPOSES OF ANTITRUST 225 industry carried on by small firms.

It appears in discussion of the touchy subject of whether the law should prevent inj ury to competi tion or inj ury to competitors - a subtle difference in theory but a big one in practice, since the in jured competitors are always seen as smaller ones. Perhaps the most striking in stance in this decade was in the aftermath of the electrical equip ment conspiracy. After the sen tencing of several of the conspira tors to jail, the Department of Justice presented the companies involved with a consent decree for their signature, in which they were to promise not to sell at un reasonably low prices - on pain of contempt of court. (This would protect the weaker competitors from such stronger ones as GE and Westinghouse). This was in broad principle what their em ployees had just been jailed for. Whether Competitors Are to Be Preferred Over Competition Many people are confused, and many volumes have been written, because principle and practice are so at odds. An interesting strad dle was made by the Chief Justice of the Supreme Court in a 1962 decision where a shoe manufac turer's purchase of a retail shoe chain was condemned because it might lead to concentration which might lead to a "substantial les sening of competition." Said Chief Justice Warren: Of course, some of the results of large integrated or chain op erations are beneficial to con sumers. Their expansion is not rendered unlawful by the mere fact that small independent stores may be adversely affected. It is competition, not competitors, which the Act protects.

But we cannot fail to recognise Congress' desire to promote com petition through the protection of viable, small, locally-owned busi nesses. Congress appreciated that occasional higher costs and prices might result from the maintenance of fragmented industries and mar kets. It resolved these competing considerations in favor of decen tralization. We must give effect to that decision. Brown Shoe Co., v. U. S., 370 U. S. 294 (1962) Commenting on this much quoted tour de force, a Yale pro fessor of law said: No matter how many times you read it, this passage states: Al though mergers are not unlawful merely because small independent stores may be adversely affected, we must recognise that mergers are unlawful when small inde pendent stores may be adversely affected. Robert H. Bork, speech before Na tional Industrial Conference Board, March 3, 1966 226 THE FREEMAN April The "Social-Purpose" Theory A hearts-and-flowers accompani ment to the use of antitrust as a safety net for small business has come into fashion since World War II. It is generally attributed to Judge Learned Hand in the Al coa case: Throughout the history of these statutes it has been constantly as sumed that one of their purposes was to perpetuate and preserve, for. its own sake and in spite of possible cost, an organization of industry in small units which can effectively compete with one anoth er. (italics added) u. s. v. Aluminum Company of America, 148 F.2nd 416 (1945) The Supreme Court liked this decision so much that it quoted much of it shortly afterward in the Tobacco case; but some peo ple said Judge Hand invented the above theory. He didn't. Fifty three years earlier the Supreme Court of Ohio, in ordering the breakup of the Standard Oil trust in that state, gave as one reason: A society in which a few men are the employers and a great body are merely employees or ser vants is not the most desirable in a republic; and it should be as much the policy of the laws to multiply the numbers engaged in independent pursuits . . . as to chea pen the price to the consumer.

State v. Standard Oil Co., 49 Ohio 137 (1892) And this has pretty much be come antitrust dogma; so much so that Supreme Court Justice Har lan, dissenting from a recent anti merger decision (all high-court merger decisions are anti merger ) remarked that it amounted to a presumption that in the anti trust field good things come usu ally, if not always, in small pack ages. u. S. v. First National Bank & Trust Co. of Lexington, 84 S.Ct. 1033 (1964) Though this "social-purpose" doctrine might have seemed com patible with the principles of eco nomics prevailing in 1892, it is hard to take seriously now, 75 years later, except as one more argument to reinforce the case for antitrust protectionism in general. It is unhappily remin iscent of New Delhi's economic re strictions in favor of cottage in dustry. It certainly would imply a forcible and disastrous trans formation of the American econ omy - whether backward to horse and-buggy days or forward to some utopia as yet without form and void, is quite unclear.

More Fun! More Skulls Crushed! These implications of the so cial-purpose doctrine throw a pin point of light on one of the key purposes to which, certainly for the last 30 years, the anti trust laws have been turned, namely, 1967 THE PURPOSES OF ANTITRUST 227 social and economic destruction. The Antitrust Division, after winning the breakup of Standard Oil, the Duke tobacco combine, the du Pont powder trust, and a few other combines, fa ned in 1916 to break up the American Can Com pany, in 1920 U. S. Steel, and in 1927 International Harvester. A lull followed; but in the 1930's, during and after the T. N. E. C. hearings, there was new talk about "fragmentation" and "atom ization" of American industry, and a hurricane of cases followed. Among the first was an attack on over 300 oil companies, seeking so many changes that the indus try called it the "Mother Hub bard" case (like a large loose gown). One plea was for a break up of the industry into its four major components, production, transport, refining, and marketing.

This case was postponed at the request of the defense authorities and was dropped in 1948 as en tirely too unwieldy, but was suc ceededby the "West Coast" case, where divorce of marketing, among other forms of industrial mayhem, was asked - and re fused by the court. Meantime, the Antitrust Divi sion attacked and sought the breakup of Alcoa and of the Great Atlantic & Pacific Tea Company, and in 1948 it sought the breakup of the four then largest meatpackers into 14 companies. The courts refused breakup of the first two, and the Division dropped the meat packer case when the court refused to hear testimony going back more than 20 years. But in 1947 the Division brought a civil suit against 17 in vestment banking firms - a busi ness which had already been under regulation by the Securities and Exchange Commission since the Securities Act of 1933. The case eventually ran to a court record of over 100,000 pages, cost the de fendants over $4 million, and re sulted in a 417-page verdict by Judge Harold Medina dismissing the case and commenting that the Justice Department had been led astray "by a fundamental, factual misconception of the way invest ment bankers in general func tion."

The Division also had sought to unlimb American Telephone of its manufacturing subsidiary, West ern Electric, finally settling for a consent decree merely requiring Telephone to give away ("dedicate to the public") 8,600 patents. Then the Division, having obtained a Sherman-Act conviction of United Shoe l\tIachinery Corporation for monopolizing, asked for its break up into three companies, though it had only one plant. Judge Wyzanski refused. In the fall of 1952 the Division 228 THE FREEMAN April brought charges of criminal con spiracy against the five maj or oil companies doing business in the Middle East, while a civil case was brought against them for over charging the Marshall Plan agency by $67 million for oil. The overcharge case was scathingly dismissed by both trial and ap peals court; and the inflammatory "international petroleum cartel" case, after scandalizing the com panies' names in the Middle East, was quietly settled with three of them, and the other two cases are still, in 1967, dragging on "in discovery. "

The 129-Company" Oil Case In the spring of 1958, following the American oil industry's mil lion-barrel-a-day emergency oil lift to Europe during the Suez crisis, the Antitrust Division, un der Congressional pressure, ob tained a bare-majority Grand Jury criminal indictment of a selected group of oil companies for alleg edly conspiring to raise crude-oil and gasoline prices. After 18 months of pawing over a million or more company documents, the Division presented a case which in eight days broke down into courtroom absurdities, and the companies were acquitted without being required even to present their defense. Cost to the govern ment, $2,500,000; cost to the companies, an estimated $7,500,000. The Federal Trade Commission over most of the 1950's was quix otically trying (perhaps) to cure the gasoline business of its price wars with a confusing series of economically absurd price discrim ination charges in Jacksonville, Birmingham, suburban Atlanta, and Norfolk, Virginia. Finally it gave up, dismissed the charges, held a big hearing, and promised to publish some "guidelines,"

which, however, have not yet been published. All this time the Antitrust Di vision was intermittently trying to "export the Sherman Act," in the process hampering American business abroad, annoying the State Department, and riling for eign courts. What would have happened if Antitrust and F. T. C. had won the above-mentioned cases, is any body's guess - the agencies had no proposals. There is an inkling in a remark of Judge Carter "in the West Coast oil case when he refused to order the companies to sell off their marketing opera tions: You cannot unring a bell. I am convinced that the dislocations that would occur would be of such nature that I don't think we can fully imagine or comprehend with any accuracy what would be the result.

1967 THE PURPOSES OF ANTITRUST 229 At present the F. T. C. and the Antitrust Division are quietly ob structing.the modernization of the structure of the banking, dairy product, beer, cement, shoe manufacturing, and other indus tries, and the growth of the new multiple-market and multiple product diversified companies.* Political Instead 01 Economic Power It is hard to see how such a course of conduct, of which the above is only an abbreviated sketch, can add up to any maj or purpose except that of destruction and obstruction in the use of the antitrust laws. And to cap it all, the enforcement agencies have for decades been saying in effect that though the heavens and earth shall pass away, the anti trust laws (as interpreted) must be enforced. Said a chief of the Antitrust Division in 1964: . . . the view that the antitrust laws may hamper the growth of the economy mayor may not be valid, but it is irrelevant under our present laws.

William Orrick, Jr., Dun's Review and Modern Industry, June, 1964 John Jewkes observed in Ordeal by Planning that, *Britain has long had but six banks, while the United States has perhaps 10,000; but the Antitrust Division says that to merge some of these would do harm that would "clearly outweigh in the public interest" the prospective. benefits to the "convenience and needs of the community" (Bank Merger Act of 1966) but it objects to having to prove this. The normal procedure is for the planners first to seize power, and only later to consider what should be done with that power. A maj or concern of the anti trust authorities is the alleged economic power held by large pri vate companies. It is often called "monopoly power," and has, theo retically, a sort of free-floating existence, intently discussed in antitrust literature but curiously unreal to businessmen. The following, though penned by a minority member of the At torney-General's Committee, ex presses one of the maj or purposes in present official antitrust policy.

He said that Antitrust . . . performs the function of keeping governing power in the hands of politically responsible persons. Power to exclude some one from trade, to regulate prices, to determine what shall be pro duced, is governing power. . . . In a democracy, such powers are en trusted only to elected representa tives of the governed. Louis B. Schwartz, quoted on page 2, Attorney General's Report. Supreme Court Justice William O. Douglas wrapped it up in his dissent in the Columbia Steel case: Industrial power should be de centralized. It should be scattered into many hands, so that the for tunes of the people will not be 230 THE FREEMAN April dependent on the whim or caprice, the political prejudices, the emo tional stability of a few self-ap pointed men. 334 U. S. 495 (1948) (He was talking about the ex ecutives of U.S. Steel Corporation, but, except for the penultimate two words, some people might read it to be about the Supreme Court itself.) But the "scattering" of power "into many hands" is not what is happening - nor what the Su preme Court is doing. The power it is taking, or trying to take from the larger private companies, it is giving to the enforcement agen cies.

Said former Attorney General Nicholas deB. Katzenbach a year ago, commenting on the Antitrust Division's perfect score in its re cent anti merger cases: We have had so many Supreme Court decisions in the merger area that it has been hard for us to digest them .... It may be that we have, from the point of view of business, more power than is necessary or essential to the car rying out of an intelligent merger policy. I am inclined to believe that we may be able to block more mergers than it makes economic sense to block. The current rapid accrual of economic power to the antitrust enforcement agencies, barely sketched above, was perhaps an ticipated by Lowell B. Mason, former chairman of the F. T. C., in his Language of Dissent, when he wrote: In this country no one need fear the belted, booted, and uniformed outfit .... The man to watch is the man in the brown tweed suit. Mild, courteous, and scholarly, he has no badge, no boots, no gun, no warrant. All he has is a little identification card in a cellophane holder, issued by an institution that is investigator, grand jury, prosecutor, petit jury, and judge all for one and one for all. ~ The Invisible Hand By DIRECTING that industry in such a manner as its produce may be of the greatest value, he intends only his own gain .... He is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention .... By pursuing his own interest he frequently promotes that of the society more ef fectually than when he really intends to promote it.

ADAM SMITH, The Wealth of Nations THEca GEORGE WINDER SOME FORM of socialism is assured once a country accepts an incon vertible currency as its monetary medium. Its money either will lose all value, as it did in Germany and several other European coun tries between the World Wars, or it will be "saved" only by drastic governmental action involving all the rigors of socialist authoritar ian rule. Britain is slowly realizing this fact. The British pound over the past twenty years has been losing value at about twice the rate of the American dollar. Such infla tion is reflected, of course, in con stantly rising wages, which leads many persons to demand govern ment control of wages to halt further price rises. That notion originated among Keynesian econMr. Winder is a long-time analyst and re porter of monetary and other poli tico-eco nomic affairs in Britain. omists, but is welcomed by social ists who see in it a means to their ends. Naturally, they would insist that if wages are to be controlled, then prices and profits must also be controlled.

Though many of the British people found this new policy op posed to all their previous ideas, they gradually came to accept it as a way to achieve a stable pound. Mr. Macmillan, the Conservative Prime Minister, had failed on sev eral promises to end the inflation. Why should the socialists, under Mr. Harold Wilson, not be given their chance? The socialists had come to power at a time of crisis in Brit ain's foreign trade, when it was imperative to reduce costs and so strengthen the value of the pound. Their first attempts were half hearted. They cut defense esti231 232 THE FREEMAN April mates and increased taxation, a notable example being a surtax on all manufactured imports. But, in their first two years of office, government spending rose 24 per cent, from 6.8 to· 8.5 billion pounds. In mid-1966 the pound was be ing supported not only by the Inter national Monetary Fund but also by the leading central banks of the world. The socialist govern ment took this opportunity to im pose on the British people its new policy of control of wages, prices, and incomes. For the first time since the Statute of Labourers in the fourteenth century, all wages were under the complete control of the government. It had pre pared the way by persuading the Confederation of British Indus tries and the Trade Union Con gress to consent to an Early Warn ing System by which all increases in wages and prices were to be referred to the National Board of Prices and Incomes. The Trade Union Congress had been prom ised that any increases in profits or dividends were to be similarly screened.

"Voluntary Cooperation II Under the Power of Coercion This unusual system of persua sion began with no positive Act of Parliament to make it legally effec tive. But the intensification of the crisis allowed the government to pass through Parliament its Prices and Incomes Act with the necessary authority for control. The Act ordered a general standstill (freeze) on all wages, prices, and incomes, to last until the end of 1966 and to be followed by six months of "severe restric tion." The fiction of voluntary en forcement was kept alive but it was only a short time before the gov ernment invoked its power of coer cion : "Although the Govern ment has been obliged to bring Part IV of the Prices and In comes Act 1966 into operation, they hope that severe restraint will be observed on a voluntary basis, and that the same general responsible attitude which has marked the period since 20th July will continue. The Government will use their statutory powers for the sole purpose of ensuring that the voluntary support of the ma jority is not undermined by the actions of a few." This is very much like the Sergeant Major's demand for volunteers ... or else.

All incomes derived from em ployment and every other type of income, including professional fees and dividends, are thus made completely subject to government control. The Act provides for a fine of £ 500 or more for any employer who contravenes its pro visions by paying over the stipu1967 CONTROL .OF WAGES AND INCOMES 233 lated wage rate - for paying too high a wage! According to a government White Paper: "It is not expected that there will be any general in crease in dividends during the next twelve months.N evertheless, all company distributions, includ ing dividends paid by companies, are subject to the standstill and should not be increased during the twelve-month period." As to wages: "The standstill to the end of 1966 is intended to apply to increases in pay and to reduction in the working hours .... Dur ing the six-month period of severe restraint (i.e., the first six months of 1967) the criteria for consid eration of new proposals for pay and hours will be more stringent than those set out in Part I of the White Paper on Prices and In comes Policy and for the time being the income norm must be regarded as zero. The guiding principle must be that of national economy and social priorities."

All long-term contracts for in creased wages were at the same time canceled: "It will clearly have been inequitable to intro duce a standstill on incomes while allowing these existing commit ments to go ahead unchecked." It is highly probable that the prices and incomes period of se vere restraint will be extended in definitely. Many people foresee that as Britain abandoned inter national free trade during the fi nancial crisis between the two wars, so she will abandon the sys tem of free enterprise during the present crisis. As one White Paper warns: "During the coming months, the Government will con sult with interested parties about the best way of carrying forward the productivity, prices and in comes policy after June 1967." There can be little doubt that this policy is not merely to meet an emergency, but envisions a scheme of redistribution to be im posed on Britain for as long as the Socialist government lasts.

Opposition from Left and Right Strangely enough, although the government has obtained the con sent of the Trade Union Congress to this policy, many trade unions strenuously oppose it. Mr. Frank Cousins, former Minister of Tech nology, has resigned over this issue, though it cannot be said that those trade unions which support him are particularly in terested in freedom; they merely want the power to bargain for their own wages, whether there is increased productivity or not. One stout defender of free en.. terprise among the Conservatives is Mr. Enoch Powell. He is con stantly condemning Labour's pol icy and showing the extreme dan234 THE FREEMAN April gers of its implications. He ad vocates, as a remedy, the freeing of exchange rates so that the British people will know the true value of their pound. The re mainder of the Conservatives, of course, are against inflation; but this did not help the pound when they were in power. They failed to advocate a balanced budget or anything else resembling fiscal re sponsibility.

The believers in free enterprise have been led into a trap by this constant inflation. If they do not now agree to Labour's prices and incomes policy, the pound will lose all value; and if they do agree, they must give the government unlimited power over the economy and their own freedom of choice. The pressure of the trade unions might eventually release wages from control; but dividends would continue to be decided by the gov ernment "in the national interest" and to meet "the claims of social needs and justice"- as though it were the sole judge of these things. The only policy which can pre vent socialism's entry by the back door in this manner is to see that a country's money is sound. ~ French Inflation, 1789-1799 Now BEGAN to be seen more plainly some of the many ways in which an inflation policy robs the working class ... the classes living on fixed incomes and small salaries felt the pressure first, as soon as the purchasing power of their fixed incomes was re duced. Soon the great class living on wages felt it even more sadly .... the demand for labor was diminished; laboring men were thrown out of employment ... the price of labor ... went down . . . . Working men of all sorts were more and more thrown out of employment.

ANDREW DICKSON WHITE, Fiat Money Inflation in France The GAP betweenEarning andReceiving WILLIAM HENRY CHAMBERLIN THERE WAS A TIME, within the memory of living men and women, when what an American earned was his to keep, subject to the payment of moderate Federal and local taxes. And, as a corollary, the American was supposed to pay his rent and medical expenses and make reasonable provision for his old age. This was economic capitalism - or individualism, to use a more accurate word; it was a simple and understandable sys tem, and it was admirably calcu lated to promote hard work and individual responsibility. The state stayed off the back of the 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.

taxpayer and, in turn, expected him to look out for the present and future needs of himself and his family. Now, scarcely a trace of this system remains. Because of enor mously increased Federal, state, and local taxes and because of the growing burden, on the produc tive part of the population, of withholding levies for various wel fare programs, the gap between what a man earns and what he recei Yes, between his nominal wage or salary and his "take home" pay, has steadily widened. Take someone who earns $150 a week, an average rather than a high salary in this age of shrunken and shrinking dollars. After de ductions for Federal and state taxes and for so-called social se235 236 THE FREEMAN April curity levies, very heavily in creased this year because of charges for Medicare, an earner in this bracket receives less than $115 a week, a bite of almost 25 per cent of what he is supposed to earn.

This is distinctly a growing trend. The amount deducted from wages and salaries is higher this year than ever before, even dur ing the years of World War II. An ingenious mathematician with a computer, equipped with statis tical information on the probable growing cost of the programs au thorized by the late spendthrift Congress, might be able to calcu late that the state's lien on the earnings of the productive by some future year, say 1984, might swallow up such a proportion of these earnings as to tempt the recipient to apply for public re lief in order to subsist. It Happened Before and Can Happen Here Do not think this is an exag gera ted, alarmist picture. It has happened before in rich and pros perous states, and it can and most probably will happen here, unless the people find some effective means to check and reverse the two parallel trends that are mak ing the phrase, "independent mid dle class," more and more of a mockery. These trends are the proliferation of bureaucracy at all levels and the ever enlarging encroachments of bureaucratic spending agencies on the earnings and reserves of producers. The state of affairs in the Byzantine Empire under the reign of J ustin ian, described in George Finlay's Greece under the Romans, flashes a warning for us: At last the whole wealth of the empire was drawn into the imperial treasury; fruit trees were cut down and free men were sold to pay taxes; vineyards were rooted out and houses were destroyed to escape taxation.

The increase of the public burdens proceeded so far that every year brought with it a failure in the taxes of some province, and consequently the confiscation of the private prop erty of the wealthiest citizens of the insolvent district, until at last all the rich proprietors were ruined and the law became nugatory. The law to which reference was made had established collective re sponsibility for the payment of taxes. But, it is not necessary to look to the empire of Justinian to find houses being destroyed be cause of inability to meet tax bur dens. In the Mt. Desert region of Maine, with which I am familiar, and no doubt in other districts, it is not uncommon to find inns and large private houses torn down because the owners have found the taxes too heavy to pay.

1967 THE GAP BETWEEN EARNING AND RECEIVING 237 Pay as You Earn There are several reasons for the substantial and rapid growth of the gap between what one earns and what one is allowed to retain. A big contributory cause, and a demoralizing development on sev eral counts, was the institution, during World War II of PAYE, the abbreviation for Pay As You Earn. Previously, the taxpayer paid his tax at the end of the fiscal year and knew exactly what the Federal and state govern ments were costing him. But with P AYE the practice developed of deducting from the pay check Federal tax, state tax, and an as sorted variety of social insurance payments. As a consequence, the typical taxpayer has scarcely any idea what he is obliged to pay on these various counts. It would be a gain for financial realism and clarity if the tax payer were given the full amount of his wage or salary and then required personally to pay all the levies which are now lumped un der one process of deduction.

There would then be less excuse for the persistent but mistaken idea that the government pays out of some nonexistent resources of its own for aid to Hottentots, for a large variety of schemes de signed to combat poverty (no one of which remotely approaches in efficacy the decision of a poor person, if unemployed, to look for a job, or, if holding a low paid job, to train himself for something requiring more skill), for Medi care and other provisions of social welfare legislation. The money for all these numerous forms of government spending comes di 1"'ectly out of the pockets of the people. If this fact were more generally known, as it would be if the taxpayer had to payout the claims of the various taxing agen cies after he had the feel of a full salary check in his pocket, public appraisal of legislators who are prodigal and of those who are economical with public money would probably be radically dif ferent from what the polls have been showing.

The Growing Burden Fifty years, or even thirty years ago the American citizen was regarded as having done his duty if he took care of himself and his family and made reasona ble offerings to religious, charita ble, and educational projects of his choice. Noone expected him to play the Atlas role of assuming responsibility for curing poverty in Africa, Asia, Latin America, Appalachia, Harlem, Watts, and other slum areas. The theory had not become pop ular that, unless the richer na tions of the world, with America 238 THE FREEMAN April at their head, somehow subsi dized the economically retarded peoples of the southern hemi sphere, not through the normal methods of trade and investments, but through direct handouts of one kind or another, the peace of the world would somehow be en dangered. This theory leaves out of consideration the fact that modern history records no case of a war started by poor, economi cally backward peoples against more affluent powers - and for a good and obvious reason. A peo ple must be fairly affluent before its rulers can develop the expen sive weapons of large-scale de struction that are dominant in modern warfare.

Now, the American taxpayer is required to shoulder burdens of which his grandfather never dreamed, which his father felt in much lighter degree. He is sup posed to pay for defending de mocracy in countries where most of .the people do not understand what the word means, for com bating famines which recur with monotonous regularity as a result of climatic, social, and economic conditions over which he has no control, for keeping a stream of aid flowing to countries of which some, so far as their governments are concerned, are clearly hostile to this country, on occasion stir ring up mobs to attack our embassies and other installations, in one case, in defiance of all the rules of civilized diplomacy, plac ing our ambassador under house arrest. Our Strange Behavior Toward friend and foe Indeed, our current policies in Africa seem to be in curious in version of the normal responses to friendly and hostile behavior.

We are meek as lambs when our citizens are arrested and expelled, our flag insulted, our embassies and reading-rooms invaded and sacked by riotous mobs. But we eagerly associate ourselves with sanctions and hostile declarations in regard to two countries which have always maintained friendly and correct relations with us and which maintain far better condi tions, as regards standard of liv ing, and peaceful and orderly liv ing conditions, than a number of African lands which are torn with savage tribal feuds and which have suffered clear retrogression since independence was, perhaps overhastily, established. The two countries are, of course, South Africa and Rhodesia. Our representatives in the UN, as they blithely vote for sanctions against Rhodesia and for a reso lution setting this country on a collision course with South Africa about the mandate over Southwest 1967 THE GAP BETWEEN EARNING AND .RECEIVING 239 Africa (an issue that is emphati cally none of America's business), seem oblivious of· the lessons of the Congo and, more recently, of Nigeria. Suppose we co,nld, by sanctions or threat of sanctions and military force, bring down the two most efficient and prosper ous regimes on the African con tinent. Would the conditions that would follow necessarily be to our national advantage or liking?

Here is a practical illustration of the disadvantages of our mem bership in the UN. Before that organization existed, Americans, as individuals, were free to hold any opinions they chose about the racial franchise in Rhodesia, or the desirability of South Africa's administration of Southwest Africa, or the theory and practice of apartheid in South Africa. But the United States government would have taken no official stand, would not have involved itself in unnecessary quarrels and compli cations. Now, the supposed necessity of conciliating the artificially swol len bloc of new African nations in the UN Assembly (a bloc of which the voting strength is in grotesque disproportion to the political, economic, and educational develop ment of its members) leads the United States representatives in the UN to seek such quarrels and complications - out of which new financial burdens and responsibil ities may grow.

Domestic Welfarism There is just as little prudence, just as little promise of relief for the overburdened taxpayers in do mestic policy as in foreign policy. The 89th Congress, which has now passed into history, earned the doubtful distinction of being the "spendingest" Congress in American history, at least in a time of nominal peace. And most of its spending was not connected with the hostilities in Vietnam, but with a host of schemes cal culated to pillage the thrifty for the benefit of the thriftless. HEW, the Department of Health, Educa tion, and Welfare, has grown from modest beginnings into an empire disbursing 30 billion dollars an nually, and completely incapable of administering its numerous and complex functions efficiently. To quote James Reston of The New York Times on the· record of the 89th Congress: In its first 174 years the Congress of the United States voted $5.8 billion in Federal funds for education; in 1965-66 alone the 89th Congress voted $9.6 billion. The first 88 Congresses voted approximately $10 billion for health since the establishment of the Public Health Service in 1798; in the last two years the 89th Congress has voted $8.2 billion for health, includ240 THE FREEMAN April ing Medicare, almost as much as in the previous 166 years. And the rec ord of most of the social and economic innov~tions of the 89th Congress fol lows the same pattern.

Now it would be absurd to sug gest that the United States was seriously lacking for either edu cation or health before the 89th Congress went on its spending spree. This country was a pioneer in providing education for all its children and has long led the world in the proportion of its young men and women enrolled in colleges. Nor have Americans suffered from neglected health. Loss of Local Control What has changed is that much power and emphasis has shifted from elected school boards, re sponsive to the feelings of their community, to a distant irrespon sible bureaucracy in Washington; and the simple human patient doctor relation of the past has been fuzzed up by the intrusion of an enormous official apparatus, smothering patients and doctors alike in an avalanche of question naires and red tape. Most economists agree that the heavy increase in government spending during the last years is a cause of the inflation which has touched off boycotts of stores and other protests. And inflation is another cause of the gap between what a man is supposed to earn and what he receives in real values. He may be receiving the same number of dollars, even a larger number of dollars, in his pay envelope. But if those dollars buy less, the effect is much the same as that of the ever-growing bite at the pay check, represented by taxes and social security levies.

Finally, the American taxation system, especially on the Federal level, is heavily weighted against the individual who does not like to be dependent on state handouts and would rather provide his own and his family's social security. Three points should be borne in mind in this connection. Inequitable Taxation First, the Federal income tax is levied on a steeply graduated basis. In most countries the weight of taxation is more or less evenly distributed between direct and indirect forms of levy. No form of tax is pleasant; but di rect graduated taxation bears much more heavily on savers than do sales or excise taxes. The Fed eral income tax, therefore, has a strong leveling effect and some times makes the gap between what a man earns and what the state allows him to keep almost gro tesque, as graduation advances rapidly in the upper. brackets. Second, there is a gross and 1967 THE GAP BETWEEN EARNING AND RECEIVING 241 palpable injustice in the practice of taxing the same source of in come twice, once when it is earned by a corporation, again when it is received by the individual stockholder in the form of a divi dend. For a time, a slight abate ment on income tax was granted in recognition of this injustice; but even this has now been abol ished. So, income that has already been taxed at the rate of almost 50 per cent as corporation income is taxed again at individual in come rates when it is received by the stockholder. In the case of persons in high income tax brack ets this means that the govern ment, with two bites at the same revenue, may take 75, 80, or even 90 per cent of net income which it has assumed no risk in earn ing. If this is not socialism, it is something pretty close to it.

Third, there is the capital gains tax of 25 per cent on any profit earned from selling a stock or piece of tangible property at a higher price than the owner orig inally paid for it. This form of taxation implies both an inj ustice and an economically undesirable consequence. The injustice is that the "capital .gain" often barely or insufficiently compensates for the loss which inflation has in flicted on the stock or property. The owner would only be even with the game if he sold a stock held for the last twenty-five years at two and a half times the price he paid for it. The undesirable effect of the capital gains tax is that it "locks" the investor into certain holdings and takes away from the market the desirable element of liquidity. Taxing the Middle Class Out of Existence A former Commissioner of In ternal Revenue, Mr. T. Coleman Andrews, familiar from his office with the many inequities and the well-nigh hopeless complexity of the system, voiced this heartfelt appeal to members of Congress some ten years ago: Whether you believe it or not, everybody is being overtaxed and the middle class is being taxed out of ex istence. Thereby the nation is being robbed of its surest guaranty of con tinued sound economic development and growth and its staunchest bul wark against the ascendancy of so cialism. We, who somehow have man aged to hold on, finally are beginning to see the shameful extent to which we have been made the special vic tims of rapacious tax enactments and we don't like it....

High rates of tax don't mean any thing when there isn't anything to tax. What with ever-growing with holding from wages and salaries, inflation, and outrageously high 242 THE FREEMAN April leveling rates of taxation by the Federal government and by many states, the prospect that the in dividual will be able to retain a reasonable share of what he earns is pretty dim. But so long as we possess basic freedoms of elec tion and expression, all is not lost. Experience is a good teacher, and as people become more ac customed to living in a mare's nest of obstructive bureaucracy and seeing hard earned money van ish in the smoke of withholding, inflation, and oppressive taxes, a strong surge of revolt may build up. What is most necessary is to educate, educate, educate. Two les sons that should be driven home in season and out of season are: That government bureaucracy will always deal with any social problem more slo'wly, wastefully, expensively, and incompetently than the private agencies which it seeks to supplant.

That, when government lightly proposes to spend tens of billions of dollars for some utopian scheme, it is not spending· "its" money, but yours, and mine, and our next-door neighbor' s. ~ Two Ways SEVERAL MONTHS AGO, the Federal Government announced that it was going to conduct a sweeping investigation of the opera tion of American Telephone & Telegraph. The natural assump tion of the public was that the Federal Government believes that profits, and rates perhaps, of this regulated utility are too high. The result of this investigation is that the price of A. T. & T. stock has dropped precipitately, and three million A. T. & T. stockholders are worried. A. T. & T. does make a huge profit, but it needs these profits to plow back into expansion of plant and equipment. We have the best telephone service, at the lowest cost in the world, in the U.S.; but, this doesn't restrain powerful bureaucrats from at tacking A. T. & T., which is a model of efficiency under private ownership, while our publicly owned post office loses over 800 million dollars a year.

ROSS ROY, "Can Detroit Be a Leader in Freedom of Enterprise?"

INVESTING IN YOURSELF ROBERT C. TYSON LAST YEAR I took a trip through South America, and I witnessed much of a continent in ferment and in a quandary. I saw firsthand the ravages of runaway inflation on the social fabric. I heard offi cials, bankers, professors, and businessmen wonder out loud on how to stop inflation and trans form social unrest into economic development - into a speed-up of economic growth. The problem was crystallized at a conference on economic develop ment that I attended. A member of the conference rose to his feet and addressed the gathering, stat ing: "At times we seem to be try ing to grow forests while forget ting the nature of the tree." Somewhat surprised, everybody Mr. Tyson is Chairman of the Finance Com mittee, United States Steel Corporation. This article is from his address at Samford Uni versity, Birmingham, Alabama, August 27, 1966. in the audience turned to the speaker.

"Why don't we realize that we can only move an economy forward when we get the individual to move forward? Without him," he continued, "we move backward." This set me to thinking about self-development and economic de velopment, about the role of the individual in the oftentimes elu sive art of nurturing economic growth - of achieving a sustained rise in the creation of goods and services - a problem common to all countries, to every type of po Iitical economy. Economic growth is no idle phrase; although but a part of the so-called dismal science of eco nomics, it is one of the most pow erful forces in the sweep of cur rent events. Kings, presidents, generals, and 243 244 THE FREEMAN April even dictators worry about it be cause no society can be great un less its productive power is un leashed. Yet the very word "growth" can be misleading, and too many of us may be mesmerized into thinking that it is more or less biological if not automatic, that it can be fer tilized, seeded, cultivated, and har vested like so many acres of wheat or cotton, that it can be simply planned from above and ordered into existence, that it can even be accelerated through - presto -rev ving up the money press.

Only When Free . .. So we sometimes lose sight of the fact that economic growth, even in a closed society like com munism, is an intensely personal matter, that it rests heavily on h uman psychology, on indi vid ual motivation, on voluntary choices. We forget that printing-press in flation is an affront to the individ ual, a delusion that steals away his savings and corrodes his sense of dedication to work and thrift. Above all, we overlook the essen tial fact that only when the in dividual is free can he be fully productive and creative, that so ciety and all social institutions, in cluding the church, government, university, and corporation, live and think and act only through the individual. But, like "growth," freedom al so seems to me to be not always understood. Many Americans, for example, seem to hold that free dom is a grant of government, for getting that our Declaration of Independence holds that all men are "endowed by their Creator with certain unalienable Rights, that among these are Life, Liber ty, and the pursuit of Happiness."

If liberty were not so endowed, then what government could grant, government could also take away. Indeed, the genius of the Found ing Fathers was their realization that government is most fallible when it comes to usurpation of freedom, that men in public office should not be blindly trusted, that the American government there fore had to be, through the Con stitution, strictly limited in its powers, subjected to checks and balances, and expressly prohibited from infringing on the endowed freedom of the individual. Ours was to be a government of lavv, not of men. And thus does the Bill of Rights seek to confirm lib erty under law. Again, quite a few of us appear to believe that while free speech, free press, free assembly, and free exercise of religion are thorough going freedoms, free enterprise is somehow an exception to the rule. I call your attention to the 1967 INVESTING IN YOURSELF 245 growing grid of so-called "volun tary" controls in the guise of guidelines and guideposts.

Importance of the Individual I believe, in other words, eco nomic growth flourishes under free dom, under responsible citizenship and government, under individual growth. I believe individual growth stems from the individual's ability to serve, from his dedication to service, and from the raising of his sights on his aspirations and possessions-incentives, if you will. And I believe individual incentives are indispensable to growth in a free society and, as the manifold problems of communism prove, in an unfree society as well. Ironical ly, the individual in communist societies, under a philosophy of materialism, loses both material well-being and freedom. As Adam Smith, that canny Scotsman, father of modern economics and, incidentally, professor of moral philosophy, noted almost two hun dred years ago : "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." In brief - responsible self-interest.

And thus does the public interest in economic growth involve the lawful private interests of individ ual growth. I believe, in short, the social good is advanced through the in dividual's free but responsible "pursuit of Happiness." So my philosophy for growth comes down to social growth through economic growth, economic growth through individual growth, and individual growth and individual fulfillment through self-investment and self discipline. <apital Formation To be sure, textbooks and econ omists treat capital formation adding to the total capital stock of a country - as the road to econom ic growth. This is true, as far as it goes, but it doesn't go far enough for, again, such thinking can lose sight of the individual tree for the forest. Capital for mation is indeed at the center of economic growth, but individual growth and individual investment are the foundation of capital cre ation. Thus, when we speak of an investment in an industry or in a country, we speak directly or in directly· of investing in people, in the individual. The individual, as a saver, is the beginning of in vestment; he, as an investor or consumer, is the end purpose of investment. In a free society, in other words, capital investment is of the people, by the people, for the people - or, more accurately, of the individual, by the individ ual, .for the individual, 246 THE FREEMAN April Now, who is this mysterious in dividual to whom I allude? He is a very unique being - he is each one of you. When you as an indi vidual have confidence in the fu ture, in the purchasing power of your money, in the inviolability of contracts and property - in short, in the climate of investment you will very likely work harder and save more. You may even directly commit your savings in an investment and share the own ership of enterprise. With these acts of working, saving, and in vesting, the wheels of economic growth begin to turn and the economy moves ahead.

So far so good. Yet the road to economic growth is usually not so simple, nor so smooth. Self-disci pline is called for. Work involves energy, time, wear, and tear. Sav ing involves forbearance, absti nence, doing without. Investing involves risk, uncertainty, the pos sibility of loss. But along come soothsayers and some of those cloaked in political power who proclaim an easier way, an easier life, instant or near-instant wealth, welfare, and security. They argue: Let's take care of the individual, for he's not responsible for his shortcomings; society is to blame. Let's spend ourselves into prosperity. Let's forget savings, for thrift can be antisocial. Let's run up the public debt, for we merely owe it to our selves. And, let's not worry too much about inflation, for it is the price of economic growth. This siren song is heady; the ballot box becomes a short cut to paradise. Of course there is a catch to this catchy tune - in fact, a lot of catches fraught with delusion and with losses of liberty. So, to me, the great economic question of the day ought not to be: How can we maximize our security and growth? Rather it ought to be: How can we maintain our liberty and hence our growth? For in liberty, in the Constitutional de sign of free choice in America, we have the mechanism for moti vating the individual, for achiev ing economic growth and hence genuine economic security, along with the opportunity to preserve and advance freedom.

A Time of Testing But I believe liberty is being tested as never before in America. I believe that our faith in free in stitutions is being tried. Campus rowdyism is giving many a col lege president a hard time. Rioters in our streets are beleaguering many of our major cities. Lobby ists and special interest groups demand all manner of handouts from the government - local, state, and especially Federal. In 1967 INVESTING IN YOURSELF 247 the name of welfare and security, the demands are for more and more - not tomorrow but today. These demands strain the body politic - and eco1].omic-and erode the foundations of our liberty. The hop~ of government-provided welfare and security seems to have become a widespread obsession. Have we lost the lesson of how shortsighted was the welfarism of "bread and circuses" in ancient Rome? Did Benj amin Franklin have many of us in mind when he wrote: "They that can give up es sential liberty to obtain a little temporary safety deserve neither liberty nor safety"?

To these questions I would only add the thought that liberty is not an abstraction; it is an intensely individual concern. It is also, as I have said, a social concern. In dividual growth and social growth are as one; individual responsi bility and social responsibility are also as one. Hence, I see freedom, responsibility, and growth as a three-way evolving process. To me, freedom and its preser vation imply personal responsi bility which, in turn, implies self discipline. Unless we discipline ourselves, there is danger that a Big Brother may do it for us. Re sponsibility, in other words, can not be casually shuffled onto the government. Responsibility means carin~ about others as well as caring for one's self. It means re sponsible self-discipline in the form of voluntary associations of individuals caring about other in dividuals. It does not mean fur ther delegation of health, educa tion, and welfare to the govern ment which is to delegate exces sive, and perhaps corruptive, polit ical power.

Limits on Government We should understand, then, that while government is neces sary for law and order, that in proportion as we give govern ment power to do things for us, we give it power to do things to us. Indeed, we should understand that the result of maximizing se curity via government is a maxi mizing .of loss of individual free dom. Hence, I believe we must dis cipline ourselves in the demands we put upon government. To the maximum extent possible we should "do it ourselves." We should realize that gains in na tional production originate with gains in individual production. We should realize that production and freedom have a common price: re sponsibility, work, forbearance, self-investment, self-discipline. And I believe that each of us must discipline himself to think through and resist the tempta tions of the soothsayers - temp248 THE FREEMAN April tations which undermine both the incentives and the independence of the individual. For example, we hear: "Reduce hours, spread the work, and prevent unemployment." This is a tempting but shallow and so cially costly demand. There is no fixed lump of work to be done. The work to be done is infinite and to the extent that each of us works less, less is accomplished. And time, after all, is relative - the fact that people worked twelve hours a day around the turn of the century is .called economic slavery; the fact that some peo ple currently work fourteen hours a day on two jobs is called moon lighting.

"Regulate job-destroying auto mation" is also suggested. This one has a certain specious plausi bility. But automation is the new 'war-cry of all those who have falsely believed in technological u~employment all the way back to the machine-smashing Luddites of early nineteenth-century England. The current labor shortage testi lies eloquently to the fallacy of this argunlent which leaped into prominence several years ago. Au tomation and machines realign and expand employment oppor tunities, increase the employee's productivity, and raise everyone's Iiving standards. "Curb profits and raise wages" is another cry. But profits are the spark plugs in the engines of en terprise. Curbing profits would thus curb enterprise and hence wages. Indeed, without profits there would be no private enter prise and no private wages what soever. "Restrict private affluence" is a popular theme. This thought at tacks income inequality and wealth accumulation and carries the im plication that, as in communism, we should all share and share alike. The argument, however, flies in the face of realism, of the diversity of skills and talents, of the need for individual incentives, of the fact that in a free society the consumer rewards in propor tion to the contribution that each of us makes to production.

"Expand public welfare" has much hasty appeal. This demand, sometimes predicated on a so called "starved public sector," car ries the pretension to some of our citizens that greater welfare is without injury to the private sec tor. Here it should be remembered that government cannot give un less it first takes away, that exces sive welfare can warp the incen tive to work of both the individual who receives it and of the in dividual who pays for it, that it can consequently stunt economic growth. "Put human rights over prop1967 INVESTING IN YOURSELF 249 erty rights" is another bit of false logic. Of course property has no rights, but property-holders do. And no individual can exist with out property - food, clothing, and shelter. Without private property the individual would have to turn to government for sustenance and so surely surrender his free dom. Human rights are not ex tended by denying property-holder rights. On the contrary, human rights and dignity are promoted by helping the property-less in dividual to help himself, to teach him marketable skills so that he can acquire property. on his own and attain independence.

Economic Growth Depends on Responsible Individualism Let me conclude, then, that the key to economic growth is the free individual, that true freedom can not exist without personal respon sibility, that without such respon sibility liberty becomes license and transgresses on the freedom of others - license and transgression, in other words, by both individual and government. Again, freedom involves choices - critical choices; and choices in volve consequences - critical con sequences. Consider some ramifi cations of freedom: Freedom to choose your leaders in public office. Freedom to choose your friends and associations. Freedom to choose your way of worship. Freedom to choose your career and where you work. Freedom to choose how you will utilize what you own and what you earn - whether to save or to spend, whether to invest or to con sume. Yet each of these choices cuts more than one way. With the political choice, for example, you can vote for the candidate who promises that he will work to pre serve our liberty. Or you can vote for the candidate who promises "pie in the sky."

I am convinced the "pie" here and now will be bigger and our liberty safer as we invest in our selves - and discipline ourselves to better serve others. ~ Beware of Enslaving Others WHAT YOU SHUN enduring yourself, attempt not to impose on others. You shun slavery - beware of enslaving others! If you can endure to do that, one would think you had been once upon a time a slave yourself. For vice has nothing in common with virtue, nor freedom with slavery. EPICTETUS ARE V lEW E R I 5 NOTE BOO K MEN can dream, can't they? And, while they are about it, they might as well dream about a po litical future that would restore to us our individual dignity and freedom to own and act. We need parables to tell us that the liber tarian philosophy has regenera tive power, and that we aren't necessarily destined to become a world of ants or bees, each of us assigned for life to our little place in a communistic heap or hive.

Two good men have dreamed recently about a forthcoming dra matic shift in American political behavior that will save us from the hive. One of them, Allen Drury, is an old hand at writing political fiction. His latest novel, Capable of Honor (Doubleday, $5.95), is the third installment of what has been pro j ected as a te tralogy. Once again we meet old political and diplomatic heroes and villains who made Mr. Drury's Advise and Consent and A Shade of Difference such memorable 250 JOHN CHAMBERLAIN stories of crises in Washington, D.C., and in the outer world. The other political dreamer is Holmes Alexander, one of our more lively conservative news paper columnists. His novel, The Spirit of '76 (Arlington House, $6.00) , follows the same basic pattern that forms the ground work of Mr. Drury's Capable of Honor, for each story is built around the flummoxing of modern collectivist "liberals" by a strong president of libertarian bent who happens to be in the White Hous~ because of the death in office of a predecessor.

Like Mr. Drury, Mr. Alexander has written an installment in a series, for two characters who ap peared in Alexander's collection of short stories about Washington political life, The Equivocal Men, are with us again in The Spirit of '76. One of the characters is Calvin Borton, the "liberal" scandal-mon gering columnist; the other is his conservative opponent, Phil Ober meister, a decent fellow who has 1967 POLITICAL DREAMS 251 a hard time selling his stuff to an opinionated "liberal" press. Together these characters give the reader a running commentary in piquant counterpoint on what hap pens in Mr. Alexander's spirited dream tale. The Role of the Press Of the two novels, Drury's Capable of Honor has the more professional finish. Like its two predecessors in the projected te tralogy, it makes canny use of contemporary parallels, taking bits and pieces of living people and recombining them to form new, but instantly recognizable, human beings.

Everything that Mr. Drury writes is courageous, but Capable of Honor is the nerviest thing he has yet done, for this novel takes the whole mass communications industry in the United States for its collective villain. The leader who gives the signals to news paper, magazine, radio, and TV in Capable of Honor is a porten tous columnist named Walter Do bius, more familiarly known to his old colleagues as "Walter Wonderful." He is not basically an evil man, for he believes in what he is doing. But he does evil with an utterly humorless inadver tence, for he can't conceive that there should be an elementary fairness even on the front pages in the presentation of news as such. Walter Dobius thinks there is only one side to any given story, and that side is the one that grows from his own "liberal" bias. So, when "good old Harley Hud sou," who has become President of the United States after seven frustrating years in the Vice Presidency, actually stands up to the communists when they massa cre American citizens and burn Standard Oil installations in far off Gorotoland in Central Africa, Walter Dobius takes it as a per sonal affront. His advice would have been to let the UN "nego tiate" with a bunch of bush com munists who had illegally seized the power in Gorotoland with the undercover help of Soviet Russia and Mao Tse-tung's Red China.

And, when Moscow and Peking compound their mischief by touch ing off a seizure of the Panama Canal by "local patriots," thus putting the U.S. into two small wars some eight thousand miles apart, Walter Dobius considers it as a sign from the Deity that Harley Hudson must be punished for his refusal to give in to the communists in the first place. Harley Hudson is a character that has been synthesized by tak ing a snippet of Harry Truman, a goodly portion of Lyndon John son, and large elements of Barry 252 THE FREEMAN April Goldwater, and whirling them all together. But the Hudson per sonality rings true for all of the oddity of the mixture, for it is the "old American" parts of Tru man, Johnson, and Goldwater that are here. Hudson's embattled Sec retary of State, Orrin Knox of Illinois, is one part John Foster Dulles, one part Bob Taft, one part Paul Douglas, and one part Karl Mundt, which is to say that he is a man to be trusted when the old-fashioned honor of the United States is involved.

But the new word with Walter Wonderful and his crowd is peace. It is the old story of Winston Churchill and Neville Chamber lain, told over again in American terms. But Walter Dobius and his TV friend, the Big TV Chain "anchor man," Mr. Frankly Unc tuous, can't see the Munich anal ogy in Gorotoland, or the parti tioning-of -Poland parallel in the communist connivance to "share" the Panama Canal with a local stooge, Felix Labaiya, who has been Panamanian Ambassador to the United States. When he succeeded to the Pres idency through the death of his predecessor, Harley Hudson prom ised his old colleagues on Capitol Hill that he planned to step aside after completing his term. But when Walter Wonderful and his friends turn virtually the entire mass communications industry in to a conspiracy to put Ted Jason, the Governor of California, into the White House, it is too much for "good old Harley" to take.

Like other politicians before him, he argues himself into taking an "indispensable man" position and decides to become an active can didate to succeed himself. Naturally, being the "head of the party" by virtue of his incum bency, he has certain built-in cam paign advantages. But he barely succeeds in making it, and the closeness of the shave is what makes Capable of Honor the ex citing fiction that it is. The day is saved only because one of Mr. Drury's old "villains," the Bob Leffingwell who lied in an earlier Drury fictional panel about his youthful association with the com munists, happens to turn "hero" at the eleventh hour, thus deliver ing crucial New York convention votes to the Harley Hudson col umn. There is vast excitement in the way Mr. Drury manipulates every thing, and there is much food for thought in it, too. The novel is particularly good in its portrayal of the effect which conniving with underworld violence and lawless ness has on politicians who would do anything to win. It is weakest in its failure to make allowance for the possibility that commu1967 POLITICAL DREAMS 253 nism in Red China, in Soviet Rus sia, and in satellite eastern Eu rope is about' to decay from with in. But this possibility, which is currently hinted in a hundred dis patches from Hong Kong and Tokyo concerning events in main land China, never occurs to Walter Wonderful and his gang. They want to temporize and shilly-shal ly with the rest of the West in the UN because they would in the last analysis rather be Red than dead.

A Principled Decision Mr. Alexander's story deals with a President, Jerry Chase, who actually does step down in order to keep his word to him self. But, unlike Drury's Harley Hudson, Alexander's mythical President has already succeeded in creating a "Chase cult" that is powerful enough to guarantee a victory for a good American con servative over a "liberal" Ameri can of the Finnegan clan. Where Mr. Drury's White House incumbent wins a victory for his side by using the great powers of his office, Mr. Alexander's pro tagonist actually succeeds by re linquishing many of the overag grandized perquisites of the mod ern chief executive. Thus, Presi dent Jerry Chase is more truly in the "old American" grain than President Harley Hudson. But Alexander's "liberal" columnist, Cal Borton, is far less of a menace to a good libertarian American fu ture than is Drury's Walter Do bius. In stooping to conquer, Har ley Hudson does what he has to do.

Mr. Alexander's novel is even more frankly a dream than is Mr. Drury's, for it involves revulsions in the contemporary American character that are more instan taneous than those which Mr. Drury writes about. The world moves swiftly in Mr. Alexander's happy prose where its tread is more hesitant in Mr. Drury's vi sion of what is in the cards for the day after tomorrow. But both novels are good bracers for liber tarians who are suffering from a loss of nerve. + ~ THE PLAY WITHIN THE PLAY: THE INSIDE STORY OF THE U.N. by Hernane Ta vares de Sa (New York: Alfred A. Knopf, 1966) 309 pp., $5.95. Reviewed by William Henry Chamberlin AN INSIDERin a world organization naturally sees most of the game. Especially· when the insider is as urbane, as sophisticated, and as free from propaganda cliches as the author of this book, a Brazilian former Undersecretary for Infor mation at the East River head254 THE FREEMAN April quarters of the United Nations.

Mr. de Sa has quit the organization and distributes his bouquets and brickbats without fear or favor and with a pleasing absence of in hibitions. One could hardly ask for a more readable guidebook on what makes the U.N. wheels revolve, on the hec tic U.N. social life, with an aver age of two cocktail parties a day. The rules for these parties are out lined in lively fashion; the reader is initiated into methods of gather ing diplomatic information, of un loading bores on wives, on observ ing such taboos as not creating mixes of Israeli and Arab dele~ gates, or throwing a South African representative into close contact with representatives of black African states. Some of Mr. de Sa's observations are on the social column gossip side; but he can be quite serious when the situation demands. He strengthens the misgivings of many Americans about their coun try's timid role when the Hungar ians struck for freedom in 1956; in his opinion, the Soviet leader ship was undecided about the ad visability of all-out intervention to crush Hungary and a firmer Amer ican attitude, with some appropri ate military gestures, might have tipped the scales in the right direc tion.

He is vigorous and forthright in his condemnation of U.N. action in using its expeditionary force to crush Moise Tshombe's autono mous regime in the Congo, a stupid move in which the United States unfortunately cooperated and con curred. He notes that this venture had no justification under the Charter, brought the U.N. to the brink of insolvency, and made any future similar operation unthink able, tartly summing up: So the Congo episode might turn out, after all, to have been a useful lesson. Still, at ten million dollars a week (the sum the U.N. was spending on its military and civilian operations) Congo College charged the U.N. a stiff tuition for its ed ucation. As a general rule, with one im portant exception, the Brazilian ex official of the U.N. displays a re freshing and often humorous qual ity of hard-boiled realism in dis tinguishing the men from the boys, the few genuine powers from the many phonies. He seems to go astray, however, in suggesting that the U.N. serves the interests of United States foreign policy. Just the reverse is the case.

This is most clearly illustrated by the way in which America's rep resentatives at the U.N. have let themselves be dragged along by African states into provocative positions toward Rhodesia and South Africa, two countries with 1967 OTHER BOOKS 255 which the United States has no ground for hostility whatever. Were there no U.N., it is scarcely conceivable that the United States Government would have partici pated in sanctions against Rhode sia, which, unlike some recipients of American bounty, has never in sulted the American flag, burned down United States installations, and made life unsafe for United States diplomatic personnel. Or that it would have struck a crusad ing pose on such an issue-as the South African mandate over Southwest· Africa, or apartheid in general. But, this one blind spot aside, the author gives a spirited and highly readable account of the way in which the passengers in the East River Noah's Ark fight and play and generally behave them selves. + ~ THE FIRST NEW DEAL by Raymond Moley, with the assist ance of Elliot A. Rosen (New York: Harcourt, Brace & World, 1966), 577 pp., $12.50.

Reviewed byMary Jean Bennett FOR AN INSIGHT into the New Deal - and if the past is prologue, an outlook for the Great Society one could scarcely do better than read Raymond Moley's masterful The First New Deal. Moley, now a columnist for Newsweek, was the Columbia law professor who gathered together in 1932 and for a number of years directed the famous "Brain Trust." This was an early think tank that included such figures as Rexford Guy Tug well and Adolf A. Berle, J r 0' and that funneled policies and speeches to Franklin Delano Roosevelt and helped frame the social revolution known as the New Deal. To Moley, schooled on the Pro gressive Movement, on "progres sives" like .Henry George and Charles Beard, the Great Depres sion called for pragmatism - bold approaches. to solve the cruel prob lems of industrial stagnation: bank failures by the thousands, unem ployment in the millions, factories operating at a fraction of their ca pacity, home and farm mortgages being foreclosed at a rate never before witnessed in the country.

Moley was attracted to the New York governor by FDR's "prag matic optimism," which was "mar velously effective because it was so contagious." Again, FDR's "acti vism was a correlative of his opti mism and his love of experimenta tion." In one of his first assign ments as a speech-writer, Moley inserted the phrase, "the forgotten man," into an early FDR 1932 cam paign address. The phrase was lifted from William Graham Sum ner's famous essay of that title. But Moley and FDR used it in an 256 THE FREEMAN April entirely different sense. The phrase caught on; Moley was in. He witnessed history - and helped make it. He gives inside ac counts of the sweeping 100 Days beginning in March, 1933, and of the London Economic Conference beginning in July, 1933. But slowly disillusion set in; the vision of economic recovery in a free society receded; desperation and radical ism gained ascendancy. FDR's ac ceptance speech to the 1936 Demo cratic Convention triggered Moley's break with FDR.

Moley had a hand in the speech draft and in fact supplied the phrase, "rendezvous with destiny," but he was dismayed by the ex cesses that crept into the draft via other "ghosts": denunciations of "economic royalists," "new mer cenaries," "concentration of con trol," "privileged princes," and "economic dynasties thirsting for power." This was not the FDR of 1932 and earlier; this was not the man who had accepted the Demo cratic nomination for President in 1932 with the words: We must eliminate unnecessary functions of Government-functions, in fact, that are not definitely es sential to the continuance of Govern ment. We must merge, we must con solidate subdivisions of Government, and, like the private citizen, give up luxuries which we can no longer afford. Nor was this the man who had run on the 1932 Democratic Party plank: An immediate and drastic reduc tion of governmental expenditures by abolishing useless commissions and offices, consolidating depart ments and bureaus and eliminating extravagance, to accomplish a sav ing of not less than 25 per cent in the cost of Federal Government, and we call upon the Democratic Party in the States to make a zealous ef fort to achieve a proportionate re sult.

In short, by 1936 Moley was fed up and soon submitted his resig nation. In 1939 he published his critical memoirs, After Seven Years. The metamorphosis was pretty complete. His teacher, Charles Beard, apparently went through the same cycle and Maley 'writes that "Beard and I had many conversations in his later days, in the 1940's, and perhaps he and I both went through -a change in which we re-examined all of our earlier preconceptions." So it came to be that Moley, a champion of reform, found that centralization can lead to excess, that there was truth in Acton's thesis on the corruptibility of power, that he felt more at home in the Republican Party for whose Presidential candidates he worked long and hard, from Wendell Will kie to Barry Goldwater. ~ THE FREEMAN MAY 1967 Vol. 17, No. 5 "'" It is when people are collectivized compulsorily, beyond the natural con trols of family living, says Dr. Curtiss, that a "population problem" appears ...p. 259 "'" Henry Hazlitt sees, in the latest offerings of the Welfare State in America, a promise of further inflation ....... p. 265 "'" The more he studies antitrust legis lation and its consequences, the less reason can Harold Fleming find for the faith of businessmen and others in such laws p. 267 "'" Because the yoke of slavery hangs always ready for those who neglect their freedom, we repeat earlier warn ings by Lord Byron, Horace, Archibald Rutledge, Samuel Gompers, and others ...p. 276 "'" And Helen Copeland turns an an cientfable to bear on those who cry "Wolf!" at prophetic warnings p. 283 ~ The principles of progress, accord ing to Robert Newell, all boil down toward mutual respect for property rights .,. . p. 285 "'" Leonard Read comes to about that same conclusion as he reviews the record of the rise and fall of civiliza tions - unto this day p. 292 1/ Harry Smith, in the tradition of Adam, credits the wealth of nations primarily to the entrepreneurial spirit in man .p. 298 "'" Dr. Edward Coleson of Spring Arbor College shares his experiences and deep reflections on the "Economic Development of Emerging Nations."

......... p. 302 Y' Randall Burchett's thesis is that few of us could hope to find "the way" without signs from those who have gone before p. 314 ,,- From John Chamberlain's glowing review of the Bahamas Handbook, one may guess that he's recently been, or is about to go, to the islands .. p. 317 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

MAY 1967 LEONARD E. READ PAUL L. POIROT Vol. 17, NO.5 P1'esident, Foundation for Economic Education 111anag'ingEdUor 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. Tel.: (914) 591 7230. Any interested person may receive its publications for the asking. The costs of Foundation projects and. services, including THE FREEMAN, are met through voluntary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are in vited in any amount-$5.00 to $10,000-as the means of maintaining and extending' the Foundation's work. Copyright, 1967, 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; 10 for $2.50; 25 or more, 20 cents each.

Any current article will be supplied in reprint form upon sufficient de mand to cover printing costs. Permission is hereby granted to reprint any article from this issue, providing customary credit is given, except IIA Promise to Inflate" and IIEconomic Development of Emerging Nations." Microfilm copies of current as well as back issues of The Freeman may be purchased from Xerox University Microfilms, 300 N. Zeeb Road, Ann Arbor, Michigan 48106, PLANNERS the world over are pointing to the current and pend ing population explosion and the dire consequences which will arise therefrom. The stories are truly frightening. It is usually contend ed that population, especially in the developing countries, will far outrun the production of food, and mass starvation will result unless something is done about it. The "something" which must be done ranges all the way from sharing our agricultural surpluses, trac tors, livestock, and hybrid seed to the use of the "pill" to cut birth rates. Is it any wonder that indi viduals, if they view all this as a collective problem, feel helpless and frustrated in looking ahead into the next century?

Does history tell us anything Dr. Curtiss is Executive Secretary of the Foundation for Economic Education. W. M. CURTISS about population problems and their solutions? Indeed it does. It tells us, for example, that individ uals respond one way to freedom and responsibility and another way to socialism. So long as a fam ily with freedom to increase its own numbers has the responsibil ity of rearing its young and car ing for its old should they become helpless, there is a very strong in centive to (1) restrict its num bers within manageable limits, or (2) increase the productivity of the family and its ability to care for increasing numbers. Both fac tors are usually at work. When there is freedom to add numbers to the family without re sponsibility to care for them, we have a genuine problem. Nor are we lacking examples which bear this out. In the United States, fam ilies on relief, with payments based 259 260 THE FREEMAN May in part on the number of children in the family, tend to be larger than where responsibility for child care rests with the parents. One need not be surprised at this man ifestation of human nature.

A Strong Motivation Responsibility toward one's children - the desire to do well by them - is a strong motivating force. But if the opportunity arises, some parents are willing to shift this responsibility whether to relatives, to friends, or to the state. Even in our comparatively free economy, more and more of the responsibility for rearing children is being shifted to the state. Per haps it began with "free" elemen tary education. No matter how many children a family sends to a government school, the school tax rate on that family's property is the same as on other property. The greater the number of chil dren in a family, the lower that family's tax per child. And for families with no property to tax, schooling is literally free. Such "free" edlication also has been extended to high school and college levels; and increasing Fed eral aid for education further dim inishes parental feelings of re sponsibility for rearing one's chil dren.

Another example of shifting the responsibility to the state occurs in the form of exemptions for children on one's income tax re turn. The more children, the less tax. Young parents, in announcing the birth of a baby, sometimes de scribe it as a new exemption. The income tax exemption is compar able to the practice in some coun tries of paying family allowances. The more children, the greater the tax allowance or the benefit payment. This is not to say that modest income tax exemptions for chil dren or even "free" education and recreation are a great incentive to increase the size of families in an advanced economy such as ours. But such measures tend to work in that direction, and they illus trate the shift of responsibility from parents to the state. Changing Circumstances In the early primarily agricul tural economy of the United States, large families were com mon. Not a high proportion of children reached maturity, but those who lived were an economic asset at an early age, both in the home and in the fields. Following the Industrial Revolution, with comparatively fewer engaged in agriculture and a higher propor tion of the population living and working in urban centers, the in centive for large families declined, 1967 THE POPULATION PROBLEM 261 and so did birth rates. Parents were presented with a choice be tween a large number of children at a subsistence level of living, or f ewer children with more of the so-called "advantages of life."

In most of the advanced indus trial countries today, we find lower birth rates and smaller families than in the developing, agricultur al countries. Since World War II, Japan has been experiencing an industrial revolution. Prior to the War, Ja pan had a very high birth rate, and planners were predicting a serious population situation as numbers outstripped the nation's food production. But with the growth of industry in Japan, the birth rate has been cut in half. When men have enjoyed sus tained freedom long enough to develop an advanced industrial so ciety, with parents responsible for rearing their own children, it would appear that there is a strong tendency to limit the num ber of offspring. It should be noted that "rearing" as used here means more than just food, cloth ing, and shelter. It includes medi cal aid, education, religion, recre ation, and whatever else parents think important for their children.

But, what if one's religion or national customs or local mores in terfere with a decision to limit the size of one's family? These are some of the many factors which affect the decision of an individual. It is a personal and not a collec tive problem. Parents truly re sponsible for rearing their chil dren are faced with many such in dividual decisions. Shifti'ng Responsibility The real problems with regard to population arise when the re sponsibility for rearing their chil dren is relinquished by or re moved from the parents. This may happen in a number of ways. Providing food free or at "bar gain" prices to families is one 262 THE FREEMAN May way of reducing parental respon sibility for children. Genuine fam ine relief is not at issue here. The providing of free food, or gifts of any kind for that matter, whether to individual families or to entire nations, fails on at least three counts. First, it doesn't touch upon their basic need for more capital to enable them to be come more prod ucti vee Second, it may discourage developing coun tries from seriously undertaking the job of increasing their own production of food. And third, relevant to this discussion, it eliminates economic pressures up on individuals to curb population growth.

It has been demonstrated in some developing countries that, when people are given food and medical aid, population growth tends to push against the limit of these resources with no improve ment whatever in per capita wel fare. As long as the people of a nation consume their entire pro duction each year, they cannot in dustrialize. To become an indus trial nation, at least some of the people must save to acquire the tools of production. The Solution Population becomes a seri ious problem to the extent that it is considered a responsibility of government. As a matter of fact, a great many problems originate in this manner, when government stands between willing buyers and willing sellers. Delivery of mails is a problem only because it is a monopoly of the state. If mail were handled privately and com petitively in the market, the prob lems would be solved. Agricultural surpluses are a problem only be cause of government intervention.

If left to the free market, supply and demand would tend to balance through price. Transportation, especially in densely populated urban areas, is a problem only because govern ment has stepped into the picture to regulate prices and to control transportation in many ways. La bor problems are serious, chiefly because government has granted certain monopoly powers to or ganized groups of workers. So it is with population! If families individually can retain the freedom to decide how large that family shall be and, at the same time, have no choice but to shoulder the responsibility for rearing the members of the family, no population problem will exist. If population expands faster than food supplies, the cost of food will rise and stimulate in creased production or imports. If the price rises to a point where families feel it is too high, they will economize in different ways.

1967 THE POPULATION PROBLEM 263 Some may take measures to avoid further increase in the number of mouths to feed. Some may search for better food bargains - per .. haps less meat and more grains. In any case, self-responsible in dividuals will feel the incentive and will make the adj ustment. Problems Stem from Intervention But, if government comes into the picture - especially to take on part or all of the responsibility for rearing the children - a popula tion problem is certain to result. And, if the state assumes both the responsibility for raising food and caring for children, two very com plicated and interrelated problems will result. The United States government, at taxpayer expense, has given away billions of dollars worth of food and other items all over the world during the past twenty years. The principal effects upon the recipients appear to be in creasing enmi ty and increasing population. How much better if the people of the developing na tions of the world could learn, in stead, how we avoided our popula tion problems by not creating them in the first place. They could learn, if they would, how we pro gressed from a nation 90 per cent engaged in farming to fewer than 10 per cent; yet, we feed ourselves in a way that is the envy of the world. They might come to under stand that all this happened be fore government started to meddle with our agriculture and created our own farm problem.

The United States could con tribute to the developing countries of the world in no finer way than simply serving as a model-an ex ample - of how freedom made it possible for the people to emerge from a small, struggling, colonial nation to a level of living that astounds the world. The miracle of all this would need explaining to those who do not understand how it could happen. That under standing is needed, not only by those of foreign lands, but by many of our own people who have come to believe that we can have more by doing less, that the state is supreme, that all the problems of production are solved, and all that remains is to divide the fruits between the public and private sectors. The great debate is whethe'r the production of a na tion is to be divided according to decisions in a free market by those who have something useful to trade; or, should government officials make the allocation ac cording to what they think is best for all.

Yes, we could serve as an ex ample for the newer countries. No doubt about it, they see our ac complishments and admire them.

264 THE FREEMAN May They would like to emulate them. But, when our emissaries go abroad to explain how we became so rich, what is the typical ex planation? Since these emissaries usually are government employees, they tend to explain our achievements in terms of what government is doing. And it comes out like this: "You must have a strong central government to control the actions of the people. You must have agrarian reform. Note how we built our agricultural surpluses! You must have minimum wage laws so that purchasing power of the workers can be high. You must organize your workers so they can defend themselves against monopolistic employers. You must build expensive roads and hospi tals and schools and dams, and so forth, like we do." It is fairly ob vious that such explanations are failing to achieve the desired re sults. Our emissaries do not tell what really brought the United States from a poor, undeveloped nation to what it is today. Nor is this clearly revealed in the model we hold up before them. Unseen and untold is the need for a high de gree of individual freedom in all walks of life - freedom to make mistakes and pay the price, as well as freedom to succeed and reap the rewards.

With freedom, people will work and produce. A few will save and create capital-tools of produc tion that will multiply the bene fits for all. This is the lesson which devel oping countries· need. This is far more essential to them than gifts of food, drugs, and tractors for their governments to dispense. If a developing nation learns the freedom formula - rather than "from - each - according-to- ability, to-each-according-to-need" - many modern-day problems that plague the people of this and other na tions will never arise. The "popu 1ation explosion" is one of those unnecessary problems. ~ Freedom From Government ECONOMIC FREEDOM, in the American sense, is maximum freedom from government. Capitalism is fundamentally a system in which people as far as possible are free to mind their own business but not free to mind other people's businesses. H A R 0 L D M. F L E MIN G. States. Contracts and Progress A PROMISE TO HENRY HAZLITT IDflllE LYNDON B. JOHNSON"pledged" the American people in his State of the Union message to "do every thing in the President's power to lower interest rates and to ease money." Whether he knows it or not, this was a pledge to resume and increase inflation.

He blandly took it for granted that it is a legitimate function of government to decide how high in terest rates ought to be. To begin with, this is govern ment price-fixing, for the interest rate is a price. It is, in fact, the most important single price in the whole economy. It is the discount on future goods as against present Copyright 1967, Los Angeles Times. Reprinted by permission. goods. It affects the price of every thing else. But under the influence of his Keynesian advisers, Mr. Johnson tells us that his administration "will press forward toward easier credit and toward lower interest rates." What he and they fail to see are the consequences of trying to do this. If the free market rate of inter est on short-term loans to business were under given conditions 6 per cent, and government arbitrarily ruled that it must be only 5 per cent or 4 per cent, the demand for loans to business would be much greater than the supply of exist ing funds. Credit would then have to be rationed among different 265 266 THE FREEMAN May borrowers, with the' government dictating who should get how much.

This is precisely what the Fed eral Reserve Board tried to do last September when it demanded a curb on bank loans to business so that more credit would be available in other directions. It has since wisely revoked this directive. The only other way in which gov ernment monetary authorities can hold the rate of interest below the market rate is either to allow the quantity of money to increase or deliberately to increase it. Other things being equal, lower interest rates encourage business. borrow ing from the banks. When banks increase their loans, they increase their deposit credits. These in creased deposits are an increase in the effective supply of money. The monetary authorities may increase the money supply on their own initiative by buying govern ment securities in the open market. They pay for these either by grant ing increased deposit credits to the member banks from which they bought the securities or by issuing and paying out new Federal Re serve notes. This is known as "monetizing" government securi ties.

Governments (and many busi nessmen and bankers) think this is fine because the increased borrowing and money creation, at the beginning, stimulates production and employment. But it also soon has another ef fect. The increased supply of dol lars cheapens the value of the dol lar and raises prices. The higher prices then tend to halt the increase in demand. Because of the higher prices, businessmen have to in crease the amount of their borrow ing still further to continue to do the same volume of business. If the monetary authorities then fail to continue the inflation by issuing still more money, interest rates soar. That is what happened last Sep tember when interest rates went to their highest levels in more than 30 years. Trying to force interest rates below their natural level finally re sults in causing them to rise much above their natural level. Easy money policies, in short, finally lead to the opposite results from those that their sponsors hope for. What is temporarily saved in interest is more than lost in higher prices.

Easy money policies are infla tionary policies. It makes no sense at all to ask at the same time for higher taxes and for cheaper money. • HAROLD M. FLEMING Antitrust ~~HUMBUG" THE ANTITRUST LAWS of the United States have since the 1930's been the subject of odd, novel, and dis concerting administrative and Su preme Court decisions; and such continue to be announced at a rate that shows no signs of abat ing. Examples of these appear in the spate of merger decisions begin ning in 1962. The Supreme Court's first decision under the 1950 amended antimerger Section (7) of the Clayton Act, in the Brown Shoe case (370 U.S.294) was a long one. Yet four trial court judges, with Brown Shoe as guid ance, shortly thereafter handed down decisions which were then reversed by the high court. And in the Von's Grocery case, de cided May 31, 1966, the Supreme Court majority handed down a de cision of which two dissenting Justices said: Mr. Fleming, for many years New York Busi ness Correspondent of the Christian' Science Monitor, is a prominent freelance writer on business and economics.

This startling per se rule is con trary not only to our previous deci sions, but contrary to the language of Section 7, contrary to the legis lative history of the 1950 amend ment, and contrary to economic real ity. But merger decisions are not the only recent ones likely to dis concert the business community. In 1966 the Federal Trade Com mission's arguments persuaded the Supreme Court that privately branded milk could not be legally sold cheaper than nationally branded milk "of like grade and quality" (unless the discount was "cost-justified") - a decision like ly to cast a wide penumbra of il legality over pricing in a variety of goods from milk to mattresses. Ten years earlier the same F.T.C., in the case of branded gasolines, had attacked a major gasoline marketer (Pure Oil in Birming ham) for trying to narrow the spread between major and inde pendent brands, which are occa267 268 THE FREEMAN May sionally of identical specifications.

And in 1964, in Simpson v. Un,ion Oil (377 V.S.13) the high court majority struck down a con signment agreement to which the Antitrust Division, in a consent decree ten years earlier, had tacit ly agreed - a decision which, since perhaps a sixth of the nation's wholesale trade is done on con signment, led a dissenting Justice to write: "Today's upsetting de cision carries with it the most severe consequences to a large sec tor of the private economy." The Belief in the Antitrust Laws Yet, year after year American businessmen profess their funda mental faith in the antitrust laws. The following are typical expres sions of this credo: First, I should like to make it very clear that I have for many years supported the basic antitrust stat utes. I firmly believe that these laws are good laws, essential laws, and that they have been the instruments of preserving within the business com munity the competitive environment which is the essence of a free econ omy.

Crawford H. Greenewalt, Board Chairman, du Pont, before the 1963 annual meeting of the Antitrust Sec tion of the American Bar Association. Maintenance of reasonable and effective antitrust policies is something that every enlightened busi nessman should and does support. M. A. Wright, President, U. S. Cham ber of Commerce, in a speech, Sep tember 6, 1966 in San Francisco. And the Attorney General's Na tional Committee to Study the An titrust Laws, in its March, 1955 report, declared its faith in "anti trust fundamentals," say~ng: Although many forces and other Government policies (sic) have ma terially promoted our creative Amer ican economy, we believe the anti trust laws remain one of the most important. Statements such as the above, made by businessmen, usually are a preface to suggestions for a more realistic interpretation of the antitrust laws; the combina tion recalls the protestations of loyalty with which the King's sub jects in former times used to plead for redress of wrongs by the King's agents, done presumably in disregard of his true intent and will.

There seem t~ be some premises here which are not altogether sound. One is that there exists an un fortunately innate tendency, in the American economy, toward monop oly and conspiracy. Another is that it has been the "historic mission" of the anti trust laws to curb this; and that, 1967 ANTITRUST "HUMBUG" 269 in fact, these laws have done so, if only by their presence on the statute books. A corollary follows naturally, from a businessman's viewpoint, namely, that the only trouble with the antitrust laws is that, in their broad generality, they have come, in recent years, to be unrealisti callyc_interpreted. The Dead-Letter Years History seldom has answers to the question, "What would have happened if . . . ?" But to the question, "What would happen to our industrial economy if there were no antitrust laws?" there is a pretty fair answer. For more than two decades after 1890, the Sherman Antitrust Act was vir tually a dead letter. Industrial pools to curb the cutthroat compe tition of the 1890's were formed, collapsed, formed again, and then replaced by huge horizontal indus trial combinations, "conceived in the sin of violating the Sherman Act," as a judge put it fifteen years later. This was the greatest "merger period" in American his tory, the ambitious comprehensive -nature of its "attempts to monop olize" being shown publicly by the new style of corporate names National, United, American. Unit ed States,Amalgamated, Allied, and so on.

For years none of these were challenged legally; most of them never were. There was no Anti trust Division until 1903. The first famous monopoly case was started in 1906, against Standard Oil. Three "trusts" (oil, tobacco, and gunpowder) were broken up by court order in 1911, after which a half-dozen good -sized cases were brought (against United Shoe, U.S. Steel, American Can, Nation al Cash Register, International Harvester, and Alcoa). But the legal results were disappointing to the "trust-busters," and the rest of the attempted monopolies of 1900-1901 escaped unscathed by the law. But not unscathed by competi tion. Some failed. Those that sur vived failed to grow with their markets; competition swept in on their flanks. In the fall of 1901, the very year of the great merger speculation, an economist wrote in the Quarterly Journal of Econom ics: As this is written ... almost every day brings word of the appearance of new competitors for various trusts, and the New York Journal of Commerce says that the revi.val of competition may be considered a general movement.

Charles J. Bullock, quoted in Trusts, Pools and Corporation, edited by 'Wil liam Z. Ripley; Ginn &' 00., 1905, p.472. The survivors lost their share270 THE FREEMAN May of-market most consistently when they tried to capitalize on what they thought of then, and the courts would think of now, as their "market power." The net of it all was put succinctly by the Su preme Court in 1920 in its refus al to break up the U.S. Steel Cor poration: "Whatever there w'as of wrong intent could not be execut ed." (251 U.S.452) Since these combinations had already been launched when trust busting began to be a popular is sue, the only effect the law could have had on their market conduct would have been to make them compete less vigorously. If so, it had no apparent effect on the gen eral vigor of the economy. Any way, as a famous economist later put it: The rate of increase in (indus trial) output did not decrease from the nineties ... the modern standard of living of the masses evolved dur ing the period of relatively unfet tered "big business". . . the rate of advance . . . considering the spec tacular improvement in qualities, seems to have been greater and not smaller than it ever was before.

Joseph A. Schumpeter, Capitalism, Socialism and Democracy, Harpers, 3rd edition, p. 81. Castles in the Sand A curious paradox dogged the trail of the Antitrust Division in its earlier Section 2 (antimonop oly) cases. Within five or ten years of each decision, it ap peared that it wouldn't have made much difference if the case had never been brought; the alleged "monopoly," like a sand castle, was doomed anyway. In 1911 when the Supreme Court ruled unanimously against Standard Oil (221 U.S.1), the company had been losing ground for a decade. The 1900's were the "twilight of the kerosene age," but Standard was also losing ground in the new gasoline busi ness to such vigorous new compet itors as Pure, Sun, Union, Gulf, and Texaco. Its earnings were de clining and its dividends were smaller in 1911 than in 1900. The court-ordered fragmenta tion of Standard was ill-devised for trust-busting. For it created six refiner-marketing companies (Atlantic and the Standard Oil Companies of New York, New Jer sey, Ohio, Indiana" and Califor nia) each, on the average, with as large a share of the market in its allotted area as the parent com pany had had for the nation as a whole. If anything, this probably enabled these survivor companies to fight the "independents" more, rather than less, effectively than a single company run from 26 Broadway could have. Neverthe less, they continued to lose, and A.NTITRUST IIHUMBUG" 271 the independents to gain, in mar ket share, for decades.

Other leading cases had simi 1arly paradoxical economic after maths. In 1895 the high court re fused to condemn the American Sugar Refining Company for com bining 98 per cent of the nation's sugar-refining capacity (E. C. Knight, 156 U.S.l). But 30 years later sugar-refining was fiercely competitive again. In 1911 the "tobacco trust" breakup left a "big three" but a couple of years later an outside firm, R. J. Rey nolds, transformed the business with its new burley-tobacco cigar ette, "Camel." A 1914 monopoly case against a motion-picture pat ents pool was won just as outside competition practically doomed the pool; a 1931 order to Fox Films to sell its shares of Loew's barely preceded Fox Films' failure; and the 1948 court-ordered divorce of movie studios from movie houses hit the business almost simultane ously with TV. In 1923 the Antitrust Division asked the courts to break up In ternational Harvester - only sur vivor of the several turn-of-the century farm-machinery mergers.

Antitrust was particularly anxious to split up Harvester's 65 per cent of the grain-binder business. The Supreme Court refused,6 to 0 (274 U.S.693, 1927). Ten years later, the company still had twothirds of the business in grain binders. But grain binders had been practically outmoded by the new harvesting combines. The last of the old-fashioned big monopoly cases brought by Antitrust was against the Pull man Company, owner of the Pull man Sleeping Car Company and of the manufacturing company that supplied it. It was a Pyrrhic vic tory. Pullman had indeed a na tion-wide monopoly of sleeping car operation, but it was an eco nomically natural one, as the Court recognized in letting a syndicate of railroads take it over from Pullman - in one piece. But the "monopoly" (on the ground) was also both unprofit able and ill-omened. It had earned one per cent on investment during the 1930's; and after the war the airlines did to it just about what, a generation earlier, the automo bile had done to the streetcar monopolies. (Pullman, Inc., in vested a good part of the proceeds from its divested sleeping cars in truck-trailer manufacture.) Mousetrap-Maker's Hazard But after Pullman, Antitrust's spectacular anti-"monopoly" cru sades no longer led toward the an titrust holy grail that business men say they believe in. In its at tacks on Great· Atlantic & Pacific, Alcoa, United Shoe, du Pont (cell272 THE FREEMAN May ophane) and GM (diesel locomo tives), it picked on companies that had succeeded by the four "i's" --'- ingenuity, imagination, in novation, and improvement. It won the A&P case on fantasy account ing and the Alcoa and Shoe cases on a redefinition of "monopoliz ing" to mean keeping ahead of competitors; it almost won its cellophane case on a now-discarded "relevant market" argument. The absurd criminal indictment of General Motors for revolutioniz ing the railroad locomotive busi ness charged that G]d captured over 84 per cent of the locomotive market during a pe riod in which two once-substantial competitors were driven from the field. As a result . . . the purchasers of locomotives and the public in gen eral have been deprived of the bene fits of competition. (italics added) Wall Street Journal, April 13, 1961.

GM Chairman, Frederic G. Donner, had a sardonic comment: While a process such as this will not turn the clock back to the age of the steam locomotive, it may well cause business to pause before un dertaking the many risks of embark ing upon a new business venture such as the development and manu facture of the diesel locomotive. In the earlier cases above, the Division's antimonopoly patrol was somewhat like an assignment to keep the Gulf of Mexico free of icebergs. But the last five cases above call to mind dissenting Su preme Court Justice Stewart's carefully documented comment in the Von's Grocery case: ". . . the defendants are being punished for the sin of aggressive competi tion." II Monopoly": Fact and Fiction The word "monopoly" as com monly used is practically synony mous with "sin," and is about as precise. It comes down from Eliza bethan days, and shows it; applied to the kaleidoscopic American business economy, it fits like a stocking on a duck's foot.

Its use as a legal "term of art" started as a fundamentally incor rect analogy with Elizabethan mo nopolies. The Tudor monopolies were official grants to royal favor ites of the exclusive rights to trade in things that people couldn't do without or find substi tutes for, like salt. They worked like very high protective tariffs, raised prices sharply, were legally enforced with guns, and could be got around only by smuggling. It is not surprising that the American public in the 1890's was confused; the nascent American ind ustrial system was. something wholly new under the sun. But the courts began the error with their 1967 ANTITRUST "HUMBUG" 273 eyes open. Said the Ohio Supreme Court, in condemning the Stand ard Oil Trust, after quoting a three-century-old precedent: It is true that in the case just cited the monopoly had been created by letters patent; but the objections lie not to the manner in which the monopoly is created.

49 Ohio State, 137, 1892. Successful businessmen soon knew better. In 1901 Andrew Car negie and John Wanamaker were quoted as saying: Every attempt to monopolize the manufacture of any staple article carries within its own bosom the seeds of failure ... no men, or body of men, have ever been able, or will be able, permanently to hold con trol of anyone article of trade or commerce. Quoted in Ripley, p. 448. But having early taken off from economic reality, the courts went further in flights of fancy. In the well-known Tobacco case in 1946 (328 U.S.781) the U.S. Supreme Court said this of monopoly: The material consideration in de termining whether a monopoly exists is not that prices are raised and that competition is excluded, but that power exists to raise prices or to exclude competition when it is de sired to do so. (italics added) One might ask, "If the monopo list has the power - as he did have under a· Tudor monopoly grant to raise prices and/or exclude competitors, why doesn't he use it?" The answer, or the joker in this de,finiti on, is that, as Andrew Carnegie guessed and the would be monopolists of 1901 found out the hard way, he doesn't have such power. He cannot raise prices and exclude competitors at the same time. His higher prices will be a loud "come-and-get-it," and the bigger he is, the louder the invi tation. It is that simple.

Or it was that simple, in the early 1900's, when manufacture was mostly of staples, industries were distinct and compartmental ized, and price was paramount. The story of how the would-be monopolist's hazards have been multiplied since those days was dramatized, though not begun, with the Model T's story in the mid-twenties. In 1923 Ford had a near "monopoly" of the lowest price car market; Model T's out sold the nearest challenger (Chev rolet) well over three to one. But four years later, the Model Twas dead; the heart of its manufac ture stopped beating. Significant ly, perhaps, 1927 was also the first year of the annual auto model change. Today innovations come fast, obsolescence is rapid, and the profitable life of products, serv ices, and equipment is short. The 274 THE FREEMAN Ma,y thresholds between industries have dropped to the vanishing point. The mobility of competitive capi tal and managerial skill into slug gish industries has been speeded like the In0bili~y_of air-borne -troops; retarded only by Sherman and 'Clayton Act antimerger rul ings. Cloistered corners there may be; but no firm can count on keep ing, its feet and protecting its fu ture except by continuously doing what got A&P, Alcoa, Shoe, du Pont, and General Motors haled into court: using ingenuity and imagination to innovate and im prove.

Conspiracy Section 1 of the Sherman Act says, "Every contract, combina tion, ... or conspiracy, in re straint of trade . . . is . . . illegal." Some antitrust experts today feel that the prevention of busi ness. conspiracies has been the most successful part of the Sher~ man Act. And no quotation from Adam Smith is more fashionable today than his whimsical observa tion: People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices. Wealth of Nations: Book I, Chap. X, Part II. This tells but half the story. For the natural tendency of busi nessmen to conspire has its own built-in "counte,rvailing .force" their natural tendency to go it alone. This last has intermittently raised havoc with combinations and conspiracies in restraint of trade from the last decades of the nineteenth century on down through that governm,ent-spon sored open breach in antitrust, the NRA, to the electrical equipment conspiracy of the 1950's.

When pools and conspiracies have tried to set reasonable prices, the disruptive or centrifugal forc es have come from within - from among their own m,embers. To prevent this, devices have had to be used, such as the depositing of money by each member, to be for feit to the other members on vio lation of the agreement. Where, on the other hand, such ad hoc agreements try to set un reasonable (above-market) prices, the disruptive forces from within are reinforced by pressure' from without. Just as the early consoli dations found that raising prices to inviting levels defeats itself, so do conspiracies. The courts have taken an unre alistic view of price agreements of even the mildest nature, just as they have of "monopoly power" that has no power. Thus in the pivotal Trenton Potteries case 1967 ANTITRUST "HUMBUG" 275 (273 U.S. 392, 1927) the Supreme Court said: The power to fix prices, whether reasonably exercised or not, involves power to control the market and to fix arbitrary and unreasonable prices. The· reasonable price today may become the unreasonable price tomorrow. (italics added) Not so, reported a 1904 observ er of industrial pooling agree ments before and just after 1900: No pool or price agreement can continue where the price has not been fixed at a reasonable figure ..• only when the pool price is too low unduly to tempt the outsider ... is its position at all secure.

Quoted in Ripley, p. 84. In the last 30 years the anti trust enforcement agencies have extravagantly expanded their con cept of conspiracy, making it an "elastic, sprawUng and pervasive offense" (Jackson, J., concurring, Krulewic'h v. U.S.336 U.S.J"J"O, 1949) embodying "conscious par allel action," implied conspiracy, and merely inference of conspir acy. A notable result has been a long record of immediate acquit tals and directed verdicts of "not guilty." But an unfortunate con sequence has been to endanger co operative business activities; even when these are undertaken at the behest of government agencies, they may, in some future year, unless protected by a piece of pa. per from the Antitrust Division, be found criminal. Conclusion In the brilliant records of Amer ican business achievement, the antitrust laws are being given a vast amount of undeserved credit. In practice such good as they have done, could have been done through Anglo Saxon common law, worked out by cases. The attempt to fed eralize business morality, through laws conspicuous for their vague ness, has turned out, after 75 years, to have chiefly resulted in the creation and growth of ever more powerful administrative agencies. An incidental, but under standable and natural, result has been to discourage, more often than to promote, competition.

Never was antitrust less needed than today - and never more broadly applied. Over 50 years ago, when the law was very young, Supreme Court Justice Oliver Wendell Holmes wrote to an English legal friend in 1910 his private opinion that "the Sherman Act is a hum bug. based on economic ignorance and incompetence." What he would write about it now, beggars the imagination. ~ 276 ETERNAL VIGILANCE By the seers of antiquity and to this day, man has been warned frequently: UNDERSTAND AND CHERISH FREEDOM, LEST SLAVERY BECOME A HABIT. Yet, man forgets - which is our justification for now reproducing some of those earlier warnings.

I. The Prisoner of Chillon Frangois Bonnivard, who had been held a pol,itical prisoner for four years in the underground dungeon of the Chateau de Chillon, an ancient castle on the eastern end of Lake Geneva, was finally released on March 29, 1536. Lord Byron 1.vrote a stirring description of Bonnivard's captivity, "The Prisoner of Chillon." After a detailed portrayal of the prisoner's abhorrence of his confinement - during which he was kept in chains and denied even the privilege of seeing daylight - Byron describes Bonnivard's release: It might be months, or years, or days, I kept no count, I took no note, I had no hope my eyes to raise, And clear them of their dreary mote; At last men came to set me free; I ask'd not why, and reck'd not where; It was at length the same to me, Fetter'd or fetterless to be, I learn'd to love despair. And thus when theyappear'd at last, And all my bonds aside were cast, These heavy walls to me had grown A hermitage - and all my own!

And half I felt as they were come To tear me from a second home: With spiders I had friendship made, And watch'd them in their sullen trade, Had seen the mice by moonlight play, And why should I feel less than they? We were all inmates of one place, And I, the monarch of each race, Had power to kill - yet strange to tell! In quiet we had learn'd to dwell; My very chains and I grew friends, So much a long communion tends To make us what we are: - even I Regain'd my freedom with a sigh. 277 278 THE FREEMAN May II. That Invaluable J ewel,Liberty Before the time of Christ, Aesop's fable on how the horse lost his freedom prompted this comment from the Roman. philosopher and poet, Horace: THIS is the case of him, who, dreading poverty, pa.rts with that invalu able jewel, Liberty; like a wretch as he is, he will be always subject to a tyrant of some sort or other, and be a slave forever; because his avaricious spirit knew not how to be contented with that moderate competency, which he might have possessed independent of all the world.

III. Security May Betray Us A rchibald Rutledge, noted author and owner of Hampton Plantation, McClellanville, South Carolina, shares this observation: I LIVE on a great river, and west ward from my place, for some 60 miles, there is not a human habi~ tation. In another direction not far from where I live is a plan tation, the owner of which is not satisfied with the size of the deer on his property. So he imported from Michigan a huge security reared stag. This buck was kept for some time in an enclosure on the plantation, inside a7V2 foot wire fence. It was in the autumn, the mating season of the deer. A native buck from the man's own place jumped that wire fence at night, killed the great stag more than twice his size, and, once more leaping the fence, escaped into the wilds again. When wild creatures are given the artificial security of parks, zoos, and circuses, they never fail to deteriorate - certainly in a physical way, and, in a sense, in a moral way as well. They be come soft, careless, dull-witted, degenerate. All the incentive for them to. achieve and to maintain physical perfection and mental alertness has been withdrawn.

They have been made to pay a fearful price for their safety. Rarely except in affliction are we awakened to a sense of our own weakness and folly, or come to 1967 ETERNAL VIGILANCE 279 realize how ,little an our acquisi tions can conduce to ·our peace of heart, which perhaps is the only real triumph in life. By some kind of negative logic, hardship, which we are accustomed univers ally to lament, is a blessing; and security, for which we long so ardently and strive for so un remittingly, may betray us. Whenever I hear that the gov ernment is helping someone, I feel sorry for that person. Or whenever I find that someone, by a monopoly grant of power , has a sure market or a sure job, I feel sorry for him,. too. Even helping a person to help himself may be a disservice to him, for you will probably - perhaps unconsciously - compel him to do it your way. Charity, if needlessly bestowed, probably will have a vicious effect.

People who are promised support will hardly work. All grants, all subsidies, all rewards for services not rendered have a deleterious effect on character; and if char acter is not of foremost consid eration, what is? IV. Legislated Security Is Bondage Samuel Gompers, the Hgrand old man" of labor and president of the AFL, 1886-1924, warned his union members to look behind the humanitarian slogans used by the advocates of government-guaranteed security. LOOK .over all the world where you will, and see those govern ments where the features of com pulsory benevolence have been es tablished, and you will find the ini tia tive taken from the hearts of the people. Socia,} insurance cannot even undertake to remove or prevent poverty. It is not fundamental and does not get at the causes of social injustice. The first step in establishing compulsory social insurance is to divide people into groups, those eligible for benefits and those con sidered capable of caring for themselves. The division is based upon earning capacity. This gov ernmental regulation must tend to fix the citizens of the country into classes, and a long.;.established insurance system would tend to make those classes rigid.

There is in the minds of many an absence of understanding of the fundamental essentials of free dom. They talk freedom, and yet 280 THE FREEMAN May would have bound upon their wrists the gyves that would tie them to everlasting bondage. For a mess of pottage, under v. Contented Slavery the pretense of compulsory social insurance, let us not voluntarily surrender the fundamental prin ciples of liberty and freedom. IT MAY seem strange that the slave, totally lacking in liberty, fre quently feels no strong resentment toward the master who has enslaved him. In fact, the slave may even feel grateful toward his master who "so kindly gives me food and necessities with which to live, and with out which I would surely die." It is said that many a newly-freed slave after the War Between the States feared liberty because, due to the narrow vision of his experience as a slave, he acquired this strange feeling of kindness toward his oppressor. A similar feeling is reported to have been held by the oppressed in Hitler's Germany, and in Stalin's Russia; and we have noted the same feeling among those who have acquired the habit of leaning on a benevolent government in our own country. All these victims of a lost liberty are unmindful of the fruits of liberty, due to the blindness which compulsory or voluntary slavery has caused.

Thus wrote F. A. Harper in Liberty: A Path to Its Recovery (1949) at about the same time Ralph Bradford, well-knou)n business organi zational official, was setting it to verse in his epic Heritage: The tragic voice of contented slavery! Of all the evils man-invented, Beyond the depths of conscious knavery, Beyond the limits of belief, It is the truth, to mankind's grief, That slavery can be contented! The slave cries out when he is sold Down river, or his back is scarred With lashes; but when he is told That safety minus risk is offered, He does not see that chains are proffered, Or know he enters a prison yard. And bondage is not always a chain, Nor a prison pen, nor an auction block; It is not always labor and pain It may be privilege, comfort and ease, Tha t hide the shackles he never sees And fasten the slave with a gilded lock!

1967 ETERNAL VI'GILANCE 281 VI. Why Is Slavery Possible? LEONARD E. READ IT IS easy enough to see how a man who has once known freedom might be forced - against his will and despite his struggles - into captivity. It is no puzzle, for ex ample, to understand how a man could be forced - at gunpoint into a Siberian salt mine. But what is the explanation when freedom declines among men who had known its blessings and yet put up no scrap to stay free? Why the lethargy all about us while American citizens submit to one control after another? Where are the scrappers - the defenders of individuality who might fore stall this trend toward slavery? Surely, slavery could never suc ceed in the face of determined and continuing resistance. For example, there wouldn't be a tiger in any zoo were the tiger to remain as ferocious as when first captured. Man simply would not put up with such a beast. The caged tiger, however, does not retain his ferocity. The wild beast soon be comes docile and as grateful for its food and other attentions as a house cat.

Why? The tiger was at liberty in its native habitat, had experi enced freedom, but ferocity at tends only the initial stages of captivity. Docility comes quickly and certainly with imprisonment. Could the reason be that the tiger has no understanding of the dis tinctions between liberty and serf dom? Knows no definitions? If the tiger has no knowledge or aware ness of his liberty, he cannot re member a knowledge he has never possessed. His cage becomes the only habitat he knows, and he eats and sleeps, contentedly. There never would have been any Negro slavery in America had the Negroes remained as intract able as when first taken in hand by the slave traders. They rebelled at first but soon became docile. They, too, had been at liberty in their African habitat. However, they were primitive men. They lacked the power of articulate expression in the field of ideas. They were not in possession of definitions and the distinctions between freedom and slavery. They lacked awareness; nor could they remember that which had never been known to them. They soon accepted as nor mal the slavery which became their lot. They had nothing but the normalcy of their slavery to serve them as a point of reference.

Symbolic of the modern trend toward serfdom is the imposition 282 THE FREEMAN May of progressive taxation, especially the income tax. The Sixteenth Amendment would not be on our statute books had any substantial number of Americans foreseen its consequences. In this· instance of a growing serfdom or, conversely, a loss in freedom of choice, the're was no abrupt change to arouse resist ance. These progressive taxes were imposed ever so gradually. Hardly anyone noticed the "take" at first. Americans adopted the principle of progressive taxation because they did not understand it. They did not realize that this was a denial of the concept of equal treatment under the laws and a displacement of the methods of voluntary exchange with a gov ernment-enforced policy "from each according to his ability, to each according to his need." Further proof that there was but little understanding of the liberty that was forsworn and the intervention. that was accepted is the fact that as the "take". has increased over the years, there has been no rebellion, even on the part of those on whom the "bite" has been the greatest. Each succeeding increase is only a new normalcy greeted with the docility and in difference of. the imprisoned tiger and the enslaved Negro. And, in my view, the reasons are the same: No understanding of the definitions and, the sharp distinc tions between liberty and se'rfdom.

It is self-evident that tigers will never be freed from zoos by any doing of their own. It is a historical fact that slav ery was not abolished in America by any rebellion on the part of the Negroes. It is equally plain that present day Americans who have accepted or are indifferent to the growing encroachments of the state cannot be expected to rescue themselves. Intellectual rebellion is not.made of indifference or docility. It is made of sterner stuff. It has its roots in an understanding that lib erty is the freedom to do as one pleases creatively; that restraint has no place except against de structive, predatory activity; that serfdom restrains creative action. It displaces self-control with con trol of self by others. To deprive a person of self-control leaves him little incentive to indulg~ in con structive or creative thought. Without the desire., one soon loses the capacity for self-control.

A person who understands these di~tinctions, even though he be in prison or in the salt mines at the point of a. gun, cannot be called a serf. All that can be properly said of him is, "There is a free man res trained." Free men, defined as those who understand these distinctions,' are 1967 ETERNAL VIGILANCE 283 tbe on1y one15 who can rescue tbe indifferent and the docile from a growing serfdom. The burden is on them and them alone. The bur den cannot be shared by anyone who is unaware. Awareness of the difference be tween slavery and liberty is the in dividual's only defense against en slavement. Therefore, it is tremendous\y important to 'Pr~~~rv~ the ideals of self-control, reflected in the concepts of personal choice, private property, freedom of ex change, and government limited to the defense of these rights of the individual. To lose awareness of these ideals makes slavery possi ble, without a struggle. It is pas sive surrender of the only reason, if not the only chance, for life. ~ THE BOY WHO DIDN'T CRY "WOLF!"

HELEN COPELAND Business and conservative elements in America have continually injured their own cause by shout ing, "Wolf!" too long and too often ... Private en terprise has conditioned the public to accept rather than rej ect statism. SYDNEY J. HARRIS A SHEPHERD BOY was tending his sheep as usual when a grasshopper lit on the end of his flute. He caught it in his hand and called out in a loud voice that was heard way down in the city, "Grasshopper!" All of the important people in town and even some who were not imMrs. Copeland is a freelance writer i1,'l Char lotte, North Carolina. portant rushed to the hillside where the boy was intensely ab sorbed in watching the green bug eat a blade of grass. When they saw it was only a small insect, they were annoyed. "What's the matter with you, Boy?" the mayor scolded. "Yelling bloody murder over a little grasshopper!" "But look at his sharp mandi284 THE FREEMAN May bles," the boy said. "He can really chew up grass." Nobody looked.

They sighed and went back down the hill. The boy caught several more grasshoppers the next day. He let them go and lay back in the soft grass to play his flute. But his ears were very acute, and he couldn't play well because of a faint annoy ing hum that took away the joy of hearing his own music. He turned over on his stomach and propped himself up on his elbows, his chin on his hands, frowning. Then, in the distance, he perceived the source of the hum, a loose gray cloud low over the horizon. Sud denly he was on his feet yelling, "Locusts, locusts!" at the top of his voice. The townspeople all rushed to the hillside. "Locusts!" the mayor exclaimed indignantly, red-faced and panting from the long uphill run. "I thought you said, 'Help us.' Don't you know we've never had locusts in this area? That's just a thundercloud. Not afraid of a little rain, are you, Boy?" "But, Sir, I can hear them. It's a huge swarm of grasshoppers out there." He pointed with his flute.

The mayor, the members of the city council, and the townspeople all looked at the dark horizon. The mayor wagged his shaggy head and snipped a grasshopper off his sleeve. "There, there," he said. "I can see this job is getting you down. You're lonesome. Next week come into my office and we'll see about getting you a position that will suit your temperament." He smiled at the shepherd boy and his big hand squeezed the boy's shoulder. "Don't worry about grasshoppers, Boy. Think of it this way. Grasshoppers can be a bene fit. They can fatten up the par tridges which means more meat in the freezers. Always think posi tively; and don't call again, unless you see a wolf." ~ The boy never saw a wolf, but the next day there came a grea t cloud of grasshoppers to the land. They neatly clipped the green grass with their sharp little man dibles till there was none left and the sheep, baaing pitifully, strag gled away. The boy then came into town, which, like the country, was overrun with locusts. The mayor with a severe case of laryngitis had gone to bed, but the members of the city council carped at the boy.

"Why didn't you tell us ? We could have seeded the sky with insecti cide !" "I did tell you!" the boy pro tested. But they turned their backs on him and he felt angry and con fused. But he was no more miser able than anyone else. Everyone was hungry and the old joke about the lazy grasshopper wasn't funny any more. + of ALL CIVILIZED societies of men have possessed inherent concep tions of human dignity and social justice. These intrinsic human values and desires, rather than the transitory governments that have attempted to articulate and formalize them, have provided the basis for social progress and the advancement of civilization. Western civilization has been founded on two essential princi ples of human association. The first principle recognizes that men are entitled without reservation to the rewards of their legitimate efforts and to jurisdiction over property they have justly acquired.

The second principle simply af firms the first in the hearts of men and provides mutual respect for human rights that translates into social ethics and civil justice. The great social controversies Mr. Newell operates a farm near Marcellus, Michigan. ROBERT K. 'NEWELL GRESS at the crossroads of history have often revolved around conflicts be tween the natural desire of men to make the most of their legiti mate opportunities and govern mental failure to reflect accurately this basic human right. Civiliza tions have stagnated and social ethics have degenerated whenever these self-evident principles of hu man association have been aban doned in favor of legislated social nostrums and politically contrived definitions of civil justice. It is difficult to assess the pre cise evolutionary position of our own complex society and proj ect social and political trends through to specific conclusions. Fortu nately, however, present human problems and social conflicts es sentially are as old as civilization itself and can be viewed in the broad perspective of political his tory. Political history teaches by comparison with previous exam285 286 THE FREEMAN May pIes gathered across centuries of human relatiQnships and is a most competent aid in making projected estimates of the future and pre dicting ultimate results of gov ernmental policies.

A Sound foundation Our nation was founded on sound principles of human associa tion that recognized the inalien able human right of free men in society to acquire property within the framework of social ethics and civil justice. Jurisprudence, dur ing the early stages of social un folding, took no direct interest in processes of human enterprise or in the development of the na tional economy. The primary con cern of law was the arbitration of justly disputed property claims; and everyone happily assumed that the blessings of, liberty ade quately had been secured for themselves and their p'osterity. be cause these principles of social de velopment vaguely had been de fined by the wording of elaborate documents. But, like historical predecessors, the nation gradually altered founding principles to con form to constantly changingdefi nitions and political formaliza tions of human rights, social ethics, and civil justice.

Human rights, social ethics, civil justice, and political freedom are words commonly employed to convey concepts of human associa tion. But, as is the case with all words that attempt to transmit ideas, the meanings of the words are as varied as the ideas of the people who use them. Ideas that are diametrically opposed, and all the gradations between, often find expression in the same word. Thus, in human association, when ever principles are abandoned in favor of political definitions of words, every form of social or ganization can find justification for its existence in the wording of a given document. A Perversion of Concepts In our society, conceptions of freedom slowly have transmuted from self-evident freedoms of hu man opportunity to diametrically opposed political formalizations. Freedom is now quite generally considered to be the by-product of socialism that emancipates the hu man being from the moral burdens and responsibilities of self-provi sion, self-government, and effec tive living. Human rights no longer are regarded as being in trinsic to the nature of man.

Rather, human rights are now de fined in terms of the welfare, eco nomic provision, and standard of living that men have a right to demand and expect from the wel fare state. Social ethics and civil justice no 1967 PRINCIPLES OF PROGRESS 287 lQnger are ba~ed. upon mutual re spect for human rights to un limited opportunity. Justice now demands that effort and indolence be equally rewarded and that men contribute to the state in accord ance with their ability and receive from the state according' to their need. Ethics no longer reside in the hearts of' men but instead are based upon nothing more substan tial than the political caprice of the moment. The law itself has greatly exceeded legitimate func tions of arbitration and plunged headlong into the economic and social'life of the nation. Government, with its multiplic ity of laws, now directly manipu lates the entire society and clum sily attempts to legislate varying human energies into conformity by reducing mankind to a common economic and social level. In the frantic search for socialized uto pia, the nation has completely lost sight of this amply demonstrated historic fact. ,Regardless of the words employed, the principles of individual responsibility, mutual respect, and personal morality rather than' governmental procla mations - must necessarily under write the social institutions 'of any lasting society.

What Might Have Been Socialistic planners have as sumed full credit for all progress in every area of human association and point with fatherly pride to the continuous growth of the na tion. The responsibility for as tronomical public debt and ruin ous inflation, which the experi ments in socialism have incurred along the way, is assumed by no one. These inevitable stigmas of socialistic experimentation igno miniously are left to be pondered by future generations. How much of the national economic and so cial growth" generally attributed to socialistic' interventionism, was due, in fact, to a normal advance in industrial technology - and in deed, how much faster and more soundly the nation might have de veloped without the intervention of political nostrums - are mat ters for hypothetical conjecture. Had the Sixteenth Amendment failed to be ratified, could the floodgates of socialism so readily have been opened ?Had the fan tastic sums of money, confiscated under this provision and squan dered on political fantasies, been invested by private enterprise, could social objectives have been identified more accurately and at tained with less waste, ext:rava gance, and corruption?' These, and many other related queries viewed against the background of politi cal history, occupy the conjectural interest' of every thoughtful citi zen.

288 THE FREEMAN May Social Decadence Less conj ectural, and more ob vious than the economic situa tion, however, is the unmistakable decline of human values that has accompanied the rise of statism and the demise of the individual. By transforming principled in dividuals, with their natural as pirations and nobilities, into a morally bereft and politically manipulated horde, the basis for our social organization and the foundations of civilization itself are systematically being destroyed. Social decadence, and all that it portends, is a problem that re sponsible citizens survey with jus tifiable apprehension. Every form of larceny, tradi tionally looked upon by individuals in society and laws of arbitration as a moral violation of human property rights, is now practiced in our society with alarming vio lence and ever-increasing fre quency. As profligate crime rap idly spreads its cancerous growth through every economic stratum of society, stolen property is often less valued than the idle diversion sadistic crime provides. Mob vio lence, senseless social atrocities, and larcenous crimes against men and property are multiplying to frightening proportions. This sin ister abasement of human dignity, however, obviously is only a sur face symptom of a far more insidious moral disease that is at tacking humanity.

The socialistic planners, whose cold intelligence devised the empty, insect-like society of stere otyped human beings, view the problem of increasing. immorality and social unrest as a failure of mankind to underwrite the social institutions of the new economics and thereby rise to the ethical challenge of modern civilization. But another estimate of the moral situation suggests that mankind has failed neither the new econ omics nor its politically defined in stitutions. Our immoral society, unfortunately, simply reflects the moral aberrance of socialistic gov ernment that tragically is failing humanity. Collectivized Injustice Socialism, like all government, formally frowns upon theft be tween individuals in the private sector of society as being immoral and socially unjust. But when so cialism, by resolution and coercive law, attempts to provide equal dis tribution of unequal earnings, the questionable processes involved are considered to be not only well within the bounds of propriety but the very essence of morality and the epitome of social justice.

When human rights to property legally are held in this dualistic perspective, it is most difficult for 196'7 PRINCIPLES OF PROGRESS 289 any citizen to make moral distinc tions between private theft and the, governmental plunder of pri vate resources. This is especially true when governmental plunder is legally in stituted and artfully engineered by elected legislators whose politi cal abilities are gauged in terms of the economic redistribution they can obtain for their constit uencies. Rather than performing the traditional role of upholding private property, the law has be come a respectable instrument of larceny in the hands of the people and has taken the lead in abrogat ing the property rights it once so nobly upheld. Larcenous crimes for ill-gotten gain, once practiced darkly in secret, have assumed the honorable guise of social j us tice and boldly moved to the halls of government.

The financial aspects of reckless tax-and-squander socialistic legis lation and irresponsible public debt can be debated at some length and even rationalized by proponents of the new economics as being in the best fiscal interests of the nation. But, it is not dif ficult to understand why citizens increasingly are losing respect for unprincipled civil authority and the odious legal and political im morality that permeates our so ciety. Law has abandoned all prin ciples of social justice and rests upon no foundation but the au thoritarian use of political power. The formerly venerated halls of government, in which the grimy business of the new morality is transacted, have become a dis graceful affrontal to every concept of human decency. Youth Lost by Default Tragically, the young people whose formative years of social adj ustment were molded by the amorphous ethical concepts of their elders, have been especially confused by the ambiguous defini tions of human rights. Conse quently, they are often openly contemptuous of all conniving au thority that defines and sancti moniously makes distinctions be tween morality and immorality, justice and injustice, private theft and public plunder. The young people, who comprise one half of the citizenry and so provide the hope for the future, already ac count for a heavily disproportion ate share of the private crimes against men and property. This projected trend toward moral an archy indicates that, like so many previous and now extinct civiliza tions, our own society is gravely endangered by internal decay of human principles.

Civilization depends entirely upon human decency and mutual respect for the rights of men.

290 THE FREEMAN May Civil order is upheld, not by law, authority, and political phrase makers as it apparently seems to be, but by the moral integrity of civilized human beings. Time will promote these confused young people to the hard core of an al ready morally decadent society and increasingly convert amoral attitudes toward property and the use· of force to acquire it into anarchistic annihilation of all hu man dignity. Since politically con trived standards of social conduct and punitive reprisals historically have never been substituted suc cessfully for principles of human association, or been able to guar antee even the minimum social re quirements for civilization, our so ciety obviously is approaching a vital philosophical crossroad. Some Fruits of Socialism Socialism offers no evidence, historic or otherwise, to support the fashionable contention that a politic ally planned economy dra matically translates into .social progress and human advancement.

At no time in history have there been more laws and more vio lence; more social legislation and more social unrest; more sta te welfare and more greedily de pendent citizens; more pseudo prosperity and more irresponsi ble debt; more political dogmas and fewer human truths; more formidable government and less ethical human relationships; more legal apparatus and less justice; more law enforcement agencies and less respectful and less coop erative citizens; more collectivism and more political corruption and social decay; and more young peo ple with fewer principles to live by. Socialism demands that citizens surrender all moral principles based on self-respect and become subservient to politically defined attitudes toward life and property rights. Life under socialism be comes an amoral course, artfully steered through a tortuous maze of absurd values and inconsistent moralizations where political power is the only criterion of jus tice. As young people appraise the long-range prospects for self-justi fication through decent and effec tive living under the socialistic system imposed by their elders, it is small wonder that frustration and disillusionment are leading to the modern concept of irresponsi bly living for the moment.

As society approaches the cross road and ponders the altern ati ves, however ,there is reason to hope for a brighter future. ,While there is no question about general moral confusion among young citizens who hold the key to the future, thus far only relatively small per1067 PRINCIPLES OF PROGRESS 291 centages have expressed their sense of futility through acts of violence, promiscuity, and sadism. Many young people retain intrin sic human values and continue to search, with little assistance from their elders, for hopeful princi ples of social progress. In the philosophical struggle to reaffirm basic principles of human association - as opposed to social ized formalizations, judicial re views, and political interpreta tions of hallowed words - it is well to remember that the attitudes of the young are formed by the moral influences that surround them and are forged by the examples of their elders. If our civilization is to avoid the bottomless pit of total collectivism and political self-de struction, the moral principle of private property and the closely related human right to self-justi fication must be supported and at tested to in every facet of human association. Mutual respect for property rights will then indicate the ethical principles to follow in every human situation and insure social progress and the advance ment of civilization. ~ We Believe' ••• WE BELIEVE in the essential, innate dignity of the individual. This belief is the very basis of our Western culture, and of our Amer ican tradition and form of government in particular.

Our philosophy of the dignity of man - of freedom, if you will flows from our belief in a Supreme Being. We believe that God created man - all men - in His image. Accordingly we believe that there is a higher purpose in life than to serve the state. We believe that this purpose is not re stricted to the material side of our lives but is first and foremost of a spiritual nature. In fact, we try to order our lives in the certain knowledge that our final destiny lies beyond the material concerns of this world. This concept of the meaning and purpose of life is the direct opposite of the communist view. Dialectic materialism denies the Supreme Being; denies the spiritual side of man; denies any but a materialistic purpose in life. Under communism, man is required to have blind faith in the state. He has no voice in the affairs of the state. He has no fran chise as a citizen. He is not master of his own destiny. He is given or denied an education, according to the will of the state .. He is ordered to work wherever the state needs him.

This is the atmosphere of a slave society. In the moral sense it is not and cannot be the same atmosphere that we have created here under freedom. From an address, "Brotherhood Through Better Understanding" by JAMES M. ROCHE. President of General Motors LEONARD E. READ EVEN BEFORE the discovery of gun powder a thousand years ago, Asians were shooting rockets sky ward. As the centuries passed, in ventive man improved the propel lants and the rockets went ever and ever higher. But until a few moments ago, reckoned in historic al time, the rockets always "ran out of gas," as we say; that is, the propellants spent themselves. The rockets soared until their momen tum was spent, but they eventually upended and returned from whence they came - to earth. Must everything that goes up come down? The answer is affirm ative provided that whatever goes up does not go beyond our earth's gravitational force. But what of a thrust that would propel the rocket into "outer space"? That's differ ent, we discover: What goes up need not necessarily come down; it is possible for an object to remain in orbit indefinitely.

Although analogies are tricky devices, they can, on occasion, as292 FALL sist in bringing the mind into range of an abstruse matter that may have an important lesson to teach. So, let's see if we can apply the rocket analogy to the rise and fall of individuals, nations, civili zations. Dean Inge inverted an old prov erb and pointed out that "nothing fails like success." A famous prize fighter put the same idea more dramatically, "The bigger they come, the harder they fall!" But are these conclusions necessarily true? Now and then - not often we observe an individual who gets himself up topside and stays there, despite the "law" that says indi vidual failure is an inevitable af termath of personal success. But when it comes to nations and civilizations we look in vain for exceptions; the record is clear: what goes up has always come down! Nor is the assessing of col1967 THE RISE AND THE FALL 293 lective rises and faUs conuned to the historians. Most of us, regard less of which side of the ideological fence we are on, concern ourselves with the fate of "our country" or the favorable and unfavorable trends of "America."

Individual Liberty the Key Before recounting examples of collective rises and falls, it is well to have in mind what significantly rises and falls. The one important feature to keep the eye on is the rise and fall of individual liberty. If the rise and fall of political pow er and coercive dominance -lib erty's opposite - were the criteri on, then we would be forced to conclude that impoverished Russia has risen beyond any nation that has ever existed, an absurd deduc tion. Detecting the general rise and fall of liberty in a nation does not require that we examine the record person by person. It can be easily spotted by merely observing where liberty's concomitant - general well-being, economic as well as cul tural - has risen or fallen. Any where such well-being is increas ing, there we know that freedom also is increasing. The undulations of city-states, nations, civilizations began more than 6,000 years ago with the rise of Sumer. It fell so flat and its cities became so deeply embedded in the desert sands that historians knew nothing of it "for the past 2,000 years - not until archeolo gists made some accidental discov eries about a century ago. And only during the past twenty years has anyone been able to decipher their cuneiform characters and, thus, to learn about the remark able achievements of the Sumeri ans. l Egypt had her heyday.

There was the rise and fall of Carthage. Edith Hamilton writes, "A new civilization had arisen in Athens, unlike all that had gone before."2 Parenthetically, so important was Athens that many of the world's people are said to be part Greek. And, without question, all civilizations have contributed to our individual inheritance. But Athens joined the growing list of failures; she fell from her preeminence. Gibbon left us a notable record of the decline and fall of the Ro man Empire. After Rome was added to the scrap heap, we witness the rise and fall of Kiev, Venice, Amster dam, and a host of other cultures, 1 Samuel Noah Kramer, From the Tablets of Sumer (Indian Hills, Colo rado: The Falcon's Wing Press, 1956) 1 293 pp. 2 Edith Hamilton, The Greek Way (New York: W. W. Norton, 1964), 212 pp.

294 THE FREEMAN May including the mighty British Em pire. Nowhere at any time can we find an exception to this rise-and fall pattern. And there is a good deal of well founded suspicion that the U.S.A. - the mightiest of them all in in dividual liberty and overall well being - has lost her thrust and is proceeding upward largely on mo mentum, that fateful interlude be fore upending and plunging down ward into the historical has-beens. Is this suspicion unwarranted? Will our nation be the exception to this evolution-devolution caval cade? Can we expect the U.S.A. to break this monotony, to prove the fallacy of this cyclical theory of history? Have we the orbital se cret? Or will "the bigger they come, the harder they fall" apply to our political economy as it has to the others? Assume there are grounds for this suspicion. Is there something, even at this late stage, that can be done about it?

facing the Problem Christianity answers this ques tion affirmatively - man can trans cend himself and break with the past - and thus this belief has been the unique promise of West ern civilization. Of three points I feel certain: (1) these ups and downs of city-states, nations, civ ilizations are Heaven's or Na ture's or Evolution's diagrams, presented over and over again, writ bold and enormously large, that all but the blind may see them; (2) we must observe, study, and learn the lessons they teach; and (3) the upending in the case of our country is not necessarily inevitable; the question is, can we intellectually meet the challenge that is unique to our times and situation? As Demosthenes de clared long ago, "The time for ex tracting a lesson from history is ever at hand for those who are wise." Upending or not depends entirely on the amount of wisdom that can be brought to bear!

Getting topside is one thing; staying there is quite something else. Nor is it too difficult to see why. Reflect on our Pilgrim Fathers and other newcomers who followed. Theirs was, as we well know, a case of "root hog, or die." But their plight, as similar plights the world over, bore the seeds for its alleviation: no way to go but up. Overcoming obstacles flexes the faculties and makes for strength; there is a common de sire to achieve; self-reliance flow ers, induced by having nothing else to rely upon; inventiveness is mothered by necessity; there is a spread of such survival virtues as thrift and honesty. There were other seminal or originative drives which, in certain favorable conditions, put poverty in the 1967 THE RISE AND THE FALL 295 background and led, eventually, to a state of material and cultural well-being. A part of the explanation "the certain favorable conditions" - as to why these seminal drives brought results superior to those previously and elsewhere experi enced was that, beginning with the late eighteenth century,· sev eral economic facts of life were discovered and extensively prac ticed: specialization, freedom in transactions, and the free mar ket or marginal utility theory of value. But even more basic and fundamental was the unprecedent ed limitation placed on coercive political power, that is, the remov al of restraints resulting in the freeing or releasing of crea ti ve energy. This felicitous windfall stemmed from the concept that man's rights are an endowment of the Creator and not the state, a concept explicitly stated in the Declaration of Independence and fortified by the Constitution and the Bill of Rights: the spiritual antecedent of the American mira cle!

Yes, the U.S.A., relative to all previous instances, made it top side. But staying in this position demands an art never yet acquired in human experience. Consider the seminal drives that put us there. Up is no longer the sole direction; down has been added and is easier, requiring no mol'~ in the way of virtues than noth ing; just letting yourself go, as we phrase it. Affluent people have no material obstacles to overcome. Strength and toughness tend to weaken or atrophy in the absence of exercise. Thrift becomes "old hat," and what more is there to achieve when one believes he has it made? Necessity is turned off as a gener ator of creative activity. To top it off, "the certain favor able conditions" have decreased as material well-being has increased, playing havoc with the most pow erful seminal drive of all: self-re liance. Getting to the root of it, the idea that rights are an endow ment of the Creator has become old-fashioned; the state as god has been substituted for God! And this shift in fundamental concepts has witnessed, as we might expect, a removal of constitutional bar riers against state power. Self reliance, in these circumstances, gives way to a reliance on omnipo tent government.

That the seminal or originative drives -Nature's handmaidens which put us where· we are have all but spent themselves seems evi dent enough. And short of a wis dom wholly new to human evolu tion, we'll discover that we're not in orbit; that an upending is upon us; and that the U.S.A. is 296 THE FREEMAN May just another in the evolution-dev olution pattern, that is, one more diagram writ bold as a lesson for some future and, may we hope, wiser people. But why should we not be the wiser people? To do the best we can in expanding our awareness, perception, consciousness - intelli gence - is what's expected of us; it's clearly man's destiny. Why wait for some future people? Thou sands of Americans with minds potentially up to the task are among us. Realization of potenti alities is thwarted only by a multi tude of distractions, trivia that any such person can easily detect for himself. The time and energy all of us fritter away - our inat tention to the really important matters of life - is appalling.

What is the wisdom required to avert an upending? I do not know; you do not know; no one knows!3 Therein is to be found my point. Looking for salvation, the wisdom in others or in organi zations and institutions has no more promise than is to be found in political parties. It is this very looking elsewhere, this shiftless, disastrous, let-George-do-it pro3 The best outline I have been able to contrive of the areas where understand ing must be sought is the chapter, "The Human Situation," in Deeper Than You Thin.k (Irvington, N. Y.: The Founda tion for Economic Education, Inc., 1967), pp. 28-44. clivity that draws an absolute blank. How can there be any wis dom in anyone of us when every one is looking for it in someone else? The Task Is Ours The first fact to keep in mind is that all wisdom has its origin and manifests itself through dis crete individuals and, insofar as you and I are concerned, only through you and me. Next, is to understand that whatever shows forth from either of us, regard less of how intelligently and dili gently we labor at the task, can be no more than tiny fragments of light or enlightenment. And last is to entertain the conviction that only in a proliferation of the search for Truth - on the part of everyone who has the potentiality for abstract thought and the capa bility to think things through can individual fragments of wis dom add up to a sum total suffi ciently large to avert another his torical upending.

This, in my view, is the lesson the bold diagrams have to teach. They seem to decree that settle ment for anything less than our best is out of the question: that's the price; take it or leave it; no higgling and haggling. If we fail to get the message, there'll be a people, eventually, who will. The fret is, of course, that while 1967 THE RISE AND THE FALL 297 you and I may do our best - will anyone else? Will everyone who is capable of this type of thinking? It doesn't seem likely, but it must be remembered that neither you nor I see very far. The message of history's rise and-fall sequence, given to us over and over again, is, indeed, writ bold. But some of the me,ssage is in fine print. The little I can read of it runs somewhat as follows: • The only w'ay for an individual to inspire others to do their best is to do his own level best. • The rise and fall of the quality of individual lives ac'count for the rise and fall of city-states, na tions, civil,izations.

• When selecting teachers for self, or children, or for one's fel low c'ountrymen, be certain that the teachers are students them selve,s. Noone can aid others in their improvement who is not ex per"'iencingself-improvement. • Be skeptical 0 f all programs promising to improve the lot of mankind that do not begin with your own improvement. • Do not be misled by the cliche, "Self-improvement is fine but it's too slow; bime is running out." The only concern an individual should have about time is his own husbandry of it. • He who favors liberty would never think of masterminding the good society. Then let him not try to plan the rearrangement of a bad soc'iety. He is as inc'apable of the latter as the former. True prac'ticality consists in each man probing for Truth and upholding what is revealed to him. A good society emerges only from c~ount less, individual stands for right eousness.

True, the message is writ bold but, then, there is the fine print which gets ever finer and increas ingly more difficult to read as one proceeds. Nonetheless, it ungrudg ingly yields to all who are worthy and reveals an ever deeper wisdom in response to devout and persist ent probing. And, assuredly, some where in the dim recesses of the message is to be found that wis dom which will make it possible for man to transcend himself, to break with his past, and to upset the monotonous rhythm of the rise and the fall. If we will aim at our own ful fillment, we can confidently leave the masterminding of nations, civ ilizations, and the world to the Creator. Ortega read rather far into the fine print and there was revealed to him what the personal dividend is: "Every Iiving crea ture is happy when he fulfills his destiny, that is, when he realizes himself, when he is being that which in truth he is." ~ KARL MARX, whose politico-eco nomic doctrines rule the lives of more than a billion persons and profoundly influence the rest of the world today, deemed labor the source of all production and gave short shrift to such factors as cap ital and management. But we know now that Marx was wrong, that the plodding effort of labor alone consumes nearly all the wealth it produces, and that all significant creations of new wealth may be traced to the courage, vision, in telligence, and organizational skills of the entrepreneur.

From an economic point of view, an isolated individual is inefficient. Mr. Smith is a businessman in California. 298 In a pastoral society, without tools and without trade, he barely wrests a living from the soil and is constantly at the mercy of the slightest change in weather or cir cumstances. Possibly a third of the world's people live this way today. The miracle of a high standard of living comes through efficient economic interchange, which in turn depends upon organization and tools. Tools can only be fi nanced through savings. However, savings have no economic value un til they become capital, channeled into useful paths. When properly invested for appropriate combina tion with labor - for job oppor tunities - this capital creates new wealth. The free or voluntary or ganization required for this proc ess is provided by human catalysts known as entrepreneurs. These en terprising and self-motivated indi viduals find fulfillment by creating financial institutions, starting in dustrial complexes, organizing commercial outlets, building trans portation arteries, and providing other organizational essentials for a high level of human economic intercourse.

The basic resources used by an entrepreneur are manpower, ma terials, machinery, markets, money, and real estate. The proper combination of resources yields profit and wealth. Improper combinations result in waste and loss.

196'7 CREATORS OF WEALTH 299 To cite a simple example, if.a mil lion dollar's worth of manpower is combined with a million. dollar's worth of building materials to make a structure worth $2,500,000 in the market, then wealth has been created. Were the building to be worth less than $2,000,000, then assets would have been combined to destroy wealth. Thus, contrary to popular belief, wealth can be destroyed even while building. Recombination of Resources The entrepreneur relies upon the value of economic resources as determined by the free II;larket.His role is to so anticipate demand and to combine available resources in such a way as to maximize the spread between their costs and the market price of his product or service. The greater the spread, the greater the creation of wealth. This recom'bining productive proc ess hurts no consumer or laborer or other owner of resources, since it brings to the market more than is taken from it. High profits, de rived from efficient service to others, benefit the stockholder, the entrepreneur, and the· economy in general while injuring no one.

Resource combinations which produce losses, however, are a net drain from the market. If anyone benefits from such combinations, it is at the expense of others. Free market values are the only "fair" values, and high profits are a meas ure of good management and ef ficient service rather than greed. When wealth is created without co ercion, it is not taken from any other owner; it is literally created and never existed before. The successful entrepreneur is a genius as rare in his field as is the outstanding painter in the field of art, or the brilliant author in the field of letters. In addition to intel ligence, the entrepreneur must have courage, persuasiveness, per severance, perspicacity, self-reli ance, and a "feel" for business. Pulled and driven by an inner force, as is a genius in any field, he is willing to work long and hard to accomplish his ends. Wealth, to him is a necessary business factor, a measuring stick, a reward for his efforts, but seldom his only goal.

He continually seeks ever greater responsibility, and welcomes the pressure of strong competition in the business arena. Professional jealousy is charac teristic of artists, authors, actors, and all other specialists tainted by human nature. Their common. de nominator is a degree of participa tion in the economic field. Some wealth is necessary for survival. Consequently, jealousy of the suc cessful creator of wealth is intense and pervasive, generally evidenced as a suspicion that vast wealth can only be created dishonestly or at 300 THE FREEMAN May the expense of others. It is said that a little larceny lies in the hearts of most people and that the businessman is no exception. In deed, a single act of larceny by one businessman casts suspicion upon all business dealings and leads to the conviction that the entire wealth-producing process requires political control. Few are the poli ticians who would deny it.

In a sense, the successful poli tician has much in common with the enterprising businessman. He too has courage, persuasiveness, intelligence, and a driving compet itive spirit. However, he seldom possesses the ability to create wealth either for himself or for the numerous humanitarian proj ects which are his stock in trade. In his frustration, he advocates government-owned enterprises, with capital raised coercively through taxation. Such enterprises invariably suffer losses; yet, a clever politician will persuade his constituents that, far from inter fering with the wealth-creating process, he is actually the balance wheel responsible for its success. Thus, he poses as protector of the public interest against the "abuses" of free enterprise. And when he crusades against profiteering, it is likely that neither he nor his con stituency realizes that he is actu ally opposing economic efficiency and better living standards.

Many otherwise intelligent per sons attribute their entrepreneuri al failures to lack of capital. But successful entrepreneurs often start without capital. Financing involves fairly orthodox methods. More important to entrepreneurial success is the willingness to charge enthusiastically into the competi tive arena alone and unaided. This can be such a frightening and frus trating experience that the first failure, or thought of it, will drive most men to the shelter of steady employment or academic tenure. The entrepreneur must be made of sturdier stuff. Private versus Governmental The political doctrine is false that the self-activated and self-re sponsible entrepreneur can be re placed in part or in whole by the state. Government attempts to com pete in the business field invari ably lose money and destroy part of the wealth already created. This is measured in the United States by the billions of dollars voted yearly in Congress to cover gov ernmental losses in such fields as real estate, finance, insurance, util ities, agriculture, and industry.

The entrepreneur starts with nothing but an idea. "If you can dream it, you can do it," is his motto. Like the· struggling artist, he works in a field where enthusi asm and dogged determination 1967 CREATORS OF WEALTH 301 playa greater role than formal ed ucation. He enlists capital through his persuasive powers, draws upon other economic resources, adds such spiritual qualities as faith and fortitude and self-reliance, and perseveres until successful. This sort of effort produces the greatest return on investment - as well as the greatest risk of loss. The mor tality rate is high for new business ventures and new products. From .the date of its birth, the tendency of a given enterprise is toward ever greater conservatism. The security of success attracts additional capital, but from more cautious investors. The dynamic leadership of the original entrepre neur gives way to professional management. The spark of creativ ity diminishes into the nine-to-five effort of the paid executive and profits tend toward standard for the industry. Thus do entrepre neurial dreams mature.

What, then, shall be said of gov ernment-run enterprise? Here, funds taxed from those power less to resist are devoted to purposes for which customers have shown an unwillingness to pay, under management motivated by tenure in the Civil Service. Lacking is the lure of profit or fear of loss which make for efficiency rather than waste; nor is managerial perform ance held up to public scrutiny as in the stock exchange. Converting scarce resources to the service of unwilling customers is a thankless and unprofitable venture, charac teristic of governmental enter prise. It consumes rather than cre ates wealth. New wealth created by entrepre neurial effort is the result of eco nomic efficiency. It benefits society in general by providing new enter prise, new services, new products, new employment, new tools, and further capital formation. Such wealth belongs to its creator and those who backed him with risk capital.

Failure to understand the na ture, the source, and the purpose of wealth results in attempts to re distribute it through graduated taxation and other devices. But the taking of wealth without the con sent of the creator or rightful owner is wasteful and destructive and harmful to society. Those unwilling to stand the strain· of hard work, risk, self-re sponsibility, and universal envy should not aspire to the creation and management of wealth. Their greater happiness is to be found in some other less strenuous role in the economic order. They may be thankful for the high standard of living afforded by new wealth in a free economy, and watch with admiration and appreciation the bold adventures of the entrepre neurial spirit. • Economic Development of Emerging Nations EDWARD P. COLESON Dr. Coleson is Professor of .Economics at Spring Arbor College in Michigan. This article, drawn in part from his personal experiences in West Africa, is from a lecture by Dr. Coleson at Northwood Institute, Midland, Michigan.

302 THE PLIGHT of the peoples of the underdeveloped countries of the world, long a chronic problem, is rapidly approaching a state of crisis. India is in the grip of. an other famine, said to be the worst in •the last century . According to a recent estimate, 96 million In dians may starve this year, a num ber equal to almost half the total U.S. population.! Obviously, no one can really .know how many people die in the villages of India, China, Africa, or some other back ward area because of malnutrition and· actual starvation. In any case, there are more than enough per ishing thus. Certainly, widespread hunger is potential dynamite in a world which is already politically unsta ble. Napoleon once called China a sleeping giant and suggested fur ther that they. be. allowed to sleep on. Perhaps it would have been better for us if they had, but it is too late now to suggest such a solution to our problems. Further more, we must remember that times have changed; it is no longer possible for a handful .of Europeans with superior weapons to defeat a multitude of "natives"

fighting with sticks and stones. Today, the natives contrive to have very nearly as good weapons as anyone else; and if they have 1 Nancy Hardesty, "India's Famine," Eternity (January, 1967) ,p.16.

1967 ECONOMIC DEVELOPMENT OF EMERGING NATIONS 303 more enthusiasm for "dying for the cause" than the rest .of us, their very numbers may make them a formidable threat. In any case~ we are "involved in man kind"whether we want to be or not; our own safety may require attention to other people's prob lems, even if we cannot think of any more humanitarian reasons for our global concerns. The Need for Definite Answers Yes, Americans can hardly be accused of being indifferent to human need. Since World War II we have showered the world, back ward or otherwise, with more than $150 billion of foreign aid, and we are continually being reminded that this isn't enough. Actually, it has been too much of such as it is but not nearly enough to do the job. Many loyal Americans are clamoring that we ought to close out the global giveaway, lest it bankrupt us. With greater domes tic debts than all our international beneficiaries combined, any ra tional person might well question the wisdom of giving away what we simply don't have. However, terminating foreign aid would make little difference with our own solvency and would be branded as an utterly heartless thing to do in a starving world.

What those who object to. our unsound practices ought to do is de vise a better program, one which would accomplish vastly more, would avoid graft and corruption, would not pauperize the recipients, and would pay its way in the bargain. Utopian, you say, but it has been done and it worked well for years. What I am describing is simply the international invest ment program of Britain in the latter part of the last century. To call it a "program" is somewhat misleading, however, because for the most part it was simply a case of English businessmen investing their own money in what they hoped would be profitable ventures around the world. Britain's Free Trade Era Proved Marx Wrong Britain's economic policy got the world out of a tight spot a hun dred years ago. At the beginning of the nineteenth century Malthus saw nothing in the future but overpopulation and short rations, with famine, pestilence, and war keeping human numbers within tolerable limits. Britain's dra ..

matic shift to a policy of free trade a little more than a century ago did much to encourage eco nomic development throughout the world and made Malthus' gloomy predictions seem quite unrealistic by 1900. They had a population 304 THE FREEMAN May explosion back then also, but with a multitude of people around the world producing all they could with improved tools in a world of relatively open markets, living standards rose faster than human numbers. It should be noted also that Europe enjoyed comparative peace, at least the absence of great wars, from 1815 to 1914, which may be more than coinci dental. Free enterprise with open mar kets has been overlooked as a means of promoting economic de velopment in a context of pe.ace and friendly cooperation even by those who presumably believe in personal freedom. Marx's claim that capitalism leads to war and almost universal destitution does not stand close inspection, al though the doctrine is widely be· lieved. Prosperity and general well-being are fringe benefits of freedom, although I, with Patrick Henry, would choose liberty if there were no material advantages in so doing. Furthermore, the blessings of political and economic freedom have also been available to the so-called backward nations on the same terms as to everyone else. While human numbers can not continue to rise without limit, much that is blamed on overpopu lation in today's world is the re sult of unwise and restrictive eco nomic policies.

Neglected Aspects of the Population Problem Americans panic at the thought of the population explosion, which many of my fellow countrymen re gard a greater threat than the bomb. We are endlessly preoccu pied with the problem and view the "teeming millions of Asia" with a mixture of pity and fear. We overlook the fact that Switzer land has almost the same popula tion density per square mile as India, and Western Germany has about twice as many per unit of area. Yet no one moans over the "teeming millions" of Western Europe where countries like Bel gium, Holland, and England also have two or three times India's population per square mile. While India has its limitations, surely Switzerland's handicaps are as great. Certainly excessive population has been much overworked as an explanation for India's woes. Un fortunately, also, our attempts to rescue India seem only to have ag gravated the situation. Our for eign aid, given to feed starving orphans and keep the country from going communist, is, accord ing to Sudha R. Shenoy of India, "... one major cause why orphans . . . are starving and why India is now so firmly set down the road to serfdom. This is because in India foreign aid provides the major porECONOMIC DR.VR.LOPMENT OF EMERGING NA.TIONS 305 tion of finance for the Plans (but) the Indian people are hun grier after three Plans than they were before."2 In a different sort of world India's "teeming millions" could be an asset. If the nations of the world played the game fairly, if governments were stable and re frained from imposing endless economic restrictions, if interna tional trade were unhampered, if ordinary people were diligent and responsible, then men with invest ment capital would flock to India or any such backward country and development would be as spectacu lar as Germany's "economic mira cle" after World War II under much less favorable circumstances.

But, as Sir Winston Churchill commented in another context, "The terrible if's accumulate." In reality India's economy is snarled in red tape, her people are hungry and getting hungrier. Tragically, the situation will no doubt get worse before it gets better. The Roots of Backwardness While the failure of the Mon soon rains of India would lead to grave problems, just as our "Dust Bowl" of the 1930's seriously dis rupted life in the stricken area, still the so-called backward areas 2 Sudha R. Shenoy, "The Coming Serf dom in India" THE FREEMAN (December, 1966), p. 39. of the world have built-in limita tions that keep their populations perpetually on the brink of starva tion where any crop failure must lead to disaster'. Europe used to have them, too, the last serious one outside the Soviet Union being the catastrophic Irish Potato Famine of 1846. To a peasant peo ple with no reserves, any natural calamity such as a drought, too much rain, or an early frost must lead to a winter of want, if not actua1 starvation.

With us it is now different. We have all heard farmers remark in the last generation or two that a killing frost, for instance, has its bright side since the price would be better for whatever crops did survive. Even the disastrous dust storms of the Depression years did not lead to widespread famine with hordes of people dying by the roadside in Kansas or Okla homa as they do in India or China. I doubt if very many people starved in America back then, even with total crop failure in the midst of the world's greatest de pression. I know some people were malnourished then, and I didn't have to read this out of a book. But this was exceptional with us - life at its worst. Out in West Africa a "hungry season" is a normal and regular feature of the yearly cycle just as tulip time in the spring or falling leaves in 306 THE FREEMAN May autumn are familiar signs of the times with us. The hungry season comes after the crops are planted when the remaining rice or corn gives out weeks before the new harvest. Then the chronic problem of hunger becomes· acute and famine makes its annual visit to the village.

Wrong first Impressions Now it would be easy for us, particularly those of us with a farm background, to quickly diag nose their difficulties if we were there and could walk out from the villages to the little patches of cultivation which are their farms. We would no doubt see in the short-handled West African hoe the source of the problem of in adequate yields, and we would pre scribe massive doses of meehani zation to get the people producing enough so that there would be abundance for all throughout the year with a surplus for market and export. We would be sure that tractors and power tools would quickly solve the problem of na tive nutrition. But if we stayed around long enough to get acquainted, we would find that the people could probably grow enough with the tools and crops they now have to tide them over the annual hungry season, if they would just try a little harder. Ask the average villager why he doesn't plant a little more rice and he will answer that it isn't any use. You will then learn that the native social system makes accumulation impossible; if his relatives learn that he has a little surplus when the hungry season comes, they will pay him a friendly visit and it will be gone within a week. They will then go hungry together.

Since there is no use to try, few do; but this results in hopeless stagnation. This is usually blamed on the warm climate; but the na tives of Alaska react in the same fashion for the same reason, al though the cooler climate and the certainty of winter storms should promote diligence and frugality. Yet the natives of the northland in this invigorating environment won't even cut a little piece of wood ahead, because they know they'll have to "lend" it to the neighbors before they get around to burning it themselves. There fore, there's no surplus and no progress. This backwardness we have long blamed on the climate. It is climate - the social climate. As a further deterrent, should some handy soul still try to get ahead, the native legal code for bids progress. In West Africa, at least, prosperity is associated in the native mind with magic. To them anyone who gives evidence of doing a little better financially 1967 ECONOMIC DEVELOPMENT OF EMERGING NATIONS 307 than his neighbor must have the charm that insures success, a powerful "medicine" which bene fits him but harms his neighbors accordingly. As soon as some calamity befalls them, they make a scapegoat of their prosperous neighbor. They prosecute him in the chief's court and continue ac tion against him until he is re duced to the s,ame dead level of poverty with everyone else. They cannot imagine that anyone can get ahead except by harming his fellows, so they try to see that this never happens. Most of the time they succeed, which keeps the country hopelessly backward.

Thus, most of the world has stagnated throughout recorded history with here and there a re markable period of progress, the exception to the rule. Here in the West we have been part of one of those dramatic eras, the much maligned Industrial Revolution. All of us are immeasurably better off' because of the diligence, thrift, and ingenuity of our fathers. It remains to be seen if we can con tinue what they started. "Ideas Have Consequences" It is hard for us to imagine the depths of poverty which are com monplace in the villages of West Africa and throughout too much of the world. We visit a native hut and find it almost utterly bare of furnishings. An iron pot set on three stones is the kitchen and the meal is eaten directly from it without dishes or silverware. The wardrobe may be a single garment which serves both day and night. The poverty of West Africa as I knew it, is not the consequence of some horrible landlord system as it may be elsewhere. There is so little in Sierra Leone because they produce so little. The soil is wretchedly poor as it is through out much of the tropical world, the hills are seriously eroded, most of the forest cover has been degraded into worthless second growth brush, farming techniques are utterly primitive, yields are pitifully small, and hence famines come often.

The natives are full of parasites which sap most of their energy and the social system discourages effort. Native crafts are primitive and unproductive. My next door neighbor in one of the villages was a weaver who wove a band of cloth about six inches wide on his crude loom. His cloth was expen sive even by our standards al though he· earned only a pittance, like everyone else in the village. Nor is there a simple Marxian solution to their problem. Perhaps things were not properly divided in their society - the chief of the village had 80 wives - but redis tributing the wealth, exce'pt the 308 THE FREEMAN May wives, would be pointless. By our standards there is nothing to divide. Wha t they clearly need in West Africa and around the world is in creased prod ucti vity, and this means better tools and techniques. But first there must be a change in people's thinking to make this possible. Marx claimed that tools ca.me first and new thought pat terns grew up to conform to the improved means of production.

Actually, a wee bit of freedom made the new equipment possible in the first place. Watt had his opportunity which developed into a practical steam engine only because the University of Glasgow took him in after the city fathers refused to let him set up shop within their jurisdiction. The sewing machine was invented in France but passed out of use when eighty machines were de stroyed by an angry mob. It was invented again like many other devices, in this case over here with no other advantage than the freedom to do it and perfect it to the point that the machine be came practical. In England Ark wright's textile mills were burned and a less persistent and coura geous man would have given up the struggle. With all the engi neering problems involved, the greatest hurdle was still finding the opportunity to make the inventi on and bring it into produc tion. Marx was clearly wrong: in the beginning was the thought - the conviction that freedom was pos sible and desirable. New tools and industrial techniques were but the by-products of the new out look. In all fairness it should be allowed that improved means of production had an impact upon man himself. Sir Winston Church ill is said to have remarked that we· shape our buildings and then they shape us. Churchill's as sertion is sounder social theory than the crude determinism of Marx and others who make man a victim of his environment, eco nomic, social, or geographic. We are still the masters of our des tiny, even in this age of automa tion and the bomb.

What We Can Do It might appear from my de scription of the West African so cial order that nothing can be done for the people. Actually, of course, there has been progress there in spite of handicaps and lilnitations, and change is the order of the day. As a first step we need to recognize what we can do to help them move forward and what they must do them selves - because we have no right to impose our ideas, however right, upon them. I would not go 1:J07 ECONOMIC DEVELOPMENT OF EMERGING NATIDNS to India with a deer rifle and start shooting sacred cows, al though I happen to think that India will not get very far with a solution to her problems until they develop a rational policy on keeping livestock. I would be quite within my right in trying to en lighten the Hindus so they would eventually make such changes themselves. One of the most press ing needs of these poverty-strick ~n countries is something which would cost nothing but would pay real dividends.

My brother, who spent several years in India and West Africa as a nlissionary, believes that the most serious economic handicap of these backward areas is the utter lack of elementary honesty among the people. They are poor because they are thieves, not the reverse. This appalling plague of graft and corruption permeates every aspect of life from government and business down to petty per sonal relationships. Bars are standard equipment on the win dows of homes out there and a night watchman is a necessity for even a private dwelling. The problem of trying to hang on. to one's own possessions becomes in surmountable. Certainly they will never make real progress until they learn to respect other peo ple's property rights. This is a necessary and possible change. It is fashionable today for an thropologists and sociologists to speak disparagingly of the accom plishments of missionaries, but they have made a very real con tribution. Charles Darwin who knew conditions in the South Sea Islands exceedingly well speaks highly of the change brought about by their effort: They [critics] expect the mission aries to effect that which the Apostles themselves failed to do. In asmuch as the condition of the peo ple falls short of this high stand ard, blame is attached to the mis sionary .... They forget, or will not remember, that human sacri fices, . . . infanticide, . . . [and] bloody wars ... have been abolished; and that dishonesty, intemperance, and licentiousness have been greatly reduced by the introduction of Chris tianity. In a voyager to forget these things is base ingratitude; for should he chance to be at the point of ship wreck on some unknown coast, he will most devoutly pray that the lesson of the missionary may have extended thus far. 3 The Importance of Character There is a closer connection be tween character and progress than we realize. It is commonly as sumed that capitalists invented greed but Max Weber points out 3 Charles Darwin, Voyage of the Bea gle (Harvard Classics, Vol. 29), pp. 437 438.

310 THE FREEMAN May that it is precisely in those. coun tries which are most backward from a capitalist point of view that the "universal reign of abso lute unscrupulousness in the pur suit of selfish interests" is most highly developed - where one finds it almost impossible to hang on to his property because thieves and rogues work overtime trying to wrest it from its rightful owner. 4 As Weber tells us, the willingness to respect the rights of others, to play the game fairly as one might say, is a necessary condition for economic development. Weber also stresses the fact that Luther and Calvin preached the dignity of labor, the responsi bility of the worker to do his best as unto God. In all the backward areas of the world today work is contemptible, something to be done by slaves who cannot get out of it. This attitude toward labor must change before any very real progress is possible. And it seems to me that work is going out of fashion here, too. Evidently we need a revival of the Puritan vir tues of honesty, diligence, frugal ity, and responsibility as part of a renaissance in our own nation also. Then we could offer the sort of leadership other nations might like to follow.

4 Max Weber, The Protestant Ethic and the Spirit of Capitalism, pp. 58 and 108. Today's "Complex Problems" and Reality Actually, those staggering prob lems we moan about continually are mostly symptoms of a larger disorder. Let us examine a few of the conspicuous ones. Our much publicized Malthusian dilemma, the population explosion, is a case in point. According to L. Dudley Stamp, perhaps the world's fore most geographer, the world could easily support 10 billion people or three times the present tota1. 5 He is assuming full production and open markets, but no revolutionary techniques yet untried and un proven - just doing as well as we already know or can know. Adequate nutrition means in creased human energy, which could result in higher productivity to provide a decent standard of living for the human family. Im proved nutrition also means better health. While the tropical lands have some special problems which are uniquely theirs, the health hazards of the tropics have been exaggerated, too. Adam Smith re marked in The Wealth of Nations that it was "not uncommon . . . in the Highlands of Scotland for a mother who has borne twenty chil dren not to have two alive." Nor were m.ortality figures more mod erate here in earlier times. We 5 L. Dudley Stamp, Land for Tomor row, p. 219.

1967 ECONOMIC DEVELOPMENT OF EMERGING NATIONS 311 have all heard of the appalling losses from fever that frustrated the attempts to build the Panama Canal. We do not know that the builders of the Erie-Wabash Canal through northern Indiana lost a. laborer for every six feet of canal dug. 6 We have also for gotten that Michigan was notori 0us for malaria in the early days as this pioneer rhyme reminds us: Don't go to Michigan, that land of ills; The word means ague, fever and chills.7 Michigan also shares the mis fortune with most tropical lands of having much poor soil. Con trary to popular opinion in America, tropical soils are usually infertile. This makes problems. But other lands have triumphed over this limitation. The Scandi navian countries have done very well indeed in spite of their poor, sandy soils. Perhaps the leading authority on the tropics, Pierre Gourou, has urged that the Afri cans and others could solve their problems by growing tree crops on the eroded hillsides and rice in the largely unused paddy lands 6 De Witt Goodrich and Charles Tuttle, An Illustrated History of the State of Indiana, p. 209.

7 Madge E. Pickard and R. Carlyle Buley, The Midwest Pioneer: His Ills, Cures and Doctors, p. 13. along the streams. 8 With such a rational program of land use, Africa would be well able to sup port its population for some while. It would be possible to go on with constructive suggestions, based not on utopian optimism but on what has been proven in practice. Today's global crisis is but the bankruptcy of unwise poli cies we have been pursuing too long. But it is not enough to loudly eri tieize unsound practices such as foreign aid and the farm program. Men of good will have the responsibility of knowing what else we might have done, of being aware of constructive alter natives. Testimony to Freedom One of the greatest sources of inspiration as well as information for the serious student is the eco nomic history of Great Britain in the latter half of the nineteenth century, the golden age of free en terprise and open markets. And, strangely, unusual people bear testimony to the accomplishments of this great era. Lord Keynes,'the British godfather of the New Deal of the 1930's, described this period in even more glowing terms than I would. 9 He tells us that in this 8 Pierre Gourou, The Tropical World, pp. 100-103 and 134-141.

9 John Maynard Keynes, The Economic Consequences of the Peace, pp. 7-10.

312 THE FREEMAN May "economic Eldorado, in this eco nomic Utopia" men forgot about Malthus and population problems in a world of full production and open markets. Keynes makes in teresting reading. Poles apart from him is Benjamin M. Ander son, an American economist who has covered the history of the first half of this century in great de tail. He introduces his excellent Economics and like Public Welfare with high praise for the pre-World War I era so eloquently lauded by Lord Keynes. This is how a con servative characterizes the same period: There was a sense of security then which has never since existed. Prog ress was generally taken for granted . . . decade after decade had seen increasing political freedom .... It was an era of good faith. Men be lieved in promises ... the good faith of governments and central banks was taken for granted. Governments and central banks were not always able to keep their promises, but when this happened they were ashamed.

... No country took pride in debas ing its currency as a clever financial expedient. The world was incredibly shocked in 1914 when Bethmann-Hollweg, Chancellor of Germany, character ized the treaty guaranteeing the neutrality of Belgium as a "scrap of paper." In retrospect, one may say that this was one of the most terrible things that has ever been said. The world is full of scraps of paper .... The greatest and most important task of the next few decades must be to rebuild the shattered fabric of national and international good faith. Men and nations must learn to trust one another. . . . There is no certainty that we can recreate the fabric of good faith which we have destroyed, but there is no higher duty than to make the effort.l° Prospects for Improvement While there is no certainty of success, it seems to me that con ditions are more favorable for a renaissance of right thinking and sound policy than they have been for many a year. Hegel insisted that a situation generates its op posite, the familiar "swing of the pendulum," and it seems to me that this is true in general, al though Hegel and his disciples sometimes carried his theory to absurd lengths. Nevertheless, the world is due for a change. As Newton would say, "to every ac tion there is an opposite and equal reaction." Even the best and most constructive movements lose their charm and go out of fashion.

"There is a tide in the affairs of men" and "the old order changes, yieldJ:ng place to new," as the poets say. 10 Benjamin McAlester Anderson, Eco nomics and the Public Welfare (Prince ton, N. J.: D. Van Nostrand, 1949), pp. 3-5.

1967 ECONOMIC DEVELOPMENT OF EMERGING NATIONS 313 This gospel of Salvation accord ing to Marx has promised much but has delivered little except star vation and oppression. A good many people who will never read Hayek's Road to Serfdom have known the terror firsthand or have seen people shot while trying to escape from the proletarian para dise. The world has been learning its economic and political theory the hard way. Not all is well in our welfare state either. In 1946 Keynes himself voiced disillusion ment with the "new economics" he had helped to create in the de pression years only a decade ear lier: "... how much modernist stuff, gone wrong and turned sour and silly, is circulating in our system .... "11 It would be interesting to 11 J. M. Keynes, "The Balance of Pay ments of the United States," Economic Journal (June 1946), p. 186. know what Lord Keynes would say today, had he lived. But a good many people who have not yet heard of Keynes and have no idea how this attempt to maintain perpetual prosperity is supposed to operate are becoming increas ingly aware that something is wrong somewhere. This failure of the managed economy on both sides of the Curtain gives us an opportunity we have not had for a long, long time. But this oppor tunity brings us the responsibility of being able to present a con structive alternative. May I rec ommend what Adam Smith called "... the obvious and simple sys tem of natural liberty .... "12 for in a context of freedom, progress would again be possible around the world. ~ 12 Adam Smith, The Wealth of Na tions, (Modern Library edition), p. 651.

Dangerous Experimentation ONLY IF we understand why and how certain kinds of economic controls tend to paralyze the driving forces of a free society, and which kinds of measures are particularly dangerous in this re spect, can we hope that social experimentation will not lead us into situations none of us want. F. A. HAYEK From the Foreword to the 1957 edition of The Road of Serfdom BEHIND YOU RANDALL E. BURCHETT Two AND A HALF centuries ago a very wise old prophet spoke these words : "Your ears shall hear a word behind you saying: This is the way, walk in it." The adjura tion is like a flawless diamond with rays of truth flashing out in many directions to invite serious thought. As any and every individual at tains a new milestone in life, he can be aware that he is seeing the dawning of a new day that is his very own, and he may realize, though dimly, that behind him there have been many voices which have spoken to him. The words he has heard most clearly were given that clarity, of course, by his own attitudes; and the results are his own inescapable responsibility.

Some of those words or voices Mr. Burchett is a banker in Tennessee. 314 would help him and some would hinder, but all have influenced him to some degree. At each milestone of one's life, as at the time of a student's· grad uation, it behooves him to pause and listen. The graduate is per haps most aware of the voices of his recent instructors. The work and effort and training of these teachers have crystallized into words which were intended to as sist each student as he moved on ward to walk in the path he chose for his future. In the days ahead he will remember the collective voice of those instructors as they said to him, in effect: "This is the way, walk in it." He reaches a further stage in that great adventure known as Life, and he consults those who are experienced in science or agri1967 THE VOICES BEHIND YOU 315 culture or other fields of endeavor. Axioms related to the field of his inquiry will be suggested; and as he goes on he ,vill remember those voices he must leave behind.

Among the voices will be that of the family physician who pointed out the way of a healthy body and mind and said to him: "This is the way~ walk in it." The voice of his rabbi~ priest, or minister emphasized to him the importance of belief in the Divine Creator and, without equivocation, that voice spoke clearly: "This is the way, walk in it." Again and again the voices of his parents gently but firmly said to him: "This is the way, walk in it," and patiently directed the way his feet should go. Nor should one forget or neglect the voices of the ancients who spoke so eloquently concerning many facets of life. New experi ences are ahead, and one's feet must walk in unfamiliar paths. There will be new joys, unexpected problems, perhaps sudden tears, best met in the light of wisdom from the voices of the past. Brevity need be no barrier to the might and power of true wis dom. The brief instruction, "Know thyself," is variously ascribed to Socrates, Plato, and others; but its value lies in its intrinsic worth and the rigorous mental discipline required of anyone attempting the task.

A young girl volunteered to sit through the night with a friend who was seriously ill. She had no duties except to report if any un favorable change should occur in the patient. Through the long hours the girl undertook to ana lyze herself, frankly and sincerely reviewed her life, and determined that a new day should and would dawn for her. She made a begin ning toward knowing herself. So should we all, in our busy Iives, take stock of ourselves and also try to partake of the rich ness of bequests from the past: Thought is the property of him who can entertain it, and of him who can adequately place it. EMERSON It is by presence of mind in untried emergencies that the native metal of a man is tested. LOWELL You cannot run away from a weak ness; you must some time fight it out or perish; and if that be so, why not now, and where you stand? STEVENSON Why live a shallow life when unfathomed depths are possible to us? Why suffer restricted vision if capable of looking to far horizons?

Why accept the degradation of servitude when the heights of freedom are to be climbed? Why 316 THE FREEMAN May bear drab existence when the heart so easily can be rich with melody and the soul filled in ap preciation of the beautiful? Even now a new day is before each of us, measured by neither hours nor miles. It is our day. In dividually we face the question: What will I do with this my own new day? As you stand in the dawning of a new day, many voices call for your attention. Some come from out of the past, while others are yet beyond you. There is the voice of shallow gaiety, and you hear the voice of accomplishment - and others. But, listen! Another call is coming to you. This voice does not ring with the sound of festivity nor is it the roar of merited acclaim. It seems that this voice must be muted because so few ever answer, despite its air of pathos and urgency. This voice sounds of suf fering' hardship, heartache, and poverty.

Suffering and hardship can lead to enlightenment, build strength of character, and disclose unreal ized abilities. And even those who have known little but sunshine may be privileged to share some of those "treasures of darkness" if they will listen and respond selflessly to that soft, plaintive appeal. Such a call comes rarely to some, while others hear it with an intensity and a dedicated response that is forever. Only the unworthy will wholly refuse to hear and heed when from beseeching hands and broken hearts comes the whisper: "This is the way, walk in it." ~ A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Paradise Regained SOME DAY a history of the world will be written in terms of islands. Where the continental masses spawn dictators and socialist re pressions, the story of the islands is spangled with recurrent adven tures in freedom. Historically it was Britain which led the proces sion, with its economists (Smith, Ricardo), its free trade politicos (Cobden and Bright) , and all those merchant adventurers who picked up an empire without quite realiz ing they were doing it. In modern times Hong Kong shows what can be done in freedom; so, to a lesser extent, does Formosa. The trouble, as Leonard Read has said, is that islands in prosperity are tempted to go "the way of all flesh," rela ps ing into protectionist and "control"

philosophies, and even into insan ity, as in the case of Cuba. But they can put on grand shows while the impulse lasts. The Bahama Islands, off the southeastern coast of Florida, have recently been putting on a particularly dazzling display of the de velopment that can result when the freedom principles are followed. Snatches of the story are told in a remarkable publication called Ba hamas Handbook: 1966-1967 (Nas sau, Bahamas, Etienne Dupuch Jr. Publications, $4.95), which is a blend of ancient island history and fascinating modern journalism. You won't find much here about the shady side of Bahaman develop ment, such as the alleged U.S. mob ster penetration of casino gambling in Freeport, a completely new city on the island of Grand Bahama just a few miles across the water from Palm Beach. But this story has been twisted out of proportion in lurid magazine accounts, so the handbook's failure to go into it re dresses the balance. The point is that when people can work with 100-cent, tax-free dollars instead of 50-cent-net-after-tax dollars, the good things greatly outnumber the bad. There is no income tax in the Bahamas, and no capital gains tax, 317 318 THE FREEMAN May and foreign investors can still get breaks there even though their home internal revenue services in the U.S. and elsewhere are exhibit ing more and more ingenuity in pursuing the fleeing enterpriser.

What impresses the reader of the Bahamas Handbook is the sheer joy of creation that is released when energy is uninhibited by the tax collector. Tycoons have been doing things in the Bahamas that they might very well have pre ferred to do in Florida, or Texas, or New Mexico, if the investment climate on the American mainland were all that it once was. Just tick ing off the Bahama development stories should prove that capital ism, even as Don Marquis' cat, Mehitabel, has a dance in the old dame yet. A City of Enterprise The big story in the book re volves around the island of Grand Bahama and the building, by Wal lace Groves of Virginia, of the new city of Freeport-Lucaya. Mr. Groves may have been shortsighted when he let professional managers in to run his gambling casinos, for some shady characters who had worked the tables in pre-Castro Havana turned up as members of the crews. But if Groves has made mistakes, they can be corrected by the commission that is looking into the gambling situation, presumably with an eye to throwing any Mafia-connected gentry out. Mean while the solid achievements of Mr.

Groves will stand any amount of inspection. An acerb critic said that the Groves group had "only" to prom ise a deep harbor and some solid industries in order to get 50,000 acres of Crown Lands at $2.80 an acre. The use of the word "only" is a tip-off to what Ludwig von Mises has called the "anticapitalistic mentality." Nobody thought Grand Bahama Island was worth any thing until Wallace Groves began inspecting its pine scrub wastes for lumber possibilities. He saw a lot more than lumber in the island, but to get land cheap he had to come up with a plan that included more than golf and casinos for prospective tourists. After signing the so-called Hawksbill Creek agreement with the Bahama government in 1955, the Groves group spent five years on surveying, site planning, ,har bor dredging and construction, building roads, and so forth. It started a bunkering service for ships which, by 1961, had become the largest single installation of its kind in the Western Hemis:: phere. By 1965 more than 1,700 ships a year were taking on nearly 10 million barrels of fuel at the Freeport Bunkering Terminal.

The refueling facilities at Free1967 PARADISE REGAINED 319 port vastly extend the reaches of world shipping. Freeport's harbor is expected to become the "Euro poort" of the hemisphere-a trans shipment point for major bulk shipments to the Carrihean area, ",,~here 100 million people live. Enter, Industry To carry out the promise of diversified industry for what had been a lazy tropical island, U.S. Steel was lured into creating for Freeport a mammoth cement com pany (4.8 million barrels a year) . The cement company uses sand from the sea bottom, so its dredg ing operations are incidentally re sponsible for Freeport's harbor. Hard on the arrival of U.S. Steel's cement subsidiary, the Syntex Corporation chose Freeport for one of its big pharmaceutical plants. All this was to provide an offset to the Freeport tourist in dustry -(300,000 a year by 1966). The profits made by Groves and the other developers of Grand Bahama Island were certainly legitimate rewards for good plan ning and hard work. The evils connected with casino gambling should pass once the investigation commission has finished its labors, but the community of Freeport Lucaya will remain.

J. Louis Reynolds, the alumi num executive, is another Amer ican who has been lured by those lOO-cent investment dollars to the Bahamas. On the island of An dros, the biggest in the Bahamas, the U.S. government has built its $130 million Atlantic Undersea Testing and Evaluation Center, or AUTEC, close to the 6,000-feet deep arm of the Atlantic known as the Tongue of the Ocean. Andros is where the sonar detection work that is necessary to repel Soviet submarines is being pushed. Rey nolds owns a 4,000-acre island farm next door to AUTEC, where he specializes in cucumbers, one of the top three Bahama exports, for the Florida market. But what Reynolds is really interested in is farming the sea. He predicts great undersea farms of lobster, shrimp, crabs, turtles, and conch, and he hopes to be the first person to grow a great spiney lobster in captivity. Reynolds says he will make Andros "a model of free enterprise."

$20 Million and Paradise Two young men, James Crosby and J ack Davis, happened to be making a good thing out of' their Mary Carter Paint Company of Tampa, Florida. But expanding the paint business on the U.S. mainland is a high-tax business. Crosby and Davis decided to put $20 million into Paradise Island, just opposite the Bahaman capi tal of Nassau. They will sell ex320 THE FREEMAN May clusivity to the few (as Hunting ton Hartford, who sold them the Paradise tract, once planned). But they will also sell swimming in the cleanest water in the world to the thousands of tourists who pour oJf the cruise ships. The Paradise development, naturally, will leap frog ahead on those 100-cent dol lars. The Future? Will the Bahama venture in free enterprise eventually go "the way of all flesh," with capital gains taxes and high income taxes creep ing in to bring it to a halt as ven turesome men like J. Louis Reyn olds, James Crosby, and Jack Davis turn elsewhere? Just recently the islands' first "labor" (and Negro dominated) government took over.

Fortunately, Lynden Pindling, the first Bahaman Negro prime minis ter, sees the connection between what Groves, Reynolds, Crosby, and Davis are doing and full em ployment for the 138,000 native Bahamans. The native population of 138,000, which is almost ex actly equal to the population of New Haven, Connecticut, caters to 900,000 tourists a year where New Haven has only a few thou sand Yale students coming in from outside. With 900,000 spenders descending upon you, there are other sources of government rev enue which make income and capi tal gains taxes unnecessary. Since Lynden Pindling took the port folio of "Tourism and Develop ment" in his own cabinet, the chances are that he sees this. The golden goose is not yet ticketed for the abattoir. ~ A Better Approach IF INDIVIDUALS say that they want high-bracket income taxes re duced because it is unfair to have to pay such high rates - the common argument - nobody is convinced because so many lower income people think that those who pay 70 per cent are lucky to have the income to pay it on. But if, on the other hand, we declare our objective to be a new and greater prosperity and a higher standard of living for everyone, and then show by examples how certain tax rates - not exclusively income - hamper industrial development, reduce the incentives for expansion, and keep people who need them out of jobs, we make an argument that is at least acceptable to intelligent people.

HAROLD BRA YMAN, Corporate Management in a World of Politics THE FREEMAN yI Compulsory sharing of wealth for the benefit of consumers has the sorry effect of diminishing the capital and tools that provide employment opportunities p. 323 yI Dr. George Roche here reviews the history of the uses and abuses of po litical power, and in subsequent ar· ticles will examine some modern man ifestations and their effects and look to the prospects for curbing these excesses p. 326 JII" A low level of mediocrity is the best "'~that can be expected, suggests Dr. Howard Kershner, from penalizing the successful , p. 340 yI Henry Hazlitt points out that the imitators of capitalism are unlikely to secure its blessings until they under stand and respect the property rights of owners p. 342 JII" And that's just about what Leonard Read is saying we'll have to do if we ever hope to deliver mail in a business·like way p. 350 ", Even our moral affairs, if we would heed the teachings of Erasmus of Rot terdam, depend for improvement upon the responsible behavior of individuals ............ p.356 VI' Professor D. T. Armentano offers a timely warning against the latest re formist efforts at price control ............ p.366 JII" Those who fail to understand why the same company shouldn't be al lowed to sell both soap and Clorox will want to share Harold Fleming's latest look at antitrust policies p. 369 Y" But not Patricia Carney! She's sim ply grateful to the businessmen who "exploit" her out of the kitchen drudgery of the past p. 378 yI John Chamberlain checks his recol lections of The First New Deal against those recorded by Raymond Moley ............ p.379 ~ Professor Alexander Evanoff finds valuable ore and numerous nuggets as he digs Deeper Than You Think with Leonard Read p. 383 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

JUNE 1967 LEONARD E. READ PAUL L. POIROT Vol. 17, NO.6 pfj'esident, Foundation for Econonlic Education 111anag'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 lin1ited goyernment, founded in 1946, with offices at Irvington-on-Hudson, New York. Tel.: (914) 591 7230. Any interested person may receive its publications for the asking. The costs of Foundation projects and' services, including THE FREEMAN, are met through voluntary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are in vited in any amount-$5.00 to $10,OOO-as the means of maintaining and extending the Foundation's work. Copyright, 1967, 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; 10 for $2.50; 25 or more, 20 cents each.

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s URITYWITHA PAUL L. POIROT SAFETY AND SECURITY rank high among human values, and rightly so. To risk one's life in reckless fashion shows a foolish disregard for self and dependents. Behav ior that diminishes or threatens the lives of other peaceful persons is deemed irresponsible and anti .. social. The case for various safety measures and security regulations would seem self-evident. But "playing safe" also may have dis advantages that ought to be con sidered. Lives can be wasted, if not snuffed out entirely, in the at tempt to be safe and secure. Safety and security alone will not sustain life. They may en hance food and shelter but afford no nourishment or covering as such. Nor are they tools of produc tion that enable a worker to in crease the product of his labor. Americans in the latter half of the twentieth century enjoy safety and security in large measure. But the high level of living to which we have grown accustomed is largely attributable to two other factors: (1) Approximate ly half of the 200 million people in the United States work to earn a living for themselves and the other half; and (2) An average of roughly $20,000 has been saved and invested in productive capital for each such job opportunity.

Without such savings and capital investment per worker, famine would be as common in America as in any backward area. Our job opportunities - our very lives-de pend upon our tools of production. So, every additional $20,000 saved and productively invested makes possible an acceptable level of living for two - one worker and one dependent. To take from a man the tools of his trade is to depri ve two Iives of their economic means of support. And it is a harsh fact that funds diverted to security programs cannot at the same time provide the tools of production and trade. Safety meas ures, however well-intended, have 323 324 THE FREEMAN June costs that always must be counted. Consider, for example, the pro posed expansion of the Federal Social Security program to a tax of 10 per cent on the first $10,800 of a worker's annual earnings. Now, $1,080 saved per year and reasonably invested would build into a, $20,000 job opportunity in about 14 years. And $1,080 added ann ually over a peri od of 40 years would cover 5 or 6 such lifetime job opportunities. Any savings bank or life insurance agent can verify that fact.

This is not to say that every worker would save and invest $1,080 a year if he (and his em ployer) were not compelled to pay it as social security taxes. Many a worker doubtless would choose to consume rather than save any such addition to his take-home pay~ But clearly, the money paid as taxes is neither saved nor in vested in productive job opportuni ties. It is currently consumed. The $20 billion transferred coercively from producers to consumers through the social security account in fiscal 1966 withdrew from the American economy potential in vestment funds equal to one mil lion job opportunities. A million lifetime job opportunities pre cluded by just one year of com pulsory social security! And 1967 is the 31st yea.r of social security tax collection in the United States. Another security measure of some import concerns the military defense of the United States of ~ America.. The total Defense Bud get for fiscal 1968 calls for ex penditure of $73 billion. Whether such spending is adequate or prac tical or necessary or desirable is not in question here. But $73 bil lion is equivalent to the capital re quirement for 3,650,000 lifetime job opportunities. And please do not mistake that fact. It does not mean that defense spending in 1967-68 will create 3,650,000 life time job opportunities. What it means is that funds,. which might otherwise have been invested in the tools of peaceful production and trade, will be consumed that yea.r in the name of national de fense.

More specifically, the Vietnam part of our national defense cur- ' rently is costing American tax payers at the rate of $24 billion a year. Tragically, 6,400 American lives had been lost in Vietnam through 1966. And it is estimated that 5,000 more Americans will have been killed in action by the end of 1967, with more than 60,000 wounded. l Heartbreaking enough are the casualty lists of individu als killed or maimed on the battle fields. But their numbers scarcely 1 u. S. News and World Report, Janu ary 2, 1967, p. 19. By late March, the fig ure had advanced to 175 killed weekly, 800 wounded.

1967 SECURITY WITH A VENGEANCE 325 begin to measure the costs of the Vietnam security action. The $24 billion to be consumed for that purpose by the United States this year is equivalent to the capital investment for 1,200,000 lifetime job opportunities. That makes a civilian casualty list approximate ly forty times the number of Americans killed and wounded on the battlefield. Highway and automobile safety programs are much in the news nowadays .. The 50,000 deaths a year attributable to motor vehicle accidents in the United States many times exceed the number of Americans killed in Vietnam. But those who urge the expenditure of billions of dollars for various high way and auto safety features ought to understand that each billion so expended is equivalent to the capital requirement for 50, 000 lifetime job opportunities. For every $20,000 in extra safety fea tures the law forces General Mo tors to add to perfectly good cars, that same law in effect withdraws one lifetime job opportunity from the American market.

The pollution of air and water is a growing threat to American lives. Recent estimates suggest that $300 billion will be committed to that war over the next 30 years. And whether that will be too much, too little, or too late is any one's guess. But it is reasonably certain that the billions of dollars to be spent annually by businesses and by governments for air and water purification cannot simul taneously be used to provide tools for productive employment. Clean air to breathe and pure water to drink are important. But they are not food or shelter or all of the other things also vital to life. And $300 billion equals the capital re quirement for 15,000,000 lifetime job opportunities. If we spend enough for such measures, perhaps we can be guaranteed a ripe old age, protect ed by medicare, defended against communism and automobiles, filled with fresh air and water, safe and secure. But will the productive workers of that happy day still deem the rest of us worth feeding and housing and caring for?

It behooves us to consider that other side of our various security measures. The lives we save by such measures may indeed be our own; but also, the lives saved may be more than offset by the num bers of workers and their depend ents thereby denied the tools of peaceful production and trade. And our own job may be one of those at stake, jobs and lives fore shortened in the name of security. These, too, are among the fatali ties of our time - the often unseen fatalities of good intentions and security with a vengeance. ~ GEORGE C. ROCHE III 1. :E:ISTO::RYTHE PROBLEM of power is as new as today's newspaper and as old as man's, civilization. Most politi cal thinkers and philosophers have concerned themselves with pow er's definition and management. Virtually all politicians and statesmen have concerned them selves with power's exercise. No man, past or present, has ever successfully evaded the long shad ow which the exercise of power has cast over his life.

What is this phenomenon that leaves no man untouched, whether perasant or philosopher? If we turn to Western man's thinking on the subject for an analysis of his definitions and applications of power, a pattern emerges which offers some valuable guidelines 326 for our own age, a time when the shadow of power is perhaps dark er and more all-pervasive than ever before. The Greeks Man's ideas on the subject of power have evolved only gradu ally. Socrates felt that he owed obedience to the power of the Athenian city-state when it un justly and hysterically sentenced him to death. His disciple, Plato, conceived a society in The Re publi,c which placed all power over everyone in society in the keep ing of a "philosopher-king." But when, then as now, "philosopher kings" proved difficult to find, Plato began to limit the pow er which he felt should be exer1967 POWER: HISTORY 327 cized by the state. He had written The Republic as a young man, producing The Statesman in mid dle life and The Law's in his old age. In each of these works, as his maturity and experience in creased, he steadily multiplied the legal and moral restrictions which he' felt .6hould be placed on the power of the ruler.

Aristotle, Plato's disciple, car ried this limitation of power still further, devising the idea of con stitutionalism. The basis of this constitutional fabric as devised by Aristotle was "natural justice." This Aristotelian natural justice was intended as binding upon all men, ruler as well as ruled, and exhibiting a power beyond man's control. Although the Greeks were ex hibiting a recognition that the centralization of' power had to be limited in a just society, they still tended to view the city-state and its exercise of power as the key stone of society. Aristotle's asser tion that man was "by nature a political animal" was typical of the Greek view that the polis was the chief means through which human potentiality could be developed. For this reason, the Greek concept of the distinction between society and state was faulty and partial at best. The Greek system of di rect democracy, when tied to the concept that the polis was the centerof' human life, eventually pro duced the downfall of the Athen ian experiment.

The people of Athens themselves beeame the tyrant, dominating and crushing any other power or opin ion, stripping their economic de pendencies of all wealth until re volt cost .them their maritime holdings, interfering with their mili tary commanders till they pro duced disaster on the battlefield, and displaying such greed that desperate property holders plotted the overthrow of the government. When such unbridled exercise of power produced a debacle, the tyr annical majority hysterically lashed out to find a scapegoat for their own folly. The execution of Socrates stands as the 2...1dl crown ing viciousness of unbridled Athe nian democracy. The Greek confusion between state and society had proven fatal to both. As the historian, Herodo tus, sadly remarked "... even the best of men raised to such a posi tion [of irresponsible power] would be bound to change for the worst." Western man was already beginning to get an inkling of the dark threat posed by too great a concentration of power.

Natural law The Greek idea of natural jus tice soon grew into Western man's next great discovery concerning 328 THE FREEMAN June power and its limitation. The idea of a "natural justice," derived from man's proper use of his capac ity for rational thought, became the basis for the idea of Natural Law, based upon the idea of a Su preme Lawgiver, a La.wgiver whose perfect intelligence was re flected in man's capacity for thought: God. Thus developed the Natural Law philosophy of the Stoics and Cicero. The idea of Nat ural Law, of a fixed code of right and wrong binding upon ruler and ruled alike, placed power in a new perspective, since it limited the exercise of power by placing God's will above man's will. References to this concept of Natural Law fill Roman philosophy. Probably no more influential advocate of the doctrine could be found than the Roman lawyer, Cicero, writing in De Republica: Right reason is indeed a true law which is in accordance with nature, applies to all men, and is unchange able and eternal. By its commands this law summons men to the per formance of their duties; by its pro hibition it restrains them from doing wrong. Its commands and prohibi tions always influence good men, but are without effect upon the bad. To invalidate this law by human legisla tion is never morally right, nor is it permissible ever to restrict its opera tion, and to annul it wholly is impos sible. Neither the senate nor the peopIe can absolve us from our obligation to obey this law ... It will not lay down one rule at Rome and another at Athens, nor will it be one rule to day and another tomorrow . But there will be one law, eternal and un changeable, binding at all times upon all peoples; and there will be, as it were, one common master and ruler of men, namely God, who is the au thor of this law, its interpreter, and its sponsor. The man who will not obey it will abandon his better self, and, in denying the true nature of man, will thereby suffer the severest of penalties, though he has escaped all the other consequences which men call punishment.

The Romans were told, "Be cause you bear yourself as less than the gods, you rule the world." Thus, as the heyday of Roman prosperity and success illuminated the ancient world, the Romans came to understand ~hat through ., obedience to a higher power they had achieved power. Had a Roman chosen to speculate upon this point, he might have marveled tha t Rome grew powerful and prosperous while it recognized a power above that of the state, de clining only when the power of the state, personified in the em peror, c.ame to be viewed as un limited and even divine. In both its success and its ultimate fail ure, Rome added another dimen sion to man's understanding of power.

1967 POWER: HISTORY 329 Chri~fianify While the pagan world had been advancing in its understanding of power and its limitation, the Ju deo-Christian heritage was also in process of formation. As the trials of the Hebrew nation as chronicled in the Old Testament had unfold ed, certain patterns of thinking had emerged. Foremost among these was the doctrine of a higher law, centering on the principle that all political authorities were to be judged and limited in ac cordance with a code not relative to man and his affairs. This was a doctrine implicit in Christianity from the beginning. The Church Fathers early recog nized the perils of power, not only to the ruled, but to the ruler as well. In the words of St. Ambrose, "A wise man, though he be a slave, is at liberty, and from this it follows that though a fool rule, he is in slavery." The measure of wisdom or foolishness described here referred to man's capacity for understanding and living in conformity to a higher, Godgiven morali ty transcending the earthly exercise of power.

Unlike the Greeks, who had seen the state as the central feature of society and a part of the "natur al" order, the early Christians saw the state as an institution in and of the sinful world. While the state was needed to exercise power to protect men from other men in this flawed world, the Christian saw the state itself as a flawed, and therefore potentially dangerous, wielder of power. Christians in the early Church did not concern themselves over much with politics as such, so they developed no clear distinction between the legitimate and the illegitimate state. But they did make explicit what had already been implicit in the Roman Natur al Law philosophy: God and not man was the final arbiter of jus tice, thus limiting any man's ex ercise of power. St. Thomas Aquinas Greek "natural justice" thus merged with Roman and Christian Natural Law to emphasize that the state was man's tool rather than his master. As the centuries passed by, the Christian idea of self-transcendence, of man's abil ity to rise above himself and above 330 THE FREEMAN June his society, became more and more explicit. At the height of the Middle Ages, St. Thomas Aquinas wrote, "The obligation of observing justice is indeed per petual. But the determination of those things that are just, accord ing to human or divine insti tu tion, must needs be different, ac cording to the different states of mankind. . . Laws are laid down for human acts dealing with sin gular and contingent matters which have infinite variations. To make a rule fit every case is im possible."

If circumstances altered cases, could the state justly exercise un limited power over the individual? The Christian answer was a re sounding "No!" Thomas insisted: "Man is not ordained to the body politic according to all that he is and has." The objection to totali tarian control developed by the Greeks and furthered in Stoic and Christian thought, was now made even stronger: Here we have the first clear and explicit challenge to totalitarianism. Although by nature part of civil so ciety, the individual person is not to be swallowed up whole in society or state. On the contrary, by virtue of certain aspects of his being - what Kierkegaard was later to call his "God-relationship" - man as such is elevated above political society and the social order. It is man's ordination to the divine that thus raises him above everything social and political that would totally engulf him. Who denies this, denies both God and man. 1 "Medieval Society While the philosophers and the ologians were making more and more specific. the moral limita tions surrounding the exercise of , power, medieval society as a whole was also making its contribution.

After the Roman Empire had col lapsed in the West, society had be come highly decentralized in char acter and had fragmented power through the institution of feudal ism. All attempts to discover a unity of power within society had been discarded, since ultimate au thority was felt to rest only in God. Medieval society functioned largely through semi-autonomous reli gious orders and independent towns and cities. What early forms of national governments existed in the Middle Ages found their purse strings tightly controlled by semirepre sentative legislatures, especially in France, England, and Spain. In practice, these bodies, repre sentative of the social strata of the times, exercised tremendous power because they could and oc casionally did withhold all finan1 Will Herberg, "Christian Faith and Totalitarian Rule," Modern Age (Win ter 1966-67), p. 67.

1967 POWER: HISTORY 331 cial support from centralized ad ministration when they chose to do so. Power remained diffused over a widely decentralized fabric of public, semiprivate, and pri vate institutions, all limited by a nloral order above both man and the state, a moral order placing its premium upon individual con g~i~ne~. This is not to suggest that abuses of power still did not oc cur. The point is, rather, that medieval man had succeeded in setting up two barriers to the ex ercise of unlimited power: (1) The recognition that the exercise of excessive power was in itself an immoral act; and (2) The discov ery in practice that power was more safely exercised when frag mented and decentralized through a variety of separate institutions. Machiavelli With the Renaissance, a new view of politics, man, and power came on the scene. Machiavelli completely dismissed the idea of any superior power providing a moral order in political life. As Francis Bacon described Machi avelli's politics, the Renaissance Italian concerned himself with "what men do instead of what they ought to do." From the time of Plato and Aristotle through the time of St. Thomas Aquinas, the central question had been the legitimate purpose-and exercise of power. Power, to the extent that it was to be used at all, was to be used only in the achievement of some higher end such as justice-or freedom. But with Machiavelli, for the first time, power became an end in itself. Power was thus separated from any ethical or metaphysical limitation and the state became independent of any other value system.

It was never Machiavelli's in tention to further immorality or encourage the destruction of values, but his amorality was based on the assumption that the acquisition of power was an end unto itself, having priority over ethical considerations. Once power becomes an end in itself, success in political affairs is measured by the acquisition and expansion of power, rather than by its wise use or moral limitation. In Lord Ac ton's phrase: "Machiavelli re leased government from the re straint of law.... " Like other realists after him Mach iavelli identifies all too readily naked power politics with the whole of polit ical reality, and he thus fails to grasp that ideas and ideals, if properly mobilized, can become potent facts, even decisive weapons, in the strug gle for political survival. History is a vast gra veyard filled with the corpses of self-styled "realists" like Napoleon, William II, Hitler, and 332 THE FREEMAN June Mussolini. They all underestimated the important imponderables in the equation of power but missed, in par ticular, the one component that in the end proved decisive: The will of man to be free, to put freedom above all other goods, even above life itself. 2 Machiavelli and the Renaissance thus paved the way for the age of absolutism. The dynastic crime waves which followed, during which despots ran roughshod over their subjects, over morality, and over their fellow despots in the unprincipled pursuit of power, are a demonstration of Machiavelli's system in action.

The Reformation Even while the long shadow of unprincipled and unlimited pow~r was spreading across the contI nent in the age of absolutism, an other turning point in individual freedom and conscience was about to arrive: The Protestant Refor mation. In the immediate aftermath of Martin Luther's decision to chal lenge the authority of the Catholic Church, it appeared doubtful that his act of disobedience would go unpunished. He was confronting a powerful and entrenched author ity, an authority which seemed to exercise vast social and political 2 William Ebenstein, Great Political Thinkers, p. 285. power. During this time, in the period before the German pr~r:ces had provided a strong polItIcal base for Luther's position, he em phasized the necessity for tol~r ance of differing viewpoints, In sisting that political power should not be used to suppress dissent. The rise of other· Protestant sects such as Anabaptism and the Zwinglian group, coupled with the Peasants' War in Germany, soon modified Luther's position. What had begun as a theory of the right of private judgment and dissent was quickly modified when he and the German princes supporting him became the revolted-against rather trlan the revolutionaries.

The social revolution implicit in the Peasants' War in Germany caused Luther to alter his politi cal philosophy almost entirely. Though he had begun his depar ture from the church in quest of liberty for individual judgment, he was not willing to grant that same privilege to others and was perfectly willing to sanction the use of political force to enforce his view. Many aspects of the Protestant Reformation and the Catholic Counter-Reformation demonstrate the side of human nature which con1plains of the ex ercise of power in the hands of others yet remains perfectly will ing to exercise that power itself. Thus the flood tide of the Ref1967 POWER: HISTORY 333 ormation, which at first glance appeared directed against the un limited power of absolutism, was soon deflected from its original course. The alliance of the powers of church and state, true through out most of Catholic Europe, soon became equally true throughout Protestant Germany. Thus Martin Luther was at once an insurgent against power and the defender of an existing power structure.

Zwingli and Calvin Though the Lutheran revolt did little to alter the fundamental centralization of power, only mov ing it from one base to another, some of the Swiss Protestants were more aggressive in combin ing their religious revolt with political revolt. The Swiss cantons were republican in their political sentiments, and this background tended to exercise a considerable measure of influence over both Zwingli and Calvin. Zwingli, for example, upheld the medieval doc trine that holders of political power who failed to conform to a higher law could and should be deposed. Unfortunately, Zwingli was killed too early to affect seri ously the course of politics in the Protestant Reformation. Although Calvin developed his ideas in the same Swiss republi can atmosphere, he tended to make such a close connection between religion and politics that he desired a state with a means of punishing all forms of "mistaken"

or "vicious" behavior. He viewed the medieval legal system as too permissive and set up in its place a theocracy in Geneva which united tremendous political and religious powers. If Luther had done his political thinking in the framework of petty tyrannies which composed the Germany of his day, and Zwingli had reached maturity in the relatively free air of the Swiss cantons, Calvin allowed no such political side issues to influence his thought. Religious truth as he saw it was dominant and left no room for the interference of polit ical niceties in the application of that "truth" to the pattern of society. Though Calvin was responsible for the exercise and centralization of power, his concept of the dig nity of the individual has out lasted the policy of religious per secution which he pursued during his own lifetime. While it is true that the leaders of the Protestant Reformation were not always out spoken opponents of the centrali zation of power, it is also true that the freedom of individual conscience which they encouraged would in the long run become a potent source of opposition to centralized power.

334 THE FREEMAN June The Calvinistic doctrine of a flawed human nature also encour aged the limitation of power: The vice or imperfection of man therefore renders it safer and more tolerable for the government to be in the hands of many, that they may af ford each other mutual assistance and admonition and that, if anyone arrogate to himself more than is right, the others may act as censors and masters to restrain his ambi tion. 3 Political Impact Actually, the influence of the Reformation had less direct polit ical impact than is often sup posed. In fact, the principal im mediate effect of both the Protes tant Reformation and the Catholic Counter-Reformation did more to further the increase of power than to control power: Scotland was the only kingdom in which the Reformation triumphed over the resistance of the State; and Ireland was the only instance where it failed, in spite of government sup port. But in almost every other case, both the princes that spread their canvas. to the gale and those that faced it, employed the zeal, the alarm, the passions it aroused as instru ments for the increase of power. Na tions eagerly invested their rulers with every prerogative needed to pre serve their faith, and all the care to 3 John Calvin, Institutes, IV, p. 20.

keep Church and State asunder, and to prevent the confusion of their pow er, which had been the work of ages, was renounced in the intensity of the crisis. Atrocious deeds were done, in which religious passion was often the instrument, but policy was the mo tive. 4 The story of the crimes commit ted by both Protestant and Catho lic rulers in pursuit of political power is a long and unsavory tale in which religious faith was an too often made the handmaiden of political ambition. Protestant and Catholic alike may have preached a religious viewpoint, but the political viewpoint of Machiavelli seems to have had the last word. As the nation-states, Protestant and Catholic alike, evolved toward their modern form, the men of the Reformation relearned the hard lesson which has perpetually con fronted all men. In the words of Milton, a man active in both the religious and political disputa tions of his age: ". . . long con tinuance of Power may corrupt sincerest Men."

The Age of Absolutism Since the Renaissance had pro duced Machiavelli's theory of power unlimited by moral con cerns and the Protestant Refor4 Lord Acton, Essays on Freedom and Power, pp. 94-95.

1967 POWER: HISTORY 335 mation and Catholic Counter-Ref ormation had provided the excuse for the actual application of these doctrines on the European politi cal scene, the stage was set for the age of absolutism. The medieval political frame work was obviously dead or dying throughout Europe by the late sixteenth century. The regional and institutional pattern of cities and guilds and local controls re tained its form but not its sub stance. A new unit of political au thority was gradually gathering all power unto itself: the State. Such was the state of affairs when Bodin published his Six Books of the Commonwealth in 1576. In Bodin the new age of absolutism had found its theorist. Machiavelli had favored the accumulation and exercise of power for its own sake but had never developed his con cept of power to include the state as a sovereign entity in its own right. Such a development awaited Bodin and the centralized, abso lute French monarchy. Bodin uti lized the old concept of the Na tural Law, divorcing God and morality from it and substituting the state in their place. Thus robbed of its legitimate meaning, Natural Law was perverted by Bodin into the bulwark of the new, absolute, sovereign State.

The rise of "Divine Right" and the absolute state, although begin ning in France, was soon paral leled throughout Europe, even in the European nation most suspi cious of power: England. The Bourbons, who had snatched the crown from a rebellious democ racy, the Stuarts, who had come in as usurpers, set up the doctrine that States are formed by the valour, the policy, and the appropriate marriages of the royal family; that the king is consequently anterior to the people, that he is its maker rather than its handiwork, and reigns independently of consent. Theology followed up di vine right with passive obedience .... The clergy ... were associated now with the interest of royalty .... The absolute monarchy of France was built up in the two following cen turies by twelve political cardinals. The kings of Spain obtained the same effect almost at a single stroke by reviving and appropriating to their own use the tribunal of the Inquisi tion, which had been growing obso lete, but now served to arm them with terrors which effectually made them 886 THE FREEMAN June despotic. One generation beheld the change all over Europe, from the an archy of the days of the Roses to the passionate submission, the gratified acquiescence in tyranny that marks the reign of Henry VIII and the kings of his time.5 Once in the seat of power, the age of absolutism became difficult to depose. Resistance: to kings be came a sin against religious faith.

Worse yet, the political philoso phers strongly supported this un holy union between religion and politics: Bacon fixed his hopes of all human progress on the strong hand of kings. Descartes advised them to crush all those who might be able to resist their power. Hobbes taught that au thority is always in the right. Pascal considered it absurd to reform laws, or to set up an ideal justice against actual force. Even Spinoza, who was a Republican and a Jew, assigned to the State the absolute control of re ligion.6 This entire generation of des pots was epitomized in the reign of the "Sun-king," Louis XIV. In the France of that day the slight est disobedience to the royal will was a crime punishable by death. Even while the subjects were com pletely bound to the ruler, no re ciprocal obligation of any kind was recognized. No guarantee of 5 Ibid., pp. 99, 93. 6 Ibid., p. 99. property or person was considered defensible. The impact of such un limited power upon the crowned heads of Europe was disastrous f or the rulers as well as the ruled.

Good intentions, ruling in the "in terest" of the people, were much discussed and little practiced. Edmund Burke, writing his Thoughts on the Causes of Our Present Discontents, warned: "... many of the greatest tyrants on the records of history have be gun their reigns in the fairest manner. But the truth is, this un natural power corrupts both the heart and the understanding." English Constitutionalism Though the age of absolutism further darkened the shadow of centralized power spre,ading across Europe, there remained some en couraging exceptions. In early seventeenth century England, Sir Edward Coke, greatest of the English parliamentarian lawyers, led the struggle against the abso lutist pretensions of the Stuart monarchy. Coke renewed the prin ciple that both ruler and ruled were subject to Natural Law. It was Coke who was primarily re sponsible for the renewed em phasis upon Magna Charta and upon traditional limitations to the exercise of royal power.

Before the end of the century, the Glorious Revolution of 1688 1967 POWER: HISTORY 337 was to complete the rejection of unlimited royal power in England. The'perilBof unlimiteddemocratic power remained to be. faced in the modern world, but at least royal power based on Divine Right had begun its decline. That decline, which began in England in the seventeenth century, was destined to spread throughout Europe within the next one hundred years. The American Revolution The harbinger of the change. to come first developed not in Europe, but in the New World. Even while the English had been moving toward the limitation of royal power, their colonies in North America had been making even greater strides: No greater contrast could be noted in the position of men than that be tween the Englishman at home, in the early seventeenth century, and the Englishman who emigrated to America. Almost all the conditions that surrounded the former were re versed in the case of the latter. The pressure of central government was immediately and almost completely withdrawn. Many of the most urgent activities of government in England, such as the vagabondage, almost ceased in the colonies. The class of settled rural gentry from which most local officials were drawn in England did not exist in America.

On the other hand, the wilderness the Indians, the freedom from re~ straint, the religious liberty, the op portunity for economic and social rise in the New World made a set of conditions wbicb bad been quite unknown in the mother country.7 But by the second half of the eighteenth century the constitu tional limitations of power, begun in England and implemented in the colonies, began to interfere with the ambition of King George III in his quest for "personal" rule. A number of Englishmen, most prominent among them Edmund Burke, insisted that the Americans were defending estab lished rights and traditions with deep roots in English history and wide implementation in the Amer ican colonies. To these opponents of centralized power, the American Revolution was the next logical step in the process begun a hun dred years before in the Glorious Revolution of 1688 when Stuart absolutism had been rejected by the British people.

The Americans so clearly recog nized the dangers of excessively centralized power that they soon erected barriers in their new sys tem of government to ensure that such concentrations did not again occur. The idea of separated powers and a system of checks and balances, deriving largely 7 Edward P. Cheyney, European Back ground of American History, 1300-1600, p. 183.

338 THE FREEMAN June from Montesquieu's Spirit of the Laws, reflected that basic distrust of centralized authority. Thus, the American experiment in dealing with power presupposed the two great lessons which Western man had learned at such great cost: (1) Decentralize political power; (2) Make the exercise of any power subordinate to a Higher Law of right and wrong which no man and no government has au thority to change. 8 The French Revolution The assault upon royal absolut ism in Europe was destined to proceed along very different lines. The French Revolution, drawing heavily upon the work of the phi losophes, adopted a completely dif ferent attitude toward the law and order necessary to the main tenance of society and substituted a faith in the "General Will" of Rousseau for the older religious ideals evidenced in the American Revolution, thus perverting Nat ural Law into "natural rights."

The distinction was to prove cru cial: If the ultimate source of au thority is God, the authority of the state is limited; but if no au thority is placed above the mys tique of the state, the door stands open to the great excesses of power which have since occurred 8 See "American Federalism: Origins" (The Freeman, Dec. 1966.) in the modern world. The French Revolution thus substituted the "General Will" for "Divine Right," and in the process rejected a powerful master only to assume another master destined to prove still more powerful. Edmund Burke Edmund Burke was among the first to see the vital distinction between the American and French Revolution and to sense the danger to human freedom implicit in the French experiment. Grounded in the tradition of Cicero and Aqui nas, Burke understood the neces sity of a religious foundation for Natural Law. He drew upon the heritage of Western man's experi ence in the handling of power, and warned that a society which would not recognize God as its sovereign and which elevated man to a pre tension as ruler of the Universe, would ultimately center such ter rible power in the state that indi vid ual man would be degraded beyond recognition.

In the late eighteenth and early nineteenth century, the contrast between the American and French Revolutions was argued on both sides of the Atlantic. The Ameri can experiment generally main tained its limitation and fragmen tation of power, based on the as sumption of human rights exer cised as the consequence of a God1967 POWER: HISTORY 339 given individual dignity. Europe in larger part pursued the ideas drawn from the French Revolu t.ion and Rouggeau'g HGeneral Will," ultimately generating a host of socialistic theories in the works of Fourier, St. Simon, Marx, and the numerous other collective thinkers which dotted the nine teenth century European intellec tual landscape. All these theorists shared a view of the world stress ing collective humanity and there fore ultimately minimizing the individual. It is one or the other of these two traditions which lies at the root of all the approaches to the problem of power which Western civilization pursues in the mid twentieth century. Stripped to their essentials, two choices con front modern man: (1) Accept ance of man as a unique individual with spiritual and creative capaci ties derived from a power above the state and protected by a frag mentation of power within society; or (2) Rejection of this tradi tionalview of man held by Western civilization and acceptance of the "Collective We" as the supreme power in the universe, recognizing no limitation upon its authority and enshrining the state as its supremely powerful a'gent. ~ Dr. Roche, who has taught history and philosophy at the Colorado School of Mines, now is a 11~e1nber of the staff of the Foundation for Economic Education.

Subsequent articles in this series on Power will deal with: (2) SO'fne Modern Manifestations; (3) Social Effects; (4) Prospects.

EQUALITY: THE LEVEL OF MEDIOCRITY I HOWARD E. KERSHNER MOST OF US are conscious of the fact that the world contains multi tudes of men who are far abler than ourselves. Far from making us jealous or unhappy, we are ex ceedingly grateful for them. We enjoy great music, but we could not write it, as Beethoven, Bach, Brahms, Chopin, Tchaikovsky, Schubert, Mozart, Verdi, and a host of others have done. We can play a few instruments, but not like Liszt, Paderewski, Kreisler, Heifetz, Rubenstein, and many other immortals who have brought heaven down to earth with their superb excellence. Our libraries are filled with good books, the treasuries of his tory, literature, and culture. We take great delight in reading Shakespeare's plays and Tenny son's poetry, but we could not have written such marvelous works. We Dr. Kershner is President of the Christian Freedom Foundation. This article is from his weekly column, "It's Up to You," March 27, 1967.

340 are fortunate that they could. Sup pose we had no great minds such as these! How fortunate that we can ride along with them, enjoy ing their creations as if they were our own. Why should we be jeal ous of them? Rather we should be thankful and pay tribute to them. Our devotion and spiritual per ception is vastly inferior to that of a Saint Paul, a Saint Francis of Assisi, a Saint Augustine, or a Saint Thomas Aquinas, but we can soar up into the heavens on the spiritual power generated by a host of saints and prophets. We enjoy our automobile, riding about the world in jet planes, our radio, television, and stereophonic music. We could not have devel oped the great industrial giants of our country that have lifted the burden of toil from our backs and emancipated us from the handi craft age into a degree of luxury unknown by kings a few centuries ago, but we can enjoy the results 1967 EQUALITY: THE LEVEL OF MEDIOCRITY 341 of the efforts of the great men who created these things for our en joyment.

When taking a loved one to the hospital, who wants a common, average surgeon? We all want a doctor, not only with superior skill, but a conscientious, honor able man whom we know has spent many long years developing the knowledge and skill required to save the life of the dear one we entrust to his care. We don't want equality. If there were no men in this world su perior to ourselves, no men cap able of earning more than we earn, no men capable of preaching finer sermons, organizing greater businesses, developing greater skill in medicine, in the arts, and in literature, and no men of great devotion or spiritual insight, it would be a poor, drab world in which to live. Let us have done with the cult of the common man and begin to recognize and appre ciate worth, talent, ability, and de votion wherever we find it. Gifted men have carried the world for ward on their shoulders. Whatso ever progress we have made, we owe to them. Let us acknowledge it and be grateful for it, and not try to clip their wings and reduce them to the level of mediocrity. ~ Changes in England A SUBSTANTIAL CHANGE in public opinion is taking place here and it is largely education by events. The Government is finding that it cannot do certain things without also adopting policies which are at least uncomfortable. We have reached the zenith of trade union power and from now on it will decline.

This week on the television we have even had a Socialist Mem ber of Parliament advocating freeing imports so as to help so-called underdeveloped countries and as a substitute for aid. We have also had the socialist National Union of Teachers urging that free meals to school children should be abandoned and that parents should accept that responsibility. Free meals have been costing the budget something well over £100,000,000 a year. It looks as if we are going to get out of Aden and let the Russians in - the consequences of which may be very serious but I imagine that your people can see what ought to be done. From a letter by s. W. ALEXANDER (London) March 31, 1967 342 Private Ownership .... A MUST! HENRY HAZLITT EDITOR'S NOTE: Henry HazIitt, well-known economic journalist and scholar, has written many books, including a novel about the rediscovery of capitalism by a young Russian after all the eco nomic and political writing of the past, except that of the Marx ists, has been wiped out. The hero, Peter Uldanov, performs the prodigious feat of recreating by his own mental effort ideas that it has in fact taken generations of great economists to develop and refine.

This novel, originally appearing in 1951 as The Great Idea, was revised and republished in 1966 as Time Will Run Back with a new Preface from which this article is drawn by permission of the publisher. Time Will Run Back may be obtained from Arlington House, 81 Centre Avenue, New Rochelle, N. Y. 10801. 368 pp., $6.00.

1967 PRIVATE OWNERSHIP •••A MUST 343 IF CAPITALISM did not exist, it would be necessary to invent it s.nd H~s discovery would be rightly regarded as one of the great tri umphs of the human mind. But as "capitalism" is merely a name for freedom in the economic sphere, the theme might be stated more broadly: The will to freedom can never be permanently stamped out. Under complete world totalitar ianism (in which there was no free area left from which the· to talitarian area could appropriate the fruits of previous or current discovery and invention, or in which its own plans could no long er be parasitic on knowledge of prices and costs as determined by capitalistic free markets) the world would in the long run not only stop progressing but actually go backward technically as well as economically and morally - as the world went backward and re mained backward for centuries after the collapse of Roman civili zation.

A centrally directed economy cannot solve the problem of eco nomic calculation, and without private property, free markets, and freedom of consumer choice, no organizational solution of this problem is possible. If all economic life is directed from a single cen ter, solution of the problem of the exact amounts that should be produced of thousands of different commodities, and of the exact amount of capital goods, raw ma terials, transport, etc. needed to produce the optimum volume of goods in the proper proportion, and the solution of the problem of the coordination andsynchroni zation of all this diverse produc tion, becomes impossible. No sin gle person or board can possibly know what is going on everywhere at the same time. It cannot know what real costs are. It has no way of measuring the extent of waste. It has no real way of knowing how inefficient any particular plant is, or how inefficient the whole sys tem is. It has no way of knowing just what goods consumers would want if they were produced and made available at their real costs.

The System Breaks Down So the system leads to wastes, stoppages, and breakdowns at in numerable points. And some of these become obvious even to the most casual observer. In the sum mer of 1961, for example, a party of American newspapermen made an 8,OOO-mile conducted tour of the Soviet Union. They told of visiting collective farms where seventeen men did the work of two; of seeing scores of buildings unfinished "for want of the pro verbial nail"; of traveling in a land virtually without roads.

344 THE FREEMAN June In the same year even Premier Khrushchev complained that as of January 1 there were many mil lions of square feet of completed factory space that could not be used because the machinery re quired for them just wasn't avail able, while at the same time in other parts of the country there 'were the equivalent of hundreds of millions of dollars worth of machinery of various kinds stand ing idle because the factories and mines for which this machine was designed were not yet ready. At about the same time G. 1. Voronov, a Communist party Presidium member, said: "Who does not know that the national economy suffers great difficulties with the supply of metals, that the supply of pipes is inadequate, that insufficient supplies of new ma chinery and mineral fertilizers for the countryside are produced, that hundreds of thousands of motor vehicles stand idle without tires, and that the production of paper lags ?"1 In 1964 Izvestia itself was com plaining that the small town of Lide, close to the Polish border, had first been inundated with boots, and then with caramels both products of state factories.

Complaints by local shopkeepers that they were unable to sell all these goods were brushed aside on 1 See New York Times, Oct. 29, 1961. the ground that the factories' pro duction schedules had to be kept. Such examples could be cited endlessly, year by year, down to the month that I write this. They are all the result of centralized planning. The most tragic results have been in agriculture. The outstand ing example is the famine of 1921 22 when, directly as a result of collectivization, controls, and the ruthless requisitioning of grain and cattle, millions of peasants and city inliabitants died of dis ease and starvation. Revolts forced Lenin to adopt the "New Economic Policy." But once more in 1928 more "planning" and enforced collections of all the peasants' "surpluses" led to the famine of 1932-33, when more millions died from hunger and related diseases. These conditions, in varying de gree, come down to the present moment. In 1963 Russia again suf fered a disastrous crop failure.

And in 1965, this agrarian nation, one of whose chief economic prob lems in Tzarist days was how to dispose of its grain surplus, was once more forced to buy millions of tons of grains from the West ern capitalist world. Problems;n Industry The industrial disorganization has been less spectacular, or better concealed-at least if we pass over 1967 PRIVATE OWNERSHIP •.•A MUST 345 that in the initial phase between 1918 and 1921. But in spite of ex travagant claims of unparalleled "eCOllOllllC growth," Russia's prob lems of industrial production have been chronic. Since factory output goals are either laid down in weight or quota by the planners, a knit wear plant recently ordered to pro duce 80,000 caps and sweaters pro duced only caps, because they were smaller and cheaper to make. A factory commanded to make lamp shades made them all orange, be cause sticking to one color was quicker and less trouble. Because of the use of tonnage norms, ma chine builders used eight-inch plates when four-inch plates would easily have done the job. In a chandelier factory, in which the ,vorkers were paid bonuses based on the tonnage of chandeliers pro duced, the chandeliers grew heavi er and heavier until they started pulling ceilings down.

The system is marked by con flicting orders and mountains of paperwork. In 1964 a Supreme So viet Deputy cited the example of the Izhora factory, which received no fewer than 70 different official instructions from nine state com mittees, four economic councils, and two state planning committees - all of them authorized to issue production orders to that plant. The plans for the Novo-Lipetsk steel mill took up 91 volumes comprising 70,000 pages, specifying precisely the location of each nail, lamp, and washstand. Yet in 1<J64:, in Rugg{a'g largest republic alone, deliveries of 257 factories had to be suspended be cause their goods were not bought. As a result of the consumer's stif fening standards and increased in clination to complain, $3 billion worth of unsellable junk accumu lated in Soviet inventories. 2 Remedial Measures Such conditions have led to des perate remedial measures. In the last couple of years, not only from Russia but from the communist satellite countries, we get reports of massive decentralization pro grams, of flirtations with market mechanisms, or more flexible pric ing based on "actual costs of pro duction" or even on "supply and demand." Most startling, we hear that "profits" is no longer a dirty word. The eminent Russian econ omist, Liberman, has even ar gued that profit be made the fore most economic test. "The higher the profits," he has said, "the greater the incentive" to quality and efficiency. And equally if not more miraculous, the Marxian idea that interest represents mere ex ploitation is being quietly set aside, and in an effort to produce 2 For the foregoing and other ex amples, see Time, Feb. 12, 1965.

346 THE FREEMAN June and consume in accordance with real costs, interest (usually at some conventional rate like 5 per cent) is being charged not only on the use of government money by shops and factories, but against the construction costs of plants. On the surface all this looks in deed revolutionary (or "counter revolutionary"); and naturally I am tempted to hope that the com munist world is on the verge of rediscovering and adopting a com plete capitalism. But several weighty considerations should warn us against setting our hopes too high, at least for the immedi ate future. The "New Economic Policy" First, there is the historical re cord. This is not the first time that the Russian communists have veered toward capitalism. In 1921, when mass starvation threatened Russia and revolt broke out, Len in was forced to retreat into his "New Economic Policy," or NEP, which allow'ed the peasants to sell their surplus in the open market, made other concessions to private enterprise, and brought a general reversion to an economy based on money and partly on exchange.

The NEP was actually far more "capitalistic," ..for the most part, than recent reforms. It lasted till 1927. Then a rigidly planned econ omy was re-imposed for almost forty years. But even within this period, before the recent dramatic change, there were violent zigs and zags of policy. Khrushchev an nounced major reorganizations no fewer than six times in ten years, veering from decentralization back to recentralization in the vain hope of finding the magic balance. He failed, as the present Rus sian imitation of market mechan isms is likely to fail, because the heart of capitalism is private property, particularly private property in the means of produc tion. Without private property, "free" markets, "free" wages, "free" prices are meaningless con cepts, and "profits" are artificial. If I am a commissar in charge of an automobile factory, and do not own the money I payout, and you are a commissar in charge of a steel plant, and do not own the steel you sell or get the money you sell it for, then neither of us really cares about the price of steel ex cept as a bookkeeping fiction. As an automobile commissar I will want the price of the cars I sell to be set high and the price of the steel I buy to be set low so that my own "profit" record will look good or my bonus will be fixed high. As a steel commissar you will want the· price of your steel to be fixed high and your cost prices to be fixed low, for the same reason.

But with all means of production 1967 PRIVATE OWNERSHIP •••A MUST 347 owned by the state, how can there be anything but artificial competi tion determining these artificial prieeg in gueh "markets"? In fact, the "price" system in the USSR has always been chaotic. The bases on which prices are de termined by the planners seem to be both arbitrary and haphazard. Some Western experts .have told us (e.g., in 1962) that there were no fewer than five different price levels or price-fixing systems in the Soviet Union, while others were putting the number at nine. But if the Soviet planners are forced to fix prices on some purely arbitrary basis, they cannot know 'what the real "profits" or losses are of any individual enterprise. Where there is no private owner ship of the means of production there can be no true economic cal culation. Elusive Costs of Production It is no solution to say that prices can be "based on actual costs of production." This over looks that costs of production are themselves prices-the prices of raw materials, the wages of labor, etc. It also overlooks that it is precisely the differences between prices and costs of production that are constantly, in a free market regime, redirecting and changing the balance of production as among thousands of different commodities and services. In indus tries where prices are well above marginal costs of production, there will be a great incentive to in crease output, as well as increased means to do it. In industries where prices fall below marginal costs of production, output must shrink.

Everywhere supply will keep ad justing itself to demand. But in a system only half free that is, in a system in which every factory was free to decide how much to produce of what, but in which the basic prices, wages, rents, and interest rates were fixed or guessed at by the sole ultimate owner and producer of the means of production, the state - a decen tralized system could quickly be come even more chaotic than a centralized one. If finished prod ucts M, N, 0, P, etc. are made from raw materials A, B, C, D, etc. in various combinations and proportions, how can the individ ual producers of the raw ma terials know how much of each to produce, and at what rate, unless they know how much the produc ers of finished products plan to produce of the latter, how much raw materials they are going to need, and just when they are go ing to need· them? And how can the individual producer of raw ma terial A or of finished product M know how much of it to produce unless he knows how much of that 348 THE FREEMAN June raw material or finished product others in his line are planning to produce, as well as relatively how much ultimate consumers are go ing to want or demand? In a com munistic system, centralized or de centralized, there will always be unbalanced and unmatched pro duction, shortages of this and un usable surpluses of that, duplica tions, time lags, inefficiency, and appalling waste.

Private Property the Key It is only with private property in the means of production that the problem of production becomes solvable. It is only with private property in the means of produc tion that free markets, with con sumer freedom of choice and pro ducer freedom of choice, become meaningful and workable. With a private price system and a private profit-seeking system, private ac tions and decisions determine prices, and prices determine new actions and decisions; and the problem of efficient, balanced, co ordinated, and synchronized pro duction of the goods and services that consumers really want is solved. Yet it is precisely private prop erty in the means of production that communist governments can not allow. They are aware of this, and that is why all hopes that the Russian communists and their satellites are about to revert to capitalism are premature. Only a few months ago the Soviet leader, Kosygin, told Lord Thomson, the British newspaper publisher: "We have never rejected the great role of profits as a mechanism in eco nomic life ... [But] our underly ing principle is inviolate. There are no means of production in pri vate hands/'3 The communist rulers cannot permit private ownership of the means of production not merely because this would mean the sur render of the central principle of their system, but because it would mean tpe restoration of individual liberty'! and the end of their des potic power. So I confess that the hope that some day an idealistic Peter Uldanov, miraculously find ing himself at the pinnacle of power, will voluntarily restore the right of property, is a dream like ly to be fulfilled only in fiction.

But it is certainly not altogether idle to hope that, with a growth of economic understanding among their own people, the hands of the communist dictators may some day be forced, more violently than Lenin's were when the mutiny at Kronstadt, though suppressed, forced him to adopt the New Economic Policy. Yet any attempt to decentralize 3 New York Herald-Tribune, Sept. 27, 1965.

1967 PRIVATE OWNERSHIP •••A MUST 349 planning while retaining central ized ownership or control is doomed to failure. As a recent writer ex plains it: If the state owns or controls the major resources of the economy, to allow for local autonomy in their utilization invites utter chaos. The Soviet planners, then, are caught on the horns of a serious dilemma. They find that their economy is becoming too complex and diverse to control minutely from above; yet they can not really achieve the tremendous productiveness of a decentralized economy without relinquishing com plete ownership or control of the na tion's resources. 4 ~ 4 G. William Trivoli in National Re view, March 22, 1966. Inflation Erodes Investment INFLATION reduces the value of financial assets such as savings accounts, bonds, pension plans and insurance policies. These in vestments have a constant face value, and rising prices mean the dollars a person gets back will buy less than the ones he put in.

Inflation, therefore, tends to shift purchasing power from these investors, who are essentially lenders, to borrowers. The notion once was popular that lenders were usually rich and borrowers often poor. If this idea ever were true, it is no longer valid in these affluent times. Surveys show that every income grouping of individuals - even the lowest - now has more finan cial assets than indebtedness. Put another way, every income group is a net lender, on the average, and thereby stands to lose purchasing power through inflation. Who are the "poor" debtors who stand to gain? All levels of government rank high among them. It would be disastrous if inflation caused a reduction in the amount of money saved and invested in new or expanded factories, offices, farms, and stores. This process is the mainspring of eco nomic growth and, because of modern technology, requires huge amounts of extra funds every year.

From Inflation and/or Unemployment by Lawrence C. Murdoch, Jr., Federal Reserve Bank of Philadelphia.

ON APRIL 3, 197, Postma§t~f General Lawrence,i O'Brien totfIa gathering of magazinepU15Tishers and editors that the Post Office Department should be turned over to a nonprofit government corpora tion. He eloquently conceded the failure of government mail de livery: Had the A T & T been operated as has the Post Office Department, the carrier pigeon business would have a bright· future. A few days later President Johnson named Mr. Frederick Kappel, the recently retired head of A T & T, as chairman of a lO man Commission to report within one year what should be done about mail delivery. Here is the dilemma of Mr. Kappel and his Commission: 350 ~,<~ Z'~ LEONARD E. READ 1. To )j·ecommend a modified form of istate ownership and op eratloii:such as a nonprofit gov ernment corporation, would sim ply postpone. any correction of the present inefficiency and waste. 2. To recommend what should be done, that is, let anyone deliver mail for whatever rates users will pay, would appear too incredible to the President, the Congress, and the people for the proposal to be accepted.

In a word, Mr. Kappel's Com mission will be damned if it does and damned if it doesn't! Thus, the Commission may de cide not to disregard the Post master General's suggestion of a nonprofit government corporation. This, of course, is still the state ownership and operation of the industry: socialism. Nor will it be 1967 MR. KAPPEL'S DILEMMA 351 looked upon as a fruitless venture by anyone convinced of his own ability to make socialism work. Most people seeln to think that the failure of socialized mail de livery to date has not been in the principle of socialization but, rather, in the faulty organization of the socialized structure. Observe the failure of one "5 year plan" after another in Rus sia, India, or wherever. Then note that the planners invariably as cribe the failure to an error in the planning rather than to the master-planning system itself. The long and the short of it is that these people do not know how to make socialism work; no one ever has; no one ever will. All the evidence confirms the failure.

It Would Still Be Socialized A nonprofit government corpor ation, however ingeniously devised, is no less a political agency than is the present Post Office Depart ment. The stern discipline of earn ing a profit or losing the invested capital is wholly absent from such agencies. Sloppy management, in stead of being penalized through personal losses, is subsidized at taxpayer expense. There is neither penalty for failure nor reward for success under a government type corporation. Note the incongruity: During the period of years when A T & T was earning profits of $25,000, 000,000 the Post Office Depart ment piled up deficits of $12,000, 000,000. The former is organized for profit; its services continually improve as its rates decrease - a colossal success. The latter is or ganized for nonprofit; its services continually deteriorate as its rates increase - a colossal failure. The Postmaster General suggests a new nonprofit, government corpor ation to remedy the mail fiasco and the President asks the retired head of the private A T & T, or ganized for profit, to recommend how to do it!

Why do so many people believe that a nonprofit corporation is better than one organized for profit? They think this way be cause they naively believe that the $25,000,000,000 earned by A T & T, for instance, would have gone to workers in higher wages and/or to consumers in lower prices had the Company been nonprofit. They overlook the likelihood that there would have been something less than nothing had the tele phone business been organized along nonprofit lines. Pro fit is not a cost of doing business, but the reward for having done it more efficiently than competitors do. Most people like to make money. It is the hope of so doing - the profit motive - that makes for competition. The fact that each 352 THE FREEMAN June is trying to outdo the others im proves services and brings prices down. 1 The record speaks elo quently for itself on this point. The Postmaster General sees that the carrier pigeon business would have a bright future had A T & T been organized as has the Post Office Department. Yet, he recommends another govern ment monopoly to displace the one that has failed! Does he not un derstand the vital distinction be tween the two? One is private, competitive, and for profit, while the other is political, monopolistic, and not for profit.

Collectivizing the Problem And now to the heart of "the problem." Why is mail delivery a national problem, whereas no such problems arise in the delivery of the human voice, or of human be ings, or of drugs and groceries, or of gas and oil? It is because mail delivery, as distinguished from the others, has been nation alized. In other words, this activ ity has been collecti vized. Were we to break the monopoly of mail delivery, "the problem" would 1 Some will argue that A T & T has little if any competition. True, it has about 88 per cent of the business, but we must not overlook the fact that there are 2,500 independent telephone compa nies in the U.S.A. A T & T has to operate as if there were enormous competition "run scared," as we say-or there will be! vanish, disintegrate; it would shatter into 200,000,000 frag ments. 2 Nationalize or collectivize ver bal communication, that is, con solidate into a single system the 200,000,000 individual desires to transmit the spoken word, and immediately we would have "a problem" incapable of solution.

Suppose it were up to you to co ordinate 200,000,000 desires to talk! What to do? Just as the Post Office Department does, you'd doubtless lump these millions of requirements into a few dozen divisions or categories. But even these you could not manage to the satisfaction of the customers. You would have "a problem"! Our nationalized mail delivery is lumped into categories. There is the personal message called first-class mail, 5¢ for the first ounce if by surface, 8¢ if by air. There is the no-charge or franked mail, billions of envelopes con taining everything from subsidy checks to political propaganda. There is Rural Free Delivery. And library literature that goes across the nation for one-fifteenth of a cent an ounce! And highly sub sidized delivery of magazines, newspaper, catalogues! And then there is below-cost freight deliv ery lumped under the heading of "parcel post." There are other 2 Approximate population of U.S.A.

1967 MR. KAPPEL'S DILEMMA 353 categories; but when all is said and done, the Post Office Depart ment has a daily deficit of $3,000, lJlJ() and several million dissatisfied customers. This is indeed "a prob lem," primarily because the in dustry is collectivized. Free the Market How is the national problem of mail delivery to be de-collectiv ized? The solution is simple enough to outline but difficult to implement within the prevailing political climate. Only two steps are necessary: 1. Repeal all laws that prohibit anyone from delivering mail for pay. 2. Let the Congress appropriate no more funds to defray Postal deficits, forcing the Department either to close down or to charge rates sufficient to cover costs. Should the Post Office Depart ment elect to stay in business, the rates would zoom. Rural Free De livery might have to be discon tinued. But, what's wrong with a rural resident picking up his mail in town as he does his groceries?

No more franked mail! Politicians and bureaucrats would be obliged to include postage in their budgets. And the mail order houses with their subsidized delivery of cata logues and merchandise! Are they to go out of business? Perish the thought! These ingenious folks will discover how to handle their own delivery problems, better and at lower cost. Gone would be lithe problem." In its place would be 200,000,000 individuals each with his delivery requirements and with numerous competing services trying to please. One might even expect postal services to advertise for customers, just as the privately operated telephone companies of fer attractive suggestions that more people make greater use of the telephone. No "problem" -just millions of requirements and busi ness opportunities. There are two major stumbling blocks to free market mail de livery. First, governmental mail han dling is a habit of long-standing.

We inherited the practice from the Old World where it was in stituted more as a system of cen sorship and snooping than as a means of efficient delivery. With out giving the matter a second thought, our forefathers wrote into Article I of our Constitution, "To establish post offices and post roads." The practice is surrounded by an aura of sanctity - however irrational. Second, neither Mr. Kappel, nor any other man, can possibly en vision how people acting freely, independently, privately, voluntarily, cooperatively could deliver mail 354 THE FREEMAN June to the American millions. Hence, most people, if they cannot think how to do it themselves, are at a loss to think of how anyone can. Thus, they mistakenly conclude that it is a task not for free men but for government. Of course, no human being can hit upon how to do this. The head of A T & T, had he lived a century ago and been asked to tell how to deliver the human voice all over the world at the speed of light, would have been stumped. Indeed, he doesn't know how to do it in 1967 after the miracle is a fait acco11~pli. He no more knows how to deliver the human voice than the head of General Motors knows how to make an automobile, or the head of Boeing knows how to make a jet, or the head of Eber hard Faber knows how to make a pencil!3 The Uses of Knowledge To rid ourselves of "the prob lem," we must understand the sum and substance of the knowl edge that accounts for voice de livery, automobiles, jets, pencils, the only aggregation of knowledge that can deliver mail with increas ing efficiency and decreasing costs.

This knowledge is not the frag3 See the chapter, "Only God can Make A Tree-Or A Pencil" in my Anything That's Peaceful (Irvington, N.Y.: The Foundation for Economic Education, Inc., 1964) pp. 136-43. ment that exists or can be as similated in any single mind. It is, instead, a coming together of literally trillions of tiny bits of know-how, infinitesimal-wisdoms, ideas, creativities, inventions, dis coveries, think-of-thats, flowing in complex interchange since the dawn of human consciousness. 4 These discrete bits naturally form to accomplish this or that - mail delivery or whatever - provided they are free to flow. This phe nomenon is comparable to and just as miraculous as the invisible molecules that show forth as a cloud, a tree, a vein of gold. Small wonder that no person knows how to deliver mail to mil lions of people, or ever will! Any one who attempts to mastermind the activity is doomed to failure.

Some ask, why not turn mail delivery over to the successful A T & T? This company knows about voice delivery, not mail de livery and is no more prepared to take over the postal business than is General Electric or Piggly Wiggly. The knowledge required for suc cessful mail delivery is not only unknown but utterly unpredict able. Noone understood the funda mentals of voice delivery a cen4 See the chapter, "The Miraculous Market" in The Free llilarket and Its Enemy (Irvington, N. Y.: The Founda tion for Economic Education, Inc., 1965) pp. 6-21.

1967 MR. KAPPEL'S DILEMMA 355 tury ago! We only know that the successful delivery of mail re quire5 a wholly new arrangement and assembly of knowledge - ex isting knowledge extending back to harnessing fire and the inven tion of zero, plus many undreamed of cost-saving, service-bettering inventions, creativities, discov eries. This new assembly of knowledge will emerge when free entry is permitted in the mail business, that is, when it is on a private property, competitive, profit and loss, willing exchange basis. And what shape or form or size the business will take cannot even be guessed. If the Answer Were Known, a Committee Might find It A century ago the human voice could be delivered no farther than two shouters could effectively communicate - less than 50 yards! But bear in mind that today's fantastic attainment was not brought about by some nineteenth century commission formulating an A T & T to solve· a problem that no one knew existed.

Successful voice delivery is the flower of the freest market ever experienced by man. Freedom is responsible for the attainment, and also explains why A T & T exists. This corporation, as well as the 2,500 independents, are merely formal and legal assem blies of existing expertise, knowl edge, persons. These structures are not the cause of the creativi ties; it is the creativities, stimu lated when men are free to try, that account for the structures. We should appreciate, in light of all the evidence, that the postal problem - and it is a real one cannot be resolved by simply re structuring the business. One doesn't start there. The sole answer lies in freeing the market. For the best service and the lowest rates, let anyone deliver mail at whatever price he can obtain! At the moment, this seems to be out of the question because there is so little faith in pri vate property, willing exchange procedures. What is required, then, is a deeper and broader grasp of these phenomenal, mirac ulous processes.

If we wish efficient mail delivery, we must first recognize the root of the trouble: a lack of faith in what men can accomplish when free. The revival of this faith rests on an improved understand ing of the phenomena which flow from the practice of liberty. It begins with your and my enlight enment. If we are successful enough, others also will behold the light. There isn't any answer, at this time, short of free market education. ~ eRASMUS, nEFORM, AND THE nEMNANT ROBERT M. THORNTON EDITOR'S NOTE: While it is not a major function of THE FREEMAN to argue theological matters or to re print sermons as such, it seems appropriate that we explore the methods of freedom as set forth by businessman Robert Thornton in an .address at St. John's Congregat,ional Church, Covington, Kentucky, March 12, 1967. 356 LAST YEAR was the 500th anniver sary of the birth of Erasmus of Rotterdam. How much public men tion was made of the great Chris tian scholar I do not know, but the occasion was acknowledged from one pulpit - that, appropri ately, of the Rev. Angus MacDon aId, minister of First Congrega tional Church in Hutchinson, Kansas.

Erasmus is, of course, not so well known as the other great figures of the Reformation. But even before Martin Luther burst on the scene in the early sixteenth century, Erasmus had for some years been speaking out plainly about the shortcomings of the church and the decline in true Christian living among both lay folk and the clergy. However, when both sides in the Reforma tion vainly sought his favor and open support, he refused to come out unequivocally for either party. Consequently, one denounced him as a heretic, the other as a coward. But after his death in 1536, when strong feelings had subsided, he once again was embraced by Prot estants and Roman Catholics alike. But Erasmus is not the kind of man who may be claimed as the exclusive property of any organi zation. "I tried to find out," wrote one of his contemporaries, "whether Erasmus of Rotterdam was an adherent of that party, 1967 ERASMUS, REFORM, AND THE REMNANT 357 but a certain merchant said to me: 'Erasmus stands alone.' "

Era~mu.s believed hiB vocation to be the advancement of learning and of the Christian religion. His office was that of the thinker and expositor and persuader whose op portunity of influencing men lies in his gifts of lucidity and elo quence. He worked incessantly, producing dozens of volumes, ma.ny of which were useful or popular or both, for generations. Erasmus' goal was, then, to em ploy humanism in the service of religion, that is, to apply the new scholars4ip of the Renaissance to the study and understanding of Holy Scriptures and thereby to restore theology and revive reli gious life. Scholarship was not to be an end in itself, but was to con duct men to a. better life. Though aware of the limitations of hu man learning, he understood it is knowledge, not ignorance, that will reveal God's truth and God's way. An Inner Grace Erasmus' dream was a return to the early Christianity of prac tice, not of opinion, where the church would no longer insist on particular forms of belief and hence mankind would cease to hate and slaughter each other because they differed on points of theology.

To Erasmus, religion meant purity Bettmann Archive and justice and mercy, with the keeping of moral commandments, and to him these Graces were not the privilege of any peculiar creed. Erasmus helped to produce a new birth in the life of Europe for he had a kindling power which set alight persons who were to be come saints and transmitters of new life. Although himself neither mystic nor saint, his greatest in fluence was on the lives and writ ings of that remarkable group of sixteenth and seventeenth century men called Spiritual Reformers. These men scorned the emphasis on ritual and dogma to the ex clusion of true religion. Wrote one of them, Hans Denck: "There is no salvation to be found which 358 THE FREEMAN June does not involve a change in heart, a new ·attitude of will, an awak ened and purified inner self." This echoes Erasmus' insistence that in the Christian experience something had to happen to a man's heart and mind. Another member of this group, Sebastian Franck, declared that "the true Church is not a separate mass of people, not a particular sect to be pointed out with the finger, not confined to one time or one place. It is rather a spiritual and invisible body •of all members of Christ, born of God, of one mind, spirit, and faith, but not gathered (Le., organized) in anyone external city. It is a Fellowship which only a spiritual eye would see. It is the assembly and communion of all truly God-fearing, good-hearted, new-born persons in the world, bound together by the Holy Spirit in the peace of God and the bonds of love."

Erasmus had the vision of an inward religion and he wanted to offer a corrective for what he had come to see as the common error of all those who were turning re ligion into an empty ceremonial ism. He believed that religion consists primarily not of outward signs and devotions but of the in ward love of God and neighbor. He urged that the essential dogmas of Christianity be reduced to as few as possible, leaving opinion free on the rest. If we want truth, he said, every man ought to be free to say what he thinks with out fear; and wherever you en counter truth, look upon it as Christianity. If Protestantism may be defined as a claim to liberty for the individual to reach his own conclusions about religion in his own way and express them freely without interference, Eras mus was in this sense closer to Protestantism than many who are now assigned the mantle. Quiet Reasoning Erasmus realized that waging the Christian battle required vigor of mind more than intensity of feeling. Detesting fanaticism and bigotry, as do reasonable and cul tivated men of all ages, he re jected the either/or zealotry and passion, and in his work there is an awareness that truth must be sought in humility. While so many men of his time were concerned with proving their adversaries wrong or wicked or heretical, Erasmus, ever sensitive to the hu man situation, was concerned with winning others to piety and to Christ. He was convinced that neither side in an argument can completely express the truth, and he did not suffer the delusion which makes a man feel he can at one blow destroy all that is bad upon this earth. "Old institutions,"

1967 ERASMUS, REFORM, AND THE REMNANT 359 he said, "cannot be rooted up in an instant, and quiet argument may do more than wholesale con demnation." Erasmus practiced what has been called a kind of low-tension Christianity. Unfortunately, there are relatively few who can under stand a person whose faith may indeed be so real, so present, and so homely, that one jests with and about it, as if it were a friend or a brother. Erasmus, writes H. H. Hudson, "bids us hold our con victions with some lightness, and to add grace to life. Our best work will be done in a critical spirit, which turns upon ourselves and itself the same keen gaze and feasting irony with which it views the world." What Can I Be? The Erasmian concept of reform as a matter of individual change is unpopular in our age of politi cal action and mass movements. The interest today is not changing ourselves but other people, pref erably in great numbers. Our method is not persuasion, as was Erasmus', but coercion. There is a demand for action now with concrete results. Life itself, as Joseph Wood Krutch has re marked, is looked upon as a col lection of problems, and we are constantly badgered to do some thing about them.

But some persons do not look upon life as merely a collection of problems. Rather they would say with Edmund Opitz that "life is not a problem to be solved, but a reality to be lived." The ques tion they ask is not "What can I do?" but "What can I be?" Christians, wrote the authors of Understanding the New Testa ment, believe that "the new life is not to be measured primarily by what the Christian does, but by what he hopes, believes, and loves - in brief, then, by what he is instead of what he does. But it should be understood that "the Christian's primary concern with faith does not free him from responsibility for his actions." Rather, "the God who has called them out of their aimless ignor ance is holy, and he demands that Christians be holy in all their conduct as he is holy." Perhaps this point will be made clear by considering the nature of sin. Mary Ellen Chase writes tha t "sin is far more than only the performance of wrong acts.

It is a condition of moral and ethical blindness; it is indiffer ence to the things of the spirit and, therefore, spiritual death. In other words, right and wrong are more than beha vior ; they are states of the human mind and soul." Or, in the words of William Barclay, "Sin is the failure to be 360 THE FREEMAN June what we ought to be." To Jesus, writes Barclay, "sin is an atti tude of bhe heart." Outward ac tions may be beyond reproach but the deciding factor is that attitude of the heart. "The differ ences in human life depend, for the most part," says Elton True blood, "not .on what men do, but upon the meaning and purpose of their acts." "What we are," writes Dean Inge, "matters much more than what we do or say." To Be a Better Self We should, I think, concentrate on efforts to be good instead of seeking first to do good. Follow the latter course and the tempta tion is to reform our fellows in stead of trying to improve our selves. Norman Ream expressed it this way: "The proper question, however, is not what you can do, but what you can become. It's a lot easier to do something than to be something. When you are tempted to ask if there isn't some thing you can do, remember there is always something you need to be, namely a better self."

"What God cares about," said C. S. Lewis, "is not exactly our actions. What he cares about is that we should be creatures of a certain kind or quality - the kind of creatures He intended us to be." There are some persons, writes William Barclay, "who help us, not by anything they' say or write, but by simply being what they are, men whom to meet is to meet God." The teaching of Jesus, wrote Albert Jay Nock, "appears to have been purely individualistic. In a word, it came to this: That if everyone would reform one (that is to say, oneself) and keep one steadfastly following the way of life which he recommended, the Kingdom of Heaven would be co extensive with human society. The teaching of Jesus, simple as it was, was brand-new to those who listened to it." There is, wrote Hanford Hen derson, only one major problem in the whole world "and that is the salvation of the individual soul. Our own personal problem is quite the same as that of every other sane, red-blooded, earnest man or woman in the whole world. It is to make ourselves as big and fine and useful and human as we pos sibly can and, were we so fortun ate as to have well-born sons and daughters, to help them to be big ger and finer and more useful and more human than we are. It is a much less spectacular job than the artificial problems of government, dynasty, empire, ecclesiasticism, trade unionism, socialism, com munism, commercial supremacy, dictatorship, and all the other ag gressive mass movements; but it 1967 ERASMUS, REFORM, AND THE REMNANT 361 is the one real and important problem whose solution will bring peace and tranquillity and worth to a world now very much dis traught."

The Salt of the Earth But, some may complain, even if a few individuals do reform themselves, what good will it be when the great majority fail to do so? What possible difference can a handful of reformed persons make in a society of millions? But these complainers are judging by "the wisdom of the world instead of a higher sort of wisdom which," explains H. H. Hudson, "reveals to every man who has it that \vhatever he may do is in itself vain and dispensable yet the soul which he throws into it and the life he builds through it are not necessarily so. Put into other terms, except God build the house, they labor in vain that build it." "Even that which in the con crete world can never be victori ous remains in that other as a dy namic force," wrote Stefan Zweig, "and unfulfilled ideals often prove the most unconquerable. Those ideals only which have failed to put on concrete form are capable of everlasting resurrection."

In his Sermon on the Mount, Jesus said to his disciples: "Blessed are you, when men shall revile you, and persecute· you, and shall say all manner of evil against you falsely, for my sake. Rejoice, and be exceeding glad: for great is your reward in heaven: for so persecuted they the prophets which were before you. Ye are the salt of the earth." The salt of the earth was no mean title for the disciples because salt was greatly valued in the time of Christ, being indispensable for the preservation of food. The meaning, in part, of the parable is that society easily becomes cor.. rupt and the forces of death are not stayed unless some folks are salt. It makes no difference that the group is small because a pinch of salt is effective out of propor tion to its amount. Nor is their call to sensational witness because salt is inconspicuous, ordinary, and mixed with common things. The method Jesus suggested to his disciples has been called by Lao-Tze "creative quietism." The obj ect, writes Leonard Read, is "to· work privately as extensively as possible but shy away from be coming a public spectacle. Instead of seeking publicity, creative quietism suggests concentration on the perfecting of thought to which others will be drawn. Have no fear that one's light will be hidden; be confident, rather, that any light, if strong enough, will penetrate the darkness."

This echoes the words of Tolstoy 362 THE FREEMAN June on the power of truth: "No feats of heroism are needed to achieve the greatest and most important changes in the existence of hu manity; neither the armament of millions of soldiers, nor the con struction of new roads and ma chines, nor the arrangement of exhibitions, nor the organization of workmen's unions, nor revolu tions, nor barricades, nor explo sions, nor the perfection of aerial navigation; but a change in public opinion. And to accomplish this change it is only needful that each individual should say what he really feels or thinks, or at least that he should not say what he does not think." A New Public Opinion Private and Unobtrusive A new public opinion will be created privately and unobtru sively. "The existing one," contin ues Albert Schweitzer, "is main tained by the press, by propa ganda, and by financial and other influences which are at its dispos al. The unnatural way of spread ing ideas must be opposed by the natural one, which goes from man to man and relies solely on the truth of the thoughts and the hearer's receptiveness for new truth."

Those called by Jesus the salt of the earth were in the Old Testa ment called The Remnant, a leaven that would transform the loaf of mankind. "If we belong in the remnant," wrote Albert Jay Nock, "we will proceed on our own way, first with the more obscure and extremely difficult work of clear ing and illuminating our own minds, and second, with what oc casional help we may offer to others whose faith, like our own, is set more on the regenerative power of thought than on the un certain achievements of prema ture action." Such persons have the power "to see things as they are, to survey them and one's own relations to them with objective disinterestedness. Those who have this power are everywhere; every where they are not so much re sisting as quietly eluding and dis regarding all social pressure which tends to mechanize their proc esses of observation and thought." "It was not an accident," wrote Rufus Jones, "that the two great est prophets of the ancient world - Plato and Isaiah - made so much of the 'remnant' in the form ulation of their hope for the better \vorld of the future." Ideally, a remnant is comprised of a "small, outstanding group of persons who have vision of the true line of march for their age and people, clear insight into the underlying principle of life and action, and a faith that ventures everything to achieve what ought to be." These 1967 ERASMUS, REFORM, AND THE REMNANT 363 spiritual rebels care more for truth than for mere unity.

The first Christians, wrote Jones, "who in the early chapters of Luke's second book, The Acts, are called 'those of the way,' felt themselves to be 'a. peculiar peo ple,' a 'remnant,' 'a true Israel within IsraeL'" While there are different interpretations of the "beloved community," they all agree that "this inner, intimate beloved community is a spiritual remnant, living and fulfilling its mission within a wider world of men unillumined and unsaved." That is, it must "mature and ripen its idea and finally carry it into the the life of the wider circle out of which it came." The great histori cal importance of remnant groups is that "over and over again" they "have discovered, preserved, and passed on some of the most pre cious truths and ideals of our no blest faith of today." The true remnant-idea, then, is "the for mation of a small prepared group of persons awakened, quickened, vitalized and so made the bearers of spiritual life to the wider world, the 'seed' of an immense harvest."

"Books and articles and public addresses," notes Rufus Jones, "except in the rare cases where they come from the pen or lips of a genius, leave the world pretty much unmoved and undisturbed." But, on the other hand, "the formation of a remnant brings a vig.. orous challenge. It puts the issue sharply. It breaks the existing lethargy. It disturbs the even ten or of life." Under usual conditions "there is no way forward except by the way of the remnant. The truth must now be matured and tested in a group of persons who accept it with conviction and are ready to suffer for it or stake life on it." Preserving the Faith The remnant, says Jones, "pos sess consciences that are more acute than those of their fellows. They are more detached from the world and more ready than most people to forego the advantages of a successful career and the re wards which go with conformity to prevailing customs, in order to champion the cause of truth and light, and to work for what ought to be. They· preserve a fundamen tal faith in the conquering power of truth, and they believe all things, hope all things, and are ready to endure all things, in the great business of making others see what they see."

The individual, continues Jones, "has creative work to do and he has his spiritual additions to make to the score of truth and life. He must, above everything else and as a sacred duty, insist upon his personal freedom as a man, whom 364 THE FREEMAN June God has made in His own image and likeness. There are occasions when an individual can serve so ciety best and most fittingly, not by yielding to its conventions nor to its historic customs and esti mates but by standing out under the compulsion of some vision of advance in the championship of an ideal which ought to prevail but does not yet prevail. If there is vitality to this vision of advance and if it is grounded in eternal reality, it will awaken a response in the souls of others and gather a group of loyal supporters, and thus produce a remnant." The real mission and service of the rem nant, concludes Rufus Jones, is to "go forward with a venture of faith and to put its vision of ad vance, its ideals of what ought to be, into practice here and now. It often means moving along the line of greatest resistance. And it is likely to entail much suffering."

A Responsible Remnant The true remnant does not seek privileges but rather is complete ly willing, even eager, to accept responsibilities. Nor does it wish to withdraw from the world, how ever unpleasant it may appear to be. A true remnant, if it is to live, must embrace the world, must ever go out into the world performing its rightful mission, working as a leaven in the lump. A true remnant must do its work with joy. Yes, even in an age such as ours when things seem to be getting worse, not better "a time of turmoil, war, economic catastrophe, cynicism, lawless ness, and distress," writes R. J. Rushdoony. But, he continues, "it is also an era of heightened chal lenge and creativity, and of in tense vitality. And because of the intensification of issues, and their 'world-wide scope, never has an era faced a more demanding and ex citing crisis. This then above all else is the great and glorious era to Iive in, a time of opportunity, one requiring fresh and vigorous thinking, indeed a glorious time to be alive."

Shouldn't we reflect, wrote John Bright, "that times that seem evil to us may serve a better purpose than times that are good? This may seem a strange thing to say, but there is much truth in it. The good times that we desire are times of freedom from disturbing bother. But perhaps from the di vine point of view they are not. For the purpose of God for us is not the comfort of our bodies or the preservation of our interests,· but the discipline of our spirits tha t we may become truly his peo ple. L.et it never· be forgotten it is precisely in suffering that the peo ple of God are selected; in suffer ing they are known. The tragedy 1967 ERASMUS, REFORM, AND THE REMNANT 365 of the times, therefore, becomes to us a personal summons to de cide for the calling of God and, in tragedy, to serve him. And though we may not see how that Kingdom could come soon, or prove tha tit will come at all, we will face the dark future with faith and pray for its coming. And we will take courage. As civilization and material property, nations and churches, are tossed into the caldron of history and seemingly destroyed, we will reflect upon Isaiah's words: 'There is always a Remnant, a people of God, a true church. And with these God works his will.' " • BIBLIOGRAPHY BARCLAY, WILLIAM, The Mind of Jesus, New York: Harper & Bros., 1961.

BRIGHT, JOHN, The Kingdom of God, Nashville, Tennessee: Abingdon Press, 1953. CHASE, MARY ELLEN, The Bible and the Common Reader, New York: Macmillan Company, 1955. DOLAN, JOHN P., Ed., The Essential Eras mus, New York: New American Li brary, 1964. ERASMUS, The Praise of Folly, Hoyt Hopewell Hudson, Translator, Prince ton, N. J.: Princeton University Press, 1941. ERASMUS, The Enchiridion of Erasmus, Raymond Himelick, Translator, Uni versity of Indiana Press, 1963. ERASMUS, The Colloquies of Erasmus, Craig R. Thompson, Ed., Chicago: Uni versity of Chicago Press, 1965. FROUDE, J. A., Life and Letters of Eras mus, New York: Charles Scribner's Sons, 1894. HUIZINGA, JOHAN, Erasmus and the Age of Reformation, New York: Harper & Row, 1957. JONES, RUFUS, The Luminous Trail, New York: Macmillan Company, 1947. JONES, RUFUS, The Remnant, The Swarth more Press, Ltd., 1920. KEE, HOWARD CLARK and YOUNG, FRANK LIN W., Understanding the New Testa ment, Englewood Cliffs, N. J.: Pren tice-Hall, Inc., 1957.

NOCK, ALBERT JAY, The Memoirs of a Superfluous Man, 1943; Chicago: Hen ry Regnery Company, 1965. OLIN, JOHN C., Ed., Christian Humanism and the Reformation, New York: Har per & Row, 1965. RUSHDOONY, R. J., Intellectual Schizo phrenia, Nutley, N. J.: The Presby terian and Reformed Publishing Com pany, 1961. SMITH, PRESERVED, Erasl1zus: A Study of His Life, Ideals, and Place in History, New York: Dover Publications, Inc., 1923, 1962. ZWEIG, STEFAN, Erasmus of Rotte'rdam, New York: The Viking Press, 1934, 1956. Reprints of this article available at 10 cents each.

D.T.ARMENTANO ALMOST EVERY PIECE of price-fix ing legislation produces results opposite to those intended. Wheth er one examines the outcome of interest rate regulation or mini mum wage legislation, the lesson repeats itself; interferences with the price system lead to unin tended and unexpected conse quences. And more, the conse quences aggravate the original situation the legislation had meant to ameliorate. Finally, the aggra vation caused by the initial legis lation generates further clamor for bigger governmental programs and stiffer Federal controls. At this point even the most in formed citizen loses the ability to differentiate sense from nonsense. Thoroughly confused, he resigns Dr. Armentano is Assistant Professor of Eco nomics at the University of Connecticut in Hartford. 366 himself to the fact that free en terprise has obviously failed,and that like it or not, it's time that the government "did" something.

He is usually completely unaware that it is the government inter vention which has failed, and not the free market. The following analysis will attempt to highlight the evidence for this contention. The most important function of a free price (a price not fixed or regulated by the state) is its ability to serve as an indication of the relative scarcity of a com modity, and automatically ration that scarce commodity to the high est demander. As long as the price of an article is allowed to fluctuate and match the supply with demand, there will be neither surpluses nor shortages, i.e., the market will be cleared at some equilibrium price.

1967 THE ECONOMICS OF PRICE FIXIN'G 367 Government price-fixing de stroys the clearing and allocating function of prices. By permanently fixing prices above or below their equilibrium values, the regulation prevents the equating of the avail able supply to the demand. Thus, short-run surpluses or shortages become inevitable. Even worse, the signals sent out by the fixed prices to the respective consumers and producers encourage inappro priate economic activity which tends to aggravate the original situation. As an example, when copper prices are pegged below their equilibri um level, a short-run shortage is likely. What is worse, low prices encourage an increase in the demand for copper, as po tential users switch away from relatively higher priced substi bItes. Likewise, low copper prices discourage the production of copper - already in short sup ply - since the low prices fail to cover the expected costs of copper production. In a double edge fash ion, therefore, the future short ages of copper are exaggerated.

Still worse, the excess demand created by the artificially fixed price of copper spills over into other commodity markets where it tends to push up the prices of other commodities or, if these prices are also fixed, cause addi tional shortages. Shortages and Surpluses The confusing consequence of selected price fixing is a combina tion of shortages on the one hand and price increases on the other. Although ration cards may be used to link available supply to demand, they neither eliminate the excess demand nor increase the deficient supply. Only a free ing of the fixed price can induce the proper economic responses from both buyer and seller. Whether the subject is a water shortage (the price has been fixed at zero for decades), an apparent shortage of city apartments (rent controls), or a money shortage (interest rate regulation) , the consequence of fixing prices below their equilibrium values is only too obvious.

Similarly, prices fixed above equilibrium generate surpluses. The inescapable consequences of a farm program or a minimum wage bill are farm surpluses and labor surpluses.N or is this the end of the mischief; there are deeper and more intangible eco nomic consequences beneath the surface. Unwanted farm surpluses are composed of scarce economic resources or factors of production, and these could have gone into the production of something that con sumers really wanted. Likewise, unemployed labor is totally unpro ductive; if employed, no matter 368 THE FREEMAN June what its wage or productivity, it could have contributed to the pro duction of needed output. Both artificial surpluses are an econom ic waste; in a world of unlimited human wants and limited factors of production, they are an econom ic tragedy of the first order. Making Crooks of Those Who Serve As a final point, price-fixing in duces economic and political be havior which attempts to circum vent or exploit the consequences of the artificial price. Black mar kets develop and substitute for "free" markets; consumers and producers who wish to buy and sell on mutually agreeable terms become lawbreakers. Those sell ers of goods or factors with arti ficially high prices seek to extend their advantage through additional legislation. With premiums on pressure-group tactics, and penal ties on legitimate enterprise, a de terioration of the proper atmos phere for economic activity is in evitable. In addition, the public becomes confused, and the confu sion mistakenly ferments into a distrust of capitalism. The rest of the story is the economic history of the last seventy years.

To a careful observer, the facts are clear. Fixing prices of partic ular products or factors can only serve to generate surpluses or shortages, trigger price increases in selected markets, and continue to misallocate scarce economic re sources. It is time that students of society concerned with wealth and welfare placed the responsi bility for these evils where they rightfully belong. ~ The Law of Duty No MAN, I affirm, will serve his fellow-beings so effectually, so fervently, as he who is not their slave; as he who, casting off every other yoke, subjects himself to the law of duty in his own mind .... Individuality or moral self-subsistence is the surest foundation of an all-comprehending love. No man so multiplies his bonds with the community as he who watches most jealously over his own perfection. WILLIAM ELLERY CHANNING, May 26, 1830 HAROLD M. FLEMING Antitrust and the Fear of BIGNESS HAROLD M. FLEMING IN THE LENGTHENING annals of the antitrust laws, the present decade, their seventh, may well go down as the "era of merger busting."

The Supreme Court has given the government lawyers an un broken series of victories over mergers, so decisive that today a brief note from the Antitrust Division is enough to block any merger; no large company would think of buying any but a bank rupt competitor; and the legal prospects for any merger or ac quisition by any of the nearly 100 companies with 1966 sales of a billion dollars or over are a haz ardous guess. The basic trouble with mergers Mr. Fleming, for many years New York Busi ness Correspondent of the Christian Science Monitor, is a prominent freelance writer on business and economics. is that they make big ones out of little ones, whereas antitrust en thusiasts would rather see a lot of little ones, of what might be called "polyopolies" (many sellers) where there are now what are fashionably called "oligopolies" (few sellers). Among the more important of this decade's high court anti merger decisions was that of last April 12, requiring the big soap and-detergent company, Procter & Gamble, to disgorge its acquisi tion, nearly ten years ago, of tp,e Clorox Chemical Company, largest maker of household liquid bleach.

That the opinion was written by Justice Douglas was no surprise. The Justice is strenuously on rec ord as against the "curse of big ness" (Columbia Steel dissent) and the "virulent growth of mo369 370 THE FREEMAN June nopoly" (Standard Stations dis sent), and candidly revealed his view of mergers in general three years ago. In reviewing a new biography of Louis D. Brandeis, he wrote that Justice Brandeis had: proved over and over again the truth about mergers - that economy in op erations was a false purpose, that the growth of power and strengthening of monopoly were the real purposes. New York Times Book Magazine, July 5,1964 In the face of such ardor, the ac quisition by the biggest company, in a big industry, of the biggest company in a small industry, didn't stand much chance. However, the decision was not just Douglas speaking. The opinion was 7 to O. Nor was it just an other merger case. This was a maj or decision in the burgeoning field of "conglomerate" mergers.

Habit and history lead the layman to think of mergers as between competitors - that is, "horizontal." This was a "product-extension" merger. And sheer size was an im portant consideration. Story of a IIProduct-Extension ll Merger Liquid household bleach, which is easy to make, sells mostly on advertising. The Clorox people, after building their company up to doing nearly half the nation's business in this item, proposed a merger to P & G. The latter's re search people figured the acquisi tion was a natural. Clorox bleach sits on the same grocery shelves with Procter's goods, and could be economically handled by its marketing people. Even more im portant, Clorox could be adver tised, especially on TV, at the ex ceedingly low quantity rates en joyed by P & G as the biggest TV advertiser in the country. The researchers reported that P & G could invade the bleach market by itself but that acquir ing Clorox would make entrance vastly cheaper. In August, 1957, the merger was made., In Septem ber, 1957, the Federal Trade Com mission issued a complaint against Procter & Gamble, charging that the merger had violated Section 7 of the Clayton Act as amended by Congress in 1950.

The F.T.C.'s final order (Docket No. 6901, November 26, 1963) written by Commissioner Philip Elman, was thorough and schol arly, and in effect "threw the book at" P & G, including the doctrines of oligopoly, incipiency, potential competition, internal expansion, and social purpose. The opinion spelled out the cost advantages of the merger, particu larly in advertising, but then said that these were "offensive to the spirit ... of the antitrust laws" because they were "achievable 1967 ANTITRUST AND THE FEAR OF BIGNESS 371 only by firms of very large abso lute size," and "more important . . . there does come a point at which ... mass advertising loses its informative aspect and merely entrenches market leaders .... " But the gist of the objection ap peared to be that, by such acquisi tion, a giant company had taken over nearly half .a pigmy ind us try. The Supreme Court went even further. It ruled that the acquisi tion was illegal because of P & G's "huge assets and advertising advantages," and that "possible economies" from the merger "can not be used as a defense."

(As did the F.T.C., the high court based its finding on the al legedly anticompetitive effect of the merger; it found that it tended to "substantially lessen competi tion." This is a quirk in antitrust interpretation \vhich may, but shouldn't, confuse the layman. By it, a big-company action that, it is feared, will aggra'vate competi tion, is condemned for threaten ing to lessen it. This is a dialectic device, built on the "oligopoly" theory, that the fewer and bigger the sellers, the more sluggish the competition. ) The Will of Congress But whatever one may think of the views expressed in this case by the F.T.C., and the Supreme Court, it would be hard to argue that they stretch the letter or the spirit of the law on mergers since Congress drastically rewrote it in 1950. The debates and reports on the Celler-Kefauver AntiMerger Act of 1950 made it explicit, not only that all kinds of mergers were affected, but also that relative size was an important·· Congressional concern.

Thus, for instance, the House Report listed as among the results it wanted to prevent, an "increase in the relative size of the enter prise making the acquisition to such a point that its advantage over its competitors threatens to be decisive." (And, perhaps odd to relate, both the F. T .C. and Justice Douglas may deserve some of the credit [or blame] for this. The Commission's 1948 "Report on Mergers," which was grist to the legislative mill, said, "There are few greater dangers to small busi ness [sic] than the continued growth of the conglomerate cor poration." And the Supreme Court's 1948 approval, in the Columbia Steel case [334 U.S. 495] of "Big Steel's" acquisition of a West Coast steel fabricator including Justice Douglas' fiery dissentis widely thought to have added to the steam under the antimerger bill.) But antibigness, in some form, 372 THE FREEMAN June has built the steam under all the antitrust laws. They were de signed to cope with the supposedly dangerous powers of big com panies. Thus, Congressman Wright Patman once testified of the 1936 Act that bears his name, "One certain big concern really caused the passage of this Act - the A & P Company." The 1914 debates over the Clayton bill were studded with references to Standard Oil.

And of the original 1890 Sherman Act itself, Supreme Court Justice O. W. Holmes dryly remarked in his 1904 Northern Securities dis sent: There is a natural feeling that somehow or other the statute meant to strike at combinations great enough to cause just anxiety on the part of those who love their country more than money, while it viewed such little ones as I have supposed with just indifference. This notion, it may be said, some how breathes from the pores of the Act, although it seems to be contra dicted in every way by the words in detail. Business Morals and Business Size This size-consciousness causes many of the paradoxes and con tradictions in antitrust. For in practice it applies different stand ards of conduct depending on business size - on the principle, once stated by Justice Brandeis, that "a method of competition fair among equals may be very unfair if applied where there is inequality of resources." To fit this concept into Anglo-Saxon legal traditions is not easy. In previous decades this antitrust double standard· has involved all kinds of issues, from "share-of-market" to "predatory pricing," plaguing legislators and the courts with the problem of how to write and interpret laws that will allow some businessmen to do things that others may not do. In the recent Clorox case Justice Harlan, in a long concurring opinion, asked for some standards "for application to mergers that . . . previously haven't been con sidered in depth by this Court."

The perennial problem was put in perhaps its sharpest focus over 50 years ago, in 1914. Speaking for the Conference Report on the Clayton bill, Senator Walsh said: . . . it was found no easy task to frame a statute which would reach the case of a plundering monopolist ... but not be oppressive to a strug gling industry contending for trade against a competitor enjoying a prac tical monopoly ... and supported by unlimited capital. The problem, in essence, is to determine how far a firm's com petitive success may be due to its sheer size and resources, rather than to its managerial skills, low operating costs, far-sighted plan ning, and use of ingenuity, imagi1967 ANTITRUST AND THE FEAR OF BIGNESS 373 nation, innovation, and improve ment. For a reasonable business man, even after he dismisses from the subject the unrealistic notions, the emotionalism, and the politi cal maneu vers, may yet wonder whether size alone doesn't some how give some "unfair" competi tive advantage which deserves to be prevented by law.

The Standard Oil Legend The primal source of such mis givings lies in the legend of the Standard Oil Company. The myth ology of that company's rapid growth from the late 1860's to the achievement of a near monopoly of refining in the late 1870's, and of how it held most of that posi tion for over a quarter century in the fiercely competitive oil busi ness, has heavily influenced anti trust thinking for 70 years. It may seem strange that im pressions so misleading could have developed in so few decades. The Rockefeller combination was ex haustively investigated and re ported on around 1900. And the hearings and briefs which led to the 1911 dissolution filled 21 vol umes of over 12,000 printed pages. Yet the folklore of Standard Oil varies widely from the facts. The principal item in the legend is that the Rockefeller group rose to power by "predatory" price cut ting. The story is that Standard used its "monopoly power" to in vade areas it wanted to do busi ness in; that it then cut prices low enough to ruin those already there; and then moved in.

The main facts in the story are as follows. Rockefeller and his early associates aimed at a mo nopoly in refining. And, in a single decade, the 1870's, they nearly achieved it. In doing so they took in the heads of most of the larger refineries they acquired, as part ners, associates, or fellow share holders - a policy unlikely to work if preceded by one of forcing them into bankruptcy. Competitors joined Standard partly because they were impressed b.y the Rocke feller group's business abilities, and partly because of a general feeling that some such combina tion was the only escape from the ruinous ups and downs of the oil industry at that time. A large number came in, for instance, in 1875, after the wholesale price of kerosene had dropped 50 per cent between 1872 and 1874. Standard never tried for a mo nopoly or anything near it in mar keting. Nor, with a near monopoly in refining, would this have made business sense, any more than for a toll-road company to build two toll-houses only a mile apart.

Standard Oil, and John D. Rocke feller personally, favored large volume at a narrow margin of 374 THE FREEMAN June profit - just as, 50 years later, the Great Atlantic & Pacific Tea Com pany, and John Hartford person ally, favored large volume at a narrow margin of profit. Standard's low-markup retail policy, nearly a century ago, turned out to be as provocative of political repercussions as A & P's turned out to be, in recent mem ory. Half the testimony in the 12,000 printed pages of the 1907 08 hearings concerned Standard's marketing. Genesis and Growth of the Legend With its 80-odd per cent of the country's refining capacity, Stand ard automatically became much the largest buyer of crude oil in the early fields. This was a politi cally hazardous position in itself. When, for instance, the Bradford (Pennsylvania) field, huge for those days, was brought in, in 1877, the unprecedented flood of oil drowned prices; and Standard became very unpopular in the oil fields.

Thus, by the 1890's, Standard had highly vocal enemies at both ends of the business - producing and marketing - just as now, though in much milder degree, do the present-day oil-industry "ma jors." In 1894 Henry Demarest Lloyd published Wealth Against Com monwealth, and gathered into it every allegation he could find against Standard, observing that "they made oil poor and scarce and dear .... The unfittest, econom ically, survives .... " Standard also fell afoul of the newspapers. This was the dawn ing age of sensational journalism. In its issue of May 16, 1897, the New York World printed a fea ture article which said of the company in part: There has been no outrage too co lossal, no petty meanness too con temptible for these freebooters to en gage in. From hounding and driving prosperous businessmen to beggary and suicide, to holding up and plun dering widows and orphans, the little dealer in the country and the crippled peddler on the highway - all this has entered into the exploits of this or ganized gang of commercial bandits.

In 1902 Miss Ida M. Tarbell, sister of an executive of the Pure Oil group, one of Standard's rising competitors, started a serialized history of Standard Oil in Mc Clure's, the best-known muckrak ing magazine of the day; the his tory was published in book form in 1904. It was full of contradic tions and errors of omission but tremendously popular. It had a chapter headed "Cutting to Kill," which probably had more effect on public opinion than all the articles written on antitrust before or since.

1967 ANTITRUST AND THE FEAR OF BIGNESS 375 The Court Decision The Department of Justice brought suit in November, 1906. Hearings went on for 15 months. The government lawyers con tended chiefly that: 1. Standard's kerosene prices varied widely from one area to an other, and were lower where com petition was strong and higher where it was weak. 2. Standard sometimes cut prices below cost. 3. In many cases Standard's methods limited independent mar keters' territories, or even de stroyed their businesses, after which prices were promptly raised. 4. By such tactics all over the United States, competition had been substantially destroyed or limited. To th~ price-cutting charges the Standard lawyers in most cases replied with evidence that Stand ard had not cut until competitors did. (If so, this has a parallel in modern gasoline markets. The largest marketer may often move first in a rising market, but sel dom, if ever, in a declining one.) They also pointed out that the gov ernment lawyers had been able to allege such charges in only 37 towns, while the Standard com panies had been selling in 37,000.

On November 20, 1909, a bench of four Federal judges in St. Louis unanimously found Standard guilty, on the uncontroverted fact that in 1899 nineteen compet ing or potentially competing com panies had been put together into the Standard Oil Company of New Jersey. This was combining and conspiring to achieve an unlawful monopoly - an open-and-shut case. As for the thousands of pages of testimony, running back 30 and more years, on unfair competition and predatory practices, the judges simply skipped them, mak ing no specific finding of intent to defraud or to compete unlawfully. Eighteen months later, in May, 1911, the U.S. Supreme Court trod unanimously the same judicial path. Justice White's opinion showed particular interest in how the combination had been put and held together; and found that the company had both intended and achieved monopoly and restraint of trade. But this opinion also walked right around what it re ferred to as the "jungle of con flicting testimony covering a period of 40 years."

Some 47 years later, a Uni versity of Chicago professor ac tually did read through the "jungle of conflicting testimony," and summarized his findings in a 30-page article in the Journal of Law and Economics (Vol. 1, 1958: John S. McGee, "Predatory Price Cutting: The Standard Oil [N.J.] Case.") 376 THE FREEMAN June In marketing, he found less than a dozen small oil dealers whose exit from the business appeared to have had anything to do with local price cutting. In refining, he found "no evidence that predatory price cutting was used to depress asset value of the more than 120 competitive refineries that Stand ard bought." He concluded: Anyone who has relied upon price discrimination to explain Standard's dominance would do well to start look ing for something else. The place to start is merger ... What this study says is that Standard did not achieve or maintain a monopoly position through price discrimination. The is sue of whether the monopoly should have been dissolved is something else.

"Cutting to Kill" No one in 1911 seemed to notice the high Court's studied disregard of the market strong-arming charges against Standard. They had already passed into legend. In 1912 a prominent economist, John Bates Clark, in a book, The Con trol of Trusts, listed some of the alleged obnoxious practices of large firms, including" ... the famil iar (sic) practice of cutting prices locally . . . (or) the cutting of the price of some one variety of goods which a rival makes, in order to ruin him." He said that "the sup pression of these policies would go far toward rescuing competition, protecting the public, and insuring to it a large share of the benefit that comes from economy in pro duction." Congress tried it.. The over whelming part of the 1914 Con gressional debate on the Clayton bill concerned "predatory 'Price cutting," and resulted in Section 2, making it unlawful to discrimi nate in price between customers "where the effect may be to sub stantially lessen competition."

But in the next 24 years, that is, until Section 2 was rewritten by the Patman Act, the number of such cases brought under Section 2 was negligible. Price cutting, for any purpose, costs money. To consider its profitability, apart from its morals, the simplest way is to look at it as though through a banker's eyes. How much will it cost? and just how are you going to profit from it? Like a military war, no one knows how severe a commercial price war may become. But one thing is pretty certain; while it lasts, the big company on the offensive will be losing more money than the little one on the defense. Meantime, the small com peti tor, instead of scaring, may close down for a while and let Mr. Big go on losing money. And even if the small firm goes broke, there's only a slim chance that the 1967 ANTITRUST AND THE FEAR OF BIGNESS 377 big one can take over its business for nickels. If the big firm is shooting for a monopoly, some body may buy up the bankrupt property for its scarcity value; but if the big competitor is just one of many, it may shoot its deer but then see one of its competitors get the carcass.

But just suppose the big com peti tor does win. Then how does he recoup his losses? By raising prices to a normal level ? That will take a long time. By raising them to abnormal, above-market levels? That is an invitation to outsiders to come and join the fun. Of price wars today, the most conspicuous and colorful are those in gasoline. They do not fit the predatory-pricing legend at all. They are started by sellers of all sizes, whose calculations have but one thing in common - a belief that they have some advantage, in novation, improvement, or low cost supply source that will enable them to come out ahead. Of the predatory-pricing notion, a gaso line marketer some years ago made the classic comment: One of the fallacies often advanced is that so-called leading marketers reduce prices to drive out competition so that they may later enj oy a monop oly. Tha t is like trying to sweep back the ocean to get a dry place to sit down. Competition is impelled by impersonal forces that never scare, and never hesitate for long, and would move in immediately when prices were restored - offering little oppor tunity for a single marketer to recoup his losses.

As a practical matter, selling be low cost to drive out a competitor is a sure road to bankruptcy. The notion of long-time gains to be made by short-time price raids in geographic markets has numer ous variations in other kinds of markets. One was quoted above "the cutting of the price of some one variety of goods which a rival makes, in order to ruin him." There are many others. Any com pany making diversified goods, selling to diversified customers, or having some vertical diversifica tion, may be charged, at some point in its business, with using its "power" to sell at "unfairly low" prices with competitive malice aforethought. Such allegations are frequently compounded with the even more fanciful notion that losses in one product line, customer category, market division, or vertical stage of a business mayor will be in definitely "subsidized" from the others. The preposterous findings against A & P in the 1940's were a striking instance; but such thinking now permeates the F.T.C.'s antimerger cases (though not present in the Clorox case) .

378 THE FREEMAN June The fact is that no well-run profit-seeking management main tains any marketing operation, product line, customer classifica tion, or vertical stage of output any longer than it holds out a rea sonable prospect of yielding a worthwhile profit. In sum, the "unfair" or "uneco nomic" advantages of size in busi ness have been greatly overrated. Antitrust is sometimes called a form of "social engineering." If so, its theories about big-versus little competition are in much need of clarification. ~ A Thank-You Note To ALL BUSINESSMEN, much ma ligned for your exploitation, my thanks for the exploiting you have done to me. Without you I would still be doing my laundry in the stream and drying my clothes on a rock. Without you I would still be walking, or traveling astride a horse at best. I would still be weaving my own clothes, and never dreaming of "wash and wear." I would have to cook over an open fire in shells or some other nat ural substance.

Thank you for making possible the hospitals that have saved my life; the operating rooms and the anesthetic that make surgery pos sible. Thank you for so many things: my television, my radio, my lawn mower, and the ability to own a house because you gave me a job. I sit here at the typewriter you made available and look around me at all the things that would be missing if you had not been moti vated by profits or a problem to solve; my lights, gas, and indoor plumbing; my electric blanket, waffle iron, and dishwasher; my electric toothbrush, watch, and vacu urn cleaner. Thank you adver tising men for telling me of all the new products available. Dear businessmen, I thank you from the bottom of my heart for making my life easier and giving me the time to write notes like this. I could not have done all this alone; bless you for doing it. The books I read, my piano, my tape recorder were priced low enough because you were able to mass-produce them. The money you have made, my friends, you earned. ~ PATRICIA CARNEY, a freelance writer in California A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN NEVER END RAYMOND MOLEY, who recruited the original Brains Trust for Franklin D. Roosevelt, broke with his boss in 1936 "without rancor or incident" because he feared the "hobgoblin atmosphere" that had developed in New Deal circles. He had learned much, and changed many of his own opinions, in the course of serving a consummate politician who, as he thought, had come to enjoy power too much for its own sake. Now, after thirty years, he tells the story of his four years with FDR in a fascinating and somewhat ambivalent book called The First New Deal (Har court, Brace and World, $12.50).

The implication of the title is that there were many subsequent New Deals, most of them COlD.e downs from the one which, as Moley puts it, "saved capitalisTIl in eight days." The Moley history of the first of the Rooseveltian ad ventures in quarterbacking is marked with what Professor Frank Freidel describes in a foreword as "respect for the facts and ... precision in handling details." Moley himself pays tribute to his assistant, Elliot A. Rosen, who spent five years examining Moley's own papers and those of "many contemporaries in various deposi tories." After Rosen had completed his work, Moley spent "nearly three years" on his own written account, doing a good deal of ad ditional research. The result, as he says, is a "story," meaning that it is history as it appears to one who played an intimate part in the unfolding of great events. Ray Moley's character is com plex, and his long life has been 379 380 THE FREEMAN June spent in the pursuit of truth. To quote Lytton Strachey, he is "no striped frieze, he is shot silk." He grew up in the Western Reserve area of Ohio in the years following the big depression of the nineties, when the ideas of Henry George were percolating in the minds of Moley's fellow Ohioans, Mayor Tom Johnson of Cleveland, Brand Whi tlock, and Newton D. Baker.

As part of the Progressive Move ment, Moley shared some of its mixed motives, wishing to com bine free enterprise with surveil lance and control by the state. No trust-buster, Moley was impressed by the thinking in Charles Van Hise's Concentration and Control, which argued that large corpora tions were inevitable and "should be controlled at the national level of government." This put him at odds with Justice Brandeis and Felix Frankfurter, and his de parture from the Roosevelt entou rage in 1936 came at a time when the Frankfurter influence was in the ascendant. The "second New Deal," which featured the TNEC investigations, the attempt to pack the Supreme Court, and the witty fulminations of Thurman Arnold against monopoly, was certainly not to Moley's taste. Moderation in All Things However, as his reflections on the "first New Deal" make plain, he now thinks that the attempt to "control" business at the "na tional level" can be as pernicious as Brandeisian trust-busting.

Moley still defends the early Roo seveltian measures on the prag matic ground that something had to be done quickly to revive the confidence of a badly shaken na tion. Since the object was achieved, the impact of the so-called "hun dred days" that followed Roose velt's first inauguration was in his opinion good. The trouble, as he now sees it, is that Roosevelt didn't know when to relax. Poli tics led FDR to make a whipping boy out of the "economic royal ists" during that 1936 campaign. But there was little need for the superheated rhetoric; Roosevelt had his victory in the bag anyway. Moley denies that the early New Deal was "homogeneous." The idea was to push action "on many fronts" in order to gain a "psy chological effect." Some of the measures were designed for re lief, some for recovery, and only one or two, such as the TVA, were for reform. The hope was that a climate would be created "in which natural forces would assert themselves." A passive Adminis tration, says Moley, never would have succeeded.

In short, as Thurman Arnold put it in his cynical Folklore of Capitalis1n, any action was better 1967 NEW DEALS NEVER END 381 than no action. Hoover had failed to comprehend. this, and so the country turned on him. To Whom Credit Is Due Moley's book is wholly objective when it comes to distributing the credit for the "first New Deal." The closing and opening of the banks was carried out in accord ance with a script written by Herbert Hoover's own Treasury officials, Secretary Ogden Mills, Undersecretary Arthur Ballantine, and acting Comptroller Francis Gloyd Awalt. It was Awalt who determined which banks were sol vent, which were insolvent, and which reflected doubt. If Hoover hadn't wai ted on Roosevelt to move in the banking crisis, he might have gotten credit for sav ing the day, for his own officials had shaped all the tools which Roosevelt and his first Secretary of the Treasury William Woodin promptly put into use.

Moley was a Roosevelt agent and emissary in London at the great international economic con ference that flopped so badly. His account of the failure shows Roo sevelt at his worst. The American delegation was supposed to work out a compromise on international stabilization that would give some thing to the "gold" countries yet permit American domestic price levels to rise toa point that would save the nation's debt structure. But, after letting Secretary of State Cordell Hull and British Prime Minister Ramsay MacDon aId labor under the illusion that something might come out of the conference, Roosevelt finally de cided to throw the "bombshell" that wrecked the whole affair. Roose velt, says Moley, was in pursuit of "that old phantom, a commodity dollar." While Moley believed, with Roosevelt, that domestic re covery was the more important issue in 1933, he considers that the President's rejection of a com promise declaration on interna tional monetary stabilization was "unwise, capricious, and, in form and substance, economic non sense." Ray Moley was not for the commodity dollar.

Nor, as it turns out, was he for a permanent NRA, or for per.. manent involvement in central planning for agriculture. In the NRA, Administrator Hugh ("Iron Pants") Johnson fell victim of his own optimism. Moley argues that "Roosevelt might best have ter minated NRA" and permitted the "old forces of competition," which "despite their often ugly mien are the lifeblood of progress," to take over. Similarly, the AAA idea of crop limitation was not designed for the ages. It had a short-term practical validity in the depressed years of the early 382 THE FREEMAN June thirties. But modern agricultural practices, with new fertilizers, new insecticides, and new machin ery, make voluntary crop limita tion a will-o'-the-wisp. For that matter, if there had not been the Dust Bowl conditions in the mid dle thirties, even temporary crop limitation would probably have failed. The Parting of the Ways l\loley came to reject Roosevelt because he felt the Democratic Party was changing to become an instrument of class war. "I was a conservative by instinct," says Moley. In his early days as a col lege teacher he believed that the two political parties should rep resent sharply different philoso phies. But after his Washington experience he decided that a blur ring of lines could help keep the nation from being torn apart.

Originally he had accepted Charles Beard's theory that the Constitu tion had been made by and for a selfish propertied class. But after working with congressmen and with departmental administrators he "rediscovered the Constitution as its makers had designed it." He went back to James Madison, who knew that "ambition must be made to counteract ambition." With war brewing in Europe, Moley thought that Roosevelt's revival of "internationalism" would "shake our constitutional fabric at home and imperil the liberties of our people." This hasn't happened as yet, but if the cycle of wars continues the U.S. may yet be bled white. Finally, Ray Moley decided that there must be "freedom" for billions of individ ual decisions in the marketplace. Roosevelt, he came to realize, just didn't understand modern indus try's need for a "diffusion of de cision-making." So Moley, who had believed in Van Hise's Concentration and Control, bowed out of the Roose velt party. The party, as he says, had left him. But there is more to it than that. The truth is that Ray Moley had really learned something by his experiences. The centralizer had become something of a libertarian. FREEMAN readers should arm themselves by taking note of Ray Moley's intellectual odyssey. ~ ~ DEEPER THAN YOU THINK by Leonard E. Read (Irvington-on Hudson, New York: Foundation for Economic Education, Inc., 1967, 208 pp., $2.00 paper; $3.00 cloth).

Reviewed by Alexander Evanoff, Professor of American Studies, De partment of English, Indiana State University. MOST LIBERTARIANS are political economists. Leonard Read has a 1967 OTHER BOOKS 383 third interest - Religious Philoso phy. Deeper Than You Think opens with a "Prologue" and closes with an "Epilogue" and both are invo cations and pleas to Self-Action, Self-Direction. Between the' Epi logue and Prologue is a treatment of macro and micro economics, a formula for happiness, a delightful exposition of economics for boys and girls (as useful for me as for the young); a moving exposition on pride. He treats of the origins of power, the origins of knowl edge; the limits of political action; the limitations as well as the pos sibilities, of men (Utopia can never come Now because the per fectibility of Men can never come Now) ; the source of ideas; altru .. ism, self-interest; poverty and impoverishment of the soul; giving and owning (nothing can be given which is not first of all acquired) ; and the Myth of Federal Aid. His subject is Freedom, Man, God, Government, Politics, Economics, and Teaching. And he is not abashed by the word God and not ashamed to use it. The impetus and drive of the book is to in spirit and to motivate others to self-discovery; there is no pro pensi ty to make car bon copy Leonard Read's.

Mr. Read's expositions possess both simplicity and profundity. And each exposition is carried down (or up) to first causes. His treattnent of economic problems is lucid and uncompromising: "I honestly believe that TVA and mail delivery, for instance, should be turned over to private owner ship and operation, that labor unions should be divested of the right to use coercion in any form, that medicare, compulsory social security, and a host of other so cialistic programs should be abol ished forthwith." Deeper Than You Think is an impressive collection of ideas which I assume may often be as mystifying to some libertarians as to the occasional welfare-statist who may accidentally encounter them. Leonard Read's pronounce ment that "regardless of preten tions to the contrary, only now and then can a person be found who does not advocate some coer cion for a laudable end" is most discreetly and politely intended to apply to libertarians as well as to the something-for-nothing "lib eral." The tendency to coercion, though perhaps weaker among libertarians, is surely not entirely absent, and this tendency Leonard Read links to pride and the Golden Intellectual Calf of one's own cre ation. Read is attempting to teach the most difficult of all things to teach: the methods of self-growth, self -developmen t, self -evolvement, and many of the corollaries req uisite to that end, e.g.: (1) A 384 THE FREEMAN June free market. (2) The freedom of choice on which all growth de pends, and the blessed privilege of blundering from which a pa ternalistic government would al truistically deprive us. (3) The existence of a Divine Source which we must seek to understand and unite with more fully, and on which all depends.

The author understands and would seek to make understand able that all beliefs and all ideas which one may hold are only a measure of one's own growth and development. "As the Eye is formed so it sees." And a pint measure will never hold a quart no matter how much one pours into it. And it is as useles's a~ro· ceeding to berate a pint measure for being a pint measure as it is to glory in one's own capacity for a greater measure, because all "measures" are, in the nature of things, abysmally limited. To glory in one's own possession of Absolute Truth and the superi ority of one's own Vision is as if the Finite and Limited were to assume it could encompass the In finite and the Unlimited. The In complete is incapable of Ultimates and Absolutes; it is not itself an Absolute or an Ultimate. All men are Incomplete and on their Way, and all their institutions are im permanent and incomplete scaf foldings toward greater and more perfect achievements. Eternal growth, evolution, and develop ment are posited.

In almost a hundred different changes and variations, Leonard Read affirms: (1) That the truth a man holds is a measure of his development. (2) That one can not insert truths where the req uisite development does not exist. (3) That if the requisite develop ment does exist one cannot give anything to anyone which the individual does not already pos sess in some degree. It would ap pear that the "truth" need only to be spoken to be believed. If the "truth" is not believed or not ac cepted, then either such a truth is not atruth or a "truth" not presently intended for the indi vidual' or nation to whom it is offered. Everything awaits ripeness. Nothing of value can be en forced. Leonard Read would probably agree with William Blake that it is impossible to the thought of man to conceive a thing greater than itself; and if a man aspires, he aspires to a more perfect reali zation of the highest in him, and the highest in him is Divine. Wil liam Blake has said that "God becomes as Man is in order that Man may become as God is."

Deeper Than YOtt Think is a good book; but extremely difficult to review in a short space. ~ THE FREEMAN JULY 1967 Vol. 17, No.7 ~ To bring forth the best from one's fellow men is the quality of leader ship William Henry Chamberlin would have us learn from the late Konrad Adenauer p. 387 ~ And police officer Jack Morano is suggesting much the same thing in his tribute to a worthy American ............ p. 394 ,v Admiral Moreell also pursues that theme as he traces the relationships between business affairs, social prog ress, and the religious life of the American people p. 399 ,v Henry Hazlitt has said before, but doubtless will need to remind us again and again, that more inflation is no cure for earlier monetary madness p. 414 ~ "Is freedom worth the candle?" is the question all of us are asking and which Dr. Jack Schreiber here examines in depth p. 416 ~ Last month, George Roche outlined the history of the use and abuse of political power; now he explores in greater detail some of the modern manifestations p. 420 ~ One of those manifestations, of course, concerns labor union policies and practices; and these, as Lawrence Fertig shows, mean more inflation ............ p.430 ~. Many of the modern political power plays seem to historian Clarence Carson to be a reversion to feudalism - without the stabilizing effects such measures afforded in earlier times ............ p.432 ,v Brent Bozell's study of The Warren Court spices the pages of "A Re viewer's Notebook" this month ............ p.445 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

JULY 1967 LEONARD E. READ PAUL L. POIROT Vol. 17, 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 goYernment, founded in 1946, with offices at Irvington-on-Hudson, New York. Tel.: (914) 591 7230. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, InCluding THE FREEMAN, are met through voluntary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are in vited in any amount-$5.00 to $10,OOO-as the means of maintaining and extending the Foundation's work. Copyright, 1967, 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; 10 for $2.50; 25 or more, 20 cents each.

Any current article will be supplied in reprint form upon sufficient de mand to cover printing costs. Permission is hereby granted to reprint any article from this issue, providing customary credit is given, except "A False Remedy" and "Labor Union Demands Mean More Inflation." Microfilm copies of current as well as back issues of The Freeman may be purchased from Xerox University Microfilms, 300 N. Zeeb Road, Ann Arbor, Michigan 48106.

Wide World Photos GERMANY has lost one of her greatest statesmen. Konrad Ade nauer faced problems far more difficult than those which con fronted Bismarck. As the remains of the 91-year-old Chancellor were consigned to the soil of his native Rhineland, the German Republic mourned the loss of its founding father. He was the individual to whom she mainly owed her rapid return to political and moral es teem and economic prosperity after the fearful ravages of Hit ler's dictatorship and the Second 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 MEMORIAM: KONRAD ADENAUER WILLIAM HENRY CHAMBERLIN World War. America and West ern Europe had reason to lament the loss of a stanch friend and ally. And the world is poorer for the loss of one who cherished and embodied some of the finest values of nineteenth century civilization.

In the personality and career of Konrad Adenauer, a career which began after those of most of his contemporaries were fin ished, the man and the hour met with singular appropriateness. It is an old German legend that the famous twelfth-century Emperor Frederick Barbarossa is not dead, but sleeping in the heart of a magic mountain, from which, at the time of Germany's greatest 387 388 THE FREEMAN July need, he will emerge as his coun try's savior and preserver. Al though free entirely of the ex treme racist nationalism of the Nazi era, Adenauer has made this legend come true. He combined some of the best qualities of the Old Germany - devotion to duty, willingness to work without stint or limi t - with a keen and just appreciation of the position, needs, and limitations of the New. In order to appreciate the mag nitude of Adenauer's achievement one must think of Germany, not as .the busy, prosperous land of today, but as the broken, prostrate country of the first postwar years.

Large parts of her cities were great masses of rubble. Her cur rency was worthless. The country was divided into four zones of occupation. Her people were re duced to a near-starvation diet and deprived of hope to improve their condition in the future by harsh restriction on what Ger many was supposed to produce in steel and other industrial goods. Reasonable Goals When German self-government, with many limitations and restric tions, was restored in 1949, Ade nauer took over as the first Chan cellor, or Prime Minister. He set himself a few clear and simple goals, all of which, with one ex ception, he realized with remarkable speed and success. A true conservative, in the best sense of the term, he abhorred commu nism as he had detested Nazism. (Hitler deposed him as burgomaster of Cologne, and he spent part of the Nazi era in prison or in hiding). Putting aside any idea of try ing to playoff the victorious powers against each other, the Chancellor committed himself to wholehearted cooperation with Western Europe and the United States. He recognized that Ger many could regain freedom and prosperity only as a part of a larger Europe, with the backing of the United States.

A second foundation stone of Adenauer's policy was belief in freedom as the key to economic recovery. So he gave his Eco nomics Minister, Ludwig Erhard, a free hand in sweeping away ra tioning, controls, the whole net work of bureaucratic regulations which had grown up under Nazi rule and had been more or less mechanically continued under Al lied occupation. This wager on free economic enterprise was not simple or easy. There were loud outcries of pro test from the socialists who fur nished the main opposition to Ade nauer. Erhard was denounced for permitting imports of luxuries like cigars and foreign fruits and 1967 IN MEMORIAM: KONRAD ADENAUER 389 vegetables while many Germans lacked an adequate supply of ne cessities. American and British economic officials, many being of I{eynesian persuasion, were horri fied. But the experiment in setting Germany's course on a free mar ket economy worked so well that it ceased to be called an experi ment and was referred to as "the economic miracle." As Erhard had foreseen, with Adenauer's approv al, unrestricted imports paved the way for ever larger exports, re gaining and improving Germany's position in the markets of the world. At the same time the in flow of foreign goods created in centives for harder work and a competitive spur to make the re viving German industries improve their quality of output.

A third basic trai t of Ade nauer's policy was the determina tion, as soon as possible, to honor Germany's foreign financial obli gations and compensate the sur viving victims of the Nazi terror against the Jews. Prewar bonds that had been virtually repudiated by Hitler were again honored and punctually redeemed. Large sums were allotted for compensation to individual Jews for their losses and a payment of a lump sum of about $800 million to the state of Israel. These payments were pos sible because Erhard's free econ omy had transformed former deficits in the German balance of in ternational payments into substan tial surpluses. The Straight and Narrow The Social Democratic leader in the first years after the end of the war, Kurt Schumacher, sneered at Adenauer as "the Chancellor of the Allies." But Ade nauer, a most patriotic German, was anything but a foreign pup pet. He reckoned, and correctly, that a reputation for straightfor ward dealing was one of his best assets for bargaining for the grad ual but steady lifting of economic prohibitions and restrictions that had been created for Germany after the end of the war and cessation of the vindictive policy of dismantling German industry.

One by one the restrictions came off; the dismantling ceased; and by 1955, equality and sovereignty for the German Federal Republic were accomplished facts. Of course, the German upward climb to economic well-being was not exclusively the work of Kon rad Adenauer. The intensive work of the whole German people was a big factor. Yet, it may be doubted whether any other statesman could have guided the first steps of the young Republic with such a sure and unerring eye for what was possible, and when. Even the faults and limitations 390 THE FREEMAN July which Adenauer's opponents de nounced were helpful in his role of restoring the regime of parlia mentary democracy that had been abolished by Hitler. One of the Chancellor's closest collaborators once said to me in Bonn: "Ade nauer is the same man we knew before the Nazi period, when he was burgomaster of Cologne, very hardworking, looking out for de tail, intolerant of opposition, very sure he is right."

A Firm Hand Adenauer knew every trick in the political book and was not averse to cutting corners to achieve his ends. His methods of admin istration were brusque, not to say dictatorial. But the German people instinctively wanted and psychologically needed the sense of a firm hand at the helm of the ship of state. A reversion to the multiparty wrangling and bar gaining of the Weimar period would have been disastrous. Ade nauer's conduct of affairs was vin dicated by three successive elec tion pluralities and majorities, in 1949, 1953, and 1957, each more impressive than its predecessor. He was probably at the height of his popular prestige in 1957, when his party, the CDU (Chris tian Democratic Union), won a clear maj ori ty over all other par ties. There was a slight setback in 1961, when he obtained a plu rali ty, not a maj ori ty. This has been attributed to the shock caused by the unopposed erection of the Berlin Wall.

An even more enduring testi monial to Adenauer's political leadership was the change of front which his repeated victories imposed on his opponents, the Social Democrats. They had begun by attacking Erhard's free market economy and by resisting bitterly the build-up of German armed forces within NATO. But their actions of the past decade on both these issues amount to an admis sion that Adenauer had been right. In their Bad Godesberg program, adopted after the Ade nauer electoral sweep in 1957, they accepted the free market economy and practically tossed their founding father, Karl Marx, out of the window. And, convinced by repeated rebuffs in Moscow that the Soviet government was absolutely averse to German re union in freedom, they endorsed German rearming within the framework of a Western alliance. So, even after Adenauer, at the age of 87, retired from his post as Chancellor, which he had held for 14 years, his main policies prevailed on a basis of general popular acceptance. Still another political success may be chalked up for him. Before the First 1967 IN MEMORIAM: KONRAD ADENAUER 391 World War and during the Wei mar Republic, German political parties had been organized along class, religious, and regional lines.

Adenauer's Christian Democratic Union was created on a broader basis, including Catholics and Protestants, industrialists, work ers and farmers. It was a party that tried to attract all groups in the population. So long as the Social Democrats tried to keep on with their traditional appeal to the industrial workers, more or less ignoring other groups, they went from defeat to defeat. So, in self-preservation, they recast themselves in the image, not of a class party following Marxist lines, but as a "people's party," offering mildly left-of-center alternatives to the equally mild right-of -center policies of the CDD. Unification of Germany: An Unfinished Task One goal Adenauer failed to achieve: the reunion, in freedom, of his country. But this goal was not within the reach of any Ger man statesman. Given the deter mination of the Soviet Govern ment to maintain its puppet re gime in its zone of military occu pation, free elections and free in stitutions for all Germany could ha ve been obtained only by war or threat of war - a risk which Ger many's Western allies were unwilling to take. Even the Social Democrats, who clung for a long time to the hope that German re union might be bought at the price of political and economic concessions, were finally brought reluctantly to realize that the only kind of United Germany which would be satisfactory to the Krem lin was a communist Germany.

If Adenauer could not achieve reunification, he did the next best thing. He created in the German Federal Republic a society so strong, stable, and prosperous that it served as a magnet to the op pressed Germans in the East, at tracting every year hundreds of thousands of refugees, until the barbarous wall of separation was erected in 1961. There will be no doubt as to which of the sundered parts of Germany will take the lead if some unforeseen shake-up in world politics would make re unification a practical possibility. To have met Adenauer as I have and seen him dominating debate in the Bundestag, not by flowery oratory, but by cool, precise, logi cal argument, gives an unmistak able impression of an uncommonly powerful personality. One would have to go back to Bismarck to find his equal; and Adenauer's mission of the restoration of a wrecked Germany was more diffi cult and delicate than Bismarck's welding the other German states 392 THE FREEMAN July into union around a powerful Prussia.

Classical Traits Adenauer lived for a quarter of a century in the nineteenth cen tury and both his grave courtli ness of manner and some traits of his personality reflect its in fluence. His tastes in music and art were classical. The slogan with which he won one election, "No Experiments," held good for the cultural as well as the politi cal and economic fields. Yet, there was an element of daring experi ment in staking Germany's fu ture on applying economic princi ples which are contemptuously dis missed in some "advanced" circles as "the conventional wisdom." Certainly, few experiments have been attended by such resounding success. It is not surprising that the old Chancellor was not highly es teemed by German intellectuals; the lack of comprehension and sympathy was certainly mutual. But Adenauer's guiding moral and political principles, although few and simple and unsophisti cated, served him well, especially in the brilliant climactic phase of his career. He knew very well, for instance, the value of honor and the pledged word; and he knew the difference between right and wrong.

This is why he went forward from one success to another, when a more superficially brilliant man, with more complex impulses, might have faltered and failed. The fact that Adenauer's goals were few and clearly shaped in his mind helps to explain his amazing physical vitality and resilience at an age when active life, for most men, has ceased. Adenauer's abil ity to outwork and outlast much younger subordinates was legen dary. When protocol required, he could stand in hot sun or pouring rain, erect, unbending, showing no signs of fatigue. A German junior diplomat told me of an ex perience with Adenauer when he was visiting Paris. The young diplomat had been given the task of seeing the old statesman to his hotel room after a day of gruel ing and exacting receptions. When the diplomat escorted Adenauer to the elevator the latter turned and, with a note of con cern in his voice, said: "Please don't trouble to come to my room. You look tired; go home and try to get some sleep."

Konrad Adenauer was a great German and a great European, a man uniquely qualified for the leadership of his country in the arduous years of recovery from the shambles to which Hitler and his crazy philosophy had reduced the country. He was not a cosmoIN MEMORIAM; KONRAD ADENAUER 393 politan figure; he was not fluent in any language but German. But his judgments in international affairs were ripe and sound; there was no more devoted a champion of the ideal of a united Europe, backed by the United States. On the new Germany that has risen like a phoenix from the ashes and rubble left by Hitler, he placed the stamp of his powerful personality in many ways. The gathering of distinguished foreign statesmen at his funeral was a tribute both to the man and to the state which he helped so much to build. The principal thoroughfare of Bonn, the Koblenzerstrasse, so often traversed by the Chancellor on his way to his headquarters in the Schaumburg Palace, has been appropriately renamed Konrad Adenauer-allee and his memory will doubtless be honored in other German cities. But Adenauer'g best monument would be panor amic views of Germany as she was when he took office, in contrast to what she was when he retired four teen years later. ~ Martin Van Buren ALL COMMUNITIES are apt to look to government for too much. Even in our own country, where its powers and duties are so strictly limited, we are prone to do so, especially at periods of sudden embarrassment and distress.

But this ought not to be. The framers of our excellent Constitution and the people who approved it with calm and sagacious deliberation acted at the time on a sounder principle. They wisely judged that the less govern ment interferes with private pursuits the better for the general prosperity. It is not its legitimate object to make men rich or to repair by direct grants of money or legislation in favor of particular pursuits losses not incurred in the public service. This would be substantially to use the prop erty of some for the benefit of others. But its real duty-that duty the performance of which makes a good government the most precious of human blessings-is to enact and enforce a system of general laws com mensurate with, but not exceeding, the objects of its establishment, and to leave every citizen and every interest to reap under its benign protection the rewards of virtue, industry, and prudence.

From a Special Message to Congress, Sept. 4, 1837 Epitaph for A PATRIOT JACK MORANO A FEW MEN probably hated Pop. They were workers he had caught stealing G. 1. rations from the Army depot where he was a guard during the Second World War. He had a special knack for catching them "waltzing out," as he put it, with hams, legs of lamb, and other products or equipment stuffed un der their jackets. It wasn't getting caught that bothered them so much as it was what Pop would tell them in the process. "You bum!" (He said it in a way that went right through you, never jokingly. Calling peo ple names was no joke to Pop.) "Don't you know that some G. 1. is lying in some stinking fox hole praying for that? Hope to God it's never your son!" No one else could say anything Mr. Morano is a member of the New York City Police Department. 394 like that without sounding corny. But Pop couldn't be corny if he tried. And he never tried. His words were entirely spontaneous.

And he meant everything he said. What he said came from a terrific pride in America. Pop was a super patriot. He would never have un derstood that the term is meant to be an insult now. To him it would have been the highest compliment. If you of the new generation find this hard to believe, please hear me. He was no square. He and his kind made the twenties "roar," real swingers in the literal sense of the word, sampling all of life to the hilt but getting their biggest kicks from courage. These were the men of World War I who were proud to be "over there." Mom screamed as the rifles cracked over his grave that cold February day at Pinelawn Nation1967 EPITAPH FOR A PATRIOT 395 al Cemetery. When the platoon leader of the burial detail handed her the flag that was draped on his casket, she buried her face in it and sobbed, "That's all I have left - a flag. But that's how you wanted it, Lou, wasn't it? To go out like a soldier - wrapped in a flag." (And how better to remem ber Pop! For years, at his insist ence, we had been the only family in the neighborhood with a full sized American flag smack in the living room.) I didn't shed a tear.

That is the way he wanted me to be - soldier like. But, today, I can't watch a parade without bawl ing like a baby. It isn't because of the many pa rades I had watched with him. Not because he was forever pointing to the flag and saying, "Here it comes, kid - Old Glory! Isn't it beautiful?" It's because I can't help remembering Pop's walk. He didn't just walk - he marched. Not an arrogant, chauvinistic march, but a happy, proud-to-be-alive and fr-ee type of march. You could spot him in a crowd a mile away because of it. He looked like an Italian James Cagney. "Here comes your Pop," Mom would say. That walk displayed a bold pride, and also concealed the meanest scar you ever saw. A German Heighty-eight" fragment had passed through his thigh, taking half of it along on tlie way out. That he hadn't the slightest limp was beyond understanding. "I knew I was going to get it," he confided to me as a boy. "I had made a promise to St. Joseph that if he got m~ out of the last show [battle] alive I would say a prayer to him every day. He kept his part of the bargain but I didn't. So I knew one of those ashcans [artil lery shells] had my name on it."

The force of the explosion hurled him against a tree in the Argonne forest. Not only was he wounded severely, but he and his buddies had another problem. They were caught in a trap. Completely sur rounded by Germans and cut off from the main American force, they were the "Lost Battalion." His sister still has the letter from the U. S. Government regretfully informing her, "Your brother Louis Morano was killed in ac tion." But these soldiers were very much alive, as the Germans were to discover when they sent in a captured dough-boy bearing a beautifully-worded surrender re quest: "You must be very proud of this soldier. He has refused every question put to him and will only give us his name, rank, and serial number. But we can hear the cries of your wounded from our lines. We beseech you on their 396 THE FREEMAN July part, for the sake of humanity, there is nothing to gain by resist ing further. Surrender and let us treat your wounded."

The American commander read the note aloud to his men. They spared him the agony of making the decision. In direct contrast to the eloquence of the note, they yelled back in their own "Hell's Kitchen" terms, "Come and get us, you Dutch bastards." The rest is history. The Lost Battalion held out until an Ameri can relieving force was able to break through and rescue them. And Pop was soon home. Home was the East Side of New York City, "where some of the worst hoods and finest men grew up side-by-side," Pop would say. lIe had a strong conviction that "it doesn't matter where you're from in this country - only where you're going. So long as you have the guts." He told me how most of the "wise guys" and "fast buck guys" he grew up with were now either behind bars or "standing in the East River with cement shoeshines." And when he noted my amazement at how casually he mentioned big-name Mafia leaders who came from his neighborhood, he reassured me, "The Mafia is nothing to worry about, kid. They only push those people who will let them. Like the poor old Italians who came to this country with a fear of them. But we're Ameri cans, kid, and no so-and-so is go ing to push us around." One of his favorite mottoes was the one printed on the old colonial flag, "Don't tread on me!"

How Pop resisted pushing was related to me by one of his World Vv'"ar I buddies. A Connecticut "hayseed" when she married Pop, Mom was ill at ease in the gang sterland of the lower East Side where they set up their first apart ment. Sensing this, he took her by the hand and marched down to the pool parlor across the street. This was the hangout for the local hoods. "Listen, you guys," he said. And all hands stopped in the middle of their games. "This is my wife, and our apartment is across the street. If I catch any one near her or it, I'll break his back." Mom got a wide berth from then on, and there was not one case of back trouble on the East Side. Eventually, the Moranos moved to Staten Island. One of my uncles, who couldn't read or write English, had eco nomic gumption enough to open a dress factory during the depres sion. Not only did he thus amass a small fortune, but also he put most of my aunts and uncles and a few cousins to work, my mother included. But even with both Mom 1067 EPITAPH FOR A PATRIOT 397 and Pop working, there wasn't enough to give mv sister and me the education they wanted for us.

So Pop began painting murals and backdrops for the local Catholic private school. The nuns in return gave us a break on the tuition. I didn't turn out to be the smartest kid in the school - my sister did; but I was the proudest. During the school plays, I would nudge the kids on either side of me, point to the scenery, and say, "My Pop painted that!" When we first moved to Staten Island, our neighbors felt sorry for Mom. They heard Pop's gruff, East Side voice and assumed he was a tough of some kind. But they soon knew better. Despi te his Bogart-like -exterior, he was a gentleman - and an intellectual. Indeed, most people he engaged in conversation (and he did this with total strangers) credited him with no less than a college education. But he had never finished gram mar school, having lost both par ents at age eleven. The extent of his self-education made him the informal "lawyer" of the neigh borhood. Relatives and friends w~r~ eonstnntly ringing the door bell to present Pop with their problems. He helped more people get their citizenship papers than has any nongovernment agency I've known.

One day, at the wedding of one of my cousins, the music stopped and the band leader announced: "The Japanese have bombed Pearl Harbor." Everyone was crying. I remember turning to Pop and say ing, "The Japanese? The Nazis? Can we beat them, Pop?" He grinned confidently and reassured me, "This country has never lost a war and we are not going to lose this one." Chauvinism? No one had more respect than he did for the militarism and resource fulness of the German people. Hadn't he fought them before? "But free men are still better fight ers," he told me. As I watched everyone of my cousins who was of military age (nine in all) march off to war, I couldn't help feeling deeply en vious. While Mom was thanking God that I was only nine years old, I was cursing my misfortune. I knew how to be a soldier. Hadn't my Pop taught me the manual of arms backward and forward since I was five? I even knew what Army chow tasted like; Pop al ways took us to the nearby Army base on "open house day" to eat in the mess halls. Why, at that age I could spot the technical er rors committed by Hollywood in the war movies. After all, I had fought through every World War I battle, vicariously, with Pop. I could even tell you how a German 398 THE FREEMAN July "eighty-eight" sounded on its way over. Like being under a bridge as a fast freight train passes over it. Right, Pop?

There was only one person who wanted "in" more than I did. The recruiting officer must have had his laughs when Pop walked in and tried to re-enlist. He was fifty at the time - to say nothing of his wound. Pop walked out dejected and muttering, "Pansies. You guys are pansies. In my show we were soldiers." So he had to be content fighting the battles from his armchair through the newspapers, explain ing every action to me. His Gods were Ike and Mac. Though tradi tionally a Democrat, he voted for Ike when he ran for President. Not because of his hero image either, but because Pop was a conserva tive Democrat. He never forgave himself for voting for Roosevelt, who had campaigned on a conserva tive platform. Pop died in February - the month of his birth, as well as that of two other great Americans. Un fittingly for a soldier, he died in bed, with his shoes off, in the Brooklyn Veterans Hospital. But he was surrounded as he would have liked, by veterans - some of them from his "show."

There was much weeping and wailing at the wake. But being of Itali an extraction accustoms one to that sort of thing. What broke me up was when Pop's Jewish buddy walked in. He strode past every one, and instead of kneeling at the casket in the Christian manner, he just stood there bowing up and down, tears streaming down his cheeks. It must have taken courage because most of the older Italians there probably didn't understand. He said to me as he was leaving, in a voice choking with emotion, "I never met a better American than your Pop." The tombstone at Pinelawn just reads, "Louis Morano, Company I, 307 Infantry, 77 Division, Febru ary 24, 1891 to February 15, 1955." That is the way Pop wanted it: "Army style - plain and simple." But no man who loved his country so much deserves to go without a more fitting epitaph. I hope this will serve. Forgive me, Pop. + Business Social Progress Religion BEN MOREELL IT IS a disturbing phenomenon of our times that those intellectuals who decry the accumulated wis dom of past ages and urge that we, discard the time-tested tradi tions and behavior standards of Western civilization are much sought after for places of distinc tion in many of our governmental operations, universities, founda tions, and similar institutions.

Those critics concede, somewhat re luctantly, that although our once respected traditions and stand ards may have been relevant, per haps even useful, in the days of Admiral Moreell, Civil Engineer Corps, United States Navy (retired), was organizer of the famed Sea bees of World War II, and served as Chairman of the Board of Jones and Laughlin Steel Corporation from 1947 to 1958. This article is from an address before the Industrial Information Institute, Youngstown, Ohio, October 27, 1966. the horse and buggy, they are outmoded and have no place in this jet-propelled era. In like-man ner, our "social engineers" assure us that our new-found knowledge of science, technology, civics, eco nomics, and human nature has left the ancient wisdom far behind. But there are some who dissent. As one who, over the years, has tried humbly to apply the lessons of history to modern problems, I am convinced that unless and until we are able to change the basic characteristics of human nature, the old virtues and values are still pertinent, perhaps even vital for our survival, in this modern age.

There is persuasive scientific evi dence that the basic nature of man has not changed for at least 4,000 years. 399 400 THE FREEMAN July The late Edith Hamilton, world authority on Greek and Roman civilization, pinpointed the issue several years ago in these words: "Is it rational that now, when the young people may have to face problems harder than we faced ... we are giving up the study of how the Greeks and Romans prevailed magnificently in a barbaric world; the study, too, of how that tri umph ended, how a slackness and softness finally came over them to their ruin? In the end, more than they wanted freedom, they wanted security, a comfortable life, and they lost all-security and comfort and freedom .... "Are we not growing slack and soft in our political life? When the Athenians finally wanted not to give to the State, but the State to give to them, when the freedom they wished most for was freedom from responsibility, then Athens ceased to be free and was never free again. Is that not a chal lenge ?"

Change, for Its Own Sake! In face of such questions, fre quently raised, it seems fashion able now to discard the old in fa vor of the new, presumably on the theory that change is inevitable, with its accompanying non sequi tur, that since all progress results from change, all change makes for progress. Many of us believe that the im position of untried theories and untested procedures on a dynamic society is perilous and that changes in such an organism should be evolutionary rather than revolutionary, on the premise that running a jet aircraft into a stone wall is not the best way to stop it! It· is significant that, in recent decades, the areas selected for at tack by those who would bring about drastic and immediate changes in the structure of Ameri can society have been, first, our basic religious beliefs, and second, the pri vate industry sector of our economy. The first is highlighted by the noisy and widely-publicized assertions of some theologians that God is no longer pertinent in this scientific age; in fact, that "God is Dead," and man has inherited His throne; weak, witless, sinful man, frequently unable to resolve the problems of .his own small household, but supremely confi dent of his competence to plan and direct the orderly functioning of the Universe!

The attack on the second area, private industry, is evidenced by the rapidly increasing pace of the socialization of all sectors of our economy. The entire country has careened toward socialism during the past 1067 BUSINESS, SOCIAL PROGRESS, AND RELIGION 401 half century. The Federal govern ment now engages in several thou sand businesses in competition with its own citizens, while pri vate business operates in an at nlosphere of governmental criti cism, hostile suspicion, restrictive controls, onerous taxation, and costly snooping by government agents. For several generations collec tivism has been edging over our landscape like a gigantic icecap. Its progress has been uneven, so some of us have been encouraged to think that we might escape per sonal disaster by securing a polit ically privileged sanctuary, that is, by "playing ball" with those momentarily in control of the polit ical apparatus of government.

But it is now clear that not one of us will save his skin unless there is a rebirth of freedom for all. Those two sectors of our social structure, religion and business, which have come under such heavy attack, are closely interwoven and interdependent. Together they have made great contributions to our social progress, and they hold enormous potential for the future. The Record of American Progress There are some who belittle American achievements. But a fair reading of the record reveals that our spiritual, cultural, and material progress in the relatively short historical period of our ex istence has been outstanding. I say this without boasting, aware that Americans cannot claim full cred it, as we are heirs to the great traditions, accumulated wisdom and skills of Western civilization. The Founding Fathers learned important lessons from Europe's mistakes, lessons which, unfortun ately, we now seem bent on un learning.

Spiritual and cultural progress are revealed by changes in individ uals. Thus they are not suscepti ble of statistical appraisal. But history has demonstrated that where the people are individually free, morally responsible, and self disciplined, there is a climate con ducive to spiritual and cultural growth. There is every reason to believe that America follows this historic pattern. However, there are valid yard sticks for measuring economic progress. Here is a nation with barely 6 per cent of the world's people which produces almost 40 per cent of the world's goods. Our people have no more innate intelli gence than the peoples of the coun tries whence they came. Our natu ral resources are no more abundant than those of many less prosper ous nations. Furthermore, they lay for centuries relatively unused, supporting fewer than a million 402 THE FREEMAN July inhabitants. Now they support more than 195 million of our peo ple, who, in turn, contribute im portantly to the support of the rest of the world.

A Conditional Response The progress achieved in America did not "just happen." It came about as the result of certain conditions established here many years ago by the Founders of our Republic. The· governmental system they initiated was founded on the be lief that there is a Supreme Be ing, whom we call God, who rules the Universe and from whom all power and all authority flow. Since all men are creatures of God, each of us is sovereign in his rela tions with all other men. Further more, each is endowed by Him with certain inherent rights which no one, not even a government which acts under authority of an overwhelming majority, can take from him without violating the moral law. These are the right to life, the right to liberty, and the right to accumulate, utilize, and dispose of one's honestly acquired property which, in effect, is the right to sustain his life. To as sure those rights our Founding Fathers established a government of strictly limited powers, which were to be defined by a written constitution, and which would safeguard certain basic freedoms, such as freedom of speech, of wor ship, of assembly, and others, in cluding freedom of economic en terprise.

Our political forebears held that in the exercise of his-God-given rights, each person is individually and morally responsible, his re sponsibilities being defined by such stern admonitions as the Ten Commandments, the Sermon on the Mount, and the Golden Rule. There is much historical evi dence to indicate that our Found ers were committed to the concept that there is a place for God in every area of Ame'rican life. Most conclusive, perhaps, is the state ment by a neutral observer, the gifted French scholar, Tocqueville, who after an extended visit to America in 1831, wrote: "... whilst the law permits the Americans to do what they please, religion prevents them from con ceiving, and forbids them to com mit, what is rash or unjust .... "Religion in America takes no direct part in the government of society, but it must be regarded as the first of their political in stitutions; ..."

The Preservation of Liberty We come now to this important question: What is the proper role of business and industry in the preservation and strengthening of 1967 BUSINESS, SOCIAL PROGRESS, AND RELIGION 408 those principles and practices which account for our incompara ble progress? Since we were conceived as a na tion of sovereign individuals, it is clear that we can improve our so cial structure only as the individ uals who comprise it improve themselves. Any attempt to im prove society by imposing im prov'ement on individuals using the coercive power of government is futile! The use of coercion to effect an alleged "good" destroys individual freedom of choice and erodes moral responsibili ty. It follows that the development by the individual himself of those positive personal traits which con tribute to a good society will re sult in a maximum furtherance of the higher ends of life, Le., schol..

arship, art, music, charity, and worship. Conversely, there are other personal traits which im pede or prevent social progress. Minimize Bad Traits The question is: Do the forces set in motion by business and in dustry tend to maximize the good traits and minimize the bad ones? Let us see how business can gen erate a climate conducive to in dividual character growth by counteracting such destructive forces as coercion, prejudice, and irrationality. 1. Coercion. The greatest enemy of human progress is coercive force which acts to restrict man's creative energies. There is agree ment among political philosophers that political action is coercive. What about business action: Is it coercive? Obviously, the' answer is "N0." The businessman, as such, has no power to coerce. He can not force people to buy his. goods or services. He' may call upon gov ernment for special privilege and thus obtain a coercive monopoly.

But by doing so he forfeits his status as a businessman and be comes, in part at least, a politi cian. The production and exchange of goods and services is a wholly peaceful process. A business so ciety tends to be a peaceful so ciety, if only because peace maxi mizes the conditions under which the production and exchange of goods are facilitated. And peace is essential for social progress. The businessman, having no means of coercion at his disposal, relies on education and persuasion. Since everyone at home and abroad is a potential customer, he must cultivate them. The peace ful exchange of goods and services throughout the world paves the way for exchange of ideas. This encourages travel and pers-OnaI contacts. So, on the whole, busi ness tends to reduce coercion in human affairs.

404 THE FREEMAN July 2. Prejudice. A man's judg ment can rise no higher than this acquaintance with the facts. Prej udice is a premature judgment based on insufficient evidence. As applied to human affairs, it im plies a dislike of some people based on their opinions, their national ity, the color of their skins, or their religion. What does business do about overcoming prejudice? The clear-cut answer is that, in this area, economic considerations should have first priority for the prudent businessman. In general, the businessman does not concern himself with the color of another man's skin - if the color of his money is acceptable. As an employer, the business man penalizes himself when he refuses to hire the best available man for the job because of some noneconomic consideration. His business sense dictates otherwise. The same is true when, as a seller of goods, he refuses to make a sale for other than economic rea sons. Thus, the mechanism of trade acts to break down the bar riers of prej udice.

3. IrrationaUty. In a good so ciety people act in reasonable, sane, and sensible ways, and busi ness disposes them so to act. Mod ern business rests on technology which, in turn, rests on science. Science and technology demand a high-level, rational pattern of thought and action. The scientist, the engineer, the business mana ger must all be rational. Thus, business contributes to the forces in our society which exert a strong pull in the direction of· rationality in human affairs. Maximize the Good Every reduction of coercion, prejudice, and irrationality affords more opportunity for creative in dividual development, which con tributes to social progress. The elimination of bad conditions might be said to establish neutral ground. Let us see what desirable positive trai ts are fostered by business. There are at least four important ones: integrity, under standing, reasonableness, and in dividuality. Let us examine each of these briefly.

1. Integrity. No society can co here for long unless people can trust each other. Nor can a busi ness long endure unless its prod ucts represent honest materials and workmanship. Regular cus tomers, an essential for survival of any business, cannot be at tracted and held without a quality product. Our entire system of de ferred exchanges and credit is based on trust. The enormous net work of mutual trust and confi dence which underlies our business system is a social force of great power and momentum, headed in 1967 BUSINESS, SOCIAL PROGRESS, AND RELIGION 405 the right direction. It makes for integrity throughout society. 2. Understanding. A hermit who grows his own food and pro duces for his own use consults only his own needs and tastes. But everyone who produces goods or services for exchange must consult the needs and desires of other people. The businessman must build a clientele. He cannot do this unless he understands the needs of his customers and causes them to feel that he can be trusted to fill those needs, now and in the future, for products they want at prices they can afford to pay.

3. Reasonableness. The vital stake which business has in peace tends to create situations in which men seek a reasonable adjustment of their differences instead of fighting about them. A businessman does not want conflict with his customers; he wants to persuade them to accept his goods. As the atmosphere of reasonableness begins to permeate all of society, people come to ap preciate the variety in human life. Instead of a desire to make other people over in their own image, they want every person to pro gress as far as his personal talents will permit. In a reasonable so ciety no man tries to play God for other men. 4. Individuality. To the extent that business and industry enable persons to take care of the economic requirements of life with a minimum expenditure of time and energy, increasing amounts of both are put at their disposal to be used in whatever individual and creative ways they see fit. Not every person will use them wisely, but if the surplus does not exist, if people are bound down by un ceasing toil, there can be no flower ing of those higher faculties which I have mentioned. Thus, business provides the essential condition which can release whatever po tentiality individuals may possess.

Creative forces Released So we see that business serves people directly by being the most economic instrument for provid ing goods and services. And in noneconomic matters business is a useful servant to society as a whole, because it releases forces which make for integrity, under standing, reasonableness, and indi viduality. It is generally conceded that an individual is most productive when he has a maximum of freedom from restraint, whether his en ergies find an outlet in religion, in writing, or in thought, or whether he is engaged in the pro duction and exchange of goods and services. And, as a matter of fun damental principle, there is no more warrant for attempting to 406 THE FREEMAN July clamp political controls on man's energies in his shop than there is to place his energies under politi cal control in his church, his class room, his editorial office, or his study. If freedom is good in any of these places, it is good in all of them!

Attempts of Protectionism What can we say about business and politics? There have been few businessmen who have not, at some time, found themselves with goods and services on their hands, but no market. This does not look good on the books, but business is a profit and loss system. If a busi nessman finds this happening to him regularly he'd better stop making high button shoes and get in. step with current fashions. On purely business calculations he would either change his product in accordance with the demands of the market or go out of busi ness. But there are other calcula tions, unfortunately not always so pure. Up to about a century and a half ago, the businessman who wanted to keep making high but ton shoes, or their equivalent, when the market called for satin slippers, would go to the king and get a royal grant of monopoly. This would decree that no one else in the kingdom had permission to make shoes of any kind, which meant that those who wanted satin slippers could wear high button shoes - or go barefoot. The sys tem was called mercantilism, and by royal patents, licensing, and controls it set up a network of restrictions and made business a a branch office of the crown.

It was easy for the intellectuals of the sixteenth, seventeenth, and eighteenth centuries to see what was going on: the king and his favorites had a monopoly on all business and industry, which they were throttling with their con trols. In France, in the latter part of the seventeenth century, Col bert, Minister of Louis XIV, asked the manufacturer Legendre, what the Crown could do to help busi ness. The answer became famous. "Laissez nous taire," he replied, "Just let us alone." It was obvious that if the king and his henchmen were stifling business and keep ing people in poverty, the remedy was to put the king in his place. And this was eventually achieved. But the producer-politician al liance did not cease when monarch ies gave way to republics. In every age and in every political arrange ment there are some who try to keep producing goods for which there is no market, as witness our costly farm program of the past three decades. Such people are putting human and natural re sources to wasteful use. The usual 1907 BUSINESS, SOCIAL PROGRESS, AND RELIGION 407 penalty for not using resources as the free market demands is to be forced out of business to make way for someone who will use the resources economically.

Democracy of The Market The free market place is a true democracy. Every dollar is a bal lot with which the people, by their purchases or their refusal to pur chase, decide what is to be pro duced and who is to produce it. But ever since the eighteenth century revolutions, which deposed the kings, people have been fas cinated by the exercise of politi cal power. At best, political power is wielded by representatives of the people who are responsible to the electorate. At worst, tyrants seize power and wield it despoti cally in the name of "the people." The worst despotisms in history are the modern totalitarian states, all of which call themselves "Peo ples' Democracies." As a former businessman, I am frank to admit that some business men have, knowingly or otherwise, played the political game. For quick returns, they have accepted, and some of them have sought, political favors and subsidies.

This fact constitutes about the only argument the socializers have left in their arsenal. They demand more subsidies for farmers, more public housing, aids to education, medicare, urban renewal, dams, power plants, and many other "Great Society" subventions. To support their arguments they point to some businesses which government has subsidized. Every businessman, who today refuses to be guided by the popu lar verdict of the market pla~e and runs to government for help, tomorrow is slated to be controlled or taken over by government, to gether with his industry col leagues! This confronts every businessman with a serious moral problem. He has a heavy respon sibility,. not only for the future of his own business, but for the future of our way of life as well. A Climate for Survival It is unfortunate that not enough businessmen have real convictions about the social con ditions which are essential if pri vate business, as a relatively autonomous activity, is to sur vive. They think their job as busi nessmen is done if they are able to pay wages and salaries to em ployees and dividends to sharehold ers and maintain a going concern.

But if we accept the thesis that each of us has a duty to preserve the cultural, social, governmental, and economic structures which made our national preeminence possible, it follows that if busi ness is misconceived as an un408 THE FREEMAN July diluted effort for more money to the virtual exclusion of other val ues, business is not good for so ciety as a whole. In fact, it is not even good for itself! Without a reasonable assurance of profits, the businessman could not survive as a businessman. But there is more to his responsibility than maintaining profits. Perhaps it can best be summarized by say ing that he, together with his fel low citizens, have an obligation to keep alive and healthy the goose which lays the golden eggs. It is an interesting concept that society is a derivative of the mar ket place. The human community does not come into being except as men are able to exchange their surplus energies in the form of goods, services, and ideas. If every man were self-sufficient, society would be inconceivable. The fact of human interdependence, as men are now constituted, implies the existence of media whereby this interdependence is manifest.

Freedom to Trade A society is impossible unless there be some exchange, and it is rich and complex in the degree to which these exchanges multiply. And they will multiply unless they are sabotaged. So we need political government to protect exchange against sabotage. But time and again this protective function· is perverted and government itself becomes the saboteur. Let me suggest briefly what this means. Businessmen should know that the concentrations of power and the collateral responsibilities which are lodged with them must be exercised in the context of American life; that if private business does not assume commun ity responsibilities, a social vac uum is created and government steps in; that bureaucrats are very adept at avoiding restraints with which the electorate attempts to protect itself; that American busi ness must act as though it has a soul; and this is just as important for a huge corporation as for an individual businessman. Those of us in business should know that what we think, what we say, what we do, and most important, what we are during working hours can not be divorced from the responsi bilities we must assume as mem bers of society at all hours! Those responsibilities can be discharged only as we participate to the full extent of our talents in the whole life of our communities.

The American social organiza tion is a fabric, the principal threads of which are religion, in dustry, law, political economy, education, social well-being, and the cultural arts. It is not enough that business should tell the pub lic only of its achievements in its RusrNESS, SOCIAL PROGRESS, AND RELIGION highly specialized sphere of pro duction and distribution. Unless American business moves into all of these areas at once and vigor ously, they will soon be fully ap propriated by those who believe and expound doctrines which will ultimately destroy our way of life and our businesses. A Constructive Course Where do we go from here? In light of our current national situa tion, what is the proper area and direction for our energies? It is evident that business cannot af ford to sit on its historic achieve ments, significant as they are, while its past laurels are wither ing away.

The eyes of the world are fo cused on us. They are watching to see how far we will depart from those basic principles, defined by our Declaration of Independence and made operative by our Consti tution upon which our political forebears erected this great Re public, principles which have been devoutly professed by our people over the years. It is unfortunate that our two major political parties are now being pulled together by the strong magnet of economic pana ceas to be administered by an all powerful central government, a government which promises to de prive men not only of their Godgiven rights, but what is even more disastrous to their survival as moral beings, to relieve them of their personal responsibility to the social order. It is a mistake to think of this development as the "new look" in political economy. It is as old as history. Those who look askance at constitutional conservatives be cause of our alleged "nostalgia for the days of McKinley" are themselves striving to have us re turn to the days of Hammurabi of Babylon, some 4,000 years ago.

All of the "welfare measures" now being practiced or proposed as great cosmic breakthroughs were tried then, and many times since. And they have always arrived at the same terminus, a nation of serfs dominated by a small clique of ruthless men. How can we fail to note that while hundreds of mil lions of the impoverished and op pressed throughout the world are yearning to live under our system, we are moving steadily toward that from which they are trying to escape? There is, without a doubt, a "new look" in America today, but only because we have lost touch with our original principles. The sixty-five years since McKinley have been the period of .The Big Change. In foreign affairs we have long since abandoned our nine teenth century policies of non410 THE FREEMAN July intervention, neutrality, and peace ful trade with all nations. The "new pattern" has been marked by two World Wars, the Korean "police action," and the continuing "Cold War," with our costly involvement in Vietnam and our debilitating foreign aid programs.

Domestically, we have witnessed the progressive extension and ac celeration of the powers and func tions of the central government in Washington and a corresponding weakening of local and state gov ernments. Government at its several levels now skims off by taxation more than 40 per cent of our total national income. In spite of this, we are steadily increasing our burden of debt. Our Federal debt is at an all-time high and in creases each year. In addition, there are hidden obligations ac cumulated under the social secur ity and government retirement systems, and as guarantees of mortgages and other indebtedness, which amount to hundreds of bil lions, the total of central govern ment liabilities alone having been estimated recently at one and a half trillion dollars, that is, $1, 500 billions, or $7,500 for every man, woman, and child in the na tion! The debts of states, subordin ate units of government, and pub lic "authorities," as well as private indebtedness, have kept pace with that of the central govern ment. Our nation is mortgaged to the hilt! And the process contin ues. Unbalanced national budgets have become a way of life. During the past five years the national budget has averaged an annual def icit of $6.3 billions. Since 1939 inflation has reduced the purchas ing power of our dollar to about 43 cents, with commensurate de creases in purchasing power of the peoples' savings accounts, pen sions,. insurance policies, annui ties, and other fixed income in vestments.

The Moral Issue Involved in Deficit Spending There is a moral issue of great significance here. Our political forebears believed that no man has a right to deprive his poster ity of their God..given rights by voting away their freedom. Thom as Jefferson considered the act of deferring payment on the public debt the same as enslaving future generations. In a letter to a friend he stated: There have existed nations, and civilized and learned nations, who have thought that a father had a right to sell his child as a slave in perpetuity; that he could alienate his body and industry conjointly, and ... his industry separately; and 1907 BUSINESS, SOCIAL PROGRESS, AND RELIGION 411 consume it~ fruits himself . . . But we, this age, and in this country especially, are advanced beyond those notions of natural law. We acknowl edge that our children are born free; that freedom is the gift of na ture and not of him who begot them; that though under our care during infancy, and therefore of necessity under a duly tempered authority, tha t· care is confided to us to be ex ercised for the preservation and good of the child only; and his labors during youth are given as a retribu tion for the charges of infancy ...

We believe, or we act as if we be lieved, that although an individual father cannot alienate the labor of his son, the aggregate body of fathers may alienate the labor of all of their sons, of their posterity, in the aggregate, and oblige them to pay for all the enterprises, just or unjust, profitable or ruinous, into which our vices, our passions, or our personal interests may lead us. But I trust that this proposition needs only to be looked at by an Ameri can to be seen in its true point of view, and that we shall all consider ourselves unauthorized to saddle posterity with our debts, and morally bound to pay them ourselves. Our new "Opulent State," cen tered in Washington, does not tyr annize, but, in Tocqueville's words, "it compresses, enervates, extin guishes, and stupefies a people." The Federal Republic contem plated by the framers of the Con stitution is giving way to a Unitary National State, with symp toms of Empire.

This sixty-five-year-old defec tion from our fundamental princi pies has been regularly viewed with alarm. But in spite of spo radic opposition to the trend, the momentum from several sources, some theoretical and some ex pedient, has yearly pushed us further toward collectivism and statism. Both major political par ties now bow· to this trend. Each goes along with it, one enthusi astically, the other reluctantly. Majoritarian Tyranny I fear that we are· drifting into a kind of "democratic despotism" in which the individual is subor dinated to undisciplined majori ties. The antithesis of majority rule is not minority rule; it is the principle of individual liberty. To secure individual liberty our Con stitution places various restraints on majority action. Lincoln spoke of our Republic as "a majority held in restraint by Constitutional checks and limitations." The con viction at the center of our system is that each man has certain in herent rights which it is the duty of government to protect, so that even as a minority of one he has immunities which no numerical majority may invade. No majority has the right, under our system, to impose its religion on any mi~ 412 THE FREEMAN July nority, or to impair its freedom of utterance-or to deprive it of prop erty. But under the new dispensa tion the majority is almighty! All it has to do is to gain control of government which gives it legal sanction to work its will on the rest of the nation. Majority deci sion at the polls is an excellent way to choose political administra tors, but it is a violation of the moral law for the majority to vote away any part of a man's freedom.

The majority may have the power to do this, but the right to this action it never has! Did the election of Mr. Johnson by the votes of 42 million people, which, after all, is only 38 per cent of those who were eligible to register and vote, confer upon him a mandate to impose his will on all 195 million of our people or, even on one indiv'idual if, in doing so, he violates that person's Con stitutional rights? Our nation was established as a society of sovereign individuals, each of whom was expected to ex ercise his freedom under God within the moral law. We con sidered ourselves to be a nation of "uncommon men," each with free dom to choose his own course of action provided it did not interfere with another's freedom of choice, and each accepting the risk of the wrong choice as the price he must pay for freedom. It was under this system that we made our greatest spiritual, cultural, and economic progress.

But in recent years, many of us have become obsessed with the delusion that there is such a thing as "the common man," and that these "common men" must be herded together by government commissars so that they can be fed, clothed, sheltered, and re lieved of responsibility for living! And all this is to be accomplished by computers and automation! America was not built by such fic titious "common men." I choose to believe that there is no such thing as "the common man," except in the eyes of certain politicians. We are all "uncommon men." We built this citadel of freedom with uncommon men. We can save it with the same kind of men. We and countless others like us throughout the nation are the "uncommon men" who will save this "last best hope of earth." Businessmen have shown by their achievements in the rigorously competitive arena of trade and in dustry that they have the talents to do this if they but have the will!

A Declaration of Rights What shall be our guide? In my researches I have found none better than that written into the Virginia Declaration of Rights by 1907 BUSINESS, SOCIAL PROGRESS, AND RELIGION 413 George Mason, in 1776, which reads: No free government or the bles:::;: ings of liberty can be preserved to any people but by a firm adherence to justic~, moderation, temperance, frugality and virtue, and by fre quent recurrence to fundamental principles. What were the fundamental principles referred to by Mason? I believe they we're, broadly speak ing, religious principles; not the doctrines and creeds which dis tinguish one sect or denomination from another, but rather the fun damental belief in God which they share. It was a basic American principle to maintain a strict sep aration between Church and State, not because of any hostility to reli gion; quite the contrary. The State was to be secular in order that the society might be genuinely reli gious and thus self-disciplined. A free society is possible only if it is composed largely of self-disci plined individuals.

These convictions are visible in both the Declaration of Independ ence and the Constitution. The framers of those documents be lieved they were transcribing "the laws of Nature and of Nature's God." The supremacy of the Con stitution was believed to stem from its correspondence to a law superior to the will of human rulers. In effect, the Founding Fathers were trying to set up a secular _______ Ql:"q~t: __ J?I!~~q.--.-Q!t._.thelr._-_idea-of -- the pattern laid down by God for man's conduct in society. And as evidence of their faith in the sanc tion of "divine Providence" for their actions, they pledged to each other "their lives, their fortunes, and their sacred honor." Dedication to Principle Our duty is clear. Let each of us dedicate himself to those fun damental principles bequeathed to us by the Founding Fathers, which served us so well over the years, until we chose to abandon them to follow the Pied Piper of State Absolutism.

Our cue is in the words of the poet Whittier: Where's the manly spirit Of the true-hearted and the un shackled gone? Sons of old freemen, do we but in herit their names alone? Is the old Pilgrim spirit quench'd within us? Stoops the proud manhood of our souls so low, That Mammon's lure or Party's wile can win us to silence now? Now, when our land to ruin's brink is verging, In God's name let us speak while there is time; Now, when the padlocks for our lips are forging, Silence is a Crime. • A FALSE REMEDY HENRY HAZLITT THE COUNTRY has been in a mild recession since the fall of last year. In previous eras not too much concern vvould have been aroused by a comparable recession (vvhich still leaves the gross national prod uct at nevv high levels). Some re adjustment vvithin particular in dustries vvould have been taken for granted. But novv, vvhen a thousand doctors nervously take the pulse and temperature of the economy every day, any failure of any index to make a nevv high record every month causes alarm.

So the government rushes to the rescue. The rescue almost invari ably consists of added doses of in flation. The government increases old spending programs and adds nevv ones. Never mind if govern ment spending has risen in every Copyright 1967, Los AnBeles Times, Reprinted by permission. 414 one of the last eight years and is novv at record levels. Never mind if there have been budget deficits in everyone of the last seven years. The spending and the deficits must be pushed still higher. Interest rates must be forced dovvn. The supply of money and credit must be increased. All this is done on the assump tion that vve cannot have continu ous full employment and prosperity vvithout at least a little continuous inflation-and maybe, at times, a big shot of it. The truth is that inflation is neither necessary for full employ ment nor sufficient to secure it. What is necessary is a vvorkable coordination of the price system.

This entails a coordination of vvages and prices. Individual vvage rates must be at the levels at vvhich the full labor force can be profit ably employed. Prices must be high J,VU7 A FALSE REMEDY 415 enough to keep a profit incentive, but low enough to permit the op timum volume of goods and serv ices to be sold. Wages and prices are always tending to reach these levels in free markets. The half-truth in the Keynesian or inflationary theory is that if wages and other costs of prod uc tion have got too high in relation to final prices, so that profit mar gins have shrunk or disappeared, an inj ection of new money or credit into the economy may sometimes raise final prices before it again raises wage rates and so tempo rarilyrestore profit incentives and production and employment. But this kind of prosperity can be kept going only as long as prices and profits can be kept at least one jump ahead of wage rates. It be comes a constant race between the printing press and the demands of the labor unions. It is a race that can only end in gross distortions of income distribution, incentives, and production, in a balance-of payments crisis, and in falling con fidence in the dollar.

This disastrous inflationary race can be prevented only if the government has the will and the wis dom to prevent the continuous im position of extortionate union wage demands. This does not mean a wage freeze as in England. It does not mean antistrike legislation. But it does mean the repeal or thorough revi sion of our present one-sided Fed erallaws. It means the removal of the spe cial compulsions put on employers and the special immunities granted to unions. The employer must not be forced to bargain exclusively with one government-certified union. The unions must not con tinue to enjoy a special license to keep a plant closed by intimidatory mass picketing until their demands are met. The right to strike does not include the right to prevent anybody else from being offered or taking the job that the striker has voluntarily vacated. Until we restore balanced labor laws, even continuous injections of more money and credit are not go ing to assure full employment be cause irresponsible unions will con tinue disruptive strikes and unrea sonable wage demands. ~ 416 JACK SCHREIBER How MUCH is it worth? How much is your personal freedom worth to you? How much would you be will ing to sacrifice today, just to keep your freedom to worship God as you see fit? What price would you pay just to maintain your right to work at the business or profession of your choice; or your right to speak freely without fear of im prisonment? Have you ever stopped to think that men haven't always been this free? Since the begin ning of time, most men through the centuries have been slaves or serfs. Personal freedom was granted as a gift by kings, or ty rants, only to a chosen few. Occa sionally, history records, there were brief periods of personal freedom, but it finally took America for the world to realize the dream of all men - the inherent right of a man to be free.

W'e aren't free to do what we want to do, but rather, Jefferson said, we are free to do what we ought to do. In other words, the price of freedom is indi vidual re sponsibility. So freedom isn't all free, you see, nor is it perpetual. Part of the American dream is that to each generation there falls a new responsibility to preserve This article is condensed from lecture notes prepared and used by Dr. Schreiber, a physi cian in Canfield, Ohio.

1967 THE LAST CANDLE 417 that freedom which was estab lished here by those early patriots. But it took more than just a phi losophy of government. Those early Americans, wise beyond their years, also realized that govern ment of, by, and for the people had to flourish in an economic system of free enterprise, with competi tion as the catalyst. So they estab lished a structure of limited cen tral government, permitting this newly won freedom to have un limited possibilities. One could assume, then, that we have it made. Never have any people, at any time, anywhere, had it so· good. But in our present abundance and luxury something is wrong. People aren't happy. They don't walk down the streets of our cities smiling, or whistling a happy tune. There is discontent, and one can sense fear of the un known. Overabundant Americans are jittery. There seems to be a tarnish on our golden Mecca. Our welfare lists are growing. We've created a new breed of men who won't work. And instead of the slogan, "God bless America," we now hear, "What have you done for me lately?" The signs aren't too hard to read. They are the signs of internal decay - the dry rot of apathy and indifference.

The symptoms of our disease of welfarism began some years ago when we began to penalize success by taxation. By using our tax dol lars,government has relieved us of Illany of our own personal re sponsibilities, in exchange for our personal freedom. We have come to think of our early history and the men who made it as a kind of fairy tale instead of the greatest success story of all time. We have been flirting with a dangerous and clever seductive mistress called socialism. And for a time, since the depression days of the thirties, we have been toying with ideas which have proven a failure in most of those countries where they've been tried. It seems to me we are in the mess we're in for several reasons. From Freedom to Barbarism The first is the natural evolution of civilization. Lord Byron, in trac ing the rise and fall of great na tions, said that "people go from freedom to glory, from glory to wealth, from wealth to vice, from vice to corruption, and from cor ruption to barbarism."

The second reason f or the be ginning of the welfare state is temptation. We are being tempted as we have never been tempted be fore - tempted to let the govern ment do it. From all sides of the Great Society comes the siren song. The government should pro vide free housing; the government should pay for college education; 418 THE FREEMAN July the government should take care of the aged; the government should provide beauty and culture; the government should guarantee jobs; and so it goes. It's not an easy thing being a free American, when all around us the misguided and the misinformed tell us the gov ernment owes us all these things which up to now we have been pro viding for ourselves. There is a third reason why we are losing our freedom. Most of us accept the beginning of the welfare state, not because of our weakness, but rather because of one of our finest virtues - human compassion.

Through our misguided love for humanity we have bought the idea that the mere spending of enor mous sums of our own money, plus the creation of vast new bureauc racy to process and administer the complexities of the new social laws will, in themselves, solve the ills of the people. By passing the buck and surrendering our personal respon sibilities into the hands of govern ment, we solve our guilty con sciences as a nation and as individ uals. And finally, we have begun our journey into the welfare state for another reason. For too long now, too many of us have been too will ing to let someone else call the shots. We have been busy with things, which in t~e end don't count for much, and in our madness for materialism we have forgotten how to lead. We have been letting "George do it," and "George" has messed it up. For one shining, glorious moment of history we had the key and the open door and the way was there before us. Men threw off the yoke of centuries and thrust forward along that way with such hope and such brilliance that for a little while we were the light and the inspiration of the world.

Now the key has been thrown care lessly aside - the door is closing we are losing the way. In summary then, we Americans have inherited the greatest nation in the world, but we're finding out it's not easy being a free Ameri can. We need to remind ourselves of the magic formula of free en terprise, operating in an environ ment of competition with limited central government. We must con stantly remind ourselves, and each other, that our freedom is threatened by those who promise us security instead of opportunity. We do not have to go down the drain of the welfare state just be cause of a silly historic cycle. We can pass on the heritage of per sonal freedom to our children with the three keys of leadership, per sonal involvement in public affairs, and a recrudescence of the home and church. This we can do if enough of us will care enough to do enough.

1967 THE LAST CANDLE 419 Freedom, Self-Control, Human Dignity, and Limited Government Once upon a time there was a young nation struggling in the community of nations to find her place in the sun. For this young country of brave people discovered that freedom is a Godgiven right. So impressed Were they with this belief that they lit a candle to sym bolize their freedom. But in their wisdom they knew that the flame could not burn alone, so they lit a second candle to symbolize man's right to govern himself. The third candle was lighted to signify that the rights of the individual were more important than the rights of the state. And finally they lit a fourth candle to show that govern ment should not do for the people those things which people. should do for themselves. As the four candles of freedom burned brightly, the young nation prospered; and as they prospered, they grew fat; and as they grew fat, they got lazy. When they got lazy, they asked the government to do things for them which they had been doing for themselves, and one of the candles went out. As gov ernment became bigger, the people became littler and the government became all important and the rights of the individual were sacrificed to the all important rights of the state. Then the second candle went out. In their apathy and indiffer ence they asked someone else to govern them, and someone else did, and the third candle went out.

In the end, more than they wanted freedom, they wanted se curity, a comfortable life, and they lost all, comfort and security and freedom. For you see when the freedom they wanted most was freedom from responsibility then Athens ceased to be free, and the Athenians of nearly two thou sand years ago were never free again. The last candle was extin guished. ~ Omnipotent Government THEY [parliaments] possess no power beyond the linlits of the trust for the execution of which they were formed. If they con tradict this trust, they betray their constituents, and dissolve themselves. All delegated power must be subordinate and limited. If omnipotence can, with any sense, be ascribed to a legislature, it must be lodged where all legislative authority originates, that is, in the PEOPLE. For their sakes government is instituted, and theirs is the only real omnipotence. RICHARD PRICE. Observations on the Nature of Civil Liberty, 1776 GEORGE C. ROCHE III 2. SOME MODERN MANIFESTATIONS MAN'S attempted exercise of pow er over other men is as old as his tory. Of almost equal age are man's speculations concerning the dangers of power and the means by which it might be limited. De centralization and a supposition of a framework of Natural Law, lim iting ruler and ruled alike, have emerged as man's two best an swers to the problem of power.

Yet, in the modern history of power, these traditional safe guards have been confronted with new definitions and new applica tions of power, posing a greater threat to man than in any of his previous history. 420 Initially, the coming of democ racy was viewed as a final end to entrenched power, as a permanent emasculation of the social agen cies and spiritual authorities which were viewed as standing in the path of man's liberty. Once the authority of church, king, and aristocracy were swept away, the reign of aU men was to begin. What may well have happened is less an end to power than its transf erence to new owners. Hobbes defined political power as political liberty and insisted that man would be free when he possessed a share of political gov ernment. Yet the fragmentation 1f){j 7 POWER: SOME MODERN MANIFESTATIONS 421 of political power into bits and pieees at once so numerous and so small, as accomplished in modern democracy, may well have offered an illusory freedom to the individ ual, since it offered him an essen tially illusory sovereignty. As long ago as 1870, Proudhon warned in his Theory of the Constitutional Movement in the Nineteenth Cen tury: It is no use saying that an elected person or the representative of the people is only the trustee for the people . . . in despite. of principle, the delegate of the sovereign will be the masteT of the soveTeign. Sov ereignty on which a man cannot en ter, if I may so put it, is as empty a right as property on which he can not enter.

The democratic ideal did not originally intend to substitute the arbitrary will of the citizenry for the arbitrary will of the King. But, as Georges Clemenceau wearily observed as he contem plated the condition of democratic Europe in the early twentieth century, "... had we expected that these majorities of a day would exercise the same authority as that possessed by our ancient kings, we should but have ef fected an exchange of tyrants." The fragmentation of sovereignty occurring in mass democracy thus proved a feeble shield for individ ual liberty. Both of the traditional guaran tees of limited power, decentrali zation and Natural Law, had heen subverted in the process. Decen tralization of power throughout the private, institutional frame work of society had been replaced with the comparatively meaning less fragmentation of sovereignty among vast numbers of individ uals. The idea of Natural Law, of limitations placed upon ruler and ruled alike, had been replaced by the dangerous and totally incor rect vox populi, vox dei. The stage was set for the confusion of the "power of the people" with the "liberty of the people." And the power about to be exercised in the name of the people was destined to make all previous exercises of power throughout history seem pale by comparison.

Sovereignty and Power As he witnessed the excesses of the French Revolution, Benjamin Constant accurately predicted the disasters to come in his admirable little book, The Course of Consti tutional Politics: The establishment of sovereignty of the people in an unlimited form is to create and play at dice with a measure of Power which is too great in itself and is an evil in whatever hands it is placed. Throughout the nineteenth cen tury, Tocqueville, von Mohl, Burck422 THE FREEMAN July hardt, and Acton shared these serious doubts about unlimited democracy. They prophesied that the very democracy which had originally been conceived for the emancipation of the individual could itself become the means of a new enslavement. A recent television comedy sketch conveys the place of power in the new democratic era. perhaps even more effectively than the thoughtful essays of social critics. In the scene, Jackie Gleason and Art Carney are trying to decide which of them will occupy the master bedroom at a hotel they are visiting. Carney delivers a lec ture about "democratic processes"

and "the American way," prompt ing a series of votes which, natu rally enough, always produce a one-one tie. Carney proposes, "I'll vote for you, if you'll vote for me," again producing the same result. They then decide to flip a coin. Gleason calls "heads," and Carney then challenges Gleason's right to make the choice, insist ing, "That's undemocratic." The comedians exploit the ri diculous situation to its fullest ex tent, proposing various devices to solve the problem and yet always coming up against Carney's asser tion that Gleason's choice of a means to settle the dispute is "un democratic." Gleason finally loses his temper, and gives the answer which majorities often give in the process of decision making: "See the size of this fist? It's bigger than yours, isn't it? That's why 1 get my choic'e!" Reforming Zeal The current of reform in the eighteenth century which swept a.way monarchy and promised a brighter day for the common man through democratic processes was quite properly directed against abuses of power by those. who op erated the political processes of the state. The reforming current was equally correct in its opposi tion to power when exercised in the private realm through monop oly situations (situations usually stemming from political grants of power by the state) .

This reforming zeal began to go astray when it mistook the close connections between the clergy and royal absolutism for a con nection between religion and mo rali ty on the one hand. and poEti cal power and exploitation on the other. Bodin and other apologists for Divine Right had so interwov en Natural Law and Divine Right that the reformers rejected moral restraint when they rejected mon archy, thus throwing out the baby with the bath and opening the door to a tremendous centralization of power because they discarded one of the two great bulwarks against 1()(J7 POWER: SOME MODERN MANIFESTATIONS 423 power, the assumption of a law limiting ruler and ruled alike. The Decline of Power? Though power had been dis trusted when in the hands of church, monarch, and aristocracy, the reformers came to feel that power could be safely entrusted to the people. Even such a stanch ad vocate of personal liberty as John Stuart Mill came to believe that power was no longer a decisive factor in politics, since the rule of the people would lead to the equit able solution of all problems through free discussion in a com mon market place of ideas.

Other nineteenth century advo cates of freedom also saw power as a deelining force which would no longer trouble the modern world. Reasoning from his organic analogies patterned after Darwin ian theories of evolution within the animal kingdom, Herbert Spencer attempted to demonstrate that an abatement of power was to be the natural result of evolu tion and progress. The First World War made clear that free discussion and pop ular sove,reignty had, in fact, not done away with power at all. Yet, even then, the reformers were not fully convinced. The rhetoric: of the World War I era is filled to overflowing with statements plac ing blame for that outburst of raw power on a last desperate reaction of the old nondemocratic order. What solutions did the reformers offer for this new outburst of pow er? More democracy, of course: "Open covenants openly arrived at," "self-determination of peo ples," and a League of Nations ex tending discussion and democracy to a truly international level. Thus, the democracies put on the great est display of raw power exercised until that moment in history, in the, name, of "making the world safe for democracy."

It might be argued that a mo narchical Germany started the war, not the Western democracies. Yet even if such a thesis could be, dem onstrated (and the facts would indicate that all the maj or na tions, democracies and monarchies alike, played their part in bring ing on the war) it would still be true that even the most demo cratic of Western nations soon came to copy the Prussian methods of mobilizing the private sector and the individual citizen for "to tal" war efforts. Even in England and the United States, the two na tions in which the individual citi zen had been most successful in preserving his liberty against the encroachment of governmental power, conscription became the means of providing an army, while great pressures of borrow ing and inflation, amounting to a 424 THE FREEMAN July form of economic conscription, provided the war chest. Preservation of Democracy The "good cause" justifying this extension of power was the preservation of "de.mocr acy " it self. Under the new democratic regimes, the warfare state pointed the way toward the welfare state, since both were to give endless and often irresponsihle power to the few while degrading the many, all in the name. of an abstract equality of men. Oddly enough, this "equality" is only to be achieved, its proponents tell us, through a tremendous inequality in the exercise of power, giving some men the right to act for others.

If the First World War had only shaken the dogma that democ racy meant an end to the dangers of power, the Second World War ended such a notion once and for all. Since the late 1930's, we have seen the unrestricted play of pow er on our society and the world, limi ted effecti vely by neither po litical theory nor moral principle. The traditional safeguards of de centralization and Natural Law have both been undercut by democ racy, only to have democracy it self provide a fertile field for the most unchecked reign of power in world history. Apparently Lord Acton was right about the corrupting capabilities of power. Surely, Hitler and his gang should be suf ficient proof of that fact. For a time, some of the reform ers still argued that such power was not harmful so long as it worked toward "humanitarian" goals. We all remember the years when the totalitarian regime of Stalin was viewed by many in the West as being somehow morally superior to the totalitarian re gime of Hitler. But, in practice, the Poles, Latvians, Lithuanians, Estonians, and any number of other subject peoples surely could point to no distinguishing charac teristics between the Red totali tarianism and the Brown.

The Warfare State Meanwhile, how did power fare in those Western democracies which prided themselves on being most nontotalitarian? In the words of one of the most distinguished students of power: Whereas the Capetian kings made war with a few seignorial contin gents whose service was for no more than forty days, the popular states of today have power to call to the colours, and keep there indefinitely, the entire male population. Whereas the feudal monarchs could nourish hostilities only with the resources of their own domains, their successors have at their disposal the entire na tional income. The citizens of medi eval cities at war could, if they were 1967 POWER: SOME MODERN MANIFESTATIONS 425 not too near to the actual theatre of operations, take no notice of it. Now adays friend. and foe alike would burn their houses, slaughter their families, and measure their own doughty deeds in ravaged acres.

Even Thought herself, in former times contemptuous of these brawls, has now been roped in by devotees of conquest to proclaim the civilizing virtues of gangsters and incendi aries. How is it possible not to see in this stupendous degradation of our civilization the fruits of state abso lutism? Everything is thrown into war because Power disposes of ev erything. I The Welfare State So much for the modern war fare state. What of the modern welfare state? The same era which saw the rise of democratic re formism in the eighteenth and nineteenth centuries also saw the widespre.ad acceptance of the prin ciples of natural science and the unfortunate accompanying tenden cy to apply the methodology of science in the political and social realms. In the nineteenth century, Auguste Comte remarked, "If we do not allow free thinking in chemistry or biology, why should we allow it in morals or politics?"

Fichte carried that assumption to its logical conclusion: "To compel man to adopt the right form of 1 Bertrand de J ouvenel, On Power (New York: Viking Press, 1949), p. 152. government, to impose Right on them by force, is not only the right, but the sacred duty of ev ery man who has both the insight and the power to do so." This as sumption lies at the root of the subsequent "social planning" which has come to dominate mod ern society. Men are now to be made free from their own igno rance and inadequacy. Power used to coerce is thus supposed to be beneficent power, power exercised "for the go('~i" of the many. Throughout history, the gre.at est vice of power had generally been thought to be the restriction of individual liberty which the exercise of such power entailed. But once modern man began to recognize no restriction of Nat ural Law upon his capability to know what is "best" for people and know it better than the in dividual citizen himself, the mod ern statist was in a position. . . to ignore the actual wishes of men or societies, to bully, oppress, torture them in the name, and on be half of their "real" selves, in the secure knowledge that whatever is the true goal of man (happiness, ful filment of duty, wisdom, a just so ciety, self-fulfilment) must be iden tical with his freedom - the free choice of his "true," albeit sub merged and inarticulate, self. 2 2 Isaiah Berlin, Two Concepts of Lib erty (London: Oxford University Press, 1958), p. 18.

426 THE FREEMAN July The Planning State In such a system, what limita tion of power is now to be rec ognized? What is to be the basis of the new political morality? As John Dewey, a philosopher of the new humanitarian planned society, phrased it, "Whether [the us,e of force] is justifiable or not ... is, in substance, a question of effi ciency (incl uding economy) of means in the accomplishing of ends. . .. The criterion of value lies in the relative efficiency and economy of the expenditure of force as a means to an end."3 In a word, all the traditional safe guards against power are now to he discounted in favor of a single measure: utility. In a textbook entitled Our Ec'O nomic Society and Its Problems, one of the planners of the new order, Rexford G. Tugwell, ex plicity stated the new definition of power: The real challenge to America . . . is the challenge of the planning idea.

Russia has silenced forever the no tion that economic affairs are gov erned by adamant natural laws. She has demonstrated that men have it in their power to set up the system they want and to make it obedient to their wishes. With Russia as an example, intel ligent people in America ... will want to plan and act. 3 John Dewey, "Force and Coercion," Ethics XXVI (1916), pp. 362 and 364. A New Definition 01 Freedom As Friedrich Hayek has made abundantly clear, it is only mod ern man that has confused free dom from coercion (the traditional use of the word) with an illusory freedom from obstacles, implying a physical ability of man to be in complete control of and beyond the limitations of his natural en vironment. In this way, individual freedom has been corrupted until it implies a "right" to any ma terial benefit which the social order can procure for -him. Hayek continues: Once this identification of freedom with power is admitted, there is no limit to the sophisms by which the attractions of the word "liberty" can be used to support measures which destroy individual liberty, no end to the tricks by which people can be exhorted in the name of liberty to give up their liberty. It has been with the help of this equivocation that the notion of collective power over circumstances has been substi tuted for that of individual liberty and that in totalitarian states lib erty has been suppressed in the name of liberty ....

This reinterpretation of liberty is particularly ominous because it has penetrated deeply into the usage of some of the countries where, in fact, individual freedom is still largely preserved. In the United States it has come to be widely accepted as the foundation for the political phi1967 POWER: SOME MODERN MANIFESTATIONS 427 losophy dominant in "liberal" circles. Such recognized intellectual leaders of the "progressives" as J. R. Com mons and John Dewey have spread an ideology in which "liberty is pow er, effective power to do specific things" and the "demand of liberty is the demand for power," while the absence of coercion is merely "the negative side of freedom" and "is to be prized only as a means to Free dom which is power."4 Power = More Power It is instructive that the great proletarian revolutions of modern times, those in France and Russia, both promised a revolt aga,inst power. Shortly before assuming authority, Lenin wrote that it was the task of the Revolution to "con centrate all its forces against the might of the state; its task is not to improve the governmental machine but to de,stroy it and blot it out." The revolutionaries act ing in the name of the people have moved against power with the avowed purpose not of assuming that power but of destroying it.

Despite this, those who assumed temporary power to destroy other concentrations of power have usu any proven unwilling to relinquish that authority once the revolu tionary process is brought to com pletion. 4 F. A. Hayek, The Constitution of Liberty (Chicago: University of Chi cago, 1960), pp. 16-17. Before the rapids, there was the rule of a Charles I, a Louis XVI, a Nicholas II. After them, that of a Cromwell, a Napoleon, a Stalin. Such are the masters to whom the peoples that rose against Stuart or Bourbon or Romanov "tyranny" find themselves subjected next .... The Cromwells and Stalins are no fortui tous consequence, no accidental hap pening, of the revolutionary tempest. Rather they are its predestined goal, towards which the entire upheaval was moving inevitably; the cycle be gan with the downfall of an inade quate Power only to close with the consolidation of a more absolute Power. 5 In both the nontotalitarian Western world and in the more frankly totalitarian experiments, the same pattern holds true. The initial assault against power is followed by a more complete and all-pervasive power structure of its own. The danger of such struc tures is all the more enhanced by the fact that such despotisms are erected in the name of "the peo ple."

In the words of Henry Mencken : It [the State] has taken on a vast mass of new duties and responsibili ties; it has spread out its powers un til they penetrate to every act of the citizen, however secret; it has begun to throw around its operations the high dignity and impeccability of a State religion; its agents become a 5 J ouvenel, Ope cit., p. 216.

428 THE FREEMAN July separate and superior caste, with au thority to bind and loose, and their thumbs in every pot. But it still re mains, as it was in the beginning, the common enemy of all well-dis posed, industrious and decent men. 6 The Modern State If the modern state has indeed become so all-pervasive in its ex ercise of power, why is there not more organized resistance ? It is the pretext that such power is wielded by and for "the people" which in effect has delivered the people, the individual citizens, in to the hands of this new despotic power. This power now exercised in the name of "the people" whether in the welfare state pattern or the frankly totalitarian form, is tremendous in scope. Worse yet, such power tends naturally to accumulate still more power to itself. An Italian scholar who wit nessed the rise of the fascist state in Europe, Guglielmo Ferrero, has made the shrewd observation that a government of great power tends to suspect that the citizens being governed would like to throw off the yoke which they bear. It is F'errero's thesis that this fear of the' government against the governed, thus en gendered, tends to rise to a great6 Albert Jay Nock, Our Enemy, the State (Caldwell, Idaho: Caxton, 1946), flyleaf.

er and grea ter level as more power is exercised - thus the more totalitarian a government, the more dictatorial, oppressive, and brutal it is likely to become. Thus power breeds appetite for more power, until not only obedi ence, but enthusiasm, is expected from the subjects of that power. It was Napoleon who first made wide use of deliberately contrived propaganda techniques to win en thusiasm for the regime in power. Since then, virtually every wielder of great power has further pe,r fected the same technique. "Pub lic image," a desire to be at once powerful and popular, seems to be a common goal in such societies. Often the pursuit of this goal has produced suppression of facts which might prove unpopular. We have all come to expect such sup pression from the modern totali tarian state. Weare also now learning that a "credibility gap" can exist in our own society as well. Thus, the powerful state comes to fear the subjects over whom it exercises power, while the indi vidual citizen comes to fear the increasing repressions and inter ferences of the all-powerful state.

It is to this that Ferrero refers: It is impossible to inspire fear in men without ending up by fearing them: from this moral law springs 1967 POWER: SOME MODERN MANIFESTATIONS 429 the most fearful torment of life the reciprocal fear betvveen govern ment and its subjects. 7 The root of this fear in both the governing and the governed is the fear of power, rampant and unchained from Western civiliz a tion's traditional limitations of power, decentralization and Nat ural Law. Power in such a society is finally embraced because of its capacity to produce discipline. The exercise of power thus becomes an end in itself, rather than a means. Finally, under whatever politi cal label, a new agency has come into being in the modern world: 7 Guglielmo Ferrero, The Principles of Power (New York: G. P. Putnam's Sons, 1942), p. 313. Throughout the vvorld, a nevv revo lutionary theory and system seem to be taking substance: what Tocque ville predicted long ago as "demo cratic despotism," but harsher than he expected even that tyranny to be; in some sense, what Mr. James Burnham calls "the managerial rev olution"; super-bureaucracy, arrogat.

ing to itself functions that cannot properly appertain to the bureau or the cabinet; the planned economy, encompassing not merely the econ omy proper, hovvever, but the whole moral and intellectual range of hu man activities; the grand form of Plannwirtschaft, state planning for its own sake, state socialism devoid of the sentimental aims which orig inally characterized socialism. 8 ~ 8 Russell Kirk, The Conservative Mind (Chicago: Henry Regnery, 1953), p. 533. Dr. Roche, who has taught history and philosophy at the Colorado School of Mines, now is a member of the staff of the Foundation for Economic Education. The next article in this series will discuss the "Social Effects" of Power.

LABOR UN ION DEMANDS MEAN MORE INFLATION LAWRENCE FERTIG By a 5 to 4 decision in mid-April the United States Supreme Court nudged our economy back toward the era of handwritten ledgers and the hand loom. This, in an age of computers and high-speed cost cutting machines! The learned Justices decided that labor unions have a right to strike over automation. Some building contractors in Pennsyl vania tried to cut the cost of mod estly priced homes by installing 3,600 prefabricated doors. The carpenters struck because they wanted to construct these doors by hand on the site. The Court's decision in this and a companion Mr. Fertig is an economic columnist. This article appears by permission of Columbia Features, Inc. 430 case upheld the strikers because of the "employer's efforts to abolish their jobs." If United States industry must protect specific jobs at whatever cost, instead of trying to serve the American public by adopting improved methods of production which lower costs and prices, the vaunted dynamism of the United States would, obviously, be de stroyed.

Because of automation Ameri can industry is absorbing more than 1.5 million new workers each year. Because of automation pay of the average factory worker has increased to $110.00 per week from the prewar wage of $21.00 per week. If strictly applied, the High Court's decision would, of course, curb this progress. This decision is just one more straw on the back of a heavily laden camel. That camel is the American prod ucti ve machine - American industry. American industry to day - and therefore the nation faces a crisis. The nature of that crisis is quite simple. Labor unions are striking for higher pay. Unions in transport, rubber, automobiles, and other major industries threaten to para lyze production. Disturbing as this prospect is, production shut downs due to strikes are not the real threat to the economy. The real danger is uneconomic wage 1967 LABOR UNION DEMANDS MEAN MORE INFLATION 431 settlements wrung from reluctant industry in order to prevent work stoppage.

The nub of the problem is that wage costs are rising at the rate of 5 per cent to 7 per cent annual ly, while productivity of Ameri can industry is not increasing by more than half that amount. When costs increase at nearly double the rate of industry productivity, there is bound to be trouble. In the first quarter this year, the median wage increases in 520 wage agreements was nearly 13 cents an hour - a twenty-year high. When costs out-race productiv ity, the result is a squeeze on prof its. As profits decline, industrial activity is curbed, jobs are affect ed, and so is capital investment for more efficient, increased pro duction. All this adversely affects industry growth and national in come. To off-set these depressing ef fects, it has been the practice of our monetary authorities to in flate the money supply by encour aging plentiful, low-cost bank loans. This tends to create acceler ated business activity. But, as in 1965, such a policy results in sharply higher consumer prices and an inflationary spiral that is dangerous for the economy in the long run. So, the basic problem is how to prevent steep wage rises which are brought about by the monopoly .power of labor unions.

The labor union problem is wor rying both the Administration and Congress these days. On the one hand, there is threat of crippling national strikes. On the other, un ions defy Presidential commis sions which recommend even as high as 5 per cent annual wage rises. There are literally dozens of plans for meeting this problem now being discussed in Washing ton. Practically every solution now being proposed embodies some form of compulsory arbitration. Big government is to step in with the big stick and enforce wage decisions on management, as well as on unions. The point is that all these plans evade the central problem. There would be no need for more government action if present monopolistic powers of unions were curbed. A better balance between the power of labor unions and the power of management is the direc tion in which a solution should be made. But, neither the Congress nor the President has a stomach for curbing the overweening pow er of labor unions today. This be ing the case, continued inflation seems to be inevitable. ~ THE N MOST AMERICANS who are bent toward socialism do not identify.

themselves publicly as socialists. Nor do they employ the Marxian slogan that socialism is the wave of the future. Nonetheless, they have a way of looking at things that embraces the idea. The American approach to socialism is gradualist, piecemeal, and step by step; it is by way of govern ment intervention, government provided welfare programs, and government regulation and con trol. These steps are called pro gressi ve, are said to be in keep' ing with the contemporary situa. tion and modern needs, and are supposed to be pointed toward a brighter future. Those who oppose these steps are called reactionary, Dr. Carson is Professor of American History at Grove City College, Pennsylvania. 432 ALISM conservative, backward -looking, opponents of progress, not of this century, and so on. The first thing to be observed about all this is that there is no such thing as socialism, actually or potentially. Socialism is a fan tasy, and the illusion that it is being approached is in the nature of a mirage. No country in the world has attained even an ap proximation of the socialist vision.

In communist countries, the state has not withered awa.y, as Marx predicted; instead, it has grown in power and sway. Nowhere does "from each according to his abil ity, to each according to his need" prevail, nor can it do so. "Need" can no more be measured than men can be induced to produce ac cording to their abilities when re wards are separated from efforts.

1067 THE NEW FEUDALISM 433 Nor is it simply that the actual falls short of the ideal, a develop ment which might be expected where human beings are involved. On the contrary, the movement toward what is supposed to be so cialism produces results quite the opposite of those claimed for it. Everywhere the results of the thrust toward socialism are simi lar in kind, though different in de gree, depending upon the approach and the zeal behind the effort. The results are, in brief, statism, bureaucratic autocracy, neofeudal ism, and neomercantilism. Government as a Means The development of statism the totalizing of government power over the lives of citizens and the veneration of the organ in which the power resides - is both obvious and readily ex plained. Anyone can see that gov ernments everywhere exercise more and more power and that those who wield the power com mand subordination and obedi ence. The state does not wither away because it has been made in to the instrument through which socialism is to be attained. Social ists were always vague as to just how socialism was to be achieved.

They could describe in detail the evils of the existing systems and the marvels that would be under socialism. The how of reconstruction was the mISSIng link of so cialist theory. To Marx the emer gence of socialism was inevit able; one need not trouble himself overmuch about precisely how the inevitable would come to pass. The main thing was the destruc tion of the existing system. In practice, however, socialists have taken over and used the state when and as they have come to power. They have used it to do all sorts of things to usher in socialism, thus building tremen dously the power of the state. To remain in power, they have found it useful to cultivate the adora tion and veneration of the state. In like manner, they took over bureaucracies, greatly enlarged them, and equipped bureaucrats with a great deal of power with which to achieve their ends. It is these bureaucrats who wield the power over the lives and intricate affairs of citizens. The result is, predictably and demonstrably, bu reaucratic autocracy, implicitly tyrannical, but in practice more often aggravating because of its pettiness and triviality. Even so, the tyranny of the Soviet Union, of Communist China, and of all so cialist (or socialist inclined) coun tries is, in the final analysis, the tyranny of bureaucrats.

Neither statism nor bureau cratic autocracy are anything new under the sun. If progress be 434 THE FREEMAN July synonymous with improvement, there is nothing progressive about them. They are an expansion, con solidation, and rigidifying of forms and institutions that have been around for quite a while. The other two products of the thrust to socialism are plainly retrogres sive, that is, are revivals of older forms and institutions in a new setting. The new mercantilism is not the subject of this paper; it will, therefore, be dismissed with only a few observations about it. Mercantilism was widely practiced in the seventeenth and eighteenth centuries, and, at its lowest ebb, never quite disappeared in the nineteenth century. It was a sys tem of attempting to promote na tional prosperity by government intervention. Particularly, it was an effort to promote manufactur ing and shipping by government granted privileges, export and im port controls, payment of boun ties, and restriction upon trade.

Many of these practices have been revived in the twentieth century, extended, and given new justifi cations. They can be referred to as the new mercantilism. Inevitable Developments The reversion to mercantilism in the twentieth century has been noted by some, but the new feudal ism has been paid scant attention, if any. Mercantilism was an instrument more or less ready at hand for socialists, as were the state and the bureaucracy. Social ists no more started out to be mercantilists than they did to be statists or bureaucrats. The posi tions developed as a result of adapting devices which were sup posedly means to an end, but which swiftly became ends in themselves. In the circumstances in which they have come to power, socialists have attempted to devel op national economies. To do this, they have fallen unavoidably into mercantilistic practices, which had a similar aim. The new feudalism has a some what different explanation. After all, feudalism is correctly associ ated with that most reprobated and despised of appellations, Me dieval. Medieval is the very antith esis of modern. It is associated in almost everyone's mind with backwardness, with darkness, with things alien to modern man, whether these associations are jus tified or not. Mercantilism has its apologists. 1 One writer even at tempts to make the new mercantil ism alluring. He says, in part: Abundance will enable a reversal of the old order of things. Modern 1 See, for example, Oliver M. Dicker son, "Were the Navigation Acts Oppres sive 1" in The Making of American His tory, Donald Sheehan, ed., (New York: Holt, Rinehart and Winston, 1963, third edition), I, 57-86.

1()111Y mercantilism will remove the econom Ie machine from the middle of the landscape to one side, where, under planning by inducement, its ever more efficient automata will provide the goods .and services required by the general welfare .... This is the promise of modern mer cantilism, and if the time is not yet, it is yet a time worth striving for. 2 Feudalism has no such apolo gists. Yet what we are developing is much more closely akin to feu dalism than to mercantilism and much more deeply entwined with the premises of those who think of themselves as socialists. Of French Design Socialist doctrines were formu lated mainly in the first half of the nineteenth century, in the wake of the final destruction of the vestiges of feudalism which had occurred during the French Revolution. They were shaped by Frenchmen more than by any other nationals, by Auguste Comte, by Henri Saint-Simon, by Louis-Auguste Blanqui, by Charles Fourier, and by others. The French were assisted by others, of course, by the Scotchman Rob ert Dale Owen, by the Germans Karl Marx and Friedrich Engels, among others.

2 W. H. Ferry, "Caught on the Horn of Plenty," The Corporation Take-over, An drew Hacker, ed. (New York: Harper & Row, 1964), p. 187. At any rate, socialist doctrines were permeated from the outset with notions drawn from feudal ism. Socialism was born (or re born) amidst the conservatism of the restoration following the French Revolution and the roman ticism of the nineteenth century. Both of these were friendly, in varying degrees, to feudalism, or its relics. Some romantics wrote lovingly and favorably of the Mid dle Ages. For example, there were the very popular novels of Sir Walter Scott in English. Most ilnportant, however, both romantics and/or socialists were anti-industrial. The new snake in the Garden of Eden was industri alization, and man had been cast out into what came to be called the Industrial Revolution. Most of men's woes, real or imagined, were attributed to industrialization, a term synonymous with the horrors of the factory town, with little children laboring at spindles, with women drawn from the home into the mills, with men spending long hours in mines, with exploitation and alienation. By comparison with industrialization and its ma chines, its factories, its mines, its industrial proletariat, the preced ing ages were often thought of as exemplifying pastoral bliss.

Those who stick to economic analysis pass over one of the deep est appeals of socialism. It can be 436 THE FREEMAN July shown rather conclusively that men worked long hours at hard and unmitigated labor before the development of large-scale manu facturing carried on in factories, that small children had worked from time immemorial, that depri vation was much greater in pre industrial times, that far from de creasing well-being, industrializa tion generally contributed to the improvement of it. The Alienation Theory According to Marx But the socialist appeal goes much deeper than this to some thing rather fundamental. Social ists claim that industrialization came in a way that dissolved the bonds of community. Modern man is alienated, said Karl Marx, and by so doing he gave a name to that phenomenon supposed to result from private ownership of the means of production, from capi talism, from industrialization, from the loss of community. The factory drew men from their ancestral homes to live in factory towns where they were "alienated" from the products of their labor by the "cash nexus." It pitted them one against the other for jobs and wages thus promoting individual ism. Competition, so socialists have held, is the war of each against all, and private property is the booty gained in the contest.

There have been two models for the community which socialists are supposed to be seeking, one historical and the other imagina tive. The historical model for com munity is found in the Middle Ages, in the medieval manor (or mil'" in Russia), in the medieval guild, university, universal church, and so on. The other model is in the never-never land of utopia, that is, by translation, in the land that is "nowhere." Marx attempt ed to give reality to utopia by mak ing it historically inevitable. Other socialists were utopian, according to Marx; his socialism was "scien tific," scientific because its outlines were supposed to emerge from the projection of trends already dis cernible. In other words, one is no longer utopian when his utopia ceases to be a product of the im agination and becomes a prophecy of the shape of the future. Marx knew, no more about how to form viable communities than did those "utopians" whom he de nounced in the nineteenth century for their futile efforts at erecting utopian communities. He di<;l suc ceed, hO'wever, in turning men's eyes away from the real source of their notion of community to the mumbo-jumbo of false prophecy supposedly based upon an extrapo lation of history. This enabled so cialists to obscure from them selves and others the medieval THE ~EW FBUDAL18M.

sources of their idea ofcommun ity. My point is this: It is not acci dental that the thrust toward what is supposed to be socialism pro duces the New Feudalism. This does not mean that socialists have wanted to revive feudalism. By and large, they have been in the ranks of those most eager to pil lory the medieval. Nor does it mean that they have succeeded in establishing a feudal order com parable to the one in the Middle Ages. My remarks do not have to do with the intent of socialists but rather with the tendency of their action. In their efforts to re cover what they supposed was a lost community, they have been drawn to favor practices which are medieval in character. These are, after all, the ones which pre vailed generally before modern man became "alienated." They are the pre-industrial, pre-individual istic, pre-cash nexus ways of deal ing with things. Socialist inven tiveness has, to an amazing ex tent, been reconstruction of ab stractions from the vaguely re called Middle Ages.

Corporatism The essence of medieval social organization was corporatism. Ac cording to Jakob Burckhardt, in the Middle Ages "man was con scious of himself only as a membel'" of a race, people, family, or corporation - only through some general category."3 These corpora tions, bodies, or organizations guild, manor, college, town, monas tic order - provided the frame work within which men had their prerogatives, privileges, duties, ob ligations, and responsibilities. A lnan, simply as a man, could be said to have hardly any rights. These belonged to him in his ca paci ty as a member of an organi zation' as a knight, as a burgher, as a priest, and so on. The New Feudalism does not, of course, resemble the old feudal ism in detail generally; the simi larity is essential. Modern social ists have not revived the outward trappings of monasticism, have not established lords of the manor who defend their possessions with sword and shield, and have not permitted a religious hierarchy to rule over a certain area of life. It should be obvious that it is not in such matters that feudalism has been revived. In at least two es sentials, also, the New Feudalism is unlike the old: positions are not inherited generally, and powers are concentrated and unchecked rather than divided and balanced against one another. Otherwise, though, there are amazing simi3 Jakob Burckhardt, The Civilization of the Renaissance in Italy (New York: Modern Library, 1954), p. 100.

438 THE FREEMAN July larities in essence between the new and the old. In the United States, which con cerns us here, the New Feudalism is corporate in a manner similar to the old. The thrust is for men to be compulsory members of some body, and to have their pre rogatives as members of that or ganization. The most obvious ex ample of modern corporatism is the labor union. There have been extensive efforts to establish, in effect, compulsory labor union membership, to fix men in their jobs by seniority "rights," to grant certain privileges to those who are members of the union, e. g., the "right" to strike, and to provide benefits such as insurance and re tirement. Farmer unions differ in detail from labor unions, but they, too, are corporate in character. The contemporary university, with its hierarchy, the tenure of its faculty, and claims to special priv ileges for its members, e. g., aca demic freedom, comes more and more to resemble its medieval counterpart.

Organizations become feudal in character as they are established and maintained by government power, as they have a special legal standing, as the members have special immunities and privileges and are subject to government control of their affairs. The oppo site type to a medieval corporation is a voluntary organization. The latter organization would ex ist at the behest of its members, would enjoy no advantages at law not possessed by individuals, and would be subj ect to no restrictions other than those generally apply ing to individuals. Thus, a labor union is called a feudal organiza tion because it is interfused with the power of government, may, in effect, act as a government, i. e., use force to attain its ends. If it had no special legal standing, it would only be a voluntary organi zation and would not merit being referred to as feudal. Modern Feudal Forms Many organizations in America are being made feudal in charac ter which did not start out that way. Thus, almost all religious and charitable organizations were vol untary in their inception. They have benefited, however, from spe cial immunities, particularly taxa tion, and pressure grows for bringing them under government control in many ways. As a matter of fact, foundations are already heavily restricted in their activi ties by government. Those bodies which we call corporations are ap parently on the threshold of being thoroughly feudalized. Limited li ability corporations had the spe cial immunity of limited liability from the beginning. This served 1967 THE NEW FEUDALISM 439 as justification, or excuse, for gov ernment regulation and interven tion in their affairs. The stock issues of corporations fall under government regulation. Some cor porations, those denominated pub lic utilities, are' vigorously con tr611ed. Antitrust legislation is used quite often as a weapon to manipulate corporations. Govern ment contracts serve as induce ments to corporations to obey the wishes of governing power.

By and large, business corpora tions are not yet themselves sub governments, but there have been proposals since the time of Theo dore Roosevelt to make them or gans of government. (For a brief period under the N .R.A. in the 1930's corporations did assume governmental powers, or govern ment acted through them, which amounts to the same thing.) In tellectuals are, once again, propos ing similar and more thorough action. This proposal was made in a recent book: The center of my suggestion is that corporations be reconstituted as made of people. The associational element has been lost to sight in most modern corporations. This is almost as true of colleges and universities as it is of business corporations, and has led to fuzziness of purpose, an incredible metaphysics of corporations, and meaningless growth. More specifically this would mean first the creation of a corporate con stituency or constituencies consisting of all those who had long-term and significant interests in the corpora tion. Just how one would balance se curities holders, workers, managers, suppliers, clients is not easy to dis cern, but they should all be in some how. Secondly, in accordance with Western political practice, there should be a separation of legislative and executive instead of the merger or identification of the two.... Fi nally, it should be acknowledged that corporations, consisting of a lot of people, must have an internal law and proper courts to administer it.4 The language of the above is vague, or fuzzy, but the meaning is sufficiently clear for us to con clude that he is proposing that corporations be made into govern ments. If all those who are asso ciated with corporations in one way or another were treated as members of a political body, a long step would have been made toward feudalizing America. Another writer in the same book suggests the universalizing in America of group power. "It is now time for constitutional theorists to recog nize," he says, "an entity inter mediate between the indi vid ual and the state. This is the group ... the wielder of effective control over large parts of the American 4 R. W. Boyden, "The Breakdown of Corporations," Hacker, Ope cit., p. 60.

440 THE FREEMAN July power system."5 In short, we should stop pussyfooting around and establish a full-fledged feudal system. Property Rights Individuals in the Middle Ages did not own real property. They held it in trust for their family, present and future. But families did not own property, either. Even the lowly serf quite often had a legal claim to his habitation upon the manor, and the lord of the manor had the land as a fief from his overlord. These grants were traceable backward, in theory, to the king, whose lands they really were. The gradual thrust to socialism in America is producing a situa tion similar to that of feudal times. Individuals continue to hold title to property in our day, but it is subjected to an increasing variety of restrictions as to its use, to building codes, to area de velopment plans, to crop restric tions, to zoning laws, and so on. Government does not claim that it owns all the land, only tha tit may exercise the powers of an owne'r over it. We approach the point where government commis sioners of one sort or another might well be called overlords without straining the imagina5 Arthur S. Miller, "Private Govern ments and the Constitution," ibid., p. 131.

tion. Surely, the best theoretical justification for contemporary tax ing policies would be that what we are able to keep of the fruits of our labor is a fief granted us by government. Actually, our property is in creasingly taken from us by taxa tion and returned to us, or others, as services which may be called boons, fiefs, or special privileges. The process is somewhat analo gous to what some historians be lieve occurred in the very early Middle Ages. It is thought that small landowners quite often turned over their lands voluntarily to lords who would provide them protection. The lord, in turn, gave the use of the lands back to the former owner. In the intervening Dark Ages, as memory faded and conquest followed conquest, it came to be held that the king was the original owner. If another Dark Ages now looms before us, it is quite probable that our de scendants will believe that the state is the original benefactor and owner. Indeed, our children are already being taught such doc trines.

Institutional Similarities There are many parallels be tween the Middle Ages and pres ent developments and tendencies. In feudal times, there were dif ferent courts and different laws toe!)' TB:E NEW FEUDALISM: 441 governing the various bodies, classes, and orders. There were courts for the nobility, for the clergy, for townsmen, for guilds, and for such things as trading fairs. These have their modern counterparts: the numerous boards and commissions with their special rules (with the effect of law) and their court proceedings. There is the Interstate Commerce Commission with its regulations and its hearings, the National Labor Relations Board with its investigations and its rulings, the Securities and Exchange Commis sion with its rulings and supervi sion, and so on. Men in the Middle Ages would not have considered such organizations nearly so strange as would our great great grandfathers.

Before the development of com mon law in some places in the later Middle Ages, it was not unusual for the law to prescribe different penalties for the same offense, de pending upon the status of the person against whom the offense was committed. Money payments were frequently exacted instead of the life of the offender. William Stubbs said, regarding England, "This differed according to a regu lar table of values. The life of a king was esteemed at 7,200 shil lings, that of ... the archbishop at 3,600, that of a bishop or ealdorman at 1,200 shillings, that of an inferior thane at 600, that of a simple ceorl at 200. There were other valuations for Britons and slaves."6 There are signs that we are about ready to follow this early medieval pattern. Several state legislatures have been or are con sidering legislation to abolish cap ital punishment except for mur derers of certain persons, as Presidents or governors and policemen. True, such an enact ment would be a long way from a table of values that would set penalties according to our "value to society," but it would certainly be a step in that medieval direction.

That such things are seriously pro posed and that the proponents are not called crackpots indicates that we are already prepared to think in such terms to some extent. Other parallels can only he sug gested here. The Middle Ages had its just price and just wage. We have minimum wages and "fair" prices. The Middle Ages had its manor. We have cooperatives with their special immunities and privi leges, reincarnations of the manor. The Middle Ages had its Chil dren's Crusade; we have the Peace Corps. The Middle Ages had craft guilds; we have labor unions. 6 Norman F. Cantor, ed., William Stubbs on the English Constitution (New York: Crowell, 1966), p. 32.

442 THE FREEMAN July Many substitutions have been made, of course. The state has re placed the king, ideology replaced religion, the Supreme Court re placed the College of Cardinals, the bureaucracy replaced the no bility, the intellectuals (scien tists) replaced the clergy, the civil servant replaced the knight, and so forth. Our situation is much more diverse than theirs, how ever; the relationships to insti tutions from one age to another is not one to one, nor is the New Feudalism as solidly established in America as was the old feudal ism in England in the twelfth century. Part of the New Feudal ism is maintained by law now, but much of it is present only in sug gesti ve tendency. Checks and Balances The old feudalism contained a principle important for the con tainment of government power and the protection of the rights and privileges of inhabitants. That principle we know as dispersion of power and checks and balances.

Medieval organizations were often centers of power which could check and offset other centers of power. Churchmen and nobles con tested with kings and emperors to limit their exercise of power. Townsmen got charters from kings to free them from interference by the nobility. Separate courts largely freed the members of a class from the power of other organi zations. The Founders of these United States incorporated this vital prin ciple in the Constitution. They separated, dispersed, and balanced powers. They were not, however, reviving feudalism when they did this. They were using a feature, probably partially derived from the Middle Ages, to accomplish somewhat different ends. They did want to limit power, of course, but they did not· want empowered classes and orders of men. They substituted geographical disper sion for classes. Governmental jurisdiction was balanced by another governmental jurisdiction (national and state), and branch of government was arrayed against branch of government to inhibit and contain the exercise of power. Americans eventually sloughed off not only classes and orders but also that personal servitude which was at the heart of feudalism.

The thrust to socialism has been made at the expense of these ar rangements. Power has been in creasingly concentrated in Amer ica, and in every other land with a movement toward what is billed as socialism; the states are no longer centers of power which can effectively protect their inhabit ants from the exercise of Federal 1967 THE NEW FEUDALISM 443 power. Within the central govern ment, power has been further con centrated in the executive branch, and that jealousy of the branches for their prerogatives no longer serves effectively to inhibit power. Crushing the Opposition Superficially, it would appear that the New Feudalism is pro viding new centers of power to counter those of the Federal gov ernment. A closer look, however, will show that this has not gen erally been the case thus far and raise serious doubts as to that's being its future course of develop ment. The organizations which signalize the New Feudalism labor unions, farmer organiza tions, corporations, civil rights groups, and so on - are not exer cising powers formerly exercised by government. Instead, they ex ercise (or would exercise in the case of those not fully developed) power in addition to that exercised by formal government bodies.

Their power is gained not at the expense of the Federal govern ment but by the loss of the con trol of their affairs by the citi zenry. Moreover, these organizations exist at the behest and pleasure of the constituted governments. They have no distinct and inde pendent sources of authority. Their courts do not exempt them from the regular court system. These organizations have served, thus far, to extend government like power into more and more areas of life. They are largely under the control of the Federal government. When they come into conflict with the Federal govern ment, or contest the general ideo logical aims of those in power, they will most likely be subdued or crushed. They have no separate source of authority which would enable them to withstand the de termination of the Federal gov ernment. In the eschatology of socialism, the New Feudalism is largely a means to an end. The end is not socialism, however, not in the real world, for socialism never has been and there is no reason to be lieve it ever will be. The end, so far as I can discern it, is cen tralized and totalized power, ab solute and unrestrained, power wielded so it may be maintained.

Whether men believe the promises of socialism is significant only to the extent that their belief leads them to yield power and obeisance to the state. The new feudal or ganizations will be broken when it becomes expedient to break them. The feudal privileges will be with drawn when it will serve the pur poses of those in power to do so. The record of this century is clear on the matter. The communists 444 THE FREEMAN July have broken all groups which might oppose them, as have other socialists such as the Nazis. Revival of the Worst features of the Middle Ages The New Feudalism does not hold for us, then, the promise of containment of power . It does bring in its wake, as a more per manent residue, some of the least prized features of the old feudal ism. Namely, it revives serfdom, that personal servitude which was the bain of existence in the Middle Ages. The New Serfdom comes in many ways: in heavier and heavier taxation, in restrictions and con trols upon property, in the manip ulation of the money supply to impel us to use it in ways the bu reaucracy has determined are ben eficial. The rigidities and inflexi bilities of feudalism are revived and promise to become permanent features as government control and regulation. As the independence of individuals is sapped by these and other measures, what were formerly rights become vestiges as privileges granted by govern ment. Thus, arbitrary privileges become a universal feature of the remains of the New Feudalism.

Three points emerge from the above analysis. First, far from be ing progressive, the new political thought and developments of our era are retrogressive in reviving some of the worst features of the Middle Ages. Second, one of the maj or developments of our era is a reversion to feudalism. Third, the power allotted to the feudal istic groups is largely a means for politicalizing life. What is likely to remain from this effort is to talized power and a residual serf dom. Perhaps, it is unnecessary to point the moral. At any rate, it is high time we stop deluding our selves about the,; character of de velopments that have been taking place. The New Feudalism tends to further concentrate political power rather than disperse and check it. ~ Governments May Change THERE IS NO FORM of government which has the prerogative to be immutable. No political authority, which is created yesterday or a thousand years ago, may not be abrogated in ten year's time or tomorrow. No power, however respectable, however sacred, that is authorized to regard the state as its property.

From RA Y N AL' S Revolution 0/ the American Colonies 1781 A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN THE COURT AN 0 TH E CONSTITUTION IN The Warren Revolution (Ar lington House, $7), L. Brent Bo zell has written a tough and knotty book that challenges all our preconceptions, whether radical or conservative, about the place of the Supreme Court in the division of the powers. I found it enor mously stimulating and enor mously unsettling. If Mr. Bozell is right in his contention that "judicial review" of legislative acts was no part of the intention of the Founding Fathers who wrote the Constitution, then it follows that the Warren Court has usurped some dangerous pow ers. In such case, we live under a judicial tyranny. A conservative or a libertarian, looking at the Warren Court's decisions alone, will naturally be inclined to applaud Mr. Bozell's thesis. What business have the judges telling the states how to run themselves? But, projecting Mr. Bozell's thinking back into the Rooseveltian Thirties, when Congress was busy passing some legislation that seemed plainly unconstitutional on its face, what becomes of the libertarian's con tention that the judges were a craven lot when they decided that "a switch in time saves nine"?

What Mr. Bozell is saying is that the judges exceed their power whenever they challenge legisla tive supremacy, even in cases when the legislators go beyond the Constitution. Under this con struction, all our criticism of the court for failing to put an end to New Deal excesses in the Nine teen Thirties becomes irrelevant. Personally, as a veteran of the older wars that pre-date Earl Warren, I find this hard to take. In short, if Brent Bozell is right, the old contest between those who want the Supreme Court justices to be strict con structionists and those who want them to be loose constructionists 445 446 THE FREEMAN July is entirely beside the point. They shouldn't be passing definitive judgment on what the legislators do Ht all. Education and Religion Waiving the desirability of cor rect judicial review for the mo ment, let us look at Mr. Bozell's reading of the historical record.

The Warren Court has acted on the tradition that Charles Evans Hughes was right when he said, "We are under a Constitution, but the Constitution is what the judges say it is." Mr. Bozell spends some time on his proof, which seems irrefutable to me, that, under the Tenth (or States' Rights) Amendment, the individ ual states should be in full control of their educational establish ments and their laws covering voter qualification, provided they maintain "a republican form of government." The Congress that passed the Fourteenth Amendment, which guarantees "equal protection" of the laws to all U.S. citizens, had no manifest intention of interfer ing with local schools or of telling the states how they were to ap portion the voting for both houses of their legislatures. In fact, the same Congress that voted for con sidering the Fourteenth Amend ment also established schools in Washington "for the sole use of ... colored children," which is an indication that the "equal pro tection" clause was only intended to cover such things as the en forcement of contracts, the right to sue, the right to give evidence, to inherit, purchase, lease, sell, hold, and convey property, and to enj oy securi ty of person and ownership. This is not to say that segregated schools are a good thing; it is only to say that under the Tenth Amendment it is the business of the separate states to handle things not constitution ally assigned to the Federal au thorities.

Disregarding the intention of Congress in proposing the Four teenth Amendment, the Warren Court decided to make its own law about application of the equal protection clause to things that had been left to the states under the Tenth Amendment. It also translated the words, "Congress shall make no law respecting an establishment of religion," to mean that states should not make such laws, either. As for state sedition laws, the Warren Court argued in Pennsylvania v. Nelson that "Congress has intended to occupy the field of sedition" - and this despite the fact that the au thor of the Federal anticommunist act, Congressman Smith of Vir ginia, has said explicitly that he had no thought of interfering with 1967 THE COURT AND THE CONSTITUTION 447 the right of the states to pass antisedition laws on their own. Mr. Bozell reviews the Warren Court misinterpretation of the Constitution with evident dis taste for the wh~.e business. But his argument against judicial re view would be the same even if Congress had passed some fla grantly unconstitutional laws and the Warren Court had then pro ceeded to throw them out.

No Final Arbiter What Mr. Bozell contends is that there is no "final arbiter" of the Constitution. He goes deep into history to show that, far from inheriting a tradition of judicial review from Coke in Eng land and from the experience of the colonies before the Revolution, we had, actually, absorbed the opposite idea of legislative su premacy. Even Coke, he says, de voted the best part of his career to expounding the right of the English parliament to make what ever laws it chose to make; his early championship of the Bonham case, which could be interpreted as putting the courts above par liament, was just a tantalizing aberration. In the eleven years between the Declaration of Independence and the framing of the Constitu tion there were allegedly nine in stances in which the courts of the states presumed to sit in judg ment on what the local legislators had done. But when Mr. Bozell began to look into these instances in detail, he found that only one of them actually proves what the supporters of judicial review say of them all. In 1787, just when the Founders were about to meet in Philadelphia, a court in New Bern, North Carolina, actually proclaimed that one of North Carolina's legislative acts must "stand as abrogated." This, says lVlr. Bozell, "was a form of words never before uttered from a judi cial bench in America, or for that matter in the Anglo-Saxon world."

When Richard Spaight, one of the North Carolina delegates to the Constitutional Convention, heard of the decision, he wrote home to denounce it as "usurpation of au thority" and "contrary to the practise of all the world." So, if Spaight acquainted other delegates with the decision of the New Bern judges, he would hardly have helped prejudice them in favor of setting up a Supreme Court of the United States with full power to negate Congress. Mr. Bozell spends a lot of time on the mean ing of the Supremacy Clause in the U.S. Constitution, and reaches the conclusion that the Founding Fathers intended to let the judges of the separate state courts be the guardians of the Constitution 448 THE FREEMAN July in case of conflict between state and national laws. In the Course of Time If the Supreme Court was not intended as a "final arbiter," but merely as a court to render j udg ments in cases as they affected individual litigants, aren't we left with a final fuzziness that leaves the Bill of Rights at the mercy of legislators? Perhaps we are.

But James Madison, among others, thought we could live with it. The authors of the Federalist Papers thought that the natural processes of tension and competition among the various public authorities would finally settle things. If Con gress were to pass bad or uncon stitutional laws, it would be fi nally disciplined by the people. Or the courts might simply refuse to punish someone who had been victimized by an unconstitutional act, and Congress would be forced to reconsider its own behavior. Out of the tensions imposed by the workings of checks and bal ances, out of the stresses, strains, rivalries, and competitions of the consensus society, a "final" deci sion would emerge. Was Madison naive in suppos ing this? Is Mr. Bozell naive in following Madison? Well, suppose that the Supreme Court had not forced the integration issue. Isn't it likely that the individual states - yes, even Alabama and Missis sippi - would have found their way to recognizing the brother hood of man ,vithout being told they must do so with all deliberate speed? Mr. Bozell says that in a consensus society some things had best be left to the "flexibility of the fluid constitution," which al lows "our various governmental structures to absorb and reflect the diverse shifts in community consensus that are going on down below." And the question he fi nally asks is "whether the Warren Revolution is in the best interests of the American commonwealth, and, if not, what weapons are available for the CounterRevolu tion?" ~ TU£ FREEMAN AUGUST 1967 17, No.8 yI Unless we learn to live by the courage of our convictions, explains Leonard Read, our shortsighted bow ing to expediency win eventually put us out of business p. 451 yI John Sparks has something to say, too, about the practicality of business men who expect the government to do their work for them p. 459 yI The fiftieth anniversary of commu nism in Russia affords William Henry Chamberlin an opportunity for ap praisal that should be of interest to anyone who still has a choice ........... ,p.463 Y' An inquisitive student discovers what makes an entrepreneur tick ............ p.470 yt Speaking of anniversaries, Profes sor Coleson recalls a few that many of us have forgotten and reminds us of others free men should cherish ............ p.472 "" A Missouri housewife thinks that poverty of mind and soul may be more harmful to an individual than financial and material poverty p. 478 1" What does one expect in "a person of quality"? Well, try for size the defi nition offered from the Monthly Letter of the Royal Bank of Canada ....p. 481 "" Despite socialistic trends, suggests Ed Breese, there are ways an indi vidual can be free, if he tries ....p. 490 JII' In this third chapter, George Roche examines various social effects of the modern manifestations of political power , p. 493 yI And for a more detailed look at one of those interventions, join Milton Friedman on the subject of auto safety ............ p. 507 J;' John Chamberlain finds his cue in Public and Private Enterprise by Professor John Jewkes of England .. p. 509 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

AUGUST 1967 LEONARD E. READ PAUL L. POIROT Vol. 17, No.8 President, Foundation for Economic Education Managing Edito1' 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. Tel.: (914) 591 7230. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary 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, 1967, The Foundation for Economic Education, Inc. Printed il U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents 3 for $1.00; 10 for $2.50; 25 or more, 20 cents each.

Any current article will be supplied in reprint form upon sufficient dl mand to cover printing costs. Permission is hereby granted to repriJ any article from this issue, providing customary credit is given, excel IlA Person of Quality" and IlAuto-Safety Standards."

LEONARD E. READ THE STEEL INDUSTRY, the textile, glass, and oil companies, the mak ers of watches, bicycles, electric lamps, and a host of other prod ucts are beset by foreign com petition. Now, in any industry, every marginal, high-cost producer faces the prospect of failure. But, on occasion, the sharpness of for eign competition may squeeze many domestic producers to the wall unless they can obtain relief. So, they draw together in search of a remedy. What remedial measures first come to mind? Doing away with the real causes of the trouble? Rarely! Mostly, such trade-de stroying devices as tariffs, quotas, embargoes are proposed, these be ing political interventions to compensate for uneconomic practices already in effect. Thus, one mis take leads to others that may build into a whole chain of bad practices. What, really, is happening here? We know, of course, that capital and tools improve a worker's ef ficiency. And some industries more readily lend themselves to mech anization than do others. In in dustrialized countries we find types of production that require large amounts of capital per worker while others still depend mostly on raw manpower. And in the highly mechanized, highly capitalized U.S.A. we might expect efficient production in the mecha nized industries, whereas foreign producers with comparatively less capital might hold a comparative 451 452 THE FREEMAN August advantage over us in the labor intensive occupations.!

But toda.y we find even our highly capitalized industries buck ling under - foreign competition. This -doesn't make sense. Never before have we had so many tools and so much capital per worker as today. And most -- foreign pro ducers have not come close to us in that regard. So, why are they giving us such rough competition? Self-Hobbled-We've No One to Blame but Ourselves The explanation lies not in what foreigners are doing to us but, rather, in what "we" are doing to "ourselves." Some of our pro ducers are being priced out of the world market. And this is being done by an accumulation of costs and by methods of pricing that are demonstrably wrong. Further, most of us are quite agreed that they are wrong, that is, if we test_ our opinions by how we act individually and on our own re sponsibility. This is the way to discover how each of us believes "deep inside." Take the example of paying farmers not to grow peanuts.

Hardly anyone seems concerned about the costs or the desirability 1 "Labor-intensive" is a part of the economists' nomenclature. Examples: Babysitting, picking and culling coffee beans, activities that do not lend them selves -to mechanization. of this program when the forcible transfer of funds from taxpayers to farmers is done by government. But one would look in vain for a farmer who would personally use force on other citizens to provide himself a living in exchange for doing nothing. And it would be difficult to find anyone who would condone such an act on the part ' of a farmer. Who among-us would ever think of approaching a farm er in this manner? "Here, John, is $25 for those peanuts you didn't grow for me this year." "John" doubtless would refuse the $25 if anyone offered it that way. Noone but an out-and-out thiefreaUy believes in feathering his own nest at -_the expense of others.

We have in this single, rela tively minor example an irrational ity - a contradiction between be lief and action - that costs mil lions of dollars annually. This cost finds __ its way into increased taxes and becomes a cost of doing business - the steel business or whatever. Multiply this by thou sands of similarl.y irrational costs, running into tens of billions, and we can see why American _pro ducers are more and more plagued by foreign competition. They are burdened by increasing costs over which they have no control. It seems unbelievable that we could be running ourselves out of 1967 WHY RUN OURSELVES OUT OF BUSINESS? 453 business by practicing what all of us·really believe to be wrong! All· I wish to examine here is the irrational· aspect of our com petitive problem. Why this dou ble standard of morality, believ ing one way and acting other wise? Unless we know where the answer is to be found, American producers will continue to seek solution in trade-destructive "rem edies" such as tariffs, quotas, em bargoes.

1 repeat, our producers are faced with costs over which they have no control, costs· arising from ac tions that are believed to be wrong. But they are also con fronted with methods of' pricing that further weaken their com petitive position, methods that no one, "deep inside," believes to be right. If we will examine one of these widely practiced pricing schemes tha tno one believes in, we can at least identify where the competitive trouble begins. Coercive Pricing But first, what is this irra tional pricing method? Broadly speaking, there are two methods of pricing. One is free pricing, arrived at in the give and take of willing exchange. The other is a~hitl'ary pricing, founded on the coercive practice of unwilling ex change. In the first method, the price for a good or service is whatever amount you or others will exchange freely and 'willingly. In ,the· second method, the price fora good or service is whatever amount can be taxed or forcibly extorted from you or others. One rests on your choice as to how you use your property. The other rests on someone else's decision as to how to use your income and property.

Coercive pricing is demonstrably wrong. A classic example, the one among ever so many which I wish to use to make my point, is the strike. While .widely used, no one believes it to be right. Strikes have played an impor tant role in pricing American products out of the market. Yet, all too many· persons will stoutly defend the strike while believing it to be dead wrong. The strike is strictly a pricing device, a means of raising some 'wages above the market rate. There is no other reason to use it. 2 Of some 17,000,000 members of labor unions in the United States, about a tenth of them participate in one or more "work stoppages" each year - an appli cation of this coercive pricing 2 Strikes never accomplish more than to raise some wages at the expense of others; they do not and cannot raise the general wage level. See Why Wages Rise by Dr. F. A. Harper (Irvington, N.Y.: The Foundation for Economic Education, Inc., 1957), 124 pp.

454 THE FREEMAN August measure. 3 The coercion is applied in forcibly preventing others from working at jobs the strikers have vacated and at wages they have rejected. Work stoppage is pro duction stoppage - costly! This device is viewed with alarm by employers, employees, and con sumers alike. Yet, it is difficult to find a person, even among em ployers, who will not concede "the right to strike." This is an overt concession to coercion as an ap propriate method of pricing. Doing What No One Approves But how many really believe in this Inethod of pricing? Not even the strikers themselves! For if they believed coercive pricing to be sound in principle, they would never try to satisfy their own wants at lowest possible prices. Instead, they would patronize mo nopolists only, always shopping for goods that are coercively priced above the market. Anyone who believes the strike or nlonopoly method of pricing to 3 Ten per cent of union membership is only 2 per cent of the total work force and thus some may ask, "What harm can be done to the economy by these few?" Merely bear in mind that when a small fraction of these 2 per cent strike General Motors, for instance, millions of workers in related indus tries, even those not unionized, are put out of work. Also, the threat of coer cion is often quite as potent as the ultimate action would have been.

be just and valid would try to find sellers who employ that method. For instance, they would seek a doctor who demands a high fee and insists: "You accede to my demand or I shall no longer attend your ills. Further, I shall use force if necessary to keep any other doctor from attending you." Do any of us, even strikers, look for such sellers?4 Indeed, not! Instead, all of us, including Mr. Union Leader, shop around for the best quality and the lowest price obtainable. Try to find the person who will pay $100 for the identi cal suit of clothes that can be bought next door for $50. While we rarely think of it in these terms, all of us try to buy each other's labor as cheaply, not as dearly, as possible. Every penny of the price we pay for any good goes to individuals for wages, rent, interest, trans portation, storage, or some other productive service. Parentheti cally, a low-priced good more often than not returns a higher wage than a high-priced good. But this does not alter the fact that, when buying, we seek services at lower, not higher, prices.

Nor need we be led astray by 4 Some will claim that the union boy cott of nonunion goods answers this question affirmatively. Gross inattention to the boycott is compelling evidence that union members do not believe in their own method of pricing.

1967 WHY RUN OURSELVES OUT OF BUSINESS? 455 the fact that all of us try to sell for as much as we can and buy for as little as possible. This is at once a natural and commend able trait when confined to the peaceful give-and-take of the free market. But we do not approve, at least in principle, gratifying these inclinations by brute force, either in selling or buying. Were we to approve coercive pricing, we would witness the grocer forcing the customer to pay a dollar for his can of beans and the customer forcing the grocer to sell his beans for a nickel. Utter nonsense!5 So here we are pricing ourselves out of world markets by adding costs we don't really believe in, and over which the producers have no control, and by pricing schemes that are demonstrably un sound. And, judging by our ac tions as buyers, we seem to be unanimously agreed that such pricing is wrong and unsound. Why this distinction between what we really believe and what we daily practice, and more or less condone? One would think that such a serious waste of resources, when agreed to as unsound, would be easy to eliminate. Why do we persist in these practices? Some5 Arbitration, which in the final anal ysis is but a variation of coercive pric ing, would price the beans somewhere between 5¢ and $1.00. Noone, if properly tested, believes in this kind of pricing.

thing is amiss; there is, as we say, "a slip 'twixt the cup and the lip." We must conclude that foreign producers are out-competing American producers because we are practicing what "deep inside" we know to be wrong. If·I may coin a phrase, we are suffering from a psychic short circuit. We are failing miserably to reason from our own moral premises to practical conclusions! The Teaching Problem Put yourself in the role of teacher, charged with thinking this through and giving corrective instructions. You have finally dis covered where the trouble is. But what is the remedy? Would you hammer away at the bad econom ics of coercive pricing? This would be just as futile as explain ing the bad economics of stealing, that is, of some feathering their nests at the expense of others. Everybody already agrees that coercive pricing and stealing are bad economics. We must continue to teach sound economics, to be sure. But when it comes to these particular troubles we find that the remedies lie beyond the scope of economics.

Other disciplines - moral philoso phy, psychology, logic, psychiatry, sociology - must be brought into play.

456 THE FREEMAN August What is it the effective teacher must first learn, and then learn how to explain, if foreign com peti tors are not to run American industrialists out of business? The answer, I feel certain, lies deeper than we think. Crowd Behavior Most individuals when acting personally and in their own name - when acting in you-and-me sit uations - are above reproach. They can be trusted; their word is as good as their bond. The promises men live by are far more honored than breached in man-to-man deal ings. We would like to think that this personal. recti tude, seen on every hand,· is a rationally structured conduct, that it has its origin in the reasoning mind. Has not pure logic commended to these people that fairness, honesty, justice, re spect, freedom are essential in gredients for mutual upgrading and peaceful living together? A forbidding suspicion: This in dividual rectitude, practiced so widely, these moral directives "deep inside," may, in most cases, be more from habit than reason.

No rational and logical mind would abruptly fail to function the mo ment numbers are introduced. No thinking person would condone or support a collective action that would be repulsive to him as a personal action. Reason and logic possess probing qualities and have no such boundaries; practical con clusions are logical extensions of moral premises. Merely observe that millions of individuals who would not steal or coerci vely price when acting in their own name and on their own responsibility will do so when they act in the name of a collective: the union, a church, a chamber of commerce,society, the majority, and so on. If these people cannot reason from the singular to the plural, how can we assume that their personal recti tude is the result of reasoning and logic? It must be only instinctive or imita tive. Is the effective teacher con fronted with the utterly baffling problem of getting people to rea son, to think things through for themselves? Even those individ uals potentially able to do so cannot make the grade short of a self-generated motivation,a hard to-come-by initiative. How can ini tiative be taught? I gather that initiative is more inborn or "caught" than taught, that it is occasionally picked up by persons when in the presence of exemplars, initiative having a contagious quality of sorts.

Individuals who have the capac ity to think things through for themselves and who, at· the same 1967 WHY RUN OURSELVES OUT OF BUSINESS? 457 time, have the gumption, the get up-and-go, the enterprise to do so, appear to be the only ones who can qualify as exemplars and, thus, as effective teachers. A Strictly Personal Problem What is it they must under stand· and learn how to explain? First, that which lies "deep in side" - conscience, if you will-is exclusively a trait of the individ ual, never of any organization, in stitution, collective. Further, its mandates are as close to rightness, soundness, righteousness as is pos sible for any person. Even more: every step in human progress, in sofar as man has had a hand in it, is a manifestation of that which lies "deep inside." Progress can never be ascribed to any corrup tion of conscience !6 Second, the responsibility for one's actions cannot be shifted, cer tainly not to anything impersonal and incapable of bearing responsi bility. Unions, churches, chambers of commerce, and the like are of this abstract nature, mere names 6 "I suggest that we postulate that the intangibles of truth and beauty, , human freedom, courage, honor, honesty are the core of the truly basic realities; and that the supposed realities which we see and touch and feel are really only shadows cast by these truly basic dynamic. forms in their many embodi ments." From The Symphony of Life by Donald Hatch Andrews (Lee's Summit, Mo.: Unity Books, 1967), pp. 257-258.

we give to groups of persons. These abstractions can no more bear responsibility than they can bear children, or speak, or think. Third, any action an individual supports or condones is his action. If it be contrary to what lies "deep inside," it is wrong accord ing to his own standards. And to hang the name plate of the wrong action on the union or some other collective is only to hide behind the cloak of anonymity -like an ostrich with his head in the sand. The individual's· responsibility· for what he supports or condones is inalienable, as inseparably linked to him as is his psyche, his soul, his mentality. If American producers are to cope with foreign competition, the way, I suspect, will not be found in trade-destructive expedients. It lies in finding and removing the causes of their present plight. The only reason that causal identifica tion appears so deep is that ... it's new territory, an area rarelyex plored.

The Will to Improve Actually, the remedy is not that difficult. It simply calls for (1) do int what one believes to be right, th~t·· is, obedience to what lies ud~ep inside," (2) avoiding the sn~re that something other than self can be responsible for what one supports and condones, (3) 458 THE FREEMAN August logically reasoning from what's "deep inside" to practical conclu sions, and (4) the will and the gumption to reason, that is, to think things through. The fact that few can carry out even these prerequisites to a healthy commerce is no occasion for discouragement. There are plenty who can - if they will! If they will! The deterrent is the plaguing thought that if I practice what I believe to be right while others do not, I'll go down while they survive. As if every step toward progress had to be taken simultaneously and unani mously - like a regiment does the goose step. It never has been thus, nor will it ever be! Were this the rule, man would still be at the primitive stage. Every advance in human history began with a single step by some lone individual toward what he believed to be right and just and sound.

Admittedly, it seems risky, even dangerous, to follow the dictates of one's conscience when others do not. But is it, really? Hearsay reports about what has happened to others often are erroneous and misleading. For the right answer, carefully examine personal experi ences; only in these is the truth revealed. Aside from an occasional "boner" in presenting and stand ing for what's "deep inside," in tegrity to conscience "pays off." Nor is the reason difficult to find. Fainter hearts, longing for the "courage" they lack, admire and support those who honestly stand by their convictions. Longing to do right, but too timid to try it, they think of the right-acting per son as their alter ego. Over and over again we hear the refrain, "I'm so glad you said it; that's what I was thinking." Such integrity requires no un usual courage; only the knowledge that it's not dangerous to be hon est. "To thine own self be true."

Anyone aware of the dividends of such action demonstrates, not bravery, but wisdom and down-to earth practicality. Further, he has the key to making what's "deep inside" go on outside, the key to not running ourselves out of busi ness. + Freedom to Improve ... but the only unfailing and permanent source of improvement is liberty, since by it there are as many possible independent centers of improvement as there are individuals. JOHN STUART MILL MANY a logical and practical man seems to go haywire in his expec tations of government. He will sail right over the philosophy that would limit government to the pro tection of life, liberty, and prop erty. When he sees human needs, he deems it practical to call for government action to relieve pov erty and provide social security, medicare, school lunches, educa tion, foreign aid, and other "chari ties." He finds it inconceivable that business could function without such government services as the post office, highways, monetary controls, weather reports - and subsidized electric power, if he comes from the region of the Ten nessee Valley Authority. He also expects "police protection" against economic adversity, unemployment, Mr. Sparks is an executive of an Ohio manu facturing company and a frequent contributor to THE FREEMAN.

price changes, and other aspects of competition. Such great faith in government's ability to administer charities, services, and controls would sug gest a long string of successes. At least, that's how most businesses gain a clientele. One satisfied cus tomer is the advertisement to the next. When a businessman wants a new office building, he seeks an architect of demonstrated skill in the design of similar structures. Professional football managers try to fill their rosters with experi enced players who show promise of greater success. An entertainer discovers that each round of ap plause is the steppingstone toward more popularity and demand. The successful consulting firm grows on its record for solving perplex ing problems. There is no finer recommenda tion than prior success - except 459 460 THE FREEMAN August where government is concerned. That's a different .story, as the record clearly reveals.

Compounding the Problem In the area of "charity," it has compiled a miserable showing of waste and graft. Recipients, who need above all else to regain self responsibility and self-reliance, are rewarded and encouraged instead to remain dependent. Unwedded motherhood becomes a livelihood. Unemployed persons choose. to re main jobless because of the com pensation. Educators and parents relinquish their responsibilities toward their children in exchange for state and Federal aid. The something-for-nothing years of the social security program are over. Henceforth, workers would do far better to buy insurance pri vately - if they had the choice. From medicare may be expected costly and inadequate service, wrapped in .red. tape and inacces sible when needed. The government's record for rendering economic service also· is deplorable. The monopolized postal service has been unimaginative and inefficient .. in contrast with other forms of communication.

Operating· costs rise year after year. Yet, in. many respects, the quality of service has declined. Part of the rapid cost increase is paid directly by "captive" customers, the nation's postal users, through higher postal rates. The remainder is "out of sight" in the government's accounting records, adding to the taxpayer's burden. Another economic service by a combination of municipal, county, state, and Federal governments is the network of highways across the nation. And to come across one of the completed stretches of the new interstate highways is a trav eler's delight. Have we an excep tion here - government successful at something other than policing? Before passing judgment, consider the alarming increase in the high way death toll. The super high ways have seen· super collisions and super holiday casualty re cords as well as super traffic jams. The word is out in Los Angeles and other cities: Avoid the free ways when large numbers of mo torists are likely to be using them.

The government has made quite a fuss about the safety of private ly manufactured automobiles. Imagine the. furor over traffic con gestion and highway fatalities if the roads were privately owned and operated! But hardly anyone ever thinks about that possibility. If we did, we might dream of the convenience and safety of a high way system under competitive pri vate enterprise rather than a gov ernmental monopoly. Government also has monopo1967 IS IT PRACTICAL 1 461 lized the business of money and credit, with a sorry record of booms and panics and depression and endless inflation. But where is the "practical" man with an alternative monetary system? When Government Plays a Handicapper's Role Another governmental role ac.. cepted in blind faith by the practi cal man is that of the handicap per, arbitrarily adjusting the vol untary agreements that have been reached in the market place. In 1966, Florida orange growers had a bountiful harvest, a surplus situ ation from which the U. S. De partment of Agriculture hastened to rescue them. But the price sup port program, based on use of orange juice in the school lunch program, afforded little help. Fi nally, the processors wisely cut out of the government program with a sales campaign to sell or ange juice at lower prices. Early results indicate success ; consump tion is running 20 percent heavier than in the previous year .. Juice processors and consumers, in this instance, have found a way around the government's good intentions.

May it serve as a lesson to all who place their. faith in the "practi cality" of government relief! This poses a provocativeques tion. Why is it that when a man of proven ability in private under .. takings is ordained with govern .. mental power, he so often becomes a·hobble to progress? Why thee dif ferencebetween the success he was and the failure he becomes? There is a difference - of this there can be little doubt - but what is that difference? Call the difference self-reliance. Call it self responsibility. CaU it incentive to achieve a greater reward. Call it a fear of not succeeding. Call it a burning desire to serve.·customers better than does a competitor. Call it any or· all of these. A business man places his savings and per sonal effort on the line, betting he will succeed. He must rely upon himself; success or failure is his personal responsibility. If he does not attract enough customers, he will not obtain a satisfactory in come and may even lose his sav ings. He risks all this on his ability to serve others and achieve in r~turn the financial and psy chological rewards of profit and satisfaction. The private owner ship spur is twofold and very real - fear of failure, and pleasure of success.

Now, put this successful busi nessman in government office, and he will have to operate without those incentives. There is no penalty involved for the lack of self-reliance unless gross neglect of duty or misconduct occurs. Government· seldom permits the 462 THE FREEMAN August existence of competition. Conse Q.uently, there is no need to per form well in order to attract more customers. Nor is there any com pelling reason to perform effi ciently. There is no competitive standard with which to compare results. With what private postal system can one compare the gov ernment's performance? There is always the taxpayer to cover defi cits. The profit incentive makes the difference. In the absence of that incentive, it seems most unlikely that a Henry Ford, Thomas Edi son, Charles Kettering, or David Sarnoff will ever emerge from the ranks of government employees. It is not a matter of selecting the "right" persons for government jobs. It is a matter of selecting the jobs that government is competent to perform. The organization de signed to defend people lacks the disciplines and incentives for suc cessful business operation. So let's be truly practical. Let the police force attend to its appropriate de fensive functions. And let economic services be performed in open com petition by responsible individuals with a proven capacity for such service. + Herbert Spencer MARVELLOUS are the conclusions men reach once they desert the simple principle that each man should be allowed to pursue the objects of life, restrained 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 provided; 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 mon archical power culminated; namely, that "the right of working is a royal right which the prince can sell and the subjects mu'st buy."

This contrast is startling enough; but a contrast still more startling is being provided for us. We now see a resuscitation of the despotic doctrine, differing only by the substitution of trade unions for kings. For now that trade-unions are becoming univer sal, 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 in dividual worker must buy!

WILLIAM HENRY CHAMBERLIN THE YEAR 1967 marks the fiftiet.h anniversary of two events of world importance, the consequences of which are still very much with us. One event was the United States decision to intervene in World War I, following the German declara tion of unlimited submarine war fare. The other was the seizure of power in the vast Russian Empire by a small disciplined band of ex treme revolutionaries, then known as Bolsheviks, now more descrip tively designated as communists. The first put the United States on a merry-go-round of European and world power politics, easy enough to mount, but costly to ride and hard to get off. The second re placed the authoritarian, tradiMr. Chamberlain, Moscow correspondent for the Christian Science Monitor from 1922 to 1934, is author of the definitive two-volume history of the Russian Revolution and numer ous other books and articles on world affairs.

tional rule of the Czars by a much more ruthless, scientifically or ganized dictatorship of a single political party - more accurately, by the top leadership of that party. Russian communism has experi enced many changes in methods of administration and in governing personnel. Most of its founding fathers perished in Stalin's para noid purges. However, two basic principles have survived intact. Lenin is supposed to have said that there could be any number of po litical parties in Russia - provided that the Communist party was in power and all the other parties in jail. This is an excellent descrip tion of how the Soviet Union is governed. Stalin, writing in the of ficial party newspaper, Pravda, on November 26, 1936, spelled it out plainly: 463 464 THE FREEMAN August In the Soviet Union there is no basis for the existence of several parties or, consequently, for the free dom of parties. In the Soviet Union there is a basis only for the Commu nist party.

There is no toleration for oppo sition parties ; and organized dis senting groups within the Commu nist party are also strictly forbid den. The consequence is that ef fective decision-making power is concentrated in the hands of a very few men, sometimes one· man, at the head of the party organization. Total Control The .. other permanent principle of communism in practice is .that the government, in one form or an other, .undertakes to· manage the whole economic life of the country. In the first phase of the Revolution all private property, except for personal belongings, was confiscat ed and nationalized. After an early period of chaos, aU factories, mines, railways, public utilities, and stores· were placed in charge of a host of state bureaucrats. At· fir~t the peasants were .. left more. or less undisturbed on their small twenty-acre farms, following the confiscation and dividing of the estates of the large and .medium landowners. But.1929 marked the beginning of a process lasting over several· years and carried on with the utmost brutality. Peasants were subjected to such measures as wholesale deportations to forced labor and one politically organized great famine. They found their in dividual possession of land abol ished and themselves regimented in collective farms; what they raised and what they received for their produce were determined by the government.

Communism was an outgrowth of World War I. And world war led to an extension of the area under its control. By 1945, communist power prevailed in a large number of formerly independent states in Eastern and Central Europe. Stalin had once declared : "We donot want a foot of foreign soil; We shall not yield an inch of our own." But he might more accurately have said: "We do not want a foot of foreign soil, except Estonia, Latvia, Lithu ania, Poland, Hungary, Czechoslo vakia, Bulgaria, Roumania, Yugo slavia, parts of Finland, East Ger many." At least, this was how the polit icalmap of Europe looked shortly after the end of World War II. Yugoslavia, to be sure, broke away to the status of an independent state in foreign relations, although it retained the one-party system and a somewhat modified form of state control of the economy. These were not, as the Russian had been, spontaneous revolutions, arising out of the miseries and dislocation 1967 COMMUNISM AFTER FIFTY YEARS 465 of war. Communism was imposed on Eastern and Central Europe from without, by the tanks and bayonets of the Red Army.

China, on the other hand, experi enced pretty much what happened in Russia in 1917. Eight years of exhausting war with Japan, accom panied by Japanese occupation of the largest Chinese cities, had cre ated a situation in which the power and authority of the nationalist government, under Chiang Kai shek, were gravely undermined. In flation had almost destroyed the value of the Chinese currency and many Chinese - mistakenly, as they realized too late - believed that communism could be no worse than existing conditions and might bring some improvement. In the first years of the Soviet state, created by the communist revolution of November, 1917, the system was so new, so untried, that there could be the widest differ ences of opinion about its future prospects. Majority opinion in the West was most impressed by stor ies of terror, violence, hunger, and general misery. But a minority clung to the hope that communism would provide an answer to the problems and frustrations of mod ern society. So varied were reports of observers returning from Rus sia that it was hard to believe they were speaking about the same country.

There are still pronounced dif ferences of opinion, judgment, and emphasis in writings about the Soviet Union. But the facts are now well established, and some broad conclusions may be stated with confidence. Endurance of the System First, communism, as it has de veloped in Russia, is a tough, dur able system, which cannot easily be overthrown, either by a palace coup or by erosion from within. One need only look at the historical record. The governing system set up by Lenin has survived numer ous threats: • Prolonged civil war; • Allied intervention, although on a halfhearted and ineffective scale; • Two major famines; • A German invasion that led at one time to the occupation of a large part of European Russia; • The savage struggle to bring the peasants under the yoke of the collective farm; • Several periods of distress and general shortage and misery un common even by Russian stand ards (the years of civil war and economic collapse, 1917-1921, the time of forced collectivization, 1929-1933, the years of war with Germany and postwar recon struction) .

466 THE FREEMAN August This was due to the formula of government worked out, con sciously or unconsciously, under Lenin. It was further modified by Stalin and was imitated to a con siderable extent by the fascist dic tators, Mussolini and Hitler. What this amounted to was rule by a combination of unlimited terror and unlimited propaganda. The people who were not convinced by the propaganda were intimidated by the terror, by the knowledge that there was no means of organ ized effective resistance. Free men who are accustomed to the expression of diverse views find it difficult to understand, even to imagine, the power concentrated in the hands of the Soviet totali tarian state. Suppose the govern ment in this or any Western coun try controlled every printed or pub licly spoken word, directed the policy of every newspaper and magazine, used the theater, the movies, the youth organizations as instruments of propaganda, dic tated what should be taught from kindergarten to university, em ployed radio and television as its mouthpieces, forbade the importa tion of foreign newspapers and politically questionable books from abroad. Suppose, in addition, that anyone suspected of disloyalty was liable to arrest and banishment to hard and disagreeable work in some remote part of the country.

The chances are there would be few open dissenters. Survival Depends on Use of Some Capitalistic Practices Second, communism has only been. able to function as a going concern by adopting some of the methods which its advocates vio lently denounced in what they called the capitalist system. The old communist ideal, "From each according to his ability, to each ac cording to his need," has been con signed to the mothballs. Extensive ly copied are the incentives of a wage and salary system, with higher pay for higher skills. Dif ferences in food, dress, and stand ards of Iiving are sharper in the Soviet Union than in the West, es pecially so because there is much less to go around. Such egalitarian experiments as equality of wages and the limita tion of the pay of communists to the standard of a skilled worker have been discarded as impractical. In recent years there has even been an attempt, with little success, to gain some of the recognized ad vantages of the free market system without instituting its essential component, private ownership. De spite communist propaganda to the contrary, the transfer of economic ownership has been, not to the workers, but to bureaucrats who are less concerned with the inter1967 COMMUNISM AFTER FIFTY YEARS 467 ests of the workers than in mak ing a profit for the state.

No Proof of Superiority Third, after fifty years, commu nism has emphatically failed to prove itself a superior productive system in comparison with an econ omybased on individual ownership. Lenin and his followers took over a huge country, so rich in natural resources as to be almost self-suffi cient. Five decades later, the Soviet Iiving standard is one of the lowest in Europe, much lower than in the United States and Western Europe, even lower than in such satellite states as East Germany and Czech oslovakia. Nor is there any reason to be lieve that in the foreseeable future the Soviet Union and other com munist-ruled countries will achieve or approach the ideal proclaimed by Stalin and Khrushchev: to over take and outstrip America. The agricultural record of the country under collective farming is a dis grace. Quite recently the Soviet government found it necessary to make large purchases of grain in the United States and other for eign countries, whereas prerevolu tionary Russia had been a large ex porter of. wheat. Removing the au tomatic incentive of private owner ship from Russian farming was like taking an irreplaceable dy namo from a machine.

The consequences of national izingall shops and service indus tries have been equally disastrous: indifference to the customer, poor quality, absence of initiative in making improvements. To be sure, there have been striking advances in the quantity of industrial out put, in scientific accomplishment, and especially in the exploration of space, in the spread of education, in certain modernizing changes in urban life. But Russia under any system would have achieved substantial progress over half a century. It was experiencing a rapid economic growth in the decade before the outbreak of World War 1. Many projects of which Soviet publicists like to boast were on engineers' drawing boards before the Revolu tion. The Soviet Union should be compared, not with Russia in 1917, but with Russia as it might other wise have been in 1967. Judging from pre-Revolutionary trends, the noncommunist Russia of 1967 would have shown substantial econ omic and social progress, less spec tacular than the Soviet in some fields, but better balanced and more conducive to the comfort of the average citizen.

Maintained by Force After fifty years, there is no in dication that communism could win maj ority support in any coun468 THE FREEMAN August try without the use of force, vio lence, and terrorism. Voluntary movement is almost always away from, not toward, communist-ruled countries. There have been two waves of migration from Soviet Russia, involving hundreds of thousands, if not millions, of peo ple. One was immediately after the Revolution; the other was after World War II when many Russians who had been forcibly or volun tarily evacuated from the Soviet Union during the time of German invasion chose not to go home. The part of Germany under Soviet oc cupation, quaintly called the Ger man Democratic Republic, lost some four million of its citizens to prospering, free enterprise West Germany. Then the communists set up a penitentiary wall in the di vided city of Berlin and an elabo rate, closely guarded system of barbed wire entanglements and booby-traps along its e'litire fron tier to prevent this continuous wholesale flight.

Hong Kong is packed with refu gees from communist China. In the divided countries of East Asia, Korea, and Vietnam, it is the same story: a stampede to get away from communist rule. There has also been a large exodus of voluntary exiles from Poland and other satellite lands of Eastern Europe. Among millions of "defectors," refugees from communism in many lands, one recent case arrests at tention. It is the flight from the Soviet Union, first to India, then to Switzerland, of Svetlana Alli luyeva, daughter of the formidable dictator, Josef Stalin, and her later appearance in the United States. Seeking the freedom of expression she was denied at home was a dra matic blow to the Soviet system in world public opinion. The wheel, in her case, had come full circle. In April, 1917, Lenin left Switzerland, where he had found political asylum, to lead the communist revolution in Russia. Exactly fifty years later Stalin's daughter had returned to Switzer land - a refugee from the regime founded by Lenin and consoli dated, built up, shaped in every detail by her own father.

Serious Problems Persist Fifth, the United States and other noncommunist countries have their problems, big and small, political, economic, and so cial. But it would be an error to imagine that, merely because they have devised effective means of suppressing open criticism and discussion, the rulers of commu nist countries face no difficulties and problems of their own. In China, there has for months been an obscure but evidently bit ter state of near civil war be tween supreme dictator Mao Tse1967 COMMUNISM AFTER FIFTY YEARS 469 tung (whose "thought" is recom mended as the panacea for all ills) and some of his closest asso ciates. The consequences are still uncertain. There is more outward appearance of stability in the So viet Union. But Lenin's and Sta lin's heirs have not found the answers to two questions of para mount importance. They have not found a means of tranferring political power in peaceful and legitimate fashion.

The quiet, unquestioning handing over of supreme authority from a President or Prime Minister to the representative of another party that has been victorious at the polls would be ludicrously impos sible under Soviet conditions. As a result there is constant rivalry, tension, intrigue, infighting among the few men at the sources of political and economic power. And, as the Soviet economy gets out of the primitive stage of try ing to produce as much as pos sible and faces the need to make investment choices, even to pay some attention to consumer tastes, the lack of a substitute for the free market system becomes more and more painfully apparent. The free market presupposes free en terprise and private ownership; and efforts to obtain its benefits where these elements are lacking are foredoomed to failure. Our Danger from Within Sixth, what does communism, half a century after it was launched as a system of govern ment in a large country, mean for the United States? If the United States will hold to the principles of economic individual ism, communism is not and never will be a challenge in the sense of providing a better life for more people. Nor is there any serious threat of military conquest; the predictable suicidal consequences of a nuclear clash are the best as surance that such a clash will not take place.

The danger to the advanced in dustrial societies of the United States, Canada, Japan, and West ern Europe is from within, not from without. Intensification of the trend toward omnicompetent government, drying up of the sources of future investment through excessive taxation, throw ing more and more of the burden of supporting the unfit and the unproductive on the producing part of the population threatens to erode and finally destroy the incentives to hard work which help to make an individualist economy so superior to a collec tivist. If America will live up to its better historic ideals, it can face the challenge of communism undaunted and unafraid. ~ A STAND ONE of the forgotten men of our age is the entrepreneur, the indi vidual who, on his own initiative and judgment, at his own risk, goes into business for himself. The agonies and ecstacies of· these un organized iconoclasts have usually been ignored by press, politicians, and public, including myself. But a chance encounter with one of these otherwise forgotten individ uals has given me a feeling of em pathy with an entrepreneur.

He sat next to me on my flight back to Detroit from Kennedy In ternational, .a trimly-built gentle man about 45 years of age, with gray hair and gold-rimmed glasses. We began conversing on the AFTRA strike, then in its second day. I found my traveling companMr. Warmbier is a student at Michigan State University. 470 OF ONE'S OWN DONALD WARMBIER ion to be the owner of an advertis ing agency, a self-made man who through long years and hard work secured for his firm numerous ac counts for the producing of TV and radio commercials. This pro duction had been halted by the strike, however, and his firm was experiencing losses. He told me of those losses, incurred because of an unforeseeable strike to which he was not a party, without re sentment, as if the bearing of such risks were a part of the standard operational procedure of his pro fession. And so it is. For the en trepreneur works without senior ity, tenure, or unemployment com pensation, deriving income when his firm earns profits, suffering if it doesn't. And while that day's news paper accounts of the AFTRA strike told of the wages foregone 1967 A STAND OF ONE'S OWN 471 by the striking employees, the losses of an entrepreneur went un mentioned.

Our discussion turned to Eng land, from where my companion h!ld j Ugt l'~tul'ned a.£ter the produc tion of several TV commercials. England seemed to him a stifling and suffocating place, in spite of the recent creative outbursts of popular music there. He saw the current flow of British talent into the music and entertainment fields as a direct consequence of the dry ing up of other forms of entre preneurial opportunity. Heavy pro gressive taxes have left entertain ment one of the few fields in which budding entrepreneurs can acquire the seed capital needed to launch new ventures. My companion recalled his own climb from a tar-paper shack in Kentucky, and how much more dif ficult punitive taxes made it. "The government takes 60 per cent of my income," he said. Here was the type of··man politicians put out of their minds when they endorse soak-the-rich taxation, the entre preneur of self-made means who must overcome such onerous bur dens if he is to. succeed.

We were approaching for land ing as I asked my companion a final question: Why, with all the unfore seeable risks, the personal losses, and the burdens of government taxation, did he decide to go into business for himself, to become an entrepreneur?· The answer came quickly, without pause for thought, as if he were stating a self-evident axiom: "I'd rather run a popsicle stand of my own than work for some government bureau." ~ The Business Climate "BUSINESS" is a product of civilization and it cannot exist for long in the absence of a specific constellation of conditions, chiefly moral, which support our civilization. The economic ingredient in the constellation is, as we shall see, free competition. But free competition cannot function unless there is general acceptance of such norms of conduct as willingness to abide by the rules of the game and to respect the rights of others, to maintain professional integrity and professional pride, and to avoid deceit, corruption, and the manipulation of the power of the state for personal and selfish ends.

W I L H ELM ROE P K E , Economics of the Free Society POST MORTEM ON The Lister Centennial EDWARD P. COLESON FORGETTING anniversaries can be embarrassing. This time, almost everybody's face should be red, except mine. We just overlooked the centennial of one of the truly outstanding events in human his tory. Now we'll have to wait an other hundred years to celebrate right. It's the principle of the thing that bothers me, not just a teacher's sadistic urge to flunk everyone for forgetting some .date that I happened to remember. One hundred and two years ago this month an unknown Scottish surgeon made one of those funda mental discoveries of the ages, one to be ranked along with the discovery of fire, the wheel, the smelting of metals, electricity, Dr. Coleson is Professor of Economics at Spring Arbor College in Michigan. 472 and atomic energy. But for the work of Joseph Lister and other well-nigh forgotten benefactors of mankind, many of us would have died in infancy as millions of others have died over the millen nia of human history and as mul titudes continue to die in the backward areas of the world even today. Truly, it may be said that "never were so many indebted to so.few for so much."

What makes the oversight par ticularly exasperating is the fact that other anniversaries have been remembered. You will recall that in June of 1965 a popular maga zine featured Napoleon on the sesquicentennial of Waterloo. Al most everyone celebrated the vic tory of Wellington and Blucher over the "Little Corporal," except 1967 POST MORTEM ON THE LISTER CENTENNIAL 473 the French who saved their fire works for the nine-hundredth an niversary of 1066 last fall. It seems that de Gaulle was more interested in William the Con queror's victory at Hastings than in one of Bonaparte's few defeats. Of course, the way to avoid for getting those important anniver saries is to plan ahead. Mark the calendar early and start getting ready for the celebration. I had been telling classes for several years that the centennial was com ing. You know, "year after next" the hundredth anniversary will be upon us and the entire world will rise up in gratitude and pay hom age to those pioneer "men against death"l whose researches have saved millions of lives over the century. Imagine my disappoint ment when August of 1965 rolled around with little visible recogni tion that there was anything spe cial about that month. I checked the date in the library and even consulted my family doctor. The former confirmed the correctness of my timing, but the latter had noted no special excitement in the medical journals or among the pro fession. Evidently, they had for gotten, too.

It is natural that we be selec tive about what we choose to cele1 This is the title of a book by Paul de Kruif, better known for his Microbe Hunters. brate. Every day must be the cen tennial of something or other. Some of these events, recent and remote, are noteworthy, too. For instance, 1964 was the nineteen hundredth anniversary of Nero's slum clearance project, prelude to urban renewal at Rome - and Nero didn't have to pay the fiddler since he furnished the music him self. "\Vhatever one may think of the ancient worthies and rascals, clearly we cannot remember all of their doings. But why we choose to remember some and forget others is a mystery. And certainly there are far-reaching consequences of these decisions as well as other choices we make. Edward Gib bon warned us long ago: . . . as long as mankind shall con tinue to bestow more liberal applause on their destroyers than on their ben efactors, the thirst of military glory will ever be the vice of the most ex alted characters. 2 IIEqual time ll for Benefactors of Mankind Now I am not suggesting that we erase those rascals from our history books - Alexander, Nero, Napoleon, and a host of others but simply that we give useful and respectable people equal time.

Take my hero, Joseph Lister, for 2 Edward Gibbon, The Decline and Fall of the Roman Empire (Modern Li brary edition), Vol. I, p. 6.

474 THE FREEMAN August Lister directing use of carbolic acid spray in one of his earliest "antiseptic" surgical operations. (Bettmann Archive) example. Here we have all theele ments of a good story, minus· the sadistic and gruesome .which should interest no one. His activ ities may have saved more lives than some of those conquerors de stroyed, which shouldgi ve him a fair claim to fame. His is the clas sic success story of how persistent effort triumphs over .the apathy of the masses and the opposition of misguided but well-meaning people. He was a surgeon in those tragic days after the discovery of anesthesia in 1846 made surgery common because it stilled the cries of the patients but more deadly because fatal infections developed in the overwhelming majority of the. incisions. Groping,. he stum bled upon the writings of a French chemist, one Louis Pas teur, and surmised that wounds would heal without ,infection if those mysterious micro-organisms Pasteur· had studied could· be ex cludedor killed. His methods were crude and unpleasant, but sound in principle, truly one of the few revolutionary developments in his tory. No doubt, many now reading these lines owe him their very lives. The last century in surgery has seen but the refinement of his 1967 POST MORTEM ON THE LISTER CENTENNIAL 475 technique. As Dr. Victor Robinson says, "Joseph Lister's manifold labors may be read in the volumes of his Collected Papers, but his lifework is summed up· in a phrase: he made surgery clean."3 In our preoccupation with detail and trivia today, we lose sight of the importance of sound principles as a point of departure.

Now, for the date of this epoch making discovery. After a great amount of groping, Joseph Lister tried his new idea on a compound fracture patient on August 12, 1865. Few days in human history have been so fateful for mankind or so unnoticed then and now. His method was bewilderingly simple. He just sterilized his instruments with carbolic acid and had it sprayed over the incision as he operated. The standard treatment for compound fractures with open wounds back then was immediate amputation, which proved fatal in many cases. Lister saved not only the patient's limb, but perhaps al so his life. Other operations in the ensuing months were equally suc cessful. Slow Acceptance of New Ideas Lister should have been hailed forthwith as the greatest surgeon of all time. But the doctors, like the rest of us, were reluctant to 3 Victor Robinson, The Story of Med icine, p. 423. change their ways. For years they had prided themselves on their dirty operating coats. The filthier the better, since a great accumula tion of dried pus and blood indicat ed a wide practice. But their pa tients died up to a hundred per cent. Indeed, a famous surgeon of the time once remarked that an English soldier on the field of Waterloo stood a better chance than a patient - let us say victim - on an operating table in a hos pital. It was even urged back then that hospitals be abolished since they were so obviously fatal. Lis ter sought to change all this and produced evidence that he was more than another charlatan or quack of which there had been too many already. But it took time for his ideas to catch on. We human beings have a right to be cautious since we have lost our way on many a detour over the ages. But it does seem that we might catch on faster than we do at times.

The next crucial date in the sanitary revolution of a century ago was the meeting of the British Medical Association in August of 1867 - a centennial we might yet commemorate in lieu of the one we forgot August 12 a couple of years ago. Lister read the only pa per worth hearing on August 9", but his contemporaries did not ap preciate the fact until long after476 THE FREEMAN August ward. Lister was not dramatic, be ing by no means an orator; and the other surgeons gave him a rough time in the question-and answer period following his pre sentation. But his ideas won out and rather speedily, too, once the movement got under way. We cannot help the fact that our fathers caught on slowly, but we could remedy our own pervert ed sense of values that glorifies the vicious and forgets the con structive. One could rewrite the history book with profit, emphasiz ing the beneficial, and passing briefly over the tragedies of the ages. And I would like to nominate for honors a host of solid citizens who worked for the betterment of mankind in medicine, in industry, in agriculture, and wherever else men and women have labored, however humbly.

Some Anniversaries for the future Since we forgot the great surgi cal centennial, perhaps it would be well to sit down with the his tory book and the calendar to start planning ahead for the next notable anniversary. May I sug gest a "double-header" coming up year after next: the bicentennial of the patenting of Richard Ark wright's "automated" spinning wheel and James Watt's improved steam engine. Here we have the genesis of the industrial age with its greater abundance for all. Like the medical revolution of a hun dred years ago, industrialization has been a great boon to a lot of rather ungrateful people who take their blessings for granted and forget how their improved stand ard of living became possible. Worse still, these benefactors of mankind are not simply forgotten as was Joseph Lister. The good they have done is disregarded, and the "growing pains" of the new industrial. era they helped to usher in are magnified out of all proportion and even dtstorted to make over these captains of indus try into deep-dyed villains. And strangely, all of this is done by intellectuals who enj oy all the fruits of those pioneering efforts and clamor for more, while they continue to vilify those who made it possible. Certainly, it would be appropriate as part of the bicen tennial celebration for Watt and Arkwright that we set the record straight on the so-called "Indus trial Revolution." As an introduc tion to this study, may I recom mend the book, Capitalism and the Historians, edited by F. A.

Hayek. 4 It is about time we cor rected some of these misconcep tions. 4 University of Chicago Press. Also available from the Foundation for Eco nomic Education, Irvington-on-Hudson, New York, $1.75.

1967 POST MORTEM ON THE LISTER CENTENNIAL 477 Be Ready lor J9761 For those who like to plan a little farther than just two years ahead, may I point out that 1976 will soon be upon us. This is also a double bicentennial, since this is the anniversary of both the Dec laration of Independence and the publication of Adam Smith's Wealth of Nations. Rather inter estingly, there are already some hardy souls getting set to cele brate the latter. One such organi zation is the "Invisible Hand So ciety," recently formed for this purpose. With Adam Smith, there is al so some correcting to do, as his disciples are so painfully aware. Perhaps a story will best illustrate the problem. Several years ago I decided to quit taking my Wealth of Nations in small, secondhand doses; so I set out to buy a copy of Smith's masterpiece for myself. I went to the local bookstore but the book was not to be found, al though Marx's Capital was quite conspicuous. A few weeks later I tried again in a much larger city.

Still no Smith, but there was Marx once more. Some months later I looked through the big bookstore of one of the state universities with the same luck. Always there was Marx but never Adam Smith. Finally, I ordered a secondhand copy through a bookstore in Chicago.5 It would appear that Adam Smith's ideas have been as com pletely mislaid. The prominence of Das Kapital suggests still another anniversary. In 1983 is another twin centen nial: the death of Karl Marx and the birth of John Maynard Keynes. Now, if present trends continue, it is quite possible that communism may complete the con quest of the world by force of arms and subversion by 1983 just in time for Orwell's 1984. But I have faith that this will never happen. There are powerful fac tors working against communism today, such as mass disillusion ment around the world, particular ly in those countries that have had firsthand experience with the vicious system. Communism has promised much but has delivered little, except terror, poverty, star vation, and death. Quoting Lin coln, "You can't fool all the people all the time"; and a host of people have long since caught on. If we would just clear our own minds so that we could present a construc tive alternative, this could be the psychological moment for a great revival of freedom. ~ 5 I note, with pleasure, that several inexpensive editions are again in print today. The Foundation for Economic Education stocks the 2-volume Dutton edition, at $4.50.

fo,e,fqo( WHAT? DONNA THOMPSON NEWSPAPERS and magazines have been filled with articles about the war on poverty. But it. seems that these analysts think of poverty only in terms of money income. The government is trying to pro vide income of a certain amount in the belief that, with material poverty obliterated, the individual can have all the good things in life and live happily ever after. The popular impression seems to be that the individual cannot amount to anything in the world if he is poor financially. Appar ently it has been forgotten that the great of the world have climbed to the heights·· from hovels, half starved, perhaps, but undeterred from the things they desired. That is where our modern think ing stumbles. The dictionary de fines poverty as "a quality or state of being poor, any deficiency in what constitutes richness. Poor Mrs. Thompson is a housewife and freelance writer in Southwest Missouri.

478 -as poverty of soil or ideas. Pov erty, a stronger word than poor, is the state of being in need." In need of what? Money, yes. But not money alone. We need a war on poverty of moral principle, poverty of character, poverty of ideas, poverty of ambition, pov erty of courage, and poverty of determination. I have been reading the life of Hans Christian Andersen. His father was a cobbler. His mother washed clothes in the river to help make a living. He was poor in this world's goods, hungry and cold, poorly dressed, and unedu cated. But rich, very rich in ideas, in dreams, in courage, determina tion, and faith in God. Poor clothes and hunger could be endured as he reached to become a great nov elist, playright, and spinner of fairy tales that have delighted children around the world. Abraham Lincoln, reading by firelight and candlelight, with ill1967 POVERTY OF WHAT? 479 fitting clothes and no formal edu cation, asked nothing of any man.

He wanted a chance and made it for himself. The pages of history reveal great actors, writers, lawyers, art ists, ministers, politicians - the list is endless. They were poor. They ,vere hungry. But they achieved because they were rich in many ways. The Nature of Growth We need to change our view point. It is well to clean up the slums. It is well to try to find work for people who will work. It is a wonderful thing to provide an ed ucation for people who want it. But let us not mislead ourselves. Those who are poor in worldly goods will not be stopped if they are rich in character, moral fiber, courage, and ambition. They will develop the talent God has given them and nothing will stop them. I do not mean that everyone has the divine spark of greatness. But any individual can help him self become a responsible, desir able citizen - not rich, but with enough - honest and law-abiding if he so desires. Look at the lead ers in your own community, many of whom from poor beginnings have risen above their surround ings. And among your neighbors are many others who live in small er houses and work for what they have - not abundance, but enough -who· go to church and send their children to school, whose pride will not permit them to ask for help and, if offered, will push the offer away with the answer, "Let me do it. I can do it for myself. I don't need any help."

I once knew a boy who was working his way through college. He had no money, but he was de termined to go on to medical school. "Medical schools cost a lot of money," I said. "I don't see how you can do it financially." I'll never forget the way he looked at me or what he said. "I've wanted to be a doctor since I was a little boy. The old country doctor in· our town used to take me with him on his calls in his horse and buggy. And I'm going through medical school and become a doctor if I have to live on a sack of peanuts a day." He became a very successful surgeon. He had started poor in money, but rich in dreams and determination. He would not be stopped. Even the Great Masterhimsel£ was so poor that he told his friends, "The Son of Man hath not where to lay his head." But his words have endured for two thousand years, his life an exam ple of wealth of spirit, of courage, of character. Each can achieve the goal that is set for him - if 480 THE FREEMAN August he is rich in those spiritual quali ties which defy the bonds of ma. terialism. In the soul and mind of man lies the richness of his life. Not what he wears or where he lives, but how he lives and what he is.

The Desire to Learn In the War on Poverty, the word education is mingled with that of material advantage. For mal education is of grea.t value moneywise .. It is also the key that will unlock many-, doors. But edu cation may be acquired without going to college. The dictionary defines education as "the imparta tion or acquisition of knowledge, skill, or the development of char acter as by study or discipline. Education is the general and for mal word for schooling, especially in an institute of learning. But knowledge, that which is gained and preserved by knowing, enlightenment, learning, is the sum of information conserved by civ ilization. To learn is to gain knowl edge or understanding by study." And you can study by candle light, as did Lincoln, or by a glow ing electric light. You can study and learn on the street, in the field, in the factory, anywhere, if there is desire and will. The world of learning, of knowledge, is open to those who want it.

Poverty in a sense is a physical and material condition to be over come; but men also must fight the war on poverty of spirit, pov erty of ambition and determina tion and courage, the poverty of our minds. "Knowledge is power." It is time men stopped thinking only in terms of financial and ma terial poverty and began to fight this poverty of the soul. If the latter is conquered, the other will take care of itself. ~ Pauper's Purpose? BECAUSE it is my social function to supply the world as well as I can with a certain thing, therefore I dread the world's being so well supplied with it that I shall be able to get little or nothing for supplying more. It is impossible to exaggerate the importance of this consideration, or the penetrating and intimate nature of its bearing on every aspect of the social question. PHILIP H. WICKSTEED. The Common Sen8e of Political Economy A Person of Quality EVERYONE'S LIFE is spent in the pursuit of self-fulfillment, but not everyone reaches his objective. The man or woman who succeeds is a person who has realized in time that satisfaction does not arise merely from being good at some thing, but also from being a cer tain kind of person.

Such a person is not content to dedicate his life to small purposes. He has quality in his ambition. He does not strive to amass stuff to feed his vanity, but does his best to become somebody who is esteemed. He wishes to be, not merely to appear, the best; for this is the mark of quality. The person of quality realizes that there is something beyond success: it is excellence. One may be successful in the eyes of the world without touching the Golden Fleece of excellence, for excellence Reprinted by permission from The Royal Bank of Canada Monthly Letter, April, 1967. is in the person and is not con ferred by the greatness of the office he holds. It is typified in what the goddess Athene said of Ulysses, that in him "deed and word notably marched together to their deliberate end." It is people,. of excellence who build greatly and lastingly. Egypt had millions of people living on the world's most fertile soil and Athens had 200,000 living on a rocky plain, yet the Egypt of that day is remembered for Cleopatra while Athens is imperishable in the minds of men.

Our idea of excellence cannot be limited to this, that, or the other area of human activity. Excellence is a thing in itself, embracing many kinds of achievement at many levels. There is excellence in ab stract intellectual activity, in art, in music, in managerial functions, in craftsmanship at the work bench, in technical skill, and in human relations. 481 482 THE FREEMAN August Only by being a person of the highest quality that it is possible for him to become can a man at tain happiness, because happiness lies in the active exercise of his vital powers along the lines of excellence in a life affording scope for their development. He must, of course, be competent, but ex cellence rises above that. Character We mass-produce almost every thing in this country, but we can not mass-produce character, be cause that is a matter of personal identity. It belongs to those who have found the part they are to play; who are doing the work for which they are best endowed; who are satisfied that they are fill ing a vital need; who are meeting their obligations and standing up to their tasks.

Such people willingly learn whatever they need to know to perform their role; they discipline their passing impulses so as to keep them from getting in the way of proper performance, and they do their jobs better than is needed just to "get by." Character is a positive thing. It is not protected innocence, but practiced virtue; it is not fear of vice, but love of excellence. Character takes no account of what you are thought to be, but what you are. You have your own laws and court to judge you, and these persuade you to be what you would like to seem. Character is having an inner light and the cour age to follow its dictates: as Shakespeare put it: . . . to thine own self be true, And it must follow, as the night the day, Thou canst not then be false to any man. People need something to be lieve in. Scientific discoveries may shake the world, but principles of behavior give it stability.

To have a set of principles is not at all to become a starry-eyed dreamer, but a person who knows simply and convincingly what he is here for. There are certain things one has .to believe in, or civilization .will die - permanent truths which, though they have their roots in the far past, are important for the present. Finally, in this array of the com ponents of quality, consider great mindedness. Here is the ornament of all the other virtues. It makes them better, and it cannot exist without them. A person who has once perceived, however tempo rarily and however fleetingly, what makes greatness of spirit, cannot be happy if he. allows. himself to be petty or self-centered, or to fall short of the best that he has it in him to be.

1967 A PERSON OF QUALITY 483 Craftsmanship There are sound standards of craftsmanship in every calling artists have to meet them, as do carpenters, lawyers, stenogra phers, operators of bulldozers, sur geons, business managers, and stonemasons. Every honest calling, every walk of life, has its own elite, its own aristocracy, based upon excellence of performance. The person of quality will take delight in craftsmanship, whether he be building a birdhouse or writ ing a novel or planning a business deal. He is impelled by his prin ciples to do well habitually what it is his job to do. That means patient thoroughness. This is not, as some avant-garde people would have us believe, anti pathetic to expressive individual ity. Craftsmanship is a means to ward competent expression rather than a brake upon it. It does not imply a sophisticated as opposed to an imaginative approach, nor slick work as opposed to clumsy work. It does mean that here is attention to details, fundamental integrity in the work, and evi dence that the workman knew what he was doing and carefully applied his skill to the task.

Motive and Ambition To seek quality in his work and his life a person must have a substantial motive. One pities the man or woman whose obsessive dream is not improvement toward excellence but escape from actuali ties and responsibilities. Such peo ple must feel unwanted, unused, and purposeless, and that is one of life's greatest sufferings. It is the anguish of empty and sterile lives, far more than any economic condition or political in justice, that drives men and wom en to demonstrate and demand instead of studying and earning. The man of quality will wish to have his journey through life leave some traces. Captain James Cook, whose voyage of discovery carried him to Canada's West Coast in 1778, said: "I had am bition not only to go farther than any man had ever been before, but as far as it was possible for a man to go." John Milton said he was prompted to "leave some thing so written to aftertimes as they should not willingly let it die." Charles Darwin wrote in his autobiography that he had made up his mind to make a contribu tion to his subject.

These men sought and found problems to be solved. They were positive. It isn't enough to be against error and ignorance: that leaves the impression that error and ignorance are the active forces in the world while we are a form less mass opposing them. Instead of denouncing or denying what 484 THE FREEMAN August others bring forth as the truth, great men offer their own truth. A motive needs to be a sincere, deeply felt, urge to find meaning in life - relevance, significance, and usefulness. Without such a goal, life becomes drab and hum drum. The man of quality lifts his head above the crowd to see a horizon fitting his abilities. He teaches his imagination to play with future possibilities, and bends his back to the immediate task that will contribute toward their coming true. There is noth ing paltry about the man who is struggling, not to be great or to hobnob with the great, but to be greater than he is.

Some people are misled from their search for personal quality by skepticism. They encourage themselves to say: "Why should I do any more work than is neces sary to get a passing mark or the going rate of pay?" People are not roused to seek excellence by ease or pleasure or any other sug ar-plum. Perhaps there are some who are content to try for noth ing more than being units in an assembly line, but even they must have moments of uneasiness in which they regret the oppor tunities they have spurned to be come something better. To push up from colorless medi ocrity toward superiority is the way of the person of quality. All satisfying human life proceeds along this line of action - from below up, from minus to plus. To be successfully what we are, and to become what we are capable of becoming, is true ambition. In choosing an aim, we should make sure that the ultimate value of it will offset the inevitable dis comfort and trouble that go along with accomplishment of anything worth while. Success has terms which must be met. It demands that we sacrifice secondary things, however delightful they may ap pear, and that we are prepared to get some splinters in our hands while climbing the ladder.

Sense of Values This, of course, requires that we develop a sense of the values of things. Every thoughtful person who has reached the age of twenty or twenty-five will realize that his mind has produced for him a cer tain set of views as to the condi tions of life and the purpose of his existence. These should be re viewed from time to time, and re vised upward in the light of ex perience. A sense of values is a personal thing, not to be measured by a yardstick common to all humani ty. In applying it to our special cases we learn to tell truth from false hood, fact from opinion, the real from the phony, and the beauti1967 A PERSON OF QUALITY 485 ful from the tawdry. We develop consciousness, enabling us to dis criminate the quality of things. We learn that everything is worth what its purchaser will pay for it, and we ask before making a choice: "What is the price 1" This is a question of deep seri 0usness' and sometimes it demands courage in the asking and in the answering. Finding the point at which a value begins to totter is an authoritative guide as to how high you really rank it.

Look for the major character istics, without being misled by the unlimited number of peripheral and secondary features. If you are weighing the value to you of a color television set against that of a chrome-encrusted car, that is simple and there are few factors; but if you are measuring the value of an extended education against the immediate attractiveness of a job, you can reach a reasonable decision only after considering the conditions under which you wish to live far in the future. What is the paramount thing 1 To elevate your thinking above the immediate and consider what is best in the long run. In making choices one needs to have a concern for excellence and a devotion to standards. There is real pleasure in setting standards and then living up to them. Even if there were no Grand Assize before which at the end we shall be summoned to tell what we have done with our talents, there is al ways the looking glass in which we are our own judges.

Most people would benefit - al though it seems to be an old-fash ioned idea - by having a little book in which they kept notes of their aspirations. Marcus Aurelius Antoninus, Roman emperor for twenty years, kept one. After at taining almost the highest form of human existence, the union of statesman and philosopher in one man, he left to us a book of medi tations. It is a collection of max ims and exhortations written when he felt especially alone and needed bracing up to keep him on the road he had chosen. Such a practice will help us to pass safely through the processes of surmise, guess, dim instincts, embryo conceptions, partial illumi nation, and hypothesis, into cer tainty and conviction. Things Needed Among the things needed by the person in search of excellence are these: a wide view, curiosity, cour age, self-discipline, enthusiasm, and energy. Having a wide view does not only include seeing things near and far in proper perspective, though .that is very important. It requires broad training in funda486 THE FREEMAN August mental principles. Specialization is vitally important in the modern world, but it is unfortunately true that for many individuals speciali zation is a dead end rather than an avenue to deeper and broader understanding. The person seek ing excellence will realize that this need not be so, and he will respond to the challenge to prevent its happening to him.

The key positions in all walks of life will go to those who are educated broadly, in a balanced way. Only they have the depth of judgment, the sense of proportion, and the large-minded comprehen sion to handle big affairs. One needs the curiosity to look below the surface of things. It is curiosity that has led to every scientific advance, and through it man has risen to the high level of philosophy and the meaning of things. Curiosity is followed by re search. You get hold of an idea and nurse it to life with persistent patience. You separate your key thoughts from a hundred and one irrelevancies. You sift through a haystack and find the pin, but you do not stop there. You look closely enough to see the Lord's Prayer inscribed on the head of it. That little extra piece of applied effort counts mightily in turning curi osity into something that is re warding. This process gives you faith in the validity of your judgment, which is the backbone of courage.

What do Commencement speakers mean when they repeat, year after year: "Education is a lifelong process" ? Every youth already knows, as he walks down the plat form steps with his diploma in hand, that he must keep on learn ing. What the speakers mean is something beyond keeping ·up with the techniques of one's profession, business, or craft. They have in mind the attributes needed to sur vive errors, to keep marching on a road that seems to be without end, to rise above disappointment and distress, to lie awake at night staring at broken hopes and frus trated plans and at a future that seems wholly dark - and to get up in the morning and go about their business with determination. All of these are part of education. To pursue his course with suc cess a man needs a strong sense of personal stability, and part of the process of maturing into excel lence is that of substituting inner discipline for outer. Tolstoy wrote in one of his letters: "There never has been, and cannot be, a good life without self-controL"

Nothing will protect us from external pressures and compul sions so much as the control of ourselves, based upon ideals form1967 A PERSON OF QUALITY 487 ulated by ourselves. Much is said in praise of endurance, and indeed much should be said, because be ing able to bear up manfully under stress and hardship is a great ac complishment. But self-control is different: it is not continued re sistance but actual mastery. It enables us to say "yes" and "no" to other men, not prompted by blind obedience to a code, but with assurance derived from a con scious evaluation of relevant al ternatives. Only an imaginary line sep arates those who long for excel lence and those who attain it, and enthusiasm is the quality needed to carry one over the border. This means having interest, zeal, and a strong feeling of the desirability of success. Enthusiasm provides the perseverance that overcomes impediments both real and imag inary.

One obstacle in the way of prog ress is resistance to change. We must develop a sense of the pulse beat of this changing life. We need to observe what's going on around us and filter it through a layer of common sense so as to decide in what direction and to what extent we have to alter course. At the beginning of the century the only people needing advanced education were those who were going for medicine, the ministry, law, and the scholarly domain. To day, everyone needs all the rele vant education he can absorb so as to be able to cope with the com plexities of life and of his job. Capability must be changed by application and work into indubit able performance. As one of the earliest Greek poets said: "Before the gates of excellence the high gods have placed sweat." All ex ecutive work, all research, all in telligent work of every sort, is based on directed diligence, on lively movements, on getting one idea on the rails and springing another.

Sources of Inspiration There are several sources from which the person seeking quality in life draws inspiration: school, home, the church, and experience. Intelligence needs information on which to work and the tools with which to work. Everywhere in the world there is emphasis on education. The underdeveloped countries need elementary educa tion urgently, and in our own country every step forward in in dustry and science raises the re quired standard of higher edu cation. Some wake up to the possibili ties and needs in their final high school year, or when they come up against the increased demands of freshman year in university: 488 THE FREEMAN August they are unfortunate people upon whom the realization does not dawn until they have put aside their graduation gowns and rubbed shoulders with the worka day world. Every child's home should pro vide a stimulating and instructive environment. Young people need to be exposed there to a context of values in which high performance is encouraged. When a prominent businessman was complimented by a fellow-commuter on the scholar ships won by his two sons, and was asked for the secret, he re plied: "We just show them that we expect it of them."

The child has an advantage when his parents qualify them selves and exert themselves to make him familiar with books, ideas, and conversations - these are the ways and means of intel lectual life - so that he feels at home in the House of Intellect. To succeed, parents need to pull themselves into the mainstream of current knowledge. They may do so by reading, by attending lec tures, by taking correspondence courses, or by forming community or neighborhood study groups. Only so can they fulfill adequately their children's need for an aware ness of intellectual values and ed ucational goals. Parents are assisted by the churches. All of the great religions have enunciated principles of con duct, and have established congre gations in which these principles are taught. Practical experience is more harsh than school and home. It is ruthless, but effective. We need not merely to learn things by chance or under compulsion but to develop the ability to extract the broadest meaning from our obser vation of the how and the why of things. One of the most valuable human rights available to the per son seeking excellence is the right to correct errors revealed by ex perience.

Canada's Obligation This is a good time to scrutinize the virtues taken for granted in our society. Do they need to be restated, revised, and encouraged? William James told students of Stanford University in 1906: "The world ... is only beginning to see that the wealth of a nation con sists more than in anything else in the number of superior men that it harbors." The obligation upon Canada is to honor the qualities in men and women which are most necessary to the continued vitality of our country. A democratic, equali tarian society does not find it easy to applaud the superior individual. It fears that by praising one it belittles another, and that some1961 A PERSON OF QUALITY 489 how seems to be undemocratic. Every person of quality gives something of advantage to his country, but before the country can appreciate these gifts, it must learn this: a society only produces great men in those fields in which it understands greatness. Quality and excellence must be inspired by people who expect high per formance of themselves as well as others.

There are five million young people in Canada's schools and universities. Among them are sev eral future prime ministers, a gov ernor general or two, many pro vincial premiers, hundreds of members of parliament - all the men and women who will be gov erning Canada far into the twenty first century. There are also the industrialists, financiers, and busi ness people who will manage the country's business. There are the professional people who will look after health, education, law, and religion. The Best Thing The best thing to give an under graduate at this time is encour agement toward development of quality and inspiration in his search for it. The best wish we can give the graduate is capacity for continued growth. Inability to appreciate the need for personal devotion to the idea of excellence, either individually or through those we might stimu late toward it, may bring on that saddest state of intelligent beings: regret for what might have been, when it is too late to take another path. The question is relevant to every person: "What is my con tribution toward quality going to be?"

There is no need to become cast down if we do not at once attain the super-best. It is a good thing to strive for excellence, but we must realize that the best possible is not too bad. Most of life is lived by batting averages, not by perfect scores. The research scientist does not ex pect that every hypothesis he sets up will prove out. The financier does not expect that every invest ment will return a maximum div idend. People live by making plans and by putting forth efforts that are, so far as they can see, in line with the results they want. Then they revise their plans and im prove their performance as ex perience dictates. We need fear only one failure in life: not to be true to the best quality we know. There is a certain satisfaction in trying, even if we do not suc ceed perfectly. As Robert Brown ing put it in "Rabbi Ben Ezra": What I aspired to be And was not, comforts me. • EDWARD Y. BREESE THOSE of us accusto d to boast ing, "It's a free co try 1" have some disturbing fact 0 face.

The free country e've known was founded on recognition of the right of the individual to "life, liberty, and the pursuit" (not guarantee) "of happiness." We were taught to believe in the right of every man to the prod uct of the labor of his hands and the creativity of his mind. We respected private property and· the owner's freedom of use, subject to minimum community safe guards. We considered govern ment to be the "servant of the people," with limited powers as delegated by individuals. Such, I believe, was the typical view of Mr. Breese has taught Industrial Manage ment at Georgia Tech and headed the De partment of Humanities at Embry-Riddle Aeronautical Institute in Florida. At present he is a freelance writer. 490 thoughtful Americans when I was a boy half a century ago. But I now find little trace of these concepts in the day-to-day practices of the community. To a frightening extent, the prind'iples upon which America was founded are giving way to the opposite principles of socialist statism. In stead of servant, government is increasingly welcomed as master.

In theory, of course, individuals still control government by means of their elected representatives. But the representatives more and more take the fact of their elec tion as a mandate to rule and govern the people. The picture thus printed is dark. But is it accurate? For perhaps a large majority of my fellow citizens, it is. Why, then, is my own thinking and way of life so unchanged except in minor and 1967 I CAN BE FREE 491 nonessential details? Why have I not become socialized along with the state, the social mores, and the majority of my fellows? There seems to be only one logical answer. Somehow, I have managed to continue living as a free man because there is some thing within me which demands it. The free life and free thought are so strong that I cannot and will not compromise either. What does that mean? What en titles me to make such a state' ment? Let me see if I can answer.

My answers may not be yours, and they may not serve you. But they are my honest answers. They have kept me free as an individual. Perhaps they have helped some who have known me. First of all, I have kept the habit of free thought and critical analysis. Whatever I read or hear I submit to the test of certain questions. What motives are be hind the words? What are they intended to mean? What is their real meaning for me? I act upon the answers to these questions. I try to place myself in posi tionswhere my personal freedom is at a maximum. I have always, by instinct, I suppose, chosen those jobs which give me a max imum of personal freedom. This, rather than financial return or prestige, has been the determining factor for me. And I have not starved as yet, or come close to it. I act upon the assumption that I am responsible for my own care and welfare. I think my fellows do not owe me a living - nor do I ask or expect them to provide for me. I try to make my own opportuni ties.

I do my best to stay out of debt. I don't· want anyone to hold a mortgage on me. or on my ac tions. I believe that private enterprise can better solve any problem than can a bureaucracy, even when the problem is a public and collective one. I see many examples. where this is so, but will cite only one: the massive achievements of Al coholics Anonymous in contrast to governmental efforts at Pro hibition. I waste no time or effort in futile "revolts" against those things which I cannot control. I step free of these things as much as possible. As an individual, I cannot destroy the system of gov ernment regulation of business; but I can try to avoid positions where these controls affect me. If I do not ask or accept favors of government, I need not be bound by the conditions under which these are granted. I support by voice and vote those elements in government with 492 THE FREEMAN August which I most nearly agree,. I write and speak in support of the prin ciples of freedom. I hope to be heard, but whether or not I am heard is less important to me than the fact that I speak.

I do not resign from society. In World War II, I served as a ser geant of the A.A.F. I would never burn a draft card. I try to live as a free man within the society of which I am a part. I believe that, in the long run, the power of ex ample will count for something. I want to be ready when the failure of socialism is generally recognized. When that time comes, free men will be needed. But it is not vital to me that I live to see that day. It will come, because it must. What is important is that I con tinue to think as a free man and do the best I can to live by those principles in which I believe. For me, of course, there is really no other choice. I must be that which I am. In a time of growing statism, I cannot force a return to limited government. But I can limit the power of government to control and affect me. I can refuse to compromise my principles in ex change for a handout. I can prac tice my beliefs in my daily living and be happy in so doing. I can think free, walk free, and be free.

~ First Comes Understanding CORRECT ACTION automatically follows understanding - the only route to correct action. Nothing else will serve. If this process seems hopelessly slow, there should be the sustaining faith that liberty is in harmony with truth, and with the intended design of the human social order. Truth is immortal, despite the defeats that it seems to suffer along the way. Truth has a power that is no respecter of persons, nor of the numbers of persons who may at any time be in darkness about truth. Truth has a power that can not be touched by physical force. It is impossible to shoot a truth. The lover of liberty will find ways to be free. F. A. H A R PER, Liberty: A Path to Its Recovery GEORGE C. ROCHE III 3. SOCI.A.L EFFECTS SUCH CONCEPTS as humanity, man kind, society, or nation are all modern in their origin. Ancient and medieval men tended to view man as an individual unit. They usually thought of larger collec tions of men as being merely larger numbers of single individ uals. Thus, such words as mankind or society did not, until modern times, convey a difference in meaning, but instead implied only a difference in quantity. It is in structive that our modern patterns of thought now give such words as society or humanity or nation a new meaning, no longer con nected directly with the concept of the individual.

What modern society seems to have forgotten, in the words of Frank Chodorov, is that, "Society are people." Within the traditional Western framework of Natural Law, our forebears have generally recognized a realm of spiritual value, beyond the laws of natural science and beyond the trappings of society. It is this recognition of the spiritual dignity of the indi vidual person which gave birth to the concept that each individual had certain rights which no other man or collection of men would be justified in violating. Modern society, acting in the name of "the people," has been in creasingly willing to override such guarantees of individual freedom. In the process, absolute power has steadily replaced absolute rights: Having agreed that the majority should prescribe rules which we will 493 494 THE FREEMAN August obey in pursuit of our individual aims, we find ourselves more and more subj ected to the orders and the arbitrary will of its agents. Signifi cantly enough, we find not only that most of the supporters of unlimited democracy soon become defenders of arbitrariness and of the view that we should trust experts to decide what is good for the community, but that the most enthusiastic support~rs of such unlimited powers of the ma jority are often those very admini strators who know best that, once such powers are assumed, it will be they and not the majority who will in fact exercise them.!

Just as it is true that the fate of a book is dependent upon the reader, it is equally and pain fully correct that the meaning of a political idea stems from the group which appropriates it. The meaning given to "democracy" and the application of the tre mendous power unleashed by the new definition of "popular rule" have paved the way toward an exercise of power never dreamt of before modern times. Yet, 50 to 75 years ago, those most en thusiastic concerning modern de mocracy believed that all dangers from power were past, since the power of the future, represented by the concentrated power of the modern state, was to be used only 1 F. A. Hayek, The Constitution of Liberty (Chicago; University of Chicago Press, 1960), p. 116. in the advancement of the material interest of the common man. State and Society Some astute observers, such men as Nietzsche and Burckhardt, were warning ·as long. ago as the mid-nineteenth century of the dangers stemming from the new mass-man and the new mass-state.

Social critics of our own time, of the stature of Wilhelm Roepke and Ortega y Gasset, have pointed to more and more signs of the dangers inherent in the central ized modern state. Meanwhile, the consolidation of power in the new dispensation has steadily ad vanced: The present disposition is. to liqui date any distinction between State and Society, conceptually orinstitu tionally. The State is Society; the social order is indeed an appendage of the political establishment, de pending on it for sustenance, health, education, communications, and all things coming under the head of "the pursuit of happiness." In theory, taking college textbooks on econom ics and political science for au thority, the integration is about as complete as words can make it. In the operation of human affairs, de spite the fact that lip service is ren dered the concept of inherent per sonal rights, the tendency to call upon the State for the solution of all the problems of life shows how far we have abandoned the doctrine of 1967 POWER: SOCIAL EFFECTS 495 rights, with its correlative of self reliance, and have accepted the State as the reality of Society.2 Such a system gives far too little to man's freedom or person ality. The state swallows the indi vidual. Even if such centralization were efficient in the satisfaction of human wants, which it is not, the means used to achieve the end would still be unacceptable simply because they are incompatible with human freedom.

Even more dangerous, perhaps, is the risk that the very concept of freedom itself can become so Inis used and distorted within such a society that no individual dare lay claim to any rights or dignity hav ing a higher source than the so ciety in which he lives. At that moment, the guarantees developed by Western civilization to protect the individual from the arbitrary exercise of power have in effect all been swept away, no matter what label that society might give it self. 2 Frank Chodorov, The Rise and Fall of Society (New York: Devin-Adair, 1959), pp. xix - xx. Once such checks upon the ex ercise of power have been re moved, all the internal vitality and freedom within such a society are open to destruction in the name of "order." Soon the preservation of "order" or the pursuit of the "greatest social good" is identi fied with whatever action the wielder of centralized power deems suitable. Resistance against the exercise of such power comes to be viewed by society not as an ex pression of human individuality and free choice, but as an assault upon the public good,a crime of the selfish individual against the selfless community.

The Authoritarian Personality A new type of personality soon comes to the forefront in such a society. Many who would tend to go largely. unnoticed in a freely competing society soon begin to exercise centralized power to in vade the market place and the pri vate sector in an attempt to ma nipulate individual decisions to achieve "social goals." In a society in which officials wield such tre496 THE FREEMAN August mendous power, they come to oc cupy a larger and larger place in the public eye and in their own self esteem. The exercise of power thus be comes a gratifying and expansive experience. The wielder invariably flatters himself that he is under taking a tremendous burden "for the good of" those over whom he exercises power. The legend of the Grand Inquisitor, who felt he had taken upon himself "the curse of the knowledge of good and evil" to achieve the happiness of "thousands of millions of happy babes" has been re-enacted time and again throughout human his tory, with ever-increasing fre quency in our age. Such wielders of power soon lose themselves in their dedication to "service," for getting their underlying motiva tion of self-aggrandizement. In all probability, Napoleon was sincere in his famous remark to Caulain court, "People are wrong in think ing me ambitious - I am touched by the misfortunes of peoples; I want them to be happy and, if I live ten years, the French will be happy."

Further, the manner in which the modern state opens the exer cise of power to men of ambition from various walks of life tends to make the exercise of that power and, indeed, its further ex tension, all the more acceptable to the mass of people. In the older era of kings and aristocrats, few men had the slightest hope of achieving a share of power. But in a modern society in which any man is a potential wielder of power, many who should and per ha.ps do know better will still allow the exercise and extension of power on the assumption that they themselves are capable of wielding such devastating and cor rupting force. It is from this com plicity in the crime of power that modern democracy especially suf f~rs, since so many among us be lieve that to achieve the good so ciety we need only "throw the ras cals out" and replace them with "good men," men who would wield power properly.

The Intellectual One of the groups within society especially at fault in the encour agement of the accumulation and exercise of power has been the "intellectual." Seldom has the case been stated more clearly than by the distinguished journalist, George S. Schuyler: It unfortunately has become fash ionable for the artist in modern so ciety to quibble over this issue of freedom. He says on the one hand that he prefers a society which em phasizes physical security for all (which necessitates in technological civilization a degree of regimenta1967 POWER:· SOCIAL EFFECTS 497 tion which endangers freedom). At the same time he properly wants a society where he is free to write, paint, and compose as he wills. He fails to recognize that the artist is so influenced by the society of which he is part, that he cannot remain free when all else is controlled. The error of the intellectuals of the West for the past two centuries has been advocating a society actu ally slavish but paraded as freedom.

This means, then, that along with free art (and indeed the very basis for it) must be free political insti tutions, free economic enterprises, and a society free of onerous re strictions. The tragedy of so many intellec tuals in the contemporary world is that while opposing extreme forms of totalitarianism, they are them selves half-totalitarian; that is to say, they express a desire for a society which is half-controlled, half regimented, half-planned, part capi talist, and part socialist. This strange hybrid they will find (in deed, have found) to be a Franken stein monster which, ironically, they have a great responsibility for cre ating. 3 Unchecked Power However the centralization of power may have come about,· its existence and its exercise are pain ful realities in our society. The 3 George S. Schuyler, Black and Con servative (New Rochelle: Arlington House, 1966), pp. 319-320.

unchecked power of labor unions, backed by coercive political legis lation, has been used against pri vate property, the general public, and, above all, the union members themselves. The ill-concealed pres sures exerted by centralized power through the large and growing numbers of regulatory agencies and "administrative" legal deci sions have left private property and the businessman literally at the mercy of forces beyond either his comprehension or his control. The levels of taxation within our society closely circumscribe the range of choice for the individual citizen in the disposal and use ·of his property. The end result of the use of power is always the same: curtailment of individual and so cial freedom of choice. Examples of unchecked power infringing upon the private sector and the individual within our own society could be multiplied almost indefinitely. How does it happen that such extensions of power and curtailments of liberty have laken place with little or no public out cry? The answer is a· painful one for the friends of man: most peo ple are unaware of liberty and its benefits. Indeed, if the loss of free dom and the. expansion of power is sufficiently gradual, it seems, that the citizens will not rise in pro test. The conversion of thepri vate sector into the public sector, 498 THE FREEMAN August of the individual's power to make decisions into the state's power to coerce 'decisions, has proceeded more gradually here than in the French Revolution, the Russian Revolution, or the Fascist experi ments of Italy and Germany. Yet, such accumulation of power and attrition of liberty, however un spectacular its progress, has been under way in this nation.

The process whereby power has come to dominate our society was outlined well over 100 years ago in Alexis de Tocqueville's oft quoted warning: 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 was to prepare men for man hood; but it seeks, on the contrary, to keep them in perpetual childhood: it is well content that the people should rej oice, provided they think of nothing but rejoicing. For their happiness such a government will ingly labors, but it chooses to be the sole agent and the only arbiter of that happiness; it provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, di rects their industry, regulates the descent of property, and subdivides their inheritances: what remains, but to spare them all the care of thinking and all the trouble of living?

Thus, it every day renders the ex ercise of the free agency of man less useful and less frequent; it circum scribes the will within a narrower range and gradually robs a man of all the uses of himself. The principle of equality has prepared men for these things; it has predisposed men to endure them and often to look on them as benefits. After having thus successfully taken each member of the community in its powerful grasp and fashioned him at will, the supreme power then extends its arm over the whole com munity. It covers the surface of so ciety with a network of small com plicated rules, minute and uniform, through which the most original minds and most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and 1967 PO'VER: SOCIAL EFFECTS 499 guided; men are seldom forced by it to act, but they are constantly re strained from acting. Such a power does not destroy, but it prevents ex istence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each na tion is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.

I have always thought that servi tude of the regular, quiet, and gentle kind which I have just described might be combined more easily than is commonly believed with some of the outward forms of freedom, and that it might even establish itself under the wing of the sovereignty of the people. 4 Acceptable Power? As the state thus accumulates all power unto itself and increas ingly absorbs the private and the individual sector, a tendency to acquiesce in the situation seems to develop among the people. We can see this process at work in our own society in the tendency of each new generation to accept an ever-widening area of govern mental involvement in the lives of its citizens. Today's young people are willing to accept displays of governmental power which were anathenla to the young people of 4 Alexis de TocquevilIe, Democracy in America (New York: Alfred Knopf, Inc., Vintage Books, 1958), Vol. II pp. 336337. ' thirty years ago and were abso lutely unknown to the young peo ple of sixty years ago. As the state accumulates this power, it tends to rationalize its position, using its newly acquired controls as a tool by which the "social benefits" of the new order are ad vertised.

There are occasional outbursts of protest as this process develops. Even many of the advocates of centralized authority are currently alarmed about the dangers im plicit in the new Federal Data Center. They recognize that a Fed eral government with a computer ized source of complete informa tion concerning every citizen is indeed a potentially powerful agency, but they are really only complaining about an increased governmental efficiency. Whether or not the material was gathered in a single place, and whether or not it was computerized, the fact is that the central government has long had such information avail able to it. In effect, many advo cates of enlarged governmental powers are now complaining be cause the government appears closer to the exercise of those powers. The Growth of Power What sort of a centralized ap paratus has grown up for the ex ercise of this new power? In the 500 THE FREEMAN August 89th Congress alone the extension of "domestic aid" programs was fantastic: James Reston has re ported "twenty-one new health pro grams, seventeen new educational programs, fifteen new economic development programs, twelve new programs for the cities, sev enteen new resource development programs, and four new man power training programs" (New Yot'k Times, Nov. 22,1966). In this single area of "domestic aid"

programs, these new additions contribute to some startling totals: some 170 Federal aid programs currently enacted into law, fi nanced by over 400 separate ap propriations within the Federal budget, administered by 21 sep arate Federal departments and agencies, assisted by over 150 Washington bureaus· and over 400 regional offices. Power ? Yes, in deed! Multiply these statistics by the other areas of government in tervention in taxation, in land ownership, and in its far-flung regulatory activity, controlling our business, communications, food supply, money supply, transporta tion, housing, and nearly every oth er aspect of· our Iives, then add the additional forays proposed .into our educational system and virtu ally every other area of the pri vate sector, and you have a form ula for total political control. The result? As Samuel Lubell has phrased it in The Future of American Politics: The expansion of government to its present scale· has politicalized vir tually all economic life. The· wages being paid. most workers today are political wages, reflecting political pressures rather than anything that might be considered the normal workings of supply and de.mand. The prices farmers. receive are political prices. The profits business is earn ing are political profits. The savings people hold have become political savings, since their real value is subject to abrupt depreciation by political decisions.

'Vhat are the prospects for free dom within such a totally polit icalized society? The unlimited power of coercion present in a society so tightly tied in economic bonds has been plainly stated. by one of the modern theorists of the total state, Leon Trotsky: "In a country where. the sole employer is the State, opposition means death by slow starvation. The old principle, who does not work shall not eat, has been replaced by a new one: who does not obey shall not eat." The threat to liberty produced by rrocqueville's predicted "ener vation" and Belloc's "Servile State," because of the insidious quality of such gradualist,amel iorative, "humanitarian" regimes, may be most dangerous of all.

1967 POWER: SOCIAL EFFECTS 501 Liberty is increasingly weighed in the balance against equality and is found wanting by those who offer themselves as "friends of the people." One of these ad~ vocates of the new order, Gunnar Myrdal, .has written in AnAmeri can Dile1'nma : In society liberty for one may mean the suppression of liberty for others ... In America ... liberty often provided an opportunity for the stronger to rob the weaker. Against this, the equalitarianism in the (American) Creed has been 'per sistently revolting. The struggle is far from ended. The reason why American liberty was not more dan gerous to equality [in the early days of the nation] was, of course, the open frontier and the free land. When opportunity became bounded in the last generation, the inherent conflict between equality .and liberty flared up. Equality is slowly win ning .... Absolute Power Power becomes absolute when it becomes the agency through which society chooses to solve its problems. There are many signs that such a choice has been made in our own society. Not only has the accumulation of power pro ceeded dangerously far in our gov ernmental structure, but,. perhaps far more dangerous, the rationale justifying that accumulation of power has made great progress among the individuals composing our society.

What is in store for a society in which power has become so centralized? The social hierarchy is in ruins; the individual members are like peas shelled from their pods and form a numerical whole composed of equal elements. The state is the beginning and end of· organization; it must apply itself to the task with the highest degree of authority and at tention to detail. But is that to say that there are no longer any priv ileged persons? There are indeed; but as regards the state they are no longer privileged as men, preceding its authority. They hold their priv ileges in and from the state. 5 Such a centralized authority soon comes to take upon itself 5 Bertrand de J ouvenel, On Power (New York: Viking Press, 1949),p.175.

502 THE FREEMAN August the power of totally reordering society. The concept of law is stripped of a higher meaning and utilized as an enabling act for the achievement of that total reorder ing of society. To do all, power must be master of all. Soon such a state recognizes no authority beyond itself. All func tions, public and private, all ac tions, no matter how individual, are subject to mass control as a part of the exercise of total power. Such is totalitarianism in its es sence. It is not merely an oppressive regime; indeed, in principle, it does not have to be particularly oppres sive at all, at least not to large sections of the population. What is involved is something much more fundamental. The old-fashioned des pot demanded obedience, taxes, and manpower for his armies. The totali tarian regime wants much more: "It's your souls they want," as some one once put it, referring to the Nazis. It's total possession of the whole man they want; and they will brook no rivals in engaging man's loyalties, hopes, and affections. 6 The New "Individual"

The living man, the individual with a source of dignity which earlier societies had viewed as transcending the state, is sched uled to have his creative capaci6 Will Herberg, "Christian Faith and Totalitarian Rule," Modern Age, Winter, 1966-67, p. 69. ties, his dignity, and his personal ity sacrificed to the new abstrac tion of collective power. Bureauc racy and the statistical evalua tion of mass-man become the new means of social sacrifice, making burning at the stake appear in efficient by comparison. What Dostoevsky's Grand In quisitor achieved through author ity and mystery, the scientists of Huxley's Brave New World achieved through scientific control of life forms. More recently, in Skinner's Walden Two, behavioral psychology updates the latest vi sion of the controlled society, suggesting that, with sufficient conditioning, the individual will be so free of frustration or the necessity of decision as to be fi nally free of the responsibilities of freedom. The new society which has arisen in conjunction with the modern centralization of power has brought with it the tools of mass-conditioning necessary to bring about such a perverted view of "freedom."

Does Power Truly Corrupt? Even while such concentrations of power and such a conditioning process rob the individual citizen of his liberty, thus destroying the individual's creative capacity and in effect penalizing both the individual and his society, the greatest corruptions of all are 1967 POVVER: SOCIAL EFFECTS 503 likely to occur in the very institu tions and men called upon to ex ercise this vast new power. The subjection of other men's wills to a man's purposes, no matter how well intended, is even more dan gerous to the power wielder than to those over whom the power is exercised. Coercion begets coer cion, producing a greater and greater necessity for the applica tion of centralized power in society since it simultaneously disrupts the private sector and justifies its own extension to solve the prob lems stemming from those dis ruptions. A man cannot stoop to using coercion against another man without allowing the corrupt ing influences of that power to work its corruption upon him.

However politically necessary such interventions into the private sec tor of society may appear to the ardent collectivist, the potential wielder of such power must first of all make an ethical choice to violate the decision-making dig nity of another individual, thus arrogating power to himself over the Iives of others in an ethical area where individual conscience should be supreme. A power-oriented society tends to become more and more mono lithic, producing an enmassment which removes all decision-making further from the individual citi zen. Such a society produces a citizenry which tends to regard the technical and social achieve ments which it sees around it as something stemming from the ex ercise of centralized power, rather than from the personal efforts of highly-endowed individuals. At that point, the mass-man comes to identify himself with the state and becomes as corrupted by power as those who themselves exercise that power. In such a society, so com pletely divorced from the creative capacity of the individual, the way is paved f or a social decline of great magnitude.

Then everything includes itself in power, Power into will, will into appetite; And appetite, an universal wolf, So doubly seconded with will and power, Must make perforce a universal prey, And last eat up himself.7 The Destruction of Society Once Natural Law and a decen tralized society are no longer ac cepted as the bulwarks of the pri va.te sector, soon power, appetite, and will begin to find every area of society a proper sphere for a further extension of coercive au thority. Intervention is piled upon intervention and power both en courages and feeds upon the strife 7 William Shakespeare, Troilus and Cressida, Act I, Scene 3.

504 THE FREEMAN August between factions of society as they struggle to prosper through the intervention of power in favor of their particular group. As the exercise of coercive power grows steadily greater and steadily more damaging to society, the strife be tween factions to benefit from the exercise of that power becomes equally destructive to the fabric of a true society. Thus, the exer cise of power is in the last anal.,. ysis antisocial, destroying the so ciety in which it occurs. The individual citizen within such a societY,already stripped of any higher dignity which does not emanate from the state, is offered an illusory social welfare, the promise of better things to come, for his· acquiescence in the new system. All man's ills are now to be solved by the passage· of the proper law, by the proper use of coercive power. Irresponsibility Such a society, abandoning in dividual dignity and responsibility for self in return for the promises of the new collective ethic, tends to breed a new form of social be ing. If the individual is not re sponsible for self, then a society formed of such individuals is also not responsible. The way has been paved for a new ethic of total ir responsibility on the part of in dividual members of that society.

Surely we witness the results of such thinking in our own time. Every conceivable crime and fail ure in our society is attributed not to the individual but to some failure or another of society to care properly for the individual. With Dr. Johnson, we might ad mit, "We cannot pry into the hearts of men, but their actions are open to observation." Surely the observation of an increasing number of the actions of men in our time would indicate some fail ing in their innermost being. The statistics are distressing: Crimes against property have increased (relative to populatIon) by over 300 per cent in the past twenty years. Crimes against persons have doubled in the .same period of time. Even these alarming statis tics do not reflect the wide accept ance of public immorality in areas not categorized as crime. The sub sidized illegitimacy of the Aid to Dependent Children program or the wide acceptance of cheating on so many college· campuses are only two of many. such symptoms of moral decline.

The steadily growing trend toward moral failure seems to ad vance at the same rate as the old er ideal of self-responsibility con tinues to decline: The American has never been a perfect instrument, but at one· time he had a reputation for gallantry, 1967 POVVER: SOCIAL EFFECTS 505 which, to my mind, is a sweet and priceless quality. It must still exist, but it is blotted out by the dustcloud of self-pity. The last clear statement of gallantry in my experience I heard in a recidivist state prison, a place for two-time losers, all lifers. In the yard an old and hopeless con vict spoke as follows: "The kids come up here and they bawl how they wasn't guilty or how they was framed or how it was their mother's fault or their father was a drunk. Us old boys try .to tell them, Kid, for Christ's sake, do your own time. Let us do ours." In the present climate of whining self-pity, of practiced sickness, of professional goldbrick ing, of screaming charges about whose fault it is, one hears of very few who do their own time, who take their own rap and don't spread it around. It is as though the quality of responsibility had atrophied. 8 Something of such disastrous social results was predicted over 100 years ago by the British his torian, Lord Macauley, when he warned that the twentieth century would be as disastrous for Amer ica as the fifth century had been for the Roman Empire, with the difference that the Huns and Van8 John Steinbeck, "America, Where Are You?" Chicago Tribune, Nov. 20, 1966.

daIs who had destroyed the Roman Enlpire had come from outside the system, while America's Huns and Vandals would be engendered within the American system by our own institutions. Generation of Zeros? As self-responsibility within our society has atrophied, what sort of a nation have we become? One social critic, Philip Wylie, has de veloped the idea that we are be coming a nation of nonpersons, engaging in "nothing education," "nothing readership," "nothing citizenship," "nothing art," and "nothing music." He describes our society as a "generation of zeros," produced by an educational sys tem which avoids the creation of any "trauma" for the individual student, from which all competi tion, all discipline, and all possi bility of low grades have been re moved from the student's path. He cites television as the creator of a generation of nothing read ers. lIe cites the current student population who· all too often are for nothing and who often assume no role or responsibility in their society except that of criticism and nihilism as nothing citizens 506 THE FREEMAN August and eventually nothing persons.

He finds the total absence of crea tivity in much of modern art as a demonstration of nothing art and levels much the same charge against modern music. He cites the noninvolvement of the mem bers of our society, people who are unwilling in case after case to offer aid or even call the police in times of crisis, as for example in the Kew Gardens, N. Y. mur der of a woman, witnessed by some thirty-eight people who did not want to become "involved."9 Thus the history of unrestricted power is again borne out. When the centralized power of the state reaches a certain point of concen tration, the society it governs will tend to disintegrate. Individual action, the spark of creativity, and human charity, all decline as the exercise of power becomes the dominant solution to all problems. Voluntary human action is in creasingly destroyed in preference for coerced human action. 9 Philip Wylie, "Generation of Zeros,"

This Week Magazine, Feb. 5, 1967. Yes, power does corrupt, a fact amply borne out by the Bobby Bakers who increasingly inhabit the seats of power. Yet such men are nothing more or less than a mirror held up to the citizenry of America, a mirror all too graphi cally depicting the moral decay of our society. Professor Ortega y Gasset has predicted the final re sult of such decay: The result of this tendency will be fatal. Spontaneous social action will be broken up over and over again by State intervention; no new seed will be able to fructify. 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 blood less, a skeleton, dead with that rusty death of machinery, more gruesome than the death of a living organism.

Such was the lamentable fate of ancient civilization.l 0 ~ 10 Albert Jay Nock, Our Enemy, the State (Caldwell, Idaho: Caxton Publish ers, 1946), p. 151. Dr. Roche, who has taught history and philosophy at the Colorado School 01 Mines, now is a member of the staff of the Foundation for Economic Education. The next article, concluding this series, will concern the prospects for dealing with the threat of power.

Auto-Safety Standards MILTON FRIEDMAN Now that the furor over car safety has subsided, it is instructive to consider some little-noticed as pects of the Federal legislation it' produced. 1. Cost. The recently issued safety standards will raise the cost and hence the price of new cars. According to some estimates, consumers will pay about $1 bil lion a year extra. Suppose Congress had been asked to appropriate this sum for the identical safety equipment, raising the money by a special excise tax on automobiles. Would Congress have enacted this pro posal as readily as it enacted the safety legislation? Yet, the two are identical except in form. 2 Delegation of power to tax. Congress has been jealous of its prerogative to impose taxes. Time and again it has rejected proposals that the President be granted dis cretion to alter tax rates. Yet, in this case, as in other similar cases, Congress has delegated to an ad ministrative official near-absolute power to decide how large a tax to impose.

3. Failure to compare alterna tives. The basic issue before Con gress was safety, not requiring automobile manufacturers to build their cars in specified ways. Yet, so far as I know, there was no discussion whether $1 billion a year would contribute more to safety if spent in this way than if spent in other ways - on im proved highways, or driver edu cation, or better enforcement of speed limits, or more intensive investigation of causes of auto accidents. 4. Who twill set the standards? The National Traffic Safety Agen cy has already been criticized for yielding to the demands of manufacturers in drawing up its final safety standards for 1968 cars. Mr. William Stieglitz re signed as consultant to the agency on roughly these grounds. Such complaints will be even more j us tified in the future - though the complaints themselves may be come less shrill. How else can it work out? Safety standards are a peripheral matter to most car owners. A 507 508 THE FREEMAN August Ralph Nader may get them or the politicians aroused enough to pass a law; but once the law is passed, the consumers will return to som nolence, from which only an oc casional scandal will reawaken them. The car manufacturers are in a very different position. They have billions at stake. They will assign some of their best talent full-time to keep tabs on the standards. And who else. has the expertise? Sooner or later they will dominate the agency-as, despite well-publicized tiffs, rail roads and truckers have domi nated the ICC; radio and TV net works,. the FCC; physicians, state medical licensure boards; and so on.

5. Effect on competition .. Several small specialty-car manufacturers have already complained that com pliance with the new safety re quirements would put them out of business - the 1931 Ford that one company replicates has less glass in total in its windshields than the windshield wiper standards require the wipers to clear! No doubt, special exemptions will be granted to these companies. But how shall we ever know about the innovations that might have been made, or the companies that might have been established, .without this additional handicap? The effect on· foreign producers will· be even more important. Any extra cost will be more of a burden on them than on U.S. producers because they sell a much smaller fraction of their output in the U.S. Beyond this, it will become clear to the agency - staffed as it must be by men trained in the U.S. industry and in daily touch with it - that our cars are really safer and that the way to promote safety is to require. foreign cars to meet American specifications.

The result will be a sheltered market for U.S. producers - and higher costs to U.S. consumers that have little to do with safety requirements. 6. The effect on safety. To begin with, the standards may well make cars safer. But, as administrative rigor mortis sets in, they will soon slow up product improvement, so that a decade from now cars may well be less safe. Reduced com petition will reinforce this ten dency. In addition, the higher price of new cars will .raise the average age of cars on the road. 7. An oft-told tale. Time and again, laws passed to protect the consumer have ended up by re stricting competition and so do ing the consumer far more harm than good. Is it too much to hope that one of these days we shall learn this lesson before we enact a new law rather than after? ~ Copyright Newsweek, Inc., June 5, 1967. Re printed by permission.

A REVIEWER1S NOTEBOOK JOHN CHAMBERLAIN Public and Private Enterprise IN ADDITION to being a good econ omist, John Jewkes, the eminent Professor of Economic Organiza tion at Oxford, is a man with an exquisite taste for historical irony. His Public and Private Enterprise (Universi ty of Chicago .Press, $2.25), which is made up of his Lindsay Memorial Lectures given at the University of Keele, .invokes Alexis de Tocqueville at the begin ning. But it is not to hail the many prophecies of that remark able Frenchman which happened to come true. Rather it is to quote from one of Tocqueville's rare his torical mistakes. "Everywhere," so Tocqueville said of the eighteen thirties, "the State acquires more and more di rect control over the humblest members of the community, and a more exclusive power of govern ing each of them in his smallest concerns .... Diversity, as well as freedom, are disappearing day by day."

This was written at the time of the Jacksonian revolution in Amer ica and the movement toward free trade in England. Far· from "dis appearing" in· the eighteen thir ties, "diversity" and "freedom" were just about to take off on the grand flight that was to make the nineteenth century such a· wonder ful period. What Professor Jewkes is intent upon establishing is to show that Tocqueville was right in retrospect if wrong in prospect, for the world previous to the eighteen thirties - the world of mercantil ism and emperors who said Hl'etat, c'e.st moi" - was indeed a world in which diversity had a hard strug gle. For just about a hundred-year span after 1830, history was to re verse itself. But now, as Professor Jewkes laments, Tocqueville's words might correctly be applied. "Everywhere, and not merely in Socialist countries," says Jewkes, "that part of the national income taken in taxation;· of the working population employed by the state; of capital expenditure incurred by 509 510 THE FREEMAN August public authority, have all been on the increase over the past thirty or forty years."

Professor Jewkes does not expect a powerful reversal in social and political thinking that will change things. All paths, he· says, "seem to lead to wider government re sponsibilities." Professor Jewkes doesn't like the contemporary in tellectual atmosphere, but the note worthy thing about his Lindsay lectures is that they don't tangle head-on with prevailing dogma. In stead of affirming fundamental doc trine, Jewkes suggests a rather pragmatic cost-effectiveness ap proach to affairs. He speaks of the lessons to be drawn from "the case by-case method." And so, without any fanfare about basic principles, or the phi losophy of freedom, we get down to Professor Jewkes's cases. Jewkes on Education Education is one thing that con cerns Jewkes. He wonders about the "rate of return" to the com munity from the push to eradicate the college dropout problem. The cost-effectiveness of trying to force-feed the expansion of uni versity training is questionable.

Says Jewkes, "A person who is trained as a doctor instead of be coming, say, a carpenter will pre sumably show higher earnings in consequence. But if many more doctors were trained, the earnings of doctors themselves, including the existing doctors, would fall. It is conceivable that the total earnings of all doctors might decrease'. Would the rate of return on invest ment in education then be consid ered negative?" This is the sort of dryly ironical skepticism that pervades Profes sor Jewkes's book. He doesn't like the accent on using the schools to solve problems that seem to demand immediate attention. For when a drive is on to educate more people in, say, industrial design or the commercial use of foreign lan guages, the stress on specifics may "tend to drive out of the curricula those broad subjects of study which no one can defend as having direct relevance for economic expansion but which contribute much to gen eral intelligence and the instinct for orderly living without which economic achievement would be in conceivable."

Jewkes likes generalists. But not when the generalists are conform ists. "University education, even at its best," he says, "tends to bring about conformist thinking; for Universities cannot operate without standard tests and proce dures." Jewkes has no good answer to the problem of battling conform ity, but he does at least raise the question "of providing leisure and resources by which the young can 1967 PUBLIC AND PRIVATE ENTERPRISE 511 learn in their own ways and pursue their eccentricities." Curiously, he is very skeptical of the value of spending huge sums on "research and development." "If we take the United States alone," he says, "where the sta tistics are most complete and where research expenditure has reached astronomical levels, the annual per centage rate of growth in indus trial production is not higher than it was half a century ago. The num ber of patents taken out in that country have not been increasing."

Jewkes wonders at the fact that "Japan, which shows the most im pressive rate of economic growth in recent years, has not engaged in research and development on any extraordinary scale." On the basis of Jewkes's evidence one would have to say that endowing a young man with funds and sticking him in a fancy laboratory is not neces sarily the way to enable him to "pursue his eccentricities" in a fruitful manner. The conclusion to be drawn from Professor Jewkes on the subject of education is that the state might pay less attention to it without any adve1 1 se effects on the body politic. But Jewkes doesn't belabor the point. Other Governmental Failures The cost of a National Health Service is another subject which Jewkes inspects in his dryly iron ical way. He concludes that a free national service paid for largely out of general taxation "not only discourages people from paying privately for their medical services but leads them to be content with a service of lower quality than they might otherwise have been p,re pared to pay for."

Professor Jewkes does not at tack the prevalent idea that "the outstandingly successful new func tion of government in our time has been the maintenance of full em ployment." Instead, he remarks on the "happy-go-lucky fashion" in which governments have accepted this new responsibility. "Persistent inflation" has been one result of carelessness. Government interven tion to wipe out "massive unem ployment" may justify itself to Jewkes "on the critical counts," but the "recent efforts of govern ments positively to engineer eco nomic growth have been among their most palpable failures." A Case lor the Free Market Instead of going minutely into the failures of government-fos tered "growthmanship," however, Professor Jewkes ends his lectures by making a case for the "free mar ket as a strong civilizing influence." He thinks capitalist publishing has done more to civilize people than anything that socialists have done 512 THE FREEMAN August anywhere. The paperback book, he points out, "was devised and has been spread over great markets by men looking for private gain. The interest in great music has been stimulated in recent years by many inventions but especially by the long-playing record and refined de vices for reproducing sound, which were invented in thelaboratories of commercial firms and widely dis tributed by many firms in vigorous competition. The sense of form and colour has been fostered all over the world by the opportunity of amateur activity and experiment through the cheapening of the cam era."

If our young are really looking for a man who questions all the cliches, Jewkes shouid be their prophet. He is not as· flashy a phrase-maker as Galbraith, but he is a far more effective critic of what has become the new "conven tional wisdom." + THE FREEMAN SEPTEMBER 1967 Vol. 17, No.9 II'" Professor Yale Brozen explains why personal choice and freedom depend upon market pricing as distinguished from authoritarian "rule by men" ............ p. 515 II'" Lest we forget, the National Forest Products Association reminds us that there are more ways than one to con serve scarce resources - an exercise II'" Meanwhile, Henry Hazlitt reminds us, human efforts at remaking the world are yielding all the disastrous consequences of world-wide inflation ...p. 556 III' And Admiral Moree" adds a caution about the home-grown variety of compulsory collectivism p. 558 in common sense . ...... p. 528 ~ That individual freedom of choice more fruitfully serves mankind than the most brilliant philosopher king could have planned for us, is the "new idea" Leonard Read proposes ............ p. 530 III' How can government best help small businesses? By getting off their backs, says Lawrence Fertig ....p. 538 ~ Dr. Roche hopefully concludes his series on POWER with a faith that man ... can and will learn to live as a creature of God, in His world p. 541 II'" Reverend Mr. Mahaffy traces in greater detail the philosophical differ ences between socialism and freedom and shows why the latter affords the only way to achieve the good intentions of the former p. 562 II'" FEE's "books of the month" in clude Dr. Sylvester Petro's The Kings port Strike, reviewed by John Chamber lain; Free Markets or Famine, edited by V. Orval Watts, reviewed by Henry Hazlitt; and The Sociological Tr,adition, by Robert A. Nisbet, reviewed by Gary North p. 571 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

SEPTEMBER 1967 LEONARD E. READ PAUL L. POIROT Vol. 17, No.9 President, Foundation for Economic Education Managing Edito1' 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-an-Hudson, New York. Tel.: (914) 591 7230. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are in vited in any amount-$5.00 to $10,OOO-as the means of maintaining and extending the Foundation's work. Copyright, 1967, 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; 10 for $2.50; 25 or more, 20 cents each.

Any current article will be supplied in reprint form upon sufficient de· mand to cover printing costs. Permission is hereby granted to reprint any article from this issue, providing customary credit is given, except "Beauty and Common Sense," "Giving a Hand to Small Business," and "World-Wide Inflation."

YALE BROZEN Practically every individual has some advantage over all others because be possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation. F.A.HAYEK MARK:f:TS do an unbelievably de tailed and effective job of utilizing information drawn from millions of individuals. They digest the in formation, signal the appropriate action to be taken in utilizing the available economic resources, and moti vate indi vid uals in the most remote corners of the world to take the necessary action. 1 Mar kets are also the most democratic institution operating in the world 1 Friedrich A. Hayek, "The Use of Knowledge in Society," American Eco nomic Review, September, 1945; reprinted in Individualism and Economic Order, (Chicago: University of Chicago Press, 1948) . today. They mInImize tyranny, maximize opportunity, and elimi nate special privilege. 2 And free markets are the most efficient means for accomplishing both of these objectives.

In contrast, the attempts of a f e1V men using the power of the state to order economic affairs have 2 Harold Demsetz, "Minorities in the Market Place," North Carolina Law Re view, February, 1965; Milton Friedman, Capitalism and Freedom (Chicago: Uni versity of Chicago Press, 1962), Chap. VII. Dr. Brozen is Professor of Business Economics, Graduate School of Business, University of Chicago. This article is a condensation of his address to the trustees and guests of the Foun dation for Economic Education, May 15, 1967. 515 516 THE FREEMAN September produced ludicrous spectacles of misallocated resources manifested in forms such as monuments mas querading as steel mills and power dams which frequently do as little for their economies as the great pyramids of Egypt. The attempts of men to rule economic affairs have been accompanied by or re sulted in the most despicable tyrannies in which "terror, sadis tic cruelty, and constant insecurity have been the lot of all save a privileged few."3 Rather than dealing with these propositions at a general level-a task which has already been effec ti vely performed by Mises, Knight, Hayek, Jewkes, Wright, and others in recent years as well as by eminent predecessors-this paper analyzes specific instances of the operation of the invisible hand. These are drawn primarily from American experience, al though it should be kept in mind that other economies provide striking examples, some of which I will mention. Even the Union of Soviet Socialist Republics, once the great enemy of market meth ods, is rediscovering the efficiency of markets as contrasted to the inefficiency of men in guiding economic activity. Determining the appropriate goods to produce 3John Jewkes, Ordeal by Planning (New York: The Macmillan Company, 1948) .

and the appropriate technology to apply in production and motivat ing the efficient production of the most efficacious goods is too com plicated a task for central plan ning. The days of central deter mination of production quotas, of technology, and of pay and profit rates are beginning to fade in Russia because of the cumber someness and the ludicrous ineffi ciency of that system of coordinat ing economic activity. The Russian attempts to moti vate high productivity and output by rewarding output in excess of a quota of X pounds of nails, for example, led to a large output of spikes and roofless houses for want of shingle nails. A shift to a quota of Y number of nails re sulted in a great output of tacks and loose rails for lack of railroad spikes. Also, the fiction produced as accounting records in order to earn bonuses became an open scan dal. Market Coordination to Meet Unpredictable Needs In this country, the extraordi nary capacity of the invisible hand to coordinate economic activity, particularly where the coordina tion must occur in a complex and unpredictable situation, is implic itly recognized in some of our regulatory legislation.' The trans portation of agricultural commodi1967 RULE BY MARKETS VS. RULE BY MEN 517 ties by truck is exempt from regu lation. Only the free market pro~ vides the service required at· the times needed at minimum cost. 4 For this reason, agricultural inter ests insist that their shipments by truck be exempt from regulation.

They learned from their .nine teenth century success in putting railroads under regulation that service is worsened and rates in creased by such controls. 5 The regulated set of enterprises operating in agricultural transpor tation demonstrate by their be havior what enormous losses of produce would occur and what costs would be incurred if all agri cultural commodity haulage were centrally controlled or regulated. Shortages of grain cars and the resultant necessity to store grain in the open with the consequent spoilage are a recurring phenom enon. This is a result of the regu lation of railroads - a phenomenon 4 The contrast between the costs of transportation under regulation and that in a free market is shown to be very marked indeed in an analysis of experi ence under the two sets of conditions by Stewart Joy, "Unregulated Road Haul age: The Australian Experience," Ox ford Economic Papers, July, 1964.

5 George W. Hilton, "Barriers to Com petitive Ratemaking," I. C. C. Practi tioners Journal, June, 1962; Paul W. MacAvoy, The Economic Effects of Reg ulation: The Trunk-Line Railroad Cartels and the Interstate Commerce Commission Before 1900 (Cambridge: The M. I. T. Press, 1965). which would not occur in the ab sence of regulation. It is fortunate that truck move ments of agricultural commodities are exempt from regulation. Otherwise, we would find ourselves in the Brazilian situation where one-third of the crops produced in the interior rot for lack of expedi tious and adequate transporta tion. 6 Expediting the Harvest A crisis in the wheat harvesting season in 1952 illustrates how open markets can meet even very short term emergency situations. The market did a job at that time which could never have been han dled by central planning or by reg ulation as expeditiously or as ef ficiently.

Unusual weather in late May and early June ripened almost all of the 15 million acres of Kansas wheat simultaneously by the mid dle of June. Usually, wheat ripens about the middle of June in south central Kansas. The custom cut ting crews with their combines be gin harvesting there and move toward west and north Kansas in July, finishing in the northern and western areas in August and September. 6 J. K. Dunn, "Grain Storage Needs in Brazil," Brazilian Technical Studies (Washington: Institute of Inter-Ameri can Affairs, 1955), p. 395.

518 THE FREEMAN September With almost all of Kansas ready to be harvested by June 16, in 1952, it appeared that only a few farmers would be able to get their wheat in before losing their crop to hailstorms, fire, wind, and other causes. "At this point, the pull of the price mechanism came into ac tion, as the services of available machines were snapped up at rates of four to five dollars an acre (as compared to the usual three dollars an acre). Across the prairies the long distance telephones were busy; . . . spot radio announce ments of 'combines urgently need ed in Kansas' . . . at generous prices [were sponsored] . "Unsold combines disappeared from dealers' lots all the way to Canada; and from Texas to the Dakotas farmer-operators dropped their farm work, loaded their ma chines, and set out for Kansas. Added to the solid core of some 3,500 full-time professionals . . . came almost 5,000 extra outfits eager to dig their cutter bars into wheat at four and five dollars per acre. They came just in time and in just ample quantity. Almost no machines were to be seen waiting for jobs, yet in almost every field there was at least one big combine knifing its dusty way through the wheat."7 7 C. M. Williams, "Enterprise on the Prairies," Harvard Business Review, March-April, 1953.

The market mobilized equipment and manpower from the far corn ers of the country in an amazingly short time to meet the emergency. It mobilized those pieces of equip ment and that manpower which occasioned the least sacrifice of alternative product. It avoided or dering equipment and manpower into the crisis area which would have entailed unduly large costs and sacrifices. Could any central planning bureau do nearly as well ? Could any set of regulations of price or usage have done anything but reduce the expeditiousness and efficiency with which the job was done? The story of India's attempt to improve agricultural practices il lustrates the point by an opposite experience. In 1959, agricultural agents were sent out by the gov ernment to persuade farmers to adopt new practices to improve their yields. The agents did an outstanding job of persuading farmers to prepare their fields for the use of new seed varieties and for the application of fertilizers.

Unfortunately, the seed did not ar rive on time and the fertilizer was delivered to the wrong places. Fields went unplanted with con siderable damage to peasant in come and the Indian food supply. A complaint made during the late April 1965 floods along the Mississippi in Illinois illustrates 1967 RULE BY MARKETS VS. RULE BY MEN 519 the power of the market to direct activity to meet crisis situations. The city engineer of Rock Island complained that sand bags were being trucked into the area threat ened by flooding and offered at 15¢ per bag. He felt that such prof iteering should not be permitted since the price before the flood threat occurred was 12¢ per bag. One may wonder how he would have felt if no one had anticipated the great demand for sand bags or been motivated to truck them in. How would he have protected the property for which he was re sponsible if no sand bags had been supplied? He had not prepared for the emergency by accumulating an inventory of bags, but the market remedied his lack of foresight.

While impersonal markets suc ceed in coordinating activity even to meet short term, unpredictable emergencies, central planning by men often fails to meet predict able, longer term needs. The In dian situation cited above is one illustration. Another is that de scribed in an April 28, 1965 D.P.!. story from Moscow based on in formation in Pravda. The news paper lamented that several 16 story apartment houses in subur_ ban Moscow were finished, but no body could move in. No elevators! The situation was not unique to Moscow. Pravda said that "in many cities of the cou~try tall buildings are being put up and everywhere there is a shortage of elevators." Market Coordination in Changing Circumstances However, let us turn to the co ordinating and directing power of impersonal markets in a situation which is not a short-term harvest crisis or flood threat. Let us take the somewhat longer period from 1939 to 1946 when the American economy was dominated by the necessity of mobilizing for war and demobilizing on the return of peace. One group of industries was completely dominated by this set of circumstances. The munitions industries (as segregated by the Census of Manufacturers and the Bureau of Internal Revenue) doubled its capital in 1940, again in 1941, and in 1942 quadrupled its capital. In 1939, assets in the munitions industries were $0.6 billion; in 1943, they amounted to $13.4 billion. The subsequent de cline was equally abrupt; within three years the capital of the mu nitions industries had fallen to $2.4 billion.

The magnificent response of the munitions industries to war de mands and their subsequent rapid adjustment to the decline in de mand was a result of the effective ness of the profit incentive. Some may think that the directives of 520 THE FREEMAN September the War Production Board pro duced this result. These people should talk to the men who staffed the War Production Board. The WPB found that the stick could slow production and asset forma tion in some lines of production, but the carrot had to be dangled to obtain increased production. The actual profit record-the incentives which produced this result - is shown in the table below. Average Rate of Return Year All Industries Munitions 1941 8.56% 11.67% 1942 7.30 12.12 1943 7.30 9.65 1944 6.59 6.18 1945 5.43 4.39 1946 8.13 -2.65 Source: G. Stigler, Capital and Rate of Re turn in Manufacturing Industries, (Prince ton University Press for the National Bu reau of Economic Research, 1963), p. 36.

Rates of return in the munitions industries are on midyear assets except 1946. As long as the rate of return in munitions exceeded that in all in dustries, the assets of the muni tions industries increased without detailed direction from the men in Washington. After 1943, when the rate of return in munitions fell be low that in all industries, assets employed in these industries de creased. Following World War II, the American economy shifted from war to peace with relatively greater ease than the European econo mies, despite the lack of direction from governmental authorities. England and other countries which used government boards to redi rect resources, and price controls and rationing to prevent chaotic consumer markets, had much greater difficulties (aside from those caused by war damage). Areas in which governmental con trols in the United States were continued, such as housing, suf fered from the same difficulties common in Europe.

Wartime and Postwar Adjustments Noone told the managers of U.S. enterprises which products they should produce. How, then, did we avoid the calamity of too many firms rushing into some in dustries and not enough into others in the shift from war to peace production? The market mech anism, profit, and other income incentives did for us the job which state planners attempted to do in other countries. Where products were in short supply relative to demand, prices went up, profits were attractive, and capacity was built or shifted to meet needs. Where products were available in relatively more than adequate quantities, prices dropped, profits declined or turned into losses, and labor and other capacity were re leased to alternative uses.

1967 RULE BY MARKETS VS. RULE BY MEN 521 Differences among rates of re turn on capital not only attracted capital from the low-return to the high-return industries; they also attracted labor. High-return in dustries attracting capital bid for labor to operate the additional cap ital equipment. Low-return in dustries, producing goods for which consumers were not willing to pay much, could not afford to meet the bids of the industries producing the preferred goods. The more rapidly expanding manufacturing industries grew by producing goods relatively more attractive to consumers in design and price. By improving design, raising productivity, and cutting price they made themselves prof itable to both their suppliers of capital and to their labor force. The more profitable industries were also high-wage industries. The four highest-return industries paid wages exceeding $5,000 an nually (1957). They were bidding labor as well as capital away from the industries producing less pref erable goods. The four lowest-re turn industries paid wages under $4,000 annually and were losing labor to the high-wage industries.

In a few industries, men rather than markets set wage rates. In these industries, job opportunities were restricted by the overpricing of labor. Coal-mining was a prime example of undue increases in wage rates with a consequent loss of jobs and movement of people out of high productivity work into low productivity occupations, the reverse of the movement which occurs in free markets. In the mid forties, coal wage rates were 18 per cent above factory rates and 380,000 men were employed. By 1960, wage rates had been pushed to 40 per cent above now higher factory rates, job opportunities decreased to 170,000, and we be came concerned about unemploy ment in Appalachia. Regional Adaptation Higher incomes in free markets act as an incentive to owners of resources (labor and capital) to move their resources not only to the industries where they produce the most desirable products, but also to the regions where they will be most productive. As we can see in the accompanying table, per capita income in Southeast United States in 1929 was only 52 per cent of the national average. Evi dently, people in this region were only about half as productive as the average U.S. resident. This was partly because of lack of capi tal for each industrial or other worker, partly because of regional handicaps such as poor markets and transportation, and partly be cause of lower levels of skill. On the other hand, Mideast U.S. per 522 THE FREEMAN September The average u. s. per capita income, in terms of 1966 prices, was $1,370 in 1929 and $2,950 in 1966. Source: Survey of Current Business, April, 1967.

capita income was 138 per cent of the national average. Evidently, there were very productive uses for labor in this area. A Voluntary Response The voluntary movement which has occurred out of the Southeast U.S. and into regions such as the Far VVest may be contrasted with the involuntary movements forced upon people by the men operating the Resettlement Administration in the 1930's. An illustrative story is the experience of a. group of Ozark tenant farmers. Their farms were bought by the Reset tlement Administration. They were told the farms would no long er be rented to them. The Reset tlement Administration was intent on moving people from low pro ductivity areas where they pro duce little income to high produc tivity areas where they could pro duce higher incomes. The Ozark tenant farmers were in effect forced to move from the farms in Southern Missouri which provided them with little income to farms in Northern Missouri which pro vided much better incomes.

VVithin a few years, however, most of the people involved had drifted back to Southern Missouri. VVhen asked why they preferred poverty in the Ozar ks to better living in Northern Missouri, the replies summed up to, "VVe missed the coon hunting and the hills." The voluntary movement which has taken place in response to market incentives has been of self-selected persons. The p~ople 1966 113 115 110 109 91 96 85 77 1929 138 129 125 114 85 81 67 52 Regional Per Capita Personal Income (as Percentage of U. S. Average) Relative Change -18% -11% -12% - 4% + 7% +18% +27% +48% Region Midwest Far West New England Great Lakes Rocky Mountain Plains Southwest Southeast VVorkers migrated from the Southeast to the areas where their labor could be used more produc tively. This movement left fewer workers on the land. The increase in land per farm worker raised productivity. Capital migrated in to Southeast U.S. and made its contribution to increased produc tivity. Proportionately, more in vestment was made in the South east than elsewhere since labor could be bid away from the infe rior alternative uses at lower costs.

As a consequence, per capita in come in the Southeast rose to 77 per cent of the national average by 1966 in spite of a great rise in the national average which oc curred simultaneously.

1967 RULE BY MARKETS VS. RULE BY MEN 523 who chose to move were those to whom higher income was more im portant than "coon hunting and the hills." Those who preferred their current surroundings did not have to move and did not. Yet, they did not lose by staying be hind. Those who moved left be hind capital and land which in creased the resources per man of the stay-at-homes. This increased the income of the stay-at-homes. The voluntary process of reset tlement works better than the cen trally directed, involuntary proc ess. It selects, by self -selection, those people to whom the sacrifices or costs entailed by movement are minimal and to whom the gains are relatively more important. Us ually, those who voluntarily move are those who can make relatively greater net gains. The voluntary response to the incentives of the open market does more to raise average productivity than man aged moves of nonvolunteers ad ministered by a government bureau.

The TVA Experience The events I have described above should warn us to go slowly in enacting special aid and sub sidy measures for low-income areas in the United States, as has already been done to some extent and more of which are being pro posed as part of the Great Society program. If these measures take the form of subsidizing people to stay put, the incentive to transfer resources to superior uses is re moved. As a result, per capita in comes - aside from subsidies in distressed areas will remain low relative to the average for the na tion. This is perhaps best illustrated by analyzing the TVA area ex perience. The area has been and is heavily subsidized. Capital is provided by the Federal govern ment (that is, by the rest of the country) for many projects at a price of 21j2 per cent. All the capi tal for some projects is provided at no cost to the TVA area. Elec tricity is furnished to many buy ers in this area at substantially lower prices than in neighboring areas whose suppliers must bear a heavy tax burden. The power company in Arkansas pays out 24 per cent of its revenues as taxes.

The TVA makes payments in lieu of taxes, but these amount to only 2 per cent of its revenues. That is quite a substantial difference in the tax burden aside from the di rect subsidization of the capital supplied to the TVA. Presumably, in these circum stances, the people of the TVA area should have gained enor mously. An analysis made by the Ken tucky Utilities Bureau in this re524 THE FREEMAN September gard turned up a very surprising result. The Bureau was asked to determine whether it would be wise to invite the· TVA to extend its operations further into Ken tucky. In order to answer the question, it studied the TVA area and eight surrounding areas. It measured the change in various welfare indices such as per capita income, longevity, level of educa tion, freedom from incidence of certain types of disease, and so on. As a result of the study, Kentucky decided not to invite the· TVA to further extend its area of activity.

The surrounding areas had, on the average, done as well as the TVA area. When I heard of the study, I was puzzled about the results. They seemed paradoxical to me or, to put it bluntly, I found them hard to believe. It was only after a number of students had done some further analysis that an ex planation emerged which made the study credible. The data on mi gration made the pieces fall into place. What TVA does is to sub sidize people to stay put who other wise would migrate. Voluntary migration of people out, and of capital in, and a change in the rural-urban balance did for the surrounding areas what the sub sidies did for the TVA area. In essence, what TVA has done and is doing is to subsidize people to stay put in an area of lower productivity than the areas to which they would move. This means that we are keeping people in low productivity jobs instead of letting markets work to move them to higher productivity jobs.

To this extent, average produc tivity in the nation is lower and per capita income is lower than it would be in the absence of the TVA. Also, income per capita in the TVA area is lower than it would be without the TVA. The capital drain from the rest of the nation has kept per capita income from rising as rapidly as it other wise would. This has reacted to cause a less rapid rise in the TVA area than would have occurred in the absence of TVA, the very op posite of the result which our fal lible legislators were presumably attempting to produce. Market Coordination of Research and Technology At this point, I want to turn to a more difficult and less analyzed area, the role of open markets in directing research and develop ment. I will do this by discussing some examples. H In 1950, we had an enormous rise in the demand for benzene. 8 See Y. Brozen, "The Role of Govern ment in Research and Development,"

The Anwrican Behavioral Scientist, De cember, 1962, for a general analysis.

1967 RULE BY MARKETS VS. RULE BY MEN 525 The price had been 14 cents a gal lon. Since it was an ingredient in the making of certain explosives, the outbreak of the Korean War greatly stimulated the demand. Since the price was still free to move, price ceilings not yet hav ing been imposed, the price moved to 50 cents a gallon. The price rise was an expres sion of the great new demand for benzene for certain overwhelm ingly important purposes. It also served as an incentive for people to conserve the use of benzene in less important applications and release it for the more important. The price rise created an addi tional response. It presented an opportunity to obtain a pay-off from the development of new tech nology for producing benzene from a new source. Benzene had been produced primarily as a by product in the extraction of coal chemicals. Because of its by-prod uct status, the elasticity of supply from the then available sources was very low. At the old price of 14 cents, it would not have paid to develop new sources by creating new technology, and there was little need for new sources since the supply was ample. The 50 cent price was a signal that the supply was no longer ample. Also, it was an incentive to develop a new source.

Universal Oil Products responded to the signal. It did some work on the platforming process for handling petroleum hydrocar bons. In three months it developed a process for producing benzene from petroleum. The price of ben zene then dropped to 25 cents. This provided the signal that fur ther research and development was not needed unless it was likely to create a process more efficient than the platforming method. The open market responded to the benzene scarcity. It directed research to do a job to the extent that resources devoted to research could do the task with a smaller resource requirement than putting resources into conserving benzene and substituting other materials. The opposite of open market di rection is exemplified by the reac tion of the Federal Bureau of Mines and of Congress. The Bu reau of Mines said to Congress and the Defense Department, "We will be running out of petroleum soon. How are you going to move military equipment such as planes and tanks which depend on petro leum products ?" The Bureau asked for a $400,000,000 appropriation to work on the hydrogenation of coal and extraction of oil from shale. It almost frightened the Defense Department and Congress into pushing the appropriation through.

526 THE FREEMAN September The oil industry is as much in terested in providing liquid fuels for military equipment as the mil itary establishment is in obtain ing the fuels. To the extent that it would be cheaper to produce the fuels by coal hydrogenation and by extraction of shale oil, the industry would move in that di rection. The industry had main tained a continuous program of research on a small scale to be ready to move when the state of science was appropriate and the scarcity of alternate sources of hydrocarbons made it necessary. The time was not ripe, how ever, and the industry indicated this in congressional testimony. Nevertheless, Congress did appro priate $100,000,000 and the Bu reau of Mines built a pilot plant at Carthage, Missouri, and in creased the scale of work at Rifle, Colorado. Both plants were shut down and have sat idle for a dec ade. We have wasted $100,000, 000.9 There is the difference between the open market response and the controlled market response. 10 Those in the open market were forced to operate on the basis of 9 The Plant near Rifle was re-activated in 1965 with a governmental appropria tion and is being used for research pur poses under contract to six oil companies.

10 For other examples, see Y. Brozen, The Role of TechnolollY in Conserving Strategic 111aterials (multilithed, 1951). economical use of resources since they could not call on taxpayers to pay for their mistakes. The controlled market operated on the basis of scarce headlines instead of the realities of resource avail abilities and economy. Conclusion Central planning by· man has been praised as a superior tech nique for organizing the use. of resources, selecting techniques, and directing production because presumably it employs man's ca pacity to reason and is rational. However, this is an argument for planning as against no planning. The issue thus drawn is false. Free markets are a method of coordinating the decentralized planning of many organizations and individuals. Each plan can be fitted to local circumstances em ploying local knowledge in such a way that the total is coordinated under the constraints imposed by total resources and total needs.

The issue is not plan versus no plan. It is centralized versus de centralized planning; limited· in itiative by a few, or widespread initiative by many. This nation has attempted to maintain widespread initiative and, at the same time, intervene in markets with special programs to benefit politically powerful blocs and presumably worthy persons 1967 RULE BY MARKETS VS. RULE BY MEN 527 who are not receiving "fair shares." Where these interventions have changed the signals, such as wage rates and prices, or forced re allocations of resources among areas or lines of production, such as the subsidizing of certain activ ities like agriculture and certain areas such as the TVA region and Appalachia, the results are fre quently the opposite of those in tended. One example of a result op posite the intent has been de scribed (the TVA instance). In that case, the intended benefi ciaries are worse off than if the intervention had not been under taken. Additional examples which illustrate the same point can be named. The tariff, which is sup posed to protect the levels of liv ing of American workers from the competition of low-paid foreign ers, has simply monopolized low paying jobs for Americans and prevented them from obtaining better-paid jobs which would have been available in the absence of the trade barriers we have im posed. ll The imposition of the minimum wage and its subsequent increases have caused a loss of bet ter-paying jobs by many of the in11 See Y. Brozen, "The NewCompeti tion-International Markets: How Should We Adapt?" Journal of Business, Oc tober, 1960.

tended beneficiaries and forced them into lower-paying jobs or un employment. 12 The subsidies pro vided for agriculture through such devices as the Rural Electrification Administration have depressed rural wage rates and increased poverty while enriching the already well-to-do. 13 The Federally spon sored and subsidized urban renew al programs which some believed would benefit poverty-stricken slum dwellers have instead forced the,m to pay higher rentals, reduced the supply of housing at their de sired rental levels, and destroyed the livelihoods of hundreds of small business people. 14 Free markets have done a mag nificent job of eliminating pov erty,15 of improving the status of 12 Y. Brozen, "Minimum Wage Rates and Household Workers," Journal of Law and Economics, October, 1962; M. Col berg, "Minimum Wage Effects on Flor ida's Economic Development," Journal of Law and Economics, October, 1960.

13 D. G. Johnson, "Output and Income Effects of Reducing the Farm Labor Force," Journal of Farm Economics, November, 1960. 14 The Chicago Housing Authority, Rehousin.q Residents Displaced from Public Housing Clearance Sites in Chi cago, 1957-58; J. Segall, "The Propaga tion of Bulldozers," Journal of Business, October, 1965. 15 A century ago, practically every body in the United States fell below what has come to be called the line between poverty and non-poverty-a $3,000 per year income measured in 1962 dollars. By 1947, the incidence of poverty as 528 THE FREEMAN September Jews, Negroes, the Irish, and other minority groups, and of pro viding opportunities and outlets for the creative use of the ener gies of even the most deviant per sons who are frequently jailed or shot in less open societies. Such markets make it impossible for the few to monopolize power and defined by this standard had fallen from nearly 100 per cent of all families to 32 per cent. By 1964, those falling below the $3,000 standard had diminished to 18 per cent.

tyrannize their fellow country men. This, of course, is the reason that those with a lust for power are the enemies of the free mar ket and the encouragers of inter vention and central planning. As Trygve Hoff remarked, in an edi torial in the Norwegian weekly, Farmand, "The hallmark of the 'planned economy' is not planning. It is that it aims to concentrate . . . power in the hands of the State." ~ BEAUTY and COMMON SENSE MOST Americans respond charac teristically to the appeals for be'au tification of our country. They want to have their cities improved, to remove scars from the land scape, to have an attractive coun tryside. Conservation and preservation ist groups have been preaching this gospel for years. They have done an effective job. They have aroused the innate decency of our people; they have appealed to American love of nature and reReprinted from the March 1967 issue of N a tional Forest Products Review with permis sion of National Forest Products Association.

1967 BEAUTY AND COMMON SENSE 529 spect for the out-of-doors. What the preservationists have done, however, is to overlook a simple fact of life. This is that our nation has grown great by learning the lesson of using our natural re sources wisely, not by locking them up. The forest industries in the last 50 years have done more for true conservation than all the Izaak Walton Leagues, the Sierra Clubs, and ladies daffodil societies I umped together. They ha ve learned to perpetuate our timber resources while at the same time supplying the nation with the wood necessities of modern life. As National Forest Products Association President, Gene C. Brewer, cogently puts it: "This is one industry that takes beauty from nature, converts it into prod ucts of beauty, and restores beauty to the forest." Preservationists currently are asking for an un realistic "moon" in a manner which could result in thousands of jobless people and their forest communities economic dropouts.

They want scenic trails, wild rivers, national parks, wilderness areas, canoe preserves, monu ments, and many other things that are laudable - if taken in propor tion. But· when they seek to in dulge hobbies at the expense of sterilizing producing resources, when they seek to cut off neces sary economic production of the needs of everyday life, they are not using common sense. If the forest industries are to be continually restricted, con stantly hampered, and put out of business, how will people fulfill their most basic human needs? What is to be the source of ma terial on which to print their news letters and sermons? What will they use to build houses? What will they use for furniture? Forest in dustries, which may have become the greatest conservationists of them all, have learned to live with recreation, parks, trails, water ways, and all the rest. But they have done it by using good judg ment and common sense.

Isn't it about time for the preservationists to use some, too? Ben Moreell WE CONSERVE natural resources by using them in the most efficient and economic manner .... If a given project cannot pass the test of economics, that is a sure sign that it is not conservation but waste. Our Nation's Water Resources - Policies and Politics IJ, f/oUA P/lIlosofiAeAIVn9 f/86 Eeen 'Jounll LEONARD E. READ LIFE in the Athens of twenty-four centuries ago was relatively sim ple. Economics as a discipline had not been considered; technology as we know it was nonexistent; spe cialization in medicine, manufac turing, or any other field had scarcely begun. Computers? "Vhy, even the concept of zero was a thousand years in the future. The Athenians, by our standards, knew nothing of the complexities we ex perience in everyday life. Simple? In a sense, yes. Yet, human beings were as complex then as now. Each individual was unique. No two thought alike, or had the same incentives, talents, desires, likes, dislikes, goals, aspi rations, energies. Variation! And to the mind of a social planner this spelled chaos, humanity at sixes and sevens. How possibly 530 could order be brought out of such disorder? Precisely the same ques tion people raise today. And in spired by the same lack of under standing!

Plato gave us the philosopher king idea - an omnipotent leader all-wise enough to play a totally dominant role. Plato's final state ment of the idea is found in Laws, #942, where the Athenian says: The greatest principle of all is that nobody, whether male or female, should be without a leader. Nor should the mind of anybody be ha bituated to letting him do anything at all on his own initiative; neither out of zeal, nor even playfully. But in war and in the midst of peace - to his leader he shall direct his eye and follow him faithfully. And even in the smallest matter he should stand un der leadership. For example, he 1 Man the Unknown (New York: Harper &. Brothers, 1935.) Every year we hear of the progress made by eugenists, geneticists, sta"The Remaking of Man" Among these few intellectual giants, we should take note of the distinguished scientist, Dr. Alexis Carrel. In his remarkable book, Man, the Unknown, he entitled the concluding chapter, "The Re making of Man."l Note how he would remake man (italics mine) : PLATO, YOUR PHILOSOPHER KING HAS BEEN FOUND! 531 know-how peculiar to each! Think of the enormous benefit that would redound to all should some one per son - a philosopher-king type - en compass in his own person a to tality of all knowledge. Be done with this helter-skelter and its wastage! What society requires is a "creative combining mind," an intellectual superman who can synthesize all of the discrete skills, know-hows, wisdoms!

Nor is this a notion exclusive with Plato; it pervades and dom inates the minds of millions. The reason that we think of the philos opher-king idea as distinctly Platonic is that he, and now and then another intellectual giant, is strikingly explicit in setting forth the notion. Millions of people go along with the idea but without any ability to express it in explicit terms. should get up, or move, or wash, or take his meals... only if he has been told to do so. In a word, he should teach his soul, by long habit, never to dream of acting independently, and to become utterly incapable of it. A Perfect Planner What really lies at the root of the philosopher-king idea which has persisted since Plato's day? To answer, "the will to power," is to gloss over the explanation. Plato himself had no authoritarian aspirations, and I suspect the same can be said for nearly every think er who dwells on perfecting soci ety. Persons who occupy them selves intellectually in this manner have neither the time nor the in clination to ascend politically.

These thinkers are searching for something more difficult to find than power is to gain. What is the object of their search? These self-appointed doctors of society view the human scene and see people going every which way, each man in pursuit of what in terests or intrigues him most. Un regulated human action is random, they suspect, lacking in economy and needing direction. How can there be any order, any grand pur pose served, when millions of in dividuals act personally, privately, and independently· of each other? Particularly when each one has only a smattering of some unique knowledge, merely a tiny bit of 1967 532 THE FREEMAN September tisticians, behaviorists, physiolo gists, anatomists, biological chemists, physical chemists, psychologists, physicians, hygienists, endocrinolo gists, psychiatrists, immunologists, educators, social workers, clergymen, sociologists, economists, etc. But the practical results of these accomplish ments are surprisingly small. This immense amount of information is disseminated in technical reviews, in treatises, in the brains of men of science. Noone has it in his posses sion. We have now to put together its disparate fragments, and to make this knowledge live within the mind of at least a few individuals. Then, it will become productive. . . .

In about twenty-five years of un interrupted study, one could learn these sciences. At the age of fifty, those who have submitted themselves to this discipline could effectively di rect the construction of the human being and of a civilization based on his true nature .... Democratic rulers. as well as dic tators [what's the difference?] could receive from this source of scientific truth the information that they need in order to develop a civilization real ly suitable to man .... We have to intervene in the funda mental organic and mental processes. These processes are man himself. But m,an ha,s no independent existence. He is bound to his environment. In order to remake him, we have to transform his world .... A group, although very small, is capable of eluding the harmful in fluence of the society of its epoch by imposing upon its members rules of conduct modeled on military or mo nastic discipline ....

Such a minority would be in a po sition to impose, by persuasion or perhaps by force, other ways of life upon the majority .... We must single out the children who are endowed with high poten tialities, and develop them as com pletely as possible. 2••• The sons of very rich men, like those of criminals, should be removed while still infants from their natural surroundings. 3 Power to the Rescue Dr. Carrel no more aspired to political power than did Plato. But these two, along with countless others, less famous, of the philoso pher-king school,4 have erected an ideological framework which has made it possible for the Hitlers and Stalins to achieve political dic tatorship without effective opposi tion. The mere acceptance of the 2 Who are "we"? It's a million-to-one bet that "we" would never have singled out that 12-year-old newsboy in Michi gan-Thomas Alva Edison! 3 Peacefully? Hardly! The removal would have to be at the point of a gun; rich parents love their children, too!

4 The late C. S. Lewis writes of these ideologists and says, "I am not suppos ing them to be bad men. They are, rather, not men (in the old sense) at all. They are, if you like, men who have sacrificed their own share in traditional humanity in order to devote themselves to the task of deciding what 'Human ity' shall henceforth mean."

1967 PLATO, YOUR PHILOSOPHER KING HAS BEEN FOUND! 533 lording-it;.over-man concept paves the way for coercionists or war lords. People - intellectual giants or midgets - who feel the necessity of. a grand synthesist (and never finding such a person, for he does not exist) will and do turn to gov ernment to handle problems they wish to shun; the state becomes their philosopher king. This naive approach leaves the gate wide open for the most persuasive and se ducti ve among the seekers after power. The philosopher king! The grand synthesist! The creative combining mind! How much con trary evidence must we have to rid ourselves of this faulty notion! The two examples of Plato and Carrel should suffice - men with admittedly superior intellects ar riving at such schemes to remake humanity. How can we explain the paradox of growing intellects lead ing to this nonsense? Perhaps the genius - the relatively superior one - is thereby blinded and sees no boundaries for himself. He steps out of bounds, as we say; he goes over and beyond the role intended for man, steps into God's Realm, and falls into an abyss of utter absurdity.

But the grand-synthesist idea can easily be refuted. Any highly specialized scientist or technician will, when carefully questioned, confess his inability to keep a breast of the advances in his own narrow specialization. Is there, then, some one of them who can arise to a know-it-all position, who can encompass infinity in his finite mentality? Preposterous! 5 The Creator's Role Those who have sincerely ap proached the problem of ordering human society have always found disillusionment in their attempts to discover the Combining Mind in any man or in any enforced com bination of men. Plato himself fi nally despaired of finding a philos opher king. In fact, as he grew older, he devoted his best efforts to the erection of barriers to the exercise of power by one human being over another. The combining mind is not to be found in creation but only in the Creator. I have never heard any one contradict Joyce Kilmer's "Only God can make a tree." How can anyone who cannot make a tree logically contend that man 5 An acquaintance who for several decades has been a distinguished phys iologist at one of our great medical schools, and who has specialized in blood, a narrow phase of a narrow spe cialization, admits that he knows very little about this "red river of life."

The deeper he explores, the greater is his sense of not knowing. Only a per son unaware of how little he knows could possibly aspire to become the synthesist of all science, let alone polit ical economy and the other disciplines.

534 THE FREEMAN September can make or remake man? Surely, man is higher in Creation's Scheme than is a tree. Because God is exclusively the Combining Mind, are we then left naked and helpless amidst our thousand-and-one seemingly dis parate specializations? Is there not some combining force at the human level and for human dis posal, a principle which if scrupu lously observed will perform this admittedly essential function? The answer is an unequivocal "Yes I" and the principle is liberty. Plato, your philosopher king has been found, not in a person but in a principle! The Provisioning of Paris Who first discovered and com prehended this principle no one knows. For centuries, some think ers have perceived the vital con nection between man and his Crea tor and between creativity and freedom. One of those thinkers who grasped at least a portion of this vital connection was Fred eric Bastiat. Writing in the 1840's about the economy of Paris, un believably more specialized and complex than the economy of Athens twenty-four centuries ear lier, he observed: On entering Paris, which I had come to visit, I said to myself-Here are a million of human beings who would all die in a short time if provisions of every kind ceased to flow towards this great metropolis. Imag ination is batHed when it tries to ap preciate the vast multiplicity of com modities which must enter tomorrow through the barriers in order to pre serve the inhabitants from falling prey to the convulsions of famine, rebellion, and pillage. And yet all sleep at this moment, and their peace ful slumbers are not disturbed for a single instant by the prospect of such a frightful catastrophe.

On the other hand, eighty provinces have been laboring today, without concert, without any mutual under standing for the provisioning of Paris. How does each succeeding day bring what is wanted, nothing more, nothing less, to so gigantic a market? What, then, is the ingenious and secret power which governs the as tonishing regularity of movements so complicated, a regularity in which everybody has implicit faith, although happiness and life itself are at stake? That power is an absolute prin ciple, the principle of freedom in transact,ions. ... In what situation, I would ask, would the inhabitants of Paris be if a minister [a philosopher king] should take it into his head to sub stitute for this power the combina tions of his own genius, however superior we might suppose them to be -if he thought to subject to his su preme direction this prodigious mech anism [freedom in transactions-the free market], to hold the springs of it in his hands, to decide by whom, or in what manner, or on what con ditions, everything needed should be 1967 PLATO, YOUR PHILOSOPHER KING HAS BEEN FOUND! 535 produced, transported, exchanged, and consumed?

Truly, there may be much suffering within the walls of Paris - poverty, despair, perhaps starvation, causing more tears to flow than ardent char ity is able to dry up; but I affirm that it is probable, nay, that it is certain, that the arbitrary intervention of government [the coercive synthesist] would multiply innnitely those suf ferings, and spread over all our fel low citizens those evils which at pres ent affect only a small number of them. 6 Miracle in the Sky The economy of nineteenth-cen tury Paris was markedly more complex than the economy of Athens in 400 B.C. And the econ omy of the U.S.A. today is incom parably more specialized and com plex than the Paris Bastiat wrote about. This point is stressed to emphasize the incontrovertible fact that the more complex the economy, the less is the possibility of human masterminding and the more must our reliance be on lib erty - freedom in transactions.

Bastiat marveled at the provi sioning of Paris, and well he might. The myriad provisioners, throughout the eighty provinces, went about their business of grow ing and raising without any 6 This extract is from Social Falla cies, Register Publishing Company edi tion, 1944. thought of where their produce was going. They merely kept their eye on prices: high, grow; low, no. And, 10, Parisians slumbered peacefully without fretting about the morrow. Principle rather than some philosopher king or dicta torial synthesist was operating to a marked extent. And, interesting ly, the people of Paris knew no more about the principle than did their provisioners. But Bastiat grasped and explained it and warned, in effect: Ignore it at your peril 17 The provisioning of Paris! A veritable miracle! Yes, a miracle in the sense that hardly anyone had any awareness as to the why of their well-being. They enjoyed these economic blessings with no more appreciation or understand ing than of the sunshine that graced their lives.

The provisioning of Paris mi raculous? Then consider this pro visioning: In 1966 more than 100, 000,000 meals were served in the skies by U.S.A.-owned airlines a lone. Just one of these - United spent more than $30 million last year in provisioning its restau rants in the clouds. I wonder what the brilliant Bastiat would have exclaimed had 1 Even in Russia the principle is not totally ignored. Were any people to disregard freedom in transactions 100 per cent, all would perish.

536 THE FREEMAN September he been my seatmate on a TWA jet leaving Athens - nearly seven miles above the Aegean Sea and winging eastward at about 600 miles an hour! Assuming that the jet itself hadn't left him speech less, what might he have said when the stewardess passed the menus? There were, of course, the appetizers, a choice of soups and salad dressings and desserts and beverages. But reflect on the en trees from which we might have chosen: Roast Sirloin of Beef [Kansas grown] Broiled Filet Mignon [Rare or well done, Sir?] Maine Lobster Thermidor [Maine lobster over the Aegean Sea!] Roast Duckling with Sour Cherries [Long Island and California] Curried Squab Chicken [India and Delaware] Fillet of Sole in Shrimp Sauce [North Channel fish] Individual Lamb Rib Roast [Utah gets into the act] All of this would have been in credible even to the perceptive Bastiat. Good foods from such dis tant places, most of them har vested weeks earlier! Impossible!

Why aren't they spoiled? For Bastiat had never known of any thing frozen except temporarily by Mother Nature. My explanation would have sounded strangely similar to his understanding of the provisioning of Paris, except more "far fetched." For instance, Monsieur Bastiat, some of these vegetables were grown in California. They were then picked, cleaned, pre pared, quick frozen, and placed in an atmosphere, kept at or near zero degrees Fahrenheit; and then the frozen vegetables and the atmos phere were transported and hoisted aboard this jet, both the vegetables and the atmosphere remaining in this state until you and I select our entree for dinner tonight. I realize, Monsieur, that you never heard of an electric oven, this marvel of freedom in trans actions, which cooks our meals to night. But a year from now, if our freedom prevails, this oven will be discarded as outmoded. Instead, a microwa ve oven will cook the fro zen steaks, for example, in four minutes. And this coffee! Isn't it delicious? And far superior to any you ever tasted in Paris. The beans were grown in Brazil, Co lombia, Guatemala, and Java, blended and roasted in New York City, and brewed on this jet in less than five minutes. Pardon me, I almost forgot. These wines and champagnes are mostly from your nati ve France.

Actually, Monsieur Bastiat, what you are experiencing tonight 1967 PLATO, YOUR PHILOSOPHER KING HAS BEEN FOUND! 537 is no more than an extension of the phenomenon you so clearly perceived 120 years ago - the ab solute principle of freedom in transactions. This jet, these delectable foods, the mobile zero atmosphere flying through space, the ovens, and so on, are a fantastic combination of nature's resources originating all over this earth, plus trillions upon trillions of tiny human creativi ties, inventions, discoveries going back to the beginning of thought. What you and I enjoy are natural and automatic coalescences of these infinitesimal intelligences, formations that occur when intel ligence and resources are free to flow. As you so cogently pointed out, no minister could have planned our experience this evening. Had any man or men - Plato's philosopher king, Carrel's synthesist, or any bureaucracy-been substituted for the basic principle· of freedom in transactions, such an evening as ours would be unthinkable. Thanks for having enlightened at least a few of us. Bonne nuit, Monsieur.

Trying to Understand It is one thing to find Plato's philosopher king, not in the form of a person, but in the observance of a principle. It is quite another matter to explain why the princi ple is so difficult to find and understand. Why, we must ask, do so few perceive what appears to be a simple fact? Perhaps .any thing is simple once perceived, complex before hand. Authoritari ans are explicit in setting forth their schemes. Why are we dev otees of liberty so vague and ambiguous when trying to explain freedom in transactions and how it works? If I have no more difficult task than to set forth the little I know and my few beliefs, it is fairly easy to be explicit. There is no trouble at all in imitating Plato's line, '.'... to his leader he shall di rect his eye and follow him faith fully," or Carrel's belief, "The sons of very rich men, like those of criminals, should be removed while. still infants from their na tural isurroundings." The authori tarian's way is founded on per sonal· dictations such as "from each according to his ability, to each according to his need," or a rent control, an embargo, a gov ernment's debt, a tariff, a sub sidy.These can be .·observed. Be ing explicit is easy.

But when freedom in transac tions is allowed, description amounts to explaining the miracu lous. When riding on a jet, for in stance, one is no more conscious of its make-up than the people of Paris were of that city's provi sioning. Who sees in that plane538 THE FREEMAN September as much a part of it as its wings the harnessing of fire, the concept of zero, the discoveries that ac counted for the vulcanization of rubber, or the making of blue prints? That jet rides as much on trillions of tiny ideas as it does on the air through which it speeds. Creativities flowing freely and in complex interchange - freedom in transactions-are in solution, so to speak; they integrate imper ceptibly, become a natural part of the human situation. They're sol uble, as are grains of sugar added to a pail of water: it still appears as a pail of water, although a mite sweeter. But the discrete grains, as the tiny creativities, are lost track of as they become an integral part of the whole.

Only now and then does a Bas tiat come among us, one who can discern a profound principle at work. Mostly we're plagued with would-be philosopher kings, men who are explicit and disarmingly persuasive. Yet, we are critically dependent on the kind of discern ment displayed by our French friend and on a healthy skepticism of the philosopher-king idea in its myriad .forms. Let man .confine himself to his own realm and never invade God's; freedom in transac tions will admirably serve us as the most efficient of organizers. ~ GIVING A HAND TO SMALL BUSINESS LAWRENCE FERTIG THE AMERICAN PUBLIC is natural ly very sympathetic to small busi ness. Everyone likes to see David victorious ()ver Goliath. The best way to help the little fellow is to remove from his back the load of taxes, work restrictions enforced by labor unions, artificial miniMr. Fertig is an economic columnist. This article appears by permission of Columbia Features, Inc.

mum wage laws, and other bur dens which now severely affect him. But even under these current restrictions thousands of small businesses, privately· financed and privately managed, have been very successful. Look through the Over the-Counter stock market and you will find there many glowing rec ords of success by small compa nies making fried chicken, elec1967 GIVING A HAND TO SMALL BUSINESS 539 tronics, hamburgers, special tools, and so on. But this record has been due in no way to government intervention by the Small Busi ness Administration (SBA). The Small Business Adminis tration in Washington has achieved an unenviable record. The SBA is probably the biggest flop of all government agencies employing Federal cash in an attempt to improve the economy by subsidiz ing special groups. This mus;t be considered a remarkable achieve ment considering the long history of failure by these agencies.

Conflicting Objectives One basic trouble with the SBA is that it tries to achieve two ob jectives which often defeat each other. On the one hand the SBA tries to "fight poverty." On the other it tries to help small busi ness grow and become more profit able. The result has been that poverty has not been noticeably relieved, and. millions of dollars of taxpayers' money has been wasted on loans to small business which never had a chance from the start. In the name of AntiPoverty the SBA has financed automobile repair shops, laundries, bakeries, hobby shops, pet shops, and the like. Frequently, these have been run by people with little experi ence and less talent. Many soon failed. In nearly all cases these businesses could not get commer cial financing because the chance of success was practically nil. An SBA spokesman said quite truth fully, "You've got to expect losses when you're fighting a war on poverty." This statement reveals a deep confusion. Most of these loans had little to do with fighting poverty.

To encourage small business (which is the other objective of SBA) this agency has financed what are known as Small Busi ness Investment Companies (SB IC's). These companies, private ly owned, are subsidized by gov ernment loans of up to twice their invested capital, at a low interest rate. They can charge off capital losses 100 per cent against current income. They can accum ulate earnings without incurring tax penalties. Stockholders of an SBIC get special tax privileges if they sell their stock at a loss they can deduct the loss from in come. A lot of people rushed to take advantage of this govern ment-financed gravy train - but the results were quite different from the anticipation. In March this year the SBA officially re ported that out of 732 such com panies, 232 were "problem" com panies ; 60 were in process of liquidating; 42 had lost more than half their private capital; and 13 540 THE FREEMAN September had lost more than half their pri vate and government capital.

Bernard L. Boutin, [then] Di rector of SBA, estimated in April that $50 million of the $242 million so far advanced by the Federal government to SBrC's would be lost. This is a sorry record. Much· of it could have been anticipated. As every businessman knows, it takes unusual ability to make a small business grow. Easy financing frequently induces sloppy man agement, and in many cases in ternal corruption. This is what happened to many SBIC's. Gov ernment cash freely distributed is not the way to stimulate sound private enterprise. In Case 01 Failure, Try More 01 Same Having produced this record of failure, what is the solution of fered by the SBA? It is the usual one offered by every government agency which is not successful after losing substantial Federal funds. Their solution is - more government money and an expanded program for Small Busi ness Investment Companies. The SBA sent to Congress at the end of May proposed legislation which would give these investment com panies greater access to Federal cash. "The average Small Business Investment Company," said Mr.

Boutin, "is much too small, much too limited in financial resources and management skills to do the job contemplated by Congress." So Mr. Boutin would raise private investment from the present $300,000 to $1 million, and he would increase maximum govern ment investment to $10 million from the present $4.5 million. In this plan there is no guarantee of "management skills" necessary to protect government cash. Many SBIC's have failed and they will again. The way to encourage small business is to relieve its back breaking load of high taxes and labor union restrictions on work. This is the form of Federal aid it needs - not government sub sidies. ~ Capital Punishment CAPITAL PUNISHMENT is when the government taxes you to get capital in order to go into business in competition with you, and then taxes the profit of your business in order to pay its losses. AUTHOR UNKNOWN GEORGE C. ROCHE III 4. PROSPECTS WIELDERS of power are destroying the world in the mistaken belief that they are improving it. Many men have experienced the tempta tion to remake the world. Some have hoped to build a happy and prosperous nation through the suppression of all traffic in alcohol.

Others have expected to create a "master race" through the ex termination of "impure" races. Such schemes invariably have ended in disaster for ruler and ruled alike. The record of failure is being extended by the most "modern" of the schemes to re make the world through the use of coercion. The record of the planned society, whether in eco nomic, political, or moral ques tions, is far from enviable. One of the worst features of the planned society is its incor poration of religious zeal in the service of repressive ends. The humility implicit in a· sound re ligious faith has often retarded men's appetite for power; but even religion is showing signs of degenerating into a mere human itarianism which substitutes the material for the spiritual and man for God. The increasing spread of the planned society has tended to sweep aside such institutional guarantees as religion and private property, and has tended to over ride the traditional political bul warks against such unchecked ex ercise of power. \Vorst of all, the extension of power has been suffi ciently gradual, and the accom panying semantic erosion has been 541 542 THE FREEMAN September so complete, that the new exten sion of power into every area of our lives is today widely accepted as our "traditional American way."

The new exercise of power in the name of "humanitarian" goals is none the less dangerous because its ends appear commendable. In the words of Immanuel Kant: "Nobody may. compel me to be happy in his own way. Paternal ism is the greatest despotism imaginable." For the social re former thus to select the .goals in pursuit of which he will exercise his tremendous authority is to deny men the exercise of their own will, stripping them of their humanity. Erosion of Value For many centuries throughout the history of the Western World, the belief in the divine origins of individual human personality be came progressively stronger, thus engendering an understanding of the necessity for the limitation and fragmentation of power. As belief in the divine origins of in dividual human personality has tended to wane in the modern world, this trend has increasingly reversed itself. Man has seen fit to dispense with God and sub stitute man in His place, and the barriers of Natural Law have come down as the result of that substitution. The way has been cleared for the exercise of power in a new moral framework. This framework now defines "morality"

as social utility, to be decided upon by those exercising power. The ethical abyss opening at the feet of modern man is the direct re sult of that definition. Since Descartes, Western phi losophy has increasingly departed from the realism of the Greeks, the Bible, and St. Thomas. The result? But in our society, where relativ ism rules supreme, where truth is not merely distorted but its very exist ence denied, power grows to mon strous p,roportions without any inner check in the bosoms of those who hold it. In the place of truth, the ideal is adjustment, that .. is, the acceptance of whatever happen to be the modes of thought and action established among us - not because it is pur ported that they are true, but just because they are. In this paradise for power unchecked by any criterion but its own, the way of the man who would bear witness to and fight for truth because it is truth is doubly hard. Not only, as in former ages, must he confront the established au thorities of the day with the diver gence of their acts from the demands of truth; he has to substantiate - ex plicitly or implicitly - the very title of truth as criterion.!

1 Frank Chodorov, The Rise and Fall of Society (New York: Devin-Adair, 1959), pp. vii-viii.

1967 POWER: PROSPECTS 543 Truth and Not Power Has the Last Word Yet, it is this modern relativism which today stands astride our society and which controls such vast and unlimited power. But power, of itself, is not the final controlling element in man's life. The old assertion that "the truth will out," suggests quite properly that Truth and not Power has the last word in the affairs of man. Power, resting upon any other foundation except Truth, ensures its own destruction, a destruction from which the Truth will again emerge in the intellect and spirit of man. Those exercising power upon any other basis than Truth are, in the words of George Schuyler, "like a colony of ants riding on the end of a log floating down the Mississippi, while dis cussing destiny." Correct action automatically fol lows understanding - the only route to correct action. Nothing else will serve. If this process seems hopelessly slow, there should be the sustaining faith that liberty is in harmony with truth, and with the intended design of the human social order. Truth is immortal, despite the defeats that it seems to suffer along the way. Truth has a power that is no respecter of persons, nor of the numbers of per sons who may at any time be in dark ness about truth. Truth has a power tha t cannot be touched by physical force. It is impossible to shoot a truth. 2 It is helpful to remember that throughout the history of man, oppression has been his usual lot.

The extent and duration of a sub stantial amount of liberty in this nation is the exception, not the rule. Should we continue to con done the wide exercise of power within our society, our exceptional circumstance seems destined to come to an end. We have reached the point in our society where we no longer seem to understand that central ized .authority has neither money nor power of its own. Centralized authority has only what wealth and power it can extract from society. It is this lesson which has convinced our most thoughtful social critics of the necessity of restricting power while dividing authority among as many diff erent elements of society as pos sible. Our modern trend is toward the destruction of such a system and the substitution of the more "efficient" exercise of centralized control. In The Course of Con stitutional Politics, Benjamin Con stant, viewing the excesses of the French Revolution, pointed out t F. A. Harper, Liberty-A Path to Its Recovery (Irvington, N.Y.: Foundation for Economic Education, 1949), pp.

126-27.

544 THE FREEMAN September that power, and not politics, was the real culprit: Entrust it [unlimited Power] to one man, or to several men, or to all men, as you please; whichever it is, the re sults will be equally unfortunate for you. You will· then wax hot against the actual holders of this Power, and will, according to circumstances, ac cuse in turn monarchy, aristocracy, democracy, mIxed governments, and the representative system. You will be wrong; it is the measure of force that is the culprit, not its holders. Your indignation needs to be directed against the sword and not against the arm. There are weapons which are too heavy for the hand of man. lilt Can't Happen Here!" Such sentiments caused our Founding Fathers to erect numer ous barriers in the way of the exercise of centralized authority. The success stemming from that limitation of power has provided more material prosperity and po litical liberty to more people than any other attempt in the history of the world. Ironically, the power of centralized administration in this country has grown in large part because of this very inex perience of the American people with tyrannical governments. The frequent response to the allega tion that centralization of power is creating a despotic administra tion is the attitude, "It can't hap pen here."

Yet, it can happen here! It is happening. A clear understanding of the American tradition of lim ited government and individual liberty is necessary if we are to resist and reverse the tendency of our times. Our forebears were consist ently suspicious of government and of the political spectrum in general. In "Thoughts and Details on Scarcity," Edmund Burke warned: To provide for us in our necessities is not in the power of government. It would be vain presumption in states men to think they can do it. The peo ple maintain them, and not they the people. It is in the power of govern ment to prevent much evil; it can do very little positive good in this, or per ha ps in anything else. Or, in the even more succinct statement of Will Rogers, "This country has gotten where it is in spite of politics, not by the aid of it." It is upon this tradition of hardheaded common sense that 1967 POWER: PROSPECTS 545 the reinstitution of the American framework must begin. Individual freedom, free enterprise, local community, the sanctity of such institutions as religion and fam ily, and the right of individual conscience ... it is in the reasser tion of these fundamental truths that power will find its nemesis.

Free to Choose' Innumerable times each day, we depend heavily upon freedom of choice in virtually every aspect of our lives. The free choice still available to the American citizen is virtually beyond belief to most of the inhabitants of the world in our time, or indeed at any time throughout history. Yet this very freedom of choice is suffering a rapid attrition. To reverse the trend, we must begin appreciat ing what blessings we have en joyed and still enjoy so that we may fully perceive the nature of the loss which faces us. Imagine trying to convince grandfather half a century ago that the time might come when the American farmer would re quire permission from a Federal agency to plant his crops ! Yet, to day, the farmer has lost his right to choose. N ewsp~pers recently c~r ried the story of an Ohio farmer who has spent the past ten years in constant litigation with the Federal government, nearly bankrupting himself in the attempt.

He is now threatened with the loss of his farm, all because of a dispute as to whether he planted twenty-three acres of wheat on his farm, or only fifteen acres. He has decided to pay his fine, the article reports. "Mr. Donaldson still maintains his innocence, but after ten years of fighting he decided to pay rather than see his 3S9-acre farm auctioned Off."3 What has happened to Mr. Donald son's freedom to choose? If a farmer can no longer raise the grain to feed his own chickens or a businessman can no longer decide which ,vorkers he will hire at what rate of pay, each has lost his freedom to choose to that ex tent. Each time the tax collector comes to your door for a growing portion of your income, you have lost that degree of freedom to choose in your life as well. Often the loss of this freedom of choice is a joker hidden in the deck and comes as quite a surprise to the community or the individ ual who so eagerly accepted the alleged benefits held out at the time the program was originally promoted. For example, Wichita recently discovered that it can no longer initiate a referendum to determine its actions or its con tinued participation in existing 3 The Wall Street Journal, April 20, 1967.

546 THE FREEMAN September urban renewal laws. It seems that once a city elects to come under urban renewal, and once condi tions exist for the application of urban renewal laws, the city in question no longer retains con trol, even by popular vote. 4 These specific examples, drawn from current newspapers, could be multiplied by the thousands the length and breadth of the land. Sometimes it helps, however, to talk about specific instances, spe cific communities, specific individ uals, because it is in these specific instances that freedom of choice is· lost for the individual or the community involved. What sort of freedom of choice lies ahead for us? The Federal government is even now extending its dominion into public education. Proposals are being put forth concerning a Compulsory Youth Corps for our young citizens be tween the ages of 18 and 20.5 How far need such trends go before the American people realize what they are losing in the bargain?

Freedom is such a precious good that we ought to be ready to sacrifice everything for it, possibly even pros perity and abundance, should we be compelled to do so by the necessities of economic freedom. Then we can point out that, luckily for us, an eco4 Topeka Journal, March 4, 1967. 5 "A Youth Corps for America 1" THE FREEMAN, April, 1967. nomic system based on liberty - with out which liberty itself cannot exist - is at the same time infinitely more productive than a system of con trolled economy. We should avoid luring men into acceptance of economic liberty by holding out to them the candy of ma terial abundance; our educational efforts should instead be made on the high level of social philosophy and should appeal to the last and supreme values. We should impress upon peo ple that one cannot deny freedom in the economic field and grant it in the remaining sectors of human activity, and we should summon the whole strength of logical argument and of experience to render this idea con vincing.6 Freedom for the Individual There is a reason, deeply grounded in moral principle, which explains the productive capacity of free enterprise. A planned, col lective economy suffers from so cial disorder and poverty, ulti mately because of the moral dis order at the heart of the system.

Conversely, the individual crea tive capacity released by a free system provides the energies to enable the free individual and his society to prosper. Such creative capacity stems from the individ ual's freedom to chart his own 6 Wilhelm Ropke, "Education in Eco nomic Liberty," What is Conservatism? (New York: Holt, Rinehart and Win ston, 1964), p. 79.

1967 POWER: PROSPECTS 547 destiny and choose his own course. A system which robs the· individ ual of that capacity for self-deter mination is immoral because it re.. moves the individual's right of moral choice, and uneconomic be cause it destroys the creative forces which produce prosperity. In short, freedom is a prerequisite of prosperity. But even if freedom did not "work," even if it did not provide more material goods to more peo ple than any other system ever devised, personal freedom would still necessarily remain man's highest goal. The desire not to be impinged upon, to be left to oneself, has been a mark of high civilization both on the part of individuals and communities. The sense of privacy itself, of the area of personal relationships as something sacred in its own right, derives from a conception of freedom which [should it decline], ... would mark the death of a civilization, of an entire moral outlook.7 Moral Norms In the final analysis, political theory, like economic theory, is a branch of moral philosophy. When successful, political theory is an application of proper moral norms to the area of political relations.

7 Isaiah B~rlin, Two Concepts of Lib erty (London: Oxford University Press, 1958), p. 14. Such moral norms hinge finally upon the power of the individual to make his own moral choices. Any system of economics or poli tics which infringes upon that range of moral choice beyond the point of establishing and enforc ing a universal rule of law, pro tecting its citizens against aggres sion, becomes immoral in its de parture from the individual framework within which all such choices must be made. To block the paths of action which a man has available to him and exert the power of the state to achieve a desired effect, no matter how be nevolently intended such an effect is likely to be, is an assault upon the dignity of man as a freely choosing, moral agent. Interferences with this dignity of man simultaneously stunt his moral and material growth. The ideal society was thus defined by Kant: The greatest problem of the human race, to the solution of which it is compelled by nature, is the establish ment of a civil society universally ad•.

ministering right according to law. It is only in a society which possesses the greatest liberty ... with ... the most exact determination and guaran tee of the limits of [the] liberty [of each individual] in order that it may coexist with the liberty of others that the highest purpose of nature, which is the development of all her 548 THE FREEMAN September capacities, can be attained in the case of mankind. 8 Unless men are left free to pur sue the path that they choose, the spontaneity, genius, mental en ergy, and above all, moral courage necessary for the progress of so ciety and the development of the individual personality will be crushed by what Mill termed "col lective mediocrity." It is the civilizing capacity of freedom, for both the individual and his society, that Western man has labored so long to understand and achieve. Confronting this civilizing capacity of freedom, the centralization of power now bids fair to invert the process. In the words of Ortega y Gasset, writing in The Revolt of the Masses: Civilization is nothing else than the attempt to reduce force to being the last resort ... "Direct action"

consists in inverting the order and proclaiming violence as the first re sort, or strictly as the sole resort. It is the norm which proposes the annul ment of all norms ... It is the Magna Charta of barbarism. How may this barbarism be turned aside and defeated in our 8 Ibid., p. 38. civilization? \Vhat are the pros pects for a free society and how may it be achieved? From what philosophic roots. must· the coun terrevolution of human freedom spring? Justice Man's traditional definition of a just society has been a social order in which, as Friedrich Hay ek wrote in his 1966 Mt. Pelerin lecture, "justice was conceived as something to be discovered by the efforts of judges or scholars and not as determined by the arbitrary will of any authority." In short, justice is an expression of a high er order than society, of a fixed and inviolable Natural Law which is to be discovered, not created by man. An order having origins higher than the state and society is a provider of inherent rights of the individual, rights to be inviol able in any society and any state, if justice is to be truly attained.

Private Property One such essential and inviol able right for a just society and for the freedom of the individual is the right to private property. Property is, in Richard Weaver's term, "the last metaphysical 1967 POWER: PROSPECTS 549 right." It is an area not subject to contention. The very hisness of property still suffices in our so ciety as a barrier protecting the individual against the increasing pressures of the omnipotent state. Private right defending nobie pref erence is what we wish to make pos sible by insisting that not all shall be dependents of the state. Thoreau, finding his freedom at Walden Pond, could speak boldly against govern ment without suffering economic ex communication. Walt Whitman, hav ing become a hireling of government in Washington, discovered that un orthodox utterance, even in poetry, led to severance from income. Even political p~rties, driven from power by demagoguery, can subsist and work in the hope that return to rea son will enable men of principle to make themselves felt again. Private property cannot without considerable perversion of present laws be taken from the dissenter ....

Nothing is more certain than that whatever has to court public favor for its support will sooner or later be prostituted to utilitarian ends. The educational institutions of the United States afford a striking demonstra tion of this truth. Virtually without exception, liberal education, that is to say, education centered about ideas and ideals, has fared best in those in stitutions which draw their income from private sources .... In state in stitutions, always at the mercy of elected bodies and of the public gen erally, and under obligation to show practical fruits for their expenditure of money, the movement toward spe cialism and vocationalism has been irresistible. They have never been able to say that they will do what they will with their own because their own is not private. It seems fair to say that the opposite of the private is the prostitute. 9 Opponents of governmental power all too often are prone to de vote much of their time and en ergy to charge and countercharge among themselves. If. the free so ciety is to be reinstituted, it would be well to remember that common ground does exist for the op ponents of the collective ethic. The state's use of coercion is the stick ing point. No matter what reform ism may be intended, the use of coercive power is unjustified. One of the great bulwarks placing limits upon the use of coercion over the individual is the institu tion of private property, the "last metaphysical right" which serves as the rallying point for the advo cates of a free society. In the words of Sir Henry Maine, writ ing in Village Communities, "N0 body is at liberty to attack private property and to say at the same time that he values civilization.

The history of the two cannot be disentangled." 9 Richard W~aver, Ideas Have Conse quences (Chicago: University of Chi cago, 1948), pp. 136-37.

550 THE FREEMAN September Just as a man is free within himself because he possesses an immortal soul which is his own, he is free in relation to the world outside only if he has private prop erty as the economic guarantee of human freedom. To erect a to talitarian system, it is thus neces sary that both spirit and property be denied. That is why the existence of God and private property are both denied simultaneously by Communism. If a man has no soul, he cannot allege that he has any relationships with anyone outside the state. If he has no prop erty, he is dependent upon the state even for his physical existence. There fore, the denial of God and the denial of freedom are both conditions of slavery.I° Self.Responsibility Just as private property calls for the exercise of responsibility in its procurement and its main tenance, man's inner claim to free dom, his immortal soul, also de mands responsible behavior of the individual. Thus, in both the out ward and inward manifestations of human freedom, the same pre condition exists: self-responsi bility.

In the modern erosion of values that has occurred, man has in creasingly lost the concept of self 10 Bishop Fulton J. Sheen, "The Ideo logical Fallacies of Communism,". House Committee on Un-American Activities, Sept. 4, 1957. upon which the individual could predicate his self-respect. If man is no longer the possessor of an immortal soul, the power and re sponsibility to choose his own course of conduct are no longer available to him. The traditional barriers to the exercise of power over the individual are thus dis carded. Natural Law is assumed to be no longer valid. The conduct of man's political and economic affairs is thus severed from a higher ethi cal standard, making morality what the state deems "moral." Re moval of an ethical yardstick against which the actions of ruler and ruled alike must be judged does not free the individual from his self-responsibility, but it sub stitutes centralized political auth ority and "group morality" in such a way as to delude each of us concerning his own ultimate responsibility for his individual actions. This distortion undercuts the attempt of the individual to realize himself as a person.

Man alone among the creatures of this earth has the rational ca pacity for self-transcendence, the quality of mind necessary to stand outside himself and view his own conduct in relation to the world around him. An individual no longer able freely to order his ac tions, in terms of the insight gained in that self-transcendence, is no longer a free man. It is this 1967 POWER: PROSPECTS 551 view of man as an individual in possession of a Godgiven soul, rather than a mere creature of society, that is epitomized in Paul's assertion in his second let ter to the Corinthians, "Where the Spirit of the Lord is, there is lib erty." How may such liberty be exer cised? If man is truly capable of freedom's exercise, what are the implications for his social order? The proposal to keep political pow er so decentralized that it cannot es cape the vigilance of social power rests its case on the assumption that the highest value in man's hierarchy is freedom. Does he put it above all other desires? Even material satis factions? If so, what does he mean by freedom? The definition that quickly suggests itself is "absence of re straint." The lone frontjersman had plenty of that kind of freedom and found it wanting; he was quite will ing to part with some of it in ex change for the higher wages that came from cooperation with others.

But cooperation entails an obligation, that of shaping one's behavior to the wishes of others, of considering pub lic opinion both in one's occupation and in one's deportment. So then, freedom in· Society is not the absence of restraints, but the management of one's affairs by a code of self-govern ance. The price of the benefits of co operation is self-restraint. ll 11 Frank Chodorov, The Rise and Fall of Society (New York: Devin-Adair, 1959), pp. 163-64. Man is only ready for freedom to the extent that he is willing to check his appetite, to demonstrate a stronger love of justice than of immediate gain. As Edmund Burke has suggested, the less re straint exercised within each in dividual in this regard, the more restraint must be exercised by the society in ,vhich the individual Iives. If men are to stay truly free, they must have the capability of self-restrain t. A Truly Moral Society Only such a society composed of individuals exercising self - re straint could be a truly moral so ciety. If the restraints necessary to maintain justice and equity come from outside the· individual, the free choice necessary for in dividual moral decision will not be present. Thus, a collectively en forced morality is divorced from the roots of all meaningful moral action. It should not be surprising, in view of this fact, that the col lective society becomes immoral in practice. Each time that central ized authority is exercised to coerce ethical choice, the capacity for making such an ethical choice is further eroded in the individual who has been coerced.

Edmund Burke's assertion that "there never was for any length of time corrupt representation of a virtuous people ..." is the state552 THE FREEMAN September ment of a painfully obvious truth. If the individuals composing a so ciety cannot make their own ethi cal choices, morality being a mat ter of individual conscience and free choice, then what possible hope can there be that collective political power can do the job? The attempt to shift individual re sponsibility to a collective ethic corrupts the action of the state by divorcing it from the individ ual moral action of free choice and conscience. At the same time, the individuals who are stripped of their capacity for moral choice are further weakened and cor..:. rupted .through the atrophy of will which stems from their loss of free choice. Ruler and ruled alike are corrupted in the process. Power Breeds Weakness So long as government is viewed as an agency through which virtue and happiness for the in dividual may be attained, so long as governments are viewed as causes rather than effects, so long as individuals believe that self responsibility may be escaped through retreat to the collective ethic, power will be rampant in our society. As the state grows more and more powerful, the in dividual citizen will tend to grow weaker and weaker. Paul Poirot's paraphrase is quite as true as Lord Acton's original dictum, "Weakness tends to corrupt and absolute weakness corrupts abso lutely." The double standard of morality which allows a person to endorse collective action which he would not perform as an in dividualis perhaps the greatest corruption of all since, in the words of Edmund Burke, "the number engaged in crimes, in stead of turning them into laud able acts, only augments the quan tity and intensity of the guilt."

Human freedom is not the power to do whatever we like, but is the privilege of being able to do as we ought. The free society is the society in which each in dividual voluntarily says, "I am my own responsibility." "Positive Action" The modern collectivist tends to view the society around him as an accumulation of "various prob lems" which must be "solved." Usually such "solutions" involve 1967 POWER: PROSPECTS 553 the coercive exercise of centralized power. Unless man is to achieve a hea ven on earth, we have no rea son to suppose that all human shortcomings are capable of solu tion. In fact, to assume that such perfection could be achieved is precisely the sort of thinking which removes God from philoso phy, substituting man as "the measure of all things." Numerous problems doubtless exist, how ever, which freely working human creativity can solve if the individ ual, voluntary, institutional well springs of human progress are al lowed to flow.

It is sometimes suggested that the libertarian/conservative is "against progress" or unconcerned with the hardships of others. In actuality, of course, all men of good will share the same goals of peace and prosperity. The differ ence between the collectivist and the anticollectivist mentality at the present moment in history is based on two libertarian assump tions: (1) Freedom is the best problem-solving device; (2) The largest "problem area" of our time is the tremendous concentra tion of power, with all of its cor rupting influences upon our so ciety, that has occurred as a direct result of the collective ethic. Thus, the collective mentality is not a problem-solving device but instead is our principal problem! Those who would plan all social action are confronted with the un predictability of human action. Because of this unpredictability, such planning does not work in practice. More important, such planning interferes with the growth of creative capacity which can only be achieved by the free in dividual.

There can be little doubt that man owes some of his greatest successes in the past to the fact that he has not been able to control social life. His continued advance may well depend on his deliberately refraining from exercising controls which are now in his power. In the past, the spontane ous forces of growth, however much restricted, could usually still assert themselves against the organized co ercion of the state. With the techno logical means of control now at the disposal of government it is not cer tain that such assertion is still pos sible; at any rate, it may soon become impossible. We are not far from the point where the deliberately organi zed forces of society may destroy those spontaneous forces which have made advance possible)2 A Negative Approach Those who oppose further state intervention in our society are branded as having only a negative program since specific "plans" and 12 F. A. Hayek, The Constitution of Liberty (Chicago: University of Chi cago Press, 1960), p. 38.

554 THE FREEMAN September "solutions" rarely are offered in rebuttal to the collectivist ap proach. But it is this very un planned quality of human freedom and creativity which is the ulti mate problem-solving device. New problems exist in our society? Then strike off the stultifying con trols emanating from the coercive exercise of centralized power, leav ing men free to deal with these problems (problems which, inci dentally, in large part have their origins in the very exercise of coercive power which was original Iy exercised in the name of solving some other "problem"). The choice is clear. If all the areas of individual creativity were pre-empted by the planned, col.. lective society, our society would face extinction. As the cartoonist suggested when he depicted one Russian bureaucrat speaking to another, "When all the world is communist, where will we get wheat?" Where, indeed, will the stuff of life be produced if the dead hand of centralized control ever perfects its grip upon our society?

It is often admitted by advo cates of the planned society that freedom does produce material gains. The complaint then leveled against the free society is that these material gains go only to those most able to produce, leaving the poor and the underprivileged at the mercy of "exploitation." Yet, it is in the voluntary and benevolent actions of a free so ciety that the individual citizen is most capable of helping himself and most readily helped by others. It is the repressive effect of the centralized state to curtail produc tion and block the paths to self improvement for those most in need. Not only is Peter discour aged from production when he is robbed to pay Paul, but, in the bargain, Paul is made the per petual ward of the state. Authority and Power In reality, it is not the libertar ian who is negative in his outlook. Rather, it is the modern collectiv ist who has lost faith in the peo ple to pursue their own affairs without coercion, control, and con stant detailed direction. How, then, may this corrupted and cor rupting centralized power be checked in our society?

Somehow, Authority and Power must be separated. Medieval man understood that Authority ulti mately was God, while Power was only a secular device. It is this distinction that modern politics fails to make. Thus divorced from a proper view of human nature and the human situation, the idea of "man as God" and the accom panying spread of coercive power have grown steadily. Coercion, be1967 POWER: PROSPECTS 555 ing negative in effect, has caused some men to oppose it. But when man talks only about "freedom from coercion," and does not relate this to a total integrated view of human nature, he remains at the mercy of coercionists. The coercionist has the plausible· argu ment at his disposal that freedom works in the abstract realm of theory, but that certain immediate goals can be reached by some "beneficent" coercion. The anticol lectivist who sees only "freedom from" finds no argument to carry the discussion from such short range goals to the long-range view of human existence in its totality.

"Freedom from," as a means of achieving what the human spirit can do, once free, is perfectly (~or rect, yet unpersuasive until it is used in pursuit of the long-term goal of human existence, self-trans cendence of the individual spirit. Just as the coercionist remains trapped on the short~term level in economics, doomed to repeat his basic mistake again and again, the thinker who sees no greater goal than "freedom from" will al so remain trapped on the short term level, doomed to carryon his endless arguments about means with the coercionist; he can only escape when he moves beyond the reach of the coercionist (where force can never go) to recognize the necessity for individual self transcendence. To limit power, man must rec ognize a source of authority above men: God. + HENRY HAZLITT latioD IT IS not only the United States that is troubled by inflation. The disease is world-wide. And it grows more virulent, not less.

This is made clear in a table just published by the First National City Bank of New York showing the currency depreciation in 45 countries, last year and over the last 10 years, as measured by cost of-living indices. The value of money declined faster last year than in the decade as a whole in 29 of the 45 countries. For the 1956-66 period, the median rate of depreciation of money in the 45 countries was 3.4 per cent a year, which means a loss of almost a third of the purchasing power of the currency in the full 10 years. The American dollar lost 2.8 per cent of its purchasing power in 1966. This was a greater deprecia tion than occurred in many small Copyright 1967, Los Angeles Times. Reprinted by permission. 556 or relatively impoverished nations, such as Guatemala, Honduras, Aus tria, and Nationalist China. Iran's currency actually showed a slight appreciation, the only one to do so.

This shows that neither small size nor national poverty necessar ily prevents a strong currency any more than great size or national wealth assures one. Most of the worst currency de preciations in 1966 occurred in South America - 18.6 per cent in Chile, 24.2 per cent in the Argen tine, 31.8 per cent in Brazil. The very worst depreciation re ported for the year - 38.6 per cent - was in Vietnam. The City Bank by implication attributes this in flation to a food shortage, espe cially the "rice panic." Yet the main explanation for the sharply lower purchasing power of Viet nam's money unit was the same as everywhere else: the government printed too much money.

1967 WORLD-WIDE INFLATION 557 In late 1965 and early 1966 the exchange rate of the Vietnam pi astre was practically cut in half, from 60 to the dollar to 118. The qUAntity of Di~gtreg was increased from 27 billion in 1964 to 48 billion in 1965 and then to 65 billion in 1966. At the end of 1966 the U.S. dol lar bought only 84 per cent as much as it bought 10 years before. On the same 10-year basis of compari son Belgium's currency bought on ly 80 per cent as much, West Ger many's 79, Switzerland's 78, Brit ain's 74, Italy's 72, Holland's 71, Sweden's 68, Japan's 66, France's 62, India's 57, Spain's 49, Chile's 10, Argentina's 6, and Brazil's only 2 per cent as much. There were a hundred alibis for this depreciation, a separate set for each country, but the real rea son was everywhere the same: the government printed too much money. Sometimes the excuse has been a "scarcity of goods." This excuse shows no correlation with what happened. Guatemala certainly has a relative scarcity of goods, but its currency has not depreciated at all in the last 10 years. In other coun tries the index of production has been soaring, yet the currency unit continues to buy less.

"War" is a favorite alibi for in flation, but the worst inflations in the last two decades have been in countries, as. in South America, that have not been at war. The truth is that inflation is al ways an act of government. It is a consequence of printing. too much money. Governments usually print the extra money because they spend more than they take in. And they spend more than they tax and try to live beyond their means because they are entranced by the vision of the welfare state. This policy bears other sed ucUve names - Expansionism, Growth, Planning, and, in the United States successively, the New Deal, the Fair Deal, the New Frontier, the Great Society. But it always means inflation, depreciating money, a further drift toward monetary chaos. ~ BEN MOREELL AMERICANS have been alerted against an undefined "commu nism." But many have not been alerted against the specific meas ures which, taken together, are communism. So, unknowingly, they accept the heart of the communist doctrine, which is the enhance ment of centralized state power at the expense of the natural rights of the individual; the right to life, the right to liberty, and the right to acquire, own, enjoy, and freely dispose of one's hon estly accumulated property.

Like most Americans, I began by hating Russian communism be cause it is an evil thing which wars against the best in human nature. Its followers invented a new code of morality which ele vates lying, murder, and treason From Admiral Moreell's acceptance speech for the Freedom Award of the Order of Lafayette, Washington, D. C., May 27, 1967. 558 into primary virtues, whenever these are thought to further their goals. They would deny our re ligion, trample on our political liberties, and put our economic activities in a strait jacket. They would stratify society into an elite of brutality riding herd on the rest of us. History shows that wherever communists achieve power they institute secret police, slave labor camps, and despotic control of every phase of human life. Recently, I undertook a study of the Communist Manifesto of 1848, to determine whether these evil practices are an integral part of their basic creed. That study led to two important discoveries: first, that the cruel methods and despotic practices of communism are essential to make their sys tem function; and second, that there is a remarkable parallel be1967 COMMUNISM-AMERICAN STYLE 559 tween the ten planks of the Mani festo and the things we have been doing to ourselves during the past half century! From my studies, I concluded that since Marx ex pounded his doctrine 119 years ago, we Americans have adopted, in some degree, every plank of his platform; and this process has accelerated markedly in recent decades!

Communism with a "made in Moscow" label is not popular in America. It doesn't need to be, if only we can be induced to ac cept Marxism under some other label. This we are now doing. Similar things have happened be fore as the great churchman, Dean lnge, warned us: History seems to show that the powers of evil have won their great est triumphs by capturing the or ganizations which were formed to de feat them, and that, when the devil has thus changed the contents of the bottles, he never alters the labels. The fort may have been cap tured by the enemy but it still flies the flag of its defenders. We Americans have been run ning away from the spirit and principles of our own Revolution in order to embrace an alien pro gram saturated with Marxism. We are under the delusion that there is some safe middle ground be tween the idea of freedom, on the one side, and communism on the other. But the danger of the "mid dle-of-the-road" position, as form er President Hoover once re marked to me, is that "you get hit by the traffic in both direc ti ons." If we are really opposed to Marxism, there is only one place to take a stand and that is with freedom, which makes no compro mise with communism, however it may be disguised!

The great political scientist, Wilhelm Roepke, architect of the economic renaissance of West Germany, stated: We should stand for a free eco nomic order even if it implied ma terial sacrifice and even if socialism gave the certain prospect of material increase. It is our undeserved luck that the exact opposite is true. More important, the free economic order is indispensable as the prerequisite of liberty, human dignity, free choice, and justice. That is why we want it, and no price would be too high for it, even if the communists would make bigger and better washing machines. A National Tragedy It is tragic that we Americans are so divided on this issue. Many of us have failed to weigh the philosopher's question, "If men use their liberty in such a way as to surrender their liberty, are they thereafter any the less slaves ?"

560 THE FREEMAN September We have casually surrendered liberty in the economic sphere, forgetting the old adage, "Whoso controls our subsistence controls us." "Economic control," said the economist Hayek, "is not merely control of a sector of human life which can be separated from the rest; it is control of the means for all our ends." Slavery is commonly thought of as ownership of one man by another. But no slaveholder would quibble about owning the man if he can own the products of the man's labor. A slave is a person to whom economic freedom is de nied. From this premise, the de nial of all other freedoms follows. The total tax "take" by all levels of government is now in excess of 40 per cent of the national earned income! This is a valid measure of the erosion of our freedoms. If the increasing power of the centralized state does not frighten us, then we get our ulcers from some of its by-products: corrup tion in high places, the growing crime rate, juvenile delinquency, indifference to our time-tested spiritual, moral, and cultural val ues, oppressive taxation, and a succession of foreign crises from each of which America emerges bearing the onus of another "de feat by appeasement."

It is pertinent to recall the prophecy of the great English statesman, Macaulay, in 1857. Ad dressing himself to America, he said: Either some Caesar or Napoleon will seize the reins of government with a strong hand, or your Republic will be as fearfully plundered and laid waste by barbarians in the twen tieth century as the Roman Empire was in the fifth-with this difference, that the Huns and Vandals who rav aged the Roman Empire came from without, while your Huns and Van dals will have been engendered with in your own country and by your own institutions. Recovery 01 Moral Values Is there a way ahead which will take us out of this morass? Is there a way to recover the sanity and balance which once marked our life? I believe there is. But it is not by means of political legerdemain. It has been pointed out by Dr. Ralph Hutchison, form er President of Lafayette College: Our common ideal is that these laws of God, these rights of man, these responsibilities of the individual to the social order should be preached and taught, but not otherwise forced upon the minds and consciences of the human race. "Go ye into all the world and teach all nations," was the last command of the Master. To force men into ways of righteousness by police powers, to legislate them into social progress by laws, to brain1967 COMMUNISM-AMERICAN STYLE 561 wash them from their evil ways, to torture men to the confessional, to hypnotize the social order with mass psychiatry, to terrorize them into discipline, was never the Creed of ~piritu.a.\ A-rner"i.ca. Education b-y con viction has been our ideal. The teach ing, persuading mission, we believe, is the way of social reform.

I do not imply that there are no problems peculiar to the eco nomic and political levels. But if men are not right at the deeper level, in their understanding of the nature of the Universe and man's position therein, they can tinker with economic and political problems from now until dooms day and still come up with the wrong answers. It is a case of putting first things first, and the very first thing is a rehabilitation of those spiritual values which are basic to the American dream. "The God who gave us life," Jefferson observed, "gave us lib erty at the same time." We cannot defeat the forces of evil if we feel compelled to adopt their practices even though this be done gradually, in increments too small to arouse suspicion. The final battle will be fought in the arena of spiritual realities. The forces of self-disciplined, morally responsible individualism will be arrayed against those of atheistic, coercive collectivism. It is my prayer that, in this Arma geddon, Americans will be found fighting on the side of a just and merciful God. ~ Human Resources BUREAUCRATS speak of developing "human resources" as if the abilities of human beings were the property of the state. The state, however, is the creature of human beings and exists for the convenience of man, not man for the state. Rather, man is the creature for which everything else is a resource. As the Scripture says, "Thou hast put all things under his feet .... " (Psalm 8:6) JAMES C. PATRICK Decatur, Illinois THE FRUIT OF COMMUNISM: S~o CIALiS TIC REDISTRIBUTIO FRANCIS E. MAHAFFY THE COMMUNIST REVOLUTION is spreading apace over Asia, Africa, South America, the Middle East, and even our own land. This has stimulated effective oratory and well-documented books aimed at alerting our citizenry to the god lessness of the philosophy and the bloodiness of the revolution at the core of communism.

Sometimes, however, those who denounce the violence of the com munist revolution support the eco nomic aims of the communists in the redistribution of the wealth by the power of the state and thus give aid and comfort to the enemy they are combating. Others - in cluding an increasing number of The Reverend Mr. Mahaffy has served since 1945 as a missionary of the Orthodox Presby terian Church in Eritrea, East Africa. 562 influential clergymen - recognize that the economic aims of social ism cannot be attained apart from violence and so join in advocating the bloody revolution. Profound scholars have clearly pointed out the economic fallacies and follies of socialism but their works have been neglected. Too few see the relationship between the philosophy of the communists and their economic goals. Few also recognize the fact that these economic ends demand a philoso phy of violence in order to attain them. The communist threat to our civilization makes it impera tive that we deal both with the underlying philosophy of commu nism and also with its economic end of redistribution. Only thus may we be prepared to offer a 1967 THE FRUIT OF COMMUNISM: SOCIALISTIC REDISTRIBUTION 563 viable alternative to communism.

Confusion exists as to precisely what communism is and how it differs from socialism. Karl Marx, the fatherof BocialiBm,deBignated his views "scientific socialism." "Communism" was originally used to describe the utopian state reached after the economic fac tors of production had so changed man and his environment that classes and conflict no longer ex isted' the state had withered away, and men 'lived in harmony on earth. This was to be the final synthesis arising out of the con flict between the capitalists and the working class. Socialism, which involved an absolute dictatorship, the dictatorship of the proletariat, was to be a temporary and inter mediary stage which would lead to full communism. Communism in this sense has never existed and never will. Marx and others, however, also spoke of their revolutionary move ment to effect socialism as com munism. Communism today refers essentially to the Marxist ideology and may be described asa means of inaugurating socialism. All communists are socialists. Com munist Russia is designated, "The Union of Soviet Socialist Repub lics." On the other hand, not all socialists are communists. In fact, many socialists vigorously repu diate the open violence of the communists. Also, communists gen erally reject such socialists as not true Marxists. Both, however, agree in supporting the main end of socjaUzation of the means of production. Both want to abolish (though there are degrees of thor oughness of this abolition) pri vate property, and substitute for it state ownership in the means of production.

Karl Marx, however, reached his conclusions on the basis of a specific philosophical position. This basic philosophy has become the driving force behind communism. Some reject this atheistic, dialec tical philosophy and yet support socialism for other reasons; even some Christians claim that it is a system in accord with the Word of God. Basically, the economic ends of communism and socialism are identical, though the underly ing philosophies may differ. The IIScientific Socialism ll of Marx Karl Marx was an atheist be fore he was a communist. He said, "Religion is the opi urn of the peo ple. I hate all gods." The idea of God and all religion was for him the result of the attempt of people to compensate for their own de fects and weaknesses. This atheism of its founder constitutes an in tegral part of the communist teach ing. In communist lands there is a systematic attempt to stamp out all 564 THE FREEMAN September religion, especially Christianity. At particular times it may suit their ends to let up temporarily on their persecution, but even that is to ward the end of weakening its de fenses and promoting its final destruction. Atheism is taught in the government schools; other schools are prohibited or drasti cally restricted. The church is tol erated or subverted and used to advance the ends of communism.

Because communism is militantly atheistic, there can never be a modus vivendi between Christian ity and communism for they are two hostile religions. While Chris tians tolerate atheists and con sider it their duty to seek their conversion to Christianity, the communists seek the utter de struction of Christianity. This blatant atheism of the communists helps explain the vio lence of their activities. There is no God to whom they consider themselves responsible, no divinely given moral code or law as the norm for acceptable ethical con duct; whatever promotes the ends of the communist cause is moral. This rejection of Christian moral ity and all Godgiven standards accounts for the fact that one can not deal with a communist or a communist nation as he would with a person or nation where God is feared. When the nations learn this important truth, there will be fewer unholy alliances with such godless powers.

Dialectical Materialism Karl Marx also based his social istic views on dialectical material ism. Unlike the philosopher, Hegel, who was an idealist and advocated a spiritual monism, holding that reality was spiritual in nature, Marx held to a dialectical mate rialism, contending that reality was material. Hegel taught that God reveals himself in history in a dialectical process. One histori cal movement constitutes the the sis which gives rise to its con flicting antithesis. Out of this con flict emerges the synthesis which takes that which was valuable in the thesis and antithesis and forms a higher stage of the mani festation of the Absolute. Marx adopted a dialectic explanation of history but held that the thesis, its antithesis, and the synthesis which arose from their conflict were the result of material eco nomic factors. The culmination of history for Marx and the com munists would be the result of the antithesis between the capitalists and the workers which would erupt in a violent bloody revolu tion which would in turn usher in the synthesis of socialism. This dialectic underlies all their think ing.

Dialectical materialism, in its 1967 THE FRUIT OF COMMUNISM: SOCIALISTIC REDISTRIBUTION 565 denial of God and assertion that all is matter, in reality sets up an idol god. Man is the highest form of matter and the comm unist state the highest expression of his material brain. Thus, God is re placed by the state. This state be comes the recipient of the honor of the citizens and the absolute mas ter of their lives, though there is no logical reason whatsoever why the dictator and his cohorts who constitute the state should be a higher manifestation of matter than any individual within that state. This state grants to the in dividual slaves under its rule the right to live. It controls all prop erty and parcels it out according to its own whims. Thus, the state becomes the father and God to the subject. It is not a crime in Rus sia or Red China for the state to slaughter millions of people who are deemed to interfere with the progress to socialism. The state becomes God. Atheistic com munism is in a real sense a reli gion, albeit the diabolical religion of state worship.

Economic Determinism Closely related to dialectical ma terialism is the doctrine of eco nomic determinism advocated by IVlarx. Man's life, his thoughts, hig c]~gg, ~nd even hig religion are determined by his economic en vironment. Such a concept logically would destroy all responsibil ity. vVithout responsibility man is no longer man. Yet communism holds men responsible, not to God or to a divine law or norm, but to the Communist party and state. They have no right, however, on their own premises, to hold men whose thoughts and even religion are determined by their economic environment responsible to any other man whose thoughts and Iif e are also economically deter mined. The Marxian and communist philosophy is also characterized by a utopian idealism. There is no room in the system for this id~al ism, yet this is the end toward which the dialectical process re lentlessly drives with the irresist ible force of an inviolable logic.

In this classless and conflictless society, human nature is so rad ically changed by the material factors of production that all is well. Marxian idealism pictures a material heaven on a material earth with men who are no more than matter living together in perfect peace and harmony. Yet, a heaven without God, without morality, and with no hope of anything but the dust at death is in reality a picture of hell. The institution of the family on which our civilization has been built has no place in the com munist society. This godless phi566 THE FREEMAN September losophy denies all Christian morals, approves mass murders and the perversion of sex. Deceit, thefts, and blasphemies form a part of this vicious system. Surely, no Christian could for a moment sup port it! To describe it, and this description accords with the de scription of the communists them selves, is sufficient to condemn it.

Communism is built on a philoso phy antithetical to the principles upon which our civilization has been built. Should this philosophy prevail, that civilization cannot endure for long. Rejection 01 Moral Absolutes The economics of the welfare state socialists is not significantly diverse from that of Karl Marx. Whether consciously so or not, both spring from an underlying philosophy which denies moral ab solutes. This philosophy mayor may not be Marxian; in either case it substitutes for the Moral Law of the Creator a relativistic standard of man. When leading churchmen adopt the philosophy of violent revolution to attain their redistributionist ends, their underlying philosophy closely re sembles that of Marx. Both <re ject the right to private property and thus the right to life. Marx's tome, Das Kapital, deals with economics. Marx did not like the way he found wealth distributed and proposed the solution, "From each according to his abil ity; to each according to his need."

The rationale for his objection to the distribution of property he found in his labor theory of value, surplus value, and exploitation by the capitalists of the .working class. He contended that the value of a product was determined ex clusively by the labor that went into it. The capitalist who hired the laborer, on the other hand, refused to pay him the full value of the product but retained "sur plus value" for himself in the form of profits. Since the laborer was not getting his due from his employer, a conflict necessarily arose. The solution to this con flict, according to his dialectic, lay in the revolution of the exploited laboring class against the cap italists which would result in the dictatorship of the proletariat and the eventual communism of the classless society. It has been clearly demonstrated (see Bohm-Bawerk's Capital and Interest and Ludwig von Mises' Socialism, as examples) that Marx's theory was erroneous.

Marx made the serious mistake of failing to take into account the time element in production. What he demanded was the present value of a product which would not be finished until later. Also, he erred in his idea that labor was the sole 1967 THE FRUIT OF COMMUNISM: SOCIALISTIC REDISTRIBUTION 567 source of value. He selected his data to "prove" his case and ig nored a vast amount of data that refuted it. Such biased selection and manipulation of data char acterized much of his writings. Once, in the midst of a blister ing African desert on the backs of plodding camels, my co-worker and I came to the unhappy discovery that the guide we had hired for the trip had never previously seen that country. Uncertain of when or if we would reach a source of water, our meager supply sud denly increased in value. We would not have exchanged our jerry tin of water for the price of a camel. Value, contrary to Marx, does not reside in the object itself as the product of labor-hours but is sub jective; it is what the prospective buyer or seller is willing under the particular circumstances to give up in exchange for the object.

Savings Benefit Laborers In the United States and other countries where between 85 and 90 cents of each dollar a product realizes goes to the laboring man who helped produce it, it can hardly be said that the laborer has been exploited. It is often ignorance of the percentage the laborer actually receives that leads to this conclusion. Besides that, much of the remainder goes to purchase better machines and to build up the business which will result in cheaper products and more people employed. About $20, 000 has been invested to provide for each job in our land. This is something radically dif ferent from the concept of ex ploitation condemned by Marx and the socialists. The reason wages are lower in many parts of the world is because there is a lack of capital invested to provide the tools for production on the farms and in the factories. This capital must come either from the savings of the people or from outside in vestment.

To have to depend solely on sav ings is a slow painful process ac companied by much suffering, long hours of work and low wages for a long time until sufficient capital is accumulated. This accounts for the suffering, child labor, and long hours of hard work in Eng land in the early days of the In dustrial Revolution. There was no other way at that time to trans form an economy from a more primitive form to a more ad vanced industrial economy. This, and not exploitation, accounted for much of the suffering in those days. The other method to hasten the transformation from a primitive to a more advanced industrial economy is by the investment of foreign capital. This, however, re568 THE FREEMAN September quires honest and stable govern ment, lack of oppressive taxes, a reasonable hope for profits along with the conviction that there will not be government expropriation of the factories or of the profits of the investors. The lack of such conditions largely accounts for the continued low standard of living in many parts of the world. Yet, communism and socialism prevent the formation of capital by their ideas of redistribution. The philos ophy of socialism keeps the world in a state of poverty, war, and chaos.

Privilege Based on Coercion The end of communism and also of socialism is the redistribution of property by the coercive power of the state. The communists pro pose to effect this by violent revo lution which aims at bringing the whole world under the iron heel of communism and reduces men to slaves of the dictator. The high concentration of power necessi tated by the pursuit of this objec tive almost certainly and ironically precludes the attainment of this end; hence, communism in reality, by eliminating one class, substi tutes for it a privileged class. This class attains its privilege, not on the basis of its merits or the will of the people, but by violence. Hence, the inevitable tyranny of communism. The more moderate socialists reject such open violence but seek the same ends by more peaceful means. Yet, let it never be forgot ten that the difference is only a matter of degree; there is no dif ference in principle.

The socialist program calls also for violence, though less naked violence than that of the com munists. The communists annihi late the opposition; the socialists merely confiscate their property. Both lead, at different paces, to the absolute dictator, for the so cialist redistribution cannot be ef fected apart from the dictator. So cialism requires that the distri bution of the wealth be according to a single plan-one man's will. This can be effected only by force, or the threat of force, which is the same thing. It is naive in the extreme to think that the economic control de manded by communism and so cialism will not also include con trol of the Iives of the people. Freedom of religion, travel, speech, and political freedom are inseparable from economic free dom. Control the economy, and you effectively control the lives of the citizens. Economic freedom means the freedom to seek to satisfy one's material needs. Economic ac tivity consists essentially in the scaling of our wants to determine which ones have priority. This 1967 THE FRUIT OF COMMUNISM: SOCIALISTIC REDISTRIBUTION 569 scaling, however, is related always to our ultimate ends; hence, eco nomic activity cannot be isolated from the spiritual realm.

The soctaHst control of. the econ omy involves the control of man's basic freedom of religion and of expression. The press is controlled by the control of property such as buildings, type, and paper. Re ligion is controlled by regulating the use of church buildings, reli gious publications, transportation, and taxes. The pulpit and its mes sage are controlled by economic restraints on those who oppose the communist ideology. Minds are directed by prohibiting the use of books not approved by the govern ment, by making all education state education, and by providing lucrative jobs for those who follow the party line. The socialist state, as Great Britain discovered, in order to effect socialism has also to control labor. Workers are not permi tted freely to move or to change jobs. Even today, adver tisements in British publications are restricted in order to prevent highly trained men from leaving British soil for more lucrative employment abroad.

Once you give to the state the ownership of the means of produc tion, as socialism demands, you have given it the power which if fully exercised will result in com plete control of the lives of the people. The communists recognize this and openly advocate the abso lute dictator. Socialists try to avoid the implications of their position; they strive for economic control while retaining a sem blance of religious and other free dom. The logic of this position, however, inevitably leads the fol lowers of both camps down the same road to slavery; except that the communists arrive there sooner than the socialists. Their early ar rival makes it easier for them to eliminate the socialists and others who refuse to accept the full implications of the communist position. A Distortion of Justice The stated end of socialism of the communist and noncommunist types is the increased welfare of the people through forceful redis tribution of the wealth by govern ment. The means chosen to effect this end, entirely apart from the obvious moral issues involved, are incapable of effecting the desired goal. It is as though a tribal chief from Africa should set out by mule to reach New York. His intentions might well be the very best; the fact would remain, however, that the method chosen to achieve his end was inappropriate.

The confiscation and redistribu tion of property in socialism can never effect improvement in the 570 THE FREEMAN September general well-being of the masses, as has been amply demonstrated wherever socialism has been tried. Socialist states exist today because their bankrupt economies are bol stered by the largess of the capi talist countries. Eliminate that aid, and socialism will die. It will either be replaced by a freer so ciety or revert to primitivism and starvation. The socialism of Russia and of the welfare states involves coer cive redistribution and thus neces s"itates the imposition of the will of one man upon another. The rule of law is replaced by the rule of man. Right becomes what the leaders or rulers in the state judge to be the proper distribution. This is a radical perversion of a justice which regards all men alike under the law. Just as it is theft for the individual to steal, so it is theft for the state to redistribute. J us tice is blind. It has no respect to the person, wealth, position, race, sex, or learning of the individual.

Perversions of this Christian con cept of justice lead to advocacy of socialism. Socialism by its nature, denies the validity of such a con cept of justice and substitutes for it the rule of the strong man who defines right and wrong by his own concept of who ought to re ceive what. Socialism, in itsef forts to make men economically more equal, must treat them un equally, taking from some to give to others. It is acceptance of this distortion of justice which leads to the moral decay and increasing violence in the world. Those who support socialism thereby contrib ute to the rotting of the moral fiber of our nation. Not only is it necessary to reject the underlying godless philosophy of communism; it is just as im perative that we reject the eco nomic principles of socialism. Both deny the right of the Creator to set the norms of conduct in his creation. Marxism is character ized by a professed atheism; so cialism by a practical atheism.

Those who adopt the redistribu tionistprinciples of socialism have thereby forfeited their right to condemn the philosophy of vio lence of the communists. ~ False Freedom THERE is an important difference between having freedom and having "free" goods and services. Whenever goods and services are "free," the people aren't. The government which gives goods and services for nothing must force people to work for nothing. J. KESNER KAHN A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN STALEl.V..[A TE IN KINGSPORT SYLVESTERPETRO is a teacher who knows the ins and outs of labor law, and he has written many first rate books and articles about the place of unions in a free society. But, as he says, most of his ear lier work could have been done in a study and a law library. His latest book, The Kingsport Strike (Arlington House, $5.00), repre sents a "new Petro," for much of it consists of material gathered on the spot in the Appalachian town of Kingsport, Tennessee, either on the picket lines of the five unions which have been strik ing the Kingsport Press since 1963, or in union halls, restau rants, homes, or the offices of ex ecutives. What we have here is Petro, the reporter (and a very good one), in addition to Petro, the legal philosopher.

Petro has tackled this particu lar job of reporting with a mind singularly free of cliches. Although it was apparent to him almost from the start that it was a par ticularly stupid strike, he ap proached the strikers as human beings who have the normal hu man attribute of pride, which can make people persist in ineffectual action for the noblest of motives. In the same even-handed way he resisted categorizing workers who decided to go back to the shop and who crossed the picket lines, or who took the jobs of last-ditch strikers, as "scabs" or "rats." He capped all this by putting the hardest of questions to the Kings port Press management, and to those among the national officers of the five unions who were will ing to talk with him. The book grows out of recorded conversa tions and eye-witness descriptions. So direct and circumstantial is Petro in his reporting that the reader must believe him when he says, in conclusion, that the Kings port strike was a vast mistake which a majority of the workers at the press did not desire. It has been kept going by the national leadership of the printing trades unions for reasons which have very little to do with local desires in the Kingsport, Tennessee, area, which happens to be an island of comparative affluence in a moun tain region which qualifies gen erally as a depressed area.

571 572 THE FREEMAN September Acting Without the Facts What were the reasons given for the strike in the first place? Petro talked with Jack Rhoten, a pressman who was still out in 1965, two years after the strike had been called. Jack had been making at least $10,000 a year in top day-shift pay, overtime, fringe benefits, and the profit-sharing plan. He had listened to some of the men who were upset over pro motions, but he himself had no gripes at all. He loved his work, and to the very end he was con vinced that there would be no strike. He explains the 500-to-30 strike vote as one that was "in tended only to give the union a firmer bargaining position." Pet ro's suspicion is that Jack Rhoten was among the thirty who opposed giving the leadership a blank check, though he never could bring himself to ask Rhoten how he had voted. Jack Rhoten despises those who agitated vehemently for the strike before it started and then went back to work, but he does not resent the return to work of those who never wanted the strike in the first place. Petro surmises that Jack has stayed out himself because he shrinks from "the sus tained act of living as a 'scab' in a community in which a large proportion of his acquaintances either stood on the picket line or had family members there." In other words, Jack Rhoten is trapped by an attitude that dates back to an era in which unions were few and weak and needed to cultivate the idea that, like a nation, they were entitled to loy alty no matter what they did.

Charlie Heffner, the former pro fessional ball player, would never have complained over money any more than Jack Rhoten. But he had listened to union leaders who were spreading the rumor that the company was going to try to strip the older men of benefits acquired through seniority. Char lie had been working nights for thirteen years, and he was in line for a steady day job. So, out of fear and anger over the prospect of losing seniority, he went out on strike "full of conviction." He was one of the noisiest among the pickets, bolstering morale "like a shortstop keeping the chatter go ing to raise his own and others' spirits." To augment his strike benefits he did a good deal of baseball umpiring, going as far afield as Allentown, Pennsylvania. One day an old high school friend in Allen town who ran a print shop asked Charlie what he had been making in Kingsport. When Charlie said that he often made $11,000 a year, and when he explained about the profit-sharing plan, the friend said, "What the hell are you 1967 STALEMATE IN KINGSPORT 573 striking about?" "That," said Charlie, "shook me· up." He was even more shaken - in fact, he was virtually torn loose from his union moorings - when he found out that at the very time when the union leaders were telling him that he was in danger of losing seniority privileges, the president of the Pressmen's Union and the manage ment of the Kingsport Press had already jointly initialed a new seniority agreement. "I trusted them," said Charlie of his leaders, "and they lied to me." So Charlh~, always a man to stand on his own feet, stopped picketing and, after much soul searching, went back to his job. Fraud, he argued, releases a man from any contract, even one with his union.

Outside Interference After many talks with the Jack Rhotens and the Charlie Heffners, and with Kingsport Press manage ment people like Ed Triebe, the company president, and Cliff Fritschle, the vice-president for industrial relations, Petro was con vinced that local conditions were not enough to justify the strike. There had obviously been some failure of communication between management and the workers in the shop. And there was the con viction of Anthony J. DeAndrade, the national president of the Pressmen's Union, that the Kingsport Press represented unfair com petition to firms in New York City and elsewhere in the North, which, supposedly, had higher labor costs. As to the failure of communica tions, Petro comments on this in his concluding chapters. The great General Electric Company, follow ing the policy of its famous vice president, Lemuel Boulware, had long had an effective employee communications program. But "Boulwarism" ran afoul of a de plorable ruling by the National Labor Relations Board which ac cused GE of "unfair labor prac tices" in talking directly with workers. Direct communications, said the Labor Board, amounted to "bargaining with the union through the employees" rather than "with the employees through the union."

Congress, of course, had never intended to trample on an employ er's right of free speech (it had only forbidden threats and prom ises), but the obvious NLRB in fringement of the First Amend ment to the Constitution is, ridicu lously, the law and will remain the law until it is reversed by a court of appeals. The point, insofar as the Kingsport Press management's failure to explain things to the men in the shop goes, is that if Cliff Fritschle, the Kingsport vice president for industrial relations, had adapted "Boulwarism" to local 574 THE FREEMAN September Tennessee conditions, he would have been guilty of "unfair labor practice." Wage Rates Were Competitive As for the Pressmen's Union President Anthony DeAndrade's contention that the Kingsport Press must be struck in order to bring local labor costs into line with those in other sections of the country, it turns out that "DeAn drade .i ust didn't do his home work." Petro discovered that Kingsport Press wage rates were higher, at the time of the strike's beginnings in 1963, than rates paid by similar plants in Bay City, Michigan, Brockton, Massachu setts, Cedar Rapids, Iowa, Read ing, Pennsylvania, and many other towns and cities both north and south of the Mason-Dixon Line.

The "pure wage rates" paid to printing trades workers in New York, Detroit, and San Francisco were higher than the Kingsport rates, but in San Francisco, for in stance, both day shift hours and overtime were so limited that the weekly take-home pay of a San Francisco pressman was less than the total pay of many pressmen in Kingsport. The contention that "low Kingsport wages" menaced New York printers falls to the ground when we discover that total labor costs in Kingsport were on the high side, and that there were many other cities, all larger than Kingsport, with lower wage rates, some very much lower. Hindsight, says Petro, estab lishes "that the strike should nev er have been called in the first place, and that the longer it went on the stupider it became." But, with the NLRB to back them up, union leaders persist in stupid strikes because they know that, with government help, they can win. ~ ~ THE SOCIOLOGICAL TRADI TION by Robert A. Nisbet (New York: Basic Books, 1966), 349 pp., $7.95 Reviewed by Gary North IN 1953, Oxford University Press released Professor Nisbet's study, The Quest for Community (now titled Community and Power), a book which has become a classic in sociology and intellectual his tory. In it, Nisbet explored the effects of the Industrial Revolu tion and the French Revolution on European social and intellectual life. The loss of the sense of com munity, the disappearance of local ties, the collapse of traditional re ligious institutions, and the aliena tion found in modern urban life all combined to isolate the individ ual. The result, Nisbet argued, has been the quest for community which has given us modern radi1967 OTHER BOOKS 575 cal movements like Marxism, Naz ism, and mass democracy.

The Sociological Tradition re turns to many of the same themes. Nisbet has selected the years 1830-1900, since he believes that the foundations of modern socio logical theory were laid in this period. He takes five basic themes - community, status, authority, aliena tion, and the sacred - and examines the treatment given to each by the major sociologists of the time: Tocqueville, Marx, Durkheim, Simmel, and Weber. Where relevant, he also discusses the contributions of other think ers, e.g., Fustel de Coulanges, Fer dinand Tonnies, Comte, and Le Play. It is the author's thesis that great periods of intellectual cre ativity come during epochs in which a transition is made be tween two major cultures. Fifth century Athens would be one ex ample, at least in the areas of philosophy and drama. Nisbet calls 1830-1900 a "minor golden age" which resulted from the col lision of traditional European cul ture with the "two revolutions" the industrial and the French. All three streams of nineteenth cen tury thought - conservative, lib eral, and radical - found their focus in the effects of modernism on the old Europe.

The book is a detailed study of the writings of these early socio logical thinkers, and as such it is enlightening and cogently organ ized. Beyond this survey, however, the r~ader is impressed with the profo~nd changes that modernism has brought to Western culture, and the terrible problems that face us. How can we find a meas ure of freedom in a world which is experiencing the total bureau cratization described by Weber, or the expansion of egalitarian pow er which Tocqueville analyzed? How can modern men find meaning in a world so secularized that con temporary scholarship has reject ed the quest for meaning as mean ingless? How can society escape the "polar night of icy darkness and hardness" foreseen by Weber? Marx appealed to a total revolu tion which would bring social sal vation through a regenerating chaos, yet even he ignored the vast problems which would confront the builders of a post-revolution ary world.

Nisbet does not attempt to answer these questions. But at least he has shown how these is sues were handled by the found ers of the sociological tradition, and how their various contribu tions have established the frame work for twentieth century so cial science. While this book is more limited in scope and intent than The Quest for Community, 576 THE FREEMAN September and therefore less likely to have a comparable impact in the aca demic community, it is neverthe less a useful and even eloquent study of the sociological issues which concerned nineteenth cen tury thought. The same problems are with us today, intensified by time and compounded by the com ing of totalitarianism. In socie ties that minimize men's imme diate and personal responsibility, how can men retain personal freedom? In a society which scoffs at the search for meaning, what can one expect besides the continual quest for power? ~ ~ FREE MARKETS OR FAMINE.

Edited by V. Orval Watts, Ph. D. (Midland, Mich.: The Pendell Co., 1967) 582 pp., fully indexed, $9.50. Reviewed by Henry Hazlitt THIS IS a collection of 63 readings on economic. subjects from 41 au thorities. It contains articles on the Industrial Revolution by Lud wig von Mises, on automation by Yale Brozen, on property rights by Murray N. Rothbard, on mo nopoly by Hans F. Sennholz, on labor by Sylvester Petro, on urban renewal by Martin Anderson, on the TVA by Dean Russell, on the farm problem by Karl Brandt, on half a dozen subjects by Professor Watts himself. Most of the second half of the volume is drawn from material published by The Foundation for Economic Education. The editor's immediate purpose in preparing this volume was to provide supplementary readings for economic courses at North wood Institute in Midland, Michi gan. Let us hope it will be used in many more colleges. A compre hensive textbook on economic prin ciples is indispensable; but a vol ume of this sort, by numerous au thorities on special subjects, is hardly less so, not only to put flesh and blood on an abstract theoreti cal skeleton, but to supply the au thoritative detailed information in a score of fields that no single writer today can hope to command.

It is an added virtue of Dr. Watts' anthology that the selec tions are not made with the aim of presenting "both sides," or "all shades of opinion," but for the purpose of promoting a true un derstanding of the principles of capitalism, of the workings of the free market, of the necessity for limiting government and preserv ing individual liberty. For the purpose of making this under standing comprehensive, many of the selections are studies of the dire results which coercive inter vention, however well-intentioned, has produced in one place after another where men have tried it.

THE FREEMAN OCTOBER 1967 Vol. 17, No. 10 ". The forcible taking of private prop erty in the name of relieving poverty often injures most the very ones for whom help was intended p. 579 III" Donald Warmbier goes back to John Stuart ·MiII for the lesson that control of property is the essence of ownership p. 591 III" Vital to the practice of freedom through trade is the understanding that value depends upon the individual's choice p. '594 iii" Spelling out that subjective theory of value was the great contribution of Bohm-Bawerk of the "Austrian School," in his refutation of Karl Marx p. 597 ~ Richard Hammond thinks it quite miraculous what a man of convictions can accomplish when he takes his stand p. 603 ~ Much needed in these days of compulsion, suggests Melvin Barger, is a clear understanding and use of the alternative power of attraction by creative individuals p. 605 Y' And for personal progress, points out Professor Evanoff, there is noth ing more helpful than the making of one's own decisions p. 612 Y' Dr. Martin Anderson, in "The Fed eral Bulldozer," brings us up to date on developments in the field of urban renewal since his remarkable book was first published in 1964 ....p. 614 yI A prominent educator points the path back toward freedom and the search for truth on the campus ............ p.627 III" Perhaps with tongue in cheek, but also with serious purpose, Dr. Max Marshall finds that various teachings, li·ke drugs, produce hallucinations ............ p.629 ", When confronted with such wild ideas, we need to pause, review our own basic premises, and stand firmly in their defense p. 634 It'" "Challenging and charming" is John Chamberlain's opening appraisal of the recent book by Whiting Williams, America's Mainspring and the Great Society p. 637 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

LEONARD E.·READ PAUL L. POIROT Vol. 17, No. 10 President, Foundation for Economic Education Managing Edito1° 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. Tel.: (914) 591 7230. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are in vited in any amount-$5.00 to $10,000-as the means of maintaining and extending the Foundation's work. Copyright, 1967, 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; 10 for $2.50; 25 or more, 20 cents each.

Any current article will be supplied in reprint form upon sufficient de mand to cover printing costs. Permission is hereby granted to reprint any article from this issue, providing customary credit is given, except liThe Federal Bulldozer," and IIEffect of Liberalism on the Campus."

THE RESULTS, after more than 30 years of Federal "war on poverty" in America,suggest that the cam paign has failed. "Instead of tem porary aid, relief has become a permanent way of life for millions. Second and third generations of families now live on relief."! Nor is it that the millions in this new class of poverty-striken are simply destitute of the material manifes tations of private property. Far worse; many have lost their self respect and the respect of their fellow men; they have lost their human dignity. What can these persons claim as their own? Respect for the dignity of an individual presumes him to be re1 U. S. News & World Report. July 17. 1967, p. 44. sponsible for the development and use of his faculties, his qualities, his properties. The personal free dom of choice that is liberty de pends upon self-control and posses sion or ownership in the form of private property. And consistent with this concept of human dig nity and private property is the right of the individual to make his own mistakes, if he so chooses, and to abide by the consequences - to know the penalties of improp er choice and action as well as the fruits of success.

"Property is desirable, is a pos itive good in the world," said Abraham Lincoln. "That some should be rich shows that othe·rs mayl become rich and hence is just enc~uragement to industry and en! 579 580 THE FREEMAN October terprise. Let not him who is houseless pull down the house of another, but let him work dili gently to build one for himself, thus by example assuring that his own shall be safe from violence." Lincoln understood that pove'rty is not to be overcome by warlike or compulsory measures, but by peaceful example. Not by pulling down the house of another, not by destroying another's life or char acter or estate, but by each man working diligently to build one for himself. A property owner, of course, might be able to live upon his own resources. But few of us now adays would be content with such a subsistence level of living. We have grown accustomed to the ad vantages of specialized production and. peaceful exchange of goods and services. Such voluntary ex change also depends on private property. Every trader is a prop~ erty owner and his own man.

Something to offer is his ticket of admission to the market - his purchasing power. For Property Owners Only This requirement for trade gives rise to a common complaint about the so-called tyranny of the market economy: that it tends to be exclusive - for property owners only. The fact that a buyer's pur chasing power depends upon what he has to offer is said to be un democratic and unfair; it doesn't afford everyone everything he wants. Some even argue that "property is theft," in the belief that any accumulations of private property must have impoverished other people. Such beliefs might have been justified under various conditions of the past - might be justified in some parts of the world today. A slave owner, for example, acquires and holds his slaves by force, and thus impoverishes them. Tribal wars for territory or other prop erty leave the losers poorer to the extent of the victors' spoils. But ina trading society as we know it, property required for produc tion and marketing can only be ac cumulated and retained by an owner insofar as he use·s it as consumers want him to. Otherwise, he's out of business.

The complaint that not every one can have everything he wants should be leveled, not against the market and the private ownership of property, but against the na ture of things. The real world is characterized by unlimited human wants and limited means, not the other way round. Any realistic so cial system must consider not only the boundless appetites of con sumers but also the conservation and efficient use of scarce re sources.

1967 THE WAR ON PROPERTY 581 Ours is not a world that affords abundance for consumption with out productive effort or other thought for the source of supply. This is why it is important to understand the basic principles and practices of private ownership and control of scarce resources. These are essential features of any peaceful society. Regulated by Competition To say that a prosperous mar ket economy depends upon respect for private property is the truth but not the whole truth. Private ownership and control, of itself, does not assure the most efficient use of scarce resources in service to others. That assurance comes as a result of competition. This is not to say that competitors are solely interested in pleasing cus tomers. But catering to the wishes of customers is the surest and easiest way to have and to hold valuable, scarce items. The fact that two or more businessmen bid for possession and use of the same resource is the consumer's guar antee that it will be used effi ciently to serve him. Consumers pay handsomely for efficient service and thus determine who, among various competitors, is to own and control the means of pro duction.

Competition for property is the great moderator or regulator of temptations to abuse the privi leges of private ownership. Com petition, of course, cannot force anyone to buy or sell at a price unacceptable to him. But competi tors can make trading difficult for those who expect something for nothing. Competition is truly the life of trade - a powerful, peace ful influence for honest and effi cient service by those who hope to own and control the use of prop erty. Nor is the moderating force of competition confined to the sup plier side of the exchange process. Consumers also compete against one another for available supplies. The resultant level of market prices tempers appetites, rations scarce items, requires responsible performance by those who are to receive goods and services in ex change for their own. The market will no more serve consumers who demand something for nothing than it will tolerate the false ad582 THE FREEMAN October vertising of fraudulent suppliers.

So, competition is a form of peace ful "policing" of the market. It tends to keep buyers and sellers honest in their trading and effi cient in their use of ever-scarce resources. Voluntary or Compulsory Let it be clear that our discus sion thus far pertains to the so called "private sector" of the econ omy - the production, the saving and investment, the trading of goods and services, and the per sonal consumption practices that result from voluntary choices of buyers and sellers in open com petition. And it bears repeating that the "private sector" market is a voluntary association of prop erty owners for the purpose of trading to their mutual advantage. Admittance to the market is gained by having something to offer. True, such offerings constitute the means for the satisfaction of the wants of consumers. But the ex pressed wants of consumers do not necessarily constitute a mar ket situation. A combination of consumers to satisfy their wants could very well be a den· of thieves.

When the power of government is invoked to plunder property, in the name of war on poverty, any receiver of such loot must recog nize that he possesses it at his own risk. The "human right" to plunder is a denial of the right to own and control property. It simply proclaims that might makes right; and that's a rough game for the meek and weak. That is precisely how thieves operate: non-owners deciding how an owner mayor may not use his property. The more we observe and be come involved in the government war on poverty, the clearer comes the message : War against poverty is war against property, and war against property is war against the poor. Monetary Misunderstanding Much of the confusion about all this may be traced to the love· of money, under the illusion .that money as· such is wealth. True, at a given moment, a quantity of money given to a poor person will enable him to buy goods and serv ices otherwise beyond his reach.

But his level of living depends upon the goods and services rather than the money. And redistribut ing the money supply does nothing as such to increase the total avail able supply of goods and services. It simply transfers buying power from one· person to another. Such transfer, however, has important consequences. Who buys what affects price and consumption and saving and pro duction patterns throughout the economy. When money is taxed 1967 THE WAR ON PROPERTY 583 from one person and given to an other, to equalize wealth, there is the strong probability that goods and services will· be diverted from productive use to immediate con sumption. Taxing the fruits of saving and productive effort dis courages thrift and work. Subsi dizing idleness increases it. This is the reason why compulsory so cialism has failed to relieve poverty when and wherever it has been tried. It redistributes the money supply, but with consequences that waste resources and lives and lead relentlessly toward famine.

The formula, "from each accord ing to his ability and to each ac cording to his need," simply emp ties the breadbasket faster than it can be filled. Within our life times we have seen this happening in Russia, Red China, India, Cuba, and other nations willing to accept every gift the free world has of fered-but not wining to practice freedom. And perhaps the most dramatic of all examples was af forded by the history of the Ply mouth Colony in the New World. The first years of communal effort, pooling the harvest and sharing "according to need," were marked by dissension, dearth, and death. Fortunately, the settlers then tried private ownership of the land and the fruits of each owner's labor; and hunger and famine have been unknown in the land since that change. Socialism Fails to Arrange lor Further Production The reason why socialism fails to relieve poverty comes clearer if one looks behind the monetary screen. Then it may be seen that material wealth is comprised of hoes and rakes and wheelbarrows, among other things.

Taking from a worker half the tools he needs to do a decent job (or taking them from that work er's employer) and dividing the proceeds among the poor in the form of consumer goods lowers the production potential of such a society. It's a grasshopper's way of high living for the moment and no thought for the morrow .. The industrial revolution, that makes for a high level of production and a high level of living for all indus trious and thrifty members of so ciety, is contingent upon respect for private property in the hands 584 THE FREEMAN October of those who have earned and saved it for a purpose. Owners of tools are in a position to hire others to help them use those tools for productive purposes. As pre viously discussed, competition ob liges the owners of resources to use them efficiently and in a re sponsible manner. The public-sector war on prop erty includes various govern mental programs of a socialistic nature such as outlined by Marx and Engels in The Communist Manifesto. And these' may be studied at close range without traveling to Russia or Red China or Cuba. What country today lacks experience with price supports and price ceilings, rent controls, mini mum wage and maximum profit la'\vs, rate regulations and other controls over interest, electricity, gas, water, housing, garbage dis posal, communications, travel, in surance, banking, and what not?

Where in today's world is a per son free to assume his own risks against the vicissitudes of old age, illness, illiteracy, illegitimacy, in digence, and .unemployment in stead of being taxed for every body else's benefit? What country is free of such protectionistmeas ures as tariffs, quotas, embar goes, and similar restraints of trade? All these are forms of plun der, war on property, class war fare in the Marxian sense. Helping the Aged Most of us readily recognize plunder when it takes the form of force applied to a person or to his property by an authoritarian dictator or by some unlicensed crook. But what do we make of a proposition like this from Presi dent Johnson's "Me~sage on Older Americans" addressed to Congress last January? "We shoul~ look upon the growing number of older citizens, not as a problem or a burden for our democ racy, but as an opportunity to enrich their lives, and, through them, the lives of all of us."

The President was advocating further expansion of the social security program originally en acted in 1935. After all these years, who could possibly question so worthy a goal as helping our selves by helping the aged? Yet, compulsory social security is a plundering game, perhaps more harmful in the long run simply be cause its ultimate impact was so dimly foreseen in the beginning. The social security tax bill has doubled on the average every six years since the first collections in 1937. It amounted to $20 billion in 1966 and threatens, under new proposals, to double again by 1974. A younger worker, facing the prospect of an annual social se curity tax of $1,000 or more, sure1967 THE WAR ON PROPERTY 585 ly must suspect that this could be come "a burden for our democ racy." Every taxpayer knows that taxes are a burden. But is the taxpayer the only victim of the social security plun der game? What of the harm done the recipients of such handouts?

Are their Iives truly enriched by relieving them of the responsi bility and the opportunity to grow out of their own errors and mis fortunes? Can a life be enriched, except as it becomes more useful? Just how does a government prom ise of old age assistance help any one to help himself? We know the harmful conse quences of paternalism beyond the call of duty within the family. And we also should understand the danger of paternalistic practices on a societal scale. That danger lies in the moral and economic impover ishment of the victims of such in tervention. Urban Renewal Another campaign front in the general war on poverty has been that of Federal urban renewal. Professor Martin Anderson has admirably documented the failure of that program. 2 More homes were destroyed than have been built un der the program; and those de stroyed were predominantly low rent homes while those built were predominantly high-rent homes.

Many of the small business firms displaced by urban renewal went out of business, while others re located in higher-rent and higher cost areas; very few have ever moved back into the urban re newal area. Most renewal pro grams decrease the tax revenues flowing into the cities' tax coffers, placing added tax burdens on pre sumably unaffected properties. And all programs involve the use of the power of eminent domain to take the property of some for re distribution or use by. others. So, urban renewal is a form of the war against property; and the ma jor victims have been the families of the very persons - the poor in whose interests the program supposedly was initiated. Not all of the various welfare programs of compulsory interven2 Martin Anderson. The Federal Bulldozer: A Critical Analysis of Urban Re newal, 1949-1962 (Cambridge, Massachu setts: The M.LT. Press, 1964) .272 pp. See especially his article on page 614 of this issue of THE FREEMAN.

586 THE FREEMAN October tion and redistribution have been as clearly cost-accounted and meas ured in their impact as the Fed eral urban renewal program has been weighed by Professor Ander son. But there is no reason to ex pect any other result from any of the other seizures or controls of private property intended to over come poverty. The noblest of in tentions may go unrealized. But the unforeseen and inevitable con sequences are quite real. When government sets the price of bread below the market level, there are two victims: the pro ducer of bread who is driven out of business, and the consumer who is left waiting in line for the bread that was not produced. The victims of rent control are as much the tenants who cannot find housing space as the landlords who cannot supply it at that fixed price. Minimum wage laws injure not only the employers who cannot afford to hire at such wages but also the employees incapable of earning them. The same tariff that bars a producer from the market also bars a consumer. Every con sumer subsidy is a tax upon pro ducers, a war against property that inj ures the poor.

The Key to Jobs The private ownership of re sources by persons most capable of using them productively is the key to job opportunities and more abundant living for the poor. The "lower third" and the "upper third" and the "middle class" have a common interest in protecting the private ownership of property. The jobs and livelihoods and lives of all depend upon it. Any person who hopes to sell his services ought to see that his prospects de pend upon property owners. Their right to own and use property, coupled with their ability to man age it well, create job opportuni ties for others. If a person is not satisfied to bean employee ofa property owner, he may· turn to self-employment. In that case, he will need to save for tools - be come a property owner himself if he is to succeed. So, in any case, whether a per son be relatively wealthy or rela tively poor, it is to his own best interest to respect and uphold the private ownership of property.

When a government seizes private property, or otherwise clouds an owner's title in the name of war on poverty, it is the poor of that society who can least afford the costs of such warfare. They will be the first to starve. Whenever a government exploits taxpayers to the point of serious inflation, which amounts to a heavy tax burden on the poor, riots and insurrection are to be expected.

1967 THE WAR ON PROPERTY 587 Riots in History What is happening in the urban centers of the United States today has happened before, and in strikingly similar fashion, among over-governed and overtaxed peo ple throughout history. Official court historians always have ascribed the inevitable rioting to such handy scapegoats as gouging merchants, greedy landlords, bru tal local policemen, slave-owning ancestors, and every· other reason except the real one: too much gov ernment intervention and too little personal freedom. This is not to defend the earlier practice of slavery in America and elsewhere or the mistaken and harmful practices of shortsighted marketeers or short-tempered law men. Human beings make mis takes; and each such mistake has consequences that ripple through society, often for years. But hu man progress is not a process of building molehill mistakes of the moment into permanent moun tains of misery . Unless we can learn by our errors to do other wise, we are condemned to keep on repeating them. And our most ter rible mistake is to fall upon an earlier evil as the justification for a new one. The horrors of slavery can never be erased by a new reign of arson, looting, murder, and riotous brutality.

The French Revolution: from Inflation to Napoleon A clearer view of current hap penings in Newark, Detroit, and other trouble spots in the United States may be· possible if we look back with that scholarly historian, Andrew Dickson White, at the se quence of events during the li'rench Revolution when the United States was a mere babe in arms. 3 Louis XVI had recklessly spent France to the verge of bankruptcy by 1789, and inflation was· to be the "short road to prosperity." Despite abundant warnings from those who recalled the history and disaster of earlier inflationary practices, the members of the French National Assembly voted ever-larger and more frequent is sues of irredeemable paper money. But the inflation, as always, ag3 Andrew Dickson White. Fiat Money Inflation. in France (Irvington-on-Hud sen. N. Y.. Foundation for Economic Edu cation, Inc.) $1.25 paper; $2.00 cloth.

588 THE FREEMAN October gravated the very evils it was pro posed to cure. What began as the confiscation of the property of the Church, the leading landlord of France at that time, became the excuse for more and more printing of worthless "assignats." This growing flood of "purchasing power" caused the skyrocketing of prices, prompting businessmen to expand operations but often in a wrong direction leading toward personal failure and bankruptcy and unemployed workers. And, as usual during in flation, wages failed to keep pace with rising costs of living. Work ers' savings were exhausted, along with any reason that might have held for saving in the first place. Thus the relentless inflation took its toll from among the very poor it had promised so much to help. Meanwhile, the recklessly-spending and money-printing government had shifted the blame for rising prices onto merchants and land lords and other businessmen equally trapped by events; maxi mum price laws and other disrupt ing control measures were enacted with death penalties for violators.

But the people rioted, regardless, and the guillotine eventually claimed the heads of those whose good intentions had brought on all the trouble. And the only thing the people of France gained from that particular version of the Great Society was Napoleon! The ways in which Louis XVI spent taxpayers' money in 1790 doubtless would seem foolish to heads of state in 1967. But there is no indication that Louis was giving the money to enemy na tions, or waging war at the oppo site side of the world on behalf of one unfriendly nation against other unfriendly nations, or plan ning to colonize the moon. It is true that modern rulers have found interesting new ways to bankrupt their country's treas ury. And the resultant inflationary resort to the printing presses may be slightly more sophisticated to day. But reckless spending of arti ficially created purchasing power still spells inflation, and today's riots by the tax-burdened and dispossessed poor of Detroit are very much the same as the riots of Paris in the 1790's.

Offering Explanations That Won't Stand Scrutiny It is not that some of the looters are the great grandchildren of Negro slaves; doubtless among them also are to be found the great grandchildren of slave own ers and of. ardent Abolitionists of a century earlier. It is not that the rioters are poor; the poor of the world have as good a record for peace and 1967 THE WAR ON PROPERTY 589 honesty and brotherly love and law-abiding citizenship as have those on any other rung of the economic ladder. Nor is it that those who flaunt the laws of the land have been de nied educational opportunity; many of their provocateurs and leaders in violence are holders of college degrees with campus train ing for insurrection. Our riotous friends are the un happy victims of the false promises and bulldozer practices of the wel fare state. These are individuals who have been dispossessed, driven from the modest homes they could afford in the name of slum clearance and urban renewal and public housing.

They are urban dwellers obliged - to pay in higher grocery bills for an annual $6 billion farm relief program. They are subject to draft for "somebody else's" war that seems far more likely to threaten than to strengthen American se curity. They are unemployed by reason of special privileges that have been extended to:ehe leader ship of organized labor unions. They are asked to pay for the pro tection granted industry in the form of tariffs, quotas, embargoes, and other price-hiking barriers to world commerce. They have been guaranteed subsistence, but with shackles attached. A slave to hand outs and subsidies, for which he himself must pay in the end, is nonetheless a slave. Stripped of his self-responsibility and his self respect, he may not be expected to understand or respect the lives or the properties of others who have earned their rights. The poor of our nation have been promised the moon - and presented the bill !

And they riot against this evil they cannot understand. Nor is it easy to understand. The aftermath of a Watts or· a Newark or a Detroit riot must ap pear to the careful observer very much like the gaping wounds in "demonstration cities" when the Federal bulldozer of urban re newal has taken its toll of homes and businesses and displaced per sons. It may be said for the riot ing, looting, and burning that it is considerably faster and less costly than the legalized method of ur ban demolition. But that does not excuse the violence or the destruc tion involved in either procedure.

590 THE FREEMAN October And what it will cost to rebuild the wrecked homes and businesses and lives all depends on whether it is attempted by the compulsory methods of government planning and taxation or by the voluntary cooperation of self-responsible and self-respecting individuals in the open competition of the market. What we can be certain of is that one method is warlike and the other is peaceful. And that should be sufficient reason for anyone to cast his vote for freedom. ~ • For further readings on the important relationship between private property and personal freedom and well-being, see: W. M. CURTISS,"Freedom Rests on Private Property," Essays on Liberty, Volume V, p. 170. HENRY HAZLITT, "Private Ownership: A Must," The Freeman, June, 1967, p. 342. PAUL L. POIROT, "Property Rights and Human Rights," Essays on Liberty, Volume II, p.79. LEONARD E. READ, "The Poor Should Look to Liberty," Essays on Liberty, Volume XII, p. 9. "When Wishes Become Rights," Es says on Liberty, Volume XII, p. 85.

DEAN RUSSELL, "Play Store Economics," Essays on Liberty, Vol ume XI, p. 218.

OVER 100 years ago, John Stuart Mill summed up the difficulty of preserving freedom under social ism with these words: If the roads, the railways, the banks, the insurance offices, the great joint-stock companies, the univer sities, and the public charities, were all of them branches of the govern ment; if, in addition, the municipal corporations and local boards, with all that now devolves on them, be came departments of the central ad ministration; if the employees of all these different enterprises were ap pointed and paid by the government, and looked to the government for every rise in life; not all the freedom of the press and popular constitu tion of the legislature would make this or any other country free other wise than in name. 1 1 John Stuart Mill, The Essential Works of John Stuart Mill (New York: Grosset & Dunlap, 1965), p. 356. Mr. Warmbier is a student at Michigan State University.

Today, in the United States at least, the. kind of formal socialism described by Mill is no longer a maj or threat. We now face not so much increasing state ownership of our enterprises as increasing state purchase of their products. As one writer puts it: The old demands that government nationalize railroads, coal mines, shipping,shipbuilding, arms-making have in the last thirty years sub sided from a roar to a whisper. In stead, governments as mass pur chasing agents have operated in creasingly .... It is this trend ... that can be expected to increase for some years. 2 Expanding use of government as .a purchasing agent, funneling through it ever-larger percent ages of the national income, has been called the movement toward a contract state, in reference to 2 Max Ways, "The Road to 1977," Fortune, January, 1967, p. 196. 591 592 THE FREEMAN October the ever-greater role contracts with the government play in the economy. This contract state dif fers in form from the socialism envisioned by Mill, but does it differ in substance? There are those who say that it does: If the government were to take 30 cents or even 40 cents or 50 cents out of every dollar's worth of our production, in contrast to its present share of about 20 cents, the govern ment would then become a larger customer of American business. It would not be a larger producer. This is a most significant difference: a government that buys a larger pro portion of our output creates neither a planned economy nor a socialist one.3 Millions of Potential Employers - Or Just One?

Yet there are reasons for doubt ing the significance of the above· difference. Mill saw socialism as a danger to freedom because it replaces the millions of potential employers of a free economy with a single employer, the state, to which everyone must look "for every rise in life." Those who would criticize the actions of a socialist state might well be in hibited by the knowledge that they risk antagonizing their only source 3 Peter L. Bernstein, The Price of Prosperity (New York: Random House, 1966), pp. 107-108. of advancement in their chosen line of work. Rather than the nation's pre dominant employer, expansion of the contract state turns govern ment instead into its predominant customer. Businessmen must de pend on the state for more and more of their sales. Relying in creasingly on a single customer, such businessmen find their free dom to criticize that customer diminished in a manner closely resembling what Mill feared would take place under formal socialism.

One advocate of increased pur chases by the state says of such businessmen that they have been . . . losing freedom in the precise pattern of classical expectation. The officers of Republic Aviation, which does all of its business with the United States government, are no more likely in pub]ic to speak crit ically of some nonsense perpetrated by the Air Force than is the head of a Soviet combinat of the ministry to which he reports. No Ford exec utive will ever fight Washington as did Henry 1. No head of Montgomery Ward will ever again brea the de fiance of a President as did Sewell Avery in the age of Roosevelt. Man ners may be involved here. But most would state the truth: "Too much is now at stake !"4 4 John Kenneth Galbraith, "Capital ism, Socialism, and the Future of the Industrial State," The Atlantic Monthly, June, 1967.

1967 FREEDOM AND THE CONTRACT STATE 593 But growth of the contract state affects not only businesses and businessmen. It also forces uni versiti.es, hospitals, research .. and cultural organizations to look· in creasingly.to the government for the sale of their services. Asgov ernment takes 30 cents or 40 cents or 50 cents or more out of every dollar of production, scholars,· doctors, scientists, even artists come to view the state as their mOst important patron and benefactQr. Under the· con~ract state, no ,less than under formal socialism, Sl point is reached· when "not all the ,.,freedom of press. or popular con stitution of the legislature would make this or any other country free otherwise than in name." • A Tale of Two Message Carriers Editorial, ChiesA!' Tribune, August 9, 1967. First class mail Letter Postcard 2c Ic 3c lc 3c "2c 4c 3c 5c 4c *6c *6c A STRANGE CONTRAST exists in recent moves of two Federal organizations, both ostensibly acting "in the public interest."

One Federal agency, the Federal Com munications Commission, has ordered the American Telephone and Telegraph Com pa~y to reduce its long distance rates. To the dismay of the more than 3 million A. T. & T. stockholders, the market value of their investment dropped several bil lion dollars as a result of the FCC action. At the·' same time another agency, the Post Office Department, is asking for a 20 per cent boost in its first class rate on letters. In less than 35 years the government operated postal service has increased by 150 per cent the· rate· on letters-from'2 cents to the present 5 cents-and another increase from 5 cents t06 cents is in the works. The rate on, the old "penny" post card, which was held at 1 cent for 80 years until 1952, would also be boosted to 6 cents~ In the same 35-year period long dis tance rates of the privately operated tele phone company have been reduced by as much as 70 per cent.

For example, a three-minute daytime station-to-station call from Chicago to Los Angeles in 1932 cost $6.25, with an overtime charge of $2a ,minute after the first three min utes. Today the same call can, be made for, $1.80, with an overtime ~harge of 45 cents aminute., > A comparison of' first· class mail ;rates for years when significant 'changes 'were made since 1932.and the cost of atypical long distance telephone call [day rate, Chicago to Los Angeles] follows: Three minute phone call 1932 $6.25 1933 6.25 1952 2.25 1958 2.20 1963 1.95 1967 1.80 *Proposed. The cost of mailing a letter is the same day or night; but not for making ~ long distance call. The night rate for a Chi cago .to Los Angeles call is 90 cents· for the first three minutes and 25 cents for each additional minute. In the light of· this, record, it hardly seems appropriate for the government to be lecturing a private, communications system on the advisability of holding down rates.

FREEDOM'S THEORY OF VALUE LEONARD E. READ THOSE OF US who wish to assist in a reversal of the present trend away from individual liberty must, among other refinements of the mind, understand, believe in, and be able to explain the subjective theory· of value, as forbidding as that term sounds. Except as we understand and apply this correct theory of value, individual liberty is out· of the question. The possessions one accumu lates are a reflection of his values. What a man owns - what is his own.- is what he is.. One's per sonality and property reflect his subjective values. But few of us care to live in isolation. We prefer to exchange ideas and goods and services with others.. And the problem is to work our strictly personal values into a price or value structure for purposes of peaceful trade. The question· to be answered is, .how does the subjective theory of val ue determine the market price?

Here it is: The exchange value 594 of any loaf of bread, of any paint ing, 01 any day's work, or 01 any good or service is whatever anoth er or· others· will offer in willing exchange. When Mrs. Smith· swaps a shawl for Mrs. Jones' goose, the value of that shawl is that goose and vice versa. Yet, each lady gains in her own (subjective) judgment. Were this. not a fact, neither would have willingly ex changed. Value can make no sense ex cept as it is subjectively deter mined, that is, as utility or gain is judged by self. Gain. or value cannot be determined for anyone by another. What has value for one may· have .more or· less value to someone else: there are those who prefer a chinchilla coat to a college education and vice versa, a freedom library to a vacation and vice versa, the theater to a TV performance and vice versa, ad infinitum. Assume that I am an artist and 1967 FREEDOM'S THEORY OF VALUE 595 do a painting· each month. Unfor tunately for me, no one wants "a Read." The value of' my work?

Zero! Now, assume that a change occurs in the minds of buyers (in each instance, subjective); "Reads" become a popular whim to the point that each will bring $1,000. The value of my work? $1,0001 For the sake of this illus tration, there was no change in the quality of the paintings. Buy ers changed their minds and, thus, the value of my work. It is perfectly plain that the practice of subjective evaluations is the practice of individual lib erty or, if you prefer, personal freedom of choice. It is also easily demonstrable that freedom of the press, free dom of religion, freedom of speech, freedom of assembly are impossible in the' absence of eco nomic' freedom. l This correct theory of value is opposed by the objective theory, that is, by arrangements where someone else, by some standard of evaluation otherthan your own, attempts to determine the value·of goods and services to you. An understanding of the fallacious objective theory and an ability to identify it in its many manifes tations helps to accent the im1 See "Freedom Follows the Free Market" by Dean Russell, THE FREEMAN, January, 1963.

portance and the validity of· the subjective theory in practice. Priorto 1870 no one had formu lated the subjective theory. Nor was it invented. Threeecollomists - Menger, Jevons, and Walras from different countries and with out collaboration, formulated the theory almost simultaneously. Their enlightenment came by merely observing how common people behave - produce and ex change - in the absence of gov ernmental or other interference. Thus, before 1870 when there was no understanding of the sub jective theory, objective methods of arriving at value predominated. The classical example of the ob jective theory of value is the labor theory of value. This theory mere .. ly affirms that value is determined by cost of production or, stated another way, by the amount of en ergyexpended. While some classi cal economists knew the theory to be wrong, they were not certain as to what was right.

Pursuing the labor theory to its logical" and absurd conclusion, a mud pie would have the same'value as a mince pie, provided that they were produced by equal expendi tures of energy. If a pearl diver came up with a pearl in one hand and a pebble in the other, they would be of equal value,! Of course, people will not ex change as much for a mud pie or a 596 THE FREEMAN October pebble asfora mince pie ora pearl. So, how does this theory find ex pression in .practice? Simply, use the power of government to take from the; mince pie makers and give to the mud pie makers! Karl Marx gave the formula: "from each according to his ability, to each according to his need." However,even the Russians no longer are strictly addicted to the labor theory of value .. Yet, they largely rely upon objecti ve stand ards of one kind or another. That is, self-determination is at a mini mum; the government arbitrarily prices nearly everything. Willing exchange is not the mode; indi vidual freedom of choice is sub stantially taboo; the subjective theory is less used in Russia than elsewhere.

Note that there is no freedom of the press, of speech, of religion, of assembly in, Russia. It is be cause economic freedom is denied; and economic freedom is impos sible unless subjective value judg ments are respected. One of the most important points to keep in mind is that the amount of effort exerted or the cost of production does not deter mine exchange value. It is deter mined by individual evaluations of personal utility. The market price or value is somewhere with in the range of these evaluations. We who are interested in individual liberty and, thus, in·the ob servance of subjective value judg ments, must know that the. objec tive theory is antithetical to our welfare,and we should be able. to identify its many practices, re gardless of how. cleverly disguised they are. Actually, we need only. keep our eyes on unwilling as distinguished from willing exchanges. All un willing exchanges rest on 0 bj ec~ tive and not on subjective value judgments.

Would you willingly exchange your income or capital for farmers not to grow tobacco, to rebuild someone else's :downtown, to put men on the moon, to underwrite power and .light for the people of the Tennessee Valley, to pay people not to work? If your an swers are negative, you can take the political applications of. the objective theory from there. Ex amples ,abound by the thousands. 2 It is a gross understatement of the case· to say that freedom rests on the practice of the subjective theory; subjective value judg ments, when honored,are free dom! + 2 See Encyclopedia of u.s. Govern ment Benefits (Union City, N. J.: Wil liam H. Wise and Co., Inc., 1965). This tome of more than 1,000· pages lists over 10,000 benefits. Reprints of this article are available at 3c each.

The Man Who Answered Marx Bohm-Bawerk DEAN LIPTON IT IS A SAFE BET that for every million persons who have heard of Karl Marx not more than one or two can recall the name of Eugen von· Bohm-Bawerk. In a major sense, this is unfortunate, for Bohm-Bawerk was the man who answered Marx. Nevertheless, it is quite under standable. Marx was primarily a propagandist, a polemicist, a gifted sloganizer. His life .story from. the time he was the editor of a radical newspaper in Germany to the years he struggled for con trol of the First International was the deliberate attempt to sway Mr. Lipton of San Francisco has been a news paperman and Army Historian and his ar ticles have appeared in numerous magazines. the minds of men. He was a poli tician in the guise of journalist, philosopher, and economic thinker. About all this, Bohm-Bawerk could not have cared less. He was the dedicated scientist searching for truth. He refined economic ideas· and· concepts in a way that few others ever had or could.

Where Marx borrowed heavily and uncritically "- from any past economist whose ideas could help him prove a point, Bohm-Bawerk would cut away at their falsity, never concerned with anything except arriving at the core of es sential truth. It was, of course, only natural that he would eventually clash with the ideas promoted by Karl 597 598 THE FREEMAN October Marx. They were starting their ascendant curve during the time Bohm-Bawerk was growing into manhood and beginning to think about the shape of the world, and the principles upon which human freedom and prosperity were based. Two Lines of Thought Eugen von Bohm-Bawerk was born in 1851. Three years earlier Marx (and his collaborator, Fried rich Engels) had published The Communist Manifesto containing the ringing declaration: "WORK ERS OF THE WORLD UNITE! YOUHA VE NOTHING TO LOSE BUT YOUR CHAINS." In 1867, when Bohm-Bawerk was just six teen, there appeared the first vol ume ofDas Kapital, the book which •was to become the bible of so-called scientific or modern so cialism.

Many of the young European intellectuals were swayed·by Marx ist .. ideas, but there is no record that Bohm-Bawerk ever was. In part, this was probably due to his teacher and mentor, the famous Carl Menger, who among other things formulated the important theory of marginal utility. At first, Bohm-Bawerk was only one of a group of brilliant, young economists gathered loosely around Menger, originating the renowned "Austrian" school of economics. But, in time, he surpassed them all, becoming the master, the man whose work left the greatest im pact. Historically, he and the other "Austrian" economists performed two important and vital functions. First, they .made corrections in the inaccuracies they saw in the work of the "Classical" econo mists, even daring to take on such masters of the past as Adam Smith and· David Ricardo.· Sec ondly, they were the main econom ic critics of Marx andhisfol lowers in the closing years .of ·the nineteenth century and the open ing years of this one.

There was another curious par adox between Karl Marx and Eugen von Bohm-Bawerk which should be mentioned. The polit ically-minded Marx never held public office. He was unable even to hold all of his followers, all the men who thought in •a gen eral way like him, together in the one enclave he knew was necessary for the quick seizure of power. Proudhon quarreled with the Marxists during the volatile days of the Paris Commune. The Marx ists expelled Bakunin from· the International. Lassalle broke with Marx to form his own Socialist party. The nonpolitical Bohm-Bawerk was appointed Minister of Finance in three different Austrian cabi nets (1895, 1897-98, and 1900-04.) 1967 THE MAN WHO ANSWERED MARX 599 But in each instance it was the·of flee seeking the tnan.Bohm-Baw erk had no political ambitions, but the political leaders of the Austria of his time knew that he had no peers in the fields of economics and finance. The post he enjoyed most was the· one he held for a long ·time as Honorary Professor of Political Economy at the Uni versity of Vienna.

Capital. and Interest Even if Bohm-Bawerk had not exposed the Marxist fallacies, his work would have had lasting sig nificance. He was among the first to explore the complicated· laby rinth of price fluctuations. Al though many have tried, no one has successfully .supplanted his two theories of interest. Here, it is only fair to point out that both were hinted at by Nassau William Senior, an English economist, in 1836. However, Senior had left them in an unfinished state, and it was Bohm-Bawerk's work which pointed up their importance. In the abstinence theory, he demonstrated that interest was compensation for the postpone mentor waiting for thesatisfac tion of a person's wants. While this idea may seem commonplace today, it wasn't in Bohm-Bawerk's time. His second theory dealt with the importance of interest to the productive process. He insisted that it was the most efficient way to secure capital investments, stat;..

ing that even a socialist .state would have· to make use of it, or some equivalent,if it were to sur vive "economically.The experiences of Soviet Russia in the years im mediately following the Russian Revolution proved· him right. In 1894, the final two volumes of Marx's Das Kapital were pub lished posthumously. They had been edited from··Marx's· notes by his long-time associate,Friedrich Engels, and we, of course,have no way·· of knowing how different they might have been if Marx had lived to do his own editing. How ever, the chances are reasonably good that the two versions would not have differed in any signifi cant· respect. Marx and Engels were intellectual twins. A com mon thread running through all of their ideas was the "exploita tion of labor." According to them, every economic process ofa free society was designed to exploit the workingman. With his usual logical thorough ness, Bohm-Bawerkdisposed of this argument in whatever Marx ist theory it occurred. Marx ar gued that interest was derived only by exploiting labor. Bohm Bawerk answered this contention by pointing out that if .interest were the just compensation for saving ashe conclusively proved 600 THE FREEMAN October in his ~bstinence theory, and ab solutely essential to the productive processes of a modern industrial nation, it could not be exploitative in the Marxist sense.

Another sample of Marxist rea soning was, that all the profits of the entrepreneur and, the capital ist were "surplus value" created bylabor. Iflab9r had not been ex ploited, there would be no profit. The corollary to this, of course, was that alJ' so-call~d "surplus value" should be returned to the worker. Bohm-Bawerk, p<?inted out that as long as a maj or part of "su,r plus value" was re-invest'ed in ,a nation's industrial capacity - ~nd not used to satisfy the capitalist's or entrepreneur's, personal wants it went ,back to the people in an ever-rising standard of living. In another one of his uncanny predic tions, he foretold that under so cialism "surplus value" would not be returned to labor, any more than it was under capitalism. If it were, the socialist nation ,would lack the means to build or main tain an industrial economy. Again the •experiences of both Soviet Russia and Communist China proved him right. In f~ct, both Russia and China expriQpriated so much of the worker's product that millions of people" were deliber ately starved, so that rapid in dustrialization could be achieved.

Labor Theory of Value Exposed But it was on the Marxist La borTheory of Value, that Bo!J.m Baw.erk turned the" full force of his powerful mind. The idea that labor "created" value did not orig inate with Marx ..Sir William Pet ty developed something lik~ it two centuries earlier, and Ricardo .de vised a similar theory. Marx 'bor rowed the Ricardian concept, and added a few sophisticated touches to it. He himself admitted that his ,whole theoretical structure rested upon the Labor ,Theory of Value, and that if it could be dis proved, "scientific" socialism would be, rendered invalid. After Bohm-Bawerk finished de molishing it, there was not a sin gle major economist who would accept the Labor Theory of Value as anything. other than an" inter estinghistorical oddity. Even many branches of World Social ism, such as the Fabian Socialists in England, discarded it as unten able. The "ambiguities and contradic tions" in Marx's language offended good sense, Bohm-Bawerk, pointed out. Marx claimed that the value of a product was determined by the "socially ,useful" labor .in volved in its production. Bohm Bawerk found the phraseology meaningless, and pointed out that it differed little from Adam Smith's distinction between productive and 1967 THE MAN WHO ANSWERED MARX 601 unproductive labor. Smith had used the artisan as an example of productive labor· and the me nial servant to.· illustrate unpro ductive labor. Bohm-B·awerk stated that· if the servant's efforts re leased his master to perform pro ductivework, then his labor .was also prod ucti ve The universal application of Bohm-Bawerk's analysis can be seen by taking the· case of ·a widow with young children who re-enters the labor force as a stenographer.

Without someone to· care for the children, she would· be unable· to work, and so the girl she .hires as a baby sitter certainly per forms productive or essential work. Utility, Scarcity, and Choice To demonstrate the validity of the Labor Theo:ry· of Value,Marx used the diamond, insisting that it was valuable because of the amount of labor expended to mine it. In other words, a diamond at the bottom of· a deep .mine shaft requiring the work of many men to dig would be worth more than a diamond found accidentally on the surface of the ground. QUite obviously, any diamond merchant who estimated the worth of a stone on this basis instead· of the usual reasons such as the number of carats or its crystalline flaw lessness would go out of business in ~hort order. To Marx, value was a concrete condition created in much the same manner that an article might be manufactured .. To Bohm Bawerk, it was a relative system of measurement depending at. any time on external factors.· He dem~ onstrated that· the Marxist con cept failed to take two important elements into consideration: util ity (or usefulness) and the nearly equally important· subjective qual ity of want or desire. Despite the appearing solidity of the Labor Theory of Value, it was nebulous, vague, and unpredictable. It lacked every characteristic that a science was supposed to have. Conversely, the Bohm-Bawerkian law worked with mathematical precision.

It could be summarized into the following formula: 1. Utility is the basis of· value. 2. ScarCity is the measure of value. 3. Price is the evidence of value .. Nothing is valuable unless it is in some way or degree useful. The decrease or increase of its value is dependent on the rise or decline of its supply. Valuable goods are costly either in terms of other goods or money. To this he added another factor for the determination of price: the sub jective quality of want. If no one wanted an article - no matter how scarce it was - its price could hardly be very great. The importance of want or de602 THE FREEMAN October sire is self-evident. The more the seller values an article, the higher his. asking price will· be. The more the buyer wants the article, the more he is willing to pay for it. This, of course, works in· reverse. The· lower the buyer's personal evaluation of an article, the less he .will be willing to pay for it.

If a seller places little value on an article, he will be willing to sell it for a low price. Subjedive Value Judgments Bohm-Bawerk covered allpossi hIe criticism before it could be leveled. He did it so well that the Marxists ever since have found themselves in the position. of hav ing to .answer the unanswerable. Take the .. way he disposed of any future objection to· the utilitarian basis for value in his monumental work, The Positive Theory of Cap tal, * for instance.. After noting that such infinitely more useful items as bread and water ordi narily.are far ·.less valuable than diamonds or pearls, he points out that they only appear to be be,;, cause under normal circumstances they are in such abundant supply while pearls and diamonds are relatively rare. But when food becomes scarce, the value of a sandwich to a starving man is far greater than that of a large and flawless diamond. A man· dying of thirst in the desert will run first to a .canteen of· water .before he even considers the bag of pearls lying a few feet away.

Bohm-Bawerk finally concluded: "Thus those very facts. which, at first sight, seemed to contradict our theory that the amount·· of value is dependent on the amount of utility condition, on closer ex amination afford a· striking con firmation of it." + A Miracle? RICHARD D. HAMMOND IF I hadn't been there, I would hardly have believed it myself. We decided to "do it ourselves." Such a decision can scarcely be de scribed as a miracle, although these days it seems almost like one. It happens that some time ago I was asked to serve on an advisory board of a voluntary organization that helps the handicapped to help themselves. This is a fine organi zation, with a worthy purpose, certainly. The time came for an expansion of facilities. The director came to the board with a well-worked out proposal which involved our raising $20,000 so that we could qualify for a 4 to 1 Federal grant which would give us $80,000. He described this "opportunity" as "growth money."

When I attempted to point out This article is from a recent letter by Mr. Hammond, a Maryland business association executive. what the multiplicity of "Federal grants" was doing to our economy, our dollar, and Qur debt, I felt that I was looked at with· a fishy eye by the director, the chairman, and my fellow board members. When I suggested that we might save some money by obtaining good used equipment, I was told im mediately that the-Federal grant specified only new and the latest equipment. At a second meeting on the sub ject, and after further planning on how to qualify for the grant, I finally said, "Sorry, men, our mo tives are good, but our means are bad, and I'll just have to drop off the board. I can't go along. If you want to raise what money we need for serviceable equipment, on a voluntary basis, I'll do my best to help. But I can't be a part in taking the money, extracted from others by force, for e'ven as worthy a project as this."

Where's the miracle? Well, after 603 604 THE FREEMAN October P. S. I tried the same approach on another board I'm on ---- similar situation -- and was .voted .down. But it's fun trying. The one success described above makes .the trying more worthwhile. • where, we could get the equipment on our own; ideas on how to go about raising money. After the meeting, one of the members came up to me and said, "Thanks, Dick, for waking us up." At a subsequent meeting, a for mal motion was passed to do the job ourselves. And we're now on the way to doing just that. I had said this, one of the men said, "Maybe we could do it this way." Another said, "I don't par ticularly want to take tax money, but I don't see how we can do the job any other way." The chairman, who had for weeks given me the impression that he thought I was crazy, almost knocked me out of my chair when he said, "Actually, this is the way I re·ally would like to see it done too, if it's possible."

To shorten the story, from that point. on, the whole atmosphere of the meeting changed. Enthusiasm took over. Smiles and excitement came out. In a few minutes,. we had numerous ideas as to how, and * * * A Source of Strength I SOUGHT for the greatness and genius of America in fertile fields and boundless forests; it was not there. I sought for it in her free schools and her institutions of learning; it was 'not there. I sought for it in her matchless constitution and democratic congress; it was not the're. Not until I went to the churches of America and found them aflame for righteousness did I understand the great ness and genius of America. America is great because America is good. When America ceases to be good, America will cease to be great. ALEXIS'DE TOCQUEVILLE, Democracy in America A T(I MELVIN D. BARGER ONE of the games people play to day is to profess a belief in free dom while advocating more and more forms of governmental com pulsion. Yet those who play the game would insist that they do not like self-deception and abhor hy pocrisy. If they deceive themselves and practice hypocrisy on this mat ter of compulsion, it is ·because compulsory programs seem to get the results they desire, while vol untary methods appear to fail. "We detest compulsion as much as you do," they might say. "But what alternative can you offer?"

The believer in classic. liberal ism cannot, of course, offer alter natives to compulsion that will pro duce the same results that compulMr. Barger is a public relations representative in Jackson, Michigan. . sory programs bring. There-are, for example, few voluntary pro grams that will give individuals the' power to tear down whole· sec tions of cities and replace them with gleaming buildings as urban renewal does. There is no practical way for a believer in voluntarism to build an unprofitable dam or to endow a special interest group with largesse. But there is a powerful alternative to compulsion, and it may be rediscovered when compul sory measures finally fail. It is called attraction. It is amazing that so few think ers of our own day have grasped this idea of attraction and how it functions in ec}lnomic affairs. It is an idea impUci in Christianity as well as in the .undamental struc ture of American government. In 605 606 THE FREEMAN October Christianity, the idea emerges as "letting your light shine so that men will see your good works and glorify your Father who is in heaven." In American government, attraction is implicit in the Bill of Rights and other statements of freedom; there is at least a confi dence that goodideas wilLtriumph through their power of attraction if all ideas are allowed to circulate freely.

Reformers in Haste One of the ironies in attraction, however, is that it is not itself im mediately attractive as a principle of operation to restless individuals seeking shortcuts and trying to get things done in a hurry. In the days before the Wagner Act, for ex ample, labor leaders made relative ly slow progress in signing up union members on a voluntary basis. Some of this slow progress, admittedly, may have grown from strong employer opposition and the intimidation of workers. But at least a large portion of the slow growth of unions could be ascribed to the fact that many workers did not· find the union's program at tractive. Rather than re-examine their own proposals and practices, labor leaders found a faster way: compulsory unionism, which per sists to this day. Though defended vehemently as the only way unions can survive, compulsory unionism still goes against the grain with the American public to such an ex tent that intense pressure from la bor leaders has not succeeded in eliminating the right-to-work pro visions from the labor laws.

There are, of course, numerous other examples of turning to com pulsion when attraction seemed a bit slow and tedious. We now have compulsory social security pro grams, compulsory medical care, compulsory agricultural programs, compulsory auto insurance, and countless other departures .from voluntarism. Just. around the cor ner, apparently, are some new pro grams such as compulsory birth control and compulsory mental health on a nation-wide scale. Busi ness organizations are being sub jected to compulsory programs by other firms in their own industry; in quite a few industries it is now the practice to organize as a soci ety or an association and to compel all eligible members to belong or face the suggestion that they are "out of it" or "not qualified to be accep1ted.as equals." And on the surface, compulsion does get things done. The social security check arrives every month, union dues are collected by checkoff, and everybody receives his fluoride from the city water supply whether he has teeth or not.

Since compulsion gets certain things done so well, what is really 1967 ALTERN ATIVE TO COMPULSION 607 wrong with it? It may appear im moral, but its proponents will also argue that it's immoral to let old people starve or to let dangerous buildings stand in a slum. Compulsion Doomed to Fail; Cannot Deliver the Goods Compulsion can be condemned for a number -of reasons. There are, as Friedrich Hayek argued some' years ago, reasons to believe that an increase in compulsory pro grams' will eventually· place the most unscrupulous individuals in charge of governmental .affairs. There are indications that this may be happening, but they are not yet conclusive. Compulsion also appears to· be legalized plun der in the view of many ; but .• this objection is countered with the argument that "government has the authority and duty to redis tribute in order to advance the common welfare." A third objec tion, that compulsion destroys freedom, does not win as many ad herents as· it should because they insist that their brands of compul sion' eventually promote freedom.

Actually, compulsion may defeat itself through its inability to de liver the goods over the long run. It subsists on the lie that man is a compliant, subservient being who can be shaped and guided in definitely into productive channels by coercion outside himself. Man is not such a compliant being; and when compulsion has run its course he is the very .power who will put it aside in favor of at traction, a force that does work indefini tely ~ Perhaps one of the keener ob servations on this basic inferiority of compulsion to attraction was pinpointed many years ago in an essay on "The Will" in Thomas Troward's Edinburgh Lectures.! While writing chiefly of the hu man will and the limitations of will power, Troward indicted all compulsion by direct implication: "Many" writers a.nd teachers insist on will-power as though that were the creative faculty. No doubt in tense will-power can evolve certain external results, but like all· other methods of compulsion it lacks the permanency of natural growth.

The appe'arances, forms, and con ditions produced by mere inten sity of will-power. will only hang together so long as the compelling force continues; but let it be ex hausted or withdrawn, and the elements thus forced intounnatural combination will at once fly back to their proper affinities; the form created by compulsion never had the germ of vitality in itself and is therefore dissipated as soon as the external energy which sup ported it is withdrawn." 1 Dodd, Mead & Company, New York, 1909.

608 THE FREEMAN October No Chance for Progress The fatal flaw in compulsion is tha tit lacks the creati vity to pro duce the new ideas and forms which. human progress demands. When a project is supported by compulsion, it· is practically, im possible to remove the compelling force without also witnessing the quick death of the thing supposed lycreated. One •such -example is when ", the government subsidizes a dying industry in order to save it for some noble, public purpose or merely to aid a dese·rving com munity; the subsidy soon has to be of a permanent nature or. the industry dies anyhow from its own inability to attract the nutrients of industrial life. The same is true of programs to force busi nessmenand labor leaders to fol low wage-price guidelines; if com pulsion is relaxed for either group' or at any point, the' guide line is ignored and forgotten. It is also true of economic stimu lants applied to ·encourage the grQwth of new industries and get them on. their" feet; they never get to the point where they want to walk alone.

Attraction, if it is really pres ent, is like Biblical Love; it never fails. If an; attractive idea or ar rangement is in motion, it draws substance to itself. as unfailingly as a magnet draws iron filings. It worked remarkably well in our pasthistory,stillworks in numer ous social arrangements, and, is still believed in as a business prin ciple at many levels. It is easy to see why attraction always supplies the highest out put of ~reative"and' produ'ctive energies. When "compulsive tactics are followed, a large amount .of energy must be expended. simply in overcoming the resistance and inertia of those being forced to submit. But where there is mu tual attraction and agreement, the energies of all parties to, the ar rangemen.t are available for pro ductive use. This would be true of almost any social organization, whether a simple neighborhood as sociation or _a national govern ...

mente To some extent, it explains why the fledgling America quickly outdistanced -the armed monarch ial states of Europe _in. the last century. Few of the nation's en ergies had to be' tied up in appa ratus for compelling reluctant minorities to go along with-the ruling powers, and-we're, therefore free for other uses. How did attraction function in the 'American past.?W ell, ,we can only conclude, that immigrants came to the United States in droves because they were attracted to it and fed up with compulsion. They were attracted' by the, prom ise of economic gain and more freedom; but at the outset many 1967 ALTERNATIVE TO COMPULSION 609 of them had to make great sacri fices in order to get out of their native countries. The· attracting force was so great, however, that they came by the millions, endur ing stinking, dangerous ships and facing huge initial debts in orde·r to make the change. Once in America, they began to make a place for themselves because they were attracted by the prospect of betterment.. Most of us who are rather well off today owe much of our good fortune to determined ancestors who had the courage to break out of stifling conditions in feudal Europe and try something new.. Compulsive measures neve'r could have done the job of settling the United States a tenth as well.

Closed-Shop Methods What about social arrange ments? It's tempting to use legal means to force groups of peopile with: a common interest into an association, which is the kind of thing that tends to go'on today in union organizations and pro fessional societies. The latter, in particular, are choosing compul sive measures up to the limits of their powers ; and anybody who belongs to such a society fre quently hears discussions of meth ods to exclude certain people' and, at the same· time, to force others to belong. The medical, dental, and legal' associations are masters at this kind of thing,and are stI."engthened by the fact that practitioners in their fields must be licensed by states. Other pro fessional groups are not far 'be hind, however, and we seem to face a future in which themem bers of every profession will be able"to control their memberships and to pass judgment on' whether a newcomer to the field can be admitted.

The pretext of this kind of com, pulsion is usually "protecting the public" and "raising the stand ards of the profession." There's no denying that associations' prob ably do elevate' professional stand ards and help circulate vital in formation among their member ships.At the same time, however, all of them are powerful interest groups-seeking additional advan tages for their members. There's nothing wrong with interest groups, but they should not have the legal right to use certain com pulsivemeasures that' excIud'e some-andf orce others to belong against their will. We need not fear that denying them a means of compulsion will destroy profes sional standards or leave the pub lic wide' open to fraud and bad practice. Any association can sur vive by· making membership in it attractive to potential members; and it can win public support for its causes by offering convincing 610 THE FREEMAN October proof that its members· do provide the best services.

Attracting Cooperation Attraction also. offers solutions to social problems such as the present conditions of Negroes and other minority groups in the U.S. Most of .. the measures presently being advocated involve one form or another. of compulsion, and some of them have succeeded·· up to a point. There's no question, for example, that pressure from the Federal government has created employment.. opportunities in a number of industries that were probably closed to Negroes before 1960. But. compulsion .has not ac complished the j oh to anybody's satisfaction; and without the con stant application of outer pres sure, conditions. would tend to re vert to what they were before 1960. There are, after all, many rea sons why it is good business to hire Negroe's on an equal basis with anyone else. Prej udices were so deep-seated in almost every or.. ganization that few people real ized this, and the groups working in the civil rights field were al most totally obsessed with. secur ing legislative remedies. Now there is widespread disillusion ment because the legislative reme dies are failing to produce the desired results, and instead of re..

appraising the philosophy of com pulsion, its proponents are simply calling for more of it.·We can ex pect, therefore, that the people at whom this compulsion is aimed will continue to. follow the letter of the law, but rarely.· the spirit of it. Pleasing the Customer It's primarily in our commercial activities that we seethe most lively functioning of the forces of attraction. Throughout the United States, thousands of sellers bid for our attention, and work con stantly to develop products and ideas that we'll want to buy. Some times these attempts to win ··us over become tiresome and irritat ing, but we wouldn't really want it any other way. If 'somebody has· to· make his proposal or prod uctattractive to us, this means weare still being allowed to choose; and where there is a meas .. ure of choice, there is probably a certain amount of freedom. We expect a great deal from the merchants who want our business, and we really have little· sympathy for the enterprise that fails be cause it neglected the needs of its customers. Most of us are custom ers a good deal of the time, and we expect to be attracted. to our pur chases. If a businessman is able to make his products and services attractive to us, we're still willing 1967 ALTERNATIVE TO COMPULSION 611 to reward him handsomely for it, and he in turn is able to attract additional capital into his busi ness and thereby grow to· draw even more customers. It is hard to see how anybody is inj ured by this process, except perhaps the busi ness competitor who ignores the wants of the customers. The gen eral public, the investors,and the employees of the enterprise all gain, while the nation as a whole is made richer. Best of all, it's done without depriving anybody of his freedom or his right to choose.

Right now, however, the idea of attraction is in eclipse with little support among the restless groups seeking change and personal bet terment. Attraction will always lack appeal to impatient people. Attraction's chief disadvantage is that it cannot work except by the fr:ee choices of the people, while compulsion can bring all sorts of extraordinary projects into being for the short term. Compulsion is the chief tool of unimaginative people whose most prominent trait is considerable contempt for the nature of man. Attraction, on the other hand, is the hidden force that holds the universe together and makes the birds sing and the flowers grow. It is the creative power that causes free men to get things done. It will last forever. ~ Healthy Discontent You MEN AND WOMEN of the advertising profession are the high priests of the cult of discontent. You are peddlers of the healthiest kind of unhappiness.

You hold the carrot of temptation and desire before the con suming public. And we reach for it. And, in reaching, we create movement, action, progress. You stimulate our desire for improvement. You whet our appetites for better food, better cars, better homes, a better education, finer suits, smarter dresses. You fan the flames of hope and aspiration. And hope, perhaps, is the most powerful force in our world today. For, without hope, the future becomes a pattern of monotony. Without hope, without dreams, without aspirations and ambition, our future world would indeed be grim and gray. C H A R L E S L. G 0 U L D, from an address to the Advertising Federation of America Decisions and Progress ALE~ANDER EVANOFF THE PHILOSOPHY of individualism has these suppositions on the ed ucability of man. It believes that no one can teach anyone any thing, that no one can tell anyone anything which the individual does not already know, or is pre pared inwardly to accept. This is true of individual preachments as well as governmental proclama tions of truth and justice. The in dividual learns through his own abilities, limitations,·. and experi ences. Therefore, the broader the scope for individual action, the broader and the greater the num ber of experiences, the better ..The less imposition or interference from above, the better.

Learning is a matter of inward readiness, a matter of something Alexander Evanoff is Professor of American Studies, Department of English, Indiana State University at Terre Haute. 612 inward feeling a recognition and a correspondence with something outside the individual. If the in ward readin'ess and preparedness based on thought and experience does not exist, the outward mani festation of thing·· or idea is not re'cognized . .Education, growth, development are a matter of inward ripeness. The more decisions an individual makes, the more· rapidly he pro gresses. It is actually dangerous to withdraw possibilities for de cision-making from the individual. Paternal action on the part of a presumably wiser entity, or gov ernment bureau, to save the in dividual entity trouble, requires the utmost probity and nicety of discrimination so as not to hinder more than help: because the blessed privilege of blundering may be more rewarding in devel1967 DECISIONS AND PROGRESS 613 opmental growth and creative function than to be deprived of the right to blunder by a ready made and imposed decision.

Individual development, prop erly conceived, hinges up,on deci.;. sion. Even a mistaken decision may result in . considerable ad vancement. The individual moves by making mistaken decisions or happy choices, as the case may be. Whenever a person's decision is made for him, he is deprived of a certain opportuni ty and, there fore, in a sense, of a certain prop erty. Whoever may have made,the decision .has robbed him, even with the best intentions in the world. A person may gain certain easements· unearned, when a deci sion is made for him, but at the same time he has been forced to forego a chance for certain self building which the process of earn ing would have accomplished for him. Decision is the vital principle of individual progress, and cannot be taken out of the individual's hands without far-reaching harm. Whoever or whatever makes a de cision for someone else, either tbrough the operation of force, prestige, faith, or prerogative, in a very real sense steals from the person for whom the decision was made.

We are in a world with just so many opportunities of choice, of right choice or wrong choice, just so many opportunities for learn ing from the results of our choices. Presumably, we are placed in this world to determine what is worth the .. choosing· and what is not worth the choosing. Each time we permit someone else to deter mine for us what is within our own choice, we have allowed some one else to dip into our pocket and to take from us a bit of prop erty that cannot .be replaced. We could not think· kindly of a friend who took property from us more precious than gold. An in dividualist could not thank any body who took away from him a legitimate and never-repeatable opportunity for progress. It will not come again. If the moment is taken away from the individual, he is that much the poorer for eternity. A man's purse may be stolen and restitution made. But if a man's opportunity for mak ing a decision is stolen, that which can never be returned to him has been taken from him.

Each decision made is a step in the individual's development. Once passed, it is gone forever. The individualist cannot thank anyone - parent, .priest, or gov ernment official-who deprives him of the opportunity to grow through the making of decisions. + MARTIN ··ANDERSON • The Federal Bulldozer has seen a lot of mileage since Dr. Ma:rtin Anderson's critical analysis· of urban renewal was first published by M:.I.T. Press in 1964. Now the book is available in a 1967 McGraw-Hill·· Paperback edition at $2.45, and also may be purchased from The Foundation for Economic Education, Inc., Irvington-on-Hudson, New York. The following article is reprinted by permission from the author's new introduction to the paperbacked edition, pertaining to developments in the urban renewal field and his experiences since first publication of The Federal Bulldozer. Martin Anderson is now Associate Professor of Business in Columbia University Graduate School of Business.

SINCE The Federal Bulldozer was published by the M.1.T. Press I have traveled throughout the country, speaking at universities, public gatherings, conventions of professional groups, and public policy forums. I have appeared on a number of television and radio shows, testified at Congressional hearings, received hundreds of letters and phone calls, and an swered thousands of questions. One question I have often been asked is this: Now that you have had a chance to re-evaluate your 614 study and conclusions, are you still satisfied with them? The answer is yes. To my knowl edge, the extensi vesearching cri tiques of my study have not turned up a single significant error in the analysis, and the experience of the last two years has strength ened' not attenuated, the conclu sions I drew from my original findings. At this moment, thou sands and thousands of people are being forced to leave their homes, the private property of some peo ple is being seized with the inten1967 THE FEDERAL BULLDOZER 615 tion of turning it over to other people for their personal use and private gain, thousands of homes -most of them low-rent units and businesses are being destroyed by the wrecker's ball and the bull dozer, and billions of dollars of your money and mine are paying for it.

Is It Right? The question that we should have asked in 1949, when the Fed eral urban renewal program start ed, is long overdue now: Is it right to deliberately hurt .peo ple, to .. push around· those who are least able to defend. them selves, to spend billions of .dollars of .the taxpayers' money, so that some people might be able to enjoy a prettier city? That .answer is your own, and for those whose morals permit them to .answer yes, there is another question:· Has any city been "renewed"? Here the answer is no. The Fed eral urban renewal program has been, and continues to be, a thun dering failure -withoneimpor tant exception: it has exhibited an amazing talent for continued growth. The reaction to failure has been a policy of escalation whose most recent manifestation is the so-called "Demonstration Cities" program. But while urban renewal has increased in size and scope, its basic nature has not changed. The urban renewal pro gram is essentially the same as it was when this book was first published.

In the book I offer the economic system of free enterprise as a viable alternative to the govern ment program,. and point out that it would not force people from their homes, that it would not take homes, ·land, and buildings from people without their consent, nor WQuld· it cost a dime of the tax payers' money. I have since dis covered that this alternative is un known and unthinkable to many people, either because they know so little about modern economic theory or because they have a deep-seated antagonism toward the economics of laissez-faire capital ism. I am insistently pressed for a "positive" alternative, which, to the questioner, invariably means an alternative government pro gram. freedom Is an· Alternative One does not have to offer any alternative government program for two reasons. First, .to presume that any valid alternative must be a government program is·. to take a blatantly unintellectual po sition. Second, and more impor tantly, the Federal· urban renewal program, by itself, is a bad pro gram.· It is causing harm, and its 616 THE FREEMAN October very elimination would therefore be an improvement. To suggest that one should not "stop harmful government .action ... until one has thought of new government action is absurd. In fact, one·of the most efficacious ways to improve the present and future living condi tions of all people in the United States would be to repeal the urban renewal program as soon as prac ticable.

Of course, local, state, and Fed eral governments could· do many things to further increase the quality of housing after the urban renewal program was repealed. The basic thrust of this govern ment action should be in the di rection of eliminating the laws and regulations that are, to a signifi cant degree, throttling the housing market today. But the main factors that will improve living conditions are (1) increased personal' incomes and (2) improved· housing technology that· will lower housing costs. The greater the degree to which our economy is free of government intervention, the faster this will occur . The details of how this would be accomplished are far too involved·' to attempt to discuss here; I hope to say considerably more about it in the future. liThe Public Interes'" One of the minimal things that any intellectual should be able to do is to define the meaning of the key terms which he uses, and· a favorite term used by many of today's intellectuals is that fa miliar phrase, "the public inter est" - alias the public good, the common interest, the consensus, the national interest, the common welfare, etc.

The urban renewal program is often justified as being in the "public interest." As with other things that are justified in the name of the public interest, it is revealing to inquire into the exact sense in which the term, the public interest, is used. "Public" refers to those people (all of them) con stituting a community, state,or nation; "interest" refers to some thing which is of benefit or ad vantage to someone. Literally, then, the public interest would have to be something that is of benefit to all the people. This is patently untrue with re1967 THE FEDERAL BULLDOZER 617 gard to urban renewal; here the benefit of some is always obtained at the expense of others. In to day's context, the public interest has become a synonym for. declar ing that, in the speaker's or writ er's opinion, the deliberate, inten tional sacrifice· of the interests of one group of people is justified hy .the. benefit that accrues to another group of people.

.The issue that. users of euphe misticphrases like the public. in terest evade, consciously or un consciously; is the sacrifice of one man's·· interests to another's. And they evade for good cause: how far would the proponent of some new idea get if he' qirectly and clearly stated that citizen X should be injuredto benefit citizen Y be causethe proponent feels that the benefit citizen Y receives justifies the injury X suffers? Concerned with Power I have had the opportunity to talk to a number of community leaders in cities where urban re newal was being considered. Dur ing thes,e conversations I was par ticularly interested in finding out why certain people strongly ad vocated the program, and I was surprised to find a consistent theme running· through their off the-record statements. They were not seriously concerned .with the poor people living in the areas they had tentatively marked for renewal; they were not concerned with •any personal financial gain; they were not even very concerned with getting a substantial amount of cash from the rest of the tax payers via .Washington. But they were concerned with power.

Again and again -:- from bank ers, politicians, newspaper editors, businessmen,and even religious leaders - I heard statements like these : "Well, I've tried to buy property in that area of town, but the owner won'tseH at a reasQn able price. Somebody has to make him sell at a- 'fair'price. Who does· he think· he is, standing in the way of· the whole city?" Or, "We need at least a whole block to do anything worthwhile;. we can't fool around trying to buy-, a lot here and a lot there. Besides some ·old man may feel attached to property that's been in his family for years. We can't wait for him to die.' We need the tool of eminent domain." In essence these "community leaders" are saying that they have no compunction whatsoever about invoking the'police power of the state to accomplish by force what they cannot accomplish by persua sion. If they can't· persuade an old man to sell his property, then they will" make him sell, and use the strong arm ofa healthy police man to back up their demand. As 618 THE FREEMAN October one particularly obnoxious editor of a major newspaper put it, "We want to get this done,· and we don't care what we have to do to get it done."

The Power of Eminent Domain The keystone of urban renewal is the power of eminent domain; private property is taken by force, or by the threat of force, for the advantage of others. How many of those who· advocate, .support, and run the program could bring them selves to do personally what their actions will eventually imply? How many would personally seize an aged couple and bodily evict them, while listening to their cries of protest? We could ask other questions. What happens to a businessman's sense of justice when he is told that his business is to be destroyed to make way for someone else's business? What happens to the Negro's sense of justice when he discovers that twothirds of those displaced are Negroes? What hap pens to a slum-dweller's sense· of justice when he . is forced out of the home he does have and then is told that he must uphold the laws and not riot? Perhaps one small step we could take in easing the problems of slum dwellers is to stop taking away that little which they do have.

There are many important issues in the· urban renewal ques tion, but there is one which is both the most important and easi est· to understand. The local gov ernment must have the power to take by force the private property of .one man - his home,· his land, his.· business - with the intent of turning it over to some other man for his private use and personal gain. It is on the acceptance or rejection of this principle that the fate of urban renewal rests, for without the power of eminent do main local governments could not force people to surrender· their homes, their land, and their busi nesses. If local· citizens are not aware of the deliberate sacrifice·· of some individuals to the personal inter ests of· others - or· worse, if they approve of it....;.urban renewal will spread. If they are aware of what is going on, do not approve, and take actions that match their con victions,· then urban renewal will not continue.

If you have been forced out of your home, if your property has been seized, if your business has been destroyed....;.then you know more about the consequences of the Federal urban renewal pro gram than any book, article, or speech can tell you. You know that the program is outrageously un just, but for you,· and a million others in the same position, it is 1967 THE FEDERAL BULLDOZER 619 likely that nothing will be done to rectify this inj ustice. Prospects for Victory But if you are threatened with the prospect of being "renewed," there is an excellent .chance of de fending yourself -if you are will ing to spend some time learning the facts about the program, and if you have the courage to speak out in public for what. you think is right. Your ammunition. is knowledge of how the program works and what it does. Your weapons are any means by which you can communicate this knowl":' edge to others in your community.

From conversations I· have had with many people throughout the country, lam convinced that the vast majority of them are opposed to the means employed to. gain the ends of urban renewaI.But even today very few people know what is happening. A few articulate people - who somehow never· can bring themselves to mention any of the strong-arm tactics that are necessary - have .portrayed urban renewal as the· program that will "save" the cities. In view of the skillful,extensive propaganda for urban renewal, it is understandable how many busy, influential people who could have checked the program have ac cepted what has been said about the program at face value. Many have even committed themselves publicly on this issue, and now, even though they may have devel oped doubts about· the program, hesitate to recant for fear of ap pearing foolish. But men can make honest errors of judgment. It is no reflection on a man's character to acknowledge a previous error in the light of new information; it is a reflection ona man's char acter if· he persists in his error.

One .of the most .dangerous threats to urban renewal is. wide spread knowledge of its nature. As a director of one of the largest urban renewal operations in the country once remarked to me, "The only thing urban renewal can't stand is publicity." Today many people feel· that it is useless to try to fight "city hall" on something as big as this, and the proponents of urban renewal desperately hope they will continue to feel this way. The initiation of an urban renewal· program is es620 THE FREEMAN October sentially a function of the local government, and .until the opposi tion grows to the point where con'" gressmen will act, . the only prac tical way to stop it is on the local level. Many communities have re jectedurban renewal in the last four or five years, but it has never been rejected without at .least one person in the community taking a public stand· against it. The Fort Worth Case Let me give you a recent case example. On April 12, 1966 there was a referendum vote on urban renewal in Fort Worth, Texas.

Fort Worth is the thirty~fourth largest city in the country, and is perhaps the largest city to date that· has brought the matter di rectly to the voters. In Fort Worth there was widespread support for the program among the city's leaders. If there is such a thing ·as an "establishment," virtually the entire establishment came out strongly in favor of urban re newal. The Mayor was for it, all the city councilmen (except one) were for it, the Chamber of Com merce was for it. The newspapers editorialized for it, and large real estate developers flew in and threatened to ignore Fort Worth in the future if the citizens did not approve urban renewal. Spe cial committees were formed, and tens of thousands of dollars were spent promoting the program. To almost everyone it was a foregone conclusion that .urban renewal was .coming in. Neverthe less, a small group of people stub bornly decided to fight the pro gram on principle. Sparked by the local Buick dealer, they formed the Citizens Committee for the Protection of Property Rights.

They were convinced the program was wrong and set out to present their· case to the· public. First they learned·· as much as they could about the program what the law is, how it works, who would lose their homes and businesses,. how much· money it would cost, where the money would come from, and so on. Then they started an educational cam paign. They set up an informal speak ers' bureau and addressed local social gatherings, civic organiza tional functions, and business 1967 THE FEDERAL BULLDOZER 6·21 luncheons .. They presented the facts and answered questions. They compiled lists of voters, wrote and mimeographed letters, sent for reprints of articles on urban renewal, and then mailed the letters and articles to the voters. They tape-recorded short mes sages, bought radio time and broadcast the messages; they wrote short newspaper ads and ran them in the local papers. They attended urban renewal meetings, they asked questions; they contacted their local repre sentatives in person, they wrote to the Mayor, and they wrote let ters-to-the-edi tor.

They called their friends, and they got offers of volunteer help and donations of money. They vis ited nearby towns, talked to peo ple who had experience with ur ban renewal, and found out first hand what happened when the bulldozers moved in. And then they went back and did what they had done before all over again. The election took place on a Tuesday, and they engaged me' to fly down from New York to ad dress a public meeting thepreced ing· Friday night. Four hundred people attended .. Before I left I taped a half-hour television speech for them; by this time enough people had become concerned so that contributions to their campaign were sufficient to buy a half-hour of television time on both Sunday and Monday even ings. I left Fort Worth on Saturday, and the general consensus, with which I agreed, was that the prop aganda guns for urban. renewal were just too big, and that it was almost certain that· urban renewal would come to their city. These feelings were confirmed on Satur day when the Mayor announced the results of a poll made by a profes sional organization specializing in opinion research. The poll flatly predicted that urban renewal would be approved by a substantial margin - but only if there was a very heavy turnout.

Overwhelmingly Rejected On Tuesday evening, city elec tion officials commented that the turnout of voters was very heavy; the City Secretary predicted that approximately 24,000 people would vote. But something happened on that Tuesday in Forth Worth. On Wednesdaymorning the tally showed that 47,545 voters had gone to the polls and 38,397 (over 80 per cent) had voted against ur ban renewal. The number of peo ple voting was double what any one had expected, the urban re newalproposal was defeated by a resounding 4 to 1 margin, and de622 THE FREEMAN October feat was overwhelming in virtu ally every precinct. A handful of amateurs had taken on a group of highly organized professionals and won. I, and perhaps everyone else who had followed the campaign, was surprised, but perhaps we should not have been. The aver age American citizen is a very in telligent, thoughtful person - once he knows the facts.

If there is anything that would strike fear into the minds of ur ban renewal proponents, it would be an outbreak of locally orga nized, articulate opposition to local renewal programs. The local re ferendum vote has proven to· be the most successful way to fight urban renewal, .perhaps because it brings the major issues out in the open for public discussion. Un fortunately, in some localities re ferendum votes are not possible, and then the only recourse is to the elected officials. However, a bill is now pending in Congress that would make a referendum vote mandatory on any renewal project. Of cours.e, there is always the possibility that a majority of the voters will vote to gain at the expense of the minority, and their approval will not make the pro gram right. However, until the program is repealed at the na tional level, a local referendum vote is a· potent weapon. Resist on Principle One of the standard ploys of the proponents of urban renewal· is .to assert that the program is "here to stay," and that the only possi ble course of action is to figure out the·most a.dvantageous way·to collaborate with the program. This is doubly· unfortunate - first be cause the assertion is not true, and second, because the act of acqui escing in principle to the program is what makes it possible.

Urban renewal has been rejected by at least 70 towns and cities that I know of, and unquestionably many more will reject it in the future. What the advocates of ur ban renewal programs dread· the most is opposition to the program on principle. With the cunning of any seducer, they know· that ·if you will agree to just one instance of forcing a person from his home, to just· one instance of seizing 1967 THE FEDERAL·BULLDOZER 623 someone's home .and . land, to just one instance of closing down some one's business, they can then, at their leisure, use the principle you have implicitly adopted to force you into accepting its .wider and wider use. Once you have agreed in prin ciple that it is .all right to harm just one man in the name of help ing the "community," you have lost and you cannot effectively ob ject to anything done in the name of .urban renewal.. Inexorably the logic of your position will be ex tended to cover more people, more homes, and more businesses. And, once· committed, you can only change your position by admitting your earlier error. Unfortunately, most people, particularly those who have committed themselves in pub lic, are loathe to retract.

But to those that have not given in on principle, and to those who are willing to reconsider their po sition, the possibilities of success fully opposing any local project are surprisingly high. Virtually all urban renewal projects now in existence got there without the local· citizens knowing very much about it; .dimly aware that the proposed urban renewal program was somehow going to get. rid of ugly old buildings and create new ones·in their place, and being very busy with their own affairs, they casually condoned it. Motives Are Suspect Until now I have always given proponents of urban. renewal the "benefit of the doubt," and have rarely questioned their motives or their morals. I have accepted their assertions that they are sincerely concerned about people, that their intentions are to improve the liv ing conditions of the poor, and that the· tragedy and suffering caused in· the .process were not foreseen by them.

But. 17 .years have now passed since the program started and everyone conne~ted .with it knows exactly how it works. The excuses have worn thin; the earnest as sertions .have lost validity, and the credibility gap in urban re newal is very wide. Increasingly, I find that my criticisms of the program draw the whining reply, "But the program was never in tended to improve the housing conditions of the poor slum areas -the real· purpose of· urbanre newal is to rebuild the city. It's not fair to blame us for what's happening." When pressed on what is happening to the displaced people, they either evade or retort revealingly,"Look, some people are always going to be hurt, that's the way it is." The fact is that every intelli gent, knowledgeable. proponent of urban .renewal. is willing to delib erately hurt innocent people, most 624 , THE FREEMAN October of them Negro and. poor, for the sake of contemplating and enjoy ing a few new bricks, a little grass, and .some shiny glass. They will protest that they don't like to do it, that. they, are trying to ease the pain as much as possible, that they wish there was something else they could do-but they will do it.

Too much is now known about urban renewal to make allowances ; the proponents know .what they are doing, and we should take their actions at face "valtie.Per~ haps it would be wise to recall an old .legal .. maxim,. acta exteriora indicant interiora secreta (out ward acts show· the inward· ~in tent). Increasing Re,sistance More and .more: people are··be coming .·very concerned with the consequences of the. urban renewal program, and many of them are speaking out. On April 14, 1966 members of the', United' States Commission on Civil Rights in vestigated Cleveland, Ohio, and charged that urban ·,renewal. and other, Federal programs were rna'" jor causes of the despondency and decay that exist in one area there. The area, incidentally, was Hough, which later in 1966 was marked by brutal rioting. One well-known member of the Commission, Rev. Theodore Hesburgh, the President of Notre Dame University, condemned the program as immoral. He was quoted in the New York Times 1 as saying, "In these Federal pro grams to rebuild the cities what has happened is that people in the worst condition find their houses bulldozed from under them. The total program:is immoral." [My italics] Urban renewal is a vast pro gram, and it is sometimes difficult to understand its impact on a sin,:; gle person's life. I' have, included below some·· exc'erpts .from one of the many hundreds of letters I received since the publication of the book. This particular letter was sent toPresidentJ ohnson, and I received 'a carbon: March 28,1965 My dear President Johnson: The Federal ,government seems to be taking a firm stand •in defending the human .. dignity and the human rights of American. citizens inmost areas of "the Great SoGiety," but I have .yet to hear any thing. about the dignity and rights of the small hO,me owner whose property lies in the way of urban renewal and whoconse quently is being victimized, 'destroyed even, by an immoral concept of' the law of eminent domain.

I am a school teacher with a ninety two-year ...oldfather who is depen,,; dent on me. Dad was ninety-two last February 25. Since he'. is crippled, 1 N ew York Times, April 5, 1966.

1967 THE FEDERAL BULLDOZER 625 having sustained a broken hip just two years and nine months ago, and is blind of glaucoma ... he cannot be left alone while I am at work. The only reason I can afford to give him the nursing care he requires is that we own our home here ... free and clear. The city wants this house in which Dad has lived for forty years and more. Or rather the university wants it and, under the guise of the law of eminent domain, is demanding it. For nearly five years now since the whole idea of urban renewal was conceived, it has seemed to me that I have been living in the U.S.S.R. rather than in the U.S.A. I have been harassed and terrified both at home and at work by telephone calls and threats includ ing a court summons from City Hall because I refuse to admit anyone who threatens this home which my father has provided for himself through his own industry against the old age and infirmity of which he is now a victim.

At one time, my attorney, whose aid I had to enlist, had all he could do to prevent City Hall authorities from sending a police wagon to my school to haul me off to court .... In addition to all this harassment and persecution by City Hall in the last five years, we have been sub j ected to the noise and filth of the demolition of six to eight houses directly across the narrow street from our home, and we have been terrified and terrorized by all the vandalism and hoodlumism that ac company a demolition. Now a univer sity parking lot has been completed on the site of the demolished homes. We endured that, too.. Temporarily we are having a little respite from the noise and dirt and confusion of tearing down and rebuilding, but the harassment and persecution by City Hall have resumed. I am stalked peri odically in my own driveway when I get home from work by so-called "in spectors" who demand entrance into my house. So far I have been able to keep them out. Mimeographed notices from "your relocation counselors"

have been shoved under my front door, ordering me to call such and such a number or else. Now I ask you, Mr. President, what do I, a teacher of more years than I care to say, a ... University gradu ate, a Phi Beta Kappa (judging from some recent appointments of yours you seem to set great store by these 626 THE FREEMAN October letters) , with a year's graduate work at Yale University, need with a re location counselor? Just because I am poor by your standards does not mean that I am an idiot. Nor do I appreci ate it when your aforementioned City Hall officials add insult to injury by suggesting that for $12,500 they feel justified in uprooting an old man from his home and in destroying a way of life for his daughter. I just want my rights and my dig nity recognized. . . . Avoiding the Damage If we are concerned sincerely with the well-being of individuals, the main issue before us is not how to help a person who has been hurt by urban renewal, nor is it to figure out ways by which his pain can be alleviated - it is to determine how this pain can be avoided.

All other questions, such as How can home owners and small businessmen participate in so called renewed areas? Should dis placed people-get increased Fed eral aid? How can people be forc ibly displaced with the least suffering? - stem from ·the implicit ac ceptance of the idea that there is nothing wrong with forcibly push ing people around in the first place. Anyone who is for an urban re newal program must also be for, at the same time: • The forcible displacement of millions of citizens from their homes. • The seizure-of one man's pri vate property for some other man's private use. • The destruction of hundreds of thousands of low-rent homes. • The spending of billions of dollars of the taxpayers' money. This kind _of a program is not logical, it is' not practical, and it is. not moral. For no government program should exist that threat ens the life, the liberty, or the property of any person. No per son, no matter who he is, should be sacrificed for the esthetic pleas ure or personal gain of anyone, no matter how educated, how rich, or how powerful. ~ Eke £iietfoi £iberalism Oft fkelamJlus JOHN A. HOWARD As the central government in creases the range of activi tie-s which it plans or regulates and conducts or subsidizes, .there is a corresponding decline in the in itiative in the decision-making and in the acceptance of responsibility by lower levels of government, by private industry, and by individ uals. This accelerating transfer of power and action is, in my opinion, grievously destructive of our form of government, our eco nomic system, and the character of our citizenry.

There are many agencies work ing in behalf of this transfer of responsibility to the central gov ernment, but probably the most in fluential is the academic communDr. Howard is President of Rockford (Illinois) College. This article is reprinted by permis li86lrom New York State Taxpayer, January, ity as it conditions the thinking of the younger generations and as its prevailing attitudes are ex tended through speeches,· articles, and consulting services. It seems to me that those who are concerned with the erosion of individual initiative and the grow ing limitations on private enter prise need to turn their attentions to the colleges and uni versi ties as a prime generating force of collec tivism. These attentions need to follow several paths. First, there should be a careful analysis of the ac curacy of the present assertions. Second, to the extent that institu tions of highe'r learning are heavily weighted or wholly domin ated by a philosophy of public as opposed to private responsibility, a concerted effort should be made 627 628 THE FREEMAN October to persuade such institutions to appoint to the faculty and in other ways bring into the educational process, people who have faith in the powers and the consequences of private initiative. Third, those few colleges and universitie·s where the voices of individual re sponsibility are forthright and public should be provided with the financial resources to become at least as powerful as their sister institutions which are militant fac tors for collectivism.

How Private Enterprise Encourages Collectivism It is a great irony that individ uals and corporations whose in comes are earned through the pri vate enterprise system continue to support colleges and universities which are in fact, if not in intent, undermining that economic sys tem. On many campuses, the atti tude prevails that profit is a dirty word. The irony is compounded be cause it has taken generations to bring educational donors to a recognition that the effectiveness of the educational process depends upon the freedom of the academic staff to conduct their work free of pressures from the donors. The in troduction of massive Federal funds on the campus has radically changed this circumstance. The Federal government exerts an enormous influence on the educa tional process. In many ways, the government serves its own ends and adds to the pro-government, anti-private-initiative bias on cam pus.

The Federal involvement in edu cation has reached such propor tions that it is unlikely that a ma jor university can, without sacri fice, select a president who does not have extensive personal con tacts with Washington officials and who does not maintain their friendly confidence. In the present situation, the few institutions that do stand on the principles of individual responsi bili ty are allies of the most critical importance to those who would preserve private initiative. ~ The Dispensation ofTeaching MAX s. MARSHALL IT IS TIME to review all usage of drugs, not just a few which are popularly discussed or those used by physicians. Notables continue to advocate the use of drugs, a bias to which many undrugged persons object. Along with in creasing numbers of products which affect the mind, a schism is developing. Eve was invented a long time ago. If you doubt that she affects the mind, you may be in for an argument from a lot of adver tisers and makers of movies. Al cohol goes a long way back in his tory, too. It is one of the few Dr. Marshall is former Chairman of the De partment of Microbiology of the University of California Medical Center, San Francisco, with 38 years asa teacher.

survivals which ultrasophisticated modernists do not scorn because of its antiquity. Athletic events, symphonies, and parties are drugs to many persons. These examples suggest that a preliminary survey of drugs on a scale broader than usual is essential if we are to reappraise the whole matter in search of a little undrugged san ity. Let me cite an important ex ample. A drug with which society is tremendously preoccupied is called Teaching, the trade name of a drug extracted from members of the botanical genus, Paedagogus. A glance at that segmented tax dollar that appears in the papers annually will show the huge size 629 630 THE FREEMAN October of the sector which goes to schools. Vast sums which are not part of the labeled tax dollar also go to schools. The nearest rival in popu lar usage is alcohol, but Teaching comes first on my list of drugs. A drug is a substance used de liberately to affect the physiology, including the mind. That is why Eve and Teaching both qualify.

Eve operates out of pure deviltry, but Teaching is purchased with tax monies in countless case lots to use on whole groups of minors. The grip that drugs have' on us and our rationalizations of their use are equally shocking. Teaching is purposely bought to affect the minds of those who take it. Its toxic effects are many and uncertain. It is hallucinogenic, and can produce a lasting eupho ria, though usually this effect ceases. soon after the next exam ination. Teaching is frequently used in heavy overdoses, for con trol of the dosage is notoriously difficult. Furthermore, the popularity of Teaching attests to the fact that it is habit-forming. Though new comers to this drug are likely to show marked resistance to its use, when taken they are more than ordinarily susceptible to its effects. Later users become so addicted that they expect everything to be dispensed in courses in schools.

There is much talk about drug addiction in the form of adult edu cation. Seriously afflicted addicts are always enrolling under a teacher somewhere. Even tough industries and businesses have been so infiltrated by users of this drug that they call for ever increasing amounts of it for those they. hire. Employees are even 'urged to go back now' and then for more be-ins with the drug. Unnoticed in the face of the dramatic and less subtle use of alcohol, this shocking adulation of a drug deserves a careful study. Space permits no more than a sug gestion of what is needed. Research Possibilities The first move should be a mat ter of public relations, for Teach ing, though one of our most com mon drugs, is not yet recognized as such. Since it pours funds will ingly into all phases of schools, no doubt a grant could be secured from the government for .this task. Pharmacologic studies come next. Such studies consider the nature of the drug, its physiologic effects 'under different dosages, in cluding its toxicity and the lethal dose, and the mechanism whereby the effects are produced. All these are directly applicable to the drug, Teaching. Our interest in drugs is primarily in connection with man, so we have to distinguish 1967 THE DISPENSATION OF TEACHING 631 carefully between beneficial doses and toxic or lethal doses. Such ranges exist for virtually all drugs.

Applying the principles of study specifically to Teaching, three problems dominate. First, the dis tinction between beneficial and toxic dosages is precarious, not sharp as it is with alcohol, for ex ample, though debates about bene ficial doses of alcohol have also been known to occur. Second, as with all hallucinogenic drugs, the toxic doses offer special difficulties because effects on the mind are measured primarily by behavior, an uncertain and complex yard stick. Third, the mechanism of action is obscure, as it is with many drugs. Sociologists will be quick to un derscore a fourth problem, and well they might. They are con cerned over the effect of any drug on society, and all of them, Teach ing included, have such effects. Earlier Experiments A few illustrations may help to illustrate the need for a com plete investigation. Consider the manner by which Hitler and other dictators have used Teaching.

Whole nations of youth were de liberately given toxic doses, that their minds would perform in ac cordance with someone's wishes. Similar usages exist today. Under the same sort of influence, the drug is also used outside of schools, in all forms of propa ganda from nationalism to no tionalism, in politics, in adver tising, in merchandizing, in ad ministration, and wherever one person or group wants to impose the chosen desires or ways on others. Recently an eminent spokesman for a large educational organiza tion advocated that teachers take a greater part in politics, thus deliberately pushing the use of this drug, Teaching, into the realm of toxicity and habit. Teach ers, who administer Teaching as licensed practitioners, like the rest of us have religious and political beliefs and also preferences in bridge partners and in salads, but the deliberate use of position to foist these preferences on others is an almost fiendish use of the drug. If doses called beneficial mean anything, they imply that those who partake are given a basis for their own judgment, not fed doses which make them pas sive.

The advocates of such dosages are so evidently operating on the belief that they are entitled to domina,te others that the toxic levels used would seem to be con spicuous, but the danger passes unseen. This air of special wisdom is especially evident among some 632 THE FREEMAN October of the men who are employed as drug-dispensers of political sci ence. Instead of requiring that they either dispense beneficial doses impartially or that they step entirely out of the scholarly roles they claim, they are allowed to step into the open and campaign for their special choices, thus dis pensing toxic doses of Teaching indiscriminately to the unprepared and unwarned. We might suppose that teachers who dispense small doses of Teach ing, perhaps that three and two are five, or that assorted squiggles can be used to represent the oomphs and gurgles we use to con vey messages and ideas to one an other, might never border on the dangers of toxicity. To accept this supposition too literally gives a false sense of security.

Forming the Habit Whereas a number of modest doses of Teaching, like vitamins, are necessary for full develop ment, a careful study will show that no Teaching can be adminis tered without some risks -from the drug. Among those with allergy, even death may occur. Both by definition and by act a teacher im poses his or her will on the taker of the drug, a process which up sets the mental activities of the victim. To be sure, strong minds will accept the :t>enefits without loss of independent operation, but by -no means all minds among the takers are strong. Since strong minds exist also among the dis pensers of Teaching, domination and acceptance on a passive basis is a notably common occurrence. Teaching then reaches excesseS and may become a habit. We face a drug which, though it is necessary to prevent a sort of mental beriberi, is subjected with many other drugs to tremen dous exploitation and excessive usage, with all the claims, self pity, and rationalizations that ac count for the sale of more than half the pills in the nearest drug store. A drug notably low in its threshold of toxicity, with definite habit-forming proclivities and with a grave social menace, can call for only one reasonable course of procedure.

Teaching is a dangerous drug, but it is essential. Though strictly a hallucinogenic drug, affecting the mind, the mind does control our acts. With a low threshold of toxicity, the drug has widespread social connotations. It is a drug which is in some degree used al most universally, but which is con centrated in schools more than elsewhere. In schools and on campuses, dis pensers of this drug carry licenses from society, in the form of em ployment and titles. The more ad1967 THE DISPEN8-ATION OF TEACHING 633 vanced the title, the more dan gerous the drug, potentially and too often in fact. Professors at tain a feeling that whatever they dispense is for that sufficient rea son beneficial. This supposition is verified by ample evidence, most simply by the fact that professors disagree among themselves more than most groups, thus proving that the dosages prescribed by any one of them needs at least some counterbalance. In itself, the as sumption of such wisdom should warn society sharply into action.

Protective Labeling and licensing May Be in Order Studies of the drug, Teaching, are certain to lead to the conclu sion that our practitioners who prescribe so much of this drug, our teachers, need to be kept un der careful surveillance. The idea that this drug increases its bene fits the more it is taken is as false with Teaching as it is with aspirin or sleeping pills. Beneficial doses lead to independent opera tion, without the drug. Otherwise the drug is too heavy and the user becomes a passive addict, a social pawn, a slave to his political party, a puppet in his religion instead of a believer, a subscriber equally to charity and to the wiles of the con man, and a swallower of all statements positively put. Heretofore not clearly labeled as a dangerous drug, this drug war rants open criticism, warning, and action. Its use must be held at a low level with special care to bal ance the enthusiasm of doctors who prescribe the drug, the in doctrinators of the classrooms, for every form of Teaching, however mild, consists of the administra tion of a hallucinogenic drug.

Once this idea is exposed, then every form of the drug, Teaching, outside of schools and campuses as well as inside, quite properly will meet with some resistance. Those who partake of only bene ficial doses of this drug become judicial and to that degree skepti cal, preserving their own minds in good order to make reasoned decisions. They drive carefully. Only such persons can be called educated persons. Come to think of it, since the presentation of any ideais a form of teaching, these words contain some of the drug. Consider them to be equivalent to the warning message on a pack of cigarettes, except that the danger is notably more serious as a risk. ~ A SEARCH FOR REASON JEROME TUCCILLE IN AN AGE when rioting, hunger, racial warfare, exploding popula tion, crippling strikes, and general disorder have become the rule rather than the exception, it is a curious thing to consider that the responsibility for these destructive social diseases is most frequently attributed to a single universal scapegoat: the capitalistic system.

It becomes even more curious when we consider that these ac cusations are made daily, not only by the political leaders in Moscow, Peking, Havana, and Eastern Eu rope, but by most of the lead ing officials right here in the United States. We have accepted the basic premises of those who would destroy free enterprise all over the world and, instead of re futing their a.rguments with logi cal philosophical convictions of our Mr. Tuccille, new to F,REEMAN readers, is a freelance writer in New York City. 634 own, we proceed to a.pologize for our wealth and explain that we really are getting more "progres sive" every day and intend to share our prosperity with the "un derprivileged" of the world. When we are told that millions are starving in India while we "selfishly" enjoy our automobiles, refrigerators filled with food, pri vate homes, and other luxuries, what do we reply? Do we say that these people are victims of a crip pling religious heritage, that can be traced back to the Stone Age, a philosophical tradition that teaches them to hate the world and withdraw from it, and that starva tion is the logical end of such a heri tage? We do not. We accept the premises of our accusers, apologize for our prosperity as if it were at the expense of those who are going hungry, and export 1967 A SEARCH FOR REASON 635 tons of food instead of ideas which are most urgently required.

When we are told that capital ists are greedy moneygrabbers who exploit the poor, do we reply tha t in nineteenth century Amer ica the industrial revolution brought forth more enlightenment, advancement, individual freedom, and economic prosperity than the wor ld had ever known before? Do we say that without the indus trialists, the men who built fac tories and offices and created jobs for others, the average worker would be, forced to waste his labor grinding wheat or hammering out horseshoes as he had for centuries past? We do not. We tell the world that we intend to police the gre,edy tendencies of the capitalist, hand cuff him with government regula tions, and tax him out of business. When we are told that the un employed demand a guaranteed in come, do we ask whose income they wish to have guaranteed to them? Do we reply that welfare is not a career or a way of life, but rather a temporary expedient to enable the unemployed to live until they find a job? Do we reply that wealth is created by a producer and belongs by right to the man who created it, not to someone else who demands it because of some temporary need? We do not. We ask instead how much should we guarantee and what is the most efficient way of raising it, without giving a thought to the producers who are victimized by such a sys tem.

When we a.re told that our cities are getting too crowded, do we reply that people have no right. to bear children they cannot afford to feed? We do not. We offer bonuses to parents with illegitimate chil dren and are talking now a.bout living allowances based on the size of the family. In other words, we complain about the population on one hand, and then reward large families on the other. This is an example of Orwellian doublethink at its most ludicrous level. On overcrowded Manhattan island the politicians respond to the problem of overpopulation by creating one of the most attractive welfare sys tems in existence anywhere-and then wonder why they have so many hungry people to feed. They allow men who make their· careers in welfare (a career which de pends upon the hunger and help lessness of others for its very ex istence) to make crucial decisions. Do they actually expect these peo ple to make decisions which would eliminate their own jobs?

When we are told that capital ists are responsible for the wretched condition of the Negro in America today, do we tell our 636 THE FREEMAN October accusers to check their basic argu ments? Do we tell them that it is not capitalism that has exploited the Negro, but rather those who deny the benefits of capitalism to the Negro who are most responsi ble ? We do not. We shake our heads guiltily, accepting the prem ises of those who would destroy free enterprise and replace it with communism, socialism, or the wel fare state. In other words, we give sanction to those who seek to de stroy us. When those who advocate free enterprise, indi vid ual self-reliance, and limited government are ma ligned as "right wingers," do we reply that a philosophy of freedom has no more in common with the extreme right than it does with the extreme left? Do we explain that autocratic government is just as evil whether it is run by a Hit ler or a Stalin? We do not. We ac cept the definition, thereby giving respectability to those who wish to identify capitalism and free enterprise in the same category as fascism and neo-nazism.

It is becoming increasingly more apparent that a philosophy of the left (in all its shadings, from communism to the welfare state to the "mixed economy" concept) can only be successfully fought by a positive philosophy of freedom. Ideas must be fought with other ideas, not emotions. It is not enough to know what one be lieves in, it is equally important to know why one holds certain convictions. An attack against a position is best met by a strong counterattack, whether the battle is one of physical force or the force of opposing philosophical and economic ideologies. Clearly, it is time for each one of us to examine basic premises. It is time to re-examine our con victions and delve into the under lying reasons for them. Most of us know what our opinions are; it is just as important to discover where these opinions came from, what are the fundamental moral and philosophical premises on which they are based. It is time to stop fighting a defensive battle against leftist ideologies and turn the tide back with a strong show of clear, rational, carefully con sidered ideas. ~ A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Wor'h"hrough Work WHITING WILLIAMS,the author of a challenging and charming book which bears the somewhat enig matic title of America's Main spring and the Great Society (Frederick Fell, $5.00), is eightynine years old, which, for a pub lishing writer, must constitute a r'ecord of sorts. Far from succumb ing to normal octogenarian gar rulity, Mr. Williams is a gaffer who distills wisdom. In his younger days, as a nonacademic sociologist, Mr. Williams used to spend a good part of his time disguised as a common laborer. He worked in coal mines in Pennsylvania,Wales, the Saar, and elsewhere; in steel mills here and in Britain; and in rail road yards and along the docks.

During the depression of the thir ties he camped out in flophouses. His effort, everywhere, was to find out what the working man and the "underprivileged" really thought. What he learned is that most men, if uncorrupted, have an in nate desire for "worth through work." People want money, of course. But even more important than money is self-esteem. Mr. Williams discovered this in the most unlikely places; even the Skid Rows in which he lived had their hierarchies of worth, reserv ing the name of "Scissorbill" for bums who were completely unproductive. The hobo, so Mr. Williams learned, rates himself above the tramp; the tramp in turn considers himself above the scissorbill. "We 'boes," so the Secretary of the Hoboes Union told Whiting Williams, "are mi gratory workers, itinerant labor ers! If we don't hop from the Northwest lumber camp in the winter down to the Oklahoma wheat fields in the summer - and get there on time, mind you-w'y, crops go to waste . . . So we 'hoes have to take the train - 'thout 637 638 THE FREEMAN October payin' no fare, of course. But a tramp! ... He walks from job to job - 'cause he don't give a damn whether he gets there or not . . .

But don't never take a tramp for a bum! He neither rides, nor walks, nor works! He's' a no-good complete." Investigating life among the bums who were lower than the tramps, Mr. Williams found the need for esteem struggling to keep itself alive even at the very bot tom of society. For example, no really self-respecting bum would ask for his portion of mulligan stew without contributing a sin gle sandwich to the collective dish. A Timely Message Since Mr. Williams' experience dates back to pre-Great Society days, his description of "Ameri ca's mainspring" as the "wish for worth through work" might seem outmoded in its substance. He himself recognizes that he may have written a book about the American world as it used to be. But the Great Society is, actually, merely a continuation of the New Deal, and Mr. Williams saw in the thirties how the "mainspring" of seeking "worth through work"

could be badly bent by the prac tice of giving government relief to people without requiring them to do anything to earn it. Men, so Mr. Williams insists, are not born to be "scissorbills." But, as he says, "we also know this - how easily we can become scissorbills !" All that is necessary is "to adopt the bum's scapegoats and false reasoning for side-stepping re sponsibility while adjusting to the crisis' challenge instead of mas tering it." Mr. Williams fears "the welfare state's increasingly generous gifts," not because he likes to see people· hungry, but because he knows the story of the Florida coast town where, after the shrimp boats had taken their operations elsewhere, the seagulls were found. to be starving because they have forgotten how to live off fish. Lessons from the Marshall Plan Though Mr. Williams hasn't in vestigated life in the so-called ghettoes in the nineteen sixties, the relevance of his book to the contemporary situation is obvious.

A government can't encourage "expectations" and expect quies cence. If the expectations aren't related to the· opportunity for work, the multiplication of scis sorbills will soon defeat the ef fort to combat poverty through government programs. We are now hearing about the necessity for a "Marshall Plan" for the Ameri can cities. But if a "Marshall Plan" is only money, it merely de lays the time for a final reckoning.

1967 WORTH THROUGH WORK 639 Money, if it inhibits the growth of the self-help philosophy, is worse than useless. Some of Mr. Williams' experi ence dates back to the period of the Marshall Plan in Europe. The money we exported immediately after World War II moved into a community where skills were wait ing to be put to work. But Mr. Williams finds the export of needed funds to Europe was le'ss significant than "the export of our unique respect - indeed our rever ence - for productive usefulness." In the ancient feudal Europe, it was only through politics, not use ful work, that a commoner could hope to rise. This tradition had hung on in Europe up to World War II. "Even in France and Brit ain," so Mr. Williams writes, "the aspiring commoner has long had to seek distinction less by the ladder of work than of politics." The sight of America's "economic missionaries," even those with ad vanced uni versi ty or technical de grees, working with their hands had more effect on Europe than the Marshall Plan money. And to the extent that the Peace Corps is effective, it is through this spec tacle of willingness to tackle jobs.

In Saudi Arabia, Mr. Williams notes, our engineer-managers have had trouble explaining the facts of industrial life to people who have considered that work is for slaves. But when desert nomads are turned into skilled drillers, re finers, and transporters of oil, "the dynamics of expectation" are transformed. Commoners discover they can hope to "climb to honor" through useful work as well as through politics. The worst thing about the Great Society is the way it has increased the growth of self-pity. This is at the crux of Mr. Williams' wor ries about our future. The older America which he knew, whether it was the America of coal mines and steel mills or the America of flophouses, indulged very little in "the sin of self-pity." The Road Bacle to Self-Respect How are we to get "America's Mainspring" to working again ? Mr. Williams lists the obstacles that stand in the way of a return to the older verities. He fears that in the' Great Socie,ty "more recognition and honor will go to elected managers as the distrib utors of gifts and less to the producers of goods and services."

And, since "leaders dependent on votes" prefer to deal less with in dividuals than with manageable groups such .as "farmers, wage earners, the sick, the elderly, or whatever," the individual's work based "Expectation Quotient" will be sacrificed to his "collective se curity-or, as in Europe, to his 640 THE FREEMAN October political career." Relief appropri ations, so Mr. Williams observes, must be handled with almost su pernatural wisdom or they end up by discouraging industrial pro ductivity as "smart group wan gling" takes over. The welfare state tends to cannibalistic con sumption of its own taxpayers. Meanwhile, since the incumbent officials are in a position to prom ise most, the tendency is toward perpetuation of one-party govern ment .. This one-party government, finding. it more and more difficult to raise taxes, goes in for per petual inflation. To preserve its sovereignty against increasingly "dangerous" criticism as the in flation strikes home, government is then tempted to expand its con trol over communications and opinion.

And so we go to pe·rdition. Mr. Williams is reminded of the kind hearted man who, when his dog begged a bite of meat during a terrible famine, gave the animal a juicy slice of its own tail. This is what the welfare state comes to in the end, once the "main spring" of "worth through work" has been snapped. + THE FREEMAN NOVEMBER 1967 Vol. 17, No. 11 ~ A visit to the local Welfare Office could tell us much about how freedom is lost, suggests newsman N. C. Christensen p. 643 ~ Or, visit the campuses, as Ralph Bradford has done, to know what is being dispensed there under the labels of economics and political science p. 647 11" For contrast, retrace with Edward Breese, the origin and development of an earlier and strictly homemade great society off the shores of Massachusetts p. 656 v Unfortunately, it is necessary to keep on explaining and trying to com bat the harmful consequences of the political propensity to inflate ....p. 662 ~ Dr. W. M. Curtiss critically ex amines various theories of taxation and comments on current practices .......... p. 674 JtI" Anne Wortham is an individual be fore she is a Negro, and respectfully requests that we let her keep it that way p. 679 ~ And FEE's prolific author of Deeper Than You Think, among other works, here delves into basic realities I .......... p. 683 ~ To the anonymous writer of the Monthly Letter of the Royal Bank of Canada, we are indebted for many helpful suggestions on the importance of self-discipline p. 688 ~ The much-touted "mixed economy"

is no stopping place, thinks Melvin Barger, but merely a milepost on the downgrade into socialism p. 697 ~ Though spun from the same wheel of Fortune, reviewer John Chamber lain now shares none of J. K. Gal braith's interpretation of The New Industrial State p. 701' Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

NOVEMBER 1967 LEONARD E. READ PAUL L. POIROT Vol. 17, No. 11 President, Foundation for Econonlic Education Managing Edit01· 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 linlited government, founded in 1946, with offices at Irvington-on-Hudson, New York. Tel.: (914) 591 7230. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are in vited in any "amount-$5.00 to $10,000-as the means of maintaining and extending the Foundation's work. Copyright, 1967, 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; 10 for $2.50; 25 or more, 20 cents each.

Any current article will be supplied in reprint form upon sufficient de mand to cover printing costs. Permission is hereby granted to reprint any article from this issue, providing customary credit is given, except "Discipline in Life."

N. C. CHRISTENSEN HOW LEANEBS LOSE THEIR FREEDOM SOMEONE has said that when you ask for help, justified or not, you surrender some part of the right of self-determination. Dependency feeds on dependency until the will to rise above imposed power fades and freedom is lost. Almost daily the reality of this statement is confirmed. When a community project en counters rough going, somebody usually jumps up and wants to ap peal to "the government" for help. This has become so common that such a proposal is expected in pub lic meetings and in sessions be hind closed doors. Perhaps we are becoming child-like in our faith, expecting that no matter how naughty we may have been, "Daddy ·will pull us out of the mess." There is no mystery in this Mr. Christensen, experienced newspaper editor and reporter, advertising executive, and former Army officer, currently does free lance writing from his home in Spokane, Washington.

growing attitude toward the priv ilege of acting for ourselves. In stead, we have been taught to look with paternal reverence to "the government," to the White House, to the Congress, or to the relief agency with offices just around the corner from where we live or work. Can it be that we have entered an era in which self-reliance is go ing out of style and in its place dependency is becoming the ac cepted thing? Judging by what is transpiring, one fears that such is the case and that the trend, un less checked, may eventually dim the lights on the Statue of Lib erty. Not long ago I attended a public meeting in which community im provement was discussed. The first question from the floor was a rea sonable one: "How do we pay for this ?" An alert citizen had a quick an643 644 THE FREEMAN November swer: "There must be some way to get the Federal government in on this. This program must be cov ered by one of the Federal agen cies. Find that agency and we'll have it made."

One courageous soul protested against opening the door to Fed eral participation. He was all but hooted down, despite his years of experience and the fact that he had pumped lifeblood into two or three dying industries, had built a small industrial empire of his own from a back-yard beginning in private enterprise and was now employing hundreds of men and women and, through heavy taxa tion, was contributing to the de velopment of his community, his state, and his country and helping to meet the spiraling costs of these governmental units. The disheartening note in this demonstration was the manner in which this advocate of free enter prise was frowned upon by his f'el low citizens, including some of his own employees, and how the vocif erous champion of a "generous, big daddy" government was cheered and supported. Sink or Swim We have projects today, includ ing a war on poverty, which seem to be achieving at least one goal.

Supporters of the war on poverty succeed in uncovering hidden areas of poverty but seldom do they ex pose the areas of vast undeveloped opportunities in this resourceful land. Seldom do we hear of more peo ple rolling up their sleeves and digging in to solve their individual problems in the way that the pio neers of this choice land uncovered the wealth that we now enjoy. Work, toil, sweat seem to be def initely out of style. Yet, there still exists a solid core of old-fashioned citizens devoted to thrift and in dustry; many of· these are young in years, but they have vision. The late President James A. Garfield once remarked: "Poverty is uncomfortable, as I can testify; but nine times out of ten the best thing that can happen to a young man is to be tossed overboard and compelled to sink or swim for him self." Responsible Charity Helps the Recipient Help Himself Churches are becoming aroused by the corroding influence of the "get it for nothing" gospel, and a churchman recently sounded this warning: "If you take care of a person from the time he is born until the time he leaves this earth, you may destroy his self-respect," N. Eldon Tanner, a member of the first presidency of the Mormon church, wrote in The Improvement Era, 1967 HOW LEANERS LOSE THEIR FREEDOM 645 official organ of that religious de nomination.

Mr. Tanner set forth the basic aims of the Mormon church's wel fare program as a world-wide ef fort to "care for our own." In this program the Mormon church pro vides employment for the handi capped, for the aged, and other unemployables in the labor mar ket. They earn their sustenance by working on church farms, in church factories and workshops. Those who cannot work are cared for from the products of the wel fare program. "If you give a person help in ob taining employment, you are not just encouraging him to earn what he gets," writes Mr. Tanner, "you are also helping him develop self respect and in time his family and neighbors will have increased re spect for him. He must feel that he is doing his part and carrying on as a part of the community." This welfare program of the Church of Jesus Christ of Latter day Saints, commonly known as the Mormon church, with head quarters in Salt Lake City, Utah, was first launched in the depres sion of the thirties. The original program, called a security pro gram, was aimed at what the church viewed as the evils of the Federal dole in the New Deal era.

The church did not object to a member working on a public project. The objection was to accept ing a dole without working. This was the evil, as the church saw it. Heber J. Grant, who was then the president of the church, said: "Mormons are strongly urged to give an active and energetic day's work for a day's pay." Mr. Tanner, in his recent state ment, declares: "If any of us think that the program of the govern ment (today) can take the place of, or in any way improve the pro grams that are outlined by the church, we are on the wrong track." A Dependent Way of Life Perhaps we should visit one of our public assistance offices. If we do, let us go with humility, for the poor will be there, along with oth ers who may create doubt in our minds. You may have difficulty, for example, in parking your car because today's public assistance recipients and applicants do not all come afoot. Large cars and small cars will be parked there when you arrive and there may be no space left for you. You may have to drive farther on, but the walk back will be invigorating and may give opportunity to ob serve more of those who have joined the growing dependency army.

Inside the office, you will have the stimulating experience of wit646 THE FREEMAN November nessing further how dependency grows. You may see a new form of independence which arrogantly demands that "the government" must shoulder the burden of one's personal comfort and survival. You may overhear the pitiful plea of a well-dressed woman that she des perately needs an extension phone installed in her home . . . and she gets it. Your sensitive nature may be touched by a young mother who says that neither she nor her chil dren can eat the food that is dis pensed to them from welfare stocks. You may be shaken by this and worry about it until you dis cover that the food she complains of is similar to the food you pur chased with your earned dollars in the supermarket the night before. You may also hear the welfare applicant, who has just driven up in a 1966 station wagon and who is dressed as well as your own wife, emphatically point out that "the government certainly can't expect us to get along on that miserly bit of money."

"How can we live on that?" she shrieks at the timid girl behind the desk. But, you will notice, the applicant doesn't walk out indig nantly and say: "I'll show you. I'll go to work." No, she doesn't do anything rash, such as getting a job. She is totally sold on the total dependency idea and she's hanging on and fighting for all she can get for nothing. Such are the things you may see on a casual visit to a public assistance office. The potential danger to freedom will become apparent when you witness the willingness of so many to slough off personal dignity, to shun honest work, to resign themselves to a state of total dependency. None of this should reflect on the character of those destitute through no fault of their own. They would willingly work, if they could. They are grateful. These people seldom complain. The evil lies in a system that encourages and allows the able-bodied to drift into a state of shiftless depen dency that takes from them their dignity and their freedom. To this they also commit their children, and this is the evil that is shock ing some of our churches and should shock us.

When either a community or an individual extends its hands and says, "Please help me," the first step has been taken toward aban doning self-determination. Throughout history, the leaner always has had trouble standing on his own feet. ~ d. Devaney, Inc., N. Y. HAVE YOU talked much with your collegiate son lately? If not, you might find a conversation quite enlightening, especially if you are talking about economics - macro, that is, not micro. Although micro, too, can be quite revealing. Until lately, those were new terms to me - I mean, new in connection with the study of eco nomics. Of course, we've all been using them for years in other contexts. But in recent academic parlance these modifiers have been given a new association. In the old economics you and I were taught about the satisfaction of human needs and desires through trade - the division of labor, specialization, the conse quent development of industry and transportation; the invention of Mr. Bradford is well known as a writer, speak er, and business organization consultant. He now lives in Ocala, Florida.

A long-playing album from his epic poem, Herita~e, describing the American story, is available from the Foundation for Economic Education. What's GoingOn Here? RALPH BRADFORD money, credit, banks, wages, profit, capital investment. That, in brief, was our classic economics, and we thought it was pretty important. But if your son is studying eco nomics, you will soon discover that this was micro economics - min uscule, elementary, parochial. Im portant? Yes, in somewhat the same sense that the alphabet is, or the ten digits - something to begin with. But it is really just a kindergarten exercise. Students must move on to the macro, the really big stuff. This gets us into the "public sector," a term that I first began to hear in European meetings twenty years ago, as. a result of their rapid shift into socialism. It is now, of course, much used by our own economists and others who are interested in the vast ex penditures of nations, the flow of international trade, tariffs and tariff unions, balance of payments, debt and debt management, and 647 648 THE FREEMAN November the economic consequences of po litical action on the grand scale.

Implicit in all this is the idea of a world economy artificially stim ulated by "public sector" spending, and directed by a self-chosen elite rather than by the untrammeled operations of the free market. Due recognition is accorded to the "private sector" - individual and corporate enterprise - but more often than not your professional economist is now a devoted Keynes ian who is all in favor of the big government necessary to a centrally managed economy, with heavy emphasis on the big spend, the big debt, and the never-pay-it philosophy. Most of them seem blissfully unaware that Keynes himself had backed off some dis tance from his original ideas be fore he died. These are some of the things you will probably find out in that talk with your collegiate son. And more than likely you will find that he is pretty much in agreement with what he has been taught. I base these conclusions on my ex perience in visiting colleges dur ing the past few years as occa sional lecturer and discussion leader. These visits were mainly in five eastern and southern states.

From such a sampling I cannot pretend to say what is going on in all colleges; but since certain atti tudes were so similar as to be almost identical in the ones I did visit, it seems reasonable to as sume that they may occur in many, if not most,colleges. Setting the Stage First. of all, your son in all like lihood is being encouraged to ac cept the present state of things as normal and permanent - state interventionism, an economy "managed" through tax juggling and/ or public spending, deficit fi nancing as a permanent fiscal pol icy, a huge national debt that need never be paid off or even reduced so long as it bears a certain rela tionship to the gross national product - and so on. As a sort of background for all this, he is heing told that in 1933 this country was on the brink of a bloody revolution which was averted only by the radical pro grams of the New Deal. Particu larly emphasized is what is termed the agrarian revolt in which, it is alleged, farmers - especially in the Midwest - were on the verge of an armed uprising. The historic peg on which such nonsense is hung is this: Under the stimulus of high prices for wheat and corn during the first world war, thousands of farmers had overextended their land holdings. Land values were artificially inflated up to five, six, even seven hundred dollars an acre. You do not need to be an 1967 WHAT'S GOING ON HERE? 649 economist to know that in normal times corn and wheat crops would scarcely. pay the interest, let alone retire the principal, on land at such prices.

It was also true, of course, that the same motivation which prompt ed farmers to buy more land led them to expend more money in its development and use - contouring where necessary, tile drainage, up to-date farm machinery, fertilizer, and so on. Thus, the better and more adventurous farmers suf fered all the more severely, when the world-wide depression of the late twenties came, with its tum bling prices of farm commodities, along with all others. Millions of farmers could not meet either interest or principal, and there were many foreclosures. This was bad - for the unfortu nate individuals involved, and for the economy. Some who lost their land became angry and bitter. There were occasional threats of violence. In one dramatic case, a farmer mob at Le Mars, Iowa, seized a. judge in his own court room, carried him out, abused him, put a rope around his neck, and threatened to lynch him unless he would agree not to sign any more orders for foreclosures. 1 Shock ing? Yes - but this isolated case 1 See James Truslow Adams, The March of Democracy, volume for 1933-41, p.11.

of mob action was a very far cry from the bloody .agrarian revolt which certain leftists would now have us believe was so narrowly averted. But students are still hearing distorted echoes of it. They are still led to believe - not by all teachers, certainly, but by some that if we had. not had the radical New Deal intervention, the whole country would have experienced a blood bath. All of which, inci dentally, is a wicked canard upon the American people,. whose de portment during that troubled period was one, of heroic restraint and courageous patience - so much so that Franklin Roosevelt him self (on the testimony of one of his far left lieutenants) often commented admiringly on the for titude of the people· under the stress of sharp adversity. This perversion of history is part of the left-wing legendry that your son is hearing. He is also being influenced to believe, by attitude if not by direct state ment, that businessmen generally are unimaginative, hopelessly re actionary, and without social con science or vision. Corporations, he is told (or at any rate so he be lieves, as surveys much wider than mine reveal), make too much prof it, are unfair to their employees, and offer very little attraction or incentive to ambitious young men.

650 THE FREEMAN November Getting Their Attention Now, because my talks are from the conservative viewpoint, I try to shock the students .into atten tion with initial statements of a rather "extreme" nature - such as assuring them they have no "right" to an education. It usually works. They clearly want to see what other absurdities this trog lodyte will utter. But it also serves to identify the conservative stu dents. There are always a few, maybe as many as ten or fifteen per cent. In private talks these students confess to a feeling of frustration. They believe in a free society and a free economy, but they are often immersed in a classroom atmosphere of state in terventionism and compulsion. To speak of free enterprise there is to invite ridicule. As a result, they are delighted beyond measure when somebody visits the campus who speaks forthrightly the for bidden language of conservatism, expressing the things they believe to be true and want to hear, but seldom do, except in terms of crit icism or derision.

Can a Man Be Both Cap'italist and Christian? Constant classroom denigration of business entrepreneurs has its inevitable effect. Here's an exam pIe of the way it works : At a de nominational college in a southern state, I met with a class in eco nomics. After a short talk, I led into a discussion period, with the teacher participating. Questions and comments soon swung to cap italism, its nature, faults, and virtues. Presently, a personable young man, who turned out to be a senior, remarked with some heat, that a man could not be a cap italist and a Christian. He said the terms were mutually exclu sive. Only one person in the class disagreed with him - another stu dent, not the teacher. I switched to something else for awhile, .then came back to the young man. Under the pretext of finding out whether his economic status had influenced his opinion of capitalists, I asked whether his father was a professional man.

No, he was in business. Further questions developed that the father owned a lumberyard and planing mill. It also came out that he was a stockholder and director in a bank. Anything else? Well . . . oh yes, he owned a business block on Main Street, and he was principal owner in a couple of ·apartment buildings. At that point I administered what I thought would be a. crush er. "Tell me," I said, "is your father a Christian?" It never fazed him. "Yes in deed," he said, rather proudly, "my Dad is quite active in our 1967 WHAT'S GOING ON HERE? 651 church. He's a very good Chris tian." That young man, a senior about to graduate, was majoring in eco nomics - and it simply had never occurred to him· that his father was a capitalist! In that same college, the teacher of a class in history said he gath ered from something I had said earlier that I did not favor Federal aid to education. I told him that was correct, and was about to ex plain why, when he stopped me. "I just can't understand," he said sadly, "how a person of your evi dent good will can be against edu c'ation!"

What kind of doctrine do you think he would be teaching your son? Two Against None At a northern college I had been asked (I do not yet know why) to include a talk on The American Business System. It was by no means an uncritical panegyric. My outline went like this: What is business? How did it start? Its foundation in trade. A quick re view of ancient economies. Growth of the free market concept in America. The "buccaneering" pe riod. The corporate concept. Moti vation of business today. In the course of the talk I men tioned two books and told the stu dents to read them if they wanted to hear all that is bad about busi ness. I also mentioned one other to read if they wanted to hear a re cital of its good points. I thought I was leaning over backwards to be fair: Two books against busi ness, one book for it. But the pro fessor in charge of the class wasn't pleased at all. He was quite satis fied with the two anti books; but he was very unhappy about the one I had cited as pro-business. He said it was by an untrustworthy author who was formerly a liberal but was now notably reactionary.

In other words, this teacher of economics didn't reany want his students to read anything favor able to business enterprise. What sort of economics do you suppose he would be teaching your son? A Queer Standard I recall the head of an economics department in a northern college. In a social hour following my for mal talk he got me to one side and asked if I didn't get a lot of protest and criticism from college officials because of what he called my ultra conservative lectures. Now the sig nifiance of that lies in the content of my lecture. Let me summariz·e it briefly: It discussed present opportuni ties and responsibilities of citizen ship. It advocated self-reliance rather than dependence upon the 652 THE FREEMAN November state, and it favored solvency rather than. technical bankruptcy as a national fiscal policy. It ad vocated minimum government of limited powers and defined respon sibilities. In the field of foreign affairs, it examined some results of our aid program and pointed out that much of it had been wasteful and fruitless; and it was sharply critical of a policy under which billions forcibly taken from Ameri can taxpayers were squandered on nations that have openly declared themselves to be our enemies. And it advocated a gradual liquidation of our freedom-strangling national debt and the restoration of the value of our money, so that those who work and save will not be wiped out through inflation.

I hope the reader will forgive this rather lengthy resume of a, not-too-important lecture. Its sig nificance is that this was the sub stance of a talk that W 1 a8 chara,cter ized as "ult1"aconservative" by the head of a college economi,c'sdepart ment. What do you suppose he is teach ing his students? No Facts, Please! Later I was invited to partici pate in a symposium at a mid South college. Long oriented to one of the big religious denominations, this college is also heavily endowed by one of the South's industrial fortunes. There were to be three speakers - two educators and one representative of business. The two other speakers were a professor of theology from an eastern col lege and a history professor from the Midwest. We were to discuss American capitalism. When I got there, I found that the history professor was a Marx ist - not by my definition, but by his own. The theologian was not a Marxist - at least not admit tedly; but he was a. left-winger, a member of ADA, and a perfect fellow traveler for the self-pro claimed disciple of Marxism. In the several lecture and discussion pe riods, he did not once disagree with the Marxist, and the two of them had a ball tearing poor old American capitalism to pieces.

As an example of typical Marxist cynicism, the history professor at tempted to layout ground rules for the discussion. He said it would be unfair to drag Russia or China or Cuba or any other communist country into the discussion. We should look at Marx in his purity as an economic and social philoso pher, and not becloud the issue by citing any unfortunate aberrations or abuses that may have occurred in these communist countries. Be lieve it or not, that was his serious proposal - and it was seconded by the theologian! The college moder ator of the series (a senior) was 1967 WHAT'S GOING ON HERE? 653 also quite willing to accept it. Needless to say, I was a stumbling block. I insisted that Das Kapital was a book and that The Commu nist Mani,!esto was a document nothing more. The only way to judge the ideas they proposed was to examine results in the countries that had tried them. To do other wise would be the· equivaJ~nt of setting up an inquiry on juvenile delinquency and gang warfare but with the proviso that the re searchers must never go near Harlem, or the seamy side of Cen tral Park - or the slums of any other great city. The matter was not formally disposed of, but I can record that I did not abide by the professor's rules!

There is no point here in trying to summarize their talks or mine. I am inclined to believe that I held my own in the fruitless contest but I hasten to state that I do not mean by that to say that I car ried the day with the students. They heard me with courtesy, and I could spot a few conservatives among them; but it was quite apparent that most of them were much more sympathetic to the radical Marxist doctrines than to the conservative ones I repre sented. Each morning the three speak ers were asked to meet for coffee in one of the lounges, there to be available to any students who cared to drop in for questions, or just to visit. Not many came, but those who did were plainly the campus leftists. The faculty ad viser on student affairs was there, and he see.med quite pleased to re port that there were two leftist student organizations on the cam pus. (Of course, he called them "pro~reggive.") On the' other hand, he told with visible satis faction about how successful he had been in thwarting the efforts of a well-known conservative stu dent organization to get started there.

Radical left-wing students? Wonderful! Conservative stu dents? Down with them! Keep in mind that he was a member of the faculty. What do you suppose he would be teaching your son? "We Owe It to Ourselves" In a southern college I made my more or less standard assembly talk in which, among other things, I advocated solvency as a national fiscal policy. In a subsequent dis cussion period I was taken sharply to task by the head of the eco.. nomics department. He said, in brief, that all talk of a balanced budget, and all concern about the size of the debt, was harmful nonsense. He then advanced what I have learned to recognize as a standard liberal cliche about our debt. It 654 THE FREEMAN November goes like this: Our debt is only around $300 billion (that. was three years ago). But our gross national product is annually more than twice that amount. So it is silly to worry about a debt that is less than half what we produce each year. This sounds plausible until it is analyzed. Who creates that vast GNP? Obviously, it is all of us ~ the American people.

So what portion of that GNP be longs to the government? None, of course; it belongs to those who create it. But what portion of it is set aside to payoff the debt? The answer is, no part of it. Oh,some of it is. taken in taxes - but not enough even to pay current oper ating expenses, else we wouldn't have the yearly deficit. Not one penny of that GNP is hypothe cated as collateral for the debt. The government has no title to it; and the only way it could be fairly cited as security for the debt would be for the government to seize enough of it each year, over and above taxes for current ex penses, to payoff the debt in a stated period. At that point the professor changed the subject - or rather, he broadened his claim. He said it was estimated that the total wealth of our country is between 2lh and 3 trillion dollars. Using the top figure, that is 3 thousand billion. On that basis, our assets in wealth would have a ratio of about ten to one in relation to our debt. So again - why worry? All the alarmist talk about the menace of· the mounting debt, he insisted, is mischievous nonsense. He added with some heat that in his opinion I was doing the country a dis service by preaching such out moded economics to impression able students.

My reply to that was to the effect that I was on that campus for two days, whereas he had the students at his mercy for nearly a year. If in that time the economic poison he was injecting could not overcome my two-day in noculation of economic sanity, then perhaps I had overestimated his powers, and maybe he wasn't as dangerous as I had thought he was! A cheap theatrical rejoinder? Maybe. But recall, please, that I was being pushed around. Any way, the students loved it - even the "liberals." But the professor was not amused. Possibly that was because his argument about the ratio of assets to liabilities of ten to one wouldn't stand analysis. For example: What are those three thousand billions of assets? Well, they are the land, the mines, the railroads, the steamship lines, the airplane lines, the manufacturing plants, the timber, the hotels and motels, the office buildings, the gold, 1967 WHAT'S GOING ON HERE? 655 silver, oil, gas, uranium, the f arms, the homes - in short, the accumulated wealth of all sorts.

Very good, but who owns all this wealth? Aside from actual gov ernment property, it is owned by the people - either as individual proprietors or as stockholders in corporate enterprise. How can you set that wealth up as collateral for the debt when the government has no title to it? The only way it could mean anything in relation to the debt would be for the gov ernment to seize enough of it to retire the debt. To all this the professor simply would. not agree. He insisted that the total wealth, regardless of its legal ownership, was a sufficient guarantee that the debt was safe, and he was not at all impressed by the evidence of continuing infla tion. In fact, when I made the point that inflation injured or wiped out the small saver, such as a holder of government bonds, his reply was, "Let them invest their money in corporate stocks and realize on capital gains." When I asked him how many small inves tors he thought were experienced enough to deal in equities, he sim ply shrugged. That was not his affair.

What do you think he would be teaching your son? Now I am sure there are some colleges - maybe many - that do not fit the pattern I have been out lining. Indeed, I am acquainted with some teachers who are mak ing a courageous effort to present a balanced picture to their stu dents. I encountered a young his tory teacher in one northern col lege who made me welcome and who confessed that he was having a pretty rough time living with the "liberal" majority of the faculty. I also met, in the Dean of one college, a devoted scholar in the best conservative tradition, who. seemed quite happy to have me preach a little "heresy" on his campus. But these were excep tions. Based on the ones I met and whose classes I attended, the aver age teacher of college economics, or government, or sociology, or modern history, makes little or no effort at objective presentation of his subject, but hews pretty close to the "liberal" party line.

Check with your son who is in college. Is this the way he is being taught? Is this the way you want him to be taught? ~ The Bettmann Archive Homemade, self-operated, and really free EDWARD Y. BREESE 656 IN RETROSPECT, it's a good thing they didn't wait for a· government grant of funds or a massive pro gram of made work or industrial subsidy. Those things didn't exist in 1659. If they had, Thomas Macy and his friends certainly wouldn't have been eligible by the standards of that time. If our ancestors had thought and acted as so many people do today, Mr. Macy and his friends would have had a high priority claim to relief and subsidy bene fits for the underprivileged and potentially unfree. Just think. They were a reli gious minority (Quaker) highly unpopular among their fellow New Englanders. They had been ac tively persecuted and forced to leave their homes. Individually, none was prominent, important, or wealthy. They had nei ther learned nor inherited skills that would be of use in their new en vironment.

To cap the climax, their place of refuge was highly unfavorable to survival on any but a bare sub sistence basis. They settled an is land, well off shore, about fifteen miles long and one to three miles broad. Its only harbor was so blocked by shifting sandbars that Mr. Breese has taught Industrial Manage ment at Georgia Tech and headed the Depart ment of Humanities at Embry-Riddle Aero nautical Institute in Florida. At present he is a freelance writer. only small boats had free access to the sheltered anchorage. The soil was sandy and infer tile. Heather and moor-sedge grew well there. Grains and vegetables did not. Sometimes salt spray blew over the island to burn out what crops there were. There was not even a decent stand of timber for house and boat building. Later, even firewood had to be imported. Note how perfectly they would qualify for subsidy and assistance in our day. Their island was a physical and economic "Appala chia" without apparent resources to create or maintain any sort of viable prosperity. It was also a religious ghetto whose people were both discriminated against and socially despised by their nearest neighbors. They had neither schools nor money to build them, nor would it have been possible to re crui t teachers from more favored areas. There were no doctors and no hospitals for the sick, no courts or police to maintain order. The children grew up with neither au thoritarian guidance nor planned recreation programs.

A grim prospect-made grimmer still by the settlers' inability, in dividually or collectively, to qualify for any private loans for working capital. Apparently, there was "no where to go from here," and no way to get there. 657 658 THE FREEMAN November Beg, Die, or Be free In any age and any society there can be only three ways for a peo ple in such a situation to react. They may seek aid from some source outside themselves, either public or private. They can re sign themselves to a survival-at subsistence-level until the com munity either dies out or is aban doned. Or they can react as freemen. This is the hardest way of all. It calls for heroism of which only the freeman seems to be capable. Almost anyone who ever lived, if he had but found himself at the Pass of Thermopylea, could have stood up and fought with the three hundred. The capacity for a brief, climactic moment of physical her oism, thank God, seems to exist in nearly all men.

It calls for another and, to my mind, a higher form of heroism to stand up to the endless, debili tating attrition of a seemingly im possible economic blind alley. Even greater qualities than these are needed to transform a barren and desolate sand reef into a cultured and prosperous community which served for two hundred years and more as a model to the world at large. Yet, this is what the early set tlers of the island of Nantucket managed to achieve. If anything, I've underplayed the difficulties these people faced. For years, they ate fish and hung on as best they could. Sometimes they chewed leather when bacon was gone. In 1672, they built their town on its present site. The things that had to be imported were obtained by bartering smoked and dried fish, on the mainlandwhen a market could be found. The offshore location of the is land meant that dead "drift" whales were frequently cast up on the beaches by wind and wave.

The meat, when fresh enough, was welcome; and the oil and bone provided a valuable natural re source for trade with the main land. Some of these whales had died natural deaths; others prob ably had been killed but not se cured by the boat-whalers of Cape Cod. Their first Live One About the year the town was founded, a northern or Right Whale blundered into the harbor and failed to find its way out again over the shallow bar. The sporting instinct, and the cu pidity, of the Nantucketer was aroused. Some unsung local smith promptly forged the first of un numbered Nantucket harpoons, and a boatload of townsfolk put out. The whale was killed and beached. The rest of the story is an American epic. Perhaps we should 1967 A GREAT SOCIETY 659 say a world-wide epic of the free man. Lookout stations were erect ed along the seaward perimeter of the island and manned by volun teer watchmen. When a whale was sighted, small boats put out from shore to the chase. The dead whale was beached and the oil, bone, and meat secured by shifts of island ers working together.

These people weren't too proud to learn. They studied the tech niques practiced by Cape Cod, Long Island, and Indian whalers, and added improvements through their own experience. In 1690, a skilled whaler named Ichabod Pad dock was persuaded to bring his family from the mainland and open an apprentice training school for the men and boys of Nan tucket. Everybody - but everybody - on the island got into the act. It's im portant to keep this well in mind. By the early 1700's small sloops, capable of cruising for several days, had begun to replace the row boats used at first. The cruises were short, however, and it was still customary to tow the car casses to shore stations for butch ering. In 1712 Christopher Hussey killed the first sperm whale ever taken by a Nantucket boat. The superior quality of the oil was quickly noted, and the hunt for the sperm whale began. These big fellows were far cruisers. To strike them it was necessary to cruise the reaches of the North and South Atlantic, the Brazil Banks, and the African Coast. Little sloops would not suffice any more.

Nor could a dead whale be towed hundreds of miles before the oil was taken from the carcass. Without Federal Aid There were still no government grants. There weren't even "sur plus" naval or merchant marine vessels available to the infant in dustry. If the islanders wanted larger vessels, they had to build them. They had to design a new type of ship for a new fishery, and learn how to build from their own designs. They had to import timber-and pay for it from cur rent income. They had to produce for themselves a hundred different implements and types of gear de manded by the industry. All of this had to be financed by a community which included no very rich families and which had, as yet, no collective credit suffi cient to float a direct loan or se curity issue. They started with larger sloops of about thirty tons, capable of cruising for six weeks or so. By 1715 they had six of these. Fifty years later, there were 101 Nan tucket whalers-sloops, brigs, and schooners. By 1775 the total had 660 THE FREEMAN November passed 150. The oil, bone, and whale ivory they brought home were sold in Boston or directly in London. The islanders were importing timber and brick for the beautiful big houses which still stand as monu ments of the early days. In time, Nantucket ships were seen in the most distant waters of the Arctic and Pacific oceans.

During the Revolution about 135 island whalers were captured by the British Navy. So highly were these men respected that, in stead· of going into prison hulks, they were forced to continue at their trade under the enemy flag. Far from destroying the fishery , war only stimulated the people to greater exertions; and the fleet continued to grow. Nantucket whaling did not end until the use of petroleum products made whale oil economically unprofitable after the Civil War. Tlte fruits of Enterprise There is no finer example in history of the achievement of co operative free private enterprise than the story of the Nantucket settlement. These people started from scratch. Brainpower and hard work and common sense made them rich. They found a natural resource where apparently none existed. Most of the early families be came related by marriage until they were one big family. Of more than average intelligence, hard working and thrifty, the people were so law-abiding that little or no government was ever needed or in evidence on the island. There were no paupers and no criminals.

No bureaucracy was needed or wanted. During the height of their pros perity and activity there was not a single lOlWyer on the island. None was needed. Capital for building and out fitting the fleet was raised by the people themselves on a strictly free enterprise basis. Everyone contributed according .to his or her means, and everyone profited. Each ship was owned in a large number of widely distributed shares and built and outfitted by the sale of these. A particular in dividual might own shares in ten or a hundred ships and would profit from the voyage of each. The island boy started to learn the cooper's trade or the boat builder's or smith's at the age of twelve. At 14 he went to sea, and became an officer in his twenties. Generally, he left the sea by forty to concentrate on the shore end of the business and make way for a new generation. Everyone on the island had an interest in the business, over and above the shares in ships. If a man made harpoons, they must be 1967 A GREAT SOCIETY 661 of the best, for he owned a share in the whales they would strike.

If he sold provisions, they must be of good quality, for the well being of the crew would contrib ute much to the voyage in which his funds were invested. If he built whaleboats, they must be well made, for his son or brother would man them. The business affairs of the town were more like the transac tions of a clearinghouse than like the typical village trade and bar tel". The amount of money in hand was small. Business was largely a matter of crediting one item against another. A losing voyage was offset by the profits of others. It was this unity of purpose, in telligence and courage in planning and venturing, and keenness of spirit in the whale hunt that made Nantucket the greatest whaling port of her era. The memory and study of their achievement stand as inspiration for all freemen to day. Above all else, Nantucket stands as the monument to men who thought and acted as freemen. Ob stacles which might have destroyed them served only as a spur to greater achievement. They had they needed - no advantage and no resource not instantly available to all freemen at all times.

You and I have these same re sources, if only we will think and dare to employ them. The lesson these freemen taught will be as valid in 1972 as in 1672. ~ Wards of the Government WE AMERICANS seem to believe that just because our pioneer fathers once subjugated the Indians, we in turn are obligated to keep them in the bondage of government "security." As a result, the Indian has the status of a ward instead of a citizen. Instead of being a responsible person, he is a dependent. And in a like manner, if we free Americans continue to turn to government for our security, we too will surely become de pendent wards instead of responsible citizens. There will be a Commissioner to control our personal affairs and our individual responsibilities. Instead of calico and blankets, we may be prom ised a hundred dollars every month. But since the principle is the same in both cases, the results will also eventually be the same.

DEAN RUSSELL - F. A. HARPER INFLATION can be prevented. Fail ure to do so is purely and simply a matter of negligence. Inflation is a trick done with money. Suppose that the govern ment were to provide vending ma chines all over the country where persons could deposit each dollar they now have and get two in re turn, by merely pressing a but ton. If everyone were to use this gadget, each person could then pay twice as much as before for everything he buys. That would be inflation in a clear and simple form. People could, of course, put away some of this new money in "a sock" or otherwise hide it from Dr. Harper, long a member of the staff of the Foundation for Economic Education, con tinues his research, writing, and teaching as President of the Institute for Humane Studies at Menlo Park, California. This article is slightly condensed from his pamphlet first published in 1951. 662 circulation and use. But with this inflation gadget operating, there would be less incentive than be fore to keep the money in hiding, because it would become worth less and less with passing time.

So the hoarding of money isn't likely to solve the present inflation problem, if it persists. Inflation means too much money. The way to prevent in flation, then, is to close down the money factory. It is just that sim ple. All the complicated gibberish one hears and reads about infla tion simply blocks an understand ing of the essentials of the prob lem - though it may impress the ignorant, or hide the negligence of those who are responsible for inflation by making the task of preventing inflation seem hopeless ly complicated.

1967 INFLATION 663 The Money Factory Where is the money factory? Who operates it? The money factory in our pres ent money system is operated by the Federal government, either di rectly or by farming it out to sub contractors under the control of government. 1 It makes paper money to replace that which has become dirty, or worn out. It makes new paper money to increase the supply. It makes pennies, nick els, and the other coins. It permits the banks to grant credit to bor rowers, which becomes money that is interchangeable with any of the other forms of money in use. But for purposes of seeing where responsibility lies in the in flation problem, we need not con cern ourselves with all these dif ferent kinds of money. It is neces sary only to say that at present all forms of money come out of the government factory, or are controlled by the government, un der a complete monopoly.

If anyone doubts the existence of this money monopoly by the government, he can test it by man ufacturing some money himself even one cent. He would then be charged with counterfeiting, and 1 Beyond· the scope of this analysis is the important question of alternative money systems, with advantages or dis advantages so far as the danger of in flation is concerned. be given a penitentiary sentence for having infringed on the monop oly. The policeman in this in stance is the one who holds the monopoly. The money monopoly is a strange one. We usually think of a monopoly as restricting output, which can then be sold at a much higher price. But in the money monopoly, the government can force the citizens to take the en tire output of its product. A Highly Profitable Monopoly Not only that, but the operation is highly profitable - nearly 100 per cent, or almost the entire price of the product. This is one clear case of an "excess profit" which the victimized customers are for~ed to pay.

If the money monopoly were not so profitable, there would be no inflation problem at this time. The profit incentive works with money and stimulates its produc tion, just as it does with anything else. In olden days when some otherwise useful commodity like gold, for instance, was used as money, anyone who wished could produce as much of it as he liked. The production of money was then legal and competitive, rather than being a crime as it is now. Its production was so costly in time and expense that the inefficient producers were crowded out, just 664 THE FREEMAN November as they are crowded out of the production of brooms or mouse traps. But it is not so with present day money, with the paper bills and deposits that make up most of our money of exchange. It doesn't cost much for the paper and ink and printing needed to make a $100 bill. It is probably the most profitable monopoly that ever existed, and the entire force of the Federal government is available to protect its monopoly against the infringement of pri vate counterfeiting.

When a private citizen counter feits money, the wrath of other citizens is aroused and they say: "He did no useful work to get that money, and yet he spends it in the market place, taking food, cloth ing, and other things away from those of us who have earned our money by working for it. He takes useful things out of the market without producing other useful things to go into the market, as we do. The effect of his chicanery is that prices go up and the rest of us receive less and less for our money." This is a correct statement of what happens under counterfeit ing. It is the reason for objecting to counterfeiting, because the coun terfeiter gets something for noth ing. And it is the reason for ob jecting to legal counterfeiting, too. If everybody tried to live off coun terfeit money, one would at once discover its effect in the extreme. There would be nothing to buy with the money and it would be completely worthless.

When the government makes new money and spends it, the ef fect on the supply of things in the market to be bought by civil ians with their earnings, and the effect on prices, is exactly the same as when any private counterfeiter does so. The only difference be tween the two is whether it is a private counterfeiter that gets benefits looted from others, or whether it is a counterfeiting gov ernment spending it on pet proj ects - projects that the citizens are unwilling to finance either by private investment or by tax pay ments. T.he Watered Punch Counterfeit money affects what you can get for your money in the market much like water affects the punch at a bring-your-own party. Each in attendance is to be allowed to dip into the punch bowl in proportion to the quantity of ingredients he has brought and dumped into it. All bring some pure ingredient wanted in the mixture. Now suppose that one person brings water, and dumps it in.

This dilutes the punch, but the 1967 INFLATION 665 person who does it is permitted to drink of the mixture the same as those who are being cheated. He gets something for nothing, and the rest get nothing for some thing by an equal amount. If everyone were to do the same as he has done, it would be perfectly clear what the adding of water does to the taste of the punch. So it is with counterfeit money, whether done privately or by the government. Why Government Inflates Money The government makes this new money in order to cover what it spends in excess of its income-its costs in excess of its tax revenues. The government makes up the shortage with the new money made in its monopolistic money factory. For our present pur poses, it makes no difference whether this is done with paper bills directly, or with bills which it obtains by issuing another form of paper money - government bonds - which are forced upon the banking system.

What the government does is like a counterfeiter who continu ously spends more than his earn ings, and who goes to his ba.se ment print shop each evening and makes enough counterfeit money to balance the shortage. His print shop might put out either paper money direct, or counterfeit bonds which he sells to the banks in ex change for the money; the effect would be the same in either in stance. Living Within Income The way-the only way-to stop this form of inflation is for the government to live within its in come. This can be done either by raising enough in taxes to meet its costs, or by paring down its costs to equal its income. In a family, the housewife may try the former method - nudging the husband to ask for a raise, or to hustle for more sales-but in the end the family must always re solve the problem by spending less than it would like to spend, and living within its income.

The government holds unlimited power to tax every family in the nation, and for decades has been raising more and more taxes, but it has never resolved the problem that way. It appears to have for gotten the possibility of reducing expenses as the means of living within its income and avoiding inflation. So we have had inflation almost continuously since 1931, and are now faced with its ac celeration. The only way to prevent infla tion is to prevent these govern mental deficits; to pay currently and in full all the expenses of gov ernment that we either demand or 666 THE FREEMAN November tolerate. To do this it is necessary either to increase taxes or to cut down the costs of government. We are only kidding ourselves if we say that we can avoid both taxes and governmental frugality, by inflation-financing of the excess of its costs over its income. Inflation a form of Tax Inflation of the type we are discussing is in reality a form of tax, not an alternative to taxes.

It is, in fact, perhaps the most pernicious form of tax, for the reason that it is not recognized as such. It can ply its evil way under cover of this ignorance, and with out the resistances and disciplines of a tax that is open and recog nized. We speak of direct and indirect taxes. Property taxes or income taxes which are paid by individ uals are direct taxes; only about one-third of all taxes are of this type where we can see them clear ly. Indirect taxes, making up the other twothirds, are collected at some point away from the con sumer, and become buried in the prices of the things we buy and the services we employ. All these direct and indirect taxes a.re at specific rates which are set by a governmental body charged with that responsibility. They decide what will be taxed, and how much. But with inflation, which is in reality also a tax, it is not these taxing bodies which designate the tax. It is a tax created by default.

When the spending part of govern ment outruns the taxing part, the difference is financed by govern mental counterfeit, by inflation which falls as a tax on each per son in the market place in the form of higher prices for what he buys. Everyone who uses money for buying in the market pays some of this form of tax. It is the close equivalent of a sales tax on everything. One who favors deficit spending-the inflation tax-should not be opposed to a sales tax im posed on all purchases of goods a.nd services, without exception. The only important difference is that the sales tax is known to be a tax, but the inflation-tax is thought to be avoidance or post ponement of the tax. Postponed Taxes a Myth This makes clear, I believe, why inflation is such a pernicious form of tax. People who would other wise protest and curb the extrav agances of government are lulled by the foolish notion that infla tion is a means of postponing pay ment of some of the current costs of government.

It is especially tempting to try to avoid taxes when the govern ment is spending with abandon for a "national emergency." It is 1967 INFLATION 667 then argued that "since the ex pensive projects of government are largely for the benefit of later gen erations," why shouldn't part of the costs be left for them to pay? This notion, as has been said, has become a steady habit in the United States. The truth is, however, that if the government this year dips into the national punch bowl of goods and services that are produced and available, what it takes out and squanders this year is not there for others this year. The more government takes and squan ders this year, the less someone ,vill get back this year compared with what he produces. Why, if we ignore the minor item of foreign trade balances, is it believed that a nation can post pone this year's cost of govern ment? Probably it is the presence of money that confuses us. If we were to think only of punch and potatoes and things-exchanged by barter - we would not be confused, because we would then realize that we cannot eat potatoes this year which are to be grown next year.

A whole nation of persons can't go on year after year consuming more than it has to consume. It can't do it for one year, or even for one day. It can't do it by allow ing inflation, or by any other means. Failure to realize that in flation is a form of tax leads to the false belief that inflation af fords a means of postponing some of the costs of government. But it can't be done. If it were possible for a whole nation to postpone one-third of this year's cost of government un til next year, why not postpone half of it? All of it? And if it is possible to postpone it until next year, why not postpone it for two years? Ten? Forever? If this were possible, we would not need to wait for utopia. We could have it now! Government Fights Government: The Inflation Fighters Our present situation comes in to clearer focus when it is real ized that infiati on is a form of tax. A part of the costs of government are paid for by what is commonly called taxes, in both direct and hidden forms, levied by the taxing part of government. The remain der of the costs of government is paid for by the inflation-tax, which is in reality levied by the appropriations part of government over the protest of the taxing part of government, which has refused to raise all the taxes needed to cover all appropriations. This re sults in inflation, and prices rise.

There then is said to arise "need" for another big project in government, the "inflation fight ers." A big force of lawyers, econ omists,. and policemen are hired.

668 THE FREEMAN November They organize the citizens into com munity inflation-fighting gangs, to lend an appearance of local re spectability to the endeavor. These local organizations also insure that neighbors will be enrolled to serve as policemen over their neighbors, in the front line trenches where the fiercest fighting is most likely to occur. Why does all this new machinery seem to be necessary? What are they doing? The new branch of government is set up for the pur pose of fighting the payment of the inflation-tax that has been as sessed by another branch of gov ernment-the appropriations divi sion. It would be as logical to have the government set up a big unit in Washington, with citizens com mittees and all that, to conduct a tax revolt against the payment of income taxes - to fight the Inter nal Revenue branch of the Treas ury Department. Economic Quaclc:ery Every illusion floats on a plau sibility.

Quack medical doctors attack the most vivid symptom with something that is plausible to the suffering patient. The treatment may be to throw cold water on a fevered patient, or to throw hot water on one with chills. The quack doctor may use two ther mometers - one that does not rise above 98.6 degrees which he uses for fever patients, and another that does not fall below that point which he uses for chill patients to "prove" that his "cure" has been effective. A quack engineer might try to prevent an explosion by adj usting the pressure gauge downward or closing the safety valve. Or a quack railroad engineer might try to prevent a wreck by adjusting the speed gauge downward instead of reducing the speed. All these are silly, indeed, but no more silly than their equiva lents in the economic field. "Price control to prevent inflation" is also silly. The only reason why the medical plausibilities seem more silly than these economic ones is that medicine is further advanced and more widely understood. The economic mistakes we are now bringing upon ourselves may one day appear to our descendants to be just as foolish as the medical superstitions of old now appear to us.

Freezing the Price Thermometer 'iVhen there is inflation, prices rise. It would appear, then, that inflation is caused by rising prices. And this is the weapon of plausi bility selected by the price-control part of government to justify its fight against the appropriations part: "The way to fight inflation 1967 INFLATION 669 is simple - just establish price controls, and prohibit prices from rising." There are two ways, in general, to test the truth of a proposal like this, and to prevent the practice of quackery: (1) judging from ex perience, and (2) reasoning to the right answer. By both of these tests, price control is shown to be economic quackery. Lessons from History There has been a wealth of his torical experience with price con trols. In fact, a recent archaeologi cal discovery reveals that the old est known· laws in the world were price control laws - 3,800 years ago in ancient Babylonia.

One of the best summaries of historical experience with price controls is easily accessible to gov ernmental officials and others. In 1922, Mary G. Lacy, Librarian of the government's Bureau of Agri cultural Economics, addressed the Agricultural History Society un der the title: "Food Control Dur ing Forty-six Centuries." She pointed out how her search of history over this entire period re vealed repeated attempts in many nations to curb by law the infla tionary rises of price. She said: The results have been astonishing ly uniform .... The history of gov ernment 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 sup ply of essential foods is in posses sion of supreme power .... They had to exercise this control in order to hold supreme power, because all the people need food and it is the only commodity of which this is true.

But we need not go so far back into history, and to a foreign land, for evidence. During World War II we were experiencing some of the vivid consequences of these controls in the form of the "meat famine."· It was not a true short age of meat at all. The trouble was that controls were preventing its exchange, all along the lines of trade from producer to consumer. This was only one small sample of the consequences of those wartime controls. How short are our memo'• ?rles. Free Price Is Economic Governor Some may be tempted to ignore this long history of failure of price controls on grounds that "condi tions are now different." Then they evidently do not understand the reasons why price controls must always fail. These reasons are perhaps the best test of whether they are likely to fail of their avowed purpose this time.

670 THE FREEMAN November It is impossible to consume something that has not been pro duced, and it is foolish to produce something that is not going to be consumed - to throw it away, or let it rot. It follows, then, that a balance between what is produced and what is consumed is-the most desirable condition - if, in fact, it is not economically imperative to have this balance. How is this bal ance of "supply" and "demand" to be attained? Under a condition of price free dom, those who produce and those who consume will resolve this problem peacefully. The means by which they do it can best be visu alized by the use of a chart, sim plified for purposes of illustration. The details, shown here as equal changes in price and quantities, differ from one product or service to another and change with pass ing time. But despite these differ ences, the principles we shall de rive apply to each product; and they apply whether the price is controlled directly by government or by any other form of monopoly.

These are the principles of price - free and controlled - as revealed by the accompanying chart. 1. Reductions in price cause in creases in the quantities wanted (on the chart, five times as much at 10 cents as at 50 cents). 2. Reductions in price cause de creases in the quantities offered (one-fifth as much at 10 cents as at 50 cents). 3. Supply and demand are equal at only one point - the free mar ket price (30 cents) ; higher prices always cause surpluses (four fifths remaining unsold at 50 cents) ; lower prices always cause shortages (four-fifths of the de mand not supplied at 10 cents). 4. Trading and the economic welfare of both producers and con sumers are greatest at the free market price, and are prevented as prices are forced either higher or lower. The only instance in which "price fixing" fails to have these consequences is where it is set at 1967 INFLATION 671 the free market level (30 cents), in which event the governmen,tal edict is a sham because that is where the price would be in the absence of this pointless edict.

This is the point where people are freely acting in response to the inexorable signals of the market place. Yet, doing business at this price becomes "lawlessness" and "irresponsibility" by edict when price control sets it elsewhere. Prices that are rigged very high or very low will kill off practically all trading. Attempts to stimulate production, consumption, and trad ing by forced labor, socializing of property, and subsidies to pro ducers and consumers are all awk ward attempts to replace the per formance of people in a free mar ket. Under controls, those near the source of supply get most of it, and those at a distance have to go without. Black markets spring up. Distant consumers try to get some of the supply. Confusion increases and tempers mount. More and more price policemen are hired who, instead of producing useful things, try to quell the confusion and chaos. The bill for their sal aries and other costs is sent to the unfortunate victims of the con trols.

The simple chart at left reveals the answer to the question: Will price control stop inflation? All history has shown it to have failed. There is only one point of price where supply and demand are in balance, where both short age and surplus are avoided, where trade is most peaceful, and where welfare is at a maximum. If this incontestable fact is understood, the belief that we can escape real ity by enacting price control laws must be dispelled as an illusion. From Price Lies to Rationing Price control really means that laws are pa.ssed to make official prices tell lies. One of the penalties for the lying is the creation of shortages that cannot be peace fully resolved. The shortage, once created, must be dealt with by further powers of government and law. There must be "rationing" -ra tioning by the government of the shortage it has created by law, rationing of goods and services to individuals because the govern ment failed to limit the output of its money factory.

When the free market is allowed to operate and to set the price at a point where supply and demand will equate, each person will have purchase tickets in the market which correspond to the supply of something he puts into the market. Gifts, of course, are an exception; but in the case of gifts, the rights to draw 'on the market are still 672 THE FREEMAN November given by the person who supplied the market with something to be bought. These purchase rights are tickets of merit based on produc tion. And the whole thing balances out,as we have said, peacefully. When the government inter venes with price control laws, this balance is no longer maintained. There are now more tickets for things than there are things to redeem. There are shortages cre ated by law. Then governmental rationing seems to be needed, whereby government officials are empowered to decide·who shan get the short supplies. This substitutes political considerations for the merit of production under a free price in a free market.

Laws That Promote Dishonesty Not only do government-con trolled prices lie, but the process also rapidly promotes dishonesty among all groups - merchants, pro ducers, consumers, government employees, everybody. The tempta tion of bribery of government offi cials becomes great. Late during World War II, a grocer of extreme ly high integrity and wide experi ence, told me that it was absolutely impossible for anyone to practice honesty according to the law and still stay in that business under price controls. The reason for this should be clear when we consider the legislated falseness and interference with business operations that become involved. If this nation is to carry a role of moral leadership in the world, it will have to be founded on the morality of individual persons. And this is destroyed by such laws. The shortages that result from price and wage controls are purely a legal creation, created by the price control law and nothing else.

In an otherwise free economy, the "success" of any price control law can be measured by the extent of the shortage it creates, or the de cline in production which it causes. And if such controls were complete and effective, they would probably stop all production for trade, which uses money. This conclusion is in escapable. Under present conditions of in flation, caused by rampant govern mental spending - with laws aimed at the symptoms of inflation rather than dealing with its causethe time is short for making an im portant choice. Its nature is indi cated by what Lenin allegedly said in 1924: "Some day we shall force the United States to spend itself into destruction." And Lord Keynes reports: "Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a con tinuing process of inflation, gov ernments can confiscate, secretly and unobserved, an important part 1967 INFLATION 673 of the wealth of their citizens."

Lenin probably knew that price and other controls - one of the main objectives of the system he favored - would then be imposed. Unless the price control law is rescinded, its disrupting influence will lead to governmental enslave ment of all labor and confiscation of all production facilities - to adopt, in other words, a completely socialist-communist system which we are presumably opposing. A Strange Dilemma: Lawlessness or Socialism The only escape from the con sequences of these laws would seem to be for the citizens to ignore them. This means lawlessness, technically, in the form of black market operations and all the other forms of evasion. This places the honest citizen who favors hu man liberty in a strange dilemma. He must choose between practic ing lawlessness in this technical sense, or supporting a socialist communist regime. If we add to a moral breakdown of the people, the confusion that is created when illusions and wish ful thinking bump up against economic laws which cannot be re voked by man-made laws, and add to this the animosity that grows under these conditions and the utter distrust of one another that is aroused, then the prospect is too sobering to be ignored.

A step in the direction of tak ing away the government's mo nopoly in the production of money, and restricting government to the judicial aspects of exchange, would be to compel· the govern ment to live within its income. This means limiting government expendi tures, strictly and abso lutely, to taxes that are openly acknowledged to be taxes. It means prohibition of the concealed and deceptive tax of inflation. If this were to be done, there no longer would be an inflation prob lem of the type we now have. If this were to be done, there no longer would be any excuse for the enactment of socialist-communist measures - these deceptive proc esses of legalized price fictions and interference with exchange. If this were to be done, it no longer would be "neecssary" to give up our liberty under futile controls aimed at the consequences of inflation rather than at its cause. Ruthless measures are called for after the citizens have allowed their servant - government - to become their master. But it is better to be ruthless and success ful in preventing inflation than to become the victims of both ruth lessness and failure. ~ Taxation Theory W. M. CURTISS TAX EXPERTS long have theorized about the raising of money for various units and functions of government.

Should taxes be for revenue only, or as a means of social con trol, or both? Should taxes be levied on cit izens equally, or should "ability to pay" be a major consideration? Where practicable, should the "benefit principle" be followed? That is, if government performs a service for specific individuals and not for all, should those who directly benefit be charged for the service? For example, should high way users be required to pay for them through specific taxes on motor fuels and motor vehicles and direct tolls? And, if such taxes are intended for highway use, are safeguards against diver sion desirable? Dr. Curtiss is Executive Secretary of the Foundation for Economic Education. 674 How pay for government schools at all levels? Studies show the tremendous economic advantages of high school and college educa tion. Most parents urgently want education for their children. Should the cost of government schooling be charged on a "bene fit" basis, either to the parents, or against the enhanced future earnings of the students?

Changed Circumstances In the early days of our coun try, tariffs were an important source of revenue for the Federal government. And there was much debate among tax theorists as to the revenue-raising versus the pro tectionist and discriminatory as pects of tariffs. But "tariffs for revenue only" becomes an aca demic issue when the national government requires one quarter or more of people's earnings. Seeking the ideal taxation form1967 TAXATION THEORY 675 ula is of course praiseworthy, but cenditions of the search have changed! The taxation experts of 100 years ago were talking about nine cents out of each personal income dollar. Today, nearly 40 cents of every dollar of personal income goes to support national, state, and local units of govern ment. This calls forth new the ories of taxation. Collecting the billions of dollars now spent by various units of government is no longer a question of "soaking the rich" but of how to extract 40 cents of each personal income dollar without stirring up a tax payer revolt.

Taxation has become a tool of monetary and fiscal management. The experts speak of "fine-tuning" the economy so that employment will be high and productivity will expand. There doubtless are those who look upon taxation as a means of redistributing wealth, in the be lief that some have too much in come and some too little. The pro gressi ve income tax is an expres sion of this belief, as are current discussions of a guaranteed an nual income for all. So, in view of the growing tax burden and the increasing use of taxes as a tool for social and fiscal control, let us further review the new theories and modern prob lems of taxation. Hidden Taxes The tendency of taxpayers to revolt against high taxes causes tax collectors to try to hide the tax burden so that the taxpayer will hardly be aware of what is happening to him. If this process takes place at a time of rapid growth in the economy, levels of living may rise at the same time that taxes are increasing. With out an understanding of what might have been, people can truth fully proclaim: "We never had it so good!"

An effective method of hiding taxes is the withholding of Fed eral, state, and local income taxes by employers from the wages of employees. Most workers are in clined to think only of their take home pay and give little thought to· the tax they are paying. The social security tax not only is hidden through withholding, as is the income tax, but is other wise disguised as well. If he thinks of it at all, the employee is likely to consider only his share of the tax, not realizing that the em ployer pays an equal amount on his behalf. Further, many who pay in the name of social security view it not as a tax but as saving for their old age. A real estate tax is rarely thought of as a hidden tax, but when I asked a neighbor how much his school taxes were, he re676 THE FREEMAN November plied: "I haven't the slightest idea; I pay them monthly along with my mortgage, interest, and insurance bill."

Perhaps the most cleverly hid den tax is inflation. When the na tionalgovernment fails to cover its expenditures through taxes, it must borrow the difference, either from individuals or the central bank. If the latter, a multiple of that debt is likely to be added to the money supply, which is infla tion. Inflation usually is accom panied by rising prices and ero sion of the purchasing power of the dollar. Since 1939, the dollar has lost about half of its purchas ing power. This is a tax upon sav ings, as truly a tax as any of the many other ways of raising rev enue. From a political standpoint it has the advantage of being hid den. Also, it is possible to make people believe that the cause of inflation is the raising of prices by greedy businessmen or of wages by labor unions. Taxes are hidden in other ways, too. Many. are incorporated in the prices of things we buy and we rarely realize that a tax has been added. Taxes on liquor, cigarettes, automobiles, and gasoline are ex amples.

Voluntary Taxes With compulsory taxes absorb ing so high a proportion of income, it may appear paradoxical to speak of voluntary taxes. But what is a government lottery, if not a voluntary tax? Certainly, a person may avoid the tax by not participating in the lottery. The state of New York spends n1illions of dollars each year to try to prevent illegal gambling. One might conclude that the law makers believe gambling is an evil which should be suppressed. But no; we find the state permitting and even encouraging certain types of gambling. Bingo is permitted under certain conditions and bet ting at race tracks where the state gets a heavy "cut" is encouraged. And now, the state-wide lottery to raise money for "education"! The state felt it needed more gen eral revenue than it could raise through its many tax sources. So, why not try a "voluntary" tax like a lottery, and call it "educa tion"? This might remove the onus for some who think gambling is a little bit evil and who do not realize that this is just another way of swelling the general rev enues of the state.

Regardless of how one may ap praise the moral aspects of gamb ling, there seems little doubt that a state lottery operates as a re gressive tax, taking heavily from the poor, even though voluntarily. Historically, governments that have resorted to lotteries have had 1967 TAXATION THEORY 677 in common a tendency toward dec adence. The state lottery feeds the idea of "something-for-noth ing" already far advanced in this country. From the standpoint of the lawmakers, it is a "last re sort," desperation effort to fill the coffers of a profligate state. Diverted Taxes and Highways to the Moon Taxes sometimes are levied for an alleged purpose and diverted to another. The gasoline tax often brings this comment: "I wouldn't mind paying the gas tax if I could be sure the money was spent to improve highways." The diversion of taxes collected from highway users has brought sufficient protest that 28 states have adopted anti diversion amend ments to their constitutions. But, in most instances, such anti diver sion measures have little effect on the overall pattern of government spending.

True, in some states, more rev enue is raised from highway users than the total spent on highways. For example, in New Jersey where there was no state income tax, more than 40 per cent of all state reven ue in 1966 was from motor vehicle, fuel, and license taxes; and about 40 per cent of that was used for nonhighway purposes. In contrast, some states spend more on highways than they collect in highway taxes. For the country as a whole, disbursements for high ways by all units of government are about equal to the receipts from highway taxes by all units of government. One may be certain that tax in come from lotteries in New York and New Hampshire will be watched like a hawk to see that it is not diverted from educational purposes. But this fear will be un founded; the huge amounts bud geted for education will more than absorb all such lottery funds. Whether the lotteries will make available additional funds for edu cation or simply release general funds for other purposes would be difficult to determine.

The point is that when 40 per cent of personal income is taken for taxes, the diversion argument is hardly important. Ways will be sought to raise this money as pain lessly as possible. Motorists ap parently will tolerate a tax equal to half the price of their gasoline. Liquor and cigarette users will submit to a very heavy tax on those products, no matter to what purpose such funds are diverted. How would government finance an excursion to the moon except by diversion? Are social security funds di verted? It all depends upon one's point of view. In the early days, when social security taxes collected 678 THE FREEMAN November far exceeded benefit payments, was there diversion? If one assumes that social security taxes are in tended for the general welfare, then there is, of course, no diver sion. If future benefits are con sidered a contractual obligation, then past and current social secur ity taxes fall far short of needs, and diversion is a term without meaning.

From an administrative stand point, with governments involved in so many activities and at such tremendous cost, it becomes prac tically meaningless to try to ear mark funds at their source for specific expenditures. The attempt is made in the Postal Service, but with what success? Deficit after deficit! People will say ~ "Let those who want mail service pay for it," or "Let those who want to go to the moon pay for it," or "Let those who want to fight in Vietnam pay for it." But do they really mean they're ready to vote the government out of that par ticular business and leave it to competitive private enterprise? In many instances, special tax ing districts are set up to provide specific services such as schools, fire protection, police protection, water, or sewerage. Diversion of such special district taxes for other purposes is reduced to a minimum under such arrange ments, though such districts often require extra funds from other tax sources.

Not many years ago, public ele mentary and secondary schools were financed almost entirely from local real estate taxes. But the trend has been increasingly toward state and Federal aid for the fi nancing of more and more elabor ate schools and school programs. Conclusion So, we see that tax policy is more complicated than it once was. What one's theory of taxation fi nally amounts to is his theory of government, because taxing is an integral part of the governmental process. And there are really but two basic and fundamentally op posed theories of government. One theory, the one upon which the United States of America was launched, held that government ought to defend the peaceful in dividual and his property. The alternative theory of gov ernment, increasingly popular among Americans, would plunder the property of individuals for the supposed benefit of others. This is socialism. And the tax policy of socialism is to confiscate all private property.

The use of tax policy for social control - for leveling wealth - is not a new development. The U.S. official who said recently he would take property from those who had 1967 TAXATION THEORY 679 more than they need and give it to those who don't have enough was merely expressing the maj or tenet of socialism. More important than taxation theories is the question of the proper function of government. 1 Rather than debate whether 10 per cent should be added to in come taxes or raised through 1 For a discussion of the proper func tion of government see Government: An Ideal Concept, by Leonard E. Read. Foundation for Economic Education, Inc. further inflationary deficits, a more basic question should be raised: Will this money be used to finance a proper function of government? Even though there will be minor differences in details, a clear un derstanding of the proper place of government in an advanced free and open society will largely elim inate the need for complicated tax ation theory. With government re duced to reasonable size, the fi nancing of it becomes relatively simple. ~ Because I Am an IN 0IVIOUALIST ANNE WORTHAM The "attached article"

mentioned by Miss Wortham in this message to friends is a reprint of her "Individualism versus Racism" from the January, 1966, FREEMAN. If you missed it, let us know. PRIOR to and after having written the attached article, I have been swamped with questions from rac ists, liberals, and conservatives Negroes, Whites, and Jews - Af ricans, Englishmen, and Israelis. Most of the questions boil down to this: "But what was so different about your environment that leads you to think as you do?" You see, I am a Negro. I was born and raised in the segregated town of Jackson, Tennessee. I at tended college at that famous pil lar of "Negro civil rights"-Tuske gee Institute in Alabama. I grew 680 THE FREEMAN November up in a segregated town; I worked as maid for white women; I was taught in college that I had to "catch up and beat them"; I have been discriminated against once in Washington, D. C. But ... a Ne gro demonstrator once called me a traitor; some college classmates hinted that I was an "Uncle Tom" ; a work supervisor called me a mav erick; a white "liberal" I worked with accused me of committing treason against my race. In other words, I spent my growing years in the "right" environment and heard all the "right" dogma but I turned out to be the wrong prod uct. Everyone wants to know why.

Why? Because I am an individual ist. It is as an individualist that I address myself to you. There are the Southern white racists, the Northern white "lib erals," the militant Negro racists, and the moderate Negro racists. At one time or another depending on the circumstances, these groups are thought of by most in our country as being on opposite sides of the issue. This is a fallacy. There is another group of people in this country who stand in op position to those who are opposed only in their means but who all have the same end in mind. What many fail to recognize is that the proponents of Negro civil rights, black power, and white or black supremacy are all on the same side of the issue. On the other side are people like me - the in dividualists - who have no need for group identification. These people, of all races and with varied backgrounds, do not sacri fice themselves to others and do not ask that others sacrifice their lives to them.

Individual Rights or Collective Wishes Those of us who have not had to think in terms of race before are now being intimidated by a race of people who are demanding much more than a chance to live. With the help of their white co horts, they have succeeded in jeopardizing the lives of us all by demanding that we sacrifice our individual rights to their collec tive wishes. Pushing Congress to implement the theory of "from each according to his ability, to each according to his need" is leading us all into collectivized slavery. Because I am a Negro, I would like to make public my thorough disgust for the stand so many have taken as speakers for Ne groes. They may speak for Negro racists. But they do not speak for those individuals for whom being a Negro means no more and is as inconsequential as a thimble of water dropped into the ocean. Be ing a Jew, a white Christian, a 1967 •••BECAUSE I AM AN INDIVIDUALIST 681 Negro, or a Puerto Rican is by no means a satisfactory or real istic measure of man as far as individualists are concerned. And living as individuals would be far easier if white and black racists would take their groupism away from this world, to another uni verse where man does not exist.

For what they preach is anti-life, anti-man. This summer, a well-known news commentator made the fol lowing observation: "... a form less, generalized hatred of white people is not easy to answer. It may be impossible. If anyone knows the answer I have not heard it." There Is a Solution There is an answer. That answer is to give no sanction to and no excuses for hatred. This summer's rioting, looting, and sniping was an expression of hatred for life which means, productivity-which means, responsibility - which means, choosing to think for one self and acting on one's own voli tion. This summer's madness was just one more revelation of the fact that hatred for a responsible, pro ductive, and rational life has been transformed into hatred for a group of people. Not all white men are responsible, productive, and rational persons; but many of them are, and many Negroes are, too. Yet, when some Negroes say "I hate Whitey," they are not speaking of particular men; they are speaking from emotions that reject the basic principles of hu man life. When they express their hate, they not only do harm to themselves but they make it diffi cult for those of us who love life to Iive in peace.

Why the hate? Why the escala tion of that expression? It is simply that it is easier to have hatred that is sanctioned by the hated than to live in peace with one's neighbors. When one hates, one must negate something. In this· case, many Negroes have ne gated their own self-interest as well as the individual rights of others. Hatred is a negative emo tion and it begets only the nega tive. But if told he is justified in his hatred, a man possessed by that ugly emotion will not ques tion his motives; instead, he will go full-force toward destroying what he hates - those who pleaded their "guilt," thereby giving him the "gun" he turns on them. With Justice for All How do you deal with the brand of hatred we've experienced in the past months? You give it no sanc tion, no money, no food - nothing. You do it justice; you do not give it mercy. Mercy in the form of OEO projects, free food, clothing, 682 THE FREEMAN November housing, medicare, and Presiden tial Commissions is not the an swer. A race of people is strang ling this nation and they are do ing so at the expense of the rights of others. When a man chooses to use force to obtain values, he is no longer to be dealt with as a man; he is to be dealt with as the brute he is. (By force, I mean anything from government wel fare agencies that cannot operate except by forced taxation, to the use of bricks, clubs, and guns).

You don't plead with a sniper you don't give goods to a man who has just finished looting another man's property - you don't claim as "victims" those who stood by when trouble was brewing and did nothing, said nothing - you don't forgive the inexcusable-you don't give patient audience to your de stroyer - you don't give your de stroyer reason to count on your pity or your guilt - you don't deal with people who ask your help in the tone of a threat. You don't pity; you grant jus tice. Pity offers an escape from reality; it is a blank check on and license to evil. We have ample proof that such pity and mercy are destructive. Justice is recogni tion of the fact that one must never seek or grant the unearned and undeserved, neither in matter nor in spirit. And the only justice that can be granted to those who demand the fruits of another man's effort is indifference. They must know, too, that once they initiate force on another man they relinquish their hold to all rights and will be dealt with accordingly.

The real victims of our state of affairs, however, are the in divid ualists. As one among this group, I ask to be left alone and to be relieved of being forced by my government to pay for the evils of others. I have good rea son to believe that I am not alone. I thank you for reading what I have to say. It is my hope that you will join me in doing all you can to protect the rights of the individual from encroachment by groups and by government.

ASIC JETS! Autos and cornflakes! Reap ers and homes and dishwashers! Trains and pencils and microscopes and ships! Clothes and computers and flowerpots and radios and watches! The list of these sup posed realities, the things we see and touch, is virtually endless and still growing. Can it be that these material things are not themselves funda mental but are in the nature of shadows cast by human qualities we cannot see with the eye or touch with the hand? Dr. Donald Hatch Andrews, the renowned scientist, answers in the affirmative: I suggest that we postulate that the intangibles of truth and beauty, human freedom, courage, honor, hon esty are the core of the truly basic realities; and that the supposed realiLEONARD E. READ ties which we see and touch and feel are really only shadows cast by these truly basic dynamic forms .... 1 Why, one might ask, should any one devoted to an understanding of economics wish to examine this postulation ? Would this not be turning away from day-to-day practicality? Are economists not primarily interested in the removal of poverty, in a proliferation of these things by which we live and prosper? Is not economics the study of the production and dis tribution of wealth, the efficient and just allocation of scarce re sources? Granted the high value of truth and beauty, freedom, courage, honor, honesty, of what 1 Donald Hatch Andrews, The Sym phony of Life (Lee's Summit, Mo.: Unity Press, 1967), 440 pp.

683 684 THE FREEMAN November relevance are they to material well-being? Do not these intangi bles pertain to another realm of life? How can voice delivery at the speed of light, for instance, be but a shadow cast by these spiritual attributes? The answers to these questions take an unconventional turn if the postulation proves correct. And, further, the study of economic wel fare must undergo a drastic shift in emphasis. But is the postulation valid? I believe it is, that material well-be ing - the possession of things we see and touch - is no more than a potential dividend of moral recti tude. To approach the matter from the negative side, is it not a fact that a high standard of living is out of the question when and where moral depravity is the mode? A society of thieves would soon perish of starvation, as would a people bereft of freedom, or unattentive to a search for truth. Were dishonor, ugliness, and lies the general prac tice, life itself, let alone affluence, would be impossible.

On the basis of these simple ob servations, are we not warranted in concluding that material well being has to be preceded by certain spiritual attributes and that the things we see and touch are shad ows cast by these intangible but real forces? Admittedly, the study of eco nomics aims at finding out how bet ter to produce and distribute the material things by which we live and prosper. But, assuming the correctness of our postulation, eco nomics of the meaningful brand is a discipline founded upon and sec ondary to a high moral order. A truly productive, trading society must presuppose men of some recti tude, not rogues. Political Authoritarianism We must distinguish, however, between true and false economics, the latter being a roguish sort of business. Merely observe the "econ omists," in business as well as in the academies, whose systems in volve feathering the nests of some at the expense of others, who would rob countless Peters to fatten selec tive Pauls, and who pay honor to little more than their own schemes.

We witness in these instances the "economists" themselves lacking the moral and spiritual attributes which must be presupposed for fruitful economic activity. This sort of thing - systems aimed at controlling individuals in their eco nomic behavior - should not be re ferred to as economics but as mani festations of political authoritari anism. Parenthetically, something is amiss in our vaunted educational institutions: turning out authori1967 THE· BASIC REALITIES 685 tarians and calling them "econo mists" who, in turn, teach authori tarianism and call it "economics."2 This parallels in confusion our "ed ucated" people who commend and lend cooperation to gambling (lot teries) as a means of financing the same brand of schooling that "edu cated" them!3 They would do well to heed Emerson, "... the end pre exists in the means." So, I claim to be false that brand of "economics" which pertains to the immoral, egotistical, and satan ic, namely, how forcibly to control the Iives of others.

These Things Shall Be Added Economics proper is concerned with the behavior of men in volun tary, cooperative, competitive, pri vate activity - with the govern mental agency of force limited to keeping the peace. Within that framework of how men behave when moral and free, we do indeed discover that the tangibles - the things we see and touch-are but shadows cast by the 2 For what this writer believes to be amiss in education, see Chapters XV, XVI, and XVII in Anything That's Peace ful (Irvington-on-Hudson, N. Y.: The Foundation for Economic Education, 1964) . 3 Education is the excuse used to justi fy the New York State lottery. For a critique of gambling as a means of financ ing governmental activities - education or whatever - see "Kakistocracy," THE FREEMAN, August, 1963. basic realities: truth and beauty, human freedom, courage, honor, and honesty. The postulate we are trying to examine is simply a scientist's rendition of "Seek ye first the Kingdom of God and his right eousness, and all these things shall be added unto you." No men tion is made of how "these things"

- the tangibles - shall be added. Merely seek what is right and true and they shall be forthcoming without further ado, automatic ally, so to speak. In short, so goes the promise, "these thing-s" are but shadows cast by finding and observing the verities. The mystery of such "manna from heaven" largely accounts for the all-too-common rejection of this counsel offered by first a bib lical and now a scientific writer. Ever so many persons, particu larly the pragmatists emerging from our modern educational in stitutions, are reluctant to accept anything bearing the sti gma of mystery; they accept only that which their little minds can analyze and explain. Investigation into how a moral people behave when free - the valid brand of economics - over whelmingly supports the view that "these things" are shadows cast by spiritual attributes. Here is but one example among many. This is written on a hot, 686 THE FREEMAN November humid day in August, but an air conditioner keeps my workroom at a comfortable temperature. The startling fact is that not a person on the face of the earth knows how to make this new-fangled gadget, nor has any living person had more than an infinitesimal part in its making. 4 Yet, air con ditioners exist by the millions, cooling homes, offices, laboratories, automobiles, airplanes, you name it! If this is not a phenomenon, pray tell, what is!

How are we to account for this miracle that has happened to us? And why has it not happened to various other persons or groups? It is evident that there could be no air conditioning in a so ciety of thieves. Or among a peo ple whose promises are naught but babble. Or among those whose search for truth is so remiss and shallow that the value of indus try, thrift, initiative, and other virtues stands unrevealed. Or among slaves where freedom does not prevail. Or among a people so lacking in courage that all inner most convictions remain forever hidden. A society of liars would lack air conditioners, planes, autos, food - and could not long survive. It should be plain that these 4 For more detailed explanations of this irrefutable claim, see "Only God Can Make A Tree - or a Pencil" in Anything That's Peaceful, and also my recent monograph, "Where Lies This Fault 1" miraculous conferments can hap pen only to a people more graced with rectitude than damned by depravity. Nor is it too difficult to see why.

At the level of economics - sec ondary to the moral order - ex change is the key to abundance. To appreciate this fact, merely contemplate your plight were you left exclusively to your own re sources. Willing Exchange: Key to Abundance There are two kinds of ex change: willing and unwilling. Unwilling exchange is of the authoritarian brand: the forcible exchange of one's income to fi nance idleness, to put men on the moon, and the· like. Unwilling ex change is beyond the pale for no other reason than its coerciveness. Were another reason necessary, its inefficiency could be cited. The Russians, for instance, are the leading practitioners of unwilling exchange. Willing exchange is the key to abundance at the economic level. In the U.S.A. alone, these ex changes - the tangibles and the intangibles - run into inestimable trillions daily, so numerous and ordinary that we are scarcely con scious of them.

Willing exchanges, essential to the removal of poverty and the 1967 THE BASIC REALITIES 687 source of economic gain, 5 are more prolific among honorable people, those whose word is as good as their bond, than among dishonor able people. We avoid trading with cheats and liars as we avoid the plague. Willing exchanges run to men of veracity; they proliferate where the verities are sought and observed; the better these truths are understood and practiced the more numerous the exchanges and, thus, the more are "these things" added unto us. It is literally true 5 See "Freedom's Theory of Value," THE FREEMAN, October, 1967. that the supposed realities which we see and touch are but shadows cast by truth and beauty, human freedom, courage, honor, and hon esty. It is implicit in these reflections that the economist who is not first a student of the verities - moral philosophy-must perforce depend on others for an understanding and spread of righteousness, the basic reality to which his disci pline is secondary. But far better if both disciplines are mastered by each and everyone of us-by you and me. ~ Swayed by Passion WHEN A STATE has weathered many great perils and subsequently attains to supremacy and uncontested sovereignty, it is evident that under the influence of long established prosperity, life will become more extravagant and the citizens more fierce in their rivalry regarding, office and other obj ects than they ought to be.

As these defects go on increasing, the beginning of the change for the worse will be due to love of office and the disgrace entailed by obscurity, as well as to extravagance and purse-proud display; and for this change the populace will be responsible when on the one hand, they are puffed up by the flattery of others who aspire to office. For now, stirred to fury and swayed by passion in all their counsels, they will no longer consent to obey or even to be the equals of the ruling caste, but will demand the lion's share for themselves. When this happens, the state will change its name to the finest sounding of all, freedom and democracy, but will change its nature to the worst thing of all, mob-rule. The Histories of Polybiu8, Book VI ONE of the most important needs of young people going out into the world from university and high school is discipline. We need to know about disci pline because we simply cannot get along with other people without it. By the time we finish our for mal education we have become persons, with status in a group en titling us to rights and imposing responsibilities.

Some acts are commanded or forbidden by the general opinion of humanity. The discipline of law is the good man's defense against the unj ust actions of other men. Other areas in life are governed by rules agreed upon so that peo ple can work and play together: the rigidity of the squares and the moves in chess, the rules of a trade union, the by-laws of a corReprinted by permission from The Royal Bank of Canada Monthly Letter, May, 1958. 688 poration, for example, and the regulation of traffic. There are other activities in which discipline plays its part. It was Cromwell's discipline of his army that broke. the cavaliers; it was Thomas Aquinas' personal discipline that enabled him to write his magnificent summations of duty and responsibility; it was the discipline of a great cause that took the little ships to Dunkirk with nothing more to guide them than directions scribbled on the back of an envelope.

Weare troubled today because disciplines to which we became accustomed through the ages are coming into conflict with new cus toms in a changing society. This is a confused period, when many people have lost or have thrown overboard the old standards with out acquiring new ones. We fear that we may be shaken loose from 1967 DISCIPLINE IN LIFE 689 our moorings in respect to mar riage, economics, politics, govern ment, freedom, democracy, and a host of other things we have cherished. This is happening in a time when we have achieved material certainty such as we never before enjoyed. Her Majesty the Queen said in her Christmas Day broad cast: "It is not the new inventions which are the difficulty. The trou ble is caused by unthinking people who carelessly throwaway ageless ideals as if they were old and out worn machinery. They would have religion thrown aside, morality in personal and public life made meaningless, honesty counted as foolishness, and self-interest set up in place of self-restraint."

Nature's Discipline Everyone who has studied math ematics, physics, and chemistry has learned about the systems and disciplines of nature. He found that a leaf, a drop of water, a crys tal, a moment of time-all these are related to and are part of the per fection of the universe. Nature is a discipline. As Confucius put it: "Order is heaven's only law." What we admire as order and beauty in the final form of any natural manifestation is the prod uct of the measured discipline of its development, like the ebb and flow of the tides, the systole and diastole of our hearts. Without these disciplined motions there would be no growth, no achieve ment, no thought, nothing. We must beware of thinking that discipline means fixity. A wave pattern is pleasing by its rhythmic alternation of dark and light, of high and low, but we know that every wave, viewed at close range, will show differences that will never recur in quite the same form. Nature is not so regi mented as to make no allowance for some degree of latitude for the individual creatures within it.

One advantage of having life run along in good order or pat tern is because good order tends to get the most out of things with the least labor. It is 2,300 years since an Athenian writer gave as an example of disorder the actions of a farmer who threw into his granary barley and wheat and peas together, and then, when he wanted barley bread or wheaten bread or pea soup, had to pick them grain by grain, instead of having them separately laid up. Discipline helps us to establish a pattern. Deep in us we dislike chaos. When we succeed in form ing a pattern, it becomes familiar and comforting. By following it we find that we can solve more problems with fewer false starts. We learn the pleasure to be found in a symmetrical life.

690 THE FREEMAN November Social Discipline Like nature, society has its dis cipline, a sort of standardized manner in which groups beha ve~ The discipline of society may be thought of as something in which one must qualify if one is to be come mature. Society has certain common expectations, upon the basis of which people are able to cooperate and regulate their ac tivities. It is obvious that society can continue to exist only under cer tain conditions. Newcomers, like young people who leave adolescence behind them and step into the world "on their own," must learn and carryon the techniques and rules of the society. Just as in the classroom the students act in ex pected wayS and the teacher has a different kind of activity, so in the wider environment different peo ple have different tasks but all must act within a discipline that gives society an orderly form. There are few fixed social levels in Canada. A person finds his· own place in the social structure ac cording to his capacities and en ergy. In striving toward his ideal he needs to keep in mind that cus toms and laws are. not obstacles to be crashed through or hurdled or evaded. They are to be respected as conditions of the vital function ing of society. They are conditions of freedom because the only alternative to the rule of law is the tyranny of the strongest. Hendrik Van Loon said bluntly that we obey the law because we kno\v that respect for the rights of others marks the difference between a dog kennel and civilized society.

Compulsion in social discipline gets its influence from long ac ceptance of it by the majority of the people concerned, but regula tion by the Criminal Code has for the average individual less signifi cance than a host of the less formal controls which surround him. Sophisticated people are more influenced by custom than they like to admit. They do not think of these customs as being part of social discipline. Yet nine-tenths of what we do in all our waking hours is done in unconscious con formity with group habits, stan dards, codes, styles, and sanctions that were in existence long before we were born. Self-discipline In the turmoil of today, wrote Lord Beaverbrook in his book, Don't Trust to Luck, man "can only keep his judgment intact, his nerves sound, and his mind secure by the process of self-discipline." We go a long way toward ma turity when we substitute inner discipline for outer. Two men of different skills, more than two thousand years apart in time, 1967 DISCIPLINE IN LIFE 691 agreed on this. Socrates, the Greek philosopher, taught self-discipline as the first virtue, saying it is necessary to make the other vir tues avail, and Charles Darwin, author of On the Origin of Spe cies, declared, "The highest stage in moral culture at which we can arrive is when we recognize that we ought to control our thoughts."

It is not necessary to think of self-discipline as something like self-punishment. We do not need to walk through fire or sleep on nails as certain sects in the East do; we don't need to go around with our noses in statute books or treatises on ethics as certain re formers in the West do. We see self-discipline in the boxer who halts his blow in mid-air at the sound of the gong, in the office manager who reflects before cen suring a worker, in the mother who refrains from punishing her child in the heat of anger. The man who gives in to the enjoyment he finds in flying off his control center, who cannot discipline his own stormy moods, will find opportunities for advance ment eluding him. He may be en dowed with great ability and he may have developed this by in tensive study, so as to be capable of great things, but he is like Napoleon, of whom Sir Walter Scott said, "the wonderful being who could have governed the world, but could not rule his own restless mind."

Minds which have the greatest natural power have most need of training, just as the most mettle some horses need schooling to make them useful. But, says someone, what about our liberty, in which we take so much pride? Discipline is not antagonistic to liberty. License of behavior is not a proof of free dom. The test of greatness of lib erty is the extent to which we can be trusted to obey self-imposed law. It is not true that we have no choice except between lawless· ex ercise of private license and the strait-jacket of conformity, with no leeway for the exercise of re sponsible judgment and the free dom of decision that goes with it. As .we found in discussing the disciplines of nature, life is order, but order with tolerances. Self-discipline means that we 692 THE FREEMAN November do not act according to our likes and dislikes, but according to prin ciples of right and wrong. It gives us freedom within the law: re sponsible freedom to move within an orbit as wide as, but no wider than, what is in harmony with preservation of the overall order on which survival and effective living depend.

Hence arises the virtue in mod eration, the avoiding of extremes, the putting of all things in their proper place. Ambitious young people will show themselves worthy of the advantages they en joy by the moderation with which they use them. Finding One's Identity Identification of one's self with established duties and rights is part of the process by which a person attains social personality. The problem of duty may be summed up in this way: the worst reason in the world for not doing something is that you don't like to do it. The important question is: should you do it? The person who follows only his likes and dis likes has not grown up. To help us find our way toward doing our duty, society has evolved morals and conventions. These are traditional generalities concerning right, wrong, duties, totems, and taboos. Some have been made formal in commandments and codes of ethics. They lay hold of raw, uncultivated man and smooth his surface and help him adj ust to social living.

It is evident, then, that there are two sources of discipline: one that is outside the person and an other inside. Social pressure is concerned with the regulation of conduct and manners; the inner discipline urges us "to thine own self be true; thou canst not then be false to any man." Our personal standard is kept in line by conscience, which may be thought of as the human mind applying the general principles of good behavior to individual ac tions. It is our personal judgment on acts about to be performed. There is a great area of life in which there are no "must" signs, a place wherein we recognize the sway of duty, fairness, sympathy, taste, and all the other things that make life beautiful and not just ordinary. Lord Moulton described this area in a picturesque way. It is, he said, the domain of obedience to the unenforceable; the obedi ence of a man to that which he cannot be forced to obey. It is no mere ideal, but is strong in the hearts of all except the most de praved. In illustration, Lord Moul ton cites the sinking of the Ti tanic, when "the men were gentle men to the edge of death." Law 1967 DISCIPLINE IN LIFE 693 did not require it. Force could not have compelled it. The feeling of obedience to the unenforceable was so strong at that moment that all behaved as, if they could look back, they would wish to have behaved.

It may be a great part of the richness of our Western culture that we have so many areas in life subject only to the urge to do what is right and fitting, without compulsion. True civilization may be measured by the extent of this land of obedience to the unen forceable. Family Discipline When we see someone away off the beam socially or personally, it may mean that he did not come up against the discipline boundary line at a time when he could have learned without hurt. Since ages before history began to be written, the hearth has been the symbol of family life. The hu man emotions and customs formed there are the most important and abiding features of life. In all the essential human traits the person is the product of the family group and its mode of life. Every parent knows that the natural tendency of children is to do what they like and to avoid do ing what they do not like. The first everyday problem of every parent is to teach his children to do the things they should do, whether they like them or not, and to avoid doing the things they should not do, even though they like to do them.

Discipline is necessary to daily life in the family, not only for health and safety and tranquility, but also to produce the habits of social behavior which avoid per petual quarreling. Children must be taught certain fundamentals like respect for other people's property and rights, and esteem for others as individuals. They need to learn, if they are to fit happily into society, to live within the law and to be honest and wholesome. Children owe duty and loyalty to their parents. E. W. Scripps, the hardheaded newspaper pub lisher, declared flatly: "There has never been a time when violation of the fifth commandment has not produced a tragedy." The truth is that children be694 THE FREEMAN No·vember lieve in parental discipline. A sur vey of 96,000 high school pupils in 1,300 schools in the United States revealed the clear-cut opin ion that parents should carefully restrict their teen-age sons and daughters as to hours, frequency of dates, places of amusement, choice of associates, smoking, and drinking. In Canada, fully three quarters of the public think, ac cording to a Canadian Institute of Public Opinion poll, that home discipline is not strong enough.

The responsibility of family nurture is not one that can be passed on to other institutions. The school, the church, and vari 0us societies have their proper functions, but no institution can fill the place in education and dis cipline that rightly belongs to the family. Parents need standards. The se cure child is the child who comes to know what his parents stand for, and that, as Dr. Henry C. Link writes in The Way to Se curity, they cannot be shaken from these standards by arguing or wheedling. Where the parents are sure of their principles, the child will be sure of his parents. There are two main road blocks in the way of realizing perfect parenthood. Many parents in this scientific age have lost the con victions of their grandparents and have not been able to replace them with a set of their own; others are trying to live out their own frustrated wishes through their children.

Discipline in School Good discipline in school re quires that we establish and main tain wholesome conditions for learning. Teachers cannot be expected to transform children who are spoiled at home into orderly, well-balanced human beings. The school can im pose no stronger discipline than the parents exercise or will sup port. "How can you work with a youngster in school," asks an ar ticle in The Educational Record, "if he hears at home that the school is no good, the teacher doesn't know what she's talking about, and the principal had better watch his step?" Discipline is needed in school, not only for the better manage ment of classes and study, but also because of its value as a habit in later life. We all have to meet standards in adult life; it will be easier to do so if we learn to toe the mark during school days. Some teachers try to be "pals" to their pupils, but the children have friends their own age and look to the teacher for something different: leadership. That leader ship needs to be positive. It does not demand an assault upon the 1967 DISCIPLINE IN LIFE 695 child's will, but it means persuad ing his will to desire the right things. The principles implanted through school discipline will be based upon pleasure in growth and achievement, not upon ex tremes of repression or leniency.

In Office and factory Like every other activity, busi ness is carried on in a complicated social setting where habits, cus toms, conventions, and laws· blend together to determine daily pro cedure. The office and the factory must have discipline, and giving force to that discipline is the re sponsibility of management. Workers must pull together if their group effort is to be effective. Every person must do his fair share· of the work, contribute to order and efficiency, and be con siderate of the feelings of his fellow workers. The duty of maintaining disci pline is one of the hardest func tions to get foremen and managers to discharge ... Discipline is not so simple today as it was a half-cen tury ago. Then it was mostly a matter of imposing the will of the boss by main force of voice, fists, and the threat of dismissal. To day, leadership of the human type is gaining ground rapidly. It re quires knowledge, tact, and integ rity. The foreman who wins the respect of his workers has prac tically solved the problem of de partmental discipline; he has se cured their willing cooperation.

The ideal sort of discipline is not gained by posting rules and regulations on a notice-board. The more rules a manager imposes upon his men, the more he raises their resentment because of the implication that they are incap able of self-direction. But a cer tain minimum of regulation is necessary to efficiency, safety, and smooth operation. Consistency Whether in the family, school, or factory, consistency in disci pline is vitally necessary. Rules that only threaten, and are not enforced, are like the log that was given to the frogs to be their king. At first they feared it, but soon scorned and trampled on it. Consistency starts with clarity. Let your rules be clear. Tell the reasons on which they are based.

696 THE FREEMAN November Announce who is responsible for their enforcement. The rules being made known, it is unfair to the working force to allow one or two persons so to conduct themselves as to hinder the efforts of the rest of the group. Leniency is cruel, not only to the group as a whole but to the of fender. He who has been forgiven a hundred times learns to believe that he has no real faults to be forgiven. Be consistent, too, in enforcing rules even when infraction of them has not resulted in material dam age. Historians tell us instances from the long-ago past, three of which will illustrate the point. In war, the Romans inflicted punish ment more often on soldiers who attacked contrary to orders than on men who had abandoned their posts when pressed by the enemy; a Greek general was awarded a garland for his victory, but fined a thousand drachmas for going out to battle personally unarmed; a ruler enacted a law that no one might possess over 500 acres of land and was punished according to his own law when it was found that he owned more.

Our reward for self-discipline and the acceptance of social re sponsibility is not necessarily money or power, but self-respect and the respect of others. To have control centered in us does,· at the very least, preserve us from being dragged through life like slaves. If a man is not the sort to seize upon discipline as· something con tributing mightily to his life hap piness - a constructive force, a protective force - then he just must bear with it, for he cannot escape it. It is better to make discipline something that will help us to get what we want out of life than to be driven into accepting it as a pitiless force. Discipline has a happiness val ue. It will not save us from having to make choices, and therefore of sometimes making mistakes, but it will help us to assess the chances and choose more wisely. Quite often we shall find that the stern thing which discipline orders is the wisest, the best, thing. + Self-Salvation I am surrounded by a multitude of men and women pathetically eager to save the world, but strangely unwilling to submit to the austere self-discipline of saving themselves.

HANFORD .HENDERSON, Hands Off (1924) THE MELVIN D. BARGER MIRAGE PLEASANT REASSURANCES crop up regularly in commentaries these days to the effect that we now have a "mixed economy." This is good, the commentators say, and a reason why there'll be continued prosperity along with a measure of stability. The mixed economy, it's argued, tends to give us the best of both worlds; we can have the productivity of traditional free enterprise combined with the wis dom and objectivity of an all-wise, all-protecti ve government. But what reassures people the most is the implication that the maj or changes in the structuring of the economy are now behind us, and that the present mix is the pattern for the future. We face not socialism, but a rather com panionable arrangement much like the present, in which certain busi nesses will be owned and operated by the government, some will be owned and operated by the private sector, while still others will be privately owned and managed but Mr. Barger is a public relations representative in Jackson, Michigan.

must operate under government control. There's something in this succotash to please the proponents of every social philosophy, and many of the commentators only stop short of saying that the mixed economy is really the long sought millennium. Quite likely, however, the mixed economy is more mirage than mil lennium. The belief that the econ omy will continue indefinitely in its present mix is probably an il lusion based on wishful thinking, because there are too many ideas in force and trends in motion that portend more major changes and continuous adjustments in the direction of increased collectivism. We have not arrived at a "mixed economy"; instead, we are really on a journey toward a thoroughly socialist one. There are several reasons why this is so. No End to Socialism One reason why the mixture will become more socialistic is that socialists are the real archi tects of the present state of af697 698 THE FREEMAN November fairs; and in their view, a "mix"

is really only a transitional phase. This is not to label as "socialist" the legislators and other political leaders of the past few decades who sponsored and voted for the laws that changed the economy. Most of them!: were highly in fa vor of the traditional American patterns. But the ideas and pro posals which they adopted were formulated and skillfully offered in piecemeal fashion by men who frankly despised capitalism and believed it to be the cause of much human suffering. They were not out to modify the existing sys tern; they were bent on replacing it; and for the most part, this is still the purpose of the writers and intellectuals who supply most of the basic ideas which later ap pear as legislation. The socialists probably won their most important victory with the gradual adoption of their view of property rights - something which may have happened as long as 50 or 75 years ago. They view property possession and control as a privilege granted by the state, revocable at any time the state re quires use of the property or the holder uses it in a "socially un desirable" manner. The traditional American view was that. property rights were almost as important as a man's right to life and should be modified only under the most extraordinary circumstances.

But the view that property pos session is a privilege rather than a right gradually won favor. The result has been the extension of government control into every ac tivity, usually on the grounds that people are abusing their privileges or not meeting their obligations. Inherently Unstable Another reason for. the contin uing socialist drift is that the mixed economy has an unstable tendency caused by the pleadings of special interest groups. This in stability seems unavoidable. The chief tools of the legislators and political managers in dealing with special interest groups are subsi dies and regulations. One difficulty with subsidies is that they never quite answer the problems or the wants of those subsidized. At the same time, grants to certain groups always inspire others to seek similar favors. Subsidizing seems to be a self-perpetuating process. The tax ing and inflation necessary to sub sidize certain groups soon pinches almost everybody, with the result that further subsidies are de manded.

The same self-perpetuating proc ess seems to apply to government regulation, with each special in terest group pleading for tighter regulation of its competitors or its 1967 THE MIXED ECONOMY MIRAGE 699 adversaries but not of its own affairs. Human nature being what it is, such developments are fairly predictable; but in any case they do nothing to stabilize the mix be tween socialism and freedom. An other tendency of socialist trends is that once a measure of social ism is accepted, it continues to grow during prosperity and ad versity; either condition will pro pel the economy further down the collectivist pathway. If the econ omy is prospering, the advocates of central planning quickly take credit and offer the tantalizing suggestion that if some govern ment intervention has done this much good, more will do even bet ter. Their cudgel is the memory of 1929 and the Great Depression, and they never tire of resurrect ing this stupendous disaster and reminding US that only the benev olent hand of government prevents a repetition.

But what if a 1929 should occur even with the present controls? Socialists would never question whether existing controls helped bring on collapse. They would sim ply blame the crash on the greed and shortsightedness of managers in the private sector. The business managers' attempts to protect themselves would be condemned as antisocial. Even in recent busi ness recessions of brief duration, managers come in for considerable criticism from government officials when they make logical opera tional adjustments such as inven tory reductions and staff layoffs. Such criticism may be expected to reach hurricane proportions in the event of a truly deep depression. And the result would be taken as justification for more government control of business activities. No Short Cut to freedom In this kind of a "heads I win, tails you lose" situation, what can individuals do to check the drift toward socialism? It does little good to warn of "creeping" or "galloping" socialism, because most people long ago lost their fear of it. "If this be socialism, let's have more of it!" they say, when praising the merits of a pet program. It also is of little avail to defeat specific socialist measures, for collectivism has been accepted up and down the line and persists as a hydra-headed monster. An individual who defeats it on one issue looks up to find ten new issues confronting him. Nor does it help much to point to the fail ures of socialism in other coun tries, because many feel that it's not a fair comparison. They say that the U.S., with its vastly su perior technology and resources, has the edge on many smaller countries. The achievements of the free enterprise system ought to be 700 THE FREEMAN November a good argument against inter vention, but people prefer to be lieve that competitive enterprise will continue to produce lavishly no matter how much it is altered and regimented.

Possibly there is no way to halt the socialistic trend at this mo ment. Noway has been found for a country to remain in a condi tion of freedom when a large num ber of its citizens favor certain forms of socialism; sooner or later, their feelings are bound to become expressed in the laws and economy of the country. These feelings may be based on false hopes and deceptions foisted upon them by unscrupulous leaders and clever propagandists; but if false ideas are accepted, they are for a time the reality one has to face. Though it may be clear to a few in dividuals that these false ideas will someday produce grim results, there's little that can be done if the majority insists that bad ideas and bad laws must run their course. Individuals May Be Trusted There is hope, however, in the good common sense of individuals, which can be trusted in the long run to spot falsehood and to do something about it. There's been considerable disillusionment lately with majority rule, which many had thought to be a panacea for the world's problems. Majorities, it's being learned, can institute tryannies quite as harsh as those imposed by one-man despotisms.

But individuals can learn to do better than they have done, and so can ruling majorities. This cor recting process may not work smoothly and automatically, and for a time the power of the ma jority in the United States may even be supplanted by a ruling elite, as seems to be happening now in Britain. Yet the long term future for good ideas is bright, for the simple reason that freedom works, while regimentation fails. The duty of the libertarian is to keep his own thinking straight in this period of vast change. He should think of what ought to be, rather than what is. His beliefs may not be politically popular, but this does not mean they are wrong or that they will not be re vived and accepted at a later date. Truth is not determined by a show of hands, and the fact that people will not vote for what is right does not destroy the truth. Crushed to earth, truth always rises again and challenges men to re-examine what they have done.

That will be easier to do, in social affairs, if believers in the ideas of freedom stick to their principles and forget such passing illusions as the belief in the permanency of the mixed economy. ~ A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN The New IndustrialState I WAS ONCE a co-worker with John Kenneth Galbraith on Fortune Mag azine. Presumably, in the course of carrying out writing assign ments, we must have been subject ed to similar influences. But what he saw, I failed to see - and vice versa. In his amiably sardonic way he used to refer to myself and to John Davenport as "Puritan" econ omists, meanwhile reserving for himself the adjective "Rumanian." By this he meant that he had no interest in the economizing func tion, which would attempt to use scarce means in the most produc tive way. To Galbraith as to Thur man Arnold, an overloaded payroll was simply a means to the end of spreading leisure and sharing a fixed amount of wealth among more people. He welcomed stagnation as a release from creative tension.

The Galbraith ideas have now been worked up systematically in a long, somewhat repetitive book called The New Industrial State (Houghton Mifflin, $6.95). I read it with considerable interest for reasons that are largely autobio graphical. For Galbraith has em braced every belief that seemed revolutionary - and therefore ex citing - to my own generation thirty and even forty years ago. He is the perfect Veblenite, even to his habit of seeking out the phrase that will best combine suav ity and immeasurable scorn. Here is the "conventional wisdom" of the 1930 radical, preserved under a bell jar for consignment to the nearest museum of antiquated ec onomic curiosities. Yet Galbraith thinks he is a red-hot ideological innovator! Never has such self delusion received such a respect ful hearing (though the good re views, one notices, have come not from the economists but from liter701 702 THE FREEMAN November ary critics who are almost totally innocent of the history of economic ideas).

Veblen's Inlluence Galbraith's theory is that the commanding influences in modern economic life dictate a suspension of market forces. We all believed this back in the late twenties and early thirties when we were talk ing about Veblen's The Engineers and the Price System and eagerly awaiting the publication of the gospel a.ccording to Ber Ie and Means. The big corporation sup posedly was in a position to sus pend "pure" competition. It could dictate its prices, control its sources of supply, and reach out, via the advertising skills of Bruce Barton and Roy Durstine, to bam boozle the customer into taking whatever the corporation stylists ordained for the so-called "mar ket." When I went to work for For tune Magazine in 1936, I was a Veblenite par excellence. After writing corporation stories for six years, however, I wondered how I could ever have been so inno cent. In support of his thesis that the modern "technostructure"

keeps itself in power in the big corporations by controlling the future despite restless stockholders and the menace of competitive change, Galbraith cites the misadventure of the Ford Company with the Edsel as· the exception that proves his rule. I might have believed this myself if I hadn't been forced by Harry Luce to visit Detroit, Toledo, Pittsburgh, and way stations to look at changing factory routines and to talk to peo ple who, with an air of conspira torial confidence, told me about the thousand dodges that enable a mem ber of a "big two" or a "big three" to steal business from an "oligop olistic" competitor. My conclu sion from a novitiate in writing for Fortune was that the system even at its most "oligopolistic" was shot through with competition, both open and hidden. But Gal braith, writing for the same mag azine, apparently listened only to the front-office fellows who be lieved the propaganda of their own trade associations about "sharing"

markets. Galbraith is at great pains to prove the singularity of the Edsel story. But just how singular was this episode? I recall writing about the dilemma faced by General Mo tors in the year of the "pregnant Buick," when the GM stylists were suddenly confronted with a car which few people wanted. Some years later GM committed itself to the rear-engine compact called the Corvair. This was a conces sion to the popula.rity of the Ram bler American on the one hand, 1967 THE NEW INDUSTRIAL STATE 703 and the invasion of the American market by the Volkswagen on the other. Alas for the planning of the GM "technostructure," the Corvair fell foul of two sets of assassins. One of them was Ralph Nader. But the other was the American con sumer, who, when a predicted de pression failed to materialize, de cided that he didn't need to worry too much about the cost of sup porting a more commodious car.

For a few short months George Romney, as head of American Mo tors, seemed to be making consid erable hay with his propaganda about the "gas-guzzling dinosaurs" which required so much money for operation and upkeep. But where is the American Mo tors Company today? Its good ideas were imitated, its shortcom ings live to plague it. As for the consumer, he cannot be compelled to any single style of car. His general preference seems to be for the rakish lines pioneered in Eu rope at a time when Madison Ave nue thought it had bamboozled the car-buying public into accepting jello-mold features forever, but who knows? - maybe the balloon roomy style will be back in vogue tomorrow. Consumer Pressure Galbraith wants to eat his cake and have it, too. He pictures the ind ustrial "technostructure" as a group which is in thorough control of the situation: it can set prices, manipulate the minds of buyers, bribe the workers by progressive wage increases, and cajole the state into underwriting the purchasing power of the masses by vari ous inflationary devices. Yet this same technostructure is pictured in savage competition for the bet ter scientifically trained manpow er. There is a contradiction here, for if the management of big industry had the power which Galbraith ascribes to it, why the eternal scrabble of corporate "ivory hunters" for inventive minds and processes? The truth is that the big company which fails to innovate goes under, as such studies as A.D.H. Kaplan's Big Enterprise in a Free Society and the works of Schumpeter have so abundantly proved. The innovator moves to the unseen prod of the consumer, who may not know pre cisely what he wants but does know that he wants variety as his own share of the national income increases.

Pure and Imperfect Galbraith makes great propa ganda with his insistence that the modern market does not represent "pure" competition. But, save in the case of such identical things as wheat measured by the bushel, 704 THE FREEMAN November there has never been a "pure" mar ket. "Workable" competition was the order of the day when the firm of Boulton and Watt was "admin istering" the prices of steam en gines and when the better car riage makers were quoting what they intended to charge for the more expensive equipages. The tailors who sold to Beau Brummel put in an extra charge for fashion, which was the equivalent of the fee exacted by Madison Avenue fashion-makers today. As Hayek and Schumpeter have both said, if we had "pure" com petition in the Galbraithian sense, there would be no competition at all. For if everyone had such things as equal access to the mar ket and equal foresight, nobody would have an edge over anyone else in the money-making process.

Perfect foresight for all competi tors would mean an end to profits. It is the very imperfection of the market that keeps innovators on their toes, results in new products, and aerates human existence. In Galbraith's world the con cept of "workable" competition plays no part. As David McCord Wright has said in a paper read at the recent colloquy of the Mont Pelerin Society at Vichy, France, Galbraith is a prophet of stagna tion. He is the first "hippie econo mist," as his friend Al Capp, the cartoonist, has had the effrontery to point out. But surely, the reader might say, Galbraith's book cannot be totally devoid of interest. It does have the incidental virtue of argu ing that leisure has its place in life, and that the claims of esthet ics are no less· valid than the claims of economics. Moreover, Galbraith is an acute student of the psychology of the team. It is perfectly true that an IBM or a Chrysler Corporation does better when its employees have a loyalty to their organization that approxi mates the loyalty of the Harvard football team to its coach, captain, and alma mater. Money is not everything, and people work for more than the pay check.

But surely this is a "convention al 'wisdom" that is as old as Cae sar's legions, or the builders of Chartres Cathedral. It is an amus ing commentary that where Gal braith is good, he echoes a con ventional wisdom that is virtually as old as civilization itself. ~ THE FREEMAN DECEMBER 1967 Vol. 17, No. 12 J;' It is not sufficient that the prom ises of collectivism are recognized as false, says Professor Carson; the cul prits must be called to account and their bankruptcy fully registered ............ p. 707 J;' The best cure against coveting the property of others, advises Leonard Read, is to see and count one's own blessings p. 716 ~ George de Huszar turns to the hu manities for a broadening of the case for liberty beyond the strictly economic appeal p. 719 J;' John Nelson, Professor of Phi losophy at the University of Colorado, would remove the coercion from uni versity and secondary education in order to upgrade the quality . p. 724 J;' And in the same let's-be-practical vein, America's master accountant and economist, W. A. Paton, calls for a careful balancing of the cultural and the vocational p. 732 ~ Nonmolestation is perhaps the key word in Dean Russell's explana tion of our interdependence and freedom p. 738 V" Dean Lipton isn't a dean either, but he pins down a couple of trouble some words - rights and equality which are frequently misused .. p. 752 V" John Chamberlain's book of the month .is The War We Are In: The Last Decade and the Next by James Burnham p. 757 J;' Sorry, that's all for this year, and all neatly indexed by Miss Bien of FEE p. 761 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

DECEMBER 1967 LEONARD E. READ PAUL L. POIROT Vol. 17, No. 12 President, Foundation for Economic Education Managing Edito1' 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. Tel.: (914) 591 7230. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are in vited in any amount-$5.00 to $10,OOO-as the means of maintaining and extending the Foundation's work. Copyright, 1967, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 centsj 3 for $1.00j 10 for $2.50j 25 or more, 20 cents each.

Any current article will be supplied in reprint form upon sufficient de· mand to cover printing costs. Permission is hereby granted to reprint any article from this issue, providing customary credit is given.

THE BANKRUPTCY OF " LIB ERA LIS M •• CLARENCE B. CARSON A CLEVER man can survive and even appear to prosper for awhile on very limited resources. He can ., live on borrowed money, shifting from creditor to creditor as bills come due, going ever deeper into debt. Promises flow from him, and plans for recouping his fortunes and producing great wealth. Many will extend credit to him, for he puts up a good front, weaves fas cinating justifications for his fail ures, and paints seductive word pictures of his prospects. There comes a time, however, in the af fairs of the cleverest of such men when their confidence game no longer works its magic. A "credi bility gap" appears; the promises, instead of attracting further credDr. Carson is Professor of American History at Grove City College, Pennsylvania. it, have all become notes fallin~ due. Notes are presented for pay ment; credit is not extended; the debts cannot be paid. When that happens, a man is bankrupt. Any resources he has are taken from him to satisfy, as far as they will, the claims of his creditors.

There is every reason to believe that Americans, as creditors, have been seduced for many years by the promises of men with few re sources but quick wits, ready jus tifications of failures, and prolific promises of future returns from their policies. These people go by the name of "liberals." The estate in which they reside-their fund of ideas - they call "Ii beraIism." They have claimed the title to this estate for so long that most Amer icans believe them. There is little 707 708 THE FREEMAN December point here in disputing their claim, though their fund of ideas might better be called by such names as utopianism, collectivism, reform ism, meliorism, or even socialism. What matters is that we all rec ognize the subject of discussion. For this purpose, let them have the title they want: Liberalism. At any rate, they have promised freely a great variety of blessings that would befall the American people if we would give them credit, and then extend it, and ex tend it, and extend it. For decades, Americans have acted as if they believed the promises; credit has been extended time and again.

Their promises might be expected to attract men of good will any where. They have ranged from a projected world-wide good to bene fits for men in their most intimate affairs. The promises have been imaginative, detailed, universal, varied, and almost innumerable. Endless and Empty Promises The "liberals" have promised world peace through international organization (first the League of Nations and then the United Na tions), a modus vivendi with com munists through concessions, the good will of all nations that would result from foreign aid programs, recovery from depression by in flation, a balanced budget with in creased taxes, a balanced budget through reduced taxes, the solu tion of the farm problem by gov ernment programs, the solution to crime and delinquency through housing programs and aid to the poor, security in old age by way of social security taxes, quality edu cation as a result of higher taxes, peaceful labor relations by way of government empowerment of labor unions, the rescue of small busi ness by antitrust action, the reviv al of cities by pouring govern ment credit and money into them, an end to monetary problems by a Federal Reserve System, better transportation service at lower prices by government regulation, the restoration of a "balance" be tween rural and urban inhabitants by farm subsidies, and so on, al most endlessly.

All the while, "liberals" have boasted that they were pragma tists, that they were interested only in results, that they tested programs by their workability. This is a most interesting claim, beca use, as we shall see, programs that have not worked have been expanded rather than abandoned. This pragmatic claim is one that should be expected in a confidence game. The man seeking credit will wish to assure his potential credi tor that he, too, is a businessman, that results alone count with him, that he will oversee carefully every aspect of his undertaking 1967 THE BANKRUPTCY OF "LIBERALISM" 709 and subject it to the most critical tests. Only when he is thus as sured will the businessman extend credit. There may be nothing more to this, however, than verbal as surances. There is a sense, of course, in which the borrower who will never repay is a pragmatist. He is prag matic in that he judges his pro gram of appeal for credit on whether he gets it or not. To the professional borrower, if he gets credit, his appeal worked; if the loan is denied, it did not. In like manner, the politician who gets elected to office concIudes that his promises worked, though the sub stantial programs he proposed may have been miserable failures.

In this sense, there should be no doubt that many "liberals" are pragmatists. Foreign and Domestic Failures Evidence mounts higher with the passage of time that the "lib eral" programs do not work, that however. much credit generous Americans extend, it only brings appeals for more time and larger amounts of money. Decades of ex periments with reformist pro grams have brought results quite different from those promised. Vaunted international organiza tions have not brought peace and brotherhood to the world. This century has witnessed already two horrendous world wars and, on a smaller scale, perpetual wars and rumors of wars over much of the earth. The United Nations is to day a Tower of Babel on the East River where delegates of the na tions of the earth gather to wrangle over whether to take up some question or other and, if they ever agree to do that, to quarrel over the agenda, the pro cedures to be followed, and who the villains of the piece may be.

Major disturbances are placed off limits from their concern and in consequential matters are the sub ject of bootless resolutions. Concessions to communists have not resulted in a modus vivendi betwixt us and them. On the con trary, such concessions have served time and again as oppor tunities for them to spread their ideas and extend their power. Dip lomatic recognition of the Soviet Union by the United States in the 1930's did not result in a mellow ing of communists. On the con trary, it gave the government of the Soviet Union a means of bring ing in more spies and organizing and controlling clandestine activ ities more effectively. Conces sions, aid, even outright capitula tion to the demands and require ments of Russian Communists during World War II did not transform them into warm friends emanating good will. On the con710 THE FREEMAN December trary, Stalin used the concession ary mood as an opportunity to ex tend Soviet power into eastern Europe and Asia. Nor have later concessions produced useful re sults. The Soviet Union and other communist countries currently are extending aid and comfort to America's enemies on the battle field.

Foreign aid has hardly pro duced a world filled with nations friendly to the United States and eager to help us in whatever exi gency arises. On the contrary, France, a beneficiary of American aid going back to World War I, is vigorously following policies anti thetical to those of the United States. India has a consistent rec ord of biting the hand that feeds it. Yugoslavia has hardly been won over from communism by Ameri can bounty. Many small countries use the occasion of American aid to make even more bellicose de mands. In the American struggle with the Viet Cong, most of those with whom there are alliances can offer only carping criticism of American policy and practice. It may be that much of this failure stems from the ambiguous charac ter of the aid in the first place, but this cannot alter the fact of the failure of the programs to produce the desired results. The domestic programs of the "liberals" have met with similar failures over the years. Millions upon millions of people have left the farms in the wake of govern ment programs which were sup posed to make farming attractive.

Surpluses accumulate of farm products priced above the market, while the prices of food and cloth ing rise, and more and more farm ers find it difficult to make ends meet. Federal housing and urban development projects have suc ceeded thus far in making the hearts of many cities intolerable places in which to live and aggra vating the lot of the poor. The Federal Reserve System was in vigorous operation when the United States suffered the worst depression in history. Small busi nessmen find it ever more difficult .' to survive because of the obstacles thrown in their way by govern ment rather than by large cor porations. Taxation for social se curity makes it increasingly diffi cult for wage earners to provide for their own retirement and med ical care. And those who rely upon a social security "fund" for these purposes should know that there is no real fund, only the chance for Congressional appropriations when one reaches an age or condi tion to receive benefits.

Problems Aggravated The "liberal" programs have failed more dramatically than the 1967 THE BANKRUPTCY OF "LIBERALISM" 711 above would suggest. They have failed to diminish crime and de linquency, to bring peace in labor relations, to stop the clamor of the poor and dissident, or to main tain fundamental order in the land. "Liberal" efforts to wipe out crime by spending billions to change the environment have been confronted by increasing crime and delinquency, violence on city streets, and more and more danger to life and property in America. Billions for education go in some part to give aid and comfort to impudent and arrogant beatniks, hippies, and whatever the un washed may call themselves. Riot ing and looting in city after city have followed government pro" grams supposed to aid just these people. Labor strife is spreading from industrial workers to fire men, police, and school teachers.

Demonstrators arise over any cause, or none at all, to disrupt services, to hurl insults at public officials, to belabor Congress, to picket the White House, to stop rent payments, to force entrance of Negroes into suburban com munities, or to prevent the ship ment of munitions to Vietnam. Rapists and murderers, turned loose by courts enamored with technicalities, return to commit atrocities upon innocent citizens. The fund of ideas of the "lib erals" has run dry, though excuses still pour forth from them and their apologists. In the face of failure, they can only call for more of the same that has produced the failure in the first place. A man standing on the verge of bank ruptcy will plead with his credi tors to make yet another ex tension of the loan. His project will be successful yet, if he can only pour more money into it. So it is with the "liberals." The prob lems, they say, are very complex and it will take many more years to solve them. Much larger appro priations must be made in order to lick particularly tenacious prob lems.

The Socialist Formula Affords No Way Out Deeper than this, there are in creasing signs of paralysis of will and failure of nerve by the Liberal Establishment, as M. Stanton Evans has called it. This is not new, but it is becoming more wide spread. It has been apparent for many years now that the farm program was a failure, but "lib erals" have been unable even to confess their error or to abandon the programs. The failure of for eign aid has hardly diminished their cry for more for the future. That communists have not been pacified by concessions becomes the "liberal's" case for further concessions. Looting and pillage 712 THE FREEMAN December are greeted by calls for more far reaching aid to the inner cities. Those in power can hardly muster the courage to deal with looting and pillage in the only way that has ever been effective - that is, by shooting looters until they stop. "Liberals" can neither pursue wars to a victorious conclusion nor withdraw. They can neither consent to vigorous punishment of criminals nor to the guilt of those who commit crimes. They can neither payoff the national debt nor even balance the budget.

In short, the "liberals" cannot cope with the situations which they have largely created. They cannot cope with them because all effective means of dealing with them are precluded by their fund of ideas. Their ideas call for peace through international organiza tion, for accommodation with com munists and dialogue to be opened up between East and West, for deficit spending to increase pros perity, for government regulation and control of the economy, for the curing of crime by improving the environment, for belief in the guilt of society rather than of in dividual criminals, continuous open-mindedness to all opinions however novel they may be. These assumptions must be abandoned or greatly modified if government is to become effective once again and if men are to have a better than even chance to deal with their own difficulties. Awaiting Foreclosure In the loose sense of the word, then, "liberalism" is bankrupt. It has been in the ascendant for many years now. It has had ample opportunity to try its ideas. They have been tried again and again, to no avail. It is devoid - bankrupt - of new ideas to deal with the situation that confronts America.

It is short - bankrupt - in pro grams to meet the crises that loom in America. For example, its leaders can neither bring them selves to remove the privileges of organized labor nor to administer even the laws that exist for hold ing it in check. The War on Pov erty or Great Society of President Johnson is only a warmed over version of the New Deal - but without a depression to whet peo ples' appetites. "Liberalism" is paralyzed - bankrupt - by its com mitment to programs that have been going on for decades. It is incapable of innovating. It can only press on halfheartedly to the enactment of new sumptuary laws (vis a vis cigarette smoking or safety features of automobiles or the inspection of meat), to special enactments of the legislature to put strikers back to work, to new controls upon enterprise, and so on, and on.

1967 THE BANKRUPTCY OF ilLIBERALISM" 713 In the technical sense, "liberal ism" is not yet bankrupt. Bank ruptcy only occurs when a man is confronted with bills that he can not pay, when he is forced to ad mit that he cannot meet his ob ligations or fulfill his promises. (There is also voluntary bankruptcy which occurs when a man simply states that he cannot meet his obligations, though his credi tors have not yet foreclosed.) "Liberalism" is not yet bankrupt in this sense. It is still in the as cendant, politically. It is still mak ing successful appeals for the ex tension of credit from the people, as it were. The national debt "limit" is still being raised, and appropriations are still being made for a vast assortment of programs. So long as this continues, "liberal ism" remains in business. Creditors Have the Option Bankruptcy is not automatic. It does not come simply because proj ects fail or because a promoter goes deeper and deeper into debt.

In short, a debtor may ruin both himself and his creditors. If they will allow him, he can drag them down with him. Bankruptcy is a proceeding by which a halt is called to the whole process. Credi tors decide that they will throw no more good money after bad, that they will give up on the debt or and recoup as much as they can from such resources as re main. It is the same with "liberalism." There is no automatic point at which "liberals" must or will pro claim their insolvency. The Amer ican people, as creditors, have the option of continuing to extend credit, to plunge themselves finally into bankruptcy along with the "liberals." They can acquiesce, or stand by inactive, while the budget is unbalanced year after year and the national debt mounts and the value of money declines, while for eign war continues with no con clusion in sight and presumptuous diplomats to the United Nations continue to whittle away at na tional sovereignty, while regula tion destroys business after busi ness, while the streets of cities and towns become unsafe, while loot ers, pillagers, and murderers prey upon Americans until the final dis order has engulfed us all in a new Dark Ages. Whole peoples have, in times past, been pulled down into the same state of moral and intellectual bankruptcy as their leaders.

Someone Must Talce Action The present mode of temporiz ing with "liberalism" practiced by most politicians, even those who oppose it as a direction, will not bring it to bankruptcy in time to forestall the bankruptcy of the 714 THE FREEMAN December American people. It does no good to insist that the debt "limit" be raised only by $6 billion this year instead of $10 billion or that the budget be unbalanced by only $4 billion instead of $16 billion. A little more bombing in North Viet nam is unlikely to bring the war to a successful conclusion. The man on the verge of bankruptcy will take whatever credit is ex tended and continue to make his unproductive schemes seem to work. Demand Payment "Liberalism's" bankruptcy will only be proclaimed when credit is shut off, when the bills are pre sented for payment, when the promissory notes are called. The "liberals" must be held to an ac counting. They must be presented with their cumulative promises over the years, and be shown that one after another their programs have failed. They must be shown that when they have taken action it has produced such and such results.

More, for bankruptcy to be pro claimed, for the choice to be made, men must stand for political office who will promise not to temporize with the "liberal" programs and who will keep that promise when elected. They must say that the budget will be balanced, that the inflation will cease, that the debt will be funded (however painful this may be), that wars will be fought to conclusion, that enter prise will be freed from bondage, that union violence and threat of violence will cease, that criminals will be apprehended, that rioters will be shot, that insurrection and sedition will be dealt with harshly, that order will be maintained and liberty restored to America. Such stands will not be easy to take and maintain. "Liberalism" dominates the major media of communication. Anyone who in sists upon the principles of free dom can expect a full measure of villification and denunciation. He will find himself and his ideas held up to the most searching scrutiny by newspaper reporters and com mentators. As a reward for all this, he may very well be rejected by the American people and never again appointed or elected to office. Yet, if "liberalism" is to be thrown into the bankruptcy upon which it totters today, such stanp.s must be made. Credit must be cut off from the "liberals," lest the American people be pulled down ward into ruin as well.

A Time of Testing for Politicians and Voters The test of the politician comes when he confronts the issue of taking a stand on principle or continuing to drift with the tide.

1967 THE BANKRUPTCY OF "LIBERALISM" 715 The test of voters comes when they are confronted with a choice of politicians, some of whom take their stand on principle, while others continue promising the m.arvels that will be accomplished by following the "liberal" pre scriptions yet another mile. The acid test for bankruptcy occurs when the creditors decide whether to extend credit one more time or to demand payment. The American people have been the long suffer ing creditors of "liberalism." For four decades they have extended credit time after time, for one unbalanced budget after another, for ever higher taxes (local, state, and national), with accelerations in the depreciation of the currency . For their efforts, they have un fulfilled promises, depleted purses, and spreading disorder, national and international. Their choice is either to proclaim the bankruptcy of "liberalism" or to be dragged down with it. The evidence is in that "liberalism" is bankrupt in all but name. The way Americans choose, when and where they have the opportunity, will tell whether they, too, are bankrupt. • George Washington OF ALL the dispositions and habits which lead to political pros perity, religion and morality are indispensable supports. In vain would that man claim the tribute of patriotism who should labor to subvert these great pillars of human happiness - these firmest props of the duties of men and citizens. The mere politician, equally with the pious man, ought to respect and cherish them.

A volume could not trace all their connections with private and public felicity. Let it simply be asked, Where is security for prop erty, for reputation, for life, if the sense of religious obligation desert the oaths which are the instruments of investigation in courts of justice? And let us with caution indulge the supposition that morality can be maintained without religion. Whatever may be conceded to the influence of refined education on minds of peculiar structure, reason and experience both forbid us to expect that national morality can prevail in exclusion of religious principle.

LEONARD E. READ t'.Je C utle and Cute of Covetoulnell WHILE MANY PEOPLE deplore cov etousness, few will compare it to murder, theft, adultery as an evil. Nor will they think of it as having any bearing on our current polit ico-economic problems. This wrong assessment ma.y be due to the fact that "Thou shalt not covet" brings up the rear of the Mosaic thou shalt-nots. I suspect that the ordering of the Commandments had nothing to do with a sin-grading scheme. Only one-of the ten had obvious priority and it became the First Commandment. The other nine were listed, perhaps, as they came to mind. And covetousness, more subtle and an afterthought, con cludes the-list. But on reflection, covetousness is as deadly as any of the other sins - indeed, it tends to induce the others. Covetousness or envy generates a destructive radiation with ill ef fect on all it touches. Psychosomatic illnesses can be traced as much to envy as to hate, anger, worry, despondency.

716 But consider the social implica tions, the effects of envy on others. At first blush, the rich man appears not to be harmed be cause a.nother covets his wealth. Envy, however, is not a benign, dormant element of the psyche; it has the same intensive force as rage, and a great deal of wisdom is required to put it down. Where understanding and self-control are wholly lacking, the weakling will resort to thievery, embezzlement, piracy, even murder, to gratify his envy and "get his share." Though weakness of character afflicts all of us to some extent, only a few are so lacking in re straining forces as to personally employ naked force, such as thiev ery, to realize the objects of envy. Fear of apprehension and repri sal tends to hold such open-faced evil in check. However, if the evil act can be screened, if the sense of personal guilt and responsibility can be sufficiently submerged, that is, if self-delusion can be effected, grat1967 THE CURSE AND CURE OF COVETOUSNESS 717 ification of covetousness will be pursued by the "best people."

Hiding in Anonymity The way is an open secret: achieve anonymity in a mob, com mittee, organization, society, or hide behind legality or majority vote. With the fear of exposure re moved, millions of Americans feather their own nests at the ex pense of others, and on a scale never imagined by thieves, pi rates, or embezzlers. Our "best people," including the highly "ed ucated," gratify their envy with no qualms whatsoever. But their salved conscience in no way less ens the evil of covetousness; quite " the contrary, it emphasizes to us how powerfully this evil operates at the politico-economic level. This subtle evil is indeed the genesis of more obvious sins. We should also note the extent to which this "guiltless" taking of property by coercion is rational ized. Accomplices, bearing such titles as philosophers and econo mists, rise to the occasion; they explain how the popular depreda tions are good for everyone, even for those looted. Thus, we find that covetousness, unchecked in the in dividual, lies at the root of the de cline and fall of nations and civili zations.

In considering the effect on the one who covets, we must be care ful not to confuse the taking of another's property with the taking unto oneself of a higher level of intelligence and morality exempli fied by another. The former is depreda tion, harmful to both self and the other; the latter is emu lation, helpful to all concerned. As contrasted with the emula tion of virtues, which takes noth ing from but adds to the welfare of others, envy is nothing more than an avaricious greed to possess what exclusively belongs to others. Envy is a lust of the flesh as opposed to an elevation of the spirit. The Hindus saw it clearly for what it really is: "Sin is not the violation of a law or a convention but . . . ignorance . . . which seeks its own private gain at the expense of others .... "1 William Penn grasped the point: "Covetousness is the greatest of Monsters, as well as the root of all Evil."

Thwarting One's Purpose As a person cannot be in two places at the same time, so is it impossible for the eye to be cast covetously at the material posses sions of others and cast aspiringly at one's own creativity. Thus, envy leaves unattended the human be1 From The Bhagavadgita (Transla tion by S. Radhakrishnan. New York: Harper & Brothers, 1948), p. 224.

718 THE FREEMAN December ing's upgrading; it is a positive distraction from the "hatching" process - Creation's Purpose. It's either hatch or rot, as with an egg; envy leaves the soul, the spir it, the intellect, the psyche to rot, and there can be no greater evil than this. Count Your Blessings' When it is clear that covetous ness thwarts Creation's Purpose and, thus, man's destiny - that among the cardinal sins none is greater - it surely behooves each of us to find a way to rid our selves of this evil. I believe the way is simple to proclaim: Count your blessings! Any person who is not aware of countless blessings, regardless of how low or high his estate, will be no more aware of his blessings should his envy be gratified. Awareness of blessings is a state of consciousness and is not neces sarily related to abundance and affluence. He who is rich in world ly goods but unaware of his bless ings is poor, and probably covet ous; he who is poor in worldly goods but aware of his blessings is rich, and assuredly without envy.

How easy the advice: Count your blessings! But what about the person unaware of his bless ings? As well advise him to ac quire wisdom, for wisdom is awareness. Some individuals are aware of no blessings, others of a few, still others of numerous blessings. Yet, no one is more than slightly aware, just as no one is more than slightly wise. Exactly how unaware we are of our blessings can be seen by com mitting them to paper - actually counting. While they are in in finite supply, observe how few are recognized. Now, throw the list away; for these must be alive each and every day in the conscious ness, not stored on paper, not mechanically canned. Try again, later: this is an ex ercise that one should never aban don. The list is longer? Note, also, how much greater the wisdom is. Conscious effort, really trying, constantly pressing against the unknown for more light is the na ture of this discipline.

As progress is made in an awareness of our blessings, we are struck by how greatly they outnumber our woes and troubles. In a state of unawareness, the woes loom enormous, and we tend to covetousness; in awareness the woes are but trifles, and the covet ousness fades away. What a remarkable cure for covetousness! While the cure rids us of our woes, it also puts us on the road to social felicity; and a further dividend is wisdom. ~ IndividualLiberty and"The Humanities" GEORGE B. DE HUSZAR THE LIBERTARIAN POSITION mus ters strong support in the dis ciplines of economics and political science, but libertarian scholar ship has neglected the realms of art, literature, and philosophy. < Further study of the humanities and their disciplines would round out the case for personal freedom. Eliseo Vivas was saying the same when he wrote in the Chicago Tribune Magazine of December 5, 1965: "We've had first-rate polit ical and economic thinking from von Mises, Hayek, and Milton Friedman, but none in other fields.

There has been no major philo sophical mind to emerge - the same for theologians .... Two of the great values which we've lost sight of are the tragic and heroic dimensions of human existence. George B. de Huszar is the author and editor of over a dozen books which have been pub lished in the United States, Latin America, Europe, and Asia. There is no more room for them in our society - yet they are essen tial components . . . the old sense of mystery and the sacred" have become secondary. While on the one hand, philo sophical and literary works would provide humane support for free dom and individuality, on the other, they would encourage teach ers and students in the humani ties to get interested in them. An indirect, noneconomic and nonpolitical approach which makes little explicit reference to contem porary socio-economic-political ar guments may be the best way to teach such basic values as dedica tion to freedom and individuality.

The humanities are acceptable to many teachers and students other wise reluctant to embrace the lib ertarian position. An approach through the humanities would make an impact in the realm of 719 720 THE FREEMAN December ideas rather than explicitly argu ing in favor of freedom and in dividualism and explicitly criticiz ing socialism and communism. As F. A. Hayek pointed out in The Road to Serfdom (p. 13) basic individualism goes back further than the eighteenth and nineteenth centuries and has broad philosoph ical and literary foundations. Making the case for freedom and individuality in terms of the hu mane studies would show these broad philosophical and literary bases to teachers and students. Surface Symptoms Politics forms the outside skin of the social organism; therefore, political manifestations are often but symptoms. To understand the disease, a deeper insight is re quired. To comprehend the funda mental problems of freedom and individuality, it is necessary to go beneath the surface and analyze philosophical and cultural issues.

The unorthodox perceptions of philosophy, literature, and art should not be dismissed as flights of eccentric fancy. On the con trary, they make possible the ex plorations which provide deeper insights into the nature of free dom and individuality, such ex plorations as those by Cervantes, Kierkegaard, and Dostoevsky. Has anyone explored the fundamental psychological causes and implications of collectivism more effec tively than Nietzsche, or more per ceptively questioned the value and limitation of civilization and prog ress than Rimbaud and Gauguin, or seen more clearly into commu nism than Heine? "The Coldest of All Monsters" Jakob Burckhardt stated that Nietzsche's books had increased "independence in the world." Stef an Zweig thought that "freedom is Nietzsche's ultimate signifi cance" and entitled one of his cha pters on Nietzsche as "The Teacher of Freedom." Nietzsche himself called the state the coldest of all monsters. He said that so cialism is "the tyranny of the meanest and most brainless" and then made the following prophetic statement in the nineteenth cen tury: " ... Socialism is on the whole a hope lessly bitter affair: and there is noth ing more amusing than to observe the discord between the poisonous and desperate faces of present-day so cialism - and what wretched and nonsensical feelings does not their style reveal to us! - and the childish lamblike happiness of their hopes and desires. Nevertheless, in many places in Europe, there may be violent hand to-hand struggles and irruptions on their account: the coming century is likely to be convulsed in more than one spot, and the Paris Commune, which finds defenders-and advocates 1967 INDIVIDUAL LIBERTY AND "THE HUMANITIES" 721 even in Germany, will seem to have been but a slight indigestion com pared with what is to come."

Heine was similarly prophetic. In 1842 he wrote: "The future has an odour as of Russian leather, blood, blasphemy, and much beat ing with the knout. I advise our descendants to come into the world with thick skins." In his Confessions Heine said: "I was oppressed by a. certain worldly ap prehension which I could not over come, for I saw that atheism had entered into a more or less secret compact with the most terribly naked, quite fig-leafless, commu nistic communism." What is needed is the opening up of material which remains largely outside the interest of many social scientists, to raise new questions, and to suggest new methods. As matters stand today, many who are deeply committed to the analysis of freedom and indi viduality unfortunately find it dif ficult to recognize the relevance of the humanities to their concerns. They should be provided with new "weapons" and new "ammuni tion."

A Monopoly of Culture "Liberals" have appropriated not only concern for the people's welfare but also for culture. The Editor of the University Observer (Winter, 1947, p. 29) stated that "liberals are always troubled when they find that a political reaction ary is a man of vision whose in tellectual or artistic work demands respect .... According to the lib eral creed, those who are on the side of man's political progress should also be the most gifted, while the enemies of progress should turn out to have little to say; by rights, they should be un creative." Thus "liberals" deni grate "reactionary" thinkers, or claim great figures of the humani ties as being their own, or use them in an illegitimate manner. But many great figures in the hu manities should be identified with the side where they properly be long - genuine concern with free dom and individuality. The fate of Kierkegaard is an example. Karl Lowith in From Hegel to Nietz sche falsely asserted that "Marx destroyed the bourgeois-capitalis tic, and Kierkegaard the bour geois-Christian world." What has become "existentialism" in recent German thought, as exemplified by Tillich, is mainly a form of so cialism. What has become "exis tentialism" in recent French thought, as exemplified by Sartre, is to a large extent Marxism. Re cently a course has been offered in New York City entitled "Marx ist Existentialism."

It often occurs that everybody sits on each other's lap and no722 THE FREEMAN December body sits on the chair. As has been said, man's mind is more gregarious than his body. The ob session .with "dialogue" makes it difficult to develop pri vate views. Yet, only persons with pri vate views can be impervious to the deeper aspects of collectivism as well as to its most obvious and overt manifestations. Mass organ izations bombard us from every angle with slogans ·and cliches to unite us for collective action. We succumb to habitual forms· of thinking and the prevalence of fads and fashions in the intellec tual world. All these discourage adherence to one's own view, crit ical mentality, individuality, and the inwardness· of man. In con trast, all that is personal and pri vate -literary insight, artistic taste, religious dedication - is to a large extent noncommunicable; they separate men and make each more aware of his uniqueness and what makes him different, and thus hinder the march of collectiv ism in the philosophic and social sense. Without such defenses, each person is vulnerable to collectiv ism.

Primacy of the Individual A fundamental thesis of the hu manities approach is the primacy of the individual not only in the usual and obvious sense but also in the sense that the more unique a .person is the more valuable he is.· This can be demonstrated most effectively by the humane studies, though it has not been done suf ficiently. Richard M. Weaver has expressed pessimism about the fate of the humanities in view of the fact that the nonaverage,what is best in man, is suppressed by today's humanists. ("The Human ities in a Century of the· Common Man," New Individualist Review, III, 1964). The daemonic and evil forces in the nature of man, the recognition of which is essential to any serious discussion, can also be· best shown through the humanities. Those who operate within the fashionable fra~ework of Comte, St. Simon, Marx, Darwin, Freud, Dewey, the behavioral sciences, and so on, will be forever incapable of under standing the basic issues involved in. the struggle between individ ualism and collectivism. They will not comprehend many things which are not in their philosophy but exist on earth. But, perhaps it is a mistake to spend too much time criticizing this fashionable framework. It is more urgent to rise above this embattled terrain and discuss matters on a higher plane, genuinely humane.

It is necessary to resist scien tism which to a large extent is materialistic and to demonstrate that man is a "spiritual" being, 1967 INDIVIDUAL LIBERTY AND "THE HUMANITIES" 723 good or bad and capable of both, and that he does not exist in the world in the sense that rocks and other things do. Once more this can be most effectively done through the humanities which re veal the meaning of "philosophy." The children· of philosophy have grown up and have established homes of their own. Philosophy has become fragmentized; it has been divided into logic, which is often reduced to mathematics or the science of language;· meta physics which is often reduced to physics; ethics, which is often re duced to anthropology; aesthetics, which is often reduced to psychol ogy. Much that was once consid ered philosophy is today part .of the empire of science. The battle against materialism can be best undertaken by reaffirming when ever possible the value of "spirit ual" ends; we need to recover the original meaning of "philosophy"

now hidden behind the imperial ism of science. Thus, we may look to the hu manities and their disciplines to accomplish the following: (1) promotion of the idea of freedom and individuality by using an in direct approach; (2) enhancement of the libertarian position by the prestige of philosophy, literature, and art; (3) reaching individuals interested in such matters, many of whom would not otherwise be attracted to the libertarian view pcint. • Signs of Civilization THOUGH OUR CIVILIZATION is the result of a cumulation of individ ual knowledge, it is not by the explicit or conscious combination of all this knowledge in any individual brain, but by its embodi ment in symbols which· we use without understanding them, in habits and institutions, tools, and concepts, that man in society is constantly able to profit from a body of knowledge neither he nor any other man completely possesses. Many of the greatest things man has achieved are not the result of consciously directed thought, and still less the product of a deliberately coordinated effort of many individuals, but of a process in which the individ ual plays a part which he can never fully understand. They are greater than any individual precisely because they result from the combination of knowledge more extensive than a single mind can master.

F. A. HA Y E K, The CounterRevolution of Science THE. University AND Secondary Education JOHN O. NELSON IN DISCUSSING university and sec ondary education we are treading upon holy ground. Weare expected to tread with prayerful reverence. To be sure, we may condemn what universities and secondary educa tion in fact are, but only in order to promote a more sublime (or ex pensive) picture of what they should be. The university and the seconda.ry school have become ob jects of testy veneration and stern worship. An intellectual, political, and moral execution greets, with an almost sure predictability, the heretic who refuses to genuflect before them. Even those who, like Russell Kirk and the editorial writer of Barron's, argue merely for the superiority of private over public education are likely to re ceive a few admonishing strokes Dr. Nelson is Professor of Philosophy at the University of Colorado where he has taught since 1950. Articles and papers by him have appeared in numerous scholarly journals and books in the United States and abroad.

724 on their back. 1 Small heresies, after all, can lead to large ones, and large ones to the largest the very rejection of formal edu cation itself, private or public. I suppose that, like a temple priest, I have been an "insider" too long to be awed either by the idols within the shrine or my fel low priests. In any ca.se, I mean here to part company with the universal worship of formal edu cation. 2 Thus, I shall not ask, 1 See, Russell Kirk, "From the Acad emy," The National Review, Sept. 19, 1967, p. 1021; "Harmful Monopoly," Barron's, Sept. 11, 1967, p. 1. 2 I shall not include in the present ref erence primary education, or education in the mere acquisition of the skills of "reading, writing, and arithmetic." Pri mary education - and particularly, uni versal, compulsory primary education merits a separate study. It will be seen, for example, that the objections we ad vance against university and secondary schooling do not apply to primary educa tion, not even universal, compulsory pri mary education (although other objec tions do).

1967 THE UNIVERSITY AND SECONDARY EDUCATION 725 "How can secondary education better serve the university?" or "How can universities and sec ondary schools be improved to better fit the young for life?" I shall, instead, attack the common presupposition of these questions and others like them. It will suf fice for this purpose to examine the last of the two questions I have hypothetically posed. The question, "How can uni versities and secondary schools be improved to better fit the young for life?" presupposes that uni versities and secondary schools fit young persons for life. Now I do not wish to claim that university and secondary schooling unfit all persons for life. I am ready to agree that they do not unfit, for instance, the theoretical physicist for his life; or the savant in an cient languages for his; or the young aristocrat for his; or the priest for his. I do, however, want to claim that they unfit young per sons for life by and large.

Different Ways 01 Lile What criteria can we employ for deciding whether university and secondary schooling fit or un fit a person for life? For one thing we can ask whether the person himself fits a university and sec ondary education and vice versa. We might plausibly argue here: by its very nature, a university or secondary education molds a per son in such-and-such patterns; a person has or has not the potential to be molded in certain patterns. Returning to a previous analogy, we might compare a university or high school to a seminary for the priesthood. In the seminary a mental, spiritual, and physical in doctrination is imposed whose em phasis is on abstract studies and speculations, asceticism, and med itation. The student who devotes six or seven years to this disci pline and does so successfully emerges in the priestly mold: de voted now by habit to abstract studies and speculations, asceti cism, and meditation. It is a well known fact that most persons are not fit for the priesthood. They lack the physical, mental, and spiritual attributes that are re quired. Thus, were large numbers of our young population compelled to enter the priesthood and to pass through seminaries, we could expect to find a large portion of the population composed of indi viduals who were not doing and being what they were suited to be and do.

Now the university by its very nature - and formal education in general - imposes a mold that, though not so narrow in its defini tion as the mold imposed by a re ligious seminary, is still fairly narrow. Emphasis is placed upon 726 THE FREEMAN December abstract studies of one kind or an other; on verbal acquisitions of one kind or another; in short, on the more purely symbolic activi ties and enterprises of men. Eyes, minds, hands, and hearts are cor respondingly turned toward the symbolic sphere; Le., paper work of one sort or another, abstract objects, abstract controversy, theo rizing, and the like, and away from the practical sphere; Le., physical labor, crafts, domestic work, and the· concrete activities of business, such as making a profi t, sales-clerking, stevedoring, bargaining, and so on. They are turned toward the one sphere and away from the other in two im portant ways. One is perfectly ob vious. When young persons under go training in the disciplines of Academe for from twelve to six teen years, day after day, ten months a year, what abilities they may have in the symbolic sphere are sharpened and strengthened, but what abilities they may have in the practical sphere are dulled and atrophied by disuse.

Unfit for Production The other is not so obvious but is, perhaps, even more consequen tial. The very insistence of par ents, elders, and communities that young persons devote their energies and minds twelve to six teen years, nine to ten months of the year, eight hours a day, to the disciplines and objects of formal schooling carries with it an im plicit evaluation. It carries with it the implicit idea that one's inter ests and efforts should be devoted to the disciplines and objects of Academe rather than the discip lines and objects of business, farming, physical labor, and the like. For, why else would so much of one's life and efforts be re quired to be spent in the fields· of academic labor as compared to the time and effort spent in the prac tical sphere? But this "should" implies, further, that academic labor is somehow more worthy than business and other practical labor; indeed, even that the latter is somehow unworthy or even con temptible. Thus, the person who emerges from a university or high school, culminating from twelve to sixteen years of academic train ing, will naturally entertain the prejudice that he ought to value (whether he in fact does or not) the disciplines and objects of Aca deme and that he ought to dis value (whether he in fact does or not) the disciplines and objects of the practical sphere.

The natures of most persons, however, are not cut of abstract, scholarly cloth. What, then, is the outcome if vast numbers of the young are adj ured and indirectly forced to attend universities, and 1967 THE UNIVERSITY AND SECONDARY EDUCATION 727 almost the entire population of the young is directly forced to at tend schools devoted to the pre liminaries of university educa tion? We can expect to find, and we do find, a large percentage of young persons who have been trained mentally, physically, and emotionally to do and be what they are not suited to do or be. More tragic, though, these young persons have learned in the proc ess, or will have learned, to con sider as alien or even contempti ble those very things that most of them were naturally suited to be and do. We might expect. such in dividuals typically to be resentful, frustrated, destructive - like Plato's stinged drones, a bane to both themselves and others. And typically they are.

Serving One's Time in School Exactly what percentage or number of students suffers or has suffered in this way from the im positions of secondary and univer sity education I do not know. I do not know whether, indeed, any re liable figures on their number ex ist. But as I have already indi cated,. the number is enormous. Unimpeachable doctrine would say, for example, that a person who is doing and being what he is fitted to do and be displays interest and excitement in what he is doing; the person who is doing and being what he is not fitted to do or be displays and senses alienation. To put it bluntly: the usual student is alienated. I am not, incidentally, referring here to what is currently called "student alienation" in the press and magazines. What the press and magazines call "student alien ation" is nothing of the sort. It is, rather, the camouflaged thrust of a small student and faculty seg ment of Academe to win control of the educational system. Its true name is "student power," and "student power" can best be un derstood as simply another of the many pincer-movements presently being launched by predatory so cialists ("civil-rights" would be an other; Federal anti-riot legislation still another) to complete the com munization of the United States.

The pretended "student aliena tion" of predatory socialism is characterized by the dispropor tionate amount of publicity and pretentious analysis it receives in the news media and the volume of self-righteous noise it generates. Genuine student alienation is sel dom publicized, though frequently commented on by teachers. It is characterized, not by speechmak ing, but apathy. The truly alien ated student is the student who merely goes through the motions of attending class, taking tests, reading texts. He is like the army 728 THE FREEMAN December draftee: a prisoner merely serv ing out his time. He has no real concern with the abstract objects of Academe. And his name is le gion. An Army of Bureaucrats I have described one respect in which the university and secon dary school by and large unfit, in stead of fit, young persons for life. This has had to do with the individual as such. There is still another, and no less consequential, respect in which formal educa tion unfits, rather than fits, young persons for life. Ignoring the nature of this or that particu 1ar individual, we might consider the nature of any advanced econ omy. An advanced economy rests upon capitalization; capitalization rests upon a production of com modities that exceeds consump tion; and such production finally rests upon a tradition and prac tice of intent physical labor, both skilled and unskilled, upon factory labor, farm labor, business labor and business enterprise, and upon the invention of goods and serv ices. Lives must be devoted to these forms of labor and enter prise, the lives of intelligent and emotionally satisfied persons, or there must result economic break down and decline.

But as we have seen, the formal educational system by and large unfits persons, mentally, physi cally, and emotionally, for these all-important. forms of practical labor and enterprise. It pre pares persons for lives devoted to paper work and theory. But even an advanced economy has only so much use for scribes and theore ticians. Where, then, can the paper-minded and theory-minded graduates of the high school and university find both useful and satisfying employment? In a word, the great majority cannot. At best, they can find simply what mimics such employment. That is, they can be employed in government burea ucracy (and very many are) or they can be plowed back into the educational system, in the manner of Ponzi's famous pyram idal fraud (and very many are). Neither bureaucracies, how ever, nor bloated educational sys tems add a tittle of substance to an economy. They both drain away the fruits of productive labor and finally the laborers themselves.

Thus the university - along with its handmaiden, secondary educa tion - by and large unfits per sons for life not only by molding them to ambitions and training that do not fit their real talents and capacities, but also by fitting them for occupations that have, on the whole, no justifiable role to play in the economy. The economy calls for business labor and enter1967 THE UNIVERSITY AND SECONDARY EDUCATION 729 prise, farm labor and enterprise, factory labor and enterprise; the high school and university con sume hordes of potential business men, farmers, and workers, and spew out in return bureaucratic scribes and theoretical ne'er-do ·wells. Prelude to Tyranny This conversion of potential entrepreneurs and entrepreneurial workers into termites (bureau cratic scribes) and stinged drones (theoretical ne'er-do-wells) can terminate only in totalitarian tyr anny. Consider, for instance, the following excerpt from an edi torial in a recent issue of a farm journal: "We may have to draft farmers some day, if an attitude expressed in a recent Universi ty of Illinois survey becomes wide spread. It showed that 95 per cent of nearly 3,000 rural high school juniors and seniors want no part of farming as their life's work."3 It is hardly necessary to point out the connection between these em pirical statistics and our theoreti cal projections. What theory tells us must occur is, in concrete fact, occurring. It might be added, more over, that the attitude referred to in the editorial is making itself felt not only in farming but in business enterprise of all sorts, 3 The Kansas Farmer-Stockman, August, 1967, p. 4.

in the region of domestic help, in every kind of work. When the present explosion of secondary and university educa tion has had its full impact, not only will a farm-draft be neces sary to replenish the labor siph oned off from the vital areas of the economy by higher education and its psychological influences but a general ,vork-draft. This "draft for a great society" (one can already foresee its name) will predictably fail in its economic objectives. The shadow of its fail ure has already been cast for some fifty years by the economic failures of state-slavery in Russia, or what is aptly called in the pages of Marxism "scientific so cialism." Economic failure will predictably beget more govern ment regulation and coercion; the latter, more failure; and so on. Thus, paradoxically, from those very institutions that prate most loudly of freedom - the university and the high school - will emerge, and is emerging, not freedom but total serfdom.

C·entral Planning No Solution I have so far painted a very dark and foreboding picture of the handiwork of the university and the secondary school in the United States. Now, let me present a possible exit from the grim con clusions I have· been forced to 730 THE FREEMAN December draw. This exit depends on the possibility of universities and sec ondary schools fitting, instead of unfitting, young persons for life in the two respects that I have been discussing - at least, by and large, and at least in the case of those matriculating in either. But how can this twofold end be achieved? Certainly it cannot be achieved in the way that the socialist, either scientific or utopian, will suggest. If "scientific," he will suggest that government planning and regula tion determine in one way or an other who is to be trained for fac tory work, who for farm work, and who for theoretical work. En trance and residence in a uni ver sity and high school will be sub sumed under this coercive pro gramming. Presumably, under its fine milling and grinding, those who are by nature farmers will be allotted to farming, those who are by nature theoretical physicists to theoretical physics, and the right numbers of each to maximally sat isfy the needs of the economy.

Remove the Coercion and Trust Competitive Schooling But state planning and coercion have proved to be an economic failure wherever tried, and theo retic consideration shows they must. I shall not repeat on the last score the findings of Mises, Roth bard, and others. They are easily accessible. And they are conclu sive. 4 It suffices to point out that, this being so, state regulation of admission to universities and high schools and state planning of cur ricula cannot solve the problems we have been discussing, since these problems are basically eco nomic in character. And for the same reason, the utopian socialist can offer no solution. He may sug gest, for example, free and unlim ited entrance and residence in uni versities and high schools. But who is to supply the housing, classrooms, bread, wine, and teach ers for these high-living inhabit ants of Academe? The utopian socialist invariably fails to tell us.

He waves the wand of his feverish imagination and like a madman thinks the imaginary banquets and ivory towers that then spring into being have real substance. The vexing human and economic problems that university and sec ondary education present can be resolved, however, in the follow ing very simple and noncoercive way. We need merely require that all tax-support be withdrawn from both; ·that compulsory school at tendance, child labor laws, mini mum-wage laws, coercive union ism, the military draft, and the other artificial instruments, de4 See for example, Murray N. Roth bard, Man, Economy, a,nd State (New York: D. Van Nostrand, 1962), Vol. 1 & 2, pp. 765 if.

1967 THE UNIVERSITY AND SECONDARY EDUCATION 731 veloped and sustained through government, which isolate educa tion from the competition of an open market, be abolished or re pealed. This being done, all sec ondary and university education would be placed upon an equal footing of trade with the other prod ucts and services of men, to compete with them a.ccording to supply and demand and the free wills of men. Universities and sec ondary schools would then take on all the various shapes and pur poses that the market would call for and sustain; they would be attended hy and large only by those fitted for the schooling pro vided ; and they would by and large fit those who matriculated for the lives they were best fitted to live. Competition on the open market and economic supply and demand would see to this, and would see to it with incorruptible honesty. ~ The Case for the Private School MANY AMERICAN PARENTS feel rightly that they, and not the state, should be responsible for what their children become; that education should be divorced from political control; and that those who prefer private instruction for their children should not be taxed for the upkeep of facilities which they did not choose nor curricula to which they do not want them exposed. There is a growing feeling that top administration and control of govern ment school systems are too remote and too difficult to influence, that parents are mere robots in a machine that leaves little individual choice. There is some resentment that families should be taxed to "educate" the ineducable until adulthood when there is neither the capacity nor desire among these "children" nor their parents for further instruction.

GEORGE s. SCHUYLER Some Reflections ON Education w. A. PATON THE EDUCATION of the individual, in a broad sense, consists of the impact on his mind of the entire stream of phenomena encountered during his lifetime, including the 1'esulting reflection and pondering. Formal education - training in schools and other institutions de voted in some degree to teaching and learning - is only one sector of the whole process, and presum ably not the most important ele ment in many cases. Nowadays al most everybody goes to school until the age of fifteen or sixteen, at least, and college training, in eluding a substantial amount of graduate work, has become the regular route to entry into the ma jor professional fields and the ex ecutive levels in business. To note that education can beDr. Paton is Professor Emeritus of Account ing and of Economics, University of Michi gan, and is known throughout the world for his outstanding work in these fields. His com ments here are excerpts from an article in The Accounting Review, January, 1967.

732 and has often been - acquired without schooling is not equiva lent to suggesting that people should stay clear of schools. Hav ing been connected with forma! education for more than a half century, I am unwilling to go that far. But I feel that we should avoid the conclusion that going to college assures intellectual growth and a successful life. The college degree may help to open the door to a job upon graduation, but it doesn't guarantee that the gradu ate has the stuff essential to good performance. It follows that a school should be regarded as a specialized un dertaking, not as the embodiment of all human experience a.nd ac tivity in miniature. In other words, a school should concentrate on the training and learning that can be accomplished more speedily and effectively in an institutional set ting than through general day-by1967 SOME REFLECTIONS ON EDUCATION 733 day experience, at home or on the job or while spending time other wise. Moreover, the school should not only restrict its efforts to fields which lend themselves to at tack in classroom and laboratory but should give primary attention to subjects that are acknowledged to be especially significant and worthwhile. Even in these high spending days no school has un limited resources, and hence there is need for care and good j udg ment in determining the nature and scope of an institution's ac tivities.

The tendency to try to cover the whole waterfront, to include in the curriculum all sorts of courses for which no solid justifi cation can be found, is one of the explanations of the sorry showing made by many present-day schools at both college and precollege levels. Somewhat related is the disposition to expand, proliferate, splinter the offerings in areas both worthwhile and questionable. Curricula Criteria Even if the generalization be ac cepted that the role of the school is limited, there remains ample room for debate as to the subjects to be included in a school program and the time and effort to be de voted to each. In making a start on the task of setting standards for selecting subjects to be taught, it may be helpful to take note of some broad principles. A review of the mental activities of the hu man animal suggests a possible grouping under two main heads. In the first place there is the process of observing and sizing up the phenomena encountered. Watch a small youngster and you'll note that he is busy looking the scene over and doing some appraising of what he observes (including, of course, hearing and feeling as well as seeing under the term ob servation). In the second place there is the process of transmit ting or communicating impres sions, views, and desires to others, beginning with parents and other members of the family.

In other words, the individual's mental activity boils down to: (1) a.bsorbing, appraising, pondering, pigeonholing; (2) purposeful ar raying and communicating. Or to put the point very tersely: brain work consists at bottom of (1) measuring and (2) reporting. Needless to say, this stab at un derlying classification is subject to plenty of objections, but this is true of all taxonomic efforts, in all fields, even at the dichotomy level. (This comment, incidentally, brings to mind another twofold division of the thinking process: (1) brea.kdown or analysis and (2) synthesis.) Applying the basic criteria in734 THE FREEMAN December dicated, it is evident that the traditional three R's come out well. Reading and 'ri ting are ma jor means of absorbing and trans mitting, and 'rithmetic is indis pensable to measurement. Writing in the calligraphic sense is not to be disdained; achieving a good hand is worthwhile, like learning to spell accurately, and a host of other accomplishments. But writ ing ability in the sense of first class composition is a more rare and much more significant attain ment. If I were faced with the problem of selecting the outstand ing subject deserving rigorous and continuing attention in the school system, in preparation for a use ful career, I would not pick phys ics or accounting but would give the edge to English composition.

In professional work of all kinds the ability to write well (reflect ing the ability to think well) is of paramount importance. In stressing writing I am not forgetting the great importance of being able to speak well, and I believe that a college or university curriculum may properly include some courses in this field. I am also not forgetting that reading ability is the underlying talent, and that without at least fair read ing skill it is difficult to make real headway in any direction in the formal educational system. Exten sive reading of good writing, of course, is a great aid in building a vocabulary and developing the ability to write. Vocational vs. Cultural An example of the human habit of setting up contrasts and con troversies where .there is no basic clash, plus the exaggeration of such differences as maY,be present, is the long-standing discussion of the relative merits of vocational and cultural studies and pursuits.

Without fully understanding what they have been aiming at,many teachers and school administrators have been clamoring for more em phasis on the cultural as opposed to the vocational or career-build ing approach in setting up college programs. "Let's develop a social consciousness," "Let's learn to be good citizens," "Let's broaden our understanding" - such are the slo gans of this group. Above all, so they say, "Let's avoid the mere bread-and-butter courses." This kind of talk is pure tommy rot. When is a person going to get ready to be prod ucti ve if not dur ing his school days, now length ened into a long stretch of years, a substantial slice of an entire life span? I would not advise any young man to go to college unless his primary objective is to prepare himself for some profession or field of endeavor, unless he hopes that the college training will help 1967 SOME REFLECTIONS ON EDUCATION 735 him to get hold of a rung of a career ladder. (This doesn't neces sarily mean that he need make a final choice of a vocation he fore entering college, or even that the .matter has to be settled during the first year or two; there's some thing to be said for retaining flexibility, and having more than a single string to one's bow.) Learn .the Native Language 8efore Dabbling in Others But there is more to the story.

Upon analysis and appraisal of the so-called cultural courses one finds little support for their preten sions. Foreign language study is generally regarded as an outstand ing part of the cultural curricu 1um' and some schools require all students to take one, two, or more years of work in this field. In some cases, indeed, this is the only uni versal subject requirement. What are the results for the mine-run student: a bare smattering of knowledge of a language in which he will never become proficient and which he will never use. In puttering, halfheartedly, through one or two years of classes in a foreign language, the time and effort of the student are largely wasted. The futility of such courses is especially clear in the case of students inadequately trained in English - who have trouble composing a postcard to mother - and this means the great majority. For heaven's sake, let's try to do som~thing to equip students in their native language, and means of communication, instead of side tracking them into a feeble intro duction to another language. I am not objecting, of course, to seri ous, intensive study of a foreign language with the end in view of mastering the language and mak ing use of this equipment in a career in foreign .service or else where.

This brings me to the main point. A thoroughgoing course in physics, chemistry, or accounting - to mention only a few possibili ties - which opens doors to pro fessional activity and a good liv ing upon graduation, obviously has more genuine cultural value than a superficial attack on a for eign language that leads nowhere. There is no good reason for la beling an interesting, vigorous, significant subject "noncultural" because it has a vocational aspect. It is not at aU difficult to select a four-year program of college courses rich in Kultur, in the best sense, as well as valuable from a professional career standpoint. A course doesn't have to be imprac tical to be eminently worthwhile. Breadth of training has some appeal and merit, but breadth that amounts to shallowness, with no 736 THE FREEMAN December depth anywhere, is not a suitable goal of educational effort. Jack-of all-trades but master of none re mains a dubious calling.

Student Aptitudes and Attitudes Today's college students in the mass are less able and less studi ous than those of fifty years ago. Growth of the view that everybody should go to college, fortified by the widespread and very silly no tion that all of us have the same package of native abilities and that all our limitations are of en vironmental origin, is partly re sponsible for this condition. An other factor is the softening of precollege training to the point where even the most backward students are pushed along grade by grade at the elementary level and generally don't find it very difficult to obtain a high-school diploma. The result is the flood ing of colleges with students lack ing the inherent mental equip ment to handle staple college sub jects effectively, as well as stu dents of ability who have never been called upon to exert them selves scholastically and hence find it difficult to make a decent show ing in college. In this situation it becomes increasingly hard to maintain traditional standards, to say nothing of strengthening such standards.

Affected by the watered-down training experienced in precollege school days, and infected more or less with the spreading sentiment to the effect that everyone has a right to share in the pie regardless of contribution or effort, the atti tudes of many college students have become very trying to the serious teacher. Indifference to the point of impudence seems to be on the increase in college class rooms. "Here I am, and what are you going to do about it" seems to be implied by the slouchy pos tures and yawning unshaven faces now confronting instructors in in creasing numbers. (The tendency toward indifference, it must be ad mitted, is often aggravated by a boring, ineffective performance on the part of the instructor.) A student's attitude, beyond doubt, has an important bearing on his performance and success throughout his school experience. Ability is important, but ability not accompanied by gumption and dri ve is likely to go to waste. The chap with fair ability who stays in there pitching may do better in the long run than the person with superior talent but lacking in de termination and staying power.

The teacher may have little spark, and the subject may not be ex citing, but usually a bit of juice can be squeezed out of the orange by the reasonably capable student if he really tries.

1967' SOME REFLECTIONS ON EDUCATION 737 The squandering of several years in college by persons who will not profit from the experience because of lack of ability or other deficiencies should not be encour aged. Aside from the funds wasted is the resulting serious loss of man power. There is also the fact that the squandered years may well crystallize the personal deficiencies and decrease the potential of the student when he finally does try to go to work. Perhaps mention should be made here of the beatniks and trouble makers who are infesting college campuses in increasing numbers these days. On this subject it is my feeling that although cleanli ness may not be next to godliness, there is still something to be said for good appearance and deport ment. I see no reason for spending a lot of money, furnished by tax payers or otherwise, to provide fa cilities for the bums - real or imi tation - to strut their stuff. ~ Reprints available, 3 cents each.

Values in the Classroom IF A LIST of the most inspiring and influential teachers of the past could be drawn up, it might well show the majority were men who were strongly and even passionately committed to certain values and who communicated these values both in the classroom and out side it. Education is, after all, not a one-sided process aimed ex clusively at the communication of facts and the development of skill in correct reasoning. Education of the whole man is also moral, that is, it involves the inculcation of values. To abdicate this responsibility in the name of a spurious scientific objectivity is to create a moral vacuum in the minds and hearts of our youth. PATRICK M. BOARMAN F R E E DO M D EP END SON DEAN RUSSELL My GRANDFATHER fought for free dom while he continued to own slaves. His concept of freedom permitted him to direct and con trol the activities of other men.

And when he was denied the legal right to take for his own use the fruits of other people's labor, he was honestly convinced that his freedom had been curtailed to some extent. An absurd concept of· freedom? Well, he was no different in this respect from Jefferson, Washing ton, Patrick Henry, and others of our Founding Fathers. It is Dr. Russell, long-time member of the staff of the Foundation for Economic Education, now heads the Department of Economics at Artesia College, New Mexico. This article was previously published as a pamphlet by the Foundation in 1953, but re cent manifestations of violence throughout the nation and the world - even by teachers suggest the need to refer again to the funda mentals of freedom Dr. Russell espouses. 738 true that they had developed a better understanding of freedom than had any political group be fore them, and I respect them highly for their revolutionary and magnificent concepts of inalien able rights which come from God instead of· government. But even so, they still believed that liberty permits some men to use violence to control the actions and· to own the production of other men. Our Forefathers believed, of course, that these controls over other men should be permitted only if they were sanctioned by a government based on the democratic or repub lican processes. But while reject ing the concept of hereditary rul ers, they did not entirely reject the "Old World" idea that it is permissible for some persons to use the powers of government to 1967 MY FREEDOM DEPENDS ON YOURS 739 aid them in controlling the ac tions and disposing of the produc tion of other persons.

A discredited idea of freedom? Well, that same concept of free dom is still widely held through out the United States today. The reasons advanced to defend the fact that some men have the au thority to control the productive actions of other men have changed. And the modern way of taking and distributing the fruits of other people's labor is seldom called slavery. But the legal right of some men to control the pro ductive activities of other men continues to exist as before. And the present-day tax of more than 80 per cent of some persons' in comes is probably a far greater percentage of their production than was ever withheld from any slave. Might or Right Is this present-day taking of other people's production legal? It is. But so was outright slavery once legal! Did that make it right? Let us hope that we Ameri cans never delude ourselves into the belief that right is properly determined by a show of hands.

For if we do, we are lost. The extent and type of the legal controls over persons, and the de gree of the taking of other peo pIe's prod uction, have varied greatly throughout the history of the United States. But the over whelming majority of the Ameri can people have always believed that freedom includes the right of some persons to use the legal au thority of government to control the productive efforts and incomes of other persons. Abraham Lincoln recognized this dilemma in 1864 when he stated: "The world has never had a good definition of the word lib erty, and the American people, just now, are much in want of one. We all declare for liberty, but in using the same word we do not all mean the same thing. With some the word liberty may mean for each man to do ashe pleases with himself, and the product of his labor; while with others the same word may mean for some men to do as they please with other men, and the product of other men's la bor. Here are two, not only dif ferent, but incompatible things, called by the same name-liberty."

Both Lincoln and Jefferson Da vis announced themselves for free dom. So did Stalin and Hitler. So do you and I and almost everyone else. And I have no reason to doubt that each is sincerely in favor of freedom-his concept of freedom. Just as I hope you will give careful consideration to my ideas on freedom, just so will I be most 740 THE FREEMAN Decembe'r pleased to give careful considera tion to yours. For unless there is a common understanding of the meaning of freedom, we will con tinue to fight each other in its name. Individual Freedom It seems to me that much of the confusion over the meaning of liberty and freedom begins with an incomplete or inadequate ex planation of what the phrase "in dividual freedom" really refers to. While human freedom neces sarily concerns the individual, it does so only in the sense that freedom always refers to a rela tionship or condition betu'een two or more persons. While it is nec essarily always individuals who understand, practice, and advance freedom, the concept applies only when there is some sort of con tact between two or more of them.

The idea of freedom would be use less to a person isolated forever from any contact with any other person. Contrasted with the ideas of food and shelter - which can be applied to one person alone the idea of human freedom has no meaning except in society. Reference to the concept of freedom, then, always applies to a condition or relationship between two or more persons. Just what is that relationship? Certainly it would be nonsensical to describe freedom as a relationship of vio lence, where some persons are trying to impose their wills upon other persons. Probably the best word to describe that condition is tyranny. Freedom Defined Freedom is a relationship or condition of nonmolestation. The word "molestation" is here used to include murder, defamation of character, theft, libel, fraud, vio lence or the threat of violence, or any other act of aggression by one person against another per son's life, liberty, good name, or property. And the fact that the molestation may be legal-slav ery, restrictions against trade, compulsory unionism, and so on does not deny that freedom is in fringed.

Since freedom describes a rela tionship of nonmolestation be tween persons, it is misleading to speak of freedom as though it ap plies to one person alone. This is misleading because it is incom plete; because it refers to only part of a necessary relationship; because it tends to obscure the fact that one or more other per sons are necessarily involved. Yet, the idea of freedom is al most always used in the sense that one individual can be free and have his freedom, even though he may be exercising legal authority 1967 MY FREEDOM DEPENDS ON YOURS 741 over the productive activities and incomes of others - up to and in cluding complete slavery. That seems to me an unfortunate con cept of freedom. But such has al ways been the popular concept and still is. Unrestrained Freedom When I speak of freedom, I mean a condition of mutual non molestation, with no person mo lesting any other person. Under that concept, I fully endorse "un restrained freedom" - a society based on the idea that no one has the right to molest anyone else; a society wherein everyone is legally forbidden to molest anyone else.

Now, I am aware that many mil lions of persons within our so ciety do not share my faith in the principle of mutual nonmolesta tion. And there seems little like lihood that the various types and degrees of molestation which now exist will disappear over night. But regardless of what others say or do, it is obvious that those of us who believe in mutual non molestation must take the first and necessary step toward it by personally following the idea of no molestation against others. There is no other way for free dom to begin except through its practice by individuals who un derstand what it is. When Hitler spoke of freedom, he merely meant a condition in which no one molested him. His concept actually required that some of the German people molest others of the German people. The only condition that freedom de scribed to Hitler was one wherein he could do as he pleased. To him, freedom was strictly a one-way street.

You shouldn't be surprised at Hitler's concept of freedom. He didn't invent it and he had no monopoly upon it. It was, and is, held almost universally. As stated above, our Forefathers fought and died for freedom. And they were sincere about it. Yet, they did this while they themselves con tinued to violate freedom by con trolling the productive activities and incomes of other persons. The vast majority of our cur rent state and Federal officials be lieve sincerely in what they un derstand as freedom. Yet, so far as I know, few if any of them fully accept the idea of freedom as a reciprocal relationship of nonmo lestation among persons. On the contrary, most of them look upon freedom as a condition wherein some persons are obligated to mo lest other persons. The candidates of all political parties in our last elections said they believed sin cerely in freedom. Yet almost all of them endorsed specific issues that undeniably molest persons by 742 THE FREEMAN December forcing some to· conform to the viewpoints and ideas of others.

Liberty and License Our legislators are honorable men. They are sincerely trying to do what they consider to be a nec essary and not-always-pleasant job. But I wonder if many of them are not confusing liberty and Ii cense. In order better to understand the reason for this possible con fusion, let us consider the follow ing example: A person uses his o,vn honestly acquired money to build a house for $10,000. In the process, he molests no person or group of persons - neither de fames them, defrauds them, breaks his voluntary contracts with them, nor uses violence or the threat of violence against them. Upon completion of the house, the owner decides to offer it for rent. For a reason known only to himself, he sets a rental price of $500 a month. At that price, the house stays vacant - even though there may be many persons who would like to live in the house at a rental price which would pay the owner a four or six or eight per cent return on his investment.

Would not the word "freedom" be the proper term to describe such a condition of nonmolestation wherein no person would be using violence or the threat of violence to impose his will or viewpoint upon any other person?· Since no one would be forced to buy and no one would be forced to sell, would that not be freedom? Most of our governmental offi cials, backed by the vast majority of the American people, would surely reply to that question some what as follows: "No! You have described a condition of license wherein the people would be robbed and exploited or forced to remain in substandard housing, wherein freedom would be de stroyed. In order to restore free dom, we would have to molest such unreasonable property owners to make sure they conform to our idea of a proper price." And so it would go as it almost always has. During the days of NRA, a merchant was accused of license if he sold below the gov ernment-set price. During the days of OPS, he was accused of license if he sold above the government set price. Under "Fair Trade"

laws, he is accused of license if he sells either above or below a price which is approved and en forced by government. Freedom - a condition of non molestation in the market place and every\vhere else - is often called license! While license - a condition wherein some persons molest other persons - is all too 1967 MY FREEDOM DEPENDS ON YOURS 743 frequently called freedom! The popular concept of freedom has al 'ways described a condition in so ciety wherein some persons use legal violence or the threat of legal violence to compel other persons to conform to their wishes. The degree of molestation has varied from time to time and from gov ernment to government. But at no time under any government has the popular concept of freedom ever been used to describe either an actual or potential condition of nonmolestation among persons. A Mutual Concept Freedom is destroyed between two persons to whatever extent either one· uses violence or the threat of violence to impose· his will or viewpoint upon the other.

Regardless of who is the aggres sor and who is the victim - or whether the violence is legal or illegal - freedom is still infringed. If you have rendered me help less by throwing me to the ground and sitting on top of me, every one understands clearly that my freedom has been severely cur tailed. But what is not generally understood is. that your freedom is also curtailed as long as you must spend your time and effort to hold me down. You thereby re strict your own progress and im provement just as you do mine. Freedom is a reciprocal relationship based on voluntary agree ments and actions. This applies in all human relationships, even though they· are seldom as clear and dramatic as person-to-person violence. The only real possibility for complete freedom for yourself as an individual is for you to re frain from initiating violence or the threat of violence against any one else. This is the vital first step toward a condition of mutual nonmolestation - a step that any one of us can take as soon as he is ready.

"But," someone may ask,. "since I am holding you down by my own free will, how can it possibly be said that I am thereby interfering with my own freedom? I am do ing exactly what 1 want to do!" Maybe so. But if the man on top understood the full significance of such a course of action, he would not deliberately follow it or use the word freedom to describe it. The reality of this thesis that no person can really have complete freedom for himself while he is imposing his will - legally or ille gally - upon the creative activities or incomes of others may possibly be more easily understood ifap proached from another angle.! 1 While examples given herein deal primarily with material prosperity, this is not to. say that economic well-being is the most important aspect of freedom. Actually, it is a by-product of something 744 THE FREEMAN December If all persons in the world ex cept you were suddenly to die, it is most unlikely that you 'would live out your normal span of life as you would want to do. That is true because the increased material prosperity resulting from speciali zation and division of labor has encouraged you to depend upon other persons for the things you want and need - the things you want to do. Imagine what would happen to you if you had to build your o\vn house from virgin tim ber with no axe or saw or nails, raise your own food without hoe or plow or seeds, be your own sur geon without instruments or medi cines, construct every itern of your own electric system without tools of any kind, and so on and so on. You would soon perish.

If half the people in the United States were suddenly to die, you would, for the same reason, no longer be able to do many of the things you have been doing and \vish to continue to do. And al though it is difficult to trace di rectly, the same sort of thing hap pens when even one productive person dies. This fact is easier to visualize if you think in terms of the "key man" of whatever busi ness you are most interested in. more important. The examples deal mostly wi th production because it is gen erally familiar and appears to be the most restricted freedom of all. The Result 01 Controls Now let us transfer this same idea over to the concepts of con trols and slavery instead of death. If the records of history are to be given any value at all, they offer conclusive proof that the slave doesn't produce as much as the per son who is working of his own free will. Nor can the slave contribute as much to one's spiritual and men tal development as he could if he ,vere released from the physical controIs over him.

If all mankind were enslaved or controlled by one person or a small group of persons, literally millions of people would starve to death as a result of the tremendous decrease in production that would automati cally follo,v. 2 The rest would sink slowly back into darkness and sav agery. Yet, the people who hold the popular, one-sided concept of free dom will still say that the slave master at least would have his "in dividual" freedom under those cir cumstances because no one would be controlling him! It is true that the slave master might be able to confiscate a large share of the available production for himself at the expense of oth ers. But, with the exception of a few brilliant fanatics who honestly believe that slavery is the best pos2 The truth of this fact is proved by both the ancient and modern histories of various European and Asiatic nations.

1967 MY FREEDOM DEPENDS ON YOURS 745 sible form of society, slaves seldom produce literature or printing presses or new methods for in creasing production and distribut ing it more widely. The man whose activities are directed by violence or the threat of violence doesn't or dinarily invent and increase the production of television sets, better surgical instruments and medi cines, great sermons and studies in philosophy, and such. The slave master cannot take for his own use and advancement that which has not been invented or produced! He might honestly believe that he him self has complete freedom, but the decreased rate of development-or even the degeneracy-of his moral, mental, social, and physical well being would offer conclusive proof of the shortcomings of such a con cept of freedom. If only half of all mankind were enslaved, this same thing would happen to the slave master in some proportion. If a person uses vio lence or the threat of violence-le gal or illegal-to control the produc tive activities or income of even one person, he himself will thereby suffer diminishing opportunities for the development of his own po tentialities. And most unfortunate of all, his action against freedom also does great harm to many in nocent bystanders who desire to live in peace with their fellow men.

Suppose that someone had tried to control the creative activities of an individual like Edison, or Aqui nas, or Beethoven, or Shakespeare, or a hundred other producers in various fields that come readily to mind. The opportunities for peace ful pursuit of the things you now do and wish to continue to do-the real meaning of freedom - would have been decreased immeasurably if the activities and incomes of those individuals had been con trolled by some outside authority ,vith the power to direct and re strain them completely. Unfortu nately, there were some controls upon the creative activities and in comes of those persons. Thus it seems reasonably certain that you and I today are missing many op portunities ,vhich would have been available to us if those men had en joyed complete freedom - if they had lived in a society organized ac cording to the idea of mutual non molestation.

Future Leaders The present and future produc tive leaders of mankind are now be ing severely controlled, directed, and restricted by governmental au thority. And it is being done be cause most of us honestly but mistakenly believe that freedom demands that some men control the creative activities and incomes of other men! The vast majority of the world's people still sincerely be746 THE FREEMAN December lieve that they themselves can have complete freedom even though they use violence or the threat of vio lence to. direct· the activities. and control the incomes of others! They do not accept the idea that freedom is a mutual relationship of non molestation among persons. Now someone may say: "This is all very well in theory, but there is no possible way of measuring what might have been or, in this case, even what might be. I still can't see specifically how I lose any of my freedom merely because some per son. in this or some other country might be controlled by his own gov ernment."

Communist Freedom Well, let's apply the test to the communist nations of today. Sev eral hundred millions of individual Russians, Chinese, and others are forbidden to trade with you or to visit you or to exchange ideas with you or to worship with you. Our periodicals and newspapers devote much space to the telling of how those persons have lost most of their freedom. But what has this to do with your freedom? Well, can you visit with those individual Russians and trade with them or exchange ideas with them or worship with. them? No, you have lost a great deal of your own freedom even though you may not .be aware of it. If any person anywhere in the world is deprived of his freedom to trade or to com municate with you, automatically you thereby lose your freedom of opportunity to trade or to com municate with him. That fact is as undeniable as two plus two equals four. A Comparison Legalized violence is already be ing used to deprive a~most half of the world's people of their freedom of opportunity to trade or to wor ship or to communicate or to visit or to exchange ideas with you. To visualize how this affects· your own freedom, just imagine what would happen to you if the other half of the world's people were also de prived of their freedom to have any contact with you. Under those con ditions, you would soon die from lack of food or shelter or clothing or medical attention, or from sheer boredom or frustration. Yet, the persons who hold the popular idea that freedom can be applied to one person alone would still say you would remain free because no one would be molesting you! Such a concept of freedom would appear to be the sheerest nonsense.

It is true that we Americans en joy more freedom-less legal and il legal molestation - than the peo ple of any other nation. But no per son in America is completely free as long as violence-under the power 1967 MY FREEDOM DEPENDS ON YOURS 747 ofgovernment or otherwise-is used to restrict or to control or to direct the activities or income of even one peaceful person. To whatever ex tent any person is forbidden to trade or to exchange ideas with you, to the same extent you are thereby deprived of the opportunity to trade or to exchange ideas with him. To repeat, freedom is a relation ship of mutual nonmolestation among persons. Yet, the over whelming majority of the world's people have always thought of free dom as being the legal right of some persons to impose their wills and viewpoints upon other persons. And they still do. Let us examine a few popular examples of this at home and abroad.

Houses and Subsidies When the Russian government builds houses for some persons at the expense of other persons, it al ways does it in the good name of freedom. But it cannot logically be called freedom because the process of governmental housing describes a relationship among persons \vherein some persons are undenia bly molesting other persons against their wills at some point within the process. When the English government grants subsidies to certain manu facturers or farmers or other fa vored groups, it claims to be advancing freedom for the English people. Actually, complete freedom ceases to exist anlong the persons involved when government rewards some persons at the .expense of other persons. It may be alleged that while a subsidy decreases the freedom of the persons from· whom the money is taken, surely it doesn't decrease the freedom of the persons who get it. This is the ever-popular "Robin Hood" concept of freedom-a per son can be "free" even though he exists by doing violence to others.

The person who accepts that idea of freedom can sincerely advocate complete government ownership and control in the name of freedom. A.nd it is worth noting that the ad vocate of government ownership whatever the degree - is always happy to specify who shall do the taking, whom it shall be taken from, and who shall be rewarded with the confiscated production. Controls and Democracy When the government of Argen tina initiates price controls, wage controls, rent controls, tariffs, gov ernment-owned hydroelectric proj ects' and other similar compulsive devices, it claims to be doing these things to preserve freedom. And apparently the vast majority of Ar gentineans believe it. Yet, in each instance, some persons obviously are using violence or the threat of 748 THE FREEMAN December violence to impose their wills upon other persons who believe differ ently. That process should not be described as freedom. And the fact that the molestation is legal has no bearing upon the fact that freedom has thereby been decreased.

When our own government takes our money from us against our wills and gives it to Tito, Franco, Peron-Germany, Italy, Japan, and other nations-our officials sincer ely believe that they are doing it to preserve peace and freedom. Yet, this entire process is based on vio lence or the threat of violence against our own citizens. In most instances, we are compelled to do what few of us would do with our own resources if we were free to decide for ourselves directly. This is the exact reverse of a condition of nonmolestation among persons. Such a transaction, founded upon violence, should never be called freedom. It is true that our officials were duly elected by the people. But so were slaveholding officials! Did that fact change slavery into free dom? Directly or indirectly, the American people have the legal right to vote for either a policy of molestation or a policy of non molestation. An examination of the record shows quite clearly that the vote is almost always for a pro gram of molestation. The various campaign platforms differ only in the degree of molestation and which group is to be molested and which group is to be in charge of doing the molesting.

Self-Defense But what about self-defense? Admitting that freedom is de creased between them when one person molests another, what is the innocent victim of the lost freedom to do? First, the person who fully un derstands freedom will never know ingly abolish or diminish it. That is, he will never knowingly initiate or advocate any action or law that imposes his ideas or viewpoints upon any other person against that person's will. Any person who is aware that he is the victim of molestation will al ways use whatever measures he deems best and most suitable to gain freedom. This is an instinc tive reaction; for, obviously, no person wishes to be molested against his will. If he understands freedom, he himself will never knowingly be the aggressor. But whether he understands it or not, he will at least strive for a con dition of minimum molestation against himself. The means he uses to gain this end may be persuasion, argument, prayer, nonresistance, noncoopera tion, guile, counterviolence, poli tics, or whatever. Most probably it 1967 MY FREEDOM DEPENDS ON YOURS 749 will be a combination of several of these and similar measures, de pending on circumstances and his understanding of moral principles.

Means to an End My goal is freedom-a condition of nonmolestation among persons. To the best of my ability, I will strive toward that goal. I will use the means which seem to me to be both morally right and tactically effective. For example, I would prefer to persuade the would-be murderer to let me live. But if that doesn't work, I believe that I am morally right and tactically correct in us ing counterviolence to defend my self against him. And that is prob ably what I will do if the occasion should ever arise. I believe that I am morally right and tactically correct when I choose to join my fellow men of a like mind in resisting aggression from the gangster at home or the marauding army from abroad-so long as we ourselves don't deny our own prin ciple by using violence or the threat of violence upon our peaceful neighbors who do not choose to join us; so long as we confine our actions to defense against a direct a,nd unquestionable threat to our lives, liberty, or property. I believe that this can be accomplished more effectively by voluntary and coor dinated group action than by involuntary group action or isolated individual action. I believe that it is morally right and tactically cor rect to advocate and support a gov ernment dedicated to the proposi tion of preserving freedom-a so ciety wherein no person is per mitted to molest any other person; a society wherein every person is legally forbidden to molest any other person. And, of course, I be lieve it is morally right and tac tically correct for society's polit ical agent to use the necessary de gree of legal counterviolence re quired to stop any person from molesting any other person. It seems to me that the sole purpose of government - the social agency of coercion - should be to defend equally all of its citizens against whoever molests them.

A Doubt Thus do I advocate and support the use of purely defensive violence as an integral and necessary means toward the preservation of max imum freedom in a world where many persons are not yet willing to live in peace with their fellow men. But it should be noted that I have no way of knowing with ab solute certainty that my endorse ment of even defensive violence is the best principle to follow. I now believe it is. But when I study the lives of Christ, Gandhi, and others who seemed to endorse a policy of 750 THE FREEMAN December turning the other cheek and of not using violence even for defense, I prefer not to become too dogmatic on the subject. Their moral policies appear to have been quite effective. Whether or not I am justified in my endorsement of defensive vio lence, this much is certain: I can not logically claim to favor freedom when I am initiating violence or the threat of violence - legal or il legal-to force any person to con form to my ideas, beliefs, or view points. Thus, come what may, I will never knowingly and deliberately initiate violence against my fellow man. I have too much respect for him (and for myself) to do such a thing.

If what my neighbor is doing with himself and his own property appears wrong or illogical to me, then it would seem certain that 'what I am doing with myself and my property appears equally wrong or illogical to him. Thus we have the choice between neither one's molesting the other, or fighting it out to determine who shall conform to whom. I choose to follow the course-of freedom, to take the first and necessary and logical step to ward a relationship of mutual non molestation. An Epilogue: Let Us Not Despair Here follows what seems to me a most encouraging thought for those among us who despair of liberty. Freedom will never disappear completely and forever - in Rus sia or anywhere else. The popular, one-way, "individualistic" concept of freedom will at least serve to prevent that. Since no person wants others to molest him, al most every person will rebel against molestation somewhere along the line, even though he may foolishly continue to molest others while he is rebelling against those who are molesting him.

At one time or another, the peo ple of all nations have rebelled against excessive molestation from their own governments. This is as true of the United States as it is of Russia. These rebellions sometimes bring an increased degree of free dom - that is, a decreased degree of molestation - for a while. Then the rebels, not fully understand ing that freedom is a condition of reciprocal nonmolestation, seem inevitably to begin to initiate the same sort of laws against which they themselves rebelled. They rebel against a tea tax, and then put a tax on tea! They rebel against price controls, tar iffs, and other restraints on trade; then they re-establish price con trols, tariffs, and the various other restraints on trade! They rebel against the idea of government1967 MY FREEDOM DEPENDS ON YOURS 751 granted special privileges to cer tain persons and groups, and then demand special privileges from government for themselves and their particular groups! They re bel against Siberia for political prisoners, and then send political prisoners to Siberia !They rebel against the Bastille, and then put the guillotine in its place!

Even so, the ideas of human freedom which have been loosed throughout the world during the past 500 years are now too· strong to be completely lost again. While the trend of the past 50 years has been toward more government and less freedom, there is no rea son to assume this· will continue forever. Peace and Freedom Depend on Individual Determination In order for the highest ideas and ideals of mankind to prevail generally, it seems obvious that a condition of peace and freedom is required - a society wherein no person molests any other person; a society wherein no person pre vents any other person from de veloping his creative potentialities to the fullest extent of his under standing and ability. This desirable state of affairs will not occur all at once. It will grow only as freedom is under stood and as faith in it is restored. If one person decides today to practice freedom, the evolutionary process in human relationships will move forward one more step.

That is the only possible path to freedom - a peaceful change in thought and understanding and action among individual· persons. Anyone can begin the practice of freedom whenever he chooses to do so. It is easy, and one need not wait upon other persons to agree before he begins. No com mittee resolutions or elections or laws are needed for a person to begin the practice of freedom. One need merely resolve not to impose his will - legally or illegally upon his peaceful fellow men in their religions, their economic the ories, their attitudes, their morals, their mores, or whatever. And then start to practice it. Set an Example But suppose that "scoundrel next door" takes advantage of your faith in freedom and begins molesting peaceful you ? Well, you will discover two things: First, your neighbor is just as convinced that you won't voluntarily "do the right thing" as you are convinced that he won't voluntarily "do the right thing." Second, when your words and your actions have con vinced your neighbor that you have no designs upon him or his, he will admire you so much that he will eventually ask you ques752 THE FREEMAN December tions to find out how you got that way - and then he is ready to hear out your ideas on freedom. A clear and simple and consistent explanation from you may cause him also to practice freedom that is, to stop advocating laws to force other people to do what he believes they should do.

Might there not be exceptions? Probably so. But it isn't too im portant. If a person is busily engaged in minding his own busi ness instead of imposing his ideas and viewpoints upon others, he 'will be pleasantly surprised at the increase in his own spiritual and physical and material well-being. In addition, if he recognizes a moral obligation to be a good neighbor and citizen, this per sonal practice of freedom would also seem to be the most effective approach to that desirable goal. ~ ATale of TWO WORDS DEAN LIPTON How FUTILE are words among those who do not understand their meaning! "We all declare for liberty," said Lincoln, "but in using the same word we do not all mean the same thing." Nor do we all mean the same thing by our words for those two important aspects of liberty: rights and equality. A hundred and thirty odd years ago young Benj amin Disraeli was Mr. Lipton of San Francisco has been a news paperman and Army Historian whose articles have appeared in numerous magazines.

standing for Parliament. This grandson of a Venetian Jew would one day become Prime Minister of Queen Victoria's England. But that was far in the future, and his immediate task was to defeat a liberal opponent. He told the solid country folk of his constituency: "I prefer the liberties we now en joy to the liberalism they profess, and find something better than the Rights of lVlan in the Rights of Englishmen." There were, of course, many in Disraeli's day as there are today 1967 A TALE OF TWO WORDS 753 to see in these words a lack of compassion; here was a young man obviously unconcerned with the rights of anyone but an Eng lishman. Anyone referring in our time to the "rights of English men" (or of Americans) surely would be denounced for negating or downgrading the rights of less developed peoples of Asia or Africa or South America. What Disraeli Knew Now, none of this would be true. To begin with, Disraeli more than most men - knew the meaning of words. He knew and understood the ideas inherent in the history of his Jewish ancestors and also was well versed in the history and traditions of Anglo Saxon England. Aside from his political ambitions, he was a writer of brilliant, witty, and in cisive political and social novels which explored the foibles, weak nesses, and strengths of the so ciety and politics of the England of his time.

Although Disraeli doubtless would have favored extending the "rights of man" to men every where, he knew that this would mean little until all men agreed on what those rights were. To a Zulu chief in Africa, who could order a thousand men to leap over a cliff to demonstrate his power, the phrase would have a meaning not understood by Disraeli's con stituents. Nor would it have meant the same thing to a French revo lutionary leader like Robespierre or St. Just, who wrote about the "rights of man" with one hand while signing his daily quota of warrants for the execution of "enemies of the state" with the other. Every dictator or king or em peror professes to rule for the benefit of the people. For instance, "divine right of kings" meant to the people of medieval Europe that the king was ordained by God to protect their rights and thus pos sessed a divine right to rule. That few kings ever concerned them selves with the rights of their subjects is quite another matter.

History, of course, records that the kingly attitude usually ranged from negligence and carelessness to the most callous brutality. Still, the theory was the "rights of man," in a different costume. All of this, Disraeli knew. So it was natural that he preferred the "Rights of Englishmen" to the "Rights of Man." He was taking nothing away from the savage power of a Zulu chief or a revo lutionary leader or an advocate of absolute monarchy or dictator ship. Nothing he could say would influence them. But he knew that the "Rights of Man" was too gen eral and meant too much to mean 754 THE FREEMAN December anything. On the other hand, the "Rights of Englishmen" was a specific term, tied to the history of a single people. Magna Charta - J2 J5 What, then, did it mean? To anyone conversant with English history, its meaning was clear. An Englishman's rights had been wrested from King John by the Barons on a memorable June day in 1215 at Runnymede when they forced him to sign the Magna Charta. True, these were rights at first to be granted the nobility versus the crown. Yet, in the en suing centuries, they were broad ened to more nearly encompass all Englishmen.

Even as civilized a nation as France had no history of success ful parliamentarian struggle against the ruling monarch. But the England of that day could look back to a Parliament that had revolted against Charles I, de manding the right to tax as the representatives of the people, and insisting that this was the people's right, and not the right of the royal house. But Disraeli also would have known that while these "Rights" extended to most Englishmen, they by no means extended to all of them; history in its boundless inconsistency had placed certain political restrictions on English Catholics and Jews. Disraeli, whose father was a convert to the Church of England, could avoid those restrictions; but most Jews and Catholics could not. One of Disraeli's historic functions would be to help make these rights uni form, to aid in the fight to apply them to all Englishmen. In the Name of Equality \Vithin the category of rights, another word which has rung down the historical corridors is "equal ity." We are destined in our time to hear much more of it. This word has struck a chord in the imagina tions and has been used by all kinds of men from the most ad mirable to the most vicious. The Chinese Communists proclaimed it as their legions poured through the mountain passes to slaughter peaceful Tibetan villagers. Peace ful men have urged it upon their neighbors, and violent men have shouted it as they squeezed the triggers of scatter guns. Nearly eighty years ago, socialistically inclined Edward Bellamy wrote about a utopian society of the fu ture in a novel entitled Looking Backward. And the word he chose as title for its sequel, written nine years later, was Equality.

The meaning of the same 'word to different men can best be judged by comparing the ideas of two historically important figures: 1967 A TALE OF TWO WORDS 755 the Virginia aristocrat, Thomas J efferson, and the French lawyer turned-revolutionary, Maxmillien de Robespierre. What did "equal ity" mean to each of them? It was a word they both liked and often used. But a glance at the slogans commonly associated with their names will show that they were talking and writing about two different things. Thomas Jeff erson, a brilliant stylist but not always a clear writer, wrote in the Declaration of Independence: "All men are created equal." The French Revolutionary slo gan promoted by Robespierre and his followers was: "Liberty, Equality, Fraternity." However, Jefferson then went on to point out that all men were created equal in the exercise of certain rights: Life, Liberty, the Pursuit of Happiness. Govern ments, in his words, were insti tuted to protect those rights; by implication, that was where gov ernment's legitimate function be gan and ended. Quite obviously, he did not believe that all men were equal. The logic of Jeffer son's position was that men were born with differing strengths and weaknesses, and that even in such external conditions as material well-being, some were born luckier than others. Equality, in this sense, is concerned with the rights of people, and not with people per see They are equal because these rights belong to all men, not just to some of them.

Fraternal Equality Under the Guillotine The equalitarian concept inher ited from the French Revolution from men like Roryaspierre - is different in kind as well as degree. This equality is fraternal, and "fraternity" in the trinitarian slo gan of the French Revolutionists became a meaningless extra word. It meant what it said: All men are equal. This is meaningless be cause it is untrue. Men are not equal. Some are born with greater intelligence than others. Some have mechanical aptitudes while others have verbal aptitudes. The simple fact is that the son of a Soviet commissar is born luckier than the son of a Mongolian herds man. Now, if anyone had the choice under which system of equality to live, he would do well to consider a fascinating historical contradic tion. Contrary to what one might suppose, the lives and liberties of men have been far more secure where their individual inequali ties have been admitted and where they were "equal" only insofar as they were subject to the law. Take, for instance, a farmer in Vir ginia during colonial revolutionary 756 THE FREEMAN December times when Thomas Jefferson was governor of the state and measure his lot against that of a peasant during the time of Robespierre.

The farmer may not have been the intellectual equal of Jefferson. He may have lacked many of the material comforts that Jefferson had taken for granted since birth. However, in the exercis€ of his natural rights, he was Jefferson's equal; and with all of the powers of his office, Jefferson could do nothing to diminish those rights in the slightest degree. The French peasant was told again and again by the leaders of the state that he was the equal of any man. There were no ranks and no titles. He was plain Citizen Peasant to all who knew him. And Robespierre was plain Citizen Robespierre to everyone from his closest associa tes down to the least significant man among Paris' huddled masses. But what did this equality mean in practice? Citizen Peasant could be dragged from his home and family, thrown into a crowded cell, charged with a vague and specious crime "against the state," and tried before a per emptory court of zealots. Convic tion was almost certain. Execu tion in barbaric manner was equally certain.

No, men are not equal. Nor do all men mean the same thing when they declare their equality and claim their rights. For our own understanding of these words, let us hearken to that earlier docu ment, which Jefferson doubtless had in mind. The Virginia Bill of Rights, published June 12, 1776, clearly and bluntly says: "... all men are by nature equally free and independent, and have certain inherent rights, of which, when they enter into a state of society, they cannot by any compact de prive or divest their posterity; namely, the enjoyment of life and liberty, with means of acquiring and possessing property, and pur suing and obtaining happiness and safety." ~ De-fuse the Bomb THOSE who are concerned over a population explosion of too many people for the amount of food they will produce, are projecting the present results of our welfare state into the future and are ignoring the limitless potential of free enterprise.

PAUL L. FISHER Redondo Beach, California A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN lite lltirdWorldWar JAMES BURNHAM has been talking sense about the Cold War for two decades and more. As his The War We Are In: The Last Decade and the Next (Arlington House, $6.00) proves, he has not always been pes simistic about the chances of the West. This book consists for the most part of selections from his National Review column which runs from fortnight to fortnight under the general heading of "The Third World War," but he has added several interpretive essays and a final chapter on "The Decade to Come." Since he views the world struggle as a contest of wills that has yet to be settled, he is not really saying that the West is hell-bent on self-destruction as the title of one of his recent books-The Suicide of the West-would seem to imply. If Burnham is always braced against seeing things in a rosy light, he is still optimist enough to know that things may turn out better if you are resolved to go down fighting.

The essential feature of Burn ham's thinking is his belief that communist policy, far from being a riddle inside an enigma wrapped in a mystery, is perfectly clear. All true Marxist-Leninists, he says, be lieve that capitalism is doomed and that it is the duty of communists of whatever persuasion to give the tottering structure of the West a push whenever it is safe to do so. Communists may bicker among themselves, and behave in "poly centric" fashion even to the point of seeming to be nothing more than good nationalists, but communist countries have not yet engaged in such suicidal struggles as brought capitalist Europe to the verge of dissolution in 1914-18 and 1939-45. vVhen the United States, which both Moscow and Peking regard as their prime enemy, finds itself in trouble (as in the Dominican Republic, Cuba, and Vietnam), communists of all persuasions form an effective "united front 757 758 THE FREEMAN December from below" to back whatever Left ist faction is fighting us.

Burnham has had his manifold disappointments in the journalistic battle which he continues to wage with unabated dedication. He had hoped that the European Common Market would somehow broaden into an Atlantic World Common Market. He had hoped that the French would find some way of keeping Algeria inside a greater French Republic. He was appalled when Eisenhower and Dulles let the English, the French, and the Israelis down in the first Suez crisis, and predicted, quite rightly, that other Middle Eastern and African troubles would flow from the failure of the West to act as a unit to keep the Mediterranean Red Sea artery open on its own terms. Looking back on the Bay of Pigs in Cuba and the aborted Hun gari'an Revolution of 1956, Burn ham is. haunted by the "might have-beens." But still he hopes that the tide will be turned, possibly by U.S. fortitude in "holding the pass" in Southeast Asia.

Bumbling Brinkmanship Burnham is particularly good when he discusses the "evasion for mulas" that are forever bemusing western statesmen. In 1917 the West thought that Lenin was too "crackpot" to make his Bolshevik Revolution stick. But the "crackpots" defeated western interven tionists and consolidated their rule. In the thirties the Popular Front with the communists was going to keep Hitler from going to war. But the Popular Front somehow ended up by being replaced by the Hit ler-Stalin Pact. The rise of Stalin was supposed to betoken the end of Trotsky's theory of the Perma nent Revolution. But Stalin's "so cialism in one country" did not preclude the success of Mao Tse tung's revolution in China, or the seizure, by the Red Army, of the Baltic States and the countries that became the "captive nations" of Eastern Europe. In China they spoke of Mao's "Jeffersonian agrarianism," but Mao eventually blossomed forth as the philosopher of the guerilla en circlement of capitalism via seizure of "rural" Asia, Africa, and Latin America. The Red Chinese "Jeffer sonian agrarians" fought us to a standstill in Korea, and are now busy reassuring Ho Chi Minh in North Vietnam that they support him in his refusal to reach any compromise with the "imperial ists" short of complete evacuation of South Vietnam by U.S. troops.

The communists have even smashed the Monroe Doctrine, gaining immunity for Castro in Cuba in return for their with drawal of offensive atomic mis siles.

1967 THE THIRD WORLD WAR 759 This, as Burnham says, is "the record" of the past. As for the fu ture, Burnham is perfectly sure that de Gaulle will never succeed in putting together a "Europe of the fatherlands" stretching from "the Atlantic to the Urals." Such a Europe would inevitably be dom inated by the Soviets, who have an atomic arsenal. As for the emer gence of a third power in "little Europe," it is blocked by de Gaulle's animus against political integration. International Policies Burnham has traveled exten sively in Africa and southern Asia, and he has observed that the popu lations of the underdeveloped coun tries keep on rising faster than the food supply. He fears that the "Third World" of the old colonial areas must choose between the rival "neo-colonialisms" of the West and the Communist East if they want military security, in vestment, and technical assistance. As applied to the policies of the West, he does not use the adjective "neo-colonial" in any pejorative sense. He thinks that Africa and Asia will get a better break from the West than from the Communist East for several reasons. First of all, the West is willing to accept the formal independence and au tonomy of its ,old colonies. Sec ondly, its economic aid is likely to be more efficient, particularly if it is left to free enterprise. Third, its sea and air power is more mobile than any force which the Soviets and the Red Chinese would be able to deploy to protect a country far from Russia or Red China.

Burnham is perfectly willing to agree with George Kennan that the "blocs" have been loosened, that Titoism has resulted in "polycen trism," that the Moscow commu nists and the Peking communists have split, that the East European countries are straining for free dom from Muscovite leading strings, and'that nationalism is the main propelling force in most of the newly emergent "Third World." But, unlike Kennan, he thinks the best way to take advantage of com munist troubles is to keep the pres sure on. If the Soviets are being assailed from within by their intel lectuals, why should we strengthen the hands of the ruling clique that would repress those intellectuals? If Red China is on the verge of chaos, why should we give the Mao ist tyrants the endorsement of in viting them into the UN? "If," says Burnham in a force ful conclusion, "if our experts and policy-makers devoted one-tenth the attention and energy" to ex acerbating the struggle between factions within the communist world that they now "lavish on polycentrism and Sino-Soviet di760 THE FREEMAN December alectics, they might discover lev ers which, properly handled, could bring down the communist enter prise." Burnham has had a good record of spotting such levers in the past, only to see his advice ig nored. The publication of his The War We Are In: The Last Decade and the Next is in itself a "lever,"

provided that it can be gotten into enough hands. ~ ~ THE RECONSTRUCTION AMENDMENTS' DEBATES, Virginia Commission on Constitu tional Government, Richmond, Vir ginia, 1967, 764 pp., $4.50 ($3.00 paperbound) . Reviewed by George Charles Roche III. FROM TIME TO TIME, the Virginia Commission on Constitutional Gov ernment makes available valuable materials pertinent to the subject of American federalism, states' rights, and related problems. The Reconstruction Amendments' De bates is a significant addition to that literature. As the Commission makes clear in its introduction, the thirteenth, fourteenth, and fif teenth Amendments to the Consti tution today provide the basis for approximately one half of the con stitutional law litigation reaching the United States Supreme Court. Such matters as school desegregation, legislative reapportionment, voting rights, restrictions on state criminal procedure, and restraints upon the economic self-control of the states fall into this category.

Some 20,000 pages of debates and committee reports serve as the basis for this compilation. The vol ume is indexed by subject and by legal cases, and also contains a bi ographical index of House and Sen ate participants in the debates which led to the Amendments. Ev ery page specifies the session of Congress, the dates and the orig inal page numbers of the Congres sional Globe from which the ma terial was drawn, as well as the names of the speakers and the topics under discussion. The ReconstructionA mendments' Debates should have great utility for all libraries as well as for all those whose professions or interest touch upon the relationship be tween state and national govern ment. An understanding of the original attitudes and opinions of those drafting the legislation, set in its historical perspective, is surely an indispensable aid in un derstanding the complex intergov ernmental problems of our time.

Copies may be procured from the Virginia Commission on Constitu tional Government, 1116 Ninth Street Office Building, Richmond, Virginia, 23219. ~ THE FREEMAN - Volume 17, January-December 1967 Prepared by BETTINA BIEN 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 articles have at least three entries-author, subject, and title, except in a few cases when title entries seemed repetitive. Books reviewed are listed on page 768. ADENAUER, Konrad In memoriam .... (Chamberlin) 7:387-393 AGRICULTURE Can food supply keep pace with population growth? (Brandt) 1:18-23 ALTERN A TIVE to compulsion (Barger) 10:605-611 AMBITION /incentive Person of quality, A (Royal Bank of Can ada) 8:481-489 AMERICAN federalism. See Roche ANDERSON, Martin Federal bulldozer, The. 10:614-626 ANTITRUST Antitrust and the fear of bigness (Fleming) 6:369-378 Antitrust "humbug" (Fleming) 5:267-275 Purposes of antitrust, The (Fleming) 4: 221-230 ARMENTANO, D. T.

Economics of price fixing, The. 6: 366-368 ATTRACTION, power of-See Voluntarism AUTO-safety standards (Friedman) 8:507 508 AUTOMATION Labor union demands mean more inflation (Fertig) 7: 430-431 BAIT and the hook, The (Carson) 2: 83-91 BANKRUPTCY of "liberalism," The (Carson) 12:707-715 BARGER, Melvin D. Alternative to compulsion. 10: 605-611 Mixed economy mirage, The. 11: 697-700 BASIC realities, The (Read) 11: 683-687 BASTIA T, Frederic-ideas of Liberty and law (Wood) 4:206 Plato, your philosopher king has been found! (Read) 9: 534ff BEAUTY and common sense (National For est Products) 9: 528-529 BECAUSE I am an individualist (Wortham) 11: 679-682 BENNETT, Mary Jean. See Book reviews (Moley) BIGGERS, W. Watts Freedom: our dilemma. 3: 155-157 BLEIL, Gordon B. Case of the bulletin board, The. 1: 23-24 BOHM-BA WERK, Eugen Man who answered Marx, The (Lipton) 10:597-602 BOY who didn't cry "wolf!" The (Copeland) 5: 283-284 BRADFORD, Ralph Contented slavery (excerpt) 5:280 What's going on here? 11: 647-655 BRANDT, Karl Can food supply keep pace with popula tion growth? 1: 18-23 BREESE, Edward Y.

Great society, A: homemade, self-operated, and really free. 11: 656-661 I can be free. 8: 490-492 BROZEN, Yale Rule by markets versus rule by men. 9: 515 528 BURCHETT, Randall E. Voices behind you. 5:314-316 BUREAUCRACY Bureaucratic blight (Chamberlin) 1: 34-41 Mr. Kappel's dilemma (Read) 6:350-355 Organized irresponsibility (Carson) 3: 164174 BUSINESS, social progress, and religion (Moreell) 7: 399-413 BUSINESSMAN /entrepreneur, role of Challenge of business, The (Rose) 3: 158-163 Creators of wealth (Smith) 5: 298-301 Stand of one's own, A (Warmbier) 8: 470-471 BYRON (Lord) Prisoner of ehillon, The (excerpt) 5: 277 CAN food supply keep pace with population growth? (Brandt) 1: 18-23 CANADA Socialism in Saskatchewan (Thatcher) 1: 3-9 CARNEY, Patricia Thank-you note, A. 6: 378 CARREL, Alexis - quoted Plato, your philosopher king has been found! (Read) 9:531ff CARSON, Clarence B. Bait and the hook, The. 2:83-91 761 762 THE FREEMAN December Bankruptcy of "liberalism," The. 12: 707 715 New feudalism, The. 7: 432-444 Organized irresponsibility. 3: 164-174 CASE of the bulletin board, The (Bleil) 1 :23-24 CHALLENGE of business, The (Rose) 3: 158-163 CHAMBERLAIN, John. See Book reviews CHAMBERLIN, William Henry Bureaucratic blight. 1: 34-41 Communism after fifty years. 8: 463-469 Gap between earning and receiving, The.

4: 235-242 In memoriam: Konrad Adenauer. 7:387-393 Men, not money, will overcome poverty. 3: 135-140 See also Book reviews (Tavares de Sa) CHRISTENSEN, N. C. How leaners lose their freedom. 11: 643-646 CIVILIZA TIO N /heritage /tradition Discipline in life (Royal Bank of Canada) 11: 688-696 Principles of progress (Newell) 5:285-291 Rise and the fall, The (Read) 5: 292-297 COLESON, Edward P. Economic development of emerging na tions. 5: 302-313 Post mortem on the Lister centennial. 8 :472-477 COMMUNISM Communism - American style (Moreell) 9: 558-561 Communism after fifty years (Chamber lin) 8: 463-469 Fruit of communism: socialistic redistribu tion (Mahaffy) 9: 562-570 COMPETITION Antitrust and the fear of bigness (Flem ing) 6: 369-378 Purposes of antitrust, The (Fleming) 4:223ff War on property, The (Poirot) 10:581£f COMPULSION / coercion /power Alternative to compulsion (Barger) 10: 606ff Moral equivalent of power, The (Howard) 4:207-214 Why run ourselves out of business? (Read) 8 :453ff CONSCRIPTION Youth corps for America? A (Roche) 4: 195-202 CONSERV A TION Beauty and common sense (National Forest Products) 9:528-529 CONTRACT, freedom/right of Prophets, jurists, and property (Palmer) 2:92-108 CONTRACT state, freedom and (Warmbier) 10: 591-593 CONTROL of wages and incomes in Britain, The (Winder) 4:231-234 CONTROLLING HCL (Paton) 1:25-31 COPELAND, Helen Boy who didn't cry "wolf!" The. 5: 283-284 CREA TORS of wealth (Smith) 5: 298-301 CURSE and cure of covetousness, The (Read) 12:716-718 CURTISS, W. M.

Population problem, The. 5: 259-264 Taxation theory. 11: 674-679 DECISIONS and progress (Evanoff) 10:612 613 DEFENSIVE force vs. compulsion My freedom depends on yours (Russell) 12:749ff DeHUSZAR, George B. Individual liberty and "the humanities." 12: 719-723 DEMOCRACY, majority rule American federalism: 3 (Roche) 2: 112ff Power: 2 ( Roche) 7: 420-429 DISCIPLINE in life (Royal Bank of Can ada) 11: 688-696 DISPENSA TION of teaching, The (Mar shall) 10: 629-633 DOMESTIC inflation versus international solvency ( North) 2: 67-72 DON'T pamper the rookies (Sparks) 1:9-10 ECONOMIC calculation Private ownership ••..a must! (Hazlitt) 6:342-349 ECONOMIC development/progress Economic development of emerging nations (Coleson) 5:302-313 Great society, A (Breese) 11:656-661 Investing in yourself (Tyson) 4:243-249 ECONOMIC prediction Right premise-wrong conclusion (Fertig) 1:11-17 ECONOMICS of price fixing, The (Armen tano) 6: 366-368 EDUCATION, higher Effect of liberalism on the campus, The ( Howard) 10: 627-628 University and secondary education, The (Nelson) 12:724-731 What's going on here? (Bradford) 11:647 655 EDUCATION, theory of Dispensation of teaching, The (Marshall) 10: 629-633 Person of Quality, A (Royal Bank of Can ada) 8:481-489 Some reflections on education (Paton) 12 :732-737 1967 INDEX 763 EMINENT domain Federal bulldozer, The (Anderson) 10:617ff EPIT APH for a patriot (Morano) 7: 394-398 EQUALITY Equality: the level of mediocrity (Kershner) 6:340-341 Tale of two words, A (Lipton) 12:752-756 ERASMUS. reform, and the remnant (Thornton) 6: 356-365 ETERN AL vigilance (anthology) 5: 276-283 EVANOFF, Alexander Decisions and progress. 10:612-613 See also Book reviews (Read) FALSE remedy, A (Hazlitt) 7:414-415 F AMIL Y life. parental responsibility Discipline in life (Royal Bank of Canada) 11: 693ff Don't pamper the rookies (Sparks) 1:9-10 Population problem, The (Curtiss) 5:259-264 FEDERAL bulldozer, The (Anderson) 10:614-626 FEDERAL Trade Commission Antitrust and the fear of bigness (Flem ing) 6:370ff Purposes of antitrust, The (Fleming) 4:221ff FEDERALISM vs. nationalism American federalism: 2 (Roche) 1: 45-56 FERTIG, Lawrence Giving a hand to small business. 9: 538-540 Labor union demands mean more inflation.

7:430-431 Right premise-wrong conclusion. 1: 11-17 FEUDALISM, new. (Carson) 7:432-444 FLEMING, Harold M. Antitrust and the fear of bigness. 6:369-378 Antitrust "humbug." 5:267-275 Pricing of gasoline, The. 3: 175-184 Purposes of antitrust, The. 4: 221-230 FOOD and Drug Administration Controlling HCL (Paton) 1: 25-31 FREE enterprise. free market system Basic realities. The (Read) 11: 683-687 Challenge of business. The (Rose) 3:158 163 Plato, your philosopher king has been found! (Read) 9:530-538 Rule by markets versus rule by men ( Brozen ) 9: 515-528 Stand of one's own, A (Warmbier) 8:470-471 FREEDOM Decisions and progress (Evanoff) 10:612-613 Individual liberty and "the humanities" (deHuszar) 12: 719-723 My freedom depends on yours (Russell) 12:738-752 Search for reason, A (Tuccille) 10:634-636 FREEDOM, loss of Communism-American style (Moreell) 9:558-561 Government by better men (Newell) 3:131-134 Last candle, The (Schreiber) 7: 416-419 My freedom depends on yours (Russell) 12:743« Power: 3 (Roche) 8: 493-506 FREEDOM: our dilemma (Biggers) 3: 155-157 FREEDOM and the contract state (Warm bier) 10: 591-593 FREEDOM of the press Liberty's decline in Britain (Wilson) 4:218ff Press and the "people's right to know,"

The (Merrill) 2: 108-111 FREEDOM'S theory of value (Read) 10:594-596 FRIEDMAN, Milton Auto-safety standards. 8: 507-508 FRUIT of communism, The (Mahaffy) 9:562-570 GAP between earning and receiving, The (Chamberlin) 4: 235-242 GASOLINE, the pricing of (Fleming) 3: 175-184 GERMANY In memoriam: Konrad Adenauer (Cham berlin) 7: 387-39'1 GILLETT, Elizabeth-See Book reviews (Rand) GIVING a hand to small business (Fertig) 9:538-540 GOMPERS, Samuel Legislated security is bondage (excerpt) 5:279-280 GOVERNMENT by better men (Newell) 3: 131-134 GOVERNMENT, role of Power: 1 (Roche) 6: 326-339 Tale of two words, A (Lipton) 12:752-756 GOVERNMENT controls/regulations Auto-safety standards (Friedman) 8:507-508 Controlling HCL (Paton) 1:25-31 Organized irresponsibility (Carson) 3: 164 174 GOVERNMENT (vs. free) enterprise Is it practical? (Sparks) 8: 459-462 See also Post Offi~e GOVERNMENT interference/intt!rvention Bait and the hook. The (Carson) 2: R3-91 Bankruptcy of "liberalism," The (Carson) 12:707-715 764 THE FREEMAN December Freedom and the contract state (Warm bier) 10:591-593 Giving a hand to small business (Fertig) 9:538-540 Mixed economy mirage, The (Barger) 11 :697-700 Rule by markets versus rule by men (Brozen) 9: 515-528 War on property, The (Poirot) 10:583ff GOVERNMENT spending Bureaucratic blight (Chamberlin) 1: 37ff Inflation (Harper) 11: 665ff Taxation theory (Curtiss) 11:674-679 GREA T Britain Control of wages and incomes in Britain, The (Winder) 4:231-234 Liberty's decline in Britain (Wilson) 4: 215-220 Selective employment tax, The (Winder) 3: 141-143 Tale of two words, A (Lipton) 12:752-756 GREAT society, A (Breese) 11:656-661 HAMMOND, Richard D.

Miracle? A. 10:603-604 HARPER, F. A. Inflation. 11: 662-673 Liberty (excerpt) 5: 280 HAZLITT, Henry False remedy, A. 7:414-415 How should prices be determiner1? 2: 73-82 Private ownership .... a must! 6: 342-349 Promise to inflate, A. 5: 265-266 World-wide inflation. 9:556-557 See also Book reviews (Watts) HISTORY Power: 1 (Roche) 6:326-339 Prophets, jurists, and property (Palmer) 2:99ff Rise and the fall, The (Read) 5: 292-297 HORACE That invaluable jewel, liberty (excerpt) 5:278 HOW leaners lose their freedom (Christen sen) 11: 643-646 HOW should prices be determined? (Hazlitt) 2: 73-82 HOWARD, John A. Effect of liberalism on the campus, The 10:627-628 Moral equivalent of power, The. 4:207-214 I can be free (Breese) 8:490-492 IDEAS, importance of Dispensation of teaching, The (Marshall) 10: 629-633 ImpreR'nable freedom, The (Sargent) 1:57-59 Post mortem on the Lister centennial (Coleson) 8:475ff Search for reason, A (Tuccille) 10:634-636 IMPREGNABLE freedom, The (Sargent) 1: 57-59 IN memoriam: Konrad Adenauer (Cham berlin) 7:387-393 INDIVIDUAL liberty and "the humanities"

(deHuszar) 12:719-723 INDIVIDUAL rights and freedom Last candle, The (Schreiber) 7: 416-419 Principles of progress (Newell) 5: 285-291 Tale of two words, A (Lipton) 12:752-756 INDIVIDUALIST, because I am an (Wortham) 11:679-682 INDUSTRIAL Revolution, industrialization Post mortem on the Lister centennial (Coleson) 8:476ff INEQU ALITY, human variation Equality: the level of mediocrity ( Kershner) 6: 340-341 Men, not money, will overcome poverty (Chamberlin) 3: 137ff INFLATION (Harper) 11: 662-673 INFLA TION, British Control of wages and incomes in Britain, The (Winder) 4:231-234 INFLA TION, U. S.-See Money INVESTING in yourself (Tyson) 4:243-249 IS it practical? (Sparks) 8: 459-462 IRRESPONSIBILITY, organized (Carson) 3:164-174 JUNIOR Achievement Challenge of business, The (Rose) 3: 158-163 JUSTICE Because I am an individualist (Wortham) 11 :679-682 Prophets, jurists, and property (Palmer) 2:98ff KAPPEL, Frederick (A T & T) Mr. Kappel's dilemma (Read) 6: 350-355 KERSHNER, Howard E.

Equality: the level of mediocrity. 6: 340-341 KEYNES, John Maynard-ideas of Domestic inflation versus international solvency (North) 2:68ff Economic development of emerging na tions (Coleson) I): 311 ff False remedy, A (HazIitt) 7:414-415 LABOR/wages/unions False remedy, A (Hazlitt) 7:414-415 Labor union demands mean more inflation (Fertig) .7: 430-431 LAST candle, The (Schreiber) 7:416-419 LET's not worry about the world (Thornton) 1 :42-44 1967 INDEX 765 LIBERALISM, modern Bankruptcy of "liberalism," The (Carson) 12:707-715 Effect of liberalism on the campus, The ( Howard) 10 :627-628 LIBERTY and law (Wood) 4:203-206 LIBERTY'S decline in Britain (Wilson) 4: 215-220 LIPTON, Dean Man who answered Marx, The. 10:597-602 Tale of two words, A. 12: 752-756 LISTER (Joseph) centennial, post mortem (Coleson) 8:472ff MAHAFFY. Francis E. Fruit of communism~ The: socialistic re distribution. 9: 562-570 MARSHALL, Max S.

Dispensation of teaching, The. 10: 629-633 MARX (Karl) the man who answered (Lipton) 10:597-602 MEDICAL care/treatment Bureaucratic blight (Chamberlin) 1: 39ff Post mortem on the Lister centennial (Coleson) 8: 472ff Socialism in Saskatchewan (Thatcher) 1: 5 MEN, not money, will overcome poverty (Chamberlin) 3: 135-140 MERRILL, John C. Press and the "people's right to know," The. 2: 108-111 MILL, John Stuart - ideas of Freedom and the contract state (Warm bier) 10:591-593 MIRACLE? A (Hammond) 10:603-604 MIXED economy mirage, The (Barger) 11 :697-700 MONEY, monetary policy Domestic inflation versus international solvency (North) 2:67-72 False remedy, A (Hazlitt) 7:414-415 Inflation (Harper) 11: 662-673 Labor union demands mean more inflation ( Fertig) 7: 430-431 Promise to inflate, A (Hazlitt) 5:265-266 Right premise - wrong conclusion (Fertig) 1: 11-17 World-wide inflation (Hazlitt) 9:556-557 MONOPOLY /oligopoly How should prices be determined?

(Hazlitt) 2: 78ff Review of Galbraith's The new industrial state (Chamberlain) 11: 702ff Sep-also Antitrust; Competition MORAL equivalent of power, The (Howard) 4: 207-214 MORALITY /ethics/religious principles American federalism: 4 (Roche) 3: 144-154 Basic realities, The (Read) 11: 683-687 Business, social progress, and religion (Moreell) 7:399-413 Erasmus, reform, and the remnant (Thornton) 6: 356-365 Power:4 (Roche) 9:541-555 Principles of progress (Newell) 5: 285-291 Why run ourselves out of business? (Read) 8:451-458 MORANO, Jack Epitaph for a patriot. 7: 394-398 MOREELL, Ben Business, social progress, and religion. 7: 399-413 Communism - American style. 9: 558-561 MY freedom depends on yours (Russell) 12:738-752 NANTUCKET, Quaker settlement Great society, A (Breese) 11:656-661 NATIONAL Forest Products Beauty and common sense. 9: 528-529 NATURAL law/order/justice Discipline in life (Royal Bank of Canada) 11: 688-696 Plato, your philosopher king has been found! (Read) 9: 530-538 Power: 1 (Roche) 6: 327ff NEGROES, rights and riots Because I am an individualist (Wortham) 11: 679-682 Federal bulldozer, The (Anderson) 10:618 & 624 War on property, The (Poirot) 10:587ff NELSON, John O.

University and secondary education, The. 12: 724-731 NEW economics on display, The (Read) 1 :32-33 NEW feudalism, The (Carson) 7: 432-444 NEWELL, Robert K. Government by better men. 3: 131-134 Principles of progress. 5: 285-291 NORTH, Gary Domestic inflation versus international solvency. 2:67-72 See also Book reviews (Nisbet) OCCUP ATION AL/professional guidance University and secondary education, The (Nelson) 12: 724-731 ORGANIZED irresponsibility (Carson) 3:164-174 PALMER, William J. Prophets, jurists, and property. 2:92-108 PATON, W. A. Controlling HCL. 1: 25-31 Some reflections on education. 12: 732-737 PATRIOT, epitaph for (Morano) 7:394-398 766 THE FREEMAN December PERSON of quality, A (Royal Bank of Canada) 8:481-489 PLA TO, your philosopher king has been found! (Read) 9: 530-538 POIROT, Paul L. Security with a vengeance. 6: 323-325 War on property, The. 10:579-590 POLITICAL power American federalism:3 (Roche) 2: 112-124 Bait and the hook, The (Carson) 2:83-91 Government by better men (Newell) 3: 131-134 POPULATION and production Can food supply keep pace with popula tion growth? (Brandt) 1:18-23 Economic development of emerging na tions (Coleson) 5: 302-313 Population problem, The (Curtiss) 5 :259-264 POST mortem on the Lister centennial (Coleson) 8:472-477 POST Office, U. S.

Mr. Kappel's dilemma (Read) 6:350-355 New economics on display, The (Read) 1: 32-33 "POVERTY" and government action How leaners lose their freeQom (Christensen) 11: 643-646 Men, not money, will overcome poverty (Chamberlin) 3: 135-140 War on property, The (Poirot) 10:579-590 POVERTY of what? (Thompson) 8:478-48"0 POWER - See Roche PRESS and the "people's right to know," The (Merrill) 2: 108-111 PRICES/pricing Economics of price fixing, The (Armentano) 6: 366-368 How should prices be determined? (Hazlitt) 2:73-82 In fla tion (Harper) 11: 668ff Pricing of gasoline, The (Fleming) 3: 175-184 Private ownership .... a must! (Hazlitt) 6: 342-349 Rule by markets versus rule by men (Brozen) 9:515-528 Why run ourselves out of business? (Read) 8:451-458 PRINCIPLES of progress (Newell) 5:285-291 PRIV ATE ownership .... a must! (Hazlitt) 6:342-349 PROMISE to inflate, A (Hazlitt) 5: 265-266 PROPERTY, ownership and distribution Fruit of C'ommunism, The (Mahaffy) 9: 562-570 Private ownership .... a must! (Hazlitt) 6:348ff Prophets, jurists, and property ( Palmer) 2: 92-108 War on property, The (Poirot) 10:579-590 PROPHETS, jurists, and property (Palmer) 2: 92-108 PUBLIC interest/sector Federal bulldozer, The (Anderson) 10: 616ff War on property, The (Poirot) 10:584ff PURPOSES of antitrust, The (Fleming) 4: 221-230 READ, Leonard E.

Basic realities, The. 11: 683-687 Curse and cure of covetousness, The. 12: 716-718 Freedom's theory of value. 10: 594-596 Mr. Kappel's dilemma. 6:350-355 New economics on display, The. 1:32-33 Plato, your philosopher king has been found! 9: 530-538 Rise and the fall, The. 5: 292-297 Why is slavery possible? 5: 281-283 Why run ourselves out of business? 8: 451-458 REAM, Norman S. See Book reviews (Howard) REMNANT, Erasmus, reform and the (Thornton) 6: 362ff RESPONSIBILITY, individual Don't pamper the rookies (Sparks) 1: 9-10 Government by better men (Newell) 3: 131-134 Great society, A (Breese) 11:656-661 How leaners Jose their freedom (Christensen) 11: 643-646 I can be free (Breese) 8: 490-492 Poverty of what? (Thompson) 8: 4n-480 Why run ourselves out of business? (Read) 8: 451-458 RIGHT premise-wrong conclusion (Fertig) 1:11-17 RISE and the fall, The (Read) 5: 292-297 ROCHE, George Charles, III American federalism (2) History, 1: 45-56 (3) Erosion, 2:112-124 (4) Future, 3: 144-154 Power (1) History, 6: 326-339 (2) Some modern manifestations, 7: 420-429 (3) Social effects, 8: 493-506 (4) Prospects, 9: 541-555 Youth corps for America? A. 4: 195-202 See also Book reviews (Coleson: Crane: Martin: Virginia Commission) ROSE,Tom Challenge of business, The. 3: 158-163 1967 INDEX 767 ROYAL Bank of Canada Discipline in life. 11: 688-696 Person of quality, A. 8:481-489 RULE by markets versus rule by men ( Brozen) 9: 515-528 RUSSELL, Dean My freedom depends on yours. 12: 738-752 RUSSIA Communism after fifty years (Chamber lin) 8: 463-469 Private ownership .... a must! (Hazlitt) 6:342-349 RUTLEDGE, Archibald Security may betray us (excerpt) 5:278-279 SAFETY measures/standards Auto-safety standards (Friedman) 8: 507-508 Security with a vengeance (Poirot) 6 :323-325 SARGENT, Lois H.

Impregnable freedom, The. 1 :57-59 SA VINGS and investment Creators of wealth (Smith) 5:298-301 Investing in yourself (Tyson) 4: 243-249 Security with a vengeance (Poirot) 6: 323-325 SCHREIBER, Jack Last candle, The. 7:416-419 SEARCH for reason, A (Tuccille) 10:634-636 SECURITY, government-guaranteed Eternal vigilance (an anthology) 5:276-283 Security with a vengeance (Poirot) 6: 323-325 SELECTIVE employment tax, The (Winder) 3: 141-143 SELF-discipline Discipline in life (Royal Bank of Canada) 11: 688-696 Let's not worry about the world (Thornton) 1 :42-44 SELF-improvement Curse and cure of covetousness, The (Read) 12: 716-718 Decisions and progress (Evanoff) 10:612-613 Erasmus, reform, and the remnant (Thornton) 6: 356-365 Freedom: our dilemma (Biggers) 3: 155-157 Person of quality, A (Royal Bank of Canada) 8:481-489 Poverty of what? (Thompson) 8: 478-480 Voices behind you (Burchett) 5:314-316 SMALL business, giving a hand to (Fertig) 9: 538-540 SMITH, Harry Lee Creators of wealth. 5:298-301 SOCIAL Security War on property, The (Poirot) 10:584ff SOCIALISM in Saskatchewan (Thatcher) 1:3-9 SOCIALISTIC redistribution, fruit of communism (Mahaffy) 9: 562-570 SOCIALISTIC trend, U. S.

American federalism: 3 (Roche) 2: 112-124 Bankruptcy of "liberalism," The (Carson) 12: 707-715 Freedom and the contract state (Warmbier) 10:591-593 Gap between earning and receiving, The (Chamberlin) 4: 235-242 Mixed economy mirage, The (Barger) 11 :697-700 Principles of progress (Newell) 5:285-291 SOME reflections on education (Paton) 12: 732-737 SPARKS, John C. Don't pamper the rookies. 1: 9-10 Is it practical? 8: 459-462 ST AND of one's own, A (Warmbier) 8:470-471 ST ANDARD Oil Company Antitrust and the fear of bigness (Fleming) 6:373ff TALE of two words, A (Lipton) 12:752-756 TAXES/taxation Gap between earning and receiving (Chamberlin) 4: 235-242 Taxation theory (Curtiss) 11: 674-679 TEACHING, the dispensation of (Marshall) 10: 629-633 THANK-you note, A (Carney) 6:378 THA TCHER, W. Ross Socialism in Saskatchewan. 1: 3-9 THOMPSON, Donna Poverty of what? 8:478-480 THORNTON, Robert M.

Erasmus, reform, and the remnant. 6: 356-365 Let's not worry about the world. 1; 42-44 See also Book reviews (Rossiter) TOTALITARIANISM, centralized power Plato, your philosopher king has been found! (Read) 9:530-538 See also Roche, Power TUCCILLE, Jerome Search for Reason, A. 10: 634-636 TYSON, Robert C. Investing in yourself. 4: 243-249 U. S. CONSTITUTION, principles of Business, social progress, and religion (MoreelJ) 7: 399-413 See also Roche, American federalism U. S. SUPREME Court Review of BozelJ's The Warren revolution (Chamberlain) 7 :445-448 See also Antitrust 768 THE FREEMAN December UNIVERSITY and secondary education, The (Nelson) 12:724-731 URBAN renewal Federal bulldozer, The (Anderson) 10: 614-626 War on property, The (Poirot) 10:585ff VAL UE, value theory Freedom's theory of value (Read) 10:594-596 Man who answered Marx, The (Lipton) 10:597-602 VOICES behind you (Burchett) 5:314-316 VOL UNTARISM/ attraction vs. compulsion Alternative to compulsion (Barger) 10:605-611 Case of the bulletin board, The (Bleil) 1 :23-24 Liberty and law (Wood) 4:203-206 Miracle? A (Hammond) 10:603-604 WAR on property, The (Poirot) 10:579-590 W ARMBIER, Donald Freedom and the contract state. 10: 591-593 Stand of one's own, A. 8:470-471 WELF ARE state How leaners lose their freedom ( Christensen) 11: 643-646 Socialism in Saskatchewan (Thatcher) 1:3-9 See also "Poverty;" Security; etc.

WHAT's going on here? (Bradford) 11: 647-655 WHY run ourselves out of business? (Read) 8: 451-458 WILSON, Granville Liberty's decline in Britain. 4: 215-220 WINDER, George Control of wages and incomes in Britain, The. 4:231-234 Selective employment tax, The. 3: 141-143 WOOD, Keith Liberty and law. 4:203-206 WORLD-wide inflation (Hazlitt) 9:556-557 WORTHAM, Anne Because I am an individualist. 11: 679-682 YOUTH corps for America? A (Roche) 4: 195-202 BOOK REVIEWS (Reviewer's name in parentheses) ALEXANDER, Holmes. The spirt of '76 (Chamberlain)· 4: 250-253 ANDERSON, Martin. The Federal bulldozer (excerpt from 1967 preface) 10:614-626 BAHAMAS HANDBOOK: 1966-1967 (Cham berlain) 5: 317-320 BOZELL, L. Brent. The Warren revolution (Chamberlain) 7:445-448 BUCKLEY, William F. The unmaking of a mallor (Chamberlain) 2: 125-128 BURNHAM, James. The war we are in: the last decade and the next (Chamberlain) 12:757-760 COLESON, Edward P. Our western heritage and The scriptural standard in economics and g01Jernment (Roche) 3:191-192 CRANE, Phillip M. The democrat's dilemma (Roche) 2: 128 DRURY, Allen. Capable of honor (Chamberlain) 4: 250-253 EVANS, M. Stanton. The politics of surrender (Chamberlain) 1: 60-63 GALBRAITH, John Kenneth. The new in dustrial state (Chamberlain) 11: 701-704 GELLHORN, Walter. When Americans com plain: governmental grievance procedures (Chamberlain) 3: 185-188 HAZLITT, Henry. Time will run bacTc (ex cerpt from the 1966 preface) 6: 342-349 HOW ARD, Irving E. The Christian alterna tive to socialism (Ream) 3: 190-191 JEWKES, John. Public and private enter prise (Chamberlain) 8:509-512 MARTIN, Rose L. Fabian freeway (Roche) 2: 128 MOLEY, Raymond, with Elliot A. Rosen.

The first new deal (Bennett) 4:255-256 and (Chamberlain) 6:379-382 NISBET, Robert A. The sociological tradition (North) 9:574-576 PETRO, Sylvester. The Kingsport strike (Chamberlain) 9:571-574 RAND, Ayn, with Alan Greenspan, Nathaniel Branden and Robert Hessen. Capitalism: the unknown ideal (Gillett) 3: 189-190 READ, Leonard E. Deeper than you think (Evanoff) 6: 382-384 ROSSITER, Clinton. 1787: the grand con vention (Thornton) 1: 6~-64 T A VARES DE SA, Hernane. The play within the play: the irl.''lide story of the U. N. (Chamberlin) 4:253-255 VIRGINIA Commission on Constitutional government. The Reconstruction A mend ments' Debates (Roche) 12: 760 WATTS, V. Orval, eo. Free markets or famine (Hazlitt) 9:576 WILLIAMS, Whiting. America's mainspring and the great society (Chamberlain) 10:637-640

About this edition

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Title: The Freeman 1967

Author: Foundation for Economic Education

First published: 1950

Series: The Freeman, volume 17

Source file: The Freeman 1967.pdf

Source page: https://freecapitalists.org/books/the-freeman-1967/

Converted: 2026-08-09 by The Liberty Archive (freecapitalists.org), converter v6

Table of Contents

January

- Socialism in Saskatchewan; W. R. Thatcher

- Right Premise - Wrong Conclusion; L. Fertig

- Can Food Supply Keep Pace with Population Growth? K. Brandt

- The Case of the Bulletin Board; G. Bleil
- Controlling HCL; W.A. Paton
- The New Economics on Display;
- Bureaucratic Blight; W H. CHamberlin
- Let's Not worry about the World

- American Federalism: History; G. C. Roche III

- The Impregnable Freedom; L. H. Sargent

- Book Reviews

February

- Contents

- Domestic Inflation versus International Solvency; G. North

- How Should Prices be Determined? H. Hazlitt

- The Bait and the Hook; C. Carson

- Prophets, Jurists, and Property; W. J. Palmer

- The Press and the People's Right to Know; J. C. Merrill

- American Federalism: Erosion; G. C. Roche, III

- Book Reviews

March

- Government by Better Men; R. Newell

- Men, Not Money, Will Overcome Poverty; W. H. Chamberlin

- The Selection Employment Tax; G. Winder

- American Federalism: Future; G. C. Roche, III

- Freedom: Our Dilemma: W. W. Biggers
- The Challenge of Business: T. Rose
- Organized Irresponsibility; C. Carson
- The Pricing of Gasoline; H. Fleming
- Book Reviews

April

- A Youth Corps for America? G. C. Roche III
- Liberty and the Law; K. Wood
- The Moral Equivalent of Power; J. Howard
- Liberty's Decline in Britain; G. Wilson
- The Purpose of Antitrust; H. Fleming

- The Control of Wages and Invomes in Britain; G. Winder

- The GAP between Earning and Receiving; W. H. Chamberlin

- Investing in Yourself; R. Tyson

- Book Reviews

May

- The Population Problem; W. M. Curtiss
- A Promise to Inflate; H. Hazlitt
- Antitrust Humbug; H. Fleming
- Eternal Vigilance
- The Boy Who Didn't Cry Wolf; H. Copeland
- Principles of Progress; R. Newell
- The Rise and the Fall; L.E. Read
- Creatures of Wealth; H. L. Smith

- Economic Development of Emerging Nations; E. Coleson

- Voices Behind You; R. Burchett

- Book Reviews

June

- Security with a Vengeance; P.L. Poirot

- Power 1. History; G.C. Roche III

- Equality: The Level of Mediocrity: H. Kershner

- Private Ownership...a Must! H. Hazlitt

- Mr. Kappel's Dilemma; L.E. Read

- Erasmus, Reform, and the Remant; R. M. Thornton

- The Economics of Price Fixing; D.T. Armstrong

- Antitrust And the Feat of Bigness; H. Fleming

- Book Reviews

July

- In Memoriam: Konrad Adenauer

- An Epitaph for a Patriot; J. Morano

- Business Social Progess and Religion; B. Morrell

- A False Remedy; H. Hazlitt

- The Last Candle; J. Schreiber

- Power 2. Some Modern Manifestations: G. C. Roche III

- Labor Union Demand Means More Inflation; L. Fertig

- The New Feudalism; C. Carson

- Book Reviews

August

- Why Run Ourselves out of Business? L.E. Read

- Is it Practical? J.C. Sparks?

- Communism After Fifty Years; W. H. Chamberlin

- A Stand of One's Own; D. Warmbier

- Post Mortem on the Lister Centennial; E. Coleson

- Poverty of What? D. Thompson
- A Person of Quality
- I can Be Free; E. Breese
- Power 3. Social Effects; G.C. Roche III
- Auto-Safety Standards; M. Friedman
- Book Reviews

September

- Rules by Marekts versus Rule by Men; Y. Brozen

- Beauty and Common Sense

- Plato, Your Philosopher King Has Been Found! L.E. Read

- Giving A Hand to Small Business; L. Fertig
- Power 4. Prospects: G.C. Roche III
- World-Wide Inflation; H. Hazlitt
- Communism American Style; B. Moreell

- The Fruist of Communism; Socialsitic Redistribution; F. Mahaffy

- Book Reviews

October

- The War on Property; P. L. Poirot
- Freedom and the Contract State; D. Warmbeir
- Freedom's Theory of Value; L.E. Read
- The Man Who Answered Marx; D. Lipton
- A Miracle? R. Hammond
- Alternative Compulsion; M. D. Barger
- Decisions and Progress; A. Evanaoff
- The Federal Bulldozer; M. Anderson

- The Effect of Liberalism on the Campus; J. Howard

- The Dispensation of Teaching; M. S. Marshall

- A Search for Reason; J. Tuccille

- Book Reviews

November

- How Leaners Lose Their Freedom
- What's Going on Here? R. Bradford
- A Great Society; E. Breese
- Inflation; F. A. Harper
- Taxation Theory; W.M. Curtiss
- Because I am an Individualist; A. Wortham
- The Basic Realities; L.E. Read
- Discipline in Life
- The Mixed Economy Mirage; M. Barger
- Book Reviews

December

- The Bankruptcy of Liberalism; C. Carson

- The Curse and Cure of Covetousness; L.E. Read

- Individual Liberty and the Humanities; G. B. De Huszar

- The University and Secondary Education; J. O. Nelson

- Some Reflections on Education; W. A. Paton
- My Freedom Depends on Yours; D. Russell
- A Tale of Two Words; D. Lipton
- Book Reviews

Index
Book Reviews
About this edition