Date: 1950-01-01T07:00:00+00:00
Keywords: liberty
Description: The Foundatin for Economic Freedom The Freeman 1969

The Freeman 1969

Foundation for Economic Education
the Freeman VOL. 19, NO.1. JANUARY 1969 The CollectiveGuilt Myth William Henry Chamberlin 3 Blaming everyone else for the faults and failures of an individual is unlikely to improve the social climate. The Only Kind of People There Are Roger J. Williams 10 Our differences, traits of individuality, are wasted under central planning-require freedom to develop. Th'e Rise and Fall of England: 11. The Fabian Thrust to Socialism Clarence B. Carson 14 Concerning the history of the Society and its development since 1884. The Free Societyand Its Enemies Tibor R. Machan 25 One's basic' view of human nature determines largely whether he favors freedom or not. Marx's View of the Di~ision of labor Gary North 28 An analysis of Marxian errors that have been politically implemented into major disasters in our time. How We Discourage Investment Henry HazliU 36 The high tax rate on the earnings of successful business ventures is a shortcut to economic stagnation.

Educationin America: 4. The Decline of Intellect George Charles Roche III 38 How dangerous a little knowledge may be is revealed by those who would reject their intellectual heritage in a new adjustment to circumstances. In Praise of the Conventiona'iWisdom Jack McCroskey 48 Our common sense ought to prevail over the utopian promises of socialism. An InquiryConcerningInequality W. A. Paton 53 Variations in nature and in the nature of man point to the blessings of diversity. Book Reviews 61 IIWar, Peace, and the Presidency" by Henry Paolucci. Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON·HUDSON, N. Y. 10533 TEL.: (914) 591-7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN 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. Any interested person may re~eive 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, 1969, 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 Only Kind of People There Are," liThe Rise and Fall of England," and IIHow We Discourage Investment."

THE UNITED STATES in the pres ent decade experienced three as sassinations of prominent public figures: President John F. .Ken nedy, his brothe.r, Senator Robert F. Kennedy, and the Negro leader, Dr. Martin Luther King. Each of these tragedies brought forth a chant of the alleged collective guilt of the entire American people for the crime of an isolated individ ual. Those who succumb to this emotional reaction should recall the wise words of Edmund Burke: "I do not know the method of drawing up an indictment against a whole people." There are more than 200 million Americans, people of the most diMr. Chamberlin is a skilled observer and re porter of economic and political conditions at home and abroad. In addition to writing a num ber of books, he has lectured widely and is a contributor to The Wall Street Journal and numerous magazines. WILLIAM HENRY CHAMBERLIN verse background~ interest~ lev els of education and knowledge, political and economic sympathies.

To hold all 200 million responsi ble for the isolated acts of more or less deranged individuals verges on national masochism and is downright absurd, as may be recognized if one recalls the cir cumstances of these killings. President Kennedy was the vic tim of a mentally unstable person whose sympathies, so far as can be judged from his record, were confusedly Leftist. The man ac cused of shooting Dr. King in Memphis is awaiting trial, so the facts are not all available. What is not in doubt is that the overwhelm ing majority of Americans de plored the crime and bore no di rect or indirect responsibility for it. Again, subject to further rev4 THE FREEMAN January elations at the trial of his assail ant, Robert Kennedy seems to have heen an innocent bystander, shot because of the implacable feud between Jews and Arabs in the Near East. Other Lands Plagued Deplorable as are such acts of violence, they scarcely form a rea sonable basis for indicting the whole American people. Political assassination is as old as recorded history and has taken place in al most all nations under various cir cumstances. There are examples in the Old Testament, in the annals of Greece and Rome. In an age more familiar with classical lan guages and history, a parallel might have been drawn between the Kennedy brothers and Rome's Gracchi, who tried to shift the balance in the cumbersome Roman constitution away from the patri cians toward the plebeians, al though they were of high birth themselves.

The Middle Ages afford many examples of hated, weak, or un lucky rulers who were done to death in one way or another. And the history of the Russian Empire has been wittily and not inaccur ately described as despotism temp ered by assassination. Some Czars perished as a result of palace coups, with the complicity of their guards. Alexander II was assassinated in his capital, St. Peters burg, after several unsuccessful attempts, by a small determined band of revolutionaries who called themselves Narodnaya Volya (People's Will). This same group took pains to dissociate itself from the killing of President Garfield (the nonpolitical act of a disappointed office seeker), putting out a statement to the effect that the assassination of high officials was a legitimate form of struggle in Russia, with its denial of liberty, but impermissible in a free re public. Ironically enough, Alexander II was the most progressive of mod ern Czars, having emancipated the serfs and introduced other re forms. The last Czar, Nicholas II, was shot down with his Czarina and all their children in a blood drenched cellar, following the sen tence of a self-constituted Bolshe vik court during the Russian civil war in 1918.

Nor have other European coun tries been free from murder for political causes, some of them com mitted by anarchists and other revolutionaries who believed in "propaganda by the deed." Among the more distinguished victims were King Humberto of Italy in 1900 (he died murmuring some words about "the dangerous trade of kings"), President Sadi Carnot of France, who was stabbed dur1969 THE COLLECTIVE GUILT MYTH 5 ing a visit to Lyons, Prime Min ister Canovas of Spain, and the Empress Elizaheth of Austria. Her killing, by an Italian anarch ist as a symbol of hated royalty, was especially ironical because Elizabeth had rebelled against the excessive formality of Vienna court life, separated from her hus band, and was leading a life of private retirement in Switzerland. So America has no monopoly of assassinations of prominent pub lic figures, for political and non political reasons. Yet no one has ever suggested that the Russian, Italian, French, or any other peo ple should be regarded as involved, en masse, in these crimes.

Steps to Curb Crime The alleged sickness of Ameri can society is a favorite theme of those who would implicate all Americans when a John F. Ken nedy, a Robert F. Kennedy, a Martin Luther King is murdered by a specific individual. Now con temporary American society un mistakably has its faults. But these do not constitute some vague sickness. They are the consequence of the failure of definite individ uals and groups to measure up to their duties and responsibilities. The United States crime rate, especially in violent forms of crime, is a national disgrace he cause the executive, legislative, and judicial branches of the gov ernment have failed in their ob vious obligation to do something about it. The rate of murder, as sault, armed robbery, and similar crimes has grown in precise pro portion as the handling of brutal criminals has become softer, more permissive, more ineffectual. State after state has been abolishing the death penalty, even for the most atrocious cases of murder without extenuating circumstances, for purposes of robhery, for instance.

From the Supreme Court down, the trend of judicial decisions has been not toward protecting the peaceful citizen in his home or on the streets, but toward hampering the police in their work and pro tecting the criminal against proper punishment for his mis deeds. There are also outrageous delays in bringing the most no torious criminals, about whose guilt there is no reasonable doubt, to answer for their crimes before the courts, which are often clogged with cases involving trivial and minor offenses. Crime is like sin; every candi date is publicly against it. But there has been no progress, rather retrogression, in taking practical concrete steps to reduce a higher incidence of crime and insecurity in the streets; in public parks, even in private homes, than one finds in foreign countries on a 6 THE FREEMAN January comparable level of education and civilization. Ordinary crime, as well as polit ical assassination, is not ·some thing for which the whole Amer ican people may reasonably be held responsible. In its present out rageous dimensions it is the nat ural and inevitable result of neglect and failure in the fram ing of laws, and the laxness and delay in administering these laws.

What is needed to promote a downward turn in the violent crime statistics is not to "cure" a "sick" society, but a numher of specific practical measures de signed to reverse the modern trend to coddle the criminal at the expense of his victims. Mob Manifestations This national guilt myth is re sponsible for other faulty judg ments and analyses. A very seri ous example of mass violence, ac companied by murder, assault, wholesale arson and looting has been the rioting in predominantly Negro sections of a number of United States cities and towns in recent years. Another such exam ple, on a minor scale, was the ac tion of some students at Colum bia University in taking physical possession of the President's office and other buildings, holding some college administrators prisoners for a time, defiling the buildings which they occupied, shouting ob scenities over the campus, and forcibly disrupting for a time the normal functioning of a great in stitution of learning.

A presidential commission pub lished a report on the causes of the riots in the cities; an aca demic commission, headed by Pro fessor Archibald Cox of Harvard, published a report on the disturb ances at Columbia. Although dif ferent persons were involved, there was a curious similarity in the method of reasoning in these two reports. The direct perpetra tors of violence were left uncen sured or, at most, praised with faint damns, while criticism was concentrated on alleged secondary causes: on that familiar scape goat, "society," in the case of the rioters; on the college administra tion, in the case of the student disturbances. Almost half a century ago the Governor of Massachusetts, Calvin Coolidge, later President, won na tional acclaim with his declara tion on the occasion of the strike of Boston policemen: "There is no right to strike against the public safety by anybody, anywhere, at any time." (What a pity no one could repeat these words with au thority in New York at the time when it was paralyzed by strikes, slowdowns, and threats of strikes by such essential groups of pub1969 THE COLLECTIVE GUILT MYTH 7 lic servants as teachers, police men, firemen, and sanitary workers!) Both of the reports under dis cussion might well have started with the same words, applied to rioting in a free country where there are plenty of opportunities for expressing grievances and seeking to redress them in a peace ful and orderly way. Instead, the presidential commission placed the principal blame for the riots on racism in white society. Insofar as racism implies deliberate preju dice and discrimination against others because of race, color, and creed, it is a vicious and dishon orable thing; yet, the law has not yet been devised that would make every individual love or esteem all his neighbors or fellow-citi zens.

Signs of Progress Few Americans today would avow themselves as racists, and external signs of discrimination on grounds of race and color have been swept away by one legal en actment after another, some by the Federal government, some by the states. Deliberate segregation by color in schools has been illegal for fifteen years. Even so, it might spare some friction and bitterness if some zealous Federal bureau crats and state education admin istrators would remember that, while the law forbids segregation, it does not enjoin integration up to the point of destroying the neighborhood school and compel ling the busing of children away from their homes into unfamiliar and sometimes unsafe neighbor hoods. Discrimination on trains, in buses and public accommodations has been legally outlawed. Doors of opportunity are opening more ' widely. There are more black faces on college campuses and in white collar jobs. Negro representation in national and state legislatures is increasing.

Under these circumstances, what rational goal is served by squalid outbreaks of race hatred and other destructive instincts, such as the maniacal impulse· to burn on a large scale - and mainly houses and stores that serve the Negro community? The net effect· of these outbreaks has certainly been to retard, not to advance Negro progress, to discourage the forces of goodwill, and strengthen the bigots and racists, white and black. Destruction on Campus The student outbreaks at Co lumbia, the University of Cali fornia, and elsewhere are also mindless in the extreme, except for a nihilistic minority who wish to bring higher education to a 8 THE FREEMAN January halt. This is not to say that there are no legitimate student griev ances, overcrowded facilities, poor food, and a skimping by some big name professors of their basic function as teachers in favor of writing books and performing odd jobs for government agencies and foundations. Such grievances, when presented in a sensible and civilized way, will certainly win sympathy and redress, except in sofar as they are rooted in one cause about which little can be done: the storming of admission doors by more students than uni versities and colleges .can com fortably accommodate.

But the "causes" which promp ted the radical minori ty of the Columbia students to break up the normal functioning of the uni versity were almost incredibly tri vial. There were two: the deci sion of the University to build on its own property a gymnasium which would have benefited both the students and the adjacent Har lenl community; and the participa tion of a few professors in proj ects sponsored by an institute of defense analysis. Neither of these issues was a proper matter of student concern; neither justified such obviously illegal doings as the sacking of the President's office, the seizure of university property, the pro voked clash with the police, the shouted obscenities across the campus. Indeed, this last conspicu ous feature of the Columbia and other travesties of revolution might well warrant an inquiry by admissions officers as to the kind of homes from which the students were selected.

Outbreaks of Disorder Call for Stern Measures Blaming everyone for wanton outbreaks of disorder except those actually responsible for these acts is not good morals, good logic, or good policy. Nor is it much use to attack that familiar scapegoat, "society." The proper course for the future is for the civil authori ties to put down future riots, should these occur, with all nec essary force. As for university and college students, their right to hold meet ings, to parade with placards, to picket peacefully for some cause should not be abridged, although it is hard to see how the pursuit of knowledge is advanced by try ing to prevent the sale of Cali fornia grapes or to interfere with fellow-students who wish to be in terviewed for employment with a chemical company. A sharp line, however, should be drawn between peaceful demonstrations and those which involve trespassing on col lege property, restraint on the free movement of individuals, and 1969 THE COLLECTIVE GUILT MYTH 9 denial of the right of other stu dents to attend classes. Young col legians who fancy themselves in the role of Trotskys, Mao Tse tungs, and Che Guevaras should be given a plain warning to cease and desist, or to transfer their juvenile playing of revolutionary games elsewhere.

Responsible Individuals It is time to examine critically a number of assumptions that are bred of the myth of the American national collective guilt complex. For instance, it is some~imes taken for granted that racial fric tion is unique in America. This disregards the numerous ethnic conflicts in other parts of the world, including the genocidal sav agery of tribal feuds in such newly emancipated African lands as the Congo and Nigeria. The war in· Vietnam is de nounced as an example of "Ameri can imperialism." Vietnam is cer tainly a sorry story and may have been a serious blunder. But there has never been the slightest Amer ican desire to exercise imperialist domination over that country or to derive profit from that faraway land even remotely comparable with the sacrifice of blood and treasure in its jungles and rice paddies. Right or wrong, wise or unwise (and it may be a long time before a fair historical judgment is possible), the American mili tary intervention has been for the purpose of warding off the estab lishment of communist dictator ship in South Vietnam and leaving the people of that tormented coun try freedom to choose their own government and way of life.

The extreme forms which the American national guilt complex sometimes takes are as foolish and unwarranted as the old-fash ioned spread-eagle oratory of United States chauvinism. It is useful to remember that guilt is always individual, never collec tive. ~ Someone to Blame SO LONG as the attitude in society is that people are responsible for themselves, but that nature inevitably wiII limit what we can have, there is a chance that the discontent people feel will be directed at nature. But when we take the attitude that gov ernment is all-powerful, that it's only because sornebody didn't pass the right law that we're in a bad way, then discontent will be directed at people. MILTON FRIEDMAN, What's Past Is Prolog'ue ROGER J. WILLIAMS The only kind of people there are IF SOCRATES were resurrected, I suspect he would call attention again to what was written about 25 centuries ago: Know thyself; if you know a lot about other things and are ignorant of your self, this is ridiculous.

We in this advanced and scien tific age have never taken Socrates seriously on this point. I maintain that we are being ridiculous; we seek to plan and yet are not informed about ourselves for whom we plan. Of course, we know something about ourselves, but science has never undertaken a serious job of understanding peo ple - a multidisciplinary under taking. We have not tackled the job of understanding ourselves with one-tenth of the fervor we Dr. Williams is Professor of Biochemistry at the University of Texas. This article is slightly condensed and published by permission from his address before the American Institute of Planners at Hot Springs, Arkansas, July 12 19, 1968. Dr. Williams' latest book, You Are Extra ordinary (Random House, 1967), is available from The Foundation for Economic Educa tion, Inc., Irvington-on-Hudson, N. Y., 10533, $5.95. 10 have shown in our research in outer space.

One of the most important facts about ourselves we have not grasped: All of us are basically and inevitably individuals in many important and striking ways. Our individuality is as inescapable as our humanity. If we are to plan for people, we must plan for indi viduals, because that's the only kind of people there are. In what ways are we individ uals? First as to our bodies. These ways are tangible and not subject to argument. Each of us has a distinctive stomach, a distinctive heart and circulatory system. Each of us has a distinctive muscular system, distinctive breathing ap paratus, and an endocrine system all our own. Most surprising and significant perhaps, each of us has a distinctive set of nerve re ceptors, trunk nerves, and a brain that is distinctive in structure and not like other brains. We are individuals also with re1969 THE ONLY KIND OF PEOPLE THERE ARE 11 spect to our minds. We do not all think with equal facility about the various things that can he thought about. Einstein was an extremely precocious student of mathematics, but on the other hand, he learned language so slowly that his par ents were concerned about his learning to talk. William Lyon Phelps, the famous English pro fessor at Yale, on the other hand, confessed that in mathematics he was "slow but not sure." There are at least forty facets to human minds. Each of us may be keen in some ways and stupid in others.

The importance of this individ uality in minds 'would be hard to exaggerate. Because of it two or more people agree with each other only in spots, never totally. The grandiose idea that all workers of the world can unite and speak and act as a unit is wholly unten able because of individuality in the minds of the individual work ers. Nor can all capitalists unite, and for the same reason. Neither can all Negroes, all Latins, all Chinese, all Jews, all Europeans, or all English-speaking peoples. It is often assumed that people disagree only because of self-in terest and differences in their ed ucation. They also disagree be cause their minds do not grasp the same ideas with equal facility. Sometimes an individual has a specific idea which seems to him perfectly clear and potent. To him it seems certain that once this idea is expressed it will gain au toma tic acceptance. Practical trial shows, however, that it does not.

To other individuals, because the patterns of their minds are differ ent, this supposedly clear and po tent idea may appear foggy, du bious, or even unsound. Failure to recognize individ uali ty in minds is widespread and is a revelation of the fact that we are ignorant about the people for whom we plan. "Environmental Determinism ll I do not know that anyone else has ever expressed it this way, but on a long walk with Aldous Huxley about a year before he died, he decried to me the fact that the prevailing philosophy to day may be described as "en vironmental determinism." Envi ronment is assumed to be the only factor in our lives; inborn individuality in body and mind are completely neglected. Accord ing to this philosophy, every child who is placed in a slum environ ment becomes a delinquent and a criminal. This, from the work of the Gluecks at Harvard and oth ers, is manifestly untrue. Neither is it true that every child who is furnished with plenty becomes for this reason an honorable and up right citizen.

12 THE FREEMAN January Our "social studies" and "social science" teaching in all our schools and universities is permeated with environmental determinism· which shows no interest in the crucial facts of individuality and quite inevitably tends to destroy all moral responsibility. A delinquent cannot help being a delinquent, we are told. Society should take all the blame. A criminal is that way because society has made him so, so society is to blame. This is blatant oversimplification in the name of social science! It disre gards how human beings are built -their fundamental nature - and can by its shortsightedness lead to a breakdown of our civilization. VVhat I have been saying does not in any sense deny the impor tance of environment. Environ ments are what we can control, and to study how to improve them is the essence of planning. But we, the people, are not putty; we are individuals, and we need to be understood.

Individuality Is Crucial To me it seems certain that the facts of individuality need to be taken into account. There are three areas, related to planning, in which I have some special knowledge. In all these areas indi viduality is crucial. Take for instance the area of nutrition and health. It would be relatively easy to produce eco nomically in factories a "man chow" which would supposedly be the perfect food for the average man. Laboratory experiences as well as wide observations show, however, that this "man-chow" idea is completely unrealistic. It will not work. Because of bio chemical individuality we do not all like the same foods nor can we thrive on the same mixture. Many human beings are so built that they derive a substantial part of the satisfaction of life out of eating. Taking variety and choices from them would be de priving them of their pursuit of happiness. The best food planning devised involves supermarkets where thousands of kinds of foods in great variety are available.

The Food and Drug Administra tion in Washington has, at least until very recently, done its plan ning on the basis of the hypo thetical average man and has sought to regulate the marketing of medicinal substances, vitamins, and the like on this basis. This cannot work because of the hard facts of biochemical individuality. Real people - individuals - do not react in a uniform manner either to drugs or to nutritional factors such as amino acids, minerals, and vitamins. No planning in the area of nu trition and health can work on a 1969 THE ONLY KIND OF PEOPLE THERE ARE 13 long range basis unless the facts of individuality are taken into ac count. If we plan for people, we must plan for individuals, because that is the only· kind of people there are. Another area of planning in which I have some special knowl edge is that of education. I have recently completed my fiftieth year as a teacher. While I have in mind no pet schemes for reorganizing schools or universities, I have had for years a growing consciousness that no successful long-range plan ning can be done unless we rec ognize fully that every mind is a distinctive one and that every young person is endowed with peculiar aptitudes which need to be recognized, developed, and used.

One of the worst lacks in modern education is the failure of young sters to know themselves and to recognize their own strengths as well as weaknesses. Education for the hypothetical average child is no good. We must plan for indi vidual children; that's the only kind there are. Closely related to the problem of planning education is planning to curb crime, violence, racial hatred, and war. As Clement At tlee aptly pointed out years ago, the roots of war are to be found in the minds and hearts of men. The late Robert Kennedy pointed out when he was Attorney-General that peaceful relations between people cannot be enforced with guns and bayonets. In my opinion, we will get no where in planning to curb violence by thinking in terms of the city of Dallas killing John F. Kennedy, the city of Memphis killing Martin Luther King, or the city of Los Angeles killing Robert Kennedy. Of course, social factors enter into violence, but there are important individual factors, too.

No informed person can think that curbing crime and violence is a simple. problem. Because it is difficult, it is all the more impor tant that we seek out - thoroughly - the root causes. I maintain that a great weakness which we exhibit in this modern scientific age is ignorance about. ourselves. Finally, let me say that our love of liberty and freedom is based upon this individuality. If we all had the same kinds of stomachs, the same kinds of muscles, nerves, and endocrine glands, the same kinds of brains, planning would be simple. We would all like ex actly the same things. We would all be satisfied to read the same books, have the same amusements, eat the same food, and go to the same church. In short, we would all live happily in the same rut. Planning is not that simple. We must plan for individuals - that's the only kind of people there are. • CLARENCE B. CARSON 1£nglanb 11. THE FABIAN THRUST TO SOCIALISM THE FABIAN SOCIETY was orga nized January 4, 1884. Its organi zation resulted in the split-up of a group that had formed the year before and would be called "The Fellowship of the New Life."

There were probably nine mem bers of the Fabian Society at the outset. 1 This was the motto adopted by the Society: For the right moment you must wait, as Fabius did most patiently, when warring against Hannibal, though many censured his delays; but when the time comes you must 1 Margaret Cole, The Story of Fabian Socialism (Stanford: Stanford U niver sity Press, 1961), pp. 3-5. Dr. Carson, Professor of History at Grove City College, Pennsylvania, will be remembered for his earlier FREEMAN series, The Fateful Turn, The American Tradition, and The Flight from Reality. 14 strike hard, as Fabius did, or your waiting will be in vain and fruitless. The significance of the . Fabian Society is not immediately appar ent. It was only one among nu merous collectivist and socialist or ganizations at its inception. At a conference held in 1886 fifty-four such societies had representatives, and the Marxist Social Democratic Federation was not even in at tendance. There were such organi zations as the Socialist League, the Socialist Union, the Guild of St. Matthew, the Anarchist Group of Freedom, the Land Restoration Leagues, the Land Nationalization Society, and the National Secular Society.2 Not only was the Fabian 2 A. M. McBriar, Fabian Socialism and English Politics (London: Cam bridge University Press, 1962), p. 23.

1969 THE FABIAN THRUST TO SOCIALISM 15 Society only one small group among many other socialist groups at the beginning, but even after more than sixty years of existence (1947) it had only about 8,000 members. 3 The importance of the Fabian Society did not arise from the number of its members. Instead, it became so influential because it attra.cted into its ranks men and women who were leaders or would become leaders in a variety of in tellectual fields. Shortly after its founding, George Bernard Shaw, Sidney Webb, Graham Wallas, and Beatrice Potter (who married Vvebb) joined the Society. Over the years, many other prominent English intellectuals and politi cians would belong. In the 1920's, for example, it numbered among its adherents those who were or would become prominent such as Clement Atlee, Stafford Cripps, R. H. Tawney, Michael Oakeshott, Ernest Barker, Rebecca West, C. E. M. Joad, Bertrand Russell, Malcolm Muggeridge, Harold Las ki, and G. D. H. Cole.4 Of equal, or greater, importance, the Fa bians. had an idea, and it was this idea which helped to draw so many intellectuals into their ranks. The 3 Cole, Ope cit., p. 273.

4 Sister M. Margaret Patricia McCar ran, Fabianism in the Political Life of Britain (Chicago: Heritage Foundation, 1954, 2nd ed.), pp. 41-45. idea can be succinctly stated: The Fabians linked reformism by gov ernment action with socialism, the latter to be achieved gradually by way of the former. So stated, the idea may not now be very impressive; certainly, it may not strike us· as original, unique, or anything but obvious. That is because we are more or less familiar with it, because it has become a part of that baggage of ideas we carry around with us. This was not the case in the 1880's and 1890's. Socialism and reform ism were antithetical currents whose advocates were usually in dogmatic opposition to one anoth er. To appreciate what they did, it will be helpful to go a little into the background of these antitheti cal dogmas. The French Had Help Modern socialism was conceived in the midst of the French Revolu tion and was shaped within a few decades following the Napoleonic Wars. It was the work mainly of Frenchmen: of Saint Simon, Charles Fourier, Pierre Joseph Proudhon, Auguste Comte, and Louis Blanc. Men from other na tions also contributed: Karl Marx, Friedrich Engels, Robert Dale Owen, and William Godwin, among others. At the time of the found ing of the Fabian Society, there were three main streams of so16 THE FREEMAN January cialism: communitarian, revolu tionary, and anarchistic.

Many of the early socialists were communitarians. That is, they proposed to achieve socialism instantly, as it were, by living in communities separated from the rest of society. An example of such a community would be Robert Dale Owen's New Harmony com munity in America, but there were many other such experiments. In these communities, there would be no private property; all would share in useful work; all would recei ve from the goods produced and the services provided. These communities were quite often con ceived as places where men having taken care of their brute needs could devote most of their energies to intellectual and esthetic fulfill ment. They were conceived as vol untary efforts, and if they were to become uni versal it would be because of their success as a way of life. There were also the revolution ary socialists, of whom Karl Marx was to become the most famous. Marx spoke of his as scientific socialism-denouncing others as utopians-but that facet of his work need not concern us here.

He envisioned-predicted or scien tifically calculated, he might have said-a time in the future when the proletariat would rise up, cast off their chains, and destroy the bourgeois state and all its parapherna lia. Socialism would somehow re place it in that last great stage of history. Anarchism was most famously propounded by William Godwin and Prince Peter Kropotkin. Its central notion was that the state was unnecessary, that formal gov ernment employing force was equally unnecessary, that if it were abolished, society would take over and manage its own affairs peace fully. Some anarchists went about attempting to destroy the state in the most direct fashion, i. e., by political assassination. This was generally intended as a terrorist tactic, to so terrorize those in gov..; erment that they would abdicate and all others would be afraid to take on their jobs. Not all anar chists, of course, pursued their ob jective in such a forthright man ner.

Societism Unbridled What gave these people title to be called socialist? What did they have in common that made them socialists? The point has long since been lost sight of largely, but it is this: they proposed that government or the state could be abolished and that soci ety would wholly replace it by subsuming its functions. This doc trine might be clearer if it were referred to as societism rather 1969 THE FABIAN THRUST TO SOCIALISM 17 than socialism. Generally speaking, early socialists abstracted from liberal doctrine the idea that the state, or government, existed to protect property. (Liberals did not, of course, hold that this was the only, or even the underlying, reason for the existence of gov ernment.) Property - individual ist, private property-, then, was the occasion for the state with its oppression, wars, and dislocative impact upon society. Abolish pri vate property, and the state would no longer have any function. Or, abolish the state, and there would no longer be any private property.

There was, then, a deep hatred of and animus against the state by most socialists. The communi tarian would abandon the state to its own devices, so far as possible. The revolutionists would assault it directly, and for Marx it would wither away. The anarchists would make it impossible. This at titude prevailed among many so cialists down to the end of the nineteenth century, or beyond. (Indeed, it can be argued - conclusively, so far as semantics are concerned - that once they ac cepted the state and began to use it they ceased to be socialists.) Out of the Ashes This was the state of socialism when the Fabians began to study it in the 1880's. Socialists were nowhere in power in any land, and it is difficult to see how they could have been, considering their animosity to government. Such communities as had been tried had been failures, usually. abysmal failures. Their revolutions had aborted, as, for example, that of the Paris Commune in 1848. Anar chists were widely recognized as a menace, and of interest gen erally to the police. Socialists were fragmented into numerous groups, their antipathy a product both of temperamental differences among their leaders and their pen chant for nit picking over fine points of doctrine. Their doctrines had been repudiated by most men who had heard of them, the esti mate of them ranging from think ing of them as downright silly to being profoundly dangerous. Their leaders were frequently personae non gratae in their native lands.

The inevitability of the triumph of socialism had no direct evidence with which to sustain the faith ful. Yet, there was a great ferment of ideas at work in England, and elsewhere, in the last three dec ades of the nineteenth century. The Victorian Way was under at tack, as has been shown. Men were losing confidence in the validity of ancient certainties. There was a depression in the 1870's, which became known as the Great De18 THE FREEMAN January pression. Reports of poverty and suffering were beginning to make an impact. Neomercantilism and nationalism were gaining sway in many countries. New ideas were being applied in many fields. Re formers, reform ideas, and reform organizations abounded. The early Fabians were social ists searching for a modus oper andi by which to achieve their goal. This distinguished them from most other socialists; these had very definite ideas about how utopia would be achieved; by way of communities, following some great revolutionary upheaval, by political assassination, via labor organization, by a revival of peas antry, and so on. In like manner, reformers were usually wedded to a favorite panacea: inflation, a single tax on land, a redivision of the land, urban housing proj ects, settlement houses, and such like.

The Fabians were not encumbered by any such fixed ideas as regards means (though some would even tually become attached to nation alization in this manner). It would be unjust to them to suggest that they were all willing to use any means for attaining socialism, but they were certainly open to the use of a great variety of means to the eventual socialization of England. They had no bias in fa vor of revolution, nor any in op position to government. Ameliorative reform was quite acceptable, so long as it thrust England in the direction of socialism. So it was that the Fabians acted as a kind of filter for the currents of ideas and movements sweeping about them, eclectically taking from whatever sources whichever ideas or programs suited their purposes. It would not be appro priate here to trace down all the sources of their ideas, but it will help to see what they did - and to see why they were eventually so successful - to note how they took from or flowed with certain currents that were already under way.

Reform by Force One of the elements of Fabian ism, as has been noted, was re formism, the willingness to use government power to make changes of a limited nature. The stage had been set for this by the liberals in the course of the nine teenth century. They had given re form a good name generally and had shown how, when it is applied in a limited manner, it can be made to' work. The main impetus of liberal reforms, of course, had been to remove government re strictions, regulations, and pre scriptions - to establish liberty-, such as the lowering of tariffs, removing religious qualifications for officeholding, repeal of the 1969 THE FABIAN THRUST TO SOCIALISM 19 navigation acts, repeal of wages legislation, freeing of the press, and so on. But there was also a minor strain of interventionism in Eng lish liberal thought. This can be best approached by noting that there were two distinct currents that went into nineteenth century English liberalism. They were, re spectively, the natural law philoso phy and utilitarianism.

Those who adhered to the natu rallaw philosophy-David Ricardo, for example - were not interven tionists, at least not in the first half of the century. They believed in a naturally harmonious. universe in which to intervene was but to bring about dislocations. The Radical Nature of Utilitarians The utilitarians had a quite dif ferent foundation for their be liefs, though they frequently ar rived at similar conclusions. They are usually characterized as phil osophical radicals. The leading figures among utilitarians were Jeremy Bentham, James Mill, and John Stuart Mill, in that chrono logical order. Bentham repudiated natural law, saying of those who had attempted to uphold it that they "take for their subject the pretended law of nature,. an ob scure phantom, which in the im aginations of those who go in chase of it, points sometimes to manners, sometimes to laws; some times to what law is, and some times to what it ought to be."5 In its place, he substituted happiness or utility as his standard of meas urement for what ought to be done. This cut away any absolute measure or standard by which to judge what action should be taken.

(Utilitarians inclined toward democracy, toward determination by the majority of what would conduce to the greatest happi ness.) This opened the way for re form in many directions. At any rate, Bentham and his followers were enthusiastic re formers. One historian notes that "Bentham had a genius for prac tical reform. From his tireless pen flowed a series of projects for the practical reform of everything: schools, prisons, courts, laws .... By sheer energy and perseverance, Bentham and his followers ... forced upon the public constant consideration of the question, '\Vhat good is it? Can it be im proved ?' "6 John Stuart Mill edged closer and closer toward some de gree of some sort of socialism as 5 Quoted in John BowIe, Politics and Opinion in the Nineteenth Century (New York: Oxford University Press, A Gal axy Book, 1964), p. 66. 6 Roland N. Stromberg, European In tellectual History Since 1789 (New York: Appelton-Century-Crofts, 1968), p. 53.

20 THE FREEMAN January he grew old, and was for a con siderable while under the influ ence of Comte's thought. 7 The thrust of the utilitarians was to ward the extension of the suffrage, educational opportunity for every;. one, reform of the Constitution, reform of the laws, and so on. By the time of William Gladstone and the emergence of the Liberal par ty, these ideas were bearing fruit in proposals to restrict the sale of alcoholic beverages and the sup planting of church controlled edu cation for some state variety. Democratic Change Rendered Respectable The utilitarian influence or bear ing on Fabianism was threefold, then. The utilitarians made reform respectable, and established a bent in that direction.' The utilitarians championed political democracy (and Mill especially emphasized freedom of expression) which would be taken up by the Fabians. Thirdly, Fabians harked back to particular thinkers in support of some of their ideas. One writer says, "The derivation of Fabian ideas from the Liberal tradition has always been stressed by his torians, and the Fabians themselves insisted on it, sprinkling their writings plentifully with footnotes and other references to John Stuart Mill, the contemporary Liberal 7 Ibid., pp. 72-73.

economists and other respectable authors."s But there was an important in fluence on the Fabians - or a cur rent which they could use - from the natural law side of liberalism too. This may be a good place to note that any idea of philosophy can have some aspect of it ab stracted so as to be used for quite different ends than its general tendency. This was what happened, at any rate, to an aspect of the natural law philosophy. A line of thought was developed in this way that led to the justification of a major government intervention. Several people traveled a similar route to this conclusion, but for reasons that will appear the Amer ican Henry George's thought may be used to exemplify this particu lar usage. The Georgist Influence Henry George was in the line of natural law thought. More specif ically, he was a latter-day Physi ocrat. The Physiocrats had sought for a natural order for economy, and they had placed great empha sis upon land and agriculture.

George started from these premis es and arrived at the conclusion that rent on land, or some portion of it, is unearned by the landlord is an "unearned increment" -, is not rightfully his, and should be ap8 McBriar, Ope cit., p. 8.

1969 THE FABIAN THRUST TO SOCIALISM 21 propriated by the government to be used for the benefit of society, which is the original source of this rent. The Fabians were early acquainted with this doctrine, though they were more inclined to use Marx's phrase "surplus value" than George's "unearned incre ment." Even so, George's reform ism by way of taxation was grist for their mill. George's Progress and Pove'rty was published in 1879. He made speaking tours in England in 1882 and again in 1884. One writer goes as far as to say that "four fifths of the socialist leaders of Great Britain in the 'eighties had passed through the school of Hen ry George."9 Another historian declares that George's Progress and Poverty was the starting point for Fabian socialism. lo Another says, more circumspectly: "His eloquent writings and lec tures brought many young men of the 'eighties, including some Fa bians, to think along lines which were to lead them to Socialism."ll If any doubt of his influence re mains, George Bernard Shaw's testimony should clinch the argu ment. HI am glad to say," Shaw 9 M. Beer, A History of British So cialism, II (London: George Allen and Unwin, 1953), 245.

10 R. C. K. Ensor, England: 1870-1914 (London: Oxford University Press, 1936), p. 334. 11 McBriar, Ope cit., p. 30. wrote, "that I have never denied or belittled our debt to Henry George."l2 Conservative Party Role The Conservative party pre pared the way and helped to estab lish the tendency for reformism in England also. This was espe cially true of it under the leader ship of Benjamin Disraeli. In his novels Disraeli displayed his in terest in and concern for poverty. One writer says that "he believed that the conditions of the common man could be improved by govern ment action. He was, indeed, a be liever in the maxim that much should be done for the people but very little by the people."l3 In 1875, when Disraeli finally had an assured parliamentary major ity behind him as Prime Minister, he began to press through a num ber of reform measures. A Trade Union Act was passed, an Arti sans' Dwellings Act, a Food and Drugs Act, and a Public Health Act. 14 But of equal or greater impor tance than the Conserva tive cham pioning of reformism, usually 12 Anne Freemantle, This Little Band of Prophets (New York: Macmillan, 1960), p. 34.

13 Salo W. Baron, "George Bandes and Lord Beaconsfield" in George Bandes, Lord Beaconsfield (New York: Crowell, 1966), p. vii. 14 Ensor, Ope cit., Pp. 35-36.

22 THE FREEMAN January dubbed "Tory paternalism," was something which the Fabians must have imbibed from conservative philosophy. The gradualist ap proach to socialism is rooted in an abstraction from conservative sociology, whose progenitor was surely Edmund Burke. Implicitly, Burke tells us much about how society must be changed, to the extent that it can be successfully changed. Society is an organism, Burke held, and it cannot be changed or altered casually, or at will. Such changes as occur must not be offensive to the system as it is, should be in accord with it, and must be introduced slowly so as not to shock it. Now Fabians really had no objection to a social ist revolution, at least most did not, but they did not believe that this could be accomplished in Eng land. Thus, their gradualist tac tics at least accorded with a wide spread English belief which owed much to conservative thought, however offensive what they in troduced might actually be to the English system.

Theories of Evolution Another element that went into the Fabian view, a current which they could turn into their own stream, was the evolutionary the ory of development. For several decades prior to the organization of the Society, the evolutionary conception of things had been gaining sway, particularly as a re sult of Hegel's philosophy of his tory, Charles Lyell's Principles of Geology, Herbert Spencer's Social Statics, and Charles Darwin's Origin of the Species and Descent of Man. Evolutionary theories were particularly important to utopians and socialists because they could be interpreted so as to give the impression that every thing was changing, that nothing was fixed, and that all things were possible. This was another source and support, too, of the notion of making changes gradually. In view of the currency of these ideas, "it was only to be expected that the Fabians would avail themselves of these ideas to justify their pro gramme. The extent to which they did so may be seen in several theoretical Tracts written for the Society at different times by Sid ney Webb, and also in Fabian Essays .... "15 The Fabians Motivated by Marxist Ideals Marxism was a major influence on the Fabians. In this case, how ever, the adoption of Marxist ideas did not give added impetus to the Fabian cause. On the contrary, they would be an impediment at this time. Hence, Fabians were disinclined to ascribe ideas to 15 McBriar, Ope cit., pp. 60-61.

1969 THE FABIAN THRUST TO SOCIALISM 23 Marx or to credit him where cred it was due. But the Fabians were socialists, and there is good rea son to believe that their socialism was informed by Marxist ideas. The Marxist influence can be shown both by external and in ternal evidence. H. M. Hyndman, leader of the Social Democratic Federation in England, was great ly influenced by Marx.t 6 He pub lished two books at a crucial time which were largely cribbed from Marx's writings: England for All (1881) and Historical Basis of Socialism in England (1883). A number of the early Fabians were deeply involved with the Social Democratic Federation. Not only that but also early reading lists for the Society indicate that sev eral of Marx's ,vorks were avail able and presumably read. As one writer says, "The particular kind of Marxist works in currency amongst the Fabians had an effect on the development of their own theory .... "17 He notes that the Fabian Essays reveal "a number of elements taken over from Marx ist theory. In addition to the em phasis on the role of the working class in bringing Socialism into existence, the doctrines of the narrowing of the numbers of the capitalist class and the increasing misery of the working-class can 16 Beer, Ope cit., pp. 67-69.

17 McBriar, Ope cit., p. 11. both be found there. ."18 It is worth noting, too, that both George Bernard Shaw and Sidney Webb virtually embraced Russian com munism later in their lives.t 9 Utopianism One other current present at the time greatly assisted the Fabians in the spread of socialism. It was utopianism. The great age of uto pian literature, particularly the utopian novel, in English was from 1883 to 1912. Some seventy-four works appeared during this peri od.20 According to one historian, the most influential of these works on British socialists were two books by Americans: Laurence Gronlund's Cooperative Common wealth (1884) and Edward Bel lamy's Looking Backward (1888). But the English also published important works of the genre: William Morris, News front N 0 ~vhere (1891), and Robert Blatch ford, Merrie England, the latter selling over a million copies. 21 It is important to keep in mind, too, that utopian literature was fre quently vague about how socialism was to be obtained but provided 18 Ibid., p. 62.

19 Ibid., p. 92; C. Northcote Parkin son, Left Luggage (Boston: Houghton Mifflin, 1967), p. 94. 20 Glenn Negley and J. Max Patrick, The Quest for Utopia (New York: Henry Schuman, 1952), Pp. 19-22. 21 Ensor, Ope cit., p. 334.

24 THE FREEMAN January glowing pictures of the ideal so ciety that would emerge. This helped greatly in popularizing so cialist goals. A Witches' Brew From these elements, however disparate and antagonistic they may have been at the time, the Fa bians concocted a blend which has come to be known as Fabianism. They fatefully linked government action (reformism) with the thrust to socialism. By so doing, they provided a modus operandi for achieving their goals which became increasingly believable to many people. By riding certain currents that were underway, they began to achieve respectability for their doctrines. In contrast to America, "socialism" became a word to conjure with in England rather than a dirty word. This should be attributed mainly to the Fabians and their methods. More over, they linked gradualism and democracy to the movement to ward socialism, thus making it that much more acceptable. The Fabians were not so much original in conceiving any of the elements as they were successful fusionists and propagandists. It was by their efforts, more than any others, that England was bent toward so cialism.

And, there is a clear connection between the rise of socialism in England and the decline and fall of England from world leadership and greatness within a few dec ades. Chronologically, the rela tionship is about as close as it could be. But it must be made clear that it was not simply an accident that the rise of socialism in England paralleled the decline of that country. To do that, the Fabian methods and program must be examined, the movement to power told, and the erosive im pact of all this on British institu tions and practices explored. + The next article of this series will further explore liThe Fabian Program."

The Free Societyand Its Enemies TIBOR R. MACHAN THE EDUCATION of citizens in the philosophy of freedom must he the concern of all those who consider the free society the proper kind of social system under which man can live with his fellow men. Unfor tunately, it is in this task that those who propose a free society find themselves least qualified. The reason is simple: how the prob lems of individuals, how their wants will best be handled is not something that we can forecast with certainty. This basic uncertainty about the ways in which free men would deal with their lives - how they would manage to travel roads built by private concerns, to mention just one issue which is raised fre quently - should not, however, pre vent one from thinking about the issue once in a while. It is true that if a free society is based on the moral point of view that each man has the moral right to the use and Mr. Machan, candidate for the Ph. D. degree at the University of California, Santa Barbara, also teaches part-time and does freelance writing.

disposal of his property - includ ing himself and his work - then it is of secondary concern how men will come to produce those things which we now seem to value very highly. Surely, if it is moral ly right to have private ownership of land, how that principle will effect the satisfaction of the now expressed desire for roads, parks, beaches, and the like is of sec ondary concern. But it is also true that unless we can successfully demonstrate that a free society is good for people, that it is of benefit to man - that the moral principles serve his best interest - we cannot very well ad vocate its adoption. Yet we know that not everyone with whom we talk about freedom is thoroughly versed in the intricacies of philo sophical reasoning. A recent dis cussion I had with a gentle lady, of advanced years showed me that it is very difficult to resolve basic problems of epistemology with someone who, though basically in telligent, just has not the time or 25 26 THE FREEMAN January the energy to absorb what is needed to consider such issues.

As a result, I considered demon strating to som.e of my intellectual adversaries that some of the things we value today - roads, parks, for ests, beaches, schools, and so on not only would be available to peo ple who wish to obtain them but would be obtainable in much bet ter conditions and circumstances than now prevail. In attempting this, I found that one cannot limit himself to one alternative. Cer tainly, it is quite possible that city roads - as they are now known would be maintained and owned by the local business concerns (groceries, gas stations, motels, banks, nightclubs, and the like). But it is also conceivable that roads might be defunct at the time when a free society will be estab lished, and the problem would not even arise. The notion that we would travel in helicopters may now seem outrageous; but with free men, one can never tell what is going to catch on next.

An important feature of this type of presentation of the possi bilities of and within a free soci ety is that at certain stages it re veals a great deal about the per son with whom one is talking. For instance, the lady with whom I was discussing the matter objected to my suggestion that businesses might own the city roads on the grounds that "they might not let me walk on them unless I do it for the sole purpose of trading with them." This revealed some thing very interesting to me about this lady. It strongly hinted that hers was a negative view of hu man nature. Clearly, it would he absurd and even self-defeating for anyone to make that kind of a lim itation on property which is wide ly used and which works, in the end, to further his benefit. A busi ness does not benefit solely through direct trade; good will, patience, and kindness to customers furthers one's business operations in any market where buyers are free to choose where they will shop. We all find it disturbing when we are being pushed too hard by sales men who cannot wait for us to make a decision. But the sugges tion that honest business prac tices, competence, consideration for one's fellow men, and respect of others' rights, would foster ill will seems to stem not so much from a concern over the availabil ity of generally recognized values and goods but from a basic dis trust of the capacity of man for goodness.

Many people believe, consciously or subconsciously, that man by his very nature is either stupid or evil. They do not act on this in their personal lives - not always, that is - but they tend to think 1969 THE FREE SOCIETY AND ITS ENEMIES 27 it when the promise of human freedom is suggested to them. They look at history and believe that the evils result, not from bad ideas, distorted views, faulty rea soning, or the absence of reason ing by many powerful people, but from the basic, necessary deficien cies of human nature. And when this becomes evident, we who be lieve otherwise can go to work on a reconsideration of the philosophy of man and society. Religion and philosophy have had great influence in bringing about the kind of society we have. I t is only through reconsideration of the problems in those very ab stract fields of study that we may be able to recast man's image. But our rethinking of those issues also may help us appreciate the con fusion that persists in many minds about alternative systems of gov ernment and society. For clearly, if man is necessarily evil or de ficient in important aspects of his character, no social system is go ing to bring about the goods which so many of our adversaries be lieve a free society cannot pro duce. As to the lady's objection, for instance, surely she must realize that if people would privately place stupid prohibitions on the use of the property which they open for trading purposes, they will vote just as stupidly when the use of city streets is considered in the "democratic process." There is, after all, no guarantee that City Planning Commissions are com posed of infallible and good peo pIe; and if they are all deficient by nature, the harmful judgments they make will affect all of us. An elite and a dictator are equally subject to the laws of human na ture. So, it is a mistake to think that pure democracy or represent ative democracy - or any other system of government in which human beings administer the de cisions - would protect us against the failings of naturally deficient or evil men. At least, in a free society we would be able to con fine the source of evil and the responsibility for it much more efficiently; while, as it stands now, we all suffer at the hands of the majority and its representatives.

Discussing the values of a free society is an exasperating job. But it is immensely revealing; it tells one a great deal about why w·e are where we are and why we are not moving toward a better alterna tive more rapidly. By paying heed to some of the things that concern our adversaries, we can learn a great deal about them and about the problems we must overcome in order to progress toward the building of a truly free society. I am by no means pessimistic. But I would warn against believing that the task is a simple one.· ~ 01 the DIVISION olLABOB GARY NORTH THE DIVISION OF LABOR is a sub ject which has fascinated social scientists for millennia. Before the advent of modern times, phi losophers and theologians con cerned themselves with the im plications of the idea. Plato saw as the ultimate form of society a community in which social func tions would be rigidly separated and maintained; society would be divided into definite functional groups: warriors, artisans, un skilled laborers, rulers. St. Paul, in his first letter to the church at Corinth, went so far as to describe the universal Church in terms of a body: there are hands, feet, eyes, and all are under the head, Christ. Anyone who intends to Gary North is a member of the Economists' National Committee on Monetary Policy and is the author of Marx's ReliAion of Revolu tion (Nutley, New Jersey: Craig Press, 1968) , from which this article has been adapted.

28 deal seriously with the study of society must grapple with the question of the division of labor. Karl Marx was no exception. Marx was more than a mere economist. He was a social scien tist in the full meaning of the phrase. The heart of his system was based on the idea of human production. Mankind, Marx as serted, is a totally autonomous species-being, and as such man is the sole creator of the world in which he finds himself. A man cannot be defined apart from his labor: "As individuals express their life, so they are. What they are, therefore, coincides with their production, both with what they produce and with how they pro duce."l The very fact that man rationally organizes production is 1 The German Ideology (London: Lawrence & Wishart, 1965), P. 32.

1969 MARX'S VIEW OF THE DIVISION OF LABOR 29 what distinguishes him from the animal kingdom, according to Marx. The concept of production was a kind of intellectual "Archi medean point" for Marx. Every sphere of human life must be in terpreted in terms of this single idea: "Religion, family, state, law, science, art, etc., are only particular modes of production, and fall under its general law."2 Given this total reliance on the concept of human labor, it is quite understandable why the division of labor played such an important role in the overall Marxian frame work. Property vs. La&or Marx had a vision of a perfect human society. In this sense, Mar tin Buber was absolutely correct in including a chapter on Marx in his Paths in Utopia. Marx be lieved in the existence of a society which preceded recorded human history. In this world, men experi enced no sense of alienation be cause there was no alienated pro duction. Somehow (and here Marx was never very clear) men fell into patterns of alienated produc tion, and from this, private prop erty arose. 3 Men began to appro2 "Private Property and Communism,"

The Economic and Philosophic Manu scripts of 1844, edited by Dirk J. Struik (New York: International Publishers, 1964), p. 136. S "Estranged Labor," ibid., pp. 116-17. priate the products of other men's labor for their own purposes. In this way, the very products of a man's hands came to be used as a means of enslaving him to another. This theme, which Marx announced as early as 1844, is basic to all of Marx's later eco nomic writings. Under this system of alienated labor, Marx argued, man's very life forces are stolen from him. The source of man's immediate difficulty is, in this view, the di vision of labor. The division of labor was, for Marx, the very essence of all that is wrong with the world. It is contrary to man's real essence. The division of labor pits man against his fellow man; it creates class differences; it destroys the unity of the human race. Marx had an almost theolog ical concern with the unity of mankind, and his hostility to the division of labor was therefore total (even totalitarian).

Class Warfare Marx's analysis of the division of labor is remarkably similar to Rousseau's. 4 Both argued that the desire for private property led to 4 J. J. Rousseau, Discourse on the Origin of Inequality, in G. D. H. Cole (ed.), The Social Contract and Dis courses (London: Dent, 1966), esp. pp. 195-208. Cf. Robert A. Nisbet, "Rous seau and Totalitarianism," Journal of Politics, V (1943), pp. 93-114.

30 THE FREEMAN January the division of labor, and this in turn gave rise to the existence of separate social classes based on economic differences. The Marxist analysis of politics relies complete ly upon the validity of this as sumption. Without economic clas ses, there would be no need for a State, since a State is, by definition, nothing more than an instrument of social control used by the members of one class to suppress the members of another. 5 Thus, when the proletarian revo lution comes, the proletarian class must use the State to destroy the remnants of bourgeois capitalism and the ideology of capitalism. The opposition must be stamped out; here is the meaning of the famous "ten steps" outlined in the Communist Manifesto. Once the opposition is totally eradi cated, there will be no more need for a State, since only one class, the proletariat, will be in exis tence. "In place of the old bour geois society, with its classes and class antagonisms, we shall have an association in which the free development of each is the condi tion for the development of all."6 5 German Ideology, pp. 44-45.

6 The Communist Manifesto (1848), in Marx-Engels Selected Works (Mos cow: Foreign Languages Publishing House, 1962), I, p. 54. For a critique of this view of the State, see my study, Marx's Religion of Revolution (Nutley, New Jersey: Craig Press, 1968), p. 112. Marx actually believed that in the communist society beyond the Revolution, the· division of labor would be utterly destroyed. All specialization would disappear. This implies that for the pur poses of economic production and rational economic planning, all men (and all geographical areas) are created equal. It is precisely this that Christians, conserva tives, and libertarians have al ways denied. Marx wrote in The German Ideology (1845~46): ... in communist society, ·where no body has one exclusive sphere of activity but each can become accom plished in any branch he wishes, society regulates the general pro duction and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner, just as I have a mind, with out ever becoming hunter, fisherman, shepherd or critic. 7 A Utopian Ideal A more utopian ideal cannot be encountered in serious economic literature. While some commenta tors think that Marx later aban doned this radical view, the evi dence supporting such a conclu sion is meager. Marx never ex plicitly repudiated it (although the more outspoken Engels did, "{ German Ideology, pp. 44-45.

1969 MARX'S VIEW OF THE DIVISION OF LABOR 31 for all intents and purposes). Even if Marx had abandoned the view, the basic problems would still re main. How could a communist so ciety abandon the specialization of labor that has made possible the wealth of modern industrial ized society and at the same time retain .modern mass production methods? How could the commu nist paradise keep mankind from sliding back into the primitive, highly unproductive, unskilled, low capital intensity production techniques that have kept the ma jority of men in near starvation conditions throughout most of hu man history? The whole question of economic production "beyond the Revolu tion" was a serious stumbling stone for Marx. He admitted that there would be many problems of production and especially distrib ution during the period of the so-called "dictatorship of the pro letariat." This period is merely the "first phase of communist so ciety as it is when it has just emerged after prolonged birth pangs from capitalist society."s Marx never expected great things from this society. However, in the "higher phase of communist soSCritique of the Gotha Program (1875), in Marx-Engels Selected Works, II, p. 24. This is one of the few places in which Marx presented some picture of the post-Revolutionary world.

ciety," the rule of economic jus tice shall become a reality: "From each according to his ability, to each according to his needs !"9 This will be easy to accomplish, since the vast quantities of wealth which are waiting to be released will be freed from the fetters and restraints of capitalist productive techniques. As Mises has pointed out, "Tacitly underlying Marxian theory is the nebulous idea that natural factors of production are such that they need not be econ omized."lo Maurice Cornforth, the Marxist philosopher, confirms Mises' suspicion that Marxists see all scarcity as a product of institutional defects rather than as a basic fact of the order of the world in which we live: The eventual and final abolition of shortages constitutes the economic condition for entering upon a com munist society. When there is so cialized production the products of which are socially appropriated, when science and scientific planning have resulted in the production of absolute abundance, and when la bour has been so enlightened and organized that all can without sac rifice of personal inclinations con tribute their working abilities to the common fund, everyone will re9 Ibid.

10 Ludwig von Mises, Socialism (New Haven, Conn.: Yale University Press, [1922] 1951), p. 164.

32 THE FREEMAN January ceive a share according to his needs)l Who Shall Plan? A critical problem for the Marxist is the whole question of communist planning: How is pro duction to be directed? By what standards should the society allo cate scarce resources? Whatever Marx's personal dreams were con cerning the abolition of scarcity, resources are not in infinite sup ply. It is because of this very fact that society must plan production. Marx saw this activity as basic to the definition of man, yet this very activity implies the exist ence of scarcity, a peculiar para dox for Marxism. The fact re mains that automobiles do not grow on trees. Someone must de cide how many automobiles should be produced in comparison with the number of refrigerators. Plan ning is inherent in all economic production, and Marx recognized this: "Modern universal inter course can be controlled by indi viduals, therefore, only when con trolled by a11."12 But how can they "all" register their preferences?

If there is no private property (and, therefore, no free market economy), and if there is no State 11 Maurice Cornforth, Marxism and the Linguistic Philosophy (New York: International Publishers, 1965), p. 327. 12 German Ideology, p. 84. planning - no political planning then who decides which goods are to be' produced and which goods are not? Murray Rothbard has stated this dilemma quite accu rately: Rejecting private property, es pecially capital, the Left Socialists were then trapped in an inner con tradiction: if the State is to disap pear after the Revolution (imme diately for Bakunin, gradually "withering" for Marx), then how is the "collective" to run its property without becoming an enormous State itself, in fact even if not in name? This was the contradiction which neither the Marxists nor the Bak unists were ever able to resolve.l 3 The Problem of Scarcity The need to coordinate produc tion implies the existence of scar cities which the production is de signed to alleviate. If everyone had all he desired at the moment of wanting it, production would be unnecessary. Raw materials must be fashioned into goods or indirectly into services, and these goods must be shipped from place to place. Such actions require time (interest on the investment of capital goods), planning (profit for success and loss for failure), and labor (wages). In short, pro duction demands planning. No 13 Murray N. Rothbard, "Left and Righ t : The Prospects f or Liberty,"

Left and Right, I (1965), p. 8.

1969 MARX'S VIEW OF THE DIVISION OF LABOR 33 society is ever faced with the problem "to plan or not to plan." The issue which confronts society is the question of whose plan to use. Karl Marx denied the valid ity of the free market's planning, since the free market is based upon the private ownership of the means of production, including the use of money. Money, for Marx, is the crystallized essence of alienated production; it is the heart of capitalism's dynamism. It was his fervent hope to abolish the use of money forever.1 4 At the same time, he denied the validity of centralized planning by the State. How could he keep his "as sociation" from becoming a State? The Fabian writer, G. D. H. Cole, has seen clearly what the demand for a classless society necessitates: "But a classless society means, in the modern world, a society in which the distribution of incomes is collectively controlled, as a po litical function of society itself.

It means further that this con trolled distribution of incomes must be made on such a basis as to allow no room for the growth of class differences."15 In other words, given the necessity of a 14 "On the Jewish Question," (1843 44), in T. B. Bottomore, Karl Marx: Early Writings (New York: McGraw· Hill, 1964), pp. 34-40. 15 G. D. H. Cole, The Meaning of Marxism (Ann Arbor: University of Michigan Press, [1948] 1964), p. 249. political function in a supposedly stateless world, how can the Marxists escape the warning once offered by Leon Trotsky: "In a country where the sole employer is the State, opposition means death by slow starvation. The old prin .. ciple: who does not work shall not eat, has been replaced by a new one: who does not obey shall not eat."16 Ultimately, the acceptance of the existence of scarcity must be a part of any sane social analysis. In contrast to this Rousseauian Marxian view of the division of labor stands both the traditional Christian view and the libertarian view of Professor Mises. Men have a natural propensity to con sume. If unrestrained, this ten dency might result in looting, destruction, and even murder.

The Need 10 Produce The desire to consume must be tempered by a willingness to pro duce, and to exchange the fruits of production on a value for value received basis. Each person then consumes only what he has earned, while extending the same right to others. One of the chief checks on men's actions is the fact of economic scarcity. In order to ex16 Leon Trotsky, The Revolution Be· trayed (1936), quoted by F. A. Hayek, The Road to Serfdom (University of Chicago Press, 1944), p. 119.

34 THE FREEMAN January tract from a resisting earth the wealth that men desire, they are forced to cooperate. Their coop eration can be voluntary, on a free market, or it can be enforced from above by some political en tity. Scarcity makes necessary an economic division of labor. Those with certain talents can best serve their own interests and society's interests by concentrating their activities in the areas of produc tion in which they are most effi cient. Such specialization is re quired if productivity is to be in creased. If men wish to have more material goods and greater per sonal services, they must choose occupations in which they can be come effective producers. Those who favor a free market arrange ment argue that each man is bet ter equipped than some remote board of supervisors to arrange his own affairs and choose his own calling according to his desires, talents, and dreams. But whether the State directs production or the demand of a free market, the spe cialization of labor is mandatory.

This specialization promotes so cial harmony; the division of la bor forces men to restrain their hostile actions against each other if they wish to have effective, pro ductive economic cooperation. In this perspective, the division of labor promotes social uni ty without requIrIng collective uni formity. It acknowledg·es the ex istence of human differences, geo graphical differences, and scar city; in doing so, it faces the world in a realistic fashion, trying to work out the best possible solu tion in the face of a fundamental, inescapable condition of man. In short, the cause of economic scar city is not the "deformed social institutions" as the socialists and Marxists assert; it is basic to the human condition. While this does not sanction total specialization, since man is not a machine, it does demand that men acknowl edge the existence of reali ty. It does demand that the division of labor be accepted by social the orists as a positive social benefit. 17 A Faulty Premise Anyone who wishes to under stand why the Marxian system was so totally at odds with the nineteenth century world, and why it is so completely unworkable in practice, can do no better than ex amine Marx's attitude toward the division of labor. It becomes ob vious why he always shied away from constructing "blueprints for the communist paradise" and con centrated on lashing the capitalist framework: his view of the future was utopian. He expected man to 17 Mises, Socialism, pp. 60-62.

1969 MARX'S VIEW OF THE DIVISION OF LABOR 35 be regenerated by the violence of the Revolution. The world beyond would be fundamentally different: there would be no scarcity, no fighting, and ultimately, no evil. The laws of that commonwealth would not be conformable with the laws that operate under bour geois capitalism. Thus, for the most part, Marx remained silent about the paradise to come. He had to. There was no possible way to reconcile his hopes for the future with the reality of the world. Marx was an escapist; he wanted to flee from time, scarcity, and earthly limitations. His eco nomic analysis was directed at this world, and therefore totally critical; his hopes for the future were utopian, unrealistic, and in the last analysis, religious. His scheme was a religion - a religion of revolution. ~ Culture vs. Barbarism CULTURE strives to establish a boundary between itself and bar barism. The manifestations of barbarism are called "crimes."

But existing criminology is insufficient to isolate barbarism. It is insufficient because the idea of "crime" in existing criminology is artificial, for what is called crime is really an infringement of "existing laws," whereas "laws" are very often a manifestation of barbarism and violence. Such are the prohibiting laws of differ ent kinds which abound in modern life. The number of these laws is constantly growing in all countries and, owing to this, what is called crime is very often not a crime at all, for it contains no element of violence or harm. On the other hand, unquestionable crimes escape the field of vision of criminol ogy, either because they have not the recognized form of crime or because they surpass a certain scale. In existing criminology there are concepts: a criminal man, a criminal profession, a criminal society, a criminal sect, a crhninal caste and a criminal tribe, but there is no concept of a criminal state, or a criminal government, or criminal legislation. Consequently the biggest crimes actually escape being called crimes.

P. D. OUSPENSKY, A New Model of the Univer8e HENRY HAZLITT PERSONAL INCOME tax rates that rise to the level of 77 per cent ob viously discourage incentives, in vestment, and production. But no politician raises the point for fear he will be accused of defending the rich. What is probably an even greater discouragement to new in vestment and increased production is the present income tax rate of 52.8 per cent on corporations. Yet this gets even less criticism than high personal income taxes. N0 body wants to defend the corpora tions. They are everybody's whip ping boy. And yet they are the key productive element on which the nation's income, wealth, and eco nomic growth depend. There was at least some aware ness of this until recent years. When the tax on corporation in come was first imposed in 1913 it R6 was at the very cautious rate of 1 per cent. It never got above 15 per cent until 1937. In the midst of World War II it was still only 40 per cent. It did not get to 52 per cent until 1952.

Today such a rate is taken for granted. Yet most of those who approve of it, and even suggest it could be a little higher, are the very people who have been com plaining most loudly in recent years about the country's disap pointing rate of economic growth. The present average tax on all corporations is about 45 per cent. On successful corporations of any size, however, the average rate is close to 52 per cent. Broadly speak ing, therefore, when anybody con templates a new corporate invest ment, he will not make it unless the investment promises to yield before taxes at least twice as much 1969 HOW WE DISCOURAGE INVESTMENT 37 as the return he would consider worthwhile. If, for example, a man would not consider a new invest ment worthwhile unless it prom ised a 10 per cent average annual return on his capital outlay, it would have to promise a return of 20 per cent on that outlay before taxes.

What is at least as important as reducing the incentive to invest ment is that the present corporate income tax reduces the funds avail able for investment. In the second quarter of 1968, according to esti mates of the Department of Com merce, U.S. corporations were earn ing total profits before taxes at an annual rate of $92 billion. Out of this their corporate tax liability was $41 billion. This reduced their profits after taxes to $50.7 billion. Out of this sum, in turn, $24.4 bil lion was paid out in dividends while $26.3 billion was retained in undistributed profits. This last figure represents the corporations' own reinvestment in working capital, inventories, im provement, new plant, and equip ment. If there had been no corpor ate tax whatever, and there had been the same proportionate distribution of profits between divi dends and reinvestment, the amount of money reinvested would have been $47 billion instead of $26 billion-about $21 billion, or 80 per cent, more a year.

By discouraging and retarding investment in new machinery and plant, the 52.8 per cent marginal corporation income tax shields ex isting obsolescent capacity from the competition of the new, mod ern and efficient plant and equip ment that would otherwise come into existence, or come into exist ence much sooner. It is obvious that a corporation income tax in the neighborhood of 50 per cent must drastically reduce both the incentive and the funds for new investment, and therefore for the consequent increase in jobs, productivity, real wages, and eco nomic growth that the politicians are always calling for. By striking so directly against new invest ment, in fact, the present high corporate income tax slows down economic growth more effectively than almost any other type of tax. • Copyright 1968, Los An4eles Times. Re printed by permission.

4. The Decline of Intellect THE LOWERED ethical standards of our age have been matched by a decline of intellect. Today, we place progressively less faith in man's intellectual powers, substi tuting a faith in institutionalized arrangements and methods. If we would help our young to develop and implement proper values in their lives, we must first recover the intellectual integrity to dis tinguish between good and bad. Such intellectual integrity rests upon a firm belief that man ca,n think, and that no genuine sub stitute exists for human thought. Dr. Roche is Director of Seminars for the Foundation for Economic Education. He has taught history and philosophy in college and maintains a special interest in American edu cation. 38 If the school is to transmit the intellectual and cultural heritage, and develop in students a proper sense of morality, it must begin by teaching them to think.

Conversely, if we would help our young people to think, we must provide a cultural and moral framework within which their in tellectual capacities may be exer cised. Yet, this disciplined thought is precisely what is lacking in the home and the school. Within the existing educational framework, moral and philosophic questions tend to be handled with the neutrality of "scientific objec tivity." As the result, our children are provided no philosophic basis for their own thinking. Instead, 1969 THE DECLINE OF INTELLECT 39 they take on the protective colora tion of the dominant social mores - a form of "social adjustment" which places a premium upon non thinking. Small wonder that our age of shrinking values also be comes the age of shrinking intel lect. Debunking Tradition, While Demanding Its fruits It is not quite fair to say that today's intellectual leaders have no values. Although they are ex tremely skeptical about values and emphasize that skepticism in all their works, many modern "intel lectuals" do have their own under lying value system which C. S.

Lewis has sharply called into ques tion: It is an outrage that they should be commonly spoken of as Intellec tuals. This gives them the chance to say that he who attacks them at tacks Intelligence. It is not so. They are not distinguished from other men by any unusual skill in finding truth nor any virginal ardour to pursue her. Indeed it would be strange if they were: a preserving devotion to truth, a nice sense of intellectual honour, cannot be long maintained without the aid of a sen timent which ... [they] could de bunk as easily as any other. It is not excess of thought but defect of fer tile and generous emotion that marks them out. Their heads are no bigger than the ordinary: it is the atrophy of the chest beneath that makes them seem so. And all the time - such is the tragi-comedy of our situation - we continue to clamour for those very qualities we are rendering impos sible. You can hardly open a periodi cal without coming across the state ment that what our civilization needs is more "drive," or dynamism, or self-sacrifice, or "creativity." In a sort of ghastly simplicity we remove the organ and demand the function.

We make men without chests and expect of them virtue and enter prise. We laugh at honour and are shocked to find traitors in our midst. We castrate and bid the geldings be fruitful.! "There Is No Truth" What are some of the philo sophic underpinnings of the edu cational system now reaping such a bitter harvest? One of the most basic principles of the Deweyite pragmatism and instrumentalism which infects our schools and our social order is that the truth of an idea is measurable only by the consequences to which it leads. If the consequences of an idea are good, then the proposition is true. How do we measure good conse quences? The good, so we are told by the instrumentalists, is· that which achieves the proper social ends. 1 c. S. Lewis, The Abolition of Man, pp. 34-35.

40 THE FREEMAN January Does the individual have judg ment in this matter? Is there some divine sanction by which we can evaluate such ends? The modern answer to both questions is "No." The measure of good is now ex clusively social, eliminating indi vidual judgment, eliminating any fixed standard of right and wrong, and indeed eliminating the very concept of truth. The fact that a modern intel lectual no longer searches for truth should not be construed to mean that he no longer searches for knowledge. The distinction comes in the fact that his search for knowledge evidences no inter est in any ultimate reality beyond the immediate workability of an idea. Any value without direct ap plication to the here and the now is considered pointless and un worthy of transmission as "knowl edge." Most men who have lived in Western civilization have premised their thinking upon the presence of a higher reality, dimly per ceived yet serving as the basis for all human endeavor. That human endeavor was an attempt to dis cover and live in consonance with that higher reality through the use of man's unique capacity to reason. The modern intellectual, applying "scientific" methods and standards to his investigation, finds no evidence of such a higher reality or any higher side of man as reflected in the individual.

Thus, man comes to be viewed as nothing more than a creature en gaged in the process· of adapta tion to his environment, a crea ture possessing neither soul nor mind in the sense in which West ern man has developed the con cept. The intellect itself, the indi vidual's very capacity to think, is finally called into question. No Use for the Mind Today's educational framework affords no place for the mind. The concept of mind always demanded discipline on the part of the in dividual if the fruits of his in tellectual processes were to com mand the attention and respect of his fellows. But in today's denial of mind, the new keys to man's personality are assumed to be composed exclusively of emotional factors, psychological "adjust ment," and materialistic creature necessities. "Adjust to your environment," our young people are constantly told. Such a denial of intellect has the effect of lowering standards for society as a whole while rob bing each of us of the essence of his individuality.

Thought, if granted any validity at all, has come to be regarded as a rather mechanical process, meas urable, and computable.

1969 THE DECLINE OF INTELLECT 41 The social engineers predict that such intellectual concentrations will be beneficial to mankind as a whole and to each individual as well. The idea advanced by Julian Huxley of a "thought bank" is considered by them in all seriousne~s. To an in quiry of The New Yo'rk Times in 1958, one of the scientists consulted about the socio-intellectual aspects of the year 2000, Professor John Weir of California Institute of Tech nology, answered that there will be no conflict among the thinking of in dividuals because "a common Thought Bank will be established from which all will receive instruc tions and to which all may repair in case of doubt." Less "scientific" but equally enthusiastic for a society that will have eliminated "divisive ness," are the recommendations of Professor Robert C. Angell. In Free Society and Moral Crisis,. the author identifies what he calls the "moral web" with socialized attitudes, and "moral crisis" with deviant behavior.

It is incidental to our present argu ment that Mr. Angell never tells us how one distinguishes whether a "de viant" group is good or bad - how one tells a saint from a delinquent, a gang from the twelve apostles - when both disrupt the social fab ric and neither behaves according to "the common values of their cul ture." What is,however, relevant here is that the remedies he sug gests for "social and moral integra tion" are all collectivistic measures, reached through public discussions in high schools, television panels, Boy Scout and YMCA programs, group therapy, prisoner rehabilita tion, and so on.2 forget and Adjust Such attitudes rest on two sup positions: 1. All past thinking and moral judgment must be dis counted if not dismissed since it predates the definition of truth as "social good"; and 2. The prepara ration for those living in such a society must no longer aim toward the education of a freely choosing moral agent but instead must em phasize the "adjustment" of the individual to the total social good.

... the difference between the old and the new education will be an important one. Where the old ini tiated, the new merely "conditions." The old dealt with its pupils as grown birds deal with young birds when they teach them to fly: the new deals with them more as the poultry-keeper deals with young birds-making them thus or thus for purposes of which the birds know nothing. In a word, the old was a kind of propagation - men transmit ting manhood to men: the new is merely propaganda. 3 Such an educational system is not designed to develop a capacity for thinking or to halt the declin~ of intellect. 2 Thomas Molnar, The Decline of the Intellectual, pp. 219-220. 3 Lewis, Ope cit., pp. 32-33.

42 THE FREEMAN January It may well be that such an at tempt at placing society over the individual (and, indeed, over God as well), would be unacceptable to many persons now living in this nation or in the Western world. It is true, however, that these are the dominant ideas among intel lectuals who will largely influence generations to come. The depar ture from tradition, morality, and even human thought which seems far advanced in theory, has scarce ly begun in practice. The most sweeping changes in our society lie ahead unless we decide to re verse the process. In facing that decision, let us compare the new values with the traditional, with our Western her itage of discovery and develop ment in morality, science, law, and art, a heritage based upon a firm and unswerving faith in man's ability to reason, in his unique gift of intellect. Remove man's power to think and to act on the basis of his thinking and you have destroyed the very quality which makes him human. To abandon such a history is to create a vac uum quite likely to be filled with the new "philosophy of change."

The Philosophy of Change Today, we are told that we have swept aside the dead hand of the past with its constricting and con fining tradition and morality. We are told that the disciplines of former ages no longer bind us. We are told that, in view of these rap id transformations, all standards are relative to social considera tions; man and society are what ever we choose to make of them. Thus, change itself, change for its own sake, becomes the dominant philosophy of the age. A variety of experiences (no matter what their quality) with constant growth (no matter in what direc tion) and constant activity (no matter how frenzied) .are now to serve as a suitable educational goal. Here again, the decline of intellect is most graphically dem onstrated. What are the standards for judg ing the purposes and values thus successively emerging in the pupil's mind? If the teacher himself has no general aim, nor final values to which all this process is related; if education itself is to grow "in what ever direction a novelly emerging future renders most feasible .... "4 This is a pointless procession of the blind leading the blind. An "educated" man is often regarded as one who is quick and clever in discussion and ready and willing to discuss anything. To freely dis cuss on all sides of all questions, without standards, without values, is to insure the creation of a gen4 Jacques Maritain, Education at the Crossroads, p. 17.

1969 THE DECLINE OF INTELLECT 43 eration of uninformed and talka tive minds, a living demonstra tion of the decline of intellect. During Goethe's travels in Italy, he spent some time in the com pany of an Itali an captain. De scribing the man, Goethe re marked, "This captain is a true representative of many of his compatriots. Here is a particularly typical trait of his. As I would often remain silent and thought ful, he said to me once: 'What are you thinking about? One ought never to think, thinking ages one! One should never confine oneself to one single thing because he then goes mad: he needs to have a thousand things, a confusion in .his head.' "5 The New Age of Doubt How different is modern educa tion from that traditionally fol lowed in Western civilization! St. Thomas always warned students never to leave any difficulty un resolved in their study, to always fully understand whatever they read or hear and to "avoid speechi fying on anything whatsover."

How few modern students follow such an injunction! He also warned teachers that they must "never dig a ditch [in front of the student] that you fail to fill up." 6 5 Jose Ortega y Gasset, Meditations, p. 8l. 6 Maritain, Ope cit., p. 50. St. Thomas well knew that cleverly to raise doubts, forever to seek and never find, was, when carried to the extreme, the great enemy of both education and thought. Many modern teachers have not learned what St. Thomas knew so well. We live in an age in which we are kept busy by endless in duction. Today we substitute facts for truths. We engage in a con stant round of activity on the assumption that, in Richard Weaver's caustic phrase, "Experi ence will tell us what we are ex periencing." No standards, no evaluation, no genuine thought it is to such a nightmare that the concept of change finally leads us. Any traditional philosophy is dis missed by modern man as "static."

Thus, any values not constantly shifting are regarded as old hat, as unworthy for a "modern" mind. Institutions, values, attitudes that show constancy are finally dis missed by a philosophy, if it can be dignified by that name, of ceaseless change. At any given moment, so says this new philosophy, the only means by which society can prop erly determine what values are ac ceptable is through a temporary consensus. Thus, we find a con stant flight of endlessly shifting ideas and values, somehow to be caught on the wing and rendered 44 THE FREEMAN January intelligible at a particular moment in time. Society now becomes the final arbiter of a "truth" as chang ing as the summer breeze, thus necessitating endless reratification by society. It should be clear that the only constant in such a so ciety would be this supposedly in fallible method of arriving at the truth. The main concern of our mod ern intellectuals has heen, not the discovery of an enduring reality, but rather the mastery of a method for measuring change. We no longer measure growth toward an ideal, simply because no ideal remains. When there is no longer a standard by which to test it, the intellect is clearly in decline.

Mental and Moral Vacuum The collapse of standards and of the intellect is closely allied to the rise in scientism, as dis cussed earlier. Modern naturalism, materialism, and scientism hold that only material, physically measurable quantities and values can exist. Thus, all other standards of religion, ethics, and culture, including any accomplishment of the mind, are swept aside. The result is an intellectual and moral vacuum. This vacuum extends to the most minor and everyday con cerns of curriculum. Traditional subjects are being displaced by courses in art appreciation,fly casting, and other intellectual ac tivities equally insignificant. A value system is essential if students are to sort out and make use of the vast assortment of mis cellaneous "facts" thrust upon them. Some hierarchy of values is essential to the use of the mind or intellect. And it is not surprising that young people who have thus been "educated" to deny their uniqueness, their capacity to think, should feel unfulfilled and con fused by the world around them.

Meanwhile, the trend continues toward a collective mentality. Un der a theory of ceaseless change and total "social goals," all values are determined by the current state of the environment. The en vironment, subject to manipula tion by the state, may be depended upon to breed conditions demand ing ever larger involvement of government in society. State con trol of society and education can be depended upon to provide sys tematic indoctrination through the innumerable channels of propa ganda opened by the decline of intellect. Social Failure Such a system of total control, supposedly relieving the individ ual of all responsibility and all concerns, must prove fatal in the end.

1969 THE DECLINE OF INTELLECT 45 Youthful enthusiasm and the joy of living may conceal the inner vac uum for some time, at least until one goes through the initial stages of adulthood - settling down in a trade or profession, getting married, hav ing children, and finding a place in society. But in the midstream of life just before age makes its first ap pearance, the existential questions about the meaning of life as it con cerns the individual are inevitably asked. Then the haphazard, practi cal cleverness picked up in the school and along the way proves frighten ingly inadequate. 7 Thus, there comes to the indi vidual something of the dichotomy suff·ered by society: the simulta neous sense of power and insecur ity. Today, we are told that every thing is possible for us. We are taught to believe this; yet, never has talk of a returning barbarism and decay been more widespread throughout Western civilization.

We bury ourselves under every conceivable material and political "security," only to find ourselves increasingly insecure and unpre pared for what tomorrow may bring. Circumstances Can't Choose We may embrace the pragmatic idea that circumstances will de cide the truth. But Ortega has reminded us that it is not circum7 Thomas Molnar, The Future of Ed.. ucation, pp. 87-88. stances which finally decide, but our character . We can move the choice away from the individual to mass man and society as a whole, we can abandon all of our tradi tional values in a wave of ceaseless change; still, somewhere deep in our hearts we know that we are deciding. We know this, even when our very indecision fi nally forms the future. Choice is not so easily abandoned. Choice becomes increasingly difficult when our educational sys tem turns out men capable of running the technical machinery of civilization but totally ignorant of the principles upon which that civilization rests.

Civilisation is not "just there," it is not self-supporting. It is artificial and requires the artist or the artisan. If you want to make use of the ad vantages of civilisation, but are not prepared to concern yourself with the upholding of civilisation - you are done. In a trice you find yourself left without civilisation. Just a slip, and when you look around every thing has vanished into air. The primitive forest appears in its na tive state, just as if curtains cover ing pure Nature had been drawn back. The jungle is always primitive and, vice versa, everything primi tive is mere jungle. 8 Yes, the jungle is always there; 8 Jose Ortega y Gasset, The Revolt of the Masses, p. 88.

46 THE FREEMAN January and when a society begins to in sist that there are no lasting val ues, that the individual is incom petent to choose his own path or to think his own thoughts, then the civilization based upon fixed moral values and free individual choice is destined to revert to that jungle. The jungle is close indeed when we believe that a man is no more than the sum of his heredity and environment, and that his behav ior, instead of his own choosing, is molded for him by his surround ings. A man thus molded could not be responsible for his action. A society composed of such men would be an irresponsible society that seeks wages without work, pleasure without pain, and learn ing without effort. Insatiable Appetites, But Others to Blame Today, we often fail to see any relationship between crime and punishment, between effort and re ward; we have no understanding of a hierarchy of values, no con cept of a total unity governing human existence. The predictable result:. a nation of spoiled chil dren. These spoiled children are of all ages, but they share a com mon conviction that if their in s·atiable appetites are unsatisfied, someone is being mean to them.

This may explain why the promises of science are so uncritically accepted at face value - the ful fillment of all desire in a flood of material goods and scientific prog ress. Weare led to believe that the very riddle of life and death is about to be solved by science. If man can have both eternal life and satiation of all desire in the here and now, then what other god need he worship? It is true that the price is high; we must be willing to give up our individual capacity to think and to choose, we must be willing to give up any fixed moral code. But what need has man for such things in social paradise? Individuals within our society become steadily less productive on the intellectual and moral diet they receive. Tocqueville caught the essence of the under lying problem: In ages of faith, the final end of life is placed beyond life. The men of those ages, therefore, naturally and almost involuntarily accustom themselves to fix their gaze for many years on some immovable ob ject toward which they are con stantly tending; and they learn by insensible degrees to repress a mul titude of petty passing desires in order to be the better able to content that great and lasting desire which possesses them. . . . This explains why religious nations have often achieved such lasting results; for whilst they were thinking only of 1989 THE DECLINE OF INTELLECT 47 the other world, they had found out the great secret of success in this. 9 Perhaps the great religious teachers were right after all in their insistence that man must recognize some higher will than his own. Nowhere is this recogni tion of a higher will more impor tant than in intellectual matters. It would appear that in the modern 9 Richard Weaver, Ideas Have Conse quences, p. 118.

world all too many men have so exalted the product of their own minds that they have come to see themselves as self-sufficient. In that illusory self-sufficiency, man has come, as we have seen, finally to lose the dir~ction and point of his own intelligence. Indeed, mod ern man has ceased to believe in the quality of his own individual intellect, and thus brought about one of the fundamental failures of our age: the decline of intellect. • The next article of this series will discuss "Discipline or Disaster." Facing the Crowd THE SOUR FACES of the multitude, like their sweet faces, have no deep cause - disguise no god, but are put on and off as the wind blows and a newspaper directs. Yet is the discontent of the multi tude lTIOre formidable than that of the senate and the college. It is easy enough for a firm man who knows the world to brook the rage of the cultivated classes. Their rage is decorous and prudent, for they are timid, as being very vulnerable themselves. But when to their feminine rage the indignation of the people is added, when the ignorant and the poor are aroused, when the unintelli gent brute force that lies at the bottom of society is made to growl and mow, it needs the habit of magnanimity and religion to treat it godlike as a trifle of no concernment.

RALPH WALDO EMERSON. Self-Reliance In Praise of the ConventionalWisdom JACK MCCROSKEY SINCE its invention in 1958 by John Kenneth Galbraith, the phrase "conventional wisdom" has developed into an insult of broad and devastating power. Call an idea a part of the conventional wisdom, and far too many people, including many businessmen and college professors, are reluctant to pursue the thought any further. Who, after all, wants to sound archaic? This development is thoroughly deplorable, for much of the con ventional wisdom, although an cient and often neglected, is as valid today as ever. It deserves both defense and praise in face of the onslaughts against it. Here are seven propositions drawn from the conventional wis dom, the attacks agai.nst them, The author is Associate Professor of Finance and. Economics at the University of Denver and IS the current editor of Business Economics.

48 and some of the ways they might be protected and preserved for use in the political debates ahead. • You can't have everything - re sources are scarce. Old hat, say many of our most popular critics. So marvelous is the U. S. productive machine that we actually can have everything. Automation has made work obso lete. People who prefer not to work should be put on the dole and encouraged to roll around heaven all day. The facts of the matter are the reverse, of course. Median family incomes in the United States now run about $8,000 annually; and, if we push ahead as diligently as we can, they may reach $20,000 annually by the year 2000 - a sum most intellectuals who disparage the need for economic growth al ready earn or at least aspire to.

1969 IN PRAISE OF THE CONVENTIONAL WISDOM 49 The key problem confronting the United States is still how to increase output, not how to redis tribute what we already produce. Our major and continuing goal should be to bake a larger eco nomic pie so that everyone can eat a bigger piece, not to reslice what ever pie is already on the dish. • It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from regard to their own interest. Most people today, our intellec tuals insist, work primarily for honor and wisdom, security and status, blue ribbons and letter sweaters. Their desire for money is strictly secondary. While the foregoing view may be partially correct, it is equally correct that given the current status of human nature we also need monetary incentives. We need high wages and sal aries to foster personal pride and dignity. We need high profits to encourage saving and risk taking.

And we need tax rates that let us keep a senior partner's share of whatever rewards our efforts gen erate. • Consumers are kings. Many social critics find this no tion terribly quaint. Consumers are enslaved by the hard sell and the soft sell, say the critics, by planned obsolescence and a com pelling impetus to waste. Let ad vertising croon its seductive tune, and consumers will tumble all over one another in a psychedelic scramble to buy any shabby con trivance sung about. The truth is that no amount of advertising can sell consumers what they don't actually want at least not for long. The Ameri can economy abounds with ex amples of massive marketing and advertising campaigns that failed. The sad saga of the Ford Motor Company's Edsel is the most re nowned. And there are many others - including General Foods' inability to promote corn flakes with freeze-dried peaches even after advertising expenditures of more than $3.5 million in 1966 alone. Not even the nation's dogs can be euchred into consuming what they don't genuinely enjoy, a point demonstrated by General Mills' decision to phase out Speak dog food after spending over $1 million annually on advertising.

Consumers, being neither phi losophers nor saints, naturally make mistakes. But by and large they do an excellent job of man aging their own affairs - no mat ter what the critics claim. Heavy handed emphasis on laws to "pro tect consumer interests" will ulti mately reduce both consumer pleasure and consumer choice.

50 THE FREEMAN January • Build a better mousetrap, and the world will beat a path to your door. If consumers really were sub liminally driven to buy whatever advertising men tell them to buy, then the search for new and bet ter products would prove super fluous. Consumers, the silly sheep, would enjoy being sheared. Be sides, like the vast majority of sheep, they couldn't tell a superior mousetrap from an inferior door knob. But U. S. businesses are en gaged in a never-ending quest for new and better products, as is at tested to by their $7.5 billion an nual expenditures on research and development. Businesses don't spend these sums out of altruism; they spend them in order to keep alive and growing in our hotly competitive economy. What really affronts and frus trates many intellectuals is not the economy's failure but its smash ing success in providing a bounti ful array of mouth-watering items.

It simply sets some intellectuals' teeth on edge to see most of the American people enjoying new automobiles and color TVs, vaca tion trips and football games, when, in their view, these people should be writing poems, paint ing pictures, and playing lutes. The market caters to consumers not to the whims of reformers. • Higgling and haggling in the market place determine relative prices. Not so, according to some of the most fashionable thinkers of our time. The market, like God, is dead. Five hundred or so giant firms dominate America's econ omy, and these firms set prices at whatever levels they please. If businessmen completely com manded prices, then presumably the prices of individual products might sometimes rise but would never, never fall. From the many thousands of possible examples, here are just two showing that such command is absurdly exag gerated. One, from consumer mar kets, concerns TVs, which fell from around $300 for a 12-inch table model in 1950 to around $130 for a decidely superior 17-inch set today. The other, from industrial markets, concerns basic aluminum, which fell roughly 30 per cent be tween 1961 and 1965. Surely, if TV and aluminum producers held absolute power over their prices if they could safely ignore pres sures from rivals who covet a piece of the action - then they used their power in the wrong di rection.

Government, not business, con stitutes the most immediate threat to free markets. And one of the most progressive steps we could take today would be the ending of 1969 IN PRAISE OF THE CONVENTIONAL WISDOM 51 government control programs, many of which were introduced during the bad-old-days of the 1930's and most of which constrict the sway of competitive forces. For instance, minimum-wage laws, far from helping the poor, have pushed workers on the bottom rungs of the achievement ladder out of their jobs altogether; re strictions on agricultural output, far from preserving the family farm, have helped force down the number of farms from seven mil lion in 1935 to three million in 1968. • Government should do for the people only what the people. can not do for themselves. Mention a problem - any prob lem from auto accidents to agri cultural prices to dirty air - and a great many Americans will jump to the conclusion that the Federal government could immediately fix up the situation if only it wanted to. Arguments that government shouldn't and can't do everything are interpreted as a serving of political horseradish or as a sign of indifference to human suffering.

The fact is that government shouldn't try to do everything. It's a matter of record in countries from Hitler's Germany to Mao's China that centrally directed eco nomic systems crush human liber ties, political and artistic as well as economic. It's also on the record that overly ambitious programs of the U.. S. government lead to the loss of our traditional freedoms. Moreover, many government pro grams, such as public housing, have worked out in precisely the opposi te way intended. Much of what is needed in the United States today is a reorder ing of national priorities. Govern ment has plenty to do, especially in the way of preserving the peace, with liberty and justice for all. But it can't do everything at once. Clearly we should take a fresh eyed look at some of our older projects, particularly our subsi dies to various political pressure groups which run into billions of dollars annually. We should also, whenever a new problem is dis covered or invented, give serious thought as to whether private businesses and individuals might be able to cope with the trouble without running to Washington.

And if it is a problem that can't be solved voluntarily, does that log ically and automatically render it soluble by force? • Everyone has to pay his bills sometime or other - even the Federal government. The New Economics, which is based on the assumption that adroit manipulation of Federal spending and taxing can banish 52 THE FREEMAN January Why, in the face of so much evidence, is the conventional wis dom held in such low repute? The both recessions and genera] price rises, has been overpromoted. American supporters of the New Economics apparently encountered so much resistance in first selling the notion that Federal deficits might sometimes prove beneficial that they went overboard in their public pronouncements. As a re sult, many government officials and even many businessmen suffer from the delusion that deficits don't matter. But deficits do matter. And just a quick look at some of our most pressing economic problems will provide any fair-minded observer with persuasive evidence. Both our mounting inflation and our deepen ing difficulties in world money markets have stemmed in large measure from the cavalier accept ance of Federal deficits.

The Federal government, no less than the most humble private citi zen, must handle its financial af fairs with reasonable prudence or else suffer the uncomfortable consequences. Far from being out moded, this bit of conventional wisdom is more up-to-date than Marshall McLuhan. * * * easy answer is simply that our times are out of joint. Alienation and despair are the catchwords of the day. And despite our extra ordinary progress over the past several decades - including the marked increase of investment and production and the sharp reduc tion of poverty - every other per son you meet seems convinced we're heading straight for eco nomic perdition. Maybe it's because life is mov ing entirely too fast. Instant food, instant money, and almost instant travel from New York to Los Angeles - all these are perfectly delightful. But perhaps they've also given us an impossible-to-sat isfy appetite for instant utopia a never-never land where hard work, personal disappointments, and all income differentials are not only abolished but abolished right now.

Well, we'll probably never reach utopia. What we can do is move toward a generally healthier, wealthier, and wiser society by making the right choices, some of them very hard choices. Much of what we need to help guide us along the way is less intellectual novelty for novelty's sake and more respect for the conventional wisdom. ~ AN INQUIRY CONCERNING INEQUALITY w. A. PATON THE VIEW that a state of inequality in mankind is bad, almost wicked, has been booming. Among welfare "workers", school teachers (in cluding the college professors), ministers, politicians, and in the ranks of reformers and do-gooders wherever you find them, there are many who are ardently espousing the egalitarian cause, and almost everybody nowadays acquiesces in the .general notion that continuing efforts to whittle down the in equalities found in the economic sphere are warranted. As can be said of most movements promising to hasten the dawn of the millen nium, the dedication of the true believers is typically based on emo tion or mystic yearning rather than careful observation and Dr. Paton is Professor Emeritus of Accounting and of Economics, University of Michigan, and is known throughout the world for his out standing work in these fields. His current com ments on American attitudes and behavior are worthy of everyone's attention.

study, and total ignorance of the subject seems to be the norm among both the enthusiasts and those who simply go along. This benighted condition of the advo cates, plus the prevailing lack of forthright opposition, or even of critical review, provide the excuse for this attempt to do a bit of prob ing. Variation in Man' 8 Surround ings. On undertaking even a lim ited inquiry the observer can hardly overlook, at the outset, the variations that are found on every hand throughout nature. Mother Earth is far from a homogeneous or quiescent mass. Our planet ex hibits a great range of geologic formations and climatic conditions. Differences in soil and water sup plies, and in temperature, wind velocity, humidity and so on are the rule, and in many localities 53 54 THE FREEMAN January changes in some factors are severe from day to day as well as from season to season. Turning to plant and animal life we find a fasci nating complexity of classes, kinds, species, and other groupings, with noticeable individual differences within both broad and narrow divi sions. Those who handle horses or dogs, for example, become very familiar with the marked dissimi larities in temperament and talent found among individuals in speci fic breeds, strains, and even in the progeny of particular parents. The plain fact is that we are every where confronted with variety, not uniformity. Indeed, the fussy per son will note .here that no two grains of sand, or blades of grass, or leaves on the tree, or kernels of wheat are identical in size, shape, and other features.

Man's Peculiarities. When atten tion is focused on man alone a wide range of characteristics is dis closed among races and regional groups, and also in narrow sub divisions such as the tribe, clan, or specific family. Differences in size, build, skin, eyesight, blood type and a host of other physical factors abound among representa tives of Homo sapiens, wherever they live. And such differences can hardly be ignored by even the most rabid supporter of egalitarian doctrine. We can't avoid accepting the proposition that no one can add a cubit to his stature by taking thought, and as yet there is no transplanting technique available or proposed by which several inches could be removed from Wilt Chamberlain's frame and trans ferred to one of his shorter team mates. Individual human beings do not look alike, they behave differ ently, and they are different, be yond doubt. Sweeping Heredity Under the Rug. But this is not the whole story. Those who proclaim the basic equality of men may con cede the differences in appearance and physical makeup and still argue that all of us begin life abreast in a basic sense, that all have the same potential or worth at the starting line. Taking this position means acceptance of the view that everyone is born a blank, a clean slate, or, alternatively, that each individual starts with pre cisely the same inherent level of intelligence, talents, overall ca pacity. In other words, the factor of inheritance is either disre garded entirely or is considered to be equalized, and the individual's record in life is assumed to be due solely to the impact of environ ment, the influences and events ex perienced. Thus the door is opened to the claim that a poor perform ance is attributable entirely to an 1969 AN INQUIRY CONCERNING INEQUALITY 55 unfortunate background of experi ence - lack of proper food, hous ing, or medical care, inadequate education and training, inferior employment opportunities, harass ment and exploitation encoun tered, and so on, and also, perhaps, sheer bad luck.

For anyone who is well ac quainted with human physiology and behavior, and indeed for all laymen with a fair amount of com mon sense and willingness to rec ognize realities, this thesis is hard to swallow, even preposterous. The evidence is conclusive that each in dividual comes on the scene with a distinctive package of traits, tendencies, capacities. Typically the differences are more outstand ing than the similarities, and some of the ingredients may be at odds rather than in harmony. As to the impact of the varying hereditary package, moreover, the case is quite clear; on every hand ex amples appear in which the· influ ence of inheritance is plainly re flected in the individual's career. This is especially noticeable among persons who are virtuosos in mu sic, and in the fine arts generally; usually it is easy to spot conspicu ous talent in the family· trees of such individuals. And likewise among those who show brilliance in professional fields, or in any line requiring high-level ability, the hereditary background is commonly very much in evidence.

"Brains" are inherited, beyond doubt, along with other qualities. That the more commonplace in clinations and aptitudes are handed down may be somewhat less ap parent, but that inheritance plays a part here too can scarcely be questioned. These comments are not in tended to deny that outstanding ability crops up here and there where the ancestry of the individ ual-assuming the facts are avail able - is very unpromising. Even so, we will rarely see genius sprout ing from a line of progenitors heavily loaded with morons. Fur ther, although almost anyone can become more capable with inten sive training there is no program that will make great writers, phi losophers, mathematicians, engi neers, researchers, executives and so on from below-par raw material. From the Haves to the Havenots. Recognition of the wide range of abilities and accomplishments among men, based at least in part on the hereditary variables, and of the impossibility of equalizing energy and talent through any sys tem of education and training, leaves us still confronted by the widespread opinion that the good society, the happy land, is one where rewards, if not attainments, are substantially equal, and that 56 THE FREEMAN January the coercive powers of the state should be invoked for the purpose of achieving - or at least moving toward - this idealistic goal. This view has been politically dominant for several decades in the United States (and in many other coun tries, of course) , and the pressures designed to exploit the haves for the benefit of the havenots (and thehavelesses) have been mount ing. The major means employed, as we all know, has been that of main taining a high level of tax levies on the more successful and productive individuals and business units and use of a portion of the funds thus confiscated to provide handouts to the elderly (our "senior citizens") , the unemployed, the needy stu dents, the badly housed, the neg lected children, the mentally re tarded, the sufferers from disaster, the farmers (both poor and afflu ent) , and many other special groups.

It is difficult to appraise the ef fect of these efforts to date in terms of progress toward economic equality, or in other respects. The assault on high incomes through the progressive tax structure has surely been a leveling influence, but even here the net results are not clear. In the case of high in dividual salaries, for example, there may be offsetting factors in the market for top-flight services. Earnings from property holdings probably have been hit harder overall - than service incomes. Evidence is not wanting to suggest that initiative and enterprise have been discouraged by the weight of punitive taxation and the continu ously increasing load of regulation and interference to which individ uals and business organizations have been subjected. The GNP as officially computed keeps on in creasing, but the rate of growth may well have been retarded by the flood of "reform" legislation. Evi dence can also be found suggesting that some of the programs launched have not only missed the mark but have resulted in injury rather than benefit to the "under privileged". All in all the showing is not one for the egalitarians to crow about.

Equalizing Economic Satisfac tion Impossible. That it is difficult to rate the results of the schemes designed to despoil the rich and leaven the lot of the poor, from the days of the New Deal on, would be conceded by most ob servers. The opponents of such programs, needless to say, would like to see a retreat begun from a movement that they regard as basically unsound and harmful. The supporters, on the other hand, while generally dissatisfied with progress to date, insist that what is needed is more of the same1969 AN INQUIRY CONCERNING INEQUALITY 57 higher taxes on the well-to-do and on business enterprise, expansion of existing government aid pro...; grams and extension of such ef forts in new directions, govern mental control of economic activ ity all along the. line. In other words, there is thus far no abate ment of the enthusiasm for the egalitarian and socialist causes. In the light of this situation it may be desirable to point out the practical impossibility of cutting the economic pie into equal con sumable slices for all, regardless of what is done to money incomes by tax levies or other financial confiscatory devices.

Assuming a society in which there is only one simple product consumed - plain rice, for exam ple - a division of the output into equal portions by governmental authority may be imagined (al though even in this extreme case the size of an adult share might exceed that of a small child, and other variations might well be pre scribed or tolerated). But when attention is turned to the actual situation in the United States, or any other area with a market economy providing an output of many thousands of different kinds of consumer commodities and services, the task of providing each person with the same amount of consumer satisfaction en counters insurmountable obstacles. Some folks like a big car and some prefer a small job. Some mil lionaires want a yacht with lots of marble and gold doorknobs and some don't care for such trim mings. The taste for sport and travel is not uniform, which means that not everyone wants an equal share of the output of fish ing rods, golf clubs, sun glasses, and the like. Some of us are ad dicted to television watching and some are not, and there are still a lot of people who have no use for cocktails or cigarettes. Some like to read and some don't, and desires vary as to types of read ing material. Not everyone cares for concerts and operas, and even if attendance were required how could everyone be furnished with equally attractive seats? And still more bothersome, how could it be arranged to provide everyone with the same degree of enjoyment?

Some members of the audience will be relatively unappreciative, especially those with impaired hearing and those who don't know one note from another. Likewise in the prosaic areas of food, clothing, furniture, and housing, in the presence of a mar ket offering almost unlimited choices, the packages of individual preferences are legion. And is it proposed that we all be compelled to buy and eat the same kind of pizzas, or any pizzas, for example, 58 THE FREEMAN January or wear neckties of a particular color? Are the diversities of con sumer inclination to be disre garded by the police state envis aged, with a resulting required uniformity in products made available for consumption? In the case of large and com plex physical units of product the equalizer faces an obviously im possible problem of division. For example, if every family wanted a riding horse, and the number of families was larger than the num ber of horses available, it would hardly be practicable to award a piece of a horse to each.

No, the plain fact is that divi sion of an elaborate array of con sumer products into equal shares is literally impossible, and pro vidingeach individual with the same amount of "psychic in come", or consumer satisfaction, is something still further out of reach. No human being or group, even if operating in the frame work of a government bureau, and even if backed by plenty of armed marshals, can cope with such problems successfully. The only kind of a society or community in which even an ap proach to equal sharing is practi cable is the prison, the slave camp, an army of privates, or - tempo rarily - castaways or other dis tressed persons on short rations. This brings us to an important and neglected point. Equality in the distribution and consuming of economic output is inherently in compatible with a prosperous, progressive society, blessed with a great diversity of tangible goods and services. Variety may not be the spice of life but it is an essen tial feature of today's market economy. A complex, competitive market, pillared on specialization and exchange, is not easily devel oped where egalitarian views are dominant (as can be seen in some backward areas of the world to day), and such an economy - even if long established and flourish ing - can be crippled and eventu ally destroyed by a continuing avalanche of share-the-wealth measures - even if the extreme step of imprisonment or liquida tion of the more prosperous (the treatment accorded to the Kulaks) is avoided.

Impairing Individual Incentive. It was noted above that evidence is accumulating indicating that enterprise and productivity have been unfavorably affected by pro gressive taxes and the accompany ing business controls and interfer ences. There remains for brief at tention the question of the effect of redistribution programs-aimed at more equal sharing - upon in dividual human beings and their basic motivations.

1969 AN INQUIRY CONCERNING INEQUALITY 59 That no two individuals have the same package of traits, incli nations, and abilities has been stressed. This does not deny, how ever, that there are some character istics common to many men. One such widespread trait is an un willingness on the part of the worker, in the vineyard or else where, to see a part of his output commandeered by government, or private pirates, for any purpose. This is particularly true of the hustlers and highly efficient. The superior worker will not continue to maintain his stride indefinitely if the fruits of his labor are seized and turned over to others, be they worthy unfortunates or parasitic drones. The experience in this country and abroad of the scores of idealistic, utopian com munities, often launched in an at mosphere of religious fervor, has a bearing. Examination of the history of such undertakings shows that almost invariably the more energetic and productive members became dissatisfied when they realized that they were sup porting the inefficient and shift less, and the usual outcome was either a slowing down to the pace of the sluggards, or departure for a more promising environment, if this were practicable.

Use of the machinery of taxa tion and other financial devices, including inflation, to take from Peter and give to Paul, may tern.. porarily obscure what is going on. In a complex economy, in which money and credit are employed to facilitate exchange, the partici pating individual often seems to have difficulty in tracing relation ships and effects. The young berry picker who works diligently and effectively out in the swamp all day and has twenty quarts of nice raspberries to show for his ef forts, would be astounded and in furiated if Uncle Sam came along and took half of his out put away from him. But when he grows up and becomes superin tendent of the berry canning fac tory, and is paid by check for his services, he may be somewhat less outraged when laws are passed requiring him to turn over to his good uncle - either by employer withholding or on his own initia tive - half of his money income.

Free spenders of the other fel low's money seldom mention the need for efficiency and high pro ductivity if the level of economic output is to keep pace with a growing population, to say noth ing of an increase in the per capita slice. They take it for granted that there will always be a willing mule to do the plowing, regardless of how well he is fed. The spenders talk and act as if the purse into which they dip to get the funds for their grandiose 60 THE FREEMAN January schemes had no bottom whatever - like the widow's cruse of oil back in Elijah's time. There is good reason for regarding their faith as unjustified. Just where the breaking point will be reached in a particular setting can not be readily predicted, but the old story of the last straw and the camel's back should not be forgotten. One thing is certain: when the econ omic climate becomes so cloudy that it offers no lure to the enter prisers, the innovators, the hus tlers, the savers, there will be a disastrous decline in productivity.

The conclusion indicated by this survey is that variation, differ ences, inequalities are a commonplace feature of man's life on this planet, and - what is crucially im portant - are indispensable to a thriving, growing market econ omy, with high living standards. A world in which there was a complete equality in economic shares and consumer satisfactions would be a drab, unproductive, sla ve-camp sort of place. Hence we will do well to guard against being beguiled by any version of the egalitarian philosophy, how ever idealistic and well-inten tioned. Let's not be misled by those urgently beckoning us toward a downhill road. Let's be thankful for the blessing of diver sity, inequality, and staunchly re sist its erosion. ~ Reprints available, 10 cents each. The Independent Individual THE SOCIAL UNIT is the independent individual; the more individ ual and independent he is, the more able is he to cooperate, and the stronger the society he creates. Cooperation is possible only amongst independent individuals; amongst others, there may be regimentation but no creative cooperation. Society is a vast, nat ural, complex, intentional, and yet largely unconscious coopera tion amongst those able to stand on their own, and, in the exi gencies of life, lend a hand.

From a Ford Sunday Evening Hour broadcast by W. J. Cameron (circa 1937) A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN A POWER FOR PEACE HENRY PAOLUCCI'S War, Peace, and the Presidency (McGraw-Hill, $6.95) is just about as unfashion able as, in a time of almost uni versal stupidity, one could wish a book to be. A conservative who once ran for the U.S. Senate as the New York Conservative Party candidate, Mr. Paolucci is both a libertarian and a nationalist. He believes that international affairs can only be messed up by those who support any of the various movements toward "world govern ment." Balance-of-power politics, says Mr. Paolucci, are not only in evitable; they are also healthy. A world monopoly of power would, by definition, be a power in the hands of the big population coun tries (Red China, India, Soviet Russia), and what this would do to the U.S., Western Europe, and the fringe nations of East Asia would be sad to contemplate. The good news in Mr. Paolucci's book is that it isn't going to happen.

As a libertarian, Mr. Paolucci believes in "leveling up" the popu lation of the U.S., which runs counter to the fashionable idea that taxation must be geared to the process of "leveling down." He is in favor of the "possessing classes," a phrase which he would undoubtedly throw in the face of Arth ur Schlesinger, who use,s similar phrases about the "haves" with a sneer. Mr. Paolucci thinks the Negroes should, in the words of William Graham Sumner, "get capital"; what they need more than anything else is self-respect, ,vhich is something that doesn't go with a life j spent on relief. As a non-WASP (his Italian ancestry obviously means that he can't very well be a "white Anglo-Saxon Protestant"), Mr. Paolucci is keenly aware of the battle which minorities have had to wage in this country to achieve financial status and a feeling of belonging. But this is the lot of minorities everywhere; it is, says Mr. Pao lucci, the human condition, and 61 62 THE FREEMAN January there is no use weeping about it.

The important thing is that, under the American form of govern ment, individuals can pull minori ties up. It has happened in the case of the Irish, the Germans, the Jews, and the Italians - and there is no reason why the Negro, coming north out of the agrarian south, can't "make it" in his prop er turn. In any case, says Mr. Pao lucci, it is not the business of gov ernment to force anybody to love anybody. The business of govern ment is to protect individuals in their rights. Law and Order Mr. Paolucci's libertarian streak does not lead him to embrace the fallacy of anarchism. He believes in the check-and-balance republic of James Madison. But he also be lieves in "we, the people" united behind the President when it comes to facing foreign threats or the bids of minorities to dis solve the federal union. The cen tral thought of his book is nailed down in a remarkable reply to Professor James MacGregor Burns, who, by implication, would welcome a diminution of U.S. sov ereignty lest a nuclear holocaust should "wipe out all checks and balances - including the voters."

Says Mr. Paolucci, "President Lincoln would have replied that a nuclear holocaust was less to be feared than peaceful dissolution \vhich would also wipe out checks and balances and with them the way of life that makes being a voter meaningful." The best things in life, says Mr. Paolucci, are those which men are prepared to die for, and it is no less true now than in ancient times that freedom is "made secure only when a sufficient number of persons who are willing to die rather than not be free combine their willing ness politically." If our federal union goes, checks and balances will check and balance nothing, the Constitution will constitute noth ing, and the civil rights of every body, the Negroes included, will be "deprived of positive value as well as legal substance." National Loyalties Mr. Paolucci, though as a liber tarian he could not very well think highly of Lyndon Johnson's do mestic views, rather admires the \vay in which a hard-grained Texas patriot decided to go against the academic liberals' conception of the White House as the place for a continuous "international ist" teachin. James MacGregor Burns, Walter Lippmann, Arthur Schlesinger, the earlier Walt Ros tow, all believed in a strong presi dency - but only when the Presi dent was under the tutelage of the internationalists. When LBJ 1969 A POWER FOR PEACE 63 turned out to be a different breed of cat than some of his predeces sors, all the "strong executive"

liberals started whooping it up for an even stronger U.S. Senate. The new idols were Fulbright, McCarthy, and other members of the Senate Foreign Relations Com mittee who wanted to take the conduct of foreign affairs out of the strong executive's hands. But if LBJ stood out against "national dissolution," his policies were still opaque when it came to considering basic balance·-of-power realities on the Atlantic side of the world. Walt Rostow, in the White House, might stand up for preserving the balance of power in East Asia. But he - along with Dean Rusk in the State Depart ment - had been for "conver gence" with the communists until the whole world was at a "take off" position to practice meliorist economics that would feed every body, the drones as well as the workers. The irony of the situa tion, as Mr. Paolucci sees it, is that Soviet Russia has, in practice, "turned Marx on his head" by creating, not a stateless paradise, but a tough supernationalistic State that will never accede to real disarmament. Moscow talks "in ternationalism" - but invades Czechoslovakia, arms communist nationalists such as Ho Chi Minh, and encourages the Arab nationalists who look to Nasser as their leader. To hope to build "interna tionalist" East-West bridges in this atmosphere is utopian.

Barbarians Within As for the utopia of One-World rule, Mr. Paolucci thinks it would be the prelude to disastrous civil wars on a pl~netary scale. The his tory of ancient Rome broods over many a page in Mr. Paolucci's book. When a balance of power existed in the Mediterranean world, Roman citizens did not fight each other. They maintained internal discipline in order to stand guard against external enemies. But after the single great enemy Carthage was destroyed, the Roman classes turned on each other. The civiI wars eventually came to an end, but the Roman Republic was insensibly trans formed into the Roman Empire. This "One World" of antiquity established a universal peace - but the energies of the population flagged. And, eventually, the bar barians broke in. Mr. Paolucci thinks this is the "law" of One Worldism. But in modern times the barbarians lurk within the advanced countries as well as in the jungles of some of the tropical "underdeveloped" world.

There are some things that are not cleared up in Mr. Paolucci's 64 THE FREEMAN January book. Would he regard the Clar ence Streit blueprint for a federa tion of the Atlantic democracies as a concession to a debilitating "internationalism," or would he accept it as a proposal for strengthening the West in its bal ance-of-power confrontation with the Soviet East? Does he think West Europe should remain a pre serve of "little nationalisms," or should it become a bigger federal entity with a possibly enhanced ability to live in a balance of power world? Before we can be clear on strategies to be pursued against the communists, the,re may be some arguing to do about the claims of Paul. Spaak, Clarence Streit, and other prophets of larger federal units. The question is whether countries such as Bel gium, France, and Italy have be come the "city states" of the mod ern Western world. It would be good to have Henry Paolucci turn his lucid mind to the consideration of where the thinking of James Madison can be applied to larger federal units. ~ A NOTE TO ADVERTISERS To THOSE who have helped themselves and the Foundation over the years through commercial advertising in THE FREEMAN, our deep appreciation. However, it has never been a Foundation prac tice to actively solicit such advertisements, our interest being primarily to explore and promote ideas on liberty.

With that in mind, we are henceforth discontinuing all outside or paid advertising, and will use the available space, as in this issue, to advise readers of special offers of books or programs or services directly related to the main purpose of the Foundation for Economic Education: an improved understanding and prac tice of the libertarian ideal. LEONARD E. READ, President the Freeman VOL. 19, NO.2. FEBRUARY 1969 From Spencer's 1884 to Orwell's 1984 Henry Hazlitt 67 In The Man Versus the State, Herbert Spencer warned prophetically of "the coming slavery" of oppressive taxation and government control. Our Saving Grace Paul L. Poirot 76 Despite powerful pressures to "live it up," we owe our lives to the long-standing habit of saving for a rainy day. The Rise and Fall of England: 12. The Fabian Program Clarence B. Carson 81 Describing the steps from municipal to national control of industry and trade.

The Squeeze on the Middle Class William Henry Chamberlin 91 The welfare state grows at the expense of those who gave strength to the ideas and institutions of political and economic freedom. Consider Your Stand Gottfried Dietze 98 A reminder to academicians that the promotion of learning involves responsibilities as well as rights. Educationin America: 5. Disciplineor Disaster? George Charles Roche III 101 When parents delegate to teachers, and teachers to pupils, the responsibility for educational content, the result must be undisciplined disaster. Pricing Ourselves Out of World' Markets? M. E. Cravens 109 Protectionism weakens a nation's capacity to cope with foreign competition. TechnologicalStatus John W. Campbell 113 Concerning the fiction that backward countries can jump to a high level of industrial achievement without experiencing the horse-collar revolution. Book Reviews 123 "An American Dictionary of the English language" by Noah Webster (Facsimile of the original 1828 edition) "The Birth of the Nation" by Arthur M. Schlesinger "The America We lost" by Mario Pei Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON-HUDSON, N. Y. 10533 TEL.: (914) 591·7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN 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. 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, 1969, 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 "From Spencer's 1884 to Orwell's 1984," "The Rise and Fall of Eng land," and "Technological Status."

HENRY HAZLITT FROM SPENCER'S1884 TO ORWELL'S 1984 IN 1884, Herbert Spencer wrote what quickly became a celebrated book, The Man Versus the State. The book is seldom referred to now, and gathers dust on library shelves - if, in fact, it is still stocked by many libraries. Spen cer's political views are regarded by most present-day writers, who bother to mention him at all, as "extreme laissez faire,". and hence "discredited." But any open-minded person who takes the trouble today to read or reread The ]}f an Versus the State will probably be startled by two things. The first is the un canny clairvoyance with which Spencer foresaw what the future encroachments of the State were Mr. Hazlitt is the well-known economic and financial analyst, columnist, lecturer, and author of numerous books. This article will appear as a chapter in a forthcoming book, Man vs. the Welfare State, to be published by Arlington House.

likely to be on individual liberty, above all in the economic realm. The second is the extent to which these encroachments had already occurred in 1884, the year in which he was writing. The present generation has been brought up to believe that government concern for "social justice" and for the plight of the needy was something that did not even exist until the New Deal came along in 1933. The ages prior to that have been pictured as periods when no one "cared," when laissez faire was rampant, when everybody who did not suc ceed in the cutthroat competition that was euphemistically called free enterprise - but was simply a system of dog-eat-dog and the devil-take-the-hindmost - was al lowed to starve. And if the present generation thinks this is true l\7 68 THE FREEMAN February even of the 1920's, it is absolutely sure that it was so in the 1880's, which it would probably regard as the very peak of the prevalence of laissez faire.

The Seeds of Change Yet the new reader's initial as tonishment when he starts Spen cer's book may begin to wear off before he is halfway through, be cause one cause for surprise ex plains the other. All that Spencer was doing was to project or ex trapolate the legislative tendencies existing in the 1880's into the fu ture. It was because he was so clear-sightedly appalled by these tendencies that he recognized them so much more sharply than his contemporaries, and saw so much more clearly where they would lead if left unchecked. Even in his Preface to The Man Versus the State he pointed out how "increase in freedom on form" was being followed by "decrease of freedom in fact .... " Regulations have been made in yearly growing numbers, restraining the citizen in directions where his ac tions were previously unchecked, and compelling actions which previously he might perform or not as he liked; and at the same time heavier public burdens . . . have further restricted his freedom, by lessening that por tion of his earnings which he can spend as he pleases, and augmenting the portion taken from him to be spent as public agents please.

In his first chapter, "The New Toryism," Spencer contends that "most of those who now pass as Liberals, are Tories of a new type." The Liberals of his own day, he points out, had already "lost sight of the truth that in past times Liberalism habitually stood for in dividual freedom versus State-co ercion." So the complete Anglo-American switch of reference, by which a "liberal" today has come to mean primarily a Stflte-interventionist, had already begun in 1884. Al ready "plausible proposals" were being made "that there should be organized a system of compulsory insurance, by which men during their early lives shall be forced to provide for the time when they will be incapacitated." Here is al ready the seed of the American Social Security Act of 1935. Spencer also pays his respects to the anti libertarian implications of an increasing tax burden. Those who impose additional taxes are saying in effect: "Hitherto you have been free to spend this por tion of your earnings in any way which pleased you; hereafter you shall not be free to spend it, but we will spend it for the general benefit."

Spencer next turns to the com pulsions that labor unions were 1969 FROM SPENCER'S 1884 TO ORWELL'S 1984 69 even then imposing on their mem bers, and asks: "If men use their liberty in such a way as to sur render their liberty, are they there after any the less slaves?" In his second chapter, "The Coming Slavery," Spencer draws attention to the existence of what he calls "political momentum" the tendency of State interven tions and similar political meas ures to increase and accelerate in the direction in which they have already been set going. Ameri cans have become only too familiar with this momentum in the last few years. Spencer illustrates: "The blank form of an inquiry daily made is - 'We have already done this; why should we not do that?'" "The buying and working of telegraphs by the State" [which already ex isted in England when he wrote], he continued, "is made a reason for urging that the State should buy and work the railways." And he went on to quote the demands of one group that the State should take possession of the railways, "with or without compensation."

The British State did not buy and work the railways until 64 years later, in 1948, but it did get around to it, precisely as Spencer feared. It is not only precedent that prompts the constant spread of in terventionist measures, Spencer points out, "but also the necessity which arises for supplementing ineffective measures, and for deal ing with the artificial evils con tinually caused. Failure does not destroy faith in the agencies em ployed, but merely suggests more stringent use of such agencies or wider ramifications of them." One illustration he gives is how "the evils produced by compulsory charity are now proposed to be met by compulsory insurance." Today, in America, one could point to scores of examples (from meas ures to cure "the deficit in the balance of payments" to the con stant multiplication of measures to fight the government's "war on poverty") of interventions mainly designed to remove the artificial evils brought about by previous interventions.

One Turn Deserves Another Everywhere, Spencer goes on, the tacit assumption is that "gov ernment should step in whenever anything is not going right. . . . The more numerous governmental interventions become ... the more loud and perpetual the demands for intervention." Every additional relief measure raises hopes of further ones: The more numerous public instru nlentalities become, the more is there generated in citizens the notion that everything is to be done for them, 70 THE FREEMAN February and nothing by them. Every genera tion is made less familiar with the attainment of desired ends by indi vidual actions or private agencies; until, eventually, governmental agencies come to be thought of as the only available agencies. Forms of Slavery "All socialism," Spencer con cludes, "involves slavery .... That which fundamentally distinguishes the slave is that he labors under coercion to satisfy another's de sires." The relation admits of many gradations. Oppressive tax ation is a form of slavery of the individual to the community as a whole. "The essential question is - How much is he compelled to labor for other benefit than his own, and how much can he labor for his own benefit?"

Even Spencer would probably have regarded with incredulity a prediction that in less than two generations England would have rates of income tax rising above 90 per cent, and that many an energetic and ambitious man, in England and the United States, would be forced to spend more than half his time and labor work ing for the support of the com munity, and allowed less than half his time and labor to provide for his family and himself. Today's progressive income tax provides a quantitative measurement of the relative extent of a man's economic liberty and servi tude. Those who think that. public housing is an entirely new de velopment will be startled to hear that the beginnings of it - as well as some of its harmful conse quences - were already present in 1884: Where municipal bodies turn house builders [wrote Spencer], they in evitably lower the values of houses otherwise built, and check the supply of more .... The multiplication of houses, and especially small houses, being increasingly checked, there must come an increasing demand upon the local authority to make up for the deficient supply .... And then when in towns this process has gone so far as to make the local authority the chief owner of houses, there will be a good precedent for publicly pro viding houses for the rural popula tion, as proposed in the Radical pro gram, and as urged by the Demo cratic Federation [which insists on] the compulsory construction of healthy artisans' and agricultural laborers' dwellings in proportion to the population.

One State intervention Spencer did not foresee was the future imposition of rent controls, which make it unprofitable for private persons to own, repair, or reno vate old rental housing or to put up new. The consequences of rent control provoke the indignant 1969 FROM SPENCER'S 1884 TO ORWELL'S 1984 71 charge that "private enterprise is simply not doing the job" of providing enough housing. The conclusion is that therefore the government must step in and take over that job. What Spencer did expressly fear, in another field, was that public education, providing gratis what private schools had to charge for, would in time destroy the private schools. What, of course, he did not foresee was that even tually the government would pro vide free tuition even in tax-sup ported colleges and universities, thus more and more threatening the continuance of private col leges and universities - and so tending more and more to produce a uniform conformist education, with college faculties ultimately dependent for their jobs on the government, and so developing an economic interest in professing and teaching a statist, pro-gov ernment and socialist ideology.

The tendency of government-sup ported education must be finally to achieve a government monop oly of education. Ancient Roots of Tyranny As the "liberal" readers of 1969 may be shocked to learn that the recent State interventions which they regard as the latest expres sions of advanced and compas sionate thought were anticipated in 1884, so the statist readers of Spencer's day must have been shocked to learn from him how many of the latest State interven tions of 1884 were anticipated in Roman times and in the Middle Ages. For Spencer reminded them, quoting an historian, that in Gaul, during the decline of the Roman Empire, "so numerous were the receivers in comparison with the payers, and so enormous the weight of taxation, that the la borer broke down, the plains be came deserts, and woods grew where the plough had been." Spencer reminded his readers also of the usury laws under Louis XV in France, which raised the rate of interest "from five to six when intending to reduce it to four." He reminded them of the laws against "forestalling"

(buying up goods in advance for later resale), also in early France. The effect of such laws was to prevent anyone from buying "more than two bushels of wheat at market," which prevented traders and dealers from equalizing sup plies over time, thereby intensi fying scarcities. He reminded his readers also of the measure which, in 1315, to diminish the pressure of famine, prescribed the prices of foods, but which was later repealed after it had caused the entire disappearance of various foods from the markets. He re72 THE FREEMAN February n1inded them, again, of the many endea vors to fix wages, beginning with the Statute of Laborers un der Edward III (1327-77). And still again, of statute 35 of Ed ward III, which aimed to keep down the price of herrings (but was soon repealed because it raised the price). And yet again, of the law of Edward III, under which innkeepers at seaports were sworn to search their guests "to prevent the exportation of money or plate."

This last example will uneasily remind Americans of the present prohibition of private gold hold ings and gold export, and of the Johnson Administration's attempt to put a punitive tax on foreign travel, as well as the actual puni tive tax that it did put on foreign investment. Let us add the still existing prohibitions even by al legedly advanced European nations against taking more than a tiny amount of their local paper cur rency out of the country! The federal Bulldozer Then I come to one last specific paral lel between 1884 and the present. This concerns slum clearance and urban renewal. The British gov ernment of Spencer's day re sponded to the existence of wretched and overcrowded hous ing by enacting the Artisans' Dwellings Acts. These gave to local authorities powers to pull down bad houses and provide for the building of good ones: What have been the results? A summary of the operations of the Metropolitan Board of Works, dated December 21, 1883, shows that up to last September it had, at a cost of a million and a quarter to ratepayers, unhoused 21,000 persons and pro vided houses for 12,000 - the remain ing 9,000 to be hereafter provided for, being, meanwhile, left houseless. This is not all .... Those displaced ... form a total of nearly 11,000 artificially made homeless, who have had to find corners for themselves in miserable places that were already overflowing.

Those who are interested in a thorough study of the present-day parallel to this are referred to Professor Martin Anderson's The Federal Bulldozer (M. 1. T. Press, 1964; McGraw-Hill paperback, 1967). I quote just one short para graph from his findings: The federal urban renewal pro gram has actually aggra vated the housing shortage for low-income groups. From 1950 to 1960, 126,000 dwelling units, most of them low-rent ones, were destroyed. This study estimates that the number of new dwelling units constructed is less than one fourth of the number demol ished, and that most of the new units are high-rent ones. Contrast the net addition of millions of standard dwelling units to the housing supply 1969 FROM SPENCER'S 1884 TO ORWELL'S 1984 73 by private enterpri~e with the mi nute construction effort of the federal urban renewal program." (p. 229) There is an eloquent paragraph in Spencer's book reminding his readers of the eighties of what they did not owe to the State: It is not to the State that we owe the multitudinous useful inventions from the spade to the telephone; it is not the State which made possible extended navigation by a developed astronomy; it was not the State which made the discoveries in physics, chen1istry, and the rest, which guide n10dern manufacturers; it was not the State which devised the machin ery for producing fabrics of every kind, for transferring men and things from place to place, and for minister ing in a thousand ways to our com forts. The world-wide transactions conducted in merchants' offices, the rush of traffic filling our streets, the retail distributing system which brings everything within easy reach and delivers the necessaries of life daily at our doors, are not of govern mental origin. All these are results of the spontaneous activities of citi zens, separate or grouped.

Aggravated Waste Our present-day statists are busily trying to change all this. They are seizing billions of addi tional dollars from the taxpayers to turn them over for "scientific research." By this compulsorily subsidized government competition they are discouraging and draining away the funds for pri vate scientific research; and they threaten to make such research, in time, a government monopoly. But whether this will result in more scientific progress in the long run is doubtful. True, enor mously more money is being spent on "research," but it is being di verted in questionable directions - in military research; in devel oping greater and greater super bombs and other weapons of mass destruction and mass annihila tion; in planning supersonic pas senger airplanes developed on the assumption that civilians must get to their European or Carib bean vacation spots at 1,200 or 1,800 miles an hour, instead of a mere 600, no matter how many eardrums or windows of ground lings are shattered in the proc ess; and finally, in such Buck Rogers stunts as landing men on the moon or on Mars.

It is fairly obvious that all this will involve enormous waste; that government bureaucrats will be able to dictate who gets the re rearch funds and who doesn't, and that this choice will either de pend upon fixed arbitrary qualifica tions like those determined by Civil Service examinations (hard ly the way to find the most origi nal minds), or upon the grantees keeping in the good graces of the 74 THE FREEMAN February particular government appointee in charge of the distribution of grants. But our Welfare Statists seem determined to put us in a posi tion where we will be dependent on government even for our fu ture scientific and industrial prog ress - or in a position where they can at least plausibly argue that we are so dependent. A Denial of Private Property Spencer next goes on to show that the kind of State interven tion he is deploring amounts to not merely an abridgment but a basic rejection of private prop erty: A "confusion of ideas, caused by looking at one face only of the transaction, may be traced throughout all the legislation which forcibly takes the property of this man for the purpose of giving gratis benefits to that man."

The tacit assumption underlying all these acts of redistribution is that: No man has any claim to his prop erty, not even to that which he has earned by the sweat of his brow, save by the permission of the community; and that the community may cancel the claim to any extent it thinks fit. No defense can be made for this ap propriation of A's possessions for the benefit of B, save one which sets out with the postulate that society as a whole has an absolute right over the possessions of each member. In the final chapter (just pre ceding a Postscript) Spencer con cluded: "The function of Liberal ism in the past was that of put ting a limit to the powers of kings. The function of true Liberalism in the future will be that of put ting a limit to the. power of ParHaments." In endorsing some of the argu ments in Spencer's The Man Ver sus the State, and in recognizing the penetration of many of his in sights and the remarkable accu racy of his predictions of the po litical future, we need not neces sarily subscribe to every position that he took. The very title of Spencer's book was in one respect unfortunate. To speak of "the man versus the State" is to imply that the State, as such, is unnecessary and evil. The State, of course, is absolutely indispensable to the preservation of law and order, and the promotion of peace and social cooperation. What is unnecessary and evil, what abridges the liberty and threatens the true welfare of the individual, is the State that has usurped excessive powers and grown beyond its legi tima te func tions - the Superstate, the social ist State, the redistributive State, in brief, the ironically misnamed "Welfare State."

But Spencer was certainly right in the main thrust of his argu ment, which was essentially that 1969 FROM SPENCER'S 1884 TO ORWELL'S 1984 75 of Adam Smith and other classi cal liberals, that the t,vo indis pensable functions of government are first, to protect the nation against aggression from any other nation, and second, to protect the individual citizen from the ag gression, injustice, or oppression of any other citizen - and that every extension of the functions of government beyond these two primary duties should be scrutin ized with jealous vigilance. Weare deeply indebted to Herbert Spencer for recognizing with a sharper eye than any of his contemporaries, and warning them against, "the coming slav ery" toward which the State of their own time was drifting, and toward which we are more swiftly drifting today. It is more than a grim coinci dence that Spencer was warning of the coming slavery in 1884, and that George Orwell, in our time, has predicted that the full con summation of this slavery will be reached in 1984, exactly one cen tury later. ~ The 1940 hardcovered Caxton printing of Herbert Spencer's The Man Versus the State, with foreword by Albert Jay Nock, 223 pages, fully indexed, is available at $3.50.

Order from: The Foundation for Economic Education, Inc. Irvington-on-Hudson, New York 10533 Saving PAUL L. POIROT THE LATE Lord Keynes and his disciples have heavily bombarded modern man with the theory that he can carelessly consume his way to prosperity. Laws without end have been enacted to implement this false doctrine of consumerism and compulsive spending. Yet, despite that trend, there are those who continue to save and invest in the essential tools of produc tion to which most of us owe our very lives. Call it our saving grace! Even the most ardent advocates of equality acknowledge a certain respect for the aims and desires of the individual. The ultimate formula for compulsory collec tivism would afford "to each ac cording to need," implying that each somehow is important. It is difficult to think of any philosophy of man and society that would wholly and consciously deny the dignity of the individual as a hu76 man being with a purpose. The point of divergence among phi losophers concerns how far into the future the individual should be free to proj ect his purpose.

The attitude toward private property is really the point at is sue here. Is the individual to be free to save and invest his own property for his own purposes, however complex and futuristic the eventual fulfillment of such purposes may be? And, especially, will his fellow men respect and defend these savings, this private property of the individual? In other words, will society's organ ized agency of force, its govern ment, be dedicated to the protec tion of life and property; or will it function instead as an instru ment for plunder? Whether plunder is deemed too harsh a word to describe the gov ernmental processes of the wel fare state will depend primarily 1969 OUR SAVING GRACE 77 upon one's understanding of the relationships between saving and investment and production and consumption. Is it right, for in stance, to expropriate from the baker of bread the stove he has saved and needs for that purpose, but wrong, on the other hand, to take the bread from the mouth of a babe? Or is it just as wrong to interfere with the production of bread as to prohibit its consump tion? The hungry babe may be quite unaware that the stove is an essential part of the bread he wants, that this and other tools involved in the roundabout proc esses of production in an indus trial age are forms of saving to which the great majority of us owe our lives. Otherwise, many of us never would have been born and most of us never would have survived.

Lifelong Immaturity Unfortunately, an understand ing of the vital importance of savings and tools does not come automatically as one emerges from childhood. Many so-called adults are content to warm their bodies with the stoves they have seized from bakers - or let the government confiscate in their be half. And if they want bread, they expect that the government also will provide it. They have not seen that government is neither a producer nor a saver; at best, it may be a protector, but even then the government itself is a consumer. In order for the gov ernment to give goods and serv ices to anyone, it first must take those goods and services from someone. And in the process of compulsory redistribution, there is a heavy loss or attrition of re sources. The government is always a consumer, withdrawing from the market scarce resources that individuals otherwise could con sume or use in further production according to their own choice and best judgment.

Any grouping of two or more individuals will reveal differences in ability and in habits of spend ing and saving - very often, marked differences. Under condi tions of comparative freedom, some few of the population will attain great wealth in contrast to the vast majority of their fellow men, simply because those few are exceptionally talented in their un derstanding of human wants and how to satisfy such wants. 1 The 1 Some readers may object here that the free market rewards the designer of tail-fins or enriches the Beatles. Whether these fads stem from freedom or from in~ terventions of one kind or another might be debated; but it seems reasonably clear that the market serves the most urgent wants of consumers, however peculiar some of us might think the tastes of others.

78 THE FREEMAN February scope of their understanding will include appreciation of the im portance of tools in the productive process. They will best know how to accumulate and combine re sources under prevailing condi tions for the optimum service of human wants. They will know how to draw from each individual his best performance, with his hands, his mind, his savings. A Power to Serve Now, what makes these talented few so wealthy in a free society is not a power to confiscate or tax the resources or to force the com pliance of others. On the contrary, they become wealthy through sup plying most efficiently what others want. Consumers thus express their appreciation and satisfaction for work well done. And the most remarkable thing of all is that the consumers themselves, who en rich the most efficient suppliers, are better off economically than they could hope to be under any other arrangement. The profit earned by the most successful competitors costs consumers less than nothing.

Every shopper knows that se cret when he looks around for the best bargain. But not every shop per knows this lesson well enough to remember it in the privacy of the polling booth. No housewife would think of proposing a tax on a can of beans before she buys it. She wants the best bargain she can find. But she may not realize that voting for an "excess profits tax" against the most efficient supplier of beans amounts to the same thing as paying more rather than less for beans. The very same consumers who volunteer their patronage to create million aires will turn right around and ask the government to confiscate the property businessmen need for efficient production of goods and services. Voters thoughtlessly assume that redistributing prop erty politically will have no harm ful effect upon the processes of production. They think that they can thus give added spending power to poorer consumers,. over looking that in the process they drive from the market the very goods and services the poorest otherwise might have been able to afford.

Every enlargement of the "pub lic sector" that authorizes the government to use scarce re sources necessarily diminishes the private sector that allows man to produce and save and consume as he chooses. The military machine in Vietnam functions as a giant consumer. The multifaceted do mestic welfare program in the United States, along with the for eign aid program, divert resources to consumption. The Space pro~ 1969 OUR SAVING GRACE 79 gram is a consumer of goods and services. Whether government spending on education, airways, highways, seaways, subways, and numerous other subsidized opera tions constitutes a net investment for productive purposes is highly debatable, to say the least. In gen eral, the small part of govern ment spending that goes toward keeping the peace, insuring j us tice, protecting life and property, and maintaining the essential market climate for open competi tion and trade· may be deemed productive; the great balance of government spending constitutes consumption of scarce resources.

The Impact of Taxes To view the matter in another light, consider the nature and im pact of the various taxes to cover government expenditures. Do they hamper or do they encourage pro duction? There seems little doubt that corporation income and excess profit taxes - progressive, in the sense that the burden falls most heavily on the more efficient opera tors - must tend to hinder pro duction. They take earnings that would most likely have been in vested in further production by competitors who thus would have tended to bring costs and prices down. - The personal income tax, as thought of generally, is also pro gressive and thus tends to fall most heavily upon incomes that otherwise would most likely have been saved and invested produc tively. The exemptions tend to en courage consumption. The Social Security tax also is a personal in come tax, though it is regressive in nature, falling hardest on those of least income and applying not at all in the higher income brack ets. It tends to encourage many workers to quit productive em ployment and rely on tax-exempt relief payments instead.

Property taxes often fall heavily on business properties and thus raise costs of production. This has special impact in areas where much of the real estate is owned by churches, schools, and other tax exempt organizations that gen erally fit the consumer definition, leaving a correspondingly greater burden on taxpaying producers. Licenses and tariffs and similar privileges at the expense of po tential competitors necessarily narrow the market or keep down competing suppliers, thus raising prices. Finally, there is the tax-like phenomenon of inflation, the legal ized printing of money to pay Federal bills, letting the govern ment draw goods and services out of the market without supplying anything of value in exchange.

80 THE FREEMAN February The process tends to hurt those on fixed incomes or pensions; it dis courages traditional saving and encourages wasteful spending in attempts to hedge against further inflation. It may make for an ap pearance of busy-ness in com merce and industry, but often in lines of production that otherwise would be neither sound nor use ful-a malinvestment of produc tive resources in boomtime, thus aggravating the problem of ulti mate correction. So, there is a two-pronged at tack upon productive private en terprise as a result of the expan sion of the "public sector": (1) the excessive government spend ing is heavily concentrated on consumer goods - on consumption rather than production; and (2) the methods of taxing and finan cing government expenditures, in contrast to voluntary spending in the market, tend to penalize and discourage thrift and productivity - to reward and encourage indo lence and waste.

Trading for Mutual Gain It is well to bear always in mind that voluntary trade occurs only if and when each party sees a gain to himself from the transaction. That both parties gain from free trade is the reason why either or both will tend to specialize and become skilled and efficient in a given line of production. This is the great advantage the market economy affords in contrast to so cialism or other coercive arrange ments. But that advantage can be wiped out by government inter vention, taxation, and confiscation of private property. Taxes on earnings and on transactions easily can become so burdensome that men lose the incentive to spe cialize and trade; the do-it-your self business is the only one that thrives under such conditions, and civilization reverts toward the low levels of self-subsistence. The followers of Keynes are wrong when they assume that the problem of production has been solved, that the world is plagued by an abundance of goods and services of all kinds, and that con sumer desire "is the final scarcity that needs to be overcome."2 What they will not see is that human wants are now and forever in satiable and that the scarcity of productive resources is man's eternal problem. M,eanwhile, if we are to survive and hope for eco nomic progress, we must continue to curb our appetites for current consumption and continue to ac cumulate the tools and capital that are needed to expand production.

This is indeed our saving grace. ~ 2 See George Reisman, "Production versus Consumption," THE FREEMAN, October, 1964.

CLARENCE B. CARSON f1£uglnub 12. THE FABIAN PROGRAM THE MOVEMENT toward socialism in England was guided, directed, and pressed by the Fabians. Of course, others had a hand in it: Marxists, cooperative common wealthers, Christian socialists, land nationalizers, syndicalists, utopians, Liberals, and labor unions, to name a partial list. But the Fabians ,vere central to the undertaking. From the mid-1880's, they pressed vigorously and along many lines for the socialization of England. Most of the big names in English socialism eventually either became Fabians or were closely as sociated with them. The Fabians moved most unerringly toward political power, provided addiDr. Carson, Professor of History at Grove City College, Pennsylvania, will be remembered for his earlier FREEMAN series, The Fateful Turn, The American TradItion, and The Flight from Reality. tional impetus to every rising cur rent, gave the movement its aura of intellectual respectability, and trained so many of the leaders who would move into the political sphere. An examination of the Fa bian program, too, will show that the means employed in the move ment toward socialism in England were generally those advocated by the Fabians. What follows is· an outline of the Fabian program as it was set forth from the 1880's into the early twentieth century, mainly in the Fabian Tracts.

The goal of the Fabians was socialism. They never made any secret of this, and, indeed, on many occasions affirmed it. For example, Tract #7 proclaims that "The Fabian Society consists of Socialists." It goes on to explain what that means: 81 82 THE FREEMAN February It therefore aims at the reorgan ization of Society by the emancipa tion of Land and Industrial Capital from individual and class ownership, and the vesting of them in the com munity for the general benefit.- ... The Society accordingly works for the extinction of private property in Land and of the consequent individual appropriation, in the form of Rent, of the price paid for permission to use the earth, as well as for the ad vantages of superior soils and sites. The Society, further, works for the transfer to the community of the ad ministration of such industrial Capi tal as can conveniently be managed socially ....

State Socialism Exclusively The Fabians proposed to achieve these ends by the use of govern mental power. The matter is bluntly stated in Tract #70: "The Socialism advocated by the Fabian Society is State Socialism exclu sively." More comprehensively, "Socialism, as understood by the Fabian Society, means the organi zation and conduct of the neces sary industries of the country and the appropriation of all forms of economic rent of land and capital by the nation as a whole, through the most suitable public authori ties, parochial, municipal, provin cial, or central." However, Fabians claimed to fa vor constitutional means of tak ing over the government in England and to be advocates of democ racy. Sidney Webb claimed in Tract #70 that the "Fabian So ciety is perfectly constitutional in its attitude; and its methods are those usual in political life in England." Moreover: The Fabian Society accepts the conditions imposed on it by human nature and by the national character and political circumstances of the English people ....

Elsewhere, he affirmed that "all students of society who are abreast of their time, Socialists as well as Individualists, realize that impor tant organic changes can only be ... democratic, and thus accept able to a majority of the people, and prepared for in the minds of all.... "1 It should be clear, how ever, that considerable constitu tional changes in the structure of English governmental power would have to be made before so cialist programs could be made in to law and that democracy in their hands would take on new connota tions. Emphasis on Equality If George Bernard Shaw can be accepted as a spokesman for the Fabians, they believed in equality. 1 J. Salwyn Schapiro, ed., Movements of Social Dissent in Modern Europe (Princeton: D. Van Nostrand, 1962), p. 161.

1969 THE FABIAN PROGRAM 83 In a speech before the National Liberal Club in 1913, he had this to say: When I speak of The Case of Equal ity I mean human equality; and that, of .course, can only mean one thing: it means equality of income. It means that if one person is to have half a crown, the other is to have two and sixpence. It means that precisely .... The fact is that you cannot equalize anything about human beings except their incomes .... 2 The chances are good, however, that Shaw was going beyond what the Fabian Society would have wanted to declare. Perhaps, some such equality was an ultimate goal, but, in practice, the Fabians only pressed toward it, as was their way, in gradual increments. The favorite tactic of the Fa bians for pressing England to ward socialism was one they called "permeation." "In its most gen eral sense, it meant that Fabians should join all organizations where useful Socialist work could be done, and influence them .... Tak ing a broad interpretation of the meaning of Socialism and having an optimistic belief in their pow ers of persuasion, the Fabians thought that most organizations would be willing to accept at least 2 James Fuchs, ed., The Socialis'rft of Shaw (New York: Vanguard Press, 1926), p. 49.

a grain or two of Socialism. It was mainly a matter of addressing them reasonably, with a strong emphasis on facts, diplomatically, with an eye to the amount of So cialism they were prepared to re ceive, and in a conciliatory spir it."3 In the following, Shaw tells how they actually achieved "per meation" in 1888: We urged our members to join the Liberal and Radical Associations of their districts, or, if they preferred it, the Conservative Associations. We told them to become members of the nearest Radical Club and Coopera tive Store, and to get delegated to the Metropolitan Radical Federation and the Liberal and Radical Union if pos sible. On these bodies we made speeches and moved resolutions, or, better still, got the Parliamentary candidate for the constituency to move them, and secured reports and encouraging little articles for him in the Star. We permeated the party organizations and pulled all the wires we could lay our hands on with our utnl0st adroitness and energy; and we succeeded so far that in 1888 we gained the solid advantage of a Pro gressive majority, full of ideas that would never have come into their heads had not the Fabian put them there, on the first London County Council. (Tract #41.) It is not ~necessary, of course, 3 A. M. McBriar, Fabian Socialism and English Politics (Cambridge: Cambridge University Press, 1962), pp. 95-96.

84 THE FREEMAN February to accept at face value all the claims· of success of the Fabians, for they were never modest in their claims, in order to see that this is how they intended to op erate by "permeation." In Tract #7, the Fabians de scribed the activities which they were to pursue in the following way: 1. Meetings for the discussion of questions connected with social isnl. 2. The further investigation of eco nomic problems, and the collec tion of facts contributing to their elucidation. 3. The issue of publications con taining information on social questions, and arguments relat ing to socialism. 4. The promotion of socialist lec tures and debates in other so cieties and clubs. 5. The representation of the so ciety in public conferences and discussions on social questions. W ide Range of Activities Actually, the Fabians engaged in a wide range of acti vities: holding their own meetings, is suing tracts, doing research, join ing organizations, engaging in so cio-political gatherings, using their individual talents in subtle ways to promote socialism, writ ing letters to edi tors, making speeches, and so on.

They cast their nets as wide as possible to draw in as many as possible of the wide range of peo ple with beliefs amenable to some degree of socialist activity. While they usually rejected any particu lar panacea, as, for example, syn dicalism and revolution, this did not mean that they rejected the people of these persuasions. The Fabians did not neglect to appeal to Christian socialists. Several of the Tracts are devoted to this sub ject. They attempt to show that there is a close affinity between so cialism and Christianity and, in deed, that the attainment of so cialism is a necessary framework for realizing the ideals of Chris tianity. The Reverend John Clif ford conveys this character of the appeal in the following excerpts from Tract #78: Another sign of the closer kinship of Collectivism to the mind of Christ is in the elevation and nobility it gives to the struggle for life. Collec tivism does not extinguish combat, but it lifts the struggle into the worthiest spheres, reduces it to a minimum in the lower and animal departments, and so leaves man free for the finer toils of intellect and heart; free "to seek first the Kingdom of God.... "

Again, Collectivism affords a better environment for the teachings of Jesus concerning wealth and the ideals of labor and brotherhood. If man is ... only "the expression of his environment," if, indeed, he is that 1969 THE FABIAN PROGRAM 85 in any degree, then it is an unspeak able gain to bring that environment into line with the teaching of Jesus Christ. Nor were the Fabians above ap pealing to communists. In Tract #113, they published a lecture that had been delivered by Wil liam Morris in which he held that "between complete Socialism and Communism there is no difference whatever in my mind. Communism is in fact the completion of So cialism: when that ceases to be militant and becomes triumphant, it will be Communism." All Things to All People The Fabians, then, tended to be all things to all men that they might win people to socialism. Nowhere is this clearer than in the particular programs they ad vocated. Here they appeared to be completely eclectic. They had few biases against any type of pro gram so long as it was in the general direction of socialism.

Such eclecticism has come to be known as pragmatism in reformist circles, but this is only another in stance of how socialists take words out of context and give them their own content. For the English Fa bians have been no more prag matic in testing the value of their programs against their ultimate results than have American re formers. They have only been pragmatic in the sense that they tested an approach by how suc cessful it was in actually getting a program put into effect. In any case, the Fabians advo cated, from the first, a wide range of programs. They embraced gov ernment intervention and amelio rative reform, though these were, from their point of view, halfway measures at best. For example, a number of the Tracts are con cerned with changes in and ad ministration of the Poor Laws. The following argument, in Tract #54, is clearly melioristic: The expense of relieving the poor, who are not wilfully improvident, is part of the ransom that Property has to pay to Labor; and it is a ransom which is not begged as a charity but demanded as an instalment of justice.

With the growth of enlightenment and the spread of humane ideas amongst all classes, and consequently greater intelligence amongst the mass of voters in the use of their politi cal power, we shall have better laws better administered. The worn-out, deserving worker will be maintained in self-respect in his old age; the temporarily disabled will be helped without pauperization .... Of a similar ameliorative char acter was the proposal for a na tional minimum wage law ad vanced in Tract #127. (Incident ally, the title of this Tract is "So cialism and Labor Policy," and it 86 THE FREEMAN February was published in 1906.) The pro posal reads, in part: Of far greater urgency and impor tance is the need for a minimum wage by law .... Every worker in a civilized state must receive a wage high enough to give him the food, clothing and house-room necessary to physical health and efficiency ....

The first step towards this end should be the determination of a real minimum of food, clothing and hous ing by an authority appointed by the government .... Then the government should be pressed to put its own house in order by the institution of a mini mum in the public service throughout the kingdom. A Minimum Wages Bill should follow, bringing all sweated trades within the scope of the law, and punishing all employers who, after a certain date, pay less than the legal minimum .... Government Ownership and Control The Fabians worked at many levels and addressed themselves to many different audiences. Even the different Tracts were appar ently aimed at people of widely varying degrees of receptivity to socialism. One might be addressed to something as un revolutionary as the Poor Laws. On the other hand, the next might deal with the intricacies of socialist theory, while a third might be burdened down with statistics about condi tions in laundries in England. The immediate thrust of the Fabians was to get the government involved in as many economic activities as possible. The long range aim, of course, was to achieve government ownership and control over the major means of production and distribution of goods and services.

This goal could be painlessly achieved, or so they claimed. Tract #13 put the matter this way: The establishment of Socialism, when once the people are resolved upon it, is not so difficult as might be supposed. If a man wishes to work on his own account, the rent of his place of business, and the interest on the capital needed to start him, can be paid to the County Council of his dis trict just as easily as to the private landlord and capitalist. Factories are already largely regulated by pub lic inspectors, and can be conducted by the local authorities just as gas works, water-works and tramways are now conducted by them in various towns. Railways and mines, instead of being left to private companies, can be carried on by a department under the central government, as the postal and telegraph services are car ried on now. The Income Tax collector who to-day cans for a tax of R few pence in the pound on the income of the idle millionaire, can collect a tax of twenty shillings in the pound on every unearned income in the country if the State so orders ....

This was the large plan, but each step had to be taken in its 1969 THE FABIAN PROGRAM 87 own time, and particular argu ments were advanced for each one. A favorite mode of argument was to use analogy with some service government already per formed to claim that another should be brought under the arm of government. For example, here is the argument for munici pal milk supply in Tract #90: If we want good milk, let us estab lish our own dairy farms in the coun try and our milk stores in the city. Many of our large towns have spent enormous sums of money to provide their citizens with water: why should they not also provide them with milk? The arguments in favor of municipal water apply with greatest force to municipal milk. ... Municipalization In the early years, the Fabians directed much of their attention to getting local governments to take over enterprises. The Tracts called for "municipalization"

much more frequently than for nationalization. Tract #91 called for municipal pawnshops. Tract #92 advocated municipal· slaugh terhouses. Tract #94 advanced the notion of having municipal baker ies. There appears to have been no particular order of priorities, for municipal hospita'ls did not gain the limelight until Tract #95. Mu nicipal steamboats got full atten tion in Tract #97. The argument for municipal slaughterhouses was similar to the others in many re spects, so it may be presented in brief: Many of our private slaughter houses are in so insanitary a condi tion that the meat is exposed to foul emanations from drains, decompos ing blood, offal, etc. They may easily become a source of grave danger to the surrounding districts. In munici pal slaughterhouses, on the other hand, the buildings are especially de signed for their purpose; they are kept in good sanitary condition, and the meat is therefore not subject to deteriora tion. . . .

The Fabian Society had earlier, in Tract # 86, called for the munic ipalization of liquor traffic. Provisions existed from 1890 onwards for municipalities to build houses for private occu pancy, and the Fabians wished to accelerate this kind of activity. In Tract #76 they noted that the "provision of housing accommoda tion for the industrial classes has hitherto been left almost entirely in the hands of private enterprise, with the inevitable result that high rents are exacted for the privilege of occupying squalid dwellings whose very existence is a grave social danger." They give this advice: "In order to get the Acts utilized by the local sanitary authority, it is advisable to care fully collect facts relating to in sanitary areas and dwellings, and 88 THE FREEMAN February thus to prove the necessity for municipal action. In large towns the work of demonstrating such need is only too easy."

A Middle Way Of course, the Fabians did not overlook a prominent role for the national government and for na tionalizing. Local governments in England are, in their inception, creatures of Parliament, and their activities have been at one time or another authorized by that body. Thus, whatever body under took socialization directly, its ac tivities would be authorized and could be directed by Parliament. In Tract #108 the Fabians advo cated "National Efficiency," and a "National Minimum" for working conditions, for housing, for stand ards of living, and for education. To achieve this, they proposed the use of grants-in-aid, a device with which Americans have since become familiar. Their argument for the grantin-aid is sufficiently revealing of the way they ad vanced an idea to be worth ex amining briefly. They descrihed it as a middle way between centrali zation and local autonomy. "The middle way has, for half a cen tury, been found through that most advantageous of expedients, the grant in aid. We see this in its best form in the police grant." Ac cording to the Tract, local police were frequently ineffective, and poorer districts were not finan cially able to maintain efficient police. "A grant in aid of the cost of the local police force was of fered to the justices and ,town councilors - at first one quarter, and now one half, of their actual expenditure on this service, how ever large this may be."

Nationalization But for activities which were nationwide, the Fabians proposed nationalization. It is clear, too, that even where the activity was not truly nationwide, they were thinking of national planning for and control of it. For example, Tract #125 deals with the ques tion of electricity and street transportation. The author (s) argues that the provision of these services efficiently extends beyond the bounds of any municipality. He proposes, then, that the coun try be divided into several prov inces, in each of which there will be a provincial board em powered by Parliament to plan for these services. Nationalization, however, appears to be the ulti mate aim. For they say: The establishment of a system of provincial boards as here indicated does not exhaust the possibilities of coordination of area in connection with local government and the col lective control of industry. In course 1969 THE FABIAN PROGRAM 89 of time it will be found possible to carry· the development· a stage fur ther, and from the Provincial Boards to elect National. Boards, which would stand in the same relation to the Provinces as the Cooperative Whole sale Society does to the various so cieties which are its component parts.

For instance, a N ationalBoard elected from the provincial Transit and Electricity Boards might be em powered to carryon the work of build ing rolling stock by direct employ ment in its own workshops for the whole of the publicly owned transit services of the country ..It might also start factories for the manufacture of traIuway rails and motor cars. It could undertake the work of con structing plants of all kinds for pub licly owned electric light and power installations. Various local authori ties build their own vans, carts, and wagons, and there is no reason why tramcars could not be built in a pub lic workshop with equal ease.... The above has been quoted at length because it indicates how Fabians would move from local activity to regional control to na tionalization to socialism. Some nationalization was to be more directly undertaken, as they envisioned it. Tract #119 called for the direct nationalization of the railways and merchant ma rine. This would involve some kind of confiscation, as they fore saw. Of course, the owners should be compensated, but the Fabians proposed that the compensation should only constitute a payment of profits to shareholders, not the return of their capital investment.

In short, the capital would simply be expropriated. As for agricul ture, Tract #123 says.: "Our ulti mate aim is to bring the whole of the land into national owner ship ..... " Land would be acquired in much the same way as railroads and shipping. "The Committee would have power to acquire land compulsorily. If a fair rent had already been fixed, then the pur chase would proceed on the lines of securing to the vendor his net income, that is, the rent .... If such a rent has not been fixed, then its ascertainment would form a preliminary to purchase." Each Step Forward a Prelude to the Next Thus would England proceed step by step toward complete so cialism. This involved no necessary order to action. Each step would draw the country inexorably toward the next, or toward others. Government ownership at any level of anything would prepare the English mentally for owner ship at another level of something else. Government planning of one activity would make necessary the planning of associated activities.

Since an economy is ultimately in extricably intertwined, it must all 90 THE FREEMAN February be eventually socialized to attain national integrity. The produc tivity and flexibility of private en terprise could be continued with out what were for them the in felicities of private ownership, and all could be achieved without anyone being greatly hurt. This was the Fabian blueprint for England. The Fabians were remarkably provincial. The rest of the world concerned them hardly at all in the early years. That England was the world's financier during the years in which they were constructing their pipe dream hardly concerned them. But they were probably as innocent of knowledge about international fi nance as they were of how to milk cows. Yet the English people were greatly attracted to these notions, and they were drawn into the po litical efforts by which the blue prints were supposed to result in a new edifice. That these were blue prints for the Fall of England, they were not told. To see that they were, we must now turn to the actual course of development.

~ The next article of this series will trace the implementation of "Reform Ideas into Political Action." The Power of the Press JOURNALISTS, always chary of saying that which is distasteful to their readers, are some of them going with the stream and adding to its force. Legislative meddlings which they would once have condemned they now pass in silence, if they do not advocate them; and they speak of laissez-faire as an exploded doctrine. "People are no longer frightened at the thought of socialism," is the statement which meets us one day.... And then, along with editorial assertions that this economic evolution is coming and must be accepted, there is prominence given to the contributions of its advocates. Meanwhile those who regard the recent course of legislation as disastrous, and see that its future course is likely to be still more disastrous, are being reduced to silence by the belief that it is useless to reason with people in a state of political intoxication.

HERBERT SPENCER, The Man Versus the State (1884) THE ~U~~ ON THE MIDDLE CLASS WILLfAM HENRY CHAMBERLIN THE MIDDLE CLASS, the large group of many occupations - profession al men, engineers, skilled me chanics, farmers, small business men, salaried employees, farmers, to list only a few - that stands between the extremes of wealth and poverty has always been the standardbearer and the surest and most solid support of a society based on political liberty and eco nomic freedom. It began to emerge with increased power and influ ence with the decay of the me dieval feudal system and waxed strong in the struggle to curb the arbitrary power of monarchy and establish free representative in stitutions. The middle class was active in the leadership of the three prin cipal revolutions of the Western 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.

world, the British in the seven teen'th century, the American and the French in the eighteenth. The French was perverted and dis torted to some extent by the greater misery of the masses, es pecially of the Parisian mob, which lent itself to the manipula tion of extremist demagogues, in toxicated with doctrinaire ideas of establishing not equality of op portunity, the American ideal, but complete material equality, to be enforced by dictators operating in the name of virtue and using the guillotine whenever moral sua sion failed. Out of all the turmoil and excesses of the French Revo lution, its Napoleonic aftermath and the various royal, imperial, and republican regimes that fol lowed during the nineteenth cen tury, middle-class social and eco nomic values acquired a firm foot ing. France supplied some of the most eloquent and erudite expon91 92 THE FREEMAN February ents of the free economy, such men as Frederic Bastiat and Jean Say.

It is the nature of absolute power, whether it be that of a king surrounded with inherited pomp, ceremony, and pageantry or that of a revolutionary dictator, to recognize no limits on what it may do with regard to those un der its rule. So it is significant that John Locke, the outstanding philosopher of the British consti tutional revolution whose ideas very much influenced the leaders of the American Revolution, in sisted upon the natural right of man to "life, liberty, and prop erty." There was never any doubt in Locke's mind, or to those of the educated middle class for whom he spoke, that property, far from being opposed to liberty, is one of the essential rights of free men. Locke, a true liberal in the origi nal sense of a word now often per verted and misapplied, went so far as to describe the preservation of their property as "the great and chief end of men's uniting into commonwealths."

The rising and expanding mid dle class was open to any able and industrious citizen, whatever his origin and background. What they more or less consciously wanted and needed was a state authority strong enough to protect honestly acquired possessions against spoli ation but not so strong as to en gage in spoliation itself. No Taxation Without Representation It is not surprising that some of the movements that led to the establishment of the supremacy of Parliament in Great Britain and to the separation of the United States from Great Britain were triggered by one specific property right: the right of the individual not to be taxed without his con sent. In his effort to govern with out the inconvenience of having a Parliament in session, King Char les I resorted to an old tax known as ship money. In the past it had been levied only in time of war and in certain maritime parts of the country. Charles imposed the levy in peace, and without geographical limitations.

One of the leaders of the op position in Parliament, John Hampden, refused to pay the tax, contending that it was illegal. Seven out of twelve judges who heard the case, under strong pres sure from the Crown, ruled against Hampden. But his stand aroused nationwide attention and sympathy and, as soon as Parlia ment was again called, "ship money" was ruled illegal. Hamp den, a country landowner, was as willing to fight for liberty as to 1969 THE SQUEEZE ON THE MIDDLE CLASS 93 speak for it. When the differences between King and Parliament reached the point of civil war, Hampden raised a regiment among his tenants and lost his life in one of the many skirmishes and small battles that followed. In the United States, also, "tax ation without representation" was a fighting issue. Like many other small causes of big events, the British levies on stamps and tea were petty in immediate impact; but the underlying claim that a Parliament in London three thou sand miles away might lay imposts on colonists who were not (and, under the travel and other circum stances of the time probably could not be) represented there excited justified suspicion and resistance.

The colonists knew very well that taxation accepted without protest would probably mean double or treble taxation in the future. Irresponsible bureaucracy ranked high with arbitrary taxa tion among the causes which led the American colonists, when pro tests and remonstrances had failed, to take up arms. This is evident from the following clause in the indictment of King George III in the Declaration of Inde pendence: He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our People, and eat out their substance. How surprised and shocked would have been the men who fought against a foreign tyranny at Lexington and Bunker Hill and Saratoga and Yorktown if they could have foreseen today's bu reaucratic monster, in the shape of Federal, state, and local govern ments, costing almost $9,000 a second to operate, and doubling its exactions from the labor of its citizens every ten years.

Design for Limited Government N a such monster was envisaged in the Constitution which the de liberations of a representative group of leading citizens of the various states yielded as the con structive fruit of the achievements of the American revolutionaries in arms and diplomacy. It is an un commonly useful and instructive exercise periodically to read over this charter of American laws and liberties. And one of its most striking features is the sparseness of promises as to what the new government will do for the people (indeed, there are practically no such promises), compared with the many explicit guaranties as to what the government may not do to the people as a whole or as in dividuals. These immunities in cluded, until the adoption of the Sixteenth Amendment in 1913, as surance against the imposition of the graduated income tax.

94 THE FREEMAN February The kind of government out lined by the American Constitu tion is in line with the political philosophy of John Locke and Adam Smith that "every man is by nature first and principally com mitted to his own care." What the Constitution promised is not to make each citizen healthy, wealthy, and wise - something beyond the power of government - but to re move state obstacles to his achiev ing these objectives by his own ef forts. This was the logical outcome of the struggle against absolute mon archy and feudalism, a struggle in which the middle class played a leading role. It was under this phi 10sophy that the middle class pros pered and expanded, because it was no closed hereditary caste but a group in the community which any one might join with the requisite conditions of industry and ability. Social Security? But today, at first gradually and imperceptibly, then more boldly and blatantly, a completely differ ent philosophy of statism has tend ed to supplant individualism, both in the United States and in Great Britain and in varying degrees in other Western countries. (One need hardly refer to the European and Asian countries where the in dividual has lost all liberties -eco nomic, personal, and political, to the grasping thrust of an all-pow erful state).

Under this philosophy the gov ernment promises its citizens vari ous forms of alleged security, in return for which it exacts a first lien on what they earn by their la bor, a lien that is indefinite and ever-expanding. The benefits may look good on paper; but their real value is steadily sapped by infla tion, the erosion in the purchasing power of the currency that is the invariable accompaniment of vast government spending. Increasing amounts are taken from every one's salary to pay for what is eu phemistically called Social Secur ity, while the dollars which may be some day paid out steadily dimin ish in value. Following British Lead This process has gone further in Great Britain than in the United States, so that a visit to Britain gives a preview of what may be the plight of the United States ten or twenty years hence. There was a time, before World War I and to a lesser extent in the interwar years, when the British pound was con sidered a desirable currency, not only to earn and spend, but to save.

No longer. Malcolm Muggeridge, leading British television commen tator, wrote recently: Our currency is gently expiring which lets us off any form of saving.

1969 THE SQUEEZE ON THE MIDDLE CLASS 95 It would be as sensible to save next winter's snow as the Pound Sterling. We have come to think of our cur rency as an ailing elderly uncle; yes terday he had a good day, this morn ing he. was feeling a little better, and able to sit up and take a little nourish ment, only in the afternoon to suffer a slight relapse. One day, of course, he will pass away - dear old Pound Sterling. It had to happen, hut even so he'll be missed. Mr. Muggeridge has a habit of satirical exaggeration; but there is plenty of evidence to support his dim view of his national currency. Wha t were once called gilt-edged securities are selling at fantastic discounts on the London Stock Ex change. New Zealand recently float ed a loan in London at 63;4 per cent, but with an interesting proviso: the value of the loan was to be reck oned in German marks, with corre spondingly higher interest and principal payments in the event of a devaluation or writing down of the value of the pound in terms of other currencies. Such a devalua tion did occur after the loan was floated.

The "English Disease" The lack of adequate incentives to capital and to labor - due to in flation and the steady depreciation in the real value of the pound - is a basic reason for what is called on the European continent the English disease: the inability of Brit ain, year after year, to balance its international payments, paying out more than it takes in. In America also the middle class finds itself more and more ground between the two millstones of inflation and ever higher taxa tion at all levels, Federal, state, and local. It is, of course, a basic part of the welfare state theory that government bureaucrats can spend an individual's money better than he would spend, or save, that money himself if it were not si phoned off in taxes. Some aspects of the 1968 election in the United States can only be interpreted as the desperation of -certain taxpay ing, self-respecting, substantial citizens confronted with continu ally higher tax bills while their wives complain of ever-higher prices at the supermarket.

The Tax Foundation recently re duced to specifics the impact of in flation and higher prices on an imaginary character named Char lie Green. Charlie is in relatively favorable circumstances; he earns $12,000 a year, up from $7,500 ten years ago. But not all is gold that glitters in, Charlie's pockets, even though his income is about $3,000 more than that of the average American family of four. Charlie has a 17-year-old son and a 15 year-old son and financing them through college, where board and 96 THE FREEMAN February tuition charges have been rising as fast as taxes, is not the least of his worries. Between 1958 and 1968, Char lie's Federal tax is up from $1,266 to $2,169: his state tax from $169 to $610; his local property tax from $590 to $1,301. All have been rising faster, the state and local tax considerably faster, than his income. And rising prices have wiped out $489 of his after-tax pay boosts.

What makes the outlook even gloomier for the economic survi val of the millions of Charlie Greens who comprise the middle class is the cumulative effect of many existing taxes. The full im pact of the expense of much of the social welfare legislation en acted by the spendthrift eighty ninth Congress has not yet been felt. This is also true .·of the cost of Social Security, which went up again, and appreciably, at the be ginning of 1969. As invariably happens with such handouts, the price tag of Medicare, Medicaid, and similar social patent medi cines is much higher than the original estimate. And there is no lack of in genious schemes for taking what others have earned, for reaping what has not been sown, for still further pillaging the thrifty for the supposed benefit of the thrift less. When, in a time of normal industrial activity, there are one million people on the welfare rolls of New York, when those who provide the most essential serv ices, teachers, policemen, firemen, sanitation employees, hold up an almost empty municipal treasury for raises out of all proportion to the rising cost of living, it is clear that something is radically wrong.

A Backbreaking Burden If present trends continue and accelerate, it is not difficult to foresee a time when incentive to creative work by hand or brain will disappear, because its fruits will be eagerly plucked by half a dozen sets of tax collectors. One root cause of the trouble is the change from the time when the American taxpayer was supposed to have done his civic duty when he supported himself and his fam ily and the religious, philanthrop ic, and educational causes of his choice. Now, he is expected to carryon his shoulders the weight of supporting millions of work less indigent in this country, as suring the triumph of democracy in countries that hardly know the meaning of the word, relieving the age-old poverty of Asia and Africa and Latin America, and paying the cost of such sociologi cal experiments as busing children for miles from their homes and 1969 THE SQUEEZE ON THE MIDDLE CLASS 97 rebuilding slums which he never made.

The burden is backbreaking and it will not be surprising if some Americans, despairing of relief from an intolerable situation, are tempted to· experiment with quack remedies that may be foolish and harmful. What is most needed is education in economic realities, education that will lead to reme dial action. When more people see the state as a robber baron that takes from them, not as a Santa Claus that gives to them, the prospects will have improved for the dismantling of the bureaucratic monster. (How completely out of hand this mon ster has grown is evident from the fact that the national budget, which only passed the billion dollar mark early in this century, now stands at $186 billion). One essential condition for reform is for the voter to use the power of the ballot more intelligently and discriminatingly than he does at present. Every legislator, every executive, at state and national levels, who makes new taxes neces sary should be marked for defeat the next time he runs for office.

When the majority of the people recognize that the free-spending leviathan state is the main source of their financial and economic grievances and insist on drastic retrenchment at any cost, the prospect of the survival of the independent middle class will be much brighter than it is at pres ent. ~ Contract or Status Using the word cooperation in its wide sense, and not in that restricted sense now commonly given to it, we may say that social life must be carried on by either voluntary cooperation or com pulsory cooperation; or, to use Sir Henry Maine's words, the system must be that of contract or that of status; that in which the individual is left to do the best he can by his spontaneous efforts and get success or failure according to his efficiency, and that in which he has his appointed place, works under coercive rule, and has his apportioned share of food, clothing, and shelter.

HERBERT SPENCER. The Man Versus the State (1884) 98 ConsiderYour Stand GOTTFRIED DIETZE Last fall, Students for a Democratic Society urged teachers to refuse to teach on November 5 (Election Day) in order to "protest an election without choice." The following memorandum of November 3, 1968, was addressed to "Teaching Assistants Concerned" by Dr. Gottfried Dietze, Acting Chairman, Department of Political Science, The Johns Hopkins University, Baltimore, Maryland.

MEMORANDUM SUBJECT: Your refusal to teach on November 5 in order to "protest an election without choice." Let me urge you to do your regular teaching on November 5, unless such teaching is canceled by the university. You should not interfere with the process of learning, but should fulfill obligations you assumed when you accepted admission as a student, fellowship' aid, and a teach ing assignment for the current academic year. The relationship between student and university is a contractual one. Implicit to that contract is the promotion of learning. This precludes interference with learning as it is offered by the school in conformity with its program which is available, to everyone who applies for admis sion. A student who interferes with the process of learning commits a breach of contract. This applies a fortiori to students, who by action of the university, receive financial aid and are given a teaching assign ment in the expectation that they will excel in the promotion of learning.

The university extended a special trust to you. It was under no obligation to admit you for the current year, to assure you financial aid, or to provide you with a teaching opportunity. The fact that you did enroll indicates that you preferred its program over that of other schools and that you considered this university's offer more attractive and more generous than offers from other schools. Please reciprocate. Although you are free to resign, as long as you enjoy the privilege of being enrolled, the university has every right to expect that you fulfill your obligations. This by no means excludes legitimate protest. Universities are places of protest by definition. Research and teaching - learning - are unthinkable without the possibility of protest. Protest is the lifeblood of academic freedom, a prerequisite for progress. However, univer sities can be havens for protest only if the process of learning is not curtailed. For learning promotes rational protest which is to be pre ferred to irrational demonstrations. Although the scope of university 99 100 THE FREEMAN February programs will always be limited (which is obvious in catalogues), it is conceivable that university officials will arbitrarily impede the process of learning. In that case, protests through the proper univer sity channels are in order. But never must such protests interfere with learning.

You refuse to teach because "the democratic process has failed." It so happens that the Johns Hopkins Press just published my new book, A merica's Political Dilemma, * a study turning around the de cline of rational democracy as a result of the pseudo-liberalism that has determined governmental policy since the New Deal. However, this regrettable. fact could never induce me not to teach. I believe with Jefferson that through education we can improve the democratic process and achieve a rational, working democracy which protects life, liberty, and property. Your complaint that the coming election is one without choice is in no way connected with the policies of this university. You do not blame the university for the failure of the parties to nominate candidates that are more to your liking. Yet, you intend to let the university suffer for something it has not done. You intend to deprive under graduates who pay tuition of the instruction they are entitled to, although they were not involved in the nomination of candidates for the presidency. You do not protest to the university authorities because you have no cause for protest. Yet, in refusing to teach, you interfere with learning - an action you would not be entitled to even if the uni versity had given you such cause.

If A hits you, you may want to strike hack, although it often may be wise to complain before striking the second blow. But would you hit the innocent B in retaliation for A's act? Won't you reconsider your present stand? *EDITOR'S NOTE: Reviewed in THE FREEMAN, June, 1968, by Edmund A. Opitz. Admiral Ben Moreell, Chairman of the Board of Trustees, Americans for Constitutional Action, commented on this book: "Vitally important ... easily readable, yet scholarly and well-documented a closely argued, systematic and provocative study of the American scene It is a timely book which can do tremendous good. I strongly recommend that everyone interested in con stitutional government and the preservation of freedom read it."

EDUCATION IN AMERICA GEORGE CHARLES ROCHE III 5. Disciplineor Disaster7 MODERN MAN'S collapse of values and intel1ectual decline must be attributed at least in part to his undisciplined nature. In no other age have men seemed so unwilling to exercise or accept any restraint upon individual appetite. We no longer seem to know how to dis cipline our young, perhaps because we no longer know how to dis cipline ourselves. If we could un cover the philosophic underpin nings of this nondiscipline, much of what is happening today in our educational structure would perDr. Roche is Director of Seminars for the Foundation for Economic Education. He has taught history and philosophy in college and maintains a special interest in American edu cation. haps become more understandable - and less acceptable. Schools, of course, are not solely to blame for the collapse of values and discipline in our society. Yet, at a time when individuals cry out for spiritual meaning and direc tion in their lives, all too many of our schools seem to play down the role of discipline, pinning their hopes upon more elaborate physi cal facilities, more of the "self expression" and "recreation" that already reflect the undisciplined values of our age.

If we fail to sow the seeds of values and of discipline among our young, we should not be surprised at the harvest. As Albert Jay Nock 101 102 THE FREEMAN February phrased it in The Theory of Edu cation in the United States: Nature takes her own time, some times a long time, about exacting her penalty - but exact it in the end she always does, and to the last penny. It would appear, then, that a society which takes no account of the educable person, makes no place for him, does nothing with him, is taking a considerable risk; so considerable that in the whole course of human experience, as far as our records go, no society ever yet has taken it with out coming to great disaster. To educate the young in proper values and proper self-discipline is not unduly complicated. Chil dren have no stronger urge than to be "grown up," and are quick to imitate the adult behavior they see around them. The inculcation of proper values and proper self discipline requires that we act as we wish our children to act. If we would discipline our children, we begin by disciplining ourselves.

But, here is the problem: How can we expect the exercise of self discipline by parents who are themselves products of a permis sive educational system? The sound idea that a child's interests should be taken into account in planning an educational program has been twisted to mean that a child should be given whatever he wants. Parents first abandon to the schools the responsibility for teaching values and discipline; the schools in turn reply that disci pline and value-education can best be left to the children themselves. Small wonder that children rebel when thus abandoned by their elders. Much of the revolt against authority came, in the wake of World War 1. The 1920's saw the crystallization of an attitude which totally rejected any stand ard outside the self. Freudian psy chologists insisted that restraint of any natural desi:re is bad. The "new era" theorists taught us that art was the unplanned result of a head-on collision between the artist's personality and the me dium of his work. The profes sional educationists made the cycle complete in telling us that our young should do only what they wish to do. Such evidences of anti discipline, in psychology, in art, and above all, in education, are now so commonplace that we take them for granted. All of this has gone hand in hand with the sub jugation of intellect to emotion, impulse, and instinct.

Freedom Becomes License A certain balance of freedom and order is essential, not only in education but in all human en dea vor. The importance of free dom in the educational process has already been discussed at length.

1969 DISCIPLINE OR DISASTER? 103 But the peculiar conception of "freedom from" rather than "free dom for" carries with it a rejec tion of all the values and inner disciplines which are necessary to give freedom any real meaning. Today "freedom" has a quality tending suspiciously toward what an earlier generation would have called "license." "Do what you want when you want to do it," modern society tells its young, and then is surprised when the young do just that! One of the-ultimate contrasts that presents itself in a subject of this kind is that between habit as conceived by Aristotle and nature as conceived by Rousseau. "The first great grievance of the critical humanist against Rousseau is that he set out to be the individualist and at the same time attacked analy sis, which is indispensable if one is to be a sound individualist. The second great grievance of the humanist is that Rousseau sought to discredit habit which is necessary if right anal ysis is to be made effective. "The only habit the child should be allowed to form," says Rousseau, "is that of forming no habit." How else is the child to follow his bent or genius and so arrive at full self-expression? The point I am bringing up is of the ut most gravity, for Rousseau is by com mon consent the father of modern ed ucation. To eliminate from education the idea of a progressive adjustment to a human law, quite apart from temperament, may be to imperil civiliza tion itself. For civilization (another word that is sadly in need of Socratic defining) may be found to consist above all in an orderly transmission of right habits; and the chief agency for securing such a transmission must always be education, by which I mean far more of course than mere school ing. 1 Babbitt was right, of course; learning is rapidly declining in most of our schools, through a steady erosion of standards, in tellect, and discipline. The late President Eliot of Harvard epito mized the tendency of our time when he insisted, "A well-instruct ed youth of eighteen can select for himself a better course of study than any college faculty, or any wise man who does not know his ancestors and his previous life, can possibly select for him ....

Every youth of eighteen is an in finitely complex organization, the duplicate of which neither does nor ever will exist." The liber tarian, of course, centers his case upon the individual, upon a per sonality whose very uniqueness necessitates freedom of choice; but the libertarians must also help to provide a proper value struc ture within which that choice takes place, else the choice itself becomes meaningless. It is such a 1 Irving Babbitt, Rousseau and Ro manticis1n, p. 292.

104 THE FREEMAN February meaningless choice to which Presi dent Eliot and most modern edu cationists have condemned our young people. In Irving Babbitt's phrase, "The wisdom of all the ages is to be· as naught compared with the inclination of a sopho more." Underlying this willingness to allow the young person to pick and choose without discipline or direc tion is the tacit assumption that no body of knowledge exists as a proper explanation of the human condition. The great point becomes riot to teach knowledge, but to teach students. If no standards ex ist, how can they be passed on to the young? Simply, it may be called the phi losophy of "doing what comes natur ally." At the intellectual level, for example, it is held that there is some magic value in the uninhibited and uninformed opinion if freely expressed. And so discussion groups are held in the grade schools and the high schools on such subjects as "What do you think about the atom bomb?" or "teen-age morality" or "banning Lady Chatterley's Lover"

or "implementing freedom among un derprivileged nations" or what not. The poor little dears have scarcely a fact to use as ballast. But no matter. The cult of sensibility believes that continuing, free, uninhibited discus sion will ultimately release the inher ent goodness of natural instincts and impulses. The fad for "brainstorming" has passed, but not the philoso phy behind it. 2 Today it seems to be assumed that any opinion whatsoever is justified so long as it is held with sufficient sincerity -and emotional fervor. One shares with Irving Babbitt the feeling that "perhaps the best examples of sincerity in this sense are to be found in in sane asylums." In part, this endless capacity for "dialogl,le" and "the open mind" stems from the same philo sophic roots producing our decline of standards and decline of intel lect. Unless the individual finally uses that open-mindedness as a preparation for the final act of judgment and selection, that is, uses his free inquiry and fact gathering as a means of finally reaching a conclusion, then open mindedness becomes only the drafty, valueless cavern through which blow the cold winds of de cline and death.

A society unwilling to disci pline its thinking and its young is a society doomed to extinction. A Disciplined Elfort Required for the Education of Leaders Good or bad leaders will always be with us, and no amount of Rousseau's "General Will" or ~ Calvin D. Linton, "Higher Education: The Solution - or Part of the Problem ?" Christianity Today, Feb. 16, 1968.

1969 DISCIPLINE OR DISASTER? 105 democratic faith in numerical ma jorities can change that fact. We will be no better than the quality of the leaders within our society, and the quality of leadership in a democracy will be no higher than the level of popular understanding permits. Unfortunately, a low level of understanding is foredoomed in a society lacking a disciplined edu cational structure. We seem unwilling to accept the discipline of genuine language study. Many future voters cannot tell the meaning of such words as grammar, logic, or rhetoric, much less use or appreciate the skills involved. The study of history has fared little better. Through mod ern "social studies," the sobering truth of history has been carefully concealed from our young. Man's achievements and his failures, the painful reality of the fate await ing the self-indulgent society and the self-indulgent individual, have been carefully buried in reams of uninformed nonsense centering on "group dynamics" or misinformed propaganda slanting the student toward collectivism as a means of solving all our "social problems."

All too many of the subj ects taught to America's young people reflect this headlong flight from any meaningful discipline of the mind. A society which thus edu cates its leaders may expect rough sledding ahead. "Progressive Education" at Work The lack of discipline noted in our educational institutions stems from both external and internal weaknesses. Many modern educa tors cannot control or properly di rect their students, nor can they display the internal discipline of mind and heart to control their own intellectual and spiritual be havior. Small wonder that those teachers who are themselves un disciplined prove such poor ex amples to the young. Genuine creative capacity in volves more than the natural tal ent of a child. A properly disci plined atmosphere must surround the child to allow his creative ca pacities to come to light. Children cannot be creative in a vacuum, but a vacuum is exactly what we provide when our. teachers are drawn from a philosophic system denying standards and discipline.

One of the last century's great commentators on education, Mat thew Arnold, once remarked: It is ... sufficiently clear that the teacher to whom you give only a drudge's training, will do only a drudge's work, and will do it in a drudge's spirit: that in order to en sure good instruction even within narrow limits in a school, you must provide it with a master far superior to his scholars. 3 3 G. H. Bantock, Freedom and Author ity in Education, p. 98.

106 THE FREEMAN February It should go without saying that a vast number of America's teach ers are anything but drudges; many of them show great self discipline and high standards, which they constantly reflect in the educational experience they are attempting to impart to our young people. Even so, we find far too many teachers of the other sort, lacking discipline and lack ing standards. Moreover, even our best teachers are severely handi capped by an educational struc ture whose underlying philosophy minimizes proper discipline. Many proponents of progressive educa tion insist that learning be set aside in favor of the unreflective and spontaneous desires and atti tudes of the child. The child is to be encouraged to follow his own desires in what he studies. Intel lectualeffort is to be displaced by spontaneous "activity." Competi tion and a disciplined system of grading are to be shunned, since they imply superiority and in feriority. The child is assumed to be able to meet his own educa tional needs without external pres sures. In a word, we are to achieve education without discipline.

A Line of Least Resistance True education, of course, im plies discipline. The discipline of competition, the discipline of standards, the discipline of responsible adults who have deter mined what is of real and endur ing purpose, the discipline of con centration, these are among the essentials of true education. Any thing less soon leads to what Irv ing Babbitt described as a typical result of the "new approach" to learning: Having provided such a rich and costly banquet of electives to satisfy the "infinite variety" of youths of eighteen, President Eliot must be somewhat disappointed to see how nearly all these youths insist on flocking into a few large courses; and especially disappointed that many of them should take advantage of the elective system not to work strenu ously along the line of their special interests, but rather to lounge through their college course along the line of least resistance. 4 The new motto in education all too often seems to be "jack of all ideas, master of none" apparently implying that, if our young people dabble in enough subjects, never mind whether they ever master any particular subject, "educa tion" will somehow have taken place. Genuine enlargement of the mind presupposes sufficiently dis ciplined study to achieve a grasp of a subject. This must be coupled with the equally necessary disci pline of viewing all subjects as por4 Irving Babbitt, Literature and the American College, p. 35.

1969 DISCIPLINE OR DISASTER? 107 tions of a single reality expressive of human existence. An educa tional philosophy which never al lows the student to master any particular subject and which de nies the existence of universally applicable general principles is a system calculated to retard the mental growth of its pupils. We have become so concerned about providing "real life situations" in the classroom, so concerned about providing a cultural potpourri based on technological develop ments in radio, the movies, and television, that the young people educated in our system are no longer in touch with reality, very uncertain as to just who and why they are. Undermining the Teacher When no inviolable standards remain, it is natural that the teacher will no longer think of himself as being in authority. All discipline must go, since the teach er has no concepts to impart and is to function only as a leader, synchronizing the amorphous col lecti ve development of his par ticipants. Thus, external discipline joins internal discipline in the discard. In such a system, one of the keys for genuine education is lost. The relationship between the master and the pupil, between the one who has achieved discipline and the one who has yet to achieve it, ceases to exist. Also lost is much of the traditional authority and prestige of the teacher.

The child-centered school may be attractive to the child, and no doubt is useful as a place in which the little ones may release their inhibitions and hence behave better at home. But educators cannot permit the students to dictate the course of study unless they are prepared to confess that they are nothing but chaperons, su pervising an aimless, trial-and-error process which is chiefly valuable be cause it keeps young people from do ing something worse. The free elective system as Mr. Eliot introduced it at Harvard and as Progressive Educa tion adapted it to lower age levels amounted to a denial that there was content to education. Since there was no content to education, we might as well let students follow their own bent. They would at least be inter ested and pleased and would be as well educated as if they had pursued a prescribed course of study. This overlooks the fact that the aim of education is to connect man with man, to connect the present with the past, and to advance the thinking of the race. If this is the aim of education, it cannot be left to the sporadic, spon taneous interests of children or even of undergraduates. 5 Social Effects 01 the "New Education"

Most civilized men have appre ciated the fact that they must de:> Robert M. Hutchins, The Higher Learning in America, Pp. 70-71.

108 THE FREEMAN February cide certain things for their chil dren, at least until the children attain sufficient capacity to decide for themselves. True freedom is the freedom of self-discipline, a freedom to choose within accept able standards and values. Take away the values and standards, take away the discipline, and meaningful freedom is taken away as well. In the education of our future leaders, we might well remember that men without moral disci pline, men who deny any allegiance to standards higher than them selves, are likely to become leaders or to follow leaders who stand for nothing but brute force. As mod ern educationists struggle to "free" man from the old "limit ing" standards, they justify their stance with constant reference to the democratic way of life. Any attempt to impose standards is thus labeled "undemocratic." It is worth remembering that democ racy is a political concept and that all applications of that concept to other aspects of human life, edu cation included, are the tacit ad mission that the architects of the new order intend that all values will ultimately be political values.

In all of the endless talk about "growth" that fills our discussion of education, we steadfastly refuse to answer the one central question, growth for what pur pose? "Growth for what purpose?" Weare told at various times that the goals include "self-expression," "life adjustment," "adaptation to daily living." The school seems to have become a center in which the individual is told that he will be subjected to no disciplinary stand ards, that he can be "himself." How does the student realize himself? By adj usting to his peers and to the society around him. He must learn to "get along." He fulfills himself in his capacity to work with others . . . in and of himself he is nothing. If he has strivings or attitudes not in con formity with the world around him, he must "adjust." He, not society, is in the wrong. The in dividual, stripped of the standards of self-discipline which would al low him to be his unique self, is thus educated in the new value of conf ormi ty.

How can this conformity be de scribed except as a mass of stand ardized mediocrity? How can such a society hope to generate the leadership necessary for its con tinued existence? The choice, fi nally, is between discipline and disaster. ~ The next article of this series will discuss "The Perpetual Adolescent."

M. E. eRA VENS WHETHER OR NOT we're pricing ourselves out of world markets is a moot question. But there's no doubt that competition from for eign producers has intensified. We may hold an edge on quality, but foreign products often are cheap er. Auto manufacturers, for ex ample, are re-evaluating their pol icies in an effort to meet competi tion. Like many other industries, they are building plants abroad and hiring foreign labor to pro duce for sale in other countries and also in the U.S. market. A number of U.S. industries are ask ing for increased tariff or quota protection against imports. Foreign competition plagues ag ricultural as well as industrial producers. Currently, some 20 per cent of our agricultural exports are subsidized in some way. Some other countries also follow the practice; but it is ironic that the U.S. farmer, who is producing enough for himself and 40 other people, cannot compete with less Dr. Cravens is Professor of Agricultural Eco nomics at Ohio State University.

Pricing Ourselves OUT 01 World Markets? productive farmers elsewhere. For instance, in cotton, the U.S. is now a net importer instead of an exporter; in tobacco, we have been losing ground rapidly in world markets since 1949. Actually, the inability to com pete in certain things is not neces sarily a sign of lack of productiv ity in our economy. It happens all the time. For instance, in 1889 Ohio was the leading apple-pro ducing state with 14 million bush els, and ranked fifth in the pro duction of potatoes with 16 mil lion bushels. Today, Ohio is eighth in apple production and sixteenth in potato production, with about 3 million bushels of each - less than enough for its own use. Shifts of Production So it is with specific agricultural and nonagricultural products in other states and areas in the U.S. and among countries of the world. Shifts in production, no matter where in the world, occur in re sponse· to certain factors. The ad vantages of specialization and 1i\O 110 THE FREEMAN February voluntary trade are world wide.

As economies develop, as trans portation systems improve, as de mands change, the most profitable combination of resources in a given area may change. The land, labor, capital, and management are shifted to the use that will pay the highest return. This flexibility of adjustment to changing condi tions is one of our major advan tages. A market-oriented economy provides the mechanism to signal needed shifts. Today, however, there is wide spread belief that the government can and should do something to prevent these economic "laws" from working to the hardship of present businesses and employees. We are encouraged to reject the possibility that someone else can grow peanuts more efficiently than we can. Because peanuts was the most profitable crop for our grand fathers and our fathers, and they made a living growing peanuts, we should be secure in the right to do this too! In the past 30 years we have about convinced o'hrselves that we can "eat our cake and have it, too." In other words, that we can have foreign aid and foreign trade without foreign competition.

Recent trade and payments prob lems have brought us face to face with the fact that the rules still apply to us. Why Are Costs Higher? If prices and costs are rISIng in the United States relative to those of our foreign competition, how does this happen? Several reasons have been suggested. La bor leaders say profits are too high. Spokesmen for management say wages are too high, labor is unproductive, and taxes are too high. Some say that the rate of investment in new plants is too low. And each faction is likely to be so well satisfied with its own answer that it ignores the answer given by others. In the world of business, it's not uncommon that a firm may find it is operating at a loss. There's no doubt that lack of profits in many domestic indus tries is a major problem. And the typical result is a reduction in operations and the laying off of laborers. The reason often given is that foreign competition has taken customers by offering prod ucts for lower prices.

On the other hand, the business firm that successfully sells much of its output abroad is likely to show profits higher than average for that industry. The fact that some business firms are losing money because of inability to com pete in foreign markets, while others with above average profits can compete, suggests that high profits are not the basic cause of 1969 PRICING OURSELVES OUT OF WORLD MARKETS? 111 the inability to meet foreign com petition. Since business profits are what is left over after meeting business costs, high profits in themselves mean only that the business is efficiently operated and competing successfully. Low prof its mean the opposite. Wage Levels Wages in the United States have been higher for many decades than those in most countries. High-wage industries are our ma j or exporters. This was true even before the United States had widespread unionization or mini mum wage laws. The parents and grandparents of millions of us mi grated here in the late nineteenth and early twentieth centuries part ly because of attractive wages plus the fact that work was available for all at going wage rates. Let us hope for still higher wages in the future, because this is a ma j or indication of our level of pro ductivity.

Regarding the productivity of labor, there appears to be no question that some so-called "featherbedding" and other labor inefficiency exists. This is a net drain on the real wages of the gainfully employed wage-earning worker, as well as on everyone else. The "featherbedding" worker recei ves wages, and has a claim on goods produced, yet produces little himself. However, a limited amount of featherbedding has ex isted for many years, and there is no evidence that it has increased enough in recent years to explain the increasing pressure of foreign competition. Why are American workers more productive than most for eign workers? Why does one Amer ican farmer produce enough food for himself and 40 others while the Russian farmer produces enough for himself and only 5 others? Do American farmers work harder or longer or what? The higher output per man in the United States is due primarily to the use of more and better tools and equipment, the superior know how and management ability of the American farmer, and his greater freedom to make decisions.

Nonfarm workers also have more and better tools. Business manage ment is more skilled and has more freedom to make decisions in the United States than in Russia and most other foreign countries. This .dependence of labor pro ductivity on the availability of modern tools and equipment and the funds to finance them poses another problem. Any policy, gov ernment or private, that prevents or discourages the purchase of new and improved tools also re duces the efficiency of labor. Taxes and tax policies are prob112 THE FREEMAN February ably the-greatest governmental hindrance to the financing of new and better tools although restric tions by licensing, franchising, and exchange control are also im portant. Taxes which bear most heavily on the growing and more efficient firms tend to penalize and discourage such efficiency. Infla tion also creates special problems in retooling for firms that fail to allow for it.

In recent years taxes often have had a double-barreled effect. They not only have reduced the ability of individuals and business firms at home to finance new and im proved equipment but also have been shunted as "foreign aid" to help the foreign competitor buy equipment. The result is that to day the foreign competitor some times has a plant quite as modern as any in the United States, he pays lower wages, and he may pay a corporate tax rate lower than that of the U. S. business firm that helped finance him. A major cause of inflation is the spending by the government in excess of its income and the re sulting need for creating new money supplies. Inflation can stop only when voters quit expecting more services from the govern ment than they are willing to pay for in taxes. Our Competitors Competition from foreign pro ducers seems likely to increase. Our urge for protection and se curity leads to more and more intervention by government in the affairs of our farms and factories and family life. This intervention on behalf of the inefficient pro ducer in agriculture and industry weakens our capacity to compete.

We are becoming increasingly prone to consider present prices or perhaps a bit higher than pres ent prices, as the "just" or "fair" price. It follows that we consider the present producers as having a "right" to continue to produce. If either of these "rights" is chal lenged by a competitor, the in efficient producer is encouraged to look to the government for help instead of trying to find better ways to serve consumers. Future pressures of foreign competition will depend in large measure on domestic policies con cerning price supports, import quotas, tariffs, and other interven tions; on other "welfare" meas ures of the government; and on the extent of inflation in the United States. High tariffs, high supports, market quotas, and other such practices may hide the prob lem for awhile, but will not solve it. ~ JOHN W. CAMPBELL IT HAS BEEN said that "technology we can't understand appears to be magic." Actually, this applies only to technology more advanced than our own - for frequently we see some great technological device and, by familiarity, fail to recog nize it for what it is.

Perhaps the Grade A #1 prime example is one which is now gen erally considered the perfect sym bol of non-technology - the epito nlization of the failure to develop technology. The peasant-farmer, plodding along behind his horse-drawn plow as he sweats to till his fields, does Mr. Campbell's editorial is reprinted here by permission from ANALOG Science Fiction Science Fact. Copyright 1968 by the Conde Nast Publications, Inc. seem, to us, about as untechnical as you can get. Yet in that pasto ral scene is a technical break through that properly ranks slight ly behind harnessing fire, and per haps a bit ahead of the wheel. (After all, all the native American civilizations got along without the wheel!) It might be described in modern terms as "a solid-state power-han dling device for coupling a heavy duty power source to heavy trac tive loads." Or, more simply, as the device that freed human slaves from service as draft animals.

One of the reasons the Romans and Greeks needed so many slaves was that there was no known way of harnessing animals to heavy 113 114 THE FREEMAN February draft loads. Man, because of his bipedal posture and his hands, could have a harness slipped over his chest and shoulders, and by leaning into it, exert all his strength in pulling the load. It was literally true that a man could exert more pull than a 1,500 pound horse. A horse's sloping chest, and lack of shoulders or grasping hands, made it impossible to tie him to a load except by putting a rope around his neck. Do that, and as soon as he pulls, he's choked by the rope at his throat; he can pull only lightly before his wind is cut off and he has to stop. True, some powerful horses can exert enough pull to move a relatively light chariot at a good speed that way but as a coupling device it's ex ceedingly inefficient. The horse couldn't pull a plow, or a heavy dray.

Oxen, equipped by nature with some well-anchored horns, could do considerably better - but it was extremely tiring on even an ox's heavy neck muscles to hold his head down against the backward pull of the load. Rapid, Heavy Transport The horse collar, invented some where, sometime during the Mid dle Ages in Europe, was Man's first really successful device for harnessing powerful animal muscles to do the heavy hauling work that was needed. It made possible hea vy transport - even on the hor rible mud ruts they called roads. It vastly increased the amount of agricultural land that could be prepared and used during a single growing season; there was far more food available for men and motive power. Where before, horses and other animals had transported goods primarily as pack animals, transportation was expanded, quite suddenly, as great ly as it was a few centuries later with the invention of the steam powered railroad.

Naturally, with the potential of heavy, relatively rapid transporta tion available, the sedan chair went out of use as the coach came in, and pack-trains were replaced by loaded wagons. Inevitably the demand for more roads wide enough - and good enough! - for horse-drawn vehicles came, and the entire economy began speed ing up. The contact with the highly so phisticated and educated society of Islam was undoubtedly a tremen dous factor in the development of the renaissance in the seacoast regions of the Mediterranean, where ,vater transport made trans portation reasonably effective. But it was the horse collar that brought an economic renaissance to most of Europe.

1969 TECHNOLOGICAL STATUS 115 It's not at all easy to recognize technological importance - partic ularly when we're used to it. Cer tainly a horse collar seems a sim ple enough idea .... Most moderns haven't actually seen and handled one, or studied one closely. Take a good look at the structure of a horse's chest and shoulders, and without study ing a horse collar, try devising a form that will fit snugly onto those sloping curves and planes, allow the horse free movement of neck and forelegs, avoid concentrating the load on prominent bony areas, and so distribute it that the horse can exert his full strength without painful chafing. Then make it stay in place without aid of adhesive tapes, glue, or surgical implants! The agricultural technicians of the Middle Ages who developed that gadget were not fools, even if they hadn't ever had a course in mechanical engineering, or force analysis. And they did achieve something that the learned Greeks and the great Roman en gineers did not; they harnessed the most effective power source in the world at the time.

And be it noted that that animal power __ source is still used as the basis for measuring our mechani cal tractive engines - as Watt orig inally defined it in his sales-pro motion literature for his new steam engines. However, two horses can do a lot more plowing than a two-horse power gasoline-engined tractor can; the gas job can't slow down in a tough spot, dig in its hooves, bellydown to the earth, and lunge with half a ton of hard-tensed muscle to drag the plow through. Of course, the tractor is also not capable of self-repair, auto matic routine maintenance, living off the fields it works, self-replica tion, or sense enough not to de stroy itself by ramming itself over a cliff. In addition to operating on locally-available fuels, a horse is approximately twice as efficient as a tractor in conversion of chemi cal to mechanical energy. Current Applications The moral of this little story is not to be applied just to humans visiting alien planets; it applies very cruelly to situations right here on our own crazy, confused world. Backward nations - I will not be euphemistic and call them "underdeveloped" because they've had the same thousands of years to develop that Europe and Amer ica had, and simply didn't do so do not recognize the importance of what could be called "the Horse Collar Revolution."

Those economically depressed nations want, most ardently, to join "the modern world" - Le., to achieve the industrially-developed 116 THE FREEMAN February status of the high-level technologi cal nations. Now there are two kinds of "status"; one is what your neigh bors think you are, and the other is what you actually have' and can do. The first type of status is, of course, far and away the most popular, and the most eager ly sought. One type of individual, if he happens to inherit a f.ew thousand dollars, or hit it lucky in gambling, promptly puts it into fancy new clothes, a down payment on a fancy new car, and a fancy new woman or two, and has himself a whee of a time being admired and respected because man, he's got all the symbols of Status! So in three months the fancy car is repossessed, the fancy wom an moves off, and the fancy clothes prove to have poor durability. Another approach is to spend the little inheritance on getting a small business started - maybe a neighborhood grocery, or a news stand. Doesn't get you much Status, of course, and not much spectacular fun . . . but put to work that way a few thousand can support you for life.

It's just that it is not as much fun, and a few thousand won't do it unless you get in and work just as hard yourself, and that makes the whole idea much less popular. Status Symbols The national equivalent now showing up among the backward nations is that foreign aid - win ning the numbers game, in the international lottery! - is spent on fancy Status projects. Hydroelec tric plants are Status Symbols, man! That means you've got it! Even if you don't have many electric lights or power machines in grass huts and fields plowed by men and women pulling wooden stick plows through the earth. Steel mills are great interna tional Status Symbols, too. Of course, what would really make one of those nations have Status with all its neighbors would be to have something really technical and ultra-fancy, like a few nu clear bombs. Trouble is, nobody, except a few experts, in a few major Western nations, have the wisdom to see that the horse collar is one of the greatest technical developments of human history.

The basic plot in Christopher Anvil's "Royal Road" stemmed from an actual disaster of WW II ; it didn't have the comfortable end ing Anvil's story did. The lesson, bitterly learned then, is being re learned most reluctantly by the backward countries today. The Allies had a tremendous mil itary need for roads and barracks and airfields in an area where 1969 TECHNOLOGICAL STATUS 117 there simply were none. It was a remote area; shipping simply wasn't to he had for sending in earth-moving machinery, bull dozers, power shovels, and so on. So local natives were hired, at high pay, to do the work. The men who set up that opera tion didn't know what a sub sistence-level economy was; they found out that fall and winter. The men they'd hired to work at such fine wages were, of course, the native farmers - who there fore didn't farm that year. In Anvil's story, the thing was planned, and the aftermath was part of the plan; in the real event it wasn't planned that way - it just happened. There was no ship ping to bring in food that winter, just as there had been no shipping to bring in earth-moving ma chinery. It was a horribly grim demonstration of the oft-repeated remark of philosophers that "you can't eat gold." There was a lot of money around - but no crops.

Repeating the Error What's happening again and again in backward countries to day is of the same order. The magnificent new dams and hydro electric plants employ thousands of workers at good wages - and hire them away from food-produc tion in a near-subsistence econ omy. The result is inadequate food production, incipient famine, and a desperate plea for help to feed the sta.rving millions. But they sure have a great Status dam! Oh, they get irrigation water, too - only sometimes the results haven't been any better thought out than the economic disaster of famine was. Many areas of the world have fairly fertile land ly ing on top of extremely saline under-soil - practically salt beds. When rain falls, the fresh water seeps downward, and keeps wash ing the salt back down to the under-soil where it is harmless. But run in irrigation water - the salt from below dissolves, and evaporation from the surface soil pulls the now-saline water up, where it in turn evaporates, and thus rapidly builds up a salt crust on the surface.

It takes several years of non irrigation, and no crops, for natu ral rainfall to wash the salt back down so the land can be used again. But don't you forget - that big irrigation dam and project is an international Status Symbol of high value! If a nation has a primitive sub sistence-level economy, this simply means that its food-and-goods pro duction has economic value just barely sufficient to keep the popu lation from starvation. And that in crop-failure years, there will be 118 THE FREEMAN February famine, and people will die of starvation. In many, many such subsist ence-level areas, if such famines occurred, there was literally noth ing whatever anyone could do to help them. The thing happened repeatedly in India and in China; India, under the British, had rail ways and His Majesty's govern ment did everything humanly pos sible to relieve the starvation. But the food needed to feed 300,000, 000 starving people can't be gath ered from the surrounding areas; they're subsistence-level e'cono mies, too. And the railroads weren't vast, heavy-traffic net works such as Europe and Amer ica had developed; they didn't have enough cars or engines. And shipping from half around the world took so long that even if the transport and grain were freely donated, it wouldn't get there in time to be very helpful.

In China, because of bad roads and no railroads at the time, there were huge areas where the only possible transport was by porters. (M ules can't climb ladders, and some of the routes required lad ders to get up mountain "passes.") Since porters had to start in car rying their own food for the round trip, it was fairly easy to figure what distance of penetration was possible before the porter had con sumed his total load in his own round-trip supply. No food what ever could be shipped into any more distant point. People in those inner areas simply starved to death because help was physically impossible. Breaking the Habit In subsistence-level economy areas today, what sort of help can the industrial nations give? Well, first is the fact that Step #1 is to break down the cultural pattern of the people that holds them at the subsistence level. And at this step, naturally, the people will do all they can to destroy the vile invaders who are seeking to destroy their Way of Life, which is the Good, the True, and the Beautiful and Holy Way.

You can't do it by telling them that they should stop growing those inefficient crops, those crops that produce protein malnutrition, and learn how to raise these new and far more efficient nutritive crops. There are problems involved that aren't economic or technical. The Israeli, for instance, have worked out techniques for grow ing watermelons, wheat, various fruits, and grains on sandy gravel irrigated with salt water. They can make the barren Negev Des ert produce fine crops of excellent food - techniques that can be ap plied anywhere there are sand 1969 TECHNOLOGICAL STATUS 119 dunes, gravel, and sea water, or salt-water springs. It would work fine in huge areas of the Sahara. No vast irrigation dams needed for this project! Unfortunately, the Arabs don't seem enthusiastic about accepting and applying this Jewish tech nique. Even if it were an Arab devel opment, the peoples of the area are tradition-oriented; it would take at least a generation to put over the idea of doing precisely those things which they know are wrong. For every farmer knows that salt water kills plants, and you can't grow plants in sand and stony gravel.

The odd thing is that the salt water irrigation can not be used in "good soil"; it works only in the worst kind of gravel-sand soil. Resistance to Change The proper development of the backward areas requires recogni tion that the people don't 'want to change. They want their results to change - they want to have the fine things other nations have, but not to build them. To pull up from a subsistence level economy, the first step is building better roads, and a more efficient agriculture. Not irriga tion projects, not tractor manufac turing plants and hydroelectric proj ects and establishing an internationally known air line, complete with twenty or so Boeing 707 jets. Man, those are real Status Sym boIs! What's needed is the Horse Col lar Revolution and its results. Draft animals can live off the lo cal fields; they don't require ex changing scarce goods for foreign fuel supplies and replacement parts.

The road network has to be built up slowly; too many farm ers diverted to vast construction projects and you have famine. You need schools - schools that teach agriculture and medicine and veterinary medicine and sim ple local-irrigation techniques and public hygiene and basic nutrition. Not electronics, industrial chem istry, and jet-engine maintenance - not for a generation will that be valid. The few natives who are really cut out for that sort of work can be taught in other na tions, where schools of that order are needed, and already exist. But don't expect them to come home there will be nothing for them to come home to for a generation. But no High Status schools? Sorry - getting out of a sub sistence system can't be achieved on Status - it has to be achieved by Status, the hard-work-and practical-learning kind of real ac complishment. The ancient truth prevails: God 120 THE FREEMAN February helps those who help themselves.

Because even God can't help some one who won't help himself that's what the ancient concept of Free Will implies! Help Is Where You Find It The more developed nations can help effectively only where the na tional leaders have the wisdom to work for real accomplishment, not for high Status projects. And be it noted - that "more de veloped nations" does not mean the U.S., the U.S.S.R., and other West ern nations alone, by any means. One example has been cited; Israel has a technique that could im mensely aid many backward na tions right now. The Philippines have developed a spectacularly productive new breed of rice by careful botanical research; they've done a bang-up job of it, and have a strain that yields three to four times as much food from a given area. It's a breed that could release two out of three rice-farmers in a sub sistence-level nation to work on those needed roads and dams and other projects, without bringing starvation to the country.

The water buffalo is an ex tremely economic animal; it's one beastie that the Western world needs to accept and use as a do mestic animal - and is needed far more widely in the world. The water buffalo yields high-quality milk, high-quality meat, and is an enormously powerful draft animal capable of working under muddy conditions which ruin the feet of most crea tures. Moreover, the critter can yield meat, milk, and power when fed on an incredible diet consisting solely of rice stub ble! The Thais have carried on a careful program of breeding for some decades, and now have breeds of water buffalo that run over a ton in weight. Rather surprisingly, about the only area outside of the Southeast Asia region where water buf faloes are used in any numbers is in Italy, where some 40,000 of them are kept. The familiar Moz zarella Italian cheese - in its orig inal, genuine form - is made from water-buffalo milk.

Only when many thousands, or millions, of agricultural workers can leave the farms for work with out producing the inevitable fam ine - only when the agricultural economy gets above the subsistence level-can any nation become "ad vanced." Argentina isn't an indus trial power - but has a highly de veloped agricultural economy. All of the highly industrialized na tions first became highly success ful agricultural nations. Yet we - and unfortunately the backward nations! - see the horse drawn plow and the farmer as 1969 TECHNOLOGICAL STATUS 121 symbols of ",.low-status, nonindus trial economies. The great trouble is that people don't want to change. It's not iust the peoples in backward countries; the great economic advantages of the water buffalo have been around for centuries, yet only Italy among all the Western na tions has accepted them. Why aren't they being raised in south ern Louisiana, for instance, where there's plenty of land and climate of the type they particularly love?

In Africa, millions of children die of protein malnutrition be cause the natives raise traditional crops that do not provide the es sential amino acids - and can't be induced to change their customs. Indians in Central America suf fered the same type of protein malnutrition; their one and only staple was corn - maize. And corn, like most grains, is deficient in lysine to an extent human be ings can't live on it. Anthropologists and nutrition ists could get nowhere changing their dietary habits; finally, bot anists succeeded in breeding a strain of corn that did contain adequate lysine, so the natives could go on doing as they'd always done - eating corn - and still get the food they needed to live. That is not a solution to the problem. Sure, it keeps the children alive - but it does not achieve the cru .. cially important necessity. Those people will remain forever back .. ward people unless they change.

A change in government does no good, for a government cannot re main in power if the people ac tively hate it. And so long as peo ple insist on not changing their Good, Beautiful, Familiar, and Holy Traditional Way of Life even if it's killing them! - the so cial system will not change. And they'll kill anyone, any govern ment, that seeks to change them, if they possibly can. Only a power fully entrenched and ruthlessly determined dictatorship can im pose on them the basic changes they, the people, must make. If, that is, you insist the change must be made in this generation. Otherwise, you'll have to have patience, and wait while slow, steady, continuing pressures alter the Established Way of Things decade by decade. Agriculture First And the greatest, fastest prog ress will be made in the backward nations which gain least Tech nological· Industrial Status Proj ects - and develop their agricul ture most.

In a rice-eating nation, if one third of the rice-growers, raising high-production strains, using new and more efficient techniques, can 122 THE FREEMAN February sell twice as much rice for only seventy-five per cent of the cost the rice farmer who would not change his traditional ways will be forced out of agriculture. His poor harvest won't be wanted. He'll lose his land, his home, all the things he has lived by and with. Here, the ruthless dictator who forces him to change his way of life is not human - it's economic. It's even more ruthless and relent less. But it, too, has the same compelling message: "You must learn a new way of life - or die I"~ At the same time, of course, the fine surplus of cheap rice means that industrial workers, road and dam builders, all sorts of people in all sorts of newly developing oc cupations, are living much better. The old near-starvation level of rice is gone - there's plenty to eat, at last.

Look, friends - industry didn't produce a high standard of living. A high standard of agriculture forced people to learn a new high standard of living and industry. And that's the only way it will be - unless a completely ruthless, dedicated tyrant oppresses his helpless people into learning the new way of life fast. ~ Beneficiaries of Capitalism THE STANDARD OF LIVING is high in the United States because of capitalism, but not all of our people are capitalists. The wages of a truck driver in our country are much higher than the wages of a coolie with a wheel-barrow in China, mainly because of the truck which the American drives. The truck is the result of capitalism, but the driver benefits as much as anyone else from the truck. Not everyone in our country owns stock in companies that make farm machinery, but everyone of us profits by the fact that wheat is sown, reaped, transported, and milled into flour by equipment produced by capitalism. How much bread would we have and what would it cost if it were not for these products of capitalism? The farm machinery industry has created a number of millionaires, but the return to all of them combined is only a drop in the bucket compared to the benefit conferred upon the consumers of our farm products.

HOWARD E. KERSHNER, Christian Freedom Foundation A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Webster's1828 Original AT FIRST BLUSH it strikes one as rather strange that the Founda tion for American Christian Edu cation should have chosen to pub lish a facsimile edition of Noah Webster's original AnA merican Dictionary of the English Lan guage. After all, so one says to oneself, the definition of words might take one anywhere, to God, Buddha, or the devil himself. What has a dictionary of 70,000 words, most of them neutral so far as any religion is concerned, to do with Christian education? One's skepticism, strong at the outset, does not survive a careful reading of the remarkable intro ductory essay which Rosalie J. Slater has provided to go with this beautiful reproduction of the text which left Noah Webster's loving hands in 1828. The theory behind Webster's "American Dictionary" was republican theory, for Noah Webster, a good citizen of Feder alist Connecticut, was very much aware that the Founding Fathers had given a rather special New World twist to a whole political vocabulary. The word "congress,"

in Britain, might be defined as "a meeting of individuals," but in America it also stood for "the assembly of senators and repre sentatives of the several states of North America, according to the present constitution or political compact, by which they are united in a federal republic; the legisla ture of the United States, consist ing of two houses, a senate and a house of representatives." This was something that represented a change from Dr. Johnson's dic tionary. In all, Noah Webster added 12,000 new words to the 70,000 of the latestJ ohnson edi tion. A good Calvinist in his later life, Noah Webster preferred Con gregational Yale in his home town of New Haven to "unitarian" Harvard. Rosalie Slater tells us 1,)~ 124 THE FREEMAN February that he considered that words like "govern," "government," "consti tution," "fast-day," "republic," "democracy," and others "reflect the uniqueness of America's Chris tian founding and God's purpose for her." In other words, the lan guage of politics in America could only be understood by people with a knowledge of the whole Chris tian heritage. The very separation of the powers in America derived from the Biblical injunction to render unto Caesar the things that are Caesar's, and to God the things that are God's. And the Western theory of inalienable rights, brought to linguistic perfection in the various writings of the Founders, came from Biblical sources.

Webster's Qualifications, Master of Many Languages As Emerson said, an institution is always the lengthened shadow of a man. Webster studied - and apparently mastered - twenty lan guages in order to give exact meaning to "the primary sense of every word." He wanted to track his meanings to their verbal headwaters, thereby freeing him self as a lexicographer "from de pendence on synonyms as substi tutes for exact meaning." (These quotations are from Rosalie Slater's essay.) But life, as Noah Webster lived it in New Haven, Connecticut, and (for an inter lude) in Amherst, Massachusetts, before the Jacksonian Revolution, contributed as much to the dic tionary as any study of Hebrew, Gaelic, or the combination of French and Gothic that the N01" mans superimposed on the Anglo Saxon tongue of eleventh century Britain. Noah Webster's republic was founded on a theory of man as a property holder, but the Founders believed in earned prop erty, not in estates kept unnatu rally large through a legal theory of entail which prevented younger sons from becoming owners.

As Rosalie Slater puts it, "The Christian concept of individual liberty and property established under the United States Constitu tion had produced, for the first time in human history, unlimited opportunity for every man and woman. An explosion of interest and exploration in every field oc curred and invention and the arts flourished. Every man needed to know everything and thus a liter ary, J ohnsonian type of diction ary was not sufficient for an American. New terms in science, industry, and commerce were mul tiplying daily and these were sig nificant in a country where men were independent and 'masters of their own persons and Lords> of their own soil.'" (The italics are Rosalie Slater's.) 1969 WEBSTER;S 1828 ORIGINAL 125 It could be that the italicized quotation has special reference to Noah Webster as an entrepre neurial character and as a part time farmer. Webster said, "Let the people have property and they will have power." He built his own modest competence on his three-part A Grammatical Insti tute of the English Language, which included his 1783 American Spelling Book (the famous "blue backed speller"), his 1783 Gram mar, and his 1785 Reader. As the dates of publication show, these preceded the Constitutional Con vention.

Webster went up and down the colonies - or the states - to sell his own books. Over a hundred year period, one hundred million copies of the Speller "were worn out by Americans as they learned their letters, their morality, and their patriotism" from Webster's subtle combination of words and philosophical substance. The Spel ler, says Rosalie Slater, "was com patible with the hearthside of a log cabin in the wilderness, it travelled on the flatboats of the Ohio, churned down the Missis sippi and creaked across the prair ies of the far west as pioneer mothers taught their children from covered wagons. Wherever an individual wished to challenge his own ignorance or quench his thirst for knowledge, there, along with the Holy Bible and Shakes peare, were Noah Webster's slim and inexpensive Spellers, Gram mars, Readers, and his Elements of Useful Knowledge containing the history and geography of the United States."

Literary Property Rights To protect his literary property, Webster fought for copyright leg islation at both state and national levels. It was his Speller that paid the family bills during the lean years when he was learning twenty languages and compiling his dic tionary. To balance his sedentary hours at the desk, he enjoyed an active life as a small farmer. Dur ing his years in Amherst (he moved there in order to conserve his money), he made the cultiva tion of his own land "a delight and a resource," employing "the ten acres of meadowland surrounding the house agriculturally." Rosalie Slater gives us an unforgettable picture of the lexicographer set ting out an orchard. He "grafted the finest kinds of apples and pears he could find, growing peaches and cherries from the stones. His large, sweet white grapes, raIsed from a fine native vine taken out of his father's farm in West Hartford, were known as 'the Webster vine.' His flowers and the vegetable garden also flourished and prospered and 126 THE FREEMAN February he could say reverently, 'for some years past I have rarely cast my eyes to heaven or plucked the fruit of my garden without feeling emo tions of gratitude and adoration.' "

When he was not working on the dictionary or cultivating his acres, Noah Webster took an ac tive part in public life. He was one of the founders of Amherst Academy, which became Amherst Col lege. For a time he served as President of the Amherst Board of Trustees. He was a whole man, and it is good to have his example set be fore us in an age when whole men are considered rather square. Would that our hippies could get to know him. ~ Copies of the 1828 Webster"s Dictionary may be ordered di rectly from the Foundation for American Christian Education, 2946 Twenty-fifth Avenue, San Francisco, California 94132. $15.00. OTHER BOOKS ~ THE BIRTH OF THE NATION by Arthur M. Schlesinger (New York: Alfred A. Knopf, 1968), 250 pp., $7.95. Reviewed by Robert M. Thornton IT IS sometimes forgotten that our history as a nation began long be fore the momentous events at Philadelphia. The signing of the Declaration of Independence was the moment of birth following 167 years of gestation as English col onies.

What were the colonists like on the eve of separation from Great Britain? What sort of civilization was to be found on the eastern seaboard of America? The late Professor Schlesinger, a pioneer in writing social history, gives us a cultural portrait of the Ameri can people instead of another po litical account. His effort is ex haustive in scope if not in detail. Each chapter treats a particular phase of colonial culture -- the family, the church, towns, educa tion, science, the arts - demon strating that American colonists were not country bumpkins or barbarians but a highly civilized people. They lagged behind Eu rope in some matters but excelled 1969 OTHER BOOKS 127 the Mother Country in others - in literacy, for instance. They were serious readers, as evidenced by the fact that a Philadelphia pub lisher brought out 1,000 sets of Blackstone's Commentaries him self after selling 1,000 imported copies, a fact remarked on, I be lieve, by Edmund Burke in his speech about the political sophisti cation of the American colonists.

Burke's term, "salutary neg lect," best describes Britain's re lation to the colonies until after the French and Indian War. Britain then introduced a series of regulations and in a dozen years came the separation that few if any wanted or predicted. The colonists were proud to be Englishmen but prouder still to be free men. The colonists, Professor Schles inger points out, were not radi cals. First, they sought to prevent a usurpation of their ancient lib erties and, second, even after pro vocations, did not interpret politi cal separation from Great Britain as a wiping the slate clean of their English heritage. This book should make clear the differences between the American struggle for independence and the revolu tions that have taken place since that time. Prior to 1776 the colonists had built up a remarkable civilization, especially considering all the obstacles they had to overcome. They were eminently capable of govern ing themselves and had done so through the years with astound ing success. Regarding themselves as responsible and mature, they resented the Mother Country's use of the rod to dominate their af fairs, especially as colonial insti tutions had produced leaders who outclassed the Britishers. Euro peans were highly impressed by the stature of the men who sat in the Continental Congresses George Washington, John Adams, Thomas Jefferson, and Benjamin Franklin, just to name the giants of that glorious age.

In this day of "instant nations," we need to re-examine the Ameri can people on the eve of inde pendence; hopefully we might then understand the institutions which produced such an abundance of great men. ~ ~ THE AMERICA WE LOST (The Concerns of a Conserva tive) by Mario Pei (New York & Cleve land: The World Publishing Com pany, 1968). 177 pp., $4.95. Reviewed by Robert M. Thornton THE AUTHOR, Professor of Ro mance Philosophy at Columbia University, offers no systematic defense of conservative values; here instead is a collection of 128 THE FREEMAN February short pieces containing his reflec tions on what is wrong with Amer ica. Several have been published before in Reader's Digest, Satur day Evening Post, Modern Age, and other magazines. It is grati fying to come across a scholar who, though not a professional economist or political scientist, can write with so much good sense on these subjects.

Many "liberals" would declare the only thing wrong with our country is that it has not changed enough. Professor Pei disagrees and makes the observation that instead of limiting change to the reforms necessary to ensure jus tice for all we have for years been casting aside what made this na tion great - throwing out the baby with the bath water, as the Ger man saying has it. What is the matter with the United States? The answer, in a word, is Statism. A nation founded on the principle of personal free dom under limited government has embraced collectivist ideas op posed to individual liberty and glorifying the State. This is mani fested in progressive income taxes, compulsory social security taxes, inflationary fiscal policies, bureau cratic controls and regulations, and astronomical Federal spend ing. Of course, totalitarianism is not simply a political or economic problem; it signifies, basically an ethical and moral decline. Weare, for instance, very happy to shrug off personal responsibility; and no longer held responsible, we find life dull and meaningless. Then the cry goes up for constant hand outs and entertainment instead of for opportunity and challenge.

Although imperfect, as all na tions of men must of necessity be, this country was once the most respected and admired in the world. But as we embrace alien ideologies, we succumb to the de mands of our critics to do penance for our prosperity, as if our pros perity were at the expense of other countries instead· of being the con sequence of values held by the men who founded this nation and shaped its institutions. So, concludes Professor Pei, having made the wrong turn sev eral decades ago, we should return to the fork in the road - and take the Right turn. ~ the Freeman VOL. 19, NO.3. MARCH 1969 The Alienated American Linda Darling 131 A challenge to the youth of America from one who cares deeply. Education in America: .6. The Perpetual Adolescent George Charles Roche III 136 Adjustment to the mediocrity of undisciplined youth denies maturity and the advantages of civilization. Tenure Thomas L Johnson A biologist examines the stultifying effects of the tenure idea.

145 Training in Trust Harold O. J. Brown 149 A theologian rev"iews the works of the late Karl Heim on the importance of mutual trust in human affairs. Distinguished Everybodies Helpful suggestions for' finding life's meaning. Archie Peace 156 The Rise and' Fall of England: 13. Reform Id'eas into Political Action Clarence B. Carson 158 How the Liberal Party under Lloyd George gave way. to the labour Party and political implementation of socialism before and during World War I. A Housing Policy for Great Britain J. Enoch Powell 171 An exciting speculation on the advantages of denationalizing the housing business. Hands Off Southern Africa William Henry Chamberlin 176 By what right does the U. S. Government pretend to solve the racial problems of other nations? Dynamics of the Free Market Robert H. Eagle 183 How the profit and loss system serves the people at a tolerable rate of change. Book Reviews: 186 liThe Third World" by Franco Nogueira "Dagger in the Heart: American Policy Failures in Cuba" by Mario Lazo "The American University - How It Runs, Where It is Going" by Jacques Barzun Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON ON-HUDSON, N. Y. 10533 TEL.: (914) 591-7?-30 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN 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. 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, 1969, 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 "The Rise and Fall of England."

THE ALIENATED AMERICAN LINDA DARLING THE ALIENATED American is cer tainly a visible entity in American society today. He is faceless, opin ionless, lacking commitment and independence. He is the man who watched the murder of Catherine Genovese and did not want to be come involved. He is the nonvoter who avoided the polls in November because of a vague, frustrated animosity toward the American "choice." He is the affluent subur banite, the blue collar worker, the· dissatisfied farmer; he is the do nothing, the silent, the forgotten American. A December, 1968, Harris Sur vey reports that at a time of un precedented affluence in our coun try, 28 per cent of adult Ameri cans feel largely alienated from the mainstream of society. More than half of the voters polled felt that their lives. w.ere ..of..Jittle concern in the social structure and that their opinions were of little value to their "representatives"

in government. When did this malady strike the American public? How did the home of the free and the brave become a fa~ade for the uncaring mass of "typical" citizens? Why has the proud America of yester year become an America of shame and violence? Where did the Amer ican people go wrong? Is, perhaps, the American of to day being pushed into a mold he does not want or deserve? Is our ever-growing government mini mizing the American citizen to a point where he is nearly extinct? It is my opinion that big govern ment, by offering effortless ma terial happiness, undermines the individual's right to do for him self. Are these materialistic stand131 132 THE FREEMAN March ards really more important than the individual's right of decision, his self-respect? The government has evolved in to a corporation surpassing the power of any private enterprise in land owned, in investments and income, in total payroll, and in employees. In Washington are officials who control the spending of nearly 200 billion dollars a year, which is a total of 350 thou sand dollars a minute. They com mand one-seventh of the American citizens in their ever-growing army of employees. They manage 800 million acres of land - one third of the nation - and spend one of every six dollars spent each year on goods and services.

Big Brother can provide you with an education, a job, or, all else failing, a welfare check. His power pervades every aspect of public, and private, life. He can even influence consumer goods by boycotts such as that against United States Steel last year. In this controlled existence of the American, individualism, sponta neity, and privacy from Big Brother are rare. You are told you should be ready for the world at twenty-one, ready for the arm chair at sixty-five, and ready for the grave at seventy-six. All else is taken care of for you. With the problem of sustaining himself al leviated, man has lost touch with the "human condition" and he ceases to care about the world around him. If there is not an in ternational catastrophe, material wants will be supplied by the omni present welfare state. Handouts May Be Harmful There is a time when welfare is necessary to help an indi vid ual and is, therefore, good. But there is also a time when this gift should be more than an unrestricted ' handout. There are often jobs available that pay less than the welfare check, so the individual's reason tells him not to work.

Should we not question the in efficiency of the government bu reau that fails to find a solution to such a major problem or even to acknowledge the existence of such a problem? Is the Federal government really so distant from the situation that it cannot see these things itself? If so, then the management should be brought out of the heights of the govern mental hierarchy back down to human size. F. P. Keppel, the pres ident of the Carnegie Corporation, once noted, "We all know that foundation aid can increase mea surably the pace of any social tendency, but we don't seem to know when this artificial accelera tion ceases to be desirable." The handout, the idea of some thing for nothing, tends to under1969 THE ALIENATED AMERICAN 133 mine individual initiative. The American is denied the existenGe of a feeling deeper than hunger. He is told he is too small to he a significant force in our automated society, that he is a mini-person.

It is small wonder that more and more citizens' are in a mood of open rev~lt ag.ainst the machinery and the men of government, against an increasingly imper sonal bureaucracy, a top-heavy Washington, a statistical model of services that dehumanize man and perpetuate a cycle of dependency. Relieved of Incentive Program after program aimed at "establishing domestic tran quility and securing the general welfare" has had almost the op posite effect: less tranquility and more violence, more public "wel fare" and less personal well-being. For example, urban proj ects and computerized .programs take the incentive and personalization out of bettering one's own community. No longer can the individual con tribute his services to the com munity structure. He is too small to be effective so he must pay taxes for outsiders to come and do the job. He becomes little more than a social security number, a life insurance policy number, a house number, and a telephone number. While the sense of com munity withers, the sense of personal identity and the feeling of being an active, determining force in one's own life also diminishes.

It is becoming increasingly true that those protesting students who carry signs reading, "Do not fold, bend, staple, or mutilate; this is a human being," speak for the frustrations of Americans every where. Through all these com plaints runs a common thread: that society is losing touch with the individual; that the sense of community has crumbled; that the power to control decisions affecting one's own life is vanishing; that the precious, intangible thing the individual human spirit is be ing neglected or injured. Rendered Irrespon$ib/e As the state has absorbed man's independence, our society has be come more socialized. The epitome of this. shift of dependence is the concept of pure communism where all responsibility is taken from the shoulders of the individual. He is told what to do in his work, his home, his religion, and his values. He need not care about business, church, or education be cause these things are no longer his responsibility; they are all controlled by the state. But what becomes of the man? Employment for all, poverty for none. Where is his incentive? So in this grow ing society man becomes apathetic 134 THE FREEMAN March to his environment because Big Brother always takes care of him.

Because he is powerless, he loses contact with the power structure. In his essay, The Cold Society, Nat Hentoff notes, "It is that in difference of power to man - the power of the state, the power of economic forces, the power of sci ence - that has been felt with chilling impact in this century. And the corollary of that coldness is man's estrangement from him self, and from his society." In this estrangement man is losing a sense of personal identity and of responsibility. Our heritage was founded on the basis of indi vidual liberty, but will surely crumble if these liberties are in fringed upon by the state. We were forewarned by Thomas J ef ferson when he said, "Yes, we did produce a near perfect Re public. But will they keep it, or will they, in the enjoyment of plenty, lose the memories of free dom? Material abundance without character is the surest way to destruction." Dissect and Control This materialism, the trademark of our modern society, has en circled the religious life of Amer ica as well. Gradually, as man's identity in the secular world be comes more and more indistinct, he finds it harder and harder to find God, because science tells him that in time there will be no more mysteries. Our society has become secularized and materialized to a point where everything can be dis sected and then controlled.

The basic axiom of the new re ligion of technology is that the system cannot break down. We have faith in the system. It can be proved whereas God cannot. As the image of God becomes less im portant, so do the other basic val-i ues of man. Science has given rise to a new breed of man. I would call it homo technicus because it is a man that, in the species sense, is technologically self-sufficient. Man can, by his technology, master nature and control the environ ment, subduing nature to his will. He has learned to cope with all questions of importance without recourse to God as a working hy pothesis : everything gets along without God, and just as well as before. The supreme being of homo technicus is the system, and men are merely its servants. It is this lack of identity and of re lating to an outer force, this ex isting only as an economic unit in society that makes man insuffi cient for the demands of life. He becomes the alienated American.

A comment that Jacques Ellul made in his observation of homo technicus struck a very tender spot. He said, "When the edifice 1868 THE ALIENATED AMERICAN 135 of the technological society is com pleted, the stains of human pas sion will be lost amid the chro mium gleam." Man can advance materially and still lose ground if he does not also advance spiritu ally. He is now in the process of losing his human spirit. Can he continue to exist like this? I think not. A Challenge to Youth: To Live in Dignify What is the answer? There is no simple solution to this dilemma, but the answer lies in today's youth. Significantly, the young adults of the present are not only fighting for an end to poverty and war, but just as urgently, for decentralization of decision-making, less Federal government. They are radically questioning the welfare state in its present form, and are searching for ways by which men can live in dignity as well as eco nomic security.

Can we succeed? I firmly be lieve that we can. Simply fighting for these things, dropping the mask of apathy, and becoming com mitted to this idea is, in itself, a victory. Self-respect can grow only out of courage; dignity can de velop only from conviction. "The reward," remarks a young folk singer, "is the act of struggle it self, not what you win." In this case the stakes are high enough to merit the risk. ~ About the Author Miss Darling is a sixteen year-old senior in high school and intends to major in polit ical science in college. She has received numerous awards in writing and an American Le gion medal in the American ism and Government program. She has been active in the last two presidential elections and has been a member of Young Americans for Freedom. This article, "The Alienated American," grew out of a civics class discussion and a strong conviction that this is one of the most urgent prob lems facing our nation's youth today. It is her hope that not only the experienced politician but also the youthful crusader will be motivated to take a good, hard look at the present American system and then ini tiate action for the preserva tion of a government of, by, and for the people rather than over and against the individual.

EDUCATION IN AMERICA GEORGE CHARLES ROCHE III 6. The PerpetualAdolescent By WAY of a decline in standards, in intellect, and in discipline, we have bred a new sort of social animal, for whom the education ist's aim is not achievement but "adjustment." That word has come to mean a number of things. To some educators, "adjustment" originally meant the provision of a modern "functional" program of high school education for those who would not receive college or vocational training beyond high school. Roughly 60 per cent of American high school children were assumed to fall into that category. But, as one of those edDr. Roche is Director of Seminars for the Foundation for Economic Education. He has taught history and philosophy in college and maintains a special interest in American edu cation. ucators, Dr. Harl Douglass, has commented, "It is coming to be believed by more and more peo ple that a good program for that 60 per cent might well be an ex cellent program for all American youth." Dr. Douglass appears to be suggesting that "adjustment"

is now aimed at slowing those of college caliber to the mental pace of the majority. Our American educational ideal is being molded more and more to that image. We now place spe cial emphasis upon training the dropouts, upon making the cur riculum so soft that no one can flunk. Thus, we are caught up in one of the fundamental "demo cratic" dilemmas of our age. It is no longer enough merely to pro1969 THE PERPETUAL ADOLESCENT 137 vide schools for all; today we must determine what purpose those schools are to serve. If we make our schools sufficiently mindless to accommodate those least able, we run the grave risk of turning out a totally mindless graduate. Such a solution should be unsat isfactory, unless we wish democ racy to mean the rule of the uniformly ignorant and incom petent. Perhaps we've toiled unduly over defects and weaknesses and shortcomings, to the grave neglect of talents and virtues and achieve ments. If we wish our schools to be only shelters for idle youth, we must recognize the frankly revolu tionary premise which underlies such a system. The logic of such "democratic" pedagogy implies a total structural change of tradi tional American society.

The American Adolescent The American child is famous throughout the world for having never confronted authority in his entire life. He typically is raised by parents who are permissive beyond belief, is educated in a school system in which the teacher is known to have no power to compel order, and is entertained by a television set whose pro gramming and advertising con stantly cater to the most childish of fads. Perhaps the poor parents of such children should not be held fully accountable. Not only are they contending against the spirit of the age in any attempt to as sert discipline, but in late years parents have been informed by the child psychologist that at tempts to impose standards of dis cipline on their children will inter fere with proper "development." Not only are we bending every effort to make spoiled brats of our young people; we carefully prolong this anti-training period by keeping our children in school far longer than do most other so cieties. The nature of that school ing seems to aggravate further the whole situation, directly inter fering with the transfer of ethical and cultural traditions from one generation to the next. The par ents are told that the schools will do the job, and then the schools do nothing of the kind.

Often, the hardest working and most intelligent parents have the greatest difficulty in raising their children. Many of the most finan cially successful people in our in dustrial society are busied by vir tue of their success. They have a great deal of money, but very little time to offer their children. All the advantages of work disci pline, which the fathers learned so well, are denied the rising gen eration largely because of the affluence, success, and hurried pace of the fathers. A road without 138 THE FREEMAN March challenges or responsibilities be comes the road too easily traveled by many of America's young peo ple. Here, again, the temptation is to delegate the responsibility to professional educators whose un derlying philosophy makes its proper discharge impossible. Once the family was bound to gether through working at com mon tasks, often including the tasks of feeding and clothing and housing the family. What com parable experience is available to the young person of today? In the absence of meaningful moral ex perience and hard work, today's young are directed toward mate rial gratification of their passing interests. The promises of our technological civilization and the philosophy of our educational sys tem both contribute to the malady.

To pin one's hope for happiness to the fact that "the world is so full of a number of things" is an appropri ate sentiment for a "Child's Garden of Verse." For the adult to maintain an exclusive Bergsonian interest in "the perpetual gushing forth of nov elties" would seem to betray an in ability to mature. The effect on a mature observer of an age so entirely turned from the One to the Many as that in which we are living must be that of a prodigious peripheral rich ness joined to a great central void'! 1 Irving Babbitt, Rousseau and Ro manticism, p. 277. That great central void to which Babbitt refers is painfully evident in the breakdown of family and the collapse of social standards. Still, we continue the "protection" of our young from any responsi bility or reality. Teen-agers are not to be punished as adults, though they commit the same crimes. The open warfare between weary adults and abusive teen agers continues on all fronts and has today been elevated into a pseudocultural movement. We bribe our children with far more money than we would ever have believed possible to spend, and then are amazed when their child ish tastes, backed with these im mense amounts of purchasing power, set standards of taste in entertainment at steadily lower and lower levels. We expect no re sponsibility in our children and all too often get what we expect.

" Adjustment" In the name of "progressive education" we have emancipated the young from all traditional au thority. We label the result "free dom," completely forgetting how difficult it is to be responsibly free. We have encouraged a revolt against standards and against dis cipline by the young people, who ultimately will be asked to pay a high price for their incapacities. One of the worst culprits in 1969 THE PERPETUAL ADOLESCENT 139 consigning these young people to their lifelong fate has been our system of formal education. Many educationists insist that the medi ocre standards in today's schools are "set by an intellectual aristoc racy" and are far too high! They regard the minimal standards of literacy imposed by industry or by higher education as unwar ranted demands. Reading, writ ing, and arithmetic have become suspect in the minds of many. Consider, for example, the senti ments of one junior high school principal: Through the years we've built a sort of halo around reading, writing, and arithmetic. We've said they were for everybody ....

We've made some progress in get ting rid of that slogan. But every now and then some mother with a Phi Beta Kappa award or some em ployer who has hired a girl who can't spell stirs up a fuss about the schools ... and ground is lost .... When we come to the realization that not every child has to read, fig ure, write, and spell ... that many of them either cannot or will not master these chores . . . then we shall be on the road to improving the junior high curriculum. Between this day and that a lot of selling must take place. But it's com ing. We shall sonle day accept the thought that it is just as illogical to assume that every boy must be able to read as it is that each one must be able to perform on the violin, that it is no more reasonable to require that each girl shall spell well than it is that each shall bake a good cherry pie .... 2 There in capsule form is standard less education carried to its logi cal conclusion!

Competition Unwanted Such an attitude, at first glance, is hard to understand, that is, if one assumes that the purpose of education is to educate. But if one believes that the purpose of education is to achieve only "ad justment," then much of the edu cationist mumbo-jumbo begins to fall into place. Mortimer Smith also quotes a letter from a state department of education inform ing parents who plan to teach their children at home that under no circumstances will they be al lowed to do so: No matter how competent the par ents may be, the child who obtains his schooling at home is not having an experience equivalent to that of the child who goes to an authorized school. The school program does not consist only of mastering the 3 R's and the various content subjects. Per haps the most important part of the school program is the association in a group .... Practically all Ameri can living today is a cooperative af2 As quoted by Mortimer Smith, The Diminished Mind, pp. 36-37.

140 THE FREEMAN Marck fair. Children have to rearn to take turns and to share. Group discipline and group loyalties have to be de veloped. 3 "Adjustment" rather than learn ing would appear to be the wave of the future! All self-discipline leading to in dependence is denied the young person in such a system. The in stitutions of higher learning in this country constantly complain of the quality of material they are given to "educate." It seems that the knowledge of geography, his tory, grammar, spelling, arith metic, science, or what-have-you, as achieved by the products of our public school system, is so slight as to be a constant embarrassment to them and to the institutions of higher learning and business firms where the well entertained but poorly educated young people eventually go. I use the phrase "well entertained" w,ith good rea son. On reading about the uninhibited conduct of certain grade-school class es, with free discussion, finger paint ing, group games, or whatever the youngsters want to do, an older man said: "That's not a new feature of education. They had that when I was a boy. They called it 'recess.' "4 3 Ibid., pp. 49-50.

4 Calvin D. Linton, "Higher Educa tion: The Solution-Or Part of the Prob lem?" Christianity Today, Feb. 16, 1968. The "Old-Fashioned" Way Meanwhile, some educationists insist that obeying the teacher or stri ving to master a difficult sub ject is negative in its impact upon the child. What an older society viewed as sound mental, moral, or intellectual training is today dismissed as "old-fashioned." In deed, some of the "progressive" educators have carried their non education to lengths that are in creasingly repudiated by more and more people concerned with edu cation. Today the term "progres sive" often is held in bad repute. Yet, many educational policies stemming from the same philo sophic roots continue to dominate much of our educational structure. The same problem continues to face us. How do we lead a child toward maturity except by initi ating him into the demands and standards of adult life? The old fashioned answer to that question rested upon definite standards, en forced through definite discipline.

During my boyhood in the mountains of Colorado, I was priv ileged to .attend a one-room, one teacher school that met the needs of children in all eight elementary grades. Admittedly, I was fortu nate to have a remarkable teacher of great character and str'ong per sonality, who was then and re lllains a profound influence on my life. Yet, without the benefits of 1969 THE PERPETUAL ADOLESCENT 141 swimming pools, guidance coun selors, of the 1,001 other such items now assumed to be "essen tial" to education, we children of that school (incidentally, a cross section of well-to-do and very poor) managed to learn our read ing and writing and arithmetic, while learning to respect adults, respect one another, and finally to respect ourselves. Throughout, the standards we were expected to maintain were never in doubt. We also knew at all times who was running the school! Such schools and such teachers have been the tradition rather than the exception in this country.

In fact, much of what we now call "juvenile delinquency" would have been subject to quick solu tion in the woodshed of an earlier day. But then, such a system as I am describing was based upon standards and discipline, viewing children as individuals, individ uals important for their own sake, individuals destined to assume a responsible place in the commun ity. Today, we extend no such courtesy to our young people. Necessity for Individual Discipline and Standards The development of the individ ual presupposes the development of a strong capacity to judge the world around him and a genuine self-commitment moving the individual to act on the basis of that judgment. As Nietzsche described the process, what is required is self-mastery, the individual's im position on himself of a style, a restraint, a proper form of be havior. When the educationists an nounce their intention to teach the young "adj ustment to life," the first question which arises is how "life" might be defined. If by "life" the educationist means only adjustment to a pattern of po litical conformity in which man no longer has problems because he no longer has aspirations, then such a definition rn.ust be dis missed. A truly individual adjust ment to life must reflect not mere conformity, but good .and bad, tragedy and comedy. Without room for man to be a hero, to pursue an ideal, to become unique ly himself, there is no opportun ity for the individual to be truly human. When men drift rather than strive, the direction of that drift is always toward barbarism, toward a decline of that sense of style and self-discipline which makes for the civilized man.

Thus, a great civilization is no more enduring than are theproper .conventions among its citizens. The child in whom good habits are not inculcated becomes the child in whom bad· habits have filled the void. Often, the basis for right 142 THE FREEMAN March conduct is less a reasoned position than it is a matter of habit. Habit in this sense is a reflection of the wide experience of the race, passed on by disciplined and demanding standards to each generation as they grow toward rnaturi ty. Not Power Over Others, but Self-Control The acquisition of such habits is never easy, since it demands much from both pupil and teacher. In fact, many men never seem to learn the lesson. "Experience keeps a hard school, but fools will learn in no other." Yet, most of us have a hard time learning from self experience, let alone the experi ence of others. The business of be ing human is never easy, and our young deserve all the help they can get as they strive for matur ity and the formation of civilized habits. What that striving has taught the Western world is that the really valuable power in this universe is not the power over other men, but the power over oneself. This power reflects not only knowledge, but restraint; not only energy, but will. To maintain standards means to develop the ca paci ty to choose and rej ect, to have so disciplined one's attitudes as to have established an ethical center uniquely oriented to self, producing right conduct in the individual no matter what the conduct of the world around him might be.

If the child is to grow toward such self-discipline, the formation of proper habits must, as Aristotle says, precede reason. No child is truly free to choose until he has become sufficiently disciplined to see the full implications of his choice. When we limit the forma tion of proper habit, we blunt the power of discrimination in the young, thus binding rather than freeing. It becomes clear that genuine learning and civilization of our young is a process which takes place only when the proper exercise of authority, the author ity of standards and discipline, is present in education. The necessity for such disci pline is especially apparent when we consider the unique attribute which human beings call mind. The word "mind" implies far more than the human brain. All pat terns of thought, all moral and aesthetic judgments, are the work of this amazingly individual qual ity possessed by each of us. All value judgments, all civilized be havior, stem from the individual's mind within which symbols are understood, evaluated, and applied in one's behavior. The idea of edu cation is to enlarge that process, not merely by the passive recep tion of ideas, but by the mind's development of the capacity to 1969 THE PERPETUAL ADOLESCENT 143 sort out, choose between, and eval uate those symbols and ideas. In short, all meaningful knowledge is knowledge which we have "made our own"; until the individual ac quires the necessary discipline of mind to do so, he has not been truly educated.

Disciplined Teaching and Learning Essential to Self-Mastery Some authority must be present in education in which the superior capacity of the teacher demon strates subtle distinctions to the relatively untrained and undisci plined mentality of the student. In this sense, values are constantly recreated in the mind of each in dividual. That process of re-crea tion is education, and demands that the teacher be sufficiently disciplined to have mastered the concepts and the processes, also demanding that the student be sufficiently disciplined to achieve the same ultimate self-mastery. In the old academic term for various subjects, "disciplines," the idea is implicit that the mind must be sufficiently developed and trained to think before it can rec ognize what is of value and what is valueless. True development of the individual rests on that ca pacity to distinguish and choose within his mind and heart. It is that capacity to choose which makes us human. It is the removal of that disciplined capacity to choose, as fostered by modern ed ucation, which would make of us mere "adjusted" automatons.

Such choice is never easy. Life itself is never easy, demanding obedience, renunciation, and the expenditure of great effort if it is to be truly meaningful. Through out the ages philosophers have demonstrated the necessity for sacrifice, for self-mastery. Yet, we are now told that man need not master himself to be "happy." Apparently more material goods and politically controlled "secur ity" are to make self-discipline no longer necessary. True happiness lies upon a different path. We must learn to put ourselves into our work, to master ourselves, if ,ve will be truly civilized. It must not be the business of the teacher to teach the young only what the young wish to learn. Instead the experience of the hu man race must be offered to the young while proper habits are de veloped, allowing these young in dividuals to assume their own self-disciplined place in civilized society. In this connection, we are all the teachers of the young. The churches as well as the schools have an obligation in this regard, and the primary obligation must rest with the parent and the home.

The idea must be conveyed that good hard work is preferable to 144 THE FREEMAN March "getting by," that people receive from life exactly what they put in, that privileges and obligations go hand in hand. As the schools pursue this gen eral disciplinary function, they also must pursue the disciplines of form, number, and language. Read ing, writing, and arithmetic· are far from outdated, no matter what the opinions of the professional educationists. When these disci plines are set aside in favor of "personality development" or "group adjustment," the school is no longer serving its function. The school must be far more than an elaborately contrived and ter riblyexpensive baby-sitting facil ity. It must first and foremost be an institution designed to. impart sound moral and intellectual disci pline to the citizens of tomorrow. Such discipline must be a disci pline of both mind and heart, re flecting an external discipline lead ing to more important, internal, self-imposed discipline. Such a sys tem would produce true individ uals, complete human beings. ~ The next article of this series will ask, "Why Institutionalize Our Errors?"

IDE~S ON tIBERT¥ Sell-Reliance THE TIME has come for us to re-establish the rights for which we stand - to reassert our inalienable rights to human dignity, self-respect, self-reliance - to be again the kind of people who once made America great. Such a crusade for renewed independence will require a suc cession of inspired leaders -leaders in spirit and in knowledge of the problem, not just men with political power who are opposed to communism, or to diluted communism, but men who are militantly for the distinctive way of life that was America. We are likely to find such leaders only among those persons who teach self-reliance and who practice it with the strict devotion of belief and understanding. J. 0 L LIE ED M U N D S, That Something THOMAS L. JOHNSON LIFE, by its very nature is ever changing. From one moment to the next there is always altera tion in the chemical and physical structure of all living matter. The fact of change applies to every level of organic organization, from the atomic to the organismic. Man, an organism, is not and cannot be an exception to this law of nature.

Since organisms do change with time, the interrelationships among organisms also change, but there are those who, by mere wishing, hope to avoid their nature and the reality of change which must oc cur in social circumstances and thus seek to establish a static sit uation. In the attempt to avoid possible change relating to employment, certain men have· succeeded in establishing an artificial system which allows the human to be unDr. Johnson is Associate Professor of Biology at Mary Washington College of the Uni versity of Virginia. naturally Hprotected" (actually harmed) by the gaining of "job security." The mania for security has gripped the human imagina tion, particularly in this century, and has caused many to pursue a goal, the achievement of which can only result in mental degener ation and intellectual stagnation. In the field of education this mania for security is exemplified by the system known as tenure: the granting of a permanent posi tion to an individual who has sat isfactorily completed a trial pe riod of a number of years. Once tenure is granted, the individual receiving tenure can only be re moved from his position due to gross misconduct in the perform ance of professional tasks or im moral behavior of a serious nature.

There can be' no rational ar gument presented to justify grant ing a permanent position to any one in any type of profession or 145 146 THE FREEMAN March field of work. JOust because a man has performed well in his work for a number of years (whether it be two or twenty) cannot be a guar antee that he will continue to per form well the next year, or for that matter, the next week or day. Man does alter his behavior con stantly and there can be no assur ance, no matter how stable an individual may appear to be, that he will continue to function well in a particular type of work. In a profit-making business no sane employer could ever afford to guarantee a job to a man for any lengthy period of time, and cer tainly not for life (up to age 65). An employee must always be sub ject to evaluation by an employer if any business is to survive. If an employee did not perform his tasks well, it would mean a loss of rev enue for the business; and if this behavior persisted, and an em ployer were not free to remove the individual from his post, the result could be the collapse of the enter prise. An employer must always be free to replace an employee who, in his judgment, is not contribut ing to the beneficial activities of the business or who cannot per form his tasks as well as another.

To guarantee a lifetime job to one man would be to deny the pos sibility of a job to another man who may have superior ability. The number of positions in any business is not unlimited; there fore, if individuals are given per manent positions in a particular business, they could not be re placed by others of superior talent and intellectual caliber until such a time as the tenured individuals completed their careers. With bus iness expansion new people are brought into a particular business, but there would still exist a large number of tenured employees who would have to be retained until their retirement occurred which would inevitably prevent more highly qualified individuals from obtaining these occupied jobs. Businesslike Education The business of education is not, with rare exceptions, a profit-mak ing business, although it must be come one if the quality of educa tion is ever to be raised to the level of its real potential. This regrettable circumstance clouds the academic scene and prevents one from seeing the actual losses which must result in any circum stance which rewards mediocrity and suppresses superiority.

In her superb political treatise, The God of the Machine, Isabel Paterson writes: "One of the early 'cases' by which 'security of tenure' was made to seem plausi ble for teachers indicates the utter confusion of thought on the sub ject, arising from failure to rec1969 TENURE 147 ognize the political power in oper ation. A teacher in California, of excellent character and teaching ability, was dismissed by a cor rupt school board for no good reason. The case was taken to court. The teacher was reinstated, on the proper grounds that she had a contract for the term and had not defaulted on it. This was thought a sufficient reason for urging measures by which a teacher must be considered as en gaged indefinitely, for that is the only meaning for 'security of ten ure' ; though this is absolutely irrelevant to the original issue (enforcement of contract), and nullifies the contractual right of the employer."

Noone can ever guarantee that an employer will always use ra tional criteria in judging the qual ifications of an employee, but when there is a contractual agree ment involved, one can always turn to the courts if one party fails to comply with the stipulations of the contract. No one can ever guaran tee that an employee will continue to function in an advantageous manner in a particular position and so it would be foolish for an employer to engage in a lifetime contract with an employee. Change is always with us, no matter how diligently some may attempt to hold it back. Tenured teachers and professors realize that they do not have to broaden their intellectual scope in order to retain their positions. Con sequentlY,many, having obtained "job security," cease to pursue knowledge in their particular dis cipline and become progressively outdated with every passing year. Tenure is a practice which na turally follows from the philoso phy of collectivists. It is a tech nique to deny individual ability for the sake of the "security" of the masses. It is a means of re warding mediocrity and allowing it to de,generate into stagnant par asitism. Academic tenure creates scholastic somnambulism.

Security Impedes Progress In any dynamic system (and all businesses are dynamic systems) the alternation of circumstances must not be impeded, for if they are, this can only result in a dis ruption of the system and a slow ing down or cessation of activity. To grant any man a permanent position simply on the basis of performance during a trial period, is to introduce a possible disrup tive element into a dynamic· sys tem which could, and often does, drastically impede progress. If an employee is efficient and performs his tasks well, it is to the advantage of the employer to retain the services of this individ ual. If an employee finds the em148 THE FREEMAN March ployer and the job to his liking, it is to his advantage to remain in his present position. An employer employee relationship is mutually advantageous as long as both parties are satisfied with the cir cumstances. Whenever either party determines that the conditions have changed and the relationship is no longer desirable, both should be free to release each other from a short-term contract.

A tenured employee is now free to seek employment elsewhere, but the employer of a tenured em ployee is not free to replace that employee with another man. Such a circumstance of necessity places a maj or obstacle in the dynamic situation which must exist in an employer-employee relation ship, and we can now witness the results of this blockage by noting the intellectual inactivity of many tenured teachers and professors. The tragic consequences for stu dents who study under these indi viduals cannot be estimated. Long-Term Employment Contracts Lead to Stagnation To advocate the prevention of freedom of action on the part of either the employer or the em ployee is to deny the existence of individual rights. Every man must be free to choose the activities of his life which will best suit his needs. No man can, in reason, be required to maintain relationships over an extended period of time in an employer-employee situation. An employee should not be forced to remain in a particular position for life (a practice of medieval times) and an employer should not be forced to grant a lifelong posi tion to an employee (a practice of the twentieth century). In either case freedom of action is pre vented and the inevitable conse quence is a degree of stagnation.

The concept of tenure is incom patible with reality. It is an idea which developed out of an irra tional evaluation of circumstances and has been maintained because of the lack of intellectuals who would or could support and ra tionally defend the basic principle of freedom which is individual rights. Tenure, a collectivist concept, and individual rights, a capitalist concept, are mutually antagonistic. The former is an attempt to deny the reality of change, while the latter is fully compatible with the nature of life and the interrela tionships among organisms. ~ Training in Trust '--- __ HAROLD O. J. BROWN __--1 A NUMBER of years ago the Ger man theologian and philosopher, Karl Heim, a man who also knew a good deal about the natural sci ences, wrote a book on the ques tion of certitude, which he called "the life-and-death question for religion."! He soon makes it clear that the question of certitude how we can be certain of anything - is vitally important not only for religion but for the whole of hu man life and society.

He begins by making a distinc tion between two kinds of certi tude: one is based on calculation 1 Karl Heim (1874-1958), Glaubensge wissheit. Eine Untersuchung iiber die Lebensfrage der Religion, 3rd edition (Leipzig: J. Hinrichs'sche Buchhand lung, 1923). The Reverend Dr. Brown is Secretary for students of theology at the Union· Interna tionale des Groupes Bibliques Universitaires (I.F.E;S.) in Lausanne, Switzerland. (Berechnung), the other on trust (Vertrauen). It is not only in mathematics, engineering, and the sciences that we seek to arrive at certitude by means of calculation. When a busi nessman, for example, considers introducing a new product, he wants to have some certitude or assurance that it will move well. Therefore, he makes a calculation of the soundness of this project, taking into consideration what he knows about his customers, their tastes and requirements, the mar ket situation, the quality of the new product, and as many other relevant factors as he can identify and evaluate. The degree of certi tude which he can obtain in this manner concerning the success of his venture is less than that ob tained by an engineer calculating the weight of a bridge section, but 149 150 THE FREEMAN March the kind is the same: it is based on calculation, but the calculation of less tangible and certain fac tors.

When it is a question not of investing in a product but a per son, in other words, of taking on a partner and giving him a share of responsibility and authority, a businessman will also make cal culations. He will attempt to eval uate his prospective partner's know-how, experience, initiative, ability to get along with people, several other factors - and his fi nancial and personal integrity. However, when one is .dealing with human beings as opposed to merchandise, there is always needed something more than mere calculation, no matter how com plex and careful. A partnership can be an unhappy proposition and many are - if one partner's confidence in the other is based on nothing more than the calcula tion tha t the other is unlikely to try to cheat him. For a better re lationship, in business as in mar riage, something deeper is neces sary. Mere calculation on the basis of past performance does not give a man much real confidence in his business partner or in his wife: he has to know something about his or her character. Character cannot be computed.

It is at this point that Karl Heim points to our need for the second kind of certitude, for the kind that is based not on calcula tion but on trust. If we cannot trust at least some of our fellow human beings, our life becomes a savage jungle. Much of Heim's book is an attempt to prove that there can be a sound basis for personal trust - that trust need not be just wishful thinking. Rather than follow him in this de tailed argument, let us consider some of the implications of his basic conviction that trust is es sential to truly human life. Trust Implies Mutuality The certitude which is based on calculation depends only on the data which can be ascertained and on the accuracy of one's calcula tions. If I want to be certain how much a man owes me, I have only to add the amounts of the notes he has signed plus any unpaid interest. The certainty of this knowledge depends on me only to the extent that I can locate all the necessary figures and add them up correctly.

But when it comes to the ques tion, "Will he pay me back?" the situation is different. To make the case clear, let us suppose that the loans are unsecured. In giving a man an unsecured loan, I have ex pressed confidence in him as a man of a certain integrity. My certainty that he will repay me 1969 TRAINING IN TRUST 151 depends on his character, or rather on my evaluation of it; that is to say, it depends on my ability and inclination to trust him, and that involves something more within me than merely my ability to add. As Heim observes, trust is a mutual thing. My ability to trust you depends not only on my knowl edge of you, but on my knowledge of myself. He writes: "Thus I can only trust another human being if I myself deserve to be trusted. If I, in my own life, always go after the strongest attraction. then I will be unable to believe that any other man is different. Only if I myself am determined not to be diverted from my course by enticements or by threats will I be able to think that another man can possess the same deter mination. Thus, when I come to trust another man, to do so makes me feel obligated to a very definite attitude of the will myself. From this perspective we understand the influence which every rela tionship of trust has on the people involved. We understand why many people only become able to believe in goodness again when they find a man whom they can trust. Nothing has a more ennob ling effect on us than to find an other human being in whose love we can believe .... Thus the trust which another person confides in us produces a power which lifts us up and carries us beyond our own limits. As often as a -relation ship of trust arises between two human beings, it is like closing an electrical contact. A current of living forces begins to flOW."2 Professor Heim does not add, as well he might, how much a breach of trust can hurt the indi viduals involved - not only may my whole world collapse if a trusted· friend betrays me, the same or even worse can happen if I betray my friend. How difficult it is for us to believe in the for giveness of a friend whom we have betrayed, or to trust him once again! He may remain perfectly trustworthy, but our betrayal of him has destroyed our own ability to trust!

The Centrality of Trust for the Individual Does Professor Heim correctly .evaluate the fundamental impor tance of being able to give and re ceive trust? Even without examin ing his evidence, most of us will sense that he is right. Each of us has had the experience of which he speaks. Even the trust of a dog or a horse has an effect upon us, making it harder to betray the animal by neglect or ill-treatment. How many of us have gone ahead and fulfilled an unpleasant obliga tion without compulsion or the 2 Ibid., p. 27.

152 THE FREEMAN March threat of untoward consequences, simply because we knew that someone we respected was trust ing us to do it? As long as a certain fundamen tal minimum of integrity is pres ent in the person being trusted, our trust influences him and strengthens him in his resolution to be trustworthy. The father who trusts his son not to lie to him does more to help him grow into an honest man than the father who always checks up on his son's veracity. On the other hand, if a trust worthy individual is put into a position where all those around hiln constantly betray him and each other, it is all but impossible for him to preserve his integrity. (This problem is faced often enough and in a very tangible way by an honest businessman forced to do business in a country in which the tax authorities take it for granted that all tax returns are fraudulent. How can you re main honest when the authorities assume, as a matter of course, that you will lie about your in come, and therefore tax you on twice what you declare? In some cases, the only alternatives are to go out of business or to give up one's integrity.) The ability to trust and to merit trust depends on the habit of trust, and trust is something that can be trained and developed. Just as no good coach will break an athlete's self-confidence by trying to force him to do something he simply cannot do, but will gradually build him up by pushing him each day to a slightly higher performance, so no good teacher will entice a pupil to dishonesty by trusting him at once with something which is beyond his capacity. On the other hand, just as no athlete ever becomes good unless he takes the risk of pushing himself harder than he thinks he can go, so no pupil becomes trustworthy unless he is trusted in some situations in which he could get away with cheating.

Over the years, and varying with the location, the kind of school, and other factors, our edu cational systems have built up ways of trusting their pupils and of exercising them in trustworth iness - the teacher may let the pupils grade their own tests; he may go out of the room during a written quiz, and so on. One of the great things about certain sports is that they force the teammates to trust each other, and teach them to trust themselves as well. There is, however, one limiting factor. We mentioned it a few paragraphs earlier: there must be a certain fundamental minimum of integrity in the person to be trusted. Without this minimum, 1969 TRAINING IN TRUST 153 all trust is misplaced, and it re sults only in deceitful dealing and disillusionment. It is precisely this minimum which is increasingly at stake today. The Centrality of Trust for Society An individual who cannot be trusted will eventually and inevi tably make moral and spiritual shipwreck of his life. Even if he should succeed in amassing wealth and power, he could have no true friend, no one who truly loved him. But the same is true of so cietyas a whole. Many people are blissfully unaware of the degree to which the very functioning of industry and commerce as we know them today depends on a certain fundamental minimum of integrity in most of the individ uals who make up a society.

Even the commonplace example of cashing a check at a bank, such as happens countless times a min ute throughout the United States, immediately confronts us with the implications of a substantial mini mum of personal trustworthiness for the conduct of any kind of business. What if I gave the teller a check for one hundred dollars and he counted out to me nine ten dollar bills in such a way that they looked like ten? It is easy enough to do, and many of us do not count the money ourselves if the teller has counted it out in front of us. But even if I recounted it at the window and discovered the short age, who is to prove that I did not palm the ten -dollar bill myself in order to get one hundred and ten dollars for a one-hundred-dollar check? Imagine a situation in which every such transaction had to be performed before witnesses, with prompt and immediate sanc tions for subterfuge. Such situa tions have existed, and they can exist again. There is no substitute for trust other than compulsion.

What happens when a lender cannot trust a borrower? He demands that the security be brought physically into his house and left there. The borrower, in turn, certainly will not accept a check, much less a credit in his bank account. He will demand that the loan be counted out to him in solid, metal money. In the extreme case he will even bring his own balance and weigh it before ac cepting it. Our Western civilization, based on several thousand years of Jew ish and Christian religion, has gi ven its citizens a long training in honesty and trustworthiness. All too often they have not learned their lesson well, but more often they have. Otherwise, the present system of commercial relation~ would never have arisen. The God of Israel demanded truth even "in the inward parts" (Psalm 51 :6), 154 THE FREEMAN March and praised the man who kept his word even when it cost him some thing to do so (Psalm 15 :.4) • Jesus told His followers that their speech must be such as to render oath-taking superfluous: their sim ple "Yes" or "No" should be its own guarantee of truthfulness (Matthew 5 :37). We all know plenty of examples of Christian and Jewish failure to live by these principles; in fact, we doubtless do not need to look beyond our own record for examples. But we have all profited by the fact that these principles do exist, and have been so clearly set forth by our religious tradition, and have, even though imperfectly, been honored by generations.

The Paralysis of Untrustworthiness That these principles, and the value-system built up around them, are breaking down, is hardly open to question. What the long range effect of such a decline in personal trustworthiness will be on our society is easy enough for the reader to proj ect. As long as there is a certain widely-accepted and honored minimum of personal in tegrity, individual responsibility will bear many of the burdens for the functioning of society. The al ternatives are chaos or compulsion. Leaving aside what will happen within society as individual rela tionships of trust become unreliable and disappear, let us look at the kind of maj or policy decisions which will be made by leaders of a society in which personal integ rity is being replaced by personal gratification. Karl Heim pointed out that peo ple who do not have firm ideals from which neither enticements nor threats can move them simply cannot believe that anyone else could have, firm ideals. This might explain why leaders of the United States, over a prolonged period, have seemed unable to believe that communists in general or Russians in particular will pursue their long-range goals despite their short-range convenience. How bet ter explain the persistent convic tion, or delusion, held in spite of all the evidence, that "the Rus sians are mellowing"? If we have lost the habit, individually and nationally, of following our ideals despite our immediate self-inter est, how can we believe that any one else will do so? And what terrible mistakes we will make through our inability to believe!

The Power of Faith A number of economic papers and books have been published re cently showing that if certain trends continue and certain poli cies are pursued, the dollar will collapse. This is not a moral judg ment, but a simple fact which will 1969 TRAINING IN TRUST 155 inevitably follow if certain factors continue to work. In the same way, despite the evident moral and re ligious implications of what has been said here, the conclusion that Western free-enterprise society must collapse - or turn into some thing unrecognizable and horrible - is not a moral judgment. It is a simple conclusion drawn from the evidence. Fortunately, there isa variable factor. That factor is man him self. Man cannot turn himself from a sinner into a saint by an act of the will, any more than he can make himself run a four minute-mile by willing to do so. Apart from a genuine and spec tacular conversion, no scoundrel can turn himself into an honest man, worthy of trust, by simply willing to be trusted. But for tunatelY,no one starts off in life as a perfect scoundrel.

Without wishing to deny the divine factor, or to fail to say that at a crucial point it becomes es sential - for that would be irre sponsible and dishonest for a Christian and a theologian - it is possible, and fully consistent with our biblical heritage and with the experience of Judaeo-Christian civilization, to say that there is a human factor, and that it is sub stantial. We have had the experi ences of which Karl Heim speaks, all of us, unless our human lives have been impoverished beyond all reckoning. We know the ennobling power in our own life of a friend's trust, even if imperfect and in completely merited by us. We have all seen the power of our trust to make another fulfill an unpleasant obligation, not because he must, but because we trust him. These are realities of human life and experience. They can be built upon, just as a coach can build upon the present strength and endurance of an athlete to make of him a champion in the future. We can build them in our own lives, and in the lives of those around us. The man who trains himself and others in trust and trustworthiness can have a certi tude, an assurance which the mere calculator can never know. ~ The Way It Is THOSE who are demanding. freedom from responsibility have yet to discover there is only freedom for the responsible.

PAUL L. FISHER DistinguishedEverybodies ARCHIE PEACE "WHAT'S it all about, my life, my world?" I assume the question is as perplexing and inescapable to others as to me. And for what they are worth, here are two premises I find helpful in examining the questions of life. 1. For all practical purposes, we are living in an unfinished world, a world in process of be ing completed and understood by man. 2. Each person is uniquely equipped to participate in this ongoing process of completion and understanding. That each of us lives out his years in an incompletely under stood world is all too obvious. We are still seeking answers to fill in the gaps in all areas of our knowl edge of the world and of ourselves, and each answer we find poses new questions. The Reverend Mr. Peace is a Congregational minister working in industry in Connecticut. But the incompleteness of our knowledge appears, to our limited understanding, to be compounded by the added element that we are actually living in a world which is incomplete - one that is still be ing "worked out."

To speak of an unfinished world may shock some. The fact of the matter is not subject to scientific proof or disproof, for it is of the nature of an expectant extension of the mind in an attempt to ade quately comprehend the involve ments of our life in this world. But, fact or faith, we humans are scarcely in a position to set limit ing boundaries when accounting for the energies operating in this world. Use any term you wish to de note the basic energies operating in this world, the gradual expan sion of our knowledge only makes plain that each advance produces more unknowns and unexplain abIes to be pursued. Principles which seemed to be unshakeable 1969 DISTINGUISHED EVERYBODIES 157 one day must be revised soon after in the light of new discoveries which suddenly become evident as parts of our world. Truly, the concept of a "devel oping world" may call for a slight re-alignment of our thinking, but even if it does it will serve as a more practical and dynamic basis for personal adjustment to the everyday experiences of our living.

It certainly enables us to slice through many of the tight limita tions which have restricted our outlook upon the world. It opens up a better basis for understand ing the many seemingly impossible experiences and questions which have been associated with the "once and for all" fixed structural conception of our world. For, to cite just one troublesome area, the difficult problems ···of understand ing unmerited suffering and hard ship maybe found to be simply rooted in the imperfect, incom pleteness of our world and its peo ples at the present stage of the building process. If, then, the world in which we live is still under construction, we who live in it are definitely parts of the ongoing process. Imperfect as we are, we are nonetheless in tegral parts of the present stage of the whole. We are "in," "of," and "by" the completing process. The abilities and personal equipment which we have are ours to be used, used up to the limit of our in dividual skills and situations.

As in any productive process, we may work for its success, "goof off," or, with a distorted sense of personal importance, impede and sabotage the process. Everyone of us has a stake in the whole, and every individual counts, for only through individual initiative and action will some small part of the process be satisfactorily aided as, and if, it advances. We have the options of choice inherent in our freedom. Within the rules every person has the right to freely choose and freely pursue his goals. This dangerous harmony in di versity is essential to the ongoing process. Like the little boy delivering an address at a school exercise in the Philippines, who after greeting the honored guests, turned to the audience and greeted them, "Dis tinguished Everybodies," we need to recognize that we are just that, "distinguished ·everybodies": ev erybodies who are here to help inch our world and mankind along nearer to the next higher level of completion. • CLARENCE B. CARSON fiEuglaub 13. REFORM IDEAS INTO POLITICAL ACTION JUST when government interven tion in England had been intro duced on a scale sufficient to mark the turn from the liberal state to the interventionist welfare state is problematical and conjectural.

There never was a time when there was not some government inter vention, of course. Probably the high tide of liberty generally was from the late 1840's to the late 1860's, though the tendency had been in that direction for more than a century and a half preced ing the mid-nineteenth century. Some measures smacking of the new intervention were passed in Dr. Carson, Professor of History at Grove City College, Pennsylvania, will be remembered for his _earlier FREEMAN", series, The Fatelql Turn, The AmeriGtitJ Ttadition, and - The Flisht from Reality. . the 1830's and 1840's, even before the repeal of the last of the maj or mercantilist .measures. And there should be no doubt that interven tion gained headway once more from the 1860's onward. Writing in 1884, Herbert Spen cer perceived already the oppres sive character of the trend: Dictatorial measures, rapidly mul tiplied, have tended continually to narrow the liberties of individuals; and have done this in a double way.

Regulations have been luade in year ly-growing numbers, restraining the citizen in directions where his ac tions were previously unchecked, and compelling actions which previously he might perform or not as he liked; and at the same time heavier pubIic~-·-bur.aensrchiefly -local, .have 1969 REFORM IDEAS INTO POLITICAL ACTION 159 further restricted his freedom, by lessening that portion of his earn ings which he can spend as he pleases, and augmenting the por tion taken from him to be spent as public agents please.! Spencer gives such examples as the following: an act passed in 1860 providing for the inspection of gas works, establishing quality controls and controlling prices; an act of 1863 requiring compulsory vaccination in Scotland and Ire land; an act of 1866 regulating cattle sheds and allowing local authorities power to inspect sani tary conditions; the establishment in 1869 of a state telegraph sys tern; an act of 1873 requiring merchant vessels to show the draught of the boat by a scale and making it necessary for ships to carry certain life-saving equip ment. "Again, there is the Act which ... forbids the payment of wages to workmen at or within public-houses; there is another Factory and Workshops Act, com manding inspection of white lead works ... and of bakehouses, reg ulating times of employment in both, and prescribing in detail some constructions for the last, which are to be kept in a condition satisfactory to the inspectors."2 1 Herbert Spencer, The Man Versus the State, Albert Jay Nock, intro. (Cald well, Idaho: Caxton, 1940), p. xii.

2 Ibid., pp. 10-14. On the other hand, one historian holds that the fabric of English liberty had hardly been rent as late as 1914: Until August 1914 a sensible, law abiding Englishman could pass through life and hardly notice the existence of the state, beyond the post office and the policeman. He could live where he liked and as he liked. He had no official number or identity card. He could travel abroad or leave his country for ever without a passport or any sort {)f official permission. He could exchange his money for any other currency with out restriction or limit. He could buy goods from any country in the world on the same terms as he bought goods at. home.... An Eng lishman could enlist, if he chose, in the regular army, the navy, or the territorials. He could also ignore, if he chose, the demands of national defence. Substantial householders were occasionally called on for jury service. Otherwise, only those helped the state who wished to do so. The Englishman paid taxes on a modest scale....

Even so, he notes that the "tend ency towards more state action was increasing."3 The Turning Point Actually, though, most histori ans are inclined to fix the date of 3 A. J. P. Taylor, English History: 1914-1945 (New York: Oxford Univer sity Press, 1965), p. 1.

160 THE FREEMAN March the turning point toward govern ment intervention and welfare state in the year 1906. Better still, that year may be taken as the consolidation of the turning, for the turn to a new direction had been building for a goodly number of years. Intervention had been increasing; both maj or parties had come to champion various sorts of intervention; the thrust to social ism was making an ever stronger impact. Within the next 15 years following 1906 major changes would be made - by legislative acts, within the constitution, by the concentration of power, and changes within party strength which would set England firmly on its road toward socialism. Nineteen hundred six was the signal year because of the results of the general election which was held. The Liberals came to power with 377 members in the House of Commons to only 157 for the Con servatives. In itself, the return of the Liberals to power would hardly have been remarkable, for they had many times controlled the government in the nineteenth cen tury. But they were not the Lib erals that had once held power.

One historian described the change in this way: "Nineteenth-century liberalism ... did not win in 1906. In domestic affairs the real sig nificance of the election is in its impetus to social democracy: the rising demand for better standards of living for the workingmen, for greater equality of opportunity, for limitations of economic priv ilege and for security against sickness, unemployment and old age."4 Reformist ideas had made deep inroads into this old party. Of great importance, too, 53 Labour Party men were elected to the House, the first time that party had any representation to speak of. Moreover, their victory and subsequent activity indicates the way the Liberals were moving. Labour-Liberal Coalition In 1903, Liberal and Labour representatives had worked out an agreement to concert their efforts against the common .Conserva tive enemy.5 In payment for this, for the next several years· Labour members usually voted with the Liberals. In addition, as the re sult of the election of 1906 there were 83 Irish Nationalists in the House. "The Liberals had thus a nlajority of 84 over all the other parties combined, and on the nat ural assumption that they would for most purposes be supported by the Labour men and the Nation alists they could expect a majority of something like 400. rrhere had 4 Alfred E. Havighurst, Twentieth Century Britain (New York: Harper and Row, 1962, 2nd ed.), p. 85.

5 Ibid., p. 83.

1969 REFORM IDEAS INTO POLITICAL ACTION 161 never been anything like it be fore .... "6 There followed a spate of legis lation which began to turn Eng land into a welfare state. In 1906, a .Workmen's Compensation Act was passed, greatly extending the coverage of an earlier act. An Ed ucation Act was passed which pro vided for the provision of meals for needy school children. While the act only permitted such action, it did acknowledge the principle of government responsibility, a considerable breakthrough. 7 'fhe Fabians had, of course,advanced the idea for such a measure. Privileges to Unions; Social Security Measures Of somewhat different character - though generally reckoned to be of greater significance - was the passage of the Trade Disputes Act. This legislation was passed to alter the effects of the 'I'aff Vale Decision made by the House of Lords in 1901. The Lords had held that a union was financially re sponsible for damages it had done by a strike against a railroad. The Liberal ministry introduced a mea sure in 1906 to deal with the mat6 D. C. Somervell, British Politics Since 1900 (London: Andrew Dakens, 1953, rev. ed.), p. 55.

7 Carl F. Brand, The British Labor Party (Stanford: Stanford University Press, 1964), pp. 20-21. ter. However, it was unsatisfactory to Labour members, and one of them submitted a simple measure which was then passed. It pro vided that labor unions were not financially responsible for damage occurring during strikes. It also authorized peaceful picketing, or, in effect, trespass. s Further legislation was passed in 1908-1909 taking England to ward the w·elfare state. Of consid erable importance as a step was the Old Age Pensions Act. This act provided that everyone, with a few exceptions, who had an annual in come of less than 21 pounds would receive a pension of five shillings per week at the age of seventy. Protective legislation was passed for workers in the coal mines, lim iting the hours of work for adult male workers to 8 hours per day. Earlier legislation had regulated such employment for women and children, but this was the first for adult males. The Labor Exchange Act provided for employment of fices to be set up over the coun try. Another act set up Trade Boards for certain of the so-called "sweated" industries. These gained the power to establish min imum wages for certain trades.

This "established the revolution ary principle of fixing by law 'a 8 Stephen B. Baxter, ed., Basic Docu ments of English History (Boston: Houghton Mifilin, 1968), pp. 250-51.

162 THE FREEMAN Marck decent wage' in industries not pro tected by unions."9 The National Insurance Act of 1911 was another major step. This was compulsory contributory health insurance for a large por tion of the populace of England. It applied mainly to people remu neratively employed, and covered such things as medical' treatment, hospital care, and compensation during incapacity. There was also attached to this act a provision for unemployment compensation. 10 But before the passage of this last act, important constitutional changes had been initiated from the House of Commons. The House of Lords had been reduced to a virtual nonentity in the Parlia ment. What was involved was the destruction of the centuries old balance of power in the English government. This action was pre ceded, however, by a long-term de cline in the powers of the mon arch. Before telling the story of the assault upon the House of Lords, then, it is in order to survey the power situation and call atten tion to the decline of monarchical powers.

Disturbing the Balance Since the late seventeenth cen tury, England had a precariously balanced system of power disposi9 Havighurst, op cit., pp. 99-100. 10 See Baxter, op. cit., pp. 257-58. tions. The executive power was vested in the monarch, though it came increasingly to be exercised through Parliament. The legisla tive authority belonged to Parlia ment, with much of the initiative located in the House of Commons because that body only could origi nate money bills. Even_ so, the neg ati ve power of the Lords was great, for that body could not only amend and veto bills but was also the highest court in the land. The independence of the courts was fully established in the latter part of the eighteenth century . The powers of the constitution ally limited monarch reached their peak under George III (1760 1820). That stubborn ruler was able to bend Parliament to his will in the latter part of the eighteenth century by various expedients, not least of which was the buying of members by astute dispensation of privileges and incomes. Neither of the two dissolute monarchs who followed him for brief reigns George IV (1820-1830) nor Wil liam IV (1830-1837) - were such as would build the power of the office or endear the people to the institution. Queen Victoria (1837 1901) did re-establish monarchy in the affections of the people and stamp the age with her name, but the power continued to slip away.

By a series of acts the franchise was extended to more and more of 1969 REFORM IDEAS INTO POLITICAL ACTION 163 the populace, and the democratic ethos that came increasingly to prevail made it appear unseemly for hereditary authority to be ex ercised. One historian notes that between "1874 and 1914, while the person of the monarch may even have gained importance as a fig ure-head, it steadily lost power as It factor in government."ll Twisting the Lion's Tail Just how low monarchy had sunk can be illustrated by the following occurrence. The Liberals thought that it might be necessary to have the King appoint hundreds of new Lords in order to get a bill to re duce their power through that House. In any case, Prime Min ister Asquith wanted to be able to use this possibility as a threat, so he approached the new king, George V, about the matter in secret in 1910. The exchange went something like this. Mr. Asquith asked: If he took the responsibility of advising another election and if he then retained his majority, would the King agree to create peers?

The King . . . asked if that was the advice. which would have been tendered-t() his father. "Yes, sir," said Mr. Asquith, "and your father would have consented." So George V 11 R. C. K. Ensor, England: 1870-1914 (Oxford: Oxford. University Press, 1936), p. 31. agreed that there seemed to be no altern ative.l 2 The natural affinity of the mon arch was with the House of Lords. It was largely an hereditary insti tution, and its members at one time or another resulted from his appointment. Yet so tenuous had the position become that the King dare not resist the request of the leader of the Commons, though that request be for an action that would lead to the diminution of the powers of the Lords. The House of Lords By the early twentieth century, then, there remained only one major check on the power of Com mons - the ancient House of Lords. To say that the Constitu tion checked Commons was little more than to say that the Lords checked them, for without the Lords to interpret that tradition, the Constitution would become what Commons would make of it.

Undoubtedly, too, power had been gravitating toward the Commons for a long time. Lord Salisbury resigned as Prime Minister in 1902, and he was the last Peer to head a government. 13 However unideal some of its members might be as individuals, 12 George Dangerfield, The Strange Death of Liberal England (New York: Capricorn Books, 1961), p: 40. 13 Havighurst, op. cit., p. 69.

164 THE FREEMAN March the House of Lords was in many respects an ideal body to check the Commons. It did not depend upon the populace for selection. On the other hand, it posed virtually no threat to the liberties of English men, for it was unlikely to origi nate any legislation. But because of its independence it could serve to limit government to protect the traditional liberties of English men. There is considerable evidence that many of the Lords were in tent on doing just that in the early twentieth century. Their over whelming victory in 1906 had .placed unprecedented power in the hands of Liberals in Commons. The opposition party was reduced to an ineffectual minority. There was, however, a potential counter balance to overweening partisan action in the Lords. Though the Lords were not technically mem bers of a political party, in their inclinations they lined up this way, according to one tabulation: 355 Conservatives, 88 Liberals, 124 Liberal Unionists (who had lately been inclined to vote with Conser vatives) .14 While the Lords did not prevent some reform measures from pass ing, they did tend to place re straints on the reformers. The Liberals in Commons found a number of their measures rejected 14 Ibid., p. 94.

by the Lords. An Education Bill was greatly altered in the heredi tary House. That body rejected a Plural Voting Bill, and vetoed, in effect, a Licensing Bill aimed at curtailing the number of Public Houses. 15 And though historians have not generally made much of the fact in this context, the House of Lords ruled in 1909 that labor unions could not use compulsorily collected dues for political pur poses. The Budget Bill of J909 The event which precipitated the crisis, however, was the Budget Bill of 1909. There are indications that the Liberals in Commons were ready to reduce the power of the Lords almost from the mo ment they came to power, but the budget affair gave them the occa sion. Some of the provisions of the budget were startling enough. Its unusual features were these: (1) sharp increases in death duties (inheritance taxes); for example, estates of £1,000,000 and over were to be taxed at about 25 per cent; (2) increases in income tax sched ules which continued the distinction between earned and unearned income first made in 1907; on incomes of £5,000 or more there was to be an additional super-tax, an innovation; (3) land taxes, of which the most significant was a 20 per cent tax on the unearned increment in value 15 See Dangerfield, op. cit., pp. 14-15.

1969 REFORM IDEAS INTO POLITICAL ACTION 165 when land changed hands; (4) high er levies on tobacco and spirits.1 6 The House of Lords rejected the budget by a vote of 350 against to 75 for. This budget reads as if it might have been the result of a collabora tion between Karl Marx of the time of The Communist Manifesto and Henry George of the some what later Progress and Poverty, with bemused Fabians peering over their shoulder. Actually, of course, it was the work of David Lloyd George. Lloyd George played such a significant role in these years in the centralization of pow er in the Commons, in its concen tration in the Prime Minister, and in the demise of the Liberal Party that he deserves a little closer look. In 1909, he was a member of the House, a Liberal, and Chan cellor of the Exchequer in the gov ernment of Asquith. He was of obscure Welsh parentage, and came to the fore in the late 1890's as a Welsh nationalist, radical, and outspoken critic of the Con servatives.

Lloyd George was indeed influ enced by Henry George, 17· had ob viously adopted some of his cen tral terminology, and· would off and on devote himself to schemes 16 Havighurst, op. cit., p. 102. 17 See Carlton J. H. Hayes, Contem porary Europe Since 1870 (New York: Macmillan, 1958, rev. ed.), p. 319. for land reform for the rest of his political career. He was a socialist, too, in all but name. His budget was a "war budget," he said, a budget for a war on poverty; as a result of which he hoped that poverty would become "as remote to the people of this country as the wolves which once infested its forests."18 One writer describes him in this way: If his convictions had been other wise than emotional, he would have been a Socialist by this time. . . . He was less a Liberal than a Welsh man on the loose. He wanted the poor to inherit the earth, particu larly if it was the earth of rich Eng lish landlords. . . .19 VVhether chosen for the spot or not, he was to spearhead the move ment to destroy the older British order and set the stage for full fledged socialism.

Parliament Act of J9 JJ Following the rej ection of the budget in 1909, the movement to red uce the powers of the Lords accelerated. It did not reach its fruition, however, until two elec tions had been held, and a new monarch had come to the throne. The House of Lords was shorn of most of its powers by the Parlia18 Quoted in Encyclopaedia Britan nica, XIV (1955), 251. 19 Dangerfield, op. cit., PP. 18-19.

166 THE FREEMAN March ment Act of 1911. It provided that, in the case of money bills, if they are not passed without amend ment by the upper house within one month, they become law with out the assent of that body. In the case of most other bills, if they are passed by the House of Com mons once in each of three succes sive sessions, they can become law if the Lords refuse their assent. 20 The Lords could now' delay legis lation temporarily, but they could no longer prevent its passage. All governmental power was now cen tered in the House of Commons. The forms by which power had been balanced were outwardly pre served in the institutions of monarchy and an upper house, but the content was gone from them. Lloyd George's War Cabinet The concentration of executive power in the hands of the Prime Minister occurred during World War I. The man who did it was, once again, David Lloyd George.

H. H. Asquith had formed a coali tion government in 1915, with the Liberals preponderating in it. But he gave way in 1916 to new leader ship headed by Lloyd George. The latter proceeded as quickly as pos sible to concentrate effective pow er in his own hands. One historian described the development this way: "Lloyd George's accession to 20 See Baxter, op. cit., pp. 256-57. power in December 1916 was more than a change of government. It was a revolution British-style. The party magnates and the whips had been defied. The backbenchers and the newspapers combined in a sort of unconscious plebiscite and made Lloyd Georg.e dictator for the duration of the ,war."21 The traditional cabinet was sub ordinated, its members losing most of their historic independence. Most of the governmental func tions were directed by a "war cabinet" made up of five members who were chosen primarily to ex ecute the will of Lloyd George.

"Lloyd George's war cabinet was a committee of public safety, ex ercising supreme command under his direction. . . . The holders of the other great historic offices merely recei vea their marching orders."22 In effect, the government took over the direction of· many facets of the lives of Englishmen during World War I. Military conscrip tion was instituted; the merchant marine was appropriated; the mines were taken over. The whole paraphernalia of controls, with which peoples have become famil iar in wartime, were introduced: price controls, rent controls, ra tioning, allocation of materials, manipulation of the money supply, 21 rraylor, op. cit., p. 73. 22 Ibid., pp. 74-75.

1969 REFORM IDEAS INTO POLITICAL ACTION 167 confiscatory taxation, and so on. Some British historians call this development "war socialism." The phrase is apt, for socialism is the generic term to describe the large role that government assumed in the lives of the people during the war. Military Conscription It is a commonplace of histori cal generalization that this de velopment .was born of wartime expediency. This judgment should not be casually accepted. Un doubtedly, socialists have discov ered grist for their mills in the methods employed during wars. But have they not also helped to shape those methods? There is no doubt that England was being bent toward socialism before the war came. Lloyd George was full of plans for accomplishing what should certainly be called social istic, at the least. Given the occa sion of the war, he would think in such terms to deal with it. So would many another.

An inkling of the nonexpedient character of much compulsion may be gained from the matter of military conscription. A Military Service Act was passed in Jan uary 1916 introducing such con scription. Yet one historian points out: "The army had more men than it could equip, and voluntary recruitment would more than fill the gap, at any rate until the end of 1916. Auckland Geddes, who was in the best position to know, later pronounced this verdict: 'The imposition of military conscrip tion added little if anything to the effective sum of our war ef forts.' "23 David Lloyd George wanted it, and much of the coun try had apparently come to favor such compulsion. The Decline 01 Liberals One other maj or development needs to be told here: the decline of the Liberal Party and the rise of the Labour Party. The election of 1922 foreshadowed the down fall of the Liberals. The Conserva tives won with 347 members elected; the Labourites came in second with 142; the Liberals were a poor third with 117, and these were divided about equally be tween followers of Asquith and Lloyd George. The Liberals gained a few members in the election of 1923, but they were still the third party. A new election in 1924 re turned only 42 Liberals, and a one-time major party had fallen from the national councils.

It can be argued that the Lib eral Party was on the way out, in any case. The party had been increasingly abandoning the his toric principles of liberalism. In the nineteenth century, the Lib23 Ibid., p. 53.

168 THE FREEMAN March erals had championed free trade and generally worked for the re moval of governmental restric tions by which liberty might be extended. By the twentieth cen tury, they were turning more and more to reforms which restricted liberty. As ameliorative reformers, they were doing little more and not much different from what the Conservatives would do. The La bourites, on the other hand, pre empted the position at the fore front of the movement for more radical change. Even so, David Lloyd George played a maj or role in the division and destruction of his party. He undermined its leadership at the outset of World War 1. He formed a coalition government which re lied mainly on the Conservative opposition. He gave short shrift to what remained of the historic liberal principles in the conduct of the war effort. In 1918, he fos tered an election which was aimed at continuing his personal leader ship of a coalition rather than the victory of his party, and he suc ceeded. The Liberal Party was then divided between followers of Asquith and himself. Probably, Lloyd George did not intend these results, but his actions contributed much to them.

There was no longer a maj or party in England devoted to the protection and extension of liberty. The Conservatives were trim mers in such matters, as they had ever been. The Rise of Labour The rise of the Labour Party parallels that of the decline of the Liberal Party. One is reminded of the limerick of the lady and the tiger. Labour had become a factor in English politics largely by the tacit aid of Liberals. When the Liberal majority dwindled in 1910, the Liberals governed with the support of Labour. The latter had provided support for reducing the Lords. During the war years, La bour Party leaders had served in the coalition government, most prominently under David Lloyd George. (It is interesting to note, once again, the role of Lloyd George. He wooed Labour mem bers astutely to bring them into the government. "He promised state control of the mines and of shipping, and the introduction of an effecti ve system of food ra tioning."24 "War socialism" was perhaps politically "expedient."

The Liberal Lady had ridden the Labour Tiger for a number of years. But at the end of the ride, the Lady was inside. Even while it was being ridden, however, the Labour Party could 24 Henry Pelling, A Sho'rt History of the Labour Party (London: Macmillan, 1961), p. 39.

1969 REFORM IDEAS INTO POLITICAL ACTION 169 and did occasionally get a quid pro quo. Most notably did it do so in the Trade Union Act of 1913. A few years before, as has been noted, a decision was rendered making it illegal for union funds to be used for political purposes. These funds were, of course, the potential life blood of the party. The Trade Union Act permitted the union funds to be used for party purposes. It required that they be kept separate from other funds so that union members who did not wish to contribute to the political fund could refuse to do so by making a written statement to that effect. Obviously, they would have been much more effec tively deterred in gaining such funds if union members had to sign an authorization for them to be so used. But the Labour Party overrode such objections in the Commons. 25 Thereafter, the La bour Party had an assured source of income.

Infiltration of the Unions by Fabian Socialism In the early years, the Labour Party was not clearly a socialist party. A considerable portion of the men who represented it in Parliament were trade union men advancing what they conceived to be the interest of trade unions. The party drew its members from 25 See ibid., p. 28. the trade unions and from social ist societies, the former providing most of the numbers. It was trans formed into a thoroughgoing so cialist party at the end of World War I,at about the time that it separated clearly from the Lib erals. A new constitution for the party was adopted in 1918, and a gen eral statement of policy soon fol lowed it. 'rhese were the work of the Fabian Sidney Webb primar ily who, according to his wife, had become "the intellectual lead er of the Labour Party" by this time. 26 The constitution opened the way for those not associated with the societies or trade union mem bers to become members of the party. More importantly, it com mitted the party to socialism. It read, in part: To secure for the producers by hand and brain the full fruits of their industry, and the most equit able distribution thereof that may be possible, upon the basis of the common ownership of the means of production and the best obtainable system of popular administration and control of each industry or service. 27 Shortly thereafter, a statement of Labour's aims was set forth in Labo1tr and the New Social Order, the work again of Sidney Webb.

26 Ibid., p.• 42. 27 Quoted in ibid., p. 44.

170 THE FREEMAN March It called for the establishment of a general national minimum, for the political control of industry, for heavy taxes, and a more gen eral appropriation of pri va te wealth for the general populace. One writer describes its impor tance in this way: Labour and the New Social Order was a significant document. Its so cialist objective clearly distinguished the new party from its older ri vals .... The Fabian gradualism of the program and the reliance upon parliamentary democracy enabled Labour to win support where its new Communist competitor failed dismally. It outlined the policies to which Labour has consistently ad hered. 28 In 1924, Ramsay MacDonald, a Labourite, became Prime Min ister of England. Socialism was not yet in power - his ministry 28 Brand, op. cit., pp. 56-57. lasted only months, but that one of its spokesmen had risen so high was surely a portent of things to come.

Within fifteen years or so, great changes had occurred in England. In 1906, England still afforded a good example of the liberal state with limited government, protec tions of private property, and ex tensive liberties for the inhab itants. After 1906, England made lengthy strides toward the welfare state, had its constitution altered so that power was centered in the House of Commons, experienced "war socialism" and the concen tration of power in the hands of the Prime Minister, witnessed the decline of the Liberal Party and the rise of the Labour Party, and the transformation of the latter party into a socialist one. Nor would the effects of all this be long in making themselves felt. ~ The next article of this series will discuss "The DecUne of England' The Flight from Reality, the series by Dr. Carson which first appeared in THE FREEMAN (October 1964 through November 1966), will soon be available in book form.

Paper $2.50 Cloth $5.00 Order from: The Foundation for Economic Education, Inc. Irvington-on-Hudson, New York 10533 A hou5ingpolicyfor GRE RITA THE RT. HON. J. ENOCH POWELL, M.P. Addressing the House-Builders Conference in Kensington, England, November 28,1968. THE TITLE is yours, not mine. My proposition is that there ought not to be a housing policy, any more than there is a food policy, a clothing policy, a furniture and carpets policy, a passenger cars policy, and so on. The same mech anism which provides food, cloth ing, furniture, carpets, cars, and the like, and has done so on an ever-rising standard for every body, could provide houses, too. Why doesn't it, then? Because we, the politicians, by the laws we make and maintain, prevent it. We use the law to keep the price of housing down to levels at which the mechanism cannot work, or at best, malfunctions. For fifty years we have practiced in regard to housing the oldest and the cruelest of all the deceptions which politi cians practice upon their victims - to persuade them that we will make a thing cheap and plentiful for them by holding down the price of it by force.

The only price at which the mechanism will work properly is the best price that can be obtained. There is only one "right" rent for a house or flat: that is the best rent the owner can command. To the extent that houses or flats are let for a lower rent than that, either because of rent control or because of public subsidy, the gen eral interest suffers. If there is shortage and squalor in housing, if people would like to have more housing rather than other things, the reason for it is what I have long since been accustomed to de scribe, in public and in private, in speeches and in writing, at elec tions and between elections, as the Two. Giant Evils: rent control and subsidy. Your Federation in its 171 172 THE FREEMAN March evidence to the Prices and Incomes Board, though a shade less flam boyant, was no less outspoken: "a combination," you said, "of pri vate rent restriction and subsi dized municipal housing to let has proved fatal to the private mar ket for rent and has been a root caus,e of slumdom and decay."

Few of the nine million rented houses in Great Britain are let at the market rent, the best rent that could be obtained for them if none were controlled or subsidized. What the gap between present rents and market rents is, nobody knows, because, in the nature of things, when an open market does not exist, one cannot know the market price. In 1967, the 5.2 mil lion municipal houses in Britain were subsidized from taxes and rates to the tune of about £130 million or, on average overall, £25 per annum. But we do not know if that represents the gap between ac tual and market rents. Some munic ipal houses and flats probably could not be let at their present high rents if there were a free market all round. Others, probably the great majority, would command a somewhat higher rent than that which would enable the housing authority to cover, without sub sidy, its outgoings in respect of them. Nevertheless, that figure of £25 a year probably does give us a useful approximate notion of the sort of gap - something, perhaps, between lOs. and 12s. a week which exists on average overall.

As to the 3lf3 million privately owned rented houses, we are even more in the dark. There must, too, be large variations, from place to place and from house to house, in what would prove in fact to be the gap between the actual and the open market rent, owing to the vagaries and chance effects of sub sidy policy and the rent laws. Escapist Policies So, we find ourselves in a situa tion not without parallels else where in politics. Politicians and public alike are standing on the brink of a gulf between common sense and things as they are, which is so wide and frightening that with one accord they shut their eyes and turn the other way. The politicians all think that if they tell the truth and try to bridge the gap, they will make themselves so unpopular as never to be elected again. The public, on their side, not unreasonably, feel that it is not incumbent upon them to push the politicians into unpleasant measures, however wise and necessary. So the conspiracy of pretense continues, and we keep producing new and ever new "housing policies," and making new and ever new promises to "solve the housing problem." The 1969 A HOUSING POLICY FOR GREAT BRITAIN 173 occasional politician here and there goes about denouncing the Two Giant Evils and appears to take no harm thereby, though if his colleagues could find a way to muzzle him, no doubt they would.

Otherwise, nothing happens. You yourselves say: ~4that policy [of market rents] is presumably un acceptable over a short-term pe riod" but "it is clearly essential that some attempt be made to rationalize the present situation." Well, let us give ourselves a treat this morning. Let us just imagine that the will existed to return to common sense in hous ing - to "rationalize the present situation," as you put it - and set out what it would involve. At least, they can't take our dreams away from us. A Return to Common Sense First, we must act both gener ally and rapidly. The easiest way to get from an unna tural to a natural situation is to do it sud denly. There are equally good po litical and practical reasons for that. If, as we believe, people would soon begin· to see and feel the benefit of open market rents, in terms of more housing and the disappearance of the phenomena of shortage, then it is best to get the painful part and the period of confusion over as quickly as pos sible so that people have time to leave it behind them and grow ac customed to the "brave new world." If subsIdies are reduced gradually and control removed bit by bit, the agony is protracted.

The practical reason is that, if only a part of the whole is allowed to go free, prices and rents there rise above what would be the ulti mate market level all round, be cause all the scarcity from other parts is concentrated on that one. If everybody is put into the mar ket at the same time, nobody can for long get more than the true market price or rent. So the first thing to aim at is to get all the subsidies and controls off in a matter of months rather than years. Secondly, while we can safely leave the private owner to aim at the best rent, if he is allowed to, something more has to be done in the case of the municipal owner, who, for close on fifty years, has worn a triple character: not only landlord, but dispenser of charity and purchaser of tenant votes. If the sole function in the future is to be a good landlord, in the best commercial sense of the term, the elected local authority is about as bad and unsuitable a body for the purpose as can be imagined. All municipal houses should therefore be vested in a public corporation, charged with two duties: to maxi mize the return from them and 174 THE FREEMAN March manage this public "estate" on the best commercial principles; and gradually to dispose of them dare I say "denationalize them"? to private property companies and private owner-occupiers.

There will be two financial con sequences: one for the particular tenants, another for everybody. Rents generally will rise - that is essential - and therefore this ele ment in the cost of living for over half the households in the country will undergo a once-for-all in crease. For the majority of them this will be no more than they have sustained many times in re cent years - though this time, as I will show in a moment, there will be solid compensations. In any case, wages will have to go up to match, because, as I wrote long ago, housing subsidies and rent control have been "Speenhamland in modern dress" - in other words, outdoor relief in supplementation of wages, a thoroughly bad thing. There will be a minority, however, who will need to have those bene fits adj usted or be otherwise helped by their fellow citizens. Taxes, Budgets, and Ideals But now let us look at the pub lic in their total character, as tax payers and ratepayers rather than tenants. The rates will be relieved straight away of all housing costs - subsidy, administration, the lot - because there will be no more municipal housing. Meanwhile, the National Housing Corporation, even after lowering some of the present very high rents, which are only obtainable in conditions of subsidy and control, ought to turn in to the Exchequer a sub stantial surplus on its operations, while the Exchequer itself will benefit by the abolition of the tax borne subsidies - in all, perhaps £150 million toward reduction of taxes and increase of social bene fits for the persons affected by the higher rents.

That, however, is not the end of it. There is more still to come; for the Budget at the moment is car rying between £300 million and £400 million a year for the capital which is lent to local housing au thorities to build new houses and flats but has to be raised in taxes by the Chancellor of the Exchequer because in present circumstances it cannot be borrowed· by the gov ernment from the public. In fu ture this capital will be raised by the private enterprise builders of new rental accommodation, just as the capital is raised for new owner-occupied houses, without recourse to the taxpayer. So, even if half the subsidies had to be given back in social payments, the huge sum of some £500 million would be available for relief of taxation. Most people would find 1969 A HOUSING POLICY FOR GREAT BRITAIN 175 the bargain a pretty good one; and remember that I have taken no credit at all in these calculations for any increased efficiency, and therefore lower real prices, which ought to result from the substitu tion of private enterprise for mu nicipal nonenterprise, and from the larger scale on which private enterprise builders would be able to plan and carry out their oper ations.

There now! Were we dreaming, or were we awake? "Ideally," and now I am quoting your own Federation again, "it would be desirable to sweep away the current jungle of rents in the public and private sectors by turning to a free market in rented housing which would allow to landlords a proper margin of profit and would bring invest ment capital back into the private rented sector." "Desirable?" Yes. "Ideally?" Well, that depends on us, whether we can make the de sirable so clear to our fellow citi zens that they will insist upon having it and will tell the poli ticians to get down to the job. ~ Something Constructive! FROM time to time, readers of Analysis urge upon me the es pousal of some program they are pleased to call "constructive." ... The reform invariably rests its case on the good will, intelli gence and selflessness of men, who, invested with the power to do so, will put the reform into operation. And the lesson of history is that power is never so used. Never. I am convinced, on the other hand, that all of the evils of which these honest people complain can be traced to the misuse of power, and am therefore inclined to distrust political power of any kind. . . .

The only "constructive" idea that I can in all conscience ad vance, then, is that the individual put his trust in himself, not in power; that he seek to better his understanding and lift his values to a higher and still higher level; that he assume respon sibility for his behavior and not shift his responsibility to committees, organizations and, above all, a superpersonal State. Such reforms as are necessary will come of themselves when, or if, men act as intelligent and responsible human beings. There cannot be a "good" society until there are "good" men. F RAN K C HOD 0 R 0 v, Analysis, July, 1949 Hands off SOUTHER ONE of the greatest moral and intellectual delusions, one of the surest roads to ultimate disillu sionment, is the crusading war. This may be defined as a conflict in which a people engages for no concrete, rationally conceived pur pose, but for the supposed vindica tion of some vague international ideal. For even the worthiest ideals are seldom realized by re sort to arms. As a dissenter in World War I, Randolph Bourne remarked: "War is like a wild ele phant. It carries the rider where it wants, not where he wants to go."

Consider in retrospect Woodrow Wilson's message, calling for a declaration of war against Ger many in April, 1917: "Make the world safe for democracy." Mr. Chamberlin is a skilled observer and reo 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. 176 WILLIAM HENRY CHAMBERLIN The actual sequel to America's participation in World War I was the emergence and spread of two systems which were an utter negation of democratic principles as understood by Wilson and practiced in those countries of North America and Western Eu rope where democracy took firm root. These systems were fascism and communism, both products of the psychological aftermath of the destruction of human life on an unprecedented scale and the uprooting of old institutions and loyalties. Who remembers the Four Freedoms, the Atlantic Charter, or other professed aims of World War II, except to mark the complete contradiction between these objectives and the much less pleasant realities of the postwar settlement?

The crusading spirit that leads Americans periodically to plunge into wars or to take steps likely 1969 HANDS OFF SOUTHERN AFRICA 177 to provoke wars, in pursuit of moralistic and often quite im practical goals, is a compound of several elements. There is an ele ment of naive arrogance, ex pressed in the assumption that, by means of war, we can make what is perhaps an unsatisfactory situ ation better, not worse. There is the equally naive and arrogant as sumption that a political system which has served us well is auto matically best suited to the needs and requirements of peoples with different historical, political, eco nomic, and social backgrounds~ There is also in a crusading war the illusion, dangerous to a na tion as to an individual, of omnip otence, of ability to control to our liking the many new, some times unforeseeable, forces that will come to the surface as a by product of war. Woodrow Wilson was a scholar and a student of history. But how much he over looked, perhaps inevitably, when he envisaged a peace based on his fourteen points and guaranteed by a new institution, the League of Nations. The inability, for in stance, to obtain just postwar boundaries and a reasonable fi nancial settlement against the de sire of the European allies for an nexations and indemnities and the inflamed state of American public opinion. Or the violent revolution ary impulses that would be unleashed by the rancor of defeat and the disruption of familiar boundaries and institutions, to say nothing of the individual and social distress caused by the pro longed slaughter. Or the unwill ingness of sovereign states to turn over the responsibilities of their own defense and the issue of whether or not to participate in future hostilities to an untried or ganization like the League of Na tions.

In retrospect it seems evident that the best promise of a lasting peace, once World War I had be gun, would have been a compro mise settlement in 1915 or 1916 which would have been ac cepted by all participants, not with full satisfaction for any, but without leaving a sense of intoler able political and economic wrong. This was 'what President Wilson himself thought before the United States became a belligerent. The best critic of vVilson, the unsuc cessful peacemaker of Paris, was Wilson on January 22, 1917, plead ing for a "peace without victory" in an address to the United States Senate: "Victory would mean peace forced upon the loser, a victor's terms imposed upon the van quished. It would be accepted in humiliation, under duress, at an intolerable sacrifice, and would leave a sting, a resentment, a bit178 THE FREEMAN March ter memory upon which terms of peace would rest, not permanently, but only as upon quicksand. Only a peace between equals can last, only a peace the very principle of which is equality and a common participation in a common bene fit."

Not the least of the advantages of a peace by negotiation - before the final breaking point came in 1918 - would have been that such a settlement would most probably have averted the victories of com munism in Russia and fascism in Italy and national socialism in Germany, thus averting new causes of new wars. The U. N. Road to War The grave and disillusioning consequences of crusading wars are now written large for all to see. Yet, the United States cur rently risks being drawn into just this type of harmful and un necessary conflict. The place is southern Africa; the instrumen tality is the United Nations, or, more specifically, its AfroAsian bloc; the cause, the willingness of the United States representa tives at the UN to vote for reso lutions which may seem innocu ous on the surface, but which have explosive implications. The section of Africa which lies between the Zambesi River and the Cape of Good Hope has not set up native nationalist administra tions. This is because the Union of South Africa, the largest and richest of the four territories of southern Africa, and its northern neighbor, Rhodesia, are under the government of people with a strong pioneering tradition who are unwilling to trust their pros pects under the black racist re gimes that would be in prospect if a system of "one man, one vote"

were introduced. This attitude is understandable because the ma jority of the African natives live under tribal conditions, isolated from modern life, and quite un familiar with Western political ideas and institutions. The remainder of southern Africa consists of two large Por tuguese colonies, Angola on the west coast and Mozambique on the east. Feeling that they stand or fall together, the governments of South Africa and Rhodesia and the Portuguese administrations in Angola and Mozambique maintain close contact in fighting subver sion. Approaches to Racial Problems Each of the states and adminis trations of southern Africa has its own distinctive approach to the African native problem. The Union of South Africa is com mitted to a policy of apartheid or separate development for its vari1969 HANDS OFF SOUTHERN AFRICA 179 ous racial groups: the whites, who are mostly of Dutch or British descent, the various native Afri can tribes, the East Indians and the "coloreds," some of them peo ple of mixed blood, some descend ants of indentured Malays. This implies separate facilities in schools, public accommodations, and political life. It is defended by most white South Africans and by some natives on the ground that a racially amalgamated so ciety in South Africa is neither possible nor desirable, that the various races are happiest if given separate opportunities. (Curiously enough, some of the extreme black nationalists in the United States seem to have reached a very simi lar conclusion.) To the South Africans - espe cially those who speak Afrikaans, a modified Dutch, and are of Dutch descent - apartheid is not mentioned apologetically, but is avowed and defended as a sincere effort to solve a difficult and com plicated racial problem. As com pensation for the denial of equal political, economic, and social rights to nonwhites in white areas of settlement, South Africans point to the separate colleges for the Bantus and other ethnic groups and especially to the gov ernment policy of setting up na tive administrative areas, some times called Bantustans, with elected native parliaments and governments, where whites are being squeezed out of existing shops and factories so that the Bantus may manage their own affairs.

One of these states, the Trans Rei, is in existence and others are projected for the future. I visited the Trans-Kei in the spring of 1968 and came away with the feel ing that the government was sin cere in its ideal of racial separate development; but there are for midable economic obstacles in the way of its realization. The land at the disposal of the present and future Bantustans cannot support the African native population. Those who seek work in urban areas encounter a good many reg ulations and restrictions. The white governing regime in Rhodesia has a somewhat differ ent approach. Apartheid, in its more extreme forms, does not exist in Rhodesia, where one is impressed by the numbers of na tive policemen and by the integra tion in most hotels and the use of African units in the small Rho desian army. Incidentally, these African units showed no sense of divided loyalty when called on to combat incursions of communist or nationalist-trained guerrilla bands operating from bases in Zambia. There are no African na tives in the South African par180 THE FREEMAN March liament in Capetown; but there are fifteen Africans among the sixty-five members of the Rhode sian parliament in Salisbury.

Portuguese policy in Angola and Mozambique is something else again. There is no official color bar for those natives who, by edu cation and habits, have acquired the status of assimilados, or civi lized people. The number of these assimilados, however, is still quite small. South Africa is completely free from any signs of native unrest, and the Rhodesian military and police forces have experienced little difficulty in dealing with guerrilla incursions. There has been more .serious fighting, the extent of which is hard to. gauge, in Angola and Mozambique, al though the principal towns and routes of communication have been securely held. The AfroAsian Sloe From the beginning, the newly independent African states have waged an unceasing vendetta against the southern part of the African continent that remains under white rule. As a matter of principle, they have been joined by most of the Asian members of the United Nations. It is through this institution that the danger of United States involvement in this foreign quarrel arises. The AfroAsian bloc that always votes against anything that may be con strued as imperialism (although selectively indifferent to Soviet demonstrations of this tendency) is weak in real political, military, and economic power. But it dis poses of disproportionate voting strength in the UN General As sembly.

The AfroAsian bloc in the UN has proved repeatedly that it has enough voting power to carry any resolution, however extreme, com mitting the UN members to hostile and punitive actions against the nations of southern Africa. These resolutions have no binding force; but they create a constant element of tension and strain in the rela tions of the United States with the Union of South Africa, Rho desia, and Portugal. In view of the fact that these countries have been uniformly friendly in their attitude toward the United States (they have paid their debts, ex tended a friendly welcome to United States tourists, and pro vided profitable .fields for trade and investment) there is no rea son for a U. S. policy of hostile pin pricks. Yet the United States has asso ciated itself with many hostile resolutions inspired by the Afro Asian bloc and in some cases has proceeded from words to deeds.

For instance, it is associated with 1969 HANDS OFF SOUTHERN AFRICA 181 an arms boycott of the Union of South Africa, although the arms which South Africa wishes to pur chase abroad are sophisticated weapons which would he useless.in civil disturbances. When I visited South Africa in the spring of 1968, Admiral Biermann, com mander of the small South Afri can navy, put to me a question that puzzles many of his country men: "Why do the Americans and British expect us, in the event of war, to keep the sea route around the Cape of Good Hope open and refuse to sell us submarines and other naval equipment we need?" It was not an easy question to answer. The United States has gone still further in· the case of Rhodesia, and in plain violation of its own national interest. This former British colony, where Britain has exercised no control over internal affairs for decades, declared its independence three years ago. It has maintained this status despite feeble harassing inroads of com munist or black nationalist ter rorists across the .frontier from Zambia (formerly Northern Rho desia) and despite sanctions against its exports and imports initiated by Great Britain with the support of the UN and the participation of the United States.

American trade with Rhodesia (with its 225,000 whites and four million natives) has been neces sarily on a small scale. But that country has been an important source of a strategic material, chrome, which the United States does not produce itself. The prin cipal other source is the Soviet Union. On the record of the two, which is the greater threat to peace, the Soviet Union or Rhodesia? Every reasonably intelligent person knows the answer. Yet the United States, by refusing to buy Rho desian chrome, has seemed to pro ceed on the theory that it is more endangered by Rhodesia than by the Soviet Union. U. S. Meddling in Africa The United States has taken up a wholly unnecessary attitude of meddling partisanship on another African issue: South Africa's ad ministration of the huge, sparsely populated, former German colony of Southwest Africa. This area, acquired by South Africa as a mandate from the long-deceased League of Nations, has been vir tually incorporated in that coun try for more than half a century.

It could not be detached without a difficult military expedition in forbidding and difficult terrain, a task which no one has the ap parent force or desire to under take. It is always unwise to threaten 182 THE FREEMAN March by implication measures which there is no intention to implement. Yet former U.S. Ambassador Arthur Goldberg went out of his way at the UN to assert that South Africa had forfeited its mandate and had no other au thority to administer this terri tory. The United States also gave its assent to one of the most futile and ridiculous projects ever spawned by the United Nations. This was the establishment of a "United Nations Council for Southwest Africa," with an as signed function of administering the territory until independence, a goal which the Council was in structed to do all in its power to achieve by June, 1968. June, 1968 has come and gone, and what this phantom Council has achieved has been precisely zero. It is futile and undignified for the United States to take part in such silly games.

Leave Them Alone In the light of the unhappy re sults of crusading wars in the past, a rethinking of American policy toward southern Africa seems clearly in order. As indi viduals, Americans may be con vinced or unconvinced by the ar guments for and against the pres ent situation in the Portuguese colonies, in South Africa, and in Rhodesia. One point that should not be overlooked in considering denunciations of the present re gimes in the Union of South Africa and Rhodesia is that hun dreds of thousands of African na tives have "voted with their feet" by voluntarily leaving other parts of Africa to seek higher wages and better opportunities in these two countries. The wise course for a country which, like the United States, has not made a conspicuous success of its own race relations would be to adopt a strictly "hands off" policy toward southern Africa, to abstain from voting on provocative UN resolutions, to withdraw the arms embargo on South Africa, and to dissociate itself from sanctions against Rhodesia. (Many of the Britons who are best informed on Rhodesian realities would breathe a sigh of relief if we would pull the rug from under a sanctions policy that has been getting no where fast.) If the present re gimes in southern Africa are doomed by the course of history, as some of their critics believe, we assume no obligation to save them. But why, in the name of realism and common sense, should we play the role of Che Guevaras and Mao Tse-tungs and help to let loose the horrors of racial strife over an area with whose peoples we have no quarrel? ~ of the FREE MARKET ROBERT H. EAGLE SOCIAL and economic changes, changes in tastes and technology, appear inevitable. Many of yester day's products and processes have passed from the scene, replaced today by countless goods and ser vices unheard of a few years ago.

Recognizing this fact, entrepre neurs attempt to anticipate or in itiate change in order to secure a profit. In an active, relatively free market, they are constantly search ing for new products and services which they hope will have wide spread appeal and consequently produce the profit which success ful innovations bring. Some of these attempts succeed; others fail. But the public as a whole is satisfied with the result of the free market mechanism, powered by the profit motive. The conditions of supply and Dr. Eagle is a freelance writer and manage ment scientist in Chapel Hill, North Carolina. demand which pace economic changes are simply the expressed desires of willing buyers and sel lers. The resources for production thus are attracted into business ventures that are potentially prof itable. However, when the source of in vestment is heavy taxation, the criterion of profit potentiality is lacking; and the size and impact of projects, thus financed, must inevitably bring about undesired changes. Had the general public's desire for such undertakings been at all discernible, entrepreneurs would have banded together to take advantage of the obvious profit potential.

Many economists have long rec ognized the role of profit (posi tive and negative) in directing economic activity out of certain lines and into others, but the fact that the profit motive paces 183 184 THE FREEMAN March change, bringing it about but at the same time keeping it within manageable and tolerable limits, has seldom, if ever, been recog nized. Yet the second role of profit causing tolerable, relatively grad ual change, in contrast to the so cial and economic upheavals which are· apparently becoming more drastic and frequent - may be as important as the role of directing economic acti vity. The movement into or out of certain economic activities is di rected by the consuming public which by its voluntary purchases or nonpurchases bestows positive or negative profits on the entre preneurs involved. Simi1arly~ the public, in a free market society in which government plays only a minor economic role, would con trol the pace. of change.

A Sense of Stability Midst the Winds of Change Both a desire for change and a resistance to change are built into human nature, in different pro portions among different hUITlan beings. Very few people enjoy liv ing in a society of constant and drastic changes. Human nature de mands some sense of stability, some assurance that life is not going to be drastically different every day. It is widely believed that the pace of modern industrial society is having deleterious ef fects on the population, socially and psychologically. On the other hand, not many people wish to live out their lives without any pros pect for change. The great mass of Americans fall into the middle ground, desiring change leavened with a certain amount of stability. And this is the kind and pace of change generally afforded as en trepreneurs cater to the general public in open competition. However, when the government becomes the single largest cus tomer in the economy, dwarfing the world's largest corporation, matters are far from the ideal described above. With its virtu ally unlimited access to resources (gained with the use of compul sion via its taxing powers), cater ing to powerful special interests (all of whom want the public treas ure spent on their own behalf), the government is in a position to bring about vast and widespread changes that are undesirable so far as the general public is concerned.

An example of the disruptions brought about by coercive govern ment intervention is the "diverted acres program." Under this pro gram, the Federal government pays large landowners handsomely to retire land from production. Senator Abraham Ribicoff re ports in the September, 1968, Reader's Digest that the average 1969 DYNAMICS OF THE FREE MARKET 185 corn acreage has been cut by 15 per cent since 1961, but the corn harvest went up by 376 million bushels. The large operators re tired their poorest land and "spent their government checks on more fertilizer and high-yield technol ogy for their remaining acres." Such a program adversely affected "the small farmer who did not have enough land to participate in the diverted acres program." The report continues, "to collect Washington's cash for diverting acres into growing pulpwood, for example, many landowners have dispossessed tenants and laborers by the thousands .... The net ef feet ... has been to eject 100,000 more farm people per year."

Shifting Populations The population movement from farms to industrialized centers goes on in any economy as it changes from predominantly agri cultural to predominantly indus trial. In the absence of govern ment intervention, this movement tends to be spread out over time rather than to occur in sudden spurts. When farm workers, un prepared by skill or background for city life, move gradually into urban centers, they can be more readily absorbed into the new en vironment than when they abrupt ly arrive in large numbers. The farm program, as Senator Ribicoff explains, is one of "the forces moving poor farm people into urban ghettos." Such environ mental wrenchings add to the over all problem of crime and delin quency. The letting of large government contracts, giant public works, space and national defense pro grams (as when military bases are located, opened, and shut down for political considerations) such ac tions, based on compulsion, have a monumental impact on the econ omy and the disposition of men, money, and materials. In addition, fiscal and monetary policies, usu ally involving the expansion of money and credit, overstimulate the economy and bring about dras tic coerced changes that no COln bination of entrepreneurs, big and small, could ever accomplish.

If these intolerable dislocations of people and resources are to be avoided, the responsibility must be withdrawn from government and re-assumed by the private sector of the economy. ~ A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Tribalism in Africa NOTHING is simple. The good lib ertarian, if he follows his theory to the end, must be for the free movement of people, goods, gold, information, and ideas over the surface of the earth. He must be for the unrestrained immigration of Indians into Great Britain, or Chinese and Negroes into Aus tralia, or Arabs into Israel, and Israeli into Egypt or Tunis. He must be for applying the princi ple of "one man, one vote" to Rho desia and South Africa. But in the practical world, the free movement of men who do not care for free dom can be destructive of all the individual liberties that have been painfully wrung from govern ments over twenty centuries of in tensive struggle.

rrhe paradoxical results of sup porting the idea of freedom for people who don't in the least care to preserve it are spelled out in great detail in Dr. Franco No186 gueira's remarkable little book, The Third World (Johnson Pub lications, London, England) , which comes to us with an enthusiastic foreword by former U.S. Secre tary of State, Dean Acheson. Dr. Nogueira is the Portuguese For eign Minister, a job to which he succeeded after a scarifying ex perience as a delegate for his country at the UN General Assem bly. In the UN the nations of the "third world" form what is known as the AfroAsian bloc. The Afro Asian nations are loud in praise of democracy, liberalism, and other Western concepts, but in Dr. No gueira's experience they don't un derstand anything they say. As a Portuguese Dr. Nogueira had, of course, to defend the rec ord of his countrymen in Africa, where Portugal retains its hold on Angola and Mozambique. Unlike the white Rhodesians and the Boers of South Africa, the Portu1969 TRIBALISM IN AFRICA 187 guese are champions of a real mul tiracialism. They don't care who marries whom. They extend the same liberties to everybody, whether white, black, brown, or yellow; and they consider their African soil to be part of the grand cosmopolitan nation of Greater Portugal. Yet, in spite of practicing the sort of liberalism which the nations of the "third world" say they want to see re stored all over Africa, the Portu guese find themselves denounced in the UN as "reactionary coloni alists."

Myth 01 Democratic Development Dr. Nogueira makes his points about Portugal's record in Africa succinctly. He believes his coun try is still in Africa precisely be cause it has had a policy that does justice to the concept of multi racialism. But this book is not an apologia. It is mainly devoted to an exposure of the myths that con trol "almost all aspects of life" on the African continent outside of the Portuguese territories. When Britain, France, and Bel gium decided to withdraw from Africa, the theory was that new multiracial states would respect the individual, leaving him in pos session of his vote, his right to a representative political party, his civil rights, and his property. In Western Europe, the individual had increased his liberties in di rect relation to his ability to make a living for himself by dependence on his unhampered skills and his own means of production. But in the new Africa of recent years, nationalist freedoms have been linked ,vith the cause of socialism (African socialism in the subSahara region, Arab socialism in the North along the Mediterra nean). Not surprisingly to liber tarians, the socialism of the new governments has proved incom patible with everything the lead ers say they want for their people.

There is the myth of democratic development. In Africa, the tribe was always more important than the individual. Parliamentary free dom in the new African countries has invariably succumbed to tribal strife, with the big tribe setting up a despotism on the basis of a single mass party. The Ibos of Ni geria weren't strong enough to maintain themselves as a separate bloc in a democratic state; hence, the necessity of recourse to tribal warfare to preserve their very ex istence. In the Congo, Moise Tshombe's tribe wasn't powerful enough to establish a separate statehood for Katanga. And in Kenya and Tanzania, the cattle herding Masai are clearly an an achronistic element, doomed to eventual extinction as the more settled tribes such as the Kikuyu 188 THE FREEMAN March learn to work the levers of a cen tralized government. Rapid Industrialization Another African myth is that of rapid industrialization. The idea was that if the West were to pour in external aid, there could be a quick movement to what Walt Rostow has described as the "take off point." But, as Dr. Nogueira points out, industrialization de pends on a healthy agriculture, a strong middle class to supply the "appropriate cadres" to operate industry, and an efficient and un corrupt government. There is no sense giving Gabon, say, a factory to make television sets when there is no local market for them, and no technical intelligentsia to sup ply repairmen.

What particularly amuses Dr. Nogueira is the myth of land re form. The idea that land is monop olized in Africa "is demagogy pure and simple," for there is no scarcity of land in the African countries, there is only a scarcity of people. The extent of African underpopulation is apparent when one considers that with only 250 million inhabitants, the African continent controls almost one-third of the votes in the United Nations. In another few years the U.S. will be more populous than all of Africa. Another African myth concerns higher education. The theory is that if universities are created by government fiat, an effective in telligentsia will be produced in due course. But before you can have a university you have to have primary, rural, and technical schools. Africa is turning out doc tors and engineers who are only so in name and in the diplomas they receive. In an Africa so controlled by myth it is hardly strange that what we are seeing is the re emergence of the tribal chief. The coming of "uhuru," or freedom, has deprived Africans of the "mod erating" power of the colonial ad ministrator. When the state is taken over by the dominant tribe, the government exercises its new dominance with a harshness and despotism that may very well end with the enslavement of minori ties. Opposition to the dominant tribe becomes a form of treason, to be punished as such.

On the wor ld scale, the new tribal nations of Africa become pawns in the struggle between Moscow and the West. They are promised much, but actually get very little that they can use. Ironi cally, the small-scale agricultural missions sent to Africa by the Free Chinese of Taiwan have done more good for the new African nations than all the money poured in by the big powers that pretend 1969 OTHER BOOKS 189 to have African interests at heart. Dean Acheson, in his pungent and lucid foreword, wonders why his own country, the United States, should lecture Portugal about her role in Africa when Angola is so much more peaceful than the Congo. It is a legitimate wonde~ • OTHER BOOKS ~ DAGGER IN THE HEART: AMERICAN POLICY FAIL URES IN CUBA by Mario Lazo (New York: Funk & Wagnalls, 1968), 426 pp., $5.95. Reviewed by BeUina Bien To DEMONSTRATE that even disin terested eye-witnesses to an event may disagree as to what really happened, a professor of journal ism stages this incident for his classes: A neighboring professor is loudly accused of indiscretion; he and his "attacker," brandishing weapons, dash out into the hall within sight of the future jour nalists. When the commotion sub sides, the students are asked to report what took place and the differences in their accounts make the point for the teacher.

The writing of history, like the art of journalism, involves report ing events as accurately as possi ble. But it also calls for selection, interpretation, and evaluation. It is difficult enough to describe a simple, witnessed incident; it is even more difficult, if not impossi ble, to learn precisely what hap pened when witnesses and report ters of complex historical events are personally involved and when reputations and lives may be in jeopardy. Lincoln's assassination has never been completely ex plained, nor has John F. Ken nedy's; historians still debate the significance of events leading to World Wars I and II; and the as signment of blame with respect to U. S. intervention in Cuba is one of many matters now in active dis pute. Several associates of John F. Kennedy have published ver sions justifying his actions; and now we have the views of a close observer not responsible in any way for U. S. diplomatic decisions.

Mario Lazo, author of Dagger in the Heart, is a man of two na tions. A noted Cuban lawyer, born and educated in this country, a U. S. Army officer in World War I, he has close ties to both countries. Although he recognizes that every historian has a national "bias," reports on Cuba since the late 1950's contain what Mr. Lazo con siders "planned distortion" - in Castro's favor. Mr. Lazo traces Cuban history briefly from the Spanish-American War. No lover of Batista, he was nevertheless 190 THE FREEMAN March deeply concerned at the prospects of a Castro takeover. There were other potential leaders available. But one by one they were effec tively eliminated by U. S. action, or inaction. Finally, when Batista was deliberately ousted, nothing stood between Castro and his sei zure of power. Mr. Lazo names names and places blame - principally on New York Times correspondent, Her bert Matthews, and U. S. State Department officials, Roy R. Ru bottom, Jr. and William A. Wie land - for concealing the true situation in Cuba and for issuing reports obviously contrary to fact.

U. S. diplomacy, based on such misinformation, led to decisions, delays, and sudden policy changes that proved antagonistic to both Cuban and U. S. interests. In spite of Castro's communist ties, his verbal attacks on this country, his confiscation and nationalization of properties, reports biased in his favor led the U. S. government to trust him and his "socialist re gime" for several years. The ten tative decision to turn against him and to help anti-Castro Cubans was Eisenhower's in early 1960; John F. Kennedy expanded and elaborated the plans in 1961, until they called for large-scale invasion by U. S. trained Cuban patriots with U. S. supplies and U. S. air cover. Knowledge of the scheme was widespread. But one man .Adlai Stevenson - raised strong objections after the plans were well advanced. Kennedy then backed down, and withdrew sup port of the invasion even after Cuban patriots had started land ing at the "Bay of Pigs." Mr.

Lazo paints a similar picture of delayed decisions and sudden last minute reversals in the case of the 1962 Cuban Missile Crisis. U. S. policy has in effect strength ened communism in Cuba making it a veritable "dagger in the heart" of the Western hemisphere. Recent Cuban history has hung at times on such a slender thread as a misdirected letter that might have led to the election of anti Batista forces in 1952. More often it has been shaped, as Mr. Lazo shows, by the political decisions of indecisive men on the basis of false reports and perhaps even deliber ate misrepresentations, by diplo matic procedures that were surely remiss, by little men in high of fice. This book presents facts and interpretations which serious fu ture historians must take into consideration when dealing with this phase of U. S. diplomacy. Al though not a participant in U. S. Cuban diplomacy himself, Mr.

Lazo has long been a knowledge able bystander and a friend of many who were involved. His an alysis, amply supported by foot1969 OTHER BOOKS 191 notes, often to the .effect that the persons named have read and agreed with his interpretation, is an important chapter in the re visionist version of history which is so very much needed to coun terbalance the many apologies be ing written and published on behalf of the political administra tions involved. ~ ~ THE AMERICAN UNIVERSITY -HOW IT RUNS, WHERE IT IS GOIN G by Jacques Barzun (New York: Harper & Row), 319 pp., $7.95. Reviewed by Robert M. Thornton and Edmund A. Opitz A LOT of things are happening on campus this season including, one presumes, some instruction. But today's educational crisis has little to do, seemingly, with the content of the courses or the tools of learn ing; it concerns, rather, the sabo tage of the educational process by the kind of institutions the giant universities have become.

It is imperative, if we desire to know what has happened to edu cation, that we find a trustworthy expositor. Jacques Barzun has been associated with Columbia University for more than forty years, first as a student, then as teacher, and finally as adminis trator. He has a brilliant and farranging mind, as attested by the fine books he has authored during the past quarter century. He en lists our sympathy by first taking us behind the scenes and giving the reader some sense of the awe some task of just keeping a uni versity going as a physical entity - in addition to the smooth pro visioning of all the equipment, books, assistants, and other per quisites now deemed so essential to the task of teachIng. Then he tells us what has gone wrong, and why. Finally, he outlines the re medial action. Today's university is expected to be all things to all people. Gov ernments subsidize it to solve so cial problems, industry pays it to conduct research, and communities demand programs of adult educa tion, so-called. Spreading itself too thin, more and more of the university's time, talent, money, buildings, and equipment is used for purposes not consonant with its proper functioning, which is teaching and learning. The uni versity' declares Barzun, under the load of demand and complaint and the corresponding loss of will to maintain its form, has abdicated from several provinces: The unity of knowledge; the de sire and power to teach; the au thority and skill to pass judgment on what claiIns to be knowledge, to 192 THE FREEMAN March be a university, to be a scholar, to be a basic scientist; finally, the con sciousness of what is properly aca demic - a consciousness which im plies the right to decline alike: commercial opportunities, service as signments for industry, the adminis tering of social welfare, and the bribes, flattery, or dictation of any self-seeking group.

Another problem is money. There is so much for impedimenta that the university strangles in its own affluence while the essen tials starve for want of funds. Gifts from individuals or grants from governments and corpora tions have strings attached so that the funds cannot be internally di rected in terms of a coherent uni versity policy. A generous alum nus, for instance, donates a million dollars for a new building. This is very nice, except that the uni versity will have to tap other resources to furnish, staff, and maintain the new building. Grants for government research may play havoc with university staffs, lur ing men from this school to that, paying them for nonteaching posi tions and incurring costs not paid for by the grants. Barzun notes, too, that in our inflationary econ omy the university is constantly faced with the challenge of meet ing rising costs without increas ing tuitions too much. And. high taxes push up costs while discour aging potential donors.

Barzun lays about him unmerci fully, sparing none who deserve criticism. He chastizes the uni versity leaders who will not change their ways, as well as professors who do not or cannot teach. He scoffs at the idea of students run ning the schools and refutes this nonsense in short order, although sympathizing with many student complaints. The final chapter, entitled "The Choice Ahead," lists no less than sixty-eight suggestions, and as sumes sufficient health in our so ciety to stand the cure - provided we have the will. Barzun ends his book on a note of quiet optimism: I have tried to sketch, the latest and least interpreter in an ancient line, what choosing to have a uni versity entails and what a great na tion may expect from it - indeed must require. I do not doubt that the United States today still possesses the makings of a university, as I do not doubt that if circumstances send the institution into eclipse, the idea of it will survive into another day.

~ the Freeman VOL. 19, NO.4· APRIL 1969 Uruguay: Welfare State Gone Wild Henry Hazlitt 195 A prime example of the course from intervention through inflation to disorder and dictatorship - if we could but learn from others. A Defeat on th·e Home Front James E. McAdoo 203 How freedom may be surrendered in exchange for a mess of pottage. The Rise and' Fall of England: 14. The Decline of England Clarence B. Carson 205 Within the broad setting of the disintegration of the European order, England declined economically, morally, politically during and following World War II. Why Have an Electoral College? Bertel M. Sparks 219 Can we honestly say that we're now prepared to write a better Constitution than the Founding Fathers did? Repressed Depression Gary North 224 Concerning the process by which the monetary and credit policies that cause inflation eventuate in depression. Medical Care Is Not a Right Charles W. Johnson 234 Some helpful guidelines concerning a concept much confused in our time.

Our TotalitarianRadicals William Henry Chamberlin 236 "A cow is a very good animal in a field; but you do not turn her into a garden." Education in America: 7. Why InstitutionalizeOur Errors? George Charles Roche III 243 How the basic structure of the educational system reflects the new methods of mass education. Peace or Politics Frank Chodorov 251 Much of the friction in society stems from government intervention with the market. Book Reviews 253 "The Southern Tradition at Bay" by Richard M. Weaver "Res Republica" by Thomas o. McWhorter Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON-HUDSON, N. Y. 10533 TEL.: (914) 591-1230 LEONARD E. READ PAUL L. POIROT 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. 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, 1969, 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 "Uruguay: Welfare State Gone Wild," "The Rise and Fall of England," and "Medical Care Is Not a Right."

URUGUAY: Welfare State Gone Wild HENRY HAZLITT IF there were a Nobel prize for the most extreme or worst example of the welfare state (and if such out right communist states as Russia and China were made ineligible), which country has done most to earn it? The decision would be a hard one. Among the outstanding candi dates would be Britain, France, Sweden, and India. But the British case, though the most familiar, is certainly not the worst; it is the most discussed and most deplored because of the former eminence of Britain in the world. The tragedy certainly reaches its greatest dimensions in India, with much of its 500 million popu lation always on the verge of Mr. Hazlitt is the well-known economic and financial analyst, columnist, lecturer, and author of numerous books. This article will appear as a chapter in a forthcoming book, Man vs. the Welfare State, to be published by Arlington House.

famine, and kept there by an in credible mixture of economic con trols, planning, welfarism, and socialism, imposed by its central and state governments. Moreover, India has always been a poverty stricken country, periodically swept by drought or floods result ing in human misery on a cata strophic scale, and it is often diffi cult to calculate just how much worse off its governmental policies have made it. Perhaps the most dramatic ex ample of a country needlessly ruined by "welfare" policies is Uruguay. Here is a country only about a third larger than the state of Wisconsin, with a population of just under 3 million. Yet that pop ulation is predominantly of Euro pean origin, with a literacy rate estimated at 90 per cent. This country once was distinguished 195 196 THE FREEMAN April among the nations of Latin Amer ica for its high living standards and good management. Uruguay adopted an elaborate state pension system as early as 1919. But its major troubles seem to have begun after March, 1952, when the office of president was abolished, and Uruguay was gov erned by a nine-man national council elected for a four-year term, six members of which be longed to the maj ori ty party and three to the leading minori ty party. All nine were given equal power.

What is so discouraging about the example of Uruguay is not only that its welfare programs persisted, but that they became more extreme in spite of the suc cessive disasters to which they led. The story seems so incredible that instead of telling it in my own words, I prefer to present it as a series of snapshots taken by dif ferent firsthand observers at in tervals over the years. * * * The first snapshot I present is one taken by Karel Norsky in The Manchester Guardian Weekly of July 12, 1956: "Uruguay today offers the sad spectacle of a sick Welfare State. It is living in a Korean boom-day dream .... No politician comes out with the home truth that this country's wide range of welfare services has to be paid for with funds which have to be earned. Demagogy is used as a sedative. The result is that the foreign pay ments deficit is increasing, in ternal debt soaring, wage de mands accumulating, prices rising, and the Uruguayan peso rapidly depreciating. Nepotism is rife.

Now one in every three citizens in Montevideo, which accounts for a third of the country's 3 million inhabitants, is a public servant, draws a small salary, is supposed to work half a day in a Govern ment office, and more often than not spends the rest of his time doing at least one other job in a private enterprise .... Corruption is by no means absent. . . . "The foreign payments deficit has been running at a monthly rate of about 5 million pesos. The public servants are asking for a substantial increase in salaries. The meat-packing workers are on strike for higher pay and a 'guar anteed' amount of a daily ration of four pounds ~f meat well be low market price. . . . "No politician here can hope to get a majority by advocating aus terity, harder work, and the sac rifice of even some of the Welfare State features." I should like to pause here to un derline this last paragraph, for it illustrates what is perhaps the 1969 URUGUAY: WELFARE STATE GONE WILD 197 most ominous aspect of the wel fare state everywhere. This is that once a subsidy, pension, or benefit payment is extended to any group, it is immediately regarded as a "right." No matter what the crisis facing the budget or the currency, it becomes "politically impossible" to discontinue or re duceit. We will find this repeated ly illustrated in Uruguay.

* * * The next snapshot I present was taken by S. J. Rundt & Associates of New York nearly seven years later, in April, 1963: "In one of his first statements the new President of the National Council admitted that Uruguay is practically bankrupt .... He made it pretty clear, however, that the country's welfare system of long standing will remain more or less unchanged. "The 'social laboratory of the Americas,' Uruguay has launched a legislative program which goes much further toward the complete 'welfare state' than any similar plan in this hemisphere. . . . The government grants family allow ances based on the number of children; employees cannot be dis missed without proper indemnifi cation; both men and women vote at the age of 18.... "An elaborate and all-encom passing state pension system was introduced as early as 1919. Fi nanced by payroll deductions of 14 to 17 per cent, which must be matched by employers, a pension is available to any Uruguayan at the age of 55 after 30 years of work, or at 60 after ten years. At retirement, the worker draws his highest salary, plus what has been deducted for pensions .... Em ployees obtain free medical service and are entitled to 20 days of annual vacation with pay. The government. takes care of expect ant and nursing mothers.

"The overwhelming expenses of a super-welfare state (where nearly one-fifth of the population is dependent on government sal aries) and the uncertain income from a predominantly livestock and agricultural economy have left their marks. Today, Uruguay is in severe financial and fiscal stress .... "Inflation is rampant .... Local production has declined sharply. Unemployment has risen. There are many severe strikes. Income from tourism has fallen off markedly .... "So far as exchange controls and import restrictions are con cerned, Uruguay has tried them all.... "In an effort to prevent an other buying spree in 1963, the new Administration decreed an import ban for 90 days on a wide 198 THE FREEMAN April array of goods considered non essential. ... All told, the ban applies to about one-third of all Uruguayan importations .... The smuggling of goods, mainly from Brazil and Argentina, has become one of the foremost headaches of Montevideo planners. . . .

"Capital flight during 1963 is estimated at between $40 million and $50 million .... "The budget deficit in 1961 nearly doubled to 210 million pesos. The situation turned from bad to worse in 1962 when the Treasury recorded the largest def icit in 30 years .... Press reports cite a red figure of 807 million pesos. The Treasury is said to owe by now nearly 700 million pesos to the pension funds and roughly a billion pesos to Banco de la Repub lica. The salaries of public officials are at least one month behind schedule .... "Labor costs in Uruguay, the Western Hemisphere's foremost welfare state, are high. The many contributions toward various so cial benefits - retirement, family allotments, sickness, maternity, accident, and unemployment in surance - vary from industry to industry, but the general average for industry as a whole is at least 50 per cent of the payroll. In some sectors, the percentage is much higher ....

"Social unrest is rising. . . . Widespread and costly strikes have become the order of the day. As a rule, they involve demands for pay hikes, sometimes as high as 50 per cent." * * * Our third snapshot was taken by Sterling G. Slappey in Nation's Business magazine four years later, in April, 1967: "Montevideo, - Two hundred imported buses are rusting away on an open dock while Uruguayan government bureaucrats bicker witheach other over payment of port charges. The buses have not moved in nearly four years. "Scores of men listed under false female names receive regu lar government handouts through Uruguay's socialized hospitals. They are listed as 'wet nurses.' "At many government offices there are twice as many public servants as there are desks and chairs. The trick is to get to work early so you won't have to stand during the four to six hour work day that Uruguayan bureaucrats enjoy.

"It is rather common for gov ernment workers to retire on full pay at 45. It is equally common to collect on one retirement while holding a second job or to hold a job while collecting unemployment compensation. These are a few of the facts of life in Uruguay - a na1969 URUGUAY: WELFARE STATE GONE WILD 199 tion gone wild over the welfare state .... "Between 40 and 45 per cent of the 2.6 million people in this once affluent land are now dependent on the government for their total in come. These include youthful 'pensioners' who have no great problem getting themselves fired or declared redundant, thereby qualifying for large retirement benefits .... "At any given moment eight to ten strikes are going on, in a na tion which until fifteen years ago called itself 'the Switzerland of Latin America' because its people were so industrious, busy, and neat. Montevideo is now one of the world's filthiest cities outside the Orient. The people have so little pride left they litter their streets with paper and dump their nastiest garbage on the curb ....

"Besides controlling meat and wool production and supplying meat to Montevideo, the govern ment also entirely operates: "Fishing; seal catching; alcohol production; life and accident in surance; the PTT - post office, telephone and telegraph; petro leum and kerosene industry; air lines; railroads; tug boats; gam bling casinos; lotteries; theaters; most hospitals; television and radio channels; three official banks; the largest transit com pany .... "In 1950 the Uruguayan peso, South America's most solid coin, was worth 50 cents. During a six day period last February, the value of the peso slumped from 72 to the $1 to 77. "Cost of living went up 88 per cent in 1965. During 1966 the in crease was something like 40 to 50 per cent. "To keep pace the government has increased its spending, ground out more paper money and lavish ly passed out huge pay raises some as high as 60 per cent a year ....

"One fiscal expert diagnoses Uruguay's troubles as 'English sickness' which, he says, means trying to get as much as possible out of the community while con tributing as little as possible towards it. "Until President Gestido took over, Uruguay had been ruled for fifteen years by a nine-member council in a collegiate system of government. It was idealistic, un workable, and rather silly from the start. It quickly fragmented, mak ing the government a coalition of seven different groups. Every year a different member of the council took over as president, or council chief. "The collegiate system was a Tammany Hall patronage-type of group. Instead of each party watching the opposition, all took 200 THE FREEMAN April care of their friends and got their cousins government sinecures. "The western world has rarely seen such patronage, nepotism, favoritism." * * *The return to a Presidential system brought hopes that Uru guay's extreme welfarism could now be mitigated. But here is our fourth snapshot, taken by C. L.

Sulzberger for The New York Times of October 11, 1967: "Montevideo, - Contemporary England or Scandinavia might well take a long southwesterly look at Uruguay while murmuring: 'There but for the grace of God go 1.' For Uruguay is the welfare state gone wild, and this fact, at last acknowledged by the govern ment, brought about today'spo litical crisis and the declaration of a state of emergency. "This is the only country in the Western Hemisphere where the kind of· democratic socialism prac ticed in Norway, Labor Britain, or New Zealand has been at tempted. Alas, thanks to warped conceptions and biased applica tion, the entire social and eco nomic structure has been set askew. Here charity begins at home. One out of three adults receives some kind of pension. Forty· per cent of the labor force is employed by the state. Political parties compete to expand a ridiculously swollen bureaucracy which only works a thirty-hour week ....

"The cost of living has multi plied 32 times in the past decade. Gross national production has ac tually declined 9 per cent and this year will take a nose dive .... "Instead of having one Presi dent, like the Swiss they elected a committee and, not being Swiss, the Uruguayans saw to it the com mittee couldn't run the country. The result was a system of self paralysis .... "Anyone can retire on full sal ary after thirty years on the job, but with full salary worth one thirty-second of its worth ten years ago, the pension isn't very helpful. To compound the confu sion, trade unions make a habit of striking. Right now the bank em ployes refuse to handle govern ment checks so neither wage-earn ers nor pension-receivers get paid .... "This was a needless tragedy. Uruguay has proportionately more literacy and more doctors than the United States. It is underpopu lated and' has a well-developed middle class ....

"Vruguay should serve as a warning to other welfare states." * * * Our fifth snapshot was taken by S. J. Rundt & Associates on Au gust 6, 1968: 1969 URUGUAY: WELFARE STATE GONE WILD 201 "The mess continues . . . and seems to perpetuate itself .... The government is getting tougher and Uruguayans more obstreperous. The powerful and sharply leftist, communist-led 400,000 member CNT (National Workers Conven tion) is on and off 24-hour work stoppages in protest against the lid clamped on pay boosts by the price, wage, and dividend freeze decreed on June 28. . . . The cur rently severe six-month drought has brought a gloomy brownout, after a 50 per cent reduction in electric power use was decreed .... The near-darkness helps sporadic anti-government rioting and ter rorist activities. A leading pro government radio transmitter was destroyed by bombs .... Trainser vice has been severely curtailed and at times no newspapers are published. . . . Last year there were 500 strikes; the dismal record will surely be broken in 1968....

"Of a population of around 2.6 million, the number of gainfully active Uruguayans is at the most 900,000. Pensioners number in ex cess of 300,000. Months ago the unemployed came to 250,000, or almost 28 per cent of the work force, and the figure must now be higher .... "The government closed at least three supermarkets and many stores for having upped prices, as well as such institutions as private hospitals that had violated the wage-price freeze decree. But de spite rigid press censorship and Draconian anti-riot and anti strike ukases, threatening punish ment by military tribunals, calm fails to return." * * * Our sixth and final snapshot of a continuing crisis is from a New York Times dispatch of January 21,1969: "Striking Government employes rioted in downtown Montevideo today, smashing windows, setting up flaming barricades and sending tourists fleeing in panic. The po lice reported that one person had been killed and 32 inj ured.

"The demonstrators acted in groups of 30 to 50, in racing through a 30-block· area, snarling traffic with their barricades, and attacking buses and automobiles. The police fought back with tear gas, high-pressure water hoses and clubs .... "The striking civil servants were demanding payment of monthly salary bonuses of $24, which they say are two months overdue." ** *These six snapshots, taken at different intervals over a period of twelve years, involve considerable repetition; but the repetition is 202 THE FREEMAN April part of the point. The obvious re forms were never made. Here are a few salient statis tics to show what was happening between the snapshots: In 1965 consumer prices in creased 88 per cent over those in the preceding year. In 1966 they increased 49 per cent over 1965. In 1967 they increased 136 per cent over 1966. By August, 1968 they had increased 61 per cent over 1967.

The average annual commercial rate of interest was 36 per cent in 1965. In 1966, 1967, and August, 1968 it ranged between 32 and 50 per cent. The volume of money increased from 2,924 million pesos in 1961 to 10,509 in 1965, 13,458 in 1966, and 27,490 in 1967. In 1961 there were 11 pesos to the American dollar. In 1965 there were 60; in 1966, there were 70; in early 1967 there were 86; at the end of 1967 there were 200, and after April 1968 there were 250. Uruguay's warning to the United States, and to the world, is that governmental welfarism, with its ever-increasing army of pensioners and other beneficiaries, is fatally easy to launch and fatally easy to extend, but almost impossible to bring to a halt - and quite impos sible politically to reverse, no mat ter how obvious and catastrophic its consequences become. It leads to runaway inflation, to state bank ruptcy, to political disorder and disintegration, and finally to sup pressive dictatorship. Yet no coun try ever seems to learn from the example of another. ~ What Is Capitalism?

AMERICAN CAPITALISM is "private ownership of the means of production and distribution." This is the very simplest of defini tions, but it gets to the heart of the question with the two words, "private ownership." There are other facets, however. American capitalism has three great pillars which support it: private property, the profit motive, and the open market where all are free to compete in the production and sale of goods and services. CARROLL REYNOLDS, Indiana Economic Education Foundation HDefeat on the Home Front · JAMES E. McADOO DURING the development of the area in which I live, one of the selling points was the privacy of our streets. Each property owner, through an annual assessment, would share in the costs of street lighting, repairs, and mainten ance. In return for this small ex pense, we would b€nefit by enjoy ing the advantages of streets closed to all but the owners and their guests. Among other things, we would be spared the annoy ances of heavy traffic, door-to door salesmen, and an invasion of fishermen who might otherwise crowd our private docks and sea walls.

All property owners became members of an Association, and an elected Board of Directors has seen to the mechanics of· collecting assessments and paying bills. Every lot has been sold, and nearly every lot now has a house upon it. While privacy may not have been the foremost advantage of our location, those who bought and built here demonstrated a ,villing ness to accept the responsibilities Mr. McAdoo is an Investment Counselor and free lance writer in Florida. associated with private streets. Recently, however, memhers of our Association were urged by the Board of Directors to vote for a proposal to dedicate our streets to the town. The argument advanced for doing so was to "eliminate" the responsibility of members for any future street repairs and re paving. The anticipated expense, rather than being met by an as sessment of members, would thus fall to the town. Our Board, prior to the vote, pointed out that the Town Com mission had no plans to remove certain attractive banyan trees that grace the centers of two streets. By implication, however, they would have the right to do so if the dedication carried. To that extent, the surrender of our rights, along with our responsibilities, was clear to all.

The vote was 90 "yes" and one "no." If the Town Commissioners had marched upon our private domain and demanded our streets by threats of. force, they almost cer tainly would have encountered vig orous, and even unanimous, re203 204 THE FREEMAN April sistance. Under such unlikely circumstances, the threat to our freedom would have been clear: an abridgment of our rights with respect to private property. With out a doubt, most of our residents would have defended not only the right to share in the ownership of private streets, but the right to maintain them as we saw fit. The members of our Association are all freedom-loving Americans. They are intelligent, friendly neighbors. Many have defended our nation's freedom in the World Wars, Korea, or Viet Nam. Of the 90 who voted "yes," not one could have regarded his vote as a willing surrender of his freedom. Yet, a change has taken place: the responsibility for our streets, along with the rights inherent in that responsibility, has been shifted from a volunt"ary Associ ation of a few families, to a unit of government. The nature of that change is not altered by the eager ness of our members to e1i.minate a responsibility, nor by our will ingness to relinquish our rights.

-The character of our loss would be the same if our rights had been taken by force. Only our attitude would have differed. The Declaration of Independ ence, at least that part we have memorized, makes no reference to responsibilities. Still, upon reflec tion, we might conclude that if we truly are endowed by our Creator with certain unalienable rights, it must be because we are at the same time charged by our Creator with certain inescapable responsi bilities. To the degree we transfer our responsibilities to others, to the same degree we surrender the rights which are intrinsic to them. One important way in which we can defend our rights, as a nation and as individuals, is to hold tenaciously to our personal respon sibilities. No headlines will lament the loss of our few private streets. Huntley and Brinkley will not re port this transfer as a blow to our country's freedom. Even our own Association membership will not feel a whit less free. But small as the import may appear, we have given up some of our rights by retreating from a personal re sponsibility. The same freedom we would be willing to die for, we have just given away on Main Street.

It was a minor skirmish, and no real contest. Freedom lost. Hope fully, a consideration of this en counter might stir some thought as to the subtle connections be tween rights, responsibilities, and freedom. The connections are there, and we can profit by them. If we do, then at some other time, in some other place, freedom might win. ~ CLARENCE B. CARSON fuglaub 14. THE DECLINE OF ENGLAND ENGLAND'S DECLINE began in the interwar years between World War I and World War II. To all appearances, England was still a great world power. The sun never set on the British flag; indeed, it had less chance of doing so in the interwar years than before. The British navy no longer quite ruled the seas, but no other did either. In the gatherings of great powers, England must still be present or consulted. Yet the inner strength which had given England power and influence around the world was decaying. The decline was political, economic, moral, reli gious, and social. Before exploring the signs of decline, it needs to Dr. Carson, Professor of History at Grove City College, Pennsylvania, will be remembered for his earlier FREEMAN series, The Fateful Turn, The American Tradition, and The Fli4ht from Reality.

be placed in a broader context. England's decline occurred within the framework of the disintegra tion of the European order, a dis integration which had ramifica tions around the world. "To think," Kaiser Wilhelm la mented at the outbreak of World War I, "that George and Nicky should have played me false! If my grandmother had been alive, she would never have allowed it."! "George" was George V of Eng land, and "Nicky" was Nicholas II of Russia. "Grandmother" was, of course, Queen Victoria of Eng land. She was not only the Kaiser's grandmother but also Czar Nicholas' grandmother by marriage. Moreover, it was not 1 W.alter L. Arnstein, Britain: Yes terday and Today (Boston: D. C. Heath, 1966), p. 237. 205 206 THE FREEMAN April simply a felicitous phrase to re fer to her as "Grandmother of Europe."2 In view of the heavy tomes since written on the "causes" of World War I, his toriansare inclined to rate the Kaiser's remark as highly naive.

Yet, it should not be casually dismissed. Grandmother Victoria might not have prevented World War I, most likely could not have. But monarchy had provided bal ance and continuity for nations and empires between the Congress of Vienna and World War I - that century of peace. It had come generally to be limited monarchy in which the monarchs' powers for abuse were shorn but in which sufficient power was re tained to counterbalance legisla tures. Moreover, the intertwining of royal families by kinship and marriage did tend to make for good relations among the coun tries of Europe. The spirit of na tionalism had distinguished peo ples from peoples, but they were still linked to one another in royal families. The disintegration of the Euro pean order was twofold during or after World War I. On the one hand, monarchy was abandoned by maj or countries: Germany and Russia most notably. Secondly, the 2 See ibid., pp. 372-73 for a simplified chart of the relationship of Queen Vic toria to the other monarchs in Europe.

empires of Central and Eastern Europe were broken up: German, Austro-Hungarian, Russian, and Ottoman. In their place, new na tions were brought into being and old ones revived: Poland, Czechoslovakia, Yugoslavia, Lat via, Lithuania, and so forth. New as well as old nations were highly nationalistic, jealous of one anoth er, and no longer generally linked with one another by royal fam ilies, though some monarchs were retained or restored. The New Mercantilism: Return to Self.Sufficiency The disintegration was both signaled and fostered by attempts of each country to become econom ically self-sufficient - by economic nationalism or neo-mercantilism, whatever term may be preferred. One history gives an example of this for one group of countries: As an expression of their sover eignty and independence each of the states in Danubian Europe erected its own tariff system .... In general the tariffs ascended in this order: Austria, Czechoslovakia, Yugoslavia, Hungary, Bulgaria, and Rumania ....

Recourse was also made to quota and licensing systems. It adds: "The small states of Cen tral Europe cannot be censured for trying to create a rounded na tional economy when the whole 1969 THE DECLINE OF ENGLAND 207 world was doing the same thing."3 In many respects, this economic nationalism was a continuation and extension to new states of developments which were becom ing general in the last decades of the nineteenth century. Country after country had erected tariff barriers: the United States, Ger many, and so forth. These had set the stage for the new surge to get colonies and dominate ter ritories in various places on the globe. The roots of World War I can be found in this expansionism which grew out of protectionism. England grasped for colonies while holding out against the pro tectionist Ineasures. This new mercantilism differed significantly in the animus behind it from the mercantilism of the sixteenth, seventeenth, and eight eenth centuries. It was spurred by the trend toward socialism and the welfare state. Countries found it expedient to erect "trade cur tains" to protect themselves from the world market in order to con trol and regulate domestic econo mies. Black and Helmreich point up the connection in their discus sion of the bills of rights in the new constitutions of the Danubian governments in the 1920's: "The government must assure the right 3 C. E. Black and E. C. Helmreich.

Twentieth Century Europe (New York: Alfred A. Knopf, 1960), pp. 293-94. to work; the health of the citizens, particular ly the laboring man, must be safeguarded; the aged must be cared for; the family pro tected, etc. To implement all these 'rights' the government would of necessity have to provide a far reaching social service program, regulate trade and industry, and become in truth the very nurturer of the whole population .... "4 Eng land held out longer-than other na tions against the interior logic, or illogic, of the requirements of the welfare state, but, as we shall see, eventually succumbed. The League of Nations The League of Nations was sup posed to bring about and maintain order and peace during the inter war years. It did not do so; indeed" it could not do so. That organiza tion was to promote international cooperation and provide collective security. Yet nation was pitted against nation economically; ma nipulated currencies made move ment of goods and peoples from one land to another increasingly difficult; ideology and action sev ered the natural Donds' o:f, one peo ple with another. Nations cannot use the power of their govern ments against one another in trade and collaborate to maintain peace politically. They cannot establish national socialism, on the one 4 Ibid., p. 291.

208 THE FREEMAN April hand, and international collective action, on the other. The notion that if the United States had joined the League matters would have turned out differently pays too high a compliment to the co lossus of the New World. The vaunted inventiveness of Ameri cans would not have sufficed to overcome the interior contradic tions of disintegrating Europe. At any rate, the old order in Europe was not replaced by a new order in the interwar years. In stead, disorder spread, became more violent, and threatened the peace of the world. Governments made that variety of internal war upon their own populations which is implicit in socialist ideology and attempted to forge anew unity by preaching class and race hatred. Governmental power was totalized, first in the Soviet Union, then in other lands. Power was concen trated in the hands of dictators or would-be dictators in land after land - in the hands of Stalin, Mussolini, Hitler, Marshall Pilsud ski, Salazar, and so forth - in the absence of the old monarchical and aristocratic restraints and under the guise of the thrust toward socialism. Dictators consolidated their power by turning to aggres sion in the 1930's. Word of new horrors began to spread, suggested by such phrases as concentration camps, Siberia, secret police, dossiers, travel permit, shot in the back of the neck, Gestapo, liquida tion of kulaks, and so forth. Intel lectuals in France, Great Britain, and the United States-themselves bent toward socialism - disavowed the misbegotten step-children of socialism known as Italian fascism and German nazism, but were gen erally unrepentant in the face of Soviet purges and the Nazi-Soviet Pact.

Decline in foreign Trade and Domestic Production Such was the setting of Eng land's decline. That decline is most readily measurable in foreign trade and economic production. In some areas, the decline was relative; in others, it was absolute. The United Kingdom's relative share of world trade - exports and imports - is indicated by these figures: in 1840, it was 32 per cent; 1913, 17 per cent; 1938, ·13 per cent. 5 More important, Bri tish imports ac counted for an increasing propor tion of the trade, while exports decreased. 6 The United Kingdom's portion of world manufacturing production was 31.8 per cent in 1870; 14 per cent in 1913; and 9.2 5 Shepard B. Clough, European Eco nomic History (New York: McGraw Hill, 1968, 2nd ed.), p. 419. 6 See Charles Loch Mowat, Britain Between the Wars (Chicago: University of Chicago Press, 1955), p. 262.

1969 THE DECLINE OF ENGLAND 209 per cent in the 1936-1938 period. 7 Britain's decline was most nota ble in the older basic industries, those industries which the British had dominated in the nineteenth century: coal, iron and steel, ship building, shipping, cotton goods, and so forth. The decline in coal mined was absolute. A record 287 million tons were mined in 1913; in the 1920's, annual production averaged about 253 million tons. S A decreasing proportion of this was sold in foreign trade. 9 "Until 1937, pig-iron production declined steadily from its absolute peak of IOtA, million tons in 1913."10 In general, iron and steel production fell during the interwar years until it began to rise in the late 1930's. What happened to the cot ton goods industry is probably most important, for it had ac counted for a large portion of ex ports in the nineteenth century. Piece goods production fell from a little over 8 billion square yards in 1912 to 31;2 billion square yards in 1930 to only a little over 3 bil lion yards in 1938. Exports of piece goods declined even more drastically: from nearly 7 billion square yards in 1912 to less than 7 Clough, Ope cit., p. 397.

8 Loch Mowat, Ope cit., p. 276. 9 Sidney Pollard, The Development of the British Economy: 1914-1950 (Lon don: Edward Arnold, 1962), pp. 110-1l. 10 Ibid., p. 114. 11j2 billion square yards in 1938.11 British shipbuilding fell off badly between the wars. From 1920 onwards the tonnage under construction fell, though the years 1927-30 were relatively good years, British launchings then run ning at about 75% of the level of 1911-13. In the slump, with millions of tons of shipping laid up, the build ing of new tonnage virtually came to a standstill: in 1933 the launchings from British yards fell to 7% of the pre-war figure. Throughout the early 1930's a large part of the industry was idle ... .12 Some new industries did grow and develop during the interwar years, such as electrical goods, automo biles, aircraft, silk and rayon goods, .and chemical products, 13 but these did not alter the fact of the general decline.

British agriculture did not fare well during the period either. There were just over 11 million acres in cultivation in 1914 (in England and Wales). It had fallen to 9,833,000 acres in 1930. Acre age under wheat in 1931 reached the lowest point ever recorded. There were some increases in pro duction in some categories, but the English were producing far less than they consumed of agricul11 Ibid., p. 121. 12 Ibid., p. 117. 13 Ibid., p. 98.

210 THE FREEMAN April tural products. 14 A flight from the land' .was characteristic of these years: "employment in agricul ture and forestry in the United Kingdom fell from an average of 1,004,000 in 1920-22 to an average or' 735,000 in 1927-28 .... Work ers left the industry at the rate of 10,000 a year, and the exodus of young.men was 'particularly 'marked. . . ."15 British Themselves Responsible for' Commercial Decline Many historians attribute the commercial and industrial decline of England to the protectionist policies of other nations, to other countries finally catching up to an earlier. lead England had gained, and to the failure of the British to modernize. Undoubtedly, the protectionist policies of other countries made trade more difficult for' the British. The latter tW6 points, however, require' explana tions rather than constituting them. In truth, the British were mainly responsible for their com mercial declin~. The reasons for that decline are .not far to seek.

England had· risen as a great in dustrial and. commercial nation when the energies of men had been· freed, when restrictions upon "land were removed or reduced, when special privileges were 14 Loch Mowat, Ope cit., pp. 250-53. 15 Pollard, Ope cit., p. 142. struck down, when liberty and property were secured for indi viduals, and when they were mo tivated by belief to constructive achievement. England's decline followed the onset of government intervention on a scale that could not be .fully compensated for. That interven tion began to' take effect in the early years of the twentieth cen tury, was temporarily vastly ex panded during World War I, and in the interwar' years began to mount once more. .The thrust toward intervention came from Fabian socialists and other re formers, was spearheaded by the Labour Party in Parliament, and gained sway during every maj or cabinet administration from 1906 onward. High taxation made the accumulation of capital a forbid ding task; regulation made new investments in many areas unen tieing; labor unions introduced inflexibilities into the economy; and Britain became less and less competitive around the world. The determination of interventionists to regulate and control was incon sistent with free trade and the gold standard; one or the other had to go, and it was freedom that went. There is not space here to tell the story in detail, but enough must be told to show how the de cline followed· from the interven tion.

1969 THE DECLINE OF ENGLAND 211 Following World War I, there was a considerable attempt at re conversion and restoration of the old order. "During 1919 the con trols of trade and shipping were allowed to end. Rationing of food and most price controls ended by 1920.... Factories and stores of 'war surplus' goods were sold off. The Government made every show of its conviction ... that Govern ments ought to get out of busi ness .... "16 This last sentence ex aggerates somewhat, but it does indicate one tendency. The budget was balanced once again, and the inflation halted. Trade with the rest of the wor ld was virtually freed. In 1925, Winston Churchill, as Chancellor of the Exchequer, was able to restore the gold stand ard. Most of this had been accomplished under governments headed by David Lloyd George, Bonar Law, and Stanley Baldwin, the latter two being Conservative Prime Ministers.

Revival Short-Lived; More Governmental Intervention These measures did not succeed fully in reviving England for two reasons mainly. In the first place, the reconversion was not that thorough; much intervention was continued, and more came. One 16 David Thomson, England in the Twentieth Century (Baltimore: Pen guin Books, 1965), p. 67. historian notes that during the war. "departments, bureaux, com mittees, controllers were created and piled on top of each other .... " After the war, "though the .flood subsided, government never re turned to its old channel."17 Signs of increasing. government appeared in the establishment of a Ministry of Labour in 1916, a Ministry of Health in 1919, a Ministry of Transport in 1919, a Department of Scientific and Industrial Re search in 1916, a Forestry Com mission in 1919, and a Medical Research Council in 1920.18 Rail road consolidation was prescribed after the war; coal mines were greatly regulated; high taxes were imposed; and some tariffs were continued. Two new welfare acts were passed shortly after the war.

"The Housing and Town Planning Act of July 1919 ... provided for government subsidies through local authorities." An unemploy ment insurance act was passed in 1920. "Nearly twelve million workers, including eight million not previously insured were brought within the scope of the act.... "19 This last was to become very shortly a great burden on English taxpayers. 17 Loch Mowat, Ope cit., pp. 13-14. 18 Ibid., p. 15. HI Alfred F. Havighurst, Twentieth Century Britain (New Y;ork: Harper and Row, 1962, 2nd ed.), p. 171.

212 THE FREEMAN April Trade Unions a Major Obstacle to Recovery The other great obstacle to the revival of England in the 1920's was the labor unions. These had grown greatly during World War I, and they now had a powerful political arm in the Labour Party. Labor unions find it very difficult to survive deflation. They depend for their following to a consider able extent upon frequent in creases in wages. This can only be accomplished generally by increas es in the money supply or reduc tions in employment. When the government began balancing the budget and later returned to the gold standard, labor unions re sisted any cut in wages vigor ously. There were widespread strikes, this activity coming to a head with the General Strike of 1926 (an event significantly pre ceded by the return to the gold standard). The government came to the aid of miners by subsidiz ing them and prescribing the con ditions that should prevail. More generally, however, those union workers with jobs continued to get high monetary wages. They did so at the expense of other workers, for unemployment became endemic in England in the 1920's, and was a fixture throughout the interwar years. By June of 1922, the regis tered unemployed had reached 1% millions. The government came to the rescue, and began its subsidi zation of unemployment on a large scale. The government, "by a se ries of Acts in 1921 and 1922 ...

extended the period during which benefits could be drawn . . . , al tered the rates of benefit, and in creased the contributions."2o One of the maj or reasons for economic decline in England during the in terwar years was that a consider able portion of the people were not working. The labor unions pro duced the situation, and the gov ernment sustained it. Unemployment was highest in the old staple industries, and re mained high during these years. These were the industries, of course, where unionization had its great impact. A further reason for decline can be seen in wages and productivity. British wages were generally higher than in other lands. 21 On the other hand, pro ductivity did not keep pace. In coal mining, for example, other countries in Europe were greatly increasing the output per man shift; England had only small gains. '''By 1936, the peak year in every country, Britain's output per man shift was 14 per cent above that of 1927, whereas the increase in the Ruhr mines was 81 per cent, in the Polish mines 54 per cent, in the Dutch mines 118 per 20 Loch Mowat, Ope cit., p. 127.

21 Ibid., p. 268.

1969 THE DECLINE OF ENGLAND 213 cent."22 Small wonder that Britain could not maintain its trade posi tion. Protecfionismin the Thirties Government intervention and labor union obstruction prevented the revival of the economy in the 1920's. With the coming of the depression of the 1930's, the gov ernment abandoned the feeble ef fort it had made to restore the policies which had made England great. The great symbols of these, the gold standard and free trade, were given up: the gold standard in 1931; protective tariffs and imperial preference were inaugurated in 1932. The pound sterling was no longer good as gold, and Eng land was no longer the trading Mecca of the world. It has been suggested that Eng land backed into socialism in the interwar years. But this was not always the case. In the 1920's un der a Conservative government there was a straightforward move ment in that direction in two in stances. Radio was taken over by the government as the British Broadcasting Corporation. A Cen tral Electricity Board was created, and it was empowered to make wholesale distribution of electric ity. In retrospect, though, it does look as if the stage was set for socialism by the backdoor. The 22 Ibid., p. 276.

governm·ent appeared to do its best to wreck free enterprise by abol ishing competition in many areas in the 1930's. Cartelization was authorized and fostered in several industries, notably coal mining, iron and steel, and shipbuilding. The government fostered com binations, collaborations, and price setting, similar to what was un dertaken under the N.R.A. in the United States. What was involved is suggested by this description: "The Government looked for the benefits of monopoly, tempered by planning in the national interest. Accordingly, the British Iron and Steel Federation was formed in April 1934. '.' . In 1935-36 it took over the price-fixing functions of earlier sectional associations, and it negotiated with foreign cartels to impose quantitative restrictions on imports .... "23 Nationalization was only a step away after this. If anything, the intervention in agriculture was more massive than that in other areas in the 1930's.

England had already, in the 1920's, attempted to establish sugar beet growing by giving subsidies (what were called bounties generally un der the older mercantilism). In the 1930's protectionist policies for agricultural products were fol lowed, and attempts at carteliza tion, of a sort, were made. Potato Marketing Boards, Milk Market23 Pollard, Ope cit., p. 116.

214 THE FREEMAN April ing Boards, Bacon and Pig Mar keting Boards were set up to do such things as control production and prices. One historian de scribes the inconsistency in this way: "Viewed in the broadest pos sible perspective, the world was suffering from a surfeit of food, and Britain, the world's chief food market, reacted to this glut by closing her frontiers to imports and encouraging her farmers to add to the world output by expand ing their high-cost production."24 At any rate, the vaunted inde pendent Englishman was indepen dent no more; he was caught in the toils of gove'rnment power by the promises of government favors. There was a revival of the Brit ish economy in the middle and late 1930's. It did not, however, signal ize the recovery to full health of the patient. Instead, it was only an instance of that deceivingly health ful flush that patients sometimes develop just before they succumb.

England declined in many other ways than the economic in the interwar years. British influence and power was waning in the world at large. At the Washington Naval Conference, and then more completely at the London Naval Conference, Britain abandoned its naval pre-eminence. The United States was accorded equality, and 24 Ibid., p. 141. the Japanese acquired a leading role in the Pacific. These indicated the decline of power and of the will to be the strongest. Waning World Influence The waning of British influence was more subtle and probably much more significant. In the nineteenth century, British politi cal forms and institutions had been the models for much of the world. In the interwar years, this ceased to be the case. Intellectuals began to cast admiring glances toward the Soviet Union: to its social planning, to one-party govern ment, to the dictatorship instituted there. Italian fascism had its ad mirers, too, as Mussolini consoli dated his power in the mid-twen ties. (At least, some said, the trains run on time in Italy.) But to look at it this way is probably to approach the matter wrong-end-to. What was there to admire and imitate about British institutions any longer? What were they? How convinced of their probity were the British them selves? Power had already been centralized in the House of Com mons and concentrated in the cab inet. The balance of powers now· remained largely in relics which were forms without substance.

Political parties represented about all that was left of the means of balancing power. But these, too, 1969 THE DECLINE OF ENGLAND 215 lost vitality during the years un der consideration. The only party that managed to get a clear majority in the inter war years was ·the Conservative Party. But its leadership was usu ally reluctant to govern. Labour got a plurality in the election of 1929, and Ramsay MacDonald, the Labourite, formed a government. It fell in 1931, and MacDonald led the movement for a National gov ernment. There was an overwhelm ing vote for candidates pledged to the National government. Actu ally, Conservatives elected 472 members to the House of Com mons, a preponderant majority it self. Nonetheless, Ramsay Mac Donald served as Prime Minister for a National government from 1931 to 1935, followed by two Con servatives, Stanley Baldwin and Neville Chamberlain, to 1940. This was surely the peacetime nadir of party responsibility in modern British history. Without effective party responsibility for what was done, there was little check left upon government. In short, Eng land turned to its own variety of "one-party" government in this period - a pale imitation of what was occurring in the dictatorships.

Retreat to Munich Britain was withdrawing from the world, retreating from compe tition behind tariff barriers,. going off the gold standard, pulling. in to the hoped-for safety of empire. Other nations were becoming ag gressively expansive: Japan, Italy, Germany, and the Soviet Union. Nobody did anything of real consequence when Japan invaded Manchuria in the. early 1930's. Britain and· France agreed not to intervene significantly when Mus solini's forces invaded Ethiopia in 1935. This would throw Mussolini into the arms of Hitler, it was feared, and Britain clung to the relics of a balance of power policy which, in fact, at this point meant a withdrawal of influence. When Spain became a battleground be tween communists, on the one hand, and fascists - assisted by Germany and Italy-, on the other, no British weight was used to prevent the intervention. Indeed, as Germany rearmed, as the Rhineland was remilitarized, as international treaties were fla grantly violated, Britain acqui esced piecemeal in virtually every measure.

The depth of the bankruptcy of British foreign policy was reached at the Munich Conference in 1938. Prior to this conference, Cham berlain had made hurried trips to meet and. treat with Hitler, plead ing with the arrogant dictator to moderate his claims. At Munich, Hitler refused to allow Czech rep resentatives to be present at the 216 THE FREEMAN April meeting of himself, Mussolini, Daladier (for France), and Cham berlain. Yet the men present agreed to the cession of Czecho slovak territory (the Sudeten land) to Germany. But if the Czechs had been present, they could have been outvoted; such are the possibilities of democratic col lective agreements. Chamberlain returned to England exultant; the Munich agreement had, he pro claimed, secured "peace in our time." And the crowds cheered! Unprincipled Behavior That men are fallible beings is undoubtedly true. They fall short of their ideals; they do not invari ably hue to the line of principle; they compromise quite often where moral questions are involved. Yet there are tides in the affairs of men, and it is not simply individ ual fallibility involved in these affairs. Chamberlain had not sim ply varied from principle; in the best of times men do this. He was confused, and his confusion was the reflex of that of a large por tion of the English people. The de cline of England was preceded and accompanied by moral and reli gious decline. It is one thing to violate the known and agreed upon principles of morality; it is quite another not to know what these principles are, to be torn between conflicting views, or to be uncertain as to the existence of veri ties. It was the latter which af flicted the English, as well as peo ple elsewhere.

One historian describes the de cline of religion in the interwar years in this way: More broadly, religious faith was losing its strength. Not only did church-going universally decline. The dogmas of revealed religion - the Incarnation and the Resurrection were fully accepted only by a small minority. Our Lord Jesus Christ be came, even for many avowed Chris tians, merely the supreme example of a good man. This was as great a happening as any in English history since the conversion of the Anglo Saxons to Christianity .... 25 Another points out that by the 1930's the number of communi cants in the Church of England only barely exceeded that of Ro man Catholics. The well-to-do still availed themselves of the rites of the church. "But no more than socially; and Puritanism lan guished except in a few Dissent ing congregations, and among the elderly."26 For several decades, the erosion of belief in verities had proceeded apace or accelerated. Intellectuals 25 A. J. P. Taylor, English History: 1914:.1945 (New York: Oxford Uni versity Press, 1965), p. 168.

26 Robert Graves and Alan Hodge, The Long Week-End (New York: Nor ton, 1963), p. 113.

1969 THE DECLINE OF ENGLAND 217 had swung over to relativism. Morals, people were taught, are relative to time and place, are matters of customs and mores. Moral absolutes were for English men reflexes of Puritanism and Victorianism, hence, old-hat, out moded, and increasingly despised. Rationality had been undercut by new currents of irrationality. Ripe for Socialism There was a close relation be tween these developments and the movement toward socialism. So cialists could not advance their dogmas in a framework of individ ual responsibility. The virtues of industry, thrift, clean living, and careful husbandry must be under mined. Traditional morality ab jured violence, enjoined respect for property, taught that men should not steal but be content with the fruits of their own labor. Cove tousness was enj oined by Holy Writ. These had to be, and were, denigrated for socialism to make its gains.

The point is this: When Cham berlain confronted Hitler, he brought no high moral position from England with which to op pose the Fuhrer. The gradualist movement toward socialism in England had acclimated the Eng lish to methods analogous to those of Hitler, if not in so brutal a guise. The British had come to accept labor union violence as a legitimate means to achieve their ends. They had been familiarized with increasing use of government force against the population to regulate trade, to confiscate ,vealth, to provide funds for idle men. What was right was what the majority voted for, according to an underlying ethos. If the major ity voted for programs which took the profits of corporations, that was not theft; it was only social justice. If the House of Lords stood in the way of this thrust for power, it should be shorn of its effective veto. There was no high ground in all of this from which to counter Hitler's moves. More over, the British people did not want adventures; they wanted peace.

It must not be thought that socialists believed consistently in the protection of minorities. Which minorities? Not the Lords. Not the farmers. Not factory owners. Not the unemployed (and their right to work in struck plants). Not of women, for the labor unions had worked diligently to drive women from their employment after World War I. The Czechs were, after all, only another minority. Why should their selfish wishes stand in the way of the great goal of world peace? It is not my point, of course, that the British were more re218 THE FREEMAN April sponsible than others for these international events, or that they acted more ignobly. They did eventually stand and fight, and they did so sturdily and even hero ically. In the dark days of 1940-41, they stood alone against the Axis might which bestrode the conti nent of Europe. Winston Church ilrs promises to "wage war, by sea, land, .and air" until victory was achieved rallied his people behind him. The point, rather, is that England's decline was of its own making, that the decay of morality underlay this decline, that the British abandoned ancient princi ples and vitiated their system, that government intervention produced the decline, and that waning influ ence abroad was a logical conse quence of the loss of certainty at home. Nor was the' war anything more than a temporary interrup tion of the British on their road leading toward oblivion. ~ The next article of this series will pertain to "Socialism in Power."

IDEAS CJN LIBIRTi'f! Martin Van Buren THOSE who look to the action of this Government for specific aid to the citizen to relieve embarrassments arising from losses by revulsions in commerce and credit lose sight of the ends for , which it was created and the powers with which it is clothed. It was established to give security to us all in our lawful and honorable pursuits, under the lasting safeguard of republican institutions. It was not intended to confer special favors on in dividuals or on any classes of them, to create systems of agri culture,. manufactures, or trade, or to engage in them either separately or in connection with individual citizens or organized associations. If its operations were to be directed for the benefit of any one class, equivalent favors must in justice be extended to the rest, and the attempt to bestow such favors with an equal hand, or even to select' those who should most deserve them, would never be successful.

Message before a Special Session of Congress, September 4, 1837, to consider monetary· problems.

VihY have an ElectoralCollege? ~ This article is an uncle's response to a lad's question shortly after the presidential election of 1968. BERTEL M. SPARKS, the uncle, worked his way out of "poverty stricken"( Appalachia through law school and two graduate degrees in law. He served on the faculty of New York Univer sity School of Law for eighteen years and is now professor of law at Duke University. He is the author of two books and numerous articles in legal periodicals. Dear Philip: In reply to your question about my opinion of the Electoral Col lege, I am in favor of retaining it. Before abolishing any institution that has been with us for such a long period, we should take time to ask why it came into existence in the first place, how it has worked in the past, and what sub stitute we have to offer. It is my opinion that a careful considera tion of· these questions will lead to the conclusion that the Electoral College is not so bad after all.

It seems that when our Found ing Fathers were about the task of writing our Constitution they were almost unanimous on two basic ideas. They wanted a gov ernment strong enough to keep the peace and they feared any such government that was that strong. They had learned from their experience under King George that unlimited power in human hands was a dangerous thing. Being a highly educated group, their knowledge and under standing of history had taught them that tyrannical power was not confined to anyone form of government. It could exist whether its form was that of a monarchy, aristocracy , theocracy, or even a democracy. Their experience un der the Articles of Confederation had also taught them that a gov ernment without adequate power could not protect its citizens in the exercise of their commercial and social relations with each other. It was a recognition of these diverse and somewhat con flicting policy goals that led them to the establishment of a form of 219 220 THE FREEMAN April government that made possible the greatest exercise of personal free dom and the development of the highest level of material well-be ing that has ever been known any where else on the earth before or since. How did they do it?

The scheme agreed upon by that little group of men gathered in Philadelphia in 1787 was not a democracy but a republic, char acterized by a separation of pow ers and a division of authority. To them this meant much more than a separation of the legisla tive, executive, and judicial de partments of government. Regard less of what separation of the de partments could be achieved, the men who were laying our founda tion feared the consequences of having all three concentrated in one central government. That much had been tried before in various parts of the world, and under such arrangements tyranny had often been the ultimate result even where the election of the officials imposing the tyranny had been by popular choice. The added feature was a federal system where the local units of government, the states, were made independent en tities and not just instrumentali ties of the central power and the central government was made one of strictly limited powers.

The exercise of even such limited powers was carefully circum scribed. The Senate was to repre sent the states, with all states be ing equal for this purpose, and the House was to represent the peo ple. The chief executive was not to be chosen by the legislative body, as is the custom in many countries of the world, but was made independent of them. Yet the power he could exercise with out their approval was strictly confined. Although the judges were to be appointed by the Presi dent, they could not be removed by him and therefore it was highly unlikely that the judiciary would ever be dominated by anyone President. It was no accident that the Representatives and Senators were given terms of different lengths and the election of Sena tors was so arranged that not more than one-third of them could be changing at anyone time. And the President's term was made of different duration from that of either House or Senate. This some what awkward staggering of terms was to avoid the instability that could result from having the whole government change, even by popular vote, at a moment of great emotional upheaval.

The Electoral College was in vented as a part, although maybe only a small part, of this general scheme of separation of powers 1969 WHY HAVE AN ELECTORAL COLLEGE? 221 and division of authority. It was a scheme for letting the people choose but at the same time avoid ing some of the dangers inherent in a direct choice. Not the least of the dangers they had in mind was that in a time of national turbu lence, such as we might be ap proaching at the present time, suf ficient emotional excitement might be generated to elect a popular and glamorous personality such as a Julius Caesar or a Napoleon Bona parte. Of course, these dangers exist under any system of govern ment. The important question is under what system can the extent of the dangers be diminished? Any present-day student of the American government knows that this system of separation and divi sion of powers with each depart ment and each political unit serv ing as a check on every other did not work out exactly as intended by the Founding Fathers. None of the three branches of the central government has ever behaved ex actly as the founders anticipated, and the powers and responsibili ties of the state governments have declined to a degree that would probably frighten any delegate to the Constitutional Convention out of his wits. The Senate was never an impartial body of wise men serving to check the popular pas sions likely to be present in the House. Both the chief executive and the courts quickly developed into something that would prob ably be unrecognizable by any but the most discerning of the Fa thers. And it is doubtful if any of them anticipated the emergence of either political parties or the ex tensive administrative ma'chinery that now plagues the central gov ernment. The Electoral College never became the uninstructed gathering of superior and sober men calmly deciding upon a suit able citizen to serve as the Chief Executive for the coming four years.

But the fact that the formal ex pectations of the Fathers were never realized should not blind us to the fact that the basic frame work which they established has served us well for almost 200 years. The central core of the tradition they established is still with us and it is now our tradi tion. The Electoral College is part of that tradition. While it is not the representative body exercising an independent judgment as was originally intended, it does have a function to perform. It is at least an accounting device registering a summation of the will of the peo ple on a state-by-state basis. Be ing on a state-by-state basis, and that not strictly .according to population, it has some tendency to decrease the likelihood of a Presi222 THE FREEMAN April dent winning primarily through an emotional appeal giving him an overwhelming advantage in one section but probably making him obnoxious to a majority of the voters in other parts of the coun try. It also makes it a little more difficult for one social or economic unit to become dominant. What is even more important in my mind, it continues to' remind us that we are a federal republic whose sepa rate political units still have vi tality.

And after all these years is any one in a position to say the Elec toral College has produced any bad results? There have been a few in stances when the electoral ma jority did not coincide with the popular majority and also two in stances when the electors failed to . elect anybody and the. question was thrown into the House of Representatives. But can anyone rightly say that~ny of these in stances have pr()duced ;bad re suIts? I believe not. And in each instance the matter was handled peacefully and without any sub stantial amount of public excite ment. That within itself is no .small accomplishment when it is remembered how frequently a change of administrations is ac companied by varying degrees of disorder in many foreign coun tries. It might even be pointed out that the two Presidents who were chosen by the House of Represen tatives, Thomas Jefferson and John Q. Adams,. are regarded by many as being among our more able Presidents.

Much has been made of the un fortunate things that could hap pen under our present system. But in view of the fact that none of the feared disasters has ever hap pened, I wonder if the danger isn't more imaginary than real. I find it hard to argue against almost 200 years of uninterrupted success! Even if no candidate had received an electoral majority in 1968, is there any reason to believe a peaceful and satisfactory solution could not have been reached? Let's explore the possibilities. First of all, the electors, except in a few states, are not legally bound to vote with the party that elected them. It is possible that if no candidate had won a majority on November 5, enough electors would have switched their alle giance to give somebody a ma joritywhen the electoral votes were cast. If that had been done, is there any reason. to believe the result would not have been a rea sonable one or that it would not have been accepted by the public?

If the electors had stood by the candidates for which they had been chosen and nobody had re ceived a majority, is there any 1969 WHY HAVE AN ELECTORAL COLLEGE? 228 reason to believe the House of Representatives would not have acted· in a responsible fashion? Even if the House had acted so irresponsibly as to fail to choose anyone, there is still another route to follow. In such a case the Vice President is to serve as if he were President. The election of the Vice-President would be by the Senate. Would the Senate be so ir responsible as to fail to choose a Vice-President? So it seems that in order for us to end up without a lawfully chosen President, the Electoral College, the House of Representa tives, and the Senate would all have to act in an irrational and ir responsible way. And as we moved from one of these bodies to the other the failure of each would place that much more moral pres sure upon the next and' would dramatize to the public the seri ousness of the occasion. The pe riod of uncertainty during which the matter was being resolved would tend to be a period of sober reflection. Tempers would cool a bit and the danger of rebellion would be lessened rather than in~creased. With so many safeguards in operation, it is unlikely that we would ever find ourselves with out a lawfully chosen and reason ably acceptable Chief Executive.

At least I haven't heard any other system proposed that holds great er promise of permanence' andsta bility than has been demonstrated by the one we have. Your Uncle, Bert The Clash of Opinion IT WERE best to draw the veil of oblivion over the weakness of character which like a moral contagion afflicts this good ·land in these later years, except for the menace to our free 'institutions contained therein. Intolerance of difference of opinion is death to them. Tolerance of such difference is not enough to maintain them. Respect for it is still insufficient to secure their true de velopment. It must be sought, invited and encouraged, for only through the clash of opinion and the attrition of --thought can man press onward towards the goal of truth and the perfection of civilization. J 0 H N w. BUR G E S S, Recent Changes in American Constitutional Theory GARY NORTH R Those who wish to preserve freedom should recognize, however, that inflation is probably the most important single factor in that vicious circle wherein one kind of government action makes more and more government control necessary.

F. A. HAYEKl DEPRESSION is the bugaboo of most Americans, far more so than inflation. Our history textbooks from grade school through col lege drum the message into the heads of the readers: the depres sion of the 1930's was the worst disaster in American economic history. The depression proved, we are told, that laissez-faire capitalism is unworkable in prac tice. President Roosevelt' s New Deal "saved American capitalism from itself." His administration brought into existence a whole new complex of governmental agencies that will supposedly be able to prevent another depres sion on such a scale. By expandGary North is a member of the Economists' National Committee on Monetary Policy. He teaches at the University of California at Riverside while working on a doctorate in Economic History. ing their interference into the free market, the government and the quasi-governmental central banking system are able to "smooth out" the trade cycle.

Ironically, many of the optimis tic statements coming out of Washington in regard to the pos sibility of depressions are re markably similar to the pronounce ments of statesmen and econo mists in the late 1920's. In 1931, Viking Press published a delight ful little book, Oh Yeah?, which was a compilation of scores of such reassurances. In retrospect, such confidence is amusing; never theless, the typical graduate stu dent in economics today is as con fident of the ability of the State 1 F. A. Hayek, The Constitution of Liberty (Chicago: University of Chi cago Press, 1960), p. 338.

1969 REPRESSED DEPRESSION 225 to prevent a crISIS as the gradu ate student was in 1928. So are his professors. This kind of thinking is danger ous. During prosperity, it con vinces men to look with favor on policies that will result in disaster. Then when a crisis comes, un sound analyses lead to erroneous solutions that will compound the problems. A failure to diagnose the true cause of depressions will generally lead to the establish ment of more restrictive state controls over the economy, as bu reaucrats prescribe the only cure they understand: more bureauc racy. Mises is correct when he argues that the statist "wants to think of the whole world as in habited only by officials."2 The majority of contemporary econ omists refuse to acknowledge that the modern business cycle is al most invariably the product of in flationary policies that have been permitted and/ or actively pur sued by the State and the State's licensed agencies of inflation, the fractional reserve banks. 3 The problem is initiated by the State 2 Ludwig von Mises, Socialism (New Haven, Conn.: Yale University Press, [1922] 1951), pp. 208-09.

3 On this myopia of the economists, see Gottfried Haberler, Prosperity and Depression (New York: Atheneum, 1962), ch. 13. Haberler no longer blames all depressions on monetary factors, and he does favor policies of repressed de pression. in the first place; nevertheless, the vast majority of today's profes sional economists believe that the cure for depression is further in flation. Profit and Loss The basic outline of the cause of the business cycle was sketched by Ludwig von Mises in 1912, and it has been amplified by F. A. Hayek and others since then. 4 The explanation hinges on three fac tors: the nature of free market production; the role of the rate of interest; and the inflationary policies of the State and the bank ing system, especially the latter. While no short summary can do justice to the intricacy of some of the issues involved, it may at least present thought for further study.

Profit is the heart of the free market's production process. Prof its arise when capitalist entre preneurs accurately forecast the state of the market at some fu ture point in time. Entrepreneurs must organize production to meet the demand registered in the mar ket at that point; they must also see to it that total expenditures do not exceed total revenue de rived from sales. In other words, 4 Ludwig von Mises, The Theory of Money and Credit (New Haven, Conn.: Yale University Press, 1953); cf. Ha berler, pp. 33-67.

226 THE FREEMAN April if all producers had perfect fore knowledge, profits and losses could never arise. There would be per fect competition based upon per fect foreknowledge. 5 This situa tion can never arise in the real world, but it is the ultimate goal toward which capitalist competi tion aims, since in a. perfect world of this sort, there could be no waste of scarce economic resources (given a prevailing level of tech nology) . It has been Mises' life work to demonstrate that the operation of the free market economy is the most efficient means of allocating scarce resources in an imperfect world. Those entrepreneurs who forecast and plan incorrectly will suffer losses; if· their errors per sist, they will be driven out of business. In this way, less efficient producers lose command over the scarce factors of production, thus releasing such resources for use by more efficient planners. The consumers in the economy are sov ereign; their demands are best met by an economic system which permits the efficient producers to benefit and the inefficient to fail.

The whole structure rests upon a system of rational economic cal culation. Profits and losses must be measured against capital ex5 Mises, Human Action eNew Haven, Conn.: Yale University Press, 1949), pp. 286-97. penses and other costs. The heart of the competitive capitalist sys tem is the flexible price mechan,.. ism. It is this which provides en trepreneurs with the data concern ing the existing state of supply and demand. Only in this fashion can they compute the level of suc cess or failure of their firms' ac tivities. The Rate 01 Interest Economic costs are varied; they include outlays for labor, raw ma terials, capital equipment, rent, taxes, and interest payments. The interest factor is really a payment for time: lenders are willing to forego the use of their funds for a period of time; in return, they are to be paid back their principal plus an additional amount of money which compensates them for the consumer goods they can not purchase· now. A little thought should reveal why this is neces sary. The economic actor always discounts future goods. Assuming for the moment that economic con ditions will remain relatively stable, a person will take a new automobile now rather than in the future if he is offered the choice of delivery dates and the price is the same in both cases.

The present good is worth more simply because it can be used im mediately. Since capitalist produc tion takes time, the capitalist must 1969 REPRESSED DEPRESSION 227 pay interest in order to obtain the funds to be used· for production. The interest payments therefore represent a cost of production: the capitalist is buying time. Time, in this perspective, is a scarce re source; therefore, it commands a price. The actual rate of interest at any point in time is a product of many forces. Economists do not agree on all of the specific rela tionships involved, and the serious student would do well to consult Hayek's The Pure Theory of Capi tal (1941) for an introduction to the complexities of the issues. Nevertheless, there are some things that we can say. First, the rate of interest reflects the de mand for money in relation to the supply of money. This is why in flationary policies or deflationary policies have an effect on the rate of interest: by changing the sup ply of money, its price is altered.

Second, the rate of interest re flects the time preferences of the lenders, since it establishes just how much compensation must be provided to induce savers to part with their funds for a period of time. This is the supply side of the equation. The demand side is the demand for capital investment. Entrepreneurs need the funds to begin the production process or to continue projects already be gun; how much they will bewilling to pay will depend upon their expectations for future profit. In an economy where the money sup ply is relatively constant, the rate of interest will be primarily a re flection of the demand for capital versus the time preferences of po tential lenders. Neither aspect of the rate of interest should be ig nored: it reflects both the demand for and supply of money and the demand for and supply of capital goods. Another factor is also present in the interest rate, the risk fac tor. There are no certain invest ments in this world of change.

Christ's warning against excessive reliance on treasure which rusts or is subject to theft is an apt one (Matthew 6:19). High risk ventures will generally command a higher rate of interest on the mar ket, for obvious reasons. Finally, there is the price premium paid in expectation of mass inflation, or a negative pressure on the inter est rate in expectation of serious deflation. It is the inflationary price premium which we are wit nessing in the United States at present. Mises' comments in this regard are important: It is necessary to realize that the price premium is the outgrowth of speculations having regard for an ticipated changes in the money rela tion. What induces it, in the case of the expectation that an inflation228 THE FREEMAN April ary trend will keep on going, is al ready the first sign of that phe nomenon which later, when it be comes general, is called "flight into real values" and finally produces the crack-up boom and the crash of the monetary system concerned.6 The Inflationary Boom In the real world, money is never neutral (and even if it were, the economists who explain money certainly never are). The money supply is never perfectly constant: money is hoarded, or lost; new gold and silver come into circula tion; the State's unbacked money is produced; deposits in banks ex pand or contract. These altera tions affect the so-called "real"

factors of the economy; the dis tribution of income, capital goods, and other factors of production are all influenced. Even more im portant, these changes affect peo ple's expectations of the future. It is with this aspect of inflation that Mises' theory of the trade cycle is concerned. The function of the rate of in terest is to allocate goods and services between those lines of production which serve immediate consumer demand and those which serve consumer demand in the future. When people save, they forego present consumption, thus releasing goods and labor for use 6 Ibid., p. 541. in the expansion of production. These goods are used to elongate the structure of production: new techniques and more complex methods of production are added by entrepreneurs. This permits greater physical productivity at the end of the process, but it re quires more capital or more time consuming processes of produc tion, or both extra time and added capital. These processes, once be gun, require further inputs of materials and labor to bring the production process to completion.

The rate of interest is supposed to act as an equilibrating device. En trepreneurs can count the cost of adding new processes to the struc ture of production, comparing this cost with expected profit. The al location of capital among com peting uses is accomplished in a rational manner only in an econ omy which permits a flexible rate of interest to do its work. Inflation upsets the equilibrium produced by the rate of interest. The new funds are inj ected into the economy at certain points. Gold mining companies sell their product, which in turn can be used for money; those closest to the mines get the use of the gold first, before prices rise. But gold is not a serious problem, espe cially in today' s world of credit. Its increase is relatively slow, due to the difficulty of mining, and 1969 REPRESSED DEPRESSION 229 the increase can be more readily predicted; hence, its influence on the price structure is not so radi cal. This cannot be said, as a gen eral rule, for paper money and credit. Unlike gold or silver, paper is not in a highly limited supply.

It is here that Mises argues that the business cycle is initiated. Here - meaning the money supply - is the one central economic fac tor which can account for a simul taneous collapse of so many of the various sectors of the economy. It is the only factor common to all branches of production. Creation of Fiat Money The economic boom begins when the State or the central bank ini tiates the creation of new money. (For the Western world in this century, the establishment of this policy can generally be dated: 1914, the outbreak of the First World War.) The central bank, or the fractional reserve banking system as a whole, can now supply credit to potential borrowers who would not have borrowed before. Had the fiat creation of new money not occurred, borrowers would have had to pay a higher rate of interest in order to obtain the ad ditional funds. Now, however, the new funds can be loaned out at the prevailing rate, or possibly even a lower rate. Additional de mand for money can therefore be met without an increase-in the price of money.

This elasticity of the money supply makes money unique among scarce economic goods. It tempts both government officials and bankers to make decisions profita ble to their institutions in the short run, but disastrous for the economy as a whole in the longer run. Governments can expand ex penditures by printing the money directly, or by obtaining cheap loans from the central bank, and thereby avoid the embarrassment of raising visible taxes. Banks can create money which will earn in terest and increase profits. Mises has shown that these policies must result either in depression or mass inflation. There is no middle ground in the long run. As we saw earlier, the interest rate reflects both the supply of and demand for money and the supply of and demand for capital goods. Inflation causes this dual ism to manifest itself in the dis tortion of the production process. Capitalists find that they can ob tain the funds they want at a price lower than they had ex pected. The new funds keep the interest rate from going higher, and it may even drop lower, but only temporarily, i.e., during the boom period. In fact, one of the signals that the boom is ending is an increase in the rate of interest.

230 THE FREEMAN April Capitalists misinterpret this low rate of interest: what is really merely an increase in the avail ability of money is seen as an in crease in the availability of capi tal goods and labor services. In reality, savers have not provided the new funds by restricting their consumption, thereby releasing capital goods that had previously been used to satisfy consumer de mand more directly, Le., more rapidly. Their patterns of time preference have not been altered; they still value present goods at a higher level than the rate of in terest indicates. Malinvestments Encouraged Capitalists purchase goods and services with their new funds. The price. of these goods and serv ices will therefore rise in relation to the price of goods and services in the lower stages of production - those closer to the immediate production of consumer products. Labor and capital then move out of the lower stages of production (e.g., a local restaurant or a car wash) and into the higher stages of production (e.g., a ste·el mill's newly built branch). The process of production is elongated; as. a result, it becomes more capital intensive. The new-money puts those who have immediate access to it at a competitive advantage: they can purchase goods with today's new money at yesterday's lower prices; or, once the prices of producers' goods begin to rise, they can afford to purchase these goods, while their competitors must restrict their purchases be cause their incomes have not risen proportionately. Capital goods and labor are redistributed "upward,"

toward the new money. This is the phenomenon of "forced saving." Those capitalists at the lower stages of production are forced to forfeit their use of capital goods to those in the higher stages of production. The saving is not voluntary: it is the result of the inflation. The result is an economic boom. More factors of production are employed than before, as capital ists with the new funds scramble to purchase them. Wages go up, especially wages in the capital goods industries. More people are hired. The incumbent political party can take credit for the "good times." Everybody seems to be prospering from the stimulat .. ing effects of the inflation. Profits appear to be easy, since capital goods seem to be more readily available than before. More capi talists therefore go to the banks for loans, and the banks are tempted to permit a new round of fiat credit expansion in order to avoid raising the interest rate and stifling the boom.

1969 REPRESSED DEPRESSION 231 Sooner or later, however, capi talists realize that something is wrong. The costs of factors of pro duction are rising faster than had been anticipated. The competition from the lower stages of produc tion had slackened only tempo rarily. Now they compete once more, since consumer demand for present goods has risen. Higher wages are being paid and more people are receiving them. Their old time-preference patterns reas sert themselves; they really did not want to restrict their consump tion in order to savee They want their demands met now, not at some future date. Long-range projects which had seemed profit able before (due to a supposedly larger supply of capital goods re leased by savers for long-run in vestment) now are producing losses as their costs of mainte nance are increasing. As consum ers spend more, capitalists in the lower stages of production can now outbid the higher stages for factors of production .. The produc tion structure therefore shifts back toward the earlier, less capi tal-intensive patterns of consumer preference. As always, consumer sovereignty reigns on the free market. If no new inflation oc curs, many of the projects in the higher stages of production must be abandoned. This is the phe nomenon known as depression. It results from the shift back to earlier patterns of consumer time preference. 1 The Depression The injection of new money in to the economy invariably creates a fundamental disequilibrium. It misleads entrepreneurs by distort ing the rate of interest. It need not raise the nation's aggregate price level, either: the inflation distorts relative prices primarily, and the cost of living index and similar guides are far less rele vant. 8 The depression is the mar ket's response· to this disequilib ri urn. It restores the balance of true consumer preference with re gard to the time preferences of people for present goods in rela tion to future goods. In doing so, the market makes unprofitable many of those incompleted proj ects which were begun during the boom.

What is the result? Men in the higher stages of production are thrown out of work, and not all are immediately rehired at lower stages, especially if these workers demand wages equivalent to those received during the inflationary boom. Yet they do tend to dem·and 7 Hayek, Prices and Production (2nd ed.; London: Routledge & Kegan Paul, 1935), chs. 2,3. 8 Ibid., p. 28; Hayek, Monetary The ory and the Trade Cycle (New York: Kelley Reprints, [1933] 1967), p. 117n.' 232 THE FREEMAN April such wages, and if governmentally protected labor union monopolies are permitted to maintain high wage levels, those who are not in the unions will be forced to work at even lower pay scales, or not at all. Relative prices shift back to ward their old relationships. The demand for loans drops, and with it goes much of the banks' profit. The political party in power must take responsibility for the "hard times." Savers may even make runs on banks to retrieve their funds, and overextended banks will fail. This reduces the deposits in the economy, and results in a deflationary spiral, since the de posits function as money; the in verted pyramid of credi t on the small base of specie reserves top ples. Money gets "tight."

Repressed Depression 9 The depression is an absolutely inevitable result of a prior infla tion.I° At first, the new money kept the interest rate low; it forced up costs in certain sectors of the economy relative to others; the structure of production was elongated; those employed by the higher stages then began to spend their money on consumer goods; and the shift back to a shortened 9 lowe this phrase to Rev. R. J. Rushdoony. 10 Hayek, Monetary Theory, pp. 126, 146, 179. production process was the result. Everyone liked the boom (except those on fixed incomes); no one likes the depression (except those on fixed incomes, if the incomes keep coming in). There is a cry for the State to do something. Banks want to have a moratorium on all withdrawals; unions want to fix wages; busi nessmen want to fix prices; every one wants more inflation. "Bring back the boom!" It can only be done now as before, with fiat money. The call for inflation ig nores the fact that new malad j ustments will be created. The short-run perspective dominates.

If the cries are heeded, the price mechanism is again sacrificed, and with it goes the system of rational calculation which makes possible the efficiency of the free market. Mises warned a half century ago against this policy of "repressed depression" through inflation. Most governments since 1914 have ignored the warning, except dur ing the late 1920's and early 1930's; the depression which re sulted was "cured" by repressed depression, and that cure is now leading to the point predicted by Mises: The "beneficial effects" on trade of the depreciated money only last so long as the-depreciation has not affected all commodities and services. Once the adjustment is completed, 1969 REPRESSED DEPRESSION 233 then these "beneficial effects" dis appear. If it is desired to retain them permanently, continual resort must be had to fresh diminutions of the purchasing power of money . It is not enough to reduce the purchas ing power of money by one set of measures only, as is erroneously sup posed by numerous inflationist writ ers; only the progressive diminution of the value of money could perma nently achieve the aims which they have in view. ll Here is the inescapable choice for twentieth century Western civ ilization: will it be depression the readj ustment of the economy from the State-sponsored disequi librium of supply and demand or will it be mass inflation? The only way to escape the depression is for the inflation to continue at an ever-increasing rate. 12 The re sult is assured: "Continued infla tion must finally end in the crack up boom, the complete breakdown of the currency system."13 The economy will go through a period of total economic irrationality, just as the German economy did in the early 1920'S.14 The German 11 Mises, Theory of Money and Credit, p. 224.

12 Hayek, Prices and Production, pp. 148-5l. 13 Mises, Human Action, p. 468. 14 On the German inflation, see Con stantino Bresciani-Turroni, The Eco nomics of Inflation (London: Allen & Unwin, 1937). catastrophe was mitigated by sup port in the form of loans from other nations; the German tradi tions of discipline and thrift also played a large part. But what will be the result if the monetary sys tems of the industrial nations are all destroyed by their policies of repressed depression? What will happen to the international trad ing community and its prevailing division of labor and high produc tivity if the foundations of that community - trustworthy mone tary systems - are destroyed ?15 It is questions like these that have led Jacques Rueff to conclude that the future of Western civilization hangs in the balance. 16 Ours is not an age of principle. Governments would prefer to avoid both depression and mass inflation, and so we see the spec tacle of the tightrope walk: tight money causing recession, which is followed by easy money policies that produce inflation and gold crises. But the trend is clear; in flation is the rule. Hayek says that it is a question of true recovery versus the inflationary spiral. 17 Until we face this issue squarely, we will not find a solution.

15 Cf. Gary North, "Domestic Infla tion versus International Solvency," THE FREEMAN (Feb., 1967). 16 Jacques Rueff, The Age of Inflation (Chicago: Regnery, 1964), pp. vii-xiv. 11 Hayek, Prices and Production, pp. 88-89.

234 THE FREEMAN April Men, in short, must think clear ly and act courageously. They must face the logic of economic reasoning, and admit that their own policies of inflation have brought on the specter of depres sion. They must then make a moral decision to stop the infla tion. The price system must be restored; the forced redistribution of wealth involved in all inflation must end. If men refuse to think clearly and to act with moral cour age, th~n we face disaster. ~ Medical Care is Not a Right CHARLES W. JOHNSON, M.D. RIGHTS are what stout-hearted men supposedly fight for. This muddled definition is probably as good as most people's understand ing of this blood-soaked concept. Rights is a word which provokes emotion. Label something a right, play a martial tune, and the le gions will march to your cause. If your opponents accept your sloppy definitions, victory is yours. Stout hearted men might do well to iden tify those rights they adore.

The concept of rights has de veloped over several centuries. It This article is reprinted by permission from the January-February 1969 issue of G. P. Press, published by the Texas Academy of General Practice. Dr. Johnson practices in San Antonio. 234 is a complex body of thought about the nature of man. These ideas have had consequences; they en abled man to emerge from barbar ism. The concept, quite properly, has acquired an emotional value. Unfortunately, to most people, the concept is hazy, distorted by those who wish to cash in on its emo tional power. Rights, as defined by Burke and Locke, as incorporated in the Dec laration of Independence, the Fed eralist Papers, and the writings of others, are the conditions neces sary for man's survival according to his nature, as he was designed by God or nature~' Man, in order to exist among the other flora and 1969 MEDICALCARE IS NOT A RIGHT 235 fauna of this planet, has certain requirements. First, he must have a drive to live and continuously act to sustain his life. By his natural design, his special means of sur vival are: conceptual, volitional thinking; hands designed for tools; and differentiation, enab ling man to specialize his produc tive energy and to prosper by trading with one another, each party profiting by the exchange.

The conditions such social organi zation requires are: the free range of each man to think, choose, and act; and to own property, to hold secure the products of his mind and hands for him to consume or save or trade. Men must, to live, assert a claim to these conditions: life, liberty, and ownership. These proper claims are rights. Actions against this system, the molesta tion of another man's life, liberty, and property, are wrongs. Noone has a right to anything he must ask permission for or in any way take from another. In interpersonal and societal relation ships there are many goods and services traded and privileges granted, but there is no "right" to take these .from another. In dis tinguishing rights from priyileges one may ask, "provided by whom ?" If it is provided by God or nature or by one's own self, it is a right. If it is provided by someone else, it is a voluntary exchange, a priv ilege - or theft.

Noone has a right to food, wa ter, shelter, money, or love if he must obtain it at the expense of the owner. Medical care is no more . a right than these. Man rightfully obtains goods and services by producing them from nature or by voluntary ex change with others. Man may ex change goods, services, and emo tional values, but he must trade to obtain them. Otherwise he is a thief acting against human ex istence. Medical care is a service traded o.r a privilege granted - or theft. Abraham Lincoln I KNOW the American People are much attached to their Govern ment;- I know they would suffer much for its sake;- I know they would endure evils long and patiently, before they would ever think of exchanging it for another. Yet, notwithstanding all this, if the laws be continually despised and disregarded, if their rights to be secure in their persons and property, are held by no better tenure than the caprice of a mob, the alienation of their affections from the Government is the natural consequence; and to that, sooner or later, it must come.

WILLIAM HENRY CHAMBERLIN A FRIGHTFUL desecration of the true values and purposes of higher education, as conceived and out lined by scholars from Plato to such modern figures as John Henry (later Cardinal) Newman and Woodrow Wilson is taking place on many university and college cam puses throughout America today. The above-mentioned thinkers and many others have always envisaged the ideal university as a place aloof from the transient clamors of the day, where professors and students are partners in the search for the good, the true, and the beautiful, where debates and discussions are carried on with methods of reason and courtesy, where studies in the humanities and natural sciences 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.

236 are pursued in an atmosphere of tranquility. The perfect university has never existed; but on both sides of the Atlantic, movement is away from, not toward, its ideals. Students whose qualifications in scholarship must be extremely dubious in many cases because of the amount of time they devote to such extra curricular activities as harassing college administrators with per emptory demands, often backed up by the crudest forms of physical coercion, are turning campuses in to prize-fight arenas. The quarrel some brawling that goes on under the most trivial pretexts, the end less demonstrations on university property, often on subjects which are quite outside the range of the university student, the general at mosphere of bedlam would be cal culated to drive Socrates, St. Thomas Aquinas, Erasmus, or any 1969 OUR TOTALITARIANRADICALS 237 other great teacher to take off for the nearest available retreat in some desert, leaving behind an in vitation to his most promising students to follow him.

Speaking at the dedication of a new library at Swarthmore, an ex cellent small liberal arts college, the diplomat-scholar, George F. Kennan, himself a liberal dissenter from many conventional positions, drew this caustic contrast between Woodrow Wilson's vision of an ideal university, shut off from the cares and clamor of the outside world, and the state of mind and behavior of the radical Left en rolled in student bodies today. To quote from Kennan's speech, which has been preserved in book form as part of an informal dialogue, with replies from dissenting stu dents and others: "We have people utterly ab sorbed in the affairs of this pass ing world. And instead of these af fairs being discussed with knowl edge and without passion, we find them treated with transports of passion and with a minimum, I fear, of knowledge. In place of slowness to take excitement, we have a readiness to react emotion ally, and at once, to a great variety of issues. In place of self-posses sion, we have screaming tantrums and brawling in the streets. In place of the 'thorough way of talk' that Wilson envisaged, we have banners and epithets and obsceni ties and virtually meaningless slo gans. And in place of bright eyes 'looking to heaven for the confir mation of their hope,' we have eyes glazed with anger and passion, too often dimmed as well by artificial abuse of the psychic structure that lies behind them, and looking al most everywhere else but to heaven for the satisfaction of their aspira tions.

"The world seems to be full, to day, of embattled students. The public prints are seldom devoid of the record of their activities. Pho tographs of them may be seen daily: screaming, throwing stones, breaking windows, ov-erturning cars, being beaten or dragged about by police, and, in the case of those on other continents, burn ing libraries. That these people are embattled is unquestionable. That they are really students, I must be permitted to doubt." The acceptance of Mr. Kennan's speech by some of his audience was typical of the spirit of the "New Left," a familiar name for the present generation of col legiate radicals, in preferring abuse to argument. What hap pened, in Mr. Kennan's words, was as follows: "But no sooner had I emerged from the stage door of the Col lege's auditorium than I was made aware - by the presence there of 238 THE FREEMAN April a group of angry young men, mostly bearded, who hissed their disagreement and resentment at me like a flock of truculent village geese - that I had stepped on some tender nerves."

Internationally Contagious Student unrest, often assuming violent and riotous forms, is not confined to the United States. There have been manifestations in free countries, where there is no excuse for violent lawbreaking, and in countries where the denial of all freedom explains and justi fies what has happened. The most obvious and striking example is Czechoslovakia, where the timid concessions to greater freedom, political and economic, have been brutally swept away by the Soviet invasion. Perhaps the most spectacular illustration of what can happen when student revolt takes place in an inflammable atmosphere was the paralysis of France last May. What began as a student revolt, involving clashes with the police, was followed by widespread strikes in factories and public services. The disorder was bought off by sweeping, across-the-board wage increases, out of all propor tion to improved productivity. The harvest that was sowed in June was reaped in November. The wage increases, followed by efforts at artificial stimulation of the economy, made French exports less competitive and a stampede from paper francs into harder currencies like the German mark and the Swiss franc and into gold set in, touching off an interna tional financial crisis.

Results of student revolt have not always been as concrete and spectacular as in France; but dis orders there have been, spreading like ripples after a stone is thrown into a pool. Characteristically, there has been the highest meas ure of restraint in Great Britain, although the University of London has had its taste of the American methods of sit-ins and "occupa tions" of university buildings. There has been more violence, in a few cases leading to deaths, in the Federal Republic of Ger many, especially in the so-called Free University of West Berlin. Apart from legitimate grievances which students have on both sides of the Atlantic - but which are not likely to be remedied by smash ing windows, blocking streets and provoking fights with the police the causes of the German dis orders are rather obscure. For example, one of the first casualties occurred in the course of clashes between police and stu dents in Berlin who objected to a visit to the city of the Shah of Iran - certainly a trivial pretext, 1969 OUR TOTALITARIAN RADICALS 239 especially as the Shah has proved himself more concerned with land reform and - other progressive changes than the typical Oriental monarch.

There has been much windy declamation against the HSystem" and the "Establishment," a glori ficationof communist professional revolutionaries .like Mao Tse-tung, Che Guevara, and Castro, and a general rejection of capitalism. The last seems a peculiar case of bad judgment on the part of young Germans. If there is one country that owes its postwar rapid advance, quite literally, from rags to riches, to the bold, intelligent. introduc tion of the principles of capital ism, especially the free market economy, that country is Germany. It is amazing that a younger gen eration separated by only a few years from this clear. demonstra tion of the superiority of private economic enterprise both as a stimulus to industrial efficiency and as a foundation for the re establishment, on a firm basis, of personal and political liberties, should produce so many misguided people yearning for the false gods of Oriental and Latin American communism.

A Vcdid Complaint There is one justified cause of discontent for students on both sides of the Atlantic. For reasons that are sometimes similar, some times different, they are not get ting as good intellectual guidance and instruction as their fathers and grandfathers. Overcrowding is one problem. This is due partly to the general growth of popula tion, which, like the weather, is something of which everyone com plains without being able to do much about it. Moreover, even allowing for the increased population, a far higher proportion of young people .are going to universities and colleges. There is a belief, especially in the United States, that this is all to the good. But it is no benefit, rather an injury, to facilitate en trance into college for the intel lectually unfit and unprepared. This is especially worth bearing in mind when, on many American campuses, there is a deliberate ef fort to recruit more students from racial minority groups, almost re gardless of qualifications.

Most certainly, no qualified per son should be excluded, because of race or color, from the benefits of higher education. By the same token, no one should have higher education thrust upon him if he is unable, through lack of training and preparation, to derive any benefit from it. Commonsensical Dr. Samuel Johnson rebutted crit icism of the expulsion of some Ox240 THE FREEMAN April ford students for creating public disturbances by engaging in loud public prayer at inconvenient times and places: "Sir, they were examined and found to be mighty ignorant fel lows." To the comment that the hearts of the expelled students were well intentioned, Johnson offered his usual quick reply: "Why, Sir, a cow is a very good animal in a field ; but you do not turn her into a garden." War Damaged Schools in Europe In Europe there has been no deliberate attempt to swell the ranks of students by making room for sometimes imperfectly pre pared members of a minority ethnic group. But because of the breakdown of prewar class lines and the easier conditions of access to the universities, a larger pro portion of the people are going to universities; and, despite the open ing of new institutions in Great Britain, Germany, and France, this makes for overcrowding. On the continent of Europe there was a good deal of wartime destruction, especially in Germany, to be made good as regards buildings, labora tories, and libraries; German stu dents who come to the better American universities usually find the facilities far superior. Also, there is a disposition in Europe to rebel against old-fashioned teach ing methods and the slight contact between professors and students.

There was .no physical d~struc tion in the colleges and universi ties of the United States. But in the matter of teaching, American students have their special griev ances. Too often professors with high reputations find themselves attracted to research and to gov ernment projects, with the result that actual contact with the stu dents is in the hands of younger and less inspiring assistants. The restoration of teaching to its old and honored place may well he the Number One problem of the Amer ican university. The students of the American "New Left" (so-called because, unlike the orthodox communists, they look to a German refugee philosopher named Herbert Mar cuse, not to Karl Marx for inspira tion, and profess more admira tion for Red China and for Cuba than for the Soviet Union) pride themselves on being not only learners but builders of a new order in America and throughout the world. Certainly, education should widen, not constrict the student's view of the world around him.

Marcuse and the New Left But the students of the New Left seem gravely deficient in 1969 OUR TOTALITARIANRADICALS 241 many of the qualities essential for forming sound judgments, in qualities which intensive study should develop. For instance, they seem strikingly devoid of humility and of humor. They are never de terred from staging demonstra tions, confrontations, and whatnot, up to and including occupation of college property and provoked clashes with the police, by the re flection that they might be wrong. Insistent on free speech for them selves, they are unwilling to grant it to others. And like their prophet Marcuse, they are intent on tearing down whatever displeases. them, from college regulations to the Ameri can government and society, with out giving anything but the va guest idea of what they would put in its place. There is nothing fresh or original in their ideas; they wallow in cliches about the sins of "society" and "the Establishment"

that are half-baked and very im perfectly thought out. It never seems to occur to them that in a modern industrial society of 200 million people work must be done, political and economic decisions must be made, priorities must be set, all sorts of problems of organi zation must be faced. Students for a Democratic Society The largest association of the New Left calls itself Students for a Democratic Society. Its aspira tions are voiced partly by disor derly mass demonstration with mindless slogans, partly by such cloudy gobbledygook as the follow ing excerpts from the Port Huron Statement of the SDS: "The political order should serve to clarify problems in a way in strumental to their solution. . . . Channels should be commonly available to relate men to knowl edge and to power so that private problems from bad recreation fa cilities to personal alienation are formulated as general issues."

Make sense out of that if you can ! At least it shows that the SDS leaders who formulated this piece of pretentious verbosity were quick to assimilate some of the worst intellectual and sty listic idiosyncracies· of their less gifted professors. About the nearest the spokes men for SDS come to formulating positive goals is to denounce pov erty and discriminatory treatment of blacks and other racial minori ties and to denounce what they portentously call the Establish ment for alleged responsibility for both these ills. What they com pletely overlook is that there is some correlation (and this is true under any conceivable system) be tween individual diligence and ability and individual reward. All that is apparently necessary, in 242 THE FREEMAN April their view, is to pull a few mys terious levers and, Presto, a so ciety of equals will emerge. We have surely seen enough of the fruits of totalitarian fanati cism in the records of communism and Nazism. The New Left is suf fering from a bad case of this spiritual and intellectual malady.

But the likelihood that they will strike deep roots in American life is fortunately slight. For they can be fairly designated as rebels without a cause, people who don't know what they want and won't be happy until they get it. Their fulminations will have about as much effect on an American so ciety based on the twin principles of political liberty under law and economic freedom through a con sumer-oriented market economy as pea-shooters bombarding the Rock of Gibraltar. ~ Mobocracy ACCOUNTS OF OUTRAGES committed by mobs form the everyday news of the times. They have pervaded the country from New England to Louisiana. They are neither peculiar to the eternal snows of the former nor the burning sands of the latter. What ever, then, their cause may be, it is common to the whole country. The innocent, those who have ever set their faces against vio lations of law in every shape, alike with the guilty, fall victims to the ravages of mob law. And thus it goes on, step by step, till all the walls erected for the defense of the persons and property of individuals are trodden down and disregarded ....

Thus, then, by the operation of this mobocratic spirit, which all must admit is now abroad in the land, the strongest bulwark of any government, and particularly of those constituted like ours, may effectually be broken down and destroyed - I mean the attachment of the people-. Whenever this effect shall be pro duced among us, whenever the vicious portion of population shall be permitted to gather in bands of hundreds and thousands and burn churches, ravage and rob provision stores, throw print ing presses into rivers, shoot editors, and hang and burn ob noxious persons at pleasure and with impunity - depend on it, this Government cannot last. ABRAHAM LINCOLN, 1838 EDUCATION IN AMERICA GEORGE CHARLES ROCHE III 7. Why 'lnstitutionalizeOur Errors? WHATEVER shortcomings may be said to exist in American elemen tary and secondary education are largely traceable to the philosophic errors discussed earlier in these pages.

For example, the unfortunate emphasis upon how to teach, rather than what to teach, stems directly from two pernicious ideas: l. There can be no fixed truth, no ultimate standard, thus making impossible all "knowledge" in the traditional sense. 2. The search for the latest version of truth (Le., Dr. Roche is Director of Seminars for the Foundation for Economic Education. He has taught history and philosophy in college and maintains a special interest in American edu cation. the method of that search) is thought to be not merely a means, but the new end itself. Our prospective elementary and secondary teachers are often given large quantities of professional "Education" courses and courses offering only a. smattering of dif ferent disciplines, leaving little time for genuine education in any discipline. The result? Much of a prospective teacher's first twelve years in school reflects the lack of intellectual standards and disci pline described earlier. When he goes to college to prepare himself to be a teacher, he finds that "teacher certification" require ments largely interfere with his 243 244 THE FREEMAN April receiving a genuine education.

Should our teacher go on to grad uate school, he' again often finds himself surrounded by professors of education. Thus the prospective teacher finds himself submerged in the educationist bureaucracy' and cut off" from much of what constitutes education in any dis cipline. In this way the education ist mentality becomes the force which often actually controls pub lic education. This force generally demonstrates itself to be almost totally unfamiliar with standards of genuine education, totally pre occupied with the development and maintenance of largely meaning less technical requirements and course work. Similar pressures generated by our wrong-headed modern philos ophy have undercut discipline and standards in many of our schools. Worse yet, these errors have be come institutionalized through the centralization and bigness press ing so heavily upon student and teacher alike throughout much of our educational structure.

The Enlargement of Educational Responsibility The parent can and should look beyond himself for specialized help in a proper education of his child, but neither parent nor teacher should be confused about the parent's ultimate responsibility or the proper role of the school in the upbringing of the young. Un fortunately, such distinctions have blurred in our society. The growth of the public school system has been more than matched by a bureaucracy to regulate its work ings. As the system has grown, elected officials have felt compelled to place"its administration in "ex pert" hands, a control generally centered in state departments of education. Public school teachers through the high school level are now expected to take certain "Ed ucation" courses serving as indoc trination in the "new" philosophy and methodology of the dominant bureaucracy. Our population ex pansion further enlarges the role of the educationists in our society until they dominate our gigantic and expensive educational struc ture and assume the functions of family and church as well. We find ourselves well advanced toward a new educational structure, and a new social structure.

It is quite natural that there should be some blurring of func tion between" the home and the school, since both should properly require discipline and both play an important role in any educa tional process. But tremendous new problems develop when both functions are undertaken by the school. Fo"r the educationist bu reaucracy, education is no longer 1969 WHY INSTITUTIONALIZE OUR ERRORS? 245 a result to be achieved, but instead has become a subject to be institu tionalized. Is it desirable for the school to so expand its responsi bility? Even if it were desirable, can the school hope to discharge such responsibility? The answer to both questions appears to be "no." The reason we have been able to muddle along with no more disastrous results than we have suffered from this usurpation of authority rests with the magnificent teachers in our schools whose personality and skill allow them to function in an at nl0sphere increasingly alien to true education. These fortunately numerous teachers have been will ing to fight the battle despite the bureaucracy in which they are entombed, and the public apathy which so commonly greets them.

The Push Toward Centralization Another result of the growing educationist bureaucracy has been that our schools have become pro gressively less oriented to the edu cation of individuals and more oriented to the education of the "masses." We now seem to turn out a "socialized" product, certi fied as socially acceptable by the appropriate diploma. The bureauc racy has succumbed to its own propaganda to the point of en couraging centralization and con solidation a.ccording to a master plan. Since the Second World War, a process of consolidation has tak en place; small, locally-oriented school districts have been absorbed into larg~r and larger school sys tems, the better to facilitate "planning." What has actually taken place is a process whereby schools have been removed further from community and parental con trol, while larger "plants," larger staffs, and larger educationist blueprints have been imposed on the long-suffering taxpayer and the much-abused students. In the process, the small schools being closed were often superior to the new and larger schools taking their place.

When centralization is carried to its logical conclusion, when the educationist bureaucracy has had the fullest possible play for its ideas, what results have we ex perienced? New York City, a city which has given its educational bureaucracy vast authority and vast amounts of money, today of fers an educational product which is frequently so inferior that peo ple seek out private schools for their children or flee from the negative city environment alto gether. Things have reached the point in which school often is not even convened, while various groups contend for bureaucratic controL The central question now seems to have become not "How 246 THE FREEMAN April can we best educate our children ?" but "Who shall rule?" Judging from some reports com ing from around the United States, the time may come when we will suffer professors' strikes in our institutions of higher learning just as today we are suffering teachers' strikes in more and more of our public elementary and sec ondary schools. It seems that once we allow bigness to progress be yond a certain point, the reactions stemming from such monolithic power will crop up throughout society.

Even when we manage to keep school in session, the problem of bigness haunts us. In James B. Conant's widely accepted study of the American high school, he de scribed high schools with gradu ating classes of less than 100 stu dents as "too small to allow a diversified curriculum except at exorbitant expense." Thus, these small schools were, in Conant's opinion, "one of the serious obsta cles to good secondary education throughout most of the United States." Mr. Conant's solution? More bigness, more centralization. It is true that a larger school provides more specialized teaching and more staff specialists-, Each student finds himself rnore coun seled and tested. But it is also true that in the process the individual teacher steadily loses his personal contact with the students as more and more of his functions are taken over by outside "special ists." Students and teachers alike are involved in more and more activities outside the classroom while less of what has been tradi tionally called "teaching," the close pupil-teacher relationship, seems possible in our super-en larged modern educational struc ture.

In the Hands of Revolutionaries As teacher and student alike have suffered in the new educa tional environment, the bureauc racy has prospered. Federal aid to education has further accelerated the whole process, helping to pro duce an increasingly dangerous situation: It is not too lTIuch to say that in the past fifty years public education in the United States has been in the hands of revolutionaries. To grasp the nature of their attem pted revo lution, we need only realize that in the past every educational system has reflected to a great extent the social and political .constitution of the society which supported it. This was assumed to be a natural and proper thing, since the young were to be trained to take places in the world that existed around them. They were "indoctrinated" with this world because its laws and relations were those by which they were expected to order their lives. In the period just 1969 WHY INSTITUTIONALIZE OUR ERRORS? 247 mentioned, however, we have wit nessed something never before seen in the form of a systematic attempt to undermine a society's traditions and beliefs through the educational establishment which is usually em ployed to maintain them. There has been an extraordinary occurrence, a virtual educational coup d'etat car ried out by a specially inclined minority. This minority has been in essence a cabal, with objectives rad ically different from those of the state which employed them. An amazing feature of the situation has been how little they have cared to conceal these objectives. On more than one occasion they have issued a virtual call to arms to use pub licly created facilities for the pur pose of actualizing a concept of so ciety not espoused by the people. The result has been an educational sys tem not only intrinsically bad but increasingly at war with the aims of the community which authorizes it.... 1 The School as an Agency of Social Reform The revolutionary impact of the educationist philosophy described by Richard Weaver centers on the attempt to junk the traditional standards and substitute totally new goals in their place. The proc ess of that philosophic departure from standards has already been described at some length. Innu1 Richard M. Weaver, Visions of Order, pp. 260-261.

merable examples surround us on virtually every hand. The princi pal effect of this departure from standards has been an assault upon individual personality. In place of teaching the young to form their own opinions, today we offer social indoctrination, en thusing endlessly about "enrich ment" and "freedom" and yet in many cases offering our young people only the dullest possible conformity. The present philo sophic assumptions common with in higher education often deny the idea of inner personality. Listen to the new method stated most frankly by John Dewey himself, writing in Democracy and Educa tion: The idea of perfecting an "inner" personality is a sure sign of social divisions. What is called inner is simply that which does not connect with others - which is not capable of free and full communication. What is termed spiritual culture has usu ally been futile, with something rot ten about it, just because it has been conceived as a thing which a man might have internally - and there fore exclusively. What one is as a person is what one is as associated with others, in a free give and take of intercourse.

What's wrong with society? The old and negative ideas stressing individual personality! Give us enough money and let us adjust the child. Then all will be well. To 248 THE FREEMAN April what must the child adjust? To "social democracy," to finding his values within society. In fact, the replacement of all norms and the replacement of all individual per sonality is to be achieved within the system because the new means of arriving at norms and stand ards, at truth, is through the new methodology. Society will vote, society will establish a "con sensus," and from that consensus will come the new standards, the new definitions of truth, the new social man as replacement for the individual. Such a system violates both of the canons necessary for genuine education. It violates the individual's freedom to choose and the framework of standards and values within which meaningful individual choice may take place.

Action Rather than Thought A society pursuing such educa tional goals is likely to become a society oriented toward action rather than thought. Such a soci ety places a premium upon masses of humanity, upon sheer body weight rather than intellectual weight. In place of moral and in tellectual standards, numbers and crowd psychology are to determine our future course. We are begin ning to-live through the first pain ful results of such a disastrous philosophy, as evidenced by the violence and mob psychology which today is commonplace both inside and outside our academic commun ity. Thus, violence has become our means for making decisions and solving "problems." Em.erson once remarked, "Men ride on a thought, as if each be strode an invisible horse, which, if it became visible, all their seem ingly mad plunging motions would be explained." Surely this obser vation could be applied to our pres ent society. In our traditional system of higher learning, educa tion was conceived as passing along the cardinal principles and values of civilization, but our mod ern assumption today is that we have no values worth passing on.

If this is the idea we give our young people to ride on, can we be surprised when they act as if there were no values? If the in tellectual community will no longer regard itself as primarily devoted to the pursuit of truth, can we be surprised when our young are no longer willing to listen to the mem bers of the academic community? When we take freedom to mean nothing more than the absence of external control, we are paving the way for the most dangerous an archy imaginable. Meaningful freedom involves the presence of internal restraint and sound judg ment. Without these restraints and that capacity for judgment, we open the door to mass action in 1969 WHY INSTITUTIONALIZE OUR ERRORS? 249 virtually every area of our society. This is not the achievement of freedom, it is a return to barbar ism. The extended criticisms laid at the door of American education prompt this question: "If things are so bad, why is the system still yielding so many first-rate stu dents, so many fine young men and women?" The answer is easy: The saving grace of our educational structure is the stubborn virtue and determined excellence of many teachers who continue to function well under admittedly adverse circumstances. Students are quick to identify a good teacher when they meet one. A real teacher never stops, but continues in school and out, by precept and example, to set high standards of discipline and character. The old teacher pupil relationship of one-to-one, the teacher and the taught, imply ing standards and discipline and the meeting of two distinctly in dividual personalities, remains the only real answer to the problem.

The Numbers Problem in Higher Edueation The philosophic shortcomings of American mass education form a core of problems for higher educa tion as well. Often the most severe criticism of American sec ondary education comes from the liberal arts faculties of our colleges and universities. They decry the intellectual rnaterial being sent them by the secondary schools and are openly contemptuous of the Education departments on their own campuses. Yet many of thes·e critics of educationism are themselves empire builders of a sort. They are often the first to suggest that more and more young people should go to college wheth er qualified or not. This is to be achieved by sufficiently lowering standards so that no one need be rej ected and no one need fail to measure up. The result in practice tends to be a steadily lowering rate of standards, a steady decline in the educational system's capac ity to treat its students as indi viduals. When such college teach ers criticize the anti-intellectual ism of the "educationist" and com plain of the spotty quality of all too many students, they may actu ally be criticizing the final result of the same relativist, materialist, collectivist philosophy which high er education itself often espouses.

Whatever the causes, some col lege classrooms seem filled with students who cannot handle solid college material, students who feel they have a Hright" to be in col lege whether or not they are quali fied or motivated. The problem is made more pressing because the total number of students, qualified or unqualified, grows steadily 250 THE FREEMAN April greater. In 1956 there were less than 3 million students in college; ten years later the number had doubled. Some estimates suggest that the next ten years will see the number doubled again. America has long been com mitted to the idea of universal education. The question today: Is having everyone in school synony mous with giving everyone an ed ucation? In actual fact, a part of our increased college enrollment has less to do with education than with the painful fact that no so cially acceptable alternative to col lege attendance exists for an intel ligent secondary school graduate.

Consider the social standing of the alternatives for an 18-year-old high school grad - the army? a job? Today America has apparently undertaken a commitment to send everyone to college, just as 40 years ago it promised a universal high school education and 40 years before that aspired to offer an eighth grade diploma to all young sters. New colleges and univer sities are coming into existence at the rate of one a week. This may well be regarded as a worthwhile ambition in an era of "ris ing expectations," if the quality of the education thus ofjer'ed has real value. But if we make a col lege education available to all only by lowering standards and making that education meaningless, we are only deceiving ourselves. Such "mass" oriented institu tions run the risk of becoming merely custodial rather than edu cational. In such an environment, teaching an individual to think for himself may easily be lost in the shuffle of massive enrollments, watered-down survey courses, and the rest of the techniques which deny primacy to the individual.

If America should demand that everyone attend college and true standards be damned, and if America builds more and larger institutions of higher learning of a sort to accommodate such a proc ess, we shall be taking the next disastrous step in the further in stitutionalization of our philo sophic errors. Surely we do not need more institutional giantism for its own sake. We have great need to bring our existing educa tional structure back within the scope of the individual student. ~ The next article of this series will discuss "The Multiversity."

PEACE or POLITIGS FRANK CHODOROV A people plagued by assassinations, rioting, and war do well to reconsider that "peace is the business of society." "Peace or Politics" is extracted from an article, "One W orldism,," by the late Frank Chodorov in the December 1950 issue of his small tnonthly journal, Analysis. PEACE is the business of Society. Society is a cooperative effort, springing spontaneously from man's urge to improve on his cir cumstances. It is voluntary, com pletely free of force. It comes be cause man has learned that the task of life is easier of accom plishment through the exchange of goods, services, and ideas. The greater the volume and the fluid ity of such exchanges, the richer and fuller the life of every mem ber of Society. That is the law of association; it is also the law of peace. It is in the market place that man's peaceful ways are ex pressed. Here the individual voluntarily gives up possession of what he has in abundance to gain possession of what he lacks. It is in the market place that Society flourishes, because it is in the market place that the individual flourishes. Not only does he find here the satisfactions for which he craves, but he also learns of the desires of his fellow man so that he might the better serve him.

More than that, he learns of and swaps ideas, hopes, and dreams, and comes away with values of greater worth to him than even those congealed in material things .... The law of association - the supreme law of Society - is self 251 25~ THE FREEMAN April operating; it needs no enforce ment agency. Its motor force is in the nature of man. His insatiable appetite for material,cultural, and spiritual desires drives him to join up. The compulsion is so strong that he makes an automo bile out of an oxcart, a telephone system out of a drum, so as to overcom·e the handicaps of time and space; contact is of the es sence in the market place tech nique. Society grows because the seed of it is in the human being; it is made of man, but not by men. The only condition necessary for the growth of Society into One Worldism is the absence of force in the market place; which is another way of saying that pol itics is a hindrance to, and not an aid of, peace. Any intervention in the sphere of voluntary exchanges stunts the growth of Society and tends to its disorganization. It is significant that in war, which is the ultimate of politics, every stra tegic move is aimed at the disor ganization of the enemy's means of production and exchange - the disruption of his market place.

Likewise, when the State inter venes in the business of Society, which is production and exchange, a condition of war exists, even though open conflict is prevented by the superior physical force the State is able to employ. Politics in the market place is like a bull in the china shop. The essential characteristic of the State is force; it originates in force and exists by it. The ra tionale of the State is that conflict is inherent in the nature of man and he must be coerced into be having, for his own good. That is a debatable doctrine, but even if we accept it the fact remains that the coercion must be exercised by men who are, by definition, as "bad" as those upon whom the co ercion is exercised. The State is men.... Getting down to the facts of ex perience, political power has never been used for the "general good," as advertised, but has always been used to further the interests of those in power or those who can support them in this purpose. To do so it must intervene in the market plac·e. The advantages that political power confers upon its priesthood and their cohorts con sists of what it skims from the abundance created by Society.

Since it cannot make a single good, it lives and thrives by what it takes. What it takes deprives producers of the fruits of their labors, impoverishes them, and this causes a feeling of hurt. In tervention in the market place can do nothing else, then, than to cre ate friction. Friction is incipient war. • A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN The SouthernTraditionat Bay As RICHARD WEAVER has said, ideas have consequenc·es. His The Southern Tradition at Bay (Arlington House, $7.00), which comes to us with a foreword by Donald Davidson, is a magnificent study in depth of the "Southern apologia" which engaged practi cally every good mind below the Mason-Dixon line between the time of Appomattox and the early years of the twentieth century. Their ideas were in themselves a conse quence of the fatal flaw in the U.S. Constitution, which took off from a theory of inalienable hu man rights yet made pragmatic allowance for the institution of slavery. Nobody could have ridden the two horses of freedom and slavery in tandem forever, and the War Between the States was defi nitely the consequence of an un tenable idea.

But if slavery was a violation of the Western view of human na ture, which recognizes the natural urge of every person to be the arbiter of his own destiny, it does not follow that the South was wrong to defend the institution of States' Rights. The Constitution was a compact freely accepted by sovereign states, and the terms of ratification certainly did not pre clude withdrawal if the powers and rights protected by the Ninth and Tenth Amendments to the basic contract were infringed. The War Between the States would never have been fought if slavery had not poisoned the atmosphere of the eighteen forties and fifties. But logic tells us that it was not treasonable for the Southern Con federacy to insist that each sep arate state had the right to deal with an institution (in this case the "peculiar" institution of slave holding) which had been accepted by the Founders as a given fact when the original contract of fed eration was being negotiated.

Richard Weaver does not defend the institution of slavery. But he most certainly deplores the cen tralizing tendencies that have made a mockery of individual and 253 254 THE FREEMAN April States' Rights. A Southerner who dallied with socialism in his younger years, Weaver came to suspect the cliches of the collec tivistic liberalism which he had originally embraced. His search for his own roots led him to the detailed exploration of practically every publicist, letter-writer, dia rist, philosopher, sociologist, his torian, and novelist who expressed the "mind of the South" in all those dismal years after the defeat of Lee's army. His conclusion was that much more than slavery was at issue in the convulsive struggle of 1861-65. Slavery would have withered away in any event for purely economic reasons (it was an inefficient method of organizing production), but was it also de creed in the stars that the South must give up what Weaver calls "resistance to the insidious doc trines of relativism and empiri cism which the Southerner carried about with him"? Weaver quotes Edmund Burke's lament for the passing of his eighteenth century world: "The age of chivalry is gone - that of sophisters, econo mists, and calculators has suc ceeded." The Southern Tradition at Bay is, in essence, a comparable lament for the Southern "age of chivalry," when (again to quote Burke) there were "pleasing illu sions" which "made power gentle and obedience liberal" and "incorporated into politics the senti ments which beautify and soften private society."

The Literature of the South Regardless of how one feels about the possibility of restoring the eighteenth century, or of re creating a fabric that would "make power gentle," one can only have intense admiration for Weaver's powers of analysis and synthesis. I had not realized the richness of the "Southern tradition" before reading Weaver's study of the post-bellum works of Alexander Stephens, Albert Taylor Bledsoe, Robert Lewis Dabney, Edward Albert Pollard, Bernard J. Sage, and Jefferson Davis himself, works which had the "object of confuting what they believed to he a monstrous aspersion, a 'war guilt lie' .... " These were not part of Vernon Parrington's "main currents of American thought," yet they are surely a distinctive part of our literature. We had our centennial of the War Between the States only three years ago, and the out pouring of commentaries and his tories that commemorated the cen tennial is still vivid. But we learned all too little about what motivated the Southern soldier.

Weaver corrects the emphasis by his rifling of the "virtual Ii brary" left by people like R. L.

1969 THE SOUTHERN TRADITION AT BAY 255 Dabney, John' Esten Cooke, and Henry Kyd Douglas on-the life of Stonewall Jackson, and by the members of Lee's personal staff who left memoirs. Who among us has read Raphael Semmes's A Memoir of Service Afloat During the War Between the States? Semmes, a lawyer as well as a seaman, was commander of the illustrious Confederate raider, the Alabama, and Weaver says his memoir is "bne of the really fas cinating narratives in the history of adventure." Besides being "seven hundred pages of colorful incident and description," the Semmes memoir is also a "remark ably skilled" polemic that reviews in succession "the nature of the American compact, the early form ative stages of the nation, and finally ... the question of slavery as it affected secession." Surely, if we are to have a rounded view of the history of our country, a Semmes should be read in the schools along with a William Lloyd Garrison on abolition, or a Daniel Webster on the sanctity of the union, or a William Tecumseh Sherman on the futility of the Southern rebellion.

Richard Weaver explores the reach of the Southern novel in a brilliant chapter called "Fiction Across the Chasm." He does not aver that John Esten Cooke, Thomas Nelson Page, Thomas Dixon, Augusta Jane Evans, Grace King, James Lane Allen, Opie Read, Francis Hopkinson Smith, Charles Egbert Craddock, and John Fox were great novelists or even great story tellers. He does not even claim too much for George W. Cable (Old Creole Days) or Joel Chandler Harris, the creator of Uncle Remus. But the Southern writers of fiction, if they were not in the same league with Mark Twain (himself a Southerner of sorts), William Dean Howells, and Henry James, did not deserve to be dismissed as dwellers in a Menckenian "Sahara of the bozart." The Overpowering Burden At bottom, Richard Weaver re sented the War Between the States because it kept the South from working out its problems in its own way. He held to the Burkean belief that society must be a "product of organic growth"

if it is not to do violence to "life's golden tree." But, since ideas must have consequences, the explosion of 1861-65 was the end result of the mistakes of 1787, when the Founding Fathers temporized with their own eighteenth century heritage of "natural law." The ac ceptance of slavery, which the late Isabel Paterson insisted was the flaw in the Constitution, was too great a burden. It prevented men 256 THE FREEMAN April from seeing things in terms of a reasonable disposition to let "or ganic growth" have its way. This does not mean that the suc cessive onslaughts of the North's "liberals" on the theory of States t Rights are justifi.ed. No nation made up of distinctive regions can be successfully dominated from a single point. Reality must be re stored to the Ninth and Tenth Amendments, which ostensibly up hold the powers and rights of the ~ RES PUBLICA by Thomas o. Mc Whorter (Nutley, New Jersey: The Craig Press, 1966), 265 pp., $4.50.

Reviewed by Sam R. Fisher ONE of the important elements in our culture is the heritage of class ical political thought, with its search for earthly justice and its roots in the Natural Law. Here is an excellent introduction to this tradition, tracing it from Plato through Cicero and Aquinas down to Burke and The Federalist. This book is a useful statement of the fundamental axioms and truths upon which republican government is based. The author, an attorney, believes with Cicero that Justice can be un derstood only by reference to the states and of the individual citi zens thereof, if the general prop ositions of the Founding Fathers are to be rescued from the central izing trends which Weaver so eloquently deplored. The Southern Tradition at Bay should be read for its general philosophical sense as well as for its evocation of a part of our culture that has been conveniently forgotten and ignor antly derided in most of the coun try for more than a full half century. ~ nature of man, and devotes the opening section of his book to this unique creature. The body of the text is a scholarly disquisition on law and government, amply docu mented. The concluding chapters show how tyranny grows up with in the forms of popular govern ment when the spirit of a people decays because of a failure in un derstanding and a loss of nerve.

This degeneration cannot be re paired, says the author, "until the realities of life cause each to look inwardly at himself and see there . . . a human heing with a will, volition, and a purpose in: life, sus ceptible to experiencing the deep satisfaction of self-reliance, inde pendence, and responsible liberty in a political society where he is master." ~ the Freeman VOL. 19, NO.5. MAY 1969 Speakman·l00 Dean Russell 259 How the enlightened pursuit of self-interest promotes human progress. Urban Renewal and the Doctrine of Sunk Costs Gary North 263 An important lesson in economics concerning when to abandon a lost cause. OneSided Capital-GainsTax Inflation gives the illusion of capital gains; the tax is real. Henry Hazlitt 270 Education in America: 8. The Multiversity George Charles Roche III 272 The problems of size when education is bent to serve the collective. ActivistJudges and the Rule of Law Edward F. Cummerford 280 "Government ot laws and not of men" threatened by judicial activism.

The Out-of-BoundsDilemma Leonard E. Read 284 How is the citizenry to keep the policing agency itself within bounds? The Failing Dynamo William Henry Chamberlin 291 West German and British experiences Americans could well heed. Spend Now, Pay Later! Paul L. Poirot 297 Tricks with money let us think we can consume more than we produce. The Rise and Fall of England: 15. Socialism in Power Clarence B. Carson 300 Regulations and controls under labor government following World War II. Progress Each individual is responsible for his own development. IPA Facts 310 As TocquevilleSaw Us Alexander Winston 311 Not a stultifying sameness, but freedom, should be man's ruling passion. Book Review: 317 "Essentials of Economics" by Faustino Ballve Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON-HUDSON, N. Y. 10533 TEL.: (914) 591·7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN 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. 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, 1969, 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 1I0ne-Sided Capital-Gains Tax," "Activist Judges and the Rule of Law," and "The Rise and Fall of England."

DEAN RUSSELL SPEAKMAN tOO Progress: Plannedand Unplanned RUSSIAN COMMISSARS and Ameri can businessmen have two com pelling objectives in common. They desire the well-being of their fami lies and success in earning their livings. Those are universal incen tives, deeply ingrained in the basic nature of human beings every where. No lasting society can be devel oped on a principle that prevents, or even seriously hampers, a per son from favoring his family (or clan or tribe) over all others, or looking first to his career ahead of yours. That's why communist theory Dr. Russell was for many years a member of the staff of the Foundation for Economic Edu cation and currently heads the Department of Economics at Hillsdale College in Michigan. applied as a complete economic and political system can never work in practice. It is based on a concept of morality that is not in harmony with human nature. The communist slogan of selfless equal ity, "From each according to ability; to each according to need,"

is simply not how human beings in general feel about other human beings. Man worries first about his parents and his children and his job, in Russia as elsewhere. We continually repeat the cliche that "man is imperfect." But we don't really believe it. For we still follow the utopian schemers whose "perfect" plans depend. upon per fect people. Actually, since man really is imperfect, no planner can 259 260 THE FREEMAN May even define perfe"ction. He can only express personal preferences. In the real world, man must first be interested in himself; other wise, he wouldn't even be alive. Success in his own job, whether he is a clerk in a store or a cleric in a church, comes first. But that uni versal characteristic of human na ture is good, not bad. For if min isters and priests and rabbis were not first sincerely interested in succeeding in their chosen careers, they couldn't be of any real help to you and me. Unless they rec ognized a primary obligation to their own families, we would be foolish indeed to trust them with ours.

This interest in self and family (in mos~ countries, "extended family") has been the basis of whatever civilization we have been able to develop and maintain. And this human desire to "get ahead" and to help our children do well is still the mainspring of human progress. It isn't that we emo tional human beings don't love other children and want to help them - indeed we do! - it is just that our own children come first. We simply do not operate on the instinctive ant level of "one for all and all for one." Attuned to Reality The people who base their polit ical. and economic systems on these fundamental motivations of man - self, family, and the accu mulation of material possessions to sustain and advance them - are acting in harmony with reality. Thus, they are the people most likely to develop a government and economy (a society) wherein every child has the greatest possibility of developing whatever peaceful' ambition he may have.

So, let us not deny man; but let us acknowledge him and his na ture - and use his own selfish am bitions as the mechanism to ad vance society in general. How can that be done? Well, the economist and philosopher, Adam Smith, ex plained the procedure in his fa mous book that was published in 1776, The Wealth of Nations. Smith observed that merchants and manufacturers try to organize production in such a manner as to create services and products which will give them high profits. "[The producer] intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which is no part of his intentions. . . . By pursuing his own interest he fre quently promotes that of society more effectually than when he really intends to promote it." Smith was referring primarily to jobs and to mass-produced goods and services at low prices. It is self-interest - the human 1969 SPEAKMAN 100 261 desire to secure goods and services for himself and his family - that causes the producer to go into business in the first place. If peaceful competition is preserved, and fraud is forbidden, there is only one way that producers can get the products and services (money) they want from us. They must compete with each other to supply products and services we consumers want. And, obviously, they must offer them at prices we can pay. In a voluntary exchange, the producer and consumer each would rather have what he is get ting than what he is giving up.

Thus, the position of each is auto matically improved by the ex change. That procedure is firmly based on human nature, and thus it offers the most direct path to desired material progress - the building of hospitals, churches, and schools, as well as the provid ing of good jobs and sound medi cal and retirement programs. A Century of Progress: Family Plan Recently, I encountered still an other example of the reality of this benefit that comes to society be cause man is interested first in his own career and family. I was in Wilmington, Delaware, for the annual meeting of the Curran Foundation. A fellow-trustee, Wil lard A. Speakman, Jr., Chairman of the Board of the Speakman Company, told me that his firm is celebrating its centennial. I expressed interest in the story of 100 years of progress by a small family-owned company that com petes with several large companies in the field of plumbing fixtures and safety equipment. Naturally, I was then invited for a quick tour of the plant!

During our tour, Bill Speakman explained that the enterprise be gan in 1869 when his grandfather, Allen Speakman, saw the need for skilled gasfitters and steamfitters. In due course, Allen's son, Wil lard Allen Speakman, became head of the company. Next, his son (my host) became president. And now the fourth generation, Willard A. Speakman, III, holds that position. The traditional American dream of "going into business for one self" has been tried by literally millions of free Americans. Most of them failed, quickly and com pletely. But whether any new business fails or succeeds is of no particular importance to you and me. The vital issue for us is that everyone shall be free to try; there must be no law or tradition that prevents you and me from starting a business that just might be carried forward by our children and grandchildren for a century and more. Those were the thoughts that 262 THE FREEMAN May filled my mind while my host was explaining to me the hydraulic principle behind the Speakman shower head. I'm not an interested student of hydraulics. I was inter ested, however, in Bill's explana tion of how his company manages to survive among its large com petitors.

He claims that a primary rea son for the continued existence and growth of the Speakman Com pany is that its customers know that the firm is family-owned and that the family will go to great lengths to protect its reputation. "Some of our products are, of course, superior to those of our competitors," he said. "But our customers can still choose from several good manufacturers. That's why we stress integrity and serv ice as much as we stress the qual ity of the product we sell." The most important information I got from my tour and conversa tion is that the company employs 500 persons at competitive wages and without reference to creed or color or politics. I asked Bill why he had hired those persons. He concluded his lengthy answer by saying, "Actu ally, when all is said and done, we hired them because we needed them." I know. As Adam Smith ex plained it long ago, the producer "intends only his own gain," but the result is that he promotes the interest of society "more effectu ally than when he really intends to promote it."

The Speakman Company molds brass into plumbing fixtures for a profit; it doesn't interfere in the lives of its employees. The would be dictator deplores such "selfish" materialism; he wishes to mold human beings into a better society for the benefit of all. Happy centennial, Bill, and I hope that the Speakman Com pany is still going strong when the fifth generation is ready to ' take over. ~ Reprints available, 3 cents each. Achievement THE INCREASE in per capita consumption in America as compared with conditions a quarter of a century ago is not an achievement of laws and executive orders. It is an accomplishment of businessmen who enlarged the size of their factories or built new ones. LUDWIG VON MISES, Planned Chaos GARY NORTH URBAN RENEWAL and the Doetrine 01 Sunk Costs ONE OF THE MOST frustrating ex periences in the area of economic reasoning is to explain in detail why a particular government wel fare project is economically un sound and therefore wasteful of scarce resources. After giving as sent to point after point of the argument, the listener refuses to accept the logical conclusion that the project should be abandoned: "But we can't stop now. We've already sunk too much into it. If we stop now, it would mean that we've lost everything!" On the face of it, this answer seems con vincing. So, how does one deal with it?

Take, for example, the urban re newal program. It has been in operation for two decades, and Mr. North is a Ph.D. candidate in history at the University of California, Riverside. apparently is a permanent and ex panding part of the expenses of the Federal government. Its spec tacular failure to accomplish its stated goals - to provide inexpen sive housing for low-income groups - has been thoroughly ex plored in Professor Martin Ander son's study, The Federal Bulldozer (M.LT. Press, 1964). We can ignore here such aspects of the program as the destruction of com munity bonds which relieve the alienation of urban life, the in evitable result of tearing down old, familiar neighborhoods. We need only point to the conclusion of Professor Anderson: "Most of the new buildings constructed in urban renewal areas are high-rise apartment buildings for high in come families; only 6 per cent of the construction is public hous264 THE FREEMAN May ing." This fact is amply demon strated: "The median monthly rent of the private apartments built in 1962, which mainly re placed low-rent housing, was $195." The program has aggra vated the housing shortage for these low-income groups by evict ing them from their present resi dences, forcing them to compete for the remaining available space in other neighborhoods. Since the new accommodations are those that were passed over by these people, voluntarily, before they were forced to move, the conclu sion is obvious: these people have been coerced by the Federal gov ernment to accept living condi tions that are less satisfactory to them than those which they pre viously had occupied.

Between 1950 and 1960, over 125,000 dwellings were destroyed under the auspices of the urban renewal program. Only one-fourth of these have been replaced, and most of these are high-rent units. Professor Mises' warning that state interference into the opera tion of a free market is likely to prod uce exactly the reverse of what the planners originally ex pected is aptly demonstrated by the urban renewal program. It has involved a multibillion-dollar sub sidy, as Anderson's book shows, to "upper income people and a few elite groups." Who paid for the subsidy? Those of us whose taxes went to financ·e the proj ects, and those millions of urban poor who were forced to leave their homes by the administrators of the urban renewal program. Anderson's recommendation is that we phase out the whole pro gram. Let the proj ects now under construction be completed, but no more. He is aware of the reality of today's politics: the public would not tolerate the program's demise before present projects are finished. Half-completed empty buildings are a standing testi mony to failure; neither the public nor Federal planners are likely to accept the implications of that failure. Yet, from the point of view of economic reasoning, those buildings should not be completed at all. At best, they will only bene fit special elite groups that can afford other housing; at worst, they will result in actual economic losses, when· rents fail to repay the original investment. Why should the public be unwilling to grasp this basic economic fact? Why should the public prefer to waste even more resources on proj ects that have proved to be unwise in the past? Why not call a halt to the waste immediately? Would it not be wise to offer these projects, as is, to the free market, accepting in payment whatever competitive private bidders would pay? The 1969 URBAN RENEWAL AND THE DOCTRINE OF SUNK COSTS 265 state could at least retrieve some of its losses by doing so.

The Sunk Costs Doctrine The policies of waste are in creasingly pursued by those who are well aware of the waste. Politi cal considerations often over shadow economic realities. But there can be no possibility of re form if people will not understand or act upon a baSIC economic principle: the doctrine of sunk costs. It is not a principle readily grasped through intuition. It in volves a careful, systematic line of argumentation, and many peo ple are unwilling to devote the effort to master it. Nevertheless, it is vital that we do so; failure to grasp the issue will cost us heavily. Let us turn from urban renewal for a moment to the more familiar area of private industry. How does the private entrepreneur make his decisions? At any point in time, he must decide whether or not to continue the projects already un derway and whether to begin new projects. He decides on the basis of expected profits. What his firm has invested in fixed capital is no longer a relevant economic con sideration, amazing as it may seem. What is a consideration is the value of the fixed capital if it should be sold now or rented now, but not what was invested before.

Previous investments are a part of what is called "sunk costs"; that is, they are past costs which no longer enter into economic consideration. Professor Israel Kirzner, in his excellent economi~s textbook, Market Theory and the Price System (Van Nostrand, 1963), explains why and how en trepreneurs make their decisions: In making these decisions, the en trepreneur must still consider the costs of production necessary for a continuation of production. He must, as in all entrepreneurial decision making, balance expected revenue against expected costs. But in mak ing this calculation, he pays no at tention whatsoever to the expenses of production that he has already paid out (or that he has irrevocably committed himself to pay). What has been paid has been paid. But in comparing anticipated costs to anticipated revenues, the entrepre neur pays no heed to those amounts that do not depend on his present decisions. These past amounts may have been wisely or unwisely in curred, but there is nothing that can be done to alter the past. The aim must be to exploit now the favorable position the entrepreneur may find himself in (as a result of the past decisions that now appear to have been wise ones) ; or to make the best of a poor situation he may find him self in (as a result of past decisions that now appear to have been unwise ones) .

266 THE FREEMAN May The doctrine of sunk costs re minds us of the old truisrn: there is no use crying over spilt milk. What each planner must do, whether in private business or in government, is to make the best of the alternatives available to him now. If losses are sure to be in curred by continuing in some line of economic endeavor, then the planner shoJ.1ld abandon it. For every minute that the project is allowed to function it is taking money out of the business. In other words, it is using up scarce resources when those resources might better be employed to sat isfy some other consumer demand (or be used by a more efficient firm to satisfy a given demand more effectively). The Balloon Analogy A rather far-fetched analogy might· be used here to clarify the meaning of the sunk costs concept. Imagine a man who is suspended from a large helium balloon by a rope. How he got there is irrele vant for our example. It seemed like a good idea at the time. He is now some fourteen feet above the ground. Naturally, he does not want to let go at this point. But the balloon carries him higher, say, to twenty feet ... He is now in a worse position than before. The issue which confronts him is sim pIe: shall he let go of the rope now or later? His decision will be prompted by what he thinks the situation will be in the future: if the balloon is likely to climb higher, he should let go; if it will soon be slowly descending, he should hang on. This much, how ever, is certain: he failed to drop when he was only fourteen feet off the ground. Perhaps he should have let go then; possibly he now wishes that he had done so. But the fact remains that he did not let go then, and his decision can not now be based upon any con sideration of a fourteen-foot-drop five-minutes-ago universe. It is the future as compared with the pres ent, not the past, which must de termine any rational decision. The past is gone, for better or worse.

Unused Capacity Along these same lines, we are frequently confronted with the fa miliar socialist argument that capitalism creates unemployment and permits idle resources. "Look at the deserted steel mills. Under socialism, the government sees to it that all the capacity of the econ omy is fully utilized." The answer to this line of reasoning involves the concept of sunk costs. Take the steel mill example. Many mills were built years ago. They were built under an earlier system of technology: the plants may have cost more to construct 1969 URBAN RENEWAL AND THE DOCTRINE OF SUNK COSTS 267 than today (not in dollars, of course, but in comparison to the cost of living at that time); the plants were designed for processes of steel production now outdated. They were built under a cert~in set of assumptions about the state of the economy: the demand for steel, the nature of the competi tion, the alternative metals that could be substituted for steel, the costs of raw materials and labor, and so on. Some or all of those as sumptions have proven erroneous with the passing of time. The plants began to produce losses be cause the entrepreneurs, being hu man, were not omniscient at the time when they drew up their plans. They made inaccurate fore casts. Their competitors, who made more accurate forecasts, will have prospered accordingly. Those who made the errors were in formed· of the mistakes through the operation of the price mechan ism on the free market. Instead of compounding their errors by con tin uing to waste scarce resources in inefficient production processes, they "let go of the rope." That is, they shut down the inefficient mills. Thus, they released raw ma terials and laborers for the more efficient producers to use. Capital ism, in short, eliminated economic waste ;it did so through the· profit and loss mechanism of the market.

The socialist wants us to believe that capitalism is wasteful be cause it permits plants to be shut down by owners. "Look at all the investment that is wasted; capi talists sank so much capital into those projects,and now it is all lost." The argument rests on a half-truth. Yes, that investment is lost. It is lost under any system of economics; in fact, it was lost the day the plant was built. The entrepreneurs knew full \vell that it Was lost; the point is that they expected this loss to produce prof its in the future. That is the heart of all investment, whether under socialism or capitalism. Scarce re sources used for one thing cannot simultaneously be used for an other. It is the rationalcalcula tion of the free market which tells us whether or not the use of the scarce resources was a wise one, but it is not capitalism as such which destroys the investment. The fact that· under capitalism plants lie empty should be seen as a blessing. Capitalism has permit ted us to count the cost of con tinuing any given process of pro duction. It encourages us to aban don the wasteful processes. The market is a constant reminder to us that there are such things as errors of investment. Itreminds us that once a plant is built, we I11USt make the best use of it that we can, and sometimes this means doing nothing with it, if doing 268 THE FREEMAN May something with it ties up addi tional scarce economic resources and wastes them. The market forces us to examine the probable future results of our decisions, while it encourages us to accept the reality and inescapable finality of those decisions that we have made in the past. Capitalism de mands that we make the best of a poor decision in the past; social ism, by keeping plants in opera tion which are wasting scarce re sources, permits men to make the worst of a poor decision in the past. The "unused capacity" argu ment is utterly fallacious.

The Stock Market Crash An economically irrational re fusal to acknowledge the validity of the doctrine of sunk costs has led many people to personal finan cial disaster. Consider the stock market decline of 1929-33. Many investors saw their paper profits collapse after October of 1929 when the inflationary policies of 1922-29 were reversed by officials of the Federal Reserve System. People saw that the general level of prices in the nation was declin ing, especially stock prices, but they refused to acknowledge the reality of the situation. Instead of considering the possibility that prices might fall even more, they concerned themselves· with the amount of money they had put into their investments. This in turn led them to hold on; the re sult was financial disaster, as prices continued to skid. The man who refuses to let go of the rope at fourteen feet had better be fairly sure that the balloon is not going to carry him even higher.

The '"usion of Equity One of the most common of all fallacies involved in the refusal to accept the sunk cost doctrine is that of "equity" in a home. Dur ing a depression, or any recession, some owners who want to sell their homes or land refuse to sell at the prevailing prices. They argue, "I have $5,000 equity in this piece of property; if I sell now, I'll lose it." The fact is that there is nothing tangible or mar ketable about ".equity." Once a mortgage payment is made, it is gone. It entitles one to remain the owner of the property until the next payment falls due. It entitles one to make decisions now as to the sale or retention or rental of the property. But there is nothing known as equity in economic rea soning: you may sell a house for more than you put into it, or less, or the same amount; but the mar ket price is not determined by the amount of money sunk into the property. One cannot have some thing "in" the home, as if it were a refrigerator stocked with food.

1969 URBAN RENEWAL AND THE DOCTRINE OF SUNK COSTS 269 We only have a title to the home which permits us to sell it for whatever we can obtain on the open market. "Equity" is a mis leading conc'ept which is stored in people's minds, not something which is in some mysterious way stored in a piece of property. The Labor Theory ot Value The labor theory of value is a concept analogous to "equity." It assumes that an economic good is worth a given amount of money on the market because a certain quan tity of human labor has been in vested in producing it. This idea was basic to all economic thought until the advent of the "margin alist-subjective" economics of mod ern times (1870's). Karl Marx was the last maj or economist to hold to the position; only Marx ists, among serious economists, hold it today. The concept is wrong. A buggy-whip, even if it were made by a painstaking mas ter craftsman, is only worth in 1969 what the market will pay; the quantity .of labor involved (which itself is a misapplied con cept from mechanics, since there is no way to measure labor) is ab solutely irrelevant. The buggy whip does not have value because of the labor; the labor has value only because of the value the buggy-whip may have on the mar ket.An hour's labor by a brain surgeon commands a higher price than an hour's services of a ditch digger (in most economic situa tions, anyway) .

So it is with a factory. The amount of labor invested in its construction is irrelevant, once it is built; the amount of raw mate rials invested is irrelevant, too. Once it is built, the factory (like the buggy-whip) must be valued in terms of what it can produce on the market or by what it could be sold for, either now or in the future. Profit and loss will deter mine what is to be done with the factory, not the money already in vested in its construction. The doctrine of sunk costs was the in evitable replacement for the labor theory of value. Today, it is only the Marxist entrepreneur or plan ner who ignores the doctrine of sunk costs; the inefficiency of So viet planning is, in part, traceable to just this ignorance. Conclusion Thus, we should look at any gov ernment project with an eye to the present and the future. The past, because it is past, is econ omically irrelevant. Unfortunately, the past is not politically irrele vant: politicians and bureaucrats may have made specific promises concerning some project. But that is another issue as far as the economist is concerned. If it is a 270 THE FREEMAN May question of economic waste versus economic benefit, the past must be discarded as part of our thinking.

Our concern is in getting the greatest possible benefit from the resources that are available now. For economics, the words of Omar Khayyam are most relevant: HENRY HAZLITT FOR 35 years American taxpayers have been subjected to a cynically onesided levy on capital gains. Prior to the stock market col lapse and depression of 1929-33, capital gains were taxed as in come, and at the same rates. And capital losses were fully deductible against income. But one day J. P. Morgan revealed before a Con gressional committee that he had paid no income tax for the pre ceding year, because his capital losses exceeded his ordinary in come. The statement caused great moral indignation. Yet if capital gains are equivalent to and should The Moving Finger writes; and, having writ, Moves on: nor all your Piety nor Wit Shall lure it back to cancel half a Line, Nor all your Tears wash out a Word of it. ~ ONESIDED CAPITAL-GAINS TAX be fully taxable as income, then by the same logic capital losses should be fully deductible against income.

But Congress preferred indigna tion (anQ1ll9:rerevellues) to logic (and fairness) and onesidedly "rectified" matters by refusing to allow anybody to-deduct more than $1,000 a year in short-term capi tal losses against income, though it continued to tax short-term capi tal gains in full as if they were income. Congress and successive ad ministrations then launched upon a career of inflation. This has paid the government handsomely at the expense of the taxpayer. The infla1969 ONESIDED CAPITAL-GAINS TAX 271 tionary rise in prices has made nominal money incomes rise. This rise in money incomes has kept putting people all along the line in higher tax brackets where they are automatically subject to higher and higher rates, whether or not their real incomes in purchasing power are any higher. Inflation has had the further re sult that people since 1933 have often been paying taxes on capital "gains" that have no real exist ence.

Suppose you bought stock or real estate for $10,000 in 1939 and sold it for $25,600 today. You would be taxed on a capital gain of $15,600. Actually, as the cost of living has also risen 156 per cent in this period, you would have achieved no real capital gain at all. Your $25,600 would buy no more than $10,000 bought in 1939. If you sold your real estate or stock for $21,000, you would be taxed on a capital gain of $11,000, though you would have suffered an actual loss in real terms. Under past and prospective in flation, the present capital-gains tax amounts to a large· extent to capital confiscation. Its harmfulness does not end there. By taxing net money gains in full, and short-term gains at rates up. to 77 .. per cent,. with loss deductions only against gains (except for a token deduction against income) the present sys tem of capital-gains taxation dis courages investment, particularly of risk capital. It "locks in" capi tal. It penalizes investors heavily for transferring investments into new ventures and so retards econ omic growth.

-There are at least a dozen dif ferent possible reforms of the capital-gains tax, anyone of which would make it less onesided. I suggest we begin with this one: When a taxpayer sells shares or a piece of property held over a long period, he should be permitted to calculate his real gain (or loss) by deflating his nominal money gain against the increase in the official consumer price index since the year in which he originally ac quired the property. The justice of this way of cal culating real capital. gains should be obvious. At least the advocacy of such a reform would help to make clear the inj ustice of the present heavy taxes on grossly in flated or nonexistent capital gains. The government might no longer be. able to profiteer so flagrantly, either in capital-gains revenues or in higher income tax rates, from its own inflationary policies. ~ Copyright 1969, Los Angeles Times. Reprinted by permission.

8. The Multiversity THE PROPER GOAL of education is the development of the individual; and the great task is to bring the educational structure back to that purpose. Unfortunately, the trend continues in the opposite direction. The multiversity, to use the term coined by Clark Kerr, would ap pear to be a modern hybrid with a scale of values oriented toward everything but the individual stu dent. Formerly, the university was regarded as a sanctuary for origi nal and independent thinking. Dr. Roche is Director of Seminars for the Foundation for Economic Education .. He has taught history and philosophy in college and maintains a special interest in American edu cation. 9.72 Many centers of higher learning today seem willing to prostitute themselves in pursuit of public funds. Indeed, the race for funds goes far beyond that; it also in cludes the development of a cur riculum featuring the vocational training demanded by the profes sions and the business community.

In short, many of our institutions of higher learning are directing themselves not toward independ ent inquiry and the development of inquiring individuals, but in stead are providing the institu tions of our society, both public and private, with the properly "prepared" (though not necessari ly educated) graduates needed to 1969 THE MULTIVERSITY 273 staff our social structure. An "as sembly line" is thus set in motion, as the demands of both public and private institutional giants shape the higher learning in America. Traditionally, academicians have abandoned the market place to better pursue their work; but it has been suggested that "modern America has thrust its academi cians back into the commercial arena." Clark Kerr, in The Uses of the University, has defined the modern university as "a mechan ism ... held together by admin istrative rules and powered by money." He adds that "it only pays to produce knowledge if through production it can be put into use better and faster." If everything within the academic community is for sale to the high est bidder, if concentrations of power, public and private, are al lowed to establish all the criteria for what constitutes education, then we should not be surprised when bigness displaces the indi vidual and "workability" replaces values.

Meanwhile, the multiversity grows by leaps and bounds. Ad ministration is becoming one of the great academic problems of our times, as "specialists" are added to handle fund raising, public re lations, purchasing, and the my riad other technical problems which we have insisted upon making a part of higher education. Under the banner of "public serv ice," the giantism of the modern multiversity is becoming the com monplace of American education. Impersonality The severe impact of the multi versity upon the student is de scribed by two Berkeley professors who have faced the situation first hand: The architects of the multiversity simply have not solved the problem of how to build an institution which not only produces knowledge and knowl edgeable people with useful skills but which also enriches and enlightens the lives of its students .... By any reasonable standard, the multiversity has not taken its students seriously ... to many students the whole sys tem seems a perversion of an educa tional community into a factory de signed for the mass processing of men into machines.l Often, the impact of the multi versity is equally severe upon the professors. As massive enrollments and expenditures have necessitated a great and growing educational bureaucracy, the traditional small "community of scholars" has grad ually deteriorated in many insti1 Sheldon S. Wolin and John H.

Schaar, "The Abuses of the Multiver sity," Seymour Martin Lipset and Shel don S. Wolin, eds., The Berkeley Student Revolt (New York: Doubleday Anchor, 1965) .

274 THE FREEMAN May tutions into a large group of sal aried employees. The great and growing numbers which the multi versity attempts to serve impose great burdens upon student, pro fessor, and administrator alike. And as they rush through their appointed rounds in an effort to keep the gigantic system in oper ation, they find that each new fall brings larger and larger crowds of students to be digested by the system. The tremendous numbers involved have forced many insti tutions to use IBM cards and other means of mass processing, further widening the gap between the institution and the individual. The impersonality beginning with registration is maintained in giant survey classes and concluded with anonymous graduations. In many cases students and professors never come to know one another indeed, the products of such a system are not always worth knowing. When any institutional frame work deals with thousands of per sons each day, it is not surprising if there is neither time nor re sources for an individualized ap proach. Yet, can the development of independent judgment and a genuine insight into the human condition be accomplished without a close interaction of teacher and pupil? The answer is no. Thus, many students who are attending the multiversity in search of an education are being deceived. They find themselves neglected in an institution primarily directed toward the procurement of Fed eral and foundation research grants and the development of the proper institutional "image."

College and uni versi ty alike seem to suffer from the same di sease. As Robert Hutchins put the case: The reason is that the students, who have been lured to the college by its proclaimed dedication to liberal ed ucation, find on their arrival that the reality is quite different. In reality, the college is, except in size, the same as a university, devoted to training and not to education .... Unless the American university is completely reorganized and reorient ed it can only mishandle and frus trate the students who reject the mindless mechanism of the academic assembly line; the students, in short, are looking for an education. 2 No Easy Solutions A part of the problem, of course, is due to the sheer magnitude of our institutions of higher learn ing. Such giantism makes adap tation to change and to individual needs especially difficult. But merely escaping from the giant university to the smaller college 2 Robert M. Hutchins, Los Angeles Times, Oct. 31, 1966.

1969 THE MULTIVERSITY 275 is no guarantee of success. The colleges are becoming in many cases little more than satellites to the great universities. Their ideas and attitudes often originate in the large universities; their teach ers are usually trained there. Some institutions are attempt ing a so-called "cluster-college" approach for re-establishment of faculty-student contact. But the expense involved leads administra tors back to,vard the "grea ter efficiency" of centralization. They argue that the savings in planning physical facilities for large blocks of students can then be applied in procurement of more and better personnel. In their view, large size becomes a solution to educa tional problems rather than a problem in itself. It is true that effective higher education requires fine intellect and scholarship in its teachers, and such teachers are difficult to attract to the small campus when all the money and most of the prestige lie in the great multiver sities, In either case, it remains extremely difficult for students to contact fine teachers. Many of the small schools cannot attract such men, and many of the large schools who can attract them are so beset ,vith vast numbers that teacher and pupil seldom have personal contact.

Size introduces a further complication. Many people recognize that a proper background in the so-called "liberal arts" is essential to the development of the whole man, whatever his profession might be. Attempts have been made to mass produce such educa tion through the use of the uni versal survey course. The result often is a student who knows something about everything and nothing about anything. Each professor and each depart ment want the whole time of the stu dent so that he can be thoroughly trained in the professor's or the de partment's specialty. Since it is ob viously impossible for the student's whole time to be spent in this way, the course of study is determined by a process of pulling and hauling and finally emerges as a sort of checker board across which the bewildered student moves, absorbing from each square, it is hoped, a little of some thing that each professor or depart ment has to offer him. 3 Specialization Not all of our problems should be laid at the door of mere size and nun1bers. Higher education labors under other handicaps as well. The pressures of the system drive the good teacher to,vard such increasingly narro'w special ization that the information ceases 3 Robert M. Hutchins, The Confiict in Education, pp. 60-61.

276 THE FREEMAN May to be readily communicable to stu dents. Our highly technical modern world de,mands specialization. But vocational specialization without understanding of the humanities and liberal arts affords a limited perspective on life. Narrow spe cialization tends to dehumanize. A man's work is a vital part of his life; but unless that work is kept in touch with the realities of the human condition and in con tact with a higher purpose, all difference between man and auto maton will have been removed. Specialized knowledge in the Western \vorld has accomplished miracles through increasing hu man control over physical environ ment. Man has achieved power in the process, a power being con centrated in the governmental and private institutional giants of our time. Rewards are high for the specialist. In such a process, how ever, we run a grave risk of losing the capacities which make us hu man. A young student of great ability easily may pass through his entire education without en countering the reality of the hu man condition or establishing his self-identity. Instead, he moves from one superficial consideration to the next, always dependent upon "expert" and "fashionable" opin ion, "objectively" studying noth ing but the "facts."

Superspecialization further requires a seemingly infinite variety of course offerings in the curricu lum. It is true that men are differ ent, but surely there are features of the human condition which are universal and which override all specializa tion. Only by maintaining a balance be tween our experimental bent and our loyalty to the ageless wisdom of our tradition can we hope to remain cul turally in the Western orbit. The distinguishing mark of the educated man is his sense of continuity and the awareness of his heritage. As Professor Josef Pieper has the cour age to affirm in an age of specializa tion, a man must be able to compre hend the totality of existence. 4 Specialization also serves as a shield for many within the edu cational community who do not appear primarily concerned with education. There are some who pursue erudition for its own sake, divorced from any meaning in human existence. They conceal their lack of a philosophy of life behind an endless search for facts.

Educational bureaucrats often seem to reflect the victory of the modern specialist over the uni versally.educa ted man. But this creates an extraordinarily strange type of man. . . . With a certain apparent justice he will look 4 Thomas Molnar, The Future of Edu cation, P. 157.

1969 THE MULTIVERSITY 277 upon himself as "a man who knows." And in fact there is in him a portion of something which, added to many other portions not existing in him, does really constitute knowledge. This is the true inner nature of the specialist, who in the, first years of this century has reached the wildest stage of exaggeration. The specialist "knows" very well his own tiny cor ner of the universe; he is radically ignorant of all the rest. . . . Previ ously, men could be divided simply into the learned and the ignorant .... But your specialist cannot be brought in under either of these two cate gories. He is not learned, for he is formally ignorant of all that does not enter into his specialty; but neither is he ignorant, because he is "a scientist," and "knows" very well his own tiny portion of the universe. We shall have to say that he is a learned ignoramus, which is a very serious matter, as it implies that he is a person who is ignorant, not in the fashion of the ignorant man, but with all the petulance of one who is learned in his own special line.5 At least a portion of the exces sive specialization of our time must be blamed upon the fetish of the doctoral degree. But a re search degree is far from an as surance that a man is a qualified teacher. In fact, as Irving Babbitt warned forty years ago, "the work that leads to a doctor's degree is 5 Jose Ortega y Gasset, The Revolt of the Masses, pp. 111-112.

a constant temptation to sacrifice one's growth as a man to one's growth as a specialist." The superspecialization de manded in our times often leaves the individual, as Ortega says, so specialized that he is ignorant in many facets of human existence, so ignorant that, outside his spe cialty, he reacts as an unqualified mass-man. Is it possible that pro fessors who speak with such au thority in areas outside their disciplines sometimes reflect that lack of training - proving them selves unqualified to exercise lead ership outside their narrow spe cialization? Publish or Perish The drive toward superspeciali zation and the accompanying mul tiversity quest for "image," serving as means for reaping the appropriate financial rewards available through conformity to the pressures of the gigantic pub lic and private institutional struc ture, have one of their most unfortunate manifestations in "publish or perish," the prolifera tion of research and publication for its own sake. One Stanford psychologist has suggested that . . . before the turn of the century, it will be recognized that radical ac tion is necessary to limit the out pouring of specialized and often trivial publications that even now 278 THE FREEMAN May all but inundate the offices of every academician. . . . The most prestige ful colleges will begin by making rules forbidding their professors to publish until they have been on the faculty five or even 10 years. They will thus create a campus culture in which publishing is considered not good form. 6 Though the professor may have had his tongue in cheek, there can be little doubt that a mass of trivial research tends to contam inate the academic atmosphere and bring legitimate research into dis repute. It also interferes with teaching. So long as the high road to academic success is thought to lie exclusively in research, we can scarcely expect faculty members to be properly concerned with the teaching function.

Writing, to be worthwhile, should flow naturally out of scholarship, not be imposed upon it; otherwise this forced labor acquires the status of Christmas cards and is counted, not read. If university administrators were required in their purgatory to read all of the trivia which their policies have produced, they would soon crowd the Gates of Hell clamor ing for surcease. 7 6 "Stop Publishing-or We'll All Per ish," The Stanford Observer, March, 1968. 7 A. H. Hobbs, "Sociology and Scholar ship," The University Scholar (Univer sity of Pennsylvania), January, 1960. It is to the ever lasting credit of a number of American colleges that they have not bowed to the pressures for research, but in stead have kept teaching as their prirnary goal. Many of our multi versity complexes could profitably note the comparative lack of stu dent unrest in the American col lege as compared to the American university. An important reason for that difference could be an attitude in many colleges that teaching is a legitimate function of higher education. Independent scholarly inquiry and research are vital to our society and form an important part of our educational process, but we throw out the baby with the bath when we so over emphasize that function that we come to neglect the means for transmitting our increased knowl edge to the rising generation.

Tenure and Promotion The internal political situation surrounding tenure and promotion can also interfere with the educa tional process. The trustees of many educational institutions have yielded to faculty pressures until control of the institution is the prize to be won in an open contest between the professors and the administrators. Many administra tive positions on campuses have fallen captive to faculty politics. Junior professors often depend for 1969 THE MULTIVERSITY 279 promotions upon senior depart mental members whose self-inter est leaves them poorly qualified to judge the merits of another pro fessor. Such forays into campus and departmental politics at the ex pense of teaching duties often are encouraged by the tenure situa tion. The tradition of tenure as a guarantee that the professor can conduct his research and publish his findings without censorship or fear for his job is a vital part of our academic heritage. But tenure was never intended as a protection for the lazy professor who read his last book while a graduate student; nor was its purpose to allow professors to engage in poli tics while neglecting teaching responsibilities.

Collective Judgment and The Committee Inside and outside the Ameri can academic community, the com mittee mentality assaults us on every hand. The highest rewards seem to go to organizers and co ordinators rather than to genu inely creative and original minds. Our worship of institutions not only gives us the multiversity, but also subjects us to nonthought by committee in the everyday conduct of our affairs. One glance at pedagogical litera ture reveals the collectivistic preoccupation: "committee," "cooperation," "integration," "teamwork," "group proj ect," "maj ority-obj ectives," "peer-group," "group-process," "group-imposed regulations," "group determined penalty," "group-accept ance," etc., etc., abound in articles, speeches, meetings, and school cata logues. Together with other ideologi cal directives, they constitute the af firmation that God and individual man do not exist apart from the col lectivity. Moreover, they imply that man's adjustment to the collectivity is the supreme guarantee that he is not in error. 8 Needless to say, committees are no better as teachers than as admin istrators.

The Quality of Teaching University teachers can be and frequently have been vigorous edu cational forces. The really effective professors prove to be those with a full understanding that genu inely effective' college teaching involves far more than lecturing before large survey classes and then quickly disappearing to the library or the faculty club. At least one aspect of the student uprising on campuses has been the teaching failure of the multi versity. In fact, the kind of stu dent protest that emphasizes body English and mass movements in 8 Thomas Molnar, The Future of Edu cation, p. 134.

280 THE FREEMAN May place of responsible individual thought and action demonstrates how little· genuine education those students have received. Students are-more than great masses of IBM cards and admini strative problems; they are far more than mere containers into which academic information should be-dumped. Their value to society, their value to themselves, and their capacity for education are deeply affected by the capacity of the uni versi ty to deal with them as individuals. If the many well qualified and highly motivated ad ministrators and professors with in higher education are to be given an opportunity to reach their students, we must reverse the trend toward the multiversity with all its negative effects. ~ The next article of this series will ask HAcademic Freedom for What?" I II Ac-ti vis-t Judges I 1 and -the Rule of La~ EDWARD F. CUMMERFORD THE FORMAL BOUNDARY between responsible self -government on the one side and tyranny or anarchy on the other is often termed "the rule of law." Never has that ten uous line been in such danger of obliteration in this country. The rule of law is mocked and attacked, ,pot only by the criminal multi tude but by supposedly responsiMr. Cummerford practices law in New York City.

Reprinted by permission of The Wall Street Journal, where the article first appeared under the title, "Judicial Jumble," April 22, 1968. ble elements. Educators and clergy urge us to break laws we do not like, and eager mobs implement their i,deas with destructive vio lence; labor unions violate laws that impinge upon their power and defy court orders usually with impunity; public officials blandly refuse to enforce the law if their political futures might suffer. But ironically, it is within the courts themselves that the most serious threat to the rule of law has developed. This comes from a 1969 ACTIVIST JUDGES AND THE RULE OF LAW 281 radically new concept of the judi cial function called "activism." Judicial activism had its genesis in the Supreme Court about 25 years ago, when some of the J us tices began to abandon the age old principle of stare decisis upon which American and English law had been based for centuries.

Stare decisis meant simply that the principles derived from pre vious decisions formed a body of controlling law for future deci sions. The primary duty of the judge, after the facts of a case were determined, was to find the law applicable to such facts and decide accordingly, regardless of his personal feelings. On this sys tem rested what Americans proud ly called "a government of laws and not of men." Judicial activism means that judges strive for what they deem a "just" result in a case in the light of their own philosophies and socio-economic values, with settled legal principles being ac corded little or no weight. Thus, decisions turn more and more upon "who" is the judge than upon "what"is the law. As a result, law is rapidly losing its certainty, sta bility, and continuity. Jurispru dence is becoming the handmaiden of sociology. This concept of the judicial function reaches its apogee in the doctrine, if that is what it may be called, that even the meaning of the Constitution itself may be changed by the Supreme Court if necessary to achieve "justice" or "equality." While the power of the Court to clarify parts of the Constitution in the first instance cannot be doubted, it is no corol lary that the Court may, at its pleasure, keep changing such meaning. The Constitution specif ically provides for its own amend ment with procedures that com pletely exclude the Supreme Court.

Some contemporary pseudo scholars of the law would have us believe that judicial activism is a proper function of courts, entirely consistent with the historical de velopment of law. This is just not true. Will of the Law Let us consider what some of the leading legal minds of the past, men whom proponents of activism claim as philosophical antecedents, have thought about the question. ~Tohn Marshall, our greatest Chief Justice, declared bluntly in a land mark case: "Judicial power is never exercised for the purpose of giving effect to the will of the judge; always for the purpose of giving effect to the will of the legislature; or in other words, to the will of the law." Charles Evans Hughes, usually ranked second only to Marshall among Chief Jus282 THE FREEMAN May tices, is often cited as an au thority for the notion that the Supreme Court can change the meaning of the Constitution. This is based on a fragment from an extemporaneous speech in 1907 "the Constitution is what the judges say it is." Mr. Hughes an grily denied having meant any such thing, but the out-of-context words plagued him for the rest of his life and to this day a.re quoted in textbooks and by professors to justify a concept he abhorred.

Oliver Wendell Holmes, a. most influential legal scholar and for 30 years a Supreme Court Justice, maintained that judges should keep their own social and eco nomic views out of decision-mak ing. Benj amin N. Cardozo, Mr. Holmes' disciple and successor on the Court, set forth in painstaking detail the historical and philo sophical criteria to be employed by judges in reaching decisions. A liberal like Justice Holmes, he did not believe that the law must be static and never change. He would have been shocked, however, at decisions that lightly discard decades of settled law on the strength of sociological or eco nomic theories. Justice Cardozo observed: "Lawyers who are un willing to study the law as it is, may discover, as they think, that study is unnecessary; sentiment or benevolence or some vague notion of social welfare becomes the only equipment needed. I hardly need to say that this is not my point of view."

Sir Frederick Pollock, probably the chief authority in modern times on Anglo-American juris prudence, repeatedly cautioned that judges should follow estab lished precedents and legislative intent, not their personal views, in reaching decisions. Two other important jurist-scholars, Felix Frankfurter' and Learned Hand, were-extremely critical of judicial activism. Mr. Frankfurter, a pro tege of Holmes, went on the Su preme Court a "liberal" in 1939 and retired a "conservative" in 1962 - but it was the Court, not Mr. Frankfurter, which had undergone the greater change. Justice Har lan speaks of the idea that all social ills can be cured by courts as having "subtle capacity for serious mischief." Pure Guesswork The criticism is not confined to Olympian levels. The legal profes sion finds it increasingly difficult to know just what the "law" is; hence, attorneys cannot advise cli ents of the merits of their cases with much assurance. If the out come of a case depends more on the personal philosophy of the judge than on any other consider ation, it is pure guesswork. What 1969 ACTIVIST JUDGES AND THE RULE OF LAW 283 was once "Constitutional" sud denly becomes "unconstitutional."

Countless Supreme Court decisions are by 5-to-4 votes, often accom panied by several different opin ions and bitter, sarcastic dissents. This is the precarious state of law today. Some activist judges go to great lengths to make sure that they will not be thought of as having unbiased minds. In speeches, arti cles, and letters to editors they frequently take positions on con troversial questions. High-ranking judges have even publicly ex pressed opinions on delicate ques tions involved in cases awaiting decisions in their own courts judicial behavior that a genera tion ago would have been consid ered reprehensible. No matter what euphemisms are employed to disguise· its effects, careful reflection must lead to only one conclusion: Judicial activism is not merely inconsistent with the rule of law, it is the total ne gation of the rule of law. If cases are decided on the personal phi losophies of judges, then in real ity there is no law. If the Consti tution has no objective meaning but means only what judges think it ought to mean, it is not a constitLltion at all but an empty symbol,a sort of national totem.

History shows that vague laws, subjectively interpreted and arbitrarily applied, are the tools of tyrants. The equation is as old as the human race - power minus re sponsibility equals despotism. Out of the vast crucible of hu man experience and travail we have constructed a splendid sys tem of law and courts that it is our duty to sustain and improve. The beating heart of that system is the judge. If his mind is a closed one, which recognizes no authority save his own predilec tions, then all the long shelves filled with lawbooks, the great nlarble columns and the black robes are but superficial trappings cloaking a travesty. Judges, like other mortals, need a large measure of humility - the conviction that one human mind can embrace but a tiny particle of all wisdom and knowledge. As one of our most respected living judges, Harold R. Medina, has ex pressed it so well: "I don't think I have any propensity or desire to mold the law to my own views ...

if I had a question of statutory interpretation and I was convinced . the statute meant, .. and was in tended to mean, one thing, I would never decide it meant just the op posite because I thought it was desirable social or economic policy to do so. This twisting and stretch ing is not for me." Nor should it be for any judge. • The Out-of-Bounds Dilemma LEONARD E. READ THE CITIZENRY establishes and empowers government to codify the taboos and enforce their ob servation; certain actions are ruled out of bounds, and govern ment is given the job of punishing transgressors. In good American theory any action by any citizen is out of bounds if it be destruc tive: murder, theft, misrepresen tation, and the like. Stay within bounds or suffer the consequences. Everything human is subject to corruption; situations get out of hand. It's easy enough for the citi zenry to delegate the policing task to the formal agency of society, but quite another matter for the citizenry to keep the agency itself within bounds. For, short of any thing yet accomplished in history, the agency will, sooner or later, declare out of bounds not only OOA destructive actions but various creative and productive actions as well. Two among countless exam pIes: It is out of bounds to raise as much wheat as you please on your own land and, in New York City, at least, to mutually agree with your tenant what rental he shall pay. In a word, government, having a monopoly of the police force, will tend to act indiscrimi nately in its out-of-bounds edicts.

And, it has always been thus: . .. the greatest political problem facing the world today is . . . how to curb the oppressive power of gov ernment, how to keep it within rea sonable bounds. This is a problem that has engaged some of the great est minds of the eighteenth and nine teenth centuries - Adam Smith, von Humboldt, de Tocqueville, John Stuart Mill, Herbert Spencer. They addressed themselves to this particu1969 THE OUT-OF-BOUNDS DILEMMA 285 lar issue: What are the proper limits of government? And how can we hold government within those limits?l The dilemma seems to be that government is something we can't get along without and something we can't get along with. Considering the great men who have attempted to resolve this di lemma, it seems unlikely that any one of us will hit upon a final solu tion. But we can and should .en tertain the hope of shedding a bit more light on the matter. My ef fort is no more pretentious than this.

During the last century, several of the best American academicians and statesmen - in an effort to prescribe a theory of governmental limitation - have agreed: The government should do only those things which private citi zens cannot do for themselves, or which they cannot do so well for themselves. That this is meant to be a pre cise theory of limitation is con veyed by the words, "do only those things." This proposal is repeated over and over again and we may there fore presume that it has a con1 Excerpted from remarks by Henry Ha?:Utt.. See.Wha-t!.s._P..a.sL."J.s...E1:'.ologue (Irvington, N. Y. : The Foundation for Economic Education, 1968), p. 14. siderable acceptance and is influ ential in shaping public opinion as to what is and is not out of . bounds in governmental activity. If that be the case, in the light of what's going on, we are well ad vised to re-examine this proposi tion. For it is true that all actions are rooted in ideas.

Parenthetically, one may wonder why I choose to pick on a small flaw in what, after all, is little more than an aphorism. It is my contention that this idea of limita tion "leaks," like a leak in the dike, and if not plugged, the whole countryside will be inundated. A trifle, yes, but as great oaks from little acorns grow, so do great catastrophes from little errors flow: For the want of a nail the shoe was lost, For the want of a shoe a horse was lost, For the want of a horse a rider was lost, For the want of a rider the battle was lost, For the want of a battle the kingdom was lostAnd all for the want of a horseshoe-nail. The aforementioned notion gains acceptance because it is so plausi ble. The government should, in deed, do some of the things which private citizens cannot do for themselves. All citizens, except 286 THE FREEMAN May philosophical anarchists - those who reject a formal agency of so ciety - are certain, in the interest of social order and common jus tice, that each citizen cannot write his own laws. Man is now and for ever imperfect and men must now and forever differ as to what is right and just. Codifying and en forcing an observation of the taboos gives the citizenry a com mon body of rules which permits the game to go on; this is what a formal agency of society can do for the citizens that they cannot, one by one, do for themselves.

Doubtless, this is what the liber tarian subscribers to this idea have in mind. And no more! They couldn't concede more and be liber tarians! A Leak in the Dike This proposal· is right as far as it goes; but it does not go far enough. It has a loophole, a "leak," through which an authoritarian can wriggle. One can easily conclude, from the wording, that government is warranted in doing for the citi zens only those things which the citizens will not and, presumably, cannot do f,or themselves. What they will not do and, therefore, "cannot" do for themselves is to implement all the utopian schemes that enter the minds of men, things that such schemers think the citizens ought to do but which the citizens do not want. to do. Re form ideas are legion; and these are the things that government is obliged to do for the people, ac cording to this proposal, as it is loosely written. That's how per missive it is; it leaves the door wide open; it's "only" is utterly meaningless!

Reflect on the veritable flood of taboos - against other than des tructi ve actions - now imposed on the citizenry by Federal, state, and local governments. And all in the name of doing for the people what they "cannot" do for them selves. In reality, this means do ing for them what they do not wish to do for themselves. Here are. but a few of many examples of things now out of bounds for American citizens: • It is against the law to grow as much wheat or cotton or peanuts or tobacco as you choose on your own land. • It is against the law, regardless of where you live, to refuse. to fi nance thousands upon thousands of local fancies such as the Gateway Arch in St. Louis or· the Fresno Mall. • It is against the law to refuse to finance the rebuilding of urban c,en ters deserted in favor of new and more preferable centers. • It is against the law to refuse to finance putting men on the moon or 1969 THE OUT-OF-BOUNDS DILEMMA 287 tracing the meanderings of polar bears in the Arctic. 2 • It is against the law to refuse to finance socialistic governments the world over.

• It is against the law to be self responsible exclusively, that is, to re fuse to be responsible for the wel fare, security, and prosperity of any body and everybody, no matter who or what they are. .How might we state this idea, then, in a way that will be under stood and which, if followed, would restore government to its principled, limited role - keep it within bounds? Consider this: The government should do only those things, in defense of life and property, which things pri vate citizens cannot properly do each man for himself. The only things private citizens cannot properly do for themselves is to codify destructive actions and enforce their observance, be the destructive actions of domes tic or foreign origin. Maintain Law and Order; All Else Leave to Choice Neither the individual citizen nor any number of them in private combination - vigilance commit tees - can properly write and en force the law. This is a job for 2 See "The Migration of Polar Bears,"

Scientific American, February, 1968. government; and it means that the sole function. of government is to maintain law and order, that is, to keep the peace. This in itself is an enormous undertaking, requir ing rare and difficult skills, but it is a task much neglected when government steps out of bounds. When society's formal agency of coercion moves in and out of bounds, it becomes impotent to keep the peace among its own citi zenry or among nations. All else - an infinity of unim aginable activities - is properly within the realm of personal choice: individuals acting cooperatively, competitively, voluntarily, pri vately, as they freely choose. In a nutshell, this amended proposal charges government with the re sponsibility to inhibit destructive actions - its sole competency - with private citizens acting creatively in any way they please. The objections to this latter pro posal are legion; indeed, they are almost as prevalent in the U.S.A.

today as in Uruguay, England, Argentina, Russia, or any other country one could mention. How, possibly, could we educate our children? Or run the railroads? Or deliver mail? Or put men on the moon? Or secure medical attention or welfare in old age? Or have a Gateway Arch? On and on! Yet, everyone of these objections can be and has been answered!

288 THE FREEMAN May Putting Men on the Moon The government is engaged in countless out-of-bounds activities, according to our rewritten pro posal. None of these is more fa vorably capturing the American imagination than putting men on the moon. 3 Even many individuals otherwise sharply libertarian in their thinking are joining in the applause for this fantastic per formance. And no one can reckon the enormous cost; it is running into untold billions. So, let's ex amine this most popular instance of government out of bounds. It is self-evident that citizens acting privately would not, at this time, engage in this enterprise. This is an example of what private citizens will not do rather than something they cannot do. Why is it so widely assumed that going to the moon is some thing private citizens cannot do for themselves? Is it because they do not have the countless billions required for the project? No, the government gets its resources exclusively from the private citizens; none from any other source whatsoever!

Is it because the skills do not 3 If the defense of our country re quired putting men on the moon, it would then qualify as a proper function of government. I am assuming that man ning the moon is not of military value. At least, I am unaware of any persua sive argument that it is. exist among private citizens? No, every last person engaged in this project was a private citizen, many of whom are now on the government payroll. Is it because a free-market en terprise is less efficient than a governmental operation? No, in every type of productive effort in which both are engaged, making comparisons possible, the free mar ket is overwhelmingly superior. We can only conclude that go ing to the moon is a project pri vate citizens could undertake but will not, voluntarily. Why? Simply because they do not want to. Nor is the explana tion difficult. I have a thousand and one opportunities for the use of my income more attractive to me than sending men to the moon.

This is far down on my priority list, not only as to desirability, but as to the amount I would volun tarily contribute - about the amount I would pay to see a good show. And I believe that a vast majority of private citizens-view ing the matter on this basis - sub stantially share my appraisal. The upshot, if left to private citizens? No trips to the moon! Not now, anyway. How can we render a judgment as to what private citizens really favor? Surely not by yeas or nays; most of us are too distraction prone for mere lip service to be 1969 THE OUT-OF-BOUNDS DILEMMA 289 trusted. So, let us judge a man's values by the way he acts: A per son favors a war if he will volun tarily risk his life in waging it; and he favors an enterprise if he will voluntarily risk his capital in financing it. Popular acclaim for a war or a moon venture or what ever, which rests on risking the lives or the capital of others, is unimpressive; it's only loose talk, detached from realism, and un worthy of serious attention.

Viewed in this light, there are few, indeed, who favor putting men on the moon, their protestations to the contrary notwithstanding! Why, then, are we in this ven ture? There are numerous reasons. For one thing, people are dis tracted and drawn by the glamor of it. Not even the fiction of Jules Verne or Buck Rogers ever re motely approached this perform ance. The TV shots of men in space divert attention from the means used to produce this spec tacular. Of the millions who do not fa vor putting men on the moon at the risk of their own capital, many enthusiastically endorse the proj ect when the risk seems to fall elsewhere. Why do they not see that this is, in reality, their own capital? Again, because of distractions. Citizens are distracted from re ality by the false promise that they can spend themselves rich. They will believe such sophistry simply because they want to be lieve it. Doesn't the Gross Na tional Product (GNP) go up $1 billion with each billion spent on the moon venture!4 Then there is the sleight-of hand expropriation of capital. That portion of one's capital taken for the moon venture by direct tax levies is so buried in the enormous Federal tax that identity is lost.

The remaining portion is equally hidden: inflation. Inflation is a tax on savings of many types. 5 The expropriation shows up not on a tax bill from the Internal Revenue Service but in the form of higher prices for bread, butter, and everything else. Who, when spending $10 for groceries, instead of the $5 he used to spend, relates the higher prices to putting men on the moon? This fiscal hocus pocus is distracting and diverts men from reality. "We do not know what is happening to us and that is precisely the thing that is happening to US."6 4 For the fallacy of GNP, see Chapter VII, "The Measure of Growth," in my Deeper Than You Think (lrvington-on Hudson, N. Y.: The Foundation for Eco nomic Education, Inc., 1967). 5 For example: cash, bank deposits, life insurance, pensions, bonds, mort gages, loans or holdings repayable in a more or less fixed number of dollars. 6 See Man and Crisis by Ortega y Gasset (New York: W. W. Norton & Company, Inc., 1962).

290 THE FREEMAN May But our proneness to distrac tion, which accounts for popular acceptance of this proj ect, is far from a complete explanation as to why we are in it. The primary rea son is that we allow government coercively to commandeer re sources that private citizens will not voluntarily commit to such purposes. In other words, private citizens are forced to do things they do not wish to do. My purpose in this cursory analysis of the moon affair is not to single it out for criticism but, rather, to raise the all-important question that relates not only to this but to thousands of out-of bounds ventures by government: Why are private citizens forced to do what they do not wish to do? After all, the formal coercive agency of society - government is their agency! We have one test, and one only, for what private citizens really wish to do: those things they will do voluntarily! It is plain that they wish telephones, printing presses, automobiles, air service, refrigera tion, houses, corn flakes, gas and electric service; indeed, a million things could be listed. And they get them - voluntarily!

But here's the rub: There are those who believe we do not know of all the things we want or, at least, are unaware of what is good for us. These "needs," invented for us - going to the moon, old-age "security," the Gateway Arch, or whatever - have no manner of im plementation except by coercion. In a word, these people who would be our gods can achieve the ends they have in mind for us only as they gain control of our agency of force: government. And the primary reason why they can force upon us those things we· do not want is our lack of attention to what are the proper bounds of government. So it is that great catastrophes fronl little errors flow! ~ A SuggestionFREDERIC BASTIAT, the French economist, journalist, and states man, must be ranked among the masters in presenting the ra tionale for limited government. His treatise, The Law ($1.00), along with Dean Russell's Frederic Bastiat: Ideas and Influence ($2.00) , are highly commended.

Order from: The Foundation for Economic Education, Inc. Irvington-on-Hudson, New York 10533 WILLIAM HENRY CHAMBERLIN A MODERN ECONOMY is a complex machine that requires for smooth and efficient operation a powerful smoothly functioning dynamo. The necessary component parts of this dynamo are private property and ownership, willingness to save and invest, wage and salary incentives adjusted for work of differing de grees of s}{ill, diligence, and effi ciency and, last but by no means least, a reasonable opportunity to earn a profit. Let all those factors function and a productive, efficient economic operation is assured. Tamper with one or more of them, and trouble is in sight. There have been many examples of this in modern times, of which the most remarkable, on the faMr. Chamberlin is a skilled observer and re porter of economic and poli1;ical conditions at home and abroad. In addition to writing a num ber •of books, he has lectured widely and· is a contributor to The Wall Street Journal and numerous magazines.

vorable constructive side, is the German recovery from the ruin and desolation of World War II. To some extent under the Nazi rule and to an increasing extent after the outbreak of war, Ger many Iived under a regimented economy. The evil consequences which this always brings to the consumer were, of course, aggra vated by unprecedented devasta tion of the larger cities and towns by air bombardment. The Germany taken over by the Allies after the surrender in the spring of 1945' was a shambles, the cities in ruins, practically no motor transport except as brought in by the occupation powers, in dustrial output at a standstill, the only functioning hotels or places of public accommodation being those requisitioned by the Allied authorities. 291 292 THE FREEMAN May Most important of all, perhaps, the essential lifeblood of industry and commerce - a currency with some stability of value - had been another war casualty. Nazi finance during the war had been more and more inflationary. And the occu piers, partly by design, partly by negligence, completed what the Nazis had begun, issuing vast quantities of irredeemable and es sentially worthless marks.

The result was that during the first years after the end of the war German currency had become, for all practical purposes, as worthless as it was in the great inflation of 1922-23 when a dollar could buy as much as a trillion marks. Since some medium of ex change was necessary, a lively in formal substitute was found in cigarettes. A tip in paper marks was scorned, while a gift of a few cigarettes was gratefully received. Fortunately, the Morgenthau Plan, with its underlying idea of destroying Germany's mines and heavy industries, was never put into full effect. But enough of its vindictive spirit got into early prohibitions and limitations on fndustrial output to discourage any reasonable hope of recovery. All the elements essential to the functioning of the industrial dy namo were destroyed; and the Germans, naturally one of the most industrious of peoples, had no real incentive to get back to peaceful labor.

The Curative Power 01 Freedom Is Demonstrated It was against this dreary and desolate background that the ge nius of one man, Ludwig Erhard, Minister of Economics in the re viving German Government, hit on the idea that made possible Germany's amazing advance, liter ally, from rags to riches. The idea was to restore the missing dynamo to the stalled economy. First, there was a currency reform, harsh but necessary and inevita ble. The substance of the reform was that the one new mark was issued for every 16 old marks. But the old marks were practically worthless and the new marks were real money, good for purchases in stores. Next came the complete scrap ping of rationing and controls. Self -goyernment was being re turned gradually and the German authorities were not permitted to change any single fixed price or fixed wage. But there was a loop hole; the whole system could be swept away with impunity. Prob ably it was felt that no German would venture to take such a drastic step. But Erhard was pre pared to make this bold wager on the curative power of economic freedom.

1969 THE FAILING DYNAMO 293 When General Clay, military Governor of the American Zone, informed Erhard that all the American economic experts were gravely concerned about the con sequences of throwing away such political crutches as price and wage control, Erhard replied: "So are mine." But the economic ex periment was allowed to stand and may be largely credited for what was often called "The Economic Miracle." In the first years, there were moments of touch-and-go; Erhard was obliged to set about promot ing the reconstruction of the na tional economy with painfully thin reserves. A sharp rise in prices seemed to threaten the experi ment; some bureaucrats began to dust off old schemes for rationing and price control. But Erhard be lieved that the free market carried its own cure. As prices rose, so did production. Through the 1950's, Germany maintained one of the most stable price levels in the world. One victory for the free economy followed another. The Federal Republic began to sweep ahead of the whole of prewar Ger many in production and exports.

From a country that was virtually bankrupt when its new currency was launched, Germany became a magnet, drawing gold from all over the world because of its con sistently favorable balance of payments. The visible standard of living showed steady growth. Ger many owes its postwar political stability, so different from the picture of leftwing and right wing extremism under the Weimar Republic, to Erhard's logically applied philosophy of a capitalist market econom~. Despite these accomplishments in freedom, a noisy, violent minor ity of German students express their ingratitude and lack of un derstanding in current exaltation of primitive communists like Che Guevara and Mao Tse-tung and the denunciations of capitalism and free enterprise. What's Wrong with Britain? While Germany since the war has given the most convincing practical demonstration of the im mense creative power of the free market and of the dynamic quality of the profit motive, other coun tries have moved in a different direction. On repeated visits to Britain since the war, with vary ing time intervals between them, I have invariably found British economists and publicists con cerned with the question: "What's the matter with Britain?"

The most obvious symptom of what people on the European con tinent sometimes call "the British disease" is the chronic inability of this country, renowned as the 294 THE FREEMAN May workshop of the world in the early phase of the Industrial Revolution, to square its international ac counts, to equalize its balance of payments. Not only has Britain carried out a reduction in the value of the pound from $2.80 to $2.40, but there are frequent rumors that the devaluation dose will have to be repeated, in one form or another. The internationally respected weekly, The Economist, recently came out in favor of a "floating pound," not tied to a fixed rate of exchange. It is easy to imagine the direction in which the pound, in vie\v of its persistent weakness, would almost certainly "float." While London remains one of the liveliest of European capitals and Britain is a magnet for Amer ican and other tourists, symptoms of the "British economic disease"

are evident on every hand. Two of the most obvious are the slack, indifferent tempo of work and the frequency with which work is stopped or slowed down, often for the most frivolous causes. On a recent visit I met two English couples who were settling down for residence in their native coun try after long periods of assign ment abroad. Both had remarkably similar stories to tell of the ex treme difficulty of obtaining reli able service from carpenters, re pairmen, and other workers who were needed for refurbishing houses and apartments. There is a familiar British postwar saying that seems to express the philoso phy of these workers: "I couldn't care less." An item from a British news paper speaks for itself: "Thieves made off one night with a pile of unwatched scaffold ing. The police noted that the thieves completed the removal in half the time regular workers would have required for the job."

Strike Losses Another feature of British in dustrial life is the frequency with which some service is interrupted by irregular or wildcat strikes, often called for such causes as how long the "tea break" should be, members of which union should be entitled to drive screws in a con struction job, or some other local issue over which management or the proverbial innocent bystander - the public - can exercise little, if any, control. The economic loss inflicted on the national eonomy, including the damage to industries not directly affected, is analyzed as follows in a recent issue of The Economist: "Over 90 % of strikes in this country are of the genre known as 'unofficial' stoppages, which means that they are generally called without notice by whoever is at that moment the effective 1969 THE FAILING DYNAMO 295 holder of power on any particular factory's floor.... The great ma jority of strikes in other countries take place at the end of a union's one-year or two-year or three-year contract .... The industrial dis ruption caused by such end-of contract strikes is a tiny fraction of the disruption caused in Brit ain when suddenly - because of some row about a tea break many motor factories have no brakes to install. That is why Britain has lost more of its na tional income through strikes in the 1960's than other industrial countries. The familiar figures purporting to show the opposite deliberately count only man-hours directly spent on strike and not the much more important conse quent loss of work through inter ruption of supplies; they are a blatant British exercise in na tional self-delusion."

Taxes Kill Incentives Overshadowing and, indeed, ac counting for many other negative aspects of the British economic scene, the low working morale, the frequent irregular interruptions of normal working hours, the slow ness of labor and management alike to accept innovations calcu lated to speed up productivity, is the incentive-killing system of taxation which often leads to counterproductive results. The famous British historian, Macaulay, once observed that the Puritans objected to the cruel sport of "bear-baiting" not be cause it gave pain to the bear, but because it gave pleasure to the spectators; and some of this alleged Puritan psychology seems to have entered into the framing of British taxation. (There is no reason for Americans to feel self righteous on this count; the trend toward skyrocketing costs of Fed eral, state,. and municipal govern ment, unless· checked, may shortly find taxes as burdensome in Amer ica as they are in Britain today.) Nothing is more essential to the functioning of the economic dyna mo that drives the machine to ever-higher standards of produc tivity than the element of incen tive for all involved in the working process. Such incentives in Britain today have been diminished almost to the vanishing point. There have been cases when wealthy Britons have felt obliged to emigrate in their late years, because their death in Britain would leave their heirs only confiscatory inheritance .taxes, or death duties, as the Brit ish call them.

Some British films have been high earners of desired dollars and other foreign currencies. But so savage are the levies on high incomes that British film produc ers .will sometimes not go to the 296 THE FREEMAN May trouble and labor of turning out a second film. Workers in factory and mine have little interest in qualifying for more skilled jobs because this means transfer to a higher bracket in taxation. The rewards to management are too small, after taxes, to encourage the maximum effort that would vastly aid the lagging balance of payments. Britons often express regret over the tendency of young sci entists, doctors, and other profes sional men who contribute so much to .a country's assets to seek greener pastures in the United States, Canada, and Australia. Taxes are not the whole story; superior research facilities and other considerations also play a part. But the lack of adequate ma terial rewards, due largely to ex cessive taxation, is a most im portant factor.

Similar Problems in fhe U.S. Even occasional glimpses of the sputtering British economic dyna mo (further affected by continu ous inflation; one British acquaint ance remarked: "It would make as much sense to save last year's snow as the pound sterling.") convey the impression that a vi cious circle has been created. The fierce incidence of taxation dis courages the extra effort that would enormously improve national productivity and encourages the "couldn't care less" mentality, affording no help in a struggle to maintain a stable currency and an even balance of payments. One need not look far to see a similar trend toward those twin evils - government overspending and increasing taxation - in the United States. The Federal tax rate in this country still falls short of the British, although it con tains such features, weighted against the saver, as the capital gains tax, undue reliance on di rect as against indirect forms of taxation, and the double taxation at the individual and corporation level of sums paid out as divi dends.

But the United States taxpayer must reckon on additional pillage at the hands of state and munici pal authorities. (For all practical purposes he has lost control of the right to determine the level of his own taxes, one of the primary issues of the American Revolu tion.) Massachusetts, the state with which I am most familiar, during the last decade has set a record of financial mismanagement which would arouse the envy of the proverbial drunken sailor; and New York and other states which specialize in extravagant "welfare" programs of subsidized idleness are little, if at all, behind. In Massachusetts, with the 1969 THE FAILING DYNAMO 297 merry cooperation of Republican governors and Democratic legis latures, the cost of running the state has trebled within the last ten years. The proceeds of a new tax are exhausted as soon as the levy is imposed; there have been three tax increases in the last four years.

The financial resources of the middle class are becoming exhausted; taxation increasingly re moves incentives and discourages production. Unless American tax payers find some means of curbing the monstrous extravagance of the Federal and state welfare pro grams, with their false promises of something for nothing, the American economic dynamo, like the British, will sputter and fail. ~ $pend Now, Pay Later PAUL L. POIROT WIDESPREAD CONFUSION concerning money and credit affords the illu sion that certain burdens of gov ernment spending, such as the costs of fighting a war, can be postponed more or less indefinitely, at least, until peace again pre vails. If a man's automobile is stolen, there is no reason for him to think that the impact of his loss may be postponed, that it may be several months or even years before he ac tually misses his car. Or, possibly he sells his car, but then finds him self holding a worthless check while car and "buyer" have disappeared. Right away, he under stands that he has lost a car. Or, instead of by check, he finds that he has been paid in counterfeit bills. His car is gone for nothing, and he knows it at once.

It's possible that the thief or check passer or counterfeiter may have the use of the car for some time before he is apprehended and obliged to pay. But, surely, that crooked way of postponing costs can have no widespread appeal. N or can a durable society be founded on the principle of steal ing from one another; all too soon there would be nothing to steal.

298 THE FREEMAN May Now, suppose the government appropriates the car in the inter est of national defense - simply takes it from the rightful owner. Will the man reason with himself that he won't miss the car until after the war? Noone really la bors under such an illusion, and well do politicians know it. Instead of simply confiscating the man's car, the national govern ment pays him for it - or gives him its bond or other promise to pay. There begins the illusion. Whereas, in fact, one car has been withdrawn from the market sup ply of goods and services available to customers, no potential buyer is aware that he then and there has lost that rnuch purchasing power. Shortly, buyers may note that cars are becoming somewhat more ex pensive; indeed that goods and services generally are rising in price. But how many housewives and other shoppers will ever come to the full realization that the cars and other goods and services that the government withdraws from the market have been replaced by nothing except "national defense"

and "general welfare"? Instead of cars and things, customers have "money!.' - of the type that only a national government with a frac tional-reserve central banking sys tem can create.' The great illusion is that all of this extra money is worth as much as the missing car, and that it ac tually will be enough to pay for a car once the war or other na tional ·emergency is over. Under that illusion, a person can easily persuade himself that the cost of the war has been postponed and that the taxpayers of a future generation eventually may payoff the national debt. Both Guns and Butter The sad truth is that real wars are not waged with weapons and other resources to be produced or withdrawn from the market at some indefinite future date. The full cost of ammunition occurs, and the burden has to be borne, as economic resources are chan neled to that purpose and before a shot can be fired. Every scarce commodity or service committed to war at that very. moment di minishes the buying power of pri vate citizens by a corresponding amount. If they have extra money in their pockets, it will be matched either by higher taxes or by higher prices - or some of both.

It's true that people may have both guns and butter if they will save enough for tools and working capital and work long and hard enough to produce all that is needed of both. And the patriotism stimulated by war may bring forth such extra effort and pro ductivity. But it will never be true 1969 SPEND NOW, PAY LATER! 299 that men can shoot guns or eat butter now that are going to be produced by a future generation. That is strictly an illusion, stem ming from a person's faith that the money and credit created by government out of thin air is worth as much as the goods and services the government with draws from the market. Upon such misplaced faith rests the sorry case for inflation. If we will think in terms of goods and services, it is easy enough to see that the cost of things used now must be borne by us now and not later. The illusion that we can spend now and pay later, or that we can pass our costs on to future generations, be gins when we try to think in terms of money and credit and its ma nipulation.!

Our debts cannot be. escaped by us or be passed along to future generations. What we leave to our children, by our reckless spending, is a ruined economy! ~ 1 It should be clear, of course, that this discussion does not pertain to private buying and selling on credit. Business men and their customers cannot create money and credit out of thin air. An in dividual may only borrow what some one else is willing and able to lend, and quickly reaches the limit of his credit if he cannot or will not meet his obliga tions: The point of concern, in this arti cle as in the world of reality, is the tampering with money and credit that is perpetrated by the government and blamed upon the victims. A House Divided LIVING WITHIN our income as a government is no more compli cated than it is for an individual to refrain from buying groceries and pretty clothes he cannot pay for. In many quarters this is an accepted objective of national tax policy. The trouble lies in the means of attaining this end. The difficulty of n1aking both ends meet in governmental fiscal matters may be due partially to our setup which separates responsibility for budgets of expenditure from responsibility for budgets of income. Any family would like wise have difficulty balancing its budget if one member had full power over spending and another over income, and if each took the attitude that the other side of the account was something for the other person to worry about.

F. A. HARPER, The Crisis of the Free Market CLARENCE B. CARSON (1£uglaub 15. SOCIALISM IN POWER IN JULY of 1945 an election was held throughout the United King dom. The war was over in Europe, but fighting still continued in the Pacific. Despite the fact that a National Government, headed by the Conservative, Winston Church ill, had been successful in prose cuting the war, the decision was made to have a partisan election. To the consternation of almost everyone, the Labour Party won overwhelmingly, returning 393 members to the House of Com mons to 189 for the Conservatives and 58 for all other parties. For the first time in history the Labour Party came to power with a clearDr. Carson, Professor of History at Grove City College, Pennsylvania, will be remembered for his earlier FREEMAN series, The Fateful Turn, The American Tradition, and The Flight from Reality. cut majority. Twice before, the party had formed ministries, but each time they had ruled with Liberal support. This time they had as clear a mandate to govern according to their ideas as they were likely to get. Socialism had come to power. In its election man ifesto for 1945, the Labour Party proclaimed that it was "a socialist party and proud of it."l In several respects, the times had been propitious for the social ists to make their move. Clement Attlee, the Labour Party leader, must have realized this, for he had pressed for an early dissolution of the government and a new election.

1 Keith Hutchison, The Decline and Fall of British Capitalism (London: Jon athan Cape, 1951), p. 291.

1969 SOCIALISM IN POWER 301 The times were right, in the first place, because-the English people had become accustomed to collec tive efforts during the war. They were acclimated to vast undertak ings by government - to large scale evacuations, to massive mo bilizations of armed forces and their deployment around the world, to collective responses to air raids and the attendant black outs, to concentration on war pro duction, and so forth. One writer says, "All this produced a revolu tion in British economic life, until in the end direction and control turned Great Britain into a coun try more fully socialist than any thing achieved by the conscious planners of Soviet Russia."2 At any rate, they were psychological ly prepared for the continuation of such undertakings in peacetime. Moreover, during the war the government had either taken or promised measures moving in the direction of socialism. The most famous of the tacit promises was the one contained in the Beveridge Report, made public in 1942. It was comprehensive in what it called for: . . . It covered all the known causes of the "giant" Want, by pro viding for unemployment benefit, sickness benefit, disability benefit, 2 A. J. P. Taylor, English History: 1914-1945 (New York: Oxford Univer sity Press, 1965), p. 507.

workmen's compensation, old age, widows' and orphans' pensions and benefits, funeral grants, and mater nity benefits. In addition to these fi nancial provisions, the Report was also based on the assumption that a comprehensive health and rehabilita tion service was to be established, its full resources available to all.... 3 "Its popular appeal was immense, 250,000 copies of the full report and 350,000 of an official abridg ment being sold within a few months. . . ."4 The thrust toward socialism during the war was, to a considerable extent, bipartisan. The Beveridge Report was author ized by the government, which was predominantly Conservative. Moreover, Anthony Eden, speak ing for the Conservative Party, had this to say in the House of Commons, December 2, 1944: We have set our hands to a great social reform programme . . . and even though there be an interruption it is the intention of each one of us who are members of the Government to carry that programme through. I have no doubt that ... if a Labour Government were returned, that Government would put through what was outstanding in this programme.

And I can say, on behalf of the Prime Minister, that we, as members of the Conservative Party, would 3 Sidney Pollard, The Development of the British Economy: 1914-1950 (Lon don: Edward Arnold, 1962), pp. 348-49. 4 Ibid., p. 350.

302 THE FREEMAN May give them support in putting through that programme .... 5 Both maj or parties, then, had done their part to prepare the people for great changes after the war. The times were right, too, be cause the long-term trend toward greater and greater government intervention and control was well established. Since the early twen tieth century, the government had become more and more involved in the economy: by minimum wages, by the dole, by "in surance programs," by heavy tax ation, by monetary manipulation, by ownership of certain undertak ings, by control and regulation. The minds of the people were set toward intervention: by the ac tivities of the Fabians, by the Left Book Club, by the very popu lar Keynesian economics, and by the tendency of most of the liter ary cadre to write favorably toward it. Fe'w in positions of leadership or authority were ap parently able to think in other than socialistic terms. Conserva tives sometimes held back against more radical measures, but they were hardly. inclined to oppose the general trend.

One other condition made it relatively easy for the socialists at the end of the war: wartime controls were still in effect, and 5 Hutchison, Ope cit., p. 285. could be continued with less re sistance than if they were intro duced for the first time. On the other hand, whichever party came to power after the war could expect some rough going. This was especially true for the Labour Party, for socialists tend to take on responsibility for all economic effort, or at any rate to claim credit for any achievements. To take on the British economy or lack of one - at the end of the war was not an enviable task. There had been considerable phys ical da.mage in Great Britain dur ing the war. An estimated £ 1,500,000,000 damage had been done to factories, railways, and docks. Some 4,000,000 houses had been either destroyed or damaged. 6 Eighteen million tons of shipping were lost, and only two-thirds of this replaced in the course of the war. 7 According to one writer, "A large part of her industrial equip ment was desperately in need of replacement, for instead of spend ing, as she would normally have done over five years, £ 1,000,000, 000 to maintain and renew plants and factories in the civilian indus tries, she had spent this money on munitions of war."8 6 Fl'2.ncis Williams, Socialist Britain eNew York: Viking Press, 1949), p. 13.

7 David Thomson, England in the Twentieth Century (Baltimore: Penguin Books, 1965),p.202. 8 Williams, op. cit., p. 13.

1969 SOCIALISM IN POWER 303 foreign Trade Problems The most serious difficulty con fronting the British at the end of the war was in the realm of for eign trade. They had come to de pend on imports for much that they consumed. "Nearly three quarters of all the food she ate came from abroad, 55 per cent of her meat, 75 per cent of her wheat, 85 per cent of her butter, all of her tea, cocoa, and coffee, three quarters of her sugar. Every year more than 20,000,000 tons of im ported food had to be brought across the seas and unloaded at her docks."9 What made this situation press ing was that the British had long since ceased to balance these im ports with goods exported. The difference was increasingly made up in recent decades by income from foreign investments, services such as shipping and insurance, and payments in gold. At the end of the war, Britain was deeply in debt abroad, most of the gold sup ply depleted, much of foreign in vestments sold to defray the ex penses of the war. Moreover, Britain had for the two decades preceding the war been losing out to competitors in those things for export where she had traditionally dominated. (This situation was not simply a consequence of the war, however, or even particularly 9 Ibid., p. 11.

such a consequence. On the con trary, in the years between World War I and World War II, the gov ernment pursued policies which made it increasingly difficult for British industry to hold its own.) In addition, the British as vic tors in the war had heavy military obligations. They undertook to oc cupy a zone in dismembered Ger many. They had heavy commit ments in other parts of the world also, and were very soon confront ed with volatile situations in areas to which their hegemony had long extended. Even so, the leadership of the Labour Party plunged into sociali zation with a will, even with ap parent alacrity. For more than a decade they had been committed to such a course if and when they came to power. And there was no counterbalancing power now to hinder them in their surge. A working majority of the House of Commons was all they needed. The Conservative Party was supine.

The House of Lords was powerless to do more than delay or make helpful amendments. The mon archy was reduced to a symbolic role in affairs. Indeed, it was the King who announced to Parlia ment the course it was to pursue. He said, in part: "My Government will take up with energy the tasks of reconverting industry from the purposes of war to those of peace, 304 THE FREEMAN May of expanding our export trade and of securing by suitable control or by an extension of public owner ship that our industries and serv ices shall make their maxim urn contribution to the national well being."Io Such power as there was in the United Kingdom rested in the hands of a socialist ministry. There were three main facets to the domestic socialization program in England: (1) the completion of the welfare state, (2) the nation alization of certain key industries, and (3) control over those por tions of the economy which re mained technically in private hands.

Completion of the Welfare State The welfare aspect of socializa tion has probably received more attention generally than any other, though it is not clear that social ists would consider it most im portant. In any case, a full-fledged welfare state was established by several acts shortly after Labour came to power. Indeed, one act was passed in 1944 which should be mentioned. It was the Education Act. This act raised the school leaving age to fifteen, provided "free" secondary education for all children, and set up a system of separating at the age of eleven 10 Alfred F. Havighurst, Twentieth Century Britain (New York: Harper and Row, 1962, 2nd ed.), p. 369. those pupils to go to preparatory schools and those to attend termi nal schools. ll The two most dramatic welfarist acts, however, were passed in 1946 under the Labourites: National Insurance Act and National Health Service Act. The National Insur ance Act provided protection against various vicissitudes to that large portion of the public which had not been so protected as yet.

It covered "every person who on or after the appointed day, being over school-leaving age and under pensionable age, is in Great Brit ain and fulfills such conditions as may be prescribed as to residence in Great Britain. . . ."12 These would then be eligible for unem ployment benefits, sickness bene fits, maternity benefits, and so on and on. The expenses were to be defrayed by employer, employee, and taxpayer (government) "con tributions." The National Health Service Act was much more con troversial. Many physicians op posed it. Even so, it was passed, and eventually went into effect in 1948. The act provided for free medical and dental services for everyone, and for those who pro vided the services to be paid by the government. It was intended 11 See Stephen B. Baxter, ed., Basic Docu1rwnts of English History (Boston: Houghton Mifflin, 1968), p. 281-82. 12 Ibid., p. 288.

1969 SOCIALISM IN POWER 305 as a comprehensive plan for look ing after the health of those Iiving in England and Wales. Welfarist in nature also was the massive house building pro gram undertaken under Aneurin Bevan, Labourite Minister of Health. The program tended to ward nationalization of housing also, for it encouraged the build ing of rental housing and dis couraged building for private own ership. It "was decided that the maj or part of the permanent building programme should be carried out through the local au thorities, who would employ build ers under contract to build houses to rent and who would be given financial aid by the Government in order that ... the houses when constructed could be let on the basis of need at fairly low stand ard rents." To discourage private building, "builders were to be al lowed to build for sale or under contract to private purchasers only to a restricted degree and only after a license had been secured from the local authority."13 Nationalization of Industry Nationalization was undertaken with considerable vigor. The broad categories of industries national ized were banking, power and light, transport, and iron and steel.

The first nationalization was au13 Williams, Ope cit., p. 127. thorized by the Bank of England Act passed in 1946; the last major one was authorized by the Iron and Steel Act of 1949. A fairly typical nationalization measure was the Coal Industry Nationali zation Act passed in 1946 to go into effect January 1, 1947. "The act provided for a National Coal Board appointed by the minister of fuel and power and consisting of nine representatives of various functions within the industry (such as finance, technology, labor, marketing), who were to operate all coal mines subject to the gen eral supervision of the ministry. The public corporation replaced more than eight hundred private companies, which surrendered their assets for a compensation. •••"14 T4e way had been prepared for further consolidation and even tual nationalization of most of these industries by the carteliza tion that had taken place in the 1930's by government sponsorship.

It was not simply a matter of chance that these particular in dustries were selected for nation alization. Socialists may not know how to plan an economy to achieve their ends. The record would indi cate that they do not. And British socialists had, in effect, organized irresponsibility on a large scale in these industries, for they had placed them under the control of 14 Havighurst, Ope cit., p. 370.

306 THE FREEMAN May boards whose members had much authority but few responsibilities - responsibilities to stockholders, responsibilities to operate efficient ly, even responsibilities to Parlia ment. Even so, British socialists demonstrated that they knew where the main arteries of a mod ern economy are. They meant to bring these directly into the hands of government agencies, and did. Before spelling out the import of nationalization and indicating the extent of much more extensive controls, it will be helpful to re view briefly the vision which the socialists had in mind. One of the men who participated in the early stages of this broad effort de scribed it as a test and an experi ment. He said, in part: ... Here at last a practical test of two vast and so far unproven as sumptions is taking place. The first is that a planned socialist system is economically more efficient than a priva te-en terprise capitalist system; the second is that within democratic socialist planning the individual can be given broader social justice, great er security, and more complete free dom than under capitalism.l 5 To make this test, planning has to reach through to every ligament of an economy. The above writer's description suggests the extent of such planning: 15 Williams, op. cit., p. 5.

The central planning organization, for example, is required to estimate the total number of men and women available for employment, the amount of essential raw materials such as coal, steel, and timber likely to be available from all sources, the total national production of goods possible in the current situation, and how this productive effort should be divided between home consumption, exports, and capital investment. Having made this analysis, the Planning Board assesses industrial priorities in the light of it; decides what proportion of the total working population is needed for national se curity in the defence services, what proportion in· the public and admin istrative services, how many in trade, industry and agriculture in order to reach the production targets set, and what general division of manpower there ought to be between export and home production, and be tween the productive and distribu tive trades. A similar assessment of the correct distribution of basic raw materials between various types of users is also required ... .16 In short, the determination of what was to be done in the eco nomic realm was to be_taken out of the market and made by gov ernment officials. To accomplish this - if it could be done - it would be necessary to have full control of key industries. The key industries of a modern economy 16 Ibid., pp. 87-88.

1969 SOCIALISM IN POWER 307 are, undoubtedly, banking, power and light, transport, and iron and steel. No modern enterprise can operate effectively without the use of one or more, and usually all, of these goods and services. Power is essential; capital is required (not necessarily borrowed money, but money, and central monetary au thorities can either maintain the money supply or destroy it); transport must be had; and equip ment and housing made in some part of iron and steel are practical necessities. The government which, in effect, possesses these essential goods and services can dictate to virtually all other undertakings. Other Controls and Regulations Of course, British socialists did not content themselves with .na tionalization. Additionally, a vast network of controls, subsidies, pri orities, prescriptions, proscrip tions, and regulations were extend ed over the remainder of industry and agriculture. .It will have to suffice here to call attention to some of these.

One of the most dramatic ex amples of compulsion can be ex amined in the regulation of the location of industry. The compul sion was provided for by a Dis tribution of Industry Act, the Town and Country Planning Act, and procedures adopted by the Board of Trade. The main impetus was to have new industries located in areas where labor was most abundantly available -.,.. to move factories to the workers. The Dis tribution of Industry Act aided by making loans, by giving finan cial assistance to companies that would open factories in desired areas, and by the use of tax mon ies to build factories for lease. This, in itself, was largely an ef fort by the government to influ ence the location of industry. But stronger weapons were at hand. In order to build a new factory, it was necessary to get a ·license from the Board of Trade. The Board of Trade could, in effect, veto a plan to build a factory any where. This was bolstered by the powers exercised under the Town and Country Planning Act: not only were new towns planned but also building activity was direct ed.17 Economic activity of every sort was minutely regulated. Wanted "production was encouraged; lux ury production was limited. Li censes were required to export raw materials and any manufac tured articles ... needed· at home.

Domestic consumption was regu lated by rationing, subsidies and price controls .... New industrial enterprises seeking capital had to be approved by a government com mittee .... " There was much more, 17 Ibid., pp. 93-94.

308 THE FREEMAN May of course: "paper control was di rected by the manager of a large paper manufacturing concern; matches were controlled by an of ficial of the largest manufactur er.... " Moreover, "Treasury bud gets were drafted with a view to controlling investment .... For foreign travel, limitations, changed from time to time, were placed on the amount of cash which could be taken from the United King dom."IS The bureaucrats made ubiquitous attempts to control ev erything. As for agriculture, it was de cided not to nationalize the land but to re'gulate and control activ ity in this area. The Ministry of Food was authorized to buy agri cultural produce and became, in effect, the sole market in which farmers were to sell. As the only buyer and seller, it proceeded to set prices to the farmers, on the one hand, and to the consumers, on the other. In general, the Min istry paid high prices for products wanted and sold them at a loss, the aim being not profit but to en courage the kind of production and consumption wanted. Agricul ture was controlled "by a range of other measures, such as the giving of acreage grants for particular crops, financial aid for improve ments, loans to agricultural work ers to become farmers on their 18 Havighurst, op. cit., p. 384.

own account, and the establishing of pools of labour and machinery upon which individual farmers can call during sowing and harve,sting seasons. There is also power to give directions to farmers to plough up land and grow particu lar crops."19 Finally, a large portion of the income of Englishmen was "na tionalized" by way of taxation. Taxes were excruciatingly high under the Labour government. An economic historian indicates that the government took 37.7 per cent of the value of the gross national product from the people in 1946. 20 The income tax was confiscatory. "Here is a story which shows it: a big American business which had decided to pay the head of its Eng lish subsidiary a salary of 20,000 dollars (£ 5,000) was informed that, owing to the Income Tax, the recipient would in fact touch half only. Not to be put off, the Ameri can business asked how much it would need to pay its servant to ensure him £ 5,000 net. The an swer came back - £ 50,000, the figure which will, after taxation, leave £ 5,093 lOs. O· d."21 Dependent and Stifled Two things should be immedi ately apparent. The first is that socialism had made the English 19 Williams, op. cit., p. 98.

20 Pollard, op. cit., p. 366.

1969 SOCIALISM IN POWER 309 people dependent upon govern ment. They were made dependent for food, for markets, for educa tion, for health services, for li censes, for loans, for subsidies, for jobs (it became necessary to belong to a labor union to work in unionized employments), for ma ternity benefits, for funeral sub sidies, for unemployment benefits, for disability payments, for build ing permits, for the amount that could be taken abroad, for priori ties for buying, for authorizations to sell, for houses in which to live (in the case of numerous renters), for broadcasting facilities, and so on. Such dependence has not cus tomarily been known as freedom; the generic term for it is bondage. Secondly, British economic ac tivity was strait-jacketed by gov ernment ownership, control, and regulation. Such overall bureau cratic direction greatly reduced the number of minds to cope with economic tasks and the number of ways that may be used to deal with them. When enterprise is free, when men receive the re wards of their labor, every man may use his initiative, ingenuity, 21 Bertrand de J ouvenel, Problems of Socialist England, J. F. Huntington, trans. (London: Batchworth Press, 1949) , p. 206.

and energy to grapple with the economic problem of scarcity. But under state dictation men are not permitted to exert their energies as they see best. If they perform at all, they are to perform as they are directed, with whatever will they can muster for the effort. Un der socialism, the English people were told what to produce, where to produce it, where to sell it, where they could buy, and when if at all to undertake it. Bureaucrats were free to plan; the people were free to obey. The economic situation of Eng land was precarious enough in 1945, as has been pointed out. The English people had a big job ahead of them to recover from the ef fects of the war and to regain their position in the world. It was task enough to challenge the initi ative, ingenuity, and energy of the whole people. Unfortunately, they decided to strait-jacket a large por tion of the population and to de pend upon bureaucrats. It was as if a drowning man should encum ber himself with balls and chains fastened to one arm and both legs, leaving himself only one arm with which to swim. In such circum stances, England's fall was precip itate. ~ The next article of this series will describe "The Fall of England."

Progress NOWADAYS we tend to equate prog gress with improvements in our material standards of life. As a nation we measure our success by how fast our total production is increasing, or by the number of motor cars for every 100 people. But isn't this a rather limited, superficial view of progress? A man is not necessarily a better man because he can afford caviar and champagne, or because he has two cars instead of one. In the end the only true measure of progress is whether we are becom ing better as human beings. This doesn't mean that material prosperity is unimportant. But its true purpose is not to enable man to wallow in luxury, or to live a life of idle indulgence. It is to give him a better opportunity to cultivate his mind and spirit, to improve his understanding, to seek wisdom, to enlarge his sympathies and sense of compassion, to' devel op his character. From IPA Facts, August-September, 1968, published by the Institute of Public Affairs, Melbourne, Australia.

Man is more than a pig at a trough. He needs higher goals, a nobler purpose, than the mere sat isfaction of his bodily appetites. Indeed, as the material things available to him multiply, the greater can be his peril, the more urgent his need to take stock, to concern himself also with things that belong to the realm of the mind and spirit. An excessive ab sorption with physical satisfac tions and pleasures led to the downfall of many of the great civilizations of the past. Material advancement can be the means to a better way of life. It can be the instrument of prog ress. But it is no more than the instrument. "The' quality" of our life is more important than "the quantity." Real progress lies within man himself, in the cultivation of his best instincts and the suppression of his worst. Real progress is self development in the highest sense, and that is something for which, in the final analysis, each indi vidual is himself responsible. ~ My FRIEND had trimmed me at squash, and I tried to recover a bit of self-esteem in the coffee shop afterward. "I've been read ing Tocqueville," I remarked, counting on his blank look.

"Read him in college," he picked me up. To prove it he spelled out the name. "Alexis, wasn't it?" "Yes," I growled into my chowder bowl, "Alexis." Small wonder, really, that my friend had run across De1nocr:acy in America. Since its publication in 1835 it has ranked as a classic appraisal of the American scene. The freshness of its observations show that although much water has· passed under the bridge in our national history since that date, the same river still flows - noisy, turbulent, and productive. This French aristocrat praised the new nation even when he was not sure that he liked it. Yet he suffered little from bias and tried to underDr. Winston, after twenty-five years of parish ministry, now devotes full time to lecturing and writing, with emphasis on history. His latest book, on privateering· and piracy, is soon to be released by Houghton Mifflin. AS TOCQUEVILLE SAW US ALEXANDER WINSTON stand our baffling ways; his sub tle mind possessed the paradoxical but precious gift of detached en gagement with his subject; and he commanded a literary style of limpid elegance. Altogether, an admirable critic.

Democracy in America is pro vocative even when its conclusions are off-target. And occasionally Tocqueville did miss. He insisted, for one thing, that equality is our ruling passion. "Equality is their idol," he declared. "Nothing can satisfy them without equality, and they would rather perish than lose it." But if we examine equality with care, we see that in its political form it is always abstract; and no one, above all. a pragmatic Amer ican, is likely to man the barri cades for an abstraction. In a strict sense, we are equal only when we fall into the same general class. Thus, all apples are equally apples (though no two are identi cal) ; all humans human, from a New Guinea Stone-Age man to Einstein; every couple is a mem311 312 THE FREEMAN May bel" of the class of two; and noses that are deliciously snub, pointed, flat, or bony as a hawk's, answer equally to the single word "nose."

Hardly a cause for pride. Would you lay down your life for it? Political equality narrows the scope of this general principle without reducing its abstractness. In their impartiality, our rights and liberties apply in the same way to all, and therefore, by their nature, transcend the individual. Every citizen (whoever he be) has the right to worship, speak, as semble with his fellows, vote, and petition for redress of grievances; every citizen (whoever he be) has the protection of the law in his person and property, and shall be deprived of these only by due process, at the hands of a jury of his peers. Cherished rights, all. But when one of our forefathers oiled his musket and whetted his sword to gain them, he fought for his rights. The equality was inci dental, as a correlative act of jus tice, and to guarantee the preser vation of those liberties to each by assuring them to all.

With basic rights secured, Amer icans have lately pushed the idea of "equal opportunity." 'Ve rec ognize that a spindly youngster from Appalachia or a ghetto child may be handicapped through no fault of his own; that Negroes have been confined to inferior education, poor housing, and menial jobs; that Puerto Ricans labor under the difficulty of language, women are down-graded in the pay scale for no reason but their sex, American Indians wear out lives of poverty and ignorance on neg lected reservations, and so on. In recent decades a flood of money and energy has poured out in an effort to alleviate the condi tion of these minorities. The mid dle-class American groans at the burden, but he does not seriously doubt his obligation. In the race of life everyone deserves a fair run, we maintain; no one, there fore, should be allowed to jump the gun because his aunt married the starter, or shove his rival in the homestretch because the finish judge owes him money. "I must say," commented Tocqueville, "that I have often seen Americans make great and real sacrifices to the public welfare; and I have re marked a hundred instances in which they hardly ever failed to lend faithful support to each other."

Vital as they are, equal oppor tunities never quite reach the in dividual. They wait for him, as a voting booth waits for the voter, a jury for the accused, a job for the man. Our laws of fair employ ment, reapportionment, open hous ing, or bussing school children, are little more than permissive. They 1969 AS TOCQUEVILLE SAW US 313 open up residential suburbs with out providing money to buy a house, they make jobs available without necessarily training for them, extend the franchise but do not educate the voter to use it, and bus underprivileged children to overpri vileged schools in the hope - but only the hope - that they will learn more when they get there. Legislated opportunities fall on everyone like rain. Never mind your name, just enter your Social Security number. What does it matter that you grow African vio lets or collect Bach or sleep on your left side or prefer hamburg ers rare or usher in church or love your wife or weep for a drop out child or have a cataract com ing on an eye or once felt God so close that you could touch Him with your hand? Just write your number in this space where my finger is ; thank you, yes, you qualify. Hardly a ruling passion.

Is there, then, no equality that recognizes the person, with all his singular hopes, fears, ambitions, and foibles? There is, indeed, and it is more precious than rubies. Every man wants to be respected for himself, without regard to his birth or station. That is why the founders of this nation barred titles of nobility and hereditary privilege; they had had enough of peasants knuckling their caps when the gentry rode by. Men will endure poverty and pain without whimpering, but not contempt. The honest carpenter deserves the same courtesy as the honest presi dent of a giant corporation. Every rank of life has its integrity. Within the intimate circle of the family this respect intensifies to love. Love is perfectly individ ual; it feeds on particulars, on what distinguishes the loved one from every other; and yet, within the family, who can claim more or less of it? When I was a small boy my parents would tease me by asking which one of them I liked the better. The question embar rassed me hugely, and I hastened to cry, "Both the same!" A mother loves her different children "all the same," and they count on it. Any other strict equality between indi viduals turns into despised same ness. We are not flattered to be mistaken f or someone else, nor told that our names are the same; we shudder at drab rows of look alike houses, and if two ladies ap pear in identical dresses, the party is ruined for both. But in the re spect of our fellows, family love, and God's beneficence, we ask only equality.

Now we come to the heart of the matter. Peel from a man his artifices, habits, skills, philoso phies, and loves, as you would an onion, until you expose his core, 314 THE FREEMAN May and you lay bare not the desire for e(fuality or political liberty, but an essential need for personal free dom. He must be able to choose among ends which he holds good, intelligently consider the means effectual to the chosen end, and have the power to use those means to that end. In the free act he at tains his selfhood, his individ uali ty, his lonely grandeur. Other wise he is no more than a thumbed mammal or, like the galleysla ve chained to his oar, simply a ma chine that sweats. The straight path of instinct or servitude is now full of forks, and the free man may agonize under the pressure of decision, but he will not go back. Freedom is his ruling passion. Widely distributed freedom gen erated on this continent a loose knit, flexible, competitive society with tendencies the very opposite of static equalism. "The spirit of improvement is constantly alive,"

Tocqueville reported. He marveled at its audacity. "The inhabitants of the United States are never fet tered by the axioms of their pro fession; they escape from all the prejudices of their present sta tion; they are not more attached to one line of operation than to another; they are not more prone to employ an old method than a new one; they have no rooted habi ts, and they easily shake off the influence which the habits of other nations might exercise upon them, from a conviction that their country is unlike any other, and that its situation is without a prec edent in the world. America is a land of wonders, in which every thing is in constant motion, and every change seems an improve ment. The idea of novelty is there indissolubly connected with the idea of amelioration. No natural boundary seems to be set to the efforts of man; and, in his eyes, what is not yet done is only what he has not yet attempted to do."

The scene struck Tocqueville as both awesome and monotonous, like an unending sea of choppy waves, for radical democracy is bound to do some leveling down while it levels up. The government must tax the luxuries of the more affluent if it is to provide neces sities for the poor, so who can build a Versailles? Educational in stitutions that admit less qualified students will surely dull the in tellectual edge of the brilliant ones. Art and craftsmanship may be good in a democracy, but seldom match in polish the single bauble created by the aristocratic artisan for an exacting lord. The result is a dead level of achievement higher than the worst possible and lower than the best desired. Tocqueville missed the concen tration of power that made kings 1969 AS TOCQUEVILLE SAW US 315 and nobles heroic figures, with their romantic gestures and mem orable follies, and in place of these saw the petty goals, cheap tastes, and drab sameness of an egali tar ian society. Historians of democ racy, he noted, record the massive flow of whole peoples, and look for impersonal causes, whereas his torians of Europe's monarchies recorded the lives of great men and looked for motives. The citizen of a democracy, thought Tocque ville, is extremely enterprising within the depressingly minute confines of his private affairs.

Lacking the impressive authority that permits a duke to summon armies and topple thrones, the democrat keeps his nose glued to the account book. His low aims and mediocre desires make mere animal comfort seem to him Para dise regained; to Tocqueville it was hell, ·with plumbing. The general leveling-out, he feared, coupled with the dispersion of power throughout the citizenry, invited the most insidious of des potisms - that of the majority. The majority is always right in a democracy, and its influence on the common man is stealthy, perva sive, and, above all, psychological. It doesn't put the rebel to the rack, but ostracizes him, for rebellion against the infallible majority is rebellion against the whole state. The small fragments of power scattered throughout the popula tion must flow inexorably into the central government if they are to be concentrated on a sufficient scale to do anything. The danger is that after the citizens have cast their periodic votes, they will settle back into the comfortable illusion that they are still exerting their sovereignty, while in fact the gov ernment is supervising them with smiling good will, like the Big Brother of Orwell's frightful vision, keeping them happy and helpless, protecting them in their ease from either the hazards of action or the rigors of thought.

"Men would not have found the means of independent life; they would simply have discovered (no easy task) a new physiognomy of servitude." Expressing fears is a pastime which has no known limits. Toc queville also viewed with alarm the possible abuse of unrestricted as sembly, apathy in the electorate, a military coup, armed revolt by black slaves, a separate nation in the agrarian South, and even a peaceful takeover by some reso lute minority. He had a sharp eye for incipient danger, we must admit. In abuse of assembly, students now biv ouac in the private offices of col lege presidents. Black Panthers make sounds like armed revolt. Government grows ever more gar316 THE FREEMAN May gantuan and minutely regulative. The erstwhile stalwart American too often sums up the good life as two cars, color TV, and Medicare. And though the Founding Fathers dared to write our Constitution behind locked doors, the modern politician frets about his image and keeps his ear cupped for the latest whiff of the consensus.

Most of Tocqueville's troubles (as Mark Twain would put it) never happened, never shattered the republic, for a reason so sim ple that it sounds preposterous, namely, that the people wouldn't put up with it. For the viability of any social system depends, in the last analysis, upon the mental habits of its citizens. Tocqueville suggests this stubborn factor when he contrasts the divergent histories of the Anglo-Saxons (as he called them - and they were) in North America and the Spanish to the south, or, again, when he attributes the superiority of America's merchant marine to the mentality of her seamen. In esti mating any nation's capacity to achieve, or to change in a given direction, ingrained attitudes of mind must be reckoned with. "We thought we could jimmy things around here and pf-f-f-f! the new age," a social worker once told me in Sicily. "We found out that you have to change their minds, too.

That's slow, and it's tough." Liberties don't come down like manna from heaven; they are won, and their responsibilities discharged, by free men. Royal tyranny vanished in Eng land because the English com moner just would not put up with it. Commoners took the field against Charles I and beheaded that troublesome monarch; later they drove James II from the throne and in his stead elected a Dutchman willing to respect Par liament's prerogatives. In the same century commoners settled New England, resolved to extend their mutual privileges; they worked the land together, should ered their muskets with a single motion in the face of danger, formed governments, built schools, and worshipped side by side in the same pew as though it were the most natural thing in the world. And it was, since they thought it wa's. Every colonist granted justice to all because he expected it for himself. He spoke his mind as conscience bade him, and the only way to silence him was to kill him.

He was his own man. Fortunately, the right mind can be as tenacious as the wrong one. The American colonists had the right mind for planting the seeds of democracy on these shores. If we can keep that mind, we will keep a free society. ~ A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Essentialsof Economics IF YOU WANT instant enlighten ment, Henry Hazlitt's Economics in One Lesson is still the desired text. If you want enlightenment in great depth, there is Mises' Human Action. But if you are looking for something in the "in between" category, the new Foun dation for Economic Education edition of Faustino Ballve's Es sentials of Economics: A Brief Survey of Principles and Policies, translated from the Spanish by Arthur Goddard ($3.00 cloth, $1.50 paper), is your meat. Dr. Ballve was a Spaniard, born in Catalonia, who became disil lusioned with his country in the thirties, when the life choices of anyone who wanted to stay home in Spain seemed to be narrowed down to the either/or of Fascism or communism. Having studied economics in England, where he managed to resist the Fabians, Dr.

Ballve had had some acquaintance with the idea of libertarianism under-law that one used to think of as peculiarly Anglo-Saxon. He took his philosophy with him to Mexico in 1943, where he wrote Diez lecciones de economia, or, as it was translated for the French edition, L'Economie vivante. The English language edition, which was first published by Van Nos trand in 1963, includes some sub stantive changes made for the French public. Dr. Ballve must have had his Catalonian brothers in mind when he wrote his book, for his clear distinctions seem directed to the emotional libertarian, particularly common in Latin countries, who tends to think of freedom as a synonym for anarchy. The emo tional libertarian goes in for syn dicalism. But syndicalism, as Dr. Ballve saw it, resulted in group interferences with the market, and pushed an economy in the direc tion of corporativism, which de mands state control of the syn dicates and so negates the original impulses of anarchistic individual317 318 THE FREEMAN May ists. Having forsworn the aberra tion of his countrymen, who seem to have a genius for turning things into their polar opposites, Dr.

Ballve was in an exceptionally good position to bring the princi ples of classical liberalism to a Latin audience. freedom of Choice Classical liberalism presupposes rights, which must be guaranteed by law and protected by the courts. In economics, the right to life, which is fundamental, becomes the right to own and to exchange what one owns in the free market if one so chooses. (How else is one to support life as a right, not as something that one lives on suf ferance of a tyrant?) In translating his liberalism in to the terms of economics, Dr. Ballve refuses to talk about that unreal abstraction, the "economic man." Like Mises, Dr. Ballve thinks that all choices, whether economic or not, vie for an indi vidual's time and energy. Any choice of any kind affects the mar ket: as Dr. Ballve puts it, "the re tirement of an entrepreneur of genial disposition can bring for tune or misfortune to many other entrepreneurs, just as the indif ference of a truth-seeker to mone tary considerations can, at a given moment, make both him and others wealthy." Thus there is a competition "not only among vendible goods, but also among things that are, as we commonly say, 'beyond price.' "

The choices of men cannot be predicted; moreover, they cannot even be averaged. So there cannot be any "mathematical economics" apart from the science of statis tics, which tells you what has hap pened, not what is going to hap pen. The future is unknown; it can be-pushed into utterly unfore seeable forms by invention, imag ination, the spirit of adventure, the willingness to' take chances. Value is a subjective matter which becomes objectified in price as people trade "disutilities" (for them) for "utilities" (which are the other fellow's "disutility"). You get rid of something you val ue less in order to pick up some thing you value more. And your judgment may. or may not reckon with the "labor hours" it takes to make something, or with "intrin sic" value. The higgling of a whole slew of subjective desires takes place within the context of the available purchasing power (money and credit) , and it is the "market"

that makes the prices. The state, of course, can inflate or deflate the prevailing price lev el by manufacturing or destroying money. Governments make depres sions by following interventionist policies that expand credit without 1969 ESSENTIALS OF ECONOMICS 319 sufficient knowledge of what peo ple actually want. Intervention, if it does not make a lucky guess, provokes malinvestment. In social ist nations this fills the store houses with unwanted goods; in capitalist and semicapitalist na tions, it piles up inventories that have to be sacrificed at a loss. Consumer Oriented Everything is fluid in Dr. Ball ve's world. Wages are not paid out of any fixed "wage fund" in ac cordance with an "iron law of wages"; it· is the consumer, in the last analysis, who pays· the worker as well as the investor and the entrepreneur. The consumer makes the demand that brings out the supply, again within the context of the availability of money, goods, and services. Just who will get what out of the cycle of pro duction, distribution, and con sumption,,-depends on many vari ables, none of which can be ac curately predicted. The willingness of the working class to reproduce itself depends on general cultural considerations. "Poverty" is a sub jective concept; what was "riches"

to a courtier in the time of Louis XIV would be considered "pov erty" by many today. Dr. Ballve is particularly good in his description of the economic process as a seamless web. Produc tion, distribution, and consumption cannot be split apart. The production, in accordance with Say' s Law of Markets, releases the purchasing power (wages, inter est, dividends, profits) sufficient to clear the market, with distribu tion figured as a cost. The numer ous time lags that separate the act of production from the act of con sumption overlap. There can be no such thing as general "overpro duction," although entrepreneurs may make bad guesses in individ ual instances that require a liqui dation of inventories at a loss. If the state does not interfere with the rhythmic pulsations of the economic process, unemployment in specific industries will quickly disappear as the workers who have been temporarily·· inconvenienced by bad guesses go to work for en trepreneurs who are gifted with better foresight.

International Trade The effort of separate nations to solve their problems on a socialist basis (which comes down to "na tional socialism" even though Marxists pay lip service to "inter nationalism") leads to national im poverishment, for, if one cannot import what other people can make lllore cheaply, one is necessarily forced to forego manufacturing the exports which would buy the most for the least in the world market.

320 THE FREEMAN May All countries have to import food and raw materials and manufac tured goods if they wish to live well; the idea of raising bananas in the temperate zone, or making automobiles in the desert, is self evidently idiotic. The law of com parative cost always holds. So, when nations begin worrying about the "balance of trade," they are saying, in effect, that the price of a currency expressed in an ex change rate is more important than bananas, or automobiles, or whatever. This is a perversion that sacrifices the consumer to an ab straction; better let the currency seek its own level in the world's money markets. Dr. Ballve's description of a consumer-directed economics is not a description of the contempo rary world. Governments every where seem to be in competition to promote a maximum amount of malinvestment by their constant monetization of new debt. Because of this, libertarians and conserva tives have been predicting for years a recurrence of the 1929 crash. It doesn't happen. But what does happen is that individuals are constantly forced to surrender more and more of their liberties while the governments go on in flating their currencies. The "con trolled economy," as Dr. Ballve says, "drifts inevitably toward communism." And, as Hayek said, "the worst get on top," for the act of controlling requires tough indi viduals who are willing to use the club, the knout, and the jail sen tence to get their way.

Dr. Ballve's little book runs to 99 pages of text, plus the space de voted to a foreword by Felix Mor ley and the prefaces to both the English and the Spanish language editions. For those who can't find time to read Mises' Human Ac tion, Dr. Ballve is a good introduc tion to the "science of choice." ~ the Freeman VOL. 19, NO.6. JUNE 1969 A CapitalistManifesto William Henry Chamberlin 323 The proven superiority of capitalism in solving the problems envisioned by Marx should bring forth a new manifesto. Combinationsin Restraint of Trade Paul L. Poirot 331 In our zeal to reform the world, we often embrace one of the very errors we most abhor. The Rise and Fall of England: 16. The Fall of England (Part I) Clarence B. Carson 335 The anomaly of the collapse under socialism of a victor nation in World War II. The Intellectin Utopia Roger Donway 346 How the mind of the reformer and his freedom to plan must give way to the coercive methods he espouses.

Jhe Right to Health Thomas S. Szasz, M.D. 352 If one has a right to treatment, does he have a right to resist treatment? And who is to provide such care? Education in America: 9. Academic Freedom for What? George Charles Roche III 363 Freedom to seek the truth within the bounds of civilized society and to attract students toward such findings. The Fallacy of "Intrinsic Value" Gary North 370 Not the labor stored in gold but its physical properties cause man to value it as money. Book Reviews 376 "The Coming Aristocracy" by leonard E. Read "Dollars and Deficits" and "The Optimum Quantity of Money, and other Essays" both by Milton Friedman "So Human an Animal" by Rene Dubas Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON·HUDSON, N. Y. 10533 TEL.: (914) 591-7230 LEONARD E. READ PAUL L. POIROT President, Ii'oundation for Economic Education Managing Editor THE F R E E MAN 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. 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, 1969, 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 reprinl any article from this Issue, providing customary credit is given, excep' liThe Rise and Fall of England," and "The Right to Health."

A CapitalistManifesto WILLIAM HENRY CHAMBERLIN MORE THAN A century ago, in 1848, Karl Marx and Friedrich Engels, on behalf of the Communist League, issued The Communist Manifesto, one of the most famous appeals for revolution. The fol lowing paragraph in the Manifesto sums up the communist objective 'in a nutshell; and this objective has been realized, in varying de gree, in the Soviet Union, main land China, Cuba, and the Soviet satellite states in Eastern Europe: "The proletariat (wageworking class) will use its political su premacy to wrest, by degrees, all capital from the bourgeoisie, to centralize all instruments of pro duction in the hands of the state, Le., of the proletariat organized as 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 WaIl Street Journal and numerous magazines.

the working class, and to increase the total of productive forces as rapidly as possible." To put this in somewhat more understandable language: The wagew,orking class will seize gov ernmental power and confiscate all property from its owners. The state will then proceed to operate factories, mines, transportation systems and endeavor to raise pro duction levels as rapidly as pos sible. The Manifesto is phrased in rather melodramatic language. It begins with the assertion that the specter of communism is haunting Europe, asserts that history can only be understood as a succession of class struggles in which slave society gave way to feudalism and feudalism to capitalism. Capital ism, in turn, must give way to a higher form of society: socialism or communism. Marx used these 324 THE FREEMAN June I· ! two words interchangeably. The communist ideal includes such points as the abolition of private property in land; a heavy pro gressive or graduated income tax; abolition of all right· of inherit ance; centralization in the hands of the state of industries, means of communication and transport, and credit; and universal liability to labor. The opposition of com munists to the existing order is emphasized in the concluding sec tions of the Manifesto: "The Communists everywhere support everywhere every revolu tionary movement against the ex isting social and political order of things ....

"The Communists disdain to conceal their views and aims. They openly declare that their ends can be attained only by the forcible overthrow of all existing social conditions. Let the ruling classes tremble at a communistic revolu tion. The proletarians have noth ing to lose but their chains. They have a world to win. "WORKINGMEN OF ALL COUNTRIES, UNITE." Vision of the future The Communist Manifesto is a call to revolutionary action. The comforting assurance that such action is in line with historical destiny is to be found in one of the few vividly imaginative passages in Marx's major work, Cap ital. In general this work is so heavily interlarded with early nineteenth century British eco nomic theory and the philosophical ideas of Hegel, which Marx twisted and applied to his own purposes, that only the most persistent and devoted communists and socialists can honestly boast of having read it through. In· this passage, how ever, Marx gets away from his customary ponderous long-winded style and sets forth the essence of his doctrine and his vision of the ~ future: "While there is a progressive diminution in the number of the capitalist magnates, there occurs a corresponding increase in the mass of poverty, oppression, en slavement, degeneration, and ex ploitation. But at the same time> there is a steady intensification of the wrath of the working class - a class which grows ever more nu merous, and is disciplined, uni fied, and organized by the very mechanism of the capitalist meth od of production. Capitalism be comes a fetter upon the method of production which has flourished with it and under it. The central ization of the means of produc tion and the socialization of labor reach a point where they prove in compatible with their capitalist husk. This bursts asunder. The knell of capitalist private property 1969 A CAPITALIST MANIFESTO 325 sounds. The expropriators are ex propria ted."

Here is a vision to tempt the eyes of advocates of revolutionary change, whether they favor peace ful or violent methods. It has all the appeal of an epic drama. There is a villain, the capitalist ex ploiter; a hero, the downtrodden proletariat; and there is an al legedly scientific assurance that the hero will win. For, if the rich become fewer and richer and the poor more numerous and more miserable, the long-range odds for social change are clearly on the side of the poor. Bad Guessing Unfortunately for Marx's repu tation as a prophet, what he rep resented as infallible laws of his torical development proved by the course of events to be mere arbi trary guessing about the shape of things to come - and pretty bad guessing, at that. Take the very keystone of the Marxist theory: the dogmatic as surance that the rich will become fewer as they gather more wealth into their predatory hands, while the poor wageworking "proletar ians" become constantly poorer, more degraded and oppressed. (In cidentally, Marx and his collabora tor, Friedrich Engels, never made clear how and why a long process of poverty and exploitation fitted and qualified the proletariat to rule.) But it is a matter of visible rec ord, which could be supported by mountainous statistics, that it is in just those countries where the capitalist system has been most faithfully preserved that the in dustrial wage-workers have achieved the most impressive gains in real wages, in food, clothing, housing, educational and employ ment prospects for their children, in everything that goes to make up a standard of living.

Even in Marx's lifetime, in the middle and latter part of the nine teenth century, the poverty of the industrial workers in the country he knew best,England, was di minishing. Could the socialist prophet revisit London where he spent so many weary hours poring over government reports on indus trial conditions, he could scarcely fail to be amazed at how living conditions in London's East End and other industrial areas had im proved, by the number of new items in the working class family's budget. And this improvement was general in all advanced industrial countries where capitalism was allowed to function. Indeed Marx, the supposedly scientific prophet of the world's economic future, has been proved completely wrong on many impor tant points of his creed. The most 326 THE FREEMAN June significant, perhaps, of his mis takes was about the increasing poverty and misery of the wage working class. Another conspicu ously bad guess was about the regular evolution from one type of social-economic organization to an other. Marx was convinced, and the idea recurs frequently in his writings, that a higher form of society would only emerge when all the possibilities of the preced ing lower form had been ex hausted.

In other words, only a country that had passed through a long de velopment of capitalism would be ripe and fit for a socialist trans formation. A socialist revolution before capitalism had reached maximum development would be a sin against Marxian theory indeed, according to this theory, could not occur. The Improbability of Communism in Russia and China Once again Marx failed as a forecaster, and on two counts. The highly developed capitalist coun tries that should, by Marx's rules, have been ready for the transition to socialism or communism, the United States, Great Britain, Ger many, showed no inclination to take this road. The communist rev olutions that occurred - in Russia in 1917, in China in 1949 - took place in countries where according to Marx no such upheavals should have occurred. Indeed, in Russia one of the principal arguments between the Bolsheviks - who pushed the revo lution through and quickly turned the supposed rule of the Soviets into the rule of the Communist Party and substituted a dictator ship over the proletariat for the Marxist ideal, dictatorship of the proletariat - and the more mod erate Mensheviks was about Rus sia's suitability for a socialist rev olution. From the standpoint of Marxist dogma, the Mensheviks had the better of the argument; Russia was in a very early phase of capitalist development and cer tainly had not exhausted the pos sibilities of this phase. But the Bolsheviks had the stronger prac tical arguments: the guns, the swift organization of a system that made the expression of any contrary views impossible. They made a revolution in the name of Marx in violation of some of Marx's basic and most cherished convictions.

Even more striking was the un suitability of China for applica tion of Marx's blueprint of revolu tion, which assumed a highly de veloped industry and a large class of organized industrial wage workers. Outside the large cities, much of China was in a pre capitalist state of economic devel1969 A CAPITALISTMANIFESTO 327 opment, far behind Czarist Russia. About the collectivist revolutions of the twentieth century, the Rus sian and the Chinese, there may be many opinions; but one fact is clear. Although both were made in the name of Marx, neither fitted Marx's prescription of socialism as an organic growth, with more or less violence, from the sup posedly lower stage of capitalism. Self-Destructive? Marx had thought of capitalism as carrying the seeds of its own destruction. Whenever nineteenth century England experienced an economic setback, Marx and his friend Engels exchanged joyful letters about the impending doom of the hated capitalist system. But in England, as in the United States and other countries, there was invariably a recovery from depression; and not only a recov ery but a surge to new heights of production.

During Marx's lifetime and dur ing the interval between his death and the outbreak of World War I there was no sign of the death of capitalism from what might be called internal disease. There was a considerable growth of socialist parties in Europe; but these par ties showed an increasing tend ency to seek their objectives by evolutionary and peaceful meth ods. Violence came into play in poorer and socially more backward countries. And, when the workers of Europe faced the choice between loyalty to nation and loyalty to class, on the outbreak of general European war in 1914, the over whelming majority followed the call to the colors. Extreme internationalists who followed Lenin's slogan, "Turn the imperialist war into civil war," were a negligible minority. Even in Russia, where poJitical assas sination, mass political strikes, military and naval mutinies had figured in the struggle against an autocratic regime, the first im pulse after the outbreak of hostil ities was toward national unity.

As the war went on, with its lengthening casualty lists, its up rooting and dislocation of vast numbers of people, its growing privations and sacrifices, this early enthusiasm vanished. The war was an important factor in bringing about successful revolution in Russia, revolts and riots in other countries. And World War II had much the same ·effect in China as had World War I in Russia. The communists were the only win ners. But this was not according to Marx. Both in Capital and in the more succinct Communist Manifesto, revolution is seen as the end product of internal weak nesses in the capitalist system, not of an external force like war.

328 THE FREEMAN June The Superiority of Capitalism The Communist 111anifesto is based on assumptions that are, in some cases, unproved, in other cases disproved by the course of historical development. It is time that some individual or group put forward a Capitalist Manifesto, affirming faith in eapitalism as the best, fairest, most efficient and humane method know'n to human experience for getting the world's work done, especially in the light of the contrasted example and les sons of its collectivist challenger. Such a Manifesto would state six reasons for the superiority of cap italism, based not on doctrinaire theories and dubious assumptions, but on the clear teaehings of hu man experience: (1) Two example:s at opposite ends of the world, Germany and Hong Kong, prove the magic of capitalism in restoring a shattered economy or creating a flourishing oasis of industry and trade which had not existed on anything like the same scale before. The recov ery of Western Germany from hunger, ruin, and apathetic de spair after Dr. Ludwig Erhard prescribed his medicine of pros perity through hard work, com petition, individual incentive, and return to maximunl freedom of trade, was so spectacular that it is still often referred to as the German miracle. To move across the frontier to communist-ruled East Germany was, as a German once said to me, like the transition from day to night.

Hong Kong is a bare island with an adj acent strip of mainland, a leased acquisition of Great Britain after one of its nineteenth century clashes with China. The city has grown enormously since the end of the war, mainly because of the influx of refugees from the com munist-ruled mainland. Four mil lion people are now crammed into this small area. Here is the com ment of a recent visitor, the Amer ican journalist, William L. White: "The little city is prosperous beyond belief. This surviving ves tige of British colonialism shows what free trade can do, if it is left free." In history and ethnic make-up Hong Kong is very different from the German Federal Republic. But both teach the same lesson: the enormous built-in dynamic of capi talism. Incidentally, Hong Kong is one place where the native popula tion emphatically does not want the British to leave. (2) Freedom· from monopoly saves the capitalist system from hardening of the economic arter ies. If one firm turns down a prom ising scientific or managerial in vention, another firm may take it up, and take the lion's share of the market with it.

1969 A CAPITALIST MANIFESTO 329 One of the least convincing ar guments for socialism is the oc casional appearance of monopoly abuses under free enterprise. But monopoly abuses under capitalism are transitory and self-correcting, if not induced and sustained by government grants of power. Un der socialism, or communism, where the state is the sole pro ducer and distributor, these abuses are permanent and irremovable. What an illusion, to imagine that the cure for the evils of monopoly is more monopoly! It is highly significant that it is always the communist-governed countries that are trying to learn from the more advanced capitalist lands. It is never the other way around. In recent years commu nism has been paying capitalism the proverbial flattery of attempted imitation by experimenting with such capitalist devices as differ ential wages, emphasis on profits for state enterprises, and so forth.

But these feeble imitations will not lead to success, it may safely be predicted, so long as the essen tial ingredients of private owner ship and private profit are miss ing. (3) Far from being reactionary and tyrannical in its effects, capi talism - with its diffusion of eco nomic power among millions of owners and investors, large and small-is the only system compatible with the checks and bal ances, the freedom of the press, the holding of free elections, and the legal guaranties against ar bitrary actions of state authority that make up the essentials of a free society. Communist regimes have been set up in various coun tries and under various circum stances. But it is surely significant that not one of these states can pass the free election test, where various candidates may compete with the spoken and printed word, and without fear of the police man's knock as a result.

A generally capitalist economy is no guaranty of political free dom. The scope and reality of free political institutions vary from country to country depending on such factors as politicalexperi ence, education, and others. But one infallible way of assuring the elimination of any trace of con trol by the citizen over the state is to set up a communist economy and thereby make the state, and the people who operate that state, the monopolistic possessors of economic power. That is a rule to which there have been no excep tions. (4) Anyone who cherishes free dom should be a convinced up holder of the capitalist, or in dividualist, economy. For freedom is in the very nature of capital ism, as compulsion is an integral 330 THE FREEMAN June aspect of an attempt to put Marx into practice. The degrees of pres sure on the individual in a collec tivist society to do what the state dictates, rather than what he may choose to do or not, vary from the frightful brutality of slave labor concentration camps to milder methods. But the pressure is al ways there. Not the least of the merits of capitalism is that it leaves the individual alone, to work at whatever may attract him, to be a hobo or a hippie.

(5) Capitalism is a non utopian system. It does not promise the earth, the moon, and the stars to those who live with it. It does promise them freedom to choose between material and nonmaterial objectives. It assures them that, subject to vicissitudes and acci dents which are in their nature uncontrollable, they will go as far, by and large, as their abilities, diligence, and aptitude will carry them. Not to be utopian may seem a rather negative tribute. Yet it is doubtful whether more or less con sciously evil men have inflicted as much suffering as have utopian idealists, enj oying a period of ab solute power and prepared to turn life into a hell for the present on the doubtful prospect that it may be a heaven for future genera tions. (6) There is a widespread feel ing that, while capitalism may be useful and efficient, it is somehow sordid and lacking in moral in spirational appeal. But on a closer view, a philosophy that has given the world the wonderful device of the free market, that makes pos sible the checks and balances on which a free society depends, that diffuses economic power as a free society diffuses political power, that avoids the cruelties of com pulsion and the illusions of state planning, that steers clear of uto pianism - such a system is by no means lacking in moral appeal, es pecially if one fairly examines its alternatives. In that connection, worth remembering is a saying of the late Wilhelm Ropke, one of the most brilliant exponents of economic freedom as indispensable for all other kinds of freedom: "While the last resort of the competitive economy is the bail iff, the ultimate sanction of the planned economy is the hangman."

EDITOR'S NOTE: The Exploitation Theory by Eugen von Bohm Bawerk is a scholarly analysis and expose of the fallacy under lying the Marxist writings. Published by The Libertarian Press, the booklet is also available at $1.50 from the Foundation for Economic Education, Inc., Irvington-on-Hudson, New York, 10533.

PAUL L. POIROT .. ' zol/o ' o I~ '~'ol~; , (0' ~ \rJoj 1\ 11 Com~inations in Restraintof 1rade .., IF ONE COULD POLL all past and present economists, perhaps the point upon which they'd most nearly agree is that combinations in restraint of trade are eco nomically unsound. Not even Karl Marx would have defended a mo nopoly or cartel. Unfortunately, there is no depth to such convictions; the agreement on the matter is strictly superfi cial. "Workers of the world unite," thundered Marx; and combina tions in restraint of trade have constituted the core of social re form from that day to this. Trade is the lifeblood of civi lized society. This is not to suggest a social organism to which the in dividual human being must bow and scrape, but an operating meth od that allows each peaceful per son to choose and act freely. The free market, in other words, is a means for social cooperation, as sociation for mutual gain. Its functioning depends not upon our being perfect or all-wise or self less or equal but upon our being human - not upon our similarities but upon our differences - not upon what we own or hold in com mon but upon our independent likes and dislikes and that which each can identify and claim as his own private property, It is neither necessary nor de sirable that there be equality in the possession of things, though certain emergency situations may give rise to such rationing - a band of pilgrims stranded on a rock in the dead of winter; sur vivors on a raft in a hostile sea; a faithful few standing by for the coming of aNew Jerusalem - or a higher stage of socialism.

Whatever one's conclusion about the efficacy of such emergency ra tioning for purposes of survival, the historical record affords no comfort to the advocates of col331 332 THE FREEMAN June lectivism as a continuing way of life. That "wave of the future" is a failure. It plugs every avenue to progress and leads only to the dead level of mediocrity. No indi vidual is permitted to gain or lose, succeed or fail - as though evolu tion could occur without birth and death. Keynes was under no illusion as to the consequences of the inter vention he advocated. "In the long run," he said, "we are all dead." Forced equalization as a method for survival in the short run leaves man without means or purpose for the long run. Noone bothers to specialize or save or attend to the processes of continuing production - unless he is allowed to retain and enjoy the fruits of such effort. Compulsory collectivism is indeed a conspiracy, a combination in re straint of trade.

Destroy the· Machinery We smile knowingly, and sadly, at the reports of the destruction of machinery by workers in the textile mills in the early stages of the industrial revolution. They thought their jobs and means of livelihood were being threatened by the new spinning jennies and looms. Today we know very well the futility of trying to earn a living spinning thread by hand or trying to weave without the latest power loom equipment. We know how shortsighted were the early factory workers with their silly combinations in restraint of trade. The very idea of breaking up the machinery that would enable them to produce more efficiently! Or do we only pretend to un derstand what they did not, while persisting in their foolish ways to destroy the property and disrupt the trade upon which our own Iives depend? Is a twentieth-century strike by workers in any particular industry any less a combination in restraint of trade than was the destructive action of their unenlightened fore bears in the textile mills a century or two earlier? What else is an employee strike than a concerted action to immobilize and render ineffective the capital and tools of their trade and the managerial talent developed and accumulated over the ages?

Are twentieth-century rioters in our cities any less destructive of life and property than were their eighteenth-century counter parts among the rabble of Paris? Are modern tariffs, boycotts, em bargoes, and controls over prices, wages, and rents any less disrup tive of trade than were similar combinations in restraint of trade in previous centuries? Are the youths of all ages who lead and follow in today's student revolts against the cumulative wis1969 COMBINATIONS IN RESTRAINT OF TRADE 333 dom and traditions of civilization less detrimental to human progress than were the Huns and Vandals who sacked and burned ancient Rome ? Was there ever a more dis ruptive combination in restraint of education than the striking United Federation of Teachers in New York City? How may future historians de scribe our Age of Inflation other than an international conspiracy in restraint of trade, a gigantic counterfeiting operation designed to transfer savings by stealth from private ownership and con trol to public disposition and wasteful consumption?

At a time when human life throughout the world is more de pendent upon the blessings of spe cialization and trade than ever before, we seem to have hit an all time high in various combinations in restraint of trade - as though determined to destroy ourselves in the process of plundering others. How does one counteract a com bination in restraint of trade - or violence in any form, for that matter? In the first place, and to the extent that he has a choice, he can withdraw his support of such harmful actions. This may be as simple a matter as clearing his mind of illusions about the nature of people and things, visualizing the numerous peaceful alternatives to this or that outbreak of violence, and putting his trust in one of those alternatives. There is no point in charging a picket line for the pleasure of knocking heads with those who have no. other objective. But one may peacefully withdraw his sup port of picketing and other forms of violence. He need not profess in public to be in favor of a right to strike; the alternative is to up hold the right to work, to serve oneself by serving others. One's right to work for an employer who provides the tools and manages the enterprise and markets the prod uct includes permission to vacate that job if the wage is unsatisfac tory; but it does not entitle the employee who quits to destroy the tools and plant and sales organiza tion and other assets of the busi ness when he leaves it. Nor does it entitle him to draw automati cally upon taxpayers to cover the wages lost by not working.

The Guaranteed Life Brings Stagnation Imagine, if you can, a business enterprise operated on the princi ple of a guaranteed position in the market, a guaranteed cost-free supply of capital and raw ma terials, a guaranteed steady stream of customers using ration coupons but otherwise obliged to pay nothing for any product or service, a guaranteed annual wage 334 THE FREEMAN June to every employee, with full tenure and seniori ty provisions and a right to strike indefinitely with unemployment compensation for the duration. What you have just tried to imagine are the terms and condi tions of a full-fledged welfare state, otherwise known as social ism, with you as the guarantor, otherwise known as the taxpayer. Scarcely anyone can stretch his imagination enough to accept so cialism when carried to its ulti mate logical conclusion. Yet, there are many who imagine that one of these terms or conditions can be imposed - one step taken - with out leading inevitably to the next, and the next, and the same even tual dead end. Every strike action condoned,every picket line re spected, every special privilege al lowed one person or group at the expense of others against their wishes, every act of coercion against peaceful members of so ciety is destructive of that society and leads to its disintegration. Un less the life of the peaceful person and his property are respected and defended, he cannot be counted upon as either a supplier of, or paying customer for, goods and services; the advantages of spe cialization and trade will be for feited, the stage set for the four horsemen of the Apocalypse: war, strife, famine, and pestilence.

If one seriously proposes to do something about a social condition he deplores - let us say, for in stance, the fact that not everyone can afford everything his heart desires - then it behooves him to advocate a cure that does not ag gravate and accentuate that very problem. It is not helpful to bolster and strengthen the demand for a scarce resource in ways that dis courage the production or other wise diminish available supplies of that scarce resource. If lack of trade is the problem, then combi nations in restraint of trade can not be a right answer. The alter native is a combination in promo tion of trade, and the process is through efficient and profitable production of goods and services. He who supplies in the market those things others most want, as evidenced by their willingness to buy, not only serves them. He thereby conserves scarce resources in the only meaningful sense of the term by turning those re sources to their most economical use. And whether or not it was his intention, he best serves himself in the process, improving his pros pects to fulfill whatever purpose he has in mind for his own life.

That kind of social cooperation or combination in promotion of trade is practically all that anyone can do to win the respect and support and good will of his fellow men. ~ CLARENCE B. CARSON fiEuglnub 16. THE FALL OF ENGLAND (Part 1) THE FALL of England after World War II was precipitate. To out ward appearances, Britain was still a major power in the world at the onset of the war. British policy was supposed to be' of great moment, if not decisive, in world affairs. If the navy no longer ruled the seas, neither did that of any other power. The sun never set on the British flag; the globes which indicated such things still sported more pink than any other color. Nor is it clear why the war should have changed matters so very much. England and the British Empire fought on the side of the Dr. Carson, Professor of History at Grove City College, Pennsylvania, will be remembered for his earlier FREEMAN series, The Fateful Turn, The American Tradition, and The Flight from Reality.

victorious Allies. Nor had the British Isles been invaded by a conquering army; alone among the great powers of western and cen tral Europe, Britain was not sub jected to the debilitating effect of occupying armies. Yet, in short order, Britain was no longer a major power, indeed, was swiftly becoming a minor power. Much of the empire was breaking away, or being cut away. The British were withdrawing forces from their traditional spheres of influence. England's role in the world, far from being increased by victory in the war, was diminishing with unseemly speed. Of course, the British had suffered much during the war, suffered from the bombing, from 335 336 THE FREEMAN June the loss of men, from the destruc tion at sea, from the disruptions and dislocations that occur in any war. But the wounds were not themselves mortal, or should not have been, to a once great nation. Indeed, others suffered more, par ticularly the Soviet Union, and gained rather than lost sway in the world. The explanation for the fall of England must he sought elsewhere. In brief, it is to be found largely in the policies and practices of the government, but before examining further into these there is a broader context that should be delineated.

All of Western Europe The fall of England was part of a more general phenomenon: the fall of western Europe. The fount and center of Western Civiliza tion for many hundreds of years has been western Europe - the British Isles, France, the Low Countries, Scandinavia, Germany, and thence to countries that had become peripheral already: Italy, Spain, Portugal, Austria, and so forth. In more recent times, the centers of power and influence had usually been England, France, Ger many, and, to appearances, a re vived Italy. But many untoward developments had occurred in con tinental Europe between World War I and World War II. It was supposed that France had the mightiest army in the wor ld. Yet, once the German armies broke through in World War II, it took them only a few weeks to complete the conquest of France. France, it turned out, was only the shell of its former self. Not only had World War I taken its toll but also an internal disintegration had sapped the will of the French to resist. Germany suffered the debilitating effect of a runaway inflation in the 1920's, accompa nied by foreign pressures and in ternal socialist experiments. Then > came the terror and violence of the years under Hitler. Italy un derwent both the deterioration of its parliamentary institutions and the fascist dictatorship of Benito Mussolini with its overtones of socialist syndicalism. Once great centers of civilization succumbed to the blandishments of men teach ing barbaric doctrines.

Then came World War II. First, most of the countries were sub jected to invasion and occupation by German and Italian armies. Then Allied armies thrust over much the same ground, and in the end occupied Germany and Italy, along with many other lands. The requirement of unconditional sur render resulted in the virtual de struction of the power and will to resist of the Germans (as well as the Japanese). At the end of World War II, 1969 THE FALL OF ENGLAND 337 then, a power vacuum existed in western and central Europe. The shell of France had been cracked or broken; only the indomitable will of Charles De Gaulle has held the country together since. That Italian power was largely the bombast of Mussolini became obvi 0us rather early in the war. Ger man power was utterly destroyed; much of its manpower and ma chinery carted away by the Rus sians; the land subjected to divi sion and occupation by conquering armies. No treaty has yet been drawn with that divided country.

If the will exists to develop any new center of power on the con tinent (aside from the personal will of De Gaulle), then there has been as yet no opportunity. World War II did not bring to an end aggressive action in the world. It only succeeded in de stroying the power to resist it on the continent of Europe and for much of Asia. The Soviet Union fount and center of international comm unism - used the European disruption as an opportunity to expand communist power and prac tices. It should have been clear by then that the Soviet Union was aggressive and expansionist. Not only had the communists made a pact with the Nazis before World War II for dividing up the spoils in eastern Europe - a pact ob served to the extent that the Soviet Union invaded Poland from the east after Germany invaded from the west - but also they had ex panded by taking Latvia, Lithu ania, and Estonia, as well as in vading and seizing part of Fin land during World War II. If any doubt remained, it should have been removed shortly. Everywhere the Soviet armies went, commu nist governments were soon set up, or were enabled to take over: in Poland, Hungary, Rumania, and so forth. The Security Council of the United Nations, which was charged with keeping the peace, was quickly deactivated by Soviet vetoes.

The Lion at Bay Britain was the only European country with major power poten tial at this moment in history which might have wielded weight against Soviet expansion. But Britain was set on another course; as we shall see. It is true enough that the British were exhausted by a long and demanding war ef fort. (But so, surely, were the peoples of the Soviet Union.) It is true, too, that the British relied heavily upon American aid to con duct the war, that. foreign invest ments had been to a considerable extent dissipated, and that there had been heavy losses of all kinds. There were excuses enough, in all conscience, for the British reti338 THE FREEMAN June cence to continue a vigorous role in the world. But when a victori ous power uses the occasion of its victory to abandon its historic role, it can hardly be attributed to exhaustion by the war. In fact, such power and force as remained in the British govern ment was turned on the British people. No matter that a majority of the electorate had voted for the Labour Party in 1945, they had, in effect, voted for the government to unleash its power on them. So cialists in power, as has been shown, continued and extended the wartime controls, appropriated property, regulated, restricted, and harassed the British people as those people tried to come to grips with the difficulties that con fronted them.

How this power was employed at its nether reaches is illustrated by the following examples from the latter part of the 1940's: . . . The Ministry of Food prose cuted a greengrocer for selling a few extra pounds of potatoes, while ad mitting that they were frostbitten and would be thrown away at once. The Ministry clamped down on a farmer's wife who served the Min istry snooper with Devonshire cream for his tea. A shopkeeper was fined £ 5 for selling home-made sweets that contained his own ration of sugar. Ludicrous penalties were imposed on farmers who had not kept strictly to the letter of licences to slaughter pigs; in one case, the permitted build ing was used, the authorized butcher employed, but the job had to be done the day before it was permitted; in another case the butcher and the tim ing coincided, but the pig met its end in the wrong building ... .I These homely examples may tell more than volumes of theory of the true nature of the socialist on slaught.

Socialist Wreckage In short order, the socialists were able virtually to wreck what remained of a once vigorous and healthy economy. Economy had suffered greatly from the inter ventions of the interwar years. It was hampered even more dras tically by wartime restrictions. But the measures of the Labour government were such as to make economic behavior very difficult to follow. The wreckage was wrought by nationalization, controls, regula tions, high taxes, restrictions, and compulsory services. There was a concerted effort to plan for and control virtually all economic ac tivity in the land. The initiative for action was taken from the people and vested in a bureauc1 David Hughes, "The Spivs" in Age of Austerity, Michael Sissons and Philip French, eds. (Middlesex, England: Pen guin, 1964), p. 99.

1969 THE FALL OF ENGLAND 339 racy. Where industries were actu ally taken over, they were placed under the authority of boards which were perforce irresponsi ble, for the usual checks and re strictions (such as the necessity to make a profit) were removed. In short, the bureaucracy was let loose and the people were bound up. To put it another way, much of the great ability and energy of the British people was turned from productive purposes to wrestling with the bureaucracy. By examining in detail, it would be possible to show all sorts of reasons for the failure of the so cialists. However, in such brief scope as this it will be more ap propriate to take two of the rea sons and explain them. These two are central, but surely not the only ones. One is somewhat pe culiar to England; the other is a universal fallacy in socialism. Let us take the broadest one first. Emphasis on Distribution Socialists have periodically claimed, at least since the publi cation of The Communist Mani festo in 1848, that the problem of production has been solved. In deed, they have waxed wroth over the dangers of overproduction, of glut, and of affluence. They have gone so far as to claim that capi talist countries have to have war in order to get rid of the excess production. The problem, they have said again and again, is one of distribution. Moreover, English so cialists have been devoted to the idea of as near equal distribution of goods and service as is possible (or "practical"). If they were right in believing that the prob lem was one of distribution and not of production, they were prob ably also right in believing that government could solve the prob lem.

At any rate, the Labour gov ernment undertook redistribution with a right good will. They levied highly graduated income taxes, taxed luxury goods at high rates, controlled prices of food, clothing, and shelter, and rationed many items in particularly short supply. Not only that, but they provided free medical services, provided pensions, and otherwise aided those with little or no income. They distributed and they dis tributed. Yet, a strange thing-at least to them-occurred: the more they re distributed, the less they had to distribute. Not only did such shortages as they had known dur ing the war continue, but others cropped up as well. One writer points out, "By 1948, rations had fallen well below the wartime average. In one week, the average man's allowance was thirteen ounces of meat, one and a half 340 THE FREEMAN June ounces of cheese, six ounces of butter and margarine, one ounce of cooking fat, eight ounces of sugar, two pints of milk, and one egg."2 Even bread, which had not been rationed during the war, was rationed beginning in 1946. The government had first attempted to fool the English people into buy ing less bread by reducing the amount in a loaf. When that did not work, they turned to ration ing. 3 Housing, clothing, food, fuel - everything, it seemed - was in short supply.

A Bad Winter The situation became perilous in the winter of 1946-47. It was, undoubtedly, a bitterly cold win ter, accompanied by unusually large snowfalls. Ordinarily, the winters in England are mild, pro tected as the island is by the water and the prevailing currents and winds. Not so, this time; the full fury of, winter settled upon the land. The effect was near catastro phe, even when reduced to dry textbook language: "... in Febru ary the coal stocks which were al ready low could not. be replenished because of transport difficulties. ... For several days much of the industry of the country had to close down; almost two million 2 Susan Cooper, "Snoek Piquante" in Sissons and French, op. cit., p. 38. a Ibid., pp. 40-43. people were temporarily unem ployed; and domestic use of elec tricity was forbidden during nor mal working hours."4 In the midst of all this deprivation, the Labour Party continued on its ideological way, "doggedly pushing their com plex nationalization Bills through Parliament whilst wrathful Tories attacked them for paying too little attention to food and fuel, and for employing three times as many civil servants as miners."5 It will be worthwhile to pause in the account briefly to consider why a cold winter should cause such distress. We should all be fa miliarenough by now with the fact that socialist countries seem to be ever and again victims of freakish weather, and such like.

Assuming that the rains fall on the just and the unj ust alike, there is no need to conclude that these are simply a result of Divine disfavor. On the contrary, a ra tional explanation is ready to hand. Socialist restrictions make it virtually impossible to adjust with the needed speed to unusual circumstances. In the market, the rise of prices signals distress, and the opportunity for profit induces men to concentrate their energies at the point of greatest demand. But in England prices could not 4 Henry Pelling, Modern Britain (New York: Norton, 1960), p. 181. 5 Cooper, op. cit., p. 51.

1969 THE FALL OF ENGLAND 341 rise, for they were controlled. Transport could not be shifted readily to carrying coal, because it was controlled. The coal miners did not respond to the challenge, for they were enjoying the politi cal perquisites they had won by nationalization. In short, national planning is for an ever-normal situation based on averages which have never exactly occurred and can hardly be expected to in the future. The very unexpectedness of the unusual makes planning for it a contradiction in terms. When men are free, their energies may be turned readily to reliev ing distress; when they are re stricted, they use up much of their energies in complaints against the powers that be. At any rate, the socialists in power discovered very quickly that the problem of production had not been solved. In England, as else where, socialists have been con fronted with mounting problems of production. By the summer of 1947 the British government was making no secret of the problem.

" 'We're up against it,' intoned the Government posters, £400,000 worth of them, all over the coun try: 'We Work or Want.'''6 There is little evidence that socialists have learned the source of what must be to them the paradoxical 6 Ibid., p. 52. development of mounting problems of production when they follow their policies of distribution. If they did, of course, they might give up socialism. The fact is that when production is separated from distribution to any considerable extent the incentives to produce are reduced. When this is accom panied by numerous restrictions which hamper men in their pro ductive efforts, goods and services will be in ever shorter supply. Increasing Intervention The other major reason for the dire impact of socialism and inter ventionist measures on England was closely related to the histori cal economic development of that country. Throughout the modern era the British have been a sea faring and trading people. In the nineteenth century, they accepted the prescription of Adam Smith, in large, specializing in what they did well, depending much on for eign trade, and importing much of what they consumed. The great prosperity which they enjoyed testified to the efficacy of this ap proach to economy. But from World War Ion, interventionist measures made it increasingly dif ficult for the British to compete in foreign trade. Union wages, the subsidizing of the idle, high taxes, the progressive disjoining of pro duction from distribution made it 342 THE FREEMAN June more and more difficult to sell goods abroad. Domestic inflation and the appropriation of foreign investments reduced Britain's position as financier in the world.

Then the Labour Party came to power in 1945. They were quickly faced with mounting deficits in foreign trade - beginning to be re ferred to by then as a "dollar short age." The "dollar shortage" was, of course, a result of governmental policy. The government was trying to distribute what it did not have in hand to pass out. It inflated the currency, supported higher wages, increased services provided with out charge, subsidized basic goods, fixed prices below what they would have been in the market, and then tried to supplement the goods and services available from abroad without giving a quid pro quo for these. "Dollar shortage" is a con venient shorthand term for the no tion that the United States ought to subsidize Britain. How the contradictions worked out in practice have been de scribed by Bertrand de Jouvenel. "The incomes of British private citizens, taken as a whole, were, in 1945, seventy-five per cent above the 1938 level. But it was far from the case that there was on offer to buyers a seventy-five per cent increase of goods and services! ..." On the contrary, "the actual position in 1945 was that a seventy-five per cent in crease in incomes was matched by a fourteen per cent diminution in consumable goods and serv. "7Ices....

In the fre·e market, this dis parity would have been closed by rising prices. But the government did not allow this to take place. Instead, it maintained price con trols and rationing. In conse quence, prices remained compara tively low for such things as food, clothing, such shelter as could be had, and electricity. The British people were able to spend a much smaller percentage of their in comes for such necessities, com pared, say, with Americans. As a result, "British purchasing power ... overflows wherever it can. Ex penditure on drink rose to 238 per cent of what it had been before the war, on tobacco to 340 per cent."s Much of this income was spent on goods that were imported, such as tobacco. More of the Same Since government action had produced the conditions in which such ironic results occurred, the logical course would have been to change the policies: stop the in7 Bertrand de J ouvenel, Problems of Socialist England (London: Batchworth Press, 1949), J. F. Huntington, trans., p.107.

8 Ibid., p. 173.

1969 THE FALL OF ENGLAND 343 flation, end the rationing, remove the price controls, and so forth. To have done so, of course, might have entailed the admission of error by politicians, a general phe nomenon without precedent in pop ularly elected' governments. It would certainly have meant the abandonment of much of the surge toward socialism. Instead of admitting it was to blame, the government turned more of its force on the British people. The government acted as if the people were to blame. They should not spend the money in the way they did. They should not buy so much that could otherwise be sold to foreigners, nor consume so much that had to be bought from abroad. One writer describes the increased use of force in this way: ... Whilst appeals for higher pro duction rang in their ears, the public found, in Dalton's autumn budget of 1947, cigarettes rising . • . in price "in a deliberate drive to cut smoking by a quarter." "And smoke your cig arettes to the butts," said the Chan cellor, "it may even be good for your health." American films stopped ar riving in Britain when a seventy-five per cent import duty was imposed, and cinemas began to empty. Timber and petrol imports were cut, so news papers shrank back to four pages and the basic petrol ration was abolished, although anyone living more than two miles from public transport could draw a supplementary allowance.

Foreign travel was suspended and public dinners dwindled into silence. Clothing coupons were cut, and there seemed to be less food than there had ever been since the beginning of the war. It became a criminal offense to switch a fire on during the summer months. 9 These measures were accom panied by efforts to increase pro duction. "Much of the wartime di rection of manpower was revived. ... Under the Control of Engage ments Order, which went into ef fect in October [1947], new em ployment could be secured only through the exchanges. Applicants would be advised to go into pri ority industries and under some circumstances would be directed to do so. . . . In November an order required registration of all the un employed and those in trades con sidered non-essential - football pools, amusement arcades, night clubs, and the like. By these meas ures it was hoped to draw into in dustry a million additional work ers."lO Other Drastic Measures to Close the IIDollar Gap/l Even this combination of Dra conian measures did not close the 9 Cooper, Ope cit., p. 52.

10 Alfred F. Havighurst, Twentieth Century Britain (New York: Harper and Row, 1962, 2nd ed.), p. 402.

344 THE FREEMAN June "dollar gap." As a matter of fact, once independent Britons had gone hat in hand to the United States asking for a large extension of credit, the delegation having been headed by Lord John Maynard Keynes. They were granted 33A, billions of dollars which was sup posed to last for several years. Ac tually, however, the deficit was so great in 1947 that the amount of credit available could hardly cover it. In 1948, Britain was granted nearly one billion additional dol lars under the Marshall Plan. Americans were led to believe at the outset that aid to Britain was for the purpose of enabling that country to recover from the war. Yet, it should be clear that for the several years following World War II the British were not simply having difficulty recovering from the war. Matters grew much worse after a couple of years of socialism than they had been during the war. The British were caught in the toils of their own government, at the behest of a majority of the electorate. They were struggling with might and main against the disabling impact of socialism. The United States was not helping Britain recover from the war; it was subsidizing socialism. By sub sidizing socialism, the United States government helped the La bour government to survive a few years, while concealing from the British people, as well as from other peoples of the world, the full extent of the debacle.

Widespread Demoralization and Corruption Socialism in England did not simply wreck the economy; the ef forts which had these results had other and undesirable side effects. Among these was a widespread demoralization and corruption of some portion of the populace. The British have long enjoyed a high repute for obedience to the law. They have usually been exemplary citizens in contrast with the peo ples of some continental countries, where evasion of the law is so common as to be nearly universal. Socialism changed things in Brit ain, or let loose something in the British character that had been more restrained theretofore. In 1937, there had been only 266,265 indictable offenses; the number had jumped to 522,684 by 1948. "In 1951, cases of violence against the person, which had soared steadily since the war, were two and a half times more than in 1938, and criminals, it seemed, were three times more vilely sexual."ll Another writer de scribes the development in this way, saying that since 1945 the "public have increasingly devoted themselves to the evasion of the 11 Hughes, Ope cit., p. 102.

1969 THE FALL OF ENGLAND 345 law and to operations upon the black markets. Contempt for au thority has increased; class con sciousness has become more acute; cynicism regarding corruption in public life more prevalent;· per sonal and class irresponsibility more in evidence; gambling prac tices more widespread."12 However elegantly the rationale for socialism may be expressed, it does not succeed for long in ob scuring its true nature from the citizenry, or some portion of them. Socialism is a plan for the use of force, for confiscation, for taking from some to give to others, for disturbing or changing the char acter of relations among people. When people find themselves thwarted by deprivations and re strictions attendant upon such pro grams, they turn to the very meth ods government has more subtly 12 John Jewkes, The New Ordeal by Planning (New York: St. Martin's Press, 1968), p. 204.

been using in practice: theft and violence. While the Labour government was turning such force as the gov ernment had on its own people, while the economy was being vir tually wrecked, while the people were being den10ralized, untoward events were taking place elsewhere in the world. Colonial peoples - or those who would speak for them were clamoring for independence. International communism was on the move to fish in these troubled waters. Revolutionaries were pre paring themselves for that de struction which they conceive to be their first task but which quite often proves the only one for which they have any adeptness. England, under the dubious tute lage of the United States and led by irresolute Labourites, was be ginning its withdrawal from its former active role in the world. That, too, is part of the story of the fall of England. ~ The next article in this series will continue to describe "The Fall of England."

Montesquieu There are means to prevent crimes, and these means are punishments; there are means to reform manners, and these means are "good examples."

ROGER DONWAY The Intelle~t in Utopia IN THE DREAMS of Western stat ists, there exists a fabulous land where the government regulates property to the maximum advan tage of mankind, where every in dividual fulfills his highest poten tial, and the intellectual atmos phere quivers with exhilerating debate .. It is a pleasant picture, no doubt, as dreams are supposed to be. But before one's reveries reach the point of legal enactment, other considerations become germane, and hardest of all, one must ask: Is it possible? That question apparently never bothers the statists, for their ideas persist untroubled though a swath of economic disaster follows them around the world. And though the crea tive mind withers in their footsteps, these dreamers see no connection. For any objective observer, how ever, their economic illusions have Mr. Donway is a student at Brown University. been well and often .dispelled, by theory and practice. Today, it would take an act of outright eva sion to claim that socialism has worked. But the contradictions of their cultural vision are demon strated less often. Indeed, since the advent of Sputnik, one is more likely to hear that it is free socie ties which are deficient in mobil izing intellectual resources, though the speaker usually mumbles some thing about the sacrifices which freedom merits.

True libertarians should not, I think, accept this niggardly de fense; they have at hand a far more potent thesis: that free in tellectual debate, and the intellec tual growth it nourishes, are in fact utterly dependent on economic freedom. The Sputnik-worshippers notwithstanding, man's intellec tual progress is the fruit and the reward of economic liherty. The reasons supporting such a 1969 THE INTELLECT IN UTOPIA 347 conclusion are not unduly tortu ous. The activities protected by so called "intellectual rights," speech, assembly, press, and petition, in evitably involve the disposal of economic goods, sometimes very large amounts, printing presses and television studios, sometimes only a place to stand. Life itself re quires that. This does not imply the depend ence of intellectual freedom on the possession of economic means, the old "what good is the right to ex press yourself if you can't afford a mimeograph" argument.

Intellectual Property and Political Priorities What I am suggesting is that because certain intellectual activi ties depend on the disposal of economic goods, the right to those activities depends on the right to dispose of property. Intellectual freedom depends on economic rig hts because it is a species of economic rights. It is a particular way of disposing of property. For this same reason, one can not have economic rights where no intellectual rights exist. If one may dispose of property as he will, he may dispose of it in the form of speeches, printings, or mass meetings, and the curtail ment of these is equally the curtail ment of an economic process. Thus, when a state becomes the sole proprietor, men and their ac tivities, including intellectual ac tivities, live or die by the permis sion and pleasure of government officials. In suppression, at least, he who controls the body, controls the mind.

The Soviet Union, for instance, has recently dealt with hundreds of dissenting intellectuals not only by refusing to publish their work, but also by depriving them of their jobs and apartments. Could even the most dedicated statist say the former was an act of sup pressing dissent, while the latter was merely economic activity? This in turn suggests the exist ence of a more subtle connection between thought and production. The free market presents men with an enormous range of diverse demand. There is, or can be, a market for virtually everything, innovations, new products, new styles. But when the commands of a small group become very nearly final, far fewer people will make the effort to think in ways unac ceptable to those in command. We know already the conforming pres sure of simple dependence; it is not hard to guess what the effects of nationally unified economic power will be.

Of course, it might be objected that a planned economy could do by decree what the free market does now: provide for intellectual 348 THE FREEMAN June debate and a wide diversity of opinion, allowing people to actu alize their ideas and communicate them. Theoretically, this does seem possible, but it does not happen, and there is considerable encour agement for it not to happen. First, because every economy must deal with its inability to satisfy all potential for consumption; some desires must go unfulfilled. Hence, socialist countries commit ted to a "decent" standard of liv ing for their people rarely find much left over for basic research, and usually less for the humani ties and social sciences. In current terms, then, it is a question of priorities; in an older lingo, a question of who gets what. To solve this problem, "liberal" economists vex themselves with cost-benefit analyses, but generally summarize with the platitudinous assurance that those "in the field"

will know who and what deserve support. If ever there were a pre scription for an ingrown culture, that is surely it. And in view of such assurances, it is interesting to remember that the two largest research and de velopment proj ects yet undertaken by governments have become a nathema to precisely those "liber als~' who now cry: All R&D to the government agencies. The atomic bomb, the Manhattan proj ect, they consider to be mankind's greatest stride toward hell, while the space program has come in for nearly universal condemnation as a vast misallocation of resources. Why do they assume future government proj ects will be more to their lik ing, unless they expect to do the deciding? Which may be fine for them, but less pleasant for everyone else. Commissions, however prestig iously staffed, are notoriously narrow-minded. Ewart Milne, re sponding to a London Times re port that young poets were pro testing the Establishmentarian outlook of the Arts Council, said: ... the Arts Council's' embrace would be likened by some of us elder poets to the kiss of death. The Arts Coun cil ... supports the kind of art, in cluding poetry, that is acceptable on a broad basis to the Establishment.

This is bound to be so in any field where state subsidy is of the essence. The Problem of Innovation What then of the unfashionable artist, dissenting scientist, inno vating experimenter? He faces only the terrible hauteur of those who are both fashionable and powerful. In the United States, the problems of innovation under planning can best he seen in the field of technical research and de velopment, which is almost 60 per cent government sponsored.

1969 THE INTELLECT IN UTOPIA 349 The basic justification for spon soring R&D under a government of limited mandate is that when legislative and executive person nel require certain information and material, they may purchase it on the market as anyone else would, by contracting with scien tists and engineers. Under this ar rangement, the government is pay ing for the product of research and not for researching as such. Thus, it seems reasonable to re quire statements from those who seek these contracts, telling us what our seventeen billion dollars a year is being spent to acquire. But by committing scientists to a definite plan, we may be tying them, perhaps for years, to pro grams which may no longer inter est them, or which may be tangen tial to some new insight more worthy of support. The "solution" sometimes suggested is for the bu reaus to pretend they are using a "projects criteria," but to allow such broadly drawn plans as will, in effect, convert the contract into a gift of patronage, the prospectus remaining principally as a sop for the mercenary public.

Experience Abroad But in the United Kingdom, where something more like a back the-man approach to subsidized creativity has been tried, the sys tem has come in for considerable criticism, and back-the-project al ternatives have been suggested. As one commentator said: In Britain, the traditions of "pure research" are deeper, and thefinanc ing of research is more insulated from the needs of government de partments or civilian technology, and therefore social needs. This may pro tect the pursuit of knowledge from corruption, but it does little else for society as a whole. More pertinently, such opera tions mark the return to a feudal conception of government. It is not surprising, then, that government patronage has proved no more liberating than aristocratic patron age. The Economist has written: Society will demand that those for whom it is paying should observe the general tenor of opinion in that so ciety. In demanding subsidies as a right, those who run [the National Theater] have to realize, too, that respect for their audiences' preju dices will be imposed on them as a duty.

In Russia, a country of extreme centralized planning, the problem has reached more drastic conclu sions. Artistic innovation, of course, is treated as a form of subversion. But even in the scien tific sphere, where innovation is essential to progress, it is scarcely a trickle. Though they innovate largely through controlled, and 350 THE FREEMAN June hence predictable, imitation of the West, they nevertheless look upon changes with mixed emotions. Bu rea ucracy and the risks of crea tivity are simply incompatible. And this has proved true not only in the management field, but also in the design stage, and even at the central planning level. Freedom from Planners But if the fate of innovation is thus precarious under a planned economy, the fate of dissent is nothing less than perilous. Milton Friedman has observed that we are likely to have more freedoms if we are able only to endorse them or rej ect them per se, and are not allowed to decide on in dividual cases. This seems per fectly true, and it applies with even greater force to a planned economy.

First of all, a planned economy can never endorse freedoms per see A free economy says: You may speak (or publish, or do what ever), but you must acquire the means to do so. In a planned econ omy, such permission is vacuous unless the government is also will ing to subsidize the action. And since no economy could provide the means to actualize every de sire, a planned economy must dis criminate, must decide cases, either individually or generically. Secondly, since a planned economy has to subsidize activities, those activities will have to be de sired considerably rather than merely tolerated. Currently, in this country, we have dissension which is vigorous and, in large measure, free. Even most of the dissenters' targets support their right to denounce society, and the right of institu tions to support them for that purpose. But if their magazines, schools, and foundations were owned by the government, sup ported by their targets' taxes, out of a limited "culture" budget, there would be much talk of pri orities, and the dissenters would be less well known. Gadflies of the right and left would find their funds in low supply whenever the majority did not wish to feel their bite, or whenever their. proddings displeased an agency, administra tion, or subcommittee. And that would be too bad, for in Milton's adage, "trial is what purifies us, and trial is by what is contrary."

Today, in Russia, intellectuals are re-Iearning the lesson of the Areopagitica: perfected men do not need opposition. The moderate sufferance which Khrushchev al lowed for a few years, as a tool in his power struggles, has been brutally revoked. In response, some Russian writers have in sisted that freedom of expression is a constitutional right, not an 1969 THE INTELLECT IN UTOPIA 351 administrative privilege. They have not seen that this is impos sible in a planned economy. When the state owns all the publishing houses, the censor and the editor merge, and the strictures of the former become the aesthetics of the latter. Such is the fate of the mind in utopia. Not in its first step perhaps, nor in its hundredth, but in its ultimate logic and basic principles. First comes the bu reaucracy, the limited funds, the priorities, then the dissent, the suppression, and the jails. It is a logical road which we are well along; and if we refuse to recog nize where we are going, we shall follow it to the end. ~ Essential Inconsistency 'I'HE WEAK POINT of the socialistic ideal is that it is a dogmatic or authoritative creed and encourages enthusiasts who hold it to think lightly of individual freedom, and suggests the very dubious idea that in a democracy the wish of the people may often be overruled for the good of the people. The ideal of democracy, in short, is government for the good of the people, by the people, and in accordance with the wish of the people; the ideal of col lectivism is government for the good of the people by experts, or officials who know, or think they know, what is good for the people better than either any non-official person or than the mass of the people themselves. Each of these two ideals contains some thing of truth, but each of these ideals may sooner or later clash with each other. This conflict may take various forms. But beliefs marked by essential inconsistency are certain to give rise to most serious and, it may be, very practical and embittered dissension. . . .

The inconsistency between democracy and socialism will never b~ :fully r~cogni.zed until earnest socialists force upon the people some law which, though in conformity with socialistic principles, imposes some new burden upon the mass of the voters. A. V. DICEY, Law and Opinion in England (1914) The Right to Health THOMAS S. SZASZ, M.D. THE CONCEPT that medical treat ment is a right rather than a privilege has gained increasing acceptance during the past dec ade. 1 Its advocates are no doubt motivated by good intentions; they wish to correct certain in equalities existent in the distribu tion of health services in Ameri can society. The desire to improve the lot of less fortunate people is laudable. Indeed, I share this desire~ Still, 1 "Concisely stated, the standard [of law as public policy] is that every indi vidual has a right to treatment, a right to good treatment, a right to the best treatment." B. S. Brown, "Psychiatric Practice and Public Policy," American Journal of Psychiatry, August, 1968, pp. 142-43.

Dr. Szasz, whose M.D. is from the University of Cincinnati in 1944, is Professor of Psychi atry, State University of New York, Upstate Medical Center, Syracuse, N. Y. This article, slightly condensed here, is re printed by permission from The Georgetown Law Journal of March, 1969. 352 unless all inequalities are con sidered inequities - a view clearly incompatible with social organi zation and human life as we now know it - two important questions remain. First, which inequalities should be considered inequities? Second, what are the most appro priate means for minimizing or abolishing the inequalities we deem "unj ust"? Appeals to good intentions are of no help in an swering these questions. There are two groups of people whose conditions with respect to medical care the advocates of a right to treatment regard as espe cially unfair or unjust, and whose situations they seek to ameliorate.

One is the poor, who need ordinary medical care; the· other group is composed of the inmates of public mental hospitals, presumably in need of psychia tric care. The 1969 THE RIGHT TO HEALTH 353 proposition, however, that poor people ought to have access to more, better, or lessexpensi ve medical care than they now do and that people in public mental hospitals~ ought to receive better psychia tric care than they now do, pose hvo quite different prob lems. I shall, therefore, deal with each separately. Not by Force Alone The availability of medical serv ices for a particular person, or group of persons, in a particular society depends principally upon the supply of the services desired and the prospective user's power to command these services. No government or organization whether it be the United States Government, the American Medi cal Association, or the Communist Party of the Soviet Union - can provide medical care, except to the degree it has the power to con trol the education of physicians, their right to practice medicine, and the manner in which they dis pose of their time and energies. In other ,vords, only individuals can provide medical treatment for the sick; institutions, such as the Church and the State, can pro mote, permit, or prohibit certain therapeutic activities, but cannot by themselves provide medical services.

Social groups wielding power are notoriously prone, of course, to prohibit the free exercise of cer tain human skills and the avail ability of certain drugs and de vices. For example, during the declining Middle Ages and the early Renaissance, the Church repeatedly prohibited Jewish phy sicians from practicing medicine and non-Jewish patients from seeking the former's services. The same prohibition was imposed by the Government of Nazi Germany. In the modern democracies of the free West, the State continues to exercise its prerogative to pro hibit individuals from engaging in certain kinds of therapeutic activities. This restrictive function of the State with respect to medi cal practice has been, and contin ues to be, especially significant in the United States. Without delving further into the intricacies of this large and com plex subject, it should suffice to note that our present system of medical training and practice is far removed from that of laissez faire capitalism for which many, especially its opponents, mistake it. In actuality, the American Medical Association is not only an immensely powerful lobby of med ical-vested interests - a force that liberal social reformers generally oppose - but it is also a state protected monopoly, in effect, a covert arm of the government354 THE FREEMAN June a force that the same reformers ardently support. 2 The result of this alliance between organized medicine and the American Gov ernment has been the creation of a system of education and licen sure with strict controls over the production and distribution of health care, which leads to an artificially-created chronic short age of medical personnel. This result has been achieved by limit ing the number of students to be trained in medicine through the regulation of medical education and by limiting the number of practitioners through the regula tion of medical licensure.

Supply and Demand A basic economic concept is that when the supply of a given service is smaller than the demand for it, we have a seller's market. This is obviously beneficial for the sellers - in this case, the medical profes sion. Conversely, when the supply is greater than the demand, we have a buyer's market. This is beneficial for the buyers - in this case, the potential patients. One way - and according to the sup2 Joseph S. Clark, Jr., the then Mayor of Philadelphia, defined a "liberal" as "one who believes in utilizing the full force of government for the advance ment of social, political, and economic justice at the municipal, state, national, and international levels." Clark, "Can the Liberals Rally?" The Atlantic Month ly, July, 1953, p. 27. porters of a free market economy, the best way - to help buyers get more of what they want at the lowest possible price is to in crease the supply of the needed product or service. This would suggest that instead of govern ment grants for special Neigh borhood Health Centers and Com munity Mental Health Centers, the medical needs of the less affluent members of American society could be better served simply by repealing laws governing medical licensure. As logical as this may seem, in medical and liberal circles this suggestion is regarded as hairbrained, or worse. 3 Since medical care in the United States is in short supply, its avail ability to the poor may be im proved by redistributing the exist ing supply, by increasing the supply, or by both. Many individ uals and groups clamoring for an improvement in our medical care 3 For an excellent discussion of the deleterious effects on the public of pro fessionallicensure requirements, see Mil ton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962). Friedman correctly notes that the justification for enacting special licen sure provisions, especially for regulat ing medical practice, "is always said to be the necessity of protecting the public in terest. However, the pressure on the legislature to license an occupation rare ly comes from the members of the pub lic .... On the contrary, the pressure invariably comes from members of the occupation itself." p. 140.

1969 THE RIGHT TO HEALTH 355 system fail to scrutinize this artificially created shortage of medical personnel and to look to a free market economy for restor ation of the balance between de mand and supply. Instead, they seek to remedy the imbalance by redistributing the existing supply - in effect, by robbing Peter to pay Paul. This proposal is in the tra dition of other modern liberal social reforms, such as the redis tribution of wealth by progressive taxation and a system of com pulsory social security. No doubt, a political and economic system more socialistic in character than the one we now have could pro mote an equalization in the quality of the health care received by rich and poor. Whether this would result in the quality of the medical care of the poor approximating that of the rich, or vice versa, would remain to be seen. Experi ence suggests the latter. For over a century, we have had our version of state-supported psychiatric care for all who need it: the state men tal hospitals system. The results of this effort are available for all to see.

The IIRight" to Psychiatric Treatment 4 Most people in public mental hospitals do not receive what one 4 This part of the article is adapted, with minor modifications and additions, from my book, Law, Liberty and Psychiwould ordinarily consider treat ment. With this as his starting point, Birnbaum has advocated "the recognition and enforcement of the legal right of a mentally ill inmate of a public mental institu tion to adequate medical treat ment for his mental illness."5 Although it defined neither "mental illness" nor "adequate medical treatment," this proposal was received with enthusiasm in both legal and medical circles. 6 Why? Because it supported the myth that mental illness is a med ical problem that can be solved by medical means. The idea of a "right" to mental treatment is both naive and dan gerous. It is naive because it con siders the problem of the publicly hospitalized mental patient as a medical one, ignoring its educa tional, economic, moral, religious, and social aspects. It is dangerous because its proposed remedy cre ates another problem - compulat1'Y (New York: Macmillan, 1963), pp.

214-16. My objections to the concept of a "right to mental treatment," formu lated in 1962, seem to me as valid today as they were then. 5 M. Birnbaum, "The Right to Treat ment," American Bar Association Jour nal 46:499 (1960). 6 For example, see T. Gregory, "A New Right" (Editorial), American Bar Association Journal 46:516 (1960); and D. Janson, "Future Doctors Chide the A.M.A., Deplore Stand That Health Care Is Not a Right," The New York Times, December 15, 1967, P. 21.

356 THE FREEMAN June sory mental treatment - for in a context of involuntary confine ment the treatment, too, shall have to be compulsory. Hailing the right to treatment as "A New Right," the editor of The American Bar Association Journal compared psychiatric treatment for patients in public mental hospitals with monetary compensation for the unemployed.7 In both cases, we are told, the principle is to help "the victims of unfortunate circumstances."8 But things are not so simple. We know what is unemployment, but we are not so clear regarding the definition of mental illness. Moreover, a person without a job does not usually object to receiv ing money; and if he does, no one compels him to take it. The situ ation for the so-called mental patient is quite different. Usually he does not want psychiatric treat ment. Yet, the more he obj ects to it, the more firmly society insists that he must have it.

Of course, if ~e define psychi atric treatment as "help" for the "victims of unfortunate circum stances," how can anyone object to it? But the real question is two fold: What is meant by psychi atric help and what should the helpers do if a victim refuses to be helped? 7 Gregory, Ope cit., p. 516. 8 Ibid. From a legal and sociologic point of view, the only way to define mental illness is to enumer ate the types of behavior psychi atrists consider to be indicative of such illness. Similarly, we may define psychiatric treatment by listing the procedures which psy chia trists regard as instances of such therapy. A brief illustration should suffice. Levine lists 40 methods of psy chotherapy.9 Among these, he in cludes: physical treatment, me dicinal treatment, reassurance, authoritative firmness, hospitaliza tion, ignoring of certain symptoms and attitudes, satisfaction of neu rotic needs, and bibliotherapy. In addition, there are physical meth ods of psychiatric therapy, such as the prescription of sedatives and tranquilizers, the induction of convulsions by drugs or electricity, and brain surgery.I0 Obviously, !) M. Levine, Psychotherapy in J.l,.ledi cal Practice (New York: Macmillan, 1942), pp. 17-18.

10 The following is a curious, though by no means rare, example of the kind of thing that passes nowadays for men tal treatment. In Sydney, Australia, "a former tax inspector on trial for mur dering his sleeping family was found not guilty on the grounds of mental illness. ... A psychiatrist told the court yester day that Sharp, on trial for killing his wife and two children, had apparently cured his mental illness when he shot himself in the head." New York H erald Tribune (Paris), July 5, 1968, p. 5. Mur der is here considered an "illness," and a brain injury a "treatment" and indeed 1969 THE RIGHT TO HEALTH 357 the term "psychiatric treatment" covers everything that may be done to a person under medical auspices - and more. In relation to psychiatric treat ment, then, the most fundamental and vexing problem becomes: How ca~ a "treatment" which is com pulsory also be a right? As I have shown elsewhere,l1 the problem posed by the neglect and mistreat ment of the publicly hospitalized mentally ill is not derived from any insufficiency in the treatment they receive, but rather from the basic conceptual fallacy inherent in the notion of mental illness and from the moral evil inherent in the practice of involuntary mental hospitalization. Preserving the concept of mental illness and the social practices it has justified and papering over its glaring cognitive and ethical defects by means of a superimposed "right to mental treatment," only aggra vates an already tragically in human situation.

As my foregoing remarks indi cate, I see two fundamental dea "cure" for it. In the Brave New World where treatment is a right, will every murderer have the right to a brain in jury - if not by means of a gun, then perhaps by that of a leucotome? 11 See T. S. Szasz, The Myth of Men tal Illness (New York: Hoeber-Harper, 1961); Law, Liberty and Psychiatry (New York: Macmillan, 1963); and Psy chiatric Justice (New York: Macmillan, 1965). fects in the concept of a right to treatment. The first is scientific and medical, stemming from un clarified issues concerning what constitutes an illness or treatment and who qualifies as a patient or physician. The other is political and moral, stemming from un clarified issues concerning the differences between rights and claims. Unclarilied Issues In the present state of medical practice and popular opinion, defi nitions of the terms "illness," "treatment," "physician," and "pa tient" are so imprecise that a con cept of a right to treatment can only serve to further muddy an already very confused situation.

One example will illustrate what I mean. One can "treat," in the medical sense of this term, only a disease, or, more precisely, only a person, now called a "patient," suffering from a disease. But what is a disease? Certainly, cancer, stroke, and heart disease are. But is obesity a disease? How about smoking cigarettes? Using heroin or marij uana ? Malingering to avoid the draft or collect insurance compensation? Homosexuality? Kleptomania? Grief? Each one of these conditions has been de clared a disease by medical and psychiatric authorities with im358 THE FREEMAN June peccable institutional credentials. Furthermore, innumerable other conditions, varying from bachelor hood and divorce to political and religious prejudices, have been so termed. Similarly, what is treatment? Certainly, the surgical removal of a cancerous breast is. But is an organ transplant treatment? If it is, and if such treatment is a right, how can those charged with guaranteeing people the protection of their right to treatment dis charge their duties without hav ing access to the requisite number of transplantable organs? On a simpler level, if ordinary obesity, due to eating too much, is a dis ease, how can a doctor treat it when its treatment depends on the patient eating less? What does it mean, then, that a patient has a right to be treated for obesity?

I have already alluded to the fa cility with which this kind of right becomes equated with a societal and medical obligation to deprive the patient of his freedom - to eat, to drink, to take drugs, and so forth. Who is a patient? Is he one who has a demonstrable bodily illness or injury, such as cancer or a fracture? A person who complains of bodily symptoms, but has no demonstrable illness, like the so called "hypochondriac"? The per son who feels perfectly well but is said to be ill by others, for ex ample, the paranoid schizophren ic? Or is he a person, such as Senator Barry Goldwater, who professes political views differing from those of the psychiatrist who brands him insane? Finally, who is a physician? Is he a person licensed to practice medicine? One certified to have completed a specified educational curriculum? One possessing cer tain medical skills as demonstrated by public performance? Or one claiming to possess such skills?

It seems to me that improve ment in the health care of poor people and those now said to be mentally ill depends less on decla rations about their rights to treat ment and more on certain reforms in the language and conduct of those professing a desire to help them. In particular, such reforms must entail refinements in the use of medical concepts, such as ill ness and treatment, and a recogni tion of the basic differences be tween medical intervention as a service, which the individual is free to seek or rej ect, and medical intervention as a method of social control, which is impQsed on him by force or fraud. "Rights ll versus IIClaimsll The second difficulty which the concept of a right to treatment poses is of a political and moral 1969 THE RIGHT TO HEALTH 359 nature. It stems from confusing "rights" with "claims," and pro tection from injuries with provi sion for goods or services.

For a definition of right, I can do no better than to quote John Stuart Mill: "I have treated the idea of a right as residing in the injured person and violated by the injury . ... When we call anything a person's right, we mean that he has a valid claim on society to protect him in the possession of it, either by force of law, or by that of education and opinion .... To have a right, then, is, I con ceive, to have something which society ought to de/end me in the possession 0/."12 This helps us distinguish rights from claims. Rights, Mill says, are "possessions"; they are things people have by nature, like liber ty; acquire by dint of hard work, like property; create by inventive ness, like a new machine; or in herit, like money. Characteris tically, possessions are what a person ha~, and of which others, including the State, can therefore deprive him. Mill's point is the classic libertarian one: The State should protect the individual in his rights. This is what the Dec laration of Independence means 12 J. S. Mill, "Utilitarianism" [1863], in M. Learner, ed., Essential Works of John Stuart Mill (New York: Bantam Books, 1961). p. 238.

when it refers to the inalienable rights to life, liberty, and the pur suit of happiness. It is important to note that, in political theory, no less than in everyday practice, this requires that the State be strong and resolute enough to pro tect the rights of the individual from infringement by others and that it be decentralized and re strained enough, typically through federalism and a constitution, to insure that it will not itself vio late the rights of its people. In the sense specified above, then, there can be no such thing as a right to treatment. Conceiv ing of a person's body as his pos session - like his automobile or watch (though, no doubt, more valuable) - it is just as nonsensi cal to speak of his right to have his body repaired as it would be to speak of his right to have his automobile or watch repaired. It is thus evident that in its current usage and especially in the phrase "right to treatment" the term "right" actually means claim.

More specifically, "right" here means the recognition of the claims of one party, considered to be in the right, and the repudia tion of the claims of another, opposing party, considered to be in the wrong, the "rightful" party having allied itself with the in terests of the community and having enlisted the coercive pow360 THE FREEMAN June ers of the State on his behalf. Let us analyze this situation in the case of medical treatment for an ordinary bodily disease. The pa tient, having lost some of his health, tries to regain it by means of medical attention and drugs. The medical attention he needs is, however, the property of his phy sician, and the drug he needs is the property of the manufacturer who produc'ed it. The patient's right to treatment thus con flicts with the physician's right to liberty, that is, to sell his services freely, and the pharma ceutical manufacturer's rights to his own property, that is to sell his products as he chooses. The advocates of a right to treatment for the patient are less than can did regarding their proposals for reconciling this proposed right with the right of the physician to liberty and that of the pharma ceutical manufacturer to proper ty.13 13 The proposition that sick people have a special claim to the protection of the State - in other words, that they be allowed to use the coercive apparatus of State to expropriate the fruits of the labor of others - is a part of a much larger theme, namely, the inevitable tendency in a society for each special interest group to enlist the powers of the State on its own behalf. In this con nection, R. A. Childs has recently writ ten: "Economically, the state uses its monopoly on expropriation of wealth to create political castes, or 'classes.' ...

Thus, today, we see the state being supNor is it clear how the right to treatment concept can be recon ciled with the traditional Western concept of the patient's right to choose his physician. If the pa tient has a right to choose the doctor by whom he wishes to be treated, and if he also has a right to treatment, then, in effect, the doctor is the patient's slave. Obvi ously, the patient's right to choose his' physician cannot be wrenched from its context and survive; its ported by businessmen who are being benefited by defense contracts and other state patronage, tariffs, subsidies, and special tax 'loopholes'; unions which are benefited by labor laws; farmers bene fited by price supports, and other groups benefited by other state-granted privi leges. . . . Of course, almost every group is harmed more by the benefits heaped on other groups than it is helped by its own special privileges, but since the state has gotten people to believe that the only valid approach to problems is to increase, rather than to decrease, state powers, no one mentions the possi bility of benefiting each group by re moving the special privileges of all other groups. Instead, each group supports the state, to benefit itself at the expense of all other groups." R. A. Childs, Jr., "Autarchy and the Statist Abyss," Ram part Journal, Summer, 1968, pp. 4-5.

Long ago, Tocqueville had perceived this phenomenon and warned of its dan gerous consequences for individual lib erty. "The government having stepped in to the place of Divine Providence in France it was but natural that everyone, when in difficulties, invoked its aid." Alexis de Tocqueville, The Old Regime and the French Revolution [1856] (Gar den City, N. Y.: Doubleday-Anchor, 1955), p. 70.

1969 THE RIGHT TO HEALTH 361 corollary is the physician's right to accept or reject a patient, except for rare cases of emergency treat ment. Noone, of course, envisions the absurdity of physicians being at the personal beck and call of individual patients, becoming lit erally their medical slaves, as some had been in ancient Greece and Rome. Bureaucratic Decisions and Care The concept of a right to treat ment has a different, much less absurd but far more ominous, im plication. For just as the corollary of the individual's freedom to choose his physician is the phy sician's freedom to refuse to treat any particular patient, so the cor ollary of the individual's right to treatment is the denial of the physician's right to reject, as a patient, anyone officially so desig nated. This transformation re moves, in one fell swoop, the indi vidual's right to define himself as sick and to seek medical care as he sees fit, and the physician's right to define whom he considers sick and wishes to treat; it places these decisions instead in the hands of the State's medical bu reaucracy.

As a result, bureaucratic care, as contrasted with its entrepre neurial counterpart, ceases to be a system of healing the sick and in stead becomes a system of controlling the deviant. Although this outcome seems to be inevitable in the case of psychiatry (in view of the fact that ascription of the label "mental illness" so often functions as a quasi-medical rhet oric concealing social conflicts), it need not be inevitable for nonpsy chiatric medical services. How ever, in every situation where medical care is provided bureau cratically, as in communist soci eties, the physician's role as agent of the sick patient is necessarily alloyed with, and often seriously compromised by, his role as agent of the State. Thus, the doctor be comes a kind of medical policeman - at times helping the individual, and at times harming him. Returning to Mill's definition of a "right," one could say, further, that just as a man has a right to life and liberty, so, too, has he a right to health and, hence, a claim on the State to protect his health.

It is important to note here that the right to health differs from the right to treatment in the same way as the right to property dif fers from the right to theft. Rec ognition of a right to health would obligate the State to prevent indi viduals from depriving each other of their health, just as recognition of the two other rights now pre vents each individual from depriv ing every other individual of lib erty and property . It would also 362 THE FREEMAN June obligate the State to respect the health of the individual and to deprive him of that asset only in accordance with due process of law, just as it now respects the individual's liberty and property and deprives him of them only in accordance with due process of law. As matters·now stand, the State not only fails to protect the indi vidual's health, but actually hind ers him in his efforts to safeguard his own health, as in the case of its permitting industries to befoul the waters we drink and the air we breathe. The State similarly prohibits individuals from obtain ing medical care from certain, of ficially "unqualified," experts and from buying and ingesting cer tain, officially "dangerous," drugs.

Sometimes, the State even deliber ately deprives the individual of treatment under the very guise of providing treatment. Conclusion The State can protect and pro mote the interests of its sick, or potentially sick, citizens in one of two ways only: either by coercing physicians, and other medical and paramedical personnel, to serve patients - as State-owned slaves in the last analysis, or by creating economic, moral, and political cir cumstances favorable to a plentiful supply of competent physicians and effective drugs. The former solution corresponds to and reflects efforts to solve human problems by recourse to the all-powerful State. The rights promised by such a State - ex emplified by the right to treat ment - are not opportunities for uncoerced choices by individuals, but rather are powers vested in the State for the subjection of the interests of one group to those of another.

The latter solution corresponds to and reflects efforts to solve human problems by recourse to individual initiative and voluntary association without interference by the State. The rights exacted from such a State - exemplified by the right to life, liberty, and health - are limitations on its own pow ers and sphere of action and pro vide the conditions necessary for, but of course do not insure the proper exercise of, free and re sponsible individual choices. In these two solutions we recog nize the fundamental polarities of the great ideological conflict of our age, perhaps of all ages and of the human condition itself; namely, individualism and capitalism on the one side, collectivism and com munism on the other. There is no other choice. ~ EDUCATION IN AMERICA GEORGE CHARLES ROCHE III 9. AcademicFreedomfor What? PROFESSOR SIDNEY HOOK has quite justly criticized the great quanti ties of "sloppy rhetoric" poured forth on the subject of academic freedom. The overdiscussion of such a topic usually stems from chronic underdefinition, reflecting the painfully human trait of hav ing the most to say on a subject when we are least sure what ought to be said.

Higher education is plagued by this lack of a workable definition for academic freedom, and this is rooted in a singular fact: Never Dr. Roche is Director of Seminars for the Foundation for Economic Education. He has taught history and philosophy in college and maintains a special interest in American edu cation. has there been a formal statement of the relationship between the academic. comnlunity and the rest of society. Is the academic com munity merely to teach our young? Or do we ask that it also discover new truths? Perhaps we also wish our teachers to serve as philoso phers of the realm. In short, no lasting answer seems to have been given the questions: Should so ciety decide what is taught in the grove academe? Should the acad emy decide society's course? Or, does some workable third alterna tive exist? Perhaps the best means of get ting at the relationship between the academy and society is to clar364 THE FREEMAN June ify what we have in mind when we discuss the education of the indi vidual student. The student is the vital link between academy and society, since it is the student in whom both have a common stake.

In the last analysis, we want one thing for the student: freedom i.e., the achievement of that ca pacity for internal self-determina tion allowing him to become a whole man, his own man. How is this freedom to be achieved? It must be achieved through knowl edge, through the development of a capacity for self-discipline, through an understanding of the obligations and privileges involved in life. Freedom for the student surely cannot be attained without free dom for the teacher. Freedom to think, to challenge the common view on occasion, would therefore seem an absolute requirement if education is to achieve the full development of the individual stu dent. Does this freedom to develop and state one's own views have no limitation? Many of those who discuss academic freedom insist that any restraint is unwarranted, since it interferes with a mysteri ous and ill-defined "universal dia logue." Others would insist that, while the freedom of research must be unlimited, society has a right to censor what its young people are taught. In effect, the teacher would be told, "Think what you like, but teach only what the majority approves."

Both of the above positions tend to be mere caricatures. Few actu ally advocate a literal freedom to teach any idea, however socially unacceptable it might be. An equally small number actually ad vocates a literal enforcement of censorship over the classroom teacher. The desirable norm lies somewhere between the two. Sure ly anyone qualified to teach the young should ideally already pos sess the inner freedom, the self discipline, the necessary internal check of the truly civilized man, to maintain the. standards of his ideas and values on such a high plane that parents should have no grounds for complaint. By the same token, parents should have sufficient confidence in the stand ards of teachers to allow them a free hand. The trouble lies in the fact that many teachers no longer seem to operate within the framework of values constituting civilized be havior. Such teachers seem to have adopted the totally relative standards so damaging to modern society. Parents are not to be blamed for recognizing that teach ers who themselves lack standards of value are ill-prepared to impart the proper values to the young.

This may explain why some par1969 ACADEMIC FREEDOM FOR WHAT? 365 ents desire to censor the classroom offerings of the teacher. Such a desire may be under standable, but it is unacceptable if freedom for student and teacher is our goal. Merely substituting one set of wrong ideas for another set, trading license for repression, will not produce the desired effect. If the teacher is to lead the student on the high road to inter nal freedom, to his development as a unique person, he must be free himself; free to pursue his specu lations, free to express the results of his findings. Such a teacher is more than an employee hired to teach the young. He becomes a seeker after truth, dedicated to explaining that truth to those who will follow. Academic freedom thus becomes an expression of sufficient confidence in the teacher to allow that process to operate. Relativism Still, the search for truth car ries with it the assumption that truth does exist. The alleged "ob jective" approach of many pres ent-day educators contains no such assumption. All ideas are to be presented to the student with out that evil of evils, the "value judgment." Such relativism finally denies all values, thus destroying the framework of civilized value within which meaningful individu al choice must be made. Christ, Socrates, and the other great teachers of history had at least two things in common: They dis tinguished between right and wrong; and they did not hesitate to announce that distinction to all who would listen. In short, they recognized a framework of values.

There is also another historical lesson to be learned on the neces sity of values. Those societies de nying the validity of a value framework have invariably proven to be societies on the decline. The Sophists who finally destroyed the Greeks serve as a graphic exam ple. Unfortunately, truth will not necessarily rise to a dominant position in a totally "objective" teaching situation. Teachers who fail to believe strongly enough in the existence of truth as a premise for their teaching often serve as the ideal foils of those who would "stack the deck" against the free choice of the individual. Witness the twentieth century history of Russia or Germany, where totali tarian control came as the after math of periods of so-called "free inquiry." Ultimately, the teacher must be free to do his own thinking and the student must be free to choose what ideas he will accept or reject. But the whole process of orderly thought becomes impossible unless some framework exists for the 366 THE FREEMAN June process of thinking. A completely relativistic stance is doomed to endless internal contradiction. If, as a relativist, a man insists that one opinion is as good as another, what defense has he against a totally contradictory view? If all views are equally valid, one man's denial is as sound as another's affirmation. Such thinking can only "agree to disagree" in an endless (and pointless) discussion foredoomed never to reach a con clusion.

In a situation where "academic freedom" is so abused, it is small wonder that society finally balks at the prospect of the deforming edu cational process which results. Most men sense that freedom in volves far more than the license to do as one pleases. Meaningful freedom has always implied re sponsibility, and responsibility de mands self-control. Self-control presupposes guidelines within which the individual attempts to live in accord with accepted and acceptable standards. The denial of those standards and of the necessity for self-control in the name of "academic freedom" is as much a denial of true freedom for the individual as is an attempt to censor student and teacher in the classroom. Either way, genuine academic freedom suffers. Much of the "sloppy rhetoric" on academic freedom to which Sidney Hook referred originates within the ranks of the "intel lectual" community - authors, edi tors, critics, and scholars, many of whom tend to be enamored of their own company. This love af fair is sufficiently ingrown that all too often these mutually congratu latory purveyors of "modern"

thought have come to regard any criticism of their position as an assault upon "academic freedom." The strength of this delusion is verified by the spectacle of the many professors who seem to view themselves as part of an embattled nonconformist minority despi te the fact that in many cases all the members of their respecti ve departments share the same ideological position. Outside Threats to Academic Freedom The pressures on academic free dom originating outside the acad emy are sometimes exaggerated. Most men of good will are ex tremely reticent to .lend their sup port to any thoroughgoing censor ship over ideas on the campus. The danger to academic freedom is perhaps less likely to result from public concern over what is being taught on campus than from increased control of the purse strings by governmental and quasi-governmental agencies. This very real threat to academic free dom,especially in research, is 1969 ACADEMIC FREEDOM FOR WHAT? 367 rooted in the use of tax monies in the manipulation of higher edu cation. This important matter will be further discussed a bit later in the context of public versus pri vate financing of education. Let it suffice here to mention the seri ous threat of government control in higher education both directly, through subsidy of education with tax money, and indirectly, through corporate agencies holding govern ment contracts.

Threats from Within Though quick to complain of external threats to their academic freedom, professors seldom look to themselves, to the academic com munity itself, as the source of the trouble. As a case in point, consider the decline in standards which often has accompanied the mass production techniques of modern higher education: To want to extend the boundaries of knowledge, or to conserve the wis dom of ancestors, some faith in the importance of learning, and in a Good that is more than private gain, is re quired. That lacking, the teacher be comes a hired hand, paid to do a chore ... The automobile-worker on the as sembly line enjoys no special freedom; he has no duties which require a spe cial freedom. And if the teacher will ingly assists in the reduction of for mal education to a mere degree-mill intended to keep young people very mildly occupied, as if they were in an inordinately expensive kindergar ten, then he surely will lose his aca demic freedom. . ..

Just what sort of academic freedom do these professor-employees expect? And just what sort do they deserve? What sacred trust are they guarding? Just how much do they themselves care about Truth? Some of them have on their shelves no books but a few free copies of textbooks; some of them talk, when they meet together, only of salaries and faculty scandals; some of them say that this state of affairs is a positive good, and look forward with relish to the demise of private foundations which, with intellectual snobbery, still cling to standards. 1 Academic freedom is further endangered from within by the growing tendency to substitute slogans for thought. Examples of such slogans abound. Appeals for increased emphasis upon proper training of individuals and higher standards within education are often denounced by teacher and administrator alike as "undemo cratic." Secure in tenure, many professors seem more irritated than stimulated by a student with an inquiring mind or a colleague who holds differing views. Nicho las Berdyaev might have been addressing himself to the Ameri can scene when he remarked: "With sorrow we must recognize the fact that freedom is dear only 1 Russell Kirk, Academic Freedom, pp.

163,177.

368 THE FREEMAN June to those men who think creatively. It is not very necessary to those who do not value thinking."2 With due allowance to the many creative thinkers and teachers throughout American education, the truth of Russell Kirk's severe indictment remains: Though they may go through the motions of "research," they care pre cious little about the duty to extend the boundaries of knowledge, and not very much about the duty to conserve the knowledge of our civilization. The humiliating pressure which many ad ministrators endeavor to exert upon teachers to publish - to publish just anything, anywhere, for the sake of the record - or to draw up enormous committee-reports about trivialities suggests that both administrators and teachers are ignorant of the true nature of academic freedom and aca demic dignity. All the administrator wants is some tangible evidence of busy-work to present to his trustees or to the state legislature; all the teacher wants is some sham-proof of his liveliness of mind that may bring him a two-hundred-dollar increase in salary. How much freedom do such men have? And how much do they deserve?3 Political Activism In addition to those who misin terpret academic freedom as a 2 Nicholas Berdyaev, The Realm of Spirit and The Realm of Caesar, p. 110.

3 Russell Kirk, Academic Ft'eedom, p. 162. "freedom to do nothing," higher education is also faced with po litical activists who use their po sitions as a sanctuary from which politically motivated attacks can be launched against the rest of society. "Sanctuary" is a well advised term. Such political activ ists never question the justice of their attacks, yet are the first to raise the cry of "academic free dom" over the inevitable reaction to their activity. Learned Hand once remarked, "You cannot wear a sword beneath a scholar's gown." He was quite right. Noone can simultaneously be advocate and scholar. Refusal to face this fact makes the politi cal activist on the campus a pri mary offender against the aca demic freedom he constantly evokes. Much of the student unrest on campus is directly traceable to faculty agitation, in which a priv ileged academic position is used to subvert the entire process. Such professors are often so busy in such causes that they neglect the very teaching and research which is the reason for the academic community's existence. Unless the teacher fulfills his duties to the system and convinces society he is discharging those duties, he can expect to lose the privileged base he has been granted. Academic freedom is not some irrevocable 1969 ACADEMIC FREEDOM FOR WHAT? 369 grant. If it is lost, we all suffer, because the process of creative thinking suffers as does the devel opment of truly free, inner-di rected students. But any right is doomed unless its inevitably ac companying responsibilities are discharged.

While the professor has every right to take part in politics on his own, the current tendency to use the academy as an arsenal and staging ground for political com bat is both unwarranted and dan gerous. Considering the enormous overextension of government in our society, we may expect that when the academy is willing to lend itself to indoctrination and activism rather than education, the end result will be political regula tion of that indoctrination. The state will prove to be a poor guard ian of academic freedom. The need is great for the aca demic community to put its own house in order. The image and the fact of an intellectual community devoted to pursuing the truth must be renewed. Meanwhile, the number of genuine teachers and scholars quietly pursuing their proper function is the cement which still holds the system to gether, despite all the destructive forces at work upon it.

This community of scholars needs protection on two fronts: from those outside the academy who would destroy freedom through excessive regulation, and from those inside the academy who would destroy the system through license. Unless faculties can regu late themselves from within, they may rest assured they will be regulated from without. The central question remains then, "Academic Freedom for vVhat?" The answer is twofold: the pursuit of truth; and the si rnultaneous responsibility for de veloping individual students so self-disciplined, so internally free as the result of their knowledge of civilized standards and human responsibilities, that the core of values constituting civilization will be consistently reflected in their behavior. That is the road to salvation for not only the aca demic community, but for every one in society. In a word, academic freedom is the freedom to perform the task peculiar to proper educa tion. \Vhen the academic com munity takes other roles unto itself, it does so at the dual risk of failing in its own function while tempting other elements in society to usurp and corrupt the educational function. ~ The next article of this series will discuss "Revolt on the Campus."

GARY NORTH The Fallacy of ttIntrinsic Value" If people value something, it has value,. if people do not value some thing, it does not have value; and there is no intrinsic about it. RT. HON. J. ENOCH POWELL, M.P. "IDEAS DIE HARD," says an old proverb. Even in an age of rapid change, such as our own, the slo gans, cliches, and errors of earlier times seem to persist; it often seems that the truths that once brought peace, stability, and steady progress are the first things to be abandoned, while the errors per sist undaunted. Henry Hazlitt once wrote of John Maynard Keynes that the true things he said were not new, and the new things he said were not true. Yet it is the new aspect of Keynes' "New Economics" that has fas cinated today's guild of econo mists. The triumph of the slogan is understandable. We are limited creatures. We cannot attain ex haustive knowledge of anything, Gary North is a member of the Economists' National Committee on Monetary Policy. He teaches at the University of California at Riverside while working on a doctorate in Economic History.

370 and certainly not of everything. As a result, we find ourselves at the mercy of the expert; simul taneously, we live our day-to-day lives in terms of ideas that we cannot be continually re-examin ing. Some things must be ac cepted on faith or by experience; we have neither the time nor ca pacity to rethink everything we know. Still, no intelligent person dares to neglect the possibility that his opinion in some area or other may be open to question. At times it is vital that we reconsider a subject, especially if it is a bar rier to clear thinking or effective action. If our error is in a realm of life in which we claim to be ex perts, or at least skilled amateurs, then the necessity of careful rea soning is exceptionally important. The persistence of some erroneous line of reasoning here, simply be cause this unexamined train of 1969 THE FALLACY OF "INTRINSIC VALUE" 371 thought is familiar to us, can be disastrous.

Take, for example, the labor theory of value. Classical econom ics - by which we mean that body of economic thought which was in vogue from the time of Adam Smith (1770's) until the margin alist-s ubj ecti ve schools arose (1870's) - was confounded by the problem of value. It proposed a cause-and-effect relationship be tween human labor and value: ab stract human labor (which itself was an abstract concept derived more from mechanics than human experience) was produced by la borers on their jobs; this abstract human labor was in some way em bodied in the products of that la bor, and this is the source of all value. Certain inescapable prob lems arose under this presupposi tion. Why did selling prices fail to correspond to the total payments made to labor? How did the phe nomenon of profit appear? What was the origin of interest? On a more concrete level, why did an uncut diamond bring a higher price on the market than an in tricate mechanism like a clock?

They could explain the disparity of selling prices of jewels and sell ing prices of clocks in terms of supply and demand, but their labor theory of value never fitted into this explanation. It was an extra neous issue. Contradictions of Marx Karl' Marx was the last major 'economist to hold to the labor theory. In this sense, he was the last of the great classical econo mists. He wanted to demonstrate that capitalism, by its own in ternal contradictions, was doomed to a final destruction. Unfortu nately for Marx's predictions, what he regarded as a basic set of contradictions of capitalism was merely a set of contradictions in the reasoning of the classical econ omists. He confused a faulty ex planation of the capitalist process with the actual operation of the capitalist system. Ironically, Marx fell into a pit which he always re served for his enemies: he looked not at the empirical data as such, but at an interpretation of the data - not at the "substructure"

of the society, but the ideological "superstructure." Das Kapital was published in 1867; by 1871, the marginalist assault had been launched by Karl Menger of Aus tria and W. S. Jevons of England. The labor theory of value which had undergirded Marx's whole an alysis of capitalism was destroyed. When Bohm-Bawerk, the Austrian economist who was to gain fame as Menger's most rigorous dis ciple, offered his criticisms of Marx in 1884 (and again in 1896), it was clear (to non-Marxists, any way) that the Marxian framework 372 THE FREEMAN June had gone down with the classical ship.! What the new theory did was to reverse the cause-and-effect rela tionship of the classical school. The value of labor is derivative: it stems from the value of labor's product. This, in turn, is the out come of supply and demand. Peo ple desire certain products; these products are not in unlimited sup ply in relation to the demand. Or, to put it another way, at zero price, some of the demand is left unsatiated. The value of the prod uct is not derived from labor; the reverse is true. Thus, value is not something intrinsic to either the labor or the product; value is im puted by acting men. Value is not a metaphysically existing sub stance; an object is simply valued (passive) by someone who actively values it. Marx always chided capitalist thinkers for making a "fetishism of commodities," Le., ascribing to economic goods a life of their own apart from the hu man and social relations that make possible the creation of the goods. But this is precisely his labor theory of value. It hypothe sized the existence of "congealed labor time" which supposedly gives 1 Cf. Gary North, Marx's Religion of Revolution (Nutley, New Jersey: Craig Press, 1968), ch. 5, especially pp. 155-70.

See also Dean Lipton, "The Man Who Answered Marx," THE FREEMAN (October, 1967). value to commodities. Had he turned to the individuals who ac tively participate in all economic action, he would have been led to abandon his own brand of "com modity fetishism." Marx, the self proclaimed empiricist, was befud dled by his own a priori theory. Contemporary Errors Yet we should not be too hasty in ridiculing Marx for his insist ence on viewing valu~ as some thing intrinsic in an economic good. People are so used to think ing in these terms that few of us are free from some variety of this basic error. Homes are seen as containing something called "equity"; factories "possess" in vestments, almost as if these in vestments were held in some kind of suspension within the factory walls. 2 The Marxist, of course, has a vested interest in this line of reasoning: the master taught it. Why others continue to indulge in such speculation is a perplexing problem. It is a case where the "common sense" economics of the man in the street is in error.

Conservatives do not like com munism. As a result, they' are willing to reject the familiar ten ets of Marx's economics. Those who have read at least excerpts 2 Cf. Gary North, "Urban Renewal and the Doctrine of Sunk Costs," THE FREE MAN (May, 1969).

1969 THE FALLACY OF "INTRINSIC VALUE" 373 from Capital and who are aware of the labor theory of value are usually willing to abandon the idea. Unfortunately, it would seem that they abandon it in name only, simply because Marx happened to believe it. They have not aban doned the fundamental approach to economics which Marx em ployed, namely, the fallacy of in trinsic value. The most common application of this erroneous con cept, at least in conservative cir cles, is the idea that gold and sil ver possess intrinsic value, while paper money does not. This error deserves special attention. There are a number of reasons why conservatives make this mis take. They are guided by the best of intentions. They see that paper money and bank credit have led in •the past and are leading today to virulent inflations. They fear the economic and social dislocations associated with inflation. They may also see that the modern socialist and interventionist states have used inflationary deficit spending policies to increase their power at the expense of private, voluntary associations. Some of the more sophisticated observers may even have understood the link between inflationary policies and depres sions - booms and busts - and they may have concluded, quite correctly, that these trade cycles are not endemic to capitalism as such, but only to economic systems that permit policies of inflation. 3 They associate inflation with pol icies of the state or the state-li censed monopolies, fractional re serve banks, rather than the vol untary market economy. Never theless, they persist in defending the use of specie metals as the only currency (along with fully redeemable paper IOU's to specie metals) in terms of the intrinsic value of the metals.

Value: Historic Ys. Intrinsic There is a basic confusion here. The confusion rests on a mixing up of two very different proposi tions: (1) gold and silver are his torically valuable; and (2) gold and silver have intrinsic value. The first proposition is indisputably correct; in fact, there are few eco nomic or historical statements that could be said to be more absolute. Professor Mises has built his whole theory of money on the fact that gold and silver (especially gold) were first valued because of properties other than their mone tary function: brilliance, malle ability, social prestige, and so forth. It was precisely because people valued these metals so highly that they were to become 3 I have summarized this neo-Austrian theory of the trade cycle in my essay, "Repressed Depression," THE FREEMAN (April, 1969).

374 THE FREEMAN June instruments of trade, i.e., money.4 Since they are so readily market able, more so than other goods, they can become money. Today we value silver and gold for many reasons, and on first glance, monetary purposes are not the main ones for most people. That is because so few populations are legally permi tted to use gold in trade, and the statist policies of inflation have brought Gresham's famous law into operation: silver coins have gone into hoards, since the value of their silver content is greater than their face value as coins. But on the international markets, gold has not yet been de throned; governments and central banks do not always trust each other, but they do trust the historic value of gold. Why this historic value? I do not want to involve myself in a rarefied philosophical debate con cerning metaphysics, but I think it is safe to say that gold does have certain intrinsic qualities. It is highly durable, easily divisible, transportable, and most of all, it is scarce. Money must be all of these, to one degree or another, if it is to function as a means of ex change. It is vital that we get our categories straight in our minds: 4 Ludwig von Mises, The Theory of Money and Credit (New Haven, Conn.: Yale University Press, [1912] 1953), pp.

109 if. it is not value that is intrinsic to gold, but only the physical prop erties that are valued by acting men. Gold's physical properties are the product of nature; its value is the product of acting men. The Case for Gold It would be a terrible mistake, however, to de-emphasize the his toric value of gold and silver merely because they possess no in trinsic value. That mistake is the one which the opponents of gold would have us make. They are equally guilty of mixing up the categories of intrinsic value and historic value, only they argue from the other direction. Conserva tives appreciate the fact of gold's historic value, but they mistakenly argue their case in terms of gold's intrinsic value. Their opponents do not appreciate the argument from history, but they spend their time refuting the conservatives' erro neous presentation. They assume that because gold has no intrinsic value (true), gold's historic value as a means of exchange is somehow invalidated. The two positions are diametrically opposed, yet they fo cus on a common ground which is irrelevant to both positions; the conservatives do not help their case for gold by an appeal to intrinsic value, and gold's opponents do not refute the case for gold by demon strating the error of that appeal.

1969 THE FALLACY OF "INTRINSIC VALUE" 375 Gold's overwhelming acceptance historically by most men in most societies is a lasting testimony to its value as a means of exchange. It should not be referred to as "a storehouse of value," as it is in so many textbooks. What we should say is that gold is readily market able and for that reason a valuable thing to store. This position of gold in history is a self-perpetu ating phenomenon: people tend to accept gold because they and others have in the past; they as sume that others will be willing to accept gold in exchange for goods in the future. This assumption of continuity is basic to all goods that function as money. Continuity is therefore a function of both the physical properties of gold and of men's estimations concerning other men's future valuations. In short, it involves nature, man, and time. In estimating the importance of gold for an economic system's proper functioning, we must take into consideration all three fac tors, keeping each. clear in our minds. This is why we need econ omic analysis; without it, we wander blindly.

Ignorance in the short run is seldom profitable; in the long run, it is invariably disastrous. Falla cious argumentation can too easily be turned against one by his en emies. Just as Marx used the falla cious labor theory of value against those classical economists who tried to defend the free market in terms of that theory, so the op ponents of gold can use the in trinsic value theory against those who try to defend the gold stand ard with it. This is not to say that logic alone will convince men of the validity of a full gold coin standard; logic is always a tool used by men of varying presup positions, and these are in turn the product of pre-theoretical val uations. We should not trust in logic to save the world. But ignor ance is far worse: it knows neither its presuppositions nor the prob able results of its arguments. It lacks consistency, it lacks clarity, and it can be turned against its user by the enemy. Therefore, let the defenders of the gold standard acknowledge the advent of mod ern, subjectivist economic reason ing. Let us face the fact that if Bohm-Bawerk's refutation of Marx's labor theory of value is valid, then all other applications of the fallacy of intrinsic value are equally invalid.

If we cannot learn to think con sistently on this point, then we will be grist for the inflationists' mill. The inflationistic Juggernaut may resemble a charging elephant in our era. It may be too late to stop it with a small caliber rifle, but we know it cannot be stopped with a pop-gun. ~ A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN The C90ming Aristocracy THE OTHER DAY a young high school teacher who is sympathetic to the rebels among the students asked me what I thought of the wave of protest that is engulfing most of our educational institu tions. I answered truthfully that I didn't mind students popping off, even if they happen to be wrong. What I did mind was the rebels' failure to see that the first duty of anybody is to become competent, to develop some skill that will carry him through life without being forced to beg his sustenance from others. If I had had Leonard Read's The Coming Aristocracy (Founda tion for Economic Education, $3 cloth, $2 paper) at my side at the time, I might have made my mean ing plainer to the young high 376 school teacher. For Leonard Read's argument that the true aristocrat is one who pursues excellence comes down to a simple endorse ment of the duty to achieve com petence. The worst feature of the campus rebellions that are caus ing such turmoil is the way they waste everybody's time. There are all those books in the libraries to be read, all those languages to learn,. all those philosophies to in spect. One doesn't even need good teachers (though it helps), for a teacher is someone to react against if you think he is wrong.

Leonard Read's advice to the rebellious student would he to start a rebellion within one's self against the waste of opportunity. He is a good advocate of his own cause, for he practices what he 1969 THE COMING ARISTOCRACY 377 preaches. Moreover, he doesn't of f end as a preacher by trying to bulldoze. He depends on lucidity and logic on a take-it-or-leave-it basis. Forums for Libertarians I have known Leonard Read for more than twenty-five years, and have watched him work at the task of perfecting his own understand ing of what he calls the freedom philosophy. In moments of pessi mism I have doubted that any Readean band of true aristocrat's can save the world. With Mao Tse-tung extolling the virtues of power as it comes from the barrel of a gun, with IVloscow clobbering the Czechs for tentatively suggest ing some minor experiments with a free market, and with our own students embracing nihilism and anarchy, who is going to be left alone to try to rise above personal mediocrity?

But then I think of Leonard Read's contributions to the rise of the Mont Pelerin Society, for example. The Mont Pelerin mem bers who have gathered once a year to try to make true correla tions in the Read sense are no longer regarded as a tiny sect with no influence on a world that is bound willy nilly for collectivism. Last September Warren Nutter was simply a student of the fail ure of communist economies to become more than inefficient in industrial-military complexes. He appeared at the Mont Pelerin con ference in Scotland to read a paper on the turmoil in East Europe. Today he is in the Pentagon, acting as Secretary of Defense Melvin Laird's adviser on the Soviet economic potential. Another Mont Pelerin member, Martin An derson, is in the White House, doing research that can be trusted to keep President Nixon from re lying too heavily on state inter vention in economic matters. We have been developing freedom phi losophy thinkers to counterbalance the popular John Kenneth Gal braiths and Arthur Schlesingers, and Mr. Read's quiet work in pro viding forums and focus for the libertarians has had much to do with the change.

Obstacles to Surmount Life is not easy for anybody who wants to perfect his under standing of the freedom philoso phy. For, as Mr. Read points out, if we were to try to divorce our selves from every last activity tainted with socialism, we couldn't exist. We couldn't ride on a train (rates set in accordance with the rules of the Interstate Commerce Commission) ; we couldn't use the airways (they are subsidized); we couldn't eat bread (the govern ment controls wheat plantings); 378 THE FREEMAN June we couldn't wear cotton clothes (cotton price supports). To live the freedom philosophy to perfec tion would be suicidal. But to take life, even one's own, is contrary to the higher law. So Leonard Read supports compro mise, but only to the extent that it is absolutely necessary to function in the world. He finds Medicare, for example, to be less tolerable than using the socialized mails, and can forswear accepting its help with less difficulty. He is more of a saint in this than I am: the government has stolen so much from me in a lifetime of taking my taxes to pay for social ism that I intend to get anything out of it that I can as partial retri bution. If Medicare can pay me for an expensive operation, I will consider it as a restitution of something that should have been left to me in the first place.

Leonard Read is not surprised to see our so-called higher educa tion in trouble. Working against the philosophy of the Founding Fathers, we set up our primary schooling in the early nineteenth century on a compulsory basis. This, in turn, necessitated a second compulsion: Parents must be taxed to pay the school bill. With the government supplying the schools, it necessarily dictated the curriculum. As long as the compulsions were limited to the early grades, where the teaching of skills in reading and writing and arithmetic took up the teachers' time and pre vented them from going off into realms of philosophy, the danger of indoctrinating the students in favor of socialism was not marked. But when the Federal government began its programs of aid to higher education, we were really in for trouble. College students are all mixed up about the means and ends of higher education. They have come to take it as a right which the state is called upon to provide without charge.

But when the state pours in money to support scientific experiment that might help the Pentagon im prove its military efficiency, the students resent it. They have been so badly educated in logic that they can't see that the government has a right to get something for its money. In accepting state aid for higher education, the student has, in effect, sold himself to the state whose power he dislikes. Other Signs of Light If the young haven't yet caught up with Leonard Read, they are bound to do so as they fight to escape from a bureaucratized world. The "freedom philosophy" makes inroads in the strangest places. Just the other day Supreme Court Justice William O. Douglas, 1969 THE COMING ARISTOCRACY 379 of all people, condemned the bu reaucrats of the Tennessee Valley Authority for proposing yet an other big dam. Justice Douglas waxed wroth because the proj ect would destroy some of the best trout fishing in America. In other words, the Justice had finally tumbled to the fact that the free dom philosophy and conservation are not mutually exclusive causes.

Then there is the discovery of Larry O'Brien, who was our Post master General, that a bureauc ratized Post Office is not an effi cient distributor of the mail. He suggested a "public corporation" to be run on private enterprise lines. This would not be wholly satisfactory according to the Read point of view, but at least the "freedom philosophy" had had some effect on Larry O'Brien. ~ ~ DOLLARS AND DEFICITS, by Milton Friedman (Englewood Cliffs, New Jersey: Prentice-Hall, Inc., 1968), 279 pp., $6.95. THE OPTIMUM QUANTITY OF MONEY, and Other Essays, by Milton Friedman (Chicago: Aldine Publishing Co., 1969) , 384 pp., $10.95. Reviewed by Henry Hazlitt IN THE LAST five or ten years no American economist's reputation has risen more than Milton Friedman's. There are solid reasons for this. He is a man of amazingly wide awareness, at home both in the academic and journalistic fields. He is an acute theoretician, a skilled statistician, an expert mathematician, and a formidable controversialist. His thought is penetrating and precise. And his style is clear, lively, and epigram matic.

Those of us who have known or read him over the last twenty years admire him as a brilliant expositor and champion of the workings of a free market, and as a devastating critic of price, wage, and exchange controls. His essay on "What Price Guideposts?" in Dollars and Deficits is an excellent example of this. But in the last three or four years he is most often referred to because of his championship of the quantity theory of money. In fact, so thoroughly saturated in the Keynesian ideology have both the academic and journalistic worlds become in the last thirty years, and so ignorant of the past, that Friedman's quantity theory of money is often referred to as if it were some startling new doc trine that he had personally. orig inated. Friedman himself makes no such claim. "The emphasis I have just been placing on the stock of money," he even wrote in 1963, "is widely regarded as old-fash380 THE FREEMAN June ioned and out of date." And in his Preface to the essays gathered in his latest book, The Optimum Quantity of Money, he writes: "The quantity theory of money, once relegated to courses on the history of thought as an outmoded doctrine, has re-emerged as a part of the living body of economic theory."

A large part of the credit for tha t re-emergence belongs to Pro fessor Friedman himself. A big step forward in this was the mon umental Monetary History of the United States that he wrote with Anna J. Schwartz in 1963. Fried man's special contribution has been to point out, with impressive documentation, how much more accurately changes in the stock of money have predicted the short term course of the economy than the Keynesian emphasis on fiscal policy or on the relation between investment, government spending, and income. There is nothing original, either, in Friedman's insistence that "inflation is always and everywhere a monetary phenome non, resulting from and accom,.. panied by a rise in the quantity of money relative to output." "Or thodox" economists have been shouting this for years. But Friedman has got more people, including former academic Key nesians, to listen. He has also got more people to listen to the misgivings that some of us have been expressing for nlany years, not only regarding the wisdom of the managers of the Federal Reserve System, but the wisdom of having a Federal Re serve system at all.

Friedman's own objections are based on his opinion, which other libertarians ought to share, that monetary policy should be based on strict, objective, invariable rules rather than on the unpredict able discretion or, as he puts it, on "the day-by-day whim of political authorities." He holds that, in the first place, the concept of a cen tral bank as an independent branch of government is not recon ciliable with the concept of politi cal democracy. He points to the mistaken goals that the Federal Reserve authorities have followed and to the costly errors they have made again and again since the Federal Reserve System was es tablished in 1913. I do not recall that Friedman has gone so far as to say, as some of us would, that practically every central bank, including the Fed eral Reserve System, has served primarily as an inflation factory. But he has repeatedly pointed out that "central banks are a neces sary - and today almost a suffi cient - condition for a balance-of payments problem."

1969 OTHER BOOKS 381 It is when we get a little beyond this point that some of us must part company with Milton Fried man - on both economic and polit ical grounds. He advocates an ir redeemable paper currency. He would do away altogether with the gold standard and the requirement of the convertibility of the cur rency unit into a fixed amount of gold. His argument here seems to me clearly untenable. "The funda mental defect of a commodity standard," he writes, "from the point of view of the society as a whole, is that it requires the use of real resources to add to the stock of money. People must work hard to dig something out of the ground," et cetera. Now so far from this being the fundamental def ect of a gold standard, I should call it its fun damental virtue. The vice of a paper money is that it is sub ject to the day-by-day whim of the politicians in power. They can run off on the printing press any amount they see fit. They can de preciate everybody's money-sav ings, or even make them worthless.

But the value of a commodity cur rency , that has to be discovered and dug and processed and refined, is not dependent on political whim. Gold money retains its value pre cisely because it costs something to produce, and its supply cannot be arbitrarily increased simply by turning a printing press. It is absolutely necessary to make the increase in the quantity of money independent of political wishes. The cost of production of the monetary metal is the unavoid able price paid for the preserva tion of a sound monetary system. And it happens today to be a ri diculously low price. The total world gold production is less than $1.5 billion a year. The total na tional income of the United States alone is some $750 billion a year. The total income of the other six teen-seventeenths of the world's population must be at least equal to this. This means that gold pro duction today costs the world less than one-tenth of 1 per cent - less than one-thousandth - of its total annual productive output. An ab surdly cheap rate for monetary insurance.

For this Milton Friedman would substitute the following type of paper money system: "My choice at the moment would be a legis lated rule instructing the mone tary authority to achieve a spe cified rate of growth in the stock of money" rIsIng "month by month . . . at an annual rate [(somewhere) ] between 3 and 5 [(per cent) J." (D. & D., p. 193) Friedman has several times changed his mind about this fig ure. The above was originally 382 THE FREEMAN June written in 1962. In his new book, The Optimum Quantity of Money, he candidly admits that as a result of further study he would now prefer a monetary increase of only 2 per cent a year instead of his previous advocacy of 4 or 5 per cent a year. Perhaps this is a good place to remind him that during the past century gold production has in creased at an average rate of about 2lh per cent a year, com pounded annually, which is amaz ingly close to his own latest esti mate of the ideal annual rate of increase of the monetary stock.

Friedman's personal vacillation is, of course, not a maj or argu ment against the monetary for mula he proposes. But it does serve to remind us that there is no objective way of determining what the quantity of money, or the annual increase in the quantity of money, ought to be. This must remain a value judgment. What ever the growth formula adopted, some people will be relatively helped by it and others will be relatively hurt by it. If the money stock is arbitrarily increased by 2 or 5 or X per cent per year, the unavoidable question arises: Who will get the new money in the first instance? Whoever gets it first will benefit at the relative expense of the rest of us. Thus the issue would inevitably and persistently lead to a political tug-of-war. Even if Friedman could get a 2 per cent monetary increase written into law in the first year, "economic-growth" fa natics, and groups whose money incomes weren't rising as fast as they thought they should, would soon be demanding a legislative change to a 3 per cent annual in crease, and others to a 5 or 7 per cent increase, and still others to a "temporary" 10 per cent increase, and so on and on.

Once we explicitly gave the gov ernment the power to increase the quantity of money, there would be no practicable way to limit that power. The political Outs would constantly be agitating for a high er rate of increase, and the politi cal Ins would adopt whatever rate of increase they thought most likely to prolong their stay in office. But Friedman's efforts to find a solution for what has become one of the world's most difficult and controversial economic and polit ical problems are unfailingly thoughtful and stimulating. Both of the books under review here are mainly collections of essays written over a period span ning nearly two decades. The chief difference is that those in Dollars and Deficits are selected as "in telligible to the public at large," and those in The Optimum Quan1969 OTHER BOOKS 383 tity of Money are more technical and addressed primarily to fellow economists. ~ ~ SO HUMAN AN ANIMAL by Rene Dubos (New York: Charles Scrib ner's Sons, 1968), 267 pp., $6.95.

Reviewed by Robert M. Thornton THIS is an age of pseudo-science and scientific superstition. For many of our contemporaries, as Jacques Barzun observed, science "is at once a mode of thought, a source of strong emotion, and a faith as fanatical as any in his tory."1 The description fits many popularizers and mere technicians, but the really great scientists tend to be humble men who regard cre ation with feelings of awe, feel ings which deepen as their knowl edge expands. Rene Dubos, the noted biologist, is one such. He bids us in this book to rise above the simple-minded and de grading notion that man is a ma chine, to forswear the idea that the conquest of nature and the moulding of minds are proper hu man goals. He demolishes the opin ion that we ought to do something (like put a man on the moon) merely because we have the tech nical capacity; such a position is operationally and ethically mean1 The Glorious Entertainment (N. Y.: Harper, 1964), p. 3.

ingless, and reflects an intellectual abdication as well. Dubos urges scientists to become more con cerned with questions about the nature and purpose of man, adding that the material satisfactions made possible by technology have added little to human happiness nor deepened our sense of the sig nificance of life. These are startling words for our time coming, as they do, not from a theologian or a philosopher but from a scientist. They set the mood for the book. Instead of the presumptuous airs of today's "in tellectuals" we find Dubos speak ing of the mysterious relation be tween man and nature. Some read ers may recall the scene in the film, The Treasure of the Sierra Madre, in which the characters played by Walter Huston and Humphrey Bogart are leaving the mine they had dug in a mountain. With a fortune in gold dust and bandits nearby Bogart is anxious to leave quickly, but Huston in sists on taking the time to "tidy up the mountain." It isn't right to open holes in the earth and not seal them up. The mountain was good to them, he goes on to say, and they should be good to the mountain. Quaint, we say, but along comes Dubos saying much the same thing even more elo quently about man's continuity with the past and the rest of cre384 THE FREEMAN June ation about the nonmaterial - or spiritual, if you will - relation between man and the rest of cre ation. It is the quality of this relationship that measures the humanness of life.

Dubos, like Joseph Wood Krutch, does not believe we learn as much about animate nature from dissec tion and analysis as from sym pathetic observation of living crea tures. Both men stress the im portance of a communion with nature and nature's creatures a welcome relief from self-styled realists, unconcerned about pre serving our natural heritage, and from sentimentalists whose good intentions sometimes do more harm than good. Dubos takes a balanced view of man, viewing him as the creative user of biological, psychological, political, environlnental, and eco nomic factors. Dubos recognizes that man becomes truly human only as a member of society but he also sees that one of the dis tinguishing characteristics of man is his freedom to choose, to make value judgments. "The life of a particular person becomes to a very large extent what he wants it to be, through a succession of de liberate choices ... steered at ev, ery step by the vision of ... goals."

~ THE FREEMAN ON MICROFILM Microfilm copies of current as well as of back issues of THE FREEMAN may be purchased from: Xerox University Microfilms 300 N. Zeeb Road Ann Arbor, Michigan 48106 the Freeman VOL. 19, NO.7. JULY 1969 The Free Market-What it is - What it implies Tom Rose 387 An exciting presentation of the case for freedom, inherent in man's nature. The Bent Ruler John R. Gearhart 393 The wavering standards of "situation ethics" are about as useful as would be a bent ruler to an engineer. Education in America: 1O. Revolt on Campus George Charles Roche III 397 The frantic and destructive flounderings ot' youth, lost in a morally bankrupt educational structure. Beneath the Gap John C. Sparks 406 The revolt of children often reflects a fundamental sickness in their parents. Socialism and Beyond Edmund A. Opitz 410 How the Socialist Party transformed American life while losing its force as a religion and a pOlitical power.

Fear Smallness, Not Bigness Leonard E. Read 425 Not the bigness of the job but the smallness of the man to fill it - there's the rub. The Rise and Fall of England 17. The Fall of England (Conclusion) Clarence B. Carson 427 Concerning primarily the dissolution of the Empire and the spread of communism into the power vacuum. This article concludes the series. Political Interferencein Medicine Richard E. Hunt 436 There is no coercive way to improve the relationship between patient and doctor. Hong Kong: A Case Study in Market Development Sudha R. Shenoy 439 Planners and reformers rarely recognize that freedom is essential to sound growth. Book Reviews: 444 tiThe Strange World of Ivan Ivanov" by G. Warren Nutter "Edmund Burke: A Genius Reconsidered" by Russell Kirk tiThe Specious Origins of Liberalism: the Genesis of a Delusion" by Anthony M. Ludovici Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON-HUDSON, N. Y. 10533 TEL.: (914) 591-7230 LEONARD E. READ PAUL L. POIROT 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. 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, 1969, 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 "The Bent Ruler," "The Rise and Fall of England," and "Political Interference in Medicine."

TOM ROSE THE FREE MARKET What it is ... What it implies THE ATTRACTING POWER of right ideas never ceases to amaze me! Recently a student approached me after a particularly stimulating class discussion in Economics. "Sir," he said, "this thing you call the 'free market,' will you please explain it for me in more detail?" The person standing before me was a young man from Lebanon. He had recently enrolled in our small college. He said he had never before heard the term "free mar ket" and it interested him. I chatted with him as I gathered up my lecture materials, quickly outlining in broad sketches the essential ideas behind the philosophy of indi vid ual freedom and responsibility. And as I did, some thing unforeseen happened! The young man's eyes lit up, his Mr. Rose is Head of the Business Department of Bryan College in Tennessee. face literally shone, and he ex claimed, "Why, it's beautiful!

This is exactly what I am looking for!" Then he went on to share with me the dream that brought him to America. He and his com patriots back home hope to develop his nation into a land of "milk and honey" that will shine as a beacon of moral and economic success to the whole world, that other nations might follow. Needless to say, what started out as a casual· explanation on my part quickly developed into some thing much more exciting. Two hours passed almost unnoticed, and our conference had to terminate because of another engagement. But it did not end until the search ing scholar was given some tools that would enable him to pursue his beckoning star. He left with some carefully selected books and 388 THE FREEMAN July suggested readings with ideas that might help light the way for him and his countrymen toward per sonal and national greatness. History has proven, with Amer ica as her most shining example, that right ideas held by men of vision and integrity can quickly build underdeveloped nations into economic giants that richly bless the world. Thus is the attracting and motivating power of right ideas! When sowed at an oppor tune time in a friendly climate, they germinate very quickly.

The Free Marlcet Defined The concept of the free market is not difficult to understand. Like all good things in life, it is simple and basic if approached in the right way. The free market is simply the voluntary exchange of goods and services between free individuals. It is as simple and as basic as that! Why, then, all the confusion and contention as to the relative merits of free market voluntarism versus the compulsory exchange of the welfare state, socialism, fascism, and communism?1 In my opinion, 1 Many scholars differentiate between the welfare state, socialism, fascism, and communism. In essence, they are all the same. They all depend on coercion rather than voluntary persuasion to induce ex change. A resisting citizen in any of these totalitarian states will end up either dead or in jail. the confusion arises because of a failure to understand the basic concepts and relationships that are involved. For instance, we should recognize that the free market, in essence, is not really a system at all. The word "system" connotes an a priori planned scheme or method of doing things, and the free market is not a planned sys tem in this sense. Rather, the free method of facilitating exchange is a natural aggregation of human interactions which result from a process of growth due to the nature of man. It was not, and could not, be planned by any finite being. It is too big, too all-encompassing, and too perfect to be the handi work of mere man. In short, the free market is what it is because man is what he is.

Man Is Free by Nature The Founding Fathers of Amer ica recognized that man is free by nature, and they stated this fact in the Declaration of Independ ence. In so doing they uncovered once again the moral base of co operative society which had large ly been obscured for thousands of years. Their declaration reiterated man's inherent right to be free' and self-responsible before God and in relation to his fellow men. Their declaration re-echoed the cry of Moses some 3,000 years earlier when he stood before the 1969 THE FREE MARKET 389 Egyptian Pharaoh and said, "Thus saith the Lord, let my p.eople go that they may serve me I" (Exo dus 8:1) The essence of man's free nature can be ascertained in two ways. First, it can be seen in the Bible, and this is sufficient for those who accept the Bible as the inspired word of God. The signers of the Declaration of Independence un derstood and accepted the revealed truth that man was created a free moral agent and thus, by nature, is and has aright to remain free and self-responsible. The above verse from Exodus is just one of a number that can be cited to ver ify man's right to and responsibil ity for self-direction.

A second way of ascertaining the same truth is through empiri cal evidence. It should not take an alert person very long to observe that man is free by his very nature. The discovery by Carl Menger that value is an imputed quality rather than an inherent quality of a good served as an important milestone in the accurate under standing of man's thought proc esses and, thus, to an understand ing of his free nature. As a re sult of Menger's work, we are now able to see that value cannot be measured objectively. We cannot determine the value of a pie, for instance, by how many man-hours went into producing it. If we could, then mud pies might be worth more than cherry pies! If such objective measurements could be used to determine value, then the produce of a group of inefficient workers would certainly be more valuable than that of an efficient group because it took longer to make. If you had the pleasant task of choosing between two seemingly identical new auto mobiles, would you pay more for one because it had more labor costs in it than the other? Not by a long shot! Studebaker got out of the automobile manufacturing business because consumers do not measure value objectively by the amount of labor costs invested in' products.

The objectively measured labor theory of value was one of many false concepts that Karl Marx ac cepted. And his mistaken concept naturally leads to the denial of an important facet of man's free na ture: that each person can and does ·establish value according to his own unique and wholly subjec tive scale of measurement. 2 And exactly what this scale of measure2 This truth is well stated in a different way by Leonard E. Read in his book, The Coming Aristocracy, page 62. "The extent of one's orbit is not self-but other-deter mined. Others, not I, decide whether they are in my libertarian orbit. I have noth ing whatsoever to do about the matter except to strive for and attain some measure of excellence."

390 THE FREEMAN July ment is, no one knows for sure perhaps not even the person who applies it - because his scale is constantly changing from moment to moment. Totalitarian societies develop when those in political power in sist upon overruling the individual value judgments of the very citi zens they are supposed to serve. It is upon this denial of man's basic nature - of his right to hold his own subjective opinion - that all forms of socialism/communism rest. And this is why socialism/ communism cannot possibly suc ceed in the long run, even in the mild form currently known as the "welfare state." Necessary Elements of Free Exchange If man is free and self-respon sible by nature, what then is needed for the free market to ex ist? Let's remember that the free market, by definition, is the vol untary exchange of goods or serv ices between free individuals. Thus, to be more accurate, we should ask what is needed for a free market to exist rather than the free market, because the free market is simply an aggregation of many independent voluntary exchanges.

Physically, all that is needed for voluntary exchange to take place are: Two individuals Two goods But metaphysically, much more is needed! In addition to two peo ple and two goods, there must also be: A recognition of and respect for the concept of private property. A difference in opinion as to the relative worth of each good. Mutual willingness to engage in exchange negotiations. Joint freedom to engage in ex change negotiations. Respect for the other person's right to be guided by and to act upon his own personal value judgment. In summary, then, at least seven ingredients are basic to voluntary exchange. If anyone is missing, exchange either will not take place or, if it does, then the ex change will not be voluntary: If property is to be exchanged, the owner and trader must be able to give clear title. If both parties value each good equally (i.e., if they fail to disagree as to what each good being traded is worth), neither one would be moti vated to engage in the necessary barter that must precede agreement to exchange. The lack of profit would not warrant the effort in volved.

If either party lacked the willing ness of freedom to trade, free ex change, obviously, would not take place.

1969 THE FREE MARKET 391 If each party did not respect the other's right to be self-guiding, there would be a tendency for one to impose his will upon the other. (This could take place by overt direct coercion, which is generally il legal; or by a more insidious form of indirect coercion, which often is legal but just as immoral as legal coercion.) The only difference between the two types of coercion is that one is "honest illegality" while the other is "dishonest legality." For instance: • In case #1, A wants B's money. Being a believer in direct action, A risks public censure by robbing B at the point of a gun. Every one recognizes the wrongness of his act, even A. This is "honest illegality." • In case #2, C wants D's money, but he is unwilling to risk public censure in the event he gets caught in the overt act of robbing, so he turns to a more devious method. He turns to "dishonest legality."

C persuades government legisla tors of his need, and they pass a tax law that legally transfers money from D's pocket to C's pocket. If D refuses to pay the tax collector, another agent of govern ment (a policeman) will knock on D's door and force him to payor put him in jail. There is no doubt at all that D's "dishonest legality" is less risky and more effective than A's "honest il legality." The only unanswered ques tion is the effect, if any, that the breaking of the moral law might cause. But parties to "dishonest le gality" are generally blissfully un aware that they have done anything immoral (or at least they think that immoral ends achieved through the agency of group action can escape punishment.) Thus, we see that any exchange that does take place through coercive action (either di rect, or indirect) benefits one party at the expense of the other. Can the Free Market Disappear?

Some lovers of freedom become apprehensive about the rising tide of socialist/communist ideology throughout the world (including our country). They see the trend of encroaching government inter vention and they imagine the day when what is left of the free mar ket system will be gone. In the short run, this rising en croachment on liberty is worthy of concern, but in the long run it is not. By saying this, I do not mean that we should· give up natural liberties willingly or without re sistance. I personally do not give ground without contesting each step of the way where the princi ple of individual liberty and re sponsibility is concerned. I, too, can visualize Orwell's 1984, but I worry not one moment about the possible loss of the free market, because it cannot happen! The free market maybe re stricted and encroached upon by all 392 THE FREEMAN July who will stoop to the "honest ille gality" of direct coercion or to the "dishonest legality" of indirect co ercion, but the free market can not be eradicated. The free mar ket cannot be eradicated because it exists in the heart of man; it is in his nature. Wherever two men are, the free market exists potentially if not actually. It may be dormant, but it will bloom into mutual profitability upon the slightest recession of coercion.

Does this mean that we need not concern ourselves with continuing to expose and resist the ideas of those who are ever-ready to in hibit voluntary exchange? Indeed not! Neither does it mean that we should relent in sharing the good news of the free market philoso phy with any who might be at tracted to it. Rather, it means that we should view the chal lenging prospects for individual freedom and responsibility with courage and assurance. The free market comes into being naturally because man by nature is free. In the long run, the nature of man assures success in our attempt to foster voluntary exchange because that is the way God made him. In the short run, let us 1;"011 up our sleeves and apply ourselves con scientiously and creatively to the stimulating avocation of helping others find and understand the mo tivating power of freedom. ~ Get Out or Get in Line IF you work for a man, in Heaven's name work for him. If he pays you wages which supply you bread and butter, work for him; speak well of him; stand by him and stand by the-institu tion he represents. If put to a pinch, an ounce of loyalty is worth a pound of cleverness. If you must vilify, condemn and eternally disparage - resign your position, and when you are outside, damn to your heart's content, but as long as you are part of the institution do not condemn it. If you do that, you are loosening the tendrils that are holding you to the institution, and at the first high wind that comes along, you will be up rooted and blown away, and probably will never know the reason why.

ELBERT HUBBARD - or Civic and Moral Responsibilitiesof t'hr' ...... :.A JOHN R. GEARHART OF ALL people who should not be T. S. Eliot's "hollow men" -with "head-pieces filled with straw"-it is America's engineers. Our gray matter contains a thorough knowl edge of our technical field and at least a smattering of the humani ties. The theoretical must with stand constant testing in practical application; balance is thereby ob tained between dreams and per formance of the possible. It should follow naturally that as we trans late highly technical knowledge into everyday scientific progress, we feel an interest and obligation to become involved in civic and governmental affairs-local, state, and national. We can hardly be unaware that Mr. Gearhart, entering his senior year in electrical engineering at the University of Illinois, is from the rural community of Beth any, Missouri. His career· goal is to work· in medical electronics.

This article won him first prize in the Spring 1968 Tau Beta Pi and Greater Interest in Government Essays Contests and is reprinted here by permission. the time of America's greatness may be running out. Within 200 years, with only 7 per cent of the earth's surface and 6 per cent of the world's population, we have become among the richest, most powerful nations in history. The rising cycle of courage to liberty to abundance, however, .has been replaced by the downward curve of selfishness to complacency to dependency. We should be re minded of Spengler's dire predic tions of the West's decline and Arnold Toynbee's observation that 19 of our 21 leading civilizations died from internal weakness and decay. Our Founding Fathers anchored in our country's documents the great principles of civilized man and his heritage. They created a "Republic" - not a "Democracy." Our pledge of allegiance states "and to the Republic for which it stands." Democracy, ultimately, 393 394 THE FREEMAN July could become mobocracy, wielding tyranny as suffocating as that of any monarch or dictator. Leaders were to govern as little as possi ble; they were to be the servants of the people, not lords over them.

Checks and balances were devel oped with care and pain, and local responsibility and public opinion were counted upon to re strain excess popular feeling. There was firm agreement with Thomas Jefferson that citizens be "bound down from mischief by the chains of the Constitution." In our present age of analysis, criti cism, and dissent, however, it is well to remind ourselves that, though the American system is not perfect, it may well be the best man has yet conceived. Common sense, the.refore, indicates that its destruction, or even the erosion of its effectiveness, could be danger ous indeed. In recent years, the doctrine of objectiv.e values (validity of "right" and "wrong") has given way to one of "situation ethics," in which truth is relative. Arthur Sylvester will probably be remem bered as the man who informed the American public that govern ment has the right to lie. News media speak freely of "credibility gaps." Pushed to a logical con clusion, any act, even murder, could be justified. It is not surpris ing that in this period the "Death of God" advocates proclaim loudly that man is now unshackled and free, free to fashion his own des tiny. From an engineering stand point, the situation is akin to be ginning a construction assign ment with deformed tools-a brok en transit or a bent ruler; and once accepted, this doctrine means man's ultimate standard can be no higher than his inaccurate, highly fallible human nature.

Order, Justice, Freedom Order, justice, and freedom should stand uppermost in our philosophy of government. Order must exist first, or proper func tioning is impossible; a govern ment's first duty is to assure the safety of its citizens. Recent dis orders in our society were aggra vated when officers of the law were deterred by Supreme Court rulings such as the Mallory and Escobedo rules, were asked to stand by dur ing looting, and were subjected to continual taunts of "brutality." Mass disrespect for law and peace followed. Violence, of course, is not the citizen's proper approach to reform. Instead, it is a step back ward from channels of debate, vot ing, and legal action. When in ternal restraints break down, po lice have no alternative but forc·e. We hear much of our "arrogance of power" internationally, but either pure pacificism or anarchy 1969 THE BENT RULER 395 would leave nations or individuals at the mercy of unscrupulous pow er. It is high time our youth learned something about the great ness of our nation. Otherwise, as evidenced by the weakness of our draftees taken prisoner during the Korean War (most American sol diers succumbed to the enemy's will), and now again in full bloom with the Vietniks, the time may come when no values are left.

Justice refers to equal treat ment under the law. It is impera tive that the majority, the average citizen, and the taxpayer be not forgotten in the current hurry to favor the minority, the criminal, and "the poor." Justice is rightly depicted as a goddess with eyes blindfolded or closed. She holds a sword, or scales, or both. Her func tion must often include punish ment. Freedom is also currently in jeopardy. If man is not free he is not responsible; if he is not re sponsible he is not moral. Order without justice or freedom is tyr anny, but freedom without justice or order is anarchy. In the same way, much so-called academic free dom is license. To maintain free dom is not easy, and it is highly questionable whether most men, deep in their hearts, are willing to pay the price. Napoleon Bonaparte was welcomed by the majority of the French. Why did I not include equality, one of the. great cries in the French Revolution and now heard increasingly in our ,country? Be cause we can be realistically equal only in the sight of God and law.

True equality is impossible with out coercion. Forced integration in our schools has been far from suc cessful. Increasing loads and addi tional types of taxes constitute forcible redistribution of wealth; a point is being reached where thrift is punished and sloth en couraged. When people demand a "right" to be equal, they frequent ly forget that others have "rights" too. Anchored in Reality The engineer should be a cre ative professional. He applies his skill and knowledge to the study and analysis of problems and de velops solutions which generally prove worthy well into the future. He is a link between technology and human endeavors, so he can not lose sight of the social struc ture in which he and other men function and live. Engineers usually prefer indi vidual initiative-the free-enter prise system-instead of the wel fare state; in fact, they enjoy responsibility and competition, fundamental qualities in maintain ing our Republic. Honor and in tegrity. have become well enough 396 THE FREEMAN July ingrained in their thinking so that it is easy for them to understand the necessity of similar attributes in a nation. It is obvious that false sentimentality must be distin guished from valid compassion, that emotion and propaganda must be distinguished from clear think ing.

Apathy and complacency do not achieve order, justice, and freedome "Every good and excellent thing," wrote Thornton Wilder, "stands moment by moment on the razor edge of danger and must be fought for." The unique talents of engineers are needed not only in their chosen fields but to help re- ." store basic principles and common sense to our country. The ruler seems bent indeed. Let us straight en it and use it! ~ The Minimum Wage To make a horse drink It is foolish to try; It's fully as hard To make customers buy: So, when prices are raised . By law or decree, That sales will fall off Is as sure as can be; And if minimum wages By commission are set Above what the worker Would naturally get, Those worth the-money Alone will be hired, While the lowest-grade labor Will surely be fired, And the jobless will sit And wonder all day Just what they have gained From the high legal pay. WILLFORD I. KING, Economics in Rhyme EDUCATION IN AMERICA GEORGE CHARLES ROCHE III 10. Revolt on Campus No OCCURRENCE in contemporary society has attracted more atten tion than the turmoil in our col leges and universities. The uproar has been accompanied by a rash of hand-wringing and soul-search ing; education, the shibboleth of modern America, seems to be dis integrating. When the answer to all problems itself becomes a problem, where does one turn?

For a start, we might examine the psychology of the leadership likely to arise in a revolutionary atmosphere. If we can understand the motivation behind a movement, Dr. Roche is Director of Seminars for the Foundation for Economic Education. He has taught history and philosophy in college and maintains a special interest in American edu cation. we should be well on the way to understanding the movement it self. Who is likely to be in the vanguard of an attempt to remake society? A man is likely to mind his own business when it is worth minding. When it is not, he takes his mind off his own meaningless affairs by mind ing other people's business. This minding of other people-'s business expresses itself in gossip, snooping and meddling, and also in feverish interest in communal, na tional and racial affairs. In running away from ourselves we either fall on our neighbor's shoulder or fly at his throat. 1 1 Eric Hoffer, The True Believer, p. 23.

397 398 THE FREEMAN July Those who are successful in the affairs of this world tend to be attuned to the reality of life as it is, thus disqualifying them selves for visionary leadership. Conversely, in Eric Hoffer's words, "Failure in the management of practical affairs seems to be a qualification for success in the management of public affairs .... [Some men] when suffering defeat in the practical world do not feel crushed but are suddenly fired with the apparently absurd con viction that they are eminently competent to direct the fortunes of the community and the nation."2 Do the outpourings of a Mario Savio represent the pursuit of power as a means of personal ful fillment? Could the romance of revolution at least partially be .ex plained as an escape from a sense of personal inadequacy? Does the constant escalation of radical stu dent "demands" suggest that men run farthest and fastest when they run from themselves?

When men or nations get tired of dodging fundamental questions in a multitude of distractions, they turn to a search for something else that will, so they suppose, give them the sense of significance which they know they lack. This does not neces sarily mean, however, that in sophis tication they learn wisdom. If they 2 Ibid., p. 74. remain adolescent in their approach to life they are frequently tempted to seek meaning for themselves and for their nation in terms of coercive power. They develop a Messianic complex. They seek to live other peo ple's lives for them, ostensibly for the good of those other people but really in the hope of fulfilling them selves. They set out to attain great ness by imposing their supposedly superior understanding upon some man or nation who is less percep tive.3 Sell-control Irving Babbitt perceived long before most men that modern edu cation was moving down a danger ous path. He noted some 40 years ago that in response to a ques tionnaire a majority of women's college graduates had rated love of humanity a higher virtue than self -control. Commenting that such a view of human nature might be pardonable in a young woman just out of college, he asked, "What are we to think of our present leaders of public opinion who ap parently hold a similar view? Let a man first show that he can act on himself, there will then be time enough for him to act on other men and on the world."4 The lapse of self-control in favor 3 Bernard Iddings Bell, Crisis in Ed ucation, p. 20.

4 Irving Babbitt, Literature and the American College, p. 47.

1969 REVOLT ON CAMPUS 399 of the "humanitarian" view of life partially explains how the dreamer of utopian schemes menaces civili zation. While all such revolution aries share a willingness to de stroy the existing order, their ideas of what should be erected in its ,place tend to vary from vision to vision, reflecting not merely a pipe dream untouched by reality, but a series of pipe dreams as un stable as the personality of the dreamer. Once s·elf-control is aban doned and reality rejected, all that remains are half-formed, bizarre visions of typically unfulfilled rev olutionary personalities. Such fuz ziness in goals, such lack of per sonal fulfillment within the exist ing order, are both evident in the rhetoric of the New Left. However fuzzy the goals of the N·ew Left may be as to detail, these revolutionaries always en vision a future in which the collectivity is endowed with un limi ted sovereignty over the indi vidual, all in the name of "social utility." For all the discussion of "freedom," today's campus radi cals are quite willing to apply massed force and harassment to intimidate anyone with the temer ity to hold opposing views.

They who clamor loudest for free dom are often the ones least likely to be happy in a free society. The frustrated, oppressed by their shortcomings, blame their failure on ex isting restraints. Actually their in nermost desire is for an end to the "free for all." They want to elimi nate free competition and the ruth less testing to which the' individual is continually subjected in a free society.5 T'his distrust of freedom, this unwillingness to allow others the free expression of their ideas, is woven into the fabric of modern intellectual life. One would be hard put to remember a time in Amer ican history when intellectuals were less tolerant than now of one another's ideas. Denunciation, not debate, seems the order of the day. As the Chancellor of the New School, Dr. Harry Gideonse, has remarked, "A few short years ago, anti-intellectualism was an epithet of derogation. Today it is an ex pression of revolutionary virility."

Perhaps part of the reason why so many professors have accepted the violent and abusive tactics of the New Left is that such a revo lutionary situation offers dis gruntled academic oldsters a vi carious opportunity to play the man of action. The Hard-core Campus Radical The campus radicals of the New Left pose a mass of contradictions: peace-loving advocates of 'mob vi olence; freedom-loving seekers 5 Eric Hoffer, The True Believer, p.37.

400 THE FREEMAN July after power; the first to cry "bru tality" at any attempted defense against their aggressions. The radicals in question are not in uni versity residence to learn - they are there to instruct the university and society. Their qualification? Judging from the public state ments of their leadership, to be qualified one must know almost nothing of history , philosophy, economics, or political theory, must have a literary background deeply steeped in James Joyce, Allen Ginsberg, and other purvey ors of the four-letter word, and must be constitutionally unable to construct intelligible English prose. Many observers have remarked upon the strong resemblance be tween the militant students advo cating a new order in Hitler's Germany and the militant students who form the hard core of the New Left. Both have relied upon the demonstration, the use of massed force; both have insisted that "talk" must end, that "action"

be the order of the day. In fact, there is much evidence to suggest that the New Left is not really so new. Professor Brzezinski of Co lumbia University views the cur rent student rebel as essentially counterrevolutionary - i.e., dedi cated to the preservation of a dying· order. If so, the New Left can be described as the frenzied expression of a "Liberal" intel lectual bankruptcy carried to its logical conclusion. A substantial minority of facul ty members lend their support to the New Left disruption of the campus. The professorial pleas for amnesty, the faculty insistence that the rioting students "have a case," is a reflection of the enmity which many academy spokesmen have borne for our essentially free and capitalist-oriented society. Recalling that enmity, that vested interest in the destruction of the old order shared by the Old Left and the New Left, we can discover new meaning in much of the current faculty permissiveness toward the New Left disruptions.

We should remember that it was the chairman of the faculty execu tive committee at Columbia who supported Mark Rudd, among others, with the criticism that the school was run "like a seventeenth or eighteenth century private uni versity." (One wonders exactly what is wrong with that. Perhaps the vestiges of academic and dis ciplinary standards were his grounds for complaint.) Rejection of the Old Left However sympathetic the Old Left may be to the antics of the New Left, agreeing in principle and only criticizing the method, it is far from clear that the New 1969 REVOLT ON CAMPUS 401 Left returns the affection. The ideas of the current campus radi cals were formed in the class rooms of Old Left professors, but now it seems that the Old Left itself has been swept over in the rush toward nihilism and destruc tion. The Center for the Study of Democratic Institutions recently invited a group of student radicals to Santa Barbara to conduct a "dialogue" on "Students and So ciety," apparently expecting that an exchange of ideas would reveal grounds for mutual respect and cooperation. However much the Senior Fellows of the Center may have respected their younger part ners in the "dialogue," the result ant discussion suggests that the students had something far more radical in mind than did the pro fessors. As one student remarked toward the close of the three-day conference: I'm not as angry about what went on as Levine [another student par ticipant] is because when I came here I thought it'd be a lot like go ing into my grandfather's house. I expected to meet a lot of nice old people who are very interested in what the young are doing and I ex pected them to tell us that we have a lot of youthful enthusiasm and that that is good, but that there ain't going to be no revolution because when I was 15 years old I said the same thing and there weren't no revolution then and there's going to be no revolution now.

But there is going to be a revo lution. I don't know whether you are going to live to see it or not - I hope that you don't, because I don't think you are ready for it. You hope-that conscience is built into the existing society, because you can't possibly envision any other kind. I hate to get into this bag of saying that everybody can't understand, but I think it's really true that after the age of 50 you are lost. You people really are far, far out of it - so far that everyone of us has had to go on to points in the discussions we had five years ago, just to bring you people up to where we are today. You've been sitting in this really groovy place called the Center for the Study of Democratic Institutions and you don't know what's going on in the world. I don't think you'll ever understand. I didn't come here to talk to you, though I'm willing to put up with this session. I came here to talk to the other students, because that's where it's at. 6 The New Left seems to reject dependence upon "dialogue." As one student at the conference urged: I think we must locate a medium between dialogue and revolution.

That medium is disruption. Disrup tion is the one thing our society 6 Students and Society, Center for the Study of Democratic Institutions, p. 61.

402 THE FREEMAN July can't abide. Our institutions are all interrelated, and if one institution is sabotaged, the society can't func tion properly as a whole. The insti tution students are, connected with is the university. If I may be per mitted a ridiculous metaphor, the university is a kind of distributor cap that students can remove from the engine of our society.7 Disruption and destruction of the existing system seem the new order of the day. The Berkeley Barb, a New Left organ in Cali fornia, typifies such sentiment: The universities cannot be re formed. They must be abandoned or closed down. They should be used as bases for actions against society, but never taken seriously. The pro fessors have nothing to teach. . . . We can learn more' from any jail than we can from any university. Like most revolutionary appeals, the New Left stresses its interest in the common needs of all stu dents, urging student unity; but in practice that appeal quickly degenerates into "Be my brother or I'll kill you," providing' us with a more accurate measure of New Left values. Meanwhile, the provo cations and the "kicks" go on. The attempt to provoke society be comes not merely the means, but the end as well. So long as these provocateurs remain a compara tively small minority on .campus, 7 Ibid., p. 43.

a deliberately disruptive group totally disinterested in education and determined to deny that edu cation to the majority, there is a means of solving that problem. The solution was provided long ago in a letter written by St. Benedict 8 to instruct his monks in the proper operation of a mon astery: If any pilgrim monk come from distant parts, if with wish as a guest to dwell in the monastery, and will be content with the customs which he finds in the place, and do not by his lavishness disturb the monastery, but is simply content with what he finds, he shall be received, for as long a time as he desires. If, indeed he find fault with anything, or ex pose it, reasonably, and with the humility of charity, the Abbot shall discuss it prudently, lest perchance God had sent him for this very thing. ... But, if he have been found gossipy and contumacious in the time of his soj ourn as guest, not only ought he not to be joined to the body of the monastery, but also it shall be said to him, honestly, that he must depart. If he does 'not go, let two stout monks, in the name: of God, explain the matter to him.

What about the Majority? A troublesome point remains. Isn't it true that far more students 8 Mnch of the same advice is also given by St. Benedict in Chapter 61 of his Rule for Monasteries.

1969 REVOLT ON CAMPUS 403 seem disaffected with higher educa tion than the small group of ad mittedly New Left radicals? Are all these masses of students actual or potential members of a student revolt dedicated to the disruption of our colleges and universities? The answer to both questions is "yes." Unless we are willing to take a long, hard look at Ameri can higher education, we may ex pect the numbers of disaffected students to continue their growth. While most American college youths are far more interested in education than in destruction, they do feel betrayed by an educational structure which has become in creasingly unresponsi ve to their academic needs and oppressive to their development as responsible adult individuals. It is this large group of disaffected students that forms the reservoir of discontent exploited by the N·ew Left. The student attending college for the first time has (or should have) some idea of what a college education is supposed to provide.

Most serious students are likely to expect intellectual discipline and high standards, not to mention a close working relationship between teacher and pupil. For the student, these disciplines, standards, and relationships presumably will pro vide the development of individual capacity and judgment, making for a well-formed and uniquely individual personality. So much for the expectations of the serious student; the realities are often painfully different. A Bureaucratic Merry-Go-Round The uses of the multiversity for fund-raising, for the aggrandize ment of administration and facul ty, and for mass student indoctri nation, all militate against proper education for the individual. Today a college education is automatic (and often meaningless). Insert a six-year-old in the educational mill and sixteen years later he is a college graduate, whether or not he has learned anything of lasting value or has matured into a unique and self-reliant personality. Such an overinstitutionalized and de individualized system becomes pri marily custodial in nature. Often this custodial function is highly paternal, but that very paternalism becomes the greatest despotism of all. The bureaucracy necessitated by such overinstitutionalized edu cation becomes self-perpetuating, and steadily less devoted to the functions of genuine education.

While such a bureaucracy can no longer educate, it lends itself admirably well to social engineer ing, to turning out technically pro ficient automatons ideally suited to running "the system" without questioning its values. This is one of the valid complaints our stu404 THE FREEMAN July dents have. One of the bits of doggerel of the Berkeley uprising, to be sung to Beethoven's Ninth Symphony, went as follows: From the tip of San Diego, to the top of Berkeley's hills We have built a mighty factory, to impart our social skills Social engineering triumph, managers of every kind Let us all with drills and homework Manufacture human minds! Thus, a moulding process is often substituted for an educa tional process. The students who are caught in the gears of the multiversity are to be excused for the feeling that the individual is powerless to change his environ ment. And, if the individual no longer matters, perhaps massive action, action designed to disrupt the workings of the existing sys tem, is the only answer.

Increasing Concern among Youth over Sodal Problems A related problem centers on the fact that many of our young people are more concerned than previous generations to know the "reason why," to examine the moral premises of our society. Perhaps they hunger for this because our present educational structure offers them so few values and principles on which to build their lives. Whatever the reason, the student with this concern for moral issues often finds himself in the company of professors for whom the morality of the existing power structure is a matter of little or no interest. When the student does find a professor who is at least willing to discuss ultimate moral ques tions, such a professor all too often proves to be an activist who foments just the sort of campus revolt advocated by the New Left. A professor at Berkeley described the faculty-student relationship at the time of the 1964 Free Speech Movement: ... So far as I was able to judge, the vast maj ority of the undergradu ates did their best to follow the con fused and changing lead of their professors. 9 Thus, the riots have often epito mized the breakdown in traditional values, a breakdown deliberately induced by some faculty members.

Could it be that our society's un willingness to honor our own tra ditions is undercutting our young people's capacity to honor any thing? If so, we should not be surprised when more and more of our youth no longer wish to play the game. Much of our present structure of higher education offers the 9 William Peterson, "What's Lost at Berkeley," Columbia University Forum (Spring, 1965), p. 39.

1969 REVOLT ON CAMPUS 405 spectacle of teachers unwilling to teach, operating within an over institutionalized educational struc ture which smothers the individual student. The system, for all its size and power, so lacks inner values that it is often unable to act even in self-defense when as saulted by New Left revolution aries from within. Surely such a system has little claim to the loyalties of the majority of sincere students who come to college to get an education! Perhaps the New Left minority and the disaffected student major ity are but different symptoms of the same disease. Perhaps they are all young people who in varying degrees are being robbed of their personalities and their core of civilizing values by a morally bankrupt educational structure badly in need of revision. ~ The next article of this series will discu8s "Crea,tivity." The Youth Movement IN THE DECADE preceding the First World War, Germany, the country most advanced on the path toward bureaucratic regi mentation, witnessed the appearance of a phenomenon hitherto unheard of: the youth movement. Turbulent gangs of untidy boys and girls roamed the country, making much noise and shirking their school lessons. In bombastic words they announced the gospel of a golden age. All preceding generations, they em phasized, were simply idiotic; their incapacity has converted the earth into a hell. But the rising generation is no longer willing to endure gerontocracy, the supremacy of impotent and imbecile senility. Henceforth the brilliant youths will rule. They will destroy everything that is old and useless, they will reject all that was dear to their parents, they will substitute new real and substantial values and ideologies for the antiquated and false ones of capitalist and bourgeois civilization, and they will build a new society of giants and supermen.

LUDWIG VON MISES, Bureaucracy B~""EA"""-rHE GAP AI~ it ~\~'\i to 0 t••: JOHN C. SPARKS THE YOUNG college professor was telling how the generation gap should be bridged: "When I com municate with my six-year-old son, I must talk on this level." With that he knelt to show that he talked on a child's level rather than that of an adult. The example was effective, but a listener offered an important clarification. "Speak in the six year-old's language, yes," he said, "but not in a six-year-old's princi ples." While it is best to use words understood by the youngster, the principles expressed should reflect the wisdom of a qualified and ex perienced adult. Unfortunately, many of today's parents seem to have abdicated their responsibility to instruct their off spring. If they have Mr. Sparks is an executive of an Ohio manu facturing company and a frequent contributor to The Freeman. tuned in, it is not to communicate, but only to listen to childish prat tle. Furthermore, the parental ex tensions hired as teachers in high schools and colleges - at least some of them - are guilty of simi lar abdication!

Now, a generation gap is noth ing new or unique to our time, but there seems to be about the cur rent gap a critical difference. The sickness manifested in the deplor able antics of a few of the young seems to be deeply ingrained in the adults who fail to see their own illogical and immoral behavior reflected by their sons and daugh ters. Worse yet, many such adults fail to recognize that they them selves are victims and carriers of the disease. Such parents from my genera tion are now reaping the whirl wind of the collectivist and totali tarian philosophy they embraced 1969 BENEATH THE GAP 407 in exchange for the old wisdom of self-reliance and self-responsibil ity. Having been exposed through out their lives to relentless "intel lectual" attacks upon individual responsibility and self-reliance, they are today unqualified and untrained to instruct their chil dren according to sound principles.

Making decisions without benefit of established principles gives answers that change with the whims or emotions of the moment. The consequence is a confusing variety of fallacies. Fallacies and Folly One fallacy is to equate the revolutionary spirit and action of youth to some noble turn of history - as though all revolutions are solidly based to overcome evil. Thus, the perpetrators of the Bos ton Tea Party are equated with the rioters at Berkeley, Christ's ejection of the money changers from the temple compared with the captors of the administrative offices at Columbia. Though the principles underlying these actions are from opposite poles, the pur ported similarity is loudly pro claimed. In this manner, violence is excused or even applauded. Open threats by student-revolu tionaries against the lives of oth ers, often with racial overtones, are common themes of television documentaries and interviews.

While public sympathy will seldom support these threats, neither is there the resolution and fortitude to condemn such immorality. Not so much a lack of courage, per haps, as the simple failure to de bunk the fallacy of revolution for revolution's sake. A second fallacy underlying the push toward collectivism, through the medium of youth disturbances, is the contention that the maj or advances of mankind throughout history have had youthful leaders. The recitation of supporting data carefully ignores all vital contribu tions by older persons. This fal lacy scarcely deserves the time to refute it. Medical scientists assure us that the human brain has the capacity for growth long after other bodily functions start to de cline. In the face of such knowl edge, are we simply to .ignore the many daily decisions by industrial, cultural, political, and spiritual leaders, most of whom are over 30 years of age?

A third fallacy, related to the second, asserts that those over 30 represent the Establishment (whatever that means), and are stodgy, stuffy, and uncreative. The real targets are the old vir tues of integrity, self-reliance, self-responsibility, courtesy, and respect for persons and for prop erty. "Old" is hardly an appropri ate description for these qualities 408 THE FREEMAN July - no matter how long since their discovery - when the purpose of such derision is to replace them with nothing, which is a far older condition among mankind. The ad vocates of big government, more control of people, and more pater nalistic programs are well aware that the success of collectivism depends upon the dilution and erosion of the ancient virtues. Consequently, anything old be comes the target - people over 30, as well as "old" marks of charac ter. Personal success and achieve ment are also maligned, anyone in the winners' circle probably hav ing resorted to such trickery as hard work, ambition, and integ rity. Those winners, it is alleged, are no longer desirous of any change that will disturb their way of life - the Establishment!

The fact, of course, is that re lieving the sore spots of mankind is not the exclusive concern of any one age group. Granted, the young may have more physical vigor and zest for crusading. But on the side of their elders is personal experience and wisdom and the other resources needed to cope with injustice. Branch Rickey was well beyond the age of 30 when he hired the first Negro professional to play baseball in the National League. Every year, thousands of bills are proposed in state and national legislatures by sincere men of all ages in the interest of justice - though such measures often tend to aggravate rather than alleviate problems. Others of all ages strive - just as sincerely and, hopefully, to better effect to limit the scope of government intervention and to expand the realm for private decision-making and individual responsibility. Sin cerity alone may not assure the correction of inj ustice, but we know that men and women of all ages are sincerely concerned.

To Magnify and Expose We return now to the basic issue behind the turbulent fa~ade of the generation gap. The unwar ranted and sometimes violent out bursts by the young serve largely to screen and camouflage the real controversy - one manifestation of it that bids to out-dramatize all others. However, this outcropping is serious; and it may help to magnify and expose the underly ing problem. Today's parents have allowed their young people to come into adulthood often defenseless against those who aspire to totali tarian power. No wonder that many young men and women have had their minds and wills cap tured by the irrationality of such leaders. How could they be ex pected, without effective home work, to cope with the half-truths 1969 BENEATH THE GAP 409 and cliches of collectivist ideolo gies? How is the young college student to argue effectively for self-reliance when every major adult action within his memory was designed to transfer the re sponsibility for personal burdens onto others via laws and new tax ation?

True, there have been warnings sounded and predictions of dire results from such abandonment of individual decision-making and self-responsibility. Perhaps those who have heard and ignored these warnings have felt the evil results would never touch them person ally - something instead that might happen to the economy un der rapid inflation; or the grad ual unpleasantness of frequent tax hikes; or the half-guilty, half welcome idea of government se curity and medical care for the elderly; or the subsidies and con trols for education, urban devel opment, agriculture, research, employment -' to cite only a few all accepted after the mildest kind of objection. Perhaps these persons hoped that all other human relations would remain the same after private decision-making was abandoned. There would be no deterioration of morals. Children somehow would learn the value of truthfulness, respect, gentleness, honesty, and hard work - without instructing them and despite the glaring contradictions lived by parents. Can we thus deny basic principles in our own actions as we move toward totalitarian ide ologies, yet hope that our sons and daughters have learned real truths and virtues regardless? It appears rather that we now must reap what we have sown.

The real issue is between the very old and obsolete totalitarian concept of those seeking power over others and the more recent view that every man has an un alienable right from the Creator to seek in liberty his own develop ment and fulfillment. Support the latter in study and deed, and the generation gap will fade to its normal insignificance. ~ Franf;ois Fenelon WE CAN DO MORE for other men by correcting our own faults than by trying to correct theirs.

EDMUND A. OPITZ Socialism and Beyond SUPPOSE you were asked to nomi nate the most influential figure in American politics during the first half of the twentieth century. Whose name would come to your mind? Would it be a President like F.D.R.? A Senator like Henry Cabot Lodge? A Supreme Court Justice like Oliver Wendell Holmes? Or would it be a machine boss like Tom Pendergast? Before we go on with this ques tion, let's pause over the word "in fluential." Is political influence measured by the power of the office; by a man's standing in a popularity contest? Or is influence primarily an intellectual and moral force, measurable, there fore, only by assessing the extent to which a man's political and so. cial ideals are actually translated into government policies and pro grams. The most influential figure The Reverend Mr. Opitz of the Foundation staff is active as a lecturer and seminar leader.

410 must be an idea-man who insinu ates his ideas into the ideological mainstream so that people there after play the political game with his deck. Viewing the matter in this light, my nominee for the most influential person in Ameri can public life since World War I is a man who never held public office. I refer, of course, to the late Norman Thomas. I fervently wish that this were not the' case, for my own position is diametrically op posed to that of Mr. Thomas; but I think I know a winner when I see one. Norman Thomas was the So cialist Party's candidate for the Presidency in 1928 and every four years thereafter for the next two decades, six national campaigns in all. He never got many votes. His greatest success was achieved in 1932 when all of 190,000 people put their X alongside his name. These electoral contests were 1969 SOCIALISM AND BEYOND 411 not very important for Norman Thomas; they did little or nothing to further socialism. A political party, in the American experience, is a private organization aimed at the capture of public office for its candidates. The American Social ist Party barely qualifies, for .it has hardly ever engaged in seri 0us politicking. Instead, it is or ganized and drilled for education and propaganda primarily; and this roundabout approach proved to be, in the end, immensely suc cessful practical politics. The so cialists in the course of a genera tion changed the American politi cal climate so subtly yet so com pletely that by mid-century no matter which candidate won, so cialism (small "s") could not lose!

Socialism with a small "s" has be come the new consensus, but capi tal "S" Socialism has virtually ex pired giving birth ·to it! We will tell, briefly, the story of the rise and fall of Socialism, following this with an analysis of the auspices under which the drive toward collectivism proceeds to day. Principles, Yes; Party, Nol Norman Thomas and his friends, from the 1920's on, advanced the socialist cause by their devoted labor, day in and day out, year after year. They wrote books, pam phlets, and articles; they lectured before all kinds of audiences and made inroads among professors, clergymen, and millionaires. An incident recorded by Upton Sin clair is pertinent. Sinclair lived in Pasadena before World War I, and writes of a· visiting European so cialist who expressed unbelief when Sinclair told him that his circle of friends included social ists who were also millionaires. To prove his point, Sinclair said he would have a dinner party the next evening and invite some of his millionaire friends. The Euro pean was astounded to meet a dozen millionaire socialists, all rounded up on short notice from Pasadena and environs. Further more, because Socialism enor mously strengthens the hand of government, it naturally appeals to politicians, Republicans as well as Democrats-and to the bureauc racy. These efforts by Thomas and associates paid off, and long before mid-century something like Socialism had become the Ameri can thing.

Thomas wrote a pamphlet in 1953 entitled "Democratic Social ism," in which he observed that "here in America more measures once praised or denounced as so cialist have been adopted than once I should have thought pos sible short of socialist victory at the polls." But, as we have seen, the American voter decisively re412 THE FREEMAN July jected socialism when it was of fered to him under that label. A 1954 editorial in the Socialist Call noted that "an examination of the Socialist Party platform of 1928 and the Republican Party platform of 1952 shows how much of socialist ideas succeeded in per meating the mind of America, in cluding business circles. In the 1930's," the editorial continued, "the United States accepted the basic principles of the welfare state. The final seal of acceptance appeared in the State of the Union message delivered by President Eisenhower to Congress in Janu ary of this year."

Norman Thomas was puzzled by the paradox of the comfortable ac ceptance of socialistic pra.ctices by the government while "socialism itself," he said, "is under much sharper attack, and the organized socialist movement is much weak er." In 1956, the Socialist Party candidate got 2,044 votes, and the party has not run candidates in '60, '64, or '68. It might seem the Socialist Party has been a Typhoid Mary, of sorts; it has been the carrier of an infectious set of ideas, innoculating others with the virus while remaining itself out side the pale. But this analogy does not walk on all fours; for while Norman Thomas has been transforming the Republican and Democratic Parties, the Socialist Party itself has been transformed. To take the measure of this trans formation, let's look at the forma tion of this party at the turn of the century. Born in Indianapolis, J90 J Perhaps the American Socialist Party has lived out its life span, for it was born nearly three-score and-ten years ago. In the year 1901, on the twenty-ninth of July, 124 delegates representing vari ous factions of socialism met in Indianapolis. The meeting is de scribed by Morris Hillquit, the old time socialist, in these words: "The convention has assembled as a gathering of several independent and somewhat antagonistic bodies; it adjourned as a solid and har monious party. The name assumed by the party thus created was the SOCIALIST PARTY ."1 How many people were therein the United States in all the little socialist factions which sent dele gates to Indianapolis? "No less than 10,000," says Hillquit. 2 The active membership was undoubt edly much less than this, which is to say that the merest handful of earnest, dedicated people - who thought they knew what they wanted and worked to achieve it 1 Morris Hillquit, History of Socialism in the United States (New York: Funk & Wagnalls, 1903, third edition), p. 339.

2 Ibid., p. 338.

1969 SOCIALISM AND BEYOND 413 - succeeded in getting the most powerful nation in history to turn away from the methods of liberty and plunge into collectivism. The Socialist Party had succeeded so wen by mid-century as to render itself unnecessary! A party platform came out of this meeting in Indianapolis, full of rhetoric, as are all political documents, but containing also an unambiguous statement of social ist procedure: "... the organiza tion of the working class and those in sympathy with it into a political party, with the object of conquering the powers of govern ment and using them for the pur pose of transforming the present system of private ownership of the means of production and dis tribution into collective ownership by the entire people."3 Ends and Means If we are to understand the na ture and meaning of socialism, we must make a rigorous distinction between, on the' one hand, the pro claimed socialist goal of a coop erative commonwealth which has no more war and no more poverty and no more inj ustice - and, on the other, the means 'which social ists would employ, or the tech niques they would use, to achieve their goal. Ends versus means.

Up to a certain point, the ends 3 Ibid., p. 343. and goals proclaimed by socialists of all denominations are the aims of all generous and fair-minded men. All men of good will seek to hasten the end of injustice and op pression; they want a more pro ductive society in which each man enjoys the fruits of his own labor and where there is more material abundance for everyone. And be cause the economic order operates at peak efficiency only in a peace ful world open to trade and travel, economic considerations reinforc·e all the moral and religious impera tives favoring peace and opposing war. Immanuel Kant, writing at the dawn of the capitalist era, foresaw an era of peace in the nineteenth century and beyond as reliance on economic production and exchange to obtain goods sup planted the political struggle to get other people's goods by privi lege and subsidy. "It is the spirit of commerce which cannot exist side by side with war," he main tained. This was a fundamental idea of Classical Liberalism whose spirit was expressed by Jefferson in his Second Inaugural, when he spoke of "peace, commerce, and honest friendship with all na..

tions." Armed with Power The socialists appear to believe that they have a monopoly on the' virtues, but in this - as in most 414 THE FREEMAN July everything else - they are quite mistaken. The unique thing about Socialism is not its professed aims; the unique thing about Socialism is the means it embraces for achieving its ends - means which include the authoritative direction and control of the lives of the masses of men by the few armed with political power. The original platform from which I have quot ed announced the means Social ists, would employ: They would form a political party and cam paign until they were voted into power; and when they controlled the government, they would na tionalize productive property. True, the document does not speak of nationalization; it refers to "collective ownership by the en tire people." Now, an entire peo ple, all two hundred million of us comprising American society, can not own anything collectively or in common; ownership is the right to the exclusive enjoyment and disposal of a good against all com ers. If there is no one against whom such a claim might be pressed, the claim itself would not arise. Now, if everybody "owns" a thing, against whom will the en tire people press their claim? "Col lective ownership by the whole people" is a mere combination of words; it is not an intelligible idea. The absurdity of the notion of social ownership is humorously emphasized by the story of a sign in a public park in a midwest ern city: "No baby carriages; no bicycles; no ball playing; this is your park." Obviously, the park does not belong to the one ad dressed but to the signwriter who lays down the rules for its use.

Nationalization of Property Ownership can, however, be vested in society's enforcement agency - government. And the ex tension of government ownership is what mainly distinguishes So cialism from other schemes for the improvement of man's lot in society: Socialists would national ize productive property. Into the hands of politicians and bureau crats would come all titles to prop erty; government would be the sole employer, and as the only em ployer, government would assign a task to each citizen and lay down the terms on which men would hold their jobs. If this sounds like the army, it is because Socialism is in fact a militaristic organiza tion of society. Socialism involves a command type of operation and, because "whosoever controls a man's subsistence controls the man," a socialist society becomes a minutely regulated bureaucratic tyranny. When men lose the right to accept the best available job and to quit for whatever reason, they have lost a large and signifi1969 SOCIALISM AND BEYOND 415 cant chunk of that free choice on which many other freedoms de pend.

A New Kind of Tyranny In 1884, Herbert Spencer fore saw the emergence of a new kind of tyranny in Western nations and wrote his prophetic essay, "The Coming Slavery." In 1912, Hilaire Belloc wrote The Servile State, predicting that when the Socialists got their way, the result would not be socialism, but a totalitarian or der in which the masses· would toil for those who possessed political power. Hayek wrote his stunning Road to Serfdom in 1944, by which time the appalling extent of slave labor in the Soviet Union was known to all men. But that evil thing, communism, was not Hay ek's culprit; he-put the finger of blame on planning, even planning of a most benign intent. If a soci ety has an overall plan, enforced by government, this will come into collision with the millions of pri vate plans of individual citizens. Citizens, pursuing their personal goals as free men are in the habit of doing, resist bureaucratic stu pidity, and the more stubborn citi zens have to be made to see the error of their ways. The planned society needs enforcers, and in the nature of the case these are not gentle visionaries and scholars; they are the worst types of men, and it must be so, as Hayek dem onstrates in a famous chapter en titled "Why the Worst Get on Top." Gentle American socialists used to lament that Stalin be trayed the Revolution; not so!

Stalin was an authentic product of the Revolution. The British accepted wartime planning under Churchill; and when a socialist government came to power after the war, the planned economy was extended to the edges of society. The catastrophic con sequences for England were de scribed by the Oxford economist, John Jewkes, in his book, Ordeal by Planning, published in 1948. The American, Hoffman Nicker son, examined The New Slavery in his book of that title, published a year earlier ; and finally even the American Socialist Party had to concede that it no longer believed in socialism - in the old sense. The Socialist Party platform for 1956 contains the familiar windy rhetoric about eliminating war, hunger,- and oppression; the so cialist ends are about the same as they were half a century earlier. But the means are radically differ ent. "Socialism," reads the plat form, "is the social ownership and democratic control of the means of production. Social ownership, which includes cooperatives, is not usually government ownership."

(It was simple government owner416 THE FREEMAN July ship, you will recall, to which the early Socialists pinned their faith.) "Social ownership would be ap plied to large-scale business not to family farms or other individual ly owned and operated businesses of similar size. Democratic con trol is not administration by the central government but control by the people most directly af fected .... " The earlier socialist blueprint contained no private sector, but present-day socialists put the fam ily farm in the private sector as well as businesses of comparable size. Now a family farm can cover four hundred acres and represent a capital investment of a quarter of a million dollars. The majority of commercial enterprises are much smaller, by comparison, than this, so this leaves several million businesses in the private sector. The present thrust of the Ameri can Socialist Party, therefore, is control of "BIG business," and this emphasis has so little sex ap peal for Socialists that they've gone out of politics. The rationale for the planned society has been taken over by others. The trend toward collectivism still continues, but it is more deceptively camou flaged.

A Fanatic Faith There's more to Socialism than its belief that productive property should be nationalized. Socialism is one of several ideologies which pin their faith to the notion that political reorganization will bring about a perfect human society: secularized versions of the King dom of God. Socialists do not mod estly believe they have a remedy for some social ills; they think they have the cure for all! In this sense, Socialism is a modern, this worldly religion. Listen to H. G. Wells, for example: "Socialism is to me a very great thing indeed, the form and substance of my ideal life and all the religion I possess." As a religion, Socialism promised a terrestrial paradise, a heaven on earth. There is an unrealistic, utopian streak running through the social ist mentality, generating a kind of fanticism which makes it impos sible to assess the realities and possibilities of human life on this planet. You've heard the brief prayer which runs: "Give me cour age, 0 Lord, to change the things which need to be changed; the strength to endure those things which cannot be changed; and the wisdom to know the difference."

The Socialists don't know the dif ference! They imagine an impos sible state of perfection and then condemn the hard realities for not conforming to their dream. Every one who has his feet on the ground recognizes the workings of 1969 SOCIALISM AND BEYOND 417 sin, ignorance, and evil in human life. "History," said Edward Gib bon contemplating the decline and fall of Rome, is "a record of the crimes, follies, and misfortunes of mankind." But none of these things need be, cries the Socialist, and the revolution will eliminate them; in the classless society of the future every man will radiate kindness and intelligence and the world itself will be transformed into a new Garden of Eden. I'm not exaggerating. Here is Karl Marx himself, in an early work entitled The German Ideol ogy, writing on the theme which is so popular these days - the theme of alienation. In what Marx calls "a natural-grown society" (as contrasted with a society con sciously planned), there arises the thing we call division of labor.

Men are gifted in different ways and come naturally to specialize in various occupations. And there the trouble begins! "As labor comes to be divided," Marx says, "everyone has a definite, circumscribed, sphere of activity which is put upon him and from which he can not escape. He is hunter, fisher man, or shepherd, or 'critical crit ic,' and must remain so if he does not want to lose the means of sub sistence - whereas in the Com munist society, where each one does not have a circumscribed sphere of activity but can train himself in any branch he chooses, society· by regulating the common production makes it possible for me to do this today and that to morrow, to hunt in the morning, to fish in the afternoon, to carry on cattlebreeding in the evening, also to criticize the food - just as I please - without becoming either hunter, fisherman, shepherd, or critic." Utopian Strains Now it is obvious to everyone that the material abundance we enjoy in modern America is due to specialized occupations and ex change. If every man were a jack of all trades, living only on what he himself produced, most of· the earth's population would shortly starve and the lives of those who remained would be "nasty, brut ish, and short." Marx never did accommodate himself to the idea of the division of labor, but com munist regimes, of course, have had to bow to reality. Neverthe less, the utopian streak is still there. Leon Trotsky ventured into never-never land when he wrote his Literature and Revolution in 1925. Consulting his crystal ball, Trotsky predicted a proletarian paradise in which "the average human type will rise to the heights of an Aristotle, a Goethe, or a Marx. And above this ridge, new peaks will arise."

418 THE FREEMAN July Marx and Trotsky are bad enough, but theirs is a sober vision compared to that of Charles Four ier who inspired several utopian colonies in nineteenth century America and converted Horace Greeley and other Americans to his views. Fourier would group so ciety into phalanxes comprising 1,620 people each and when the world was thus organized man, beast, and nature would be wholly redeemed. "Men will live to the age of 144," wrote Fourier, "the sea will become lemonade; a new aurora borealis will heat the poles ... Wars will be replaced by great cake-eating contests between gas tronomic armies." Whatever Four ier's mood when he wrote this, the man was obviously insane and thus comparatively harmless; but a kind of madness afflicts even the sober est Socialist. The proletarian para dise is out of this world; heaven cannot possibly be achieved on this earth. To improve the conditions of earthly life is every man's job; to perfect them is God's. Those who try to establish perfection on earth usurp God's role, and in the name of Man they subjugate men.

Some former Socialists acknowl edge the validity of these criti cisms, so they crusade for collec tivism using a different tack. Thus the new consensus, shaped by the Socialist mold, but completely pragmatic rather than idealistic. Reinhold Niebuhr, the eminent theologian, was a Socialist most of his life. He left the Socialist Party some twenty years ago saying that its creed "contained even more miscalculations than the liberal creed which it challenged." Does this mean that Niebuhr came over into the conservative or libertarian camp? Not at all. Niebuhr now fa vors a mixture of freedom and planning, as he would put it, in order tha t no one of the three major foci of power shall come to predominate. It is the power of Big Business that is the primary object of Niebuhr's concern, and he thinks we need both big govern ment and big unions to cope with Big Business. The position is that power in society assumes three forms - as business, government, and labor, and that each of these must be played off against the other. Let's submit this position to critical analysis, beginning with government.

Two Kinds of Power Near ly every political theorist until the present day has identi fied government with the police power. The government of a given society was regarded as the power structure. The head of the govern ment was the commander-in-chief of its armed forces, which were charged with the task of defend ing the society against foreign 1969 SOCIALISM AND BEYOND 419 foes. The police protected citizens against criminals, and the legal system offered redress when colli sions of interest occurred within society. The government has the power to tax, and various other re sponsibilities as set forth in the country's constitution. That which distinguishes a government from any other organization within so ciety is that government alone is granted a legal monopoly of co ercion. Anyone not blinded by ideologi cal prejudice knows that the pow er wielded by government is un like every other species of power in society. Should you run afoul of the law you will quickly realize that the police, the courts, and the jails are not a branch of General Motors. The army fighting in Viet Nam is not under the control of A.T.&.T.; and if some young man you know is drafted, he will be drafted by the government and not by Du Pont or Alcoa. You'll be paying your income tax when due, and you'll pay it to the govern ment. If you fail to pay, you'll be visited by an agent of the I.R.S., not by a Fuller Brush man.

How, then, can a bright theolo gian like Niebuhr fail to sense the power with which government is endowed? Only because. he is blind to the nature of business. Niebuhr has said that the "prestige and power [of] the giant corporation [with its] right to hire and fire . . . certainly makes big business a part of government." (New Leader, August 26, 1951) This is a beautiful example of logic turned inside out. The right to hire and fire is nothing more than an exercise of the right of an owner to say who shall be allowed to use his tools and under what circumstances. There's an auto mobile registered in your name; but if you are not permitted to use it yourself, nor to decide who shall be allowed to use it and when, then the car cannot rightly be called your property. (Either that, or you have teen-age chil dren !) Attack on Business Now, hiring and firing is not a unique function of government, even though government employs millions of civil servants. But if you cannot make your own de cision as to who shall work for you in your own factory or store or restaurant or bank or what ever, then you are prevented from exercising the natural responsi bility of ownership. Niebuhr's curious observation boils down to the nonsensical assertation that big business, by behaving in a busi nesslike fashion - by hiring and firing - thus demonstrates that it's part of government!

The attack is leveled against 420 THE FREEMAN July BIG business, and thus it slips under the guard of some· people. The size of things is a factor in our judgment of them; we don't like things to depart too far from the norm. In fairy tales and folk lore both giants and dwarfs carry overtones of the sinister. Bigness carries the suggestion of inordin ate strength, and that is always a threat; so we like to have things the right size. But how do we de cide what size is proper for a business? And who should decide? Should the government decide how big X industry should be? Or should the consumers of X indus try's products decide? I have no hesitancy in saying that the size of a given business should be de cided by consumers. If consumers like a given product, they tele graph their fondness to the manu facturer ~ who tools up to produce more of it, increasing his output until diminishing sales give him the clue to cut down.

The theory of the free market, or laissez faire, or Classical Lib eralism, never contemplated an un regulated economy. Laissez faire opposed government regulation in order that the economy might be regulated by those most directly affected - the consumers. Accord ing to the theory of laissez faire, government was to act as an um pire to interpret and enforce the previously agreed upon rules of the game; government was intend ed to keep the game of competition going by punishing breaches of the rules. Within the rules, a given business or industry had complete latitude to expand or contract or fail. "Bigness" Decried So what is a big business? The world's biggest business engaged in the exclusive manufacture of French horns is the Sansone Com pany which employs about fifteen craftsmen in a loft just north of Times Square. This is technologi cally feasible. Now, an automobile might be handcrafted in a shop with only a few employees, and such a machine might win the "Indianapolis 500"; but the Amer ican consumer favors the kind of car that can be mass-produced by the millions, and so Ford, Chrys ler, andG.M. employ hundreds of thousands of men. The appropri ate size of an industry varies greatly according to the nature of the enterprise, but the final deci sion as to the right size of X in dustry properly rests with con sumers. Unless, of course, the pro prietor .decides he wants to do custom work at his own pace and prefers to stay small.

If you recall your textbook in economics, you'll remember the equation: Land + Labor + Capi tal + Wealth. Human energy aid1969 SOCIALISM AND BEYOND 421 ed by tools and operating on nat ural resources produces wealth. Business and industry is somebody making, growing, or transporting things which consumers demand, or performing a service. Human laziness is a factor in economics, and it is a safe bet that men would not work as they do nor as hard as they do if they didn't have to. Men have to work, not because anyone forces them to work, but because the human race would perish if people gave up working. This is simply a fact of life; this is not coercion in the sense in which those unfortunate millions who have perished in Soviet slave labor camps have been coerced. Coercion is not part of the private sector. (Acts of coercion may oc cur in the private sector but only as criminality.) A unique and nec essary feature of government, however, is that society has grant ed it a legal monopoly of coercion.

Government is the power structure in a society. But a business can not exercise power without break ing the law - or else it secures the conni vance of government and op era tes as a cartel. Given a framework of law which preserves competition and peaceful trade, a business should be as big as consumers want it to be - as evidenced by their buying habits. And business, as such,· has no power - not the coercive kind of power which is the type govern ment must have. The position that we need big government and big labor to contain the threat of big business has the props knocked from under it if "big business" is seen to be a vague term, and when we realize that business as such is not a threat but rather an essen tial for maintaining the general prosperity. Unions Are Special What about "big labor"? The mythology surrounding this ques tion is hard to penetrate, for it is a modern article of faith that to labor organizations is due the ma jor credit for the fact that wages are higher today than they were fifty years ago, and hours of work less. But mere organization does not produce goods; only the appli cation of human effort to raw ma terials, augmented by tools and machines (capital) produces goods.

And our increasing efficiency in production is due to inventions, good management, and above all, to the machinery the average worker has at his disposal. On an average, there is a twenty-one thousand-dollar investment of cap ital per worker in American in dustry. This is why Americans are more productive than workers in other parts of the world, such as Great Britain, where trade union organization has been much tight422 THE FREEMAN July er than here and has been going on since the nineteenth century. Un ions do not contribute to our pros perity; they detract from it; they institutionalize unemployment. Furthermore, national legisla tion such as the Norris-La Guardia Act and the Wagner Act have granted special privileges and im munities to unions to engage in acts of intimidation and violence which would jail nonunion perpe trators. This is a serious breach of ~he Rule of Law. And in bar gaining with employers within the terms laid down by the N.L.R.B., the discussions proceed with one party's hands tied by partisan leg islation.

Let me offer a striking analogy of this situation from the pen of the Harvard economist, Prof. E. H. Chamberlin. He's writing about what is called "bargaining," and says: "Some perspective may be had on what is involved (in labor management "bargaining") by imagining an application of the techniques .... in some other fi~!u. If A is bargaining with B o\er the sale ofB's house, and if A were given the privileges of a mod ern labor union, he would be able (1) to conspire with all other owners of houses not to make any' al ternative offer to B, using violence or the threat of violence if neces sary to prevent them, (2) to de pri ve B himself of access to any alternative offers, (3) to surround' the house of B and cut off all de liveries, including food, (4) to stop all movement from B's house, so that if he were for instance a doctor he could not sell his servic·es and make a living, and (5) to in stitute a boycott of B's business.

All of these privileges, if he were capable of carrying them out, would no doubt strengthen A's po sition. But they would not be re garded by anyone as a part of 'bargaining' - unless A were a la bor union." Intellectual Error The intellectuals of our time are bemused by power. Irving Kristol is an intellectual and also a liberal of sorts, but he's nevertheless able to maintain his objectivity. "The liberal," he writes, "is pleased with the increasing concentration of power in the national govern ment, because he sees in it an op portunity to translate his ideals into reality .... He is convinced - not always by evidence, often by self-righteousness - that he knows how to plan our economy, design our cities, defeat our enemies, as suage our allies, uplift our poor, and all in all, insure the greatest happiness of the greatest number. And for this knowledge to be ef fectual, he needs more power over the citizen than Americans have traditionally thought it desirable 1969 SOCIALISM AND BEYOND 423 for a government to have." (New Leader, September 14, 1964) The liberal is saying, in effect: "We're a lot. smarter than the rest of you folks, and possess a keener sense of moral responsibility as well. Why, therefore, should we sit idly by while mankind mind lessly repeats the same damn fool mistakes over and over again?"

Well, the worst mistake mankind continues to make is to turn its destinies over to some demagogue who in turn whips people up into mass movements. "People go mad in herds; they recover their sanity one by one." The mob intoxication wears off and then each person can locate for himself those loopholes in logic through which a tiny bit of his liberty trickles away, and he can plug the leaks with sound ideas. Some conservatives and liber tarians spend a lot of time attack ing big government. The mythol ogy surrounding big business and big labor can be stripped away; and when we've finished that job, big government remains, towering over us and watching us like Big Brother in Orwell's novel. But the excessi ve size of government is a secondary eff·ect. A government must be large enough to accom plish its task, and during wartime or to cope with a crime wave it will naturally expand. Our criti cism should be directed at government doing the wrong things and not at mere size, because whenever government starts doing the wrong things, it will overflow its bound aries and become too big. Govern ment should be large and virile enough to keep the peace, to pre serve individual rights, and pun ish anyone who injures his fellows - as injury is defined at law. But when a government attempts to run the economy and dictate the actions of peaceful people, it usurps improper authority, and thus grows to inordinate size.

Back to Fundamentals Liberty in human affairs will never be wholly lost, nor ever wholly won. We've heen on the los ing end for some time now, but it is our great good fortune that whatever runs contrary to the nat ural grain of things will eventu ally bring about its own demise. Socialism as a consistent intellec tual system has committed suicide, although its practical consequences are still with us. Now we are con fronted with the shallow notion that big business is a power struc ture, as is big government and big labor; and we must somehow pre vent the ascendancy of anyone of these three powers. Upon analysis, this position is seen to be error piled upon error. A business is as big as consumers want it to be; and if they want it to fail, it fails.

424 THE FREEMAN July The power displayed by modern unions is a chunk of raw political power bestowed by national legis lation on some people over other people. The bestowal of this kind of power is a violation of the prin ciples of the free society and a breach of the Rule of Law. Fi nally, government has certain in dispensable functions to perform and it should perform these tasks with vigor and integrity-and no others. Once we have the ideas sorted out and rearranged in order, then what shall we do? How shall we act? Well, that's up to you, for in the nature of the case each man must answer for himself when it comes to deciding where he shall exert his influence. Bonaro Over street has set the idea to verse: You say the little efforts that I make Will do no good. They will never prevail, To tip the hovering scale Where justice hangs in the balance. I don't think I ever thought they would.

But I am prejudiced beyond debate In favor of my right to choose which side Shall feel the stubborn ounces of my weight. ~ John Stuart Mill THE WORTH of a State, in the long run, is the worth of the in dividuals composing it; and a State which postpones the inter ests of their mental expansion and elevation, to a little more administrative skill, or of that semblance of it which practice gives, in the details of business; a State which dwarfs its men, in order that they may be more docile instruments in its hands even for beneficial purposes - will find that with small men no great thing can really be accomplished; and that the perfection of machinery to which it has sacrificed everything, will in the end avail it nothing, for want of the vital power which, in order that the machine might work more smoothly, it has preferred to banish.

IT WAS a pleasing note: "Thanks for your letter. It's so nice to do business with a person instead of a computer." The comment dealt less with a new-fangled gadget than with a phase of organizationitis. When the job gets bigger than the man, there is a deplorable tendency to overdelegate and lapse into a push button operation - form letters for all occasions, for example. When a job overflows the limits of one's personal attention, there's the "ghosting" of speeches, letters, books, statements of policy, and so on. And ghost is about all that is left of any man who ceases to be personal: an organism without personali ty ! Long ago I decided that when my part in FEE goes beyond what I can attend to personally, then FEE is too big for me. I shall write my own speeches and books, dictate my own letters - and sign them. Assistance and counsel? Yes, all I can muster! Nor is anyone ever "too little"

to be eligible for personal atten tion. It is not my business to pass judgment on who is or isn't im portant to freedom. Noone knows where genius is about to sprout! There comes to mind the story of the man who set forth on a jour ney to Jerusalem to see the Savior: 'Year Smallness, Not Bigness LEONARD E. READ Along the way numerous persons asked for assistance but to each he replied, "Sorry, I haven't time for you; I'm on my way to Jerusalem to see the Savior." In Jerusalem, he learned that one of those by the way side was the Savior. The lesson? Treat each person, regardless of race, creed, color, fame, or fortune, as if he were the Lord so as not to pass by the one who may be most important of all. When a man's job is so big he can't follow this rule, then it's bigger than he can handle! Another test for job-fitness: An individual has moved up the lad der as far as he should go if, on the next higher rung, he could no longer give full personal atten tion to his assigned role. When a man finds himself behaving as impersonally as a computer, it's time to rejoin the human race!

The aforementioned note with its person-computer comparison also reveals one of the reasons for the general fear of bigness in 425 426 THE FREEMAN July business. I do not buy the popular notion that a business is bad be cause it is big. The size of capital investment, markets, employees, sales, profits tells us nothing about goodness or badness. The lone bandit is a social menace; the big gest corporation in the world A T & T - is a benefactor. Size simply is a measure of material dimensions but has nothing, as such, to do with social well-being or morality. Big businesses off·er big jobs that require big men; and men of this caliber are a scarce resource. When big men cannot be found, such jobs are serviced by "ghosts," men who are incapable of remain ing personal and self-responsible; their roles are bigger than they are. We observe numerous persons not big enough for the roles as signed to them in small businesses; indeed, some too inadequate to head a family. But the bigger the operation, the greater the proba bility of more big jobs than big men to fill them. These deficiencies lead careless observers to associate the personal failures with bigness, explaining, in part, their unjusti fiable fear of bigness. They over look the many businesses, formed in response to natural market forces, where most of the big jobs are filled by big men.

There are, however, examples of bigness formed by coercion, an unprincipled force, where the jobs are too big for anyone. We observe this in big or bloated government where there are countless jobs bigger than any man can compe tently fill. When government gets so far out of bounds that its costs can not be met except by inflation and exorbitant taxes, unnatural big ness in businesses results. Merg.ers and conglomerates take place, not in response to normal market forces but as organizations to take advantage of unprincipled govern mental policies. This sort of giant ism tends to create jobs too big for anyone. The point to keep in mind is that bigness in itself is the wrong criterion for forming our own opinions or framing public policy as to economic enterprises. Public policy should concern itself solely with its own righteousness; it should never serve to encourage unnatural formations of enter prises or to deter enterprises that are natural responses to a free market.

Conceding a sane public policy, then nothing need concern us about the bigness of businesses or jobs except the smallness of our selves for the roles we try to play. If we are big enough, then we can act like persons rather than com puters. ~ CLARENCE B. CARSON 1£U91au~ 17. THE FALL OF ENGLAND (Part 2) THE FALL of England should be attributed most directly to the misuse of governmental power by socialists. They turned the power of government on their own peo ple, restricting, inhibiting, and obstructing the exercise of their energy and ingenuity for c_onstruc tive purposes. Of course, these obstructive activities were not ex clusively employed by the Labour Party; socialistic ideas and prac tices had long since become the common coin for virtually all the politicians, thanks to the Fabians and their aids, witting or unwit ting. The Labour Party was only more thoroughgoing than the rest Dr. Carson, Professor of History at Grove City College, Pennsylvania, will be remembered for his eariler FREEMAN series, The Fateful Turn, The' American Tradition and The Flight from Reality.

This article concludes the current series on England. in the application of the socialist ideas. The two best symbols of the fall of England, however, were the de pendence of England on the United States and American policy and the cutting loose of empire. England's dependence on the United States was heralded by the so-called dollar shortage after World War II, by the applications for loans, by the American subsi dies, by the Canadian loans, and by the abandonment of an inde pendent role in the world. (Some Americans are apt to be more con scious of the British influence on American policy than of its being the other way around. Such influ ence has undoubtedly been con siderable. However, my point has to do with actual dependence, not with the direction of flow of in427 428 THE FREEMAN July tellectual influence.) The loss of independence should be inter preted as an unmistakable sign of the fall from former greatness.

Breakdown of Empire The dissolution of the British Empire came quickly after World War II. There were three major moves in this direction made by the Labour Party. One of these was the cutting loose of large blocks of territory in the Far East. India was divided and be came two countries: Pakistan and India. Ceylon and Burma were granted independence at the same time as India and Pakistan. Cey lon, Pakistan, and India accepted Commonwealth status, but Burma cut loose more completely. The second move was to change the character of the Common wealth. The commonwealth ar rangement had been one in which all member nations professed their loyalty to the monarch and ac cepted the dominance of England. The members were referred to as dominions, and thus tacitly rec ognizing that domination. It be came apparent at a conference of prime ministers held in 1946 that this state of affairs was no longer quite acceptable. As one historian summarizes the affair, "the real significance of this conference was that Britain no longer pre sided as the real and overwhelming power behind the organization, with her economic and military strength providing its' material potential."! The word "Dominion"

had become irksome. The Domin ions Office was replaced in 1947 with a Commonwealth Relations Office. The Commonwealth re mains now largely as a relic of former times, a symbol of rela tions which once existed and re main in memory. The third move was the with drawal from the Near and Middle East. This is the fabled land mass in which arose the ancient civili zations; it lies athwart the paths connecting Africa, Asia, and Europe. With the dissolution of the Turkish Empire during and after World War I, the British moved in to assume much of the suzerainty over the area.. Shortly after World War II, they began their withdrawal: from Palestine, from Egypt, and from other Mos lem countries. The return of the Conservatives to political power in England in 1951 did not long delay the proc ess of cutting loose' much of the rest of what remained of the Brit ish Empire. In Africa and the Americas pressures were mount ing for independence for numer ous remote and obscure provinces.

1 Don Taylor, The Years of Challenge (New York: Frederick A. Praeger, 1960), p. 39.

1969 THE FALL OF ENGLAND 429 The following account gives some indication of the process: ... The Anglo-Egyptian Sudan became a sovereign state in 1956, and British Somaliland was given independence in 1960.... Independ ence was granted to the Federation of Malaya in 1957.... Status as in dependent sovereign states was also given to the Gold Coast (rechristened Ghana) in 1957, to Cyprus and Ni geria in 1960, to Sierra Leone and Tanganyika in 1961, to Uganda and Western Samoa ... in 1962, to Kenya and Zanzibar in 1963, to Malta in 1964 and to Gambia in 1965.2 So it has gone with colony after colony. A goodly number of them have retained commonwealth status, but, as has been indicated, this was coming to mean less and less. There have been breaks from the Commonwealth, too, as, for ex ample, that of the Union of South Africa. The British Empire is only a light shadow of its former self.

It should be emphasized here that England's greatness did not reside in or arise from the posses sion of an empire. On the con trary, the acquisition of an empire was, in large measure, a reflex of greatness. It is true that from the latter part of the sixteenth 2 Alfred F. Havighurst, Twentieth Century Britain (New York: Harper and Row, 1966, 2nd ed.), p. 486. through the latter part of the eighteenth centuries the British had been under the sway of mer cantilistic ideas and had acquired an empire of sorts following the practices associated with them. But following the American War for Independence a great change occurred. The British came in creasingly under the influence of the ideas of free trade. The great ness of England flowed from the energy and ingenuity of her peo ple, freed as they were from so many l~estrictions and obstacles to productivity. Commerce and Culture The British Isles illustrated the verity of Adam Smith's dicta: that the wealth of a nation con sists of the goods and services that a people can command, and that the way to augment these is to trade freely with all others, producing those things in which that nation has some advantage and buying from others what they can more economically produce.

The British Isles were well situ ated and geographically well equipped as a training ground for a seafaring people. So it was in the Modern Era, the British ventured forth to the far corners of the earth, their ships burdened with goods much sought after by somebody or other. In return, they brought back treas430 THE FREEMAN July ures for the people of their own islands. To facilitate this trade, trading posts were established, in vestments were made, native pro duction was bolstered, political control was extended, and so on. By the latter part of the nine teenth century, some Englishmen were beginning to attach value to the Empire itself, and the British began to formalize it once again. But this was probably more de fensive than anything else, for other nations were now turning to the acquisition of colonies and to the erection of barriers to trade. It is important to remember, too, that British ships did not carry goods only; they carried at least the appurtenances of civiliza tion to many of the, darkest parts of the world. Britain was, in the nineteenth century, the center of a great civilization and exempli fied many of its finest achieve ments: of government, learning, discipline, ordered liberty, thought, and institutions.

It should be obvious, but it is not to many people today: the at tainments of civilization are not equally distributed around the world. Cultural relativism has taken its toll. Many talk as if all peoples are on an equal plane of achievement and development. Of course, this is nonsense, however high-flown the language in which such notions may be garbed. The customs and habits of many peo ple are and have been barbaric, their institutions cruel and re stricti ve, their religions a hodge podge of superstitions, their econ omies a melange of inhibitions to economy. The British offered to those willing to learn some chance of amelioration. Two Faces of Power The spread of British influence was generally the leading edge of civilization in the greatest days of England. That is not to say that the British were always just in their rule, that every innova tion they championed was an im provement, or that barbarians were always transformed into civilized peoples. On the contrary, there is little enough that the wisest of men can do to help oth ers, and human nature is too much flawed for us to hope that good in tent was always the ruling pas sion. Indeed, it is most likely that the British sought mainly their own good in what they did. Yet the benefits from this extended to many other peoples.

Even so, it is doubtful that an empire is an ideal arrangement either for those who have one or for the peoples who fall in some way under imperial rule. Such power does indeed offer oppor tunities for its abuse. As it is 1969 THE FALL OF ENGLAND 431 desirable that each man stand on his own f.eet, so it may be desira ble that each people direct their own course. In the abstract, an excellent case can be made against empires and an equally good case can be made for national inde pendence. In some sort of imagi nary world, the-cutting loose of the empire by the British might have had entirely salutary results. England might have prospered as it basked in the good will of peo ples freed from its tutelage. Some such idealism may have inspired some of those who had a hand in the dissolution. Thereis a hint of this posture in the following state ment of John Strachey, a promi nent Labourite: "That daemonic will to conquer, to rule, and some times. to exploit, which first pos sessed us as a sort of emanation from the Gangetic plain two hun dred years ago, ha~ left us. And thank heaven it has."3 Unprepared for freedom Whether it is fortunate or un fortunate, we do not live in the imaginary world of socialists or even in the abstract world of ra tionalists. We live in a very real world where power holds sway, where peoples are variously sit uated to maintain their independ ence before it, where peoples of 3 John Strachey, The End of Empire (New York: Random House, 1960) , p. 217.

different backgrounds, religions, and heritage lay claim to and vie for control of a given territory, where there are some who have little to no aptitude for govern ing territories of the extent of nation-states, and where other power flows in to fill the vacuum of that withdrawn. In a number of instances, in dependence, rather than bringing peace, brought bitter struggles and contests. So it was for India. That land had been held together, it appears, only by British media tion and control.. Once these were withdrawn, India was divided be tween irreconcilable Moslems and Hindus. The ensuing creation of two separate countries brought its own train of horrors: A veritable Walpurgisnacht en sued, since an understanding for peaceful exchange of populations proved. to be the merest euphemism. Millions wrenched from their ances tral homes, were driven blindly to ward unknown, promised lands.

Plunder and arson, wholesale rape and massacre befell hapless victims of the partition. 4 What happened in Palestine is a somewhat more familiar story. Jews claimed the territory as their ancestral homeland. In 1945 and after, they poured into Pales tine in increasing numbers. Many 4 Arthur J. May, Europe Since 1939 (New York: Holt, Rinehart and Win ston, 1966), p. 429.

432 THE FREEMAN July Arabs lived in the area, and claimed the land by possession. The British withdrew in 1948 in favor of the United Nations. That body proceeded to partition the land, a portion of it being granted to the Jewish state of Israel. The Arab countries in general and Arab residents in particular re sented and resisted the United Nations action. To the present day, the conflict remains unre solved. The Thrust of Communism The most drastic impact of British withdrawal from colonial possessions, along with the with drawal from theirs of other Euro pean powers, has been the thrust of communism. A host of ideol ogies were promulgated in the nineteenth century, most of them more or less socialistic and all of them erosive of civilization, for they were assaults upon the foun dations of civilization - the in herited culture, the learning of the ages, revealed religion, the older institutions, and so on.

The most barbaric of these ideologies - excepting possibly anarchism - was the one promul gated by Karl Marx and Fred erick Engels. It is the one that twentieth century communists claim to represent most faith fully. Once in power, communists are, of all socialists, the ones most willing to use force and violence to achieve their ends, particularly on the international scene. They are the ones who have taken ad vantage most tenaciously of the opportunities for the spread of power opened by the withdrawal of Britain and other colonial pow ers. Indeed, there is a close connec tion between communist doctrine and the abandonment of empires by governments socialistic in character. Marxists have held that empires are instruments for capitalistic exploitation of back ward peoples. Western socialists of whatever hue have accepted this charge at face value gen erally. One writer notes that in England an "idealistic picture of a Socialist Galahad riding to the rescue of the oppressed and en slaved Colonial Empire . . . had been presented in so much Social ist writing before and during the war.... " It was not surprising, then, that "to the new generation of nationalist leaders arising in the Colonies it was a system of exploitation built up through the years by which the imperialist oppressors had waxed fat at the expense of backward peoples. In deed, earlier generations of So cialists had told them SO."5 West ern socialists have played into the hands of the communists. Acting 5 Taylor,op. cit., p. 101.

1969 THE FALL OF ENGLAND 433 on general socialist premises, they have cut away empires as they gained the opportunity, and pressed generally for it to be done everywhere. As they have done so, the international communist movement has moved into these areas thrusting for control and the extension of the totalitarian power of communism. A New World of Barbarism The end of the British Empire has been accompanied by the spread of a new barbarism in the world. As Western power has been withdrawn, much of Africa has re verted to tribalism. Much of Asia has come directly under the Ham mer and Sickle. Communists vie for power in Arab lands, and dis order spreads from land to land under the revolutionary impetus provided by Moscow and Peking. The security to property which governments once provided has gone from most of the world, and that individual liberty which it so effectively buttressed is in so many places a thing of the past.

Britain was once the center from ¥lhich ideas and practices for se curing liberty and property were advanced around the world. This is no longer the case. An England under the pervasive influence of Fabian socialism has lost the power to protect civilization, the vision to discern its lineaments, and the will to take decisive stands against barbarism. The England that once was is no more. The fall of England is notab solute, of course. It is relative to the powers of other nations, rela tive to strength and influence once wielded, relative to that place which she-once occupied. There remains, of course, the relics of an empire in the Commonwealth of Nations. There remains the relic of British financial leader ship in the world in the Sterling Bloc. Indeed, everywhere one ex amines, there are relics of former greatness: in universities which retain a vestige of former leader ship, in a monarchy which is al most purely ceremonial, in a House of Lords which awaits the next blow to its position from Com mons, of craftsmanship in such fine names as Rolls Royce, of re ligion as remain in a still estab lished Church of England, of em pire in ceremonial visits to out-of-the-way places by royalty and ministers. The habit of great ness can st.ill be sighted in self confident ambassadors, in literate if somewhat decadent writers, and even in an occasional will to lead expressed by some Britons. These are, however, faded reflections of glories past, as things stand.

There was even some economic revival in the 1950's and going into the 1960's. The Conservatives 434 THE FREEMAN July in power from 1951 to 1964 re stored a modicum of domestic tranquillity to the United King dom. There was even talk once again of British affluence. The value of the pound was stabilized on the world market in the in terim between two socialist gov ernments. The iron and steel in dustries were denationalized. Con trols were already being relaxed in certain areas before the return of Conserva tives, and they were much more generally removed thereafter. As rationing ended, so did the shortages it had produced. One historian notes that the "lot of the average English family im proved. The 1950's witnessed a housing boom, and by 1961 one family in four lived in a post World War II dwelling. The scars of war disappeared .... The by products of the affluent society also included increasing numbers of supermarkets and other self service stores . . . , the general acceptance of an annual two-week vacation for most families, and, by 1962, the ownership of a tele vision set by four families in five."6 This renewed prosperity, of sorts, should be attributed to the efforts and energy of the Eng lish people and almost exclusively to private industry.

6 Walter L. Arnstein, Britain: Yester day and Today (Boston: D. C. Heath, 1966), p. 363. The return of Labour to power in 1964 under the guidance of Harold Wilson was the signal for new troubles and an accentuation of old ones. The pound has been devalued once more. The United States has been called on to help shore up the currency. Britain has suffered from the flight of physi cians and other professions from a land of severely delimited op portunity. The will to nationalize is no longer very strong; indeed, there appears to be little enough enthusiasm for socialism itself. Yet, its tentacles are firmly fas tened on the country. What of the future? The time has not come, of course, to pronounce the fall of England as final. That England has fallen from its former great ness there should be no doubt. Whether that land will rise again to greatness, whether her people will lapse into the kind of his torical slumber that has happened to many former great kingdoms and empires, or whether some for eign invader will arrive to smash the relics and drive the inhab itants into mountain redoubts no one can know at this time. The eastern branch of the Roman Em pire survived for nearly a thou sand years at Constantinople after Rome itself had fallen to the Bar barians. Spain is still a nation1969 THE FALL OF ENGLAND 435 state several centuries after great ness has fled. Western Europe has had seveTal rises and falls during the Christian Era, and this is more particularly true of France.

There may always be an England, but the issue is by no means set tled. There was a time when there was no England, and it may be so again. The islands have been there for ages, but they have had many and diverse inhabitants. TheTe is a sense in which we can be glad that the present Eng land is not great and powerful. Such influence as a socialist gov ernment could give is hardly need ed in the world. The welfare state is all too barren and lifeless to provide succor for the spirit of man. If England is to revive and prosper, it will surely be because her leaders and people have some great vision before them, some thing that appeals not only to the flesh but to the spirit, something that will instill discipline, that will call forth the best· efforts of her people. There are, of course, demonic visions as well as good ones. Communism is such a de monic vision, and its prophets now move restlessly over the earth seeking minds to seduce. The Brit ish are under the sway of neither such a demonic vision nor of one that could provide again new im petus to civilization.

There is, however, in England's great history both the key to that country's revival and to the recov ery of civilization. Surely, all men of good will hope that they will rediscover these great ideas and beliefs and give them vitality once more. ~ International Order PLANNING on an international scale, even more than is true on a national scale, cannot be anything but a naked rule of force, an imposition by a small group on all the rest of that sort of standard and employment which the planners think suitable for the rest .... To undertake the direction of the economic life of people with widely divergent ideals and values is to assume responsibilities which commit one to the use of force; it is to assume a position where the best intentions cannot prevent one from being forced to act ina way which to some of those af fected must appear highly immoral. F. A. HAYEK, The Road to Serfdom POLITICALI I I MEDICINE RICHARD E. HUNT IN TRYING to define the nature of current problems in human rela tions it is essential to first define man's basic nature. Behavior then in keeping with this basic nature will lead to harmony and happi ness in human existence, the aim of all rational, moral men.

Man is a being of volitional con sciousness. He is constantly faced with the choice of thinking ration ally or evading reality. Knowledge comes from his conscious percep tion of his environment, that is the real world in which he lives, concepts are then formed based on reality as it exists and the in tegration of these concepts leads to advances as yet undreamed of. We all have only one basic right and that is the right to lead our own life and seek our own happi ness. Man has sole, individual reDr. Hunt is in the solo private practice of anes thesiology in Santa Rosa, Calif. He received his doctor of medicine degree from Cornell U. Med ical College, New York. His article is reprinted here by permission from The AMA (American Medical Association) News of October 28,1968. 436 sponsibility for his actions (his life) and must assume these re sponsibilities. We are not all equal in any ability. Each one of us is different. Each one of us has strengths and weaknesses in mind and body, and it is immoral for one to gain strength by exploiting the weakness of another; just as it is immoral for one to use his weakness as a claim on another's strength. Only through evasions, lies, and tricks is one able to avoid punishment for his errors and reward for his accomplishments.

There is no status quo; there are no guarantees of success; there is no basic minimum; and by the same line of reasoning there are no limits to the productivity of men's minds under a system of free, voluntary cooperation. Our country was founded to as sure "life, liberty, and the pursuit of happiness" for all who would pursue these goals, not for any 1969 POLITICAL INTERVENTION IN MEDICINE 437 one segment of the population, not just for the politicians, not just for the white people, not just for the Negro people. We all have the right to lead our own Iives. All the other things currently referred to as such are not rights. They are privileges. Education, automobiles, medical care, color TV, good hous ing, etc. are all basically produced by the conscious effort of men's minds and they must be earned by the recipients. If they are not, if they are taken by force, legislative action, lies or tricks from the peo ple who produce them and given to others simply because someone says he needs them, there is the immediate creation of the old slave-master relationship. In this case we have the absurd situation of the producer being the slave of the man· who "needs" his product because the government.has forced it to be so. The products of men's minds and labor both tangible and intangible are being taken out of the hands of the producers by political intervention in every seg ment of our lives.

Political intervention is respon sible for the moral degradation and misery we are rushing to ward. Those people in government who feel they can improve on reality, who feel they can "plan" things and do better than the law of supply and demand are thor oughly evil and immoral because of the inevitable lowering of living standards their planning creates. It makes no difference whether they do this with conscious intent or are merely well meaning but naive. The ·end result is the same - misery, poverty, lack of respect for law and order, and bloodshed. I hold the politicians who advocate this intervention as well as those who would cooperate with them in the "planning," be they physicians or businessmen, personally respon sible for the mess this country is in today. Most. physicians believe in free enterprise. They recognize that the affluence and high standard ofliv ing which Americans and others in the free world enj oy today is due to voluntary cooperation of thoughtful, rational men in a free market. The high standard of med ical care we· have today is due to the freedom under which we have practiced in the past, and most patients realize this, too. We are tradel'S in a free market. We trade services for money which repre sents the productivity of our pa tients in their respective fields.

Because our services are so im portant, we occupy a position of relatively greater influence in our society. We are well educated and do our best for our patients be cause it is in our rational self-in terest and the interest of our pa438 THE FREEMAN July tients to do so. We are not. in fallible. We aremen, not gods. We make errors and we do our best to learn· from them. But today the malpractice suits against doctors are att.empting to penalize physi cians for not being infallible! The grotesqueness of this travesty of justice staggers the imagination of any rational man. Many people feel today that cap italism is good for t.he rich people, for the "Wall Street financiers" or for the privileged and that capi talism is designed to keep the poor people in a position of subservi ence and poverty. Nothing could be further from. the t.ruth. This is a lie which has been furthered and nurtured ad nauseam by every collective political system in his tory both current and past. I refer now to the Nazis, all forms of com munism or socialism, and to the welfare statists and social planners in this country today. The truth is that capitalism is the only sys tem which has ever given every citizen a chance to improve him self and puts a stop to coercive monopolies which tend to fix prices and wages thereby insuring that those in a lower economic position will never be able to improve their lot. Coercive monopolies, price and wage fixing, and poverty are re sults only of governmental inter ference. There is no other way it can be done except by legislation.

The free market operates in ex actly the opposite way and is therefore the only moral choice for rational men to make today. With the above in mind it is with intense regret that I see the medical profession publicly demon strate its willingness to cooperate in governmental schemes which overtly claim to have interest in improving medical care. You doc tors are in error who say that if the medical profession supports and collaborates with these gov ernmental health programs, they will succeed in improving the quality of medical care. This is another way of saying that if the programs fail to live up to the gre~t expectations of the politi cians, it will be the physicians who are to blame. The programs were doomed to failure as efforts to ben efit mankind just as every other socialistic plan has caused poverty, misery, and bloodshed in the past. Only naive men would accept such blame and guilt. We as physicians in our own self-interest and that of our patients should never ac cept such a position whether it is placed on us by the government or by another physician. We must place the guilt where it belongs on the men who drew up the laws and on those who support govern mental interference in the prac tice of medicine. ~ A CASE STUDY IN MARKET DEVEL.OPMENT SUDHA R. SHENOY WITHIN the past twenty years Hong Kong has grown from a minor trading port into a center of manufactur ing, with exports to some seventy nations round the world. Hong Kong seems to have found a formula for development that is not widely understood.

The number of industrial estab lishments in Hong Kong rose from 947 in 1947 to 9,301 in 1967, the number of employees during that same period rising from 51,627 to 431,973. 1 Exports of manufactured goods in 1965 were 41j2 times the 1953 level. By all such tests of growth, . Hong Kong compares most favorably with the United Nations' target rate of 3.5 to 5 1 These statistics, and much of the in formation in the following paragraphs, have been taken from the Annual Re ports of the Director of the Department of Commerce and Industry, Hong Kong, 1948-49 to 1964-65; and the Annual Re ports of the Commissioner of Labour, Hong Kong, 1946-47 to 1966-67. I am also indebted to E. F. Szczepanik, The Eco nomic Growth of Hong Kong (London: Oxford University Press, 1958). Miss Shenoy, of India, is pursuing graduate studies in economics at the School of. Oriental and African Studies, University of London.

per cent a year. It may be added that Hong Kong has never experi enced the chronic shortage of ex change earnings supposed to typ ify underdeveloped countries. 2 Cotton man ufactures have· re mained the staple among export items, accounting for as much as two-thirds of the total in earlier years, but down now to about 55 per cent. Initially, simple knitted goods, piecegoods, and yarn formed the major part of these ex ports, but the industry has rapidly diversified to the manufacture of a large variety of clothing and the more highly finished textiles. Re cent exports include woolen knit wear, brocades, carpets, and lace. Textile machinery, originally man2 Cf. J. Bhagwa ti, T he Economics of . the Underdeveloped Countries (London: Weidenfeld and Nicolson, 1966), ch. 18.

440 THE FREEMAN July ufactured just for local use, is now being produced for export as well. Such items as firecrackers, Chi nese foodstuffs, and bamboo man ufactures once formed a major part of the export list. But by 1955, a wide range of consumer goods were being manufactured, includ ing torches, nylon gloves, electric clocks, and enamelware. Current exports have moved further into the industrial range: plastics, cameras, transistor radios, air conditioners, w~ter-heaters, light machinery (such as pumps and generators), and precision engi neering products (e.g., watch parts and aircraft components) are now made in Hong Kong. Hong Kong's shipbreaking in dustry is the largest in the world. At first, the scrap was utilized in the local construction industry; but this, too, is now being ex ported. With the development of the shipbuilding industry, yachts, and trawlers were' exported, mainly to the United States. Tugs, lighters, and barges were built for Borneo, Kuwait, and Ceylon.

Hong Kong's industrial develop ment thus proceeded along classic lines, from the simpler consumer goods to the more sophisticated varieties; from light industrial products to the intermediate types. Hong Kong has never suffered from inability to import heavy' industrial goods, which supposedly hampers the development of many areas. 3 Nor is there a Five-ora Ten-Year Plan or other such cen tralized resource allocation in Hong Kong. Indeed, no govern ment "planner" might have, ex pected Hong Kong to set an ex ample of rapid development. It has few, if any, of the textbook pre conditions for successful develop ment. 4 The domestic market for many of its exports is narrow or nonexistent. It has no natural re sources (with the exception of an excellent harbor), and no coal, oil, or other domestic fuel supply. The tillable area - 13 per cent of· a total of less than 400 square miles - is of poor quality. Hong Kong thus has to import virtually all its food, fuel, and raw materials. Even drinking water is pumped in from China.

No Tools for Planning The Colony has other handicaps from a planner's point of view: it lacks some of the most elementary government statistics and other guides for control over the econ omy. Figures on registered indus trial employment and daily wage rates began to be collected in 1947. Trade figures were added the fol3 Cf. J. Bhagwati, Ope cit. 4 Cf. G. Meier and R. Baldwin, Eco nomic Development: Theory, History, Policy (New York: Wiley, 1959), ch. 16.

1969 HONG KONG: A CASE STUDY 441 lowing year. A Retail Price Index was constructed in 1953 and an Index of Wage Rates the following year. But there are· still no official national income estimates, or even an Index of Industrial Production. There' are no official balance-of payment figures, no restrictions on trade and payments, no export du ties, no central bank; banking reg ulation is negligible. Consequently, the government simply has no basis for applying the various fis cal, monetary, and other measures recommended in most modern text books on public finance and devel opment. For most of the past twenty years, the highest income-tax rate was 121;2 per cent (currently 151;2 per cent) ; taxes on earnings and real property, and import duties on a narrow range. of commodities (chiefly tobacco, wines, and drugs) are the main sources of revenue. Up to 1955, primary education (which is not compulsory), sub sidized housing, basic medical services, and other "welfare"

items a.ccounted for slightly more than one.-third of total government expenditure, with an equal pro portion being spent on roads, water supply and other "econom ic" services. By 1968, "welfare" expenditures had risen to two thirds of the total, the total hav ing increased from an average of HK $271 million in the years 1948-55 to HK $1,800 million in 1968. (U.S. $1.00 == H.K. $6.00.) The increased provision of such services was made possible by ris ing productivity. Hong Kong has no minimum wage legislation, a negligible amount of labor legislation, and only a few very weak unions. Yet, take-home pay doubled between 1958 and 1967. The retail price index rose only 9 per cent in the interim, so this represented a sub stantial increase in real earnings. Living standards rose significant ly, as exemplified at a basic level by changes in diet. Per capita rice consumption fell, while its quality improved, and more meat and veg etables were consumed. Imports of frozen meat rose from 26,000 tons in 1955 to 121,000 tons in 1965.

Hong Kong thus combined rapid economic growth with a rise in Iiving standards. Quotas and Restrictions Hong Kong's development has proceeded entirely without gov ernment-to-government "aid." In deed, other governments have sought to curb their imports of goods manufactured in the Colony. The first quotas were imposed in 1954, by the governments of the U.S.A., Pakistan, and Thailand. The next year a number of South East Asian governments followed suit, but Hong Kong manufactur442 THE FREEMAN July ers switched to markets in Africa and Latin America. In 1958, the U.K. government imposed limits on imports of textiles and clothing manufactured in Hong Kong; the U.S. government began limiting such imports in 1963. The story behind these last re strictions is revealing. It begins with the so-called agricultural price support policy of the U.S. g'overnment, which among other things, maintains the domestic price of U.S. cotton above the world level. The Department of Agriculture, then finding itself laden with "excess" supplies of cotton, added an export subsidy to offset the price support. Mean while, imported textiles were be ginning to replace U.S.-made tex tiles in U.S. markets, as foreign manufacturers bought cotton (in cluding American cotton) at world - not U.S. - prices, while their labor costs were well below the American level. American manu facturers turned to Washington for protection against losses; and, in 1961, a "countervailing" import duty was imposed-to offset the export subsidy to offset the price support. Hong Kong textiles, how ever, sold so well despite this ad ditional burden that import quotas were placed in 1963. Hong Kong manufacturers have responded by improving the quality of their exports.

Other countries restricting Hong Kong imports by means of hea vy duties, quotas, and the like in clude Australia, Canada, France, Ghana, New Zealand, Nigeria, Norway, Rhodesia, Singapore, Switzerland, Tanzania, Uganda, and the West Indies. Laissez-faire How did Hong Kong achieve all this? It has been suggested that the availability of capital and the presence of a large refugee popu lation - obviously possessed of a certain amount of get-up-and-go are perhaps the two chief· factors co.ntributing to Hong Kong's suc cess. u But those individuals who came as refugees to Hong Kong possessed their enterprising qual ities even before they arrived; nor does a waterless rock off the Chi nese coast offer the best prospects for investment. The difference lay in the economic environment, in the free markets created by pol icy: "Almost complete laissez fairism unleashed human potenti alities, paralysed in other countries by elaborate control systems."6 The government made no attempt to impose or preserve any par ticular resource allocation, but provided instead the stable legal, fiscal, and monetary framework 5 Cf. The Economist (London), 19 Oc tober, 1968.

6 E. F. Szczepanik, Ope cit., p. 65.

1969 HONG KONG: A CASE STUDY 443 that the market requires for opti mal functioning. This use of the pricing system meant the full utilization of the empirical knowl edge of ever-changing circum stances, which can never be cen tralized, but is only available scattered among individuals. 7 Re source allocations were thus de termined, via profit and loss, by international consumer preference. Hong Kong's economic growth was part of this general process. Investment in directions where returns were rapid and large meant that output and thus real incomes were raised rapidly; this, in turn, made higher saving and investment possible - but in con tinuously more sophisticated types of machinery, which permitted not only further increases in produc tion but also diversification of out put. Resources were thus created where none existed before. One fundamental point must be stressed: the course of Hong Kong's development could scarcely have been predicted before it oc curred, even on the basis of a detailed knowledge of the past growth of. the now-developed na tions. No one, in 1947, had any idea of what a developed Hong Kong might look like! It was only 7 See F. A. Hayek, "The Use of Knowl edge in Society" and "The Meaning of Competition," in Individualism and Eco nomic Order (London: Routledge and Regan Paul, 1949).

by the market process that this, in fact, became evident. This logic is capable of wider application. In 1750, on the basis of the knowledge available then, it would hardly have been possible to "plan" in advance for the develop ment of the North Atlantic region. Both North American and West ern Europe were still relatively underdeveloped, and no one knew, in concrete terms, what shape any development might take! This il lustrates the contradiction in what is termed "planned economic de velopment": since we do not know what a developed Africa, Asia, and Latin America might look like, we are necessarily limited to planning for the reproduction of what has already been achieved, in the past, elsewhere! The market process, on the other hand, sets no such limitations; it is adapted to the realization of hitherto latent and unknown possibilities. Inasmuch as the underdeveloped nations represent, as it were, a vast realm of such unrealized po tentialities, it is above all essen tial in these areas to create the environment for a market econ omy.8 ~ 8 See F. A. Hayek, Competition as a Discovery Procedure (forthcoming pub lication by the Institute of Economic Affairs, London) and his remarks in What's Past Is Prologue (Irvington, New York: Foundation for Economic Educa tion, 1968).

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN THE STRANGE WORLD OF SECRETARY of Defense Melvin Robert Laird picked himself a good man when he asked Profes sor G. Warren Nutter of the Uni versity of Virginia to become his chief adviser in the Pentagon on the economic potential of those nations which we must assume will be our enemies should any maj or war develop. The latest proof of Nutter's soundness as a thinker and researcher is a little book called The Strange World of Ivan Ivanov (World Publishing Co., $5), which contrasts the life of an average head of household in Soviet Russia with that of John Doe, average American. The book has a score of good features, not the least of which is Professor Nutter's love for a hu morous story. But what makes it really noteworthy is that Profes sor Nutter is not fooled for a min ute about the meaning of the So viet menace. The Russian economy creaks and groans at every joint; it can't satisfy human desires for the good life. But this same econ omy, which turns out a gross na444 tional product that is about a third of our own, manages to sup port a fearsome military estab lishment. Professor Nutter is able to report both sets of facts, the economic and the military, to his boss, which means that nobody in high executive place in Washing ton should be misled about Soviet capabilities.

Ivan Ivanov, the Russian com mon man, gets the short end of the stick precisely because his rulers regard intercontinental bal listic missiles, an ABM system, submarines, tanks, MIG planes, and a huge standing army as top priority matters. But it is an old story that totalitarian govern ments can only produce for war. You can't plan to produce for peace, for peace assumes almost as many personal 'objectives as there are human beings. One man will want a car, one a special kind of house, one the leisure to go fishing instead of behaving like an economic man ..There. is no way of catering to this sort of thing except by a free market system, 1969 THE STRANGE WORLD OF IVAN IVANOV 445 which, by definition, a totalitarian state cannot tolerate and still hold on to its monopoly of power. Being a Mont Pelerin econo mist, Warren Nutter understands this thoroughly. He isn't sur prised that the Soviet economic strength, or lack of it, is a poor gauge of its military power, and vice versa. He tells a story about a Western military aide watching a Soviet aircraft battery in action in World War II. The man was fascinated by the accuracy of the guns and the skill with which they were handled. When the action was over, the aide tried to light his pipe with Soviet-made matches. A dozen of them broke.

Throwing the remaining matches to the ground, the exasperated fellow turned to his companion and asked, "How can people who make and man guns like those produce matches like these?" This is the Soviet economy in a single joke. It's something to worry about in war. But it will never, never catch up with the West in times of peace. Tied to the Land Agriculture in Soviet Russia is incredibly inefficient. It uses a labor force nine times that of ours, yet manages only to produce an output some 70 or 80 per cent as large. There are one hundred acres of arable land for every tractor in America as compared with four hundred in Russia. The Soviet peasant keeps the Russian cities fed from his little private plot, which he is permitted to keep by a Communist Central Committee that knows famine al ways follows when the private plots are abolished. Countrymen in Russia are not permitted to move into the cities without special per mit; if they were not, to all in tents and purposes, serfs, bound to the soil as much as any peasant in the times of the czars, there would be a mad rush to get out of the villages. Only the industrial workers in Russia are allowed to quit their jobs. The result is an annual turnover of 22 to 30 per cent. The Soviets can't admit there is any unemployment, since everyone is supposed to work. But in the large cities there is actually an unemployment rate of 8 per cent, while 25 to 30 per cent of the population are, normally with out jobs in the small and medium size cities.

The "general welfare" of Ivan Ivanov is a travesty of the phrase. By our standards, says Professor Nutter, Ivan lives in a slum and enjoys a standard of life halfway up to the U.S. poverty line. The U.S. has 1.4 automobiles· per family; the Soviets have two cars for every 135 families. In Amer ica there are 480 telephones per 446 THE FREEMAN July thousand persons; in Russia the figure is 30 per thousand. How Freedom Is Curbed Material wealth, of course, is not everything. But Ivan Ivanov does not enj oy the blessings of liberty in his slum. If he wants to write, he is up against a state monopoly of everything from newspaper presses to book pub lishing companies, to say nothing of the forests that provide the ma terial for paper. Russian authors who permit their work to be pub lished abroad without Central Com mittee permission are still jailed, even asin the days of Stalin. If Ivan Ivanov wants to join his fellows in a crowd, it had better be for a government purpose, such as dem onstrating before the Red Chinese Embassy or assembling on May Day to watch the soldiers file past.

Attendance at church is permit ted; but if Ivan Ivanov is not an atheist, he can't hope to join the Communist Party. Ivan has a democratic right to vote, but the candidates he is asked to support are all designated by the govern ment. Ivan's son goes to school, but his textbooks are centrally se lected, and his literacy permits him only to read the party press and such ancient classics as are deemed politically safe. (He can, of course, listen to foreign broad casts, but he had better not act on anything he hears.) Since neither Ivan nor his son can have any private property beyond a few bonds and personal effects, no pri vate defenses can be rigged up against the state. The upper classes in the Soviet Union, meaning the big bureau crats, army officers, and party functionaries, get the best of ev erything, from country villas to choice seats at the ballet. But Ivan Ivanov can only look at the good things of life from afar. He must shop at the state stores, he must apply for housing from the state, he goes to state schools for education. If Ivan Ivanov lives in a city, it will be in a space that is unbelievably confined. On an aver age, there are 2.3 persons living in each room in the Soviet cities.

So it goes inside Russia. It is small wonder, then, that the satel lite countries such as Hungary and Czechoslovakia hunger to re turn to their old Westward orien tation. The Soviets are bound to extend their tyranny outward, or the communist bloc would com pletely disintegrate. If it were just a matter of eco nomic competition, the West would have nothing to worry about. Un fortunately, the Communists know how to subvert. And they have achieved "nuclear parity" with us, which means that we can't laugh them off. ~ 1969 OTHER BOOKS 447 ~ EDMUND BURKE: A GENIUS RECONSIDERED by Russell Kirk (New Rochelle, N. Y.: Arlington House, 1967), 255 pp., $5. ~ THE SPECIOUS ORIGINS OF LIBERALISM: THE GENESIS OF A DELUSION by Anthony M. Ludovici (London: Britons Pub lishing Company, 1967), 192 pp., $4. Reviewed by Edmund A. Opitz No BOOK about Burke is a substi tute for reading the man himself; but it is helpful to have a manual which supplies a ground plan, so to speak. We need to know some-· thing about Burke's life and ca reer; his education, intellectual lineage, and major preoccupations.

Russell Kirk has written a fine primer, which may also be read with profit by anyone wishing to assess Burke's contribution to the stock of Western thought about man and society. Burke's genius was evoked by the events which engaged his professional political interest; by the growing tension over the American Colonies, by the British in India, and especial ly by the revolutionary events in France. Burke was a public man and most of his literary efforts were in the form of speeches occasioned by issues which no longer concern us; but to the examinatton of these issues Burke brought a pow erful mind, a set of enduring prin ciples, and a richly stocked back ground of historical knowledge. His Speech on Conciliation with the American Colonies is part of our history, and so is the Speech on American Taxation; but they are of more than historical in terest. Viscount Morley once ob served that these two speeches, plus Burke's Letter to the Sheriffs of Bristol, "... comprise the most perfect manual in our literature, or in any literature, for one who approaches the study of public af fairs, whether for knowledge or for practice."

Then there is the long and pre scient work on the French Revo lution. Many people, then and now, view the upheaval in France as a movement of emancipation, and Burke, too, championed liberty. "It is our inheritance," he wrote. "It is the birthright of our spe cies. We cannot forfeit our right to it but by what forfeits our title to the privilege of our kind." Why then did he oppose the French Revolution with all the vigor .at his command? Because he viewed these events as unleash ing a set of ideas which are hos tile to liberty. Majoritarianism or popular sovereignty appears to re move the-old shackles which have hamstrung "the people," only to replace them with new restraints 448 THE FREEMAN July on individual persons - in the name of "the people" ! Thus emerges totalitarian democracy with tyranny over each in the name of all. Burke opposed the theoreti cians who regarded society as a mere mechanical arrangement of parts, to be disassembled at will and slapped together again. ac cording to some late model spec ulation. He did not, however, slip into the opposite error of suppos ing society to be· an organism; but society is somewhat analo gous to a living thing in that so cial change is not to be accom plished on the instant by a kind of surgical transplant technique. We of the modern world have had suf ficient experience with revolution, one would think, to know that this crude method at best gets rid of a few rats by burning down the barn. People are involved in any kind of social change; and if per sons are not to be violated, development and progress in society must be accomplished prudently and by almost imperceptible de grees under the radiating influ ence of ideas. This insight, and the patience that goes with it, is what Burke instills in a reader.

If we were to paste today's label on the system Burke opposed it would read "Liberalism." This body of doctrine has been ably criticized in recent years, but Mr. Ludovici manages to drive in a few shafts from his own unique perspecti vee This man, in his ninety-first year, and with a score of books behind him, is a much neglected thinker. He's an· aristo crat who is critical of European aristocracies, an artist who has watched the world grow uglier, an individualist in an age of mass man. The modern world will not like what this gifted man says about it, which is one measure of the importance of hearing him out. ~ the Freeman VOL. 19, NO.8· AUGUST 1969 Floating Exchange Rates J. Enoch Powell 451 The case for reliance on the market rather than exchange controls as the guide to international trade. Capital Gains George Hagedorn 461 It's not real income being taxed, but the principal of the thing.

Money and the Market Paul L. Poirot 464 The market origin of money and its vital importance for business accounting and management. The Forgotten Man William Graham Sumner 470 Builders of Utopia always seem to forget to provide for the one who pays. Protectedto Death Henry Hazlitt 481 A government that kills off the producers is hardly protecting consumers. The Best Audience Is One! Leonard E. Read 483 Reasons why the scatter-gun is harmful rather than helpful in the promotion of ideas on liberty. Tariff War, LibertarianStyle Gary North 488 He who strikes the second blow starts the fight: why it's better to trade goods than to trade blows. Educationin America: 11. Creativity George Charles Roche III 497 Concerning the individual nature of the creative process and how it is thwarted by institutionalized conformity. The ConsequencesAre Absolute June I. Ward 504 Man faces many choices, but the consequence of each is fixed and immutable.

Book Reviews 507 "Frederic Bastiat: Ideas and Influence" by Dean Russell "The Economy of Cities" by Jane Jacobs "Free Speech and Plain Language" and , "The Book of Journeyman," both by Albert Jay Nock Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON·HUDSON, N. Y. 10533 TEL.: (914) 591-7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN 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. 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, 1969, 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 "Protected to Death."

THE RT. HON. J. ENOCH POWELL, M.P. My THEME is human folly. It is a theme so prolific and inexhausti ble that one wonders at the sur vival of a species incessantly pre occupied with the assertion of absurdities, that is, with the de nial of salient facts about the en vironment in which it exists. All nations have their own local and national nonsense; but on none of these would I presume to address you. I am in a foreign country. Decency, therefore, for bids me to expatiate upon the foi bles of Britain; and good manners debar me from referring to those of my hosts. There is, however, no lack of material on that ac count, because you and we and many other nations participate together in one and the same grand nonsense, which is respect fully referred to as "the internaFrom an address of May 19, 1969, before Trustees and guests of The Foundation for Economic Education. tional monetary system." This huge pyramid or Tower of Babel is constructed upon a simple but perfectly adequate foundation.

This is the assertion that the val ues of the different national cur rency units in terms of one an other and of ounces of pure gold ought not to vary from month to month or from year to year or even from decade to decade - at least, unless they are altered by a committee decision among the nations. It is similar to, and as absurd as, asserting that all the prices of stocks and shares are to remain unaltered unless and until this one or that is revised by the Stock Exchange Commission. I will not detain you by argu ing, what is obvious, that neither in the one case nor the other will the prices ever be right - except, by some remote chance, for an in stant of time. Apart from this A.Ell 452 THE FREEMAN August extreme exception, they are all bound to be more or less wrong, in one direction or the other, all the time. Of course, if the various national currencies were gold, chopped into bits of different sizes, or gold represented by pieces of paper which could in stantly and unconditionally be ex changed for a specified bit of gold, then indeed their respective values in terms of one another would be, if so desired, immutable, because they would all be one and the same stuff.

This used, until just after I was born, to be the case; and the memory like the memory of so much else prewar (which to me means "pre-World War I) still haunts mankind and is part of the etiology of the collective aberra tion I am discussing. This was specially plain when we in Britain plunged into it in 1925 by what was miscalled "going back onto gold." After a decade of war and confusion, at last the blessed, the magic, the prewar equation of £3 :17 :10Y2 sterling with an ounce of fine gold occurred in the mar ket. It was a nostalgic moment, and small wonder if we tried to grapple it to ourselves forever, saying, like Faust to the passing hour: "Oh, tarry yet; thou art so fair." Within six or seven years the decision was found to be unsustainable and presently it became widely accepted that it had also been inherently wrong and one of the causes of the depression into which we and other countries descended around 1930 and from which some recovery was percep tible after 1931. It is one of the ironies of our age that those who wholeheartedly accepted this view hastened to re-establish the sys tem of 1925 again after 1944 and have maintained it pertinaciously ever since, explaining that all that was wrong in 1925 was the par ticular figure chosen to be fixed.

$35 an Ounce You in the United States still live under the influence of a sim ilar popular emotion. Having once asserted, thirty-five years ago, that the price of fine gold was $35 an ounce, you have persisted in that assertion as though the mere repetition could make and keep it true. There is an enormously deep human yearning-which finds mul tifarious religious expression for something changeless and eternal to which to cling: "0 Thou that changest not, abide with me." H.ere was an equation, closely allied with the concept of the na tion itself, something around which in any case the human in stinct for survival and diuturnity strongly centers - the equation be1969 FLOATING EXCHANGE RATES 453 tween a piece of gold and a dollar bill, the very symbol of America. Surely its permanence could be as serted and, being asserted, be se cured? Once again, if and so long as that dollar bill was instantly and unconditionally exchangeable with gold, the statement would be a truism and therefore true; but when it ceased to be so exchange able, there was no reason why, ex cept for a brief chance moment, the price of gold in terms of dol lars or of dollars in terms of gold, should remain at any particular figure: the conditions of supply and demand, of production and de sirability, of the two things hav ing no specific and necessary rela tionship. Yet, to maintain the assertion, you have more than half emptied Fort Knox and spun a web of controls and compulsions around American citizens.

Trapped by Error So here are our two nations, along with others, making asser tions about the respective values of our domestic currencies which are manifestly untrue, and asser tions about the stability or per manence of those respective values which are manifestly absurd. Yet to these assertions we are com mitted by dint of habit and repe tition and the most solemn and repeated asseveration. This is no new phenomenon. Indeed, as I have suggested, one form or another of it is perfectly normal. Consequently, we have ample experience from which to predict with assurance how peo ple will react in order to defend and shore up the untruth and ab surdity, because, of course, being untrue and absurd, it is always threatening to collapse. One reac tion - I will not dilate on it at any length - is to shout at anyone who points out the untruth or ab surdity, to drive him away with stones and curses, and, in primi tive times, if possible to kill him.

Those who in recent years have been so bold as to talk in public about a floating pound or a mar ket price for gold will be person ally familiar with this kind of treatment. The next reaction is to invent a range of imaginary terrors de picting what would happen if the untruth or absurdity were aban doned. This may, psychologically, be an attempt to frighten oneself out of thinking, and is perhaps close kin to those medieval elabo rations of the horrific torments which awaited those who ques tioned the dogmas of ecclesiastical authority. These superstitious fears are, I believe, worth exten sive and patient examination, be cause they illustrate one of the great dangers to freedom, whether it be freedom of thought and 454 THE FREEMAN August speech, or of trade and economic decision. This is that, once free dom has been lost, it can so easily be made to appear impracticable, and indeed chimerical.

Unfounded Fears As soon as the price of an arti cle is controlled, men are soon per suaded that unless it were con trolled, the article would be unobtainable: if food prices were decontrolled, they imagine they would starve; if house rents were freed, they imagine they would perish of exposure. Thus the loss of a freedom becomes self -perpet uating through fear of the un known, and habit soon teaches men to believe there is no alter native to the state in which they find themselves. This is cognate with the awkward fact that while the effect of control is easy to ar gue - "if the government fixes the price, then that is the price which will apply" - the practicability and superiority of freedom are in the last resort demonstrable only ex perimentally, by experience. We know that men can walk erect on two legs, because in fact they do; but if we had been kept for long enough on all fours, we should treat with skepticism and ridicule any bold spirit who sug gested that it would be much easier and simpler to walk about.

We should have become convinced that any such dangerous and un proven experiment would speedily result in broken noses or cracked skulls. The terrors with which imagi nation has invested the simple no tion that gold and the various na tional currencies should be allowed to price themselves, like anything else, in the market and that all the contortions and controls de signed to fix their respective prices are futile and harmful, find close parallels wherever the mar ket has been distorted or des troyed. Hence, in examining the superstitious fears attendant on the preservation of "the interna tional monetary system," we are confronting the same imaginary monsters as bar the road to every freedom. I take the first. "We should be plunged into uncertainty, and never know the exchange rates from one day to the next." This is the cry of the prisoner of the Bastille, who pitifully longed for the security of his confinement.

He, however, did at least get reg ular meals and Iive in the same old cell. The irony today is that the very people who express this fear never know at present a mo ment's freedom from anxiety. Day by day the headlines scream at ' them about impending devalua tion, or revaluation, or some other abrupt and disagreeable contin1969 FLOATING EXCHANGE RATES 455 gency. The pains they dread are those with which they are already suffering - but in a specially acute form, for one more uncertainty and unknown is added to all those which exist anyhow: namely, the uncertainty as to whether, when, and how the arbitrary fixed price will be .altered. An Added Uncertainty There is no uncertainty in this world quite so great as the uncer tainty about what a government is going to do next. These uncer tainties already have to be taken into account in every transaction in which the future exchange value of currencies is a factor. In the j argon, only "spot" is fixed while "forward" varies from day to day, reflecting as best it can the opinions which those con cerned hold about the future.

The moral is this. We. do not banish change and uncertainty by pretending, or asserting, that they do not exist. We thereby only make them even harder to antici pate and to guard against. A premium has always to be paid to insure against the unknown. That premium will be higher if the unknown includes the actions and decisions of politicians and if trends and changes in the real world are not constantly being re flected, genuinely and freely, by changing market prices. What a terrifying position it would be if the spot prices on the Stock Ex change were pegged - and inci dentally, therefore, rigged and subsidized by the controlling au thorities - while only the futures were allowed to move. I have disposed, just now, inci dentally of the argument that in ternational trade would be inhib ited by a higher cost of insurance against currency risks, by point ing out that the opposite would in fact be expected. I pause only to note that this argument is a special form of the general claim that control is economical and minimizes costs by substituting certainty for uncertainty - a prop osition which any person or trade with practical experience of state control finds highly satirical. The actual effect is to replace continu ous adjustment by large, jerky, and belated concessions to a real ity it is no longer possible to deny or defy - in this context, the sud den, long-anticip·ated but long delayed jolts of devaluation and revaluation.

Planned Chaos vs. freedom Sometimes, however, it is sim ply stated as self-evident that the growth of world trade would suf fer if the respective currencies and gold were continuously priced against one another in the market. This is a recognizable variant of 456 THE FREEMAN August the well-known "chaos" supersti tion, whereby the operation of the market in any area is described as "chaotic," immediately creating by this metaphor the impression that the movement of individuals and their relations with one an other are impeded. We are so fa miliar with such terms as "tra.ffic chaos," "administrative chaos," "chaos and dark night," that the mere mention of the word is suf ficient not merely to suspend judgment but to neutralize experi ence. People who are perfectly and daily familiar with the market where it exists - in the shopping center, for example, or on the stock exchanges - will instantly persuade themselves wherever they are not accustomed to it that it would produce "chaos." This im pression is reinforced by the ap plication of the solemn and im pressive term "system" to the op posite. It is wonderful what can be achieved by giving to the, truly chaotic, behavior of national gov ernments in the last twenty years the title of "the international mon etary system," and describing as "a threatened collapse of the sys tem into monetary chaos" the prospect of those governments be ing forced to recognize the true respective values of their curren cies.

The "system" - to call it for once by its nickname - incidentally necessitates, and has in fact al ways necessitated, the repeated and abrupt interference of gov ernments in the trade and invest ment of their subjects, internal and external: changes of taxation, import controls, import deposits, import surcharges, alterations of interest rates, prohibitions on loans. To be able seriously to argue that such a system is actu ally favorable to international trade is striking evidence of the depth to which superstition has penetrated. The fear of the un known like all fear renders its vic tims irrational and blind to their surroundings. The Course 01 Trade Another superstitious fear-we may be more familiar with this in Britain than you are here - is that if the exchange rate of a country's currency were to fall, it would be unable to buy the raw materials for its industries or even the food which it needs. This is a particular version of the general cry in defense of control: "If it were not there, we should starve."

There is, of course, absolutely no rational basis for this fear. If a given number of British prod ucts of a certain kind exchange for a given amount of raw materi al or finished goods in Brussels or Buenos Aires or New York on one 1969 FLOATING EXCHANGE RATES 457 day, so they do the next day, ir respective of any alteration over night in the exchange value of sterling. The supply and demand equation in Brussels or Buenos Aires or New York is unaffected by the number of pounds the ex porter gets for his francs or pesos or dollars when he changes them to come home, or by the number of pounds the importer has to find to buy the goods in francs or pesos or dollars. The realities are unaltered: the same volume of British goods and ser vices exchanges in the outside world for the same volume of for eign goods and services. In other words, our ability to buy what we want from abroad is unaffected: our standard of living remains absolutely unchanged.

What would happen is that if the exchange rate fell, and con sequently importers had to find more pounds while exporters earned more pounds, there would be a shift - ever so slight, but enough and just enough to pro duce a balance without borrowing - away from imports and toward exports. The shift would be so slight as to be imperceptible less, at the moment, than one per cent of the national product or much less than the gain which we make year by year in production - and the shift in jobs would, of course, be even smaller still. This tiny margin is the sole extent to which Britain's standard of living is being, even tempo rarily, maintained by the rest of the world: it is a margin so nar row that the economic growth even of a single average year is sufficient to swamp it. Yet, it is the only basis for the accusation which the British positively enjoy leveling against themselves, that they "imagine the rest of the world owes them a living."

IISa/ance of Payments ll Another common but equally irrational fear that prevails in countries which, under a system of fixed parities, inevitably have what is called "a deficit on the bal ance of payments," is that if the current parity were not artificially maintained but were to be replaced by a free and therefore fluctuating and at first presumably lower val uation, foreigners would, as the phrase goes, "take their capital out." The victims of this delusion imagine, as many of us do in Britain, that they would thereby be impoverished, like a village, which has been pillaged by a horde of marauders. In the first place, no productive capital, whoever it belongs to, can be shipped abroad: these assets are, as you might say, landlord's fixtures, and the refineries, re torts, and furnaces are there to 458 THE FREEMAN August stay. The most that a foreigner who holds shares in them can do is to try to find somebody to buy the shares from him for cash, and then exchange the cash for for eign currency. The capacity of the country to produce goods and ser vices remains the same.

Let us, however, follow through what would happen. To the extent that foreigners decide to exchange their shares, or other interest bearing securities, for the cash of the country, the demand for cash is increased and for shares and securities is lowered. In other words, the prices of the shares and securities fall, and the interest obtainable on them - or the re ward for surrendering one's cash in exchange for them - corre spondingly increases. When the foreigners, having realized their securities, proceed to convert them into other currencies, to that ex tent they drive down the rate of exchange of the currency out of which they are getting in favor of those into which they are get ting; and thus, in effect, they ob tain a lower rate of return on their money - or suffer a loss of value, whichever way you like to look at it - in the new situation compared with the old. Thus, the more foreigners "take their money out," the more the inducements not to do so mount up, in the form of higher rewards for staying and severer penalties on go ing . It is a sobering experience which, even with fixed parities, has befallen a number of investors in Britain in recent years.

So the fear of a "rush of money out of the country" is pure bogey man. I have spelled it out in terms of the foreign holder; but obvi ously the same logic applies to one's own nationals. By all means, if they like to exchange their as sets for cash and then convert and invest it abroad, good luck to them! They take the consequences, but none of the rest of us suffers. If internal interest rates rise somewhat in consequence, that is nothing to the rise in rates which we have actually suffered in the effort to "keep up with the Joneses." In itself, a fall in the rate of exchange neither harms nor impoverishes a country. In deed, there is no such thing as a "high" exchange rate or a "low" exchange rate, but only a "right" exchange rate and a "wrong" ex change rate. Projecting a Trend Then comes another "but," in troducing another superstitious fear. "But if we let the exchange rate go free, it may fall and fall and never stop." This is, in fact, a very common argument against the market in any area where it does not already prevail: if prices 1969 FLOATING EXCHANGE RATES 459 are free to rise, they will go on rising forever; or alternatively, if prices are free to fall, they will go on falling forever. It is, of course, nonsense, but none the less dan gerous for that. This is why, when food prices were controlled, peo ple feared they would skyrocket otherwise: so long as the price of an egg is controlled at 6 pence, you cannot prove that this does not prevent it from rising to one shilling, or two shillings or any figure you care to name. When the pound is pegged at $2.40, there are people who come to you, seri ous, educated adults, and say that if it were free, it would fall to $1.00. It is their version of the two-shilling egg. One retort, as above, is: "Well; and if so, what of it?" But another, perhaps more suitable for' the weaker brethren, is: "No, it wouldn't; because if the discrepancy between the fixed price and the free price were any thing like that, nothing on earth under our sort of conditions - not even a combination of central bankers - would be able to main tain the present fixed price for any length of time." But all this illustrates once again the force of the superstitious fear of the un known.

Inllation Jitters My last group of superstitions centers around inflation. We have been having a bad dose of these superstitions in Britain lately, be cause it has paid the politicians to support (whether knowingly or not) the myth that a fall in a country's exchange rate automati cally causes a general rise in prices. This served both as a bogey to protect the absurdity of the fixed rate system, and also as a blind to cover the causes of the higher prices which actually oc curred in the fiscal year 1968 when the pound sterling was de valued. When a market exchange rate is substituted for a fixed exchange rate, two things happen; the def icit (or surplus) - that is, the loan to or from foreigners of a certain quantity of goods and ser vices - disappears; and secondly, relative prices alter internally so as to accommodate that change. Other things being equal, the re sult would be a general rise (or fall) in prices, the total of goods and services available being that much less (or more). However, as I have pointed out, the proportion was in our case minute and, in any event, more than compensated for by the rise in domestic output.

There would, therefore, have been no general rise in prices if other factors had been neutral. After the change-over from a fixed to a market rate has taken place, further changes in the rate 460 THE FREEMAN August will cause an alteration in some internal prices relative to others if, but only if, there is a change in the terms of trade; that is, if a given quantity of a nation's goods and services exchanges for more or fewer than before in the outside world. When this happens, there may also, but will not neces sarily, be a rise or fall in the gross national product in consequence and thus, in the absence of other factors, a general fall or rise in prices. However, the principal context in which inflation appears in this whole debate is the belief that fixed rates of exchange are a safe guard against domestic inflation, and - according to taste - either prevent the politicians from in dulging in it or force them to keep control upon it. There are three answers to this, at different levels. One is that fixed rates of exchange demonstrably do not pre vent domestic inflation, and that there is no correlation between the stability or otherwise of do mestic prices in various countries and their showing in deficit or surplus under the system of fixed exchange rates.

The second answer is one I am entitled to give with confidence as a working politician: it is that if there were no such thing as the balance of payments, if the country concerned were the only inhabited land on the globe, the politicians would still be punished by the electorate for indulging in more than a certain mild degree of inflation. The true sanction on inflation, and the true penalty for practicing it, is the effect on peo ple of the defeat of expectations and the shift of power from per son to person, class to class, gov erned to government, which it causes. That is what the politician has to answer for when he meets his constituents. But the third, and last, answer is a defiance. "If we here want to inflate our currency, what busi ness is it of any other country, provided we do not try to insist on everybody else financing us? That is, provided we accept the consequences in terms of truth ful exchange rates, it is part of our sovereign independence to do as we will with our own domestic currency and to be as much, or as little, pseudo-Keynesian as we please."

Finally, Common Sense and Reason Become Suspect I conclude by confronting the last and most dangerous of the demons which keep people im prisoned in the cage of control and falsification, once the spring door has closed behind them. This is, that common sense and reason themselves become suspect. "If 1969 FLOATING EXCHANGE RATES 461 you were right," the prisoners protest, "we would have walked out of prison long ago; if the bars were illusory, we should not then have all lain in fetters so many years. What you say is too simple and obvious to be true. Away with you; you are a false prophet." So the prisoners are made to act as their own wardens, and the world has witnessed these last twenty five years, if it would but look, the ironical spectacle of whole nations wrestling with conundrums, com monly miscalled "economic prob lems," which are the creation of their own persistence in absurd, and manifestly absurd, practices.

How, then, if rational argument thus becomes counterproductive, are the superstitions to be de stroyed and the imaginary prisoners liberated? Don Quixote turned sane on his death bed, but that cure will not do. My own guess is that sooner or later, quite accidentally and unpredictably, an inrush of reality occurs, against which even the most entrenched superstitions and self-punishing delusions are not proof, and the edifice of control and falsification collapses, leaving the former vic tims out in the open, bewildered but intact. That will be the mo ment, with encouraging and re assuring words, to approach and say: "That's all right. There was nothing to be afraid of all along. I told you so!" This uttered, it will only remain to turn smartly away, and open the attack upon some ensuing folly. ~ AT THIS TIME the whole Federal income tax system is under scru tiny, with the possibility that sub stantial changes will be made in it.

In the discussion, the subject of Mr. Hagedorn is Economist and Vice-Presi dent of the National Association of Manufac turers. This article is from his column in NAM Reports, June 9, 1969. tax treatment of capital gains is being brought up. Frequently, the attitude is expressed (or implied) that capital gains are, after all, simply one kind of income which should be taxed in the same way as any other. We see this assumption em462 THE FREEMAN August bodied in some of the statistical horror stories, intended to illus trate how wealthy taxpayers get away with murder. The usual pro cedure is to show that the tax payer really pays a much lower rate on his income than the sched ule of tax rates would suggest he should. In the computation of his "actual" tax rate, capital gains are included in the divisor, on a par with the wages, dividends, and interest received. The same view appears more ex plicitly in a statement by Profes sor Robert Eisner, of Northwest ern University, recently included in the Congressional Record. After protesting generally against tax "loopholes," Professor Eisner goes on to say: "Most conspicuous and substantial are the huge amounts of income now enjoyed in the form of capital gains." A little later he argues: "For those who take the capital gains route of earning money, taxes are of course mini mal. ..."

This raises a question which we will try to analyze in this column. Are capital gains simply another form of income - to be logically included in income totals, and taxed, on the same basis as any other form? We may note, first, that the De partment of Commerce, in its com pilations of the national income, does not include capital gains. This is a matter of well-established sta tistical practice on which there is no dispute among experts. The reasons for it are obvious. To in clude in the total of the national income an item resulting solely from the revaluation of existing assets would be to give a com pletely false picture of the state of the economy. We cannot make each other prosperous by selling each other things which have been around all along, even if we raise the figure on the price tag. There is no real income for the nation in such exchanges. But this still leaves the ques tion of whether capital gains may be a real item of individual in come. Is it possible, in some strange way, that a realized capi tal gain is an integral part of a person's income, without being part of the total national income?

This question is often dismissed impatiently with the comment that anyone may spend capital gains in just the same way he spends his salary or his dividends. A person, if he chooses, may spend all of his past savings and not only the part he regards as a capital gain. But this doesn't mean that when we draw down on past savings they become current income. When this is brought up, the argument usually shifts to another ground. It is contended that a per son may spend his capital gain, 1969 CAPITAL GAINS 463 and still leave his savings intact. This sounds persuasive until we analyze its implications. Suppose your savings are in the form of ten acres of land, for which you originally paid $900 an acre but which are now worth $1,000 an acre. You might figure that you could sell one acre and spend the money on consumption without impairing your original savings. After all, you would still have $9,000 worth of land left. It sounds good but, if the price kept going up and you kept selling land an acre at a time and spending the money, it would be hard to main tain indefinitely that you weren't impairing your savings as your landholdings declined toward zero.

It seems clear· that when the government taxes capital gains, it is taking a share, not of the indi vidual's current income, but of his past savings. The fact that the market might have revalued the assets in which those past savings are embodied doesn't change that situation. Of course, political leaders who pride themselves on being "prag matic" may brush all this aside. Capital gains are there and, since the government needs revenue, why not tax them? A fine theo retical distinction as to whether they are or are not income may seem beside the point. We will not comment on this pragmatic view beyond pointing out that it would be hard to com bine it with moralistic protests of outrage at the present special tax treatment of capital gains. We do feel some qualms at the thought that the government could j ustifi ably tax anything that is handy, simply by declaring it to be in come.

We suppose that some form of the pragmatic argument will con tinue to prevail and that capital gains will continue to be taxed. We hope, however, that political pragmatism will include some rec ognition of the practical effects of capital gains taxation on the economy. The impairment of individuals' past savings by capital gains taxa tion is matched by an equal im pairment of the nation's supply of capital for use in production. The fact that such impairment, in either sense, is currently made good from other sources doesn't change the matter. Presently there are strong voices calling for more severe tax treatment of capital gains, on the ground of equity as among tax payers. It seems to us a case of an invalid argument being used to support an economy-damaging proposal. • PAUL L. POIROT MONEY and the MARKEl' JOGGING is great for the circula tion, but it is no cure for inflation. A man simply can't outrun a printing press.

"A printing press run wild" is not a perfect definition of infla tion, but it will do for a start. The details have to do with the ex change of goods and services and with the money supply which serves as the medi urn of exchange and the foundation for economic calculation or business accounting. Goods and services can be ex changed directly as a matter of barter. But the process is primi tive and cumbersome. Supply and demand are continuously chang ing for each item; in the absence of money, there is no easy or con venient way for any buyer or sel ler to compare various costs of production or to determine the profit or loss from his operations. 464 If he is to specialize in production and trade, really go into the busi ness of serving consumers, he needs a special tool: a unit of ac counting or economic calculation a medium of exchange that will enable him to compare with rea sonable accuracy the cost of one commodity or service with the cost of various other factors of production. In other words, he needs a money so that he can know the money prices at which economic goods are available for trade.

This is not to imply that anyone ever sat down and logically in vented money. Tradesmen proba bly discovered by a process of trial and error and long experience that some particular item of commerce was more universally traded, more easily recognized, more readily ac cepted than most other items 1969 MONEY AND THE MARKET 465 perhaps some precious metal such as silver or gold. Whatever it was that thus facilitated trading came to be used as the medium of ex change or money - and then it was possible to determine the money prices of other scarce and valuable resources. It's true, of course, that money is a great convenience to traders. It facilitates the process. And it's doubtless true that money was dis covered or came into use because traders found it helpful. But the great value of money and the most important reason for having a monetary unit is that it permits the· entrepreneur to operate in a businesslike manner. It makes pos sible the record keeping and cost accounting by which he can de termine, with workable accuracy, the profit or loss from various op erations, combinations of re sources, transactions. It takes enough of the guesswork out of the process to enable competitive private enterprise to function in an open market and to efficiently serve the most urgent wants. of consumers. It is the essential life blood of specialized industrial pro duction and trade.!

The future is always uncertain, 1 For further development of the im portance of money for economic calcula tion, see Human Action by Ludwig von Mises (Chicago: Regnery, 1966 revised edition), especially pp. 212-231 and 398 478. to be sure. The conditions of sup ply and demand for each and ev ery item of commerce are con stantly changing. And the most successful entrepreneur is the one who· can most accurately predict or guess the direction of such change and plan his operations ac cordingly. Money prices, of course, do not eliminate the uncertainties of the future in an ever-changing world. Prices simply extract from the giant computer of the market place the most accurate possible representation of the latest avail able conditions of supply and de mand. Not perfect, but something; and this is information vital to the conduct of business and trade. Formulas for Perfection Are Doomed to Fail There is a grave temptation among those who appreciate the necessi ty of money to try to set forth its specifications and create an artificial money system that would perfectly serve the purpose of trade. The natural money that grows out of trade - gold, for in stance - is subject to more or less unpredictable changes in purchas ing power: the discovery of new mines or mining techniques might augment the supply; or various new nonmonetary uses for the metal or a popular urge to hoard gold would affect the demand. In other words, gold is a monetary 466 THE FREEMAN August yardstick that might shrink or expand in general purchasing power from time to time. So the temptation is to create an artifi cial yardstick that might be of stable purchasing power. Instead of relying on the market to deter mine what the money unit ought to be and how much of it there ought to be, some men believe that a better money system can be provided through government definition, regulation, and control; if it is to be gold (or whatever else may be chosen as money), let government regulate the supply and set the price in order that the money unit may have greater sta bility; let government take charge of coinage or printing to assure that each monetary unit is of the precise weight and fineness as ad vertised ; let government devise an index of the cost of living or of purchasing power as a guide to the quantity of coins or other monetary units to be allowed in circulation.

To yield to such temptation is to mistake the nature and purpose of money. Money comes into being only as the result of trading in the market. Artificial money sub stitutes are relatively worthless as the tool for economic calculation upon which industry and trade de pend - the greater the artificial ity, the less the value for mone tary purpose. Stop the Counterfeiters There is one useful service gov ernment can perform with respect to money. It can apprehend and punish counterfeiters who might try to substitute "fool's gold" for the real thing, thus to withdraw goods and services from the mar ket by defrauding rightful own ers. But governments are rarely content to limit their activities to the defense of life and property. Politicians bend easily to popular demand, and will as quickly serve the purposes of counterfeiters or other pressure groups as they would serve the purposes of hon est and peaceful men and women.

This is why no honest, peaceful person ever should delegate to government any responsibility for or control over the money system, other than to stop counterfeiters. Anything the government does must be paid for in taxes. There is hardly any limit to what a gov ernment will attempt to do if it can gain control of the money sys tem and resort to inflation as a method of taxation to extract goods and services from rightful owners. And this is one of the major reasons why the market re lies upon gold as money. Govern ments have discovered no way to artificially augment or inflate the supply of gold. Unfortunately, not all consum ers and - more unfortunately still 1969 MONEY AND THE MARKET 467 - not all businessmen understand the vital necessity for a market originated and market-regulated money if the market economy is to survive. In consequence of such misunderstanding, governments have been authorized-or, at least, permitted - to tamper with the money system until inflation has become the order of the day in practically every significant na tion of the world. "Paper gold,"

we are told, "is better than the real thing!" And it's true that fiat money affords one of the most effective ways for government to get control of all scarce resources, including people. But for honest, hard-working men and women, this is not a condition to be pre ferred above any other. Nor is an inflationary situation one that can last indefinitely, for it destroys the source of its sustenance - the market economy of competitive private enterprise. Fueling the Fires of Inflation Because they do not understand the cause and the nature of in flation, businessmen as well as consumers at every level of in come and property-ownership turn more and more to government to uphold their particular interest at the expense of other persons or groups. But by this process of begging for relief, they delegate to government additional powers that only aggravate the basic problem and further fuel the fires of inflation.

For example, many of the aged have placed their faith in Social Security, which leaves them en tirely dependent upon the future taxing power of government. The personal thrift and saving so vital to future production of goods and services are thus discouraged. Un der pretense of keeping faith with senior citizens, Social Security benefit payments are continuously escalated to try to keep pace with the ever-rising cost of living. So, taxes must be raised; yet there are larger and larger Federal defi cits financed by new printings of "paper gold." It bears repeating here that government-created fiat monies, artificial and irredeemable paper promises that have been declared legal tender, are not the same as real money originating through voluntary trade; nor do these fiat monies adequately serve to facili tate business and trade arid pro vide a useful unit of business ac counting. This fiat money, as in the case of any other form of gov ernment price fixing, only creates shortages or surpluses that amount to waste of economic re sourC2S. For instance, the irre deemable paper simply induces buyers and sellers to stop trading and start hoarding. Gresham's 468 THE FREEMAN August Law that bad money drives out good money means that tradesmen will hoard gold instead of going about their business as usual. So phisticated recipients of irredeem able paper promises hasten to con vert the paper into any and every available tangible resource. If they can't redeem in gold, they will try to redeem in some other form of real property. They may not real ize it, but they are trying to find something that will serve as money.

So it is that the prices of real property are bid up to levels that reflect not only anticipated annual earnings but the higher resale price that is to be expected with further inflation. And the gov ernment collects a tax on the so called capital gains whenever an owner can be tempted or forced to sell; or else it imposes an inherit ance tax likely to ruin the busi ness in case the late owner could not rid himself of it in time. Misuse of Scarce Resources Instead of plowing earnings back into productive but taxable enterprises that would serve the wants of consumers, businessmen are tempted by such policies of exorbitant taxation to divert earn ings into tax-exempt charitable trusts that more often than not become propaganda agencies for the socialistic principles upon which they are based. So, the rev enues of competitive private en terprise are diverted, by taxes or through various tax loopholes, to causes that are detrimental rather than conducive to perpetuation of the market economy. The profits or rewards consumers have desig nated for those who best served them are thus turned against the consumer-oriented system of pri vate ownership and trade.

Businessmen are bound to do their best to avoid the impact of heavy taxation. They seek special depletion allowances to quickly write off the value of natural re sources that are being used in the course of production. Also, they apply for extra...;rapid depreciation schedules on tools and equipment and other production facilities; or they try to add a cost-of-living clause in the depreciation schedule so that the write-off of the old ma chinery will be sufficient to cover the higher-priced new machinery at time of replacement. This is not to condemn the busi nessman for trying to do his best with his business. But these ef forts at tax avoidance tend to be largely wasted, in the long run. And they certainly do nothing to halt the inflation that is causing the problem. Changing the rules of accounting to accommodate an encroaching socialism is certain to ruin the accounting system, but 1969 MONEY AND THE MARKET 469 it will not curb the socialistic trend. Socialism affords no way to make use of the money prices of a free market; business account ing or economic calculation is a unique feature of the market econ omy.

Creating the Climate for Trade Instead of wasting time and ef fort to change the system or the principles of economic calculation and accounting - instead of ask ing the government to grant tax exemption and at the same time. to assume power to regulate and control more and more of the econ omy, including control over money and over people - the first order of business ought to be the limita tion of government and the pres ervation of the only kind of a free market economy in which business can logically function for the satisfaction of the wants of . the consumers. Only when money and its regu lation and control is taken from government and left to the mar ket, only then can .entrepreneurs and consumers enjoy the blessings of private ownership and compet itive enterprise, specialized industrial production, and free trade. And free trade in gold is the key to sound money and sound busi ness procedure.

Finally, it should be understood that all the wasted resources and the wasted efforts of businessmen to avoid the consequences of gov ernment tampering with money ultimately mean fewer goods and services available at pric.es the poorest of consumers can afford. This is not a deliberate war against the poor. Government planners and spenders fully in tend to help the poor through var ious welfare programs. But these very programs lead to the govern ment deficits that lead in turn to inflationary policies that distort and eventually dry up the opera tions of business and trade. The resultant hoarding of economic re sources, by those who can afford to fight against inflation in that manner, isolates from the market resources that good business prac tice otherwise would have made available as efficiently as possible for use by the poor. The ultimate victims of inflation are the ones who can least afford the malin vestment of scarce resources. ~ THE FORGOTTEN MAN WILLIAM GRAHAM SUMNER THERE IS no such thing on this earth as something for nothing.

Whatever we inherit of wealth, knowledge, or institutions from the past has been paid for by the labor and sacrifice of preceding generations; and the fact that these gains are carried on, that the race lives and that the race can, at least within some cycle, ac cumulate its gains, is one of the facts on which civilization rests. The law of the conservation of energy is not simply a law of physics; it is a law of the whole moral universe, and the order and truth of all things conceivable by man depends upon it. If there were any such liberty as that of doing as you have a mind to, the human race would be condemned William Graham Sumner was Professor of Political and Social Science in Yale Univer sity when he delivered his memorable speech on "The Forgotten Man" in 1883, portions of which are presented here. 470 to ever lasting anarchy and war as these erratic wills crossed and clashed against each other. True liberty lies in the equilibrium of rights and duties, producing peace, order, and harmony. As I have de fined it, it means that a man's right to take power and wealth out of the social product is meas ured by the energy and wisdom which he has contributed to the social effort.

N ow if I have set this idea be fore you with any distinctness and success, you see that civil liberty consists of a set of civil institu tions and laws which are arranged to act as impersonally as possible. It does not consist in majority rule or in universal suffrage or in elective systems at all. These are devices which are good or better just in the degree in which they secure liberty. The institutions of civil liberty leave each man to run 1969 THE FORGOTTEN MAN 471 his career in life in his own way, only guaranteeing to him that whatever he: does in the way of industry, economy, prudence, sound judgment, and the like, shall redound to his own welfare and shall not be diveTted to some one else's benefit. Of course, it is a necessary corollary that each man shall also bear the. penalty of his own vices and his own mis takes. If I want to be free from any other man's dictation, I must understand that I can have no other man under my control. .

"The Poor and the Weak" Now you know that "the poor and the weak" are. continually put forward as objects of public inter est and public obligation. In the appeals which are made, the terms "the poor" and "the weak" are used as if they were terms of ex act definition. Except the. pauper, that is to say, the man who can not earn his living or pay his way, there is no possible definition of a poor man. Except a man who is incapacitated by vice or by phy sical infirmity, there. is no defini tion of a weak man. The paupers and the physically incapacitated are an inevitable charge on so ciety. About them no more need be said. But the weak who constantly arouse the pity of humanitarians and philanthropists are the shiftless, the imprudent, the negligent, the impractical, and the inefficient, or they are the idle, the intem perate, the extravagant, and the vicious. Now the troubles of these persons are constantly forced upon public attention, as if they and their interests deserved espe cial consideration, and a great portion of all organized and unor ganizedeffort for the common wel fare consists in attempts to re lieve these classes of people. I do not wish to be understood now as saying that nothing ought to be done for these people by those who are stronger and wiser. That is not my point. What I want to do is to point out the thing which is overlooked and the error which is made in aU these charitable ef forts.

The notion is accepted as if it were not open to any question that if you help the inefficient and vi cious you may gain something for society or you may not, but that you lose nothi:q.g. This is a com plete mistake. Whatever capital you divert to the support of a shiftless and good-for-nothing per son is so much diverted from some other employment, and that means from somebody else. I would spend any conceivable. amount of zeal and eloquence if I possessed it to try to make people grasp this idea. Capital is force. If it goes one way it cannot go another. If you 472 THE FREEMAN August give a loaf to a pauper you can not give the same loaf to a laborer. Now this other man who would have got it but for the charitable sentiment which bestowed it on a worthless member of society is the Forgotten Man. The philan thropists and humanitarians have their minds all full of the wretched and miserable whose case appeals to compassion, at tacks the sympathies, takes pos session of the imagination, and excites the emotions. They push on towards the quickest and ·easi est remedies and they forget the real victim.

The Simple, Honest Laborer Now who is the Forgotten Man? He is the simple, honest laborer, ready to earn his living by produc tive work. We pass him by because he is independent, self-supporting, and 'asks no favors. He does not appeal to the emotions or excite the sentiments. He only wants to make a contract and fulfill it, with respect on both sides and favor on neither side. He must get his liv ing out of the capital of the coun try. The larger the capital is, the better living he can get. Every particle of capital which is wasted on the vicious, the idle, and the shiftless is so much taken from the capital available to reward the independent and productive la borer. But we stand with our backs to the independent and productive la borer all the time. We do not re member him because he makes no clamor; but I appeal to you whether he is not the man who ought to be remembered first of all, and whether, on any sound so cial theory, we ought not to pro tect him against the burdens of the good-for-nothing. In these last years I have read hundreds of articles and heard scores of ser mons and speeches which were really glorifications of the good for-nothing, as if these were the charge of society, recommended by right reason to its care and protection. Weare addressed all the time as if those who are re spectable were to blame because some are not so, and as if there were an obligation on the part of those who have done their duty towards those who have not done their duty. Every man is bound to take care of himself and his fam ily and to do his share in the work of society. It is totally false that one· who has done so is bound to bear the care and charge of those who are wretched because they have not done so.

The silly popular notion is that the beggars live at the expense of the rich, but the truth is that those who eat and produce not, live at the expense of those who labor and produce. The next time 1969 THE FORGOTTEN MAN 473 that you are tempted to subscribe a dollar to a charity, I do not tell you not to do it, because after you have fairly considered the matter, you may think it right to do it, but I do ask you to stop and re member the Forgotten Man and understand that if you put your dollar in the savings bank, it will go to swell the capital of the coun try which is available for division amongst those who, while they earn it, will reproduce it with in crease. liThe Working Classes" Let us now go on to another class of cases. There are a great many schemes brought forward for "improving the condition of the working classes." I have shown already that a free man cannot take a favor. One who takes a fa vor or submits to patronage de means himself. He falls under ob ligation. He cannot be free and he cannot assert a station of equality with the man who confers the fa vor on him. The only exception is where there are exceptional bonds of affection or friendship, that is, where the sentimental relation supersedes the free relation.

Therefore, in a. country which is a free democracy, all propositions to do something for the working classes have an air of patronage and superiority which is imper tinent and out of place. Noone can do anything for any body else unless he has a surplus of energy to dispose of after tak ing care of himself. In the United States, the working classes, tech nically so called, are the strongest classes. It is they who have a sur plus to dispose of if anybody has. Why should anybody else offer to take care of them or to serve them? They can get whatever they think worth having and, at any rate, if they are free men in a free state, it is ignominious and unbecoming to introduce fashions of patronage and favoritism here. A man who, by superior education and experience of business, is in a position to advise a struggling man of the wages class, is cer tainly held to do so and will, I be lieve, always be willing and glad to do so; but this sort of activity lies in the range of private and personal relations.

I now, however, desire to direct attention to the public, general, and impersonal schemes, and I point out the fact that, if you un dertake to lift anybody, you must have a fulcrum or point of resist ance. All the elevation you give to one must be gained by an equiva lent depression on someone else. The question of gain to society depends upon the balance of the account, as regards the position of the persons who undergo the respective operations. But nearly 474 THE FREEMAN August all the schemes for "improving the condition of the working man" in volve an elevation of some work ing men at the expense of other working men. When you expend capital or la bor to elevate some persons who come within the sphere of your in fluence, you interfere in the con ditions of competition. The advan tage of some is won by an equiva lent loss of others. The difference is not brought about by the energy and effort of the persons them selves. If it were, there would be nothing to be said about it, for we constantly see people surpass others in the rivalry of life and carry off the prizes which the others must do without. In the cases I am discussing, the differ ence is brought about by an inter ference which must be partial, ar bitrary, accidental, controlled by favoritism and personal prefer ence.

I do not say, in this case, either, that we ought to do no work of this kind. On the contrary, I be lieve that the arguments for it quite outweigh, in many cases, the arguments against it. What I de sire, again, is to bring out the forgotten element which we al ways need to remember in order to make a wise decision as to any scheme of this kind. I want to call to mind the Forgotten Man, because, in this case also, if we recall him and go to look for him, we shall find him patiently and perseveringly, manfully and inde' pendently struggling· against ad verse circumstances without com plaining or begging. If, then, we are led to heed the groaning and complaining of others and to take measures for helping these others, we shall, before we know it, push down this man who is trying to help himself. The Abuse of Legislation Let us take another class of cases. So far we have said nothing about the abuse of legislation. We all seem to be under the delusion that the rich pay the taxes. Taxes are not thrown upon the con sumers with any such directness and completeness as is sometimes assumed; but that, in ordinary states of the market, taxes on houses fall, for the most part, on the tenants and that taxes on com modities fall, for the most part, on the consumers, is beyond ques tion. Now the state and munici pality go to great expense to sup port policemen and sheriffs and judicial officers, to protect people against themselves, that is, against the results of their own folly, vice, and recklessness. Who pays for it?

Undoubtedly the people who have not been guilty of folly, vice, or recklessness. Out of nothing comes nothing. We cannot collect taxes 1969 THE FORGOTTEN MAN 475 from people who produce nothing and save nothing. The people who have something to tax must be those who have produced and saved. When you see a drunkard in the gutter, you are disgusted, but you pity him. When a policeman comes and picks him up you are satis fied. You say that "society" has interfered to save the drunkard from perishing. Society is a fine word, and it saves us the trouble of thinking to say that society acts. The truth is that the police man is paid by somebody, and when we talk about society we for get who it is that pays. It is the Forgotten •Man again. It is the industrious workman going home from a hard day's work, whom you pass without noticing, who is mulcted of a. percentage of his day's earnings to hire a police man to save the drunkard from himself.

All the public expenditure to prevent vice has the same etfect. Vic-e is its own. curse. If we· let nature alone, she cures vice by the most frightful penalties. It may shock you to hear me say it, but when you get over the shock, it will do you good to think of it: a drunkard in the gutter is just where he ought to be. Nature is working away at him to get him out of the way, just as she sets up her processes of dissolution to remove whatever is a failure in its line. Gambling and less men tionable vices all cure themselves by the ruin and dissolution of their victims. Nine-tenths of our measures for preventing vice are really protective towards it, be cause they ward off the penalty. "Ward off," I say, and that is the usual way of looking at it; but is the penalty really annihilated? By no means. It is turned into police and court expenses and spread over those who have resisted vice.

It is the Forgotten Man again who has been subjected to the penalty while our minds were full of the drunkards, spendthrifts, gamblers, and other victims of dis sipation. Who is, then, the For gotten Man? He is the clean, quiet, virtuous, domestic citizen, who pays his debts and his taxe-s and is never heard of out of his little circle. Yet, who is there in the society of a civilized state who deserves to be remembered and considered by the legislator and statesman before this man? State Regulation and Control Another class of cases is closely connected with this last. There is an apparently invincible prejudice in people's minds in favor of state regulation. All experience is against state regulation and in fa vor of liberty. The freer the civil institutions are, the more weak or 476 THE FREEMAN August mischievous state regulation is. The Prussian bureaucracy can do a score of things for the citizen which no governmental organ in the United States can do; and, conversely, if we want to be taken care of as Prussians and French men are, we must give up some thing of our personal liberty.

Now we have a great many well intentioned people among us who believe that they are serving their country when they discuss plans for regulating the relations of employer and employee, or the sanitary regulations of dwellings, or the construction of factories, or the way to behave on Sunday, or what people ought not to eat or drink or smoke, All this is harm less enough and well enough as a basis of mutual encouragement and missionary enterprise, but it is almost always made a basis of legislation. The reformers want to get a majority, that is, to get the power of the state and so to make other people do what the reform ers think it right and wise to do. A and B agree to spend Sunday in a certain way. They get a law passed to make C pass it in their way. They determine to be teeto tallers and they get a law passed to make C be a teetota.ller for the sake of D who is likely to drink too much.

Factory acts for women and children are right because women and children are not on an equal footing with men and cannot, therefore, make contracts prop erly. Adult men, in a free state, must be left to make their own contracts and defend themselves. It will not do to say that some men are weak and unable to make contracts any better than women. Our civil institutions assume that all men are equal in political ca pacity and all are given equal measure of political power and right, which is not the case with women and children. If, then, we measure political rights by one theory and social responsibilities by another, we produce an im moral and vicious relation. A and B, however, get factory acts and other acts passed regulating the relation of employers and em ployees and set armies of commis sioners and inspectors traveling about to see to things, instead of using their efforts, if any are needed, to lead the free men to make their own conditions as to what kind of factory buildings they will work in, how many hours they will work, what they will do on Sunday, and so on.

The consequence is that men lose the true education in freedom which is needed to support free in stitutions. They are taught to rely on government officers and in spectors. The whole system of gov ernment inspectors is corrupting 1969 THE FORGOTTEN MAN 477 to free institutions. In England, the liberals used always to regard state regulation with suspicion, but since they have come to power, they plainly believe that state regulation is a good thing....;.if they regulate.- because, of course, they want to bring about good things. In this country each party takes turns, according as it is in or out, in supporting or denouncing the noninterference theory. Who Is the Victim? Now, if we have state regula tion, what is always forgotten is this: Who pays for it? Who is the victim of it? There always is a victim. The workmen who do not defend themselves have to pay for the inspectors who defend them.

The whole system of social regu lation by boards, commissioners, and inspectors consists in reliev ing negligent people of the conse quences of their negligence and so leaving them to continue negligent without correction. That system also turns away from the agencies which are close, direct, and ger mane to the purpose, and seeks others. Now, if you relieve negligent people of the consequences of their negligence, you can only throw those consequences on the people who have not been negligent. If you turn away from the agencies which are direct and cognate to the purpose, you can only employ other .agencies. Here, then, you have your Forgotten Man again. The man who has been careful and prudent and who wants to go on and •reap his advantages for him self and his children is arrested just at that point, and he is told that he must go and take care of some negligent employees in a factory or on a railroad who have not provided precautions for them selves or have not forced their employers to provide precautions, or negligent tenants who have not taken care of their own sanitary arrangements, or negligent house holders who have not provided against fire, or negligent parents who have not sent their children to school.

If the Forgotten Man does not go, he must hire an inspector to go. No doubt it is often worth his while to go or send, rather than leave the thing undone, on account of his remoter interest; but what I want to show is that all this is unj ust to the Forgotten Man, and that the reformers and philoso phers miss the point entirely when they preach that it is his duty to do all this work. Let them preach to the negligent to learn to take care of themselves. Whenever A and B put their heads together and decide what A, B, and C must do for D, there is never any pres sure on A and B. They consent to 478 THE FREEMAN August it and like it. There is rarely any pressure on D because he does not like it and contrives to evade it. The pressure all comes on C. Now, who is C? He is always the man who, if let alone, would make a reasonable use of his liberty with out abusing it. He would not con stitute any social problem at all and would not need any regula tion. He is the Forgotten Man again, and as soon as he is brought from his obscurity you see that he is just that one amongst us who is what we all ought to be....

The One Who Pays Such is the Forgotten Man. He works, he votes, generally he prays - but he always pays - yes, above all, he pays. He does not want an office; his name never gets into the newspaper except when he gets married or dies. He keeps production going on. He contrib utes to the strength of parties. He is flattered before election. He is strongly patriotic. He is wanted, whenever, in his little circle, there is work to be done or counsel to be given. He may grumble some oc casionally to his wife and family, but he does not frequent the gro cery or talk politics at the tavern. Consequently, he is forgotten. He is a commonplace man. He gives no trouble. He excites no admira tion. He is not in any way a hero (like a popular orator) ; or a problem (like tramps and outcasts); nor notorious (like criminals); nor an object of sentiment (like the poor and weak) ; nor a burden (like paupers and loafers) ; nor an object out of which social capital may be made (like the benefici aries of church and state chari ties) ; nor an object for charitable aid and protection (like animals treated with cruelty) ; nor the ob ject of a job (like the ignorant and illiterate); nor one over whom sentimental economists and statesmen can parade their fine sentiments (like inefficient work men and shiftless artisans).

Therefore, he is forgotten. All the burdens fall on him, or on her, for it is time to remember that the Forgotten Man is not seldom a woman .... It is plain enough that the For gotten Man and the Forgotten Woman are the very life and sub stance of society. They are the ones who ought to be first and al ways remembered. They are al ways forgotten by sentimentalists, philanthropists, reformers, enthu siasts, and every description of speculator in sociology, political economy, or political science. If a student of any of these sciences ever comes to understand the posi tion of the Forgotten Man and to appreciate his true value, you will find such student an uncompro mising advocate of the strictest 1969 THE FORGOTTEN MAN 479 scientific thinking on all social topics, and a cold and hard hearted skeptic towards all arti ficial schemes of social ameliora tion. A Wasted Productive force If it is desired to bring about social improvements, bring us a scheme for relieving the Forgot ten }.VIan of some of his burdens.

He is our productive force which we are wasting. Let us stop wast ing his force. Then we shall have a clean and simple gain for the whole society. The Forgotten. Man is weighted down with the cost and burden of the schemes for making everybody happy, with the cost of public beneficence, with the support of all the loafers, with the loss of all the economic quack ery, with the cost of all the jobs. Let us remember him a little while. Let us take some of the burdens off him. Let us turn our pity on him instead of on the good-for-nothing. It will be only justice to him, and society will greatly gain by it. Why should we not also have the satisfaction of thinking and caring for a little while about the clean, honest, in dustrious, independent, self-sup porting men and women who have not inherited much to make life luxurious for them, but who are doing what they can to get on in the world without begging from anybody, especially since all they want is to be let alone with good friendship and honest respect. Cer tainly the philanthropists and sen timentalists have· kept our atten tion for a long time on the nasty, shiftless, criminal, whining, crawl ing, and good-for-nothing people, as if they alone deserved our at tention.

The Forgotten Man is never a pauper. He almost always has a little capital because it belongs to the character of the man to save something. He never has more than a little. He is, therefore, poor in the popular sense, although in the correct sense he is not so. I have said already that if you learn to look for the Forgotten Man and to care for him, you will be very skeptical toward all philan thropic and humanitarian schemes. It is clear now that the interest of the Forgotten Man and the interest of "the poor," "the weak," and the other petted classes are in antagonism. In fact, the warJll= ing to you to look for the For gotten Man comes the minute that the orator or writer begins to talk about the poor man. That minute the Forgotten Man is in danger of a new assault, and if you intend to meddle in the matter at all, then is the minute for you to look about for him and to give him your aid. Hence, if you care for the Forgotten Man, you will be 480 THE FREEMAN August sure to be charged with not caring for the poor. Whatever you do for any of the petted cla$ses wastes capital. If you do anything for the Forgotten Man, you must· secure him his earnings and savings, that is, you legislate for the security of capital and for its free employ ment; you must oppose paper money, wildcat banking, and usury laws, and you must maintain the inviolability of contracts. Hence, you must be prepared to be told that you favor the capitalist class, the enemy of the poor man.

Needed: an Understanding and Practice 01 Liberty What the Forgotten Man really wants is true liberty. Most of his wrongs and woes come from the fact that there are yet mixed to gether in our institutions the old medieval theories of protection and personal dependence and the mod ern theories of independence and individual liberty. The conse quence is that the people who are clever enough to get into positions of control, measure their own rights by the paternal theory and their own duties by the theory of independent liberty. It follows that the Forgotten Man, who is hard at work at home, has to pay both ways. His rights are meas ured by the theory of liberty, that is, he has only such as he can conquer. His duties are measured by the paternal theory, that is, he must discharge all which are laid upon him, as is always the fortune of parents. People talk about the paternal theory of government as if it were a very simple thing. Analyz~ it, however, and you see that in every paternal relation there must be two parties, a parent and a child, and when you speak metaphorical ly, it makes all the difference in the world ,vho is parent and who is child. Now, since we, the people, are the state, whenever there is any work to be done or expense to be paid, and since the petted class es and the criminals and the j ob bers cost and do not pay, it is they who are in the position of the child,and it is the Forgotten Man who is the parent. What the Forgotten Man needs, therefore, is that ,ve come to a clearer under standing of liberty and to a more complete realization of it. Every step which we win in liberty will set the Forgotten Man free from some of his burdens and allow him to use his powers for himself and for the commonwealth. ~ HENRY HAZLITT Protectedto Death THE FEDERAL TRADE COMMISSION now wants to require all forms of cigarette advertisements to carry the following warning: "Cigarette smoking is dangerous to health and may cause death from cancer, cor onary heart disease, chronic bron chitis, pulmonary emphysema, and other diseases."

In other words, the cigarette in dustry would be ordered to com mit suicide. Personally, I own no tobacco stocks and haven't smoked a ciga rette since the age of 11. I am even willing to concede that the sub stance of the proposed warning may be true. Nevertheless, certain aspects of it strike me as odd. It is perhaps true that if you smoke two packs of cigarettes a day, you may end up 20 years from now with lung cancer. But it is almost certainly true that if you were to drink two quarts of whisky at a sitting, and could hold it down, you would end up dead within 24 hours. Yet the FTC is not planning to force the whisky, gin, or vodka distillers to announce that their product is even mildly dangerous to health. Moreover, once this compulsory warning precedent is established, logic and nondiscrimination would require that it be applied across the board. There is evidence that excessive quantities of milk and butter lead to excessive cholesterol in the arteries, which may also lead to coronary heart disease, which may also lead to death.

Should not the dairies be forced to print this warning on their milk cartons? Driving an automobile may also cause death. Should not the auto companies be compelled to print this warning on the outside of the driving-seat door? Under the guise of "protecting the consumer," Congress in recent 481 482 THE FREEMAN August years has been delegating to ap pointive administrative boards life and-death powers over private in dustries. An outstanding case was the law of 1962, passed during the alarm caused by the thalidomide tragedy in that year. Prior to 1962, Federal law already gave the Food and Drug Administration power to prevent the marketing of unsafe drugs. The old law allowed a new drug to be marketed if the government took no action within 60 days after an application was filed. But the new law inaugurated a few very dubious legal and ad ministrative precedents. It re quired that a new drug must be shown to be "effective" as well as safe. It put the burden of proof on the industry to supply "substan tial evidence" that a drug was effective before it was permitted to go on the market. And it allowed a government official to withhold a drug from the market indefi nitely simply by not acting on the application.

This gave bureaucrats power of life or death over a product or a company. They have not hesi tated to use or abuse this power. As one result, there has been a dramatic fall in the number of new drugs reaching the market. The FDA has tried to discour age the sale of nearly all vitamin tablets. It recently took initial steps to ban from the market about 90 fixed combinations of antibiotics because in its own opinion they aren't needed. It says that neither the drug companies that put them out nor the doctors that prescribe them know what they are doing. It seems never to have occurred to the FDA that, so long as a prod uct is not shown to be unsafe, the best way to find out whether it is effective is to allow it to be tried. Thus one industry after another is in danger of slow strangulation from bureaucratic controls. When will Congress, learn that in the long run the best way of "protecting the consumer" is to encourage the competition of pro ducers, to treat the consumer as a responsible adult and not as a half-wit and to allow him to make his own decisions and his own mistakes? ~ Copyright 1969, LOS! Angeles Times. Reprinted by permission.

t audience is one! LEONARD E. READ TIME AND AGAIN, over the years, friends of the freedom philosophy have urged FEE to go on radio, TV, and into other public media. Or, "Get that excellent article in the Reader's Digest; it reaches millions."I Implicit in such ad vice is the notion that ours is a selling rather than a learning problem, that the job is to insinu ate our ideas into the minds of others rather than having some thing in our own minds that oth ers will wish to share. Theirs is an inversion of the educational process. Let me state my own position at the outset: Were some philan thropist to say, "Put FEE on TV and I'll foot the bill," my answer 1 Noone "gets" an article in the Reader's Digest any more than in THE FREEMAN. Editors and publishers do their own getting precisely as you get your own ideas. would be, "No, thank you." And that would be to turn down mil lions of dollars. Why would I re ject such an offer? Not because of any objections to the use of our material in public media; far from it! I simply frown on wast ing other people's money and I have an aversion to kidding my self.

Any experienced lecturer or per sonal counselor, who ignores ap plause and accurately assesses re sults, knows full well that the best audience is one, though he may not know the reason why! The biggest live audience I ever addressed was 2,200. But the ap plause must have been for "a good show" rather than for any ideas that might have been garnered, for I have yet to find the slightest trace of any ideological impact or of any lasting interest aroused by that lecture. 483 484 THE FREEMAN August Often, when I have been sched uled to address a convention or an annual meeting, a friend in that community has at the same time arranged for a small, invitational gathering. The big affair pays my expenses in dollars, and little more. But the small one invariably yields handsomely in terms of FEE's objectives. Experiences with Groups My experiences over several decades attest to the fact, and I believe many teachers would con firm, that the smaller and more personal the audience the better are the educational results. From the inexperienced, however, comes the general insistence on "reach ing the masses." Nor should we expect any change in this falla cious attitude unless we are able to explain why the best audience is one.

In the case of a national con vention, for instance, the program chairman may share my ideas on liberty and invite me for this rea son and this alone. His aim is to "educate" the members or, at the very least, to get them interested in the freedom philosophy. Over looked is the fact that he may be the only one attending the con vention who is. really interested in these ideas. The others, by and large, couldn't care less; they are not looking for my ideas and, as a consequence, do no "drinking in" at all. I might as well have spoken to so many cemetery headstones. However, if the message is pre sented in a highly entertaining manner, audiences will loudly ap plaud and, on occasion, give the speaker a standing ovation. And the speaker, unless severely real istic, may think they are approv ing his message rather than the entertainment he furnished. More often than not, the program chair man is primarily interested in "a warm body" who can amuse. If all of his speakers are rousingly applauded, his associational fel lows will adj udge him the best chairman they ever had - and that's the reward he seeks. But from the speaker's standpoint, the honorarium comes pretty close to all that counts.

The smaller invitational gather ing is another matter. Only those accept the invitation who are in terested in the ideas for which the speaker is reputed. As a result, such sessions often continue for hours with a give and take of ideas edifying not only to the guests but to the speaker as well. Parenthetically, of the small gath erings, a FEE Seminar with many hours of concentration on and dis cussion of the freedom philosophy is the best of all when viewed in the light of our aims. But in all of these smaller sessions the 1969 THE BEST AUDIENCE IS ONE 485 "drinking in" is incalculably greater than in the large, wholly impersonal conventions. However, even these small get togethers, rewarding as they have been over the years, do not meas ure up educationally to the man to-man confrontation between two individuals, each in a high spirit of inquiry. 2 One times one beats 2,200 times zero!

A lecturer, if at all experienced, "feels" an audience. He knows whether or not they're listening. There comes to mind an audience of 500 really first-rate people. I knew they were not tuned in, that I wasn't even entertaining them. Later that night, the reason dawned: the lighting or, rather, the lack of it; I had been speaking in near darkness, as ineffective as if through the loudspeaker of a radio. A few weeks later, when asked to give the same lecture before an equally first-rate audience, I ar ranged to be spotlighted. Never have I had a more responsive au dience. There's a good reason why stages have footlights. Ido not wish to leave the impression, how ever, that the responsive audience "got the message"; only that they 2 "My definition of a University is Mark Hopkins at one end of a log and a student at the other." Attributed to James A. Garfield in a letter accepting nomina tion for Presidency - July 12, 1880.

were listening and were, at least, entertained. Such are the highlights of my experience which lead me to the conclusion that the best audience is one. Bearing in· mind that "get ting the message" of the freedom philosophy is the sole problem here at issue, let us now examine how the educational process works as related to our aims. The Process of Education In the first place, no person can ever grasp these ideas who has not done some thinking about them on his own. A truism: "A man only understands that of which he has already the beginnings in him self." In a word, regardless of how powerful a magnet may be, it can never attract straw or sawdust. This fact drastically limits the number of those who are educable in economic, moral, and political philosophy. It makes nonsense of the notion that educating the masses is even a remote possi bility. Next, of the few who have done some thinking on these matters for themselves, only that fraction of them are further educable who eagerly seek additional enlighten ment. A person who is satisfied with what he knows will never add to his knowledge, and one might as well talk to a book as to him.

There is a further crucial point, 486 THE FREEMAN August well expressed by Cardinal New man: The general principles of any study you may learn by books at home, but the detail, the color, the tone, the air, the life in it, you must catch all these from those in whom it already lives. 3 "You must catch all these from those in whom it already lives"! You can "catch" the idea that the best audience is one far easier when it is made available for read ing than you can by listening to the same idea over radio or TV or as a member of a large audience. When reading, you can reread but you do not relisten to the difficult ideas in speeches, that is, not when the speaker is before large audi ences. But if you are one of a dozen in a discussion session, where you are in personal contact with the one "in whom it already lives," there is a back-and-forth exchange which brings you and the other to a common level of under standing, that is, if you "have the floor" to the exclusion of the other eleven.

When the audience is you and you alone, you do, in fact, "have the floor." Assuming that the teacher is intelligent and that you 3 From "What Is a University 1" re printed in The Essential Newman, ed. V. F. BIehl (New York: New American Library, Inc., Mentor, 1963) p. 162. are at once eager to know and per ceptive, you will become a better teacher yourself as a result of the experience. There is no other get together in which the transmittal of ideas is so assured of success as in this one-to-one arrangement. The best audience is always one! The experiences and reasons I have cited are enough to convince me that the best audience is one, but there is a deeper reason which, if I understood and could explain, would be even more convincing. It's in the area of radiation. There is an enormous dissipation of ra diating energy in large audiences. The "sending" is weakened by spreading it out, and the atten tion - "receiving" - markedly di minishes. I know this to be true from experience and not from anal ysis, just as I know that the law of attraction - magnetism - works its wonders, though I do not know why.

Hurrying in Wrong Diredion The rebuttal to these observa tions is heard over and over: The process is too slow. Overlooked are two unassailable facts. The first is that no ground is gained except as new teachers of the freedom philosophy come into existence. And good teachers are not made from large audi ences. Any effort, such as FEE's, which does not result in more 1969 THE BEST AUDIENCE IS ONE 487 teachers is meaning less. And the hope must be that they will far excel our own capabilities. The second is that ours is defi nitely not a numbers problem in the sense of tens of thousands or millions; like every constructive movement of ideas throughout his tory, ours is exclusively a quality problem. Studying the history of movements, it is clear that you alone could turn the world toward freedom were you competent enough. Until you reach that state of competence, it will behoove others of us in our varied en deavors to try to fill in where there may be deficiencies.

True, the educational process is slow, but it alone merits our at tention and effort. While the prop agandizing, proselytizing, selling the-masses techniques get quicker results, the results are no good; they lack any upgrading quality. Indeed, they tend to turn uncommitted citizens away from the freedom philosophy. It is folly to hurry in the wrong direction! As Charles Mackay expressed it in the preface to the 1852 edition of Extraordina,ry Popular Delusions and the Madness of Crowds, "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they recover their senses slowly, one by one." Above all, we must bear in mind that good results depend on the power of attraction which, in turn, rests on excellence. Any in dividual can assess his own com petence in this respect by merely observing the extent to which others are seeking his tutorship on free market, private ownership, limited government, and related concepts.

If, hopefully, the seekers be numerous, may they appear one by one, for that is the magic num ber of the perfect audience. ~ The Maturing Process THOSE ON OUR SIDE who are looking to the young to lead this nation back to freedom will look in vain. For most of us, it is only with age, if ever, that we acquire the wisdom to be content to live under always imperfect rules that will permit us imperfect men to make our own imperfect decisions, with consequences for each man and for all men that no one can fully predict and that will always be something less than the New Jerusalem. BENJAMIN A. ROGGE, What's Past Is Prologue TARIFF WAR Libertarian Style GARY NORTH "COMMON SENSE ECONOMICS" is a phrase used to describe the eco nomic reasoning of the proverbial man in the street. In many in stances, this knowledge may rest on principles that are essentially correct. For example, we have that old truism that there are no free lunches. If some of our profession al experts in the field of govern mental fiscal policy were to face the reality of this truth, they might learn that even the skilled application of policies of mone tary inflation cannot alleviate the basic economic limitations placed on mankind.! Such policies can make things worse, of course, but they are powerless to do more than redistribute the products of in dustry, while simultaneously redis1 Cf. Gary North, Marx's Religion of Revolution (Nutley, New Jersey: Craig Press, 1968), pp. 56-57.

Mr. North is a Ph.D. candidate in history at the University of California, Riverside. 488 stributing power in the direction of the state's bureaucratic func tionaries. 2 On the other hand, not all of the widely-held economic beliefs are even remotely correct; some of these convictions are held in inverse proportion to their val idity. The tariff question is one of these. The heart of the contradictory thinking concerning tariffs is in the statement, "I favor open com petition, but. . .." Being human, men will often appeal to the State to protect their monopolistic posi tion on the market. They secretly favor security over freedom. The State steps in to honor the re quests of certain special interest groups - which invariably pro claim their cause in the name of the general welfare clause of the Constitution - and establishes sev2 Bertrand de Jouvenel, The Ethics of Redistribution (New York: Cambridge University Press, 1951), pp. 72-73.

1969 TARIFF WAR, LIBERTARIAN STYLE 489 eral kinds of restrictions on trade. Fair trade laws are one exam ple. They are remnants of the old medieval conception of the so called "just price," in that both approaches are founded on the idea that there is some underlying objective value in all articles of fered for sale. Selling price should not deviate from this "intrinsic" value. 3 Monopolistic trade union laws are analogous to the medieval guild system; they are based in turn upon restrictions on the free entry of nonunion laborers into the labor market. Tariffs, trade union monopolies, and fair trade laws are all praised as being safeguards against "cut throat" competition, Le., competi tion that would .enable consumers to purchase the goods they want at a cheaper price - a price which endangers the less efficient pro ducers who must charge more in order to remain in business. The thing which most people tend to overlook in the slogan of "cut throat competition" is that the person whose throat is slashed most deeply is the solitary con sumer who has no monopolistic organization to improve his posi tion in relation to those favored by Statist intervention.

People are remarkably schizo phrenic in their attitudes toward 3 Gary North, "The Fallacy of 'Intrin sic Value'," THE FREEMAN (June, 1969). competition. Monopolies of the supply of labor are acceptable to most Americans; business mo nopolies are somehow evil. In both cases, the monopolies are the prod uct of the State in the market, but the public will not take a con sistent position with regard to both. The fact that both kinds operate in order to improve the economic position of a limited spe cial interest group at the expense of the consumers is ignored. Busi ness monopolies are damned no matter what they do. If they raise prices, it is called gouging; if they cut prices, it is cutthroat compe tition; if they stabilize prices, it is clearly a case of collusion re straining free competition. All forms may be prosecuted. No firm is safe. The State's policies of inflation tend to centralize production in the hands of those firms that are closest to the newly created money - defense industries, space-orient ed industries, and those in heavy debt to the fractional reserve banking system. It is not surpris ing that we should witness a ris ing tide of corporate mergers dur ing a period of heavy inflationary pressures, as has been the case during the 1960's in the United States. Yet, with regard to busi ness firms (but not labor unions), the courts are able to take action against almost any firm which, 490 THE FREEMAN August is successfully competing on the market.

As Dr. Richard Bernhard has pointed out, "What is becoming illegal under federal law in the United States is monopolizing as the law now defines monopoliz ing; and, since this is now con sidered a crime, it is possible that perfectly legitimate business ac tions by one firm may, if they 'inadvertently' lead to monopoly power, put a firm in jeopardy of the law."4 Thus, we see a rational economic response on the part of business firms - consolidation for the sake of efficiency on an in creasingly inflationary market prosecuted by the State which has created those very inflationary pressures. There is an inconsist ency somewhere. Tariffs Are Taxes A tariff is a special kind of tax. It is a tax paid directly by impor ters for the right to offer foreign products for sale on a domestic market. Indirectly, however, the tax is borne by a whole host of people, and these people are sel dom even aware that they are pay ing the tax.

First, let us consider those in the United States. One group af4 Richard C. Bernhart, "English Law and American Law on Monopolies and Restraints of Trade," The Journal of Law and Economic8 (1960), p. 142. fected adversely by a tariff is that made up of consumers who ac tually purchase some foreign prod uct. They pay a higher price than would have been the case had no duty been imposed on the im porter. Another consumer group is the one which buys an Amer ican product at a high price which is protected by the tariff. Were there no tariff, the dom~stic firIns would either be forced to lower their prices or shift to some line of production in which they could compete successfully. Then there is the nonconsumer group which would have entered the market had the lower prices been in effect; their form of the "tax" is simply the inability to enjoy the use of products which might have been available to them had the State not intervened in international trade.

Others b~sides the consumers pay. The importer who might have been able to offer cheaper prod ucts, or more of the products, if there had been no tariff, is also hurt. His business is restricted, and he reaps fewer profits. All those connected with imports are harmed. Yet, so are exporters. They find that foreign govern ments tend to impose retaliatory tariffs on our products going abroad. Even if those governments do not, foreigners have· fewer dol lars to spend on our products, be1969 TARIFF WAR, LIBERTARIAN STYLE 491 cause we have purchased fewer of theirs. Two groups are obviously aided. The inefficient domestic producer is the recipient of an indirect gov ernment subsidy, so he reaps at least short-run benefits. The other group is the State itself; it has increased its power, and it has increased its revenues. (It is con ceivable to imagine a case where higher revenues might in the long run result from lower tariffs, since more volume would be involved, so we might better speak of short run increases of revenue.) We could also speak of a psychological benefit provided for all those who erroneously believe that protective tariffs actually protect them, but this is a benefit based on igno rance, and I hesitate to count it as a positive effect.

A second consideration should be those who are hurt abroad, although we seldom look at those aspects of tariffs. Both foreign importers and exporters are hurt, for the same reasons. The fewer foreign goods we Americans buy, the fewer dollars they have to spend on American goods and services. This, in turn, damages the position of foreign consumers, who must restrict purchases of goods which they otherwise might afford. This leaves them at the mercy of their own less efficient producers, who will not face so much competition from the Amer icans, since the availability of foreign exchange (U.S. dollars) is more restricted. The tariff, in short, penalizes the efficient on both sides of the border, and it subsidizes the in efficient. If we were to find a bet ter way of providing "foreign aid" to other countries, we might provide them with our goods (which they want) by purchasing their goods (which we want).

That would be a noninflationary type of aid which would benefit both sides, rather than our pres ent system which encourages bul lies in our government and creates resentment abroad. Protecting Vita/Industries What about our vital industries, especially our wartime industries? If they are driven out of business by cheaper foreign goods, what will we do if we go to war and find our trading patterns disrupt ed? Where will we find the skilled craftsmen? There is some validity to this question, but it is difficult to meas ure the validity in a direct fash ion. It is true that certain skills, such as watchmaking, might be unavailable in the initial stages of a war. There are few appren tice programs available in the United States in some fields~ Nev ertheless, if there really is a need 492 THE FREEMAN August for such services, would it not be better to subsidize these talents directly? If we must impose some form of tax subsidy, is it not al ways preferable to have the costs fully visible, so that benefits might be calculated more efficiently?

A tariff is a tax, but few people ever grasp this fact. Thus, they are less willing to challenge the tax, re-examine it periodically, or at least see what it is costing. In direct taxes are psychologically less painful, but the price paid for the anesthetic of invisibility is the inability of men to see how the State is growing at their ex pense. ,What Tocqueville referred to as the "Bland Leviathan" - a steadily, imperceptibly expanding State - thrives on invisible and indirect taxes like inflation, tar iffs, and monthly withdrawals from paychecks. 5 It ought to be a basic libertarian position to dis," cover alternative kinds of tax pro grams, in an effort to reduce the economic burden of the State by making the full extent of taxation more obvious. Trade War, Statist Style One advantage of the direct sub sidy to protected industries is that such subsidies would not normally result in trade wars. When one 5 Robert Schuettinger, "Tocqueville and the Bland Leviathan," THE FREEMAN (January, 1962).

nation sees its products discrimi nated against by another State, it is more apt to retaliate directly. It threatens to raise tariffs against the offending country's products unless the first country's tariffs are reduced. If there is no re sponse, pressures arise within the threatening country's State bu reaus to enforce the threat. That, it is argued, will frighten other nations which might be consider ing similar moves. So the tariff war is born. The beneficiaries are the inefficient on both sides of the border and the State bureaucrats; the losers are all those involved in trade and all consumers who would have liked to purchase their goods at lower prices. This kind of war is therefore especially pernicious: it penalizes the productive and subsidizes the unproductive. There are many reasons why these wars get started. During periods of inflation, certain coun tries wish to keep their domestic currencies from going abroad.

These currencies, if they have in ternational acceptability, are grounded in gold or in reserve currencies theoretically redeema ble in gold. Foreign central banks can ask for repayment, and the inflating nations can be put into extreme financial embarrassment when too many of these claims are presented at one time. So they try to restrict purchases of foreign 1969 TARIFF WAR, LIBERTARIAN STYLE 493 goods by their domestic popula tions. Tariffs are one way of ac complishing this end. Tariffs, in short, prevent international "bank runs," at least for limited periods of time. Another cause is the fear of State bureaucrats during times of recession or depression that do mestic industries will not be fa vored when domestic populations buy from abroad. This was the case under the infant neomercan tile philosophies so popular in the 1930's.6 The depression was ac companied by a wave of tariff hikes in most of the Western na tions, with reduced efficiency and economic autarchy as a direct re sult. Domestic manufacturers cry for protection from foreign pro ducers. What they are crying for with equal intensity is protection from the voluntary decisions of their own nation's domestic pur chasers; it takes two parties to make a trade, and protection from one is equally protection from the other.

The effect of tariff wars is re duced efficiency through a restric tion of international trade. Adam 6 "The interests which, in times of prosperity, find it hard to enlist support for their conspiracies to rob the public of the advantages of cheapness and the division of labor, find a much moresym pathetic hearing." Lionel Robbins, The Great Depression (London: Macmillan, 1934), p. 65. Smi th, in the opening pages of Wealth of Nations, presents his now famous argument that the division of labor is limited by the size of the market. Reduce the size of the market, and you reduce the extent of the division of labor. The cry for protection should be seen for what it is: a cry for a reduction in efficiency. In a country like the United States, where less than 5 per cent of our national income stems from foreign trade, the cry is especially ludicrous. We hurt the other na tions, whose proportion of inter national trade to national income is much higher (West Germany, Japan) , without really aiding very many of our own producers. But there are so few vocal interest groups representing those who benefit from freer trade, while those who have a stake in the in tervention of the State make cer tain that their lobbyists are heard in Washington. The scapegoat of "unfair foreign competition" may be small, but being small, it is at least easy to sacrifice.

The Balance of Trade In precapitalistic days, econo mists believed that nations could experience permanent "favorable" balances of trade. A favorable bal ance was defined as one where you sold more goods abroad than you imported, thus adding to the na494 THE FREEMAN August tional gold stock. Wealth was de fined primarily in terms of gold (a position which, even if falla cious, makes more sense than the contemporary inclination to define wealth in terms of indebtedness). Prior to the publication of Wealth of Nations (1776), the philos opher, David Hume, disposed of the mercantilist errors concerning the balance of trade. His essays helped to convert Adam Smith to the philosophy of classical liberal ism. Hume's essay, "Of the Bal ance of Trade," was published in 1752 in his Political Discouri~es; it established him as the founder of modern international trade theory. The early arguments for free trade still stand today. Hume fo cused on the first one, which is designated in modern economic terminology as the price rate ef fect. As the exported goods flow out of a nation, specie flows in.

Goods become more scarce as money becomes more plentiful. Prices therefore tend to rise. The converse takes place in the for eign country: its specie goes out as goods come in, thus causing prices to fall. Foreign buyers will then begin to reduce their imports in order to buy on the now cheaper home markets; simultaneously, consumers in the first nation will now begin .to export specie and import foreign goods. A long-run equilibrium of trade is the result. A second argument is possible, the income effect. Export indus tries profit during the years of hea vy exports. This sector of the economy is now in a position to effect domestic production, as its share of national income rises. It will be able to outbid even those foreign purchasers which it had previously supplied with goods. Last, we have the exchange rate effect. If we can imagine a world trading community in which we have free floating exchange rates on the international currency mar kets (which most governments hesitate to permit), we can see the process more easily. In order to purchase domestic goods, for eigners must have a supply of the exporting nation's domestic currency. As demand for the goods continues, the supply of available currency drops lower.

Foreigners competitively bid up the price of the exporting na tion's currency, so that it costs more to obtain the currency nec essary to buy the goods. This will discourage some of the foreign buyers, who will turn to their own markets. Where we find fixed ex change rates, the same process ex ists, but under different circum stances. Either black markets in foreign currencies will be estab lished, or else some kind of quota restrictions will be placed on the 1969 TARIFF WAR, LIBERTARIAN STYLE 495 availability of the sought-after currency, as demand rises for ex change. Foreigners will simply not be able to obtain all the cur rency they want at the official price. Thus, what we witness is an equilibriating process of the exchange of goods; there can be no long-run imbalance of trade. No nation can continue to export more than it imports forever. Tariff War, Libertarian Style When some foreign State de cides to place restrictions on the importation of goods from another country, what should be the re sponse of that latter country's eco nomic administrators? Their goal is to make their nation's goods at tractive to foreign purchasers.

They should want to see the inter national division of labor main tained, adding to the material prosperity of all involved. If this is the goal, then policies that will keep the trade barriers at low levels should be adopted. Instead, there is the tendency to adopt re taliatory tariff barriers, thus sti fling even further the flow of goods. This is done as a "warn ing" to other nations. If the 1930's are anything like representative years of such warn ings, then we should beware of conventional tariff wars. In those years a snowballing effect was produced, as each nation tried to "out-warn" its neighbor in an attempt to gain favorable trade positions with all others. The re sult was the serious weakening of the international specialization of labor and its productivity. At a time when people wanted cheaper goods, they imposed trade restric tions which forced prices upward and production downward. 7 Pro fessor Mises' old dictum held true: When a State tries to improve economic conditions by tampering with the free market, it usually succeeds in accomplishing pre cisely the results which it sought to avoid (or officially sought to avoid, at any rate).

The best policy for "retaliation" would be to drop all tariff barriers in response. A number of things would result from such action. For one thing, it would encourage the importation of the goods pro duced by the offending country. Then the three effects described earlier would go into operation. The offending nation would find that its domestic price level would rise, and that its citizens would be in a position to buy more for eign goods (including the goods of the discriminated country). What would be done with the cur rency or credits in the hands of citizens of the high tariff nation? 7 Wilhelm Ropke, International Eco nomic Disintegration (London: Hodge, 1942), ch. 3.

496 THE FREEMAN August They could not spend it at home. If we, as the injured party, con tinued to make it easy for our citizens to buy their goods, we would provide them with lots of paper money which could be most easily used to buy our goods in re turn. We would gain the use of the consumer goods produced abroad, and we would be losing only money.W e would be getting the best possible goods for our money, so the consumer cannot complain; if we had imposed re taliatory tariffs, consumers would have had to settle for domestically produced goods of a less desirable nature (since the voluntary con sumption patterns are restricted by the imposition of a tariff) . Our prices would tend to go down, making our goods more competi tive on the international markets. The tariff is a self-defeating de vice. As American dollars came into the high tariff nation, they could be exchanged for our gold.

But this would tend to increase the rate of inflation in that coun try, as the gold reserves would most likely serve as the founda tion for an expansion of the do mestic money supply. Domestic prices would climb, and the citi zens would attempt to circumvent the tariffs in various ways. Black markets in foreign currencies and goods are established; foreign goods are purchased in spite of tariff barriers; pressures for freer trade can arise, especially if the discriminated nation has wisely refused to turn to retaliation in the traditional way. The statist tariff war is irra tional. It argues that because one's citizens are inj ured by one re.. striction on foreign trade, they can be aided by further restric tions on foreign trade. It is a contemporary manifestation of the old cliche, "He cut off his nose to spite his face." It is time that we accept the implications of Da vid Hume's two-hundred-year-old arguments. The best way to over come restrictions on trade, it would seem, is to establish poli cies that encourage people to trade more. ~ Free Trade FREE TRADE is such a simple solution for so many of the world's ills. It doesn't require endless hours of debate in the United Na tions ... or any other world-wide debating society. It requires only that one nation see the light and remove its restrictions. The resuIts will be immediate and widespread.

w. M. CURTISS, The Tariff Idea EDUCATION IN AMERICA GEORGE CHARLES ROCHE III H. Creativity "THE CHIEF wonder of education is that it does not ruin everybody connected with it, teachers and taught," Henry Adams once re marked. Such may indeed be the sad consequence of an education that fails to teach people to think, to participate in some small way in the creative process which dis tinguishes man from animal. If we would better understand the crea tive process, we might begin with the recognition that creativity does not originate in and cannot be measured by standDr. Roche is Director of Seminars for the Foundation for Economic Education. He has taught history and philosophy in college and maintains a special interest in American edu cation. ardized controls. The concepts of standardization and creativity are mutually exclusive. Our society's continuing attempt to judge its success by the degree of "con sensus" it achieves, by the extent to which it imposes "adjustment"

on the individuals who are its members, is a demonstration of our failure to realize the mutually exclusive nature of that relation ship. We seem to insist that the individual will find fulfillment to the extent that he makes his peace with the system. It is true enough that we must be able to live and work with our fellows. But, is mere "adjustment" 497 498 THE FREEMAN August enough? A Fortune study under taken a few years ago asked 150 corporation presidents and 150 personnel directors whether, if they had to choose, they would prefer: (1) the adaptable admin istrator, skilled in managerial techniques and concerned primar ily with human relations and with making the corporation a smooth working team; or (2) a man with strong personal convictions who is not shy about making decisions likely to upset tested procedures. The vote: the presidents divided half-and-half; the personnel men, 3-to-l in favor of the administra tor. 1 This preference for "adjust ment" over creative leadership is widespread in our society.

Adjustment vs. Creativity When creative capacity is sac rificed to adj ustment, the results are likely to be futile and unin spiring. In fact, human beings owe most of their conspicuous histori cal advances to periods when "ad justment" and control could not be forced upon social life. The dead hand of conformity and spontaneous forces of creativity simply do not act in concert. The periods historians usually describe as "civilized" were invariably trig gered by lapses of enforced con1 William H. Whyte, Jr., "The New Il literacy," The Public Schools in Crisis, ed. by Mortimer Smith, p. 108. formity, thus making possible a creative flowering. There can be no such thing as "creativity on command," because gen uine originality arises within the individual, not the collectivity. That aristocratic element in cre ativity implies a reliance upon higher standards than can be expected of society as a whole.

The personal aspect of creativity cannot be mass-produced. Indeed, the process works in reverse. Con fucius had the idea that if an in dividual could only come to terms with his own personality and de velop his own potential, that de velopment would extend, in ever widening circles, throughout a larger and larger area of influ ence, first touching those nearest the individual, finally spreading to the community at large. Since so cieties on the whole have proven notoriously unwilling to accept high standards and truly advanced ideas, the result of such individual creative development, when it has occurred, has been the apparent "social maladjustment" of the unique and creative personality, whose only guilt consists in his possessing more wisdom than so ciety can accept. When societies have chosen to penalize such "mal adjustment" and have demanded conformity, they often have de str0yed the creative impulses which gave them viability.

1969 CREATIVITY 499 Creation in the Service of Truth and a Higher Morality Thus, society is obligated to allow freedom to the creative indi vidual or risk its own destruction. A form of that same obligation applies to the creative individual. Unless his capacities are used to serve truth, the creative individual is also finally destroyed. Those who live immediately after a pe riod of free creativity are espe cially vulnerable in this regard. Be cause previous creative genius has already "thought through" a prob lem, subsequent generations often feel it unnecessary to rethink it, thus failing to recreate the solu tion within themselves. Few men have realized that the true must be not only discovered, but peren nially rediscovered and redefined. Any moral code which does not allow for individual, internal ex pansion of an ethical ideal is doomed to extinction. In Ortega's words, "The good is, like nature, an immense landscape in which man advances through centuries of eXPloration."2 There are signs that the modern world displays little enthusiasm for advance along such lines. We seem to feel that we can free the whole world from material con cerns, but one need ask, "What does it profit a man to free the 2 Jose Ortega y Gasset, Meditations, p.37.

whole world if his soul is not free?"3< And how free are our souls if we are valued by the world around us only for our ability to shed our personalities, to "adapt" to the values and standards of our soci ety, to suffer the death and burial of the originality and creative ca pacity which should give us our identities? In this world of utilitarian and materialist values, we seem to have forgotten that truth is not the servant of man. Unless the indi vidual is the servant of truth, both he and his society are doomed. Society cannot do without the services of the creative individu al; the creative individual is like wise doomed unless his capacities serve a higher morality than his own devising. The individual achieves his fulfillment only as he overcomes his own limitations and transcends himself in service of a higher ideal. ... If there is no God, as Truth and Meaning, if there is no higher Justice, then everything flattens out, and there is neither anyone nor any thing to which man can rise. If on the other hand, man is God, the situation is flatter still, hopeless and worthless.

Every qualitative value is an indica tion that in the path of man's life there lies something higher than man. 3 George Santayana, Character and Opinion in the United States, p. 118.

500 THE FREEMAN August And that which is higher than man, i.e., the divine, is not an exterior force standing above and ruling him, but that which, in him, makes him truly man - his higher freedom. 4 The Key to Creation True education must recognize the individual nature of original ity and creativity. No matter how dynamic the teacher, the effective force in genuine education is the student's will to learn and to grow. All learning and discovery, with or without a teacher, takes place deep in the individual's personal ity. Sir Isaac Newton, when asked how he had reduced the vast quan tity of physical phenomena to ap parent simplicity, replied, "Nocte dieque incubando" (turning them over day and night). The one fact which we know about that "turn ing" process was that it demanded a tremendous withdrawal into self, tremendous thought and introspec tion. To compare Newton's answer with the methods all too common in modern academic research pro vides a revealing insight. First the researcher "structures" a re search project, gathers a team of co-workers, and requests founda tion grants in support of his work - then, if the corporate judgment so wills it, the "team project" be4 Nicholas Berdyaev, The Realm of Spirit and the Realm of Caesar, p. 40.

gins. That such research provides "facts," one cannot deny. It is less clear that it yields the intuitive perceptions which can be achieved when a gifted individual takes those facts and "turns them over day and night." The collective approach to wis dom is forever suspect. Emerson once insisted: Ours is the age of the omnibus, of the third person plural, of Tammany Hall. Is it that Nature has only so much vital force, and must dilute it if it is to be multiplied into millions? The beautiful is never plentiful. 5 "The beautiful is never plenti ful." How true. When we complain of the "failures of our age," do we not label ourselves unrealistic? Haven't all ages and all societies been filled with shortcomings? The great achievements have always been individualistic. Indeed, any original achievement implies sep aration from the majority. Though society may honor achievement, it can never produce it.

The morning after Charles Lindbergh flew the Atlantic non stop from New York to Paris, an associate of Charles Kettering rushed into the research expert's laboratory in Dayton, Ohio, shout ing: "He made it! Lindbergh landed safely in Paris!" Kettering 5 Emerson: A Modern Anthology, ed. by Alfred Kazin & Daniel Aaron, p. 182.

1969 CREATIVITY 501 went on working. The associate spoke again: "Think of it - Lind bergh flew the Atlantic alone! He did it all by himself!" Kettering looked up from his work momen tarily and remarked quietly: "When he flies it with a commit tee, let me know." It seems as if the Deity dressed each soul which he sends into nature in certain virtues and powers not communicable to other men, and sending it to perform one more turn through the circle of beings, wrote UNot transferable" and HGood for this trip only," on these garments of the soul. There is something decep tive about the intercourse of minds. The boundaries are invisible, but they are never crossed. 6 If each of us is to perform his unique function, each must be free to do so. The word "freedom" means nothing unless it consists first of all in freedom of personal ity, the individuality possible· only if a person is a free creative spirit over whom neither state nor so ciety is omnipotent. The individual must be free to listen to that still small voice within: There is a time in every man's ed ucation when he arrives at the con viction that envy is ignorance; that imitation is suicide; that he must take himself for better or worse as his portion; that though the wide uni verse is full of good, no kernel of 6 Ibid., p. 215.

nourishing corn can come to him but through his toil bestowed on that plot of ground which is given to him to till. The power which resides in him is new in nature, and none but he knows what that is which he can do, nor does he know until he has tried. 7 The individual who is thus cul tivating his own little piece of the universe may well be engaged in the production of a unique and valuable vision, a vision which no collection of men, no "consensus" can possibly evaluate: ... the only difference is that what many see we call a real thing, and wha t only one sees we call a dream. But things that many see may have no taste or moment in them at all, and things tha t are shown only to one may be spears and water-spouts of truth from the very depth of truth. 8 Intuition These "water-spouts of truth from the very depth of truth" are the product of individual intui tion. Such intuition operates large ly outside the conscious mind. It goes under many names and is subject to many interpretations, ranging from "a flash of insight into Absolute Truth" to "prompt ings from a guardian angel."

Those who are responsive to such promptings are the creative among us. Probably many more of us 7 Ibid., p. 99. B C. S. Lewis, Till We Have Face8, p. 277.

502 THE FREEMAN August might participate in Creation if we would only respond to our in tuitions, if we would fan the tiny spark into a flame. Unless we leave the individual free to do that job for himself, unless we prepare him for such an ,expectation, we do not have an educational system worth its name. The Role of a Demanding Environment Granted the necessity for intu ition, how does a man learn to discipline himself and respond to the call when it comes? Imagina tion there must be, but imagina tion disciplined by intellect. The development of intellect demands work and academic standards. Only an education with a well-developed hierarchy of values, demanding much from the individual, can lay the groundwork for the union of imagination and intellect which allows creative thinking. What are some of the elements in such a hierarchy of values? One necessary element would be a well developed memory - reminding the world that lasting accomplishment is produced not by the easily pleased forgetter of hard truths, but by the man who remembers and understands reality, even when it is most painful. Another element would be a. well-established set of values which the individual has accepted as his own. A dis tinguished psychiatrist has recently made it clear that sound char acter formation is not possible unless the individual clearly knows who he is and what he believes. 9 Here again, lasting accomplish ment has never come from those willing to shift their personality or their principles for a more com fortable "adjustment" with the world. Accomplishment, intuition, and creativity have always come from those who knew who they were and what they believed, even when they suffered at the hands of the world for their firm grasp of reality and personal identity.

Self-Esteem Such creative people, knowing who they are and what they value, tend to reflect self-esteem. A re cent study of self-esteem among young boys reflected a high cor relation between what the boys did and what they thought they could do. Those boys coming from homes where parents maintained a close interest in them, where parents demanded high standards of behavior and performance, where firm discipline was a fact, not a debating point, proved to be boys of strength and achievement, capable of creative application of intellect, personality, and imagi nation. 9 William Glasser, Mental Health or Mental Illness? p. 15.

1969 CREATIVITY 503 The findings from these studies con cerning the factors that contribute to the formation of high self-esteem sug gest important implications for par ents, educators and therapists. They indicate that children develop self trust, venturesomeness and the abil ity to deal with adversity if they are treated with respect and are provided with well-defined standards of value, demands for competence and guid ance toward solutions of problems. It appears that the development of independence and self-reliance is fostered by a well-structured, de manding environment rather than by largely unlimited permissiveness and freedom to explore in an unfocused way.l° Just as the individual must be free to pursue his intuition, so he must be the product of a disci plined environment to develop properly his capacities of intellect and imagination. Once again, those 10 Stanley Coopersmith, "Studies in Self-esteem," Scientific American, Feb.

1968, p. 106. interested in education are faced with the necessity of providing freedom for the individual to choose, but defining it as freedom to choose within an already estab lished framework of values. It appears to be true that man can only be genuinely free when he accepts the discipline of a higher standard. Perhaps each of us can only be a creator to the extent that he is in harmony with The Creator. The man who lives his own vo cation and follows his own destiny is the creative man, since his life is in full agreement with his true self. It is the business of educa tion to allow the individual to develop that harmony of capacity and opportunity, of intent and ful fillment, of creativity and creation, which provides the chance for the individual to use his life in pur suit of everlasting goals and achievements. ~ The concluding piece in this series will discuss "A Philosophy of Growth."

The Consequences Are ABSOLUTE JUNE 1. WARD CONTRARY to much popular belief, we of the planet earth live by certain unalterable absolutes. In America since the late 1800's our intelligentsia have been trying to teach us that this is not true. "The only absolute is change," they say - which statement is a contradic tion in terms, since by sound defi nition an absolute is that which does not change. There are in fact certain abso lutes that no amount of wishing, hoping, praying, or hiding will destroy. The basic one is - we live in a world where nothing is given to mankind except life itself and the elements of the earth. Even these so-called free gifts cannot be used without some effort on the part of the recipient. It is then safe to say absolutely: Nothing is free. NO"N, if this is a basic natural Mrs. Ward is a housewife and full-time stu dent at Bowling Green University in Ohio, majoring in American history.

law, then the human beings on this earth must take it into con sideration when they build philo sophical, political, religious, and economic systems. But do they? Our philosophy is based on prag matism - whatever works is true; our politics are based on com promise - promise them anything, but get elected ; our religions are built on humanitarianism - man's highest good comes from serving other men; and our economic be liefs tell us we can spend, waste, destroy, and borrow indefini te1y without coming to a. day of reck oning - we never have to pay a debt we owe ourselves. Let us apply this law of built-in costs to just one of these fields of human endeavor. Let us explore the damage done to our economic life as a result of ignoring the ab solute - nothing is free! Goods come into existence by the use of three things: elements (ma.tter), thought (ingenuity), 1969 THE CONSEQUENCES ARE ABSOLUTE 505 and labor (energy). Man takes the elements of the earth, applies thought, and then proceeds with his labor to bring into being a re sult or good which is useful to him. If man does not think or if he reasons incorrectly, he suffers want and the elements are wasted.

If he applies labor alone, his harvest is meager and might not sustain him. Only when he applies both thought and labor to the ma terial universe does he produce an adequate harvest. By taking thought, mankind has been able to harness the earth's elements in the form of energy to make them work for him. In this way - that is, by using capital he can reap a larger harvest than would be possible by the use of his manual labor alone. But no matter how ingenious man's technology, he can never come to the place where he no longer needs matter, thought, and labor (all three) to produce goods. But what are the new breed economists telling us? "We have achieved perpetual motion through our harnessing of energy. Man no longer needs to work because he has machines to work for him. All man needs to do now is redistrib ute the produce and we will all have enough." Weare free to hold all manner of beliefs about this world, but we are not free to select the consequences of our beliefs. If we ig nore the law which states, "A force cannot be applied in any di rection without an equal force in the opposite direction," or, more simply, Nothing is free, we will still reap the consequences of that law.

If we ignore the fact that a totalitarian trend is generated whenever any society tools up for the political redistribution of goods, if we presume that a totali tarian society can produce enough goods and services so that society en masse can have a high standard of living, and if we believe that a secure "utopia" is a positive good, we still have the problem of price. The price, fellow men, is free dom. Cradle-to-grave economic se curity demands that the receiver give up his conscious volition, be come a robot, and allow himself to be spoon-fed by the giver of this "good." "But that is not what the seeker of security is looking for," you say. "What he really wants is to live without mundane tasks and have complete freedom to do what he wishes with his time." Now, there's a noble aim - and one which is impossible to achieve in this world. The world can support a few nonproducers, but not non producers in large groups. This is true because many men have sufficient ingenuity and energy to 506 THE FREEMAN August produce more than they personally need and are willing to do so as long as they are allowed the de cision as to its distribution. When they are no longer allowed this decision, they cease to overpro duce, because they know that no one has the right to make: them work for others. In the realm of human endeavor, the division of labor is from choice, not, as is true with the lower forms of life, from physiological differences.

In the last fifty yea.rs America has been more and more ignoring the absolute, Nothing is free, and \ve have come to a. time of deci sion. We can recognize this law and gradually reverse our direc tion, slowly lopping off those seg ments of our economy which are doles and, over a period of years, become once again free and self reliant; or we can continue in the path we're on and become com pletely totalitarian and impover ished like the rest of the world; or we can try to retain our free dom in a partially controlled econ omy until we go down in· an eco nomic heap with a world-sized monetary collapse" We have these three choices but we have no choice about the e"nd results of the path we take. These results are preordained by law and will come to pass regard less of our wishes in the matter. That is the way the laws of nature operate. If we choose the wrong path at this point in time, one can always retain the hope that human free dom will ultimately rise like the Phoenix from the ashes of its own funeral pyre with renewed youth Mdb~~~ • Franklin Pierce I READILY, and I trust feelingly, acknowledge the duty incumbent on us all, as men and citizens, and as among the highest and holiest of our duties, to provide for those who, in the mysterious order of Providence, are subject to want and to disease of body or mind, but I cannot find any authority in the Constitution for making the Federal Government the great almoner of public charity throughout the United States. " .. It would, in the end, be prejudicial rather than beneficial to the noble offices of charity." ..

From a Veto Message in 1854 A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Bastiats Influence IT IS a sobering experience to read Dean Russell's Frederic Bastiat: Ideas and Influence (Foundation for Economic Education, $2). Not that Mr. Russell's intellectual bi ography of the great French pio neer of the "freedom philosophy" lacks its exhilarating moments. Bastiat had his triumphs, many of which came after his premature death in 1850 of tuberculosis. Un der the Second Empire of Louis Napoleon French commercial pol icy took a more liberal turn (iron ic, inasmuch as the Second Empire was essentially a dictatorship). It was Bastiat's influence that caused the Emperor of the French to draw back from the extreme pro tectionist policy that had been the rule ever since the first Napoleon. But the "interventionist" fallacies which Bastiat exposed in many a witty parable have as many lives as a thousand cats, and the sober ing quality of Mr. Russell's book derives from the obvious parallels that may be drawn between early nineteenth century France and the present day in both England and the U.S.

When Bastiat went up to Paris from his childhood home at Mu gron in southwestern France, it was the time of Louis Blanc, the socialist, and Proudhon, the anar chist. Marx had not yet succeeded in evolving what he called "scien tific socialism" (a contradiction in terms if there ever was one), but socialist ideas were in the air nevertheless. Blanc believed the State owed every man a living, and he had organized the movement for National Workshops. W,ell, it was just a few months back that Senators Eugene McCarthy and Abe Ribicoff were telling us that it is the duty of government to be come the "employer of last resort" if people can't find jobs in the free enterprise system. The fact that Bastia t had exposed all sorts of government compulsions as a drag on job-creating production and consumption has yet to penetrate large areas of the modern con sciousness. But what a prophet Bastiat was!

Writing about Bastiat's career as a legislator, Dean Russell quotes the Bastiat "Law of Bureaucracy." 507 508 THE FREEMAN August Said Bastiat, "I am a firm be liever in the ideas of Malthus when it comes to bureaucrats. For their expansion in numbers and projects is fixed precisely by Mal thus' principle that the size of the population is determined by the amount of the available food. If we vote 800 million francs for government services, the bureau crats will devour 800 million; if we give them two billion, they will immediately expand themselves and their proj ects to the full amount." These words date back to December of 1849, which means that what we now know as Parkin son's Law was formulated by Bas tiat a century and more before Parkinson told us that the bureau crat's work always expands to fill the time available to do it. Bastiat, the Economist Dean Russell does not make any exaggerated claims for Bastiat's originality as an economist. After all, the ideas which Bastiat ex pressed in his major work, Har monies of Political Economy, had been present for the most part in Adam Smith and Jean Baptiste Say. Say's famous "law of mar kets," which emphasizes the tru ism that production creates its own purchasing power (in wages, interest, and dividends), is simply a statement of the "harmony of in terests" that is the result of a free market. And Adam Smith's figure of the "invisible hand" is Bastiat in a metaphor.

The prime virtue of Bastiat as an economist resided in his style, which turned the "dismal science" into something full of life and sparkle. Beyond that, Dean Rus sell thinks Bastiat's greatest con tribution was as a theorist of gov ernment. Actually, Bastiat did not go much beyond Adam Smith in his definition of the duties of the State. He thought government should be limited to providing the courts, the police, and the money system needed to guarantee equal justice to all. Well, Adam Smith had said before Bastiat that gov ernments were instituted among men to provide cheapness, safety, and health, which meant that there must be a free economy (to keep prices low), a good police force and adequate preventive measures to keep the environment clean. But Bastiat, with his genius for the sardonic turn of phrase, summed up the case for the anti statists in words that will never be forgotten when he remarked that "the State is the great fiction by which everybody tries to live at the expense of everybody else."

Herbert Spencer was never able to beat that for memorable verbal ization, and only the late Isabel Paterson, among moderns, has come close to Bastiat when it 1969 BASTIAT'S INFLUENCE 509 comes to giving anti-intervention ist ideas an epigrammatic turn. Before I knew anything of Bas tiat I was impressed by Mrs. Pat erson's statement that the Recon struction Finance Corporation, a Hoover Republican idea, was the inevitable precursor of the Roose veltian Works Progress Adminis tration. Said Mrs. Paterson, when the RFC tried to bail out U.S. corporations in the 1929-32 period, "You can't put J. P. Morgan on the dole and keep poor people from demanding their share." And, of course, it turned out just that way. But Mrs. Paterson's wisdom was simply a restatement of Bas tiat's warning to the "upper class es" of France. In his Harmonies of Political Economy Bastiat had chastised the upper classes for setting a "fatal example for the masses." "Have they not," so Bas tiat wrote of the upper classes, ". . . had their eyes turned per petually toward the public treas ury? Haven't they always tried to secure from government more special privileges for themselves as manufacturers, bankers, mine owners, land owners? Haven't they even gotten subsidies from the public treasury for their bal lets and operas? . . . And yet they are astonished and horrified when the masses adopt the same course!

When the spirit of greed has for so long infected the wealthy classes, how can we expect it not to be adopted by the suffering masses?" Proponent of Free Trade Dean Russell is especially good in showing how Bastiat became the link between the early suc cesses of Richard Cobden and the Anti-Corn Law League in Eng land and the work of Michel Che valier in converting the govern ment of the French Second Em pire to a moderate tariff policy. Bastiat, the friend of Cobden, had never been able to combat the anti English prej udices of his own countrymen during his lifetime. Realizing that the French masses would never adopt an English idea, Cobden had warned Bastiat that free trade must first be sold in France to an intellectual and governmental elite. But Bastiat was a popularizer, and hence con stitutionally unable to resist mak ing a mass appeal. Unable to stir either the masses or the elite to accept free trade, he left it up to his disciple, Michel Chevalier, to move the legislators and the elite of a later period to turn things around.

Bastiat's ideas were in the as cendancy in the 1850-1914 period; even in protectionist America the free traders kept forcing the issue until they achieved a victory with the Wilsonian Underwood Tariff. After World War I, however, mer510 THE FREEMAN August cantilist ideas came back into vogue. There were Keynes in Eng land, the New Deal in the U.S., Hjalmar Schacht in Germany. Things haven't improved since World War II. But Bastiat's prin ciples are incontrovertible, for the "freedom philosophy" is in accord with man's instinct for life. As the 1968 events in Czechoslovakia proved, the demand for freedom will re-emerge in the most un promising places. It can be sup pressed with bayonets, but the men with the bayonets cannot force a society to produce beyond the subsistence point. Bastiat will have his great revival when the world has had enough of the high cost measures that intervention and protectionism entail. ~ ~ THE ECONOMY OF CITIES by Jane Jacobs (New York: Random House, 1969, 268 pp., $5.95) Reviewed by Robert M. Thornton CITIES CAME FIRST, declares Jane Jacobs; urban man antedates the farmer; agriculture and animal husbandry were "invented" in pre historic cities and "exported" to rural areas when cities grew crowded. Similarly with industry, for do we not see manufacturing plants, the. latest "export" of cit ies, moving into the countryside?

This matter of priority is impor tant, for cities, according to Mrs. Jacob's thesis, are the rejuvenat ing or reproductive element of the whole economy. As go the cit ies, so goes the nation. Hence the importance of understanding just what makes cities rise and pros per. The answer, Mrs. Jacobs con tinues, is the emergence of new enterprises with opportunities for men to work, repeated not once but many times over and over. When cities fail to do this (De troit, Pittsburgh, and New York are some of the examples she of fers) , they stagnate and the whole economy slides into a decline. What is needed to revive the decaying cities of our nation? Not massive injections of money; for while money is needed, creativity is more important - entrepreneurs with new ideas for using wealth to create more wealth. (The same is true of "underdeveloped" na tions and minority groups; they could generate their own capital by creating new work.) To whom do we look for the creation of new work? Not so much to large, well established companies as to small companies and new companies not bound by the old ways of doing things or the sterile divisions of labor that often go with mass pro duction of undifferentiated goods and services. One is reminded of Gerald Heard when Mrs. Jacobs speaks of the dangers of over specialization and superefficiency.

1969 OTHER BOOKS 511 Look what happened to the ants with their strict division of labor! What do we do? Wen, in one sense, "ve can do nothing. Mrs. Jacobs, like F. A. Hayek, under stands that you do not just put a city together like a child playing with building blocks. Rather you try to set up the right conditions which will pe.rmit, and even en courage, a city to grow more pros perous, trusting to human crea tivity for the rest. What are some of the conditions? Mrs. Jacobs ex plains that "enterprises serving city consumers flourish most pro lifically where the following four conditions are simultaneously met: (1) different primary uses, such as residences and working places, must be mingled together, insur ing the presence of people using the streets on different schedules but drawing on consumer goods and services in common; (2) small and short blocks; (3) buildings of differing ages, types, sizes and conditions of upkeep, intimately mingled; and (4) high concentra tions of people."

Eight years ago, in her The Death and Life of GreatAmerican Cities (reviewed in THE FREEMAN January, 1962), Jane Jacobs took a lonesom·e stand in opposition to city planning and critical of "the Federal bulldozer." Now, once again, she takes a solitary posi tion startlingly different from most of those who proffer diag noses of urban malaise. Implicit in the whole book is the idea, fa miliar to readers of THE FREEMAN, that where government or unions or business have the power to re strict competition or in any way thwart new ways of doing things, there will eventually be stagna tion. What puzzles the reader is why Mrs. Jacobs fails to come out a.nd say it plain and clear, espe cially with regard to government. No monopoly, business or union, can exist without at least the tacit approval of the' political powers. But whatever the reason, libe.r ta.rians and conservatives may re joice that still another book, and a most fascinating and unusual one., is added to the stack of vol umes defending individual liberty and the free market against cen tral planning by the State. ~ ~ FREE SPEECH AND PLAIN LANGUAGE by Albert Jay Nock (Freeport, N. Y.: Books for Li braries Press, 1968, 343 pp., $9.50) • THE BOOK OF JOURNEYMAN by Albert Jay Nock (Freeport, N. Y.: Books for Libraries Press, 1967, 114 pp., $6.50) Reviewed by Robert M. Thornton ADMIRERS of the late Albert Jay Nock - editor of THE FREEMAN, 1920-24 - will be pleased that two of his long out-of-print books have 512 THE FREEMAN August been republished.Free Speech and Plain Language, a collection of essays issued in 1937, includes the morale-raising "Isaiah's Job." The short pieces which comprise The Book of Journeyman were first published by the New Freeman in 1930. Nock, a first rate social critic, was chiefly interested in the qual ity of civilization in the United States; this is the theme that knits together most of these essays.

A truly civilized society, Nock contends, encourages the full col lective expression of all five social instincts - the instincts of expan sion and acquisition, of religion and morals, of beauty and poetry, of social life and manners, and of intellect and knowledge - and per mits none to predominate at the expense of the rest. When a society goes on the rocks, as they've all done sooner or later, it is the col lecti ve overstress of one or more of these fundamental insights that wrecked it. Nock indicted American society for leaving "the claim of too many fundamental instincts unsatisfied; in fact, we are trying to force the whole current of our being through the narrow channel set by one in stinct only, the instinct of work manship; and hence our society exhibits an extremely imperfect type of intellect and knowledge, an extremely imperfect type of re ligion and morals, of beauty and poetry, of social lif.e. and man ners." The trouble with our civilization, then, is that "it makes such limited demands on the human spirit; such limited demands on the qualities that are distinctly and properly humane, the qualities that distinguish the human being from the robot on the one hand and the brute on the other."

Nothing can be done about this problem unless people acquire a brand-new ethos: "We have hope fUlly been trying to live by mechan ics alone, the mechanics of peda gogy, of politics, of industry and commerce; and when we find it can not be done and that we are making a mess of it, instead of experienc ing a change of heart, we bend our wits to devise a change in mechan ics, and then another change, and then another." But "it is the spirit and manners of a people, and not the bewildering multiplicity of its social mechanisms, that determines the quality of its civilization." A thorough reading of Nock's social criticism gives an excellent perspecti ve on the age we live in; it may help us understand why so many of the young are disgruntled with life as they see it lived in this nation today. Nock is the most charming of writers, and has proved a better prophet than many of his highly touted contempo raries. ~ the Freeman VOL. 19, NO.9· SEPTEMBER 1969 V~lue - the Soul of Economics W. H. Pitt 515 Why inject anti-economic frictions into such a smooth-running mechanism as the market?

Student Power and All That Benjamin A. Rogge 519 The Professor offers some ideas on who ought to be in charge on campus. ~Jreedom IS Responsibility Bertel M. Sparks 522 Not the guaranteed life, but self-responsibility - that is freedom! Two Concepts of Equality Edmund A. Opitz 529 Men who desire an equality in matters of justice must be free to differ in other respects. On Economic Rights David Kelley 541 There's an important difference between the natural rights to one's own life and property and the spurious claims against others . .. Education in America: 12. A Philosophy of Growth George Charles Roche III 546 In conclusion, education for individuality turns out to be an individual rather than a collective responsibility. Too Mad to Laugh! D. Elton Trueblood 554 Persons consumed by righteous indignation may do more harm than good for "the cause." Tax Policy Hans F. Sennholz 556 A search for policies of taxation consistent with the ideal of a limited government and a free economy.

Beyond the law Manas 564 "Coercion does not intrude upon the becoming of good men, which is a process entirely separate from the control and prevention of bad behavior." Book Reviews: 573 "The Treaty Trap" by Laurence W. Beilenson "Enemies of the Permanent Things" by Russell Kirk Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON·ON·HUDSON, N. Y. 10533 TEL.: (914) 591-7230'" LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN 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 government. 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, 1969, 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.

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W. H. PITT VAILUIIE The soul of economics The processes of the market are those of a free-running, frictionless machine; and the insertion of Uanti-economic" frictions into the mech anism - what is this but the most disastrous vandalism? IT SEEMS to me that there are two stages in the formation of "value" .,and that it starts with a subjec tive, personal, evaluation, by indi viduals, of the usefulness of an article for the satisfying of their desires. Some of us, having a par ticular desire for an article, make our subjective evaluation of it in deliberate fashion; others, lack ing the particularity of that de sire, or perhaps not requiring the article quite so urgently, make only subconscious measurement of its usefulness, that is, of its utility. The second stage occurs when those with immediate purpose for the article cast around for the Mr. Pitt, of Bayswater in Victoria, Australia, describes himself as a "publicist for freedom."

He is a frequent contributor to journals such as The Australian Financial Review. means of acquiring it. A few will manufacture it for themselves, even though this, in terms of time and effort, is probably the most expensive process. Others, econo mizing a little, will combine their efforts in a cooperative produc tion. But most of us, on desiring something, but not being in such desperate need of it as to warrant our manufacturing it for our selves, will get it "in the market," doing so by exchanging for it some other article or service for which our regard, as vendor, is not at that moment so high. While those manufacturing the item for themselves may seem to have but little effect upon "the market," their outlays in time and effort are nevertheless seen and noted by 515 516 THE FREEMAN September everyone, and form the ultimate base for the price structure. In the market, you see no concern for the reasons, whatever they be, that activate individuals to expend their effort; the concern is for the amount of our effort, were we manufacturing the article for our selves.

In deciding upon an exchange in the mar ket, we commence from our knowledge of the cost in time and effort were we to make the article for ourselves,either indi vidually or cooperatively. But be ing rational, intelligent humans, we seek always to satisfy our de sires with the least expenditure, whether this be measured in time, effort, money, or in other commod ities or services. Therefore, we seek out those who, with an abun dance of the article, or having a facility greater than our own for its production or, having a desire greater than our own for the com modity or service which we can provide in exchange, will offer the article we desire at a price that will give us a saving· in our exer tion. When there are several who will thus offer us the article, the desire to minimize our exertion induces us to seek the best offer, thereby testing the market to its limit and attaining the greatest possible sav ing. The market is thus a mech anism for the economizing or conserving of human energy - the most excellent mechanism of all, not only in that it permits the im-, mediate conservation of energy, but also in that, by acting as a register and indicator, it steers the whole community toward a constantly increasing conserva tion of energy. It thus promotes the maximizing of results and the minimizing of effort.

The Objective Expression In order properly to appreciate the functioning of the market, there has to be recognition of the' fact that everyop.e who "goes to the market" and participates in the exchange of goods and serv ices, does so in order to save him self effort. Any proposed transac-' tion must offer a benefit to both vendor and purchaser, otherwise it will not take place. This is so even when an article or service is offered at a price well below "true value." In every case the offerer is satisfied that in making the deal he is receiving a benefit and is achieving something that he other wise could not. He may regret that he takes his decision at a time when the article or service with which he is parting will bring him less in return than it might at some other time: but at the moment of decision he sees it to be advantageous that he should sell. The advantage is that failure 1969 VALUE - THE SOUL OF ECONOMICS 517 then to make the decision could involve him subsequently in a greater exertion. The market, thus, is a place where goods and services are evaluated, subjective ly, by individuals, the evaluation then being made evident, objec tively through price, to others.

Price, one might say, is the indi cator, the objective expression of and the evidence of value: and value roots in, and is at every stage concerned with, the saving or economizing of effort. Money, the Ultimate Refinement That this view of value is cor rect receives support from the everyday meaning that attaches to the word "economics." Where this word occurs on its own, it is, in general, used in its deepest and widest meaning and, concerned for the prosperity of the com munity as a whole, deals with the fruitfulness of our overall activity and therefore with our overall economy of effort. But when spe cific fields of acti vity are in mind, an appropriate definitive is used: we talk, for example, of "the eco nomics of the sugar industry" and conclude that prospects for the in dustry here in Australia will be good if, or even because, the po litical or climatic conditions in other sugar areas are disastrous and throughout the world there will be deleterious effect upon both other sugar producers and all sugar consumers.

In either the particular case or the general, it is the maximizing of results through the economizing of effort that is our concern. It is our instinct for economizing ef fort that has led to the use of one or another particular commodity as a unit for the measurement of values. Through the subsequent use of tokens for these commodi ties, what we now call "money" has developed and it is its potency in the economizing of time and effort that makes money the ulti mate refinement in the mechanism of the market and the greatest of all our servants. "Price" cannot be the same thing as "value." It is the measure of value and the objective indi cator for the monetarily accepta ble figure, dictated by all our varying individual evaluations, at or around which transactions cus tomarily occur. It is a character istic of "price" that it allows of a benefit for both the vendor and the purchaser, being above the evaluation of the vendor and be low that of the purchaser, each of whom, necessarily, approaches the market in search of different sat isfactions. Like all mechanisms, the market, with its function for the economizing of time and effort, is servant alike to the good, the compassionate, and the perceptive 518 THE FREEMAN September as well as to the evil, the incon siderate, and the oblivious. We interfere with it at our peril, for the interference is interference with the economizing of time and effort, the penalty thus being au tomatic, widespreading, and as sured. This is the lesson of the ages as well as of our immediate logic.

In an inquiry into economics we must commence with the ques tion as to just what it is that we are economizing. Clearly, the an swer is that our inquiry concerns the process whereby human be ings economize in their time and effort, that is, in their exertion; for the economizing of time and effort is the mainspring of ra tional intelligent human activity. With this in mind, we can accu rately determine what value is and how it is to be measured, what price is and how it is ex pressed, what the market is and how it operates, what the true rights of property are and how these rights are not only violated by long-established legal ,vrongs but also threatened by further legalistic damaging of the auto matic processes of the market. These processes are those of a free-running, frictionless ma chine; and the insertion of "anti economic" frictions into the mech anism - what is this but the most disastrous vandalism?

The Essential Simplicity It seems to me that correct theorizing in the realms of eco nomics is an essential prerequisite to the preservation and growth of freedom in its beautiful entirety or in any of its sparkling facets. Until there is a widespread under standing of the essential simplic ity of each section of the market mechanism, there cannot help but be unending attempts at inter ference with the market. These interferences can, of course, never be such as wholly to destroy the market (and freedom) but they can never fail to harm it. Under standing of the processes of the market can come only with ap preciation of two facts, the one that the science of economics has as its concern the economizing of our time and effort, and the other that value, which the most percipi ent perhaps of my friends calls "the soul of economics," can have reference not to cost in terms of labor or effort, not to either of utility or gain, not, although the relationship gets closer, even to scarcity, but only to the saving or economizing of effort.

Summarizing, then: articles of trade are evaluated, subjectively, according to the amount of exer tion which their possession will save for the possessor: and their price, manifested objectively in 1969 VALUE - THE SOUL OF ECONOMICS 519 the market, must always be above their desirability as evaluated by the vendor and below their de sirability as evaluated by the pur chaser. Exactly the same processes of subjective evaluation and ob jective pricing occur with services. In the case of services the out come of exertion is intangible and is promptly dissipated, whereas in the case of articles of trade (commodities) the effect of exertion is applied to material substances and is there for a time stored up in tangible form. In each case, both vendor and purchaser, both prac titioner and client, first consider the effect of past exertion and then aim to conserve future ex ertion. In the estimation of future conserved effort lies the core and center of value. ~ STUDENT POWER and all that BENJAMIN A. ROGGE THE QUESTION is this: To whom does Wabash or any college or uni versity belong? To the current students? to the alumni? to the faculty? to the administration? to the Board of Trustees? to "soci ety"? to some mixture of these agencies?

The answer to this question is of some importance. Perhaps, though, it should be made even more specific: Where does sovDr. Rogge is Chairman of the Department of Economics at Wabash College in Indiana. This article is reprinted by permission from the Wabash Bachelor, Spring, 1968. ereignty lie in a given college or university? Who's in charge around here? Rogge-type answers: (1) A college exists, in theory, in whole or in part, to serve its students. In the same way, Steck's Men's Store exists, in part, to serve the students of Wabash Col lege. But Steck's Men's Store does not belong to its customers and Wabash College does not belong to its students (past or present). "Student power," in the sense of a claim by students of a right to 520 THE FREEMAN September make decisions that relate to their college or university, is thus of no substance or standing. This is not to say that a college or university administration is al ways acting wisely if it ignores the wishes and the recommenda tions of its students. It means only that, when the chips are down, the students can rightly be told to get the hell out of the ad ministration building and to stop interfering with the conduct of college business.

(2) The faculty members of a college are employees of the col lege and, by definition, a college does not belong to its employees. Again, this is not to say that a college administration is necessar ily unwise if it delegates author ity over (say) the curriculum to its faculty. But again, when the chips are down, the college can rightly say to any faculty member for any reason whatsoever, "Go away!" A human being has a right to believe in and espouse com munism or laissez faire capitalism or any other piece of nonsense but he has no right to be paid by someone else for doing so, against the will of that someone. So-called academic freedom is in reality a denial of freedom - the freedom of those to whom a school belongs to put the resources under their con trol to the uses they believe ap propriate. Again, a school is surely unwise if it refuses to permit a wide range of views to be pre sented to its students but it is not denying anyone his natural-born right if it takes this unwise po sition.

Administration Delegated Control (3) The members of a college administration are also employees of the college - hence they cannot be the ones to whom the college belongs. In practice, they are the ones to whom control is usually delegated by the "owners" and they are the visible source of au thority on the campus. Unfortu nately, many college administra tions in this country seem to have abdicated (not delegated) their authority to some combination of students and faculty members (or athletic departments). The re sult is a kind of tragicomic an archy - although for short periods of time on some campuses it can be very exciting (even intellectu ally exciting) for everyone in volved. A college should be actu ally run by the administration not the faculty. As Sidney Hook has put it, "Give the intellectual everything he wants - but power." (4) Does it follow that it is to the Board of Trustees that a col lege or university really belongs?

In the case of a private college the answer would seem to be yes. It is this Board that has legal control 1969 STUDENT POWER AND ALL THAT 521 of the assets that the college has acquired. It is this Board that, in theory, is responsible for seeing that the assets are used for the purposes for which they were and are made available to the college. In the case of the public college, the answer is somewhat more com plex. Here the Board must ulti mately answer to those who large ly pay the piper - the taxpayers of the jurisdiction involved. When the taxpayer in California screams, "We've got to get those Lefties and Hippies out of Berkeley," he may not be evidencing much knowledge of educational proc esses - but he is exercising a right that is essentially his. After all, it's largely his money. Claims of Society Invalid (5) But what of the claims of society? Do not the institutions of higher learning in any society really exist to serve the interests of that society? In a word, No. In the first pl:t.ce, the word "society"

is filled with ambiguities and difficulties. As a matter of fact, those who use the word in these cases usually mean by "the interests of society" the interests of society as seen by their own minority group, whether it be the National Association of Manufacturers, the National Education Association, or Americans for Democratic Action. But more than that: the best ex ample of a university system serv ing the interests of its society would be the German universities under Hitler or the Russian uni versi ties of the last 50 years. Neither society nor the students nor the alumni nor the faculty is or should be in charge at Wabash College. The administration is and should be in charge, acting under the authority delegated to it by the Board of Trustees, and serv ing the purposes of the college· as defined in its charter and inter preted by that Board over the years. And if you think things probably aren't this simple and clear-cut in practice, you're right.

~ IDEAS ON LIBERTY Malcolm Muggeridge A FUTURE SOCIAL HISTORIAN is likely to decide that the most powerful instrument of all in bringing about the erosion of our civilization was none other than the public education system set up with such high hopes and at so great expense precisely to sustain it. . From an article, "On Rediscovering Jesus," Esquire, June, 1969 Freed esponsibility IN HIS INAUGURALaddress on Jan uary 20, 1969, President Richard M. Nixon declared, "The essence of freedom is that each of us shares in the shaping of his own destiny." The fact that the state ment received so little comment from the press and other news media is an indication of how in sensi ti ve the media have become to their own terminology. Appar ently it was felt that there was nothing unusual about the state ment made. But if the words are measured against the positions taken by the media with a high degree of consistency for at least the past thirty-six years, they are revolutionary.

The revolutionary character of President Nixon's statement is best illustrated by contrasting it Dr. Sparks is Professor of Law at Duke Uni versity School of Law, Durham, North Caro lina. 522 BERTEL M. SPARKS with a definition of freedom enun ciated in another inaugural ad dress delivered by another presi dent twenty-eight years earlier. On that occasion some citizens were thrilled and others were frightened as they heard their president divide freedom into four categories. Within a short time and with the enthusiastic coopera tion of the press and the academic community, the "Four Freedoms" achieved a status almost on a par with Holy Writ. They are still eulogized from the lecture plat forms of the public schools and are still looked upon by many as at least "quasi sacred." But re gardless of how solemn We· become as we recite the catechism of free dom of speech, freedom of reli gion, freedom from want, and freedom from fear, it is hard to avoid such questions as whether or not these goals represent a foun1969 FREEDOM IS RESPONSIBILITY 523 dation upon which a nation can build and whether or not they are aims worthy of a free people.

Kept by a Master It might be well for those who have been taught that satisfaction of the four freedoms is enough to usher in the rnillenni urn to ask themselves whether or not there is a fattening hog in the country that doesn't already enjoy every one of them. Noone interferes with the hog's grunting or his worship if he is inclined to either worship or grunt. He is provided with a comfortable place in which to live and with plenty of food to satisfy his needs. He is well pro tected from danger and has no occasion to defend himself against the wild animals of a hostile for est. Is that enough for man? Is it enough to satisfy the longing of the human spirit? Is it a sound basis for building that human dig nity that separates man from the lower animal kingdom? Our new president asserted, "The essence of freedom is that each of us shares in the shaping of his own destiny." That is some thing the fattening hog cannot do.

And it is something a human be ing might not be able to do even if all the four freedoms so pas sionately idealized by our earlier president are fully provided for. If sharing in the shaping of your own destiny means anything, it means having a freedom of your own person. It means a freedom to move peacefully from place to place. It means a freedom to en joy the fruits of your own body and that means a freedom to enjoy the product of your own labor. It means freedom to enjoy, use, and dispose of the things for which you have worked and which you have-accumulated by the sweat of your brow. These are all things the fattening hog does not have even though the four freedoms of an earlier day are supplied in abundance. But the truly signifi cant thing is that the fattening hog could not have the four free doms he does enj oy unless he also had a master, that is to say, un less he had an owner who was providing them. Neither can any government provide its citizens with those four freedoms unless that government is also a master with power to seize the material necessities from somewhere else.

And from where and from whom is government to make such a seizure? The .answer should be clear. But the two statements thus separated by a span of twenty eight years are brought into even sharper contrast when it is noted that the statement of the "Four Freedoms" says nothing about re sponsibility while the statement 524 THE FREEMAN September from our current president is concerned entirely with responsi bility. To say that one is free to shape his own destiny is to as sume that one is responsible for his own destiny. And therein lies a distinction that cannot be ex plained away as just a difference in semantics. Inseparable Qualifies Too much of what has been written about freedom and respon sibility has been written on the assumption that the two are sep arate although closely related en tities and that if one has freedom he should somehow be a responsi ble citizen of the society where that freedom is enjoyed. To state the proposition in such terms is to misrepresent the essence of a free society. Freedom and respon sibility are not separate entities; freedom is responsibility. One can be free to share in the shaping of his own destiny only to the extent to which he is responsible for his own destiny. And he cannot be free to shape his own destiny ex cept to the extent to which he abstains from interfering with the destiny of another.

Recognizing this identity of freedom with responsibility means getting down to the bedrock of what it is to be free. And to be really free has little relevance to the romantic freedom some have imagined as existing in primitive man. It is probably true that prim itive man roamed the forest gath ering his own figs and capturing his own game wherever and whenever he chose. But under these circumstances freedom was quite circumscribed. Primitive man was not free because after he had gathered his figs or cap tured his game he had no assur ance that he would get to eat them before they were snatched from him by an intruder. This uncer tainty made it imprudent for him to gather more than could be con sumed on the spot. He was not free until he had organized him self into a state upon which he conferred power to prevent theft, robbery, murder, and similar acts. It should be noted that even this limited organization called for a surrender of what man might previously have viewed as part of his freedom. In order for the system to work the state had to be given the exclusive power to use force. What had been each indi vidual's right and responsibility to provide for his own self-defense became an organized self-defense.

And therein lies the essence of the true state. The state is organized self-defense and any time it be comes anything more than that it becomes a threat to freedom and a threat to man's dignity as a man. But so long as it is confined 1969 FREEDOM IS RESPONSIBILITY 525 within its proper boundaries it serves the uplifting purpose of setting the individual man free to gather more food than can be presently consumed and it gives him the assurance that the sur plus will be protected for subse quent use or for trade. With that freedom primitive man began to contemplate and to make tools, thereby increasing his material efficiency and expanding his pro ductive capacity. He was on his -~ way up! How Power Grows But the state did such a good job of keeping the peace and the advantages of this organized self defense became so obvious that other temptations began to pre sent themselves. Each time man was faced with an emergency in his personal life he was tempted to surrender additional responsi bilities to the state. Each time he did so he soon learned that with each surrender of a responsibility he also surrendered a freedom. To that extent he found himself turn ing away from his march upward as a man and toward the level of the fattening hog. He was turn ing away from responsibility for his own choices and his own des tiny. He was responding to the invitation to enjoy the four free doms and abandon his dignity as a human being. Upon discovering his predicament man has usually recoiled and has sought to regain that which has been lost. But once a thing has been surrendered to the state, the only agency clothed with power to use force, it can rarely ever be recovered without a struggle, and the struggle is usu ally a violent one. Unfortunately, as soon as the battle is won and the weight of its responsibility is felt, the temptation to retreat is again presented.

Probably the most dramatic as well as the most widely known illustration of this fight for free dom followed by displeasure with its consequences occurred when a mass of foreigners were being held as slaves in Egypt. They had been reduced to the fattening-hog stage of serving their masters and somehow they were not enj oying it. Along came a leader named Moses who led a rebellion. The rebellion was a success and with in a short time the now ex-slaves were out on their own. They were no longer the property of their masters. They were free. But as free men they had no master who could be relied upon to supply their material wants. They be-: came distressed and threatened a rebellion against their new leader. They began to say they had rather be slaves of the Egyptians than to be faced with the necessity of planning for themselves. They 526 THE FREEMAN September were distressed to learn that free dom to shape their own destiny meant nothing more and nothing less than responsibility for their own destiny.

Early American Experiences Plymouth and Jamestown The experience of the Egyptian slaves has been repeated with de pressing and monotonous regular ity throughout human history. Men offer their lives to become free only to become frightened as soon as the prize is obtained. It would not be profitable to pile up a multiplicity of illustrations here but the experience of the early European settlers who arrived in America cannot be ignored. These settlers came to America to escape oppression of one kind or another in the old country. They arrived on rocky, inhospitable shores where there were no houses, no factories, no drug stores, and not even any neon signs to brighten the horizon. It was an underde veloped country. The first group in Virginia in 1607 and the first group at Plym outh in 1620 were in a similar predicament and they both went through the same process. When supplies became scarce they de cided to build a common store house, put all the food there, and let some bureaucrat dole it out as needed. The result is a familiar story, though present-day social planners would like to forget it.

The food shortage became more acute. Starvation increased. Few houses were built. There was much illness. When supplies reached the desperation point, both colonies, without any collaboration on the subject, took similar steps. They both abandoned their economic., planning business and told each man that he would have to shift for himself, that he would have to shape his own destiny. Prosperity was on its way immediately. The Plymouth and Jamestown experiences have been repeated over and over in both governments and individual lives. Cynics con tinue to say, "Yes, but the situa tion has changed." They seem to assume that the fact of change· repudiates every lesson the hu man race has learned thus far. Of course the situation has changed and, so long as even the rudimen tary elements of a free society are preserved, the situation will con tinue to change. The more relevant question is, how has it changed?

If a planned economy wouldn't work in either Jamestown or Plymouth for a group so small that every person present was known by name to every other person, that should be all the more reason why it can't work for 200 million people in an industralized society.

1969 FREEDOM IS RESPONSIBILITY 527 Positive vs. Negative Aspects of Freedom The philosophy expressed by the president inaugurated in 1969 might be distinguished from that of the president of twenty-eight years earlier by saying it is just a difference in prepositions. Presi dent Nixon said the essence of freedom is that each of us shares in tl).e shaping of his own destiny. Expressed in a slightly different ~ way, that would mean each one is free to participate in shaping his own destiny. Each one is free to work for himself, to venture into the unknown and the unexplored, and to risk everything on his own personal judgment. But the defi nition offered twenty-eight years earlier was peppered with nega tive prepositions. It was freedom from fear and freedom from want. Can it be truthfully said that the current crop of "beatniks," "hip pies," and similar characters is anything other than a generation that has grown up taking the four freedoms seriously? They are cry ing for freedom from all responsi bility, freedom from all restraint.

Either their cry must be heard or the philosophy on which it is based must be repudiated. In a free society men must be free to embark upon their own ventures, free to start new enter prises and search for better ways of doing things. Each one must be free to seek his own goals, not just accept what his government either forces or permits. Wherever that kind of positive freedom has been permitted to flourish the economic well-being of all people, especially those at the lower end of the scale, has always moved steadily upward; and wherever positive freedom has been curtailed, the reverse has been true. That is the kind of freedom that enabled this tract of land known as the United States to emerge from a wilder ness to the wealthiest nation on earth within a very few years. And let no one assert that the wealth of the United States is more the result of her natural resources than it is of her love of freedom. Any such assertion would display a total ignorance of both history and geography and would leave unanswered the question why a similar development has not been observed in South Amer ica, Africa, or India.

Two specific incidents, one from early America and one from modern America, will suffice to illustrate the operation of posi tive freedom in the economic realm. The settlers at Jamestown soon discovered that the gold they thought was there was not to be found and that the corn they thought would be the great new agricultural crop actually pro duced very little in proportion to 528 THE FREEMAN September the work required to grow it. They turned to tobacco but had difficulty selling it to Europeans. Under these conditions a young man named John Rolfe went to work on the problem. He began with tobacco, the one plant that seemed to grow unusually well in Virginia. The taxpayers didn't provide him with any experiment station nor did he receive any foundation grant. But he went to work on his own responsibility without any assurance that any tming would ever come of his ef forts. Within a short time he developed a tobacco plant of a lighter color and a finer texture which was found more palatable to Europeans. Within a short time they were· buying all the tobacco the settlers of Virginia could pro duce and were demanding more.

Hundreds and even thousands were soon employed in a new industry and some were getting rich. A battle in the continuing war on poverty had been won. And such battles will continue to be won as long as men are left free to fight them. And no battle will even be undertaken when man's freedom to shape his own destiny, that is, respon,sibility for his own destiny, is withheld. Anyone who thinks experiences comparable to that of John Rolfe are necessarily confin~d to a by gone age and therefore-unworkable in the more complex economy of the present might consider the story of a man who will be called Joe. (The name is fictitious but the rest of the story is authentic.) According to reports in the public press, Joe, his wife, and his four children moved into a $15-a month, two-room shack in 1952. , With $600 as his total assets he began experimenting in urapi um mining. By 1957 Joe and his wife were living in a large mansion where they were throwing parties with guest lists running upwards of 5,000 names per party. Then by 1969 Joe was on the verge of bankruptcy. But Joe vows he will payout and that he will again be throwing million-dollar parties.

Whether or not he actually achieves his present goal is still uncertain. But whether he suc ceeds or fails his experience il lustrates the story of freedom everywhere in every age. If risks are taken some must fail. If no risk is taken all must remain in poverty. And whatever the out come in Joe's present struggle to regain a vanishing fortune, Joe will have experienced the romance and tragedy of being a free man, of making his own choice as to the enterprise he will pursue and the manner in which he will pursue it, and of living by the choices made.· No government can give a citizen more. ~ ts of Equality EDMUND A. OPITZ THE GREAT political battles of the modern world have been fought around certain key words, one of which is Equality. The watch words of the French Revolution, you recall, were "Liberty, Equal ity, Fraternity." Talleyrand got fed up with this slogan and once remarked that he'd heard so much talk about fraternity that if he had a brother he'd call him cousin!

There's a sound reason for Talleyrand's advers·e reaction to the idea of brotherhood. The hu man capacity for affection is lim ited and it is selective. The de mand for unlimited brotherliness puts human nature under a strain; it generates a backlash in the form of the either/or mood of the revolutionary who puts a gun to The Reverend Edmund A. Opitz is a member of the staff of the Foundation for Economic Education, Book Review Editor -of THE FREE MAN, lecturer, and seminar discussion leader. your head and says: "Be my brother, or I'll kill you!" Sane so cial living forbids murder; it strives after justice; and it re serves brotherliness and love for family and friends. Real friendship, even within a limited circle, is a genuine achieve ment: Recall the words of La Bruyere, writing in the middle of the seventeenth century: "Some ask why mankind in general do not compose one nation, and are not contented to speak one lan guage, to Iive under the same laws and agree among themselves to have the same customs and the same worship; whilst I, seeing how contrary are their minds, their tastes and their sentiments, wonder to see even seven or eight persons Iiving within the same walls under the same roof and making a single family."

We don't have the word Fra529 530 THE FREEMAN September ternity in our political heritage, but the idea of Equality occupies a prominent spot. Our Declaration of Independence reads: "We hold these truths to be self-evident, that all men are created equal." Note well that the men who pre pared this document did not say that "all men are equal"; they did not say that all men are "born equal" - both propositions being obviously untrue. They said "cre ated equal." Now, the created part of a man is his soul or mind. Man's body is compounded of the same chemical and physical elements which go into the make-up of the earth and its creatures, but there is a men tal and spiritual essence in man which sets him apart from nature - his soul or psyche. It is an arti cle of faith in our religious tradi tion that the soul of each person is precious in God's sight what ever the individual's outer cir cumstances; and equality before the law is implicit in this premise - the idea of one law alike for all men because all men are one in their essential humanness.

But right here the likeness ends; human beings are different and unequal in every other way. They are alike in one respect only; they are equal before the law. Equality before the law is the same thing as political liberty viewed from a different perspective; it is also justice - a regime under which no man and no order of men is granted a political li cense issued by the state to use other men as their tools or have any other legal advantage over them. Given such a framework in a society, the economic order will automatically be free market, or capitalism. We are speaking now of the idea of equality in a politi cal context. Later I shall deal with the opposing concept of economic equality, which is incompatible with limited government and the free market. Equal Justice Before the Law Political equality is the system of liberty, and its leading features are set forth in Jefferson's First Ina ugural Address: "Equal and exact justice to all men, of what ever state or persuasion, religious or political; peace, commerce, and honest friendship with all nations - entangling alliances with none .... freedom of religion; freedom of the press; freedom of person under the protection of the habeas corpus;" and so on.

The idea of political equality equal justice before the law - is a relatively new one. It did not exist in the ancient world. Aristotle opened his famous work entitled Politics with an attempted justifi cation of slavery, concluding his argument with these words: "It is 1969 TWO CONCEPTS OF EQUALITY 531 clear, then, that some men are by nature free, and others slaves, and that for these latter slavery is both expedient and right." Plato wished to see society con structed like a pyramid. A few men at the top wielding unlimited power; then descending levels of power - the men on each level being bossed by those above and bossing, in turn, those below. On the bottom are the slaves, who outnumber all the rest of society. Plato knows that those in the lower ranks will be discontented with their subservient position, so he proposes to condition them with a. "noble lie," as he calls it. "While all of you in the city are brothers, we will say in our tale, yet God in fashioning those of you who are fitted to hold rule mingled gold in their generation, . . . but in the helpers silver, and iron and brass in the farmers and other craftsmen." Fraudulent theories of this sort are invented by men who suspect gold in their own make-up!

Hinduism provides a contem porary example, of a system of privilege. The highest caste in Indian society is the Brahmin caste; the lowest caste is the Sudra. In between are the Kshat riya and Vaisya castes - warriors and merchants, respectively; out side the caste system altogether are the Untouchables. Men are born into a given caste, and that is where they stay; that's where their ancestors were, and that's where their descendants will be. There is no ladder leading from one level in this society to any of the others. Hinduism justifies these divisions between men by the doctrine of reincarnation, ar guing that some are suffering now for misdemeanors committed dur ing a previous existence, while others are being rewarded now for earlier virtue. This outlook breeds fatalism and social stagnation. The eminent Hindu philosopher and statesman, S. Radhakrishnan, defends the caste system. He lik ens society to a lamp and says, "When the wick is aglow at the tip the whole lamp is said to be burning."

Our Western Heritage Politics rests upon certain as sumptions in metaphysics, and we make different metaphysical as sumptions than do the Greeks and Hindus. In other words, we have a different religious heritage. Our religious values come from the Bible. Christianity was introduced into the ancient world, and it has had important political conse quences. We take personal liberty for granted and regard slavery as artificial because of nineteen cen turies of emphasis on the worth of the individual soul. The soul of 532 THE FREEMAN September man was a battleground on which were thrashed out the issues of good and evil. The individual was held responsible for the proper ordering of his soul; that is, he had the gift of free will. His sal vation was neither automatic nor guaranteed; it hinged on a series of voluntary decisions, choices freely made. It takes a while, centuries some times, for a new idea about man to seep into the habits, laws, and institutions of a people and shape their culture. It was not until the eighteenth century that Adam Smith came along and spelled out a system of e~onomics premised on the freely choosing man. Smith referred to his system as "the liberal plan of equality, liberty, and justice." The European so ciety of Smith's day was, by con trast, a system of privilege; it was an aristocratic order.

Control by Conquest England's aristocratic order did not arise by accident, but through conquest; it may be traced back to the Battle of Hast ings in 1066 and the Norman in vasion. William of Normandy had a claim, of sorts, to the English throne, a claim which he validated by conquering the island. Having established his overlordship of' England he parceled out pieces of the island to his followers as payment for their services. In the words of historian Arthur Bryant, "William the Conqueror kept a fifth of the land for himself and gave one-quarter to the Church. The remainder, save for an insig nificant fraction, was given to 170 Norman and ·French followers nearly half to ten men."! This redistribution of England's territory was, of course, at the ex pense of the Anglo-Saxon resi dents who were displaced to make room for the new owners. The new owners of England from William on down were the ruiers of Eng land; ownership was the comple ment of their rulership, and the wealth they accumulated sprang from their power and their feudal holdings. That is to say, they did not obtain wealth by satisfying consumer demand. Under the sys tem of liberty where the economic arrangements are free market or capitalistic, the only way to make money is to please the customers.

Under any alternative system, you make money by pleasing the poli ticians, those who hold power. Either that, or you wield power yourself. This was a fine system - from the Norman viewpoint; but the Anglo-Saxon reduced to serfdom viewed the matter quite differ ently. It was obvious to the serf 1 Story of England, Arthur Bryant, Vol. I, p. 164.

1969 TWO CONCEPTS OF EQUALITY 533 and the peasant that the reason why they had so little land was because the Normans had so much; and, because wealth flowed from holdings of land, the Anglo Saxons reasoned correctly that they were poor because the N01" mans were rich! It is always so under a system of privilege, where those who wield the political power use that power to enrich them selves at the expense of other peo ple. It makes little difference whether the outward trappings are monarchical, or democratic, or bear the earmarks of Orwell's 1984; in a system of privilege, political power is a means of ob taining economic advantage. Keeping the Peace When our forebears wrote that "all men are created equal," they threw down a challenge to the system of privilege. They believed that government should keep the peace - as peacekeeping is spelled out in the old-fashioned Whig Classical Liberal tradition. This preserves a free field and no fa VOl"

- which is the meaning of laissez faire - within which peaceful eco nomic competition will occur. The term "laissez faire" never meant the absence of rules; it didn't im ply a free-for-all. The term comes originally out of chivalry and was used on the j ousting field to signal the beginning of a match. Two armored knights got ready to ride at each other and the cry of "laissez faire" meant, in effect, "You boys know the rules; may the best man win." Government, under laissez faire, does not in tervene positively to manage the affairs of men; it merely acts to deter and redress inj ury - as in jury is spelled out in the laws. This is the system of liberty championed by present-day liber tarians and conservatives. Adam Smith's "liberal plan of equality, liberty, and justice" was never practiced fully in any na tion, but what was the ~esult of a partial application of the ideas of The Wealth of Nations? The results of abolishing political pri vilege in Europe and starting to organize a no-privilege society with political liberty and a market economy were so beneficial that even the enemies of liberty pause to pay tribute.

R. H. Tawney, one of the most gifted of the English Fabians, was an ardent socialist and egalitar ian. His most famous work is Religion and the Rise of Capital ism, but in 1931 he wrote a book entitled Equality, arguing, in effect, that no one should have two cars so long as any man was un able to afford even one. He wished to take from those who have and give to those who have not, in or der to achieve economic equality.

534 THE FREEMAN September But he acknowledged that there was an earlier idea of equality equal treatment under the law. Here is what Tawney writes about the beneficial results of the move ment toward political liberty and the free economy in the early dec ades of the nineteenth century, the movement known as Classical Liberalism: Few principles have so splendid a record of humanitarian achievement. ... Slavery and serfdom had survived the exhortations of the Christian Church, the reforms of enlightened despots, and the protests of humani tarian philosophers from Seneca to Voltaire. Before the new spirit, and the practical exigencies of which it was the expression, they disappeared, except from dark backwaters, in three generations .... It turned (the peasant) from a beast of burden into a human being. It determined that, when science should be invoked to in crease the output of the soil, its culti vator, not an absentee owner, should reap the fruits. The principle which released him he described as equality, the destruction of privilege. 2 All these good things were a result of the effort which began two centuries ago to put the sys tem of liberty - equal rights be fore the law - into practice. But, of course, when men are free polit ically, there will be economic in equalities. There will continue to 2 Equality, R. H. Tawney, pp. 120-121.

be rich and poor, as there have been wealth differentials in every society since history began, but now there's this difference: the wealthy will be chosen by the daily balloting of their peers in the mar ket place; and the wealthy won't necessarily be the powerful, nor will the poor necessarily be the weak. Variation Among Men Variation is a fact of life; in dividuals differ from one another. Some are tall and some are short; some are swift and some are slow; some are bright and others are not so bright. The talents of some lie along musical lines, others are athletes, a few are mathematical wizards. Some people in every age are highly endowed with a. knack for making money, and in every age some people have more worldly goods than others. Rich and poor are relative terms, but every so ciety reveals a population distribu tion ranging from opulence to in digence. This occurs under mon archies and in primitive tribes which measure a man's wealth by cattle and wives; it occurs in com munist states where, as Milovan Djilas pointed out in a famous book, a "new class" emerges out of the classless society, and the "new class" enjoys privileges de nied the masses.

Under the system of liberty, the 1969 TWO CONCEPTS OF EQUALITY 535 free market will reward men in differing degrees so that some men will make a great deal of money while others have to get by on a very modest income. But un der the system of liherty even those in the lower income brackets enjoy a relatively high standard of living; and, furthermore, the practice of the Rule of Law guar antees that there'll be no persecu tion for deviant intellectual and religious beliefs. The government does not try to manage the econ omy or control the lives of the citi zens; it keeps out of people's way, unless injury is committed. Differentials in wealth charac terize every possible kind of so ciety. This is a fact of life; this is the way things are. This varia tion in human beings is beyond the power of the human will to alter; nor if we understood the issue would we will it otherwise even if that were within our power. Economic equality is not an intelligible concept.

Serving Consumers But while economic equality is a chimera, political equality is not. We can will political equality, and our f orehears in the Classical Liberal tradition did will political equality with the happy results al ready noted. Under conditions of political equality, which is the sys tem of liberty, a man's income depends upon his success at pleasing consumers - at which game some people are much more successful than others. A certain American entertainer made eight million dollars last year for gyrating and howling in public places. He didn't get any of my money, and except for the fact that I believe in liberty, I would have paid a substantial sum to keep him permanently tranquil ized! On a somewhat higher level, there are talented people who are sensitive to consumer demand, and so they produce the kind of goods or render the kind of serv ices that people will be able and willing to buy. In the free mar ket, goods and services exchange only for goods and services.

Everybody is a producer and comes into the market as a buyer with the purchasing power he has obtained from the prior sale of his own services. In short, the route to economic success is to please the customer. Under every other system the route to economic success is to please the politicians in power or to gain power yourself. This is the system of privilege, enthroned in most nations today and under some form of which most people in the past have lived. The Lib eral Era, mainly the nineteenth century, constitutes the only breakaway; our own country's 536 THE FREEMAN September past affords the best example of the great multiplication of wealth which results from the release of individual human creativity under the system of liberty. The Nature of Political Power I've used the term "power". sev eral times, so let's note that the word "power" in this context re fers to government. There's only one genuine power structure in a given society, and that is the gov ernment. Government possesses a unique, one-of-a-kind type of power, and unless the government deputizes or licenses some other person or agency no one in a given society may exercise the kind of power which government alone wields. We employ meta phors when we speak of buying power or economic power. Govern ment is the power structure. Only government can mobilize the police, the armies, the navies; only government can draft a young man to serve in Vietnam; only government can tax, and so on.

The largest corporation in the land cannot force me to buy one of its products or work for it; I can ignore General Motors, but no one who chooses to live within these fifty states can ignore the real power structure - which is the political agency, government. Under a monarchy, economic ad vancement is obtained by pleasing the king or the queen. Royal fa vorites lived well while enjoying the friendship of the ruler, but when they fell out of favor they sometimes lost their heads. The mass of people lived in what we would think of as poverty, and typically they lacked the guaran tees of intellectual, religious, and civil liberties that we take for granted. Moreover, the entire na tion from top to bottom lived quietly with the idea of economic stagnation; no one thought in terms of a progressive increase of the stock of goods so that every one would move gradually up the economic ladder - they thought in terms merely of redistributing the existing stock of wealth. Noone thought of increasing the size of the pie; the idea was to obtain a bigger slice for one's self -either by seizing it in a direct power grab, or as largesse by being a friend of the powerful. A similar sentiment - anti-economic in na ture - prevails today.

The big domestic political issue is poverty. The nation has been geared to welfare measures ever since the New Deal, a generation ago; then in 1964 Congress opened the Office of Economic Opportun ity and decla,red war on poverty. Indigence may be measured in various ways, but whatever else it is, indigence is a lack. A person who is poor would be better off if 1969 TWO CONCEPTS OF EQUALITY 537 he owned a larger and finer house, had several extra suits and sport jackets in his closet, enjoyed tas tier and more nourishing food plus an occasional drink. After improving the situation at the level of necessities he'd move ahead to the amenities - to recre ation, a second car, air condition ing, and so on. Poverty Overcome by Production The point to note is that people move· out of poverty only as they command more of the things which are manufactured, grown, or otherwise produced. Poverty is overcome by production, and in no other way. If you are seriously concerned with the alleviation of poverty your concern for in creased production must be equal ly serious. This is simple logic.

But look around us in this great land today and try to find some one for whom increased produc tivity is a major goal. There are some able production men in in dustry, but most established busi nesses have learned to live com fortably with restrictive legisla tion, government contracts, the foreign aid program and our inter national commitments. The com petitive instinct burns low, and the entrepreneur who is willing to submit to the uncertainties of the market is a rare bird. And then there are the farmers. Agricultural production has taken a great leap forward in recent years, but no thanks to those farmers who latch onto the government's farm program and accept pay ment for keeping land and equip ment idle. Union leaders claim to work for the betterment of the membership, but no one has ever accused unions of a burning de sire to be more prod ucti ve on the job. Politicians are not interested in increased industrial production.

As a matter of fact, it might be said that the national government is continually - by its interven tions - manufacturing poverty, and the whole country lives at a level lower than natural ,economic necessity would dictate. An overall increase in the out put of goods and services is the only way to upgrade the general welfare, but there is no clamor on behalf of increased productivity only an occasional murmur. The clamor is for redistribution, for political interventions which ex act tribute from the haves and bestow largesse on the have nots. Present day politics is based on the redistributionist principle: taxes for all, subsidies for the few. Its alleged purpose is to elevate the low income groups by depress ing the wealthy. President John son, addressing Congress in J an uary 1964, phrased it thus: "We are going to try to take all of the 538 THE FREEMAN September money that we think is unneces sarily being spent and take it from the 'haves' and give it to the 'have nots' that need it so much."

Several years earlier a. theo logian of considerable reputation, Nels Ferre, expressed similar sen timents, but gave them a. religious flavor: "All property is God's for the common good. It belongs therefore, first of all to God and then equally to society and the individual. When the individual has what the society needs and can profitably use, it is not his, but belongs to society, by divine right."3 The Role of the Market The rage for redistribution is upon us, and we might multiply statements similar to the ones I have quoted from Mr. Johnson and Dr. Ferre. Those who es pouse this viewpoint hold the ut terly mistaken notion that the dis tribution of rewards in a. free market society, or capitalism, is analogous to the parceling out of loot to members of a robber gang, or the division of spoils after a pirate expedition. Actually, these things are as unlike as night and day; there is no comparison between them. In the free econ omy, a man is rewarded to the degree that he pleases consumers.

Now, the market is not a magic 3 Christianity and Society, p. 226. instrumentality which comes up automatically with the right an swer for every sort of question. The market is a sort of popularity contest; it tells us what people like; it's an index of their prefer ences. The market provides a very valuable piece of information, but it's not the whole story. It's im portant for a shoe manufacturer to project an accurate guess as to whether women next season will prefer chunkies to wedgies; but a similar fingering of the popular pulse is out of keeping in the in tellectual and moral realms - un less one is a liberal intellectual! I refer to the proclivity of the current crop of opinion molders to ask: "What's going to be the fashion in ideas this season?" One glaring example of this-a former professor of mine was a leading clerical spokesman for involving the United States in World War II; now he's a. co-chairman of SANE. This man has a good market in the intellectual realm, but of course he opposes the market in the economic realm.

The market is the only device available for serving our creatur al needs while conserving scarce resources; but the market is no gauge of the truth or falsity of an idea. The market measures the popularity of an idea, but not its truth. Mises and Hayek are better economists than Samuelson and 1969 TWO CONCEPTS OF EQUALITY 539 Galbraith but the market for the services of the latter pair is enor mously greater than the popular demand for Mises and Hayek. Likewise in aesthetic questions. An entertainer's popularity is no index of his musicianship, and a best selling novel may fall far short of the category of literature. The market is simply a mirror of popular preferences and public taste; but if we don't like what the mirror reveals, we won't im prove the situation by throwing rocks at the mirror! There is much more to life than pleasing the cus tomer, but if the integrity of the market is not respected cons umer choice is impaired and some peo ple are given a license to foist their values on others. Permit this kind of poison to infect economic relationships and our ability to resist it elsewhere is seriously weakened.

We throw rocks at the mirror whenever we undertake programs of social leveling, aimed at eco nomic equality. The government promises to aid the poor by redis tributing the wealth. This is a power play, and it is the poor generally the weakest members of society - who are hurt first and most in any power struggle. Fur thermore, economic inequalities cannot be overcome by coercive redistribution without establish ing political inequalities. Every form of political redistributionism widens power differentials in so ciety; officeholders have more power, citizens have less; political contests become more intense, be cause control and dispersal of great wealth is at stake. Every alternative to the market economy - call it socialism or communism or fascism or what ever - concentrates power over the lives and livelihood of the many in the hands of a few. The principle of equality before the law is dis carded - the Rule of Law is in compatible with any form of the planned economy - and, as in the George Orwell satire, some men become more equal than others.

We head back toward the Old Regime - the system of privilege. Every state tends to create the means of its own support - com prising citizens and pressure groups who realize their depend ence on the state for such eco nomic advantages as they enjoy. The court at Versailles was the symbol of this under the Old Regime; the symbol in our time is a deep freeze, a vicuna coat, a television set, the relief racket, a lush government contract, farm subsidies, predatory labor unions, or what have you. Human beings are imperfect now and forever, and the societies we form exhibit all the imperfec tions individuals display and more 540 THE FREEMAN September besides. There·'s no way to achieve utopia; heaven on earth is an im possible dream. But human beings will do better under the system of liberty than under any other social arrangement. In the ninteenth century, as Tawney pointed out, the abolition of privilege got rid of slavery and serfdom; it turned the peasant into a human being. Furthermore, this was a comparatively peaceful century - between the Congress of Vienna and the First World War.

Real wages doubled, redoubled, and doubled again. Diseases were diminished and people lived long er; illiteracy almost disappeared, and people were freer in their daily lives than ever before. Things were far from perfect, but they were more than tolerable - until a few people got the idea that human affairs could be per fected if the lives of all men were put under political direction and control. This would create a vast power structure on top of so ciety; but the fear of power was overcome by the thought that power, this time, was democratic and majoritarian in nature, and thus benign. The tragic fallacy here is that power obeys the laws of its nature, no matter what the sanction. Political power is invari ably coercive, and if used wrongly destroys what it is set up to secure. Fans of Lewis Carroll will re member his poem, "The Hunting of the Snark." Every time' the hunters closed in on their quarry the snark turned out to be a boojum. Every time a determined group of people have concentrated power in a central government to carry out their program, the pow er they have set up gets out of hand. The classic example of this is the French Revolution, which turned and devoured those who had started it.

It is not so much that power corrupts, as that power obeys its own laws. Our forebears in the old-fashioned Whig-Classical Lib eral tradition were aware of this, so they sought to disperse and contain power. They chose politi cal liberty, in full awareness that in a free society the natural dif ferences among human beings would show up in various ways; some would be better off than others, but there would be no political inequality. The alternative to the free economy is a servile state in which a ruling class enforces an equality of poverty on the masses. To embark on a· program of economic leveling is like. trying to repeal the law of gravity; it'll never work, and trying to make it work defeats our efforts to attain rea sonable goals. ~ On Econolllic Rights DAVID KELLEY THE MODERN LIBERAL has tried to assume the mantle of liberty's de fender as worn by the liberal of the nineteenth century. Though thirty years of his "social experiments,"

and volumes of theory, have shown that he does not fit the role, his self-image has hardly changed. And most persistent of all, per haps, is his incongruous claim that he is defending man's rights. The basis of that claim is the theory of "economic rights," which is founded in society's alleged duty to provide all its members with certain "necessities." These claims of the individual against society, however, cannot be called "rights." Consider, for example, the follow ingassertion of an economic right: Everyone. has the right to educa tion. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory.! Such statements are little more than obfuscation; if left unques tioned, they wouJd destroy the meaning of "right," and attach the libertarian connotations of the word to statist programs of com pulsion. Let us see why. It has often been observed that rights are closely connected with duties, that your rights impose obligations on me and the protec tion of your rights requires re strictions on my freedom to act.

This is true so far; the possession of rights would be meaningless if no one were obliged to observe them. But what sort of obligation is involved? In the answer to this question lies the difference be tween natural rights and the libMr. Kelley is majoring in philosophy as a 1 U.N. Declaration of Human Rights, student at Brown University. Article 26, sec. 1. 541 542 THE FREEMAN September erals' "economic rights."2 A man's natural rights entail only a nega tive obligation for other men - the obligation not to use force against him. "Economic rights," on the other hand, impose positive obli gations, which in fact violate nat ural rights. Natural Rights and Responsibilities One of the sources for the theory of natural rights is John Locke's Second Treatise on Civil Govern'ment. Man in the state of nature - that is, man by his own nature - possesses rights to life, liberty, and property. These are all expressions of man's freedom from other men. But what about duties; what does man owe to other men? Only the recognition of their rights.

The state of nature has a law of nature to govern it, which obliges everyone; and reason, which is that law, teaches all mankind who will but consult it, that, being all equal and independent, no one ought to harm another in his life, health, liberty, or possessions. 3 2 In fact, there is one eco'nomic right: the natural right to acquire and dispose of property through free trade. I shall use the phrase "economic right," how ever, to refer to things like welfare, housing, and education, assuming for the sake of argument that they are rights. 3 Second Treatise, sec. 6. This is the negative obligation not to use force against other men; there is no positive obligation that is natural, as rights are. Thomas Jefferson held a similar theory. The rights to "life, liberty, and the pursuit of happiness" establish man's independence from other men; they do not, however, entail any positive duties of men toward one another. "From the point of vievl of the community, 'rights' have a negative implica tion. . . . His 'natural rights' theory of government left all men naturally free from duties to their neighbors."o!

It is not difficult to show why these rights do not imply positive duties. Natural rights are all rights to actions. The right to life is not the right to have one's life assured; it is, rather, the right to livee It is the right to take the ac tions one considers necessary to secure his life and happiness. The right to life does not, however, guarantee the success of any ac tions - only the freedom to act. The other natural rights apply to specific areas of freedom. The right to property is the right to own, to use and control, the things one has earned, but it applies only after one has earned them. Whether or not one will earn them 4 Daniel J. Boorstin, The Lost World of Thomas Jefferson (New York: Henry Holt & Co., 1948), p. 195-6.

1969 ON ECONOMIC RIGHTS 543 is another matter - not a question of rights. Rights protect actions, but they cannot guarantee the suc cess of those actions; they protect men from each other, but not from reality and the fact that only by certain actions can they achieve their purposes. Human Relations and Economic Rights One of the areas in which rights protect man's freedom of action is that of hunlan relations. A right to action is a right to act on one's judgment, including his judgment of other men. One is thus free to choose with whom he will associ ate. Other people, however, also have rights and the freedom to choose, which one is obliged to re spect. In any association of men, therefore, the free consent of all involved is a moral prerequisite. A duty asserts a moral relation between two or more men. Accord ing to the libertarian argument, therefore, obligations other than to abstain from the use of force can only be incurred by some pre vious, freely chosen act, such as signing a contract. Any obliga tion not incurred in this way would be an infringement on my moral freedom to act as I. choose, and thus an infringement on my natural rights.

An examination of "economic rights" will show that they do imply positive obligations which are incompatible with liberty. A man has the right, according to the U.N. Declaration, to a job (Art. 23), leisure (Art. 24), an adequate standard of living, food, clothing, shelter, and security (Art. 25), and education (Art. 26). All of these are, in one form or another, rights to things, to economic goods. The difference here between natural and "economic rights" is evident. Natural rights are rights to these things if one earns them, if one obtains them in mutually voluntary trade with others. "Eco nomic rights," however, attach no such condition to the right; a per son has a "right" to have these goods, regardless of how they are to be obtained. Thus, while natural rights guarantee men the freedom to act, though not guaranteeing the success of their actions, "eco nomic rights" guarantee men things produced by the successful actions of others.

The value of economic goods is largely a reflection of the fact that human labor is required for their production. A "right" to aneco nomic good, then, includes a "right" to the human labor in volved, that labor which was suc cessful in producing the good. These "rights" obviously impose positive obligations on at least some men; if someone else has a right to something that I produce; 544 THE FREEMAN September then I am obliged to produce it for him. Natural rights only require that men abstain from certain kinds of action, but say nothing further about how they should act. "Eco nomic rights," on the other hand, require positive actions from men beca use they specify the goals and beneficiaries for which they should act. They specify certain products which must be produced, and the methods by which these products are to be distributed. If people have a right to food, clothing, and wealth enough for leisure, these things must be produced; if every one has a right to them, they must be distributed so that everyone has them. To require that certain things be produced is to require that men produce them, that is, that men act in certain ways, for certain goals. To· require that goods be distributed in any way other than by the prior voluntary agreement of the producers is to require that some men act for other men, not as a gift, not out of benevolence, but as a legally en forceable duty.

Imposing on Others No theory that imposes upon men unchosen duties - which are in no way incurred by their exer cise of natural rights - can claim to protect political freedom. If the government tries to protect economic rights, it necessarily vio lates natural ones. Is there, however, another "di mension of freedom," economic freedom? The concept of "free dom" can only be applied where the potential "oppressor" is not completely determined in hi~ (or its) actions; that is, one can only be free from men. "Economic freedom," however, as liberals use the term, means exemption from certain economic laws. To be free from these, one would have to be free from their conditions. One condition is the nature of reality. Man has certain needs that must be satisfied by recourse to the ex ternal world. But if he acts to gain things from nature, he is subject to her laws: "Nature, to be commanded, must be obeyed."

IVlan must discover what will sat isfy his needs, how to obtain it, and then act to gain it. Nothing guarantees success at any of these steps, and poverty or disease or ignorance is the penalty imposed on the unsuccessful. Noone can be free from this; one cannot legis late a change in reality. One can only substitute the work of some one else for his own, and in doing so, he is not free from the require ments of reality; he has only found a new way of meeting them. The other condition against which "economic. rights" protect is the exercise of free choice by 1969 ON ECONOMIC RIGHTS 545 other men. Thus, in a free society, if a man wants a job, the employer must be willing to hire him; if he wants to buy a product, the pro ducer must be willing to sell it to him. To be free from this condi tion, one must be free from indi vidual choice, which means: free from freedom, which is meaning less. The obligations which "eco nomic rights" impose restrict one's moral and political freedom with out in any way producing a coun terbalancing increase in freedom.

Those "rights" have additional antiliberal implications. An obli gation to observe the "economic rights" of other people easily be comes a· duty to the state, for it is only through the state's programs that such "rights" can be ob served. It is only the state, more over, which can decide what "economic rights" there are, and who has them, for those "rights" de pend on what the economy can afford, and, as a result, are con stantly changing. Since "economic rights" infringe upon political freedom, to recognize them is to recognize. the right of the state to decide how much freedom it is go ing to allow, and how much it will destroy, whether that decision is made by a dictator, or by pressure groups, or by majority vote. The doctrine of "economic rights" thus provides an excuse for statists to destroy the consti tutional system of freedom which is based on natural, inalienable rights. That doctrine is therefore a moral and intellectual fraud the state-conferred benefits to which it refers cannot be called rights. ~ IDEAS ON LIBERTY Economics in One Lesson THE LONG-RUN CONSEQUENCES of some economic policies may become evident in a few months. Others may not become evident for several years. Still others may not become evident for decades. But in every case those long-run consequences are contained in the policy as surely as the hen was in the egg, the flower in the seed.

From this aspect, therefore, the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy,. it consists in tracing the consequences of that policy not merely for one group but for all groups. HENRY HAZLITT EDUCATION IN AMERICA GEORGE CHARLES ROCHE III 12. Philosophyof Growth IN THIS EXAMINATION of educa tion in America, we find substan tial gaps between the ideal we envision and the reality we face. Closing those gaps by construct ing a comprehensive educational "system" seems unrealistic, not only because it is difficult to focus any system upon the individual, but also because society rejects any such attempt. We must re member, however, that the process of education is epitomized by ceaseless questioning, even when the answers seem difficult or dis tant. In the best sense of educaDr. Roche is Director of Seminars for the Foundation for Economic Education. He has taught history and philosophy in college and maintains a special interest in American edu cation.

546 tion, each of us must ask, and finally answer, his own questions. Ethical considerations, in the final analysis, are matters of individual conscience. Unless each of us is free to ask and answer the proper questions, matters of ethical im port can hardly be considered, much less decided. Furthermore, none of us can accurately gauge the mind of an other. Those with least apparent promise often come forth with astounding creativity. Education must offer challenge and variety to awaken the individual con science and draw forth unique qualities and capacities. Looking for the b~st in others and allow ing their free development, letting 1969 A PHILOSOPHY OF GROWTH 547 people be themselves, affords each the opportunity to achieve his own potential. Such a view of educa tion implies no "system," no "es tablishment," in the usual sense. The central fact of our present educational structure is its failure to allow for individuality. In creasingly institutionalized educa tion emphasizes the collectivity over the individual, denies the significance of religious sanction in the lives of men, insists upon relativity as the highest standard of morality. The result has been a lowering of standards and an erosion of the dignity and worth of the individual-the very anti thesis of genuine education.

The Aim of Education The task of the educator is primarily that of liberation. The individual needs to be freed from his 'limitations in order to de velop his potentialities and be come a better man than he would otherwise have been. This is the most radical presumption of all. If we assume that the individual can develop his uniquepotentiali ties only in freedom, implicit in that assumption is that different people have different capacities 'and varying rates of progress. Thus, genuine education implies discrimination and difference' as distinguished from the dead level of equality. Once this individual quality of education is understood, it be comes apparent that "social util ity" is not an appropriate measure of the student's achievement. Re spect for the individual requires that his education be measured in terms of his growth, his becoming. The object and the measure of genuine education remains the in dividual. Development of individ ual personality, not social con formity, should be education's concern. Education is the process by which the individual gains pos session of his soul and becomes a human being fully responsive' to his capacities.

In a practical sense, genuine education trains students to think for themselves. Mere indoctrina tion will not suffice: Cannot we let people be themselves, and enjoy life in their own way? You are trying to make that man another you. One's enough.! If education is to provide the opportunity for the full develop ment of personality and independ ent thought, it must also provide a frame of reference giving mean ing to that independence. Rever ence for truth is quite as impor tant as development of personal uniqueness. Thoreau's remark that "in the long run men hit only 1 Emerson: A Modern Anthology, ed. by Alfred Kazin and Daniel Aaron, p. 363.

548 THE FREEMAN September what they aim at," should serve to remind us that education must also give status and direction to man's moral existence, convincing the individual that man is more than merely animal and therefore possesses correspondingly higher obligations and aspirations. We may now define in a more pre cise manner the aim of education. It is to guide man in the evolving dyna mism through which he shapes him self as a human person - armed with knowledge, strength of judgment, and moral virtues - while at the same time conveying to him the spiritual heritage of the nation and the. civili zation in which he is involved, and preserving in this way the century old achievements of generations. 2 Who Is the Educator? Eme'rson once critized the uto pian quality of his own work, say ing, "I found when I had finished my new lecture that it was a very good house, only the architect had unfortunately omitted the stairs."

Such a demanding view of educa tion as outlined in these pages runs the risk of being a "house without stairs." Especially in view of the present institutional struc ture, what educator can perform such a. demanding task? Fortunately, we need not wait for institutional reform if we wish substantially to improve the 2 Jacques Maritain, Education at the Crossroads, p. 10. education of our young. Not all education occurs in the school. Ed ucation, like charity, hegins at home. If the task of reforming a giant educational structure serv ing millions of children seems too large, could each of us at least as sume responsibility for the proper mental and moral development of a single child? The individual need not feel impotent when he has be~ fore him a task on a scale which he can comprehend as an individ ual, especially when that task is the development of human person ality, surely the single most im portant undertaking in the world.

There is one catch: If the effort is to have the chance to succeed, the individual educator of the in dividual child must want to meet the challenge. ... people, I am certain, greatly un derestimate the power of men to achieve their real choices. But the choices must be real and primary, not secondary ones. Men will often say that they want such and such a thing, and true, they do want such and such a thing, but it turns out that they want something else more. It is what they want. most that they will be most active, ingenious, imaginative, and tireless in seeking. When a person decides that he really wants some thing, he finds he can surpass him self; he can change circumstances and attain to a goal that in his duller hours seemed unattainable. As an old teacher of mine used to say, "When 1969 A PHILOSOPHY OF GROWTH 549 you have done your utmost, something will he given to you." But first must come the honest desire. 3 Parents Unfortunately, many parents have been unwilling to assume primary responsibility for their offspring. It is true that the mod ern school has tended to assume functions for which it was ill suited, thus becoming a poor sub stitute for the parent, but the primary blame must rest with the negligence of many parents.

The selfishness of more and more of our contemporary parents also manifests itself in neglect of chil dren. Parents all too often pity them selves, run away from their plain duty, their chief job, their greatest avenue to the respect of God and of honest men. They place their own wel fare,even their amusements ahead of the well-being of their sons and daughters. They may, and usually do, see that the boys and girls are clothed, fed, washed, have their teeth attended to; but to make pals of them, to live with them, to laugh and cry and work and play with them, lovingly but firmly to discipline them, this takes too much time and effort alto gether. The American parent tends increasingly to pamper himself or herself. In consequence little is taught to the children by precept and less by example. Then the parents dump their progeny at the feet of the school3 Richard Weaver, Life without Prejudice, p. 119. .

master and schoolmistress and say, "Here, we have no time to bring these youngsters up, nor have we any stom ach for the job. You take them over, as totally as possible, and do what we will not do for our own. Train them in character; that is what you get paid for."4 Before we can impart self-dis ciplinH to our children, we must first possess that quality ourselves. We cannot solve the problem of raising children by pretending to make the schools responsible; nor can we solve the problem of ex ercising authority by transferring that authority to the children themselves. Let us have a little severe hard work, good, clean, well-written exer cises, well-pronounced words, well set-down sums: and as far as head work goes, no more .... Let us have a bit of solid, hard, tidy work .... And one must do this to children, not only to love them, but to make them free and proud: If a boy slouches out of a door, throw a book at him, like lightning; don't stand for the degenerate, nervous, twisting, wistful, pathetic centreless children we are cursed with: or the fat and self - satisfied, sheep - in - the - pasture children who are becoming more com mon: or the impudent, I'm-as-good as-anybody smirking children who are far too numerous. 5 4 Bernard Iddings Bell, Crisis in Edu cation, pp. 98-99.

5. G. H. Bantock, Freedom and Author ity in Education, pp. 175, 177.

550 THE FREEMAN September How many parents would face up to such a responsibility in their own home? How many would tol erate, much less encourage, a school operated on such "old-fash ioned" principles? The process of character building is a demand ing, day-by-day job. The job im plies great expectations in the child, plus the parent's willingness to give the sustained time and ef fort to insist that the expectation is fulfilled. Not only must the parent be prepared to give of himself to ac complish the task, but he must be prepared to set the proper exam ple. Does this demand a great deal of each of us? Yes, indeed! And no amount of tax collection and PTA activity can serve as a substitute. Any area of life where we achieve success demands time, energy, patience - expenditure of self. Surely the building of a fam ily and the raising of children can be no exception. It is not enough to know what is right; we must also live that knowledge. "If one's wisdom exceeds one's deeds, the wisdom will not endure." This is a highly individual task, one which cannot be successfully collectivized.

Teachers Does such parental responsibil ity rule out the importance of the teacher? Indeed not. The dedicat ed teacher, who has mastered himself and who would spend his life in helping the young to master their lives, is engaged in one of the highest callings. Without such men and women, the school as an extension of parental responsibil ity would be impossible. In fact, it has been the devotion to duty of many teachers and administra tors which has enabled our educa tional system to keep operating successfully, despite bureaucratic rigidity and parental flight from responsibility. Still, the good teacher is fighting a losing fight unless the home enforces the dis cipline and standards necessary to support the learning experience of the classroom. Ultimately, failures in education rest with the individ ual parents who are willing to ac cept less than the best, and un willing to fulfill their own respon sibilities. Our children finally re ceive an education which is an accurate reflection of the princi ples accepted by adult society.

Public Funding of Education The Bundy Report on urban ed ucation, financed by the Ford Foundation, has described the current educational bureaucracy as "a system already grown rigid in its negative powers," and has warned that power and respon sibility must go hand in hand. This was to have been achieved by the now famous· "decentraliza1969 A PHILOSOPHY OF GROWTH 551 tion." In practical terms, the re sults of decentralization in New York City Public Schools have been a resounding failure. The en tire nation has watched public ed ucation in Ocean Hill-Brownsville literally come to a halt. But this is not the failure of a, genuine at tempt at decentralization. The people have insisted that schools be publicly funded, and yet pre tended that somehow this would not affect the decision-making process in neighborhood schools. Power and responsibility have not been allowed to flow together. The individual parents in Ocean Hill Brownsville should have a say in the education of their children; they also should pay for that ed ucation. So long as they lack that responsibility, it is not surprising that they act irresponsibly.

Across this nation, those par ents who would exercise respon sible choice in the education of their children are penalized for their responsible behavior. Par ents who would place their chil dren in a. private school more responsive to their values and at titudes are advised by the tax collector, "First support the state's educational philosophy; then, if you have any surplus re sources, you may pursue your ed ucational philosophy." Education in America has be come a reflection of the insistence that education be a function of government, cost free to partici pating students, fully financed at taxpayer expense. What originat ed as local schooling, supported by taxation in the immediate com munity (and therefore somewhat responsive to local and parental wishes) has inexorably moved to ward bureaucratic bigness - the fate of all publicly funded proj ects. On the local level, the parent finds the system less and less responsive to his concerns. Mean while, power has tended to gravi tate from the little red school house to the State House and from the State House to Washington.

Control of the purse strings has brought control of education. The remaining private educa tional institutions on all levels face exorbitant costs as they try to compete for scarce educational resources. How are they to attract students and faculty in view of the expensive plants, research fa cilities, salary scales, and subsi dized tuition offered by "public" institutions? Many have suc cumbed to the lure of state and Federal aid, losing self-control in the process. Proposals lor Reliel There have been various propo sals for relief of this bureaucratic congestion, among them the idea of "decentralization." But recent 552 THE FREEMAN September events should make it clear that no genuine decentralization can occur under public funding. The effect of socialized finance in any project, education included, is to ward more centralized control, not less. Another proposal is to allow the individual tax credit for income sp·ent or given for educational pur poses. This, too, might serve as a holding action, though it still fails to deal with the underlying moral issue. Why should the money of one citizen be taken by force to finance the education of other peo ples' children, any more than to finance the building of other peo ples' homes, the gasoline for other peoples' cars, the payment of other peoples' medical expenses? I have yet to hear a compelling moral ar gument justifying coercion for such a purpose.

So long as we are willing to allow an immoral premise to dom inate our educational endeavors, we must be willing to live with ugly results. The only lasting solu tion is to remove· education from the hands of government, restor ing responsibility to the student and the parent. The response at that point tends to be, "Why, if there were no pUb 'lic education, parents wouldn't send their children to school!" I have yet to meet the person who will not send his children to school. It is always those other people who would supposedly be remiss in their duty. A parallel case may be discovered in the ar guments of the last century con cerning organized religion. The original argument for a state supported church was that religion would fail if people were given their choice whether or not to sup port organized religion. The iden tical argument is advanced today in regard to education, despite the fact that religion thrives after more than a century of separation of church from state. Is there any compelling reason why voluntary support of education should not be given a similar opportunity?

Ultimate Solution Lies in Freedom and Responsibility Educational reform must begin with parents as individuals, with the recognition that better up bringing for their children lies in their hands, not in the hands of the state·. If and when enough par ents begin living their lives self responsibly and apply such prin ciples to their children who are an extension of self, a new education al day will have dawned. The an swer, then, is not to "throw the rascals out," substituting good men for bad in the political con trol of collectivized education. In stead, let each act in his own small orbit, with his own children, with 1969 A PHILOSOPHY OF GROWTH 553 those whom he influences directly. If one's example and understand ing are of high enough quality, the educational picture will begin to change no matter what course politicalized education might take. Those who effect great revolu tions are always small in number.

Such people need not wait to be come a majority. No one else can do the job except those who understand what needs to be done. The disruptive influence of political centralization in education will continue until it has been over shadowed and rendered meaning less by a moral force of sufficient intensity, a force generated by in dividuals who understand what is at stake and who serve notice by their own example that a better way exists to educate our young. ~ This article concludes the series on Education in America. Bound volumes now availableEDUCATION IN AMERICA by George Charles Roche III CHAPTER TITLES: 1. What Has Happened? 2. Freedom, Morality, and Education 3. Scientism and the Collapse of Standards 4. The Decline of Intellect 5. Discipline or Disaster? 6. The Perpetual Adolescent 7. Why Institutionalize Our Errors? 8. The Multiversity 9. Academic Freedom for What? 10. Revolt on Campus 11. Creativity 12. A Philosophy of Growth 176 pages, fully indexed. $3.50 cloth; $1.75 paper Order from: THE FOUNDATION FOR ECONOMIC EDUCATION, INC.

IRVINGTON-ON-HUDSON, NEW YORK, 10533 D. ELTON ,TRUEBLOOD TOO MilD to bll1l6H THOUGH it is sometimes said that ours is an immoral or at least an amoral generation, this is mani festly untrue. It would be far closer to the truth to say that we are too moral, too judgmental, too condemning. The photographs of campus confrontations and vio lence normally depict those who are "angry." "Professor faces irate students" is a standard head line. Always there is some claim about injustice or unfairness, and the faces in the photographs are contorted by bitterness. If there is any pleasure, it is the pleasure of denunciation. There is no lack of dedication; what is lacking is laughter! Since the issues in the confron tations are uniformly simple, in the eyes of the violent, instead of calm discussion, we have "de mands." The mood which now re ceives the most publicity is strik ingly similar to that of John 554 Brown at Harpers Ferry. The ones who are featured in the headlines are not marked by a lack of con cern for morals, but by that ex treme concern for morals which is the essence of fanaticism. Weare, in fact, ;plagued by an inverted Puritanism.

The lack of humor is abundantly evident in contemporary student assemblies. The speaker, in ad dressing a thousand students, em ploys an approach which has ap pealed to many other student gen erations as very funny, but only a small minority now laughs. The others keep their straight Puri tanical faces. It is not that they have heard the joke before; it is simply a failure to respond to subtle approaches to the truth. Violent attack is a different mat ter and this brings instant re sponse, but dull people are not made wise simply by becoming angry.

1969 TOO MAD TO LAUGH 555 The decline of laughter is not merely an evidence of the widely publicized "generation gap." In deed, there is grave doubt whether the generation gap so often men tionedexists at all. Though there is always some difficulty in com munication between different ages of human beings, this is not now the chief problem. What has ap peared is an "idea gap." I realize how nearly independent of age this is when I encounter the enor mous difficulty of communication between groups of the same age. I feel actually closer in thought to some persons of twenty than to some of my own age. The decline of laughter appears to depend on nothing more pro found than the recognition that ours is an imperfect world. Why this should be a shocking discov ery, I have no idea, but it seems to be such to many in our genera tion. Much of the problem is really philosophical. Millions have im bibed the sentimental idea of nat ural human goodness and have really expected utopia right around the corner. When it does not come, they are angry in their disap pointment and begin to indulge in harsh judgment of others. The em phasis, accordingly, is always on other people's sins, but never on our own. If only the ,establish ment could be changed or replaced, then the problem would be solved!

But, of course, it is not solved. In the progress of the French Revo lution the establishment was dis placed, all right, but what ensued was a reign of terror. What we need in our time is a mature realism which makes us understand that the human pre ... dicament is with us to stay. We shall not eliminate sin in others and we shall not eliminate it in ourselves. We shall not achieve utopia in universities or anywhere else, though we can make some things rela tively better than they are. Meanwhile we are wise to learn again to laugh, primarily at ourselves. ~ This article by the noted Quaker author and philosopher is reprinted by permission from Quaker Life, published by the Friends United Meeting, Richmond, Indiana. IDEAS ON LIBERTY Ralph Waldo Emerson WE PASS for what we are. Character teaches above our wills. Men imagine that they communicate their virtue or vice only by overt actions, and do not see that virtue or vice emit a breath every moment.

TAX POLICY HANS F. SENNHOLZ AN IMPORTANT PILLAR of our re publican form of government is the people's control over govern ment spending. Representative government means budgetary con trol. The' people, through their representatives, consent to certain taxation in order to facilitate pub lic policies. They determine the task of the Administration and its expenditures. No penny must be spent without the consent of Congress. Senator Monroney of Oklahoma, Chairman of the Joint Committee on Organization of Congress, briefly described this pillar as fol lows: "The primary function of the Congress is still the exercise of the power of the purse . . . If we use this power well, we can and will be able to control the size Dr. Sennholz heads the Department of Eco nomics at Grove City College in Pennsylvania. 55,6 of government, its activities, and the number of people who find their way on or off the payroll.

This is the major responsibility given to the Congress by the Con stitution. We dare not fail in this assignment." But how has the Congress actually discharged this duty during the 1960's? Since 1960 the Federal govern ment has grown rapidly in size and expense. Administrative Bud get expenditures alone have risen from $76.5 billion in 1960 to an estimated $153.9 billion in the fiscal year ending June, 30, 1970. (Cf. The Budget of the United States Government for 1970, p. 524.) But this is not the only Federal budget. The 130 Federal trust funds, among which the Old-Age and Survivors' Insurance (Social Security) and the Hospital Insur1969 TAX POLICY 557 ance Trust Fund (Medicare) are the largest, receive taxes and dis burse funds without Congressional appropriations. Their expenditures have grown even more signifi cantly than Administrative spend ing. From 1960 to 1970 they are expected to rise from $21.2 billion to $48.3 billion, or 128 per cent.

And finally, there are some 85 Federal enterprises and govern ment-sponsored enterprises that are scheduled to spend another $31 billion. Altogether, the Federal government plans to spend $232 billion in the coming fiscal·· year. When compared with 1960, this constitutes an increase of nearly $120 billion. The Burden Grows Since 1960 the Federal govern ment has more than doubled its taxing and spending and, at the given rate of growth, must be expected to double again in less than 10 years. The growth rate of Federal Trust Funds, which cover more than two-thirds of the total Federal expenditures on health, education, and welfare, will prob ably exceed all others. In the 1970 Budget, Trust Fund receipts are estimated at $50.9 billion, or 35 per cent of total administrative receipts of $147.8 billion. Nor does there appear in sight any end to the expansion of the Social Secur ity and Medicare programs.

In terms of total personal in come of $800 billion, which is the government's favorite measure of progress and prosperity, the 1970 Federal tax take of $198.6 billion amounts to approximately one fourth. But personal income is a gross estimate that includes per sonal taxes of more than $105 bil lion. If we deduct this amount and base our calculations on disposable personal income of only $700 bil lion, the $198.6 billion of Federal spending amounts to 29 per cent. But how is this possible if most people pay Federal income tax rates below 29 per cent? Many in dividuals, in fact, pay much higher rates. Highly productive business men pay various corporation taxes in excess of 50 per cent plus in divid ual income taxes of 50 per cent or more on the remainder, which comes to 75 per cent or more of their earned incomes. The tax burden of government that is frequently overlooked is hidden in the costs of all goods and services we consume. All goods bear taxes that account for varying shares of the purchase price. This is how every citizen, even the poorest member of soci ety, must bear the growing bur den of his government. Taxes are the largest single item in our cost of living; nothing else can com pare with the cost of government.

For instance, Americans spend 558 THE FREEMAN September less than $100 billion on food per year and more than twice this amount to finance the Federal gov ernment. To Change the Economy We often forget that taxation aims not only at raising the de sired revenue but also at other purposes. Today, taxes are a fa vorite tool of government policy and control. In the past, regula tion through taxation was limited, by and large, to protective tariffs which restricted the supply of goods in order to benefit certain producers. Modern regulatory ob jectives are much wider and more far-reaching. Some taxes aim at influencing certain consumption. Some are designed to affect cer tain sectors of production and trade. Others are to change busi ness customs and conduct. Still others aim at controlling or chang ing our economic system. The rev enue accruing to the government treasury may be a desirable but not vital objective of taxation.

Taxation may even aim at changing our economic system. All taxes that attack the substance of private property, destroy indi vidual incentive, and prevent capi tal formation, are gnawing at the foundation of a free economy. Confiscatory income taxes and business taxes diminish the in centive to work. Many professional people whose services are urgently needed by society are induced to work less and retire earlier than they otherwise would. Young men may be tempted not to enter busi ness and become founders and pro moters of successful enterprises, but to seek security and prestige in government offices and appoint ments. Confiscatory taxes that aim at the roots of our individual enter prise system, spend and consume what generations have built and accumulated. Heavy death duties and highly progressive business and income taxes tend to consume productive capital. It is true, such taxes do not destroy the real capi tal - factories and equipment but they consume the liquid cash the heirs must raise in order to satisfy tax claims. In expectation of his demise, a successful busi nessman may sell out to his com petitors in order to prepare his estate with readily marketable securities, such as U.S. Treasury bonds. The confiscatory death tax thus eliminates many independent enterprises and promotes growth of giant corporations.

To Equalize Incomes Our present tax structure open ly aims at greater equalization of income and wealth through tax rate progression. However, this must not be understood to mean 1969 TAX POLICY 559 that the system relieves the lowest income brackets from a propor tional share of the tax burden. On the contrary, it has been proven by a number of able writers that even the poorest people pay a higher percentage of their income in indirect taxes than does the class with the greatest number of taxpayers. F. A. Hayek, eminent Austrian economist, found that "it was not the poorest but the most numer ous and therefore politically most powerful classes which were left off relatively lightly, while not only those above them but also those below them were burdened more heavily - approximately in proportion to their smaller polit ical strength." Taxation is no simple govern ment matter. It presents problems of shifting, diffusion, and inci dence, the difficulties of which challenge even the ablest econo mist. Every tax sets into opera tion a chain of reactions that af fect industrial production, wages, income, employment, standard of living, mode of living, and so on.

Most legislators probably are un aware of the numerous economic effects of the taxes imposed. They may be unaware that the steep graduation of the income tax accomplishes the very opposite of what it was meant to do. It per petuates economic and social inequalities and thereby creates a rigid class structure that divides society. The expropriation of high incomes effectively prevents for mation of capital and wealth that facilitate individual improvement. How can an able newcomer from the wrong side of town rise to economic and social eminence if his "excess income" is expropri ated at every turn of success? How can he challenge the business es tablishment with its hereditary wealth and position if he is pre vented from accumulating the necessary capital? On the other hand, old business es can relax, turn inefficient and bureaucratic because newcomers with excess profits are prevented by confiscatory taxation from ever challenging the establishment. It is true, the tax progression pre vents the rich from growing rich er; but it also protects them from the threats of competition by am bitious and able newcomers. Thus the rich stay rich, and the poor stay poor, which gives birth to economic and social classes. In stead of individual effort and pro ductivity, the coincidence of birth and inheritance becomes the main economic determinant for most individuals.

To Fight Inflation The tax objective that has been very much in the news through560 THE FREEMAN September out the 1960's is the cure of infla tion. Taxes are raised or reduced depending on the rate of inflation. Surtaxes are imposed and tax credits for equipment purchases are repealed because inflation is said to require the tax boost. The rationale of this taxation is based on the popular, although erroneous, notion of inflation. Ac cording to this view, rising prices are inflation. Prices are pushed up by pro:flt-seeking businessmen and labor unions seeking unreasonable wage increases. In order to reduce their purchasing power, which is reflected in an ever-rising demand for production equipment by busi ness and for consumers' goods by labor, the Federal government aims to check this demand through higher taxes. Unfortunately, such tax levies cannot alleviate inflation, but may actually make matters worse, be cause they do not attack the root of the inflation problem. The fu tility of taxation as an inflation remedy becomes apparent as soon as we accurately define inflation.

If we bear in mind that inflation actually is the creation of new money by government, we clearly perceive the futility of trying to cure inflation by new tax levies which merely shift more purchas ing power from the people to the government. Taxes do not halt the printing presses; only the President and his monetary authorities can halt them. If the monetary authorities con tinue to print money or create credit, no tax, no matter how high, can prevent the effects of inflation, such as rising prices and wages. It is true, rising taxes may cause havoc and ruin for taxpay ers, but they do not necessarily slow down the government money presses. It is even conceivable that profits and interest might be com pletely expropriated - which, of course, would precipitate economic stagnation and chaos - and yet in flation could continue to ravage the country. After all, one does not preclude the other. In fact, the policies complement one an other as they extract income and wealth from the people.

Taxation and Inflation Twins Taxation and inflation are twin burdens imposed by government. A given administration may resort to inflation because taxation is unpopular; and the next admini stration may choose to tax because inflation is unpopular. But both measures further reduce the peo ple's income and wealth. Inflation reduces the people's real income through higher prices. Fixed in come recei vel'S and owners of money or claims to money have their real purchasing power re duced in proportion as the govern1969 TAX POLICY 561 ment gains through money cre ation and deficit spending. Though the following administration may resort to higher taxation, it does not thereby reduce the money sup ply created by its predecessor. So, prices stay high even though the money presses may be silent for a while. The new tax levies on busi ness tend to reduce capital invest ment and economic output. And this lower output in turn raises prices even higher. Both inflation and taxation thus raise prices and reduce disposable real income while boosting government rev enue.

It is true, if the surtax revenue were applied toward reduction of the money supply, prices would tend to decline. The inflation would be followed by a deflation with all its disastrous conse quences. But the burdensomeness of government would not be re duced by the shift in policy. The people, instead, would face three blows of government finance: in flation, taxation, and deflation. Can a free economy survive such an assault? Inflation - the creation of new money - can be halted without delay. Its inevitable effects gradu ally spread throughout the system and run their course. Prices may continue to rise many months after the new money· was first created. After aU, economic adjustments take time. During this period of readjustment which pre sents great difficulties to business, a wise administration would re duce its tax burden rather than raise it. Taxes Should be Neutral In a free society the cost of government should be small com pared with national income. Nev ertheless, government must resort to taxation in order to cover its expenditures. But this taxation should not intentionally divert the economy from production chosen and directed by millions of con sumers. Taxes should be neutral.

A neutral tax would merely take a part of every citizen's income for public expenditure without aiming at regulating or changing the economic actions of people. In particular, it would not hamper economic freedom and would not promote government enterprises with taxpayers' money. In fact, government would terminate its ownership or operation of busi ness-type activities for which there is no specific constitutional authorization, returning such properties through competitive bidding to individuals and private business organizations. Such a withdrawal of the Fed eral government from activities that by tradition and constitution were left to the individual would 562 THE FREEMAN September instantly reduce the need for tax revenues. For instance the Fed eral government owns 32.3 per cent of the total land and water area of the United States. More than 700 Federal departments, agencies, and subagencies carry on business-type activities, such as loans, grants, research, propa ganda, news and advisory serv ices, transportation, communica tions,. construction, management of land and other resources, gen eration and transmission and dis tribution of power, and so on. If all this bureaucratic activity were liquidated and the vast assets sold to the people, a great many tax problems would vanish. In the hands of taxpayers this property not only would yield tax revenues instead of consuming them but also would be made productive in the service of human needs and wants.

Such a fiscal reform would re vitalize the ideals and principles that made this nation great; it would permit reduction of many taxes and the abolition of those most damaging to the economy. Welfare Through Tax Reductions Substantial reduction of estate and income taxation would give new life to private charity and voluntary social action. There can be no doubt that many contem porary evils, such as persistent poverty, chronic unemployment, lack of education and training, slums and crime, have grown to such frightening proportions be cause confiscatory taxes have crip pled private charity and voluntary social action. The Federal govern ment now faces intolerable condi tions and loud demands for their solution because it has nearly pre empted social welfare through its tax policy. When almost 40 per cent of personal and corporate in come is consumed by various levels of government, there is little left for private charity and voluntary social action.

The Federal government alone cannot solve the burning economic and social problems of our time, but it could help to revitalize private effort by removing or lib eralizing its limits on the deducti bility of charitable contributions. To encourage independent action toward desirable social objectives, the Federal government must, above all, cease to discriminate against the very individuals it aims to benefit. The aged, for instance, whose well-being is a primary concern of contemporary government, now lose their Social Security benefits if they should continue to earn certain wages. Why not halt this discrimination and permit them to work freely for their own support and better ment? If retired workers con1969 TAX POLICY 563 tribute their efforts and talents to charitable endeavors, why shouldn't such contributions be treated as "gifts" by the tax code? Economic development is said to be an important objective of the Federal government. Yet, such development by individuals - what ever is built and created - is im mediately subjected to taxation by all levels of government. A wiser tax policy would seek to reward individual effort rather than pen alize it. Tax credits might help to spark business development in de pressed areas. To provide employ ment for educationally and cultur ally handicapped workers, the minimum wage legislation could be revised in ways that would per mit employers to hire and train them.

If education is seriously consid ered a governmental responsibil ity, why not adopt tax policies that would encourage rather than discourage private efforts to that end? If slum clearance and urban renewal are desirable, why not encourage private enterprise to help, through tax incentives rather than penalties? A wise tax policy need not im pose ever higher taxes but might, instead, give recognition to indi vidual effort and achievement toward the realization of welfare objectives. Above all, care should be taken not to cause the very evils the intervention is meant to alleviate. Of course, such tax policy would not be neutral. It would still re flect government planning and di recting along welfare state lines. But it might be a hopeful initial step on the road back toward self reliance and universally lower tax ation. ~ IDEAS ON LIBERTY Proportional Taxation STRAIGHT PROPORTIONAL TAXATION is the only practical and definite arithmetic principle of direct taxation that there is between the principles of (a) everybody paying the same amount of tax and (b) income equalization, that is, taxation, coupled with subsidy, which results in everyone having the same income after the tax and subsidy.

BRADFORD B. SMITH, Liberty and Taxes THESE are days in which the once vigorous confidence of men in the principles of the secular society is wearing thin. The "liberty" so ardently proclaimed by the eight eenth-century philosophes has be come a limp banner miscellaneous ly stained by partisan spokesmen. Its purposes are so narrowly con ventionalized that about all that remains of its splendor is a rhetor ical ring. The ideal of fraternity, while still cherished by many men, exercises no noticeable restraint on the application of technological skills to military slaughter. And the unquiet desperation of urban riots and student protests gives voice to denunciations of the in equality in ordered social relation ships. What has gone wrong? No man of humane intelligence is ready to abandon the great conceptions by which the secular society was An editorial reprinted by permission from the July 24, 1968 issue of MANAS, a journal of independent inquiry published in Los Angeles.

564 shaped. The ideals of liberty, equality, and fraternity still rule in all thinking about social ethics, but now we praise and declare them in a mood of despair instead of high expectation. The social systems constructed to embody these principles have turned against them in so many devious ways that the best efforts of men to serve them often lead to new falsifications. Have we made some mistake so deep lying that it uni versalizes its disorder in what ever we do? Can we identify that mistake .without permitting our analysis to degrade into some form of hackneyed political criticism? This will be difficult to do in an age when thought can attract no wide attention unless it is politi cally partisan. Now it may be right here, in this insistence on political appli cation, that our basic trouble lies. For the passion for lawmaking and political system-bUilding re1969 BEYOND THE LAW 565 suIts, sooner or later, in the estab lishment of certain popular fictions about man and his life in society.

These fictions are held to he so cially necessary, and therefore pragmatically true. Quite possibly these fictions, and not the ideals of the secular society, are what is breaking down. Take for example the founda tion secular principle of the sep aration of church and state. The virtues of this separation are self evident. From any impartial point of view the defenders of separa tion are unmistakably right in their contentions. How do we know they are right? They are right because the historical record of theocracy can be shown to be filled with intolerable tyrannies. No argument. But it does not follow from this empirical support of secular ism and separation of church and state that religious thought has no importance or will nt>t continue. Practical secularists know this, of course. They simply argue for freedom of religion, contending that religious activity should never lead to sectarian control in public affairs.

Practical difficulties remain. Moral philosophy and religious teachings overlap. Political sys tems claim a moral ground. The very ideas of liberty, equality, and fraternity spring from ethical inspiration. Even atheism, as Paul Tillich pointed out, has a religious aspect, and the United States Su preme Court, in a recent decision affecting conscientious objectors, declared that free-thinking phil osophical convictions must be re garded as having the same stand ing before the law as "religious training and belief." Meanwhile, dozens of writers have drawn at tention to the parallels between authoritarian political states and the rule of theocratic empires in the past. Secular Solutions Fail What then does the secular state attempt? In practice, it endeavors to prevent the religious acquisi tion of political power or coercive authority, and to foster, as well as it can, a generalized morality which derives its authority from reason and its sanctions from non theological rules.

In itself, this arrangement may be said to be "ideal," so far as lawmakers are concerned. But the question which must be asked is whether the· assumption that es sential human problems can all be settled by law is a creeping de lusion that comes to dominate the thinking of secular lawmakers. The obsessive concern with ideol ogy and the insistence on political action as the only important means for improving the human condi566 THE FREEMAN September tion are evidence of one of the fictions we spoke about earlier the assumption that .final human good can be defined in political terms. Any definition concerned with final good requires the postu lates of religion or of religious philosophy. So, from this assump tion by secularists, schism is built into the secular society. The Role of the State What, actually, is the secular state? It is an ordering social in stitution which declares its neu trality on all questions not di rectly concerned with the public safety and the general welfare. It will not interfere with the lives and opinions of men, save in be half of these practical ends. Many of the principles of the secular state are found in a passage in John Stuart Mill's essay on Lib erty. He wrote: The obj ect of this essay is to as sert one very simple principle, as entitled to govern absolutely the dealings of society with the individ ual in· the way of compulsion or control, whether the means used be physical force in the form of legal penalties, or the moral coercion of public opinion. That principle is that the sole end for which mankind are warranted individually or collective ly in interfering with the liberty of action of any of their number is self-protection; that the only purpose for which power can rightfully be exercised over any member of a civilized community against his will is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant. He can not be rightfully compelled to do or forbear because it will be better for him to do so, because it will make him happier, because in the opinions of others to do so would be wise or even right. These are good reasons for remonstrating with him, or rea soning with him, or persuading him, or entreating him, but not for com pelling him, or visiting him with any evil in case he do otherwise. To justify that, the conduct from which it is desired to deter him must be calculated to produce evil to some one else. The only part of the con duct of anyone for which he is amenable to society is that which concerns others. In the part which merely concerns himself his inde pendence is of right, absolute. Over himself, over his own mind and body, the individual is sovereign.

This is a view which, by reason of its crucial moral derivation, we dare not give up, but it is also· a view, by reason of· many practical failures, we are now obliged tc look at very closely - or, rather: from a stance different from thE one which gives it emotional hui uncritical support. It is easy t< assent to Mill's principles on in· tuitive grounds; why, then, d< they work so poorly?

1969 BEYOND THE LAW 567 Minimizing the Error In a world inhabited by imper fect men, some failure, no doubt, is inevitable. The question is, would less failure become possible if we reformulated the problem? For example, the context of the discussion is the political issue of the state's right to coerce. Mr. Mill would limit that right. What is the intent of social control? The securing of behavior that is socially tolerable or acceptable. What is the principle of limit to control? The intuitively given im portance of individual liberty. Now liberty is really an incom mensurable value which always has its wings clipped by definition. If we actually knew all that lib erty or freedom implies for hu man beings we would be so wise that we would have no social prob lems at all. Politics, however, as we say, is a practical matter, so, for the purposes of social arrange nlents, we give a pragmatic, work ing meaning to liberty and make our laws.

But the transcendental content of freedom is neither contained nor exhausted by such political limitations and securities. There are other ways of considering its meaning. The role of the State, practically speaking, is control. At best it is traffic-management and channel ing. But there are other institutions - schools, for example whose role is almost opposite. Schools are intended to liberate human beings - that is, unfold their capacities in ways that will enable them to taste the possibil ities of freedom more extensively. Schools also teach the disciplines of mutuality, of cooperation and sharing. A human being, enlarged and matured by education, has more freedom than an ignorant man because he is able to avail himself of many more potential ities of action, much wider ranges of choice in the exercise of his powers. Precision Without Coercion In education, there is also a principle of necessary order, but it is not coercive. For the student, discovery of the use of limits gives precision to his knowledge. So, in the context of education, the im port of the question of freedom versus order is radically changed.

Managing the subtle balances be tween these two principles is the essential process of growing into maturity, and education is the collaborative art which helps in dividuals to learn this manage ment for themselves, so that they eventually become independently good at it - which is to be free. Coercion plays absolutely no part in education; it appears only when there is some perversion or 568 THE FREEMAN September breakdown in the process of edu cation. This hardly needs argu ment. The natural teacher never im poses arbitrary limits on his stu dents. A reasonable limit gains personal adoption by the students. The teacher may intimate the ne cessity of limits, but he does not impose them. Any course of study will require some boundaries, in order to achieve a focus, butedu cation does not begin until the student sees the function of the boundaries and begins to decide for himself when to stay within them and when to go beyond them.

An arbitrary limit accepted by the student would not give him a gen uine form to work in - but only a pseudo-form, a context of indoc trination. Some day, if he has spirit and intelligence, he will abandon that form as a barrier to his growth. All this is elementary. We know it from our intuitions about hu man growth and our experience in education and in human relations. But putting this knowledge to work in teaching involves endless delicacies, gentle encouragement, patience, and severe regulation of one's bursting eagerness to help people along. All this is elementary, absolutely certain in respect to human devel opment, yet it has nothing to do with coercion, nothing to do with politics, nothing to do with well considered organization for oppos ing or controlling tyranny. But it has everything to do with what we call the good society. Unless these educational realities form the foundation of social life in individual relationships, there can not be a good society. This, too, is elementary.

The Primary Sources 01 Goodness Here, then, is the focal trouble with John Stuart Mill's essay on Liberty. It ignores the primary sources of goodness in human life and concentrates on the secondary considerations of political forms. Most of modern thought similarly concentrates on secondary consid erations. And that is why the "ideal" political forms, logically described and brilliantly defended, produce so many terrible dilem mas. Our exhaustive deliberations concerning these forms neglect the all-important fact that every po litical system - good, bad, indif ferent - floats in a sea of primary human relations which coercion can never order or get at, except smotheringly and destructively. Political thinking by-passes the very springs of all the primary good in human life. Then, when we experience so much pain from political failure, we conclude that we must remedy our politics with a better system, when the fact 1969 BEYOND THE LAW 569 is that our real difficulties are not political at all. The trouble orig inates in our lack of attention to the uncoercive disciplines.

It is difficult to obtain agree ment for this view because there is so much pain generated by poli tics. But to accept political diag noses for the pain is to accept a static, depressed estimate, of all men. It is to rej ect the idea of human progress, as distinguished from the external forms of social or political progress. Today, at last, we may be in a position to recognize this mistake, simply be cause recent history has proved how little we really know about the meaning of progress. Freedom and Order? It is of course a cliche of do nothing passivity to claim that ed ucation is the alternative to polit ical activism. But a basic com plaint of all political critics of modern society is that our educa tion is no good, either. And it is certainly a fact that modern West ern education has been the chief agency for creating faith in the fiction that politics will solve all our problems. Only an education independent of ideological fictions can serve our need.

But the need for social controls is real, isn't it? Of course. In political dialogue, you do not ar gue this question unless you are an anarchist. The crucial point, however, is that the problem of coercive control is always allowed to absorb our energies too soon. And when this happens· in edu cation, it is always fatal. The teacher who jumps to control of his students, interrupting tenta tive efforts of their own at self limitation, becomes an anti-human force, a destroyer of education. He is abolishing or limiting free dom when· he doesn't need to. You could say of such a teacher that he has been infected by the polit ical approach to life, obsessed by the last-ditch necessities of coer cion. He may not know any better. But he makes the invasions of political control more and more likely, and perhaps "necessary," with every interference with the self -discovery and self -control of his students. Every act of arbi trary control in education is a self-fulfilling prophecy of human defeat, generating the necessities of future coercion.

The problem of freedom and order can never be settled at the level where the cause of true hu man freedom is already lost - the political level. The more you try to establish freedom at that level, the more you fence it in. And the more it is fenced in, the bitterer the disputes of political rivals with one another. How else can things go, when you discuss free570 THE FREEMAN September I dom only in terms of controlling it by coercion? Critique of Mill by James fitz;ames Stephen It is interesting to look at a long-neglected criticism of Mr. Mill by one of his contemporaries. We have for review James Fitz james Stephen's Liberty, Equality, Fraternity, first published in 1874 and now reissued, with R. J. White as editor, by the Cambridge Uni versity Press (1967, $7.50). Ac cording to the jacket: Stephen's work is written as a systema tic den uncia tion of John Stuart Mill's political thought. It is thus of great importance in the his tory of Utilitarianism, and also as the most forthright and systematic of the Victorian attacks on Democ racy. Against Mill's hopes for an educated populace, Stephen insists on the prime need for coercion. He denounces Mill's concept of Liberty as destructive of the social order and denies that the concept of jus tice has any necessary connection with the ideal of social equality.

This introduction is enough to make you wonder if Stephen is worth reading at all. But the fact is that his arguments are brilliant, and even persuasive, since he at tacks Mill with all the realities of social experience which contra dict the fiction that social control through secular political power is sufficient to solve human problems. In one place Stephen says: I believe it to be simply impossible that legislation should be really neutral as to any religion which is professed by any large number of the persons legislated for. He that is not for such a religion is against it. Real neutrality is possible only with regard to forms of religion which are not professed at all by the subjects of legislation, or which are professed by so few of them that their opinions can be regarded as unimportant by the rest. English legislation in England is neutral as to Mahommedanism and Brahman ism. English legislation in India proceeds on the assumption that both are false. If it did not, it would have to be founded on the Koran or the Institutes of Manu. If this is so, it is practically certain that coercion will be exercised in favour of some religious opinions and against others, and the question whether such coercion is good or bad will depend upon the view of religion which is taken by different people.

A little later Mr. Stephen con siders what the secular authority must say to a religion claiming divine authority for its teachings: Your creed is, no doubt, divine, and you are the agents of God for the purpose of teaching it, but lib erty of opinion is also more or less divine, and the civil ruler has his own rights and duties as well as the 1969 BEYOND THE LAW 571 successors of the Apostles. But, con venient as this is, it is a mere com promise. The theory is untrue, and no one really b'elieves more than that half of it which suits him. If spir itual means that which relates to thought and feeling, every act of life is spiritual, for in every act there is a mental element which gives it its moral character. If tem poral means outward and visible, then every act is temporal, for every thought and feeling tends toward and is embodied in action. In fact every human action is both temporal and spiritual. The attempt to dis tinguish between temporal and spir itual, between Church and State, is like the attempt to distinguish be tween substance and form. Formless Inatter or unsubstantial form are expressions which have no meaning, and in the same way things tem poral and things spiritual presup pose and run into each other at every point. Human life is one and indivisible, and is or ought to be regulated by one set of principles and not by a multitude.

What a pity this was not said by Mr. Mill instead of Mr. Stephen! If Mill had said it, it would have been a solid brief for the cultivation of those pre-polit ical virtues on which all good politics must depend - for the evolution by individuals of those self-regulated forms of free action which solve the problem of con tent and form, of freedom and order, before its contradictions and failures reach the morally blind jurisdiction of the body pol itic. For that unity of being, that balance between spirit and matter, cannot really be achieved at the political level except by the coer cion and control of the thoughtless majority by the wise minority in which Mr. Stephen believes. In short, we cannot ever use in free dom, fraternity and equality the truth Mr. Stephen declares, with out taking it out of his hands as a legislator. For he is, after all, determined to coerce. As he says: The real difference between Mr.

Mill's doctrine and mine is this. We agree that the minority are wise and the maj ority foolish, but Mr. Mill denies that the wise minority are ever justified in coercing the foolish majority for their own good, whereas I affirm that under circum stances they may be justified in doing so. And, alas, Mr. Stephen has the evidence of immoral and unprin cipled history on his side. What ever the political ideals declared, minorities do work their way to partisan control, and the only val ue a constitution and the rule of a secular state can show for their claims is in serving as a not too efficient brake on this tendency. Mr. Mill is really defending an educational principle, but at the 572 THE FREEMAN September political level. No coercion is a rule in teaching. But he presses this principle into service in an area of life where coercion gets all its working definitions - where, in evitably, his principle withers and dies. That principle can grow strong only in the circumstances of .unqualified hospitality to free dom; and it will grow strong, also, only under deliberate, individual self-development by human beings.

A people in whom the discipline of freedom is strong enough can overcome the rule of coercion, but only by not needing it. This is not an ideological consideration. Mr. Stephen, in turn, is really misapplying the philosophic con tent of "whole-man" education, bending its radical and unbreak able unities into an argument to defend coercion at the political level. This is an abuse of reason. Neither in theory nor in prac tice can either view succeed. Lawmakers will of course go on making laws, and anarchists will of course go on opposing them, while the failure of exist ing laws will continue to create demands for greater legislative severi ty. There is no way to pre vent these monotonies of history. What can be done, however, by those who understand such diffi culties, is to give all their efforts to the resolution of dilemmas of freedom and order within the unity of individual human beings, knowing full well that when these dilemmas extrapolate to politics, there can never be anything more than bumbling, faulty, expedient, and finally very cruel ways of meeting the problems they create.

The fiction that politics can deal with these problems is doubtless the greatest delusion of our age. This is not to suggest that the making of good laws has no im portance. But it seems obvious that wise laws can be made only by men intelligent enough to see that no people on earth can be legislated to either individual or collective salvation; that laws can not direct the creative potential ities of human life; that coercion dare not intrude upon the becom ing of good men, which is a proc ess entirely separate from the con trol and prevention of bad be havior. There is hardly a humanist jurisprudence, although there can be humanist influence on juris prudence. The issue turns, quite simply, on faith in man, on under standing how he grows and be comes better and wiser, and on recognizing the transcendent im portance of giving growth a high er priority than control. ~ A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN TREATY-RELIANCE a DISEASE IF, as President Richard Nixon has said, the Era of Confrontation is giving way to the Era of Nego tiation, it would seem to follow that we are in for a period of treaty making. The conventional wisdom is that treaties are highly desirable. But Laurence W. Beil enson, a Los Angeles lawyer who was a U.S. liaison officer with the Chinese army in World War II, thinks that "treaty-reliance" is a "disease." In an elaborate study called The Treaty Trap: A History of the Performance of Political Treaties by the United States and European Nations (Public Affairs Press, $7.00), Mr. Beilenson proves that the "paper chains" of treaties between sovereign nations have never succeeded in holding "against 'interest." The "bad guys"

(Kaiser Wilhelm, Joseph Stalin, Adolf Hitler) have cynically re ·garded treaties as "scraps of pa per." But the "good guys" (demo cratically elected governments) have had just as lamentable a record of performance - or may be we should say nonperformance. Some statesmen, of course, have been more hypocritical than oth ers. The least hypocritical ruler was Joe Stalin, who wrote in 1913 that "a diplomat's words must contradict his deeds - otherwise what sort of a diplomat is he? Words are one thing - deeds some thing entirely different. Fine words are a mask to cover shady deeds. A sincere diplomat is like dry water or wooden iron." Since we are apparently about to enter into some sort of nuclear treaty with the Soviet Union, the most immediately relevant chapter in Mr. Beilenson's book is the one which details the record of the Bolsheviks as members of the "diplomatic club." The commu nists began by repudiating both the debts and the treaties made by the Czars and the Kerensky re gime, although they subsequently 574 THE FREEMAN September claimed the benefits of the older Russian treaties. In the first im portant Bolshevik treaty, that of Brest-Litovsk, Lenin promised the Germans that his government would engage in no agitation against the German State. But the minute the Soviets had opened an embassy in Berlin they began to carryon subversion, dispensing "grossly underestimated" sums of money to provoke a Bolshevik revolution inside Germany. "Yes, of course, we are violating the treaty," said Lenin, "we have vio lated it thirty or forty times ....

Napoleon hunted the Germans for violating the [Tilsit] peace treaty, and the present [Napoleon] will hunt us for the same reason. Only we shall take care that he does not catch us soon." The 1933 U.S.-U.S.S.R. treaty of recognition included antisub version promises. So did Soviet treaties with Estonia, Lithuania, Latvia, Iran, Italy, France, Japan, and other nations. Meanwhile the Comintern, the Soviet trade mis sions, the various Russian embas sies and the local communist par ties, all went about the business of "subversion as usual." Even during World War II, when it was to Stalin's interest to keep on good terms with his Western allies, there was a history of Soviet treaty breeches. Despite the prom ise to England to render "assistance ... of all kinds," the Soviets refused the use of their airfields to enable the British to drop arms and food to the Polish Home Army in Warsaw in 1944. At Yalta Stalin promised to apply the "prin ciple of the Atlantic Charter" Le., the right of free elections to East European nations. But the Yalta document was systematically violated from the start. It was perfidious of the Sovie~s to make their deal with Hitler to carve up Poland in 1939. But here Stalin trapped himself; he trusted Hitler to keep his bargain. It was the only known instance of Stalin's succumbing to the "disease of treaty-reliance."

A Tradition of Broken Treaties In the matter of "breeches of treaties not to subvert," says Mr. Beilenson, the Soviets have "made a new high." But in other types of breech the U.S.S.R. has merely emulated the West. The ancient Greeks were chronic treaty break ers. After years of exhausting war Athens and Sparta and their re spective allies swore in the Treaty of Nicias to refrain "for fifty years" from bellicose activities in cluding "fraud or damage by land or sea." What followed was "seven years of cold war" in which neither Athens nor Sparta gave back the territories they had promised to return. After seven years of sub1969 TREATY-RELIANCE A DISEASE 575 version Athens and Sparta were at each others' throats once more. It did not matter that Athens was a democracy and Sparta a tyr anny; both city states violated their agreement from the day it was signed. If one may make a generaliza tion based on Mr. Beilenson's evi dence, the most peaceful periods in the world's history have been those in which the fewest treaties have been negotiated. Louis XIV of France was always forging new "paper chains" and breaking them at his convenience. Despite his own perfidies, Louis XIV suffered from the "disease of treaty-re liance," says Mr. Beilenson; "it would be tiresome to recount all the promises for which Louis paid Charles II of England, which Charles regularly broke." In the "Humpty Dumpty period" of the eighteenth century Charles VI of Austria, who had no sons, entered a whole series of treaties designed to protect the lands he was leav ing to his beautiful daughter, Maria Theresa. He gave up trade advantages and territory to guar antee the "Pragmatic Sanction"

that was to defend the "female heirs of the House of Austria. But if Maria Theresa hadn't been a woman of mettle she would have been done in by her "guarantors," including the Prussian "monster," Frederick the Great, who made a grab for Austrian Silesia the mo ment that Charles VI died. Maria Theresa "turned to those from whom she had no promises," and they saved her for reasons of "sen timent and interest," which proved "more dependable than treaties." Peace Without Treaties Comparatively few treaties were signed during the nineteenth cen tury, which Mr. Beilenson calls "the peaceful century." The U.S. beha ved badly toward its French ally in the years after Yorktown, when John Jay "purposely de ceived France" in his efforts to reach a satisfactory peace agree ment with Britain. But thereafter the U.S. kept relatively clear of "paper chains" for more than a hundred and forty years. We did break our word to Colombia when President Theodore Roosevelt used a U.S. cruiser to prevent Colom bian troops from interfering with the Panamanian revolution. This particular treaty breech was in our "interest," for it gave us the Panama Canal. We owned up to our own duplicity when we paid Colombia $25 million in 1922 in settlement of Colombia's claims.

Since we refused to sign the Versailles Treaty, we weren't party of acquiescing in many of the treaty breeches of the twenties and the thirties. But the Kellogg Briand Pact did link us in a gen576 THE FREEMAN September eral way to the "Versailles sys tem." "The paper structure" of those years, says Mr. Beilenson, "was· the strongest ever erected." But, despite the "paper chains," the Japanese invaded Manchuria, the Germans rearmed secretly, the Italians seized Ethiopia, the Brit ish let the Germans build sub marines in violation of the naval clauses of Versailles, and nobody bothered to stop Hitler when, in defiance of treaty obligations, he invaded .the Rhine demilitarized zone in 1936. The moral of the tale is to sign treaties "selectively, sparingly, and cautiously." And when you do sign them, be skeptical of their value; even "inspectors," watching for breeches of arms limitation guarantees, can be bribed. Above all, be wary of electing rulers who are prone to attacks of the "dis ease of treaty-reliance." Even Stalin got caught in that particu lar trap. ~ ~ ENEMIES OF THE PERMA NENT THINGS by Russell Kirk (New Rochelle, N. Y.: Arlington House, 1969, 311 pp.) $7.00.

Reviewed by Robert M. Thornton THE TONE of this Kirk miscellany is more positive than the title in dicates; the accent is on such friends of the permanent things as T. S. Eliot, Max Picard, Ray Brad bury, George Orwell, C. S. Lewis, and Eric Voegelin. Intelligent com mentary on the work of such men is cheerful reading for those who are tired of being told over and oyer again tha t this is an age of change, and that we must adapt to the new. Of course things change - sometimes for the better, but often for the worse. It is absurd, therefore, to discard tested ways of doing things - religious beliefs, moral codes, customs and manners - simply because they are old. Age, as a matter of fact,counts in their favor, indicating that the belief or practice has survival value. Kirk argues persuasively against the modern inclination toward the abnormal in art, literature, and politics, and against the new style men "who think in slogans and talk in bullets," the "terrible sim plifiers" who "reduce politics to catch-phrases; . . . who promise social, rather than personal, sal vation." "A norm," he explains, "means an enduring standard. It is a law of nature, which we ig nore at our peril. It is a rule of human conduct and a measure of public virtue."

Happily, the agony of our time is producing books that point the way ahead, and this is one of them. ~ the Freeman VOL. 19, NO. 10 • OCTOBER 1969 The LibertarianPhilosophy Benjamin A. Rogge 579 Dr. Rogge explains his points of departure from conservatives, modern liberals, and the New left. The Great Depression Hans F. Sennholz 585 A survey of four distinct phases of the "great depression," with reasons and understanding that may help to avert repetition. Socialized Airwaves Jerry Emanuelson 597 How the principles of private property might help to resolve a knotty problem. Gold's Dust Gary North 599 Gold may well collect dust when properly policing a nation's monetary policies. Read's Law Leonard E. Read 608 "No politician can fly higher in office than he flew while getting there." The Quiet Revolution Edmund A. Opitz 611 "In quietness and in trust shall be your strength." (Isaiah 30:15) In Doing 1l0ne's Own Thing" Henry Edward Simons 619 Radically creative, yes, but not radically destructive of traditional ways.

Problem or Opportunity? Clarence B. Carson 622 When the garbage business is monopolized by government, how do we know whether a given item is a waste or a resource? The Anyones A poetic plea for constructive differences among men. AI Siebert 629 Problems the Free Market Can't Solve Paul L. Poirot 630 The organized demand of something for nothing is the kind of a problem for which there is no market solution. Book Reviews: 636 "Education in America" by George Charles Roche III "The Man from Monticello: (An Intim~te Ufe of Thomas Jefferson)" by Thomas Fleming Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON·ON·HUDSON, N. Y. 10533 TEL.: (914) 591·7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN 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. 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, 1969, 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.

I INTEND to answer a question that disappointingly few people even bother to ask. The question is this: Just what is Ben Rogge's social philosophy? Or, as some have put it: "Rogge, just what kind of a nut are you?" I suppose one must expect to create both suspicion and confu sion when he demands, at one and the same time, that the social se curity system be abolished, that the laws making it a crime to use marijuana be repealed, along with the laws against child labor, and that we sell Yellowstone Park to the people who operate Disney land. This is indeed a mixed bag, but it is my very own bag; and to me these apparently diverse ele ments represent simply different Dr. Rogge is Chairman of the Department of Economics at Wabash College. This article is from a Chapel Talk at the College on April 10, 1969. The libertarian Philosophy BENJAMIN A. ROGGE applications of a single guiding principle. This principle is that each man and each woman should be permitted to.do his thing, singly or in pairs or in groups as large as the Mormon Church or General Motors, so long as it's peaceful. Or to put it another way: In Rogge's world, the role of the state would be precisely no more and no less than that of the night watchman.

In the words of Thoreau, "Govern ment is an expedient by which men would fain succeed in letting one another alone." Now to the heart of the matter. First, is my social philosophy properly described as one of the competing ideologies of our day? To this the answer is no. In the first place, it is so far out of fash ion that it can hardly be said to be competing; secondly, it is thought by many to be not of our 579 580 THE FREEMAN October day, but of the last century; and thirdly, I see it as not an ideology at all but rather as the negation of ideology. I quote now from Webster's New Collegiate Dictionary: "IDE OLOGY - the integrated asser tions, theories and aims constitu ting a politico-social program." To me, this identifies the ideologue as someone, be he Christian or Mos lem or Marxist or Fascist or Lib eral Reformer or Monarchist, who has a clear vision of what man is or should be or could become and who has some kind of socio-politi cal program for bringing about the desired state of affairs. To the ideologue, the ideal social system is to be defined in terms of certain ends or goals to be attained, such as the elimination of poverty or the elimination of racial prejudice or the maximizing of the growth rate or the establishment of the one true religion or the dominance of the master race or the imple mentation of the General Will or the Eternal Glory of the American or the French nation. Usually, but not always, there are certain re straints placed on the means to be used, ,but the emphasis is always upon the vision of the proper goal of man's existence here on earth, as revealed by voices from burning bushes or by prophets or by the magnificently objective results of science or in the massive and blind forces of history or in the' dark and mysterious processes of the human mind or what-have-you.

Look to the Means To the libertarian, in a certain sense, it is not the ends of man's actions that count - only the means used in serving those ends. To each of the ideologues he says: "You may be right and you may keep on trying to convince me and others that you are right but the only means you may use are those of persuasion. You may not im pose your vision by force on any one. This means not only that you are not to stone the heretic or the prostitute or the hippie or the col lege dean or the Jew or the busi nessman or even the policeman; it means as well, and most impor tantly, that you are not to get the policeman or the sheriff to do your stoning for you." In saying this, the libertarian is not necessarily declaring him self to be agnostic in his attitude toward any and all ideologies. He may in fact have some clear pref erences as among ideologies. At the same time, men who feel deeply about something are rarely tolerant with respect to that some thing. I, Ben Rogge, do not use marijuana nor do I approve its use, but I am afraid that if I sup port laws against its use, some fool will insist on correcting my 1969 THE LIBERTARIAN PHILOSOPHY 581 habits. I believe that the typical Episcopal Church is somewhat higher on the scale of civilization than the snake-handling cults of West Virginia. Frankly, I wouldn't touch even a consecrated reptile with a ten-foot pole, or even a nine-iron, but as far as the Angli can Church is concerned, I am still an anti-antidisestablishmentarian, if you know what I mean.

Distinctive Characteristics Well, so what? How does all this set the libertarian apart (whether for better or for worse) from all others? Let us first take the traditionalist or conservative, with whom the libertarian is often linked, largely erroneously. True, together they sing the chorus of damn the unions, damn the mini mum wage laws, and damn the progressive income tax. But when the libertarian starts a chorus of damn the tariff or damn the Sun day blue .laws, he ends up singing a solo. Let me be careful about this. What I am asking for is pre cisely what men like Albert Jay Nock have asked for in the past that the society be distinguished from the state and that the society not be absorbed by the state. So ciety, with its full network of re straints on individual conduct, based on custom, tradition, reli gion, personal morality, a sense of style, and with· all its indeed powerful sanctions, is what makes the civilized life possible and meaningful. I am not proposing an anarchic society; on the con trary I am essentially a conserva tive on Inost questions of social organization and social process. I do believe in continuity, in the im portant role of tradition and cus tom, in standards for personal conduct, in the great importance of the elite (imperfect though they may be) .

But unlike the political con servative, I do not wish to see these influences on individual be havior institutionalized in the hands of the state. As I read his tory, I see that wherever the gen erally accepted social processes have been made into law, civiliza tion has ceased to advance. For one, the penalty to be paid by the innovator, which is severe even without the law, and perhaps properly so, is made so severe (even including death) as to stop that healthy and necessary and slow process of change through which civilizations move to higher levels of achievement. For another, the elite, if given the power to implement their views with the use of force, are almost certain to be corrupted by that power and to cease playing their essential and beneficial role in society. The pages of history 582 THE FREEMAN October are strewn with the wreckages of superior men who have been un done by the corrupting influence of possession of the power to coerce.

Modern Liberalism Now to the modern liberal. How does the libertarian differ from the modern liberal? Well, the mod ern liberal cuts in where the con servative cuts out and cuts out where the conservative cuts in. Like the libertarian, the modern liberal is all for sin, so long as it's peaceful. But unlike the liber tarian, the modern liberal i.s per fectly willing to use the sheriff to attempt to bring about whatever outcomes he desires in economic life. Should there be a Pure Book.s, Plays and Films Administration? Never, says the modern liberal. Should there be a Pure Food and Drug Administration? Of course, says the modern liberal. If two consenting adults engage in an unnatural act in private, should the law intervene? Never, says the modern liberal. If two consenting adults arrive at a wage contract calling for the payment of $1.00 an hour to the one, should the state intervene and require that the payment must be no less than $1.60 per hour (even if, by the very act, that leads to no contract; to no job at all) ? Of course, says the modern liberal. These exampIes could be multiplied indefi nitely.

Now, perhaps there are real dif ferences in circumstances that make these differences in evalua tion consistent. Perhaps the mod ern liberal is right and the liber tarian is wrong. What I am trying to point out is that the libertarian, he he right or be he wrong, is opposed to intervention by the state in any of the peaceful ac tions of individuals or groups, whether the relationship involve sex, games, or the market place; and this sets him apart from both the modern conservative and the modern liberal. The New Left Now what of the New Left? Here, too, there are some family resemblances, and some of my lib ertarian friends are now involved in a love affair with the New Left. In some ways this makes sense. The New Left and the libertarians share a common suspicion of con centra ted power, and particularly of the power to coerce; they join in not wishing to be ruled by any establishment, even of the elite; they tend to be alike in leaning toward pacificism and noninter vention, at least in opposing the U.S. involvement in Viet Nam and the Russian involvement in Czech oslovakia. But there the love affair comes to an abrupt end.

1969 THE LIBERTARIAN PHILOSOPHY 588 To the libertarian, private prop erty is an extension of the human personality and an absolutely nec essary element in the structure of a society of free men; to most New Lefters, private property is largely an invention of the estab lishment to suppress the free hu man spirit and is a barrier to the full expression of human concern and relatedness. To the libertari an, or at least to Ben Rogge, the "politics of confrontation" of the New Left is neither peaceful as a means nor acceptable as an end, if the end is what it so often seems to be, the imposing of a minority view on the majority by what amounts to blackmail. "Give in to my demands and I'll leave your office; throw me off your property and you are the one who is guilty of breaking the peace. 'Call in the cops to protect that which is yours and you are a Fascist pig." To the libertarian this is no~sense, and very danger ous nonsense indeed. The goal of the victory of persuasion over force in 'human affairs can hardly be well served by what amounts to the use of force.

But of course, the goal of the New Left is not the goal of the libertarian - the right choice of means. In fact, the goals of the New Left are difficult to identify, particularly in terms of the kind of social arrangements they wish to see' brought into being out of the ashes of that which we now have. Given their rejection of capitalism. and liberal democracy, there seem to be three main possi bilities: (1) an essentially anar chic arrangement, with no govern ment; (2) a syndicalist-commun alist-pastoral arrangement, pat terned after the kibbutz in Israel, with minimal government; or (3) an out-and-out Marxist-socialist dictatorship of the proletariat. To the libertarian, the first would mean the tyranny of the strong, and life would indeed be mean, nasty, brutish, and short; the. sec ond would mean economic chaos and, given our dependence on the goods produced by a sophisticated technology, this approach would require that some eight out of every ten of us lie down and die; and the third would mean tyranny, bold and bloody and bright.

We Work with Imperfections and Thus Need fo Be Free To all of these - the conserva tive, the modern liberal, and the New Left - the libertarian says, with HuckleberryFinn,. "No thank you, I've been there· before." He insists that what marks the civil ized society is not so much what goals its people are seeking but what means are used and accepted in the seeking of goals. He insists that to the opinions and ideas and 584 THE FREEMAN October revelations of even the best of men must still cling the mortal, the human uncertainty. If even those who come to be least im perfect in knowing and acting can not be identified in advance (or even clearly identified after the fact) surely it follows that each imperfect man must be given (in deed, has) the right to follow his own imperfectly selected star in his own imperfect way, to march to the music that he hears and not to the music that you and I hear.

The libertarian is in no sense a utopian. He argues only that in a world in which each imperfect individual was left free to make his own imperfect decisions and to act on them in any way that was peaceful, enjoying the fruits of his successes and suffering the agony of his mistakes, man could at least fully attain to the dignity and tragedy and comedy that comes with being a man rather than a thing. And here, somewhere East of Eden, there is little more that we can expect out of life. ~ IDEAS ON LIBERTY Up Through the Ranks THERE is not of necessity any such thing as the free hired laborer being fixed to that condition for life. Many independent men everywhere in these States a few years back in their lives were hired laborers. The prudent, penniless beginner in the world labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own account another while, and at length hires another new beginner to help him.

This is the just and generous and prosperous system which opens the way to all, gives hope to all, and consequent energy and progress and improvement of condition to all. Nomen living are more worthy to be trusted than those who toil up from poverty; none less inclined to take or touch aught which they have not honestly earned. Let them beware of surrendering a political power which they already possess, and which if surrendered will surely be used to close the door of advancement against such as they and fix new disabilities and burdens upon them till all of liberty shall be lost. ABRAHAM LINCOLN, Message to Congress, 1861 HANS F. SENNHOLZ fBI GRIAf nIPRI~~I~N ALTHOUGH the Great Depression engulfed the world economy some 40 years ago, it lives on as a night mare for individuals old enough to remember and as a frightening specter in the textbooks of our youth. Some 13 million Americans were unemployed, "not wanted" in the production process. One worker out of every four was walking the streets in want and despair. Thou sands of banks, hundreds of thou sands of businesses, and millions of farmers fell into bankruptcy or ceased operations entirely. Nearly everyone suffered painful losses of wealth and income.

Many Americans are convinced that the Great Depression reflected the breakdown of an old economic Dr.. ·Sennholz heads the Department of Eco nomies at Grove City College in Pennsylvania and is a noted writer and lecturer for freedom. order built on unhampered mar kets, unbridled competition, specu lation, property rights, and the profit motive. According to them, the Great Depression proved the inevitability of a new order built on government intervention, polit ical and bureaucratic control, hu man rights, and government wel fare. Such persons, under the in fluence of Keynes, blame business men for precipitating depressions by their selfish refusal to spend enough money to maintain or im prove the people's purchasing power. This is why they advocate vast governmental expenditures and deficit spending - resulting in an age of money inflation and credit expansion. Classical economists learned a different lesson. In their view, the Great Depression consisted of four 585 586 THE FREEMAN October consecutive· depressions rolled into one. The causes of each phase dif fered, but the consequences. were all the same: business stagnation and unemployment.

The. Business Cycle The first phase was a period of boom and bust, like the business cycles that had plagued the Amer ican economy in 1819-20, 1839-43, 1857-60, 1873-78, 1893-97, and 1920-21. In. each case, government had generated a boom through easy money and credit, which was soon followed by the inevitable bust. The spectacular crash of 1929 followed five yearS of reckless credit expansion by the Federal Reserve System under the Cool idge Administration. In 1924, after a sharp decline in business, the Reserve banks suddenly cre atedsome $500 million in new credit, which led to a bank credit expansion of over $4 billion· in less than one year. While the im mediate effects of this new power ful expansion of the nation's money and credit were seemingly beneficial, initiating a· new eco nomic boom and effacing the 1924 decline, the ultimate outcome was most disastrous. It was the begin ning of a monetary policy that led to the 'stock market crash in 1929 and the following depression. In fact, the expansion of Federal Reserve credit in 1924 constituted what Benjamin Anderson in his great treatise on recent economic history (Economics and the Pub lic Welfare, D. Van Nostrand, 1949) called "the beginning of the New Deal."

The Federal Reserve credit ex pansion in 1924 also was designed to assist the. Bank of England in its professed desire to maintain prewar exchange rates. The strong U.S. dollar and the weak British pound were to be readj usted to prewar conditions through a policy of inflation in the U.S. and de flation in Great Britain. The Federal Reserve System launched a further burst of infla tion in 1927, the result being that total currency outside banks plus demand and time deposits in the United States increased from $44.51 billion at the end of June, 1924, to $55.17 billion in 1929. The volume of farm and urban mortgages expanded from $16.8 billion in 1921 to $27.1 billion in 1929. Similar increases occurred in industrial, financial, and state and local government indebted ness. This expansion of money and credit was accompanied by rapidly rising real estate and stock prices. Prices for industrial securities, according to Standard & Poor's common stock index, rose from 59.4 in June of 1922 to 195.2 in September of 1929. Railroad stock 1969 THE GREAT DEPRESSION 587 climbed from 189~2 to 446.0, while public utilities rose from 82.0 to 375.1.

A Series of False Signals The vast money and credit ex pansion by the Coolidge Admin istration made 1929 inevitable. In flation and credit expansion always precipitate business maladjust ments and malinvestments that must later be liquidated. The ex pansion artificially reduces and thus falsifies interest rates, and thereby misguides businessmen in their investment decisions. In the belief that declining rates indi cate growing supplies of capital savings, they embark upon new production projects. The creation of money gives rise to an economic boom. It causes prices to rise, es.pecially prices of capital goods used for business expansion. But these prices constitute business costs. They soar until business is no longer profitable, at which time the decline begins. In order to pro long the boom, the monetary au thorities may continue to inject new money until finally frightened by the prospects of a runaway in flation. The boom that was built on the quicksand of inflation then comes to a sudden end.

The ensuing recession is a period of repair and readjustment. Prices and costs adj ust anew to consumer choices and preferences. And above all, interest rates read just to reflect once more the actual supply of and demand for genuine savings. Poor business invest ments are abandoned or written down. Business costs, especially labor costs, are reduced through greater labor .productivity and managerial efficiency, until busi ness can .once more be profitably conducted, capital investments earn interest, and the market econ omy' function smoothly again. After an abortive attempt at stabilization in the first half of 1928, the Federal Reserve System finally abandoned its easy money policy at the beginning of 1929. It sold government securities and thereby halted the bank credit ex pansion. It raised its discount rate to 6 _per cent in August, 1929. Time-money rates rose to 8 per cent, commercial paper rates to 6 per cent, and call rates to the panic figures of 15 per cent and 20 per cent. The American economy was beginning to readj ust. In June, 1929, business activity began to recede. Commodity prices began their retreat in July.

The security market reached its high on September 19 and then, under the pressure of early selling, slowly began to decline. For five more weeks the public nevertheless bought heavily on the way down. More than 100 millionshares were traded at the New York Stock Ex588 THE FREEMAN October change in September. Finally it dawned upon more and more stockholders that the trend had changed. Beginning with Octoher 24, 1929, thousands stampeded to sell their holdings immediately and at any price. Avalanches of selling by the public swamped the ticker tape. Prices broke spectacu larly. Liquidation and Adjustment The stock market break sig naled the beginning of a readj ust ment long overdue. It should have been an orderly liquidation and adjustment followed by a normal revi val. After all, the financia~ structure of business was very strong. Fixed costs were low as business had refunded a good many bond issues and had reduced debts to banks with the proceeds of the sale of stock. In the follow ing months, most business earn ings made a reasonable showing.

Unemployment in 1930 averaged under 4 million, or 7.8 per cent of labor force. In modern terminology, the American economy of 1930 had fallen into a mild recession. In the absence of any new causes for de pression, the following year should have brought recovery as in pre vious depressions. In 1921-22 the American economy recovered fully in less than a year . What, then, precipitated the abysmal collapse after 1929? What prevented the price and cost adj ustments and th us led to the second phase of the Great Depression? Disintegration of the World Economy The Hoover Administration op posed any readjustment. Under the influence of "the new econom ics" of government planning, the President urged businessmen not to cut prices and reduce wages, but rather to increase capital out lay, wages, and other spending in order to maintain purchasing power. He embarked upon deficit spending and called upon munici palities to increase their borrow ing for more public works.

Through the Farm Board which Hoover had organized in the au tumn of 1929, the Federal govern ment tried strenuously to uphold the prices of wheat, cotton, and other farm products. The GOP tradition was further invoked to curtail foreign imports. The Hawley-Smoot Tariff Act of June, 1930, raised American tariffs to unprecedented levels, which practically closed our borders to foreign goods. According to most economic historians, this was the crowning folly of the whole period from 1920 to 1933 and the begin ning of the real depression. "Once we raised our tariffs," wrote Ben j amin Anderson, "an irresistible movement all over the world to 1969 THE GREAT DEPRESSION 589 raise tariffs and to erect other trade barriers, including quotas, began. Protectionism ran wild over the world. Markets were cut off. Trade lines were narrowed. Unemployment in the export in dustries all over the world grew with great rapidity. Farm prices in the United States dropped sharply through the whole of 1930, but the most rapid rate of decline came following the passage of the tariff bill." When President Hoover announced he would sign the bill into law, industrial stocks broke 20 points in one day. The stock market correctly anticipated the depression.

The protectionists have never learned that curtailment of im ports inevitably hampers exports. Even if foreign countries do not immediately retaliate for trade re strictions injuring them, their for eign purchases are circumscribed by their ability to sell abroad. This is why the Hawley-Smoot Tariff Act which closed our borders to foreign products also closed for eign markets to our products. American exports fell from $5.5 . billion in 1929 to $1.7 billion in 1932. American agriculture cus tomarily had exported over 20 per cent of its wheat, 55 per cent of its cotton, 40 per cent of its to bacco and lard, and many other products. When international trade and commerce were disrupted, -American farming collapsed. In fact, the rapidly growing trade restrictions, including tariffs, quotas, foreign exchange controls, and other devices were generating a world-wide depression. Agricultural commodity prices, which had been well above the 1926 base before the crISIS, dropped to a low of 47 in the sum mer of 1932. Such prices as $2.50 a hundredweight for hogs, $3.28 for beef cattle, and 32¢ a bushel for wheat, plunged hundreds of thousands of farmers into bank ruptcy. Farm mortgages were foreclosed until various states passed moratoria laws, thus shift ing the bankruptcy to countless creditors.

Rural Banks in Trouble The main creditors of American farmers were, of course, the rural banks. When agriculture collapsed, the banks closed their doors. Some 2,000 banks, with deposit liabili ties of over $1.5 billion, suspended between August, 1931, and Febru ary, 1932. Those banks that re mained open were forced to cur tail their operations sharply. They liquidated customers' loans on securities, contracted real estate loans, pressed for the payment of old loans, and refused to make new ones. Finally, they dumped their most marketable bond hold ings on an. already depressed 590 THE FREEMAN October market. The panic that had en gulfed American agriculture also gripped the banking system and its millions of customers. The American banking crisis was aggravated by a series of events involving Europe. When the world economy began to disin tegrate and economic nationalism ran rampant, European debtor countries were cast in precarious payment situations. Austria and Germany ceased to make foreign paymEnts and froze large English and American credits; when Eng land finally suspended gold pay ments in September, 1931, the crisis spread to the U.S. The fall in foreign bond values set off a collapse of the general bond market, which hit American banks at their weakest point - their in vestment portfolios.

Depression Compounded 1931 was a tragic year. The whole nation, in fact, the whole world, fell into the cataclysm of despair and depression. American unemployment jumped to more than 8 million and continued to rise. The Hoover Administration, summarily rejecting the thought that it had caused the disaster, labored diligently to place the blame on American businessmen and speculators. President Hoover called together the nation's in dustrial leaders and pledged them to adopt his program to maintain wage rates and expand construc tion. He sent a telegram to all the governors, urging cooperative ex pansion of all public works pro.,. grams. He expanded Federal pub lic works and granted subsidies to ship construction. And for the benefit of the suffering farmers, a host of Federal agencies embarked upon price stabilization policies that generated ever larger crops and surpluses which in turn de pressed product prices even fur ther. Economic conditions went from bad to worse and unemploy ment in 1932 averaged 12.4 mil.lion.

In this dark hour of human want and suffering, the Federal government struck a final blow. The Revenue Act of 1932 doubled the income tax, the sharpest in crease in the Federal tax burden in American history. Exemptions were lowered, "earned income credit" was eliminated. Normal tax rates were raised from a range of 11/2 to 5 per cent to a range of 4 to 8 per cent, surtax rates from 20 per cent to a maximum of 55 per cent. Corporation tax rates were boosted from 12 per cent to 133A: and 141/2 per. cent. Estate taxes were raised. Gift taxes were imposed with rates from 3A: to 33 Y2 per cent. A 1 ¢ gasoline tax was imposed, a 3 per cent automo bile tax, a telegraph and telephone 1969 THE GREAT DEPRESSION 591 tax, a 2¢ check tax, and many other excise taxes. And finally, postal rates were increased sub stantially. When state and local govern ments faced shrinking revenues, they, too, joined the Federal gov ernment in imposing new levies.

The rate schedules of existing taxes on income a,nd business were increased and new taxes imposed on business income, property, sales, tobacco, liquor, and other products. Murray Rothbard, in his author itative work on America's Great Depression (Van Nostrand, 1963), estimates that the fiscal burden of Federal, state~ and local govern ments nearly doubled during the period, rising from 16 per cent of net private product to 29 per cent. This blow, alone, would bring any economy to its knees, and shatters the silly contention that the Great Depression was a consequence of economic freedom. The New Deal of NRA and AAA One of the great attributes of the private-property market sys tem is its inherent ability to' over come almost any obstacle. Through price and cost readjustment, man agerial efficiency and labor pro ductivity, new savings and invest ments, the market economy tends to regain its equilibrium and re sume its service to consumers. It doubtless would have recovered in short order from the Hoover in terventions had there been no fur ther tampering.

However, when President Franklin Delano Roosevelt as sumed the Presidency, he, too, fought the economy all the way. In his first 100 days, he swung hard at the profit order. Instead of clearing away the prosperity bar riers erected by his predecessor, he built new ones of his· own. He struck in every known way at the integrity of the U.S. dollar through quantitative increases and qualitative deterioration. He seized the people's gold holdings and subsequently devalued the dollar by 40 per cent. With some third of industrial workers unemployed, President Roosevelt embarked upon sweep ing industrial reorganization. He persuaded Congress to pass the National Industrial Recovery Act (NIRA), which set up the National Recovery Administration (NRA). Its purpose was to get business to regulate itself, ignor ing the antitrust laws and develop ing fair codes of prices, wages, hours, and working conditions.

The President's Re-employment Agreement called for a minimum wage of 40¢ an hour ($12 to $15 a, week in smaller communities), a 35-hour work week for industrial workers and 40 hours for white 592 THE FREEMAN October collar workers, and a ban on all youth labor. This was a naive attempt at "in creasing purchasing power" by in creasing payrolls. But, the im mense increase in business costs through shorter hours and higher wage rates worked naturally as an antirevival measure. After passage of the Act, unemployment rose to nearly 13 million. The South,especially, suffered severely from the minimum wage provi sions. The Act forced 500,000 Negroes out of work. Nor did President Roosevelt ignore the disaster that had be fallen American agriculture. He attacked the problem by passage of the Farm Relief and Inflation Act, popularly known as the First Agricultural Adjustment Act. The objective was to raise farm in come by cutting the acreages planted or destroying the crops in the field, paying the farmers not to plant anything, and organizing marketing agreements to improve distribution. The program soon covered not only cotton, but also all basic cereal and meat produc tion as well as principal cash crops. The expenses of the pro gram were to be covered by a new "processing tax" levied on an al ready depressed industry.

NRA codes and AAA processing taxes came in July and August of 1933. Again, economic production which had flurried briefly before the deadlines, sharply turned downward. The Federal Reserve index dropped from 100 in July to 72 in November of 1933. Pump-Priming Measures When the economic planners saw their plans go wrong, they simply prescribed additional doses of Fed eral pump priming. In his J anvary 1934 Budget Message, Mr. Roose velt promised expenditures of $10 billion while revenues were at $3 billion. Yet, the economy failed to revive; the business index rose to 86 in May of 1934, and then turned down again to 71 by Sep tember. Furthermore, the spend ing program caused a panic in the bond market which cast new doubts on American money and banking. Revenue legislation in 1933 sharply raised income tax rates in the higher brackets and im posed a 5 per cent withholding tax on corporate dividends. Tax rates were raised again in 1934.

Federal estate taxes were brought to the highest levels in the world. In 1935, Federal estate and in come taxes were raised once more, although the additional revenue yield was insignificant. The rates seemed clearly aimed at the redis tribution of wealth. According to Benjamin Ander son, "the impact of all these multi1969 THE GREAT DEPRESSION 593 tudinous measures - industrial, agricultural, financial, monetary and other - upon a bewildered in dustrial and financial community was extraordinarily heavy. We must add the effect of continuing disquieting utterances by the President. He had castigated the bankers in his inaugural speech. He had made a slurring compari son of British and American bank ers in a speech in the summer of 1934.... That private enterprise could survive and rally in the midst of so great a disorder is an amazing demonstration of the vi tality of private enterprise."

Then came relief from unex pected quarters. The "nine old men" of the Supreme Court, by unanimous decision, outlawed NRA in 1935 and AAA in 1936. The Court maintained that the Federal legislative power had been unconstitutionally delegated and states' rights violated. These two decisions removed some fearful handicaps under which the economy was laboring. NRA, in particular, was a night mare with continuously changing rules and regulations by a host of government bureaus. Above all, voidance of the act immediately reduced labor costs and raised productivity as it permitted labor markets to adjust. The death of AAA reduced the tax burden of agriculture and halted the shocking destruction of crops. Unem ployment began to decline. In 1935 it dropped to 9.5 million, or 18.4 per cent of the labor force, and in 1936 to only 7.6 million, or 14.5 per cent. A New Deal for Labor The third phase of the Great Depression was thus drawing to a close. But there was little time to rejoice, for the scene was being set for another collapse in 1937 and a lingering depression that lasted until the day of Pearl Har bor. More than 10 million Ameri cans were unemployed in 1938, and more than 9 million in 1939.

The relief granted by the Su preme Court was merely tempo rary. The Washington planners could not leave the economy alone; they had to earn the support of organized labor, which was vital for re-election. The Wagner Act of July 5, 1935, earned the lasting gratitude of labor. This law revolutionized American labor relations. It took labor disputes out of the courts of law and brought them under a newly created Federal agency, the National Labor Relations Board, which became prosecutor, judge, and jury, all in one. Labor union sympathizers on the Board fur ther perverted the law that al ready afforded legal immunities and privileges to labor unions. The 594 THE FREEMAN October U. S. thereby abandoned a great achievement of Western civiliza tion, equality under the law. The Wagner Act, or National Labor Relations Act, was passed in reaction to the Supreme Court's voidence of NRA and its labor codes. It aimed at crushing all em ployer resistance to labor unions.

Anything an employer might do in self-defense became an "unfair labor practice" punishable by the Board. The law not only obliged employers to deal and bargain with the unions designated as the employees' representative; later Board decisions also made it un lawful to re'sist the demands of labor union leaders. Following the election of 1936, the labor unions began to make ample use of their new powers. Through threats, boycotts, strikes, seizures of plants, and outright violence committed in legal sanc tity, they forced millions of work ers into membership. Conse quently, labor productivity de clined and wages were forced up ward. Labor strife and disturb ance ran wild. Ugly sitdown strikes idled hundreds of plants. In the ensuing months economic activity began to decline and un employment again rose above the ten million mark. But the Wagner Act was not the only source of crisis in 1937.

President Roosevelt's shocking attempt at packing the Supreme Court, had it been successful, would have subordinated the Judi ciary to the Executive. In the U.S. Congress the President's power was unchallenged. Heavy Demo cratic majorities in' both houses, perplexed and frightened by the Great Depression, blindly followed their leader. But when the Presi dent strove to assume control over the Judiciary, the American na tion rallied against him, and he lost his first political fight in the halls of Congress. There was also his attempt at controlling the stock market through an ever-increasing num ber of regulations and investiga tions by the Securities and Ex change Commission. "Insider" trading was barred, high and in flexible margin requirements im posed and short selling restricted, mainly to prevent repetition of the 1929 stock market crash. Never theless the market fell nearly 50 per cent from August of 1937 to March of 1938. The American economy again underwent dread ful punishment.

Other Taxes and Controls Yet other factors contributed to this new and fastest slump in U.S. history. The Undistributed Profits Tax of 1936 struck a heavy blow at profits retained for use in busi ness. Not content with destroying 1969 THE GREAT DEPRESSION 595 the wealth of the rich through confiscatory income and estate tax ation, the administration meant to force the distribution of corporate savings as dividends subject to the high income tax rates. Though the top rate finally imposed on undis tributed profits was "only" 27 per cent, the new tax succeeded in diverting corporate savings from employment and production to dividend income. Amidst the new stagnation and unemployment, the President and Congress adopted yet another dan gerous piece of New Deal legisla tion: the Wages and Hours Act or Fair Labor Standards Act of 1938. The law raised minimum wages and reduced the work week in stages to 44, 42, and 40 hours. It provided for time-and-a-half pay for all work over 40 hours per week and regulated other labor conditions. Again, the Federal government thus reduced labor productivity and increased labor costs - ample grounds for further depression and unemployment.

Throughout this period, the Fed eral government, through its monetary arm, the Federal Re serve System, endeavored to rein flate the economy. Monetary ex pansion from 1934 to 1941 reached astonishing proportions. The monetary gold of Europe sought refuge from the gathering clouds of political upheaval, boosting American bank reserves to unac customed levels. Reserve balances rose from $2.9 billion in January, 1934, to $14.4 billion in January of 1941. And with this growth of member bank reserves, interest rates declined to fantastically low levels. Commercial paper often yielded less than 1 per cent, bank ers' acceptances from V8 per cent to lAo per cent. Treasury bill rates fell to 1/10 of 1 per cent and Treas ury bonds to some 2 per cent. Call loans were pegged at 1 per cent and prime customers' loans at 11j2 per cent. The money market was flooded and interest rates could hardly go lower.

Deep-Rooted Causes The American economy simply could not recover from these suc cessive onslaughts by first the Re publican and then the Democra tic Administrations. Individual enterprise, the mainspring of un precedented income and wealth, didn't have a chance. The calamity of the Great De pression finally gave way to the holocaust of World War IL When nlore than 10 million able-bodied men had been drafted into the armed services, unemployment ceased to be an economic problem. And when the purchasing power of the dollar had been cut in half through vast budget deficits and currency inflation, American busi596 THE FREEMAN October ness managed to adj ust to the oppressive costs of the Hoover Roosevelt Deals. The radical infla tion in fact reduced the real costs of labor and thus generated new employment in the postwar period. Nothing would he more foolish than to single out the men who led us in those baleful years and condemn them for all the evil that hefell us. The ultimate roots of the Great Depression were growing in the hearts and minds of the American people. It is true, they ahhored the painful symptoms of the great dilemma. But the large majority favored and voted for the very policies that made the disaster inevitahle: inflation and credit expansion, protective tariffs, labor laws that raised wages and farm laws that raised prices, ever higher taxes on the rich and dis tribution of their wealth. The seeds for the Great Depression were sown by scholars and teach ers during the 1920's and earlier when social and economic ideol ogies that were hostile toward our traditional order of private prop erty and individual enterprise con quered our colleges and universi ties. The" professors of earlier years were as guilty as the poli tical leaders of the 1930's.

Social and economic decline is facilitated by moral decay. Surely, the Great Depression would he in conceivable without the growth of covetousness and envy of great personal· wealth and income, the mounting desire for public assist ance and favors. It would be in conceivable without an ominous decline of individual independence and. self-reliance, and above all, the burning desire to be free from man's bondage and to be responsi ble to God alone. Can it happen again? Inexor able economic law ascertains that it must happen again whenever we repeat the dreadful errors that generated the Great Depression. ~ IDEAS ON LIBERTY Mob Mind in 1928-29 AFTER the crash in 1929, a speech was made before the Chamber of Commerce of the State of New York to explain what had hap pened, which discussed, among other things, the phenomena of mob mind which had been so manifest in the year and a half that had preceded the crash. The speaker made the generaliza tion, familiar to social psychologists, that the more intense the craze, the higher the type of intellect that succumbs to it.

BENJAMIN ANDERSON, Economics and the Public Welfare JERRY EMANUELSON THE SITUATION regarding control of the airwaves may well be the closest approximation to total so cialism in the world today. The use and allocation of radio fre quencies is totally regulated by international treaties and national governments. Private ownership of the airwaves is virtually non existent. The responsibility for this condition rests mainly with the governments of the United States and the other supposedly capitalistic nations. Organized communism had little to do with the governmental seizure of the airwaves. The term "airwaves" actually refers to empty space, rather than air. Such space remains useless until someone turns on a radio transmitter - just as much of the land in the American West reMr. Emanuelson is a licensed broadcast engi neer and a student of electronics engineering in Colorado. mained useless until it was settled and developed by the pioneers. The airwaves qualify as property in the same sense that land does.

Both can be bounded, claimed, and controlled either by private in dividuals or by governments. With respect to land,we have applied the private-property homestead principle. With respect to the air waves, we have resorted to socialism. . Imagine what the consequences might have been if, when this country was being settled, the gov ernment had zoned all land and leased it out by granting three year licenses. This would have been out-and-out socialism. Yet, this is exactly the situation that prevails with respect to the air waves in our supposedly capital istic society. Instead of resorting to social ism, radio frequencies could be considered as private property, 597 598 THE FREEMAN October with unclaimed radio frequencies subject to claim by anyone who has a transmitter and wants to use the unclaimed frequency. If a hobbyist wants to transmit televi sion signals on channel 4 in an area where that channel is un claimed, why shouldn't he be per mitted to do so? The homestead ing principle should be applied to the airwaves as well as to land.

Unowned frequency space could be claimed in the same manner that unowned land is claimed. Radio frequencies also could be bought and sold just as land is traded among willing buyers and sellers. If a hobbyist establishes sole claim to channel 4 in a given geographical area, any broadcast ing company that subsequently wants to use that frequency space should be free to try to buy or lease it from the hobbyist. With the current state of tech nology, there is plenty of fre quency space available for every one who is willing and able to buy or build a UHF radio transmitter. Except in a few metropolitan areas, nearly all of the· UHF tele vision channels are unused. Yet, just one of these UHF television channels contains enough fre quency space for 600 AM broad cast or two-way radio stations each with a range of 30 miles or so. Undoubtedly, much of this idle frequency space would be put to good use if the airwaves were a commodity on the open market.

As with any other scarce and valuable resource, putting the air waves on the free market would insure their most efficient and profitable use. A "radio-home steader" hobbyist would have the same incentive to sell or lease his frequency space to a broadcasting company as any land owner might have to sell or lease his land to a mining company if it contained rich mineral deposits. Strange that a country founded on the principles of private prop erty and the free market should ignore those principles in exploit ing the discovery of radio. ~ IDEAS ON LIBERTY Private Property BARBARISM has its earmarks, and the acquisition of property through conquest or superior force is notably one of them. Civili zation, too, has its earmarks, and the orderly disposition of property through the medium of deeds, leases, wills, and other contractual arrangements is not only an earmark of civilization but an absolute prerequisite.

EDW ARD P. SCHARFENBERGER The best way for a nation to build confidence in its curr,ency is not to bury lots of gold in the ground; it is, instead, to pursue responsible fi nancial policies. If a country does so consistently enough, it's likely to find its gold growing dusty from disuse. Editorial, THE WALL STREET JOURNAL (July 8, 1969) GARY ·NORTH WHEN I read the above sentences for the first time, something clicked in my mind. That the con clusions drawn by the editorialist concerning the importance of gold for monetary purposes are opposed to my conclusions is neither here nor there. What is important is tha t within an editorial hostile to gold, the writer has hit upon one of the basic truths of the in ternational gold standard. The gatheTing of dust on a govern ment's stock of monetary gold is as good an indication of fiscal re sponsibility as 'would be the addi tion of gold dust to the stock.

In order to place things in their proper perspective, we must con sider the function of money in general and the size of a nation's gold stock in particular. Money, Gary North is a member of the Economists' National Committee on Monetary Policy. it should be understood, is useful only as a means of exchange. The reason some particular economic good functions as money is be cause it is the most highly market able good available; it outrivals other items in the four properties of any monetary good: durability, transportability, divisibility,. and scarcity. For that reason it is in demand; people are willing to part with other scarce goods and serv ices in order to purchase money. Murray Rothbard has commented on this unique function of money: Thus, we see that while an increase in the money supply, like an increase in the supply of any good, lowers its price, the change does not - unlike other goods - confer a social benefit.

The public at large is not made richer. Whereas new consumer or capital goods add to standards of living, new 599 600 THE FREEMAN October money only raises prices - i.e., dilutes its own purchasing power. The rea son for this puzzle is that money is only useful for its exchange-value. Other goods have "real" utilities, so that an increase in their supply satis fies more consumer wants. Money has ?nl y utility for prospective exchange; Its utility lies in its exchange-value or "purchasing power." Our law ~ that an increase in money does not confer a social benefit - stems from its unique use as a medium of ex change.! No Measure for Social Benefit I would prefer to modify Dr. Rothbard's statement somewhat. If economic analysis is accepted as a tool for better understanding, then we must be careful not to derive ethical judgments from the application of a supposedly neu tral tool of analysis. This, I be lieve, is in line with the epistemo logical foundations laid down by men like Ludwig von Mises and Lionel Robbins. What we can say, therefore, is that an addition to an existing stock of money cannot be said to confer a social benefit in the aggregate. Given Professor Mises' analysis of inflation (which Dr. Rothbard generally accepts, as I do), we know that those who have first access to the new money do, indeed, gain a benefit: they can spend the newly mined (or 1 Murray N. Rothbard, What Has Gov ernment Done to Our Money? (Pine Tree Press, 1964), p. 13.

newly printed) money at yester day's prices. Their competitors who do not have immediate access to the new money are forced to restrict their purchases as supplies of available goods go down and/or prices of the goods increase. Thus, those on a fixed income cannot buy as much as they would have been able to buy had the new money not come into existence. Some peo ple benefit in the short run; others suffer loss. Economic analysis as such gives us no clue as to the overall social benefit; in the ag gregate, social benefits may have increased, .stayed the same, or fall en. But Dr. Rothbard's general point is vital: the increase of the total stock of money cannot be said, a priori, to have increased a nation's aggregate social benefit. The only way such a statement could be made would be in terms of a value-laden set of presuppo sitions which deems it socially beneficial to aid one group in the community (the miners, or those printing the money) at the ex pense of another group (those on fixed incomes). Economics as such could never tell us this, which should encourage us to re-examine the presuppositions lying behind the highly inflationary recommen dations of many of those enam ored of the "new economics."

If it is true that there is no way of supporting, through the use of 1969 GOLD'S DUST 601 economic analysis, the idea that an increase in the money supply in some way increases aggregate social benefits, then certain con clusions will follow. For the sake of argument, let us assume that the supply of paper dollars is tied both legally and in fact, to th~ stock of gold in the Federal gov ernment's vaults. Let us assume that for each ounce of gold brought to the government, a paper receipt called a "dollar" is issued to the one bringing in the gold for deposit. At any time the bearer of this IOU can redeem the paper "dollar" for an ounce of gold. By definition, a dollar is now worth an ounce of gold, and vice versa. What will take place either if an addition of new gold is made by some producer, or if the government (illegally) should print up a paper dollar? Rothbard describes the results: An increase in the money supply, then, only dilutes the effectiveness of each gold ounce; on the other hand a fall in the supply of money raises the power of each gold ounce to do its work. [Rothbard is speaking of the long-run effects in the aggregate.] We come to the startling truth that it doesn:t matter what the supply of money ~s. Any supply will do as well as any other supply. The free market will simply adjust by changing the purchasing-power, or effectiveness of its gold unit. There is no need whatever for any planned increase in the money supply, for the supply to rise to offset any condition, or to follow any artificial criteria. More money does not supply more capital, is not more productive, does not permit "economic growth."2 Once we have a given supply of money in our national gold sys tem (or wampum system), we no longer need to worry about the ef ficiency of the monetary unit.

Men will use money as an eco nomic accounting device in the most efficient manner possible, given the prevailing legal, insti tutional' and religious structure. In fact, by adding to the existing money supply in any appreciable fashion, we bring into existence the "boom-bust" phenomenon of inflation and depression. 3 The old cliche, "Let well enough alone," is quite accurate in the area of mon etary policy. Why Gold? We live in an imperfect uni verse. We are not perfect crea tures, possessing omniscience, om nipotence, and perfect moral na tures. We therefore find ourselves in a world in which some people will choose actions which will benefit them in the short run, but which may harm others in the long 2 Ibid., p. 13. 3 Cf. Gary North, "Repressed Depr.... sion," THE FREEMAN (April, 1969).

602 THE FREEMAN October run. The gold miner, by diluting the purchasing power of the mone tary unit, achieves short-run bene fits. Those on fixed incomes are faced with a restricted supply of goods available for purchase at the older, less inflated, price levels. This is a fact of life. Neve.rtheless, Professor Mises has defended gold as the great foundation of our liberties pre cisely because it is so difficult to mine. It is not a perfect mechan ism, but its effects are far less deleterious than the power of a monopolistic state or licensed banking system to create money by fiat. The effects of gold are far more predictable, because they are more regular; geology acts as a greater barrier to inflation than can any man-made institutional arrangement. 4 The booms will be smaller, the busts will be less devastating, and the redistribution involved in all inflation (or defla tion, for that matter) can be more easily planned for.

Nature is niggardly; that is a blessing for us in the area of mon etary policy, assuming we limit ourselves to a monetary system tied to specie metals. We would not need gold if, and only if, we could be guaranteed that the government or banks would not 4 Ludwig von Mises, The Theory of Money and Credit (Yale University Press, 1951), pp. 209-11, 238-40. tamper with the supply of money in order to gain their own short run benefits. So long as that temp tation exists, gold (or silver, or platinum) will alone serve as a protection against policies of mass inflation. The Stock of Gold The collective entity known as the nation, as well as another col lective, the State, will always have a desire to increase its percentage of the world's economic goods. In international terms, this means that there will always be an in centive for a nation to mine all the gold that it can. While it is true that economics cannot tell us that an increase in the world's gold supply will result in an in crease in aggregate social utility, economic reasoning does inform us that the nation which gains access to newly mined gold at the beginning will be able to buy at yesterday's prices. World prices will rise in the future as a direct result, but he who gets there "fustest with the mostest" does gain an advantage. Thus, so long as there is a demand for South African gold, we can expect to see South Africa selling her gold if the value of the goods she can purchase is greater than the value of the gold. to her. What applies to an individual citizen miner ap plies equally to national entities.

1969 GOLD'S DUST 603 So much for technicalities. What about the so-called "gold stock"? In a free market society which permits all of its citizens to own gold and gold coins, there will be a whole host of gold stocks. (By "stock," I mean gold hoard, not a share in some company.) Men will own stocks, institutions like banks will have stocks, and all levels of civil government. - city, county, national-will possess gold stocks. All of these institu tions, including the family mem ber, could issue paper IOU slips for gold, although the slips put out by known institutions would no doubt circulate with greater eas.e (if what is known about them is favorable) . I suppose that the "na tional stock of gold" in such a situation would refer to the com bined individual stocks. Within this hypothetical world, let us assume that the national government wishes to purchase a fleet of German automobiles for its embassy in Germany. The American people are therefore taxed to make the funds available.

Our government now pays the German central bank (or similar middleman) paper dollars in order to purchase German marks. Since, in our hypothetical world, all na tional currencies are 100 per cent gold-backed, this will be an easy arrangement. Gold would be equally valuable everywhere (excluding shipping costs and, of course, the newly mined gold which keeps upsetting our analy sis), so the particular paper de nominations are not too impor tant. Result: the German firm gets its marks, the American embassy gets its cars, and the middleman has a stock of paper American dollars. These bills are available for the purchase of ,American goods or American gold directly by the middleman, but he, being a specialist working in the area of currency exchange, is more likely to make those dollars available (at a fee) for others who want them. They, in turn, can buy American goods, services, or gold.

This should be clear enough. Paper Promises Easily Broken Money, it will be recalled, is useful only for exchange, and this is especially true of paper money (gold, at least, can be made into wedding rings, earrings, nose rings, and so forth). If there is no reason to mistrust the Ameri can government, the paper bills will probably be used by profes sional importers and exporters to facilitate the exchange of goods. The paper will circulate, and no one bothers with the gold. It just sits around in the vaults, gather ing dust. So long as the govern ments of the world refuse to print more paper bills than they have 604 THE FREEMAN October gold to redeem them, their gold stays put. It would be wrong to say that gold has no economic function, however. It does, and the fact that we must forfeit storage space and payment for security systems testifies to that valuable function. It keeps governments from tampering with their domes tic monetary systems. An ingot of prevention is worth a pound of cure (apologies to Harold Wilson).

Obviously, we do not live in the hypothetical world which I have sketched. What we see today is a short-circuited international gold standard. National governments have monopolized the control of gold for exchange purposes; they can now print more IOU slips than they have gold. Domestic populations cannot redeem their slips, and since March of 1968, very few international agencies have access to governmental gold stocks (or so we are told). The governments create more and more slips, the banks create more and more credit, and we are deluged in money of decreasing purchas ing power. The rules of the game have been shifted to favor the ex pansion of centralized power .. The laws of economics, however, are still in effect. Trading Without Gold One can easily imagine a situa tion in which a nation haS' a tiny gold reserve in its national treas ury. If it produces, say, bananas, and it limits its purchases of for eign goods by what it receives in foreign exchange for exported bananas, it needs to transfer no gold. It has purchasing power (ex ported bananas) apart from any gold reserves. If, for some reason, it wants to increase its national stock of gold (perhaps the gov ernment plans to fight a war, and it wants a reserve of gold to buy goods in the future, since gold stores more conveniently than bananas), the government can. get the gold, or it could before March, 1968. All it needs to do is take the foreign money gained through the sale of bananas and use it to buy gold instead of other economic goods. This will involve taxation, of course, but that is what all wars involve. If you spend less than you receive, you are saving the residual; a government can save gold. That's really what a gold reserve is - a savings account.

This is a highly simplified ex ample. It· is used to convey a basic economic fact: if you produce a good (other than gold),·· and you use it to export in order to gain foreign currency, then you do not need a gold reserve. You have merely chosen to hoard foreign currency instead of gold. That ap plies ·to citizens and governments equally well.

1969 GOLD'S DUST 605 What, then, is the role of gold in international trade? Dr. Pat rick Boarman clearly explained the mechanism of international exchange· in ·The WaU Street Jour nal of May 10, 1965: The function of international re serves is NOT to consummate inter national transactions. These are, on the contrary, financed by ordinary commercial credit supplied either by exporters or importers, or in some cases by international institutions. Of such·commercial credit there is in individual countries normally no shortage, or internal credit policy can be adjusted to make up for any un toward tightness of funds. In con trast, .international reserves are re quired to finance only the inevitable net differences between the value of a country's total imports and its total exports; their purpose is not to fi nance trade itself, but net trade im balances. The international gold standard, like the free market's rate of in terest, is an equilibrating device.

What it is supposed to equilibrate is not gross world trade but net trade imbalances. Boarman's words throw considerable light on the perpetual discussion concerning the increase of "world monetary liquidity" : A country will experience a net movement of its reserves, in or out, only where its exports of goods· and services and imports of capital are insufficient to offset its imports of goods and services and exports of capital. Equilibrium in the balance of payments is attained not by in creasing the quantity of a mythical "world money" but by establishing conditions in which autonomous movements of capital will offset the net results, positive -and negative, of the balance of trade. Some trade imbalances are tem porarily inevitable. Natural or so cial disasters take place, and these may reduce a nation's productivity for a period of time. The nation's "savings" - its gold stock - can then be used to purchase goods and services from abroad. Specif ically, it will purchase with gold all those goods and services needed above those available in trade for current exports. If a nation plans to fight a long war, or if it expects domestic rioting, then, of course, it should have a larger gold stock than a nation which expects peaceful conditions. If a nation plans to print up millions and even billions of IOU slips in order to purchase foreign goods, it had better have a large gold stock to redeem the slips. But that is merely another kind of trade im balance, and is covered by Boar man's exposition.

The Guards A nation w4ich relies on its free market mechanism to balance 606 THE FREEMAN October supply .and demand, imports and exports, production and consump tion, will not need a large gold stock to encourage trade. Gold's function is to act as a restraint on governments' spending more than they take in. If a government takes in revenues from the citi zenry, and exports the paper bills or fully backed credit to pay for some foreign good, then there should be no necessity to deplete its semi-permanent gold reserves. They will sit idle - idle in the sense of physical movement, but not idle in the sense of being eco nomically irrelevant. The fact that the gold does not move is no more (and no less) significant than the fact that the guards who are protecting the gold can sit quietly on the job if the storage system is really effi cient. Gold guards us from that old messianic dream of getting something for nothing; that is also the function of the guards who protect the gold. The guard who is not very important in a "thief-proof" building is also a kind of "equilibrating device": he is there in case the overall system should experience a tem porary failure.

A nation which permits the market to function freely is, by analogy, also "thief-proof": every one consuming is required to offer something in exchange. During emergencies the gold is used, like the guard. Theoretically, the free market economy could do without a large national gold reserve, in the same sense that a perfectly de signed vault could do without most of the guards. The nation that requires huge gold reserves is like a vault that needs extra guards; something is probably breaking down somewhere. Conclusion I have come, as a recent popu lar song puts it, "the long way around." What I have been trying to explain is that a full gold coin standard, within the framework of a free market economy, would permit the large mass of citizens to possess gold. This might mean that the "national reserves of gold" - that is, the State's gold hoard - might not have to be very large. If we were to re-establish full domestic convertibility of paper money for gold coins (as it was before 1934), while removing the "legal tender" provision of the Federal Reserve Notes, the economy would still function. It would probably function far better in the long run.

That, of course, is not the world we live in. Since it is not a free society in the sense that I have pictured, we must make certain compromises with our theoretical model. The statement in The Wall 1969 GOLD'S DUST 607 Street Journal's editorial would be completely true only in an economy using a full gold coin standard: "The best way for a nation· to build confidence-in its currency is not to bury lots of gold in the ground." Quite true; gold would be used for purposes of exchange, although one· might save for a "rainy day" by burying gold. But if gpvernments refused to inflate their currencies, few people would need to bury their gold, and neither would the government. If a government wants to build con fidence, indeed it should "pursue responsible financial policies," that is, it should not spend more than it takes in. The conclusion is ac curate: "If a country does so con sistently enough, it's likely to find its gold growing dusty from disuse."

In order to remove-the necessity of a large gold hoard, all we need to do is follow policies that will "establish Justice, insure domestic Tranquility, provide for the com mon defense [with few, if any, entangling alliances], promote the general Welfare, and secure· the Blessings of Liberty to ourselves and our Posterity." To the extent that a nation dep~rts from those goals, it will need a large gold hoard, for it costs a great deal to finance inj ustice, domestic vio lence, and general illfare. With the latter policies in effect, we find that the gold simply pours out of the Treasury, as "net trade im balances" between the State and everyone else begin to mount. A moving ingot gathers no dust. Which leads us to "North's Corollary to the Gold Standard" (tentative): "The fiscal responsi bility of a nation's economic poli cies can be measured directly in terms of the thickness of the layer of dust on its gold reserves: the thicker the layer, the more respon sible the policies." , IDEAS ON LIBERTY Nobody's Business THE ESSENTIAL difference between the pre-war and the postwar gold standard was that the former had to work, because, if it did not do so, the banker went bankrupt. After the outbreak of war in 1914 the Government - not the banker - was responsible, and what is the Government's business is often nobody's business.

GEORGE WINDER, A Short History of Money Read's Law LEONARD E. READ IT IS becoming more and more fashionable for probers into polit ical economy to concoct a "law" and tack their name onto it. Doubtless, this fad stems from such famous instances as Gresh am's Law.~ "Bad money drives out good money." Or, Say's Law of Markets: "Production geneT'ates its own purchasing power." This tendency among our con temporaries is a humorous way of presenting a serious idea, believed by each to be sound and original. Nor can I fault anyone for trying to have a bit of fun with what otherwise might be dismal and foreboding. Perhaps the best known of the new ones is Parkinson's Law: "Ex penses rise to meet income." A book entitled The Peter Prin ciple currently heads the best seller list: "In· a· hierarchy every employee tends to rise to his level of incompetence." Brozen's Law reads: "Most ob viously true economic policy prop ositions are false."1 Rogge's Rule' tickles my fancy: "Whenever the government passes a law for your protection, take to the hills - because you are about to be had !"2 The subject here, however, is Read's Law: "No politician can fly higher in office than he flew while getting there."

This "law" has no meaning, of course, until we identify the point of reference for "higher." And the height to which I aspire is freedom; that is, no restraint 1 Yale Brozen, Professor of Business Economics, Graduate School of Business, University of Chicago. See THE FREEMAN, June, 1968, p. 328. 2 Benjamin A. Rogge, Professor of Po litical Economy, Wabash College.

1969 READ'S LAW 609 against any creative action. In other words, freedom is my idea of high; socialism, statism - call it what you will - is my idea of low. Without resort to the above point of reference, my "law" would have to be stated something like this: "N0 politician, after getting into office, can remove any more restraints against freedom than he promised to remove. in his campaign speeches." Let me relate how handy this "law" is. Over the years, I have known numerous aspirants for high office who, in private, endorse the freedom philosophy all the way - no exceptions! I am led to be lieve, "There's my boy!" Later, as I hear or read his campaign speeches, I find nary a word about the. socialism he intends to repeal -if elected. Indeed, only his polit ical label seems to distinguish him from his socialist opponent. If such a candidate is sufficiently art fulat vacillation, he's elected.

Then, friends of mine hopefully ask: "What achievements for free dom are you looking forward to from so-and-so?" I respond by re peating Read's Law: "No politi cian can fly higher in office than he flew while getting there." My questioners chuckle, reflect on the campaign speeches, and draw their own conclusions. I have an swered them accurately without a single disparaging or offensive reference to so-and-so. No per sonal attack - just an incontro vertible fact revealed! Bear in mind that my claim has to do only with an inability to fly higher, not lower. An officeholder's "ceiling" is set by his campaign speeches; he can descend to any level. I recall the campaign pre tensions of an aspirant to our highest office. He flew higher than anyone since Grover Cleveland. But once in office, he fell into a sideslip and never pulled out of it. Let me explain how I discovered Read's Law. The campaign man ager of a candidate was my close personal friend. Because his man's speeches were socialistic, I was critical. "Why, he believes the same as you and I do," came the reply. "He has to say what he's saying to get elected. Once in of fice, he will practice what we be lieve." The contention was that his candidate would fly higher in office than he flew while getting there. But no one was able to prove that untenable thesis; when the last vote was in, the candidate had lost.

The Truth Must Prevail This experience led me to three important conclusions. The first is that no officeholder can ever over throw any socialistic practice un less there is an enormous consen610 THE FREEMAN October sus that it be done away with; otherwise, the practice is too tightly woven into the social fab ric to be cast out by some political trick. Ridding our society of TVA or Social Security, for instance, is utterly impossible unless there be a general agreement for repeal. The candidates who never mention repeal in their campaign speeches make no contribution whatsoever to a new consensus. So, they have mustered no support for it, what ever their private views may be. They can never fly any higher than they flew while getting there! They are impotent. On the other hand, if they had been elected be cause of their advocacy of repeals, they would then have a. popular mandate to so perform.

Second, the candidates who pre tend privately to believe in free dom principles and who run for office on other than a clear-cut freedom platform, do not under stand these principles; they do not know them! Conceded, they know about them and can recite the ideas quite impressively - as can actors. The reason that so many of us are deceived in our private talks with these men is that we cannot see into their minds as to whether or not they really apprehend the ideas behind their words. We can only know for sure what they believe when we see them in action - in their cam paigns. Candidates who thorough ly apprehend freedom principles would not - indeed, could not - do other than uphold them. When one knows a principle, its observation and practice is second nature. 3 Finally, let politicians who pri vately say they are for freedom, but who publicly espouse socialism in order to get elected, be faithful to their public pronouncements.

Freedom will fare better this way. Exposing the fallacies of socialism and explaining the principles of freedom cannot possibly be achieved except through fidelity. Truth can never be found by those or among those who practice dis simulation. Devotees of freedom have every thing to gain and nothing to lose when campaign promises, regard less of how socialistic, are faith fully kept. We need only remind ourselves that no politician can ever fly higher in office than he flew while getting there. Further more, the advancement of freedom is not a matter of who wields political power over creative ac tions; rather, it depends upon the disassembling of such power. " 3 See "When Freedom Becomes Second Nature," Notes from FEE, November, 1969.

The QUIET Revolution THE GREAT NATURALIST,John Bur roughs, wrote that "in the ordi nary course of nature, the great beneficent changes come slowly and silently. The noisy changes, for the most part, mean violence and disruption .... The still small voice is the voice of life and growth . . . In the history of a nation it is the same." This is a time of noisy change, a time of violence and disruption, a time of perpetual crisis. There is, we are told, a crisis in family life, a crisis in the cities, a crisis in race relations, a, crisis in re ligion. Doubt has been cast on all the old certainties; nothing ap pears fixed except change - and the inmates are trying to run the The Reverend Mr. Opitz is a member of the staff of The Foundation for Economic Educa tion. This article is from his guest sermon at Kirk in the Hills, Bloomfield Hills, Michigan, August 10, 1969. EDMUND A. OPITZ asylum. The present mood has been captured in the familiar lines by William Butler Yeats: Things fall apart; the centre cannot hold; Mere anarchy is loosed upon the world ...

The best lack all conviction, while the worst Are full of passionate intensity. A bill of particulars is not need ed; any man can supply his own, from any newspaper, any day of the week. And the feeling grows among us that the whirlwind of change which has scrambled our value system has erased all guide lines, all benchmarks, all stand ards. The 1960's have not dealt kindly with Americans, and our magnifi cent accomplishments in outer space serve but to highlight the 611 612 THE FREEMAN October tragic ruptures which mar our social life. We are bogged down in a land war in Asia, as a phase of the cycle of wars into which we have been locked since 1914. Whereas America was once re garded by the world's peoples as "the last, best hope of earth," it is now reviled in many quarters. Latin American countries ask a Presidential emissary to call off his tour because they cannot guar antee his safety. The nineteenth century trend in the direction of constitutionally guaranteed liber ties of the citizen in his personal, his social, and his economic affairs slowed to a halt in the twentieth.

The tide of totalitarianism began to rise, and communism in Russia has recently celebrated its fiftieth anniversary, confident of its strength, sure of the future, able to count on the disaffected of all countries - including our own - as allies. We are uncertain about the philosophical basis of our own form of society; Adam Smith seems almost as· remote as the original Adam, and who reads The Federalist Papers nowadays? The Executive branch has become semi-autonomous, and the Supreme Court usurps a legislative func tion. At the level where most of us live there is· mounting concern over increased crime· and the open incitements to violence - to which certain sectors of our society re spond by displaying a paranoid sense of collective guilt. And then there are the demonstrations, the riots, and that crushing blow to our spirit - three tragic assassina tions. What has happened to people?

What will become of America? What of the church in all this? Outward Signs of Inner rurmoil I take it as axiomatic that ex ternal disorder and social strife is a reflection of disorder in the mind and soul. For it is in the nature of the human condition that man forever seeks a harmony within himself, that is, an ordered soul; and secondly, he works for an· outer order of society. Thomas Aquinas put it this way: "Man has a natural inclination toward knowing the truth about God, and toward living in society." This is to restate the Great Command ment given to us by the Master when he said: "Thou shalt love the Lord thy God with all thy heart, and with all thy soul, and with all thy mind, and with all thy strength. . . . And thy neigh bor as thyself." (Ma~k 12 :30-31) The inner and spiritual liberty proclaimed in the Gospels must seek to realize itself and find proper expression in outer and so cial freedom. Christianity pene trates society and creates the ap1969 THE QUIET REVOLUTION 613 propriate political and economic structures by means of Christian persons who are citizens or magis trates. The earth will never wit ness a fully realized Christian society, for this would mean the Kingdom of God, and God's King dom is beyond history. But what we can hope for is a society Chris tian in its norms, Christian in its understanding that man is formed to serve a transcendent end, to ful fill a purpose beyond society.

Biblical religion understands the world as the creation of God who looked out upon his work and called it good. It regards loan as a creature who bears a unique re lation to this God, being formed in his image - meaning that man possesses free will and the ability to command his own actions. This free being is given dominion over the earth with the admonition to be fruitful and multiply. He is commanded to work in order that he might eat; he is made steward of the earth's resources and held accountable for their economic use. He is to respect the life of his neighbor and not covet his goods; theft is wrong because property is right. When this out look comes to prevail, the ground work is laid for a free and pros perous commonwealth; the City of Man is not an end in itself, it is the proving ground for the City of God. "Secular Christianity" The contemporary outlook is quite different. It excludes God from its reckoning, and in a sec tor of the church we witness the paradox of a school of thought proclaiming "secular Christian ity:" The present outlook views the world as self-existent and man is reduced to a mere natural prod uct of natural forces - autono mous man, stripped of all attach ments which were thought to bind him to a transcendent realm of being. Shorn of his cosmic dimen sion, man is depersonalized; no longer the creature of God, he is red uced to a mere unit of mass society struggling to retain ves tiges of his humanity as his world goes through a time of troubles.

Secular trends have acquired such a momentum that religious movements tumble along in their wake. Theologians talk about the death of God and the new moral ity. The New Clergy tell us that the church must go, as they rush out to man the barricades; they preach violence and the overthrow of society. "The New Clergy in tersects with the New Left," de clares a writer in a recent Har pers. "These men are out to remake the world," some wit re marked, "as God would have made it in the first place - except he lacked the funds!" P olitically -minded churchmen 614 THE FREEMAN October seek to shape the churches into an ecclesiastical power bloc which would reduce religion to a mere instrument of revolutionary social change. We witness the growth of organizations, agencies, and councils designed to bring ecclesi astical leverage to bear on society, in a manner indistinguishable from the efforts of secular collec tivists. Chief among these is the National Council of Churches and the World Council. If social salva tion were to be had from large, powerful, and prestigious ecclesi astical organizations, then we should have been saved already.

But provide a religious organiza tion with wealth and power and it begins to change into a secular agency. The church in every age has come under the spell of secu lar movements and enthusiasms, to the detriment of spiritual re ligion. Churchmen dream of a large and powerful organization, both for the sake of the church itself - as they think - and for the sake of what that church might accomplish by its influence on government. In former days, churchmen invoked government to guarantee purity of doctrine by punishing those who deviated into some heresy. The aim was to get more souls into heaven. Today, churchmen seek to strengthen the hand of government and give it the power to manage the economy and control, where needed, the lives of the citizenry. The aim is to guarantee economic security from cradle to grave. Mistaken Methods It is easy for us now to see that medieval churchmen were mis taken in thinking that souls could be shoveled into heaven by the forced repetition of some incanta tion. Someday it will be just as evident that present-day church men are sadly misguided in their preoccupation with the reshuffling of the existing stock of economic goods. Like the secular liberals and collectivists, these churchmen expect to overcome economic dis abilities by political interventions.

They'll never aGhieve prosperity by taking this tack. Poverty can be overcome by increased produc tivity, and in no other way; and a society of free men is more pro ductive than any other. It follows that we maximize production and minimize poverty only as men are increasingly free to pursue their personal aims - including their economic goals - within the frame work of law. Prosperity, in fact, is a by-product of liberty. Limit the government to its proper compet ence, so that men are uncoerced in their interpersonal relations including their economic arrange ments - and the general level of well-being rises.

1969 THE QUIET REVOLUTION 615 A generation ago, Dean Inge of St. Pauls foresaw a "reversion to political and external religion, the very thing against which the Gos pel declared relentless war." It is not that Christianity regards so cial progress as unimportant, the Dean goes on to say; it is a ques tion of how genuine improvement may best be promoted; "the true answer ... is that the advance of civilization is a sort of by-product of Christianity, not its chief aim; but we can appeal to history to support us that this progress is most stable and genuine when it is a by-product of a lofty and un worldly idealism." The church is in the world, but it is not wholly of the world. Whenever it seeks to further social progress by embracing the cur rently fashionable political nos trum, it not only fails to achieve its social ends by politicalizing its gospel, but it betrays its own na ture as well. The church's job is to remind man, in season and out, who he really is and what he may become; and this task, in every age, means some resistance to "the world." The church must never marry the spirit of the age, Dean Inge used to say, for if she does she'll be a widow in the next.

The Saving Remnant Sometimes we despair of the church, but we must not forget that in every age there has been a creative and self-renewing activity at work within it; and it's at work there today. This is the sav ing Remnant. The seventeenth century Church of England Bishop, Richard Warburton, pon dered these matters. Is the church worth saving, he wondered? Whimsically, he compared the church to Noah's ark, and con cluded that the church, like the ark of Noah, "is worth saving, not for the sake of the unclean beasts that almost filled it and probably made much noise and clamor in it, but for the little corner of ra tionality [Noah and family] that was as much distressed by the stink within as by the tempest without." The French have a saying: "The situation is desperate; but it's not serious." The human venture has always been an uphill fight. The biological odds were against the emergence of man, and the scales have always been weighted against man's survival. But these facts, in themselves, have never been grounds for widespread or long-continued despair; certainly not wherever the Christian faith has taken hold.

A certain seventeenth century New England Puritan left a jour nal, in which was found this en try: "My heart leaps for joy, every time I hear the good news 616 THE FREEMAN October of damnation." Now the Puritans were a peculiar people, and this one had an odd way of putting things. But perhaps he is telling us something, in his oblique way. It is' good news that man possesses the gift of freedom so far-reaching that he is personally responsible for the ultimate fate of his soul. This is not to say that man saves himself; it is to say that the in dividual may choose to accept or rej ect the means of grace made available to him, and that his act of choosing is determinative. Responsibility Implies Freedom This old doctrine says, first of all, that Somebody in the universe cares for us individually, one by one. Such is the basic implication of any system of rewards and punishments based on merit or demerit. The conviction that this is a universe where, in the long run, we do get our j list deserts implies that we have a responsi bility for our lives; that nobody really gets away with anything.

No man is held accountable for an outcome which his actions did not affect one way or the other. Responsibility implies freedom. To say that man is a responsible being is to say that his freely made choices do cause things to happen this way rather than that. Life's alternate possibilities of re ward and punishment imply that men must choose. And because the universe does not jest, it has not given man the freedom to make a choice as to how he will commit his life without at the same time equipping that choice with power to affect the ultimate outcome. This is the core of the Doctrine of Election which a hillbilly preacher explained to his flock in this fashion: "The Lord votes for you; the Devil votes against you. It's the way you vote that decides the election." Even if you do noth ing, your very inaction becomes a form of action, affecting the out come one way or the other. The Power behind the universe has so much confidence in man that it has made him a free and responsible being. This is a basic premise of our religious heritage, but our generation, like each be fore it, must earn its heritage anew before we can make it our own.

The rest of creation is complete; we alone are unfinished. The Crea tor has given the animal world all the answers it needs; answers locked up in instinctual responses as old as time. But man has not been given the answers; before our eyes the Creator has posed a gi gantic question mark. Weare handed a question, and the answer is ours to give. We have the re sponsibility, the freedom, and the power to respond.

1969 THE QUIET REVOLUTION 617 If these things are true at all, they are true for everyone, but not everyone is equally able to grasp them as truths. Organiza tions that are equipped with the blinders fastened on them by wealth, power, and success are handicapped; they come to care more for their image than for the truth. It is sad to observe that nothing fails like success. But or ganizations and individuals who are not drawn into the power-and success game may advance the truth without encumbering it with themselves. They may become part of the saving Remnant. "Be still, and know that I am God," sang the Psalmist CPs. 46 :10). "In quietness ... shall be your strength," said Isaiah. (Isaiah 30: 15) Victory for the things we want victorious comes not with noisy demonstrations, clamorous agitation, bustling cam paigns, shouted slogans, heated discussions, passionate arguments, emotional debates, demagogic har angues; neither will it come by a display of power or a show of strength. The only victories worth winning arrive quietly, by the slow progress of thought, by the refinement of moral values. "Noth ing is so powerful as an idea whose time has come," and the ripening of ideas in the corridors of men's minds and the transla tion of these into appropriate action when ready is the only way man may advance. It is in the in tellect and in the moral imagina tion - that is, in the human spirit - that men may "wait upon the Lord and renew their strength."

The great Swiss economist, Wil helm Roepke, was also a deeply religious man. He fought in World War I and was the first intellec tual exiled by Hitler. "For more than a century," he writes, "we have made the hopeless effort more and more baldly proclaimed, to get along without God. It is as though we wanted to add to the already existing proofs of God's existence, a new and finally con vincing one; the universal destruc tion that follows on assuming God's nonexistence. The genesis of the malady from which our civili zation suffers lies in the individ ual soul and is only to be overcome within the individual soul." And if the care of souls is not, first and foremost, the province of the church, what - in God's name - is the church's main business? Disorder in society reflects a disorientation in man's inner life. If there is confusion as to the proper end, aim, and goal of per sonal life, then bizarre social ideol ogies will prove irresistibly at tracti ve and a sickness spreads in society. A healthy society, on the other hand, is the natural conse quence of sound thinking and right 618 THE FREEMAN October action among men and women who are pursuing the life-goals proper to human beings.

The church is a means for ends beyond itself; and our lives con tain potentialities which can never be fully realized on the biological and social planes alone. Weare in volved in lost causes; but take heart from St. Paul, where he speaks of foolish things confound ing the wise and weak things con founding the mighty. Paradoxi cally, there is a kind of strength in weakness, and there is a kind of wisdom in foolishness. And there are victories in lost causes, because God may choose them to work out his purposes. ~ IDEAS ON LIBERTY Man to Man Justice THE UNIFORMED POLICEMAN does not originate right and wrong. He merely extends and reinforces the observance of those, rights and duties that stem from the Ten Commandments. In all respects he is a mere projection of the individual human conscience and in no case can he be made to substitute for it. On the contrary, a widened sense of individual conscientious responsibility can be made to shorten the policeman's "beat" considerably. It is· in this direction - the direction of a more acutely developed sense of individual conscientious responsibility - that we must constantly look for any permanent improvement in the ordered general wel fare of our society.

It must be remembered that ninety-five percent of the peace, order and welfare existing in human society is always produced by the conscientious practice of man to man justice and person to person charity. When any part of this important domain of personal virtue is transferred to government, that part is auto matically released from the restraints of morality and put into the area of conscience-less coercion. The field of personal respon sibility is thus reduced at the same time and to the same extent that the boundaries of irresponsibility are enlarged. CLARENCE MANION. The Key to Peace In doing !!One!sOwnThing!! HENRY EDWARD SIMONS As A MEMBER of the "freaked out" and "turned on" generation, I find little comfort in the mental atti tUdes of some of my peers. In fact, it is a consequence of their "drop out" awareness that makes one fearful of the kind of leadership potential coming from these an archy-oriented visionaries. Such radicalism on campus is perhaps a sad commentary on the present ed ucational atmosphere of permis sive ideas and professors.

There is no "safe" campus if one equates safety and security with learning fundamentals and being free to think and experience new ideas. "But," you say, "isn't this what it is all about in the campus mood today?" I doubt it. Serious consideration of contempo rary values and judgments does Mr. Simons is both a teacher in the New York City public schools and a graduate student at New York University. not come in the form of riots, burning, and other antisocial ac tivities. The breakdown of the school is the only achievement if one feels this is a value. Our nation is derived of differ ent ideas and a competitive spirit. But responsibility always has been a factor in making constructive change a reality. Change, for it self, has no merit. That is like dumping last year's automobile be cause it is not "new," or consider ing people "old-fashioned" because they are over 30 years old. Some of our most creative ideas and practical inventions have come because a man had experience and insight gained from years of liv ing.

Perhaps our youth-oriented rad icals do not realize that their claims of insight are far from unique; adventures and ideals have inspired men and ·events 619 620 THE FREEMAN October throughout history. But the youth of today seem so determined to make history, spending their en ergies and abilities as if there had been no past and is to be no fu ture. The need to "blow one's mind" and identify change with long hair and eight-button suits is a far cry from effecting realistic and constructi ve change. The "tuning out" and LSD thrills offer no escape from reality. Change for the Better Such attempts to change one's life experience lead to considera tions in which living becomes a true hell, and the only change is for the worse. There is no need to destroy one's life in order to change the world as it appears, and as it really is - the difference be tween the two depending on one's age and experience as well as ma turity.

First of all, age affords no spe cial insight - whether one be young or old. The capacity to care for others, to participate freely in an open and competitive economy, and to learn from one's experi ences can be a springboard to im proved insight and skills. New ideas create new industries with new markets to serve. Man re ceives and acts upon ideas; and the work of applying ideas to pro duction affords personal joy and objective rewards. Change thus flows from the discovery of po tential within oneself and among one's contemporaries. The inventive minds create new needs. The electrical industry found itself needing people to fill jobs, which did not exist until Edi son came along with the electric light. Other examples are endless. Change can be prod ucti ve and ef fective in terms of social and eco nomic benefi ts. Technological changes within the past fifty years stagger the imagination - and pending innovations are beyond an ticipation. But this is fruitful change - requiring new "idea" men and women and creative personal insight and motivation. Business leaders do not want "dead-end"

thinkers! They seek creative sensi tive people to build and to make competitive change practical and effective. A David Sarnoff or a Tom Watson· or a Henry Ford these men brought about changes, but socially useful changes. A per son of strong individuality and personality, Captain Edward V. Rickenbacker, put his stamp of special concern and participation in the aviation industry. Faith in the Future Who says we don't want change, or that we would deny the ideals of those individuals with faith in the future! But faith in mankind is not the current rage on campus.

1969 IN DOING "ONE'S OWN THING" 621 Unfortunately, a lack of faith per sists and serves as a justification for anarchy and the rejection of respected institutions and ways of solving problems. All too common in the thoughts and practices of today's college generation is the fear that our nation cannot adapt to growth and change and that they cannot find their identity by participating in the peaceful way of getting. things done. But theirs is the most "old-fashioned" view of all, and it is not justified. Soon, hopefully, our college gen eration may catch up to the mod ern, yet eternal, reality that there is never a lack of desire for new ways and new ideas of individual style and merit. , IDEAS ON liBERTY Free to Discriminat(! IF MAN IS TO CONTINUE his self-improvement, he must be free to exercise the powers of choice with which he has been endowed. When discrimination is not allowed according to one's wisdom and conscience, both discrimination and conscience will atrophy in the same manner as an unused muscle. Since man was given these faculties, it necessarily follows that he should use them and be personally responsible for the consequences of his choices. This means that he \rpust be free to either enjoy or endure the conse\ quences of each decision, because the lesson it teaches is the sole purpose of experience - the best of all teachers.

When one's fellow men interpose force and compulsions be tween him and the Source of his being - whether by the device of government or otherwise - it amounts to· interrupting his self-improvement, in conflict with what seems to be the Divine design. Man must be left free to discriminate and to exercise his freedom of choice. This freedom is a virtue and not a vice. And freedom of choice sows the seeds of peace rather than of conflict. F. A. HARPER, Blessings of Discrimination A copy of this pamphlet is available on request from The Foundation for Economic Education. Irvington-on-Hudson. N. Y.

Problem or Opportunity? CLARENCE B. CARSON THE DISPOSAL of trash, garbage, and refuse is becoming a maj or problem, it seems. The feature page of one· Sunday newspaper described the matter with this frightening headline: Will Our Garbage Bury Us? Indeed, newspapers and magazines have' been devoting increasing amounts of space to the situation. We are told that policemen are having to allot more and more time to disposing of abandoned automobiles. In some states, trucks used to pick up refuse carelessly thrown out by motorists bear legends as to how much this costs the taxpayers each year. Dr. Carson is Professor of History at Grove City College in Pennsylvania. Books by him include The Fateful Turn, The American Tradition, and The Flight from Reality, originally serial ized in The Freeman. 622 Many cities are running out of places to dump garbage. The countryside is dotted with auto mobile graveyards. The problem has come to national attention; in 1965 Congress passed a Solid Waste Disposal Act. A move is afoot to increase the appropria tion for this activity. Something must be done, we are told, else we shall founder and sink in our own waste.

Whether a given situation con stitutes a problem or an oppor tunity is a nice question. Is a given material a waste or a re source? Trees were once a great obstacle to the utilization of land for farming in the eastern part of North America. They were cut down, rolled into position so that they could be piled up, then 1969 PROBLEM OR OPPORTUNITY? 623 burned. They were refused, hence, refuse. Today, of course, trees are reckoned to be a great resource, are planted, sometimes fertilized, and intentionally grown. Nor is time the only factor in changing problems into opportunities (or vice versa) or wastes into re sources. Of even greater impor tance is who is viewing the task or material and what object he has in view. This principle can be readily illustrated. When government undertakes to perform a task, it quickly becomes a problem. When private business undertakes to perform a task, it is seen as, and is, an opportunity.

For example, I cannot recall hav ing seen an article on the problem of making automobiles. Indeed, the basic problem of constructing an automobile was long since solved, and men labored at it not as a public problem but as an op portunity. Yet, disposing of old automobiles (a simpler task basi cally than constructing new ones) is now described as a major prob lem. In large, this is true because government increasingly monopo lizes the disposal industry (though this does not begin to tell us why government forecloses opportuni ty and raises problems). Dispos ing of wrecked or old automobiles was once a great opportunity for private business, but it is becom ing a problem for politicians and looms as a burden for taxpayers. Numerous other examples come to mind of this principle. Provid ing transportation in cities was once a great opportunity for pri vate entrepreneurs; it led to such fabulous successes as the private building of the New York subway system. But since governments haveentered more and more into transportation (particularly with in cities), it has ceased being an opportunity and become a series of monumental problems for cities.

The post office is a perennial prob lem. Airports, since they are heavily subsidized by govern ments, are described as problems. So it goes with many other tasks. What is waste or what is re source depends almost entirely upon how it is viewed. A private entrepreneur will tend to view all material in the light of its po tential use - he can profit by uti lizing it. Governments, on the other hand, may be inundated by waste, for they do not recognize profit as a measure of public de mand. Back on the Farm How did the refuse problem come about in America? It was not always so. When I was a boy growing up on the farm, we had no waste disposal problem worth discussing. Indeed, we had very little that could be classified as 624 THE FREEMAN October waste. Leftover food was carefully saved to be fed to the hogs. Worn out metal objects were saved kept in a pile - against the day the junkman came around so that they could be sold. Buckets, cans, and jars had many potential uses once they were emptied of their orig inal content. Sacks could not only be used as containers for produce, but also were a source of cloth.

Animal wastes were returned to the soil. Any large object was apt to contain lumber or other scraps which could be used in future con struction. Hardly anything then could be called waste. I am aware, of course, that times have changed, that it is no longer economical to use labor in ways that were even then becom ing marginal. Specialization has proceeded apace so that it now may be cheaper for a carpenter to use another nail than to retrieve one he has dropped. Containers and products have poured forth in bewildering shapes and varieties. Yet, as will be seen, this is just the point. Specialization has pro ceeded apace in production and distribution; it has declined and atrophied in the utilization of left overs. Hence, the mountains of waste that are said to loom over us. Two developments of import have occurred regarding leftovers. One is that manufacturers have ceased to give much thought to further uses for their container than the original one. That under states the case. They have devoted much energy to developing con tainers that can be thrown away after one use. Second, there has been a trend away from separated and segregated trash and garbage.

"All the trash goes together," the sweeper used to say (when humor was not so sophisticated), as he approached someone in his way. What was once a jibe has become a fact in many towns and cities; garbage has become a potpourri of boxes, cans, coffee grounds, leftover food, papers, fourth class mail, and what not. Hence, its vari ous elements are ruined for other use even before they reach the dump. The opposite of specializa tion has occurred. What was once potentially usable has been made waste by methods of storing and collection. Government Garbage Collection There are several interrelated reasons why this has come to pass, but the most direct one is this: Governments (city usually) entered the business of trash and garbage collection, in many cases establishing monopolies or near monopolies of this collection. Quite often, even if a citizen did not use the service, he would still have to pay. When governments took over 1969 PROBLEM OR OPPORTUNITY? 625 trash collection, production and distribution were separated from disposal. A large rent occurred in the economic fabric. Private en terprise continued to produce and distribute (sell) goods, but these functions were no longer inte grally related to further uses or disposal. Specialization has pro ceeded with great vigor in produc tion and distribution. It is grind ing to a halt in reuse of materials and their final disposition.

The reason for this is not far to seek. The disposal of leftovers was taken out of the economic realm and placed in the political. In the economic realm, leftovers offer an opportunity for further use and profit; in the political realm, leftovers are only a prob lem. Moreover, force had been in troduced in the affair; one had to pay for the service whether he would or not, and was frequently denied alternatives. Not surpris ingly, the citizen lost interest in separating and segregating his leftovers. After all, why should he bother with it? Why not lump it all together? This is what he did, when he could, and politicians began to acquiesce - in pursuit of votes. The Cost of Labor Another reason for the mounting waste is the cost of labor. There is no blinking the fact that it often takes considerable ingenuity and labor to reclaim materials from an earlier use for another one. There is the cost of collection, the labor of getting them ready for use, and the intelligent employment or reproduction for reuse. Almost any material sufficiently sturdy to be in the way could be put to some productive use. But costs may discourage this. The crucial fac~or here has been government inter ference in the labor market. This interference has been by way of minimum and union wages, com pulsory education, partial exemp tions from the draft for attending college, the subsidizing of idle ness in old-age pensions, and so forth. Moreover, labor costs have been made more expensive to the employer because of required so cial security payments, by pay ments into the unemployment fund, by the cost of bookkeeping to keep up with all these, and by regulations on t~e use of labor.

These costs explain, in part, why potential labor and various ma terial resources are not utilized, hence, why they become waste. There is a deeper dimension to the mounting piles of waste. They are mute indicators of the wasted lives among us; they are a much truer measure of the unemploy ment in America than the figures released by government agencies. This writer does not know, of 626 THE FREEMAN October 'course, how many people should or could be productively employed, or at what, but it is reasonable to suppose that some portion of them could render leftovers into goods, and would do so were they not subsidized in idleness. The main reasons why the dis posal of leftovers has become a problem, then, are these: govern ment pre;.,emption of garbage col lection, the consequent separation of production and distribution of goods from the disposal of left overs, the decline in specialization in dealing with leftovers, the lumping of all "trash" together so as to render it unfit for further use, the changing of disposal from economic opportunity into politi cal problem, and the pricing of labor out of the market which might deal more effectively with "'''hat is otherwise refuse.

The prognosis, given current conditions, is that the waste situ ation will continue to worsen. Looming ahead are probably gov ernment regulations on manufac turers and distributors as to ma terials to be used in dispensing their goods. When government undertakes to provide a service, it cannot be long before more force is applied to make the way of the user harder and the task of government easier. Already, labor unions have begun to perceive the diabolical possibilities for leverage from tying up garbage disposal in cities and towns. They have long realized the possibilities of hurt ing people by tying up production and distribution. The stopping of disposal may he even more potent. The concentration of this service because of government monopoly renders cities prostrate before their demands, or very nearly so. Return the Responsibility to Individuals and Families There is a way out of this mess which offers possibilities of better prospects. To put it in its simplest form, it is this, Return the re sponsibility for' the disposal of leftovers to individuals and fami lies. I am aware that this proposal, I in its blunt and simple formula tion, is unlikely to gladden many hearts. Many a housewife would throw up her hands in despair. As if she doesn't have trouble enough already getting her husband to set out the garbage cans, now there is to be no pick-up service!

Yet, such a reaction does not take into account the response of pri vate enterprise and the market. I do not know all the myriad ways the market would respond, nor am I sure that in particulars I am right about a single one of them. After all, mine is only one mind, and many minds would be loosed by this change to provide solutions to the problem. Still, it is worth1969 PROBLEM OR OPPORTUNITY? 627 while to explore some of the possi bilities. One thing we may be sure of, however, is that the householder would not be left to his own de vices to dispose of his leftovers once the responsibility became his. Indeed, the massive resources of private enterprise would be mus tered to serve him as a customer. Ingenuity might be expected to be devoted to producing containers that could be reused, could be re turned, could be easily discarded, or some combination of these. If containers became of greater concern to consumers, existing and potential technology un doubtedly would be employed in this way.

One of the important changes that might be expected to occur if private enterprise took over re sponsibility for disposal from gov ernment is that positive incentives would be substituted for force and penalties in trash collection. It might still be appropriate for gov ernments, in the interest of health and safety and for the protection of property, to make rules re garding the burning or disposal of trash, and to enforce these with penalties. But private enterprise would try to attract its customers to dispose of their waste in help ful ways. One of the possibilities is that stores might become collection centers for many items that other wise become debris, especially if the stores and customers could see a way to profit in the process. Stores are patrons of manufac turers. Manufacturers might be expected to give attention to mak ing their packages reclaimable. It is this function that has been neg lected because of the present ar rangements. Delivery truckS, which otherwise return empty from their rounds, could be used to return the containers to collec tion points for reprocessing plants.

A Specialized Service What is being discussed is, in the broadest terms, the restoration of specialization to disposal of leftovers. If restrictions on the use of labor and other resources were removed, a great deal of spe cialization might be expected to develop in the collection of what is now refuse. Many of these left overs have potentialities for reuse as matters now stand: edible scraps, fats, metals, bottles, paper, rags, and the like. There would un doubtedly be a residue of just plain trash to be carted away and burned, buried, or converted. It would, however, have been reduced to quite manageable proportions once private businessmen put their minds to it. It may be objected that all this sounds like too much trouble for 628 THE FREEMAN October the householder, and for the others. There are two considera tions which should reduce if not entirely remove this objection. One is that a variety of incentives would be employed to induce peo ple to perform the tasks of col lection. Not only might stores offer rewards for the return of their containers but also the householder might well be paid for some of his leftovers picked up at his home.

At the least, a token payment should be made for food scraps, magazines and newspapers, scrap metal, old furni ture, rags, and such like. Part of the payment might be made in hauling away free the refuse that remained. It is amazing what trouble people will go to for a little reward, as the popularity of trading stamps attests. For those who find the whole business distasteful, they should be free to lump all their leftovers together and pay to have it removed. Waste Not, Want Not There is another consideration, however. It is the matter of moral ity. Waste not, want not, is a venerable adage. The fact is that we are wasting potential resources in astonishing quantities today by making containers without atten tion to their further use and by the methods of disposing of left overs. The problem is not onesided as it is often presented what to do about the waste. It has another side - how best to employ our resources. And, as pointed out, we add to the material waste the wasted lives of those denied pro ductive employment by govern ment policies. True, it is possible to waste time by reclaiming some objects to use. For some people it may be a waste of time to sepa rate their leftovers for further use. What is and is not waste can not be settled a priori, and it I should not be settled by govern ment policy. Instead, it should be left to an integrated market where the matter of what is irreclaim able waste can be decided by cal culation. This results in prudent saving and reclamation as well as economic decisions as to what is to be thrown away.

The foregoing suggestions as to how leftovers might be effectively collected and used or disposed of may be debatable. They are sub mitted only to awaken the imagina tion to the myriad possibilities of positively dealing with what is to day described as a growing prob lem. But there can be no reason able doubt that once responsibility is placed on the individual, once private enterprise is mobilized to serve him as a consumer, what have been problems become oppor tunities and what was waste will much of it become resource. ~ Anyone can destroy. Anyone can take a life. Anyone can steal. Anyone can cause strife. Anyone can complain. Anyone can fear defeat. Anyone can slander. Anyone can lie and cheat. Anyone can hurt feelings. Anyone can say "It can't be done." Anyone can be unfriendly. Anyone can spoil fun. Anyone can hold back. Anyone can look the other way. Anyone can be lazy. Anyone can waste his life away.

Anyone can count on wishes. Anyone can see sin. Anyone can use force. Anyone can give in. Anyone can see weakness. Anyone can act upset. Anyone can be slow. Anyone can play hard to get. Anyone can leave the work to others. Anyone can wait to be saved. Anyone can blame his brother. Anyone can be enslaved. Anyone can bury his talents. Anyone can run. Anyone can earn his life -by not being "Anyone." AL SIEBERT 629 I S LVE How OFTEN, and in what varia tions, we hear the old theme: "The government should intervene be cause private enterprise has failed to solve the problem!" The follow ing list is far from complete, but will serve to illustrate: The social security problem The farm problem The unemployment problem The housing problem The transportation problem The school problem The medicare problem The poverty problem The population problem The slum problem The conservation problem In a sense, every need felt by each and every person in the world is a problem - for that individual.

The person who sees a way to sat isfy a given need looks upon the situation as an opportunity rather than a problem. That's what pri vate enterprise is: a process of converting problems into oppor630 PAUL L. POIROT tunities. A successful entrepreneur is one who sees and seizes the opportunity when there is a prob lem, turning available resources into goods and services most wanted by others, serving their needs and helping himself in the bargain. Private enterprise in volves cooperation between a per son with a problem and a person who views it as an opportunity. Socialism, on the other hand, is a pooling of persons, all of whom have the same problem: they want something for nothing. Such a demand affords an entre preneur no opportunity to serve himself by serving others. Hence the cry: "Private enterprise has failed, the govern'ment must inter vene!" Check again the foregoing list, or any other situation that has now become a major public problem. Does it represent an or ganized demand for something for nothing? If so, private enterprise can't solve it-not on those terms; 1969 PROBLEMS THE FREE MARKET CAN'T SOLVE 681 but neither can it be resolved by resort to force.

The problem ever has been a relative scarcity of the resources required to satisfy the multiplicity of human wants - insufficient know~edge and will and energy to combine available resources in ways that would fulfill every per son's wishes. Because there is a cost of producing or acquiring everything of an economic nature that man wants, it has been nec essary to determine in some way or other what is mine and what is thine. That determination, during most of recorded history, has been by force - the strong lording it over the weak, some men enslaving others 'and confiscating their prop erty. Only in relatively recent times, and only in parts of the world, have men ever tried the al ternative of getting what they want from one another by serving that other's interest, instead of stealing from or enslaving him. This is the system of private own ership and control .of resources, with open competition in the mar ket, and with government limited to the protection of peaceful per sons and their property.

Such competitive private enter prise has not afforded instant utopia on earth. Man's wants have multiplied much faster than his capacity to fulfill them, despite the remarkable record of material achievements when, and to the ex tent that, the market economy has been tried. Our Wants May Deceive Us In a sense, the infinite expansi bility of wants is one of the main springs of human progress. His unsatisfied desires drive a man to work and plan and invent and pro duce. They also render him vul nerable to promises of something for nothing -launch him on flights from reality that may destroy the source of goods and services to which he owes his rising expecta tions, if not his life. It is not the comparative records of perform ance under freedom or under slavery that cause men to turn from competitive enterprise back toward coercive socialism. It is not that competitive enterprise has failed to deliver to every man his due; competitive enterprise is re jected by thoughtless men because it has not delivered everything that irresponsible demagogues promise. Such persons fail to con sider that the demagogues neither have been able to nor can they ever fulfill their promises by the methods they espouse.

The person who demands that private enterprise solve the social security problem, else he will re ject private enterprise, is demand ing that a way be found for a 632 THE FREEMAN October person to have reasonable income and resources when retired with out his having saved anything of value prior to his retirement. There is no way for man to per form such a miracle. The govern ment only appears to do so when it takes property from those who have earned it and gives some of it to those who have not. The compulsory social security program was launched in the United States in 1935 primarily as a device to induce oldsters to give up jobs in order that young sters might be employed. Few at that time bothered to ask what had caused the widespread depres sion of economic conditions and the heavy unemployment. "A fail ure of private enterprise," they assumed; whereas, in fact, prior government intervention had granted special privileges to or ganized labor, had tampered with supplies of money and credit, had artificially depressed interest rates, and generally had erected barriers to industry and trade.

Nevertheless, over the years from 1935 through mid-1968, the Federal government collected some $219 billion dollars in the name of social security from those younger persons who had found jobs in covered occupations. Most of that money has gone in benefit pay ments to those who had retired. The balance, perhaps an eighth of the total (which is unrealisti cally referred to as the OASDI Trust Fund) has been spent for other purposes of government. In other words, not a penny of the amount any worker pays as social security taxes is saved or invested to yield a return to him when and if he retires. Such payment, if he ever gets it, still must come from those younger workers currently employed and subject to taxation. Shortages and Surpluses No; private enterprise cannot solve the social security problem which government intervention has created. Neither can the gov ernment solve it. Private enterprise does afford the indi vid ual the maximum opportunity to prepare for his own retirement. And that is a far better chance than any intervening government would al low him - after taxes.

What government has done, with regard to social security, is to es tablish a price ceiling. The offer, in essence, is "free" social security benefits to anyone over 65. In other words, the price to be paid by him is zero. 1 Whenever the government establishes terms like 1 Many proponents of the social secur ity idea will contend that the payment of taxes during working years entitles one to a handout after he retires. But courts seem not to interpret either the Constitu tion or the Social Security Act in that way.

1969 PROBLEMS THE FREE MARKET CAN'T SOLVE 633 that, private enterprise cannot and will not do the job. Price fixing by government is the classic way of creating short ages and surpluses. The price, if set lower than the market would have determined, creates an im mediate surplus of would-be con sumers and a shortage of willing suppliers. Everyone would like a lot of something for nothing; no one wants to supply anything at that price. On the other hand, a price, which is set higher than the market would have determined, results in a rash of suppliers and a dearth of buyers. The social security "problem" is a surplus of retired persons hoping someone else will provide their livelihood during their flight from reality. While no attempt will be made to discuss here the details of the various other "problems" the mar ket allegedly has failed to solve, the nature of shortages and sur pluses may be clarified somewhat by brief reference to "the farm problem."

The farm Problem The farm problem is at least as old as the industrial revolution, when businessmen found ways of attracting personal savings for in vestment in factories and ma chines and tools that would afford better employment opportunities than prevailed when nearly every one farmed as a matter of self subsistence. Naturally, mechanization works from industry back into agricul ture. As specialization and trade develop in a given society, a smaller percentage of its popula tion is needed to produce food and fiber. Agriculture appears to bea depressed industry over the many decades generally involved in the shift from a 90 per cent agrarian to a 90 per cent urbanized and industrialized economy. This is the competitive market manner by which workers and other scarce resources are drawn from less at tractive to more attractive em ployment opportunities - from old industries to new. This is why ag riculture was a chronically de pressed industry in the United States over much of the past cen tury - why there came to be a "farm problem" and a demand for government intervention.

Fortunately in a way, much of the intervention inadvertently had the effect of speeding farm speci alization and mechanization. The price supports and other farm subsidies by and large were made payable to the most successful farmers; the pittance paid to smaller and less efficient operators was not enough to appreciably slow the movement of workers from farming into other industry.

634 THE FREEMAN October American agriculture today is fully mechanized and well capital ized - on a par with other indus tries. The shift of population from rural to urban employment is largely accomplished in the United States. So, the government farm price support programs of the twentieth century in the United States have accidentally eased rather than ag gravated the chronic surplus of farm operators. How these and other government interventions combined to yield a prolonged and general unemployment and waste of manpower will be discussed shortly. Meanwhile, let it be noted that the farm subsidy programs did create serious surpluses of wheat, cotton, corn, peanuts, rice, tobacco, potatoes, milk, butter, eggs, wool, and various other farm commodities. Scarce resources were wasted to the extent that government price-fixing held such farm produce above the reach of consumers in U.S. and world mar kets. And there were other conse quences. For instance, a part of the world market demand for cot ton that American growers other wise might have supplied thus was diverted to foreign growers or to manufacturers of synthetic fibers.

And the same is true with respect to other commodities under price control. A price arbitrarily set too high creates a surplus; a price set too low results ina shortage. And the marginal buyers and sellers thus excluded from the market are the very ones who can least with stand such discrimination. Actions and Reactions Causes have consequences, and no particular injection of force into the economy ever ends at that point. As suggested above, the farm programs that drove work ers off farms were blended with other' interventions that denied them more productive employment opportunities. Wage and hour laws, special privileges to unions, and various relief programs turned unemployment into a way of life for some - at everyone's expense. Men who are paid as much for not working as for working are likely to remain unemployed; but who can believe that he's still a man whose .life depends· on the dole?

These ever-expanding voting blocs of nonworkers demand their "rights." And government officials, who do not understand the im portance of defending private property, continue to tax the savers and workers in a futile at tempt to give those others their something-for-nothing. Meanwhile, businessmen are urged to cooper ate and develop employment train ing programs - apparently, with out capital and without prospect for profit. Private enterprise sim1969 PROBLEMS THE FREE MARKET CAN'T SOLVE 635 ply can't solve that kind of a prob lem: ;;t surplus of subsidized non workers. Nor can private enterprise build low-cost new housing as fast as the government can condemn ex isting structures and bulldoze them down. Rent controls, zoning regulations and restrictions, tax exemption or abatement, and privi leges granted to building trade unions artificially boost'" the de mand for housing and render it impossible for anyone to supply such housing at a profit.

There is no way on earth for private enterprise to supply all the freeways drivers would like. Or all the bridges or ferries or subways or airports or commuter transpor tation consumers would use if someone else could be made to pay the cost. Private enterprise cannot build costless schools as fast as finan cially irresponsible boards of edu cation, teachers' unions, and stu dents can outmode and destroy them. It is impossible to build enough hospitals or to train enough doc tors and nurses and other personnel to service the demands of those who are paid to be sick. Private enterprise did not solve the problem of landing two men on the moon in 1969, because pri vate enterprise did not have a $25 billion charge account against the market's limited resources in ex change for a small packet of moon dust. But the fact that a govern ment can force 200 million citi zens to ship two of their number to the moon and back does not mean that the government can either measure or fulfill the more urgent of the infinitely varied wants of the 200 million.

If the problem is to exchange something for nothing, private en terprise can't solve it. Government may pretend to do so up to the limit of the property and the pa tience of long-suffering workers and taxpayers. But if the problem is to exchange something for something in ways that best allo cate scarce resources to the wil lingness and satisfaction of those involved, then government's only role is to protect private property, leaving all else to free men and the free market. (j IDEAS ON LIBERTY Edmund Burke To PROVIDE for us in our necessities is not in the power of gov ernment. It would be a vain presumption in statesmen to think they can do it.

A REVIEWER'S NOTEBOOK DURING the 1968-69 academic year hardly a week passed without news of some new outrage perpetrated by the Students for a Democratic Society, or, as cartoonist Al Capp prefers to call them, the Students for a Decomposing Society. Spoiled brats posing as revolutionaries got off with the lightest penalties - or even none at all-for such palpably illegal acts as trespass, destruction of property, the theft and spolia tion of documents, and the physical manhandling of deans. College ad ministrators and faculty members seemed paralyzed by the attacks, and some professors and even a couple of university presidents ac tually condoned the rioters. It was an amazing spectacle, particularly noteworthy in that it occurred in a 636 JOHN CHAMBERLAIN EDUCATION IN AMERICA nation that has gone all out for "aid to education." Libertarians could have pre dicted it: when immense sums are deployed out of the public treasury to subsidize something, it is scarce ly surprising that the recipients of the bounty should take it lightly.

What is a broken window or a smashed desk when the taxpayer is there to provide for its replace ment? And why should professors be respected when they spend half their time working on political projects, turning their marking chores over to graduate students whose main concern is to have the statistics ready for tabulation on punch cards that the professors mayor may not see? Our philosophical disarray 1969 EDUCATION IN AMERICA 637 started long before there was a Students for a Demonic Society nonorganized organization. In one sense, the SDS-ers, ugly and stupid though they may be in the tactics they have chosen, are more victims than victimizers: they are the chil dren of the Age of Relativity, which is dedicated to the principle - or the nonprinciple - that there are no fixed truths, no values worth cherishing. Educational values are not possible in a college world that lacks convictions and reference points, and it is to the lack of values that George Charles Roche III has addressed his main inquiry in a brooding book, Education in Amer ica (Foundation for Economic Ed ucation, $3.50 cloth, $1.75 paper).

Permissiveness at Home and School Dr. Roche has many things on his mind. There are the parents, for one thing. The worst offenders on the campuses happen to be the sons and daughters of middle-class affluence, kids who have never seen from close-up what happens in lands where State enterprise has replaced the individual organizer. It is a cliche, and an untrue one to boot, that a generation gap exists between the revolting campus "lib erals" and their parents: for the most part they stand for the same permissiveness. Dr. Roche is convinced that there is no discipline in the university world because there has been a prior breakdown in discipline at home. He surveys a situation in which our "mass" oriented insti tutions run the risk of being merely "custodial" rather than educational. The child passes from the hands of the baby sitter to the teacher as "adolescent sitter," and in the shuffle of massive enroll ments the "custodial" teacher has no impulse (unless he happens to have an unusual conscience) to teach the individual to think for himself within a framework of the quest for truths that are open to those who are diligent students of the past.

The Multiversity Complex: Publish or Perish Dr. Roche levels some of his most telling shafts at the big "mul tiversity" that prizes what passes for modern research more than it prizes an individual relationship between teacher and student. He thinks the student has a legitimate gripe against the big "superspecial ized" university where "a mass of trivial research tends to contami nate the atmosphere." The stu dents in quest of instruction feel "betrayed by an educational struc ture which has become increas ingly unresponsive to their aca demic needs and oppressive to their development as responsible adult individuals." Ortega was right: the 638 THE FREEMAN October professor who is ignorant of many facets of human existence'! "reacts as an unqualified mass-man" out side of his specialty. Dr. Roche quotes an unnamed Stanford psychologist as saying that before the year 2,000 is onr us we will have to take ":t;aQical ac tion" to "limit the outpouring of specialized and often trivial pub lications that even now all but inundate the offices of every aca demician." The prestigious conege of the future, says this Stanford observer, "win begin by making rules forbidding their professors to publish until they have been on the faculty five or even ten years.

They win thus create a campus culture in which publishing is con sidered not good form." Committee Mentality Then there is the "committee mentality" to combat. As Dr. Roche says, the highest campus awards seem to go to organizers and co-ordinators rather than to genuinely creative and original minds. Thomas Molnar's observa tion is pertinent here: "One glance at pedagogical literature," says Mr. Molnar, "reveals the collec tivistic preoccupation: 'Commit tee,' 'cooperation,' 'integration,' 'teamwork,' 'group-project,' 'ma jority-objectives,' 'peer-group,' 'group-process,' 'group-imposed regula tions,' 'group-determined penalty,' 'group-acceptance,' etc., etc., abound in articles, speeches, meetings, and school ,catalogues. Together with other ideological di rectives, they constitute the af firmation that God and individual men do not exist apart from the collectivity. Moreover, they imply that man's adjustment to the col lectivity is the supreme guarantee that he is not in error."

The late Benjamin Stolberg put it simply: "One doe'S not think in committee." Dr. Roche's book is enough to make devil's advocates of all of us. The spectacle of the educational world that he has anatomized con firms meln my belief that the way to do a boy or a girl a good turn I is to keep him out of our more prosperous educational institu tions. There should be less public "aid to education," fewer billions poured out by state and munici pality. Let those who hunger for knowledge get it on their own; if they can manage to do this, they will appreciate it. Better to send a boy or girl to one of the smaller colleges - Ben Rogge's Wabash, say, or John Howard's Rockford - I where the "publish or perish" fet ish has not gone to Berkeleyan ex tremes. And a word for the big corpora tions: Let them do more of their recruiting in the high schools, where they will be able to find stu1969 EDUCATION IN AMERICA 639 dents who have not yet been cor rupted by what passes for univer sity teaching. If Dr. Roche is right about the educational world whose devalued state he has so trench antly criticized, we would all be better off if it were forced to go back and scratch for its funds.

Who knows, if the public "aid to education" shibboleth is scotched, we might get some good propri etary colleges. • Bound volumes now availableEDUCATION IN AMERICA by George Charles Roche III CHAPTER TITLES: 1. What Has Happened? 2. Freedom, Morality, and Education 3. Scientism and the Collapse of Standards 4. The Decline of Intellect 5. Discipline or Disaster? 6. The Perpetual Adolescent 7. Why Institutionalize Our Errors? 8. ,The Multiversity 9. Academic Freedom for What? 10. Revolt on Campus 11. Creativity 12. A Philosophy of Growth 176 pages, fully indexed. $3.50 cloth; $1.75 paper Order from: THE FOUNDATION FOR ECONOMIC EDUCATION, INC. IRVIN'GTON-ON-HUDSON, NEW YORK, 10533 640 THE FREEMAN October ~ THE MAN FROM MONTICELLO (An Intimate Life of Thomas Jef ferson) by Thomas Fleming (New York: William Morrow & Com pany, Inc., 1969), 409 pp., $10.00. Reviewed by Robert M. Thornton NONE OTHER of the Founding Fathers is invoked more often than Thomas Jefferson by those arguing the political questions of our day. He is variously claimed by conservatives and "liberals,"

progressives and agrarians. Mr. Fleming does not try to enlist our third President for this cause or that, but his Jefferson clearly dis trusts the all-powerful state and actively opposes high taxes and wasteful spending by the gov ernment. Fleming barely touches on the role of Jefferson as states man, focusing instead on the great patriot off his pedestal. We see Jefferson as thinker, politician, farmer, scientist, inventor; as hus band, father, grandfather, and grea t grandfather; as host and neighbor, horseback rider and vio linist; as correspondent, traveler, and diarist. Many occupants of the White House are remembered only for that reason, but this was only one of Jefferson's claims to fame and one which he did not even choose to mention on his headstone. Limiting himself to a one-vol ume work, Mr. Fleming has to be selective in what he tells of J ef ferson; nevertheless, he offers a fine and readable portrait of the Sage of Monticello. Fleming, like Albert Jay Nock, sees Jefferson as perhaps the most civilized man ever produced in this nation, of a stature to equal such a world fig ure as the great European, Goethe.

But Fleming, unlike ·Nock, does not see Jefferson as being always the disinterested philosopher and statesman. Jefferson was, after all, human; he had his loves and hates and anxieties and on occasion was known to lose his temper. Anyone wishing to become bet ter acquainted with one of the greatest of all Americans, and one of the most charming, could do no better than to read this book along with Nock's Jefferson and Eliza beth Page's The Tree of Liberty. , the Freeman VOL. 19, NO. 11 • NOVEMBER 1969 Let Us Give Thanks Thanksgiving and freedom go together. Donna Thompson 643 The Golden Calf Walter R. Youngquist 645 The sad story of how freedom may be traded for a false promise of security. USha Says My House Is Dark ... " Benjamin N. Woodson 652 The immature, unaware of blindness, place the blame for their shortcomings outside themselves. The Non-System Martin F. Schaffer 655 We can very well take care of ourselves if not oversystematized by others.

Free Market Disciplines Leonard E. Read 656 The market reflects the good and the bad in us, if we'll look, and also disciplines our expenditures. The Battle in the Streets Clarence B. Carson 662 "The rioters are following the lesson plan learned from the government." The Value of Money Hans F. Sennholz 670 Goods-induced and money-induced factors that affect the value of money. Unknown·Costs of Pollution Howard CaUaway 679 Damages from pollution can be levied against those who cause the problem. The Mythologyof SpaceshipEarth Gary North 683 How can man bridge the intellectual chasm between scientific knowledge and moral knowledge? Good Sense Makes Good Business! Helen Bugbee 692 Preserving the climate for business is more important than selling a customer ideas about "rights" that no one can afford. William Henry Chamberlin:1897·1969 698 May he rest in peace! Book Review: 701 liThe War on the Poor" by Clarence B. Carson "Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON·ON·HUDSON. N. Y. 10533 TEL.: (914) 591·7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN 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. 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, 1969, The Foundation for Economic Education, Inc. Print.ed 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 "The Battle in the streets."

let us GIve thanks DONNA THOMPSON RECENTLY, in an old book, I found a dedication I would like to shout from the house-tops and blazon across the sky.! "This Book (as a mark of grat itude for inestimable blessings en joyed, in liberty of person, lib erty of property, and liberty of opinions, to a degree never ex ceeded in this world) is respect fully dedicated to a beloved but bleeding country torn in pieces by factious, desperate, convulsive and ruinous struggles for power. It is likewise dedicated to those mil lions of human beings, who neither hold nor seek office, but who are made the instruments of those who do seek them; and who, while a foreign enemy presses at their 1 M. Carey, The Olive Branch, or Faults on Both Sides, Federal and Demo cratic. A serious appeal on the necessity of mutual forgiveness and harmony. (Philadelphia: M. Carey & Son, 1814.) Mrs. Thompson is a housewife and freelance writer in Republic, Missouri.

doors, are enfeebled and kept from union, to gratify the ambition of a few men, (not one in five thou sand of the whole community) who have brought to the very verge of destruction, the fairest prospect ever vouchsafed by heaven to any nation." Today we face the same issues that our country faced more than a hundred and fifty years ago: men who are seeking power at any cost and students and others who blindly follow. They are the in struments of those who do ·seek, not only to possess, but to destroy as well, followers who are blind to the consequences of their own folly. Our country has met these prob lems in the past and solved them through courage and faith, with a determination that the rights of the individual should prevail, and that our people should live in a land of law and order without fear. It will do it again. 643 644 THE FREEMAN November On Thanksgiving Day we are supposed to stop and give thanks.

Instead we think of turmoil, strife, riots, and wars. Yet in spite of all these we have much to be thankful for and should give thanks for the many good things with which our lives have been blessed. It seems to me that we should not think about how much we have to be thankful for on a special day. Instead we should be thank ful every day and every hour of our lives for the good things which are ours. Weare likely to forget if we wait for a special day on which to express our thankfulness. I imagine the Pilgrims were thankful every day that passed that first hard winter at Plymouth Rock. But they were making such a struggle for survival that we have no record that they ever stopped or of what they thought. Maybe they felt as so many peo ple do today that they had nothing to be thankful for. But somewhere along the line they were awakened to the fact that they had very much. They had survived a long and difficult year. They had battled through illness, death, Indian raids, hunger, and cold in a hostile land. They were alive and able to face the morrow. They were possibly giving inward thanks all along, but that first Thanksgiving Day was an outward manifestation of their inward feeling. Every day when they said their prayers, I am sure they not only asked for help from God, but thanked him as weV for the things he had given them.

We are living in so much tur moil, so much strife, with so many people struggling for power, for money, for publicity, for at tention of every kind that it is hard to reason clearly. There ar~ great numbers of people who are saying we have nothing worth while here in the United States. There is nothing in our country that is right. It is a sad situation when, as the old· saying goes, "we cannot see the forest for the trees." But this Thanksgiving, I am increasingly aware of what I have to be thankful for. And even in these troublesome times we should not forget to give thanks to a God who is not dead, but to a God who lives. And being thankful, I wish that everybody could read the dedica tion in The Olive Branch and could remember. We should bow down in heart felt thankfulness and "gratitude for the inestimable blessings en joyed in liberty of person, liberty of property and liberty of opinions never exceeded in this world .... "

Thanksgiving Day! Every day, let us give thanks. ~ theGolden ealf THE AMERICAN PEOPLE right now are in the Valley of Decision. We must decide nOlV whether we shall continue to live under liberty as free citizens, or kick it all out of the window and, for the promise and hope of perpetual physical se curity, exchange it for a system of regimented living as the serfs and property of a socialist dicta tor state. The choice is ours to make and no man or woman in this country can escape the making of it. Indifference to this paramount issue is just as deadly to our free dom as the outright embracing of socialism itself! Two human attributes are, prob ably, responsible for more misery, death, hopelessness, war, and starMr. Youngquist is former President and now Director Emeritus of The First Federal Sav ings and Loan Association in Minneapolis. WALTER R. YOUNGQUIST vation than everything else in the world put together. One of these is the lust for personal power; the other is the constant desire for easy physical security without personal responsibility. Call it greed if you will. The two mesh together perfectly. History records that those who would destroy the liberties of the people first give them largess, grants, doles, and the promise of security in the money bags of government. His tory also records that those who lose their liberty barter it away for the promise of security at the hands of the state.

The Struggle for Freedom The struggle for human freedom is as old as humanity itself. The first pages of unfolding history 645 646 THE FREEMAN NovembeT reveal to us a picture of oppressed humanity hopelessly struggling, driverr hither and yon over the earth under the lash of ruthless masters. These hapless humans have lived and died as cattle. They were, and are in fact, the beasts of burden, the physical property of the King, the Pharaoh, the Em peror, the Nabob, the Union of Soviet-Socialist Republics, or whatever you call that creature known as the authoritarian or to talitarian state. Always the ceaseless struggle of the peoples of nations has been to throw off the shackles forged by their own rulers, or fight to the death in fending off a foreign des pot attempting to extend his per sonal power. The Rise - and Fall - of Nations The history of nations is not that they rise, but that they rise - and fall. The Romans, under the Republic, achieved, perhaps, a greater measure of freedom than any other ancient people. They also achieved considerable security for themselves and imposed an era of comparative peace over the then civilized world. It was called the Pax Romana. Centuries later the British Empire maintained an era of Pax Britannica. Certain it is that the Roman Republic did pro duce great prosperity for the Romans. All their conquered territories paid tribute to them. Life was easy, and then licentious. Then moral decay set in, and while Rome gave every outward appearance of strength and security, it was rot ting at the core. Then the smart politicians came on the scene. The way to achieve power over the Romans was to promise them se curity. Give them doles from the state; open up the corn-cribs, put, lots of people on the public pay rolls; tell them that they shall never worry again, the state will take care of them. Finally came the Gracchi Brothers, each trying to outpromise the other - the fore runners of the American Demo crats and Republicans! The Romans took the bait, they put their trust in the state - and were conquered by a less civilized but more virile people who trusted in themselves! "A nation that wants anything more than freedom will lose its freedom," said Somerset Maugham, "and the irony of it is, if it is comfort and security it wants, it will lose them too."

As the centuries came and went, as the Christian religion spread with its teachings of the infini te worth of the individual, with its emphasis on the value and sacred ness of human life, men every where began to stir with the urge for freedom. The centuries-old struggle took a long step forward when the English barons, in the 1969 THE GOLDEN CALF 647 beginning of the thirteenth cen tury, wrested Magna Charta away from the unwilling King. The Security of freedom There is a security which is real. It is the security of responsi ble freedom. If that freedom can be maintained, then physical secur ity follows as a natural conse,-quence. But if a free man seeks physical security outside of him self, with no urge or obligation to provide it for himself, then he will achieve that security at the ex pense of his liberty. This nation has been extremely fortunate in its ancestral heritage.

The Pilgrims came to our unknown land because they wanted to be free. Particularly, they wanted freedom of religion. They had been whipped around in Europe, persecuted, and with no hope for betterment. Then they looked over the wide ocean. They knew not what was on the other side, except one thing: freedom to worship as they wished. History has told the story. We have freedom, but it was earned at a terrible price. Then, in the great migrations that took place from northern Europe in the latter half of the nineteenth century, we received the workmen who turned this country into the land of opportunity, who built and worked in our factories, who took homesteads in the West and turned the prairies into productive farms. It was the surge of economic free dom, the fundamental building stone of this nation. The Declaration of Independ ence proclaims: We hold these truths to be self evident: That all men are created equal; that they are endowed, by their Creator, with certain unalienable rights; that among these are life, lib erty, and the pursuit of happiness.

That to secure these rights, govern ments are instituted among men, de riving their just powers from the con sent of the governed. The Constitution of the United States is a document to limit the power of government. The people who wrote that instrument had the exp.erience of living under the rule of a foreign king. They had firsthand experience with the archaic, selfish, individualistic ac tions of a foreign monarch. They would set up a government "of the people, by the people, for the peo ple," and every citizen would be enti tled to the protection of the law. Always, however, there is the desire on the part of many people to circumvent the law. Always there are schemers who want to get rid of the law so far as they are concerned. They are the bu reaucrats, those who are in posi tion to wrest away from others their rights, while entrenching themselves in bureaucratic protec648 THE FREEMAN November tion. This tendency has gone so far that it is doubtful if it can ever again be controlled, and it may very well be the road down which this country will finally go into a socialistic dictatorship.

Two Philosophies of Government Struggling for Supremacy Now, there persist in this world two philosophies of government, each struggling for supremacy. One of these says that the state is supreme, and the source of all authority, well-being, and security. It conceives that the citizen is the subject and property of the state, and that all of the privileges, all of the freedom which the citizen enjoys, is a dispensation of the state. It denies that any man has certain unalienable rights which no government may invade, cur tail, deny, or destroy. It is the concept of the state as the all-wise master which not only owns the citizen but is obligated to care for him. It owes every man a job with out any responsibility on the part of the individual to create one for himself. Everyone is entitled to an equal share of everything that is produced regardless of his abili ties, his industry, his thrift, or his frugality. Everyone is entitled to medical attention when sick and a proper burial when he dies. His only duty is not to die until he has collected his full benefits.

This philosophy manifests itself in a thousand ways but princi pally in progressive regimentation of labor, of agriculture, of busi ness and the professions. Another symptom is the ever-growing bu reaucracy and the tendency for governmental agencies and bu reaus to multiply themselves, to seek more and more power over the citizens; to covet increasing_~ power over public funds and to levy heavier and heavier taxes; to ceaselessly promulgate rules which have the force of law; to seek and expand authority to accuse, prose cute, and fine or imprison the citi zens who refuse to obey their edicts; to constantly seek to throw off all restraints of constitutional government; to circumvent the courts; and if that doesn't suc ceed, to pollute and degrade the courts by the appointment of men beholden to the supreme authority. It becomes further apparent in the gradual abdication by the Con gress of its powers and position as defender of the people's liberties; by a progressive weakening of the legislative branch of govern ment through a system of favors handed out by the chief executive; and by a corresponding increase in the power of the executive. Thus, slowly but surely, the transforma tion takes place from a "govern ment by law" to a "government by men."

1969 THE GOLDEN CALF 649 The Meaning of Liberty The other philosophy conceives that the individual citizen is the true source of authority; that the state is the creation of the sov ereign people; that its function is to govern within the limits set by the sovereign people, and not to engage in business in competition with the citizens. It recognizes that ,liberty is of the spirit as well as of the body and that the individual must be free to develop his own personality and resources, accept ing the responsibilities of that freedom. Recognizing that disci pline is essential in every ordered society, it conceives that discipline of a free people must be self-im posed and voluntary. This philoso phy teaches that the state is the subject and property of the people; that it is without authority ex cept that granted by the consent of the governed; that its function is to foster the well-being of the individual, to create for him a climate where the human personal ity may develop into its-full flower ing, and in which his liberties shall be protected under just laws. This philosophy teaches that the only liberal government is one which is duly limited to keeping the peace. A government which squan ders itself into bankruptcy cannot be liberal. A people which leans more and more heavily upon the gratuities of a paternal state, a people which believes the doctrine tha t "the state owes me a Iiving"

must be prepared soon to surren der its liberty. Patrick Henry said: "N0 free government, or the blessings of liberty, can be preserved to any people but by a firm adherence to justice, moderation, temperance, frugality, and virtue and by a frequent recurrence to fundamen tal principles." True liberalism holds that lib erty is an endowment by the Cre ator upon which no power may encroach, and no government may deny. It holds that the individual must be free to choose his own calling, to develop his talents, to own and keep a home sacred from intrusion, to rear children in or dered security. It holds that he must be free to work for whom he wishes, or not to work, without tribute to anyone, to earn, to save, to spend, and to accumulate prop erty. It holds that the first duty of the state is to protect the citizen under the law. Promises of the Welfare State We are now asked to turn away from the qualities and principles that made us a great nation. False leaders have come among us seeking more power over our Iives and occupations. They have dan gled before us a picture of the lush pastures of economic security; 650 THE FREEMAN November we have listened - and followed.

These leaders would have us believe: - that security is surely to be found in the money bags of gov ernment, if we will but permit them to run our business, our farms, our professions, our jobs, and our lives. - that the source of all security and welfare is the state and that it may not be had except from the state. - that higher taxes upon our labor and thrift will provide us more welfare. - that the state will give us more security by spending more than its income and by depreciat ing the value of money. - that we may have more abun dance if the state limits the har vest of our fields and the yield of our flocks; that prosperity is in creased by paying farmers to over produce, destroying the surplus, and taxing everybody to pay for it. - that we may have more lib erty through more laws and regu lations giving more power to the state and to officials, agents, in vestigators, and bureaucrats in general to supervise and regulate every detail of our lives.

- that American citizens will rise to nobler heights of morality and individual achievement if they trust the state to provide all that is needful. - that we may enjoy freedom from want, freedom from every thing except the greatest of all freedoms - freedom from the tyranny of the state itself. It Is Socialism! They call this "public welfare," "security," "social and economic equality," "elimination of the profit motive," "~production for .. use," and similar names to cover up its true nature. It is Socialism. This headlong plunge into a socialist dictatorship is going to end up with the dictator telling us where we may work, what we shall do, how long we may work, and for what wages. They will tell us how many square feet of living space we may have, who shall provide it, and on what terms we may live in it. They will tell us what we may buy, what we shall pay for it, what we shall get for what we sell, what we may plant, where we may plant it, and how much; and how we shall dispose of the harvest.

This is the securi ty of the Negro slave before the emancipa tion, the security of the American Indian, the security of the Eng lishman under socialism, the se curity of a "guaranteed" job - as in Russia. It won't be long in com ing unless we rej ect false promises and exercise self-responsibility. Government aid to the individ1969 THE GOLDEN CALF 651 ual is followed by government con trol of the individual, which means government force against the individual. No people can re main free except by exercise of thrift and frugality. The Golden Calf The modern version of the story of the Golden Calf would read like this: And the people of America mur mured because life was so hard, and they pined for security. And the bu reaucrats, hearing of their sad plight contrived to make the people secure. So they said to the people: "Put your trust in us and we shall open unto you the bottomless money bags of govern ment. They shall be your Golden God who will care for you and your chil dren from the cradle to the grave.

Your beds shall be soft; your bellies shall be filled with good things to eat; your labor shall be easy and your wages shall be great. There shall be long seasons of time-and-a-half and double-time. You shall generously share the fruits of labor of others and much time for ease shall be your lot." And the people said: "Hurrah, verily shall the money bags of government be our Golden God and upon these leaders shall we trust our securi ty." Thus did the people of America de liver themselves into bondage. ~ IDEASON LIBERTY Two Sides of Poverty IF PAYING PEOPLE not doing productive work is anti-poverty, it's more than offset by the pro-poverty effects of taxing away the earnings of those doing productive work. If handing out money is anti-poverty, taxing in the money is pro-poverty. If puttin'g people to work is anti-poverty, then union re strictions, minimum wage laws, discriminations, and the like which keep people from getting a job are pro-poverty.

If training people to take jobs is anti-poverty, taxes which discourage investors from providing these jobs are pro-poverty. No matter how fast we increase our anti-poverty measures, poverty continues to grow because of the increasing and spreading pro-poverty ones. Protecting the right-of every American to be free to work without disruption or restriction (Open Employment), letting those who work enjoy the fruits of their own labors (Taxation with Limitation), and permitting investors to profit from their financing of productive enter prise and employment (Free Private Enterprise) - these are the things which do the most to eliminate pro-poverty condi tions ·and reduce poverty. J. KESNER KAHN "She saysmy house · d k "IS ar ... BENJAMIN N. WOODSON IN THE EYES of the law, a boy be comes a man when he reaches the age of twenty-one. But I rise this month to suggest to you that a boy truly becomes a man, not on his twenty-first birth day, but, rather, on the day he comes fully to realize that his destiny in this competi tive world is his own personal and exclusive responsi biUty.

This realization comes to some young men long before the twenty first birthday, and to some others long after that significant anni versary (and sometimes long, long afterward) . . . and to some it comes not at all. Now here you might say to yourself that this observation is an elementary one which belabors the obvious and elaborates upon Mr. Woodson is President of the American General Insurance Company, well known for his writings on freedom. 652 the self-evident. But possibly you will agree, on further reflection, that the point is obvious and self evident only to the person whose maturity and experience and ob servation have served to make it so. Perhaps it will be worth your while to look around you for a moment and contemplate the rela tionship of this precept to some of those men and women on whom your gaze falls. You will quickly see, I believe, more examples than one of the man who is mature by the calendar but is still an adoles cent emotionally and philosophi cally.

You will observe that such a man still feels deep within himself that he should be able to rely upon others to carry him and coach him, to teach him and help him, and, finally, even to perform for him . . . and by the sam.e reason1969 "SHE SAYS MY HOUSE IS DARK •.." 653 ing he feels entitled to place upon others the responsibility for his shortcomings and his failings. Observe this man closely, I urge you, for there is much to be learned from his immaturity of thought and viewpoint. He will tell you in his every ut terance that he has not yet ac cepted the responsibility for his own batting average. He will tell you that he has not yet recognized and conquered the natural human impulse of every man to place the blame for his failings and short comings outside himself. He will speak to you of advantages denied him, of promises by others long unfulfilled, of assistance due him but not delivered, of faults not in himself but in his stars.

He will account for his inade quate grasp of a subject he should have delved into long ago on the grounds that he was shortchanged in school, or by lack of schooling - forgetting that in the ten or twenty years since he last attended a class he has had ten or twenty years to study and learn had he been of a mind to do so. He will assure you with all con viction and utmost sincerity that he is not naturally inefficient or willfully indolent, but that his dis persal of effort results from mat ters quite outside his control. He will tell you that-he would have been on time for his appointment with you if he had not been de. layed by some third person or some unforeseeable event. (The most perceptive and dis cerning man I know remarked once in my hearing, "The man who is always late always has an ex cuse - always! - and, what is more, it is a good excuse, too; but he nevertheless continues to be al ways late.") This man of immaturity, what ever his vocation, will tell you that he would do better occupationally if only he had a better understand ing of his own company and its business, or of investments, or economics, or banking, or business law, or whatever, but that nobody has taught him - forgetting that it is his responsibility to learn, not someone else's obligation to teach, and that virtually every ..

thing he needs awaits him in pub lications to which he has ready ac cess either in his employer's place of business or at the public li brary. He will tell you that he, too, would close more and bigger sales, or turn out cleaner blueprints, or produce more units of work or fewer rej ects, or both - if only his manager or supervisor would work with him and coach him and help him "as much as he helps all the other fellows in the department." He will tell you, his countenance shining with honest certainty, that 654 THE FREEMAN November he works as diligently, as intelli gently, as imaginatively, as all those around him, but that the others get more lucky breaks than does he. . (I know a man who says - and believes himself implicitly, mind you! - that he is "the best bridge player" in his particular circle, but that he "can't hold cards" by which he means to contend that he has consistently drawn weaker hands than the others in the. game over a long period of years. And I give you my word that the man truly believes it!) The man who is still immature emotionally and philosophically tells you this truth about himself by his attempts to place the re sponsibility for his deficiencies upon circumstance, or fate, or other persons. He implies to you that he hasn't yet run up a good score because those others who are supposed to hit the ball for him haven't done well enough to give him the high batting average to which he would like to become ac customed. He hasn't yet faced squarely the elementary fact that only his own trips to the plate, and only the hits which he himself drives out and his bat, his eyes, his muscles, his cunning, will serve to build his batting average and his record of accomplishment across the years.

One sunny morning in the year 49 A.D., a Roman statesman and philosopher named Lucius An naeus Seneca sat himself down and wrote a letter to his friend Lucil ius. The communication he sent on its way that day has survived these nineteen hundred years be cause it tells so simply and so un forgettably the truth that all men, until they change themselves by intellectual maturity and strength of character, tend naturally to place the blame for their short comings outside themselves. Here is what he wrote: "You know of our old house keeper, our old servant, who has been in our home for years. Her sight has failed and now it is gone. I am telling you a strange but true story: She is not aware that she is blind, and constantly urges her keeper to take her out of doors because she says my house is dark. "What we laugh at in her, 1 pray you to believe, happens to everyone of us, for no one of us knows himself to be avaricious or covetous or vain.

"The blind at least call for a guide, while we go astray on our own accord. '1 am not ambitious,' we say, 'but in Rome one cannot live otherwise.' 'I am not a spend thrift, but the city requires a great outlay.' 'It is not my fault if I am erratic, if I have not yet settled upon a definite course of life; it is a fault of youth.' 1969 "SHE SAYS MY HOUSE IS DARK ..•" 655 "Let us not seek our disease out side of ourselves; it is within us, it is inlplanted in our bowels. And the mere fact that we do not per ceive ourselves to be sick serves to make our cure more difficult." If we grow myopic, let us not IDEASON persuade ourselves that the world grows dark around us. If our own failings hamper us painfully, let us not try to place the blame out side ourselves ... "let us not seek our disease outside of ourselves," for the fault is our own. ~ The Non-System LIBERTY I'M a firm believer in the notion that all that society owes any man is the right to do as he pleases to work, not to work, to provide a service, to dream, or to create so long as he doesn't interfere with another man's right to do likewise. If I want to do an honest day's work to support my family, I should be free to do so. If I don't want to work, then I shouldn't bother others who want to, nor should I expect that they owe me part of their earnings.

Man is a needy being. If I feel that I can provide one of these needs, then let me do so. Galileo was troubled that the time for the swing of a chandelier was the same for a long swing and a short swing. Others in the same church saw the same thing. Only he dreamt and created. Left to do so without outside interference, most men will create, even if only to provide minimum sustenance. And all the while, where is the system? We need none. Indeed, we have few systems in our socie~y that are doing for man. Producers seem to get by despi te systems and plans, however well-inten tioned, that for the most part im pede free enterprise. We have sys tems, systems that watch systems, and systems that overlap. We have planners, planners that watch planners, and plans that overlap. Give me a chance to act with out roadblocks, because in the process of trying to eke out a liv ing - a single working man or a corporation - I'm preoccupied with obstacles. Let's not make others live as we do, but rely instead on mutual trust and respect. We can very well take care of ourselves if not oversystematized by others.

MARTIN SCHAFFER, Allentown, Pa.

LEONARD E. READ FREE MARKET DISCIPLINES CONTRARY to socialistic tenets, the free market is the only mechanism that can sensibly, logically, intel ligently discipline production and consumption. For it is only when the market is free that economic calculation is possible. 1 Free pric ing is the key. When prices are high, production is encouraged and consumption is discouraged; when prices fall, the reverse holds true. Thus, production and con sumption are always moving toward equilibrium. Shortages and surpluses are not in the lexicon of free market economics. Conceded, the above is no news to those who apprehend free mar ket economics; they well know of 1 Professor Ludwig von Mises estab lishes this point, irrefutably, in his book, Socialism (London: Jonathan Cape, Ltd., 1969) . 656 its disciplinary influence as re gards production and consump tion. This alone warrants our sup port of the free market. However, the free market has two other quite remarkable disciplinary pos sibilities which have seldom been explored.

Before making that exploration, it is necessary to recognize the limitations of the free market. The market is a mechanism, and thus it is wholly lacking in moral and spiritual suasion; further, it em bodies no coercive force whatso ever. In these respects, the market is without disciplinary possibili ties. "Like all mechanisms, the mar ket, with its function for the econ omizing of time and effort, is servant alike to the good, the com passionate, and the perceptive as 1969 FREE MARKET DISCIPLINES 657 well as. to the evil, the inconsider ate, and the oblivious."2 Scrupu losity is not among its character istics. The free market is a name we give to the economic activities a shorthand term, we might say - of a people acting freely, volun tarily, privately, cooperatively, competitively. It is distinguished by universal freedom of choice and the absence of coercive force. Ideally, only defensive force government - is employed to put down fraud, violence, predation, and other aggressions.

Given a society of freely choos ing individuals, the market is that which exists as a consequence it is a mechanism that is other wise nondefini tivee It is the pro cession of economic events that oc cur when authoritarianism - polit ical or otherwise - is absent. While private enterprise is often practiced in a manner consonant with free market principles, the two terms .. are not synonymous. Piracy is an enterprise and also private. Many businesses when in league with unions, for instance - willingly or not - feature ele ments of coercion and thus are not examples of the free market at work. The free market has only been 2 See "Value-The Soul of Economics," by W. H. Pitt. The Freeman, September, 1969. approximated, never fully at tained, and, doubtless, never will be realized. It is an out-of-reach ideal; we can only move toward or away from it. Yet, in the U.S.A., even in these days of a rapidly growing interventionism, the free market flourishes to a remarkable extent. To appreciate this, merely envision the countless willing exchanges - hundreds of millions daily - such as Mrs. Jones swapping a shawl she has made for a goose Mrs. Smith has raised, or the money you pay for a phone call or a quart of milk. In these instances, each .. party gains, for each desires what he gets more than what he surrenders. In a word, the free market is individ ual desire speaking in exchange terms. When the desire for Bibles is accommodated in noncoerced exchange, we can conclude, quite accurately, that we are witnessing a market for Bibles. Or when the desire for pornography is being thus accommodated, we can con clude that there is a market for trash. I repeat, scrupulosity is not a feature of the market.

An Amoral Servant When the desires of people are depraved, a free market will ac commodate the depravity. And it will accommodate excellence with equal alacrity. It is "servant alike to good . . . and evil."

658 THE FREEMAN November It is because the free market serves evil as well as good that many people think they can rid society of evil by slaying this faithful, amoral servant. This is comparable to destroying the sun because we don't like the shadows we cast or breaking the mirror so that we won't have to see the re flection of what we really are. When I sit in front of a TV and view trash, I tend to rant and rave at what I'm seeing. Wake up: What I hear and see is a reflec tion of what's in me! Thus, my only corrective is to read a good book or otherwise cease to patron ize such low-grade performances. The market is but a response to - a mirror of - our desires. Once this harsh reality is grasped, the market becomes a discipli~ary force. To elaborate: Say that a person desires, buys, and reads a filthy book. Were he to realize that what he's reading is a picture of what's in his own make-up, such a realization, by itself, would tend to change him for the better. The market would then reflect the im provement. But note that the mar ket has no such effect on those who ar~ oblivious to this fact. It's the knowledge of this character-re vealing fact that makes of the market a disciplinary force. I am only trying to point out the mar ket's potentiality in this respect.

Instead of cursing evil, stay out of the market for it; the evil will cease to the extent we cease patronizing it. Trying to rid our selves of trash by running to gov ernment for morality laws is like trying to minimize the effects of inflation by wage, price, and other controls. Both destroy the market, that is, the reflection of ourselves. Such tactics are at the intellectual level of mirror-smashing, attempts not to see ourselves as we are. The market's potentiality as a disci plinary force is thereby removed. To slay this faithful, amoral ser vant is to blindfold, deceive, and hoodwink ourselves. Next to for swearing a faith in an Infinite In telligence over and beyond our own minds, denying the market is to erase the best point of reference man can have. So much for the first somewhat unexplored possi bility of the market as a discipli nary force. Imperfect Man Now to the second. This cannot be explained unless we are aware of our numerous shortcomings, of how narrow our virtues and tal ents really are - everyone's, no ex ceptions.

Let's take, for example, the greatest mathematical genius who ever lived. He's a giant in his field. Yet, without any question, he's a know-nothing in countless other ways. This goes for outstanding 1969 FREE MARKET DISCIPLINES 659 generals, chemists, physicists, sci entists of whatever brand. No one ever gets more than an infinitesi mal peek at the Cosmic Scheme, at the overall luminosity, even at himself. We must see that the biggest among us is tiny. And one who denies this about himself is displaying the greatest ignorance of all: he doesn't even know how little he knows! "If we wish to know anything, we must resign ourselves to being ignorant of much."3 Reflect on this human reality, on imperfect man, particularly on the more imaginative and brilliant individuals among us. While they possess an outstanding and re markable aptitude or two, they too are daydreamers. "If only I had a million dollars," is a dream that flashes across countless minds.

Many of these specialists want above all else to pursue their own p.eculiar bent whether it be going to the moon, genetic alteration of other human beings, releasing the atom's energy, or whatever. Knowing so much about one thing and so little about every thing else, they are unable to know what effect their ambitions, if achieved, might have on the hu man situation. Just as a baby with a stick of dynamite and a match is unaware of what the conse quences might be! 3 John Henry Newman. The lamentable fact is that sci entists, pseudo scientists, and other technologists have been given a wishing well: the Federal grab bag. They, thus, are encour aged to carry out any experiment their hearts desire, without let or hind.rance. Leaving aside the de struction of our economy by infla tion - featured in the grab bag's financing - they are alarmingly endangering all the people on this earth, even the earth itself. And primarily because they suffer no restraining and disciplinary forces; their passions and ambi tions are on the loose!

The Disciplines of the Marlcet The remedy? Let these ambi tions be submitted to the disci pline of the market precisely as are most other commodities and services. Go to the moon? Of course; that is, when the market permi ts the venture, if enough people voluntarily subscribe the cash. Release the atom's energy? By all means; that is, when the market is ready for it. Am I saying that the market has a wisdom superior to the Pres:.. ident of the United States, or the Congress, or a bureaucracy? I am not. The market is a mechanism and is neither wise nor moral. I am only claiming that it has dis ciplinary qualities. To understand why requires no more than a 660 THE FREEMAN November knowledge of what the components of this mechanism are: millions upon millions of individual prefer ences, choices, desires. The market is an obstacle course,. before I can pursue my bent or aptitude or ob session, I must gain an adequate, voluntary approval or assent! No wishing well, this! My own aspira tions, regardless of how deter mined, or lofty, or depraved, do not control the verdict. What these others - impersonal as a computer - will put up in willing exchange for my offering spells my success or failure, allows me to pursue my bent or not.

There are exceptions to this rule, of course. For instance, some of us who may be unable to win in the market will, like Van Gogh, face starvation in order to pursue our passions. The threat of star vation, however, is quite a disci pline in itself; at least, not much is likely to be uncovered in these circumstances that will destroy life on earth. It takes big financ ing to do unearthly things. The market very often returns fortunes for comparative junk and, on occasion, returns nothing at all for great and beneficial achievements - temporarily, that is. Eventually, in a free society, the junk goes to the junk heap and achievements are rewarded. I believe that anyone should fol low his star; but let him do so with his own resources or with such resources as others will vol untarily supply. This is to say that I believe in the market, a tough disciplinary mechanism. I do not believe in cars without brakes, impulses without repulses, ambi tions without check points, wishes run riot. Societal schemes that are all sail and no ballast head society for disaster!

The rebuttal to this line of rea soning is heard over and over again: "But we voted for it," meaning that the Federal grab bag - open sesame with other people's income - has been democratically approved. Granted! But this is nonsense: The fruits of the labor of one man are not up for grabs by others, that is, not rationally. 4 This is not a votable matter, ex cept if one's premise be a so cialistic society. What's right and what's wrong are not to be deter mined at the shallow level of nose counting or opinion polls. To argue otherwise is to place the same value on the views of morons as you do on your own. Others l Money or Mine? As a disciplinary force over wild aspirations, the President of-- the United States, a member of Con4 For what I consider to be a rationally constructed explanation of this point, see "The American System and Majority Rule" by Edmund A. Opitz, THE FREE MAN, November, 1962.

1969 FREE MARKET DISCIPLINES 661 gress, a bureaucrat is not only less effective than the market but less effective than any single buyer or seller in the market. An indi vidual, when a government official, considers only how much of other people's money should be spent. The motivation in this instance favors spending over economizing. The same individual, in the free market, considers how much of his own property he is willing to put on the line. The motivation in this instance is self-interest. And this is tough! Ambitions as silly as tracking the meanderings of polar bears by a Nimbus satellite stand a chance for satisfaction when a grab bag made up of other people's money is readily at hand;5 where as, the free market gives short shrift to projects that are at or near the bottom of individual pref erences. True, were personal ambitions subj ected to the disciplines of the market, trips to the moon would 5 See "The Migration of Polar Bears,"

Scientific American, February, 1968. Jenkin Lloyd Jones have to he postponed. Atomic en ergy might be a phenomenon of the future. Many other scientific explorations - some secret - tak ing place today in our universities and Federally financed would, un der the discipline of the market, still be safely stored in imagina tive minds. This is no argument against technological breakthroughs. It is merely to suggest that these illu minations be financially encour aged only as the free market per mits. The resulting steadiness in progress might then be harmoni ous with an expanded understand ing of what it is we really want and can live with. I repeat, societal schemes that are all sail and no ballast head society for disaster. The free mar ket is ballast - a stabilizer - we might well put to use if we would avoid wreckage in the stormy seas of political chaos. I This article will appear as a chapter in Mr.

Read's book, Let Freedom Reign, to be avail able soon. iDEAS ON LiBERTY THE ACHILLES HEEL of the socialist theory is that the more intensively it is applied the more the human being loses his options. Without the free interplay of the forces of the free marketplace the greater must be the centralization. of planning and authority, and the greater the role of coercion.

© The Battle In the Stleets CLARENCE B. CARSON THE BATTLE in the Streets is an omen, a sign, a portent, and it must be interpreted as such. It is a dramatic presentation for all of us to see of what is wrong with the programs the government has em ployed. The rioters are following the lesson plan learned from the government; they have learned the lesson weIland are now applying it. For decades, government has made war on the poor with pro grams that were supposed to bene fit them. It has sanctioned the use of force to achieve what would otherwise be economic ends. It has penalized production of farm prod ucts, fostered union organization and .tactics, taken by force from This article is reprinted by permission from Dr. Carson's new book, The War on the Poor (Ar lington House, 1969). Copies of the book are also available from the Foundation for Eco nomic Education, Irvington-on-Hudson, N. Y., $5.95.

662 those who produce to give to those who do not. The .government, by example. has taught that the way to pros perity is to avoid the requirements of economy, to spend rather than save, to destroy rather than to produce. It has taught, by its ac tions, that those who save, invest, build, produce, provide jobs, offer services are dangerous antag onists, if not outright enemies, of society. On the other hand, it has taught that those who do nothing worthwhile, who roam the streets and parks, Who malinger or plan demonstrations to force conces sions, are objects for special con sideration and solicitude. Govern ment has said, by way of its pro grams, that the way to improve life in the cities is to demolish the buildings and make the earth bare.

1969 THE BATTLE IN THE STREETS 663 The Battle in the Streets is a paradigmatic imitation of all this. The rioters demolish buildings with molotov cocktails and fire, leaving structures scarred ruins, driving out small businessmen and inhabitants. They loot the stores, taking from those who produce for those who do not. The enemy is clearly made up of those who have saved, invested, built, pro duced, provided jobs, offered serv ices, and so on. The work of years is undone in short order by the rioters. Government Points the Way All this is clearly diseconomic, but then government had shown the way. These rioters should have been producing prosperity, accord ing to the new economics, for they were destroying buildings that might be rebuilt, gutting stores of goods that might be replaced, even making jobs by creating new "needs" that would be met. (The new economics has taught for years that the basic problem in America is to stimulate demand.) The force and violence employed in the Battle in the Streets was an imitation of that which govern ment has been employing for years in its war on the poor.

For years, reformers have pro claimed that their programs fell short of attaining their ends only because they were too timid, were not carried out in a sufficiently thorough fashion. The Battle in the Streets tests that hypothesis. There are not halfway measures there. Rioters do not wait for bull dozers to level buildings. They do not wait for property to be ac quired by the way of the exercise of the power of eminent domain. They simply take it over for de struction. They do not wait for goods to be taken by taxation and given to the poor. They simply ~onfiscate them by looting. If pros perity can be achieved by force, it should be more readily attained by massive and direct force. Many of the reformers do not appear to misunderstand the import of all this; they standby today calling for the appropriation of tens of billions of dollars for spending in these areas demolished by rioters, and other areas of like character.

Even the assaults upon firemen, police, and the armed forces brought into the field of combat are not hard to understand. There 664 THE FREEMAN November are overtones in this of the ex pression of hatred for authority, a hatred that may contain in it glimmers of understanding of how deeply government has failed the poor by making war on them. More directly, though, the police, particularly, are the representa tives of traditional authority, charged with the task of protect ing life and property. This is an assault upon property, and police must not be permitted to exercise their assigned duties. In this cir cumscription of the power of the police, the rioters are imitating in a more direct fashion what the Federal courts have been doing for some time now. It is true that the Battlers in the Streets are making war on themselves. In this, too, they are following the pattern set by the government. The government has set citizen against citizen and group· against group. It has also turned one aspect of a man against his other aspects, as in the case of the war on the consumer. Those who have taken to the streets demonstrate this same behavior.

It. is quite likely that sometimes a man may have thrown a molotov cocktail which set fire to a dry cleaning establishment where some of his own clothes were. This interpretation is not at odds with the fact that the Battle in the Streets has been spurred by agitators, that various and sundry radicals have fomented it. Instead, these agitators share much com mon ground with the reformers who have promoted the govern ment programs. Both have wished to transform society by force; the reformers would do so by using formal government; the agitators pursue their course more directly. Of course, those in control of gov ernment cannot and do. not con done rioting and insurrection, but so far as they reward it by gov ernment appropriations into the ruined areas, as they did at Watts, they show a remarkable affinity with the aims of the rioters .... Who Are the Victors? Who are the victors in this civil war that results from the war on the poor? This is not the story of the victors, so the question will not be dwelt upon here. But there are many who have benefited and do presently benefit from the gov ernment intervention. Many have a vested interest in the continua tion of the government programs.

It will only be necessary to allude to some of them. Among the victors, thus far, have been the politicians. These range from Presidents of the United States to the local favor dispensers. Many politicians have become accustomed over a good many years now to getting elected 1969 THE BATTLE IN THE STREETS 665 to office by promising favors to various interest groups, to farm ers, to labor unions, to the aged, to the young, and so on. In effect, they have become used to buying their way into office by promising benefits bought with the tax mon ey of all of us. For those who de sire power, there seems to be no better way to attain it than to cater to one of the basest of hu man desires, the desire to get something for nothing. It does not seem to matter that the bulk of the population does not and can not benefit from such practices. The beneficiaries are numerous even so, but let it suffice that they simply be named: the bureaucrats who dispense the favors and wield the power, the labor union leaders who enjoy both munificent salaries and prestigious positions, the cor porations that get government con tracts, the builders who get inex pensive land in strategic locations by way of urban renewal, estab lished businesses that benefit from the blocking of potential competi tors by government restrictions, the holders of franchises, monopo lies, and licenses, the farmers who are growing wealthy by way of government subsidies, the mem bers of labor unions who are able to keep their jobs at higher wages, the intellectuals who provide grist for the programmatic mills,and all the others who have good incomes or prestigious positions in consequence of the intervention.

When all these are joined with the millions upon millions who are now dependent upon government for subsistence (all those receiv ing welfare payments, farm pay ments, subsidies, social security, unemployment compensation, and so forth), who believe .themselves helpless without the government aid (and have been made nearly so by the intervention), their number is probably sufficient to form electoral majorities. This is not to imply that the victors are necessarily conscious that they are victors over the poor. There is every reason to believe that many of the politicians (and those who succor them) really wish to help the poor. In any case, charity demands that .we give them the benefit of any doubt and believe that even now many of them do not know how badly awry their programs have gone.

666 THE FREEMAN November A Divisive Force The War on Poverty, then, has not resulted in the conquest of poverty. It has, instead, resulted in the conquest of the poor. Gov ernment has divided the populace into contending factions, has em powered portions of the people against others, has lent its force to the cause of some and turned its back upon others. The incipi ent civil war that is an inevitable result of such policies has finally broken out in the streets. Strictly speaking there are not yet victors, for the war is not over: there are only those who have been advan taged by the conflict. Even so, it is surely time for the work of pacification. Those who have been contend ing are not natural enemies. Farm ers are not at odds with urban dwellers by nature, capital with labor, government with the poor. The Battle in the Streets is not even a logical consequence of or response to poverty. On the con trary' the various peoples in a country complement one another; specialization of function requires and begets cooperation; the ap propriate response to poverty is not destruction, but economy. The work of reconciliation proceeds from this understanding. . . .

Programs that were supposed to aid the poor have harmed them instead. Justice with eyes wide open has discriminated among the citizenry, has selected farmers for special ministrations, has looked with favor upon labor unions, has bestowed privileges upon some businesses, has gone with its bag of goodies into the hearts of the cities. Mercy blinded has taken from the poor to give to the rich, has taxed the generality of people to pay subsidies to wealthy farm ers, has driven workers away from the gates, has priced the poor, the unskilled, the disabled, out of the labor market, has driven small businesses to the wall, and has forced the urban poor from their habitations to make room for multilane highways and high-rise apartments. Cruelest and most deceptive of all, government has raised false hopes and expectations of the good which it claims can be done by its methods. The e'mployment of force was supposed to benefit the poor; Mercy could take up guns, so the program implied. Some of the poor have taken the message to heart.

They have taken up weapons to improve their own well-being. The Battle in the Streets is the dra matic result. In consequence, the poor are poorer; they have only preyed upon one another. The Unethical Is the Inexpedient What was inexpedient turned out to be also unethical. To turn it 1969 THE BATTLE IN THE STREETS 667 around, and get first things first, the unethical is also inexpedient. It is unjust to take from the poor to give to the rich. It is equally unj ust to take from the rich to give to the poor. But even if it were just to take from the rich to give to the poor, governments do not operate in that fashion. They take from all producers, rich and poor alike, to give to nonproduc ers, at best. Nor can it be other wise. The resources of the wealthy would soon be exhausted, if some devices could be found to appro priate these alone. In that case, we should all be impoverished, how ever, for the distributed wea.lth would be used to vie for the de creasing supply of goods that would result from the decline of investment.

There is no hope for the poor from government intervention. The reason is that government is not the right instrument for in creasing wealth. The results of the massive governmental programs thus far illustrate the fallacy. Large numbers of the poor have been made perpetually unproduc tive, dependent upon government, and perennially poor. To pay for this, the productive have been re duced to servility to government by way of taxation and regulation, and those who would rise by their own efforts have had the way made harder. Nor is this failure due simply to corruption, malfeasance, or even the tendency of men to pervert the programs to their own ends (the latter being not only a possibility but a virtual certainty). ' ... The Poor Need Economy The political shenanigans of petty local politicians grasping for War on Poverty funds would no doubt make interesting reading. But to focus on these would be to suggest that the programs have failed because of incidental cor ruption. It would leave the way open to hope that with better ad ministration and some improve ments the programs would work.

There is no reason to suppose that this is the case. The programs have failed be cause they misconstrue the nature of government and economy. They have attempted to employ force to produce economic results. Men cannot be forced to be economical; yet when left to their own devices, men will be ·economical. Economy 668 THE FREEMAN November results from willing effort, from willing innovation, from willing exchange, from free decisions, and from voluntary combinations. Gov ernment action tends to produce rigidity, to keep things the way they are, to make it much more difficult for the poor to improve their lot. It raises costs, raises prices, produces surpluses - goods that will not be bought at the prices it decrees -, causes unem ployment, reduces competition, re moves opportunities, and results in· shortages, depending upon how it is employed. The poor cannot benefit from all this because they need economy.

The war upon the poor will be ended when the numerous inter ventions are ended. This is of a piece with what is needed for the reconstruction. Governments must be restricted to their proper sphere in order that the poor, as well as everyone else, may be freed to improve their own condition, if that is their desire. To suppose that the poor would be clever enough and have the perseverance to manipulate government to their advantage is to suppose something contrary to what has ever been or is ever likely to be, in any case. If the poor were that clever and per sistent they would not remain poor for long in any conditions. Gov ernment intervention has ever been a device to give additional advantages to those who already have power and wealth. It was an illusion that it could be otherwise. The fact that wealthy men pre· dominate as national political fig ures today and advance these strange welfarist notions - such figures as the Kennedys, the Roos evelts, the Rockefellers, and so on - should have alerted us to the power quest that is involved.

Hope Lies in Freedom The hope of the poor lies with freedom. The politics of expansive government is not for the poor. Politics is the arena of influence peddlers, of batteries of lawyers, of five-per-centers, of special tax exemptions for oil millionaires, of cost-plus contracts, of those who have the inside track, of dema gogues who feather their nests at public expense, of the powers that be. The poor have neither the re sources, the background and edu cation, nor the time to spend on such quests. They cannot compete in this arena ; at best, they will only get some of the crumbs that fall from the table; at worst, they will have television sets with which to view the political spec tacles put on with their money. The hope of the poor lies with restricted and limited government. It is indeed a work of reconstruc tion to regain this condition. Lim ited government and free men was 1969 THE BATTLE IN THE STREETS 669 once the great promise of Ameri can life. The Founders of these United States constructed a gov ernment of separated and balanced powers so that hungry politicians might vie for power against one another rather than the populace.

They limited governments and specified their powers so that men might compete in an arena of free dom rather than contest for polit ical spoils, so that industrious men might have the fruits of their la bor, and so that the indolent might be spurred to labor by their needs. And they perceived that it was better for all that charity proceed from those who were concerned than that the poor receive gov ernment fa VOl'S exacted from the industrious by power-seeking pol iticians .... There is hope for the poor. There is hope for them in the res toration of liberty and their re turn to useful service, to bringing forth crops from the soil, to mak ing and purveying goods, to pro viding much needed services. When the disaffected poor learn again to serve rather than to bribe, their labors will result in providing healing ministrations to society. America's Greatest Gift Let this work show, too, that it is not only interventionists who are concerned with the poor. Certainly, those who entertain grave doubts about the beneficence of government programs may at the same time be deeply concerned about the poor. That parent who does everything for his child does not love more than others; he is only more indulgent. He is actu ally denying the child experiences that would lead to much needed progress toward being able to look after himself. Love not only gives generously when the occasion war rants but also withholds wisely for the good of another. The great est gift that America can bestow upon the poor is that liberty by which they may receive the fruits of their toil. The promise of Amer ican life, as Thomas Jefferson put it in 1801, is "a wise and frugal Government, which ... shall not take from the mouth of labor the bread it has earned." i) THE V A L U E o F HANS F. SENNHOLZ MOST ECONOMISTS are in agree ment that the inflation in the United States during the past three years has been the worst since the early 1940's, taking ac count of both severity and dura tion. But they cannot agree on the nature of the inflation that is en gulfing the American economy. To some, inflation denotes a spectac ular rise in consumer prices; to others, an excessive aggregate de mand; and to at least one econo mist, it is the crea tion of new money by our monetary author ities.

This disagreement among econ omists is more than an academic difference on the meaning of a popular term. It reflects profes sional confusion as to the cause of Dr. Sennholz heads the Department of Eco nomics at Grove City College in· Pennsylvania. 670 the inflation problem and the pol icies that might help to correct it. A review of some basic prin ciples of economics that are ap plicable to money may shed light on the problem. Two basic questions need to be answered: (1) What are the fac tors that originally afforded value to money, and (2) What are the factors that effect changes in the "objective exchange value of mon ey" or its purchasing power? Money is a medium of exchange that facilitates trade in goods and services. Wherever people pro gressed beyond simple barter, they began to use their most market able goods as media of exchange. In primitive societies they used cattle, or measures of grain, salt, or fish. In early civilizations where the division of labor extended to 1969 THE VALUE OF MONEY 671 larger areas, gold or silver emerged as the most marketable good and finally as the only medi um of exchange, called money. It is obvious that the chieftains, kings, and heads of state did not invent the use of money. But they frequently usurped control over it whenever they suffered budget deficits and could gain revenue frorp. currency debasement.

When an economic good is sought and wanted, not only for its use in consumption or production but also for purposes of exchange, to be held in reserve for later ex changes, the demand for it obvi ously increases. Wemay then speak of two partial demands which combine to raise its value in exchange - its purchasing pow er. The Origin of Money Value People seek money because it has purchasing power; and part of this purchasing power is gen erated by the people's demand for money. But is this not reasoning in a vicious circle? It is not! According to Ludwig von Mises' "regression theory," we must be mindful of the time factor. Our quest for cash hold ings is conditioned by money pur chasing power in the immediate past, which in turn was affected by earlier purchasing power, and so on until we arrive at the very inception of the monetary demand. At that particular moment, the purchasing power of a certain qUbintity of gold or silver was de termined by its nonmonetary uses only.

This leads to the interesting conclusion that the universal use of paper monies today would be in conceivable without their prior use as "substitutes" for real money, such as gold and silver, for which there was a nonmonetary demand. Only when man grew ac customed to these substitutes, and governments deprived him of his freedom to employ gold and silver as media of exchange, did govern ment tender paper emerge as the legal or "fiat money." It has value and purchasing power, although it lacks any nonmonetary demand, because the people now direct their monetary demand toward govern ment tender paper. If for any reason this public demand should cease or be redirected toward real goods as media of exchange, the fiat money would lose its entire value. The Continental Dollar and various foreign currencies over the years illustrate the point. On Demand and Supply The purchasing power of money is determined by the demand for and supply of money, like the prices of all other economic goods and services. The particular rela672 THE FREEMAN November tion between this demand and supply determines its particular purchasing power. So, let us first look at those factors that exert an influence on individual demand for money.

As money isa medium of ex change, our demand for it may be influenced by considerations of facts and circumstances either on the goods side of the exchange or on the money side. Therefore, we may speak of goods-induced fac tors and money-induced factors. Variation on the Side of Goods A simple example may illus trate the former. Let us assume we live in a medieval town that is cut off from all fresh supplies by an enemy army. There is great want and starvation. Although the quantity of money did not change - no gold or silver has left our be leaguered town - its purchasing power must decline. For everyone seeks to reduce his cash holdings in exchange for some scarce food in order to assure survival. The situation is similar in all cases where the supply of avail able goods is decreased although the quantity of money in the peo ple's cash holdings remains un changed. In a war, when the chan nels of supply are cut off by the enemy or economic output is re duced for lack of labor power, the value of money tends to decline and goods prices rise even though the quantity of money may remain unchanged. A bad harvest in an agricultural economy may visibly weaken the currency. Similarly, a general strike that paralyzes an economy and greatly reduces the supply of goods and services raises goods prices and simultaneously lowers the purchasing power of money. In fact, every strike or sabotage of economic production tends to affect prices and money value even though this may not be visible to many observers.

Some economists also cite the level of taxation as an important factor in the determination of the exchange value of money. Accord ing to Colin Clark, whenever gov ernments consume more than 25 per cent of national product, the reduction in productive capacity as a result of such an oppressive tax burden causes goods prices to rise and the purchasing power of mon ey to fall. According to that view, with which one may disagree, high rates of taxation are the main cause of "inflation." At any rate, there can be no doubt that the American dollar has suffered se verely from the burdens of Fed eral, state, and local government spending and taxing that exceed 35 per cent of American national product. Yet, this purchasing power loss of the dollar would have been 1969 THE VALUE OF MONEY 673 greater by far if a remarkable rise in industrial productivity had not worked in the opposite direction.

In spite of the ever-growing bur den of government and despite the phenomenal increase in the supply of money (to be further discussed below), both of which would reduce the value of the dol lar, American commerce and in dustry managed to increase the supply of marketable goods, thus bolstering the dollar's purchasing power. Under most difficult cir cumstances, businessmen managed to form more capital and improve production technology, and thus made available more and better economic goods which in turn helped to stabilize the dollar. With out this remarkable achievement by American entrepreneurs and capitalists, the U.S. dollar surely would have followed the way of many other national currencies to radical depreciation and devalua tion. Factors on the Side of Money There also are a number of fac tors that affect the demand for money on the money side of an exchange. A growing population, for instance, with millions ofma turing individuals eager to estab lish cash holdings, generates new demand, which in turn tends to raise the purchasing power of money and to reduce goods prices.

On the other hand, a declining population would generate the op posite effect. Changes in the division of labor bring about changes in the ex change value of money. Increased specialization and trade raises the demand and exchange value of money. The nineteenth century frontier farmer who tamed the West with plow and gun was largely self -sufficient. His demand for money was small when com pared with that of his great grandson who raises only corn and buys all his foodstuff in the super market. Under a modern and a highly advanced division of labor, one needs money for the satisfac tion of all his wants through ex change. It is obvious that such de mand tends to raise the exchange value of money. On the other hand, deterioration of this divi sion of labor and return to self sufficient production, which we can observe in many parts of Asia, Africa, and South America, gen erates the opposite effect.

Development and improvement of a monetary clearing system also exert an influence toward lower money value. Clearing means offsetting payments by banks or brokers. It reduces the demand for money, as only net balances are settled by cash payments. The American clearing system which gradually developed over 674 THE FREEMAN November more than 130 years from local to regional and national clearing, slowly reduced the need and de mand for cash and thus its pur chasing power. Of course, this re duction of the dollar's exchange value was negligible when com pared with that caused by other factors, especially the huge in crease in money supply. Business practices, too, may in fluence the demand for money and therefore its value. It is customary for business to settle its obliga tions on the first of the month. Tax payments are due on certain dates. The growing popularity of credit cards reduces the need for money holdings throughout the month, but concentrates it at the beginning of the month when pay ments fall due. All such variations in demand affect the objective ex change value of money.

The Desires of Individuals for Larger or Smaller Holdings The most important determi nant of purchasing power of money under this heading of "money-induced factors" is the very attitude of the people toward money and their possession of cer tain cash holdings. They may de cide for one reason or another to increase or reduce their holdings. An increase of cash holdings by many individuals tends to raise the exchange value of money, reduction of cash holdings tends to lower it. This is so well understood that even the mathematical economists emphasize the money "velocity" in their equations and calculations of money value. Velocity of circu lation is defined as the average number of times in a year which a dollar serves as income (the in come velocity) or as an expendi ture (the transaction's velocity). Of course, this economic use of a term borrowed from physics ig nores acting man who increases or reduces his cash holdings. Even when it is in transport, money is under the control of its owners who choose to spend it or hold it, make or delay payment, lend or borrow. The mathematical econo mist who weighs and measures, and thereby ignores the choices and preferences of acting individ uals, is tempted to control and manipulate this "velocity" in or der to influence the value of mon ey. He may even blame individ uals (who. refuse to act in accord ance with his model) for mone tary depreciation or appreciation.

And governments are only too eager to echo this blame; while they are creating ever new quan tities of printing press money, they will restrain individuals in order to control money velocity. It is true, the propensity to in crease or reduce cash holdings by 1969 THE VALUE OF MONEY 675 many people exerts an important influence on the purchasing power of money. But in order to radically change their holdings, individuals must have cogent reasons. They endeavor to raise their holdings whenever they foresee depressions ahead. And they usually lower their holdings whenever they an ticipate more inflation and declin ing money value. In short, they tend to react rationally and nat urally to certain trends and poli cies. Government cannot change or prevent this reaction; it can mere ly change its own policies that brought forth the reaction. The Supply of Money No determinant of demand, whether it affects the goods side of an exchange or the money side, is subject to such wide variations as is the supply of money. During the age of the gold coin standard when gold coins were circulating freely, the supply of money was narrowly circumscribed by the supply of gold. But today when governments have complete con trol over money and banking, when central banks can create or withdraw money at will, the quan tity of money changes significant ly from year to year, even from week to week. The student of money and banking now must care fully watch the official statistics of money supply in order to understand •current economic trends.

Of course, the ever-changing supply of money must not be viewed as a factor that evenly and unif ormly changes the level of goods prices. The total supply of money in a given economy does not confront the total supply of goods. Changes in money supply always act through the cash holdings of individuals, who react to changes in their personal incomes and to changing interest rates in the loan market. It is through acting indi viduals that supply changes exert their influences on various goods prices. In the United States, we have two monetary authorities that con tinually change the money supply: the U.S. Treasury and the Federal Reserve System. As of February 28, 1969, the U.S. Treasury had issued some $6.7 billion of money, of which $5.1 billion were frac tional coins. The Federal Reserve System had issued $46.3 billion in notes and, in addition, was hold ing some $22 billion of bank re serves. Commercial banks were holding approximately $150 billion in demand deposits and some $201 billion in time deposits, all of which are payable on demand in Hlegal money," which is Federal Reserve and Treasury money.

The vast power of money crea tion held by the Federal Reserve System, which is our central bank 676 THE FREEMAN November and monetary arm of the V.S. Gov ernment, becomes visible only when we compare today's supply of money with that in the past. Let us, therefore, look at the vol. ume of Federal Reserve Bank credit on various dates since 1929: Date Total in Billions 1929 June $ 1.3 1939 Dec. 2.6 1949 Dec. 22.5 1959 Dec. 29.4 1969 Aug. 20 58.2 SOURCE: Federal Reserve Bulletins. These figures clearly reveal the nature and extent of the inflation that has engulfed us since the early 1930's. The 1940's and again the 1960's stand out as the periods of most rapid inflation and credit expansion. How Government Creates Money Why and how do our "monetary authorities" create such massive quantities of money that inevit ably lead to lower money value? During the 1940's, the emergency argument was cited to justify the printing of any quantity the gov ernment wanted for the war effort.

During the 1960's, the Federal government through its Federal Reserve System was printing fe verishly in order to achieve full employment and a more. desirable rate of economic growth. Further more, the ever-growing public demand for economic redistribution inflicted budgetary deficits, the financing of which was facilitated by money creation. How was it done? The Federal Reserve has at its disposal three different instruments of control which can be used singly or joint ly to change the money supply. It may conduct "open-market pur chases," Le., it buys V.S. Treasury obligations in the capital market and pays for them with newly created cash or credit. Nearly all the money.issued since 1929 was created by this method. Or, the Federal Reserve may lower its dis count rate, which is the rate it charges commercial banks for ac commodation. If it lowers its rate below that of the market~ demand will exceed supply, which the Fed eral Reserve then stands ready to provide. Or finally, the Federal Reserve may reduce the reserve requirements of commercial banks.

Such a reduction will set Federal Reserve money free for loans or investments by commercial banks. It does not matter how the new money supply is created. The es sential fact is the creation by the monetary authorities. You and I cannot print money, for this would be counterfeiting and punishable by law. But our monetary authori ties are creating new quantities every day of the week at the dis cretion of our government leaders.

1969 THE VALUE OF MONEY 677 This fact alone explains why ours is an age of inflation and mone tary destruction. Variable Responses The Quantity Theory, which of fers one of the oldest explanations in economic literature, demon strates the connection between variations in the value of money and the supply of money. Of course, .it is erroneous to assume, as some earlier economists have done, that changes in the value of money must be proportionate to changes in the quantity of money, so that doubling the money supply would double goods prices and re duce by one-half the value of money. As was pointed out above, changes in supply always work through the cash holdings of the people. When the government re sorts to a policy of inflation, some people may react by delaying their purchases of certain goods and services in the hope that prices will soon decline again. In other words, they may increase their cash holdings and thereby counter act the price-raising effect of the government policy. From the in flators' point of view, this reac tion is ideal, for they may con tinue to inflate while these people through their reaction may pre vent the worst effects of inflation.

This is probably the reason why the U.S. Government, through post office posters, billboards, and other propagand~endeavorstopersuade the American people to save more money whenever the government itself resorts to inflation. When more and more individ uals begin to realize that the in flation is a willful policy and that it will not end very soon, they may react by reducing their cash hold ings. Why should they hold cash that depreciates, and why should they not purchase more goods· and services right now before prices rise again? This reaction intensi fies the price-raising effects of the inflation. While government in flates and people reduce their mon ey demand, goods prices will rise rapidly and the purchasing power of money decline accordingly. Passing the Buck It may happen that the govern ment may temporarily halt its in flation, and yet the people continue to reduce their cash demand. The central bank inflators may then point to the stability of the money supply, and blame the people for "irrational" behavior and reac tion. The government thus excul pates itself and condemns the spending habits of the people for the inflation. But in reality, the people merely react to past experi ences and therefore anticipate an early return of inflationary poli678 THE FREEMAN November cies. The monetary development during most of 1969 reflected this situation.

Finally, the people may totally and irrevocably distrust the offi cial fiat money. When in despera tion they finally conclude that the inflation will not end before their money is essentially destroyed, they may rush to liquidate their remaining cash holdings. When any purchase of goods and services is more advantageous than holding rapidly depreciating cash, the value of money approaches zero. The money then ceases to be mon ey, the sole medium of exchange. , When government takes control over money, it not only takes pos session of an important command post over the economic lives of the people but also acquires a lucra tive source of revenue. Under the ever-growing pressures for gov ernment services and functions, this source of revenue - which can be made to flow quietly without much notice by the public - consti tutes a great .temptation for weak administrators who like to spend money without raising it through unpopular taxation. The supply of money not only is the best indi cator as to the value of money, but reflects the state of the nation and the thinking of the people. ® IDEAS ON LIBERTY Debauch the Currency 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, governments can confiscate, se cretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some .... As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, .all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

JOHN MAYNARD KEYNES The Economic Consequences of the Peace (1920) HOWARD CALLAWAY AIR AND WATER pollution do not raise' basic philosophical or theo retical questions but nevertheless puzzle many libertarians. Can it be that there is no answer within a framework of voluntary agree ment and that necessity requires regulation by government? Such problems present a clear challenge to the ideal of freedom and obvi ously require an answer. Air and water pollution are a definite threat to the structure and continuation of urban, indus trial civilization; they cannot and should not be underestimated. The quality and purity of this nation's rivers and streams and air are con tinually deteriorating, but little has been done to correct the situ ation. Mr. Callaway is a junior, with a major in philosophy, at the Pennsylvania State Uni versity. This article is slightly condensed from the July, 1969, Commentary on Liberty, pub lished by the Philadelphia County Young Americans for Freedom.

LLUTION At issue here is the concept oi "rights" and its proper extension. Air being a "free" good, does not a businessman have the right to use it as he sees fit? By the same token, does not the ethical conflict of this issue derive from an im plicit assumption that everyone else has a right to clean air? The concept of human rights has changed over the years but can be recognized in writings going back at least to John Locke. On the other hand, air and water pollution on such a grand scale as we are experiencing today are rela tively new problems. In view of this, the new facts of air and water pollu tion require an extension of the concept of rights. Perhaps one reason why these problems have not already been solved is the loss of prestige which common law has suffered at the hands of this century's invigor679 680 THE FREEMAN November ated legislatures. Some forgotten judge presiding over a case of damage due to air pollution might have solved this question long ago.

A precedent, once set, might have avoided this problem as it looms today. In any case, the question remains, and the answer" is not really so difficult as it may seem. Assessing the Damage Consider a small stream flowing through two properties. It seems clear that neither owner could claim the rights of property over the water of that stream in the same sense that they own the land. If one of them were' to take a glassful, the water in the glass would be his, in the same sense as any other property, as soon as he lifted it out of the stre'am. Without prior agreements, however, the up stream property owner would not have the right to block the flow of the stream or to redirect it so that it would no longer pass through the land of the down stream man. Neither would one have the right to pollute the water of the stream so that it would be no longer usable by the other. Unused· water that flows down the stream belongs to no one so long as it is not used. Now, sup pose that the man upstream opened some sort of mill or plant which had the side effect of polluting the stream. This business produces a product which the owner sells.

Since this is a new product, the owner of the plant does not know that he is polluting the water as a result of his process. And since the amount of pollution is small, the man downstream may take no notice of the change in the quality of the water which is passing through his land and make no complaint. Everything "continues smoothly between the two men. Now, suppose the new product attracts customers and the owner greatly increases his production. With this, the level of pollution in the stream greatly increases and the water becomes unfit for the purposes of the second property owner. Up to this time, the effect of the upstream plant upon the quality of the water in the stream is an unknown cost being borne by the man downstream in terms of lower quality water. It is when the level of pollution can be noticed that this heretofore unknown cost becomes evident. Obviously, there could have been no legal protection against a form of damage of which no one had knowledge. In the hypothetical case just cited, the downstream man could not ask that his neigh bor be prosecuted, since, no law could have been written to cover this specific type of damage. How ever, the situation could have been handled very neatly through a civil 1969 UNKNOWN COSTS OF POLLUTION 681 action in which a judge would have been required to make a new application of the concept of prop erty rights.

The damage done to the quality of water in the stream came as an effect of the process of production and the owner of the business should be held liable for the cost. This unknown cost, once it is rec ognized, should be paid by the owner of the plant. At first, it might take the form of damages paid to the man downstream. But one could foresee that the owner of the plant would likely install some equipment which would clean the water before it was returned to the stream. The cost of this new process, and of the damages which would otherwise be paid to his neighbor, would· then appear as a part of the cost of production which would likely be reflected in an increase of the unit price of the product. The same basic analysis applies as well to air pollution and to any such cost of production which had been previously unknown. In a sense, we are all the downstream man in respect to those gre'at in dustries or in respect to the auto mobile users who are polluting the air.

The situation becomes more complicated when we consider the case of a large steel plant upriver from several towns and cities. There might be thousands of peo ple who had access to the river and who· would thus be dese·rving of compensation for their losses. The same applies to those who live downstream from a municipal ity which continually dumps tons of raw sewage into the water. In regard to the air, it becomes evi dent, on application of this prin ciple, that we all live "down stream" from each other and that any pollution of the air which damages another, demands retri bution. It should be noted that many in dustries might not be· able to pay costs of production which they have thus far been able to shift onto their neighbors. However, this is no argument against the principle involved here. These costs are paid by someone in any case. The recognition of an other wise unknown cost in the produc tion of some item and in the sales price merely allows the consumer to accurately value that product in relation to other things available.

The Role of the Courts If the courts were to begin to award damages to those affected by these various problems, I think this could not be construed as gov ernment regulation of industry. The distinction between this pro posal and many of the others which have been considered goes 682 THE FREEMAN November back to the unwarranted distinc tion between civil and criminal law. Criminal law is conceived in the judicial systems of the world as applying to an act which of fends society in general, while civil courts are supposed to deal with cases in which an individual is damaged. It seems obvious that this is an unfounded distinction. If "society" is offended or dam aged by the actions of an individ ual it must be through the effect of this action upon ~ome other individual (s). The fact that laws against air pollution have been written as criminal laws has al lowed many persons to continue in their old methods. Where it might cost a great deal to eliminate some source of pollution, many corpora tions have been faced with the almost pleasant alternative of be ing dragged into court to pay per haps a hundred-dollar fine twice a year.

Perhaps the best method of eliminating pollution is through the use of court inj unctions. If giant industries or municipal util ities found that their entire pro duction could be halted by the act of a single affected individual, the cost of eliminating the pollution they cause might seem small in deed. Not the Innocent, But the Guilty, Should Pay The longer this day of reckon ing is put off, the larger will be the cost of eliminating such un known costs as are now being paid by the innocent. It is impossible to calculate the damage which has already been done. In addition, the free ride which the pollution producers have enjoyed at the ex pense of everyone else has brought untold distortions into society. All of the products of these industries have been underpriced and over produced at the expense of those industries which do not produce pollution. Suppose the automobile industry had been obliged to com pete with other forms of transpor tation under condition that each form pay in full to eliminate any pollution it caused! In effect, the failure of the courts to award damages to those affected by pollu tion is an intervention by default and should be considered as such.

As long as the possibility of change exists (as it must in a free economy or free culture) un known costs of all types will con tinue to crop forth. This will re quire a persistent extension of the meaning of freedom in ways which cannot be fully foreseen and ought not be foreclosed. I) The Mythology of Spaceship EARTH GARY NORTH THE FLIGHT of Apollo XI was probably the most stupendous technological achievement of the decade. (Unquestionably, it was the most stupendous bureaucratic achievement of the decade: sched uled for 1969, it actually took place in 1969!) Editorials in every paper in America, I suppose, have lauded the flight as the monument to the capacities of mankind to conquer nature and order our af fairs, the assumption being that the ability to fly a rocket implies the ability to organize a society, in theory if not in practice. The flight has brought to the forefront that old cliche, "Man's scientific wisdom has outrun his moral wis dom"; we can go to the moon, yet somehow we have failed to solve Gary North is a member of the Economists' National Committee on Monetary Policy.

the problem of mass poverty in the United States. The gap between moral wisdom and scientific knowledge has been a problem since the scientific rev olution of the sixteenth century. Immanuel Kant, writing in the late 1700's, struggled mightily with this very question: How can man bridge the intellectual chasm between scientific knowledge (the realm of law and necessity) and moral knowledge (the realm of freedom and choice) without sacri ficing the integrity of one or the other? Hegel, Marx, and the mod ern moral philosophers have all lived in the shadow of this dilem ma, and the crisis of modern cul ture reflects man's failure to re solve it. The responses to this dilemma, as a rule, take one or the other of two forms, symbolized 688 684 THE FREEMAN November by Arthur Koestler as the Com missar on the one hand, and the Yogi on the other. The Commissar is enraptured with science and technology; he is confident that scientific planning in proper hands can so alter man's environment as to bring about a new earth and a new mankind.

The Yogi takes the opposite tack of disengagement from "the world," laying stress on each man cultivating his own garden. Find inner peace, he urges, and the ex ternal world will take care of it self. His assumption is that sci ence and technology are neutral, that developing from their inner imperatives they will eventually find their own benevolent level. But this assumption is invalid because the planners won't let it happen this way. Once accept sci entific planning as a legitimate and even necessary function in a society and any form of "spiritu ality" which assumes the impo tence of moral concepts in the social and economic affairs of men is helpless before the planning elite. If a change in the hearts of men only has impact on their in ternal lives, then the external realm of science is left free to do its "neutral" best. Unfortunately, the planners can never be neutral; hence, their application of tech nology to the affairs of men can not be neutral. Planning involves the allocation of scarce resources, and some programs must be ac cepted while others are rejected.

The planners must use a scale of values - nonempirical, a priori moral values - in the administra tion and formulation of their plans. Hayek's arguments along these lines in his Road to Serfdom (1944) have laid the question to rest. Unless one's moral commit ment involves a view of external reality, one will remain helpless to reverse the course of external affairs. For this reason, those who counsel retreat from the world ac tually cooperate with the drift into totalitarian planning. From the Moon to the Earth During the week of the moon shot, I fully expected some local television station to show George Pal's 1950 classic, Destination Moon. Sure enough, a Los Angeles station presented it one evening. No doubt it was shown in other cities around the country. I missed it this time, but I have seen it of ten enough to reproduce some of its dialogue verbatim (the dialogue, however, was considerably inferior to Pal's special effects). Tom Pow ers played a military man whose rocket programs kept producing failures. He finally is able to con vince John Archer, a captain of private industry, to construct the rocket that will get the job done.

1969 THE MYTHOLOGY OF SPACESHIP EARTH 685 The message-: only American pri vate enterprises can get us to the moon. That was great stuff in 1950. Yet the reality is far, far removed in 1969. The moon shot was, by its very nature, a task for the state. Private firms could be contracted, but the NASA officials 'were be hind it, financially and administra tively, from start to finish. Tom Wicker, writing in his nationally syndicated column, put the fact in all its clarity: "No one ever made the remotest pretense that men could get to the moon via free enterprise, states' rights, rugged individualism, or matching grants."l The reason: ". . . this was government-managed enter prise, pointed toward an agreed goal, operating on planned time and cost schedules, with ample ad ministrative authority derived from Federal power and wealth." An amen is due here. Good show, Mr. Wicker. Mr. Wicker, unfortunately, made a great leap of faith when he be gan to compare our heavenly achievement with our supposed capabilities for solving more earthly tasks. He was not alone in this leap. Editorial after edi torial echoed it, and I single him out only because he is widely read and generally regarded as one of 1 Tom Wicker, Riverside, Calif. Press, July 22, 1969.

the superior liberal pundits. He makes the leap seem so plausible: "So the conclusion that enlight ened men might draw is that if the same concentration of effort and control could be applied to some useful earthly proj ect, a similar success might be ob tained." He recommends a vast program of publicly-owned hous ing construction, say, some 26 million new units by 1980. Flora Lewis' column was far more optimistic; her horizons for mankind's planning capabilities are apparently much wider. "If the moon can be grasped, why not the end of hunger, of greed, of warfare, of cruelty?" She admits that there are problems: "They seem provocatively within our new capacities and yet maddeningly distant. We are told it is only lack of will that frustrates these achievements, tOO."2 Nature is boundless, apparently; only our "lack of will" prevents us from unlocking the secrets of paradise and ending the human condition as we know it. This is the mes sianism of technological planning.

It is basic to the thinking of a large segment of our intellectuals, and the success of the Apollo flights has brought it out into the open. Mr. Wicker wisely set for our 2 Flora Lewis, Los Angeles Times, July 22, 1969.

686 THE FREEMAN November government a limited goal. Miss Lewis does not necessarily limit the task to government planning alone, but it is obvious that she is basing her hopes on a technological feat that was essentially a statist proj ect. At this point, several questions should be raised. First, should the state have used some $25 billions of coerced taxes in order to send two men to the moon's surface? Would men act ing in a voluntary fashion have expended such a sum in this gen eration? In short, was it worth the forfeiting of $25 billions worth of alternative uses for the money? Second, given Mr. Wick er's plans, could we not ask the same question? Is the construction of public housing, and the use of scarce resources involved in such construction, on a priority scale that high in the minds of the American public? Would a non inflationary tax cut not be pref erable?3 It is typical of socialistic thinkers to point to emergency spending (e.g., a war) or some statist rocket program and rec ommend a transfer of funds from one branch of the state's planning bureaucracy to another. I have never heard them recommend a reduction of spending by the state.

Spending precedents set in war3 Cf. Gary North, "Urban Renewal and the Doctrine of Sunk Costs," THE FREE MAN (May, 1969). time, like "temporary" taxes, seem to become permanent. Finally, in Miss Lewis' example, is the mere application of the techniques of applied science sufficient to end warfare and cruelty? Or could it be, as the Apostle James put it, that our wars come from the hearts of men?4 Conversion, in and of itself, may not redeem tech nology, but can Miss Lewis be so certain that technology can redeem mankind? The Limits of Technology Technology is a tool. Like any tool, it has its limitations. One must be very careful to keep from using an inappropriate tool to com plete some task. It makes it im perative that the user specify the exact nature of his task before hand. Any standard economics text book will usually compare eco nomics with engineering. The con trast is not perfect, but it does set before the reader the different ways an economy must plan. The engineer must decide, given a spe cific goal, how to allocate the avail able resources to complete it. The economist must look at the avail able resources, and decide where to allocate them, given a multi plicity of goals. In some cases, it will be difficult to separate the two jobs, but the distinction is 4 James 4:1.

1969 THE MYTHOLOGY OF SPACESHIP EARTH 687 useful for purposes of conceptu alization. The Technocrats of the 1930's urged us to accept the economic guidance of the engineering elite. They would eliminate "waste." Yet the engineers of the Soviet Union have been forced to construct crude economic accounting tech niques in order to deal with such "capitalistic" phenomena as value and the rate of interest. Engin eering - meaning specialized, tech nological competence - cannot deal with such psychological imponder ables as consumer preferences. Only the price mechanism of a free market can do this with any degree of accuracy, which is why Ludwig von Mises rejects socialist planning. 5 If we confuse engineer ing with economic calculation, we will destroy the rational allocation of scarce resources by the market. It would involve turning over the task of ordering literally quintil lions of economic relationships to a centralized elite with necessarily limited knowledge. 6 The results can be predicted: irrational deci sions, petty bureaucratic coercion, and a loss of political freedom.

Governments can provide cer tain services that, by their very 5 For a summary of this literature spearheaded by Mises, see my chapter on "Socialist Economic Calculation," in Marx's Religion of Revolution (Nutley, New Jersey: Craig Press, 1968). 6 Ibid., p. 193. nature, men do not want to see of fered to the highest bidder, as on a free market. Justice is not to be purchased for the profit of the judges involved. Governments are seldom efficient in solving complex, interpersonal problems that re quire a careful balancing of sup plies and demands (for they are plural until registered, specifically, on a market, by a given supplier and a specific purchaser); when personal preferences of many in dividuals involving varied and even conflicting goals are the issue, gov ernments are not particularly suc cessful agents for getting things settled. The fine shadings are lost in the aggregate decisions.

A Leap of Faith Therefore, to take a leap of faith from some particular in stance of a "successful" govern ment project - success defined as the operationally satisfactory com pletion of a certain unquestioned goal - to the realm of economic planning involves a faith far greater than anything imagined by the medieval scholastics. Yet Dr. Irving Bengelsdorf, a staff writer with the Los Angeles Times, thinks that "there may be hope" along this line of thinking, in spite of the difficulties inherent in any computerized quantification of qualitative personal prefer ences. He states the problem well; 688 THE FREEMAN November he cannot show how his answer is linked operationally with the prob lem he states: In contrast to the novel and un cluttered venture of getting to the moon, [an] uninhabited, non-social, nonpolitical moon, the problems of society are exceedingly complex to solve because any solution demands that people have to change their daily ways of life, their interactions with other people. This is difficult to do.

For, from birth, people already come overlaid with traditional prejudices, encrusted with hoary cultures, and swaddled in ancient customs. And these are hard to change. But, there may be hope. Both the Apollo 11 flight and the Manhattan Project of World War II show that once a clear goal has been set, a vast, complex project involving large num bers of people with different training and skills working together can achieve a solution. 7 Between the first paragraph and the second lies a social revolution. Also present in the gap is the un stated assumption that we can re duce the complexities of society to "a clear goal," which is pre cisely the problem governments have not learned to solve. I am at a loss to see how a wartime bomb project or a trip to the moon in dicate anything except the amaz ing capacity for spending that gov ernments possess. 7 Irving S. Bengelsdorf, Los Angeles Times, July 24, 1969.

Spaceship Earth Barbara Ward, one of the most respected Establishment thinkers in Britain, and former editor of The Economist, has taken Buck minster Fuller's spaceship analogy and has turned it into an effective neo-Fabian propaganda device: "The most rational way of con sidering the whole race today is to see it as the ship's crew of a single spaceship on which all of us, with a remarkable combination of security and vulnerability, are making our pilgrimage through infinity."8 This assumes, of course, a chain of command, a previously agreed upon destination, and some shared faith in the way one goes about getting there. But what are a few assumptions among rational men, especially planners? Now, fellow crewmen, "Think what could happen if somebody were to get mad or drunk in a submarine and run for the controls. If some mem ber of the human race gets dead drunk on board our spaceship, we are all in trouble. This is how we have to think of ourselves. We are a ship's company on a small ship.

Rational behavior is the condition of survival." Clearly, as she points out, "Rational rules of behavior are what we largely lack."9 All is 8 Barbara Ward, Spaceship Earth (New York: Columbia University Press, 1966), p. 15. 9 Ibid.

1969 THE MYTHOLOGY OF SPACESHIP EARTH 689 not lost, however. Our divisions are based on divisions of power, wealth, and ideology, but these can be overcome through reason. There is a universal means of instant communication - technology which brings us together .10 "Quite apart from common tools and methods, we also have mental atti tudes that do not vary from cul ture to culture and are common to a single world civilization."ll What these common bonds are, she fails to mention; nevertheless, "in short, we have become a single human community."12 The problem with all of this "spaceship reasoning" is that it assumes as solved those funda mental problems that need solving in order to make possible the spaceship analogy. The thing which strikes me as ironic is that the language of the spaceship involves a chain of command approach to the solution of human problems. Those humanitarian intellectuals who decry the petty military dicta torships in underdeveloped nations want to impose a massive system of command over the whole earth.

That is what the callto world gov ernment implies. 13 The spaceship analogy necessarily views society as a vast army. Yet for some rea10 Ibid., -p. 4. 11 Ibid. 12 Ibid., p. 14. 13 Ibid., p. 17. son, Hayek's identical conclusion about the implications of socialist planning is invariably rej ected as absurd. It is the 1nentality of the militarist. Miss Ward even is will ing to admit that our experiences in wartime helped to create the foundation of modern economic policy: Thus, not by theory or dogma but largely by war-induced experience, the Western market economies have come to accept the effectiveness and usefulness of a partnership between public and private activity .... but there is now no question of exclusive reliance on anyone instrument or any one method. The pragmatic market economies have worked out their own evolving conceptions of public and private responsibility and the result is the dynamic but surprisingly stable mixed economy of the Western world. 14 The Chaos of Noneconomics I would have put it a different way. I would have pointed to the signs of our contemporary sys tem's increasing inefficiency, cor ruption, and extralegal practices which we more usually associate with those warfare economies from which she says we borrowed our planning techniques. What we have created is a noneconomics, and Miss Ward proclaims the ben efits of such a system: 14 Ibid., pp. 9-10.

690 THE FREEMAN November But, on the whole, in economics the Western world can move from posi tion to position with little sense of contradiction and incompatibility. We had no very fixed views before so we do not have to bother too much about what we believe now. It is a consider able source of strength.l 5 This, then, is "reason, spaceship style." It is the triumph of intel lectual chaos, and it is inevitably recreating the economy in its own image. Grounding the Ship Dr. William G. Pollard, a physi cist who was a part of the Man hattan Project, has written a little book which tries to undergird the spaceship analogy with a theolog ical framework. His theology is radical, but he is honest in seeing the purpose of the Apollo flights as being ultimately religious. He thinks it marks the end of the era of science-worship. Diminishing marginal returns are about to set in: Sending men to the moon and bringing them back in 1969 may prove to be from the perspective of the twentieth century the central symbol of the golden age of science in the twenty-first. Like the great pyramids of Egypt or the lofty cathedrals of medieval Europe, this feat will stand out as a peak expression of the spirit of the golden age; the maximum eco15 Ibid., p. 10.

nomic investment which a great civili zation could make in a feat which served no useful purpose other than making manifest the lofty height to which the spirit of an age could rise. It will not be worth repeating except perhaps by Russia for the purpose of sharing in its glory. Thereafter, even more massive applications of science and technology to basic human needs will have become so urgently neces sary that no further diversion of available talent and resources to manned space flights can be per mitted. 16 We can hope that he is correct, but who knows for certain? The government was so successful, as it usually is, in achieving a feat "which served no useful purpose" other than its own glory, that we may have more of the same. But this much should be clear: the analogy of spaceship earth is more than an analogy; it is a call to religious commitment. The call is to faith in centralized planning.

At the beginning of this essay, I pointed to the dual theories of regeneration, symbolized by the Yogi and the Commissar. They feed on each othe~ take in each other's intellectual washing, so to speak. If we are to confront the mythology of spaceship earth, it must be in terms of a rival moral philosophy, one which has social 16 William G. Pollard, Man on a Space ship (Claremont, Calif.: Claremont Col leges, 1967), pp. 59-60.

1969 THE MYTHOLOGY OF SPACESHIP EARTH 691 and economic implications, as well as technological implications. We must deny the validity of any vision of man as central planner, a little god who would arrange in an omniscient fashion the lives of all men in all the spheres of their existence, as if we were some per manent military crew. We must acknowledge the validity of the late C. S. Lewis' warning in The Abolition of Man that when we hear men speaking of "man's tak ing control of man," we should understand that it implies certain men taking control of all the others. When men seek to divinize the state, they succeed merely in cre ating hell on earth. The Christian church fought this point out with Economic Growth the Roman Emperors, both pagan and Arian. The state may not claim to be God's exclusive or even chief representative on earth. 17 The the ology of spaceship earth would have us return to the religious political theory of the ancient world, all in the name of progres sive technology and planning.

The astronauts are back on earth. We must seek to keep them here. It is time to ground our spaceship programs, both interplanetary and domestic. Let the captains go down with their ideological ship. There are better ways of allocating our scarce resources than in construct ing spaceship earth. I 11 R. J. Rushdoony, Foundations of So cial Order (Nutley, New Jersey: Craig Press, 1968). IDEAS ON LIBERTY THE ONLY POSITIVE WAYS the government can use to attempt to promote economic growth are to tax, inflate, spend, and con trol-that is, to leave you with less real money to spend, and to restrict the ways you can spend what you have left. Thus, we are clearly not choosing the means and policies that will increase the long-time production of goods and services that we consumers want and are willing to pay for. I am convinced that the only possible way to accomplish that goal is to reject totally the restrictive influence of government controls and ownership and deficit spending, and to return to the free mar ket economy that is the hallmark of· a responsible and pros perous people.

DEAN RUSSELL Good sense malles good business! HELEN BUGBEE "FOOD AND TELEVISION are Ameri can necessities," proclaimed an ad from a firm of stockbrokers who were looking forward to the in vestment opportunities offered by proposals to exempt "the poor" from Federal income taxes. Maybe the writer of that ad couldn't tell the difference between a television set and a necessity, or maybe he merely finds it conven ient for selling purposes to rede fine every luxury as a necessity as soon as most Americans can af ford it. But there are many Amer icans whose view of reality is so dim that they really can't see the difference. They are the ones who worried Dr. Edward A. Piszczek, then president of the Illinois State Medical Society, when he comMiss Bugbee is a freelance editor and writer specializing in employee communications. 692 plained a few years ago of "the popular notion that a man should spend what he earns for his pleas ures rather than his needs. A man should buy a television set, a trip to Florida, or a sports car, so this reasoning goes, because this is his cardinal right. But someone else should pay for what he really needs, such as his life or his health. . . . And if no one else will pay for it, the doctor should serve him for nothing."

The distinction between a ne cessity and a television set was perfectly clear to Dr. Piszczek as it is to anyone with a firm grip on reality. His interest in keeping the distinction clear in the minds of people who might buy television sets and then fail to pay doctor bills was obviously different from that of the broker who wants to 1969 GOOD SENSE MAKES GOOD BUSINESS! 693 sell stock in companies that deal in television sets. But brokers who deal in invest ments, as well as companies that deal in television sets and other prod ucts, also share an interest in ensuring the perpetuation of a so ciety in which they can do busi ness. And that interest might well take priority over the urge to sell their products! Before they add to the confusion of people whose grip on reality already is weak, they might consider the current threats by some of the poor against the society in which busi nessmen are trying to operate.

They might ask themselves how those people got the idea of what they claim as "rights." In a society so affluent that it can be contended, with almost no dissent, that a television set is a necessity - even for the poor there must be something about the poor that makes and keeps them that way. It must be a deficiency either in their ability and willing ness to earn money or in their ability and willingness to manage it. The latter often stems from a failure to accept the reality that 2 pIus 2 make 4 and cannot make 6 or 8 or 10. And if their grip on reality is that weak, it may be dangerous to redefine as a neces sity each new luxury that is brought within the reach of most people by mass production! From Luxuries to Rights It's a short step from calling a luxury a necessity to calling it a right. In the short time since Dr. Piszczek made his complaint, the product he deals in - medical care - has been made a "right" for the "medically indigent." That means that the rest of us must pay for their care with our tax money.

Before businessmen get too eager to turn television sets into necessities and to sell these and other desirable products to people who are about to be exempted from taxes, they well might pon der whether they want these lux uries-became-necessities turned in to "rights," with the burden on businessmen and other taxpayers increased to pay for them (or to pay for police protection if the "rights" are not granted). It's good business, of course, for businessmen who have goods and services for sale to look at the opportunities for profit in almost everything that happens; but it's also good business to take account of the dangers that accompany the opportunities! The broker's ad spoke of "companies selling con sumer goods and services" as "the particular beneficiaries" of the tax cut for the poor, and held out to investors in such companies the prospect that "2.2 million Ameri cans will have $700 million more to spend. . . . And not only will 694 THE FREEMAN November they have more money to spend.

With more money they'll be able to borrow more money." Among companies that stand to benefit, said the ad, are companies that "deal in everything from food, soft drinks, girdles and TV sets to installment and' housing loans." One man in the installment loan business, Ernst A. Dauer, director of credit studies of Household Fi nance Corporation, showed his awareness of the dangers that ac company such opportunities when he told a seminar of the National Industrial Conference Board re cently of the need for "constant attention by credit managers" to the credit worthiness of borrowers. Consumer installment debt, he said, has grown 125 per cent in the last nine years. That's 1V2 times as fast as the national prod uct has increased, and Mr. Dauer predicted that installment debt would grow another 122 per cent by 1980. One wonders how Mr. Dauer would rate the "credit worthiness" of people who have been declared "medically indigent"

so the taxpayers will pay their medical bills. Should they be granted credit, say, for a television set? Of course, businessmen can't be expected to forget their business or to act as though their prospec tive customers were simple-minded and in need of a protector. Customers would resent that idea as much as businessmen would. However, no one should single out the poor as the simple-minded when it's reported that business men are mailing credit cards to welfare clients, and when busi nessmen add to the confusion of brains already dangerously addled by promoting the ideas that non essentials are necessities and that buying power can be increased by using part of it to cover finance changes. Earn More and Get More Some of the so-called rights that some of the poor are demand ing, and some of the threats and actions they are using to enforce their demands, suggest that the only possibility of keeping our society viable and prosperous is to clear up their confusion and show them how to earn more money and get more for it. Some of the demands being made are so fantastic that few businessmen would take them seriously. How ever, President Nixon's proposals for a "family assistance" system should suggest that even far-out demands be viewed seriously. Not so many"years ago, only leftwing periodicals took seriously any pro posal for a guaranteed income.

President Nixon's proposals dif fer from the guaranteed income by requiring work or an attempt 1969 GOOD SENSE MAKES GOOD BUSINESS! 695 at work before a family would be eligible for $1,600. In today's mar ket $1,600 doesn't sound like much, and most people would agree that a family should have at least that much. But it would cost taxpayers $4 billion to guar antee that minimum, and hardly any of the people who believe families should have $1,600 would expect to pay f~!}j it by reducing their own consumption. Instead, they'd make every effort to shift the burden of increased taxes to their employers or their customers through wage increases and price increases, thus reducing the value of the $1,600 grant. Then the poor would feel cheated and demand more "rights." This may happen over and over, as it has happened when previ ously legislated benefits have left the beneficiaries as poor as they were before. The dollars received have gone up, but so have the dol lars recei ved by everyone else.

And no matter how many times their dollar incomes are raised, the poor will find themselves as far behind as they were before, since everyone else gets an increase, too. The poor still won't be able to buy the latest luxury-become-ne cessity, whatever it may be, and will demand another increase. Sooner or later their demands or their anger will destroy us through economic breakdown, revolution, or both - unless they come to un derstand that even an affluent so ciety cannot deliver more to its people than its people produce, and that the best way for one to have as large a share of the na tion's output as he thinks he should is to increase his earning power and make the best use of his buying power. The Cost of Credit It is to be hoped that those who wish to sell to the rural and urban poor may find a better approach more sound than the one a Chicago bank used some time ago to sell its revolving credit program: The man who spends only what he has doesn't have much. Waiting till you accumulate enough cash before you make a maj or purchase such as a dishwasher is like waiting till you can afford to get married. You don't.

And the bitterest pill is having to watch others enj oy their possessions while you wait . . . and wait. . . . That's quite a sales argument. Most people would like to believe there's some magic way a man can spend more than he has this year without spending less than that next year to pay bills. It's mentally easier to accept that pipedream than to face the fact that neither credit merchants nor other lend ing institutions give away credit. They sell it at a price, whether it's called interest or carrying 696 THE FREEMAN November charges or something else. And the amount paid for credit is money that can't be spent for products. So the man who hopes to increase his buying power by spending more than he has shrinks his buying power instead. The only way a man can spend beyond his means without shrinking his buy ing power when the debts fall due is to welch on those debts. It's hard to believe any businessman welcomes such behaviors, though growing numbers of debtors are filing in bankruptcy. The National Consumer Finance Association calls personal bankruptcies "a growing concern." Certainly, the complex credit mechanism that is supposed to sustain our affluent society would break down if busi nesses could not count on credit customers to meet their obliga tions.

American Families Already Overburdened by Debt Of those American families where the breadwinner is under 35, the average already is carry ing debts adding up to 81 per cent of a year's income; and families with breadwinners between 35 and 54 are not far behind, with debts totaling 78 per cent of a year's income. Morris Rabinowitch, president of Financial Counselors, San Francisco, estimated last year that one third of American families were overextended in debts and on the brink of serious trou ble. More recently, John Vincent Neeson, San Francisco manage ment consultant, said that "the average family, in terms of its earning income, is within six weeks of bankruptcy." So, businessmen may be asking for trouble that will blow up in their faces when they encourage people who are thought to need tax relief and help with school lunches and medical bills to spend money and even go in debt for things they might do without.

Not every businessman has the same incentive as the Chicago savings and loan association that ran a full-page ad recently under the heading "Inflation? ... it's up to you." Its message was: What's the best strategy to cope with inflation? It's based on two kinds of know-how - how to get the most from your income and how to handle your surplus funds. Inflation is a signal to postpone some of your spending plans and scale down others. If you don't, at the end of each week or month, you may be in creasingly short of cash or a notch deeper in debt. Some advertisers might ques tion the willingness of people who need such a message to read all about planned spending, super market shopping, consumer credit, 1969 GOOD SENSE MAKES GOOD BUSINESS! 697 and investment of surplus funds. It's far easier, of course, to be lieve in fairy tales than to accept statements like the following: Consumer credit is costly .... For many, the easiest way to reduce ex penses is to cut down on credit buy ing. The family that remains in debt with installment payments for cars, appliances and other consumer goods loses purchasing power in two ways.

First, interest and carrying charges grea tly increase the total cost. And second, the credit buyer loses the extra interest income his money could earn in a savings account while he saved for a cash purchase. It's also easier to peddle the nonsense that everyone can have more than he earns than to talk the kind of sense that requires thought. But a free society cannot survive at a high level of de velopment unless its people begin to think and to understand what they're doing. H. G. Wells wrote shortly after World War I in his Outline of History: Human history becomes more and more a race between education and catastrophe. Fifty years have passed, and catastrophe is close upon us. Have we time to win? Perhaps not. Peo ple might not listen if we do talk sense. But we can't know for sure unless we try. And there is this powerful incentive: Showing peo ple how to manage their affairs intelligently will not only preserve and improve our society but will generate profitable business in the process. ~ IDEAS ON LIBERTY Ludwig von Mises CAPITALISM has improved the standard of living of the wage earners to an unprecedented extent. The average American family enjoys today amenities of which, only a hundred years ago, not even the richest nabobs dreamed. All this well-being is conditioned by the increase in savings and capital accumu lated; without these funds that enable business to make prac tical use of scientific and technological progress the American worker would not produce more and better things per hour of work than the Asiatic coolies, would not earn more, and would, like them, wretchedly live on the verge of starvation.

All measures which - like our income and corporation tax sys tem - aim at preventing further capital accumulation or even at capital decumulation are therefore virtually antilabor and antisocial.

698 William Henry Chamberlin 1897-1969 READERS of these pages during the past three decades have become familiar with the name of William Henry Chamberlin. Few of them, however, came to know the man. Though he wrote nearly a score of books, he remained essentially a newspaperman. In a career that spanned half a century, he traveled extensively, meeting people, asking questions, shaping and reshaping his own views. In 1922, at the age of 25, he went to Moscow for the Chris tian Science Monitor. While he was at first strongly sympa thetic toward the Soviet regime, he was soon disillusioned by Stalinism's harsh reality. After a dozen years the Monitor moved Mr . Chamberlin to the Far East, where he saw the rise of Japan's militarism. In 1939 he shifted to France, leaving only after Germany's Nazi armies occupied the country. Few men saw so much of the dark forces that were driving the world toward war.

Through it all Mr. Chamberlin remained ebullient, ever confident that man, given time and proper leadership, could find his way through the wilderness. Well past the age when most men retire, he was still plying his newspaper trade. On a working trip to Europe he stopped for a few days in Switzerland where, while walking a mountain trail, he suf fered the stroke that brought his death. Saddening though it is, there is solace in an exit that is so perfectly in character. Editorial from The Wall Street Journal, September 16, 1969 The following excerpts are from Mr. Chamberlin's article in the May 1959 Freeman: The Supreme Issue: The Individual versus the State WHEN the State goes beyond its proper functions of maintaining law and order at home and provid ing protection against foreign ag gression, and starts to assume the role of a universal provider and regulator, it never knows when to stop. One arrogation of pow·er leads to another, and the planned economy quickly develops into the totalitarian State ....

Gone are the days when sturdy Grover Cleveland - rejecting a proposal to provide government compensation for farmers whose crops had been damaged by hail remarked, in substance, that while the people should support the gov ernment, the government should not support the people. Now, it is no exaggeration to say that governments in many fields do under take to support the people, or certain groups of the people. This task is very expensive, requiring taxation on a scale that formerly would have been considered fan tastically impossible. It also neces sitates far-reaching controls. One is reminded of Alexis de Tocque ville's "immense and tutelary power," which would rob the human race of all initiative and self-reliance, which would labor for their happiness, but choose to be the sole agent and the only arbiter of that happiness, which would "spare them all the care of thinking and all the trouble of living" ....

The Soviet Union, where the combination of political dictator699 700 THE FREEMAN November ship and economic collectivism has prevailed consistently despite minor shifts in tactics and policy, has been a false beacon light to leftwingers in America and West ern Europe ever since it was established in November 1917.... From the cradle to the grave the Soviet citizen is conditioned by propaganda and, through a rigidly authoritarian school system, is as signed or directed or channeled into the work the State thinks he should take up. The horrors of forced labor under Stalin, the worst kind of slavery, have abated. This is not because his successors are more humane than the de ceased dictator. But they realize that the former system of over working and half-starving millions of people in Arctic slave labor camps is too wasteful in manpower for a country that is feeling the effects of tremendous war losses in its present low birth rate. How ever, large numbers of people, if not actually kept behind barbed wire, are forcibly detained in re mote places where they are forced to work at the tasks assigned to them.

It is a great pity and irony that just when the strength of the United States lies in being as dif ferent from the Soviet Union as possible, in adhering firmly to the principles of the free market, con sumer free choice, maximum op portunity for the individual, there are voices in this country that use a mistaken fear of Soviet economic competition as an argument for driving us further along the path toward economic statism. Apart from the threat of mili tary attack, which is a question in itself, the only thing we need fear from the Soviet economic pattern is that we should imitate or adopt it, even in part. Only if and as we maintain in our own lives the his toric American principles of in dividualist opportunity in econom ics and other fields shall we worthily fill our historic destiny as champions of the principle that the State should be the servant of its citizens, not the master of its sub jects. ~ A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN THE WAR ON THE POOR IF the American Republic is to go down the drain, it will be be cause 200,000,000 people, give or take a few hundred thousand, are taken in by the "post hoc, ergo propter hoc," or "after this, there fore because of this," way of look ing at everything that has been happening since the days of the New Deal. Our country is obvi ously prosperous: it sends men to the moon, it throws money away all over the globe; it enables 400, 000 kids to idle away their time sitting around a Catskill pasture and soaking up rock music and marijuana fumes; it keeps a big population in college so that they may take their exercise in demon strating and in throwing the deans downstairs. So, since the New Deal response to the 1929 depression came first in time, this response and the many extensions of the "government aid" principle that have followed - must, so the argument goes, he the cause of all sub sequent good things.

"Post hoc, ergo propter hoc," however, can be a thunderous fal lacy for several reasons. For one thing, it involves cutting up time into little pieces, and arbitrarily picking one point as the begin ning. A longer view of things might insist that contemporary American prosperity is due to nineteenth century inventions, or the thinking of the Founding Fa thers, or empty land, or the genes of the immigrants, or the decline of mercantilism, or a continental free trade area. Taking the long view, one is perfectly justified in saying that we are prosperous be cause our fundamental economic vitality has enabled us to triumph over the government interventions that have come thick and fast since 1933. In his The War on the Poor (Arlington House, $5.95), Clar701 702 THE FREEMAN November ence B. Carson chooses a contrari ous "after this, therefore in spite of this" approach. He sustains his thesis - that the things the poli ticians try to do for the poor are achieved at the expense of the poor - with brilliant logic and with irrefutable statistics. Such is the spell of the post-New Deal "propter hoc" fallacy, however, that Professor Carson's sanity will be regarded in most "intellectual"

quarters as a quaint form of mad ness. The Death of Agriculture Professor Carson was born on a red-dirt farm in Alabama, and he vividly recalls Franklin D. Roose velt's promises to "restore the bal ance between rural and urban dwellers." He remembers how his neighbors in the early thirties wrestled with the boll weevil, the grub worms, the floods, and the drought. Even so, "cultivated farm followed cultivated farm" in those days. In the middle thirties came the government programs: "the cotton allotments, the soil conser vation checks, the crop loans, vague talk of parity and higher prices and soil improvement." Yet, as Professor Carson saw with his own eyes, the more the govern ment "helped" the farmers, the more desperate became the situa tion of agriculture. The sons left the farms to work at sawmills, the daughters to clerk in stores. "There was nothing dramatic about the death of agriculture there," says Dr. Carson, "it was more like a lingering and wasting sickness."

When he went to college and learned something about econom ics, Dr. Carson discovered that the government programs forced "marginal" farmers to become "submarginal." Y,ears later, when, as an economic historian, he be gan to assemble the statistics, he could see how the government aid programs .defeated themselves. The big farmers got the most money for "acreage reduction." They put the government largesse into bet ter fertilizers, better seeds, better labor-saving ,machinery. The mar ginal farm,ers couldn't keep up in the race. And so today, instead of having 25 per cent of the popu lation living on farms as in 1933, the figure' has been reduced to around 8 per cent. The drift to the cities would have occurred in any event, but the tempo might have been slowed if the New Deal hadn't tried to be so "helpful." The ex-farmers, moving into town, clogged a labor market that was already the ob ject of the government's "war on the poor." There was the big 1937 drive to build up the unions, with 1969 THE WAR ON THE POOR 703 the help of the new labor legisla tion. But the rise in wages, which came with a onesided "collective bargaining," was not matched with a corresponding rise in labor productivity. Minimum wage leg islation came in 1938. Meanwhile, as business made less money, the stock market fell. We had a "de pression within a depression,"

and in November, 1938, WPA "make-work" employment reached an all-time high. It was not the New Deal interventions that ended the unemployment of the thirties, it was war orders from an em battled Europe. Sacking the Cities Professor Carson deals with "urban renewal," but his word for it is "sacking the cities." Follow ing Martin Anderson, he notes that "urban renewal" has actually resulted in a decrease in the num ber of low-rent housing units available to the poor. It is in the central city slums of today that the "war on the poor" comes full circle. The whirl of the wheel is instructive. It began with the pay ment to the richer cotton growers to take land out of production. The money went into equipment that did away with the need for the Negro field hand on the acres that were still cultivated. Taking the trail to the Northern cities, the Negro field hand crowded into the slum just as the Federal bulldozer was beginning its devastating work. But opportunity beckoned to the ex-field hand's children: they could become dope pushers.

After so much irrationality, foisted on an uncomprehending people by politicians whose chief stock in trade is to keep the masses dependent on the state, it is scarcely to be wondered at that we now have irrational battles in the streets, with the slum inhabitants making war on themselves. The government, as Professor Carson puts it, "has set citizen against citizen and group against group." "It is quite likely," so he observes, "that sometimes a man may have thrown a molotov cocktail which set fire to the dry cleaning estab lishment where some of his own clothes were." Political Backfire At the recent Mont Pelerin Con ference in Venezuela we heard something about "Director's Law," so-called because Professor Aaron Director of the University of Chi cago first formulated it. Accord ing to "Director's Law," the gov ernment programs of a middle class democracy invariably take from the poor (who are less nu merous) to help the middle-class majority.

704 THE FREEMAN November Dr. Carson restates Director's Law in his own way. "To suppose that the poor would be clever enough," he says, "to manipulate government to their advantage is to suppose something contrary to what has ever been or is ever likely to be. . . . If the poor were that clever and persistent they would not remain poor for long in any conditions. Government inter vention has ever been a device to give additional advantages to those who already have power and wealth . . . . The fact that wealthy men predominate as national political figures today and advance these strange welfarist notions - such figures as the Kennedys, the Roosevelts, the Rockefellers, and so on - should have alerted us to the power quest that is involved." As Dr. Carson says, the hope of the poor lies with putting hob bles on expansive government. Rescuing Andrew Jackson from the fell clutch of Arthur Schle singer, who tried to make Jackson over into aNew Dealer, Dr. Car son quotes Old Hickory as saying that the humble "have neither the time nor the means of securing ...

favors to themselves." The war on the poor will end when limited government is restored. , the Freeman VOL. 19, NO. 12 • DECEMBER 1969 A Democratic Dilemma Morris C. Shumiatcher, Q.C. 707 A cogent analysis of the weakness of opinion polls to find right answers to complex economic and political problems. Pyrafttids All Over the Place Leonard E. Read 714 A pyramid is a monument to man's pride built by the coerced labor of others. Inflationismas Political Policy J. H. Peters 717 A banker's translation of ideas on inflation, money, and credit as first set forth by ludwig von Mises. The Price of Liberty Paul L. Poirot 725 Concerning the vital importance of private property, voluntary exchange, market prices, and sound money for rational human action. Our InalienableRights Park Chamberlain 730 A nice question concerning the means one may employ in self-defense. Instinctand Ethics Edmund' A. Opitz 732 The origin and development of our ethical code by man as a responsible human being.

A Difficult Question Stanley Yankus 741 How can a man value his life without a genuine purpose for living? The Art of Iconoclasm Orien Joh'nson 744 How to displace a fallacy without destroying the person who believed it. Who Pays Taxes - and How? How various forms of taxes fall on individuals. A Free Lance in the Free Market An author invites competition. Lemuel R. Boulware Robert G. Bearce 750 752 Book Reviews: IICountdown to Chaos: Chicago, 1968: Turning Point in American Politics" by Jeffrey Sf. John liThe Truth about Boulwarism" by Lemuel R. Boulware Index for 1969 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding. 757 761 the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON·ON-HUDSON, N. Y. 10533 TEL.: (914) 591·7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN 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.

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, 1969, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00j 10 for $2.50j 25 or more, 20 cents each. Any current article wilt be supplied in reprint form upon sufficient de· mand to cover printing costs. Permission is hereby granted to reprin1 any article from this issue, providing customary credit is given, excep1 llinstinct and Ethics."

MORRIS C. SHUMIATCHER, Q.C. A Democratic Dilemma The following is from a recent television interview moderated by Mr. Gordon McGinnis on CKTV's program, "Guest House," at Regina, Saskatchewan. Dr. Shumiatcher is a prominent Canadian lawyer and a staunch defender of the individual against the encroachments upon his rights by the State. What he says oj political affairs in Canada would seem to describe pretty well the situation in most any democratic nation oj our time. QUESTION: When we talk about democracy and rule by the major ity of the people, what of the mi nority who are causing a lot of friction in our society? Democracy postula tes rule by the people and, generally, the prin cipal rules are made by majorities. But, of course, democracy works only if both majorities and mi norities are prepared to adhere to certain fundamental rules of law and practice. That is to say, a majority has the right to govern but it does not have the right to destroy or crush the minority. By that same token, the minority has the right to live and survive, but it does not have the right to disrupt and destroy the ability of the majority to carry out its obliga tions to govern.

The minority may, by disorder, by refusing to adhere to normal rules of democracy, destroy the whole democratic structure. But majority rule does not mean sim ply that if you have the power of a giant, you should use it as a giant. Power must be used with restraint and with all due regard for legit imate minority rights. I want to give you an illustration. I haven't the slightest doubt if a poll had been taken in Nazi Germany in 1938 - let us say, as to whether the maj ori ty of people in Germany at that time subscribed to the ra707 708 THE FREEMAN December cial superiority theories of Hitler - that the majority would have voted in favor of the doctrine and a policy to give it effect. But sim ply because the majority might approve it does not mean that it is right. QUESTION: Is there a possibility that this sort of thing could hap pen today? It is quite possible. I think that you may have a majority that will decide to take reprisals against a minority and in fact we have such cases today. But I think you are most concerned at the moment about the right of 300 people in Vancouver to disrupt or seek to disrupt a meeting of the Prime Minister of Canada when he at tends there on legitimate political business, as was the case a few days ago. Of course, there is no right to stifle free· speech with· violence and threats of violence.

As he said at the time, after these unfortunate events last week in Vancouver, democracy depends upon the use of reason, of logic, of the right to persuasion. As soon as force or violence is used by a minority or a majority, as soon as a person says, "I alone have the right to talk. You have no right to contradict or answer!" then the whole foundation of democracy disappears. That is why the mi nority and the majority both must adhere to the rules which I spoke of earlier. These are gentlemanly rules and they are based on cour tesy and restraint. Because they depend on good manners, the dem ocratic fabric is a very delicate one. It is one that can be easily ruptured; it is one through which violence and brute force and self ishness can break easily. When that happens, men lose their dem ocratic rights, and the strong and unscrupulous prevail. After all, there are very few places in the world today where anything like a democratic system exists. De mocracy is the exceptional form of government in the world today as it has always been throughout the centuries. It is a freak, if you will, and one which, because of its fragility, must not only be cherished, but jealously guarded.

That, really, is what we say when we sing, "0 Canada : We stand on guard for thee." QUESTION: Why is there today this shabby attitude of Canadians toward the office of the Prime Minister? It does not seem to me, at least, that it has ever existed in this country before, certainly not in my time. Well, that is a very good and a very difficult question. I think one of the problems is this: Our Prime Minister is a highly intel lectual and a very able man. Even 1969 A DEMOCRATIC DILEMMA 709 his detractors must admit this. What is more, he is accustomed to discussion, to confrontation if you will. His experience as a univer sity law teacher schooled him in the art of man-to-man debate. He has felt that he can take the pulse of the nation and determine its sentiment and disposition by go ing out amongst the people and discussing with them matters that are of national concern. That is a very worthy objective.

I think he must now have sec ond thoughts on this program upon which he embarked a year ago, for the very simple reason that you really do not find the pulse of the people in the streets at all. Those who are the respon sible people of this country simply are not the people who walk or march the streets - or who dem onstrate or who appear in mobs or come forward in parades or carry signs or shout slogans at the Prime Minister or anybody else. That is not where the busi ness of the nation is being car ried on - whether by mechanics or builders, tradesmen or produc ers, or by any of the hundreds of useful callings and professions that serve the nation. The thought ful people, the people that are really concerned with the affairs of our nation, simply do not go out in the streets to air their views; and therefore, if the Prime Minister wishes to take the pulse of the nation, I do not think he will ever find it in the parks or at the curbstones of the cities at all. That is not wp.ere he will learn anything beyond the latest ob scenities of the day. I think he has come to realize that there isn't much wisdom there - nor even a willingness to acquire it. That is the first point, which is important.

Secondly, I think that those peo ple who occupy the streets do not come forward with a genuine de sire to discuss anything at all with the Prime Minister. They simply press on in order to shout and to demonstrate. What they demon strate most is their own ignorance and arrogance. Can you think of a more inane way of expressing an opinion on any issue of impor tance? I do not care whether it is on Viet Nam, on taxation or med ical care or pensions or Indians or whatever else. Is there a more inane way of expressing a view on a difficult question of national policy than to carry around a sign with three or four words (one or two of which are probably ob scene)? Or by shouting slogans or by marching? These are activi ties fit for persons who are illit erate, untrained, and incapable of articulating their views. The intelligent person, on the other hand, if he has views on a subject, may enter into a logical debate, 710 THE FREEMAN December may write an article, a, letter, or may speak with others interested.

He will at least set his views out in some order and he will back his views with facts. But does a mob, confronting the Prime Minister, present facts or logical argu ments? Of course not. They are just there as so many bodies, mak ing unpleasant noises and unat tractive gestures, hoping to get some publicity if possible - but certainly not to advance the in terests of the nation. Their moti vation is disruption and destruc tion, or so, I confess, it appears to me. QUESTION: Let us talk about our members of Parliament in OttO;wa, our governmental representatives jor any given area. They are se lected by the people to go there to represent them. Are the atti tudes oj the electors mature, sen sible, and logical toward the mem bers that they select? Some are and some are not. I think that the weakness lies in the very point I sought to make earlier in relation to the Prime Minister who has been seeking the views of the people in the streets. The trouble today, it seems to me, is that the role of a member of Par liament has changed and become perverted from its original con cept. The member of Parliament now says to the public: "If you elect me, I will be your mouth piece and speak for you." To the mass of his constituency, he says: "Tell me what you want, and I will do whatever you tell me to do." This, of course, is quite ridic ulous because the public cannot possibly know all of the implica tions of giving effect to "what they want." The complex facts, the difficulties involved in any policy, are largely unavailable to the pub lic. Take the question of wheat prices, of international trade, of tariffs. In any area, the complexi ties of trade and commerce, inter national agreements, and a host of other considerations require long study. The public simply hasn't the means of acquiring the facts or the experience in making rational judgments based on those facts.

So, it seems to me that the whole role of the M.P. as repre sentative of the people should be reconsidered. His proper role, I believe, is that of delegate, where the candidate for office says to his public: "If you have trust in me, you can elect me for three or four or five years; I will bring my experience and knowledge to bear on the problems that may arise during that period. I do not know what they may be, but I will make my decisions as I think the facts warrant from time to time; I can not promise anything except that 1969 A DEMOCRATIC DILEMMA 711 I shall act reasonably and honestly and to the best of my ability in conducting your affairs, and I will use as much care in dealing with them as I would in dealing with my own." He must then make the judgments himself. It is for him to do, not what he thinks is popular or what he believes may reelect him, but what, in the light of fact as he discovers it and his own judgment as the exigencies of the time indicate to him, is right. The politician who keeps his eye on the public opinion poll and his ear to the ground and who engages in other interesting physical contor tions cannot possibly make the right decisions.

The public opinion poll depends upon picking ten or a hundred or a thousand people in the streets at random and asking them, off the fcuff, "What do you think about this? Should we recognize Com munist China or not?" Now the person questioned may never have given the matter the slightest con sideration or thought. And so he comes up with an instant answer because he feels he ought to have some opinion on every subject or he will be thought a fool if he doesn't. But the chances are that if he does give an answer - and most people do say something it will be a foolish answer. And the chances of getting collective foolish answers are even greater. When the politician or the mem ber of Parliament tries to deter mine what the people want, if he looks at the result of the public opinion poll, what is he likely to get? Is he getting the considered views of the most thoughtful and intelligent persons in the com munity? Those who have pondered the questions or those who have studied them and are truly con cerned over them? Of course not!

In effect, he will get the lowest common-intellectual-denominator in the community. That is what the public opinion poll is likely to reflect. And if that is to make our country's policy, if that is to be the basis of our position on such issues as our currency, or devalu ation, or trade relations with the United States and the hundred other odd countries we deal with, how can we hope to have rational effective results? If you had a problem - I don't care if it is one in mathematics or chemistry or engineering or in any other field you care to name - and you wanted the answer, would you go out and ask the first ten people you saw on the street, "What is the solution to this prob lem?" And when you tabulated the answers you got, would you then take the mean average of all of the answers you collected? If you did that, you would be called in sane! And yet, the problems we 712 THE FREEMAN December tackle nationally and internation ally are no less complex; if any thing, they are more so. Still, we seem to think that somehow, if we ask enough people and get enough answers, we are going to come up with some profound solu tion to the problems that bedevil us. I suggest that though we may get answers, they are unlikely to be reliable or useful answers. The public opinion pollsters will no more find the answers on the street than will the Prime Min ister.

QUESTION: Is there a fear that our environment of freedom in Qan ada is being seriously threat ened? I do not think we should have fear. We should have apprehen sions perhaps, and we shoUld be watchful. We have all heard: "The price of freedom is eternal vigi lance." But where is the vigilance in polling the public and asking them what is popular? "What do you want? Do you want annual guaranteed incomes?" If you are asked that, and if you have no other facts before you,it is like asking if you are in favor of motherhood. It sounds like a good thing. And so you say, "Yes - I want a guaranteed income, of course!" So, it appears in a poll that most people want it. But what is not known or asked is, "What price are you prepared to pay for it?" The price you are bound to pay will be a price reck one~ in more government inter ference, more confiscation of prop erty by way of taxation, direct and indirect, upon death, and in a dozen other ways. There will be less freedom of choice and of oc cupation, because, let us face it: .

the more state pension and secur ity plans we have, the more we are hedged about by commitments to these plans; the less mobility we have; the less willing we are to move and try something new. Every time we subj ect ourselves to a new measure of social secur ity, each new security measure that takes present earnings from a person in relationship to his job on a promise of future benefits, deprives him of his willingness and freedom to change, to move, -'i to improve himself, to try some thing new and .different. I can un derstand this fetish for social se curity in an old and tired culture; perhaps there was nothing else to hope for in a country like England after the War. But the Beveridge cradle-to-grave security has gone a great distance in reducing the inventiveness and resourcefulness of the English people and dimin ishing the productivity of the pop ulation; of that there is no ques tion.

But we are a new nation here 1969 A DEMOCRATIC DILEMMA 713 in Canada. Weare just beginning to waken to our great national potentialities. What a pity if, at a time when we should be stretch ing our limbs and testing our strength as individuals and col lectively straining our sinews as a nation - not just in the physical or economic sense hut socially, culturally, spiritually - we crawl into the confining shell of welfar ism and seek a safe and unadven turous life in the stagnant back" waters of the world! QUESTION: Are those people that are able, willing, and do in fact exercise their right to vote - are these persons more qualified to day to make decisions than they were say five or ten years ago? I would say less so. I would say the person who genuinely desires to inform himself on public affairs today has a great many more dif ficulties in his way than people encountered, say, forty or fifty years ago, because the facts today are so much more numerous and complex. It is so difficult to ac quire the reservoir of information that is necessary to form any ra tional conclusion, that the chal lenge is considerably greater. But simply because the challenge is so great, I think more and more of us will be moved to accept it. It is not that a tiny group of people and no others are capable of mak ing the decisions. We all are. We all have that capacity; but we can participate in the business of de cision-making only if we are pre pared to study the facts and issues diligently, continuously.

It is not enough to read the headlines and slogans that we find in the press. It is not enough to listen to what comes off the street even if it is dignified by a radio report or a television broadcast. These are only the superficial symptoms of our agitated times. You will learn nothing from them except that people are still capable of violent, irrational, angry acts. In order to form reasonable, work able, helpful judgments, there is no shortcut even in our electronic age. We must be prepared to work and study, and to inform - not in flame - ourselves and others. These are the prosaic, perhaps clumsy,paving stones that make up the road that democracy must travel. Construction may be slow - but there is no glamorous easy way. ~ PYRAMIDS LEONARD E. READ My ENCYCLOPEDIA explains that, "The true pyramid exists only in Egypt." The reference, of course, is to the familiar pyramidic con figuration. Everyone knows that the pyramids of Egypt are pyra mids!

But, aside from configuration, what, really, is a pyramid? Read ing on, I find that "each monarch built his own pyramid, in which the mummified body might be preserved for eternity from hu man view and sacrilege and into whose construction went years of time and measureless amounts of material and labor." Here we have our functional cue as to the nature of a pyramid. A pyramid is a monument to man's pride built by the coerced 714 labor of others. As with the Egyp tian models, the materials and labor must be assembled by extor tion if a project is to qualify as a pyramid. The rich man's mansion or mausoleum, if built at his own expense,· is not a pyramid. Nor do Disneyland and Fisherman's Wharf qualify as pyramids, fi nanced as they are by consumer choice in a free and open market. The Taj Mahal - "It is deemed one of the most beautiful build ings in the world" - is, by func tional definition, a pyramid. And it is beautiful only in the sense that beauty may be skin deep. For back of that pretentious fa~ade of marble and jewels is ugliness: slave labor, thousands upon thou sands of slaves for many years. It 1969 PYRAMIDS ALL OVER THE PLACE 715 is a pyramid, a monument to the pride of the Mogul Emperor, Shah Jehan.

The impulse to memorialize one self - a monument to pride - runs strong in many people; but this is of no special concern to others, insofar as it can be satisfied with one's own resources. That's the business of the individual and of no one else. But give these indi viduals power to command the re sources of others, and the impulse runs wild, often swelling into boundless activities and assuming all sorts of forms, even to the monumentalizing of silly ideas in which the originators take pride. And this does, indeed, become everybody's business! It is easy enough to see that Brasilia, hewed out of wasteland far from where people live and labor, is nota city built in re sponse to the demands of Bra zilians in a free and unfettered market. It is no more a response to their aspirations than the Taj Mahal represented a gratification of the slaves who erected it. Bra silia is a pyramid, pure and sim ple, a monument to the pride of a man who had coercive power over the resources of others - J uscelino Kubitschek.

It is also easy to see that Vene zuela's steel mill is a pyramid. This is a monument to an idea quite as silly as the notion that we in the U.S.A. should grow our own cof fee. Were that mill abandoned to the jungle and the steel imported instead, with each worker given severance pay at the rate of his present wage - for the rest of his life, Venezuelans would be money ahead! Some Home-Grown Examples Should we not be able to identi fy just as easily our own pyra mids, such as the Gateway Arch in St. Louis, the Fresno Mall, and a thousand and one other more or less conspicuous structures? Most of the towns and cities in America today can boast of similar monu ments to pride! For .instance, every Federal "urban renewal" project is a pyra mid. Not one of these "develop ments" is a response to free and willing exchange. The people who are now forced to pay for these monuments to ideological pride have tended to desert the down town centers for suburban shop ping centers. These "renewals"

have been made possible by the power on the part of some to command the resources of others; American citizens have no more volunteered their own income or capital for such projects than the people of Egypt volunteered their resources for one of their pyra mids. Every high-rise apartment in 716 THE FREEMAN December the Federal "slum clearance" pro gram is a pyramid. There are now so many other examples in every city -even in towns - that a local resident would find it difficult to name them all. Ideas that Enslave But not every pyramid is made of rock, brick, mortar, steel. Us ing our functional definition, so cial security, Medicare, the Fed eral full-employment program, and countless other ideological inno vations are as much pyramids as Brasilia: monuments to man's pride made possible by the coerced labor of others - the originator's pride in his ideas! I repeat, the impulse on the part of so many people to memorialize self - one's ideas or accomplish ments or whatever else - is be nign so long as the gratification is achieved solely with one's own resources. It is harmless, and it is none of anybody else's business.

The harmless memorializing im pulse becomes the destructive pyramidic impulse when and only when coercive power over the in come and capital - resources - of others is permitted. Grant this power to one and there is no prin ciple by which it can be denied to everyone - as we are now wit nessing. How about granting this co ercive power to no one, that is, no special privilege for anyone? That would be fair to everyone. Our pyramids? Why not simply aban don them now as grotesque, un finished testimonials to the harsh tyranny of the authoritarian way? Let each man build and do as he chooses with his own resources, so long as it's peaceful, and the result will be as high as any civilization can possibly rise. I Inflationism as PoliticalPolicy J. H. PETERS The greatest mistake that can be made in economic investigation is to fix attention on mere appearances, and so to fail to perceive the fundamental difference between things whose externals alone are similar, or to discriminate between fundamentally similar things whose externals alone are different.

LUDWIG VON MISES, The Theory of Money and Credif ATTEMPTS to penetrate the na tion'seconomic future are engag ing the attention of its business and industrial leaders as never before. They are avidly reading and consulting experts in the fields of economics and politics in an endea vor to interpret as ac curately as possible all that is hap pening today in terms of its im plications for the future. But to attempt to read our eco nomic future in .proj ections based on current developments and those of the recent past isa difficult and unproductive undertaking. It is far more to the point to obtain Mr. Peters left the presidency of the First National Bank of Loveland, Colorado, to be come for many years the editor of Rand McNally & Company's Bankers Monthly magazine. from the reading and contempla tion of what has happened over an extended period of economic history an improved knowledge and understanding of what we may do to give that future the shape and direction we want it to take.

Samuel Taylor Coleridge said it well· sometime during the early years of the nineteenth century: "If man could learn from history, what lessons it might teach US! But passion and party blind our eyes, and the light which experi ence gives us is a lantern on the stern which shines only on the waves behind us." We have an unexcelled oppor tunity to avail ourselves of the lessons of economic history in the many writings of Ludwig von 717 718 THE FREEMAN December Mises, who predicted the inflation which followed World War I in a 'Work entitled The Theory of Money and Credit, the first Ger man-language edition of which was published in 1912.1 His writ ings thus cover a period of nearly sixty years of experimentation with the monetary and fiscal meas ures invoked by governments in their sundry endeavors to deal with all manner of economic prob lems. All that follows is based on those of his observations which have a special bearing on the causes of inflation,2 its conse quences, and its sole remedy: stop1 The first English edition of a version written in 1924 appeared in the 1930's, and the book, to which was added a then current essay on "Monetary Reconstruc tion," was last published in 1953.

2 Von Mises indicates a strong prefer ence for the use of "inflationism" as the only term that conveys the precise mean ing intended. He defines "inflationism" as "that monetary policy that seeks to in crease the quantity of money," whereas "inflation" is said to mean "an increase in the quantity of money (in the broader sense of the term, so as to include fiduci ary media as well) ,that is not offset by a corresponding increase in the need for money (again in the broader sense of the term) so that a fall in the objective ex change-value of money must occur." He makes the further point that inflationism must occur on a very substantial scale before it will manifest as inflation in the ordinarily accepted sense of the term. "Inflationism," in other words, maybe said to be the policy that tends to induce "inflation." In the present situation, the policy and its effect appear to be general ly regarded as one and the same.

ping the arbitrary expansion of the money supply. A Pernicious Fallacy Invades Economic Thought Perhaps the most pernicious idea that has ever invaded the economic thinking of this or any other time is the one that sees inflation as a more or less harm less device by means of which the welfare of all or. some segment of the public may be effectively and permanently advanced. And per haps the most pernicious aspect of that idea lies in the readiness with which it lends itself to the pur poses of demagogues who are quite content to promote·the adop tion of inflationary measures as a means of achieving some momen tary political advantage, regard less of what the more remote con sequences of their expansionary efforts may prove to be. Time was when monetary infla tion was achieved by employing a single device for a single purpose: the coin of the realm was clipped, and the motive was profit. The government .needed financial help and that was the only then known method of tampering with the cur rency as a means of satisfying that need. Questions of currency policy played no part in the deliberations that prompted it. There was no thought of influencing economic trends or the general price level 1969 INFLATIONISM AS POLITICAL POLICY 719 by manipulating supply and de mand factors.

More recently, however, our currency has been debased by a number of devices for a number of reasons, most of them poorly considered and far more harmful than helpful, but nevertheless pur portedly rooted in well-intentioned currency policy. The free coinage of &ilver, for example, was advo cated by one group of proponents as a means of increasing the price of silver as a commodity, while the prime concern of another group 'was to raise the general level of prices by increasing the money supply. It was through the efforts of the latter that paper inflationism came to be advocated in many states, partly as a forerunner of bimetalism and partly in combi nation with it. But the closely re lated issues of monetary policy and. inflation were then inade quately comprehended and poorly understood by the public at large, a condition that is all too preva lent to this day. Although today's currency is nominally based on gold, it actual ly consists in large part of credit and fiat money, the available quan tity of which can be increased or decreased almost at will by our monetary authorities for what ever purposes happen to serve the needs or expediencies of· the momente Every such change is pre sumed to play a thoroughly con sidered role in effecting some desired change in the objective exchange-value of the money in circulation.

Indired Taxation However valid or otherwise the course pursued to the end in ques tion may be, there remains the problem of the degree to which the prescribed remedy should be applied. To this there can be no precise answer because economists and statisticians have the greatest difficulty in isolating and identi fying the determinants of the value of our money, and our Fed eral agencies and lawmakers find it even more difficult, if not im possible, to control them. Infla tion, however, lends itself most readily to any effort to engage in painless spending; and because the effects achieved, particularly in the earlier stages of the proc ess, are quite. unobjectionable to both the payers and gatherers of taxes, it has at such times gained considerable unwarranted popu larity. Stated differently, the basic cause of inflation lies in govern ment's unwillingness to raise the funds it requires by increasing taxation, or its inability to do so by borrowing from the public. In flation as a means of financing 720 THE FREEMAN December World War I, for example, had the great advantage of evoking an ap pearance of both economic pros perity and added wealth. Calcula tions of every kind were thus falsified, giving rise to distortions in the figures upon which business and industry relied for guidance in the conduct of their affairs.

These distortions led, among other things, to the taxing away of portions of the public's capital without its knowledge. It is thus· that political consid erations all too often interfere with the proper functioning of one phase or. another of the eco nomic process. Left to its own devices, the economy has a way of effecting its own cures of malad justments as they arise. If its pricing mechanism is permitted to reflect without outside inter ference the extent and urgency of the needs and wants of the public, supply and demand will inevitably arrive at a condition of balance. It is generally supposed that in flation favors the debtor at the expense of the creditor, but this is true only if and to the extent that the reduction in the value of money is unforeseen. Inflationary policy can alter the relations be tween creditor and debtor in favor of the .latter only if it takes effect suddenly and unexpectedly.

If, on the other hand, inflation is foreseen, those who lend money will feel obliged to include in the rate of interest they ask both a rate that will compensate them for the loss to. be expected on account of the depreciation actually antici pated, and as much more as might result from a less probable further depreciation. And any who hesi tate to pay this additional compen sation will find that the diminished supply of funds available in. the loan market will compel them to do so. Savings deposits, inciden tally, decreased during the infla tion that followed World War I because savings banks were not inclined to adjust interest rates to the altered conditions created by variations in the purchasing power of money. Supposed Benefits of Inflation Are Illusions There are inflationists who, though they are admittedly quite aware of the evils of inflation, nevertheless hold that there are higher and more important aims of economic policy than a sound monetary system .. A failure on the part of the public to compre hend all· of the implications of the position thus taken makes infla tion a readily available political expedient. When governments are relieved of the necessity for mak ing ends meet, socialistic trends and other unpopular consequences of a given policy are all too readily 1969 INFLATIONISM AS POLITICAL POLICY 721 concealed in order to win and hold the required degree of public ac ceptance; and having. arrived at that point, arrival at a condition of absolutism is only a question of time.

There isn't a shred of validity in the proposition that continued inflation is to be preferred to any steps that might be taken with a view to counteracting it; in the notion, for example, that increased unemployment in any degree would be too large a price to pay for a stabilized price structure. Quite ignored in this view of the matter is the consideration that stabilized or increased employment obtained temporarily at the price of infla tion is a very poor bargain in deed, and that the effect of that continuing process can only be to give rise to an accumulation of economic maladjustments that must eventually fall of its own weight. It will be recalled that the na tion's economic situation in 1934 was quite the reverse of today's. Employment was at a very low level, but governments around the world were dealing with it alto gether unrealistically. Instead of adjusting wages to the generally prevailing low level of prices, they sought to ward off a fall in money wages and otherwise in terfered with the processes that would have restored the economy to a condition of equilibrium in the natural course of events.

They ignored the unwelcome truth that by stabilizing wages at an arbitrarily high level they were actually increasing unemployment and perpetuating the dispropor tion .then existing between prices ,and costs and between outputs and sales, the predominant symp toms of the crisis with which they were contending. Just as an in flated wage structure stood in the way of needed adjustments when the economy was at a low ebb, it will inevitably be found to have much the same effect when at tempts finally are made to curb the malinvestments generated by boom conditions. Subjective Value 01 Money Contributing to the difficulties just cited are, first of all, the mul titudinous factors that influence the objective exchange-value of money, popularly called its pur chasing power. But its subjective exchange value is also important. Just as in the case of economic goods, the economic valuation of money is based on subjective esti mates of individuals as prompted by their psychological reactions to whatever circumstances and conditions may happen to obtain in their respective situations. Sub jective value, therefore, cannot be determined with even a modicum 722 THE FREEMAN December of accuracy, and any decisions based on an assumed ability to do so is sure to be highly conjectural, to say the very least. 3 It is clear, therefore,. that infla tion" functions quite inadequately as ,a .purely political instrument.

Its, effects cannot be predicted with any degree of precision, and if continued indefinitely it must lead to a collapse. Its popularity is due in the main to the public's inability to fully understand its consequences. Barriers to Reversal Standing in sharp contrast to the great ease with which a policy of inflation may be used by those in authority for their own pur poses is the great difficulty of re versing that process - of invoking and implementing a policy of re3 An article entitled "Psychology and the Consumer," which appeared in the August, 1969, issue of Business in Brief, published by The Chase Manhattan Bank of New York, strongly supports this view. The author variously described the consumer as a "hero," a "villain," and a "victim," the respective roles played by him in the (1) 1965-66 period of caution, (2) the period of excessive optimism which got under way at the beginning of 1967, and (3) in the current year of dis regard of the restraints on consumer spending which it was sought to impose by the boost in Social Security taxes and the tax surcharge. Notwithstanding the latter, "for 1968 as a whole, consumer outlays were 9.0% above 1967 - signifi cantly contributing to inflationary pres sure."

strictionism or restraint which has the effect of increasing the value of money. This maybe done '( 1) by reducing the supply of money in a period of constant de mand, or (2) by holding it at a uniform level or one that is in sufficiently high to meet anticipa tions based on recent price trends. The latter, less' severe method con sists in simply waiting for an" in crease in the demand for a limited supply of money to manifest as a condition of restraint. Adding to' the difficulty of pur suing a policy of restraint are these considerations: 1. Far from bringing to the na tional Treasury the added dol lar resources to which inflation too readily gives rise, restraint diminishes them. 2. It tends to induce a scarcity of some economic goods by facili tating exports and restricting imports. 3. Taxation becomes more bur densome. 4. Unpopular creditors, as a class, are thought to gain at the ex pense of the far more numer ous debtors. (Today in the United States, the large corpo rations tend to be the debtors, while the creditors by and large are numerous small savers with insurance, savings accounts, and the like.) 1969 INFLATIONISM AS POLITICAL POLICY 723 Redeemability But every inflationary policy must sooner or later be aban doned, and there will then remain the problem of replacing it with another. It was the clear intent of the law in the first place·· to preserve the metal parity of our currency, and that can be the only legally and morally acceptable ob;..

jective of the new policy. Suspen sion of co·nvertibility left that premise altogether unchanged. The inflation made possible by the suspension of convertibility, however, has already worked grave inequities in contractual relations of every kind, and to abandon metal parity in the formulation of a new policy could only serve to make bad matters worse.· Although the consequences of inflation can not be eliminated by a mere re versal of policy, and existing in equities would in large part re main, metal parity would at least hold more. promise· of future sta bility than any available alterna tive. Even so, the value of our cur rency will be too largely subject to political pressure, and it is to be hoped that the electorate will see to it that a preponderance of such pressure is exerted in behalf of a stable· currency. For· it is, after all, no part of the proper function of government to influence the value of the medium of exchange.

That is the function of the mar ket, in the use and operation of which government· is only one· of many participants. I t is to the market itself that all must look for the means of establishing the relative exchange values of eco nomic goods, and government has, or should have, little actual voice in the matter. The result of any attempted in tervention by government will be determined in large part by the subjective values placed on goods by the masses of participating individuals through the pricing process. While our monetary au thorities have some knowledge of the factors that determine the value of money, they have no way of determining the extent to which subjective estimates of value (prices) are affected by variations in the quantity of money. Govern mental intervention is therefore confronted with the impossible problem· of calculating the inten sity with which variations in the ratio of the supply of money to the demand for it affect the mar ket.

The Evils of Price Control The adoption of price and wage ceilings is frequently suggested as a means of controlling inflation, but history's case against that course is devastatingly complete. Such ceilings would automatically 724 THE FREEMAN December stimulate demand for and curtail production of the very goods that happened to be in scarce supply. The mechanism of the market would no longer be effective in allocating available supplies, so it would be necessary to bring other forces to bear on the problem. These have historically led through various intermediate stages, be ginning with the rationing of· the most important necessities, to the eventual abolition of private prop erty. There is no workable sub stitute for the age-old laws of supply and demand. And so it is with the balance of international payments. If natural forces are permitted to function without interference, the tighter money conditions which. will nor mally prevail in the debtor coun try will induce a reduction in its prices, thus discouraging imports and encouraging exports, and thereby tending to bring about a restoration of equilibrium. The government in question can best serve its own needs by refraining from intervention of any kind.

The role of the speculator is a further case in point. In times long past the ···aetivity of specu lators .was held to be responsible for the depreciation of money; but, here again, history makes it clear that prices are determined in the market, and· that any at tempt to alter them over a given period by speculation is sure to fail; that the immediate effect of speculation is to reduce price fluc- \ tuations rather than to increase them. In the case of a steadily weakening currency, however, the effect of speculation will be to cause the expected depreciation to depart from its otherwise uni form pattern, and to proceed by fits and starts, with intermittent pauses. But the framework will be set by the extent to which market factors are responsible for the decline; and if inflation happens to be the cause of the difficulty, it is to the cure of that malady that all corrective efforts must be di rected.

We are faced with a choice be tween the forces that make for monetary stability and those that will inevitably take us in the op posite direction. We can't have it both ways. I IDEAS ON LIBERTY What You Should Know About Inflation ONE of the most stubborn fallacies about inflation is the as sumption that it is caused, not by an increase in the quantity of money, but by a "shortage of goods." HENRY HAZLITT "ETERNAL VIGILANCE," advised John Philpot Curran in 1790, is the price of liberty; and numerous scholars have elaborated on that theme. But the "price" to be dis cussed here is of another order: the rate at which an item moves in trade. Now, the price of liberty is not just a figure an owner arbitrarily selects to print on a tag. At his figure, buyers mayor may not appear. Nor is the price of liberty a figure arbitrarily selected by a prospective buyer. Again, his bid mayor may not attract a seller.

Rather, the price of liberty is the figure or the ratio at which a trade occurs between a willing buyer and a willing seller in open competition - without coercion or fraud on the part of either trader or any third party. If the point seems belabored here that the price of liberty can only be derived through voluntary exchange, the excuse is that so many people act as if they had missed the point. The individual who lacks sufficient self-respect to PAUL L. POIROT respect the dignity of every other human being has missed the point. He who uses his own life or prop erty in ways that violate the prop erty rights of other individuals has missed the point. The person who does not understand why scarce resources must be privately owned and controlled if they are not to be wasted has missed the point. Anyone who thinks that buying and selling, saving and in vestment, production and con sumption could occur in a logical or orderly manner without the in stitution of private property has missed the point.

The point is that unless there is private ownership and control of property then voluntary exchange or free trade between willing buy ers and willing sellers could not occur; one must hold full and clear title before he may transfer the right of possession and use. Furthermore, except as it is thus established through voluntary ex change, the price for a commodity or service will not accurately re flect the available supply of the 725 726 THE FREEM,f\N December item or the effective demand for it - and will not serve as a ra tional and reliable guide for pro ducers or consumers. This is why the price of liberty necessarily must be the price determined through open competition in a free market. ProbablY by a process of trial and error and long experience, tradesmen invented or discovered money - a universally traded, eas ily recognized, readily acceptable item such as silver or gold that would help to facilitate. the trad ing of other goods and services.

In any event, further discussion of the price of liberty requires recognition at this point of the vital role of money in the market economy - money that not only originates as a result of voluntary exchange but also serves as the essential unit of accounting and calculation for those who would engage in production and trade. 1 Money and the Market The market process of voluntary exchange, and that alone, gives value to money as a medium of exchange and as a unit for pur poses of economic calculation. The vital information a trader needs 1 See "Money and the Market" in THE FREEMAN, August, 1969, page 464. See also "Value: the Soul of Economics" by W. H. Pitt, THE FREEMAN, September, 1969, page 515. concerning supply and demand is afforded only by the free-market price. Money serves as a common denominator for pricing all kinds of goods and services, for com paring the cost or value of one scarce resource with alternatives or substitutes, for deciding wheth er to save or spend, produce or consume, buy or sell. But to ef fectively serve its purpose, money must originate in and derive its value from the working of supply and demand in free and open com peti tion. Governmental declara tions of legal tender or issues of fiat money are useless at the very best; and far more often than not they lead to false price signals and the waste of scarce resources.

It is important to buyers and sell ers to be able to express exchange ratios or prices of all items in terms of money . But it is equally important that the nature and val ue of the monetary unit be estab lished by willing buyers and sell ers in the market rather than arbitrarily by government edict. Once again, why this repetition or emphasis of the relationship between money and the market and the importance of money for the purpose of business account ing and economic calculation? And the reason again is that so many people act as if they had missed the point. Among the top echelon of economists are those who would 1969 THE PRICE OF LIBERTY 727 possibly agree, if pressed, that gold could serve as money but who prefer instead to debate whether the government should print 2 per cent or 5 per cent or 10 per cent of additional fiat paper money each year, >or whether Special Drawing Rights (SDR's) might better serve the purposes of a World Bank than have other pa per promises; those persons have missed the point. Anyone who ad vocates government spending for purposes he is· unwilling to finance with his own resources (which probably means that others would rebel if directly taxed for such purposes -which in turn means deficit spending and inflation by government) that person has missed the point. The point is that when either the government or an illegal counterfeiter arbitrarily in creases the supply of "money," the market is flooded with deceptive prices, economic calculation is thwarted, and the result must be a wasteful use of scarce and val uable resources.

So, once more, liberty is per sonal freedom of choice, and the price of liberty is the market price arrived at through voluntary ex change between a willing buyer and a willing seller. The enemies of· liberty are coercion and fraud, and the result of such interven tion is a false and misleading sig nal rather than the price of liberty that accurately· reflects supply and demand and upon which produc ers and consumers may reliably base their economic calculations. Coercion Sends False Signals Unfortunately, the prospective trader in the market is ordinarily unable to distinguish· between the price of liberty and the false price signals thrown forth by interven~ tionists. The "eternal vigilance" urged upon him must be directed toward an identifiable cause of the misleading signal, toward the co ercion that enters and disrupts the market. It is the common duty or responsibility of every would be trader, of every citizen inter ested in a free and viable economy, to help police the market. And this is the principled role of govern ment: to maintain the peace, to detect and discourage outbreaks of violence and fraud, to protect the life and property of every peaceful person and his right to enter unmolested into the proc esses of production and voluntary exchange.

The case for the limitation of government has been made over and over, and the only excuse for taxing the reader's patience with this repetition is that the vast majority of people act as if they had missed the point. Business men who advocate intervention to place and hold them on a pro728 THE FREEMAN December tected pedestal above the ordinary trader in the market have missed the point. Labor union leaders and followers who demand special rights and privileges, unavailable to others competing for scarce resources, have missed the point. Would-be educators who advocate the use of force to impose their "superior wisdom" upon others have sadly missed the point. Hu manitarians who would confiscate the property of the thrifty and productive to subsidize the shift less have missed the point.Dream ers who would populate the moon at the expense of those with their feet on the ground have missed the point.

How Government Intervenes The point is that the only justi fication and appropriate role for government is to protect and de fend the dignity of the individual and the pri vate property each has earned; that government may not be perverted· into an instrument of plunder without destroying man's best chance for life and livelihood. Whenever the individual relaxes his vigilance and allows his duly constituted police force to clip the coins or arbitrarily add to the stocks or decree an artificial. value for each monetary unit, the inevi table cost he must bear is a loss of liberty. The minimum wage established by government edict always has to be a false price signal; it is not the market-established price of liberty - it is a loss of liberty. The false wage or price creates an unmarketable surplus of that most scarce of all resources, human labor; and such. a "surplus" is sheer waste. Rent control laws that hold rental ·rates below market levels encourage the wasteful occupation of the scarce housing space that already exists and discourage the construction of additional hous ing. This coercive intervention re flects a false picture of supply and demand; it disrupts economic cal culation; it wastes resources; it is antisocial and a denial of liberty.

The same is true of any and every attempt at government price con trol. There is no end to the examples that could be cited to illustrate how intervention destroys life and property and liberty. What they all illustrate, in effect, is that so cialism cannot be made to work, no matter how brilliant the man in charge, because socialism dis rupts the market, renders it im possible to know the price of lib erty or to make the economic cal culations by which human beings can rationally decide what to do with themselves and their re sources. "Irrational," "irresponsi1969 THE PRICE OF LIBERTY 729 hIe," "unaccountable," and "anti social" aptly depict the socialist. And all he lacks is the price of liberty. Why Socialism Must fail Karl Marx was a socialist whose mind was closed to the price of liberty. "From each according to ability and to each according to need" is first and foremost a de nial and denunciation of the insti tution of private property. This necessarily precludes voluntary ex change. It closes the market and deprives producers and consumers of vital information market prices would otherwise reveal concern ing the supply of and the demand for scarce resources. How is any one's "ability" or his "need" to be evaluated in the absence of free trade and market prices?

So Marx, like most socialists be fore and since, turned to the "cost of-production" or the "labor" theory of value. And it's true that human labor is a scarce resource and can be valuable; but it is a half-truth at best and a gross il lusion at worst. What gives real value to a tool is not the amount of labor that can be used in pro ducing the tool but the amount of labor saved and the satisfaction gained through the production and use of the tool - as against doing without it. And only through will ing exchange in the market is it possible for anyone to know whether to spend his time produc ing this tool, or that, or neither one. Marx could guess wildly, and enforce his edict if his police pow er were strong enough; but he would have no way to compare the results with the alternatives un der his system. For that compari son, he would need the price of liberty; yet, his basic premises denied the functioning of the market.

This is why Soviet bureaucrats, if they stick rigidly to their closed system of coercion and con trol, can never know whether to produce spikes or tacks, tractors or toys, human food or jet fuel, shoes or sputniks. Nor can any other government force in the wor ld ever know how hard or how far to push any project, relative to the alternatives, once the project has been pulled out of the free market and out of the realm of rational economic calculation. That politicians, with their pen chant for power over others, should stumble into such chaos is to be expected. But how can one condone the utopian intellectual, whose noble aim is to help his fel low man, but who insists that socialism is a reasonable means to that end? Should not he be ex pected to know the price of liberty? @ - Our I-b 1Ina lena e Rights Should government be limited in their defense? PARK CHAMBERLAIN IN NOVEMBER of 1965, in the State of New York, a man named Adri an Cancil was sentenced to three years in prison for a crime which he did not commit. Pending ap peal, he was released on a so called certificate of reasonable doubt. He put his free time to advantage by discovering the name of the guilty party, whereupon he bought a tape recorder and con cealed it in hi,s clothing. Then he found and engaged the guilty one in conversation, inveigled him into admitting his guilt, took the taped admissions to the district attorney, and won back his free dom.

A heart-warming story of a tri umph for the rights of the indi vidual, is it not? Or is it? Or is it actually a story of a serious crime perpetrated by Adrian Can cil against a fellow citizen? In the eyes of the State of California, for example, it was the latter. In 1967, in fact, the legislature of Mr. Chamberlain·is an· attorney· in Los Altos t California. 730 that state (cheered on by the American Civil Liberties Union) passed a law condemning actions such as that of Adrian as crimi nal, and punishing them with a three years' prison sentence and a fine of $2,500! The reader of THE FREEMAN will immediately see the philosophical I question involved, which .is this: To what extent should govern 1nent interfere with a citizen's rights to clear himself of a charge of crime? To find the answer, let us re state the principles underlying our American political philosophy, namely, first, that eyery citizen is endowed with inalienable rights to his life and liberty, and second, that it is the prime duty of gov ernment to preserve these rights.

Reasoning from these premises, can we avoid the conclusion that any governmental restraints .. upon the citizen in this area should be minimal indeed, and, in fact, that here is an area wherein govern ment. should itself take positive 1969 OUR INALIENABLE RIGHTS 731 action, and with the most efficient weapons? It must be agreed, of course, that Adrian Cancil should not have been allowed to take violent action to prove his innocence such as, for example, a physical assault upon the guilty man. But why should he be forbidden to do what he did? Had he merely sur reptitiously memorized the guilty man's statenlent and reported it to the district attorney, he would have committed no crime any where.:....but the district attorney most likely would not have be lieved him and he would have served out his wrongful sentence. But because he surreptitiously tape-recorded the statement, he committed an action so fiendish that in the eyes of the State of California, at least, and perhaps in those of some other states, he would have deserved an additional three years in jail!

And so let us suppose that Adri an had been sentenced wrongfully not in New York but in Califor nia, and that while awaiting the result of his appeal he had con sulted his district attorney with respect to his plans to clear him self by use of the tape-recorder. That official must, of course,' have warned him that any such activi ties would be criminal. Suppose, then, that Adrian had urged that a plain clothes policeman be directed to don the recorder and get the evidence. In all probability (although the California law is not perfectly clear) the district attorney must have advised Adri an that that too would be illegal! And so this innocent man would have been totally deprived of any use of this excellent weapon for the preservation of his basic rights! Strange as it seems, there are those who warmly approve of Adrian Cancil's frustration, who would· zealously ban the use of such electronic devices by any one, private or public, for any purpose whatsoever. The Ameri can Civil Liberties Union has in fact commenced legal action to have their use declared completely unconstitutional. The success of this suit would mean not only that government should forbid us the use of weapons most effective in preserving our lives and liber ties, but also that government it self would not be able to defend our rights by such means. Or, to put it in general philosophical terms, the outlawing of such de vices would mean that govern ment would be encouraged to enter an area where its activity' should be minimal, and at the same time reduced in efficiency in the area where its activities should be maximal. I) EDMUND A. OPITZ NEARLY EVERYONE is a moralist these days, and a moralist in pop ular caricature is one who always views with alarm. Even the self proclaimed immoralists of our time fall into this. category, for they denounce as "intolerant"

any and all who look askance at their weird "beat" deviations. Dis agreements are sharp at all levels, among the viewers with alarm, but the primary breach is between those who hold that the ultimate sanction for ethical standards must be sought in a supernatural order, and - on the other hand those who assert that within the social and natural orders we may find the ingredients for a viable ethic. The first position is theistic; the latter humanistic. The Reverend Mr. Opitz is a member of the staff of The Foundation for Economic Educa tion. This is a chapter from a forthcoming book, Reli~ion and Capitalism: Allies Not Enemies, to be published by Arlington House. 732 The humanists, if we may be permitted this term for the sec ond group, admit that the moral code which prevailed in the West until two or three generations ago was widely believed to have had its origin and sanction in religion.

But, as they view the matter, the transcendent dimension has such a weak hold upon modern man that to insist on a metaphysical source of moral values in these times is to weaken ethics by tying it to a dead horse. Moral values, they assert, are autonomous if they are anything; let them there fore stand on their own feet. De tach ethics from religion, they urge, in order that men may be I virtuous for the sake of happi ness! Men should not do right in I a vain effort to please some deity, or because they believe that God has arbitrarily commanded cer tain actions and forbidden others.

1969 INSTINCT AND ETHICS 733 These nontraditionalists tout a "scientific" or "rational" ethic. The opposite of "rational" in this context is not "irrational"; it is "theistic," "customary," or "re ceived." No one would admit that his own ethical system or moral code is irrational, and it is obvi ous to everyone who has checked into the matter that there have been and are ethicists of several schools who are powerful reason ers. Every philosopher relies on reason, and not only rationalists; how,ever, reason does tell some men that reason is not the exclusive route to knowledge of the complex reality that environs us. A distinction which arises at this point seems to elude many. It is a distinction between reason as a means for achieving a norm, and reason itself as the norm. Perhaps the point may be clarified by anal ogy."How do you propose to go to Boston?" is a question which demands answers in two distinct categories. "By car" is one an swer, which informs us that the means of transportation is not train, plane, foot, or horse. Hav ing settled this point, we still need further information before the' question can be regarded as an swered. "By way of the Taconic, north, to the western end of the Massachusetts Turnpike, then east." This gives us the route, so that we know that the car will not proceed up the Merritt or over the New England Thruway.

Now take the serious question, "How shall we validate ethical norms?" Those who answer, "By reason," are really uttering a mere truism. "We're going to think about it," they are saying. And everyone who thinks about these or any other matters is using his reason. This is our only means for figuring things out, and it is not a means belonging exclusively to rationalists; it is the common means employed by everyone who philosophizes. Using this means, we seek for answers to the ques tion of how to validate ethical norms. This has to do with the realm where the sanctions may find anchorage, whether within nature and society, or in a realm beyond the natural and social or ders. Reason is our tool for operat ing on the problem posed; it is not itself the answer. Experts at Debate There are dogmatists on both sides of this controversy, and the skilled among them can and do ex-, pose weaknesses in their oppo nent's position. The humanist might charge his opposition as follows: The moral code is an ac quired characteristic; it has to be learned anew by each generation.

It is difficult enough to establish this code theoretically, even if we 734 THE. FREEMAN December treat it .as self-evidently useful to society and necessary for harmony in human relationships. Why, then, compound these difficulties and force things out of focus by involving .. ethics with metaphys ics ?The uncertain, in this or, any other area, is shpred up by relat ing it to the certain; but when you hook ethics up with meta physics, you relate it to the even more uncertain, to the dubious! We don't need· a transcendent sanction in order to validate or prove a down-to-earth ethic. To which the theist .might re spond: If you appeal to Nature to sanction human conduct, you haven't looked very far· into Na ture. Not even Kropotkin with his mutual aid theories denied the Darwinian struggle for existence; he merely desired to point out that it was not the whole story. But it is part of the story, and a large enough part so that we are justified in saying that Nature gives a mandate to the powerful, the fleet, the unscrupulous to live off the weaker, the slower, the in nocent. And if you think to draw your ethical sanctions from soci ety, whose society are you talking about? .A society. of headhunters?

Nazi society? Communist society? The Great Society? As a matter of fact, if a significant number of people can be made to believe that moral conduct is merely that which is sanctioned by the society in which. they live, then morality is subverted, into merely custom ary behavior and mere legality. Furthermore, you are confusing sanctions with consequences. An ethical code resides somewhere be hind the sanctions advanced to validate it, and the consequences cited to justify it. If the code is put into practice, the consequences may well be personal happiness, interpersonal harmony, and a prosperous society. But these re suIts do not constitute a set of sanctions; the sanctions are on the other side of the code, in the realm of philosophy .. Once' we are intellectually convinced that our moral code is valid,· then muster enough will power to practice it, then - and only then - do we get a bonus in the form of well-being in society. But you have the thing turned around! So much for the preliminary give and take.

AWay Through the Dilemma Evidently, each side has a case which might be spelled out at length. Is .it a deadlock, or do we have here· an instance' of an im passe due to the hardening of the categories on either side to the point where their usefulness as conceptual tools has been. im paired? And, if this is so, is there a way between the horns of the dilemma? There might be such a 1969 . INSTINCT AND ETHICS 735 breakthrough if we could - by adopting a ·new perspective-pose and develop a thesis which might avail itself of certain strong points in both positions. Here's such a thesis: The moral. code'; plays a role in the .life of man comparable to. the role of instinct in the lower organisms, in that each functions to relate the inner nature of the respective organism to the full range of its environment. The recently published Harper Encyclopedia. of Science says· that "the scientific study of instinct has increased greatly in recent years, and the concept itself has regained an academic respectabil ity it has not had since the time of Darwin." At the forefront of this research, much of it under field condi tions, are. Tinbergen, Lorenz, Thorne and Barrends; Eu ropeans all. "It now seems clear,"

the entry continues, "that instinct and intelligence are two quite dif ferent ways by which animals meet .life's problems. Instincts are essentially prefabricated answers." In a word, an organism's in~tinc tual equipment. adapts it optimally to its normal environment. Ani mals - along with birds, insects, and fish - are equipped . with a kind .' of internal servomechanism, or automatic pilot, which keeps them effortlessly on the beam. In stincts align the animal with the forces of life, or with the laws of its own nature. Organism and en vironment are thus kept "in play" with' each other-except when en vironmental changes are so catas trophic that the automatic adjust ment equipment fails,. the organ ism perishes, and perhaps a spe cies becomes. extinct. The very perfection of auto matic, instinctual adj ustment may prove the undoing of orgflnisms relying on this device; when sur vival, depends on a creative re sponse to novel environmental changes, something other than in stinct is needed. This is, of course, intelligence. Instinct cis not a mere precursor of intelligence, nor is intelligence an outgrowth of in stinct; they are radically different.

In order for intelligence in man to have an opportunity to flourish, the instincts had to be suppressed. The Absence of Instincts Human beings are virtually without specific instincts. There is no servomechanism in men which automatically keeps the human organism or the species within the pattern laid down for human life. Men have to figure things out and, by enormous effort, learn to con form their actions' to the relevant norms in the various sectors of life. This absence of instincts in man constitutes the ground for man's radical inner. freedom, the freedom of his will. Animal lives 736 THE FREEMAN December are fixed to run in narrow, con stricted channels; they obey the will of God willy-nilly. Men, how ever, vary enormously from each other at birth, and the differences widen as individuals mature each into his specialized individuality. And each person has the gift of a freedom so radical that he can deny the existence of the creative forces which produced him. This freedom of his makes it not only possible but mandatory that man take a hand in the fashioning of his own life. No man creates him self, but every man makes himself, using the created portions of his being as his resources. This is what it means to say that man is a responsible being.

A magnificent animal like Man 0' War is not a natural horse; he is the product of generations of human breeders and trainers of horses. They are mainly respons ible for his superiority, not he. Of all the orders of creation only man is a responsible being; ev erything else, every horse, dog, lion, tiger, and shark is what it is. Only man is, in any measure, re sponsible for what he is. Man makes himself, and therefore each person is morally responsible for himself. This is possible because man has escaped from the strait jacket of instinct. Let me quote from a once well known Dreiser novel, Sister Carrie, which appeared in 1900~ "Among the forces which sweep and play throughout the universe, untu tored man is but a wisp in the wind. Our civilization is but a wisp in the wind, scarcely beast, in that it is no longer wholly guid ed by instinct; scarcely human, in that it is not yet wholly guided by reason. On the tiger no responsi bility rests. We see him aligned by nature with the forces of life - he is born into their keeping and without thought he is protect ed. We see man far removed from the lairs of the jungles, his innate instincts dulled by too near ap proach to free will, his free will not sufficiently developed to re place his instincts and afford him perfect guidance. He is becoming too wise to hearken always to in stincts and desire; he is still too weak to always prevail against them."

Dreiser makes full use of a nov elist's liberties here, but his point er is in the right direction. Some thing within the tiger causes it to obey the laws of its inner nature unconsciously and easily, and, by so doing, the beast is in harmony with outer nature as well. But man's case is radically different. Does he have a true nature deep within him, visible when the en vironmentally imposed camouflag es are peeled off? And, if so, what are its mandates? Once man 1969 INSTINCT AND ETHICS 737 knows the laws of his own being, how shall he muster sufficient will power to obey them while avoid ing distractions and temptations that emanate from other facets of his complex nature? My thesis is that the role played by instinct in the lower order - keeping the organism on target - is assumed in man by the ethical code. Animals have in stincts but no morals; men have morality but no instincts. An ani mal's instincts guarantee that he will neither disobey nor deviate from the law of his being; a fish does not seek the dry land, a robin does not try to burrow in the ground, a gibbon does not yearn to swing on the North Pole. But man fulfills the law of his being only with the utmost difficulty if then - and the only means at his disposal to align him with the forces of life is his ethical code. It is this code, and this alone, which may provide him with a life-giv ing, life-enhancing regimen.

A Single Ethical Code Let me anticipate two quibbles. Instinct is sometimes contrasted with intelligence, and it is the lat ter, some say, on which man must rely. Or reason, as Dreiser sug gests above. This is a play on words. We rely on intelligence to improve transportation, but we ac tually ride in automobiles or airplanes, which are the end result of applying intelligence to the prob lem of getting from here to there. Similarly, it is intelligence that discovers, analyzes, frames, and selects the ethical code. Which brings up the second quibble. Why the ethical code? Are there not many conflicting codes ? Well, no - to be dogmatic! There is a hard core of similarity, almost identity, in everyone of the world's devel oped moral codes. This is the Tao, the Way, referred to by the great ethical and religious teachers in all cultures. Without it, man ceases to be man. (For an expansion of this point the interested reader is referred to C. S. Lewis' The Ab olition of Man.) This begins to move us away from the humanistic ethics re ferred to earlier. Do we need to part company, and if so, by how much? The two most prominent schools of naturalistic ethics are the utilitarians and the pragma tists. It was John Stuart Mill who invented the name and argued the case for the former. He described it as "the creed which accepts as the foundation of morals, utility, or the Greatest Happiness Prin ciple." It "holds that actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of hap piness. By happiness is intended pleasure, and the absence of pain; 738 THE FREEMAN December by unhappiness, pain, and the pri vationof pleasure."

Pleasure and happiness are de sirable indeed, and we wish· more of them for everyone. But to equate "pleasure producing" with "right" at the outset of a pro posed ethical inquiry is to beg the question. There is undoubtedly a connection here, for doing the right thing has a high degree of correlation with happiness, but the connection is along the lines of the intelligence-automobile il lustration above. It is as if the utilitarian were asked, "What is the temperature of this room?" and he answered, "I feel chilly." Now there is some relation be tween this question and the an swer, but the answer is not direct ly responsive to the question. It evades the question, implying that there is no way of finding out the temperature. There is no ther mometer, perhaps. Mill and the utilitarians do not really get at the ethical question. They think they are talking about ethics when, in fact, they are discussing something else. Similarly, the pragma tists.

Why Does It Worle? The pragmatists are mainly con cerned with workability; it's right if it works. Here is a map of the New England states. The pragma tist follows it and drives to Boston without getting lost. "Wherein lies the virtue of this map?" you ask him. "This map is good be cause it works; it got me to where I wanted to go." "Why," you pur sue, "do you suppose this map got you to your destination?" "That," says our pragmatist, "is a meta physical question of the sort I cannot be bothered with." So, we have to answer the question for him. The map "worked" because it was not just any old map; it was a map which corresponded to the terrain over which our pragmatist traveled. An eminent British philosopher of a generation or two ,ago, W. P. Sorley, neatly wraps up and dis poses of utility-workability theor ies. "It may be allowed," he writes, that the "relation between theory and practice does not necessitate the pragmatic explanation that the truth of the theory simply consists in its practical utility. The corre spondence between theory and practice can also be explained on the view that the knowledge proves itself useful in its applica tionsbecause it is true: the utility does not make it true; its truth is the ground of its utility. The for mer explanation is open to the fatal objection that it tends to dis credit itself; for, according to it, the truth of the view that truth consists in utility must consist in the utility of this view. It would 1969 INSTINCT AND ETHICS 739 be difficult to show any practical utility which the explanation pos sesses; but if we did succeed in showing such utility, it. would be formulated in yet another propo sition, whose truth again would have to consist in some practical end supposed to be served by it, and so on indefinitely. But if the truth of·.the proposition does not consist in or depend upon its util ity, then we may hold that its util ity depends upon its truth: it is useful because it expresses reality or real relations in the form of knowledge; and this brings them within the range, and possibly within the power, of the human mind."

Objective. Moral Values And now what about the weak nesses in the case for the theistic ethics, as that case is usually put? Fundamental to this position is the conviction that moral norms and standards are as much a part of the ultimate nature of things as the fact of the specific gra vity of water. It might be convenient, at times, if water had other char,.. acteristics, but wishing won't al ter the facts. Likewise, moral val ues.Honesty is right, and most of the time it may also be the best policy. But there are times when dishonesty would pay, where hon esty makes us mighty uncomfort able; there is a conflict between what I want to do and what I know 1. ought to do. In order to maintain the integrity of the moral.life, the .ethicist ·champions the view that moral values are "out there," objective, as. impervi ous to human tampering as any other fact of nature. Emphasis on their objectivity seems to imply that moral values are alien to hu man nature, and, if alien, hostile to man. If they are equated with God's will, God comes to seem an Oriental. despot inflicting arbi trary and· perverse· rules upon his creatures for his pleasure and their. frustration~ This syndrome is, of course, a caricature.

Moral values are. said to be ob jective in the sense that their val idityis part of the system and order of the universe, of that same universe. which is manifested also in persons. Neither is alien to the other, because both are part of the same reality. Sorleygoes a step further. "The objective moral value is valid independently of me and my will, and yet it is some thing which· satisfies my purpose and completes my nature." The ethical code may come into con flict with our superficial self on occasion, precisely because it takes its orders from our real self. Inner conflicts area part of living, and we encounter them in all the ven tures of life. Take any sport played to win.

740 THE FREEMAN December It becomes a day and night preoc cupation, with hours given over day after day for years to strenu ous workouts. But this is only the visible part of the story. There is also a perpetual conflict with the impulse that wants to break train ing, to goof off, to lead a more normal life. Then there is the agony of the contest itself where the will to win takes over and pushes the athlete beyond his powers of conscious endurance in to collapse the moment after his victory. His deepest will had at tached itself to a regimen for op timum functioning, overcoming the continuous static and rehellion from other facets of his person ality. Similar experiences are en countered in the intellectual life, and in the moral life. Check out the latter with a me dieval theologian. Thomas Aquin as says: "If virtue were at odds with man's nature, it would not he an act of the man himself, but of some alien force subtracting from or going beyond the man's own identity." Go back to St. Paul. The Gentiles do not have the Mosaic law, he writes in his Epistle to the Romans, but "they show the work of a law written in their hearts." And Moses himself, as recorded in Deuteronomy, com mends the keeping of God's com mandments in order that there shall be flourishing life. "Choose life," he says. Where is this com mandment, he asks rhetorically; is it up in heaven or beyond the sea? No, he declares, "the word is very nigh unto thee, in thy mouth and in thy heart, that thou mayest do it." What are we to understand Thomas, Paul, and Moses to be saying? Are they saying that to obey God's will for us is equiva lent to following the laws of our own being? It's pretty close to that. And that is precisely what an animal's instincts do for him.

The difference is that we are free to ignore or disobey the laws of our being, whereas no animal has that power. Tested by Time, the Human Potential Emerges In the course of several thou sand generations of human be ings a slow deposit has accumu lated as the result of individuals here and there successfully realiz ing a portion of the human poten tial. The recipes they left behind, tested and winnowed over the cen turies, form the hard core of the ethical code. This is not a pre scription for a life of power-seek ing, or one of money-making, or a life devoted to fun and games, or to fame. These things are not intrinsically evil, but an inordi nate attachment to anyone of them breaks training, so to speak. Proper use of them, on the other 1969 INSTINCT AND ETHICS 741 hand, is part of life's schooling process. What are we being schooled for? A clear-cut positive answer to this question is impossible, for it outruns human experience. But a pretty clear hint comes through when we contemplate the alterna tives. Wealth, pleasure, power, and even knowledge, when sought as ends in themselves, begin to send up signals that they are, in real ity, only means to ends beyond themselves. The space scientists "build redundancy" into their capsules,more of everything than normal requirements would ever demand. Man, too, is overbuilt, in that each person has a wide range of potencies and a reservoir of untapped energy at his disposal, more than any of us ever use. Nor is man left on dead center with all this latent power. He has a chart containing the salient landmarks, and this chart is the ethical code.

Let him begin to use this chart and the pieces fall into place, bits of the great design begin to em erge, the person fulfills his des tiny. "The event is in the hands of God." @ 1\ DifficultQuestion STANLEY YANKUS WHAT did you talk about at the dinner party last night? Chances are you discussed the weather, your favorite TV show, sports, a story in the news, and similar tri via. We don't often discuss our deepest concerns; how often do we engage in a conversation about the purpose of life? It's not that few persons care about life's meaning; everyone wants to know what it's Mr. Yankus moved to Australia from Michi gan in protest against government intervention in agriculture, but knows that it is not a sufficient purpose for his life. all about. Conversations about the purpose of life are rare because one difficult question leads to an other and no one likes to admit he's stumped.

Why do we need a purpose in life anyway? Should not life, after all, be lived spontaneously and ad venturously? Let the philosophers think about life; the rest of us are content to live it! But can we live life to the full - and not m8'rely exist - unless our lives have direc tion? The effort to discover the 742 TH·E FREEMAN December purpose of life is. to provide us with a goal, lacking which we are hopelessly lost. No wind serves him who has no destined port, runs an old proverb. You own a clock to tell the time; a pen to write with, a chair to sit on. Catalogue your possessions and isn't it true that every one of them is owned to some purpose? When something has served its purpose - your purpose really you discard it. Things which do not serve some purpose of ours are without value to us; but what purpose do we serve ? We don't value any object except as it serves some purpose, and a man will not value his own life unless he discovers a genuine purpose for living. The higher level· his pur pose, the more will he value the days of his life.

Man Needs a Purpose Beyond Primary. Survival Needs Let's pose a basic question: Why do we need anything at all? In imagination, abandon all your possessions, then observe what needs come first to the fore. Be fore the day is out we'll experience discomfort and perhaps pain; hunger pangs and the sharp edge of the north wind make it clear that our primary survival needs are for food, clothing, and shelter. If you wish to go on living, old mother nature doesn't offer you any alternatives at this level; meet these primary needs or die! But once these needs are met and your survi val assured, then you are confronted by the need to find something to do with your life that will give meaning to survival by challenging your powers and drawing out the best that is in you. Some men have said . that the noblest purpose in life is· to serve our fellow man. Suppose someone dedicated to the ideal of serving others knocked on your door say ing, "I have decided that I know what is best for you. You are making some horrible mistakes in your life and I have come to con vert you. to the .... correct way of living." Such a caller would get a cold reception. Every man has a right to live his own life, and men whose professed purpose it is to serve others deny this right to those others. Besides, the man who is busy serving others cannot be engaged in his own self-improve ment. And if his own self is un improved, how can he improve others?

There are many choices open to anyone who tries to select the best purpose in life. Choice itself is the foundation of every such purpose; life would be meaningless in the absence of any choice. If some bureaucrat had the power to de cide how you should think and act 1969 A DIFFICULT QUESTION 743 in every situation, there would be nothing in your life you could call your own, not even your life pur pose. The Liberty to Choose The greatest opportunity in life given to man by his Creator is free will-the liberty to choose what he likes to do and reject what he does not like to do. Many men let their lives be governed by their likes and dislikes. However, what a man likes to do and what is right are not always identical, as I shall demonstrate. Children at play will always choose what they like to do. Watchful mothers forbid their children to play with electricity, matches, poisonous drugs, and other harmful substances because the consequences can be inj urious or even fatal, no matter how much the child may enjoy such play. One of the aspects of growing to ma turity is a recognition that our ac tions have consequences for which we are responsible.

Many men believe the circum stances in their lives occur by luck or chance. Such men deny that cause and effect operate in the universe. It is self-evident that a man is free to choose what he likes to do, but he cannot choose the consequences of his actions. These are determined by the na ture of things. For example, a man is free to touch a red-hot stove with his bare finger and he is free to tell lies to all of his friends, but he is not free to choose the results. His finger will get burnt and his friends will despise him for his untruths. The results of these ac tions and. of every other action in life are determined by the natural laws, whether man likes these re sults or not. His likes and dislikes will not turn his mistakes into virtues. What is a law of nature, any how? The laws of nature, the laws of God, the laws of Creation are simply phrases used to describe the way things are and the way things work. The laws of nature cannot be canceled, bribed, or evaded. If you seek liberty, good health, or success in any other worthy endeavor, look for the laws of nature underlying all things.

As I see it, man's chief purpose in life is to discover the laws of nature so he can harmonize his ac tions with them and achieve good results in whatever he wishes to do with his life. Such a purpose in life excludes no one. It is open to everyone, no matter what his circumstances may be. By seeking the laws of nature in all things, a man best serves God, his fellow men, himself, and the cause of liberty. ~ The Art of Iconoclasm ORIEN JOHNSON My FIRST experience in iconoclasm occurred one afternoon after a hard day at the office. My four year-old son greeted me with the announcement, "I can fly, Daddy; I can fly." Not wishing to squelch the vivid imagination I saw developing in his fertile brain, I went along with him and allowed him to rattle on in great enthusiasm about his new idea. Then I saw what I was doing. I was building him up for a grand let-down, psychological and perhaps even physical-for our second-story sun deck was his favorite play spot and I had vi sions of him trying a take-off which might have disastrous· ef fects on his little bones. So I knew I must point out the falla cies in his cherished belief in order to prevent possible harm later.

Mr. Johnson, of Palo Alto, California, is a counselor in public relations and fund raising. 744 Iconoclasm is the practice of tearing down idols or false con cepts and ideals which people hold to tenaciously. At first glance this seems a negative position to take, but I am suggesting that it is a good· and helpful technique to em ploy and an art which should be cultivated. For untold centuries men thought the world was flat, and such a belief didn't matter as long as our transportation needs were confined to a continent or two. But the iconoclasts, the early ex plorers and scientists, took away this ancient belief and replaced it with a concept more compatible with the world in which we live. Iconoclasm, in this case, proved a beneficial practice for the good of all mankind. When we move from the area of the physical sciences into that of the social sciences we find a multitude of theories and prac1969 THE ART OF ICONOCLASM 745 tices being taught and held with great passion. My particular con cern in this paper is the so-called revolutionary ideals and hypoth eses being disseminated among college and university students. In a sense the tired old men of the Establishment have had a· hard day at the office and the young genera tion is saying, "We can fly, Daddy; get out of the way."

Highly idealistic young people are dreaming grand dreams about changing the nature of man and liberating the world from all op pression. Many are evidently only concerned with rebellion against the established order and seek only to disrupt and destroy it. Some are so certain they will suc ceed in the complete overthrow of the present order that they are wondering what they will put in its place. At this point a few are dragging in Marxism and other variations of faded socialistic dreams and holding them up as if they were innovations on the so cial scene. They can't understand why everyone doesn't see the light, and are quick to label all unbe lievers "racists" or "fascists." They are like the little boy who found a dead cat in the garbage can and said to his mother, "Look at the perfectly good cat I found," then was puzzled at his mother's attitude when she refused to share his enthusiasm.

It is time for parents, teachers, and others who have any contact with youth to learn the gentle art of iconoclasm. We must discover how to carefully point out the fallacies in their theories before they are severely disillusioned and irreparably hurt. I use the term "gentle art" and urge the careful approach as op posed to the confrontation and polarization tactics of the young radicals. Men only use these latter tactics when they won't take the time to learn how to communicate or wish only to impose their will on others with displays of power" Blueprint for IILiberation U The following quotations are from a program written by sev eral "Berkeley Liberation Com mittees" as examples of theories and ideals being adopted and dis seminated by certain radical stu dents, professors, dropouts and fellow sympathizers in one uni versity community. From these we might be 'able to formulate an approach for parents and edu cators who would establish com munication with those who follow such leadership.

"We shall create a genuine community and control it to serve our material and spiritual needs." I had to look for this statement. I wanted some point of agree ment, some common point from 746 THE FREEMAN December which to say, "Here we stand to gether. Now where do we go from here?" Can we not commend young people for their desire to provide for man's material and spiritual needs? I'm sure we could all agree that such needs can only be met in community. Now our only ,problem is to seek feasible ways to 'ac complish the goal we both desire. , There is one word in that quote we 'should probably clarify first. Exactly what is meant by "con;' trol"? Are we not all concerned with liberty? Are we not con cerned with restrictions and con trols that inhibit the fulfillment of our material and spiritual needs? We must know the nature of this new "control" before we shake off present "controls" or we may' Iive to regret the change in jailors.

"We will create an Internation al Liberation School in Berkeley as a training center for revolu tionaries,"they say. "We 'will unite with other movements throughout the world to destroy this racist capitalistimperialist system." We dare not snort at such bra":' vado or flinch when they throw in a few four-letter words. This is all part of the calculated shock treatment intended to create fear and confusion. We exercise great restraint and inquire further. "Wewill create malls, parks, cafes and places for music and wandering. Higk quality medical and dental care, including labor atory tests, hospitalization, sur gery, and1nedicines will be made freely available. 'Child care col;.. lectives staffed by both men and women, and' centers "for the care of strung-out souls, ,the old and the infirm will be established'. Free legal services will be ex-: panded. Survival needs such as crash pads, free transportation, s'witchboards, free phones, and free food will be met."

And Who Will Pay? Here are some points we can respond to with sincere interest. This is a positive program. We can commend them on their con cern for these urgent human needs. But we must ask, "How will these services be paid for 1" And the "Berkeley people" have an idea. "Bus'inesses on the Avenue should serve the humanist revolu tion by contr'ibutingtheir profits to the community." Indeed. And what if they don't? "Berkeley cannot be changed without confronting the indus tries, banks, insurance companies, railroads, and shipping interests dO'ininating the Bay Area. We will demand a direct contribution from business, including Berkeley's big gest business - the University, to the cornmunity until a nationwide 1969 THE ART OF ICONOCLASM 747 assault· on big business is success ful." We force our,selves to hear them out, then probe some more. "What if confrontations and demands don't bring in enough money?

Would more violent means then be attempted ?" "Through rent strikes, direct seizures of property and other resistance campaigns, ,the large landlords, ,,' banks and developers 'who are gouging higher rents and spreading ugliness will be driven out. We shall force them to trans fer housing control to the com munity, making decent housing available according to people's needs." Transferring Title Now weare beginning to get the picture. They propose to seize property by force and drive out the present owners. Would it be possible for us to point out that when this occurs they will then become the oppressors and the former owners would become the poor people with the same prob lems they seek to solve by means of this violence. Will these new poor people then have to start another revolution and wrest the power back again in order to meet their needs? Perhaps this is what they have settled for, an endless succession of oppressions and rev olutions in which the power mongers use the "needs of the down trodden masses" as a psychologi cal weapon by which to gain sympathy for their cause. Once they are in power another power structure will form and hope to gain the upper hand. And the slogan-symbols for such a pro gram are "peace and love."

It should be easy for us to point out that political revolu tions are comparatively easy to precipitate. They have beenoc curring quite regularly for many centuries. The manuals tell how it is done. You march, you demon strate, you protest, you write clever slogans on signs, you resist, you propagandize,You destroy. These are easy to do because you can always point your finger at the "bad guys" and keep at it until you cut them down. And I'm sure many young people have settled for this exciting prospect and are ready to die for such a short sighted goal. Innocent Victims But there are many more thoughtful young people who are genuinely concerned about social issues. Yet some of these will get caught up in the excitement and go along on the destruction jag just for the ride. They think this is the only way to fly, and are not prepared for the crash that in evitably occurs at the end of such 748 THE FREEMAN December utopian dream flights. These are the ones in which we must invest special time and interest in our iconoclastic pursuit.

A skillful iconoclast knows that a person will not give up a cher ished belief until he finds a better one. The reason some people hold so strongly to false concepts is because of a basic insecurity. They are usually deeply concerned about life and its problems and sincerely want to have some part in change for the better. They have become disillusioned with the cliches and the slogans of suc cessive political platforms and their inability to live up to their many promises. Some have settled for the fanatical destruction phi losophy as a last desperate attempt to level the status quo and build again on the. ruins. We must remember that these highly motivated young people are not basically diabolical and evil. Most of them sincerely de sire good to come of their actions however radical they may seem to some. They are like the possum which crawls farther and farther out on a limb when a hunter climbs the tree after him. The more the hunter shakes the limb, the tighter the possum clings to his insecure position. He will only leave this tenuous position by sheer physical force; or when the pressure is off, he will find his way back to a more secure position.

So the skilled iconoclast does not begin by shaking limbs, but carefully shows and demonstrates a better way. In a sense we are saying, forget all these grandiose programs aimed at healing all the ills of the world. Give freedom a chance. The social problems of mankind are much too sophisti cated· for any simplistic plan to cure. None of these ideologies is worth defending with all the pent up emotions that divide men and cause an eternal succession of bloody conflicts and wars. On a Person-to-Person Basis But there is something we can do about the needs of men. There is a positive program to which we can subscribe. But it is a program we design ourselves and one that can only be implemented by us as individuals or by others with whom \ve voluntarily cooperate. We create our own social revo lution by doing something revolu tionary whenever we see a fellow human suffering. According to the ancient parable, two-thirds of the men who saw the wounded man ly ing beside the road passed him by.

Only the Samaritan did something about the situation. The two who were too busy to respond that day were busy men dedicated to work for mankind through the respected 1969 THE ART OF ICONOCLASM 749 institutions of their day. They were so busy serving "humanity" that they failed to notice a suf fering human. This hypocrisy hasn't escaped the notice of sensitive young peo ple who see the same attitude re flected in many of our modern institutions. So the cry goes out to renounce allegiance to all the traditional institutions and to cel ebrate this new freedom with singing and dancing in the streets. And in the alleys behind those streets are the cheap flats where rats gnaw on baby's toes and old people live in solitary loneliness with no one to care. The climate of opinion which the young radicals have created calls for renunciation of the in humanity of computerization and the depersonalization of automa tion. It calls for globe-encompass ing plans to liberate the masses.

It calls for a new terminology which makes extensive use of the words love, peace, brotherhood. Yet it makes no realistic provi sion for the brother in the alley who is an epileptic and can't en joy the music in the streets. How revolutionary must a pro gram be to attract today's youth? Is this one radical enough to tear a few of them away from the singing and dancing long enough to read a book to a blind person in a smelly hovel? Or listen to the woes of a gin-soaked mother, es pecially if she happens to be their own? There's more to the art of icon oclasm than meets the eye. It is not so much a philosophy to ex pound and argue as it is a radical way of life. This kind of philoso phy is caught rather than taught, but it is probably the only way to save our youth from utter cyni cism and at the same time to save our own sanity. , HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each Order from: THE FOUNDATION FOR ECONOMIC EDUCATION, INC.

IRVINGTON-ON-HUDSON, NEW YORK 10533 PAYSTA'XESLEMUEL R. BOULWARE EVERYONE is demanding a rapidly rising level of living. And most citizens expect their take to mount much faster than their contribu tion ... with government paying the difference. They seem vaguely to assume that government will recover most of its costs from a very .few in dividuals or from the owners of business or from future genera ... tions or from some magic source. Public servants in both parties, as the· price of getting and staying in office, are forced to appear to be getting a lot done, and trying to get a lot more done, in this di rection demanded by the majority. But most citizens - including most college graduates - seem not to know where the money is to come from~ Government can and does get money in only two ways. The first Mr. Boulware, now retired, is noted for his edu cational approach to industrial relations at General Electric. This article is excerpted by permission from The Truth About Boulwarism reviewed on page 760. ' 750 is from current taxes· assessed as taxes. The second is from what appears to be borrowing against future taxes. But most all such borrowing now turns promptly into the very current tax of .in flation.

Government collects this money through both direct and indirect taxes. Both kinds wind up being paid almost entirely by consumers. But taxing consumers directly and visibly is unpopular and very bad politics. The electorate keeps forc ing government to minimize direct taxes and collect its major rev enue indirectly through taxes hid den in prices and collected from consumers in two ways. The first is through the levies on business which are erroneously believed by most citizens to he levies on the owners. These taxes are not and cannot be paid by the owners in any business that sur vives. They are merely collected for government by business in prices which have had to be in creased enough to cover the hid den indirect tax. The second way government collects money indirectly through consumer prices is by inflation which,· historically and now, is simply a tax of the most deceitful, most brutal, and most debilitating kind. How it comes about is this: Government does not dare tax to equal expenditures, because that 1969 WHO PAYS TAXES - AND HOW 751 would require disillusioning the majority of voters who believe something-for-nothing can be ob tained for the many through gov ernment or other gang force.

So government borrows. If it can borrow from individuals with a.. proven history of paying back loans - this would not nor mally be inflationary since the arrangement is self-correcting. But government quickly finds it can not borrow enough from individ uals since they know government is on an inflationary course and will not pay back as much value as it borrows. So government is forced to bor row from the banks. The money is put on deposit. This results in creation of new money to match the amount of the borrowing but not matched by any new supply of goods. This is politely called "monetizing debt." Actually, it is just printing worthless money which is added to the existing sup ply and dilutes the value of exist ing dollars by just that much. The consumer pays his part of this as a·· hidden tax in every purchase thereafter. So, who pays taxes? Everybody does. No few do or could supply the enormous sums which govern ment is spending and which long since exceeded the total income of everybody west of the Missis sippi.

Such huge taxes cannot be sup plied from any few considered wealthy. Even the best-off 10 per cent of all families - down to in clude the $1,000 a month level pay only 28 per cent of the na tion's tax bill. The rest has to come from the remaining 90 per cent of the population. These 180 million persons - while as a group recei ving 85 per cent of benefits to individuals - have generally no idea they are themselves supply ing 72 per cent of everything gov ernment spends. The further down the income, savings, and even the relief scale a citizen is - that is, the poorer he is - the greater is the relative impact on him of the taxes levied on business and of the tax of in flation levied on him through gov ernment cheapening his money. Consumer tax and price prob lems are not solved by what ap pears to be a shift of the burden to business. Borrowing hardly de lays at all their impact to the con sumer. The only remedy to stop inflation is at its source. The best way to start is to cut out the futile and wasteful part of the govern ment spending and to tax openly to match the remaining expendi 'tures. Public servants will do this once they become convinced that a majority of their constitutents knows the facts and wants it done.

; DURING my freshman year of high school, I took upon myself that patriotic but arduous task of mak ing myself a. fervent anticommu nist. Books pertinent to the sub ject were studied with more zeal than were algebra and world geography, and I proceeded to accumulate a voluminous library exposing that most evil monster formulated by Karl Marx. Com plex numbers, the binomial the orem, and the main waterways of Europe held but a secondary status in my education. My ener gies were channeled toward more profound subj ects - dialectical materialism, slaughter of the ku laks, and Comintern policy. Mr. Bearce promised to try an article when he recently subscribed for The Freeman. Here it is. 752 A FREE ,LANCE IN THE FREE MARKET ROBERT G. BEARCE One of my first priori ties was to really know what communism was, that is, what it was that I abhorred with so much enthusi asm. This was accomplished by writing a definition compiled from dictionaries, various encyclopedi as, and literature on Marxism Leninism. I labored on this mo mentous undertaking for a full two weeks, using in the process at least two score sheets of note book paper. Only after the most scholarly and diligent study was I able to gloat over the final draft defining communism in two or three precise, hard-hitting para graphs.

Since that period of shrewd study into Bolshevism eight years ago, I have lost my prized defini tion, not only in material fact but 1969 A FREE LANCE IN THE FREE MARKET 753 also from my memory, for I did have it memorized. Remember, I wanted to prepare myselfade quately for the opportunity to en lighten unwary Americans about the threat of the Red Horde. Quite frankly, my enlighten ment as to the horrors of com munism was nothing more than a nai ve, emotional response. It had nothing to do with a penetrating, conscious understanding of the real nature and threat of com munist theory. But in this type of involuntary hypocrisy, I doubt that I stand alone. I fear that today I have many comrades-in-arms who are zealous defenders of capitalism, the free market system, free en terprise, and the like, without practicing what they preach. Their devotion to the integrity of the in dividual is a deceiving accumula tion of words, cliches, and books on capitalism, not a day-by-day living example of that belief.

Several days ago, on my way to see my physician, I spotted a bul letin board outside a church which gave wee words of wisdom to passers-by. The message: "Preach by your ACTIONS and not by your WORDS!" Amen and ditto! We have a bad habit of cloaking ourselves in self-contented pride concerning our intentions and thoughts without ever taking positive steps for ward in proof of our faith. I've seen a lot of my physician these past few years. During my senior year of high school, I had to drop out due to illness. I· am now twenty-two, and still haven't recuperated enough to permit my attending a bastion of higher learning, that is a college, where some of my colleagues are sitting, cursing, marching, burning, and rioting. Yet, I have gained during this time a better understanding not only of communism but of many other areas of life as well. Despite my lack of a degree and material-physical assets that many claim necessary for security and accomplishment, I have rolled up my sleeves and entered into that stimulating proving ground for progress - the free market.

Rugged Competition No, I'm not an industrialist, public relations man, or supermar ket proprietor. I'm a freelance writer, a financially embarrassed one to be certain, but a writer, nevertheless. It is in this field of joy and disappointment that I have learned to appreciate free enter prise, and only when I began to understand this system did I really attain any knowledge of what communism is. I claim no more than an elementary understanding of the American economic system, 754 THE FREEMAN December but what I have learned on the positive side of capitalism proves to me that socialism has always failed, that it will always fail, and that it works contrary to the free dom with which man is endowed by God. Take away the hammer and sickle, the workers' parades with red banners, the brute force, and the concentration camps so char acteristic of Soviet communism, and what do you have? Nothing but a miserable, freedom-choking system known as socialism. In deed, if you removed the brute force, you wouldn't have socialism at all, since the system survives on totalitarian coercion bolstered by occasional transfusions of good old capitalism.

But I do not mean to wander into a slough of despond over the evils and sins of the socialist state in the Soviet Union. My testimony is one of optimism regarding my experience in the free market realm of editors and rejection slips. finding. the Market I am my own man, left to my self-discipline, individual initia tive, and personal responsibility. I've. no desire to write pornog raphy, so I have no state interfer ence or regulation. The only re strictions imposed upon my work are those I place on myself -laziness, conceit, inefficiency - and those placed on me by magazine editors. Now, magazine editors are hu man - a fact that I doubt often but one that gains credibility when the postman brings me a check in return for an accepted story. Edi tors are guided primarily by what their readers want, whether it be true confessions, murder mysteries, or essays on economic philosophy. This public demand is tempered by editorial innovations and ex periments. For example, the pub lic might not be in a mood for the harsh realities concerning air pol lution. An energetic editor, though, will use the informative power of his periodical to print a forceful article on the subject, even though his readers might possibly enjoy reading more about rattle snake hunting in Oklahoma.

My Writer's Market lists some 4,000 markets fora freelance writer. Imagine! Four thousand opportunities to sell the product of my ingenuity and initiative articles that might range from·a swashbuckling tale of the sea to an account of the young men and women working in Honduras with Amigos de las Americas. The pos sibilities open to me include art magazines, trade journals, nature magazines, travel magazines, and garden magazines. Those aren't all. There are calendar magazines, as-i 1969 A FREE LANCE IN THE FREE MARKET 755 trology magazines, poetry maga zines, and western magazines, not to speak of detective magazines, aviation magazines, and automo tive magazines. Suppose, for example, that I submit a brief article describing a certain druggist's participation in civic affairs to Drug Topics, a trade journal catering to the phar maceutical profession. As often is the case, my submission is reject ed. What do I do? I have at least thirteen other trade journals in the drug business that might find my article suited to their publish ing needs. I submit to them.

What does this mean? Free market capitalism and free com petition! The market is there, and it is open to me, unbridled by state interference. faith in freedom Plus Basic Political and Economic Rights It is in this field of writing that I have come to appreciate freedom. I can't really define this word; I don't need to, for I know that it works in men's lives. Freedom is a living faith to me, and I don't need to have a precise definition of it. Besides the political rights to freedom of speech and press, I have these five basic economic rights: 1. to work in callings and locali ties of my choice. 2. to bargain with my employers. 3. to go into business, compete, make a. profit. 4. to bargain for goods and serv ices in a free market. 5. to be free of arbitrary gov ernment regulation and control. One lesson writing has taught me, with no Iittle pain on my part, is that men definitely are not equal in some respects.

Our Declaration of Independ ence states: "We hold these truths to be self-evident, that all men are created equal. ..." What does this mean as we take it in the context of the remaining portions of the Declaration? Simply that each of us has the constitutional right to rise to any level of achievement in this world consistent with his in dividual capabilities and ambi tions. Nowhere in the Constitution· or Declaration of Independence do we find the Founding Fathers propos ing that government must assure its citizens equal standards of liv ing, equal intellectual achieve ment, or equal job status. Henry Van Dyke stated the thought quite nicely: "Democracy declares that men, unequal in their endowments, shall be equal in their right to de velop these endowments." Basic to the above documents of individual freedom are the be liefs that man is not perfect and that only God is divine. It follows that all utopian plans for chang756 THE FREEMAN December ing society through coercive legis lation against the integrity of the individual - all in the name of ul timate perfection-are predestined to failure and are contrary to the will of God.

This ambitious notion that state legislating will change man's en vironmental conditions and thus achieve utopia without poverty, discrimination, hatred, envy, and the like, is the pleasant reverie of social scholars in a dream world. The heart of the problem lies within man's heart. Only when man's inner self-seeking, rebel lious nature is changed can he set his mind to overcoming covetous ness, jealousy, and racial hatred. Man Is Responsible Man is responsible for his ac tions and thoughts-envy, hypoc risy, and yes, love for his fellow man. Assuming that some state could achieve an all-encompassing equalization of wealth - without totalitarian force - and a society with a minim urn of disease, I dare say we would still witness the product of man's inner nature greed, pride, and all the rest. Again, men are responsible, each individual endowed with varying ambitions and capabili ties.

Frequently in my writing, my ambitions sag, and I must admit, humbly so, that my capabilities remain at a fairly consistent low level. Thus it is that I receive ten rejection slips for each sale that I make. That's a discouraging bat ting average. Alas, do you not feel for the plight of the downtrodden freelance writer in America! I doubtless could make a case with today's compassionate hu manitarians and utopians who would demand that the state sub sidize me! My rightful share of this nation's wealth would be doled out to me! I could join the legions of other Americans who are daily relinquishing personal responsibility in return for great er authority over their lives! I would be on the road to blissful state security! No, thank you. I'm content to rise and fall, and rise and fall again according to my own ambi tions and abilities. I have a cer tain amount of satisfaction in knowing that when I'm up, it is due to my own efforts, and that when I'm down, it is due to my own failure.

Success or failure, I am respon sible for my own - and free to preach what I practice. ~ A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN JEFFREY ST. JOHN, author of Countdown to Chao8: Chicago, 1968: Turning Point in American Politics (Nash Publishing Corp., 9255 Sunset Blvd., Los Angeles, Calif., $6.95), is among the proph ets. He has been the bearer of bad tidings, predicting the Yippie polit icalizing of the Hippie movement, and telling us of the leftist cam paign to substitute street brawl ing for Constitutional legislative procedures, long before any of it happened. But he also has his con structive side: he hopes to turn the forthcoming 200th anniversary of the Republic which is coming up in 1976, into a real celebration of the philosophy of the Founding Fathers, which included a prin cipled acceptance of libertarian economics as well as the politics of limited government and sepa ration of the powers.

In its opening chapters Count down to Chaos deals with the news in a special way, seeking to deter mine the continuity of Leftist planning that connects such things as the Democratic 1968 convention week in Chicago with what had gone before it and what has come out of it. It was a fortnight before the Students for a Democratic So ciety and the Yippies had de scended on Mayor Richard Daley's Chicago that Mr. St. John, in col laboration with Williamson Good, told Barron's Financial Weekly subscribers precisely what was go ing to happen on the Chicago streets during the convention. The whole thing had been set in motion early in 1966 with the for mation of a Chicago Project Com mittee by the National Mobiliza tion Committee Against the War in Vietnam, headed by a middle aged radical named David Del linger. Rennard (or Rennie) Davis, a chief planner for something called the Center for Radical Re search, was put in charge of the Project Committee. Tom Hayden, a founder of Students for a Demo cratic Society, and Jerry Rubin, the creator of the Yippies, both of whom had collaborated on the march on the Pentagon in 1967, threw in their lot with Dellinger and Davis, and a meeting was held in March of 1968 at an unsuspect757 758 THE FREEMAN December ing YMCA camp in northern Il linois to coordinate plans for mov ing the members of some eighty five Leftist organizations to Chi cago for the "battle of the cen tury" against Mayor Daley's "pigs" and, incidentally, the whole American political process.

In brief, Chicago was anything but spontaneous, even though the "political riot" attracted many in nocent youngsters who had put in appearance just because they felt it the "in thing" to do to "make the scene." If the media had really tried to get at the truth of what happened in Chicago, there would have been no need for Mr. St. John's recapit ulation of events. But the TV cov erage, as was perhaps inevitable, zeroed in on violence with no at tempt to explain its genesis. What we got from the news media was an unmotivated story. We saw the police "reacting" to events; we learned nothing very much about the' long-planned provocation de signed to turn the week of the Chi cago Democratic Convention into the opening salvo in a revolution ary war. Mr. St. John is an excellent re porter who tried to delve below the surface of immediate happen ings. But he is much more than a reporter; he is also a student of liberty in the Leonard Read sense.

The second half of his book takes an unexpected turn when he makes the announcement that "regular Democrats and Republicans have no idea of the real aim of the New Left." The Convention Week events in Chicago of 1968, he tries to tell the "regulars" of both parties, were "part of an attempt, such as that in Germany in the 1920's and 1930's, to carry the country beyond the welfare state." And with this Mr. St. John is off into a description of how the wel fare state becomes a "bridgehead to the police state." Mr. St. John is worried about certain historical parallels. Quot ing Dr. Leonard Peikoff of Brook .. lyn College, he notes that the pe riod of the German welfare state under Bismarck and the coming to power of Hitler and National Socialism· was "roughly forty-five years." The period spanning the birth date of the New Deal in 1933 to the "violence and dis orders" of the Democratic 1968 Convention is "roughly thirty-five years." More ominous still, in Mr.

St. John's opinion, is the collapse of latter-day Liberalism (not really Liberalism) in the 1960's and the emergence of aNew Left radicalism similar to that which engulfed Europe prior to both World Wars. The New Left an archists echo the syndicalist Sorel on violence; the hippies recall the Vandervogel German youth of the 1969 WELFARISM AND BEYOND 759 Weimar Republic who dressed in nonconformist clothing, strummed guitars, and moaned around their camp fires that the "older genera tion would not let them be 'free'.'" Far from making them happy, the welfare state and the "mixed economy" encourage the young in their contempt for the whole sub~ ject of economics. The need for savings is not understood when a minimum is seemingly guaranteed without regard to one's contribu tion to production. Mr. St. John notes that the appearance of the "mixed economy"· and the welfare state was followed by dictatorship in Russia and Poland (1917), Italy (1922), Spain (1923), Turkey (1923), Chile (1927), Greece (1928), Japan (1929), Brazil (1930), the Dominican Re public (1930), Argentina (1931), Guatemala (1932), Uruguay (1933), Austria (1933),· Germany (1933) and Mexico (1934). In all cases the retreat from capitalism was followed by an abandonment of democratic government.

Mr. St. John quotes Hayek: "It is now often said that democracy will not tolerate 'capitalism.' If 'capitalism' means ... a competi tive system based on private prop erty, it is far more important to realize that only within the system is democracy possible." No doubt a certain amount of state wel farism can be tolerated for a time in the richer nations without a relapse into dictatorship. But the attrition of democracy begins when enough people, responding to the demagogues, begin demanding more from the central government than is compatible with maintain ing a rate of savings sufficient to keep production expanding as the population itself increases. Infla tion and taxation, the source of welfare funds, require compulsion to make them acceptable. And, as Hayek has said, "the worst gets on top," for only the "worst" is willing to use the clubs that are necessary to compel the producers to yield what ought to be regarded as the seed corn for future crops.

To save the U.S. from the anti capitalist "counterrevolution" that began in the nineteen thirties, Mr. St. John suggests that we insti tute an "Age of Reform and Re peal." In 1976, he says, "we will observe the 200th anniversary of the signing of the Declaration of Independence." Unfortunately the plans for celebrating the anni versary are not taking off from the individualism of the Founding Fathers. The Boston Bicentennial Commission, says Mr. St. John, "is stressing the Liberal and leftwing premise of 'interdepend ence' . . . and completely ignores the affirmative aspects - and the very existence of the American Revolution and of the subsequent 760 THE FREEMAN December Industrial and Technological Rev olutions." And the Philadelphia Bicentennial Commission will have a hard time commemorating the Founders' principles if former Democratic Senator Joseph Clark, an enemy of the original doctrine of the separation of the powers, uses his membership on the Com mission to put forward his own anti-Federalist point of view.

As a description of the events leading to the "political riot" at Chicago Mr. St. John's book is first-rate. But its greater im portance may derive from its in sistence that we revive our old traditions in preparation for the 200th anniversary of the Republic that will be here before we know it. ~ THE TRUTH ABOUT BOUL W ARISM by Lemuel R. Boulware (Washington, D.C.: The Bureau of National Affairs, 1969, $7.50 cloth, $2.85 paperback. 190 pp.) Reviewed by Edmund A. Opitz PIONEER investigators of electrical phenomena are memorialized by the terms in which later genera tions discuss the science. Every time we talk about amperes, ohms, volts, and watts we pay tribute to A. M. Ampere, G. S. Ohm, Alessan dro Volta, and James Watt. It seems fitting, therefore, that a new approach to industrial relations should turn up in the elec trical industry as "boulwarism," after Lem Boulware, now retired from General Electric.

The term boulwarism was coined as an epithet; it is now part of the vocabulary as a label for the ef forts of a business or industry to fill voluntarily its five-fold obliga tion to: Employees, Customers, Shareholders, the Community, and Government. For General Electric this involved an extensive program of education which began in 1947, under Mr. Boulware's direction. So successful was this operation that General Electric suffered little from the union problems which plagued other industries. The un ions gave us the word when they blamed their failure on "boulwar ism." Precisely what did Mr. Boul ware do? The book under review tells the story in broad outline and it reproduces some of the messages and illustrations used in company publications at the time. Simply, the campaign was designed to tell the story of how the business sys tem operates, the nature of the free market, and the limited role of government. The story of how this was done has been admirably told here, making this book a handy manual for people in personnel work as well as a lively account of an important incident in business history. ~ THE FREEMAN-Volume 19, January-December1969 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.

ACADEMIC freedom Consider your stand (Dietze) 2: 98-100 Education in America (Roche) 6:363-369 ACTIVIST judges and the rule of law ( Cummerford) 5: 280-283 ADVERTISING In praise of the conventional wisdom (McCroskey) 1: 48-52 Protected to death (Hazlitt) 8:481-482 AFRICA, southern, hands off (Chamberlin) 3: 176-182 AGRICULTURE Pricing ourselves out of world markets? (Cravens) 2:109-112 Problems the free market can't solve ( Poirot) 10: 630-635 ALIEN ATED American, The (Darling) 3: 131-135 ANYONES, The (Siebert) 10:629 (poem) ART of iconoclasm, The (0. Johnson) 12:744-749 AS Tocqueville saw us (Winston) 5:311-316 BANKING and consumer credit Good sense makes good business! (Bugbee) 11:692-697 See also Federal Reserve; Money BATTLE in the streets, The (Carson) 11 :662-669 BEARCE, Robert G. Free lance in the free market, A. 12:752-756 BENEATH the gap (J. C. Sparks) 7: 406-409 BENT ruler, The (Gearhart) 7:393-396 BEST audience is one! The (Read) 8:483-487 BEYOND the law (Manas) 9:564-572 BIEN, Bettina. See Book· reviews (Lazo) BIG business Fear smallness, not bigness (Read) 7:425-426 Socialism and beyond (Opitz) 7: 420ff.

BOUL WARE, Lemuel R. Who pays taxes - and how'? 12:750-751 BROWN, Harold O. J. Training in trust. 3: 149-155 BUGBEE, Helen Good sense makes good business! 11: 692-697 CALLA WAY, Howard Unknown costs of pollution. 11: 679-682 CAMPBELL, John W. Technological status. 2: 113-122 CAN ADA, political opinion Democratic dilemma, A (Shumiatcher) 12:707-713 CAPITAL gains (Hagedorn) 8:461-463 CAPITALIST manifesto, A (Chamberlin) 6:323-330 CARSON, Clarence B. Battle in the streets, The. 11: 662-669 Problem or opportunity? 10: 622-628 Rise and fall of England, The ( 11) Fabian thrust to socialism, The. 1: 14-24 (12) Fabian program, The. 2: 81-90 (13) Reform ideas into political action. 3: 158-170 ( 14) Decline of England, The. 4: 205-218 (15) Socialism in power. 5: 300-309 (16) Fall of England, The (Part I). 6:335-345 ( 17) Fall of England, The (Part II). 7:427-435 CHAMBERLAIN, John. See Book reviews CHAMBERLAIN, Park Our inalienable rights. 12: 730-731 CHAMBERLIN, William Henry Capitalist manifesto, A. 6: 323-330 Collective guilt myth, The. 1: 3-9 Failing dynamo, The. 5:291-297 Hands off southern Africa. 3: 176-182 Our totalitarian radicals. 4: 236-242 Squeeze on the middle class, The. '2: 91-97 Supreme issue, The: the individual versus the state. 11: 699-700 CHAMBERLIN, William Henry (1897-1969) Obituary. 11 :698 CHARITY, private Forgotten man, The (Sumner) 8:470-480 CHODOROV, Frank Peace or politics. 4: 251-252 CITY jlocalproblems Battle in the streets, The (Carson) 11 :662-669 Defeat on the home front, A (McAdoo) 4:203-204 Problem or opportunity? (Carson) 10:622-628 Unknown costs of pollution (Callaway) 11 :679-682 COLLECTIVE guilt myth, The (Chamberlin) 1:3-9 762 THE FREEMAN December COLLEGE/university unrest Art of iconoclasm, The (0. Johnson) 12: 744-749 Beneath the gap (J. C. Sparks) 7:406-409 Collective guilt myth, The (Chamberlin) 1:3-9 Consider your stand (Dietze) 2:98-100 Education in America (Roche) 2: 101-108; 5: 272-280; 7: 397-405 In doing "one's own thing" (Simons) 10:619-621 Our totalitarian radicals (Chamberlin) 4:236-242 Student power and all that (Rogge) 9: 519-521 Too mad to laugh! (Trueblood) 9:554-555 COMBIN ATIONS in restraint of trade ( Poirot) 6: 331-334 COMMUNISM/ collectivism Capitalist manifesto, A (Chamberlin) 6:323-330 Socialism and beyond (Opitz) 7:410-424 Supreme issue, The: the individual versus the state (Chamberlin) 11: 699-700 See also Marx CONSEQUENCES are absolute, The (Ward) 8:504-506 CONSERV A TION of resources Problem or opportunity,! (Carson) 10:622-628 CONSIDER your stand (Dietze) 2:98-100 CONTRACTUAL rights/obligations Consider your stand (Dietze) 2:98-100 - Tenure (T. L. Johnson) 3:145-148 CONVENTION AL wisdom, in praise of (McCroskey) 1: 48-52 COOPERATION (social), voluntarism Free market, The-what it is ... what it implies. (Rose) 7:387-392 Peace or politics (Chodorov) 4:251-252 CRAVENS, M. E.

Pricing ourselves out of world markets? 2: 109-112 CRIME, riots, destruction Battle in the streets, The (Carson) 11:662-669 Collective guilt myth, The (Chamberlin) 1:3-9 Combinations in restraint of trade ( Poi rot ) 6: 331-334 See also College/university unrest CUMMERFORD, Edward F. Activist judges and the rule of law. 5:280-283 DARLING, Linda Alienated American, The. 3: 131-135 DEFEA T on the home front, A. (McAdoo) 4:203-204 DEMOCRATIC dilemma~ A (Shumiatcher) 12:707-713 DEMOCRACY, majority rule As Tocqueville saw us (Winston) 5:311-316 DIETZE, Gottfried Consider your stand. 2: 98-100 DIFFICULT question, A (Yankus) 12:741-743 DISTINGUISHED everybodies (Peace) 3:156-157 DONWAY, Roger Intellect in utopia, The. 6: 346-351 DYNAMICS of the free market (Eagle) 3: 183-185 EAGLE, Robert H. Dynamics of the free market. 3: 183-185 ECONOMIC calculation/planning Free market disciplines (Read) 11 : 656-661 Inflationism as political policy (Peters) 12:717-724 Marx's view of the division of labor (North) 1:28-35 Money and the market (Poirot) 8: 464-469 Mythology of spaceship earth, The ( North) 11: 683-691 Training in trust (Brown) 3: 149-155 Urban renewal and the doctrine of sunk costs (North) 5: 263-270 ECONOMIC depression Great depression, The (Sennholz) 10:585-596 Repressed depression (North) 4:224-234 ECONOMIC development/progress Hong Kong (Shenoy) 7:439-443 Technological status (Campbell) 2: 113-122 ECONOMICS, production, trade, incentive Capitalist manifesto, A (Chamberlin) 6: 328ff.

Dynamics of the free market (Eagle) 3:183-185 Free lance in the free market, A (Bearce) 12:752-756 Value - the soul of economics (Pitt) 9: 515-519 EDUCATION, theory of Beneath the gap (J. C. Sparks) 7: 406-409 Best audience is one! The (Read) 8:483-487 Beyond the law (Manas) 9: 564-572 Free society and its enemies, The (Machan) 1:25-27 Tenure (T. L. Johnson) 3:145-148 See also Academic freedom; College/ university unrest EDUCA TroN in America. See Roche ELECTORAL College, why have? (B.M. Sparks) 4:219-223 EMANUELSON, Jerry Socialized airwaves. 10:597-598 ENGLAND. See Great Britain 1969 INDEX 763 EQUALITY (government enforced) As Tocqueville saw us (Winston) 5:311-316 Inquiry concerning inequality, 'An (Paton) 1:53-60 On economic rights (Kelley) 9:541-545 Two concepts of equality (Opitz) 9: 529-540 FABIANS (British) Rise and fall of England, The (Carson) 1: 14-24; 2: 81-90 FAILING dynamo, The (Chamberlin) 5:291-297 FALLACY of "intrinsic value," The (North) 6:370-375 FEAR smallness, not bigness (Read) 7:425-426 FEDERAL Reserve and credit expansion Great depression, The (Sennholz) 10:585-596 Value of money, The (Sennholz) 11:670-678 FISHER, Sam R. See Book reviews (McWhorter) FLOATING exchange rates (Powell) 8:451-461 FORGOTTEN man, The (Sumner) 8:470-480 FREE MARKET / enterprise/ competition Dynamics of the free market (Eagle) 3: 183-185 Free lance in the free market, A (Bearce) 12:752-756 Free market disciplines (Read) 11: 656-661 Free market - what it is ... what it implies, The (Rose) 7: 387-392 Hong Kong: a case study in market development (Shenoy) 7:439-443 Problems the free market can't solve (Poirot) 10: 630-635 Speakman 100 (Russell) 5:259-262 FREE society and its enemies, The (Machan) 1: 25-27 FREEDOM, liberty - philosophy of Consequences are absolute, The (Ward) 8:504-506 Difficult question, A (Yankus) 12:741-743 Freedom is responsibility (B. M. Sparks) 9:522-528 Golden calf, The (Youngquist) 11:645-651 Non-system, The (Schaffer) 11: 655 Price of liberty. The (Poirot) 12:725-729 FREEDOM of speech/press Free lance in the free market, A (Bearce) 12:752-756 Intellect in utopia, The (Donway) 6:346-351 See also Academic freedom; Ideas FROM Spencer's 1884 to Orwell's 1984 (Hazlitt) 2:67-75 GALBRAITH, John Kenneth - ideas of In praise of the conventional wisdom ( McCroskey) 1: 48-52 GEARHART, John R.

Bent ruler, The. 7: 393-396 GEORGE, Henry - ideas and influence of Rise and fall of England, The (Carso·n) 1:20ff. GERMANY, post World War II Failing dynamo, The (Chamberlin) 5:291-297 GOLDEN calf, The (Youngquist) 11:645-651 GOLD'S dust (North) 10:599-607 GOOD sense makes good business! (Bugbee) 11 :692-697 GOVERNMENT controls/regulations From Spencer's 1884 to Orwell's 1984 (Hazlitt) 2:67-75 Protected to death (Hazlitt) 8:481-482 GOVERNMENT enterprises Problem or opportunity? (Carson) 10: 622-628 Problems the free market can't solve (Poirot) 10:630-635 Pyramids all over the place (Read) 12:714-716 GOVERNMENT, limited - philosophy of Battle in the streets, The (Carson) 11:662-669 Bent ruler, The (Gearhart) 7:393-396 Beyond the law (Manas) 9: 564-572 Golden calf, The (Youngquist) 11:645-651 Our inalienable rights (P. Chamberlain) 12: 730-731 Out-of-bounds dilemma, The (Read) 5:284-290 Supreme issue, The : the individual versus the state (Chamberlin) 11: 699-700 GOVERNMENT spending Dynamics of the free market (Eagle) 3: 183-185 Mythology of spaceship earth, The (North) 11: 683-691 Our saving grace (Poirot) 2:76-80 Spend now, pay later! (Poirot) 5:297-299 Squeeze on the middle class, The (Chamberlin) 2:91-97 Tax policy (Sennholz) 9:556-563 Who pays taxes - and how? (Boulware) 12 :750-751 GREA T Britain Failing dynamo, The (Chamberlin) 5 :291-297 From Spencer's 1884 to Orwell's 1984 (Hazlitt) 2:67-75 Housing policy for Great Britain, A (Powell) 3:171-175 Rise and fall of England, The. See Carson GREAT depression, The (Sennholz) 10:585-596 764 THE FREEMAN December HAGEDORN, George Capital gains. 8:461-463 HANDS off southern Africa (Chamberlin) 3: 176-182 HAZLITT, Henry From Spencer's 1884 to Orwell's 1984.

2:67-75 How we discourage investment. 1: 36-37 Onesided capital-gains tax. 5: 270-271 Protected to death. 8:481-482 Uruguay: welfare state gone wild. 4: 195-202 See also Book reviews (Friedman) HEALTH, the right to (Szasz) 6:352-362 HONG Kong: a case study in market development (Shenoy) 7:439-443 HOUSING policy for Great Britain, A (Powell) 3: 171-175 HOW we discourage investment (Hazlitt) 1:36-37 HUNT, Richard E. Political intervention in medicine. 7:436-438 ICONOCLASM, art of (0. Johnson) 12:744-749 IDEAS, ideologies - influence of Art of iconoclasm, The (0. Johnson) 12:744-749 Instinct and ethics (Opitz) 12: 732-740 Libertarian philosophy, The (Rogge) 10:579-584 Rise and fall of England, The (Carson) 1: 14-24; 2: 81-90; 3: 158-170 Too mad to laugh! (Trueblood) 9:554-555 IDEAS, innovations, inventions, change In doing "one's own thing" (Simons) 10:619-621 Intellect in utopia, The (Donway) 6:346-351 Non-system, The (Schaffer) 11:655 Technological status (Campbell) 2: 113-122 IN doing "one's own thing" (Simons) 10: 619-621 IN praise of the conventional wisdom (McCroskey) 1: 48-52 INDIVIDUAL rights, freedom Alienated American, The (Darling) 3: 131-135 Democratic dilemma, A (Shumiatcher) 12:707-713 Medical care is not a right (C. W.

Johnson) 4:234-235 On economic rights (Kelley) 9:541-545 Our inalienable rights (P. Chamberlain) 12:730-731 INDIVIDUALITY, inequality, human nature Free lance in the free market, A (Bearce) 12:752-756 Free market - what it is . . . what it impli'es, The (Rose) 7:387-392 Free society and its enemies, The (Machan) 1: 25-27 Inqujry concerning inequality, An (Paton) 1:53-60 Only kind of people there are, The (Williams) 1: 10-13 Political intervention in medicine (Hunt) 7 :436-438 INFLA TIONISM as political policy (Peters) 12:717-724 INQUIRY concerning inequality, An (Paton) 1: 53-60 INSTINCT and ethics (Optiz) 12:732-740 INTELLECT in utopia, The (Donway) 6: 346-351 IPA (Institute of Public Affairs, Australia) Progress. 5: 310 JOHNSON, Charles W. Medical care is not a right. 4: 234-235 JOHNSON, Orien Art of iconoclasm, The. 12: 744-749 JOHNSON, Thomas L. Tenure. 3: 145-148 KELLEY, David On economic rights. 9: 541-545 KIRZNER, Israel - ideas of Urban renewal and the doctrine of sunk costs (North) 5:263-270 LABOR unions and employment Great depression, The (Sennholz) 10:585-596 Marx's view of the division of labor (North) 1:28-35 Socialism and beyond (Opitz) 7:421ff.

LAW, order, judicial system Activist judges and the rule of law (Cummerford) 5: 280-283 Our inalienable rights (P. Chamberlain) 12:730-731 Unknown costs of pollution (Callaway) 11:679-682 LET us give thanks (Thompson) 11: 643-644 LIBERALISM, classical versus modern Libertarian philosophy, The (Rogge) 10: 579-584 On economic rights (Kelley) 9:541-545 Right to health, The (Szasz) 6:354n. Two concepts of equality (Opitz) 9:529-540 LIBERTARIAN philosophy, The (Rogge) 10: 579-584 MACHAN, Tibor R. Free society and its enemies, The. 1: 25-27 MANAS Beyond the law. 9:564-572 1969 INDEX 765 MARCUSE, Herbert - ideas of Our totalitarian radicals (Chamberlin) 4:236-242 MARX, Karl - ideas of Fallacy of "intrinsic value," The (North) 6:370-375 Marx's view of the division of labor (North) 1 :28-35 Rise and fall of England, The (Carson) 1: 16, 22ff. McADOO, James E. Defeat on the home front, A. 4: 203-204 McCROSKEY, Jack In praise of the conventional wisdom.

1 :48-52 MEDICAL care Medical care is not a right (C. W. Johnson) 4: 234-235 Political intervention in medicine (Hunt) 7:436-438 Right to health, The (Szasz) 6: 352-362 METHODOLOGY, libertarian Best audience is one! The (Read) 8:483-487 MILL, John Stuart - ideas of Beyond the law (Manas) 9:564-572 Instinct and ethics (Opitz) 12:737ff. Right to health, The (Szasz) 6:359ff. Rise and fall of England, The (Carson) 1: 19ff. MISES, Ludwig von - ideas of Inflationism as political policy (Peters) 12:717-724 Marx's view of the division of labor (North) 1:31ff. Mythology of spaceship earth, The (North) 11:687ff. Repressed depression ( North) 4: 224-234 MONEY, inflation, credit expansion Fallacy of "intrinsic value," The (North) 6:370-375 Floating exchange rates (Powell) 8:451-461 Gold's dust (North) 10:599-607 Great depression, The (Sennholz) 10:585-596 Inflationism as political policy (Peters) 12:717-724 Onesided capital-gains tax (Hazlitt) 5:270-271 Price of liberty, The (Poirot) 12: 725-729 Repressed depression (North) 4: 224-234 Tax policy (Sennholz) 9: 556-563 Value of money, The· (Sennholz) 11:670-678 Who pays taxes - and how? (Boulware) 12:750-751 MONEY and the market (Poirot) 8:464-469 MYTHOLOGY of spaceship earth, The (North) 11: 683-691 NATURAL law/order/rights Consequences are absolute, The (Ward) 8:504-506 Difficult question, A (Yankus) 12:741-743 Instinct and ethics (Opitz) 12: 732-740 On economic rights (Kelley) 9:541-545 Quiet revolution, The (Opitz) 10:611-618 NON-system, The (Schaffer) 11:655 NORTH, Gary Fallacy of "intrinsic value," The. 6:370-375 Gold's dust. 10:599-607 Marx's view of the division of labor.

1 :28-35 Mythology of spaceship earth, The. 11:683-691 Repressed depression. 4: 224-234 Tariff war, libertarian style. 8:488-496 Urban renewal and the doctrine of sunk costs. 5: 263-270 ON economic rights (Kelley) 9:541-545 ONESIDED capital-gains tax (Hazlitt) 5:270-271 ONL Y kind of people there are, The (Williams) 1:10-13 OPITZ, Edmund A. Instinct and ethics. 12: 732-740 Quiet revolution, The. 10: 611-618 Socialism and beyond. 7: 410-424 Two concepts of equality. 9: 529-540 See also Book reviews (Barzun, Boulware, Kirk, Ludovici) ORWELL, George - ideas of From Spencer's 1884 to Orwell's 1984 (Hazlitt) 2:67-75 OUR inalienable rights (P. Chamberlain) 12:730-731 OUR saving grace (Poirot) 2:76-80 OUR totalitarian radicals (Chamberlin) 4:236-242 OUT-OF-BOUNDS dilemma, The (Read) 5:284-290 PATON, W. A. Inquiry concerning inequality, An. 1: 53-60 PEACE, Archie Distinguished everybodies. 3: 156-157 PEACE or politics (Chodorov) 4:251-252 PETERS, J. H.

Inflationism as political policy. 12: 717-724 PITT, W. H. Value - the soul of economics. 9:515-519 POIROT, Paul L. Combinations in restraint of trade. 6: 331-334 Money and the market. 8: 464-469 Our saving grace. 2: 76-80 Price of liberty, The. 12: 725-729 Problems the free market can't solve. 10:630-635 . Spend now, pay later! 5:297-299 766 THE FREEMAN December POLITICAL action/privilege Battle in the streets, The (Carson) 11 :662-669 Peace or politics (Chodorov) 4:251-252 Read's law (Read) 10:608-610 Right to health, The (Szasz) 6: 360n. Rise and fall of England, The (Carson) 3: 158-170 Two concepts of equality (Opitz) 9:529-540 POLITICAL intervention in medicine (Hunt) 7:436-438 POLLUTION, unknown costs of (Callaway) 11:679-682 POVERTY, government programs Battle in the streets, The (Carson) 11:662-669 Forgotten man, The (Sumner) 8:470-480 Good sense makes good business! (Bugbee) 11:692-697 Two concepts of equality (Opitz) 9: 529-540 POWELL, J. Enoch Floating exchange rates. 8:451-461 Housing policy for Great Britain, A.

3:171-175 POWER (governmental), coercion Combinations in restraint of trade (Poirot) 6:331-334 Golden calf, The (Youngquist) 11 :645-651 Pyramids all over the place (Read) 12:714-716 Socialism and beyond (Opitz) 7:418ff. Two concepts of equality (Opitz) 9:529-540 PRICE of liberty, The (Poirot) 12:725-729 PRICES/pricing Price of liberty, The (Poirot) 12: 725-729 Value - the soul of economics (Pitt) 9: 515-519 PRICING ourselves out of world markets? (Cravens) 2:109-112 PRIV ATE property Battle in the streets, The (Carson) 11 :662-669 Defeat on the home front, A (McAdoo) 4:203-204 Price of liberty, The (Poirot) 12: 725-729 Socialized airwaves (Emanuelson) 10:597-598 PROBLEM or opportunity? (Carson) 10:622-628 PROBLEMS the free market can't solve ( Poirot) 10: 630-635 PROGRESS (IPA Facts) 5:310 PROTECTED to death (Hazlitt) 8:481-482 PYRAMIDS all over the place (Read) 12:714-716 QUIET revolution, The (Opitz) 10:611-618 RADIO/TV Socialized airwaves (Emanuelson) 10 :597-598 READ, Leonard E.

Best audience is one! The. 8: 483-487 Fear smallness, not bigness. 7: 425-426 Free market disciplines. 11: 656-661 Out-of-bounds dilemma, The. 5: 284-290 Pyramids all over the place. 12: 714-716 Read's law. 10:608-610 RELIGION, morality, ethics Beyond the law (Manas) 9: 564-572 Instinct and ethics (Opitz) 12:732-740 Quiet revolution, The (Opitz) 10:611-618 Training in trust (Brown) 3: 149-155 REPRESSED depression (North) 4: 224-234 RESPONSIBILITY, individual Collective guilt myth, The (Chamberlin) 1:3-9 Free lance in the free market, A (Bearce) 12:752-756 Freedom is responsibility (B. M. Sparks) 9: 522-528 Golden calf, The (Youngquist) 11:645-651 "She says my house is dark ..." (Woodson) 11:652-655 Training in trust (Brown) 3:149-155 RIGHT to health, The (Szasz) 6:352-362 RISE and fall of England, The. See Carson ROCHE, George Charles III Education in America (4) Decline of intellect, The. 1:38-47 (5) Discipline or disaster? 2: 101-108 (6) Perpetual adolescent, The.

3: 136-144 (7) Why institutionalize our errors? 4:243-250 (8) Multiversity, The. 5:272-280 (9) Academic freedom for what? 6:363-369 (10) Revolt on campus. 7:397-405 (11) Creativity. 8:497-503 ( 12) Philosophy of growth, A. 9: 546-553 ROGGE, Benjamin A. Libertarian philosophy, The. 10: 579-584 Student power and all that. 9:519-521 ROSE, Tom Free market - what it is ... what it implies, The. 7:387-392 RUSSELL, Dean Speakman 100. 5:259-262 SAVINGS and investment How we discourage investment (Hazlitt) 1: 36-37 Our saving grace (Poirot) 2:76-80 Urban renewal and the doctrine of sunk costs ( North) 5: 263-270 SCHAFFER, Martin F. Non-system, The. 11: 655 1969 INDEX 767 SCIENCE, technology Free market disciplines (Read) 11: 656-661 Intellect in utopia, The (Donway) 6: 346-351 Mythology of spaceship earth, The (North) 11 :683-691 Out-of-bounds dilemma, The (Read) 5:284-290 Technological status (Campbell) 2: 113-122 SECURITY, government guaranteed Alienated American, The (Darling) 3: 131-135 Golden calf, The (Youngquist) 11:645-651 Problems the free market can't solve ( Poi rot ) 10: 630-635 SELF-IMPROVEMENT', self-reliance Difficult question, A (Yankus) 12:741-743 Distinguished everybodies (Peace) 3: 156-157 Progress (IP A) 5: 310 "She says my house is dark ..."

(Woodson) 11: 652-655 SENNHOLZ, Hans F. Great depression, The. 10: 585-596 Tax policy. 9:556-563 Value of money, The. 11:670-678 SHENOY, Sudha R. Hong Kong: a case study in market development. 7: 439-443 "SHE says my house is dark ..." (Woodson) 11: 652-655 SHUMIA TCHER, Morris C. Democratic dilemma, A. 12:707-713 SIEBERT, Al Anyones, The (poem) 10:629 SIMONS, Henry Edward In doing "one's own thing." 10: 619-621 SOCIALISM and beyond (Opitz) 7:410-424 SOCIALISM (British) See Carson SOCIALIZED airwaves (Emanuelson) 10: 597-598 SPARKS, Bertel M. Freedom is responsibility. 9: 522-528 Why have an Electoral College? 4:219-223 SPARKS, John C. Beneath the gap. 7:406-409 SPEAKMAN 100 (Russell) 5:259-262 SPENCER, Herbert - ideas of From Spencer's 1884 to Orwell's 1984 (Hazlitt) 2:67-75 SPEND now, pay later! (Poirot) 5:297-299 SQUEEZE on the middle class, The (Chamberlin) 2:91-97 STUDENT power and all that (Rogge) 9: 519-521 SUMMER, William Graham Forgotten man, The. 8:470-480 SUNK costs, urban renewal and, (North) 5:263-270 SUPREME issue, The: the individual versus the state (Chamberlin) 11: 699-700 SZASZ, Thomas S.

Right to health, The. 6: 352-362 TARIFF war, libertarian style (North) 8:488-496 TAX policy (Sennholz) 9:556-563 TAXES, taxation Capital gains (Hagedorn) 8: 461-463 Forgotten man, The (Sumner) 8:470-480 How we discourage investment (Hazlitt) 1: 36-37 Money and the market (Poirot) 8: 464-469 Onesided capital-gains tax (Hazlitt) 5:270-271 Our saving grace (Poirot) 2:76-80 Squeeze on the middle class, The (Chamberlin) 2:91-97 Who pays taxes - and how? (Boulware) 12: 750-751 TECHNOLOGICAL status (Campbell) 2: 113-122 TENURE (T. L. Johnson) 3: 145-148 THANKSGIVING Let us give thanks (Thompson) 11: 643-644 THOMAS, Norman - ideas of Socialism and beyond (Opitz) 7:410ff. THOMPSON, Donna Let us give thanks. 11: 643-644 THORNTON, Robert M. See Book reviews TOCQUEVILLE, Alexis de, as he saw us (Winston) 5:311-316 TOO mad to laugh! (Trueblood) 9: 554-555 TRADE, international Pricing ourselves out of world markets?

(Cravens) 2: 109-112 Tariff war, libertarian style (North) 8:488-496 TRAINING in trust (Brown) 3: 149-155 TRANSPORTATION Technological status (Campbell) 2: 113-122 TRUEBLOOD, D. Elton Too mad to laugh! 9: 554-555 TWO concepts of equality (Opitz) 9:529-540 UNITED Nations Hands off southern Africa (Chamberlin) 3: 176-182 U. S. CONSTITUTION Activist judges and the rule of law ( Cummerford) 5: 280-283 Why have an Electoral College? (B. Sparks) 4:219-223 UNKNOWN costs of pollution (Callaway) 11 :679-682 URBAN renewal and the doctrine of sunk costs (North) 5:263-270 URUGUAY: welfare state gone wild (Hazlitt) 4:195-202 768 THE FREEMAN December VALUE - the soul of economics (Pitt) 9:515-519 VALUE of money, The (Sennholz) 11:670-678 VALUE, intrinsic, the fallacy of (North) 6:370-375 WARD, Barbara - ideas of Mythology of spaceship earth, The (North) 11 : 688ff. WARD, June I. Consequences are absolute, The. 8: 504-506 WELFARE state philosophy Forgotten man, The (Sumner) 8:470-480 From Spencer's 1884 to Orwell's 1984 (Hazlitt) 2:67-75 Golden calf, The (Youngquist) 11:645-651 Uruguay: welfare state gone wild (Hazlitt) 4: 195-202 WHO pays taxes - and how? (Boulware) 12:750-751 WHY have an: Electoral College?

(B. Sparks) 4:219-223 WILLIAMS, Roger J. Only kind of people there are, The. 1: 10-13 WINSTON, Alexander As Tocqueville saw us. 5:311-316 WOODSON, Benjamin N. "She says my house is dark ..•tt 11:652-655 YANKUS, Stanley Difficult question, A. 12:741.;.743 YOUNGQUIST, Walter R. Golden calf, The. 11: 645-651 BOOK REVIEWS (Reviewer's name in parentheses) , BALL VEt Faustino. Essentials oj economics (Chamberlain) 5:317-320 BARZUN. Jacques. The American university (Thornton & Opitz) 3: 191-192 BEILENSON, Laurence W. The treaty trap (Chamberlain) 9:573-576 BOULWARE. Lemuel R. The truth about Boulwarism (Opitz) 12:760 CARSON. Clarence B. The war on the poor (Chamberlain) 11:701-704 DUB OS. Rene. So human an animal (Thornton) 6: 383-384 FLEMING, Thomas. The man jrom Monticello (Thornton) 10:640 FRIEDMAN, Milton. Dollars and deficits (Hazlitt) 6:379-383 FRIEDMAN. Milton. The optimum quantity of money. and other essays (Hazlitt) 6:379-383 JACOBS. Jane. The economy of cities (Thornton) 8:510-511 KIRK, Russell. Edmund Burke: a genius reconsidered (Opitz) 7: 447-448 KIRK, Russell. Enemies of the permanent things (Thornton) 9:576 LAZO, Mario. Dagger in the heart (Bien) 3: 189-191 LUDOVICI. Anthony M. The specious origins of liberalism (Opitz) 7:447-448 McWHORTER. Thomas O. Res publica ( Fisher) 4: 256 NOCK. Albert Jay. The book of journeyman (Thornton) 8:511-512 NOCK. Albert Jay. Free speech and plain language (Thornton) 8:511-512 NOGUEIRA. Franco. The third world (Chamberlain) 3: 186-189 NUTTER. G. Warren. The strange world of Ivan Ivanov (Chamberlain) 7: 444-446 PAOLUCCI. Henry. War, peace. and the presidency (Chamberlain) 1: 61-64 PEl, Mario. The America we lost (Thornton) 2: 127-128 READ. Leonard E. The coming aristocracy (Chamberlain) 6: 376-379 ROCHE, George Charles III. Education in America (Chamberlain) 10:636-639 RUSSELL. Dean. Frederic Bastiat: ideas and influence (Chamberlain) 8:507-510 ST. JOHN, Jeffrey. Countdown to Chaos: Chicago. 1968 (Chamberlain) 12:757-760 SCHLESINGER, Arthur M. The birth of the nation (Thornton) 2: 126-127 WEA VER. Richard. The southern tradition at bay (Chamberlain) 4:253-256 WEBSTER, Noah. An American dictionary oj the English language (Chamberlain) 2: 123-126

About this edition

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Title: The Freeman 1969

Author: Foundation for Economic Education

First published: 1950

Series: The Freeman, volume 19

Source file: The Freeman 1969.pdf

Source page: https://freecapitalists.org/books/the-freeman-1969/

Converted: 2026-08-09 by The Liberty Archive (freecapitalists.org), converter v6

Table of Contents

The Freeman 1969

- The Collective Guilt Myth; W.H. Chamberlin

- The Only Kind of People There Are; R. Williams

- The Rise and Fall of England XI. C. Carson

- The Free Society and Its Enemies; T. Machan

- Marx's View of the Division of Labor; G. North

- How We Discourage Investment; H. Hazlitt

- Education in Amerca 4: G. C. Roche, III

- In Praise of the Conventional Wisdom; J. McCroskey

- An Inquiry Concerning Inequality; W. A. Paton

- Book Reviews

February

- From Spencer's 1884 to Orwell's 1984; H. Hazlitt

- Our Saving Grace; P. L. Poirot

- The Rise and Fall of England XII. C. Carson

- The Squeeze on the Middle on the Middle Class; W. H. Chamberlin

- Consider Your Stand; G. Dietze

- Education in America 5. G. C. Roche, III

- Pricing Ourselves Out of World Markets? M.E. Cravens

- Technological Status; J. Campbell

- Book Review

March

- The Alienated American; L. Darling
- Education in America 6. G. C. Roche, III
- Tenure; T. L. Johnson
- Training in Trust; H. O.J. Brown
- Distingquished Everybodies; A. Peace

- The Rise and Fall of England XIII. C. Carson

- The Housing Policy for Great Britain; J. E. Powell, M.P.

- Hands off Southern Africa; W. H. Chamberlin
- Dynamics of the Free Market; R. Eagle
- Book Review

April

- Uruguay: Welfare State Gone Wild; H. Hazlitt

- A Defeat on the Home Front; J. E. McAdoo

- The Risee and Fall of England XIV. C. Carson

- Repressed Depression; G. North

- Medical Care is Not a Right; C. W. Johnson, M.D.

- Our Totalitarian Radicals; W. H. Chamberlin
- Education in America 7. G. C. Roche, III
- Peace or Politics; F. Chodorov
- Book Reviews

May

- Speakman 100; D. Russell
- Urban Renewal; G. North
- One-Sided Capital Gains Tax; H. Hazlitt
- Acitivits Judges; E. F. Cummerford
- The Out of Bounds Dilemma; L.E. Read
- The Failing Dynamo; W.H. Chamberlin
- Spend Now, Pay Later; P.L. Poirot
- The Rise and Fall of England XV. C. Carson
- Progress
- As Tocqueville Saw Us; A. Winston
- Book Reviews

June

- A Capitalist Manifesto; W. H. Chamberlin

- Combinations in Restraint of Trade; P.L. Poirot

- The Rise and Fall of England; XVI. C. Carson

- The Intellect in Utopia; R. Donway
- The Right To Health; T. Szasz, MD
- Education in America 9. G. C. Roche, III
- The Fallacy of Intrinsic Value; G. North
- Book Reviews

July

- The Free Market; T. Rose
- The Bent Ruler; J. Gearhart
- Education in America 10. G. C. Roche, III
- Beneath the Gap; J. Sparks
- Socialism and Beyond; E. Opitz
- Fear Smallness, Not Bigness; L.E. Read
- Rise and Fall of England XVII. C. Carson

- Political Intervnention in Medicine; R. E. Hunt

- Hong Kong; S. Shenoy

- Book Reviews

August

- Floating Exchange Rates; J. E. Powell
- Capital Gains; G. Hagedorn
- Money and the Market; P. L. Poirot
- The Forgotten Man; W. G. Sumner
- Protected to Death; H. Hazlitt
- The Best Audience is One; L.E. Read
- Tariff War; Libertarian Style; G. North
- Education in America 11. G. C. Roche, III
- The Consequences Are Absolute; J. Ward
- Book Reviews

September

- Value; W.H. Pitt
- Student Power and all that; B. A. Rogge
- Freedom Is Responsibility; B. M. Sparks
- Concepts of Equality; E. Opitz
- On Economic Right; D. Kelley
- Education in America 12. G. C. Roche, III
- Too Mad to Laugh; D. E. Trueblood
- Tax Policy; H. Sennholz
- Beyond the Law
- Book Reviews

October

- The Libertarian Philosophy
- The Great Depression; H. Sennholz
- Socialized Airwaves; J. Emanualeson
- Gold's Dust; G. North
- Read's Law; L. E. Read
- The Quiet Evolution; E. Opitz
- In Doing One's Own Things; H. E. Simons
- Problem or Opportunity; C. Carson

- Problems the Free Market Can't Solve; P.L. Poirot

- Book Reviews

November

- Let Us Give Thanks; D. Thompson
- The Golden Calf; W. Youngquist
- She Says My House is Dark; B. Woodson
- Free Market Disciplines; L.E. Read
- The Battle in the Streets; C. Carson
- The Value of Money; H. Sennholz
- Unknown Costs of Pollution; H. Callaway
- The Mythology of Spaceship Earth; G. North
- Good Sense Makes Good Business; H. Bugbee
- Obituary - Willima Henry Chamberlin
- Book Reviews

December

- A Democratic Dilemma; M. Shumiatcher

- Pyramids All Over the Place; L.E. Read

- Inflationism as Political Policy; J.H. Peters

- The Price of Liberty; P.L. Poirot
- Our Inalieanble Rights; P. Chamberlin
- Instinct and Ethics; E. Opitz
- A Difficult Question; S. Yankus
- The Art of Iconoclasm; O. Johnson
- Who Pays Taxes - and How? L. Boulware
- A Free Lance In the Market; R. Bearce
- Book Reviews

Index
Book Reviews
About this edition