Date: 1950-01-01T07:00:00+00:00
Keywords: liberty
Description: The Foundatin for Economic Education The Freeman 1971

The Freeman 1971

Foundation for Economic Education
the Freeman VOL. 21, NO.1. JANUARY 1971 The Feminine Mistake: The Economics of Women's Liberation Gary North 3 To price themselves out of the market is scarcely an appropriate step toward women's liberation. How to Be a Benefactor Leonard E. Read 15 Self-responsibility well may be the ultimate of social responsibility. The Woes of the UnderdevelopedNations Erik von Kuehnelt-Leddihn 21 The aggravating gap between living standards in various nations poses a dilemma for proponents of Christian charity. The Creative Thrust of Capitalism Merryle Stanley Rukeyser 33 Concerning the importance of saving and investment and freedom in developing nations. Throttlingthe Railroads (Conclusion): 9. The Future of the Railroads Clarence B. Carson 39 If the railroads and their customers are to survive, it's time to stop government intervention and try freedom. Cost-Plus Pricing Paul L. Poirot 48 When demand is the only consideration, regardless of supply.

The Protesters W. A. Paton 51 A call for maturity in the attitude and behavior of parents. Book Reviews: "Envy" by Helmut Schoeck "Youth, University, and Democracy" by Gottfried Dietze Anyone wishing to communicate with authors may send first·class mail in care of THE FREEMAN for forwarding. 60 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 linlited 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, 1971, 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. Articles from this journal are abstracted and indexed in Historical Abstracts and/or America: History and Life. THE FREEMAN also Is available on microfilm, Xerox University Microfilms, Ann Arbor, MIch igan 48106. Permission granted to reprint any article from this issue, with appropriate credit.

The Feminine Mistake I FIRST READ about the Women's Liberation Fro'nt in the spring of 1969 in a copy of New York, a new magazine devoted to the cru cial problem of how to survive in New York City. That description of WLF opened with an account of a young heiress demonstrating karate as one' of the basic skills needed for her survival. At the time I was inclined to dismiss the WLF··as just another of the freak ish movements that seem to flour ish in alienated urban cultures, or in the educated segments there of. But in recent months I have come to the conclusion that the WLF is important, and that it is dangerous. Not because of the "crazies" on the fringe - who grab the headlines - but because WLF has latched onto an appeal ing (and fallacious) slogan: "Equal pay for equal work." Mr. North is a Ph.D. candidate at the Uni versity of California, Riverside. GARY NORTH By focusing attention on the very real fact of differential pay scales between men and women, WLF activists have gained a wider audience than might other wise have been likely. Here, it would seem, is a legitimate com plaint against the supposed in equities of the capitalist system.

Here is where "male chauvinism" makes itself felt: pure discrimi nation that is in no way related to one's personal capacities or per formance. This argument cannot be dismissed with a' shout of "You look like last year's sneakers, sister !" The reason the WLF has been able to gain a hearing on the "equal pay for equal work" pro posal is because it is already right in line with the last thirty or forty years of government inter ventionism. It presupposes that the government, merely by enforc ing a wage law, can in some way 4 THE FREEMAN January influence the aggregate economy to move along "positive, humani tarian" lines. This proposal, be cause it is not radical in 1970, lends an aura of respectability to an otherwise ludicrous movement. "Some of their rhetoric is exag gerated," one intelligent woman remarked to me, "but you can't argue with them on this point." I can, and I will.

"Fair Employment" The argument in favor of "equal pay for equal work" rests on a concept of labor that was overturned in the 1870's. It as sumes that there is such a thing as concrete human labor, a phys ical entity that in some way can be measured. Value is in some way linked to labor, and pay should reflect value. This was the economic premise of virtually all economists until the advent of modern economics ; Karl Marx was the last major economist to hold the labor theory of value. Modern economics rests on the concept that value is linked to usefulness; the value of labor depends on the value of labor's output. The dis tinction between the two concepts of value is crucial. When Women's Liberation ac tivists argue that a basic im morality exists in any economic system that does not reward all laborers equally for equal work, they imply that capitalism has in some way failed the test of common decency. What they do not realize is that competitive market capi talism actually comes closer than any other operational economic system to meeting their demands.

All factors of production are re warded exactly according to their productivity in a model of pure competition; in practice, market capitalism approaches that model in a remarkably close way. But the reward is not in terms of the "equal pay for equal work" slo gan; .the reward is based on the concept of marginal cost, or "cost of the most important use fore gone." The cost of any factor of production is based on the cost of the least expensive substitute for that factor; its value is depend ent upon the economic value of its product. In the long run, the free market tends to work, through competition, toward a balancing (or equating) of economic value and economic cost. Any factor of production that is receiving too large a share of net revenues will be forced to accept a smaller share through competition. This is true whether the factor of pro duction is a computer or a secre tary.

The advocates of "fair employ ment" keep pointing to the pro duction side of the equation, vaguely identifying the product 1971 THE FEMININE MISTAKE 5 with "work." But the return to any factor of production is based upon the cost of replacing that factor just as much as it is based on the value of the factor's prod uct. Competition is supposed to equalize the two - cost and value - if maximum economic efficiency is to be maintained. (By economic efficiency, the economist means the highest value of production from a given input of resources, or a given .level of production from the least expensive input of resources.) Therefore, the return to the computer is not based on "work," and neither is the return to the secretary. The return to each is based upon its contribution to pro duction in comparison to the po tential contribution of the near est competing factor. That is truly fair employment. (Now, one can also speak of charity as a means of increasing the return to a par ticular human factor of produc tion - paying him or her more than he or she is economically worth - but one should not argue for this in terms of economics, a mistake made by virtually all of the "fair employment" advocates.) A woman who is seriously con cerned with getting fair pay for her contribution - mental, physi cal, or simply resembling Raquel Welch - has to ask this question: What would it cost this company to replace me? If a woman knows that there are five other women ready and willing to take her sec retarial job at $350 a month, then she would be wise not to demand very much more than $350 a month in wages. She can demand a bit more, given the costs of train ing a new girl, the difficulties in volved in all bureaucratic changes, and the tastes of her boss with re gard to what constitutes someone who is sweet, cute, and so forth.

But she must limit her demands. Willing to Work for Less The WLF complains that women are forced to accept menial wages. But in many, many cases, the reason she can accept such wages is precisely because she enjoys the advantages of being a woman: she has a man who will help bear the financial burdens of her own up keep. She is on the job in order to supplement his earnings, so she is willing to work for wages that are essentially supplemental in magnitude. This, of course, means .considerable hardship for the working woman who has no hus band to support her. But her case is not fundamentally different from the man in his late thirties who has eight children and who is faced with competition from bright, young, single college grad uates who are willing to take over his job at the same pay, or per haps slightly less pay. The value 6 THE FREEMAN JanuarJ of one's contribution to a com pany is not directly related to one's marital status or the num ber of children involved.

If the advocates of "fair em ployment" are really concerned with morality, then they must ask an additional question: What are the burdens imposed on the per son 'who is unemployed but who would be willing to take a job at lower pay? Fairness should relate to all those in the economy, not just those insiders who happen to have the jobs in question. The supporters of "fair employment" legislation are unwilling to face the other half of the labor equa tion, the "unfair unemployment" generated as a direct consequence of the "fair employment" law. Minorities and Costs The explanation of the "menial wages" paid to secretaries is not too difficult to present,· once the concept of the return to a factor of production is grasped. Compe tition keeps wages down, just as it keeps prices down. The WLF women are not really that con cerned with the wages of the secretary, however. The members of the WLF are the better edu cated segment of the female pop ulation; what they refuse to ac cept is the fact that 'women execu tives are paid lower wages. That, it is argued, is a consequence of male chauvinism. Why aren' their M.A.'s worth as much al some man's M.A. (or even B.A') l I am willing to concede tha there is such a thing as a cor porate bias against employinl women. For one thing, men insid4 corporations have little desire t< expand the pool of available labOJ to compete for their jobs. FOJ another, most men probably re sent the idea that women coul< replace them in their jobs. Lik4 most prejudices against collec tives, the thought which galls mal4 employees is not the idea that ~ particularly gifted woman migh"

replace a particular man (whicl is, really, the kind of decision tha' is made in a business firm), bu" the idea that "women" can replac4 "men." People· are geared to think if terms of aggregates, even in thOSE decisions that are essentially in dividual (or, in economic terms "marginal"). So those inside com, plain, "If you let one of them in you'll have to let them all in,' which is patently false, and t< combat it, those on the outsidE yell, "Then if you won't take onE of us on his (or her) own merit by George, you'll have to take al of us!" So they put pressure or the government to pass a "fail employment" act that prohibib discrimination, and thereby con firms the worst fears of the in 1971 THE FEMININE MISTAKE 7 siders. And then there is pressure to take incompetents into the firm, just to meet the external re quirements of the legal system. Pass a law against economic big otry, and you help to confirm the dire predictions of the bigots.

Tokenism replaces competition. Let us therefore assume that men are bigots when it comes to hiring women. Some of the big otry, however, is not irrational. There are basic institutional rea sons why women are not sought after as men are to serve in ex ecutive positions. The obvious one is that women marry and have children. For a job requiring con siderable training and experience, the threat always exists that the woman will quit for family rea sons. Men also quit their jobs, but generally for economic rea sons. A company can raise a man's salary and at least have some chance of success in keeping him. Also, a woman's husband may decide to move out of the area; it is his decisi0n, and his wife must follow. There is no way a com pany can fight his decision with much possibility of success. Traditional Hiring Practices Another basic reason why wom en are not hired is simply because they have not been· hired in the past. Bureaucracies do exist, and habitual· patterns do get established, and there are fundamental costs of reorienting any bureau cratic structure. A change in hir ing practices certainly affects one important part of any company's organizational pattern. You do not "shake up the system" any time without bearing certain in stitutional disutilities-costs. The greater the break with traditional hiring policies involved, the great er the disorientation, at least initially, of the company.

There· is one final comment that seems appropriate. If a survey were to be made of any· random secretarial pool in the corporate structure of America, it would be quite likely that a sizable majority of the women would prefer to be under male supervisers. Given the opportunity of serving under a woman holding a B.A. or a man holding a B.A., most women, I think it is safe to say, would choose the man (assuming similar personalities and competence of the competing candidates). If the men of a corporation had the choice, an even larger percentage would be likely to prefer mascu line superiors. This is a fact of life, unlikely to change in the· near future. A corporation must weigh the initial disadvantages of thwarting this preference among its employees. The woman prob ably will have to offer some spe cial advantage to the company 8 THE FREEMAN Januar~ that her masculine competitor cannot or will not.

Wage Competition I appeared on a Los Angeles television show in November of 1969. It was one of those after noon talk shows aimed at the "lunch bunch" - a distinctly fem inine audience. Preceding me was an articulate, middle-aged lady from England, the founder of a female labor exchange organiza tion which supplies womanpower to various corporations. By pre 1968 standards, she would have been considered a militant for women's rights. As the director of this multimillion-dollar organ ization (an even more remarkable feat by British economic stand ards) , she was asked what she thought of the fact that women get paid less than men for their labor. "Well," she replied, "the best form of competition we wom en have is our willingness to work at lower wages. If you were to eliminate that, you would remove our most effective employment weapon." That woman understands the nature of competition.

The fact that the "equal pay for equal work" law is not yet in operation makes it possible for a woman to obtain that initial ac cess to a previously masculine occupation. If she were to demand a man's wages initially, she would stand far less chance of gaininJ her real objective, namely, th opportunity to prove her capacit~ in the occupation of her choice The company hesitates to hire: woman, given the definite uncer tainties in hiring women in gen eral. (Is she a Women's Lib type ~ What is she after?) But if she can offer the company a premiun to offset the logical risks involve( (not to mention the questionablE hostili ty ), she can make it wortl the company's risk. The most ob· vious premium is a willingness tc take a lower wage. If she shoulc fail on the job, the company ha~ not lost so much. By removing this most effectiVE of weapons, the WLF would serio ously jeopardize the possibilitie~ for advancement by women into the higher echelons of American business. Only the most obviously competent women, the ones from the best schools with the highest grades and most impressive out side activities, would have a shot at the better jobs. Actually, the WLF proposal borders on the su icidal: certainly it would not be the WLF type who would be hired unless she could show some over whelming economic reason why she should be selected over a less radical miss from a prestigious finishing school (plus an M.B.A.

from Harvard School of Busi ness). The upper echelon posts 1971 THE FEMININE MISTAKE 9 would be converted into semi monopolies of those women who already hold them. If the WLF's goal is really to open the doors of American business to women large numbers of women - the "equal pay for equal work" pro posal is ridiculous. It is self defeating. Of course, for those women already in the system, the law would be an almost flawless grant of monopoly returns. Minimum Wage Law for Women Inescapably, from the point of view of economic analysis, the "equal pay for equal work" pro posal is the demand for a mini mum wage law for women. The minimum wage would be equal to the minimum pay scale for a man of comparable talents and respon sibility. Like all minimum wage laws, it is primarily a legally op erating barrier against all those worth less than the minimum wage. As shown in the earlier part of this paper, the woman initially is worth less, not because of her lack of work, but because of the higher risks and economic institutional disutilities associ ated (in the majority of Ameri can firms) with hiring women.

In general, minimum wage laws force the less productive, higher risk, less desirable (for whatever reasons) persons into lower pay ing jobs not covered by the minimum wage laws. If the job mar ket as a whole is covered, then the laws tend to force them out of work entirely. A person who gen erates only $1.25 worth of returns to his company will not be hired if the minimum wage is $1.75. Those least able to afford unem ployment - the least ~killed, least educated - are the ones hurt most by the laws. In this country, as study after study indicates, this means the Negro teenage male, but it also means the less skilled women. Those just entering the market, with little experience and training, are the "first fired, last hired." Our WLF propagandists insist that housework is the intolerable curse of the American woman. It is housework's boredom and lack of creativity that oppresses wom en, degrades them into beasts of burden. That women would have to seek employment as household workers is, for the WLF, the ulti mate example of male chauvinism.

So what do we find? The minimum wage laws have been the most effective means of forcing more women into employment as house hold domestics! Household employment is not covered by minimum wage laws. As a result, those women who have been excluded from jobs in the covered industries (since they are not allowed to compete by 10 THE FREEMAN January bidding down wages) are now forced to seek less desirable em ployment. This means they must go to the uncovered industries. It also means that more of them than would enter this market in the absence of the laws now try to get in, thus forcing wages even lower. Professor Yale Brozen of the University of Chicago made a study of precisely this effect of the minimum wage laws in the October, 1962 issue of The Journal of Law and Economics. He sur.,. veyed the employment figures, be fore and after a rise in the mini mum wage law, in three different periods. His conclusion: "In each instance when the minimum wage rate rose, the number of persons employed as household workers rose." He then made this warning: However, the coverage of the Fair Labor Standards Act has been broad ened, and further broadening is pro posed. Much further broadening will close the safety valve [Le., the non covered industries into which the un employed flee]. We will, then, find the amount of structural unemployment (Le., unemployment concentrated in certain age groups, in one sex, or race, in groups of less than a given level of education, and in certain regions) in creasing as minimum wage rates in crease.

This prospect, of course, applies only to the less desirable employ ees or potential employees. "For families with large numbers of children [which can now employ cheaper servants] and women em ployed in better paying occupa tions, further increases in mini mum wage rates and their cover age may be very desirable, how ever unwelcome this may be to the less educated, less skilled fe male worker foreclosed from a better paying job by the rise in the minim urn rate and coverage." Across the Board Effects Brozen is considering only the more familiar minimum wage law, the kind which sets a fixed mini mum wage per hour for. all memo bers of the population in the cov ered industries. The WLF scheme is not quite the same. What thE "equal work for equal pay" schemE would produce is a minimum wagE law for all women throughout aI: covered industries, from the sec· retaries to the female vice-presi dents. It would not be limited tc merely those employees in thE $1.50 to $2.50 per hour range. In· stead of seeing only the botton: segment of female employee~ forced to take less desirable posi· tions, i.e., those which the mer would not be bidding for anyway the WLFproposal would see to i1 that all entering female employeeE would be downgraded (except fOl the few token women hired fOl the purpose of fending off a Fed· 1971 THE FEMININE MISTAKE 11 eral investigation). There would be a downgrading all the way along the employment ladder.

Companies would not outwardly break the law, of course, but there are many ways to avoid regulations that are undesired by personnel departments. For ex ample, two applications are re ceived: a man holds a B.A. and a woman holds a B.A., and both seek the same post. The woman had better be from a prestigious aca demic institution or have had some kind of previous business experience, or else be physically attractive, and the man should have no exceptional qualifications to distinguish himself. The wom an might very well be qualified for an even higher post, one which her male counterpart would not even be considered for, so she is, in effect, downgrading her oppor tunities to be employed in the higher echelon job. For her to meet the true demand for labor on a competitive market, she can take a prestigious job at lower wages than her male counterpart, or take a less prestigious job at equal wages to her male counter part. She cannot take a higher job, given equal qualifications of the two applicants and equal pay scales, for the reasons outlined above: women are less desirable employees for most companies, and they must distinguish themselves in order to be hired. A law will not change the basic economic parameters of the labor market; it can only change the ways in which the discrimination is ac complished.

Downgrading Hurts Most at the Lowest Levels The downgrading effect will, as always, be most harmful to those women who are not members of the population segments from which the WLF recruits its mem bership. As women at one level of employment are forced into the jobs below - the jobs in which less training and lower educational qualifications are required - the women who would originally have applied at the lower level will be forced to accept an even lower classification. Finally, the glut will appear in the "uncovered" portions of any company's jobs, i.e., those jobs unaffected by the "equal pay for equal work" law simply because no man would ap ply for them with or without the law. The law will produce struc tural unemployment in these jobs, or else the older pattern Qf wage competition will appear once again: women competing only against other women on a market in which not only the usual secre tarial candidates are scrambling for jobs, but also the women forced out of the next higher level 12 THE FREEMAN January of employment by the "equal pay for equal work" law.

Women without husbands or wealthy fathers to supplement their incomes will be the losers. Women who have not attended the better colleges will suffer far more than the very bright, highly quali fied, highly ambitious types who can gain access to the prestige jobs from the start. Men, of course, will continue to be hired. Women will then be in competi tion primarily with women. By changing the competition param eters from wage competition into educational or experience competi tion, the women without the "pa per qualifications" - college de grees, years of successful employ ment, an attractive photograph will be the losers. Their most effec tive tool of economic survival, namely, their willingness to com pete with the male employees by accepting lower wages, will have been removed. The beneficiaries will be those women with the col lege degrees and those already in their chosen jobs.

Conclusion The WLF, by the very nature of its economic proposals, has rele gated itself into a role more gen erally associated with the opera tion of a medieval guild. It has become the advocate of a monopo listic, prestige competitive, high security employment system, one geared to all those women with im pressive educational backgrounds and/or impressive physical pro portions. The "equal pay for equal work" scheme is essentially elitist. As Max Weber pointed out half a century ago, the mass market de mand for goods and services came to the West only when competition shifted to price competition. He called it "the democratization of demand," contrasting it with the medieval emphasis on the produc tion of luxury goods by and for elites within the economy. As he wrote, the shift from production for elites to production for a mass market "is characterized by price competition, while the luxury in dustries working for the court fol low the handicraft principle of competition in quality."

What Weber wrote about the ex pansion of the market for goods is equally true for the expansion of the market for labor. If you want to create a market that per mits free entry, mass employment, and increased benefits for those not in elite categories, you must permit wage competition. Other wise the employment game will be played in terms of paper quality: employment resumes, college tran scripts and photographs. Naturally, the WLF members tend to be recruited from just these elitist segments of the na1971 THE FEMININE MISTAKE 13 tion's population. They are the girls with the college degrees and the affluent fathers who will be able to support them until they can find "the right job." The WLF girl who is willing to put on a little makeup and hide her militancy to her employer will have access to the jobs denied to her less advan taged sisters. She can drop out of the WLF and into a prestige job at her discretion. Therefore, what we find in the case of the WLF is a replay of a very ancient tune: a group calling for the imposition of a government law for the "good of the masses" ultimately encour ages a law which would benefit the elitist stratum from which it re cruits its members. Here is an other example of the privileged minority which does quite well by doing good.

The Competitive Firm Will Pay Women Fairly For the woman who is really competent in what has generally been regarded as a man's world, the "equal pay for equal work" scheme cannot help her, and it may hinder her initial access to the job in which she expects to demon strate her abilities. Once she gets the job she wants, at whatever salary, she can prove her worth as a valuable factor of production, assuming she is talented. She will need no Federal law to get her legitimate reward from her em ployer, assuming the employer is serious about staying competitive in the world's markets. There are, of course, inefficient firms. These will not strive to stay competitive, Le., by rewarding every factor of production accord ing to the value of its output. This is the kind of overstuffed, flabby corporation that Robert Townsend attacks in his delightfully icono clastic book, Up the Organ,ization.

Townsend's recommendation to the talented but underpaid woman is identical to his recommendation for the talented, underpaid man: quit. That kind of firm is not in terested in competition and there fore uninterested in creativity and production. It is best to get out. Townsend's article in the Septem ber, 1970 issue of McCall's warns women that a company which con sistently discriminates against women at all levels is probably filled with hacks, especially at the top; a good firm will pay her what she is worth. She should shop around until she finds one, just as Mary Wells, the enormously suc cessful advertising executive, was forced to do. If a firm is competi tive, Townsend writes, it wIll pay women fairly. By implication, we ought to con clude that the hostility to women who have proven their capability rests on a commitment to security 14 THE FREEMAN January above competition. Another mini mum wage law will not solve this problem. What will solve it, as. I argued in the January, 1970 issue of this journal, is a return to the decentralized, profit-oriented, free market business firm that is not shielded from competition by a host of Federal regulations and Federal subsidies, both direct .. and indirect. What the competent woman needs, especially the Everyone Wants More woman who is not loaded down with paper qualifications, is that initial shot at the job that will serve as her. testing ground, re gardless of whether she gets a paycheck as large as a man's.

What she does not need, and what those of us who benefit from her greater productivity do not need, is the establishment of the WLF's neomedieval principle, "equal pay for equal work," , IDEAS ON LIBERTY IT MAY BE taken for granted that all men want greater rewards, either material or psychic, or both, than they are receiving. In some the desire for increased reward is much keener than in others; those in whom it is keen are on the lookout for more lucrative employment. Some complain that their rewards are altogether "too small" and insist that they should have more. If they are able to persuade the community of this, they may be given an additional material reward or they may be offered the chance to work and earn an additional amount. Those whose rewards are considered by the community to be "too small" and who aver that they want to earn more are classed as "unemployed" and are looked upon as a social problem.

The "problem" is to increase their rewards. It is assumed (wholly without proof) that they cannot do this for themselves and hence· that society must do it for them. However, the "unemployed" are not differently situated from others. They are receiving some rewards and they want more; the same can be said of us all. If the "unemployed" are helpless, so is everyone. OSCAR COOLEY, Paying Men Not to Work HOWTOBEA BENEFACTOR LEONARD E. READ THE WORLD'S WOES may have been greater and more numerous in 1850 than now. But, if they were, my grandfather as a young man was unaware of them. There were no radios, TVs, or telephones. Iso lated in backwoods country, he had no newspaper, not even a magazine. All the troubles of man kind, so far as he knew, were those which fell within a distance he could walk or ride horseback; and they were minor problems, few and far between. In brief, grandfather had no social prob lems except grandfather-size ones.

But today! There is hardly a disaster or a social mess on the face of the earth that isn't imme diately dinned .into our ears or emblazoned in glaring headlines. News! And unless one is instinc tively or rationally immune to this calami ty barrage, he will incline toward the untenable belief that every ill of mankind is his probIem. Thus misled, he is an easy victim of the fallacious notion that the solution of all of these is his "social responsibility." True, each of us is at once a social and an individualistic being and, therefore, each does in fact have a social responsibility. How ever, we should know what that responsibility is, and what it is not, else we will work against rather than in harmony with our fellow men. The grandfather-size problem, as it turns out, is about the maxi mum' size any of us is able to cope with. When we get it into our heads that other people's problems are our responsibility to solve, we "rise" to a level of utter incompetence. However good our intentions, our meddling makes matters worse rather than better.

To illustrate: I am a writer of sorts. It must be obvious to you, whoever you are, that I cannot 15 16 THE FREEMAN January solve your problems. Elect me to Congress and I remain as I am, my competence not improved one whit by reason of this change in occupation. Nor will it upgrade my competence to place me in the highest political office in the land, or to make me the head of A.T . & T.! Business to the Whipping Post Before considering how we can become true benefactors, that is, how we can soundly discharge our social responsibilities, let's reflect on the mischief done in the belief that social responsibility requires everybody to solve everybody else's· problems. For example, take business firms, especially those with the most customers, workers, and in vestors. They are today's "whip ing boys." Such firms are picked on by politicians, muckrakers, and those millions who can be sold any nonsense - if it is repeated often enough. Pied Pipers with enormous followings are everlast ingly insisting that these corpo rations assume their "social re sponsibility," such as training and hiring the so-called hard core un employed.

So beset are many executives with these widespread collectivis tic notions that they tend to neg lect their proper functions of hir ing the most competent personnel, turning out better products at lower prices, and making larger profits; they concentrate instead on preserving the corporate im age. These outpourings draw busi nessmen into a popularity contest for which they have no compe tence, and cause them to de-em phasize their skills in production and exchange, the skills that brought them to the top. Instead of serving as spokesmen for free entry and competition and how the market economy best serves everyone, they drop into a defen sive role. They shift from portray ing what is true to denouncing what is not true. Or they may suc cumb altogether to these unreal istic notions, in which event they apologize for profits and become parties to the growing collec tivism. This is a mischievous trend. If continued, it will prove disastrous not only to investors and workers but to the very customers many of whom are doing the condemning.

When the emphasis is on the im age rather than the performance, not only will the performance de teriorate but so will the image. And everyone involved must bear a share of the inevitable failure. Public policy, it seems to me, should be geared to consumer in terest - that's all of us. And as a consumer, I cringe when business executives behave as if theirs is 1971 HOW TO BE A BENEFACTOR 17 first and foremost - or, even sec ondarily - the job of looking out for pockets of poverty or the level of employment· or the general wel fare or any other so-called social goal. These men will serve us best in every way - including allevia tion of our poverty and so on when they stick to their own knit,. ting! Born a shoemaker, stay a shoe maker was, by and large, the lot of the masses until the idea of opening the market to competition was recently discovered - about seven generations ago. What a revolution that brought about!

Open opportunity· for masses of people and the most successful war on poverty in the history of man kind! Adam Smith and J. S. Mill John Stuart Mill, gifted with in sight, was among the numerous men to grasp the pursuit of self interest as an efficacious way of life: The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to ob tain it. Earlier, Adam Smith had ob served that: ... by directing that industry in such a manner as its produce may be of the greatest value, [the individual] in tends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no, part of it. By pursuing his own interest he frequently pro motes that of the society more ef fectually than when he really intends to promote it.. I have never known much good done by those who affected to trade for the public good. It is an affectation ....

If "to trade for the public good" is at best an affectation, one must then conclude that he should trade for his own good, which is to say that each of us should ob serve the rules and pursue his own self-interest. Thus will he best .serve others and fulfill his social responsibility. What a switch from current thinking! But events of the past 200 years, if I read them aright, confirm this view - absolutely! There is in this thesis, how,;. ever, a presupposition that an in dividual knows what is to his best interest. There's the rub; few have this knowledge; no one has it perfectly. This presupposition may ex plain why the· brilliant and cau tious Adam Smith inserted that word "frequently" into his fa mous paragraph. Every now and then ~ frequently-there are in18 THE FREEMAN January dividuals who more or less intelli gently perceive their self-interest; and in these cases the ardent pur suit of that interest promotes the interests of society - contributes to the public good.

The pursuit of self-interest as one's objective is not widely ap plauded. Generally, such action is associated with greed, avarice, selfishness. Low-brows! This only demonstrates the extent of the confusion. Motivation and Interpretation Self-interest is the motivator of human action~ Regardless of pre tensions to the contrary, a com munist. is as much motivated by self-interest as am 1. In this sense, everyone is self-centered; self-interest is the ultimate given. And to be purely selfless is to be dead. There are two main variables in this matter. The first relates to the motivating power of self interest. In some people it is a feeble force, often too low to be recognized. Such people sometimes think of themselves as selfless, and they nearly are. In others, self interest is a powerful motivator of action. The second variable is the one at issue; it has to do with how intelligently self-interest is inter preted. For instance, the thief thinks of his interest as best served by stealing from others.

This is an interpretation so nar row and antisocial that the more it is pursued, the more is the pub lic good subverted. There are, on the other hand, those who so in telligently interpret their self-in terest that they would never think of trying to pursue their own good by depriving others of the same right, or in any way im peding the efforts of others to ob tain their own good. What this amounts to in the final analysis is serving or ob serving the self-interest of others in order to best serve one's self. This is an interpretation so in telligent that the more it is pur sued, the more is the public good served. To repeat, it is the fre quent appearance of these en lightened individuals that led Adam Smith to an obscure truth: H •••he [man in pursuit of his own interest] frequently promotes that of the society more effectu ally than when he really intends to promote it."

The ardent pursuit of self-inter est is the way to social felicity or the public good,presuming that individuals are not allowed (by government) or do not allow themselves to act at cross pur poses with the freedom of others, thereby damaging their own in terests. To my way of thinking, this is the way ,. and the more pow1971 HOW TO BE A BENEFACTOR 19 erfully the individual is moti vated to putsue his enlightened interests, the better. If this is the right way, then we should not lightly abandon it simply because we find only a few among us who are intelligent interpreters of self-interest. Stick to the right way and concentrate on increas ing an enlightened self-interest. This is the only proced ure that makes sense. Beware the Selfless Consider the alternative. Sup pose each individual were to abandon· his own interests when ever he observes others misinter preting theirs. What are some of these misin terpretations of self-interest? All will agree that theft is wrong. But of the millions who wouldn't per sonally steal from any other, what about those who will, without the slightest qualm, get the govern ment to feather their own nests at the expense of others? What, really, is the difference? Were all to do this, all would perish. If this isn't a mistake, pray tell, what is! The list, of course, is long and must include every individual who does unto others that which he would not have .. them do unto him.!

And to be included, also, are· the 1 See my Readiness Is All, a pamphlet. Copy on request. muckraking critics of producers who are trying their best to out do competitors, to profit by best serving consumers. To make "whipping boys" out of those who serve us most efficiently is to dis play an ignorance of our own in terests. What, then, is the alternative to the pursuit of self-interest? It is that these people who do not even know their own interests should pursue your and my good - the public weal! This is to com pound ignorance in society. For, surely, an individual who does not know his own interest cannot re motely know mine, let alone the countless interests of millions. Social Responsibility Now to the final question: How best can I become a benefactor to mankind? By assuming my social responsibility. Of what does this consist? There are three steps. Number one is to do all in my power not to interfere with the business of others.

The danger of minding other peo ple's business is twofold. First, there is the danger that a man may leave his business unattended to; and, second, there is the danger of an impertinent interference with another's affairs. The "friends of humanity" almost al ways run into both dangers. Number two is to mind my own business.

20 THE FREEMAN January Every man and woman in society has one big duty. That is, to take care of his or her own self. This is a social duty. For, fortunately, the matter stands so that the duty of making the best of one's self individually is not a separate thing from the duty of filling one's place in society, but the two are one, and the latter is accomplished when the former is done.2 Number three is implicit in minding my own business: prac ticing, as best I can, the difficult and sensitive Judeo-Christian philosophy of charity. 3 2 This and the previous quote from the chapter, "On Minding One's Own Busi ness," in What Social Classes Owe To Each Other by William Graham SUmner. This chapter is in a pamphlet. Copy on request. 3 See "What Shall It Profit a Man?" in my Deeper Than You Think (IrvingA Code for Survival Minding one's own business is the doctrine of liberty. Admit tedly, this has no glamour for the "friends of humanity," the social architects, the one's who would mind other people's business. To rule out their masterminding of others is to deny their peculiar pursuit of happiness.

Minding one's own business, on the other hand, serves self by serving others and is a task of a size to fit the individual - big or little. This can be life's mostfas cinating venture - self-interest in its most intelligent conception, benefaction at its very best. ~ ton-on-Hudson, N. Y.: The Foundation for Economic Education, 1967) PP. 108 117. For an instructive and inspirational book on this subject, see Magnificent Ob session, a novel by Lloyd Douglas. IDEAS ON LIBERTY EVERYONE is familiar with the intense struggle for existence that is carried on among the trees of a forest. It is asserted that the struggle is so intense, and the issue of life and death so sharply drawn among the young pines of a thicket, that the cutting of an inch from the top of one of them will doom it to ultimate extinction .... Fortunately, or unfortunately as the case may be, the issue of life and death is· seldom so clearly and sharply drawn among human beings as it is among trees, but in the long run the results appear to be much the same. If that be true, it follows that the religion which best enables men to conform to the laws of the Univ~rse (God's laws) and to survive in life's struggle, will eventually be left in possession of the world.

THOMAS NIXON CARVER, The Religion Worth Having TheWOES 01 the underdeveloped nations ERIK VON KUEHNELT-LEDDIHN A FEELING of love and charity to ward one's neighbor,a sense of responsibility and personal guilt have characterized Christian thought at all times~ Now the world has shrunk, due to the new means of transportation developed by modern technology. Hand in hand with diminished distances goes a sudden discovery of the great dif ferences between the nations and races -less the psychological, more the material differences. Of course, the Western nations have known for some.· time that they were richer than the peoples of the various tropical and not-so tropical colonies, while the latters' awareness of their own poverty is Dr. Kuehnelt-Leddihn is a European scholar, linguist, world traveler, and lecturer. Of his many published works, the best; known in America is his book, Liberty or Equality? His most recent publication is The Timeless Christian.

something relatively new. Thanks to official travels and scholarship residences in North America, Eu rope, and also in Japap., they started to realize that in spite of their newly won independence their living standards are way be low those of the West. But it is primarily the impressions gained from tourists, illustrated papers, movies, television, and books that have given them a hitherto un known feeling of inferiority, of envy, sometimes even of hatred. They have. questioned themselves as to why they are so "underdevel oped," why the already rich na tions are getting richer while their progress (though. visible here and there) is so slow that the gap be tween them and their former mas ters continues to increase - mak ing, in a way, a sham of their independence, their emancipation. 21 22 THE FREEMAN January This sort of questioning goes on not only among the "emerging na tions," but also in our midst. Sinc.e Christians are sometimes moved by virtues and often have a laud able propensity to seek the rea sons for an unhappy state of af fairs in their own and not in some body else's failings, they increas ingly tend to attribute the poverty of the "emergers" to their o,vn colonialist expansionism in the past and their grasping economy in the present. The Latin Amer ican masses, the starving Hindus, the miserable "Blacks" in Africa are all so badly off because we are so prosperous! Human beings, so they reason, after all are equal; they have basically the saIne de sires, the same intelligence, the same reactions, the "fundamentally same" attitude toward work, pleas ure, love, and food. So, if a con siderable part of the world is left way behind in the general scram ble for prosperity, it cannot be their fault - and if it is not their fault then it must be ours. Fjither we progressed so fast that they cannot keep pace or we brutally exploited them in the past, stunted their growth, and are still contin uing such malpractices. As a re sult, their living conditions are "incompatible with the dignity of man."

In this reasoning there are sev eral fallacies, starting with the attempt to internationalize the ab surd idea that equal wealth is a just demand of all individuals of one country - all differences in this matter today constitute a provocation and a manifestation of rank inj ustice. Even if one might advocate equal pay for equal work, what happens to the man who toils much harder than the average? In Austria, for example, the legal 43-hour week for workers is soon to be reduced to 40 hours, but (as a poll found out) the self employed work more than 62 hours on the average. (My own average is 81 hours.) It is also obvious that work which requires decades of training and education cannot be remunerated in the same way as skills that can be acquired in a week, a few months, or a year. To Lacl< Is to Envy Yet, whatever the reasons for a bigger income, envy comes into play. And envy also has a leading role in international relations. A country which acquires wealth quicker than another one is, in our present "climate," committing an inj ustice, an act of collective ag gression and must be morally con demned. But since it is not (not yet!) considered immoral to work harder or to be· more intelligent though personal qualities are sys tematically ignored·· by the demo cratic doctrine in the political 1971 THE WOES OF THE UNDERDEVELOPED NATIONS 23 field - one has to look for or in vent moral arguments that are still accepted. In other words: if nation A has a much higher living standard, has greater wealth than nation B, the reason is that A ex 'ploited or still exploits B. (New Lefters have leveled this accusa tion also against the USSR.) The poverty in certain "under developed" nations appears· to us to be real misery. But is it really "extraordinary"; is it really "in compatible with the dignity of man"? This might be so from our subjective Western point of view if, for instance, we compare the living standards of an unemployed German worker with those of a jobless Indian in Calcutta, a city whe,re one-fourth or one-fifth of the population is born and dies in the streets. But at the same time we have to take into consideration that mankind, according to the lat est estimates, is about half a mil lion years old and that anything approaching "conditions compat ible with the dignity of man" 5,000 years ago existed only in a very few spots among a handful of a chosen few.

The Rarity of Freedom If we were to envision man's long emergence on the dial of an ordinary clock, then such - still exceedingly rare - conditions arose just 5 minutes before twelve. Larger areas with a slightly in creased number of "comfortably off" people - let us say, during the High Middle Ages - existed only one minute before twelve. And· a sizable number of countries with majorities enjoying the blessed state of "material dignity" can only be found in the last 80 years or, according to our time table, 14 seconds before twelve. Needless to say, there still are many areas today where living standards are not much higher than they were in the Neolithic period (11 :50 to 11 :56 on our clock). This means life in caves, in illness, heat and cold, hunger, boredom, despair, in perpetual fear of wild beasts, snakes, all the enemies of early man. During that period, as we learn from excavations, the aver age age of men who survived childhood was 28, of women 22 years.

I think that we even have illu sions as to the life of the upper crust in the more recent past. Louis XIV could never get rid of his lice and Versailles in the sum.. mer emitted an unbearable stench. Frederic II of Prussia smelled to high heaven. Travel was an un mitigated torture. It has been es timated that the living standards of His Excelle,ncy, Herr von Goethe, Prime Minister of Wei mar, would never be accepted to day by a skilled German laborer 24 THE FREEMAN January who just pushes buttons to get classic music, jazz, warm air, or a movie right in his room, a man who owns a vehicle outranging-in speed and comfort anything Goe the could have dreamed of. Viewed in the light of statistics, the ques tion as to what is compatible with the dignity of man. is a very diffi cult one to decide. There was a time - Biblical times! - when len tils were a choice dish. Obviously, the various nations, races, and tribes are living in various stages of development. But where would we be if no individual, no tribe, no nation could progress unless all the others did as well? Prog ress always implies a few pioneers leading the path - and not waiting endlessly until the rest, the less endowed, the lazier, the less enter prizing, the less self-disciplined ones decide to catch up.

Sentimental Romanticists Yet here, precisely, we come to the initial error about the woes of the "underprivileged" countries. Individuals within a nation, and the nations themselves, are neither identical nor equal. There are some biological reasons for this state of affairs (scientifically too much under debate to be enumerated here) but, above all, there are de cisive cultural patterns which might be changed in the long run but certainly not overnight. We have seen minorities (often of a combined ethnic, racial, and re ligious character) .doing materi ally better, sometimes even much better than their neighbors living in the same climate, under the same government, the same laws, the same economy. (Climate, as the student· of anthropogeography knows, is one of the least im portant but most frequently cited factors determining the inclina tions for hard and systematic work.) Yet all these differences are almost willfully overlooked by the sentimental Christian roman ticist. Knowingly or unknowingly, he is even affected by a number of Marxist notions.

Leftist thought, we must bear in mind, has infiltrated Christian thinking to a remarkable degree. (See THE FREEMAN, Fe'bruary, 1968.) A superficial reading of the Bible, the exhortations of Christ not to become a servant of Mammon but to remain "poor in spirit," the monastic ideals (in a secular version), the tradition of the mendicant orders, the rise of a bourgeois civilization not par ticularly devoted to religious fer vor, "practical materialism" which is possibly a result of a. commer cial outlook - all this has initially fostered leftist currents in the Evangelical ("Protestant") world, but .. then. also appeared with un expected vigor in the Catholic do1971 THE WOES OF THE UNDERDEVELOPED NATIONS 25 main. This is an odd· development because, as Max Weber and, later, Alfred Miiller-Armack have dem.;. onstrated with clarity and full documentation, it was in the world of the Reformed faiths that Ital~ ian-born "capitalism" reached its apogee and the modern so-called "Protestant Work Ethic" came in to being. Medieval man worked very little. Between 90 and 140 feast days (besides the Sundays) were no rarity. On the other hand, Christmas was not a holiday in Scotland even at the turn of the century. The combination of. free enterprise, hard work, and the saving habit helped the "Protes tant" countries to overtake the Catholic and Eastern Church na tions; and only after they adopted the "Protestant Way of Life"

were the Catholic countries of the West in our days able to compete successfully with their neighbors to the north. This process,how ever, has not taken place in most countries of Latin America. We look for it in vain elsewhere, ex cept in the Far East, where an entirely different motivation ex plains the contempt for the dolc'e far niente (delightful idleness). Twisting Theology The .. inroads of leftist economic and social· thinking became mani fest first in Protestant theology. Suddenly, one remembered that the only persons physically chas tiz'ed by Our Lord were the mer':" chants. Now the same process can be observed in the Catholic Church. There are "internal" rea sons for this state of affairs, but also external (Marxist) influences. Not to .be overlooked is also a certain amount of subconscious opportunism. A new (leftist) "trimphalism" thinks to regain the "lost working class." The de nomina tionally mixed areas of Central Europe reflect the age-old Catholic animosities against the Jewish banker, the Calvinist man ufacturer, and the Lutheran big landowner. To St. Thomas Aqui nas, trade was of the most doubt ful moral value; but if one reads the great social-economic Encycli cals from Leo XIII to Pius XII one still finds no trace of leftist thought. A man like Father Gus tav Gundlach, S.J., of the Gregori an University, a friend of mine and practically the author of Quadragesimo Anno, steered clear of all leftist pitfalls. The situation changed under John XXIII, per sonally a very conservative pon tiff, when the Encyclical Mater et Magistra was composed largely· by professors of the Lateran Uni versity.

In the Encyclical Popularum Progressio which had a distinct "overseas message," the leftist tenor was somewhat more dis26 THE FREEMAN January tinct. Not the Gregorian, not the Lateran University, but a group of Dominicans in Paris working under the leadership of the late Father Lebret were the main au thors of this message. Father Lebret who before' his demise lec tured in Latin America said at a meeting in Sao Paulo: "Whether God is on the side of the commu nists or the capitalists, I do not profess to know, yet I have a sneaking suspicion that God rather favors the communists. And if you ask me whether I am unhappy about this, I must answer you candidly that I am not." These circumlocutions simply imply that a good Catholic ought to lean rather toward communism than toward free enterprise and the ideals of personal liberty. No won der that L.atin-American "Chris tian-Democratic" parties are often far more socialist than the social ist parties themselves. They fre quently excuse their attitude as designed to "take the wind out of the sails" of the Marxist par ties, but in this respect they are singularly ineffective. Note the case of Chile where a most thor ough agrarian reform has merely resulted in a marked decrease of agricultural production and an equally marked increase in leftist votes which has produced a Marx ist president.

The ascendancy of leftist ideas under the pontificate of Paul VI, certainly not known as a radical innovator, may be attributed to the fact that the· Catholic Church has practically no outstanding economic or financial· .minds of the first order. At the moment only one living author comes to my mind. Here we are faced. with a situation aptly described by the late Wilhelm Roepke, who had pointed out that economics with out ethics are inane and that moralizing without economic knowledge is disastrous. Charity or Justice? This sort of inj unction also should have been heeded by Miss Barbara Ward (Lady Jackson) who for some time has been con sidered an expert on the "emerg ing nations." In her recently pub lished book, The Angry Seventies, prepared for and published by the Papal Commission on Justice and Peace in Rome, she reminds us of the plight of the hungry and des titute masses overseas which will wreak the most terrible venge ance if we do not make bigger and better efforts to aid them ma terially and if we do not redress our trade' balance with them. To her - and to a number of well meaning souls - we are guilty of their misery. (Last February the Bishop of Innsbruck, in a pastoral letter, claimed that poverty in In1971 THE WOES OF THE UNDERDEVELOPED NATIONS 27 dia is due to the colonial period.

Apparently the wily sons of Al bion introduced the caste system and some 250 million holy cows to India !) At least one per cent of the GNP, so Miss Ward argues, must be set aside and handed. over to these nations without too many strings attached. There should be international coordination, some sort of World Bank, to handle these transfers. She even demands that a steadily increasing share of the resources should be chan neled through international agen cies. (If I understand her rightly, by the end of the seventies these grants should reach colossal pro portions.) The amount of aid due should be stipulated in interna tional treaties and the obligation to shell it out laid down and "given the force of law." One thinks with horror of what would happen in case of a grave economic crisis when our own populations would be suffering - break the treaties? Miss Ward's dream to aid the underdeveloped nations financially and materially is no doubt a pro foundly Christian one,and we would have nothing against it in principle if she were: (a) to show us a reasonable and effective way to do it, and (b) if she would not call her plan a "new kind of jus tice," thus appealing to our rather masochistic Western sense of guilt.

A clarion call to charity would be all right, but "justice"? Nor do I like her big stick, the menace of the hungry millions rubbing us out altogether. India's untouch ables or the peons of Colombia would starve to death amidst the ruins of Ruhr valley factories. Their military victory (a most doubtful event) would not solve anything. Anticolonialism Let us first look at the possible methods of such aid. In theory, an effective means of aiding the "emerging nations" would be to enlist all sorts of enterprises of the Free World to invest if the "emerging nations" (a) had polit ical stability, and (b) could offer real security. If they could meet these two preconditions, the for eign investors would be satisfied with a rather modest return. But few of the countries can give us these guarantees; and thus the history of foreign capital overseas has always been a history of eter nal expropriations by "national socialist" governments.

This lack of stability and secur ity can be explained. The "new independent nations" which now play such a big role in the U.N. escaped much too early from their tutelage: in the case of Latin America in the early nineteenth century, under the pressure and 28 THE FREEMAN Janua.ry with the aid of the Washington London axis; and, after World War II, under the threats of the Washington-Moscow axis, each partner' outdoing the other in "anticolonialism." In this game the Soviets, in the possession of Northern Asia, were thoroughly hypocritical while the Americans projected quite illegitimately their own historic experience to entirely different circumstances .. The Con go obviously had nothing in com mon with the Thirteen Colonies, and Patrice Lumumba was not a dark George Washington. Colonialism is not an invention of wicked manufacturers and bankers, as Hobson and Lenin as"'" sumed, but a natural activity of most nations faced with a pO'wer vacuum (or a cultural void) either on their borders or beyond the sea$.Without the British colonial drive the United States would not exist; without Bavarian colonial efforts this Austrian writer would not ~xist; without Greek colonial ism Aristotle and Archimedes and Pythagoras would not have been born; without Spanish "colonial ism" the Aztecs 'would have gone on slaughtering up to 20,000 men a week at the Teocalli; without the French,' colonizing spirit the Zenanyana, the unspeakable hor rors of the Evil Night, would still be celebrated in Dahomey. There is just .good colonialism and' bad colonialism. And in a free world, "neocolonialism" - one nation own ingproperty in another one - is also unavoidable. There is, if one insists, even Swiss and Dutch "neocolonialism" active in the United States. It is significant that Emperor Haile Selassie and President Tubman of Liberia de plored the fact that their two countries never had experienced the material advantage of a co lonial period.

If the "underdeveloped nations" (this, needless to say, excludes ex colonies which were mere exten sions of the British motherland) escaped much too early from the domination of civilized powers, the same can· be said about our Ger manic-Teutonic' ancestors who de stroyed the Roman Empire thus starting the Dark Ages. A group of historians, discussing the time required for our forebears to match again roughly Roman lev... els, agreed on a period lasting up to nine hundred years. Progress Takes Time Our democratic illusions as to human equality make us think that the Western (or the East Asian) performance can be re peated elsewhere in .almost no time~ It takes generations of mor ally, intellectually, psychologically retrained people .to establish a technological civilization of high 1971 THE WOES OF THE UNDERDEVELOPED NATIONS 29 material standards, a civilization demanding a maximum of ·disci pline, responsibility, enthusiasm for hard work, cleanliness, accu racy, quickness of mind, reliabil,;; ity, veracity, objectivity, realism, saving instincts, business sense.

Just visit factories in India (or even in Russia) and you will see where the human difficulties lie. Just read the pertinent books on Africa, dealing with the African psyche in· its present stage. (To morrow it might be different since nations are "plastic" and change their character in the· course of time, but we are .talking about today ..) Weare here referring to documentary works like Michel Croce-Spinelli's Les Enfants de Poto-Poto containing taped discus sions with Africans, or the Social ist Rene Dumont's L'Afriqueno1ire est mal partie. By and large the necessary hu man presuppositions for a modern, partly industrial, partly agrarian economy do not yet exist in the "emerging nations," except in Eastern Asia (Japan, both Chinas, Korea, Vietnam, but not in the rest of Indo-China) .unless West ern financing, Western manage ment, Western engineering and know-how, and the enforcement of Western work discipline are brought into play:. Absenteeism overseas sometimes reaches in credible proportions. Fortunately, thanks to startling discoveries, a new agrarian development is in sight but let us remember the words of Dr. J. S.Kanwar of the Indian .Council of Agrarian Re search in New Delhi who said that if modern agrarian methods were diligently used in only two major Indian States (out of 14), all of India could properly be fed; would this be done in all of India, two-thirds of the produce could be exported. But there are profound psychological and cultural rather than purely "financial" reasons why .India starves and why the trouble in the rest of the Under developed World is about the same.

The average working time for the average Mid-African (male) farm er is four hours a day. After all, it. took us centuries of trial and error, of disappointment and real suffering, to acquire our .knowl edge, our skills, our experience, a sense of reality, and our dyna mism. I am talking here not only as a historian and theoretical re searcher, but also as a man who annually circles the globe. Prelude to Investment Would Be Guarantees In other. words, the necessary precondition for effective aid, as far as· investments go, would be guarantees ---' all sorts of guaran tees. In· order to be fruitful and lasting, investments must be se30 THE FREEMAN January cure against expropriation, .sabo tage, brigandage, trade union blackmail, the destructive forces of civil wars, guerilla activities. Yet, how are we going to achieve this? The governments with some sort of permanence who can effec tively give such guarantees are very few and far between. The democratically governed countries are in many cases even less to be trusted than benevolent autocra cies because democracy provides the frame for the legal, nonrevolu tionary rise to power of confisca tory and collectivist ideologies. I would rather invest on the Ivory Coast - which is effectively ruled by a realistic man dedicated to free enterprise - than in Chile un der present conditions.

And if we talk not about invest ments, but about gifts, let me quote you a bright African, who complained that in the old days France as a colonial power paid for everything, but now "we look most ridiculous, one seems to be more incapable than before." France aids Africa still far too much. "If we really must sink, all right, then let us sink. Only too often, this aid which is given to us makes our lives too easy and· it finds no good place in the economy of our coun try. It really does not help - on the contrary: it makes us lose all sense of reality." (LesEn/ants de Poto-Poto, pp. 360-361.) Agrarian Reformers Higher living standards, how ever, can never be provided by agriculture a:lone. And, a techno logical civilization demands great sacrifices in the form of obedience, a sense of accuracy, time, and co operation. Industrializing a happy go-lucky, dreamy, agrarian nation without strong material ambitions can only be done with a great deal of training, education,motivation, although some ideologues main tain that it can be done more quickly by the harsh imposition of totalitarian rule, enslaving un willing workers. However, one does not get very far by this method, witness the case of Russia and its satellites with the excep tion of East Germany. Even East Germany is far from having West German living standards because one cannot drive fast in the best car if the brakes .are on.

Still, East Germany has the "Protestant Work Ethic," and that places it apart from the other satellites. Intelligent observers like 1. Rosier, Fredrick B. Pike, and Jean Gebser have realized that the key to a material improvement overseas is the refashioning of the minds and habits of "under;., developed" nations. This, however, cannot be achieved without a rad ical change of their cultures. Take only the fact that in Hindi the word for yesterday and tomorrow 1971 THE WOES OF THE UNDERDEVELOPED NATIONS 31 is the same. (It· differs from "to day.") The automobile does not mix with juju. As Arthur Koestler has told us in The Lotus and the Robot, civilizations are package deals. One cannot pick out certain items and leave the rest. Emerging Nations, Orphaned Too Soon At the root of the tragedy we indeed find the· premature decolo nization. In this connection it has always to be kept in mind that colonies, contrary to a generally accepted myth, were profitable on ly in a very few cases. Of Ger many's colonies before 1914, only Iittle Togo was in the black. The Belgian Congo was a sound finan cial proposition only in the 1940 1957 .. period. Between 1908 and 1960 Belgium invested no less than 260 million .gold francs and earned 25 million. The profits France derived from its colonies in .this century was about one fourth of the original investments.

Disraeli thundered against the "miserable colonies" and Richard Cobden inquired: "Where is the enemy who would do us the favor to steal them from us?" Adam Smith was right when he ridiculed the panic which broke out in Brit ain after the loss of the Thirteen Colonies: British exports to North America, valued at $15 million a year before American Independence, reached $61 million dollars by 1806. Colonies might be a mat ter of national pride or of military interest, but if inhabited by a "backward" population, they sel dom are a paying proposition. It is, moreover ,by no means accidental that· the present Euro pean prosperity arose with the loss of colonies, that the European nations with the greatest per cap ita incomes (Switzerland, Nor way, Sweden) never had colonies. The expenses involved in provid ing the colonies with roads, rail roads, hospitals, health services, schools, universities, administra tive machines, military and naval installations, while still so much had to be done at home, were enormous. And if well-meaning Americans complain that the Bel gians or the Portuguese did noth ing for the higher education in their colonies, that native M.D.'s and Ph. Do's did not· roll en masse from the assembly lines, let them remember the net result· of the "intellectu.alization" of the Amer ican Indians; in spite of great material sacrifices, the results are not encouraging. What simply happened all over the globe is that the colonial youngsters left the home of their foster parents prematurely in a huff and now demand that someone else care for them. (The two sugar daddies, Unele· Sam and Uncle Ivan, are in 32 THE FREEMAN January for it too.) The young runaways refuse to face their defeat. They belong - to use the labels of H.

Fortmann - to Cultures of Shame, while we belong to a Culture of Guilt. And they have nicely suc ceeded in making some of us feel very guilty. Of course, Westerners are occasionally tough people, but there can be no doubt that we have treated each other infinitely worse than we treated the nations and tribes in overseas areas who, without Western medical services, would exist on a much smaller scale. Self-Help As charitable Christians,. we ought to aid them. Let us, how ever, discard the notion of a "New Kind of Justice." Let us findintel ligent ways to help them in trans forming themselves into modern nations because, for better or worse, they want it. In the mean time we ought to determine the way and modality of such (chari table) efforts. This is a most diffi cult problem whose treatment ought to vary from place to place. Handouts certainly will not do. Who, after all, should be the im mediate recipients? Certainly not the gov~rnments of most of these countries. I think with horror of the pal atial buildings erected by Mr. KwameNkrumah, of his lux ury yacht, of the golden bed of his finance minister, of Mrs. Indira Ghandi's check for $50 million offered to Nasser after the Six Day War, of loans to certain Latin American countries reappearing as. deposits in American and Swiss banks. Or should we distribute cash at street corners?

God gave to most, though not to all, of these countries prodigious natural wealth. Tangible wealth, however, as Japan, Switzerland, Scandinavia, and Taiwan teach us, is the fruit of human effort. Therefore, we have to try pa tiently to show them a way which, after everything is said and done, can only somehow resemble ours. This is a most complex and, above all, psychologically difficult ven ture. The "underdeveloped na tions" would have to take our ex tended hand without. any display of false pride -'- take it or leave it., IDEAS ON LIBERTY John Milton BUT what more oft in nations grown corrupt, And by their vices brought to servitude, Than to love bondage more than liberty Bondage with ease than strenuous liberty?

The Creal; of Cap; MERRYLE STANLEY RUKEYSER WHILE the unaware and the fan tasy builders have been gleefully pointing to the imminent decline of capitalism, the world of reality in Southeast Asia, West Germany, and elsewhere has since World War II demonstrated the enor mous potentials of the open mar ket free choice system in' accel erating productivity. On my recent visit to the Ori ent, I was struck with the potency of ideas and philosophy in im proving hitherto meager levels of material well-being. Certainly Taiwan, Hong Kong, South Korea, Singapore, and even Japan are without large natural resources, but the industriousness of their work force under improved man agement and increased foreign in vestment have delineated the complex factors that make for accelerated growth. Mr. Rukeyser is well known as a business con sultant, lecturer, and columnist. The secret success ingredients have included the introduction of better methods and increased use of capital goods - labor-aiding machinery - under conditions that enlarge indi vid ual freedom of choice and incentives. Such dis ciplines as improving technology, increasing capital investment, and introduction of new management techniques stand in sharp contrast with the effortless panaceas sugar coated with labels of "liberalism"

and socialism. Socialism's appeal is based largely on emotional fac tors rather than on relative per formance in achieving better liv ing under competing systems. If little Taiwan is used as a microcosm for fact finding, it be comes clear that there are broadly two approaches to problem solv ing. One is the purely demagogic approach of ignoring costs .and individual preferences and assur ing perpetuation of even unwanted 33 34 THE FREEMAN January activities through the "miracle" of subsidies. If, by way of illustra tion, railroad labor, material, and tax costs are out of line with revenues, the easy solution lies in clamoring for subsidies. Sim ilarly, if arbitrary lifting of con struction wages far out of rela tionship to productivity results in prohibitively high costs, the "remedy" is for the state to sub sidize the operation. Yet the per sistent use of such uneconomic approaches in New York City and elsewhere, in the face of historic frustration, has been to deteri orate real estate and cause much needed new housing construction to be stillborn. Making the land lord stand between the home renter and inflation has caused unthinkable shortages and human degradation. But the uninformed, seeking scapegoats, fail to see that those who insist on rent ceil ings without corresponding ceil ings on costs are in the position of the man who murdered his father and mother and then pleaded for clemency on the ground he was an orphan.

Consequences 01 Intervention The chaos in real estate is not a testament to weaknesses of the free market. On the contrary,' it springs from decades of bureau cratic interference with the op eration of a free market. Such approaches are self-defeat ing. The Republic of China on the island of Formosa turned from such folly. It acts on the belief that progress lies in technological improvements which cut costs through improved productivity. It takes creative talent for inno vators to devise methods for mak ing two blades of grass grow where but one grew before, but political hopefuls persist in pon tificating that we'll subsidize you if you can't get costs down to a level customers are able and will ing to pay. The providers of sub sidies are being liberal with other people's money. They interfere with the essentials of a competi tive system in which the customer is the boss. By buying or with holding orders, the consumer in a free economy decides what should be produced, in what quan tities and according to what spec ifications. When there are subsi dies, however, government forci bly steps in and weakens the capacity of the customer to disci pline the businessman. Instead .of resting the survival of an enter prise on pleasing potential buyers, the inefficient hope to get by through pressuring politicians.

When the businessman recoups part of his costs out of levies by government on the taxpayers, the customer is weakened in his sov ereign rights at the market place.

1971 THE CREATIVE THRUST OF CAPITALISM 35 Instead of facing the discipline of innovating or perishing, the inefficient producer rests on his laurels and hopes to live on the crutch of subsidies. But this makes everyone poorer, since in efficiency and waste are thus socialized, not eliminated through new and improved techniques. The creative energy inherent in economically prudent operating principles has caused a growth rate in Taiwan (Formosa) far above the 5 per cent a year target set by the U.N. for emerging un derdeveloped nations. Taiwan had been handicapped by fifty years of stagnation under Japanese over lords. Only 25 per cent of. its scarce land - about 2.3 million acres - is arable; and industry fifteen years ago was primitive. Personal incentives under the Chiang Kai -shek regime were heightened by the sale of govern ment owned land to farmers. Taiwan vs. Mainland China With massive economic aid from the United States which came to an end in 1965, Taiwan with its forward thrust in farm ing and in commerce and industry, has become a yardstick for meas uring the high cost on the Chi nese mainland of operating there in accordance with Leninist-Marx ist doctrine.

Since 1953, the Republic of China (Taiwan) reports an an nual increment in economic activ ity of 8 to 10 per cent, while the mainland was stagnating. Para phrasing Marie Antoinette's "Let 'em eat cake" at the time of the French Revolution, the mainland communists were in effect telling their underfed people: "Let 'em eat propaganda." More impressive than the im perfect statistical information about mainland China has been the eagerness of its nationals to escape, as evidenced by the num ber of people pressing to get into Hong Kong, whose population rose from 600,000 at the end of World War II to in excess of 4,000,000. Meanwhile, per capita income in Taiwan rose from a bare $43 in 1952 to $258 in 1968. In agriculture, if 1952 is taken as 100, production of farm prod ucts in Taiwan in 1969 had grown to 226. While the total area culti vated increased only two or three per cent, the yield per acre was doubled. The intensification re sulted not only from technical farming procedures, but also through land reform, better farm credit facilities, and rural elec trification. So impressive have these gains been that the Taiwan Government has recently been sending out at its own expense technical missions to emerging countries in Africa, Latin Amer36 THE FREEMAN January ica, and elsewhere to demonstrate how to fight hunger by producing more on available farm acreage.

The results reflect a consolidation of many changes, including pest control, crop rotation, mechani zation on farms, and better moti vation of farmers. Principal crops include rice, wheat, soybeans, sweet potatoes, and vegetables, and the little island nation also produces peanuts, sesame, pine apples, and sisal. As a result, Tai wan has not only become self sufficient in food, but actually ex ports some. In industry since 1952, the an nual rise has been 14.2 per cent and in manufacturing 15.1 per cent. Despite the sharp percentage gain in wages, labor rates and living standards are still low not only by U.S. and Western European standards, but also in comparison with Japanese levels. Japan has been experiencing a labor shortage, and has diverted some of its industrial production to Taiwan, South Korea, and else where, where labor has been more abundantly available. Japan and the noncommunist nations in Southeast Asia, including Hong Kong, and Singapore, have suc ceeded with negligible natural resources. The countries import raw materials and export finished goods. Originally they traded primarily on low labor costs, but with the rise in prosperity there has been a partial narrowing of the gap between Southeast Asian labor costs and those in the West.

Such emerging competition poses new problems for the United States; we can no longer ignore high money wage rates here on the ground that we possess unique means of offsetting them through technology. Japan· and its neigh bors have adopted sophisticated technology. Investment Makes the Difference Taiwan has gone in diametri cally the opposite direction from collectivization in mainland China. This is evidenced by the fact that private enterprises in Taiwan have grown 14-fold over the last 18 years, whereas governmental economic operations there, in cluding enterprises formerly owned by the Japanese and turned over to the government, and pow er, railway, highway, ports, and communications - all in the pub lic sector - have meanwhile mul tiplied only 5 times. In contrasting the approach· in Taiwan with that of mainland China, a spokesman for Taiwan said: "Communist China. has al ways been against 'material in.,.

centives,' although small doses of such rewards existed both in agri culture and industry. The 'Cul tural Revolution' tried to eliminate 1971 THE CREATIVE THRUST OF CAPITALISM 37 even these small doses, but re cently there has again been less denunciation of material rewards which seems to indicate that some enterprises are again resorting to this 'reactionary' practice. "The low productivity in China is also due to lack of investment capital." Republic of China officials as sert that the island nation is now internally generating enough cap ital to finance its continuing de velopment. The earlier strides made in Taiwan were made possible not only by better management meth ods and better disciplined workers but by capital formation. This was set in motion by investment by foreigners, including Chinese liv ing overseas. These figures, sup plied by the Taiwan Government, show the trend: FOREIGN INVESTMENTS BY COUNTRY (Expressed in units of $l,OOO-U.S.Currency) United Year States ~pan Others Total 1953 1,881 160 2,041 1954 2,028 14 50 2,092 1955 4,42'3 4,423 1956 1,009 1,009 1957 11 37 48 1958 1,116 1,116 1959 100 45 145 1960 14,029 309 14,338 1961 4,288 1,301 375 5,964 1962 738 2,664 639 4,041 1963 8,734 1,397 216 10,347 1964 10,223 728 916 11,867 1965 31,104 2;081 1,955 35,140 1966 17,711 2,447 746 20,904 1967 15,726 15,957 7,005 38,688 1968 34,555 14,855 4,035 53,445 1969 27,882 17,642 36,697 82,221 TOTAL 174,442 60,753 52,634 287,829 Progress Abroad Matched by Deterioration at Home While there have been new laboratory demonstrations since World War II in Japan, Southeast Asia, West Germany, Republic of South Africa, and elsewhere of the vitality of the free market and the competitive system, there has been in the United States, the world's traditional showcase of free enterprise, an increased tend ency to whittle away ati the system.

Right now, after giving lip service for more than a genera tion to freer international trade, this country, under the pressure of rising competition from Japan, West Germany, and elsewhere, has been reversing policy and discuss ing the achievement of salvation through restrictive quotas rather than through establishing better technology which would enable Americans to hold their own with out artificial props. After World War 1, fear of the foreigner resulted in increased im migra tion restrictions in this country, with rigid quotas. This was done to save the relatively well paid jobs of domestic work ers. But capital is international, and, while the movement of men was restricted, capital flowed across boundaries. Through direct investment American· companies opened their own facilities in for eign labor markets. Thus, there 38 THE FREEMAN January was leakage in the primitive ef fort to preserve jobs on a basis other than competitive efficiency.

Now, in face of the hazard of pricing ourselves out of markets, there has been talk in the House Ways and Means Committee of setting import restrictions on shoes, textiles, and other products. But, even if such quotas would temporarily appear to do the job, they would tend to lead to blind alleys. If Japan, for example, is restricted on shipping textiles to the United States, its enterpris ers will strive for survival through capturing a substantial part of the foreign markets to which American firms are still exporters. The prime objection to seeking salvation by restraining the free dom of the marketplace is that it diverts attention from real prob lems. The basic issues are the need ed changes in U.S. technology, laws, collective bargaining procedures, relations between govern ment and business, and in man agement policies to heighten effi ciency in making and distributing goods and services. Certainly the inflationary policy of the Federal government and the class bias in the labor-management laws can not be swept under the rug. In his State of the Union Message two years before he retired, President L. B. Johnson, while giving a goodie to the unions in recom mending repeal of Section 77B of the Taft Hartley Act assuring freedom of the states to pass right-to-work laws, significantly suggested a review of the whole field of labor-management legisla tion. The concepts in existing Fed eral labor-management laws are obsolete and reflect the depression bred fears of 1935 when the Wag ner Act was passed. The need is to let economic forces operate through the open competition of the unhampered market. ® IDEAS O~ LIBERTY The Methods of Capitalism AMONG the "less developed" countries, as the term is most often used, almost all have at least one thing in common. They are countries that desire capital but have not yet put into practice the methods of capitalism.

H A R OL D M. F L E MIN G, States, Contracts and Progress CLARENCE B. CARSON Throttling the Bailroads VIRTUALLY everyone who has any interest in and knowledge of the transportation situation in the United States must agree that the railroads are in trouble and that their difficulties are very closely related to a host of other trans port problems. The vast Penn Central system is bankrupt. One after another once famous passenger trains have been cut, and less well known ones have long since been canceled. Most companies say that they lose money on their commuter busi ness. Street transportation com panies in most cities are generally money losers. Traffic congestion Dr. Carson is a frequent contributor to THE FREEMAN and other journals and the author of several books, his latest being The War on the Poor (Arlington House, 1969). He is Chairman of the Social Science Department at Okaloosa-Walton College in Florida.

The Future of the Railroads is endemic around and within most cities of any size. Exhaust from the internal combustion engine used on automobiles, buses, and trucks principally is a major pol lutant of the atmosphere. Railroad unions are perennially on the verge of striking and tying up transportation throughout the length and breadth of the country. Highway building in the urban ized areas of the country goes on at a torrid pace and yet it always appears to be behind the rising demand for highways and streets. Disposal of waste - in some con siderable part a transportation problem - is a mounting burden. The decline of the railroads is not a development isolated from everything else in America; the effects extend outward to the much 39 40 THE FREEMAN January more comprehensive matter of all of transportation, and what hap pens to transportation affects the commercial and fraternal life of a people.

Proposed Remedies Proposals for doing something about the transportation situation have not been wanting. Govern ments at various levels have begun tentative and hesitant reversals of long term policy toward the rail roads within the last decade or so. Politicians have at long last ceased to talk of the railroads as if they were a menace that somehow has to be contained else it will destroy the country. They have begun to treat them more as if they were respected elderly grandparents, for whom some provision must be made in the period of their dotage. Subsidies are now being provided for various commuter trains and some for longer distance ones. The Federal government is about to commit itself to take over and run the remaining passenger trains, if the companies cannot do so. In a similar fashion,cities have been subsidizing or otherwise taking over street transportation sys tems. One proposal which has much support is that government should devote itself to coordinating the various modes of transportation within the country as well as the international carriers under its aut h 0 r i ty. In dee d , Con g r ess charged the Interstate Commerce Commission with some such task as this for surface· transportation in an act passed in 1940. The pre amble said: It is hereby declared to be the na tional transportation policy of the Congress to provide for fair and im partial regulation of all modes of transportation subject to the provi sions of this Act, so administered as to recognize and preserve the inher ent advantages of each; to promote safe, adequate, economical, and effi cient service and foster sound eco nomic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discrimination, undue prefer ences or advantages, or unfair or destructive competitive practices; to cooperate with the several States and the duly authorized officials thereof; and to encourage fair wages and equitable working conditions; all to the end of developing, coordi nating, and preserving a national transportation system by water, highway, and rail, as well as other means, adequate to meet the needs of the commerce of the United States, of the Postal Service, and of the national defense.!

1 Quoted in Marvin L. Fair and Ernest W. Williams, Jr., Economics of Transportation (New York: Harper, 1950), pp. 727-28.

1971 THE FUTURE OF THE RAILROADS 41 Politically Impossible All this may sound quite plausi bleon paper. Why, indeed, should the government not develop a na tional coordinated system of trans portation? Why could it not use the carrot and the stick, alternat ing with regulations and induce ments skillfully administered so as to achieve this national goal? The most direct reason why government cannot develop a co ordina ted transportation system is in the nature of politicf. Politi .. cians operate by conciliation and compromise. They attempt to bal ance interest against interest, re gion against region, rural popu lation against urban, and so on. Whichever interests are at the moment most clamorous and cru cial to election victories will 're ceive the most attention. It is diffi cult to see how this would be likely to result in coordinated economic activity. At a little deeper level, it can be seen why government would not succeed 'in this even if it could mirror the electorate much better than it usually does. Government intervention tends to fix relation ships in patterns that have existed at some, time in the past. This is so, not only because government action inhibits change and places obstacles in the way of adjust ments to new circumstances, but also because any sort of factual basis upon which men would oper ate to coordinate transportation would be taken from the past Le., would be historical. If all the data that might conceivably be brought to bear on transportation were fed into a computer, the an swers that could be obtained from the computer, so far as they would be factual, would be answers for some time in the past. To make the point concrete, it might be pos sible to construct a. model for a coordinated transportation system for 1925 on the basis of data now available. But none can be con structed now for 1975 except by extending current figures - that is, fixing it in the present pattern - or by 'speculating as to what will be needed in the future.

The Uncertain Future The deepest reason why govern ment cannot intervene so as to provide a coordinated system is that no one knows what modes of transportation are wanted iri what quantity and of which quality in the future. The present writer does not know how many passen ger trains between which points may be wanted in the future. He does not know whether there should be more or less than there are at the moment. He does not know how many hopper or grain cars will be needed next season, how many automobile carriers, 42 THE FREEMAN January how many gondolas, how many flat cars, where a new railroad should be laid and an old one dis continued, where new stations should be built and old ones aban doned, and so on. This writer does not know, nor does anyone else, what 'will be wanted in the future. If he did know, he could become fabulously rich by providing it at just the right time and right place.

But alas, such infallible foresight is denied to us mortals, whether we are clothed with the powers of government or not. This being the case, a coordi nated transportation system, if there is to be one, will have to be built by trial and error, by specu lation; and it will never be com pleted until all change has ceased. This means that there will be mal investment, that there will be waste, that some of the specula tions will not payoff. This is one of the central arguments for hav ing such speculations made by pri vate investors rather than govern ment. If government agents guess wrong, we all pay. If private in vestors guess wrong, they lose. Irresponsible Performance at Everybody's Expense But we do not all simply pay once and get it over with if those in government guess wrong about what is wanted; we may continue to pay and pay. Politicians do not readily give up when they are wrong; they frequently continue to throw our good money after their bad decision. They have fer tile imaginations when it comes to thinking of reasons for operat ingenterprises at a loss. If they operate passenger trains which have only an occasional passenger, they can still justify it on the grounds that if an all out war came the trains would still be needed, along with many other reasons of like character.

Past experience indicates, also, that if government enterprises do not succeed economically, the poli ticians rather than· blaming them selves will blame the people, or, more precisely, some portion of the people which can serve as a scapegoat .. Government power may then be used to make the people fit the procrustean bed of facilities that government has provided. It is easy to see how this might work with a coordinated transportation system. The more popular modes could be scheduled at inconvenient hours and the less popular ones at peak hours of transport need. In creasing restrictions on the use of private automobiles and trucks and airplanes would likely be made in efforts to make governmental facilities payoff. (Of course, pri vate companies like to have such aids as these from governments when they can get them.) 1971 THE FUTURE OF THE RAILROADS 43 Summation of Evidence But it is not necessary to resort to the imagination to examine the effects of intervention. This work has already explored many of these in detail in connection with the railroads. The main reason there is not now a coordinated sys tem of transportation in this coun try is government· intervention .. A summation of the conclusions from evidence already presented will make the point. Government inter vention in railroad activity has: 1. discouraged investment by limiting earnings and prescribing conditions of operation.

2. discouraged innovation not only by harassing investors but also by making railroads continue costly operations once they have been established. 3. discouraged consolidations that would have produced truly transcontinental systems by the long and short haul clause as well as other devices. 4. discouraged competition by establishing rates and service re quirements and by fostering con solidations among naturally com petitive lines. 5. subsidized and advanced other modes of transportation while in hibiting railroad competition by regulatory measures. 6. empowered railroad employ ees against the companies by sup porting unionization, by sponsoring collective bargaining, byestab lishing seniority systems and work rules, and by fixing an expensive retirement system on the rail roads. 7. produced bankruptcies, cod dled inefficiency, and adopted pen alties of one kind or another for the efficient.

8. fostered overconstruction at the outset, prevented the aban donment of unremunerative lines and facilities, and required the railroads to pay for expensive safety measures which are usually provided at taxpayer ,expense for other modes of transportation. 9. taken from railroad manage ments most of the authority for making entrepreneurial decisions but fastened upon them the re sponsibility for continued opera tion. The list could surely be extended but the point emerges: The present transportation mess is a result of government interven tion. The railroads have been greatly limited in their appointed task of helping to link the coun try together commercially and fra ternally. They have been .ham pered, restricted, limited, inhib ited, harassed, regulated, pushed, pulled, and controlled. The fact that some railroads can still oper ate profitably is testimony to the great economic advantages of this mode of transportation.

44 THE FREEMAN January Subsidies and Controls The Federal government is now proposing to take over and operate passenger trains if the companies will not continue them. Already subsidies are being provided for the Metroliners on the Penn Cen tral and for some commuter trains. There is a familiar pattern in this activity. Governments first adopt restrictions and regulations which· inhibit private enterprise in providing certain services. Then, they enter the field to pro vide the services. It has happened with city transportation systems. It has happened with housing. Once in the field, governments ex tend their domain, and taxpayers are called upon to make up the losses incurred by government operation. What community in America will not want a Metro liner? And what politician will not see votes in requiring the govern ment to provide it? Some railroads may see a bo nanza in all this. But they should long since have learned to beware of governments bearing gifts. It is easy to see that if government operates passenger trains, and private companies the freight trains, a contest will quickly· de velop over which shall bear what proportion of the costs. Govern ment can bankrupt line after line by shifting the costs toward freight, thus setting the stage for government takeover of the rail roads.

There is a way out of this mess, however, which promises much better results. It is a way that even the railroads may be too timid (or too fearful) to suggest. It is a way that promises much for investors, for management, for workers, and, above all, for con sumers. It is the way of freedom rather than control. It is the way of economy rather than waste. It is the way of service rather than servitude. It is the way of muster ing the ideas and abilities of nu merous men rather than the stulti fying concentration of .decision making power which now obtains. It is the way of prosperity rather than depression, of life rather than death for an industry. In short, turn the railroads loose! Remove the restrictions, limitations, controls, prescriptions, and regulations which now hamper and restrain them. Allow them to serve in whatever ways they can and will, profitably and felici tously. There is no reason why they should not be allowed to, and every reason why they should.

free the Market If what is wanted by Americans is a coordinated transportation system which will provide for their transportation needs, then one of the ways they can hope to 1971 THE FUTURE OF THE RAILROADS 45 have it provided is to turn the rail roads loose, turn them loose to charge market determined prices, turn them loose to form whatever combinations may appear to those involved to be desirable, turn them loose to extend services where they will and to abandon those that are unwanted, turn. them loose so that their managements can make the entrepreneurial decisions, turn them loose to hire whom they will at whatever wages are mutually agreeable between employer and employee, turn them loose from the grip of subsidized and privi leged competitors, turn them loose to take advantage of their low variable costs and allow them to increase their proportion of the traffic so as to meet their high fixed costs - in short, turn them loose from the ubiquitous grip of government.

The most direct way to accom plish this would be to repeal the vast century-long tangle of state and Federal legislation affecting the railroads. Abolish the Inter state Commerce Commission and the· various state regulatory com missions. Remove all prescriptions as to rates, service, investment, sale, abandonment, long and short hauls, new construction, and so on. This would leave the railroads free to manage their own affairs. Remove all the special privileges extended to labor unions .. Cease to subsidize competitors in various ways. Chaos Now Prevails Americans have been taught to believe over the years that chaos would result if this were done. It is true that we could expect many changes if railroads were freed from restrictive and inhibiting legislation. One of the things that might be expected is that under the prod of economic necessity rail road men would begin to shake off their lethargy and become more vigorous. Competition would re vive: among railroads, with ba.rges, with trucks, with automo biles, with airlines, and so on.

Railroad managers might be ex pected to cease thinking of ways to curtail service and to start thinking of ways to extend it. As some railroads began to be quite profitable, investors would be lured into putting more money in them. Stocks whose prices have been stagnant for decades might be ex pected to begin to fluctuate con siderably. Ima.ginative entrepre neurs would dream of nationwide rail systems and move to form them. Prices of rail services would fluctuate, differ from company to company and region to region. New sources of goods and services would be opened up to vie with established ones. Some services would be abandoned and new ones 46 THE FREEMAN January would be conceived. Truckers, barge lines, and airlines would feel the spur of competition. Com panies that could not compete suc cessfully would sell out or go out of business. If this be chaos, it has never been clear why the consumer should fear it. It is clear why all sorts of vested .interests might and do fear competition and en terprise,why those in the business fear competition for they may not be able to hold their own, why labor union leaders and those with seniority fear the competition of would-be workers, and why truck ers, barge lines, and airlines would fear freed railroads. But the worst the consumer - which is all of us - has to fear from competition is lower prices and better service. If the increase of choices and deci sions he is offered be chaos, then many would no doubt welcome such chaos.

Freedom Brings Order Actually, we have the chaos now, the chaotic tangle of legislation within which all commercial trans port operates, the chaotic patch work of railroads over which goods and people must pass to go from coast to coast, the chaotic situation on the streets and high ways as vehicles of a vast assort ment of shapes, sizes, and operat ing conditions vie with one another for limited space, a chaotic situation which results in the rending crashes which produce their annual huge tolls of dead and wounded bodies .and vehicle destruction, the imminent poten tial chaos which strikes perpetu ally threaten, the chaotic struc tures and facilities of a declining railroad industry unable to attract new capital, and so on. It is ironic to fear that freedom would result in chaos when we are confronted on every hand with chaos, both ac tual and potential, much of which has resulted from intervention.

Of course, the railroads are not the only means of transport that should be .freed. Others are re stricted and restrained by regula tion also. It is this restraint of commercial transport, while leav ing individual transport free, which has produced so much that is unwanted today, so many of the deaths and injuries on the high ... ways, so much of the congestion, so much of the pollution, and so much of the contest for limited space .. If we continue to inhibit commercial transport, we shall, no doubt, have to place increasing re strictions on individual transport. There is another way. It is to free all transport of any restraints that are not directly related to protecting life, liberty, and prop erty. Coordination will occur within the marketplace; profes1971 THE FUTURE OF THE RAILROADS 47 sionals will do much of the work of transport; the amount of con gestion and pollution will probably be greatly red uced; and the choices of means and quality of transport will increase. 8 uch a prognosis is warranted from past experience with the market.

As things stand, the future of IDEAS ON the railroads is bleak. 80 is the future of consumers of their ser vices. Over a period of about ninety years, virtually every sort of intervention has been tried intervention which has brought us to the present pass. It is time for yet another experiment - an ex periment with freedom. ~ LIBERTY An Orderly Universe WE THEREFORE BELIEVE in liberty be cause we believe in the harmony of the universe, that is, in God. Pro claiming in the name of faith, for mulating in the name of science, the divine laws, flexible and vital, of our dynamic moral order, we utterly re ject the narrow, unwieldy, and static institutions that some men in their blindness would heedlessly introduce into this admirable mechanism. It would be absurd for an atheist to say: Laissez faire! Leave it to chance! But we, who are believers, have the right to cry: Laissez passer!

Let God's order and justice prevail! Let human initiative, the marvelous and unfailing transmitter of all man's motive power, function freely! And freedom, thus understood, is no longer an anarchistic deification of individualism; what we worship, above and beyond man's activity, is God directing all. Editor's note by GEORGE B. DE HUSZAR, inspired by an unfinished passage in Frederic Bastiat's Economic Harmonies.

PAUL L. POIROT EVERY SELLLER of a commodity or service wants to cover his costs of production and receive something over and above such costs if pos sible. He spends long hours. keep ing records and, with rare excep tion, believes that he actually sets the price of his goods and services by adding a margin above his expenditures. The truth, however, is that all recorded costs of an item are washed· out and rendered irrele vant by the actual market price at which that item is traded - a price determined by the competitive forces of supply and demand. That price becomes the new "cost" of consideration to the next user, regardless of how much labor he or any prior owner expended on that particular item. And if he sells it in turn to another willing buyer, the latter's demand will have as much to do with deter48 mining the price as do the supplier's recorded expenses. Cost, of course, influences the supply side of the market and thus the price; but costs incurred do not determine price.

To believe or to say that any item of commerce is but the sum of the costs incurred in producing it - a package of somebody's prior labor - is to introduce a confus ing irrelevancy into the bargain ing process that determines the price at which free trade takes place. The only relevant factors ina voluntary trade are that each party to the transaction, at the moment, values what he re ceives more than he values what he gives. Each thinks that he gains from the trade, no matter what costs were incurred to pro duce what he gives or gets in exchange. That's all there is to the sub1971 COST-PLUS PRICING 49 jective theory of value. It takes into account the demand as well as the cost of production. And this determination of prices in the open competitive market affords the current running record of costs and returns that a business man needs in order to calculate profit or loss and judge whether or not to continue a particular business activity.

His record of yesterday's costs and returns may afford him some clues as to the efficiency of his procedures. But today's prices are the nearest indication available to him as to .what tomorrow's costs and returns may be. What are to day's prices for the buildings and machinery in use as compared with other production facilities now on the market or waiting to be in vented? What are today's prices for various raw materials as com pared with available or potential substitutes? How do today's prices for hired help compare with prices for labor-saving machinery? And how do today's prices for his sale able commodity or service com pare with prices for competing items? The Labor Theory Despite this marvelous facility of market pricing and economic calculation, it man as producer finds it almost impossible to view his. product or service other than as the result of labor or work. If he's working for wages, he de mands a wage rate high enough to keep pace with "the cost of living."

If he's selling wheat or corn or beans, he wants prices high enough to cover his costs of production. If he's providing a postal service under an exclusive government monopoly, he wants postage rates to cover costs. In other words, the seller's in clination is to try to hedge against the forces of supply and demand so as to assure a price that would include a "fair" markup over costs. What he seeks, in effect, is a guaranteed customer. And the postal service monopoly is a good example of such a condition. If the customers do not cover the costs, other taxpayers are obliged to do so. Market prices, with com petitive postal services, are for bidden. There is no way of know ing what might be the demand for or the supply of postal services if buyers and sellers were obliged to look to the market to tell them how much of which scarce resources to devote to such purposes. Resources are simply used in the postal monopoly, with no way to know whether the use represents con servation or waste. The force of government sees to it that the full costs are covered by taxpayers, regardless of the inefficiency and waste.

50 THE FREEMAN January Outside the Market Government pricing and govern ment contracts, including the pay ment of subsidies of any kind, al ways are on a "cost-plus" basis because in those cases the efficient market method of pricing has been prohibited. Supply and de mand are ruled out of the determi nation: the customer is led to be lieve the resources involved are not very scarce-relatively free; the supplier is guaranteed that taxpayers will cover his costs, whatever they may be. Such social istic pricing affords no effective method of economic calculation by which to measure success or fail ure, profit or loss, conservation or waste. Thus, socialists are fore doomed to stumbling in the dark with their outmoded labor theory of value - the sum of costs. As long as men continue to view goods and services as a package of labor or the sum of the costs of production, they will continue to turn to government for subsidies, handouts, privileges, guaranteed incomes, protectionism, and the like. The more this is done, the less chance there is to trade for gain in the open market - the only system· of pricing that conserves rather than wastes scarce re sources. 1 Chief and foremost among those scarce resources is man, not for his capacity to con sume as the socialists implY,but for his productive power to serve himself by serving others. , 1 It may be assumed that the most urgent purposes of consumers will be served in one way or another and that it is best to do it as efficiently as possible.

A businessman's profit or loss is the measure of his efficiency-his capacity to minimize the cost of serving consumers. Profit denotes the conservation, and loss the waste, of scarce resources. IDEAS ON LIBERTY Security May Betray Us WHENEVER I hear that the government is helping someone, I feel sorry for that person. Or whenever I find that someone, by a monopoly grant of power, has a sure market or a sure job, I feel sorry for him too. Even helping a person to help himself may be a disservice to him; for you will probably - perhaps uncon sciously - compel him to do it your way. Charity, if needlessly bestowed, probably will have a vicious effect. People who are promised support will hardly work. All grants, all subsidies, all rewards for services not rendered have a deleterious effect on character; and if character is not of foremost consideration whatis? . , ARCHIBALD RUTLEDGE THE PROTESTERS w. A. PATON SOCIOLOGISTS and psychologists (to say nothing of other academic spe cialists ) have been having a field day diagnosing, explaining, and at times - condoning the phenom enon widely known as "student unrest." Indeed, the concern of some of the professors has waxed to the point of willingness to pro mote, and even to participate in, the programs of the campus re volters. With this situation it is not unreasonable to conclude that the sympathetic professors have played a significant part in pro viding a climate that encourages student discontent, and must asDr. W. A. Paton is Professor Emeritus of Ac counting and of Economics at the University of Michigan. Since retirement in 1959, after 45 years on the Michigan staff, he has done part-time teaching and lecturing at 14 colleges and universities in 10 states, for periods rang ing from a few weeks to a full school year.

This experience has afforded an unusual oppor tunity to observe the development of campus unrest, and the reactions of teachers and admin istrators to wayward student behavior. . ..'-6 ~:-.,-- If . -- -~ , sumea measure of responsibility for the consequences. Especially in the "social sciences" there are many instances of instructors who neither require serious study of the subject (such as it is) nor reg ular class attendance, which leaves their students with plenty of time to cultivate restlessness. And in some departments it is easy to find members who seem to be none too busy themselves, either at teaching or engaging in· any other form of scholarly endeavor. This is still not the typical state of af fairs, it should be acknowledged, in medicine, engineering, and the professional schools generally, where a majority of the students are striving diligently to gain a handhold on a career ladder, and most of the teachers are trying hard to be helpful.

Playing a.role perhaps more im51 52 THE FREEMAN January portant than that of the profes sors in opening the door' to the restless and unruly are the acqui escent and obliging administra tors, widely represented among today's college and university presidents, deans, and other of fleers. The extent to which these people cater to the dissident groups is nothing short of amaz ing, and deeply disturbing, to many old grads. And boards of trustees and regents should not escape mention in this connection. Often a majority of the members of the governing board are not fa vorably inclined toward the atti tudes and policies of faculty and administration, but they turn their backs most of the time and pussyfoot even when conditions clearly call for a positive stand. Semantic Confusion To support the view that the leaders in campus disorders are idealists troubled by the ills of the educational system, and incensed by the limitations of prevailing programs for dealing with the plight of the disadvantaged and downtrodden, resort is had to some very sorry semantics. Words are potent weapons in man's affairs, and their misuse can bring unfor tunate results ranging from minor misunderstandings to tragic con frontations and crises. The dis turbances in the schools we are currently witnessing cannot rea sonably be regarded as construc tive efforts to improve the educa tional process, or amend alleged bad practices in any other area.

Fomenting disorder, smashing windows and burning buildings, throwing missiles (from bricks and rocks to bombs and bullets) at the police and other official law enforcement personnel, physical attacks on students and teachers who are trying to carryon - these are hardly the earmarks of an idealistic reform movement. I have personally viewed hun dreds of shattered windows and doors on the beautiful grounds of one of the world's renowned pri vate universities and the experi ence was nightmarish. At a large state institution, which I know well, one episode was the seizure of the new undergraduate library, which cost the taxpayers several millions, by a band of twenty to thirty "youths" who held posses sion for many hours while wreck ing files and equipment, disar ranging and damaging thousands of volumes, defacing walls, and otherwise disporting themselves. The result was a shambles, forc ing a temporary complete closing of the building, to the great dis advantage of the thousands of un dergraduates regularly using the library's facilities. This costly ca per of the "militants" is only one 1971 THE PROTESTERS 53 of a long list of interferences with normal operation during the last three years, usually featured by violence and vandalism, and the total effect has been a substantial impairment of the functioning of the university. To date, moreover, not a single student participant in the disruptive incidents has been expelled, or even suspended. A dean did indeed announce suspen sion of one stalwart "youth" who knocked a teacher down and broke his glasses, but the outcries of outraged "student government"

groups and their faculty support ers soon induced a revocation of the dean's initial decision. Query: Why shouldn't campus rowdies, thugs, vandals, and riot ers be properly and plainly de scribed, instead of being labeled as "protesters," and credited with an earnest desire to better school environments and operations and assist in solving all pressing so cial problems? Professional Agitators There is solid evidence that hardened agitators, often trained abroad, are involved in most major strikes and riots in the schools as well as on the streets. These are people dedicated to de stroying the American educational system and - ultimately - produc ing a condition of general chaos that will insure the complete collapse, like a house of cards, of our political and economic insti tutions. Apologists for the student activists, and the disorders in which they figure prominently, should take note of this estab lished fact. There is room for ar gument, of course, as to just how potent the professional agitator cells are, in stirring up trouble.

With respect to the faculty members and administrators who are prone to defend groups and organizations sponsoring militant "movements" and activities, there is a noticeable tie that binds: al most to a man they are either out right socialists, or dominantly so cialistic in outlook. They are all definitely unfriendly to private business enterprise and an un hampered, competitive market; they damn capitalism at every op portunity, in the classroom and elsewhere, either bluntly or by sly slurs and digs running from faint praise to half-truths and downright misrepresentation. Gen eralizing as to the views of the student troublemakers is less war ranted, but that the leadership of the various groups is heavily loaded with Marxists and procom munists is very clear. Nothing can be done, needless to say, to convince the partyline foreign agents, and their con firmed fellow travelers and syco phants, that there is any merit in 54 THE FREEMAN January the American experiment in indi vid ual freedom - freedom to move about, to choose an occupation, to save and acquire property, to pros per, and (on occasion) to become wealthy. But we can still hope that the host of well-meaning citi zens who have been somewhat tol erant of the youthful "protesters,"

and indifferent to the turmoil they have stimulated in the schools, will wake up, and exert a restrain ing influence before the wrecking operation reaches the point of no return. Widespread Mental Smog One striking feature of the times is the willingness of people generally, and especially in the ranks of the intellectuals, so called, to disregard plain facts and be beguiled by illusions and mi rages. Common sense seems to be on the wane. The widespread men tal smog from which we are suf fering, it may be urged, is much more dangerous than the fumes emitted by our motor. vehicles. This condition appears the more remarkable, at first glance, in a society equipped with an incred ible array of gadgets providing almost instantaneous and world wide communication, a flood of printed material on every con ceivable subject, and an elaborate educational framework designed to keep us occupied with learning from early childhood on into the adult years. But perhaps this is what ails us. Perhaps we are so swamped with information - and misinformation - that the power to think, to reason, to get at the nub is becoming atrophied.

As most careful observers will agree, the protesters and revolu tionaries have been aroused rather than restrained by the permissive and indecisive tactics of those in charge .. Give them an inch and they'll take a mile is just as true today as in the past. Will we nev er learn that coddling and cajolery will not check those bent on tear ing our schools to pieces, or en gaging in any other form of law lessness? And neither will "trying to understand," "opening new avenues of communication" (a fancy description for setting up a flock of committees, conferences, and discussion groups), and other soft-soap suggestions from pro fessorial ranks, aimed at advising or mildly admonishing, restore order and efficient functioning to the campus. The Need to Take a Stand Nobody favors arbitrary or ty rannical suppression of the rest less and discontented, even when they have no solid ground under their feet. (We greatly need the inventive and innovative indi vidual, in all fields.) But taking a 1971 THE PROTESTERS 55 defini te and determined stand, lay ing it on the line and not backing down, are essential to the curbing of destructive conduct, in school or out. There are, at long last, a few schools where this position is being asserted, forthrightly, and some supporting voices are being raised in high places in govern ment. Delay has, of course, made the chore of restoring order much more difficult. Purging academic staffs, stiffening admission re quirements, and increased willing ness to resort to expulsion are developments badly needed.

A concluding question: What will be the impact on American productivity, on the level of out put of goods and services, of the diversion of time and energy to attempts to cope with student law lessness, plus the serious impair ment of the usefulness of our edu cational facilities accompanying the school disorder and destruc tion? The economic system in this country is already showing signs of staggering, despite the momen tum achieved by the technologi cal advance, under the burden of costly programs reflecting the pre occupation with the needs of the ailing, the elderly, and the "dis advantaged," a widespread and increasing irtdifference to effi ciency and good performance, a complex and stifling tax struc ture, a crime wave of frightening proportions, a mountainous de fense effort, which probably can not be· greatly relaxed in the near future, growing governmental in terference and control in all fields, coupled with fiscal irres ponsibility and the continuing plague of inflation. In short, we have about all the troubles and difficulties we can take. Any sub stantial addition to the load at this juncture may topple us. And in the face of the prospect of tre mendous increases in population (according to the predictions) how can the present per-capita standard of living be maintained, to say nothing of improvement?

The almost forgotten truism that "we can't consume any more than we produce" still holds. The Exposure of Nonsense, All in Good Time To clear the air, blow away the mists of nonsense and confusion, there is a great need for men of the stamp of Jonathan Swift, Gilbert and Sullivan, and our own Will Rogers. What a blessing it would be if a crop of talented hu morists and satirists were to spring up, with the genius to riddle with ridicule the preten sions and poses of the "liberal" professors and their ilk! (We have Al Capp, but he needs help.) Once joking about the prevailing absurdities became popular, a re56 THE FREEMAN January turn to sanity, to order, to decent mine seventy-odd years ago, and beha viol'"- as the standard to I read and reread it until I knew which all men should strive to re-many of the tales "by heart." (1 pair - might well be in sight. A wonder if there are any third gale of laughter would surely be graders nowadays so stimulated good medicine at this juncture. by the stuff provided for them.) Even some of the "protesters" One of the "poems" included was might be nudged into joining a a satire written by Matthew jocular chorus, and looking with Browne (pen name of William less favor on commotion and Brighty Rands, 1823-1882), first wanton destruction. published in 1864. This is worth Recently I happened to open up being brought to light again for my battered copy of Book of its own sake, and also because it Tales, a volume edited by William might serve as a model for a hu Swinton and George R. Cathcart morous piece on the antics of the and published in 1880 as a read-present-day protesting "youths."

ing supplement for third graders. Here, then, is "Lilliput Levee," This book was a great favorite of taken verbatim from the Tales: 111I1111111 L illiput Levee 1. WHERE does Pinafore Palace stand? Right in the middle of Lilliput Land! There the queen eats bread and honey; There the king cop-nts up his money. 2. Oh, what a wonderful change to see! Nothing is dull as it used to be, Since the children, by clever, bold strokes, Have turned the tables upon the old folks.

1971 THE PROTESTERS 57 3. Now the thing was easily done, The children being two to one; Brave as lions, quick as foxes, With hoards of wealth in money-boxes. 4. They seized the keys, patrolled the street, Drove the policeman off his beat, Built barricades, and stationed sentries: Give the word when you come to the entries! 5. They dressed themselves in riflemen's clothes; They had pea-shooters and arrows and bows, So as to put resistance down: Order reigns in Lilliput Town. 6. They went to the druggist's, broke in the door, And scattered the physic all over the floor; They went to the schoolroom, and hid the books; They munched the puffs at the pastry-cook's. 7. They sucked the j am, they lost the spoons, They sent up dozens of fire-balloons, They let off crackers, they burnt a guy, They piled a bonfire ever so high. 8. They offered a prize for the laziest boy, And one for the most magnificent toy; They split or burnt the canes off-hand, And made new laws in Lilliput Land.

9. N ever do to-day what you can Put off till tomorrow, one of them ran; Late to bed, and late to rise, Was another law which they devised. 10. They passed a law to have always plenty Of beautiful things: we shall mention twenty,A magic lantern for all to see, Rabbits to keep, and a Christmas-tree, II. A boat, a house that went on wheels, An organ to grind, and tarts at meals, Drums and wheelbarrows, Roman candles, Whips with whistles in the handles, 58 THE FREEMAN 12. A real live giant, a roc to fly, A goat to tease, a copper to sky, A garret of apples, a box of paints, A saw, and a hammer, and no complaints. 13. Nail up the door, slide do,vn the stairs, Saw off the legs of the parlor chairs, That was the way in Lilliput Land, The children having the upper hand. January 14. They made the old folks come to school All in pinafores, - that was the rule, Saying, E ener-deener-diner-duss, Kattler-w heeler-w hiler-wuss.

15. They made them learn all sorts of things That nobody liked. They had catechisings; They kept them in, they sent them down In class, in school, in Lilliput Town. 16. Oh, but they gave them tit for tat! Bread without butter, - stale at that, Stick-jaw pudding that tires your chin, The marmalade on it ever so thin. 17. They governed the clock in Lilliput Land: They altered the hour or the minute hand; They made the day fast, or made it slow, Just as they wished the time to go. 18. They never waited for king or for cat, Or stopped to wipe their shoes on the mat; Their joy was great; their joy was greater; They rode in baby's perambulator!

1971 THE PROTESTERS 59 19. There was a levee in Lilliput Town At Pinafore Palace. Smith and Brown, J ones and Robinson, had to go,All the old folks, whether or no. 20. Everyone rode in a cab to the door; Everyone carne in a pinafore: Lady and gentleman, rat-tat-tat, Loud knock, proud knock, opera-hat. 2l. The palace, bright with silver and gold, Was full of guests as it could hold. The ladies kissed her Majesty's hand: Such was the custom in Lilliput Land. 22. His Majesty knighted eight or ten, Perhaps a score, of the gentlemen; Some of them short, and some of them tall; Arise, Sir What's-a-name What-do-you-call! 23. Nuts and nutmeg (that's in the negus); The bill of fare would perhaps fatigue us; Forty fiddlers to play the fiddle: Right foot, left foot, down the middle. 24. Conjurer's tricks with poker and tongs, Riddles and forfeits, comical songs; One fat fellow, too fat by far, Tried "Twinkle, twinkle, little star!"

25. His voice was gruff, his pinafore tight; His wife said, "Mind, dear, sing it right;" But he forgot, and said "Fa-Ia," The Queen of Lilliput's own papa! 26. She frowned, and ordered him up to bed; He said he was sorry; she shook her head: His clean shirt-front with tears was stained, But discipline must be maintained. 27. Now, since little folk wear the crown, Order reigns in Lilliput Town; And Jack is king and Jill is queen In the very best government ever seen.

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN THE MORE orthodox way of at tempting to refute a socialist, or any kind of collectivist, is to ap peal to his latent sense of rational ity. Since every individual is dif ferent, equality - as distinct from legal equity - cannot be legislated. The attempt to do so suppresses the innovative spirit in a society, and everyone is the poorer for it. If you can get a socialist to admit this, you have him where you want him. He will be compelled to sup port some adaptation of the com petitive principle in order to square his thinking with a sense of reality. Unfortunately, the world is full of people who are not in the least concerned with creating a socialist order for idealistic reasons, how ever misguided the reasons may be. These people aren't looking for a progressive society of any type. What they want to do is to pull front-runners down, to penalize excellence, to make everybody the same, for reasons that are ground ed in emotion. They are the envi ous ones who cannot stand to see anybody move out of the ruck.

They are impervious to the logic 60 that must ultimately tell any sens ible person that it is the division of labor that supports our huge modern populations, the envious and the unenvious alike. This is the mentality dissected by Helmut Schoeck (Envy, Harcourt Brace Jovanovitch, $7.50). Curiously enough, the term "en vy" is hardly mentioned by any of our big-name contemporary sociol ogists or political philosophers. There are plenty of economists who are prepared to refute social ism by recourse to the rational appeal. One even finds them behind the Iron Curtain - or one did be fore the Czechoslovak crisis re sulted in the suppression of the Ota Siks who were trying to re validate market principles in the sluggish Eastern societies. But there seems to have been a con spiracy of silence about the sub ject of envy. In combing over the literature on social change, Professor Hel mut Schoeck, who taught at Em ory University in Atlanta before returning to Europe to take a chair of sociology at the Univer sity of Mainz, discovered that on1971 ENVY 61 ly one modern writer, a French man named Eugene Raiga, had ever devoted a single book to the role of envy in stirring social and political disturbances. Against this meager showing there have been hundreds of writers from R. H.

Tawney to Michael Harrington who have rung the changes on the alleged sin of acquisitiveness. In deed, it has been considered far more wicked to provoke envy than it has been to break the command ment that says, "Thou shalt not covet." Justice Oliver Wendell Holmes used to twit his friend, Harold Laski, about the "passion for equality," which seemed to him a dissembling way of "ideal izing envy." Significantly, Laski, though he was the most rhetori cally gifted of the British Labor Party's publicists, avoided answer ing Holmes's pointed remarks. If he had tried to do so he would have inevitably called attention to the ugliest side of the socialist movement. Aside from Eugene Raiga and a few novels such as L. P. Hartley's Facial Justice one has to go back to the nineteenth century to find any extensive commentary on envy as perhaps the chief destructive elemen t in society. The philoso phers, Kant, Schopenhauer, Kierke gaard, Nietzsche, all had some thing to say on what they consid ered one of the more important, if reprehensible, human drives. Adam Smith spoke of the need for laws to· keep property from being in vaded and destroyed by the envi ous. Herman Melville, in Billy Budd, dramatized the envious man as the embodiment of evil, and Eu gene Sue's Frederick Bastien: Envy dealt with the subject almost clinically in fiction that foreshad owed modern psychoanalysis. And the ancients and the relatively an cient, from Aristotle to Chaucer and Francis Bacon, were not afraid to speak against the envi ous man.

Professor Schoeck thinks that modern social and political theor ists have repressed the concept of envy out of sheer embarrassment. The whole surge of our modern society has been toward "socializ ing" the economy, and if one were to admit that the movement has been in response to resentful and evil men, it would create a most unpleasant and painful state of affairs. The iniquitous secret of socialism is that it leads, in its more extreme manifestations, to a world without sociability or so ciableness. With Leftist theoreti cians taking over so many of the media and so many of our univer sity chairs, it is hardly likely that we will get much dispassionate treatment of the subject of envy. What we do get is a literature of circumlocutions. The writers speak 62 THE FREEMAN Januan of "conflict," which is a matter of overt behavior. Envy is a silent, secretive process that can be hid den behind protestations of ideal istic concern for equality. Since it is silent (nobody likes to admit it), our writers don't have to pull it out of the closet. But Professor Schoeck surmises that the failure to identify envy for what it is has had much to do with the maso chism of our younger generation, many of whom feel guilty because their parents have money, or be cause the nations of the West are more prosperous than those of the "third world." The positive and energizing values of capitalist so ciety are lost sight of simply be cause we no longer tolerate any discussion of envy and covetous ness as being among the more sterile human· attributes.

Professor Schoeck·· is .willing to concede the high-mindedness of some socialist theorists. But he has recourse to anthropology to prove that envy remains a constant in society, no matter what the prin ~iple of organization. In primitive collectivisms the envious man con centrates on little things. The Siri ono Indians of Bolivia denounce the hoarding of food. But although they conform outwardly to collec tivist norms, the individual Siri ono hunter will hide his catch out side the camp. After nightfall he will return, possibly with his wife, to the hiding place for a lonel~ feast. It is part of the myth of ~ "golden age" to suppose that pre historic communities were joyfu utopias where everyone shared. an< nobody envied anybody else. The possibility of creating ~ collectivist society without env~ founders on the necessity of giv ing somebody the power to main· tain order. Naturally, power oj any kind provokes envy amon~ those who do not have it. It is nc accident that the Russians haven'i been able to create an equal soci· ety; if they had, it would have reo suIted in a situation in which no body would do the less congenial work. To get production out of thE poor slobs in the "classless" soci ety, the Soviet managers have had to establish a 40: 1 differential be tween maximum and minimum in comes. In Western countries, where the urge to utopianism hasn't yet killed the market econ omy, the ratio is more like 10: l.

Even the Israeli kibbutz has proved disappointing to those who hoped that communal life could be a life without envies and resent ments. To exist at all, the kib butzim have had to make use of the products, the technology, and the achievements of individualistic societies. They have succeeded to some extent, but at the cost of producing a younger generation that is obsessed with the fear of 1971 ENVY 63 showing signs of individual su periority. The individual who ex ercises a poetic gift feels guilty, and it is judged an offense to do intellectual work when physical labor is demanded. Professor Schoeck, recognizing human nature for what it is, doesn't expect to do away with en vy anywhere. But the time has come, he says, for a "hardening towards exaggerated sensitivity to envy." It makes no sense for us to behave "as though the envious man was the main criterion for eco nomic and social policy." We should treat the envious man for what he is, a person who wants to pull others down without bother ing to expand his own capacity for excellence.

~ YOUTH, UNIVERSITY, AND DEMOCRACY, by Gottfried Dietze (Baltimore: Johns Hop kins Press, 1970), 117 pp., $6.50. Reviewed by George C. Roche III IT HAS BECOME commonplace to criticize the modern university, its faculty, and students. The sig nificance of Professor Dietze's latest work is that he goes far be yond such criticism. Not that he approves of the present academic community: Laziness, vanity, and arrogance, the seeking of and corruption through power, the elimination of excellence, the negation of the search for the truth, devious pursuits of material .' things, intellectual sacrifices, and the absence of freedom - all can be found in modern universities. Sympathetic to youth and its problems, Dietze feels that the young people living in what he calls "the liberal-democratic era." have sufficient uncertainty and in security to face without the fur ther uncertainty and insecurity likely to result from contacts with the modern uni versi ty. From that point on, however, he parts com pany with protesting students, em phasizing that today's protesters tend to favor those courses of ac tion most detrimental to genuine education.

In Professor Dietze's analysis, both university failures and stu dent failures are traceable to a single cause - the politicalization of the university, a direct result of mass democracy and the accept ance of the welfare state: The present breakdown of law and order, usually reflected in crimes against property rights, is in a large measure the natural consequence of so-called social legislation. Individual citizens cannot be expected to respect property rights if the government has consistently disregarded these rights and destroyed public trust and all sense of obligation. Today's students have grown up in this atmosphere. Rioters are the children the welfare state has re leased.

64 THE FREEMAN When rioting students protest against the "Establishment," they apparently do not realize that they themselves are a product of that Establishment: . . . the student diagnosis of pres ent societies is a quack diagnosis, for establishments are not sick be cause they are insufficiently demo cratic, socialist, egalitarian, etc., but for the very opposite reason - name ly, because they have gone too far to the left. Student aims, therefore, are likely to increase the illness of so ciety rather than to heal it, just as a doctor who makes a wrong diag nosis and applies the wrong therapy is likely to worsen his patient's con dition. Rioting students are outcasts of the establishment only on the surface. On closer inspection, they are its products. Student rioters are outcasts of the establishment only insofar as the establishment has re mained healthy. Insofar as it has become sick, they are representative of it. They are the poison produced by the infections of the body politic, out to destroy that body.

The author reminds us that this has all happened before, describ ing the vulnerability of Weimar democracy: Political factions fought it out in the Reichstag, in the streets, and in universities, which increasingly had become places for political debate and controversy. In the end, Hitler arose and . . . streamlined the uni versities into his system. Professor Dietze's erudition ir philosophy, history, law, and let· ters comes to bear on the subjec1 of the university's proper place iIJ society. The ideal for the student: the scholar, and the university it self comes alive as the reader be gins to understand the meaning of a "community of scholars." Youth, University, and Democ racy is filled with insights for stu dent, teacher, and administrator. The book also makes clear to the rest of us that, for all the short comings of today's universities, we must be careful to distinguish between today's politicalized cam pus and the historic role of the university. Seen in that historic role, the university should be and can be a bulwark against the mob mentality: . . . universities, developing along with constitutionalism, have pro tected the freedom of the individual against authoritarian popes, kings, and popular demagogues, and [can] continue their libertarian mission in modern democracies. That mission implies maximal benefits for the community - including youth. For only free universities can serve truth, and only advancement toward the truth can satisfy the perennial quest of a traditionally confused, sad, and brave youth for clarity and bring about the kind of public good youthful idealism has always longed fu~ I the Freeman VOL. 21, NO.2. FEBRUARY 1971 Man and Miracle C. Austin DeCamp 67 A tribute to George Washington and his role in the ·"Miracle at Philadelphia."

Consumerism Max E. Brunk 71 Consumerism is a movement of activists who champion issues which appear to be beneficial to consumers. On InstitutionalSenescence Paul H. Jacobson 82 let's re-examine the urge to create or perpetuate institutions that do not serve liberty. The Liberationof Women: Thoughts on Reading Some Old Cookbooks Bettina Bien 87 Capitalism has taken much of the drudgery out of homemaking and brought economic freedom to women. The Medical MarketPlace A. R. Pruit, M.D. 93 The story of trouble in a regulated industry subjected to inordinate inflationary pressures. Tile Lure of NonprofitableServices Kurt V. Leininger 104 Some would have us abandon all else and work solely for the "public good." False Remedies for Poverty Henry Hazlitt 107 How union privileges, social measures, inflation, and more direct socialism all aggravate the problem of poverty. Who Should Vote? Your welfare may be in his hands.

Paul L. Poirot 120 Boo~ Reviews: "Did You Ever See a Dream Walking?" by William F. Buckley, Jr. "The Conservative Tradition in European Thought" by Robert Schuettinger Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding. 125 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 PTesident, 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 publication~ for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met througb 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 mean~ of maintaining and extending the Foundation's work Copyright, 1971, The Foundation for Economic Education, Inc. Printed II 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.

Articles from this journal are abstracted and indexed in Hlstorica Abstracts and/or America: History and Life. THE FREEMAN also I available on microfilm, Xerox University Microfilms, Ann Arbor, Mlc~ igan 48106. Permission granted to reprint any article from this ISSUE with appropriate credit, except "On Institutional Senescence," "Th Medical Market Place," "The Lure of Nonprofitable Services," an "False Remedies for Poverty."

C. AUSTIN DE CAMP MAN and MIRACLE GEORGE WASHINGTON'S high re gard for the Constitution of the United States was expressed in a letter to Lafayette early in 1888: It appears to me, then, little short of a miracle that the delegates from so many different States ... should unite in forming a system of na tional government so little liable to well-founded objection. From that phrase, Catherine Drinker Bowen derived the title fo~er historical narrative of the Constitutional Convention of 1787, Miracle at Philadelphia. With Washington presiding over their deliberations, some 55 diverse per sonalities, representing 12 sov ereign sta tea, agreed on a code of associati9n proclaimed by GladC. Austin De Camp, Retired Lt. Col. Engrs. AUS, saw volunteer service in World Wars I and II. His 86 years have been devoted to exposition of America's gift of freedom to. the world, speaking and writing of the meaning behind the major anniversaries we celebrate.

stone "the greatest document ever struck off by the hand of man" a document designed to give unity and purpose to a government of men and of states and to assure that liberty should be the birth right of succeeding generations. "Miracles do not occur at ran dom," observes Mrs. Bowen. "Every miracle has its proven ance, every miracle has been prayed for . The wine was first water in Cana; there was a wed ding and a need." And, one might add, the individuals were at hand to fulfill such need. As to the miracle at Philadel phia, the prayer for freedom had been growing in intensity for fifty generations. The need was evident in the conduct and gov ernance of 13 embryo states along America's Atlantic shore.· In due time, the requisite human agency appeared, making liberty the first 67 68 THE FREEMAN February and foremost concern of the po litical structure. Those develop ments of American philosophy, culminating in the decision for a free mankind, are indeed a great miracle. How fitting then, in cele bration of Washington's birthday, that we check our bearings to de termine if we are worthy of our miraculous heritage: attainable freedom for all mankind.

The Seeds 01 Liberty and the flowering To review the history of liberty is to realize that the concept is of relatively recent origin. Liberty could be no part of a polytheistic religion, with a multitude of gods enslaving men and directing their destinies quite apart from human desires and capabilities. Only some 3,900 years ago did Abraham make the first major break from polytheism; and much of the world today has yet to break those chains. The meaning of freedom develops slowly. With all the fine theories of freedom evolved by the Greeks, they neither embraced monothe ism nor discarded slavery. Eng lishmen spelled out the begin nings of the rights of man in the Magna Carta; they recognized the right of the individual to by-pass the clergy in reading the Scrip tures; they enhanced the quality of justice through impartiality in court practices; but they remained the subjects of rulers who inher ited sovereignty by Divine Right.

The great break-through to the idea of citizen sovereignty came on the Atlantic coast of America, among people conditioned to self .. reliance, resourcefulness, and in dependence.Freedom - the right of choice - was knocking at their door. And they opened that door in recognition of their need. Abraham had sown the seed: one God of the universe manifest ing Himself through the individu al. Intervening centuries of re ligious and philo·sophical gestation enabled Thomas Jefferson to put it in these words: "All men are created equal ... endowed by their Creator with rights ... life, lib· erty, and the pursuit of happiness ... that to secure these rights, governments are instituted among men." How, then, to structure B government to implement thi~ new-born idea of citizen sov· ereignty? Except for the inspired leader· ship of George Washington ir those perilous years after 1776 this child might have died in in· fancy, and we might still be grope ing for a practical way to res1 sovereignty in the individual. His· tory should record him, not onh as the father of his country, bu1 also as the father of citizen Soy ereignty - the greatest advance ir 1971 MAN AND MIRACLE 69 social and human relationships since the dawn of civilization.

Citizen Sovereignty The governance of man, if one traces the social contract through time, begins with the tribal chief tain. It progresses from smaller to greater rulers'hips, all substan tially authoritarian in method and monarchical in design. The Divine Right of Kings and succession by primogeniture typify such sys tems, the freedom of the individual ever secondary to the authority of the sovereign. Then, the mira cle - the mantle of sovereignty enveloping each citizen and his heirs forever, theirs the responsi bility for working out the intangi bles of human liberty and volun tary association. Under citizen sovereignty, the excellence of any government de pends directly upon the excellence of the citizenry. If one is unhappy with today's state of the nation - law, order, education, inflation, pollution, war, morals, or what ever - the only honest and coura geous course is serious self-exam ination. And then the question: "What am I going to do about it ?"

One helpful answer might be to try to repair the lack of humility and gratitude in our spiritual makeup. To daily and sincerely register thanks for our heritage as citizens should make of us better sovereigns than we are. Also, we might seek an ideal sovereign after whom to pattern the exercise of our own privilege and duty. And what better choice than George Washington, first citizen sovereign following the re jection of monarchy, and model of unimpeachable honesty. Parson Weems may have been a better historian than he knew when he invented the myth of the cherry tree, an interpretation of the greatness of a man who would not lie. Douglas Southall Freeman says of Washington: "For the long and dangerous jour neys of his incredible life, he always had the strength and di recti on needed, because he ever walked a straight line." Another question we might ask ourselves: "Does the sovereign believe in the cause he serves ; am I truly dedicated to the freedom of mankind?" Evidence of Wash ington's dedication is to be found in these responses when he was sought for speaking engagements after the war: To the Reformed German Congre gation in New York - "the establish ment of Civil and Religious Liberty was the motive which induced me to take the field."

To the New Church in Baltimore - "We have abundant reason to re joice that in this Land, the light of 70 THE FREEMAN February truth and reason has triumphed over the power of bigotry and supersti tion and that here every person may worship God according. to the dic tates of his own heart ... It is our boast that a man's religious tenets rnay not forfeit him the right of attaining and holding the highest offices that are known in the United States. Biographer Freeman says further: George Washington was neither an American Parsifal nor a biological sport. What he was, he made him self by will, by ambition and by perseverance . . . He ever walked a straight line. There is the crowning glory of the man, a man with few, if any, of the accepted factors of great ness such as commanding states manship, great eloquence, great scholarship, great skill as a build er, or even great military prow ess. Not by talented genius that Washington attained the mantle of greatness, but because he walked a straight line. Achieve ments unparalleled, by unswerving devotion to truth. Truth, which makes men free.

Washington left us a legacy of opportunity and of truth - basic elements in the structure of na tional endurance. Facing today's "times that try men's souls," may we be guided, by a man and his miracle, to walk a straight line. t) If, to please the people, we offer what we ourselves disapprove, how can we afterwards defend our work? Let us raise a standard to which the wise and honest can repair. The event is in the hand of God. Attributed to GEORGE WASHINGTON during the Constitutional Convention MAX E. BRUNK IN AMERICA TODAY people work fewer hours, have more security and real wealth than ever before, and yet we are an unhappy people involved in much social dissent. We are frustrated over poverty, equal rights, changing social mores, campus revolt, pollution, and our environment. It is no longer fashionable to talk or worry about our productive capacity either as a nation or as individuals.

Farmers and our business institu tions are taken for granted. We are not so much concerned with the source of our wealth as we are with its appropriate disposal. The things we worry about to day were, of course, problems years ago, but we were too busy, too insecure,. too poor to do much Dr. Brunk is Professor of Marketing at Cornell University. This article is from his talk before the Illinois Agricultural Association at Chicago, November 17, 1970. about them. Perhaps we should be thankful for the affluence that has made it possible for us to move these "old problems" upward on our scale of priorities. At the same time we should recognize that while affluence provides the means it does not necessarily provide the wisdom for instantly coping with the complex social problems now concerning us. Affluence has provided an abundance of people who are eco nomically free to concern them selves about the affairs of others.

Man hours no longer thought to be needed to produce goods and serv ices are, in no small degree, the source of our social discontent. Until quite recently, we have been so busy growing in an indus trial sense, and we have enjoyed the fruits of our labor so much, that we have had little time or re71 72 THE FREEMAN Februar'y sources to devote to those broad social problems created by our rap idly advancing technology. No small part of this technological advance has been in agriculture. Those persons left in agriculture today are the economic survivors of the greatest mass migration in the history of man. Had there been no out-migration from agriculture over the past 35 years, our present farm population would be 65 mil lion rather than 10 million. This sudden displacement includes many who have neither the capac ity nor yen to learn and master a new profession - many who find it disagreeable to work by the clock and calendar. Many of these are the technological dropouts who are in trouble - who are both a burden and responsibility of our modern society - who are a source of discontent in this time of afflu ence.

One Dropout, One Vote Formula for Disaster Numbered among the dropouts and other technological misfits are many of our youth who, supported by affluent parents, have not had to worry much about becoming pro ductive citizens. Our colleges are crowded with those who have lit tle or no idea of the professions they ultimately seek to follow. Many, in their bewilderment, seek immediate changes in our social structures amounting to an instant social security designed to per petuate their dole. Suddenly we are aware of a large and growing group living on the leavings of a highly pro ductive society. Earlier societies have had their leisure classes but never before in history has so large a proportion of a society been free of the worries of seek ing the bare essentials of food, shelter, and clothing. The perplex ing problem facing us is how to absorb these technological drop outs and make them productive.

For how else are we to combat a national negativism and get on to ward a happier society? In the meantime, this growing horde of economic parasites takes on a very serious meaning in a one-member, one-vote democratic society. Still in the minority, their presence is largely manifested in social meddling-in contemplation about the welfare of their fellow man. One such movement we vague ly call consumerism - a term still too young for the dictionary. This particular movement not only impinges on your rights as a consumer but also is symbolic of present-day social meddling. Consumerism is a movement of activists who champion issues which appear to be beneficial to consumers. My carefully worded statement that consumerism is a 1971 CONSUMERISM 73 movement of activists who cham pion issues which appear to be beneficial to consumers is blunt and to the point. It will not make the consumerist happy for it ex poses the spurious implication that there is, outside the market place, a bona, fide movement of consum ers who join in common cause on their own behalf. Nevertheless, in order to understand the growth, strength, and power of consumer ism one must realize that it is not a movement of consumers them selves. The term implies protection of the consumer, but the flood of proposals for ways and means of protecting the consumer are not generally traceable to those seek ing· protection for themselves. To the contrary, the specific issues of consumerism are initiated by those who, for assorted reasons, seek to protect others from harm. It is this third-party involvement in a buyer-seller relationship that gives consumerism its uniqueness. The consum~r activist, regardless of motive, is indeed a crusader.

Third-Party Intervention Time will not permit an explora tion of all the motives of the con sumerist. They obviously range from selfish to unselfish, from dis honest to honest, from thoughtless to well informed. Whatever his motives, the consumer activist con tends that consumers should be protected from physical and eco nomic harm, that consumers should be informed and educated in product knowledge, that con sumers should have a choice in the market place, and finally that con sumers should have proper legal redress for wrongs. Such virtuous aims seem undebatable until one realizes that under consumerism they are subject to third-party in terpretation which mayor may not be in the consumer interest. In a normal market relationship, the buyer's right to accept or re j ect imparts forceful economic meaning to these aims consistent with each individual's particular set of values. But competitive en terprise is rejected by the consum erist who identifies protection in terms of third-party values. And because such values can always be made to appear rational, they are condoned and often vigorously supported by the general public.

As a result, innumerable laws, reg ulations, and coercions are rapidly displacing the free decision of the individual in the market place, and the right of the consumer to choose increasingly becomes a mockery. Without much doubt, I reveal my personal conviction on consum erism. I think most of all I resent the hypocrisy of the politics be hind consumerism - the illusion that someone is doing something for me when in fact he is only do74 THE FREEMAN February ing something, at my expense, to serve his own selfish political in terests. I hear business leaders today claiming that consumerism is anti business - antiproducer - anti agriculture. They, too, have fallen victim to the hypocrisy of consum erism. They are mistaken. Con sumerism is aimed at the con sumer. Business can adjust and endure under consumerism much better than consumers can. To business, cons umerism merely closes the doors to certain oppor tunities, redirects effort, or alters the competitive advantage one business might have over another.

But look what it does to the con sumer who pays the cost and loses the benefits that a prohibited prod uct or service could have provided. I reject the popular contention that the housewife-consumer is ig norant, stupid, or uninformed merely because her actions are not consistent with either my beliefs or the beliefs of any professional consumerist. In my opinion, con sumers with dollars in their pock ets are not weak by any stretch of the imagination. To the contrary, they are the most merciless, mean est, toughest market disciplinari ans I know. I reject the thesis that there is anyone universal value in marketing that can be made ap plicable and acceptable to all 200, 000,000 American consumers. Any businessman who succeeds in his efforts to capture the favor of the consumer knows this. He knows that the values and needs of differ ent consumers change with almost every purchasing decision. Surely we need to distinguish between the proper role of government in pro tecting consumers from deceptive practices and the inappropriate role of serving as intermediary be tween buyers and sellers in mak ing value judgments.

The Price We Pay In our zeal to protect the "inno cent" consumer, we need recognize that each protective step necessar ily limits our productive capacity as a nation. It may be argued that a wealthy nation can afford such luxury and, though this is true, we need also to take into account the price we are paying for con sumerism. Risk is inherent in every con sumer purchase - in every con sumer act - and man can do noth ing to alter that fact. The efforts of man to eliminate risk in the market place contain much polit ical appeal but are nonetheless fu tile because the reduction of one kind of risk must always be ac companied by a compensating in crease in another kind of risk. The cost of protection is deprivation. We can, if we desire, achieve a high degree of auto safety by re1971 CONSUMERISM 75 ducing speed; but society rejects the sacrifice and instead, with the safety belt, accepts a lower safety level requiring less sacrifice.

Some of the most protected members of our society. are the inmates of our prisons. These un fortunates know the personal cost of their protection through acute awareness of their deprivations. But the cost of consumer protec tion is not so apparent. We have no way of putting a value on the sacrifice in foregone products and services that a free market could provide. Motivated by Power So far I have identified the con sumerist only as a, kind of self appointed, omnipotent guardian of the consumer. Who is the consum erist? Where do his ideas come from? What gives him motive? To some degree I think we are all con sumerists at one· time or another. We all have ideas about how other people should behave or be made to behave. When we get worked up about some issue we may even be come activists and try to force our opinions on others. However, the most potent and dangerous con sumerists are found in the ranks of elected public officials, career public workers, authors and writ ers, college professors, school teachers, preachers - people who have time on their hands to worry about others-people whose status depends on publicity and popular ity - and perhaps above all, those technological dropouts who have yet to find a place in society.

It is interesting to observe that the consumerist sometimes has as much difficulty convincing the con sumer of her need for protection as in convincing a regulatory body to do something about it. This is what they call education. But in final analysis the consumerist with the real punch is the elected official who champions laws, the appoint ed official who establishes regula tions, or the self-appointed med dler who needs only to demonstrate, to release a report or make a speech to hit the headlines. I doubt that my congressman is responsible for the eight sets of seat belts that came in my latest car, but I got them and I paid for them. While some congressmen deem it expedi ent to play on the political oppor tunities of consumerism, we can be thankful that most of our public representatives, perhaps much bet ter than the general public, under stand the shams of consumerism. In a very real sense, these respon sible representatives often protect the consumer from the consumer ist.

The Case of Unit Pricing So far I have dealt in broad gen eralities. Perhaps a specific illus76 THE FREEMAN Februar'y tration may help to expose con sumerism in its true light. I have heard it said that if strawberries were a manufactured product, they would be restricted from the mar ket today because so many people are allergic to them! Indeed, the long arm of consumerism will soon reach back to the products of the farm as it already has in its in tense concern with antibiotics, in secticides, herbicides, and fertil izers. Anyway, my little story has to do with unit pricing and I approach it with no misgivings. From mail I have received, I've learned the danger of commenting on any con sumer issue because someone, some self-appointed consumerist, always stands ready to defend such issues. A few years ago someone had the thought that if all products in the retail store were price-marked in equivalent units of pounds, quarts, square feet, and the like, then the consumer could better identify the best buy. There was an implied as sumption that the variety of pack age sizes on the market were a calculated attempt to deceive the consumer.

Gradually the idea began to catch on and more and more people be gan to accept and champion it. I know of no strong bona fide con sumer support for the idea but I do know of a lot of passionate pleas made by consumerists who thought the idea had merit, especially for people on a tight budget. Finally, the proposal gathered enough steam to be ordered into effect by the Department of Consumer Af fairs in New York City. But be fore it could be invoked, the courts ruled that the Department had no authority to require conformance. The matter currently rests there whilE! steps are being taken to es tablish the needed authority. But, as in any fight, charges and countercharges flew wildly. The merchants claimed that the costs of so marking products would be prohibitively expensive - that the net increase in cost would be borne by the consumer. The consumerists claimed that such marking would enable some consumers, and par ticularly those who needed it most, to save up to 10 per cent on their grocery bill. Noone really had any facts, though the idea sounded plausible and workable. This is the typical way consumerist issues arise and generate support, first among those who would like to do something for the consumer, and then among consumers who inno cently become effective consumer ists without really knowing it. It also reveals the typical negative reaction of the business commun ity which serves only to. add the fire of certainty to the consumer ist's eyes.

Fortunately, this is one idea that 1971 CONSUMERISM 77 could be tested with reasonable pre ciseness, and one of my colleagues at Cornell, Professor Daniel Pad berg, undertook to do that in a chain of stores in the Midwest. The most interesting of his con clusions is that both the costs and benefits were grossly overstated. The costs in the smallest stores ran to over 4 per cent of the sales value but in large supermarkets they amounted to less than a tenth of one per cent of sales. But a check of product movement over time in dicated no significant shift in pur chases by the consumer. In two broad food categories the con sumer actually shifted her trade up to the higher cost per unit item; in the cereal category she shifted to lower-cost packages; and there was no change in the others. Sur veys of consumers shopping these test stores revealed that awareness of the availability of the informa tion was greatest among the high income, well-educated consumers.

Despite these findings, the only real facts on the issue available, it is my prediction that the consumer ist will continue to champion unit pricing, will continue to talk about how it will benefit the poor, and eventually will succeed in getting widespread regulations making unit pricing mandatory. The issue of unit pricing did not originate from any factual base, and accordingly, facts are not likely to alter the decisions of those who champion its cause. It makes no difference that the theory of unit pricing is based on a false and strictly materialistic premise. It makes no difference that it gives the large merchant a competitive advantage over the small. It makes no difference that the wealthy take greater advantage of the informa tion than do the poor.· Even if the benefits are not very great, it may be argued that the costs are in significant. At least the consumer doesn't need a computer when she shops and she gained a notch in her right to be informed. But is the cost really insignificant if we add this to the hundreds of other laws and regulations that have been forced on the consumer with in the last several years?

The Market Will Handle Whatever Is Essential Once again I would make it abundantly clear that I neither ad vocate nor oppose the idea of unit pricing. I am only saying that if indeed it has merit, if truly enough people want it, the compet itive pressure of the market is suf ficient to bring it into being with out the aid of third-party med dlers. In a democratic society we can, if we desire, force its cost on the public by either legislation or regulations. But no amount of leg islation or regulation can force its 78 THE FREEMAN February use on· an unwilling, uninterested consumer. In today's sensitive market, the producer of any product or service needs to keep an eye on both the consumer and the consumerist. The activities of the consumerist are c;-using the consumer increas ingly to rationalize her actions in the market place, and this verbal justification is in turn affecting her behavior. Shrewd marketers in the past have always responded more to the actions of Mrs. Con sumer than to her talk. The litera ture of market research is full of examples in which the consumer said one thing but did another.

When called upon to explain his actions, everyone hopes to sound rational, whether he acted that way or not. Consumerism is creat ing a self-consciousness in con sumers and developing a vocal re sponse based on third-party ra tionalization that can be grossly misleading to those bearing the responsibility of serving the con sumer. Business Is Suspect In considering the impact of con sumerism .on marketing, any in dustry should recognize that con sumerism breeds on suspicion of the motives of business. Some thing has to be wrong, someone has to be unhappy for consumer ism to exist. The consumerist sees different-sized packages on the market, not as an attempt to meet the differing requirements of peo ple, but rather as· a deliberate ef fort to confuse the consumer. In the consumerist's mind, fractional ounce contents have nothing to do with efficiency or cost savings but are designed to make comparative pricing difficult! Codes are put on packages to hide vital information from the consumer! Colors and printing are used to deceive! Pack aging is used to cover faulty merchandise, and advertising is designed to make people act im pulsively against their better judg ment! The list is endless, and it always will .be, for this is the nature of consumerism. However, I believe this observation tells us that the more business conducts its affairs in the open -lives in a goldfish bowl so to speak - the less it will be subject to the whims of the consumerist.

My little example on unit pric ing may sound trivial but it is not so considered by the industries in volved. It's like the truth-in-Iend ing law. How many consumers do you think wanted this law for their own protection? How many thought it might be a good idea for someone else? How much more do you now know about interest rates and carrying charges than before the law was passed? How many dollars has it saved the con1971 CONSUMERISM 79 sumer? Regardless of how you choose to answer, the truth-in lending law is now safely tucked away on the books where it can be forgotten. The few mills of mar keting margin that it will perma nently cost may even be worth the silencing of the consumerist on this issue. I only regret that it has freed the consumerist to dream up some other regulation that might hurt me more. Consumerism is made up of little issues each affecting either rela tively few consumers or few busi nesses. It thrives on the impor tance of being unimportant. It enlists the passive support of the majority against the vigorous op position of the few and in this way it grows on our economy like a cancer. There is a common belief that consumerism has grown out of the malpractices of business.

This is false, but certain malprac tices of business have been ef fectively used by the consumerist to give credence to specific con sumer issues. The characteristic approach of the-professional con sumerist is to find several flagrant violations of good faith which can be substantiated. These are pock eted while a broadside charge is made against an industry. When the charges are met with denial, the specific cases are brought forth from the pocket to legitimatize the general charges. The repetition of this time-worn legal trick seems never to be recognized by the little American who believes he is being wronged by big business. The whole idea of the giant-killer has a certain romantic appeal to him. The President's Special Assistant lor Consumer Affairs There is one other timely con cern and that has to do with cur rent efforts to create one govern mental agency, office, bureau, or department to serve as spokesman for the consumer. Provision for such an office came out of Senate Committee hearings just prior to the 1970 elections and the House had already acted on a somewhat different version of the same measure.

How effective a spokesman for the consumer such an agency might be is demonstrated by the past activities of the President's Special Assistant for Consumer Affairs. During its eight-year ges tation period much effort has been made to gain consumer, business, and labor support for the program. Many talks have been given, press conferences held, and consumer meetings scheduled. Although the office of Special Assistant has car ried the identity and prestige of the White House and has been served by three different, highly respected and competent ladies, the general public has never really 80 THE FREEMAN February taken the Office seriously. Any mention of the Office will usually bring forth a knowing twinkle of the eye or a sympathetic smile. It should be apparent to the most ardent supporter of the program that bona fide consumer interest has failed to develop. It should be apparent that our responsible pub lic officials should be doing more important things than writing specifications for panty hose or the size of lettering on a can of sardines.

Apparently, the consumer al ready knows that any remedial action he deems necessary is most directly accomplished as a result of his actions in the market place. He also knows that the market place respects his actions whether he is in the minority or with the maj ori ty. He does not expect to impose his consumption values on his neighbor, any more than he expects his neighbor's values to be imposed on him. The Office of Consumer Affairs, in order to demonstrate public concern, claims the receipt of over 40,000 consumer complaints a year. That sounds like a lot of un happy people, but how significant is it when you consider that it amounts to one complaint per 15 million dollars of consumer expen diture per year? Anyway, it is my guess that bona fide complaints far, far exceed this number but that they are sent to those who can do something constructi ve about it - not to places where only punitive action can be anticipated.

Unhappy Consumers Vote IINo li All of us have had unsatisfac tory experiences with products. Not only have we been misled at some time or other, but many times products have failed to per form or come up to our expecta tions. Thinking people must rec ognize that this is part of the price we pay for being the wealth iest and most productive nation in the world, part of the price we pay for progress, development, and improvement. We learn by mak ing mistakes. Every year, thou sands of new prod ucts and services reach the market; and for every new one, thousands are withdrawn - rej ected by the consumer . We can, if we desire, avoid these costly and wasteful errors. We can protect the consumer, but do we really want to close the market and forego all improvements in products and services? Do we really want to substitute admin istrative dictate from Capitol Hill for individual buyer decision?

Regardless of any new agency that might be created to represent the consumer, and regardless of the growth of consumerism, the only true reading of the consumer is to be obtained from her actions 1971 CONSUMERISM 81 in the market place. There can be no true spokesman for the con sumer other than the actions of the consumer herself. She can ra tionalize her actions but, try as she might, she cannot explain them in full. That is why she can not tell you what new or modified goods and services would better serve her needs. In marketing re search I have spent the better part of my life ringing consumer doorbells in a futile effort to get them to tell me how some product or market service can be improved or what new products or services they want, only to find that in our conversation they failed either to visualize their alternatives or iden tify the true values to which they in final analysis respond. The con sumer, in her. mute but effective way, can only bring all her value considerations to bear in response to what is offered her. She has her own built-in protective device. If you displease her - if you do not offer her the best alternative - if indeed you deceive her in terms of her own values, she simply and quickly votes "no" in the market place. That is the miracle of the free market - the miracle the con sumerist refuses to recognize. @ IDEAS ON LIBERTY Long Range Consequences THE ECONOMIC CONSEQUENCES of socialism are fairly ob vious, and they have been dealt with at length and compe tently by a number of economists. Government gets into business and industry in a big way, as a producer itself and as the major consunler for industries tied in with gov ernment spending. But important as these economic effects are, collectivization has long range consequences of far deeper significance. Political control and direction of eco nomic life, even under the noblest of auspices, carries with it demands and imperatives which are hard to reconcile with the basic assumptions which lie at the foundation of our culture and our institutions.

BEN MOREELL, The Admiral's Log ON PAUL H. JACOBSON TITUTIONAL SENESCENCE This article by Mr. Jacobson, from Fairway, Kansas, first appeared as a Letter in the Wall Street Journal of Septem ber 30, 1970. It is reprinted here with his permission. JOHN GARDNER'S new social initi ative "Common Cause," the sub ject of "Gardner's Temperamental Imperative" (Aug. 31), touches on a more fundamental issue than his proposal or your article sug gest. Both proceed from the as sumption that most, if not all, of our major problems lend them selves to solution by new or exist ing institutions, and from a basic belief that institutions, and insti tutionalization of our lives, are al ways the first weapons to reach for in attacking our problems. All this is very much consistent with today's generally accepted American social theory. This body of social wisdom states further that only institutions with broad, preferably national, influence and a cloak of intellectual grandeur de82 serve much attention or following.

In the atmosphere of social self consciousness prevalent in recent years, we have seen a proliferation of institutions, followed inevitably by their attendant bureaucracies bearing elaborate, theory-laden, empirically untested programs in social experimentation. Another view, however, holds that we are excessively preoccu pied with our institutions; that we have transferred ever increasing responsibility for the outcome of our personal existences from indi viduals and small groups to our institutions, and in the process have burdened our institutions with exorbitant expectations; this has led inevitably to disappoint ment and apathy or, worse, re bellion. Further, this view holds, 1971 ON INSTITUTIONAL SENESCENCE 83 our preoccupation leads us to cling with a death grip to useless or outworn institutions, following the lead of groups with residual spe cial interests in them, rather than permitting them a quiet death and a decent burial.

Emphasis on Collective Action The decade of the 1960's was characterized by an unprecedented effort to use the power of institu tions, mostly Federal agencies, to bring about the most far-reaching and fundamental control ever at tempted over our social and eco nomic environment. Not since the New Deal have we indulged in a comparable binge of institution creating, focusing above all on na tional institutions and national uniformity and standardization in goals and objectives. All this was propelled by a contagious feeling of intellectual confidence in our ability to apply self-conscious, col lective effort to the solution of vir tually any major social problem. It was simply a matter of identi fying the correct levers and pres sure points and applying the weight of our newly created (or resuscitated) institution, where upon society would respond as pre dicted. If any fact is apparent in 1970, it is that society did not respond as predicted and that the bold so cial and economic experiments of the sixties fell far short of their goals. Most of the experiments had little effect in the end on the prob lem attacked (despite some legal progress, basic racial antagonism is more truculent than ever), and some were downright counterpro ductive (vigorous economic growth, stimulated by deliberate government action, burned itself out to become rampant inflation).

Only the most insensitive politi cian nowadays fails to recognize that a substantial part of his con stituency has lost confidence, not perhaps so much in him as in the institutions he represents. We are no longer surprised at school bond issues rejected, at light voter turn out at the primary polls, at dis content and high turnover in the newer, socially involved Federal bureaucracies. Indeed, the ironic footnote to a decade of unprece dented institutional activism seems to be the fact that large num bers of Americans have not only lo'st confidence in our institutions, they appear to have lost interest in institutions in general. Mr. Gardner is correct in assess ing the present state of our society as a case of "institutional decay." However, it would be more correct to say that we are living in an age of advanced institutional gigan tism of a kind that ordinarily sig nals the senescence of a species.

The implied analogy to animal ex84 THE FREEMAN Februar'y tinction is more apt. The dino saurs, impressive beasts that they must have been, no doubt lived, toward the end, in a very delicate ecological balance with the world around them. They were most like ly victims of rather subtle environ mental transformations to which they were unable to adapt. The most successful and durable of the species to follow them were typi cally small, mobile, adaptable, and unspectacular. Giants in Trouble Examples of the institutional gigantism-senescence syndrome abound in our government and so ciety. Prominent bureaucracies, notably the Pentagon and the vari ous regulatory agencies, demon strate well-known leviathan char acteristics. One need only live in or near a major city like New York for a period of time to realize that the institution (taking the word in its wider meaning) of the sprawling metropolis is quite lit erally beyond human control, un able to provide a safe, let alone pleasant, environment for its hap less inhabitants.

The demise of the Penn Central is an interesting case where a last ditch attempt at adaptation was made; although it is now clear that at least. some of the fate of this giant organization was attrib utable' to mismanagement, the Penn Central was doing one thing that may in other times and other hands have saved it - taking steps to get out of the railroad business. Of course, not all cases of institu tional or species senescence are accompanied by enlargement of in dividual constituents. The family farm in America has simply failed the requirement of adaptation de spite massive attempts at subsidi zation to· keep it alive. Interestingly, the analogy of an imal evolution seems to follow through in adumbrations of devel opments in organizational behavior in America today. There appears to be a tendency in these times, concurrent with the decay of our standard institutions, for small, often ad hoc organizations to de velop to meet specific needs. There is reason to think that this will turn out to be a far more effica cious organizational response to the increasing complexity and ve locity of change in our modern so cial and economic environment than the increased centralization and concentration of power we have come to expect.

Business began some years ago testing the concept of decentrali zation in an attempt to come to grips with gargantuan organiza tions that were 'showing signs of hardening of the arteries, and the success of this concept is no longer disputed. For all the sound and 1971 ON INSTITUTIONAL SENESCENCE 85 fury introducing the various new Federal programs and bureaucra cies designed to aid the disadvan taged during the sixties, black peo ple, the primary target of this plethora of altruistic fervor, today have little but scorn for· any in volvement whatever on the part of whites in their affairs. Their pri mary confidence and loyalty seem now to lie with local, black-man aged organizations that have de veloped rather spontaneously to meet specific, empirical needs of local communities. Organizations of this kind are not characterized by a great deal of formality or in tellectual edifice and need little help from self-appointed reform ers or organizational theorists.

They simply work, they fulfill their intended function, and they are once again - typically small, mo bile, adaptable, and unspectacular. Decadent Institutions Should Wither Away Institutions for which there is a clearly identifiable, pressing need will have no struggle for survival. On the other hand, the only ra tional thing to do with those insti tutions that have outlived their usefulness, or proven their useless ness, is simply to let them fade away, ,perhaps with a little help. This may mean resisting the de mands of many of our activist politicians to tie our gasping cities into financial heart-lung machines, throwing much good money after bad. It may mean relegating rail passenger service, or other forms of rail service for that matter, to the history books if commercial demand is insufficient to support them without subsidy crutches. It may mean repealing laws and dis mantling bureaucracies that serve no useful purpose beyond self-per petuation or supporting special in terests.

American society is cluttered today with institutional deadwood, and we shovel much sand against the tide, so to speak, in our at tempts to protect those among our institutions that deserve to wither away. In our passion for imposing uniformity and standardized con ditions everywhere, we have vastly overestimated the number and magnitude of problems which real ly demand national attention and impressive institutions to tackle them; we have allowed ourselves to be smothered in a stifling ex cess of institutional mother love. We have forgotten that laws en acted, institutions created or ex panded, so often call for new re strictions of individual liberty, new reasons for expropriating more personal property (taxa tion) , not just the unmitigated, manna-from-heaven benefits pro claimed by our politicians. So we continue to rush forth to embrace 86 THE FREEMAN Februar'y every opportunity to barter away a portion of our liberty for a vague promise or a fear assuaged.

Liberty a Setter Cause Mr. Gardner's Common Cause would bring us a continued preoc cupation with our institutions and their resurrection. I suggest that a more appropriate, and far more pressing, "common cause" today is the task of rebuilding personal lib erty before it too becomes extinct. Champions of this cause are not now to be found in prominent places or great numbers. Those who call themselves "liberals" (an ironic degradation of a namesake from an earlier age) continue to clamor for greater collectivization of our lives by trying to convince us that somehow life, if left to their management, will provide something for nothing. The so called "conservatives" seem to be come more enamored of repressive use of police power every day; some of the more extreme among them, if pressed, will allow as how perhaps we should be preparing some sort of "work" camps (sub stitute "concentration") for shift less hippies and students, black rabble-rousers and other malcon tents.

The "common cause" of a re emphasis and rebirth of individual freedom probably shares with Mr. Gardner's Common Cause the kind of largely cerebral appeal that makes it difficult for its propo nents to generate the irrational fervor that usually provides the motive force for popular social missions. Perhaps we can only hope that there are enough trou bled people left who realize that any government, democracy in cluded, that does not dedicate it self first and foremost to the pro tection and advancement of indi vidual liberty will end in tyranny. I) IDEAS ON LIBERTY Imprisoned Ideas WE MUST be Servants of the Spirit, not Prisoners of the Organiza tion. We must keep in touch with the sources of life, not lose our selves in its temporary vehicles. And whenever the demand of the spirit, the categorical imperatives of the soul, conflict with the demands of the organization, it is the first to which we must listen.

But all this was said long ago. It is all contained in one of the legendary sayings of Jesus, and bears all the marks of authen ticity: "This world is a bridge. Ye shall pass over it. But ye shall build -no houses upon it." W. J. BROWN, from The Spectator, September 19, 1947 Courtesy of Old Sturbridge Village The Liberation of 'Women THOUGHTS ON READING SOME OLD COOKBOOKS BETTINA BIEN "VIVE la difference," say the French in referring to the differ ence between the sexes due to physical and physiological causes. This difference can be a source of delight to those free to enjoy it, but can generate ill-feeling and friction between the sexes if they are compelled by law to ignore it.! Our physical and physiologi cal characteristics are bound to 1 For a discussion of some effects of prohibiting discrimination on the basis of sex in economic dealings, see Gary North's "The Feminine Mistake: The Economics of Women's Liberation," THE FREEMAN, January, 1971.

Miss Bien, a member of the staff of the Foun dation for Economic Education, enjoys and appreciates the modern aids to homemakers. 87 88 THE FREEMAN February have economic consequences, which will persist so long as human life continues as we know it. Legal and political rights, with out distinction as to sex, have been recognized gradually by the governments of most civilized na tions of the world. By legislation and common law decisions, women have acquired freedom on a par with men to act, own property, and make contracts in their own behalf. (This freedom is being eroded by the present trend toward socialism - to the disad vantage of both men and women. Special government privileges and subsidies, progressive taxation, legislation limiting the right of contract, hours of work, and so on, have already seriously inter fered with the rights of property owners and the freedom of con tract. But this is another story.) For all practic'al purposes, laws now deal with men and women pretty much the same.

Economic Opportunities In recent decades, economic and professional opportunities have been opened towomen. Step-by-step, insofar as social customs have permitted, and within the limita tions imposed by the "difference" between the sexes which at least the French appreciate, women in this country are relatively free. They may now compete with men, each to the extent of her abilities, in seeking their chosen goals economically and professionally. The tremendous advances, which have made it possible for women to achieve recognition as persons - legally, politically, economically, and professionally - are undoubt edly due in large part to capital istic contributions. Savers, in ventors, and producers, operating in a relatively free market econ omy risking their own private property in the hope of profit, sup plied the goods and services which have freed women from the daily drudgery and heavy manual labor expected of them for centuries simply to fulfill their roles as sexual companions, mothers to their children, and homemakers for their families. The improved production and preparation of food, more efficient transport, bet ter retail outlets, and inventions' of modern household appliances have given women more time to pursue interests outside the home.

In this day of push button kitchens, automatic timers, elec tric refrigeration, home freezers, mechanical beaters and choppers, prepared foods and instant mixes, a housewife cannot begin to con ceive of the many strenuous chores her grandmothers and great grandmothers coped with daily. Imagine a home without heat or electricity. Imagine a kitchen with1971 THE LIBERATION OF WOMEN 89 out a stove, refrigerator, or run ning water. Suppose there were no corner stores or supermarkets with milk, butter, bread, meat, vegetables, or soap. Think of a life when each family had to grow its own food, gather the fuel to cook it, tote all water, produce the textiles, and sew, patch, and mend the family clothing. Early Household Hints Early cookbooks offer helpful hints to save the housewife's time and energy, hints which no mod ern bride need consider. For in stance, keep kettles of water,· both hot and cold, handy always in the kitchen. Pine wood is an econom ical fuel for heating ovens but hard wood makes much hotter coals. Lamps will have a less dis agreeable smell if you dip your wick-yarn in strong hot vinegar, and dry it. Teach children to pre pare and braid straw for their own bonnets, and their brothers' hats. Fresh meat brought into the house should be carefully covered from the flies,· put in the coldest place in the cellar, and then cooked promptly - especially in summer.

Save all the nice pieces of fat to make lard, and put those that are not so nice into the soap grease. The earliest cookbooks and housekeeping manuals appeared only about 200 years ago. Few women could read before then; and how-to-do-it information, so much of which was needed to run a· household smoothly, was passed along by example and by word of-mouth. Firing the Oven One early cookbook published in this country was The Ameri can Frugal Housewife by Mrs. Lydia Maria Childs (12th ed., 1832). The housewife of that day cooked over an open fire, roasted meat on a spit, or baked in a re flecting oven before the fire or in a brick oven built in the chimney. To fire up the oven was such a chore that one or two days a week were set aside just for baking. With good planning, five succes sive bakings could be done in the oven with one heating: "The bread first - then the puddings afterward pastry - then cake and gingerbread - and lastly, cus tards." This last suggestion comes from Mrs. M. H. Cornelius, whose book, The Young Housekeeper's Friend, appeared in 1859. At the time she wrote, brick ovens were going out, cooking stoves and ranges coming in. Yet, boiled din ners, stews, soups, and steamed cakes and puddings prepared on top of the stove were still more popular with the cooks than cakes which called for firing up the oven.

In 1832, Mrs. Childs wrote for 90 THE FREEMAN Februar'y the rural housewife who had her own vegetable garden, a few fruit trees, and chickens. The whole family shared in the household chores, of course, and most house wives had extra help from a hired girl or a female relative living with the family. Yet, the respon sibility for the work was the housewife's. She grew the herbs for flavoring, gathered the eggs, and ofttimes milked the cow. She baked with yeast of her own mak ing, or used eggs or baking soda and cream of tartar for leaven ing - baking powder was not for sale until about 1850. She did the family's cooking, and did it all with crude utensils. She beat eggs with a fork or a wire whisk, and elbow grease - the rotary egg beater did not come into general use until the second half of the nineteenth century. Housewives had to bake the family's bread regularly. This meant mixing the dough, usually in the evening, setting it to rise overnight, and kneading it "very thoroughly." Mrs. Cornelius wrote, "A half an hour is the least time to be given to kneading a baking of bread, unless you prefer, after having done this till it ceases to stick to your hands, to chop it with a chopping-knife four or five hun dred strokes. An hour's kneading is not too much." Bread was the staff of life and good bread was a source of pride to the housewife.

Lack of refrigeration was a continual challenge. The housewife took care to use things before they spoiled or to find satisfactory ways to preserve them. Before the canning industry developed in the late 1800's, she had to preserve fruits and vegetables in season· to be ass ured of provisions year round. In 1859, Mrs. Cornelius ad vised putting preserves in wide necked bottles, pasting paper over the tops, and then brushing egg white over the paper with a feather to seal the bottles and discourage mold. first, Get a Cow The nineteenth century house wife had to be a Jill of all trades. The industrial revolution with its increased specialization and divi sion of labor barely ruffled the surface of traditional housekeep ing practices. The 1859 housewife purchased a few more household items than her grandmother could have in 1832. But she still had to kill her own fowl, cut up the fam ily's meat, salt it, smoke it, or otherwise cure it and keep it safe from bugs and animals. To be sure of good dairy products, she was told: "The first requisite is to have a good cow." Keeping a cow added to the household chores. Someone had to feed the cow and milk her, day in and day 1971 THE LIBERATION OF WOMEN 91 out, set the milk for the cream to rise, and churn butter at least twice a week. Without refrigera tion, keeping milk, cream, butter, and dairy utensils sweet was a continual worry. Now that dairy products are sold in stores, pack aged and ready to use, men do most of this heavy manual labor on a mass production basis, using methods developed and equipment produced with the aid of increased savings and investments.

Doing the family wash was an other backbreaking chore in the nineteenth century. First the soap had to be prepared from lye made out of wood ashes, and fat and grease saved from cooking. The water had to be toted and heated, heavy wash tubs filled, with count less trips back and forth to the stove. After the clothes were sorted, the finest and less soiled things were washed first, the coarser and dirtier items later in the· same water. Most pieces were scrubbed by hand on a washboard. The white things were boiled. After washing, rinsing, boiling, wringing, bluing, and starching as necessary, the clothes were wrung and hung outdoors on a line. Doing the family wash took another full day of the housewife's time. Ironing consumed most of a third day each week. The flat irons and special "polishing irons" for final touch ups had to be heated on the stove and reheated again and again as they cooled.

Then Came Automation The kitchen stove or range l:lsing wood or coal gradually came into use in the mid-nineteenth century. These had advantages over the open fireplace and the brick oven. With the use of gas and the construction of gas lines in the late 1800's, new cooking jets became available - gas ovens came considerably later - making meal preparations a little easier. The development of electricity, refrigera tion, large scale special ized farming, improved transpor tation, professional bakeries, and the expansion of retail outlets have further liberated women from the grueling household labor which had been their lot in life. Automatic washing machines and dryers have taken the drudgery out of doing the family wash. Moth-proofed woolens and new miracle fibers have simplified the care of the family's clothing. Vacuum cleaners, floor polishers, and local dry cleaning establish ments help to keep homes and their furnishings clean the year round, doing away with the need to scour the house and every thing in it from top to bottom spring and fall. Refrigeration and other effective ways of pre serving foods have freed the fam92 THE FREEMAN February ily menu from dependence on the season. When compared with her nineteenth century counterpart, the modern housewife is truly liberated from grinding household drudgery and endless kitchen chores.

When a housewife presses a button or turns a switch on a modern household appliance, she has at her command the labor of countless specialists - savers, in vestors, inventors, producers, and merchants - each of whom then helps with her daily chores. In effect, they help tote the wood when she turns up the thermostat. A twist of the faucet draws the water. Turning a dial will fire the oven. A push-button machine will wash, rinse, and wring the weekly wash. With a trip to a grocery store, the housewife can in effect grow the family's food, milk the cow, churn the butter, make the cheese, gather the eggs, knead and bake the bread, grind the spices, kill the poultry, cure the meat, preserve fruits and vegetables, and make the soap. Capital, the Key Each person in the world dif fers from every other person. Thanks to these differences, ev eryone benefits if each of us is free to concentrate in the field of his (or her) greatest aptitude and interest. There is some specializa tion and division of labor even in small groups and primitive com munities. But under capitalism, with private property and the freedom to move, invest, and exchange goods and services throughout large areas and among increasingly large populations, it has been possible to develop and exploit our differences more fully than ever before, to everyone's advantage. It was this complex economic system, developed on the basis of highly specialized divi sion of labor, which liberated women from their traditional household chores.

Women are different from men - and always will be. The woman of the 1970's has gained recogni tion as an individual under law. She may own property, make con tracts and, thanks to the develop ment of capitalism, now has time to pursue her special aptitudes and interests outside the home and thus compete with men econ omically and professionally. Rath er than trying to compel denial by law of the physical and phys iological differences between the sexes, let's acknowledge and ac cept them philosophically as the French do: "Vive la difference." f) The Medical Market Place A. R. PRUIT, M. D.----- ...... WHAT is the state of the market, what are the economic problems of the health industry today? Re alistic appraisal of the current situation requires examination of the nature of the market prior to the onset of massive state inter vention. So let us review the eco nomic history of organized medi cine in the United States. Was it an open market? If not, what kind of a market, and what factors led to its development?

American medicine was until about 1850 a free-wheeling, highly competitive, free market industry. Like the ministry in some reli gious denominations today, anyone who "felt the call" was free to hang out a shingle and declare himself available. The only re strictions were those put upon Dr. Pruit is a practicing physician at the Hertz ler Clinic in Halstead, Kansas. This, article is from a paper presented recently to the Amer ican Association of Physicians and Surgeons. him by the quality and availabil ity of the competition, and by the favor of the customers who dic tated his rewards. Similarly, med ical schools were easy to start, easy to enter. These schools taught every conceivable approach to health from the orthodox to the mystic. Many of the schools of this time were organized as profit making institutions. Some were owned by the faculty. Some were privately endowed. Some were hardly more than diploma mills.

Their quality and the quality of their products ran the gamut of the quality spectrum from excel lence to quackery. It is easy to understand why rnany of the finest men in ortho dox medicine, those dedicated to the development. of medicine as a science, would feel totally dissat isfied with this seemingly chaotic arrangement. One can only ap93 94 THE FREEMAN February plaud their desire to improve the over-all quality of medicine for the public benefit. Their problem was one of implementation. How can this improvement be accom plished? Can the people, through education or any other means, ever have enough special information to be able to recognize and choose quality· care out of this hodge podge of misinformation and charlatanism? Or, is human gul libility so great, and human abil ity to choose responsibly so frail, that some means must be found to protect individuals from their own folly and insure the delivery of what we know to be the highest quality care? Who is to be respon sible: man or the state? That was their basic question. This trouble some but fundamental question lies at the root of every sociopo litical problem which faces us to day.The men in medicine did not believe that man could be respon sible. Their answer: the state.

They believed that orthodox medi cine should seek the sanction and protection of the state to help shield the people from their in ability to choose responsibly. Origin of the A.M.A. The American Medical Associ ation was organized in 1847 and committed itself to two proposi tions which, when fulfilled, would improve the over-all quality of American medicine. But these same propositions led to sharp restriction of the medical market place. From a free market, it quickly changed to what many economists call a discriminatory monopoly, which simply means a market place which favors, in variably through legislative fiat, one competing group over all others. How did this come about? The two propositions were (1) that medical students should have acquired by the time they were ready to practice a "suitable edu cation"; and (2) that a "uniform elevated standard of requirements for the degree of M.D. should be adopted by all medical schools in the U. S." What would be "suita ble" and "elevated" was to be de termined by a consensus of the best minds within the organiza tion.

Certainly, these laudable goals of themselves could have no pos sible bearing on medical econom ics. What did bear on the medical market place, however, was the method of implementing those propositions. The method was to exclude, by state intervention, all undesirable or unqualified com petition: first, by licensure of only qualified M.D.'s, and second, by control, through the state mecha nism, of medical school standards. These objectives were achieved in two stages. It took the A.M.A.

1971 THE MEDICAL MARKET PLACE 95 fifty years to convince all state legislatures that licensure was necessary, but by 1900 this goal was accomplished. The states in turn delegated the power of licen sure to organized medicine through the State Boards of Med ical Examiners, all of whom were members of orthodox medicine. Subsequently, control of standards of medical schools was accom plished comparatively quickly fol lowing the now famous Flexner Report in 1910. With licensure already in effect, it was a simple matter to change the rules of the State Examining Boards to con sider only graduates of medical schools which were approved by the A.M.A. and/ or the Association of American Colleges, whose lists were identical. A short time later, these controls were extended to many of the hospitals of the coun try by defining standards for hospitals eligible for internship and residency programs. Today, through the efforts of the Joint Accreditation Commission, these controls have been extended to all the hospitals in the country. The delegation of these powers by the state, making A.M.A. a .quasi state agency, gave it complete con trol over entry into the practice of medicine as well as control over access to the nation's hospitals.

It is this control over entry and access that prompts Prof. Milton Friedman of the University of Chicago to call the A.M.A. the most powerful trade union in the world. Control over entry and access is also the reason other economists call the health industry a discrim inatory monopoly. Monopoly Practices Viewed in the light of the cur rent acute shortages of physicians, the successful argument deriving from the Flexner Report is iron ical. In brief, the argument held that America was suffering from an overproduction of doctors and that it was in the public interest to have fewer doctors who were better trained. It was recom mended, therefore, that a sub stan tial fraction of the medical schools be closed; that standards be raised in the remainder and admissions be sharply curtailed. This is to say, in effect, that the public should be protected against the consequences of buying medi cal services from inadequately trained doctors by legislating poor medical schools out of business as if all could have Cadillacs if Fords were outlawed.

Whatever names one may apply to the industry or to the A.M.A., it is a fact that the number of doctors produced by the medical schools has remained relatively static for many years despite a rapidly increasing population. In 96 THE FREEMAN February 1910 when the Flexner Report was published there were 23,300 med ical students in the United States and the total population was roughly 100,000,000. Today, there are 35,883 medical students, to serve a population of approxi mately 200,000,000. The effort to upgrade the quality of medicine, by controlling the standards re quired of medical schools, has re sulted in a sharp decrease in the number of medical schools avail·· able to the students. In 1910 there were 162 Inedical schools in the United States. By 1920 this num ber had been reduced to 85; by 1930 to 76; and by 1944 it reached a low of 69. It seems clear, then, that control over entry has result ed in a restricted and controlled medical mar ket with the number of physicians, as well as the med ical schools, in chronically short supply.

When Demand Exceeds Supply, Prices Tend to Rise It is axiomatic that when de mand exceeds supply, other fac tors being equal, the price of the goods or service in demand also increases. It is also true that when standards of quality are elevated, the price of the better quality product is also elevated. A Cadil lac necessarily costs more than a Ford. To know that these laws have held true in medical economics, we only need remember that the medical profession has become one of the highest paid of all the professions - thus reflecting the relatively higher costs of medical care to the general public. Ordi narily, however, one would expect, in a market where supply is so severely restricted, a much greater cost differential than there has been. The medical profession. has been able to deliver quality med ical care to the general public, rich and poor, at prices within the reach of any who needed care.

There were many mitigating factors which made this possible. Once the barriers to entry into the profession were overcome, the in dividual physician was free to practice when, where, and how he pleased. There was no Board of Directors making decisions for everyone. Competition with his fellow physicians helped to keep his prices down and the quality of his care high. Contract with each patient through "fee for service" demanded his personal involve ment with the singular problems of the individual, the essential in gredient in quality medical care. The ancient Hippocratic tradition that care would be provided re gardless of ability to pay was an extremely important factor. Free dom of choice by the physician and by the patient, community respect and its derivative, the 1971 THE MEDICAL MARKET PLACE 97 sense of responsibility to the com munity, all played important roles. The success of the system depend ed precisely upon the fact that it was not an organized business en tity. There were no police commit tees like peer review, or utiliza tion review. Competition, contract, and freedom of choice provided all the restraints that were necessary.

This, then, is an economic over view of the American medical sys tem prior to the advent of govern ment inflation of the nation's sup ply of money. It was not a perfect system. There are no perfect sys tems this side of heaven, in spite of the contrary declaration of the planners of the American utopia. But that system functioned bril liantly enough to bring American medicine into worldwide esteem. It is the very nature of this high quality but severely restricted and inelastic supply market and of the control mechanisms which sustain it, as outlined here, which makes the system so vulnerable to mas sive intervention. At the same time, the system raises almost in surmountable obstacles in the way of those who are totally opposed to this intervention and to the philosophy which prompts it. Who ever controls entry and access has the power to control the economic destiny of every physician in the ind ustry if he chooses to use .that power.

The Impact of Inflation Inflation is one of the most dev astating, destructive, and demoral izing forces which can be imposed on a civilized society. The distor tions and dislocations which it produces are so numerous and oc cur in such rapid succession, that the adj ustments and rearrange ments which society would achieve under normal growth conditions now become impossible of achieve ment, thus creating permanent dislocations and maladj ustments with social disintegration the ul timate result. Most of the dislocations and maladjustments which are chronic problems in the health industry today are directly or indirectly an aftermath of inflation. The in crease of doctors in the cities and their decline in small towns, the growth of specialists and the de cline of generalists, the increase in emotional and social problems and the decline and distortion of social values and standards, are but a few of the multitude of dis tortions and dislocations which are aggravated by, or caused by, a continuing general inflation. I mention here these effects of gen eral inflation because of their bearing on problems to be dis cussed later.

For discussion purposes, the health industry can be considered as an isolated economic unit which 98 THE FREEMAN February functions within itself in exactly the same way that the national economy does. As such a unit, it is subject to the same laws of the market place. Such an economy tends toward a state of equilibri um between supply and demand, and the prices of goods and serv ices to the consumer are reflected in this equilibrium by remaining fairly stable. If, in this state of relative equilibrium, there is an intrusion of hitherto unavailable money, there occurs an immediate dis equilibrium. In the general econ omy the increased demand caused by the influx of new money is met (at least for awhile) by an in crease in productivity and a rise in prices, which tends to return the market toward a state of equilibrium again. As long as the producers can profitably increase their produc tivity by raising their prices, then supply and demand will continue to tend toward equilibrium.

This holds true for the general economy and it holds true for the health industry as long as the in flation is general. But when a massive increase in the supply of money is suddenly inj ected into the isola ted economy of the health industry, there is an entirely dif ferent situation. The health in dustry can cope with general in flation because its internal equilibrium is not greatly disturbed. However, when a secondary in flation is imposed on the industry by a sudden vast increase in the supply of money within its iso lated economy, the disequilibrium which occurs between supply and demand has immediate and seri ous consequences throughout the industry. The medical market can not react as the general market reacted for the obvious reason that in the general economy, sup ply has been relatively flexible and could adequately respond to de mand; but in the medical economy, supply, particularly in the vital area of physician's services, is relatively inflexible and cannot re spond adequately to great in creases in demand.

Subsidies to Medical Schools The first maj or intrusion of government into the health indus try began with World War II and the subsidization of medical schools. This intrusion did not cause an immediate disequilibri um in the medical market. It was concentrated in the area of what may be termed a producer's mar ket and had no appreciable direct effect on consumer demand. How ever, when coupled with some of the consequences of general in flation, it did cause major changes in the distribution of physicians, thus affecting their supply in the 1971 THE MEDICAL MARKET PLACE 99 vital area of service to the con sumer. The initial effect of the use of fiat money to subsidize medical schools was to cause an inflation of research activity. While this in creased activity did serve to in crease (inflate) our knowledge and technical ability in many areas, it had other, far-reaching and less salutary, effects. There was, first of all, a great increase in the size of the faculty of med ical schools. With continued sub sidization, and through the device of tenure, the number of teachers and research fellows tended not only to grow but to become per manent, thus greatly increasing the costs. Since the chief source of funds from the government was earmarked for research purposes, the schools tended to be diverted from their main purpose-to teach students - and to become more and more preoccupied with re search. As the research programs grew, more and more physicians were diverted into research, thus adversely affecting the supply available for private practice.

The availability of fiat money in this area, along with the rapid growth of population and the in creasing demand for medical serv ices, did increase, very slowly, the number of medical schools and the total number of medical stu dents. In 1944 there were 69 medical schools. By 1969, their num ber had climbed to 99. Interest ingly enough, though hardly sur prising, every medical school in America is now dependent upon the Federal government for more than 50 per cent of its income. Some, I am told, receive as much as 85 per cent. The medical schools of America can no longer survive without continued government support. The total number of med ical students attending the vari ous medical schools by 1969 had risen to 35,883, an increase of about one-third over 1950. I have been unable to obtain any exact figures on the number of these graduates who enter private prac tice. However, John Gardner, for mer Secretary of Health, Educa tion and Welfare, in his 1967 Report to the President· on med ical costs made this statement: "It is estimated that in the period 1950-1965 the demand for physi cian services increased by at least 41 per cent, probably considerably more. Meanwhile, the total supply of active physicians increased by only about 31 per cent, while the supply of physicians in private practice increased considerably less." (Emphasis added.) Walter McNerney, writing re cently on medical costs, calculated that: "If we double the output of American medical schools today and keep all other factors con100 THE FREEMAN February stant, it will be 30 years before we double the total number of physicians in the country."

Supply in the medical market place is, indeed, inelastic. Thirty years of war and the continuous mobilization of huge numbers of men in the armed forces; the tremendous growth of bureaucratic health agencies, state and Federal; the mushrooming of research programs in the medical schools and in the so-called "think tanks"; all of these, made eco nomically possible only because of fiat inflation of the money supply, have increased the demand for physicians. The entry of doctors into these artificially created areas of demand has, in terms of the supply available to private prac tice, negated completely the in creased production of physicians by the medical schools. Controls Upset Balance Between Demand and Supply The net result of government intervention in medical education has been (1) the Federal govern ment has gained virtual control of medical education; (2) in terms of an increasing demand for serv ices there has been a relative de crease in the supply of physicians available to render services through entry into private prac tice.

The passage of the Hill-Burton Act initiated the second major in trusion by government into the medical market. The rapid in crease in the number of hospitals which resulted, coupled with the growing demand for medical serv ices generally, caused a hyper acceleration of demand for trained auxiliary medical personnel of all kinds. Supply of personnel has not been adequate to meet the de mand, and a spiral of wage in creases has resulted throughout the industry. It is significant, as a reflection of this disproportion ate increase in cost, that until the advent of Medicare, hospital fees were the only prices throughout the health industry which in creased significantly faster than price levels in the general econ omy. According to Mr. McN erney, "over 60 per cent of health care costs are attributable directly to manpower." When one considers that nursing salaries have more than quadrupled in the last 25 years, that the salaries of other technicians have risen compara bly, and that all wages are still rising, one can see immediately that the effect of special inflation within an industry where all tech nical help is in short supply is to put an exorbitant price tag on the services demanded.

With the advent of Medicaid and Medicare the already strain1971 THE MEDICAL MARKET PLACE 101 ing health market was immediate ly forced into a state of marked disequilibrium. In this instance, vast sums of unearned and hith erto unavailable dollars were suddenly poured into the demand side of the ledger. The immediate effect was not just an increase in demand. There occurred a psychological hyper inflation of demand. The con sumer, released from all the re straints imposed by "cost" and "afford," develops, rather quickly, a whole new spectrum of com plaints which demand attention. Chronic ailments which were not disabling, with which he had lived and been productive for many years without seeking medical aid, now become more and more emergent. He begins to demand attention for increasingly trivial complaints. His calls upon the physician become more frequent and his hospital admissions more frequent. He demands more so phisticated and more luxurious services and facilities than he was willing and/ or able to pay. for be fore. The physician once had dif ficulty keeping him in the hospital long enough; more and more the problem now is getting him to leave. As we have already proved, with the vast and never-ending expansion of welfare programs over the past 30 years, there is no end to the growth of needs and demands when they are unre strained.

As long as the government con tinues to stimulate demand, and supply remains inelastic, acute shortages will continue and wages will continue to rise. Attempts to further improve efficiency by more mechanization and increased para medical personnel will only in crease capital investment and op erational costs. Physicians and hospitals, who must pay their bills or close their doors, have no choice but to increase fees and to continue increasing them with each new spiral of wage, price, and tax increases. This, in gen eral, is the situation in the med ical market today. As long as in flation continues, this will remain the situation, and no combination of managerial talent under the sun can do anything constructive about it. Further Intervention No Cure What happens when the medical market, as seems likely, becomes a government controlled monopoly, administered by a politically ori ented bureaucracy? It seems un likely that the situation will im prove under the least competent and least efficient form of admin istration which man has yet de vised.

The only thing that can possibly be achieved by government inter102 THE FREEMAN February vention is a drastic reduction in the over-all quality of' medical care at a tremendous increase in cost to the consumer. The pro gram will be entirely dependent on a continuation of inflation in spite of massive increases in tax ation for the already overbur dened taxpayer} and in spite of wage and price controls which will be applied throughout the indus try. The demise of competition, the eradication of "fee for serv ice" contract between the phy sician and the individual patient, the distortion of freedom of ac tion and freedom of choice, must all have an almost lethal effect on physician motivation and incen ti ve. The art of medicine under these circumstances must degen erate into a sterile and grossly distorted caricature. There may, for awhile, be luxury care but the element of quality will, all too often, be lacking.

Lower the Standards? The only possible way to ade quately increase the supply of physicians under the present cir cumstances is to lower the stand~ ards of qualification. Just as the Registered Nurse shortage of the 1950's caused the development of Licensed Practical Nurse pro grams, so will the planners try to meet the physician shortage by the development of what should be, but will not be, called Licensed Practical Physician programs. The imposition of these programs will, in effect, turn the clock back about 70 years, as far as the over-all quality of medical practice is con cerned. In the pre-Flexner Report era, however, the consumer had a free choice of quality. In our time the poor quality care will be im posed by the state. The vast ma jority of Americans will have to accept it. There will be no choice in the matter. This is not a pleasant report. It is, I believe, an honest one. I can not here attempt evaluation in depth of the many maladj ust ments which have accrued, not only from external influence and interferences, but also from our own past errors both of omission and commission in the manage ment of our affairs. Further study and evaluation of these funda mental problems is, in my opinion, imperative. No useful purpose can be served by minimizing a serious situation. Just how serious our situation is becomes immediately apparent when we realize that the problems of medicine are but one set of symptoms of a disease which threatens our entire social structure.

There is no easy solution. Be fore we can understand effects, the causes in which they are root ed must be explored and identi1971 THE MEDICAL MARKET PLACE 103 fied. Until we understand causes, we cannot hope to find effective solutions. The situation is by no means hopeless. On the contrary, we have every reason to be hopeful. There is more awareness, more concern, more intensive study, more under standing of fundamental issues today than at any time in the past 30 years. Disillusionment with government policy, its profli gate spending, its gross inefficiency, its monumental failure to im prove society, is growing rapidly. Inflation cannot last forever. It must end, as historically it always has, in economic and social dis aster, but this will not be the end of the world. Our form of govern ment may not survive, but we will. If we know and understand enough, we can, in our turn, and in our sphere, help recapture a heritage which we have somehow lost. , BIBLIOGRAPHY GARRISON, FIELDING H., An Introduction to the History of Medicine, Fourth Edition. Philadelphia: W. B. Saunders Co., reprinted 1966.

KESSEL,REUBEN A., "Price Discrimination in Medicine," Journal of Law and Eco nomics, 1958. FRIEDMAN, MILTON, Capitalism and Free dom. Chicago: University of Chicago Press, 1962. Journal of the American Medical Associ ation, November 24, 1969. "Washington's Week" (Column), Amer ican Medical New8, August 3,1970. GARDNER, JOHN W., "Medical Costs: A Re port to the President," Condensed Re port-lli edical Economics, April 3, 1967. McNERNEY, WALTER J., "Why Does Medi cal Care Cost So Much?" The New England Journal of Medicine, June 25, 1970. IDEAS ON LIBERTY Free Medicine Can Make Yon Sick SOCIALIZED MEDICINE includes government care of the sick and support for the family as well. If this support amounts to approximately the same as the man can earn from his own daily labor, he is tempted to be sick continuously. The temptation would be the greatest for people in low income brackets, illness actually being preferable to good health.

This may sound strange, but doctors can observe the fact in their daily practice. Many people want to be sick, or sicker than they actually are, because material advantages in the form of compensations and liability payments are involved. CHARLES G. JONES, M.D.

KURT V. LEININGER A PRESSING QUESTION today asks where the young will channel their abundant energy. Civil engineers are worried that the influx of new engineers will not keep pace with the rising demand for engineer ing services. Yet they are in some doubt as to the best way of pre senting the engineering profes sion to the young as an exciting field of endeavor. The best way would seem to show the young what engineers do, what they have the potential for doing, and the actual and potential rewards, monetary and otherwise. Instead, however, the alleged benefits of "nonprofits" and "public service" are frequently advanced to entice the young (particularly today's young) to enter engineering. A good example is a recent radio inCaptain Leininger is an Engineer at Edgewood Arsenal, Maryland. This article is reprinted by permission from the August 1970 issue of Civil En~ineerinA· 104 terview with a prominent engi neering professor.

Discussing the future of the field of environmental sciences and engineering, the professor said that this is an attraction to the young because the work they will do won't "profit an individual industry" or "result in higher profit statements to a group of people who are anonymous" to the young. He went on to add that "one can work in the public sector and begin to see something of their efforts developing on the scene."! Dissecting these comments, it appears that the young are urged to seek employment in an organi zation that can generate no prof its, can provide no information to its investors as to the fate of their capital, and yet is able to provide 1 Quotes from the American Chemical Society News Service. Transcript #460.

1971 THE LURE OF NONPROFITABLE SERVICE 105 the opportunity for individual achievement. It is laborious to un dertake to criticize these comments in the setting of the most affluent society on earth, but I think it is essential to do so. Sign of Consumer Satisfaction Profits generated by a free (or even semifree) enterprise system are the means by which the vari ous producing segments of a com plex society, employing a division of skills, can gauge their success in meeting the requirements of society. Profits mean that a com pany is successful in meeting con sumer demand for its products; decreasing profits mean that the company's energy is misdirected and should be reoriented toward more urgent requirements. A pro ducer operating with no profit, yet continuing to operate, can only stay in business at the cost of other producers who are mak ing .a profit. Ironically, a non profitable company must also rely on the profit system, to even com pute that it has no profits.

At the most fundamental level, an individual employee who pro duces less than he requires for his livelihood can only continue to be employed at the expense of other employees who are producing more than they require for their im mediate need. Contrary to Karl Marx's view of the workability of "from each according to his ability, to each according to his need," this actu ally discourages the "able" from continuing to produce and re wards the "needy" for not pro ducing enough to provide for him self. The net result is a leveling process where achievement is stifled and mediocrity or even sloth is the status quo. This is the system held out as attractive to the young. The pro fessor I quoted could be con fronted with the question, why should the most able and profit able people keep producing, when their rewards, if any, are not pro portional to their achievements? But he evades this consideration and blithely states that individ uals will be able to see "something of their efforts developing on the scene" if they are not tied to the profit system. He is correct that results will be seen, but they will not be positive results, as any of numerous unprofitable govern ment activities can attest (e.g., postal service, public housing, so cial security, and medicare).

Anything Worth Doing Should Be Done Profitably The question now will be raised as to how we can say that the profit system applies to the ~road field of public works and espe cially pollution control, even grant106 THE FREEMAN February ed that it applies to private indus try (which I'm sure some would grant). The answer, perhaps glibly stated, is that it is still in dividual people who use the prod ucts of large engineering works. The fact that there are many peo ple using a public work at the same time does not relieve the producer from making the best product at the lowest possible cost, which is the criterion for profit ability. It is true that the field of pollution control is unique in that people do not use the products for their own direct benefit as much as to prevent their activities from harming other people. But this still requires a successful prod uct. If a consultant designs an abortion, the word spreads and he's out looking hard for clients, or his plans are not approved by a state agency empowered to grant construction permits.

It makes sense that while the lure of "nonprofit" and '''public service" is advanced by the civil engineering profession, engineerProfits ing students will avoid the field, and turn to chemical or electrical engineering careers in profit-ori ented organizations that offer the highest starting salaries. This could also explain why major tech nological advances in the pollu tion-control field are being forged by chemical engineers and others who are in private, "profitable" concerns. If civil engineering is to draw the talent it sees as necessary, it must break away from the "lure to nonprofitable service" and em phasize the fundamental attri butes of the profession. If this isn't sufficient, perhaps the broad civil engineering profession itself is outmoded, and the various spe cialties within the broad field re quire emphasis. In any event, if the profession can orient itself to the facts of reality' (Le., new de mands, new technology, and the necessity of making profits), that in itself would draw people who then would have a new avenue to profitable achievements. ~ IDEAS ON LIBERTY PROFITS .••are the special creation of the abiIjty, the know-how, the inventiveness, the foresight, the imagination, of the superior executive. They are, in effect, not added into price but taken out of the cost.

JOHN CHAMBERLAIN, The Roots of Capitalism HENRY HAZLITT remedies for povert~ FROM the beginning of history sincere reformers as well as dema gogues have sought to abolish or at least to alleviate poverty through state action. In most cases their proposed remedies have only served to make the problem worse. The most frequent and popular of these proposed remedies has been the simple one of seizing from the· rich to give to the poor. This remedy has taken a thou sand different forms, but they all come down to this. The wealth is to be "shared," to be "redis tributed," to be "equalized." In fact, in the minds of many re formers it is not poverty that is the chief evil but inequality. Henry Hazlitt is well-known to FREEMAN readers as author, columnist, editor, lecturer, and practitioner of freedom. This article will appear as a chapter in a forthcoming book, The Conquest of Poverty, to be published by Arlington House.

These direct redistribution schemes (including "land reform" and "the guaranteed income") are so immediately relevant to the problem of poverty that they war rant separate treatment. Here I must content myself with remind ing the reader that all schemes for redistributing or equalizing incomes or wealth must under mine or destroy incentives at both ends of the economic scale. They must reduce or abolish the incen tives of the unskilled and shiftless to improve their condition by their own efforts, and even the able and industrious will see little point in earning anything beyond what they are allowed to keep. These redis tribution schemes must inevitably reduce the size of the pie to be re distributed. They can only level down. Their long-run effect must 107 108 THE FREEMAN February be to reduce production and lead toward national impoverishment. The problem we face here is that the false remedies for pov erty are almost infinite in num ber. An attempt at a thorough refutation of any single one of them would run to disproportion ate length. But some of these false remedies are so widely regarded as real cures or mitigations of poverty that if I do not refer to them, I may be accused of having undertaken a comprehensive analy sis of the remedies for poverty while ignoring some of the most obvious.

What I shall do, as a compro mise, is to take up some of the more popular of the alleged reme dies for poverty and indicate briefly in each case the nature of their shortcomings or the chief fallacies involved in them.! Unions and Strikes The most widely practiced "remedy" for low incomes in the last two centuries has been the formation of monopolistic labor unions and the use of the strike threat. In nearly every country to day this has been made possible 1 I have examined most of these schemes in more detail elsewhere (chiefly in my Economics in One Lesson and in Man vs. the Welfare State) and must refer the interested reader to these and other sources for more extended dis cussion. to its present extent by govern ment policies that permit and en courage coercive union tactics and inhibit or restrict counteractions by employers. As a result of union exclusiveness, of deliberate ineffi ciency, of featherbedding, of dis ruptive strikes and strike-threats, the long-run effect of customary union policies has been to discour age capital investment and to make the average real wage of the whole body of workers lower, and not higher, than it would otherwise have been.

Nearly all of these customary union policies have been disheart eningly shortsighted. When unions insist on the employment of men that are not necessary to do a job (requiring unneeded firemen on Diesel locomotives; forbidding the gang size of dock workers to be reduced below, say, 20 men no matter what the size of the task; demanding that a newspaper's own printers must duplicate ad vertising copy that comes in al ready set in type, etc.) the result may be to preserve or create a few more jobs for specific men in the short run, but only at the cost of making impossible the creation of an equivalent or greater num ber of more productive jobs for others. The same criticism applies· to the age-old union policy of oppos ing the use of labor-saving ma1971 FALSE REMEDIES FOR POVERTY 109 chinery. Labor-saving machinery is only installed when it promises to reduce production costs. When it does that, it either reduces prices and leads to increased pro duction and sales of the com modity being produced, or it makes more profits available for increased reinvestment in other production. In either case its long run effect is to substitute more productive jobs for the less pro ductive jobs it eliminates. Yet as late as 1970, a book appeared by a writer who enjoys an exalted reputation as an economist in some quarters, opposing the in trod uction of labor-saving ma chines in the underdeveloped countries on the ground that they "decrease the demand for labor"!2 The natural conclusion from this would be that the way to maxi mize jobs is to make all labor as inefficient and unproductive as possible.

Overtime Rates A similar judgment must be passed on all "spread-the;..work" schemes. The existing Federal Wage-Hour Law has been on the books for many years. It provides that the employer must pay a 50 per cent penalty overtime rate for all hours that an employee works 2 Gunnar Myrdal, The Challenge of World Poverty (Pantheon Books, 1970), pp. 400-401 and passim. in excess of 40 a week, no matter how high the employee's regular hourly rate of pay. This provision was inserted at the insistence of the unions. Its purpose was to make it so costly for the employer to work men overtime that he would be obliged to take on additional workers. Experience shows that the pro vision has in fact had the effect of narrowly restricting the length of the working week. In the ten year period, 1960 to 1969 inclu sive, the average annual work week in manufacturing varied only between a low of 39.7 hours in 1960 and a high of 41.3 hours in 1966. Even monthly changes do not show much variation. The lowest average working week in manufacturing in the fourteen months from June, 1969 to July, 1970 was 39.7 hours and the high est was 41 hours.

But it does not follow that the hour-restriction either created more long-term jobs or yielded higher total payrolls than would have existed without the com pulsory 50 per cent overtime rate. No doubt in isola ted cases more men have been employed than would otherwise have been. But the chief effect of the over time law has been to raise pro duction costs. Firms already working full standard time often have to refuse new orders because 110 THE FREEMAN Februar'y they cannot afford to pay the penalty overtime necessary to fill those orders. They cannot afford to take on new employees to meet what may be only a temporarily higher demand because they may also have to install an equivalent number of additional machines. Higher production costs mean higher prices. They must there fore mean narrowed markets and smaller sales. They mean that fewer goods and services are pro duced. In the long run the inter ests of the whole body of workers must be adversely affected by compulsory overtime penalties.

All this is not to argue that there ought to be a longer work week, but rather that the length of the work week, and the scale of overtime rates, ought to be left to voluntary agreement between individual workers or unions and their employers. In any case, legal restrictions on the length of the working week cannot in the long run increase the number of jobs. To the extent that they can do that in the short run, it must necessarily be at the expense of production and of the real income of the whole body of workers. Minimum Wage Laws This brings us to the subject of minimum-wage laws. It is pro foundly discouraging that in the second half of the twentieth century, in what is supposed to be an age of great economic sophistica tion, the United States should have such laws on its books, and that it should still be necessary to protest against a nostrum so fu tile and mischievous. It hurts most the very marginal workers it is designed to help.

I can only repeat what I have written in another place. 3 When a law exists that no one is to be paid less than $64 for a 40-hour week, then no one whose services are not worth $64 a week to an employer will be employed at all. We cannot make a man worth a given amount by making it ille gal for anyone to offer him less. We merely depri ve him of the right to earn the amount that his abilities and opportunities would permit him to earn, while we de prive the community of the mod erate services he is capable of rendering. In brief, for a low wage we substitute unemploy ment. But I cannot devote more space to this subject here. I refer the reader to the careful reasoning and statistical studies of such eminent economists as Professors Yale Brozen, Arthur Burns, Milton Friedman, Gottfried Ha berler, and J ames Tobin, who have emphasized, for example, 3 Man V8. the Welfare State (Arling ton House, 1969), pp. 23-25.

1971 FALSE REMEDIES FOR POVERTY 111 how much our continually rising legal minimum wage requirements have increased unemployment in recent years, especially among teenaged Negroes. The Mounting Burden of Welfare Plans and Taxes In the last generation there has been enacted in almost every ma jor country of the world a whole sackful of "social" measures, most of them having the ostensible purpose of "helping the poor" in one respect or another. These in clude not only direct relief, but unemployment benefits, old-age benefits, sickness benefits, food subsidies, rent subsidies, farm subsidies, veterans' subsidies - in seemingly endless profusion. Many people receive not only one but many of these subsidies. The pro grams often overlap and duplicate each other. What is their net effect? All of them must be paid for by that chronically forgotten man, the taxpayer. In perhaps half the cases, Paul is in effect taxed to pay for his own benefits, and gains nothing on net balance (ex cept that he is forced to spend his earned money in other directions than he himself would have chosen). In the remaining cases, Peter is forced to pay for Paul's benefits. When anyone of these schemes, or a further expansion of it, is being proposed, its politi cal sponsors always dwell on what a generous and compassionate government should pay to Paul; they neglect to mention that this additional money must be seized from Peter. In order that Paul may receive the equivalent of more than he earns, Peter must be allowed to keep less than he earns.

The mounting burden of taxa tion ,not only undermines individ ual incentives to increased work and earnings, but in a score of ways discourages capital accumu lation and distorts, unbalances, and shrinks production. Total real wealth and income is made smaller than it would otherwise qe. On net balance there is more poverty rather than less. But increased taxation is so un popular that most of these "so cial" handout schemes are origi nally enacted without enough in creased taxation to pay for them. The result is chronic government deficits, paid for by the issuance of additional paper money. And this has led in the last quarter century to the constant deprecia tion of the purchasing power of practically every currency in the world. All creditors, including the buyers of government bonds, in surance policy holders, and the depositors in savings banks, are systematically cheated. Once more 112 THE FREEMAN February the chief victims are the working and saving families with moderate incomes.

Yet everywhere this monetary inflation, eventually so disruptive and ruinous to orderly balanced production, is rationalized by politicians and even by putative economists as necessary for "full employment" and "economic growth." The truth is that if this monetary inflation is persisted in, it can only lead to economic dis aster. Price and Wage Controls Many of the very people who originally advocate inflation (or the policies which inevitably lead to it), when they see its conse quences of raising prices and money wages, propose to cure the situation, not by halting the in flation, but by having the govern ment impose price and wage con trols. But all such attempts to suppress the symptoms enor mously increase the harm done. Price and wage controls, to pre cisely the extent that they can be made temporarily effective, only distort, disrupt, and reduce pro duction - again leading toward impoverishment.

Yet here again, as with the other false remedies for poverty, it would be an unjustifiable di gression to spell out in detail all the fallacies and evil consequences of special subsidies, improvident government spending, deficit fi nancing, monetary inflation, and price-and-wage controls. I have myself dealt with these subjects in two previous books: The Fail ure of the New Economics 4 and What You Should Know About Inflation;5 and there is, of course, an extensive literature on the sub ject. The chief point to be reiter ated here is that these policies do not help to cure poverty. Another false remedy for pov erty is the progressive income tax, as well as a very heavy burden of capital-gains taxes, inheritance taxes, and corporate income taxes. All of these have the effect of dis couraging production, investment, and capital accumulation. To that extent they must prolong rather than cure poverty.

Outright Socialism We come now to the final false remedy for poverty to be consid ered in this article - outright so cialism. Now the word "socialism" is loosely used to refer to at least two distinct proposals, usually but not necessarily tied together in the minds of the proposers. One of these is the redistribution of wealth or income - if not to 4 (Princeton: D. Van Nostrand, 1959.) 5 (Princeton: D. Van Nostrand, 1960, 1965.) 1971 FALSE REMEDIES FOR POVERTY 113 make incomes equal, at least to make them much more nearly equal than they are in a market economy. But the majority of those who propose this objective 'today think that it can be achieved by retaining the mech~ anisms of private enterprise and then taxing the bigger incomes to subsidize the smaller incomes. By "outright socialism" I refer to the Marxist proposal for "the public ownership and control of the means of production."

Now one of the most striking differences between the 1970's and the 1950's, or even the 1920's, is the rise in the political popularity of Socialism Two - the redistribu tion of income - and the decline in the political popularity of So cialism One - government owner ship and management. The reason is that the latter, in the last half century, has been so widely tried. Particularly in Europe there is now a long history of government ownership and management of such "public utilities" as the rail roads, the electric light and power industries, the telegraph and tele phone. And everywhere the his tory has been much the same deficits practically always, and in the main poor service compared with what private enterprise sup plied. The mail service, a govern ment monopoly nearly everywhere, is also nearly everywhere notorious for its deficits, inefficiency, and inertia. (The contrast with the performance of "private" in dustry is often blurred, however, in the United States, for example, by the slow strangulation of the railroads, telephone, and power companies by government regula tion and harassment.) As a result of this history, most of the socialist parties in Europe find that they can no longer at tract votes by promising to na tionalize even more industries.

But what is still not recognized by the socialists, by the public, or even by more than a small minor ity of economists, is that present government ownership and man agement of industries, not only in "capitalist" Europe but even in Soviet Russia, works only as well as it does because it is parasitic for accounting on the world mar ket prices established by private enterprise. Too Much Taken for Granted Weare so accustomed to the miracle of private enterprise that we habitually take it for granted. But how does private industry solve the incredibly complex prob lem of turning out tens of thou sands of different goods and serv ices in the proportions in which they are wanted by the public? How does it decide how many loaves of bread to produce and 114 THE FREEMAN February how many overcoats, how many hammers and how many houses, how many pins and how many Pontiacs, how many teaspoons and how many telephones? And how does it decide the no less dif ficult problem of which are the most economical and efficient meth ods of producing these goods?

It solves these problems through the institutions of private proper ty, the free market, and the ex istence of money - through the interrelations of supply and de mand, costs and prices, profits and losses. When shoes are in deficient sup ply compared with the marginal cost of producing them, their price, and therefore the margin of profit in producing them, will increase in relation to the price and margin of profit in producing other things. Therefore, the ex isting producers will turn out more shoes, and perhaps new pro ducers will order machinery to make them. When the new supply catches up with existing demand, the price of shoes, and the profit of making them, will fall; the supply will no longer be increased. When hats go out of fashion and fewer are worn, the price will decline, and some may remain un salable. Fewer hats will be made. Some producers will go out of business, and the previous labor and salvageable capital devoted to producing hats will be forced into other lines. Thus, there will be a constant tendency toward equalization of profit margins (comparative risks considered) in all lines. These yearly, seasonal, or daily changes in supply and demand, cost and price, and com parative profit margins, will tend to maintain a delicate but con stantly changing balance in the production of the tens of thou sands of different services and commodities in the proportions in which consumers demand them.

The Competitive Role The same guide of comparative money· prices and profits will also decide the kinds and proportions of capital goods that are turned out, as well as which one of hun dreds of different possible meth ods of production is adopted in each case. In addition, within each indus try as well as between industries, competition will be taking place. Each producer will not only be trying to turn out a better prod uct than his competitors, a prod uct more likely to appeal to buy ers, but he will also be trying to reduce his cost of production as low as he possibly can in order to increase his margin of profit - or perhaps even, if his costs are al ready higher than average, to meet his competition and stay in 1971 FALSE REMEDIES FOR POVERTY 115 business. This means that com petition always tends to bring about the least-cost method of production - in other words, the most economical and efficient method of production.

Those who are most successful in this competition will acquire more capital to increase their· pro duction still further; those who are least successful will be forced out of the field. So capitalist pro duction tends constantly to be drawn into the hands of the most efficient. But how can this appallingly complex problem of supplying goods in the proportions in which con sumers want them, and with the most economical production meth ods, be solved if the institutions of capitalism - private ownership, competition, free markets, money, prices, profits and losses - do not exist? The Baffling Problem of Economic Calculation Suppose that all property - at least in the means of production - is taken over by the state, and that banks and money and credit are abolished as vicious capitalist institutions; how is the govern ment to solve the problem of what goods and services to produce, of what qualities, in what propor tions, in what localities, and by what technological methods?

There cannot, let us keep in mind, be a hundred or a thousand different decisions by as many different bureaucrats, with each allowed to decide independently how much of one given product must be made. The available amount of land, capital, and labor is always limited. The factors of production needed to .make A are therefore not available for B or C; and so on. So there must be a single unified over-all decision, with the relative amounts and propor tions to be made of each com modity all planned in advance in relation to all the others, and with the factors of production all allo cated in the corresponding pro portions. So there must be only one Mas ter Production Plan. This could conceivably be adopted by a series of majority votes in a parliament, but in practice, to stop intermin able debate and to get anything done, the broad decisions would be made by a small handful of men, and the· detailed execution would probably be turned over to one Master Director who had the final word.

How would he go about solving his problem? We must keep in mind that without free competitive markets, money, and money-prices, he would be helpless. He would know, of course (if the seizure of the 116 THE FREEMAN February means of production has only re cently occurred), that people un der a capitalist system lived in a certain number of houses of vari ous qualities, wore a certain amount of clothing consisting of such and such items and qualities, ate a certain amount of food con sisting of such and such meats, dairy products, grains, vegetables, nuts, fruits, and beverages. The director could simply try to con tinue this pre-existing mix in definitely. But then his decisions would be completely parasitic on the previous capitalism, and he would produce and perpetuate a completely stationary or stagnant economy. If such an imitative so cialism had been put into effect in, say, the France of 1870, or even of 1770, or 1670, and France had been cut off from foreign con tacts, the economy of France would still be producing the same type and per capita quantity of goods and services, and by the same antiquated methods, as those that had existed in 1870, or even in 1770, or 1670, or whatever the initial year of socialization.

It is altogether probable that even if such a slavishly imitative production schedule were deliber ately adopted it would overlook thousands of miscellaneous small items, many of them essential, because some bureaucrat had neg lected to put them into the schedule. This has happened time and again in Soviet Russia. What Shall Be Produced? But let us assume that all these problems are somehow solved. How would the socialist Planners go about trying to improve on capitalist production? Suppose they decided to increase the quan tity and quality of family housing. As total production is necessarily limited by existing technological knowledge and capital equipment, they could transfer land, capital, and labor to the production of more such housing only at the cost of producing less food, or les.s clothing, or fewer hospitals, or schools, or cars, or roads, or less of something else. How could they decide what was to be sac..; rificed? How would they fix the new commodity proportions?

But putting aside even this formidable problem, how would the Planners decide what ma chines to design, what capital goods to make, what technological methods to use, and at what local ities, to produce the consumers' goods they wanted and in the pro portions they wanted them? This is not primarily a techno logical question, but an economic one. The purpose of economic life, the purpose of producing any thing, is to increase human satis factions, to increase human well1971 FALSE REMEDIES FOR POVERTY 117 being. In a capitalist system, if people are not willing to pay at least as much for the consumer goods that have been produced as was paid for the labor, land, cap ital equipment, and raw materials that were used to produce them, it is a sign that production has been misdirected and that some of these productive factors have been wasted. There has been a net decrease in economic well-being instead of an increase.

There are many feasible meth ods - crucible, Bessemer, open hearth, electric furnace, basic ox ygen process - of making steel from iron. In fact, there are today a thousand technically feasible ways of making almost anything out of almost anything. In a pri vate enterprise system, what de cides which method will be used at a given place and time is a comparison of prospective costs. And this necessarily means costs in terms of money. In order to compare the economic efficiency of one productive method with another the methods must be re duced to some common denomina tor. Otherwise numerical compar ison and calculation are impossi ble. In a market system this common denominator is achieved by comparisons in terms of money and of prices stated in money. It is only by this means that society can determine whether a given commodity is being produced at a profit or a loss, or at what com parative profits or losses any num ber of different commodities are being produced.

"Playing" Capitalism In recent years even the most doctrinaire communist countries have become aware of this. They are going to be guided hereafter, they say, by profit and loss. An industry must be profitable to justify itself. So they fix money prices for everything and measure profit and loss in monetary terms. But this is merely "playing" free markets. This is "playing" capitalism. This imitation is the unintended flattery that the com munists now pay to the system they still ostensibly reject and denounce. But the reason why this mock market system has so far proved so disappointing is that the com munist governments do not know how to fix prices. They have achieved whatever success they have had when they have simply used the quotations they found already existing for international commodities in the speculative markets - i.e., in the capitalist markets - in the Western world.

But there are a limited number of such grains and raw materials with international markets. In any case, their prices change daily, 118 THE FREEMAN February and are always for specific grades at specific locations. In trying to fix prices for com modities and the multitudinous objects not quoted on these inter national markets the communist countries are at sea. The Marxist labor theory of value is false and therefore useless to them. We can not measure the value of anything by the number of hours of "labor time" put into it. There are enor mous differences in the skill, qual ity, and productivity of different people's labor. Nor can we, as suggested by some Soviet econ omists, base prices on "actual costs of production." Costs of produc tion are themselves prices - the prices of raw materials, of fac tories and machinery, rent, inter est, the wages of labor, and so on. Our Differences Guide Us And nowhere, in a free market, are prices for long exactly equal to costs of production. It is pre cisely the diff erences between prices and costs of production that are constantly, in a free market economy, redirecting and chang ing the balance of production as among thousands of different com modities and services. In indus tries where prices are well above marginal costs of production, there will be a great incentive to increase output, as well as in creased means to do it. In industries where prices fall below mar ginal costs of production, output must shrink. Everywhere supply will keep adjusting itself to de mand.

Where prices have been set arbitrarily, real profits and losses cannot be determined. If I am a commissar in charge of an auto mobile factory, and do not .own the money I payout, and you are a commissar in charge of a steel plant, and do not own the steel you sell or retain the money you sell it for, and we are each ordered to show a profit, the first thing each of us will do is to appeal to the Central Planning Board to set an advantageous price (to him) for steel and for automo biles. As an automobile commissar, I will want the price of the cars I sell to be set as high as possi ble, and the price of the steel I buy to be set as low as possible, so that my own "profit" record will look good or my bonus will be fixed high. But as a steel commis sar, you will want the selling price of your steel to be fixed as high as possible, and your own cost prices to be fixed low, for the same reason. But when prices are thus fixed blindly, politically, and arbitrarily, who will know what any industry's real profits or losses (as distinguished from its nom inal bookkeeping profits or losses) have been?

1971 FALSE REMEDIES FOR POVERTY 119 Decentralized Chaos The problems of centralized di rection of an economy are so in superable that in socialist coun tries there are periodically experi ments in decentralization. But in an economy only half free - that is, in an economy in which every factory is free to decide how much to produce of what, but in which the basic prices, wages, rents, and interest rates are blindly fixed or guessed at by the sole ultimate owner of the means of production, the state - a decentralized system could quickly become even more chaotic than a centralized one. If finished products m, n, 0, p, and so on are made from raw rnateri als a, b, C, d, and so on in various combinations and proportions, how can the individual producers of the raw materials know how much of each to produce, and at what rate, unless they know how much the producers of the finished prod ucts plan to produce of the latter, how much raw materials they are going to need, and just when they are going to need them? And how can the individual producer of raw material a or of finished product m know how much of it to produce unless he knows how much of that raw material or fin ished product others in his line are planning to produce, as well as relatively how much ultimate consumers are going to want or demand?

An economic system without private property and free-market price guides must be chaotic. In a communistic system, centralized or decentralized, there will always be unbalanced and unmatched pro duction, shortages of this and un usable surpluses of that, duplica tions, bottlenecks, time lags, inef ficiency, and appalling waste. In brief, socialism is incapable of solving the incredibly compli cated problem of economic calcu lation. That problem can be solved only by capitalism. 6 ~ 6 For a fuller discussion of the prob lem of economic calculation, see my novel, Time Will Run Back (originally pub lished by Appleton-Century-Crofts in 1951 as The Great Idea, and republished under the new title by Arlington House in 1966). And see especially the discus sion by the great seminal thinker who has done more than any other to make other economists aware of the existence, nature, and extent of the problem, Lud wig von Mises, in his Socialism: An Analysis (London: Jonathan Cape, 1936, 1951, 1953, 1969), and in his Human Action (Chicago: Henry Regnery, third revised edition, 1963), pp. 200-231 and 698-715. See also Collectivist Economic Planning, edited by F. A. Hayek (Lon don: George Routledge, 1935), and Eco nomic Calculation in the Socialist Soci ety, by T. J. B. Hoff (London: William Hodge, 1949).

WHEN a majority seems deter mined to do foolish things, a re former might try to fool them into passing a prohibition law. But the majority will neither ac cept nor respect a law it fails to understand. If the better idea were widely understood, political reform would be quite easy - and quite unnecessary. Advocating a law, as a short cut to understand ing, wastes precious time and en ergy that might have been used to explain and justify the better idea. An excellent example of such patient explanation is afforded by the 85 Federalist Papers offered by Alexander Hamilton, John Jay, and James Madison during 1787 and 1788 to bring understanding and popular acceptance of the new Constitution. To be sure, they wanted "to pass a law"; but their approach was to help the people 120 WHO SHOULD VOTE? PAUL L. POIROT see the wisdom of the Federal Constitution, to enable them to live within the spirit as well as the letter of the law.

In view of the great interest today in who should be allowed to vote, one is surprised to find only two or three brief references in The Federalist to the matter of suffrage. Hamilton, .Madison, and Jay were content, it seemed, to rely on the laws of the various states to determine who might vote. And they could foresee no problems arising, no incentive for any state to manipulate its voting requirements in a manner detri mental to the national interest. They could never have believed that Congress (in 1913) would be granted power to tax incomes "without apportionment among the several States, and without re gard to any census or enumera tion." Nor could those men of 1787 1971 WHO SHOULD VOTE? 121 have conceived of the Federal gov ernment as a gigantic gravy bowl to be dipped into and drained by hungry blocs of voters. A Modern View 01 Government In the United States, at least, the Federal welfare state is pri marily a development of the twen tieth century. Governmental wel fare measures, if any, before World War I were handled largely at the local level; there had been no substantial use of Federal funds to buy votes, no reason for states to modify their voting laws and practices to gain special pri vi leges in Washington. Now, we know. And it is conceivable that the authors of the Federalist Pa pers might have given more atten tion to voting requirements had they imagined how far we might stretch the use of the ballot. There simply was no call to explain the limitations of balloting to Ameri cans of 1787 who understood why government should be limited. And until Americans of our time un derstand the case for limited gov ernment, there is no way to fool them into passing a law to limit the franchise.

Meanwhile, debate rages end lessly over who is to be allowed to vote - whether the franchise should be extended to teenagers - and about the inequities of this or that particular form of taxation. But seldom, if ever, does such debate get down to basic principles, that is, the discussion of voting and taxation in terms of what government is for and what it ought to be doing. If one believes, for instance, that a major purpose of govern ment is to bring about a more equal distribution of wealth taking from the rich to give to the poor - then it would seem entirely logical to confine the franchise to the "deserving poor" and to levy the costs of governing against the rich who supposedly have con spired to build up private for tunes. Teenagers, in that case, presumably would fall generally among the poor, who "deserve" to vote and to enjoy tax-exemption. But, sharing the wealth is not quite so peaceful and simple as some advocates seem to believe.

Someone always winds up with m.ore than "his fair share," and coercion inevitably is required to get it away from him again. Ad vocates of force always have fought, and always will, over who should exercise the coercive power. The Role 01 Force It is by no means clear to great numbers of Americans what they want their government to do. On the one hand, they are quite will ing to tax up to 70 per cent or rnore of a person's livelihood, year 122 THE FREEMAN February after year, especially if he is rela tively productive. Yet, these very same persons will "stand on prin ciple" against the draft of a young man for 2 years at soldier's pay. If citizens of the United States do not volunteer in sufficient force to carry out government commitments, say in Vietnam, then the government will draft them and their property. "Unfair," cry many of the citizens. "These young men are needed for a do mestic peace corps. The property taken by taxation is needed in the domestic war on poverty, aid to the cities, aid to education, aid to agriculture, aid to the unemployed - to each according to need."

These "friends of the poor" in the United States who advocate the use of government force to ac complish their domestic programs are logical, at least; they have no ideological quarrel with the com munists in North Vietnam or any where else. Their quarrel, rather, is with the idea of limited govern ment and with their "old-fash ioned" neighbors who believe that government's only function is to protect life and property and to keep the peace. Respect for life and property does not originate among men as a fear of reprisal by force in case of trespass but as a sense of pro priety, a conscience, a capacity to distinguish right from wrong. Such a distinction is not deter mined by voting or by tossing a coin. It is a moral decision an in dividual can and must make for himself only, with such guidance as he may derive from his own ex perience and thought and from the shared experience and wisdom of others. If it is right to defend one's own life or property, then it cannot at the same time or by the same reasoning be right to take the life or property of another by force. Those who can understand such reasoning and control their actions accordingly are then ready for the idea of limited gov ernment - a policing agency of society to preserve the peace, to protect the life and property of every peaceful person against threatened or actual violence by any other person or group.

A Question of Responsibility In a sense, each human being ought to be in charge of his own life ~a self-reliant, self-respon sible, peaceful,mature individual. And in that case the principle of one-man-one-vote seems reason able. But few, if any, of us ever quite measure up to the persons we ought to be. And it would, therefore, seem advisable to limit the franchise, or refuse it alto gether to those who clearly fail to beha ve responsibly. Youth, to be sure, is not an in1971 WHO SHOULD VOTE? 123 fallible sign of immaturity and ir responsibility. But no one expects a year-old baby to vote for Presi dent. There's no magic in anynum ber, but it probably is just as well to withhold voting rights from all persons under 21 years of age. Automobile liability insurance companies, for instance, consider all young men under 25 to be more or less irresponsible. Buying votes is generally frowned upon as a reprehensible practice. And if it is bad practice, then it would seem reasonable to withhold the franchise from any person the livelihood of whom is derived primarily from govern ment, say more than 50 per cent, and in any case if he receives more than $10,000 a year from tax-col lected sources. This would include, among others, most public officials, government employees, welfare clients, teachers in public schools, employees of firms largely de pendent on government contracts, inmates of prisons and other gov ernmentalinstitutions.

With reference to criminals and others of proven irresponsibility, the franchise probably should be withheld for a certain period of probation, say for two years fol lowing release from any penal in stitution; or, for at least two years following conviction on any criminal charge even if no fine or other sentence were assessed. The recent public clamor about the poverty level, and the very idea that families with less than $3,000 of annual earnings would be elig ible for subsidy suggests that ev ery member of such a family should be ineligible to vote as long as that family condition of pov erty persists. Furthermore, in view of the heavy burden of taxes in the United States, it would seem ad visable to withhold the voting priv ilege from all members of any family group that pays less than a nominal figure of say $300 a year in Federal, state, and local direct tax levies. Bankruptcy, whether voluntary or at the insistence of creditors, should be sufficient cause to re lieve any person of the voting privilege for a reasonable period of time, such as ten years.

The Practice of Freedom Hinges on Education and Understanding The foregoing is not intended to cover all cases of irresponsible action, but· to suggest some of the more flagrant examples that might well be considered by those who want a government primarily for the protection of life and property and the preservation of peaceful conditions in the community. If a person is able to show that he is self-reliant and has not behaved irresponsibly toward others, let 124 THE FREEMAN February him vote in elections and other governmental decisions that ought to be reached democratically. In the final analysis, however, an individual will tend to look upon this limitation of voting rights through the same eyes by which he views the purpose of gov ernment. If he wants to protect property, he'll leave the decisions Trampling Justice to the owners; but if he wants to confiscate property and is not con cerned about such waste of scarce resources, he'll do everything he can to enfranchise the non-owners and herd them to the polling booth.

In any case, the practice of free dom, today as in 1787, is entirely a matter of education and under standing. ~ IDEAS ON LIBERTY No MAN is allowed to be a judge in his own cause, because his interest would certainly bias his judgment, and, not improbably, corrupt his integrity. With equal, nay with greater reason, a body of men are unfit to be both judges and parties at the same time; yet what are many of the most important acts of legislation but so many judicial determinations, not indeed concerning the rights of single persons, but concerning the rights of large bodies of citizens? And what are the different classes of legislators but advocates and parties to the causes which they determine? ... The apportionment of taxes on the various descriptions of prop erty is an act which seems to require the most exact impartiality; yet there is, perhaps, no legislative act in which greater oppor tunity and temptation are given to a predominant party to trample on the rules of justice. Every shilling with which they overburden the inferior number is a shilling saved to their own pockets.

J AMES MADISON, from The Federalist Papers, No. 10 A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN THE FLOWERING OF A TRADITION WILLIAM F. BUCKLEY, JR. has a genius for provocative titles. The label on the cover of his anthology of American conservative thought in the twentieth century, Did You Ever See a Dream Walking? (Bobbs-Merrill, $8.50), comes from a half-forgotten popular song. For me, the Buckley choice is absolutely delicious, for I recall from some thirty years ago that the Chicago political scientist, Charles Merriam, used the same rhetorical query from the same song to introduce a profile of the old curmudgeon of New Deal days, Harold Ickes, whose political thought Bill Buckley would surely describe as a nightmare. Buckley's answer to the ritual istic "liberalism" which has, in the course of forty years, seeped out of the intellectual weeklies to become the conventional wisdom of our mass magazines is a highly personal one, even though it is here expressed through the choice of twenty-three separate contribu tors. The point to be made about the Buckley anthology is that it represents for the most part the flowering of a tradition, with most of the essays coming from the nineteen fifties and the nineteen sixties. Albert Jay Nock and Henry Hazlitt are among the few older hands. Because this book is a flowering, it has a mellowness, a suavity of articulation, an ur banity, and a tolerance for eclec ticism within a 'general scheme that would have been broken if the editor had ranged backwards in time to the earlier years of the century, when much of our con serva tism - or libertarianism had a desperate tone. Bill Buck ler's conservatism is enormously civilized, which means that it de mands certain standards of de bate, certain stylistic qualities, a rejection of the type of polemicist that Emerson must have had in mind when he asked, "Why so hot, little man?"

The Buckley taste for polem icism that is good literature is almost flawless. The first figure to walk in his dream-become-actual is Garry Wills, who has the lead ing position in the section called "The Historical and Intellectual Background." Mr. Wills here ex hibits a nineteenth century Whig gish - or maybe it is' mild Tory view of the state, which is to say 125 126 THE FREEMAN February that he is determinedly non ideo logical but generally in favor of less government action rather than more. It is not the business of the state to provide ideal justice, says Mr. Wills, for that would require marshaling too much force in the hands of fallible men. Nor should the state try to compensate men for their failings. Equity and order come before abstract equal ity and abstract justice, with "con venience" playing the mediating role. Men, in general, must have scope to exercise their wills.

One would have predicted from his tone in "The Convenient State" that Garry Wills would have been happy to accept the sort of give at-the-edges interventionism that marks the Richard Nixon concep tion of the state. The Nixon view, vvhich reminds one of Disraeli, is at least an improvement over the harsher will to ideal justice that dictated the leveling efforts of the Great Society and really "polar ized" our society. But no, the present-day Garry Wills has taken to assailing with an unholy passion the Nixon-type "convenience" which accepts the free market with minor reservations. Could it be that if Garry Wills had been a little more rigorous in "The Con venient State," he would have avoided becoming something of a doctrinaire antilibertarian? Mr. Buckley does not say. But it could have been with a tacit urge toward balance that the second section called "The Limitations of the State" includes sterner libertari ans Henry Hazlitt, Milton Fried man, Max Eastman - and even Albert Jay Nock, who is admitted for brilliance of style despite a "merry anarchism" that Mr.

Buckley rejects for himself. Mr. Buckley despairs of giving any exact definition to "conserva tism"; he prefers to make what he calls an "empirical probe." His empiricism accepts people who think of conservatism variously as a position and an attitude, with religion sometimes entering the equation and sometimes not. Whittaker Chamber's "The Di rect Glance" pleads for a. funda mentally religious opposition to communism; the Max Eastman of "Freedom and the Planned Econ omy" would settle for some simple common sense about keeping eco nomic power diffused. Willmoore Kendall, though he was a religious man at bottom, leaves other-worldly considerations out of his politics; he accepts the Madisonian balance as a basis for what he calls "The Two Majori ties" - meaning the concurrent majority that sets Congress up as a watchdog on the President, and vice versa. Brent Bozell, who in his later career has been moving toward 1971 THE FLOWERING OF A TRADITION 127 theocracy, is presented here in an earlier guise. Not quite a strict constructionist, Bozell thinks it proper for judges to push the Constitution in an "unwritten di rection" if a big consensus favors it. He does not, however, think the Supreme Court should "make law" by its decisions at a time when the nation is still unable to decide between two possible in terpretations of Constitutional language. If the Court moves faster than public opinion, as it did on the integration issue, it produces a chaotic period in society.

Sometimes the Buckley aper~us, which are plentiful as blackberries in the separate introductions which he contributes to the vari ous sections of his anthology, are more piercing than the essays that follow. Thus, in the section that is titled "The Relevance of Social Science," which contains selections from Leo Strauss, Jeffrey Hart, Eric Voegelin, and Christopher Dawson (one of two Englishmen in an American anthology), the Buckley remarks on the "limits of empiricism" come through with sharpness and clarity where Strauss and Voegelin, though worthy scholars and able teachers, spin things out. Strauss muffles his originality with a sing-song tone, and Voegelin uses an abso lutely barbarous academic language, "immanentizing the escha ton" all over the lot. Jeffrey Hart, whose style is clean and brisk in his essay on Edmund Burke, could tell Voegelin that you do not make converts to a point of view by writing for Divinity Ph.D.'s who already agree with you.

There isn't room in this space to deal adequately with Mortimer Smith on schools, or Jane Jacobs on city renewal, or Harry Jaffa on the ticklish subject of giving free speech to communists, or Ernest van Den Haag on the claims and rights of race, or Russell Kirk on the need for rewards, or Frederick Wilhelmsen on the origins of Christmas, or Hugh Kenner on the "new scholarship," or Michael Oakeshott on the rise of the masses, or Frank Meyer and James Burnham, both of whom I have reviewed in these pages before. Besides, I wish to lament Mr. Buckley's failure to include some older, admittedly less urbane lib ertarians to his gallery who had a lot to do with preparing the ground for the flowering that is presented in the anthology. I miss such things as Isabel Paterson's sharp analysis of the totalitarian potential of a public school system, and Peter Drucker's description of the Founding Fathers as "con servative counterrevolutionists,"

and Garet Garrett on the econom ics of the first Henry Ford, and 128 THE FREEMAN February Rose Wilder Lane on the rebirth of freedom. Frank Chodorov should be here to join his master, Albert Jay Nock, and we could have welcomed something from John Dos Passos's exploration~ in early American history. Moreover, Ludwig von Mises has lived in America for a long time, and Hayek was at the University of Chicago for a number of years. They were part of the dream that began to walk here in the nineteen forties. However, all anthologies are necessarily personal, and Mr. Buckley is entitled to his own. He is himself a most valiant part of the flowering of the mid-century which he has so discerningly pre sented. ~ THE CONSERVATIVE TRA DITION IN EUROPEAN THOUGHT, Selected and edited by Robert Schuettinger (New York: G. P. Putnam's Sons, 1970) 385 pp. $6.95. Reviewed by Edmund A. Opitz THE PHILOSOPHY of conservatism stems mainly from Edmund Burke, and it is fitting, therefore, that the opening sections of this fine anthology should be drawn from his works. The classical world is represented by Plato, Aristotle, and Cicero; Hegel tries to tell us what he understands by the state as "the realized sub stantive will"; and the judicious Richard Hooker expounds the idea of the natural law. Tocqueville warns us of the despotic tenden cies that come masked in demo cratic forms, and Disraeli outlines the answer of Tory Democracy to this danger. The case for mon archy is presented by the Arch duke Otto. On more congenial ground, so far as modern readers are concerned, there is Roepke, Jewkes, Oakeshott, and Hayek.

The rich diversity of views in this anthology serve to make con servatism's major point; men are various, and their manifest indi viduality must be reflected in social arrangements aimed at max imizing freedom. The believer in liberty, label him as you please, is one who respects human differ ences as somehow part of the cosmic scheme; he does not feel called upon to correct God or Na ture by uniformitarian politics imposed on unwilling subjects. He works toward a better society meaning one .that is freer and more just - but he knows that a perfect society is a chimera and the effort to achieve one leads to new excuses for tyranny. He is against social engineering because he wants each person to work out his own social destiny. The book has an enlightening Introduction by Professor Schuet tinger, and ample suggestions for further reading. , the Freeman VOL. 21, NO.3. MARCH 1971 Th'e Kingdom on Earth Leonard E. Read 131 Reflections on "the problem" and progress toward solution, on FEE's 25th Anniversary.

The Poor Laws of England Henry Hazlitt 137 Four hundred years of welfare-state programs suggest that political cures for poverty may be futile. Radica,1 Economics, Old and New Hans F. Sennholz 147 How the "new economics" is related to pollution as cause and consequence. Subsidizinga Crisis: The Teacher Glut, 1971 Gary North 154 A case history of interfering with the market in education to create a surplus of teachers. Thomas Cooper: Early Libertarian A skilled economic theoretician - often ahead of his time. Oscar W. Cooley 168 AntitrustHistory: The American Tobacco Case of 1911 D. T. Armentano 173 An economic review of one of the historic cases in antitrust law. So Who Are You, Young Man? Julian Chase 187 A poetic appeal for understanding and tolerance of traditional values. Book Review: 189 IlThe Silent Revolution: The Industrial Revolution in England as a Source of Social Change" by John W. Osborne.

Anyone wishing to communicate w,ith authors may send first-class mail in care of THE FREEMAN for forwarding.

tile 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 111anaging 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, 1971, 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.

Articles from this journal are abstracted and indexed in Historical Abstracts and/or America: History and Life. THE FREEMAN also Is available on microfilm, Xerox University Microfilms, Ann Arbor, Mich· igan 48106. Permission granted to reprint any article from this Issue, with appropriate credit, except "The Poor Laws of England," and "Anti· trust History: The American Tobacco Case of 1911."

The Kingdom on Earth TH ANNIVERSARY OF FEE LEONARD E. READ MARCH 1971-the 25th Anniver sary of The Foundation for Eco nomic Education! "Well, what on earth have you accomplished in a quarter cen tury?" That is a valid question which, alas, cannot be answered with a Victory salute. Indeed, surface ap pearances point to nothing but losses, the broad social practice of freedom having steadily waned through the years since FEE began. In the light of such evi dence, why keep trying? There is reason aplenty for per sistent effort, not only on our part but on yours, whoever you are. The private ownership, free ex change, limited government way of life, more stumbled upon than brought about by any precise de sign, has no long-range survival value except as a supporting rationality comes to the rescue.! This remarkable politico-economic' ar rangement cannot last without in tellectual, moral, and spiritual un derpinnings, many of which have yet to be discovered, understood, explained. In the absence of un derstanding, coercive collectivism - statism - spills in to occupy the vacuum. Witness what's happen ing!

In a sense, then, these 25 years have been a period of probing be neath our waywardness to solid foundations upon which to erect and refine a rationale that will make a free society possible. Do our troubles stem from eco nomic illiteracy? We thought so in the beginning. Without discount1 For a development of this point, see "A Role for Rationality" in my Let Freedom Reign (Irvington-on-Hudson, N. Y.: The Foundation for Economic Ed ucation, 1969), pp. 9-24. 131 132 THE FREEMAN March ing the need for economic under standing, we no longer view it as the bedrock on which to build. For were everyone lacking in moral scruples, the mastery of economics would not make a whit of differ ence. Fundamentally, ours is a moral problem. What Accounts for the Rises and Declines of Society? All history attests to the rise and decline of nations, societies, civilizations. And any thoughtful person, when his own society ap pears to be on the wane, will try to get at the root of the rnatter.

What is the unique strength of an emerging society or the peculiar weakness that leads toward social decline? What accentuates these ups and downs? Why this monot onous evolutionary-devolutionary sequence? If there were a simple and ob vious explanation, it long since would have been brought into the open for all to see and, hopefully, bent to our purpose. I believe that this obscure force, or the lack of it, must be identified with the human psyche; it is a quality that develops or deterio rates in the minds of men. The cause of these ups and downs oc curs within each individual. Con tagious, yes, for like begets like; but this would be the only sense in which the force might be construed as social. Unquestionably, this is a personal problem. What, then, can it be? I suggest that it has to do with the rise and decline of integrity: the accurate reflection in word and deed of whatever one's highest conscience dictates as Truth. Such dictates of conscience may not in fact be Tru th but they are the nearest approximation possible for any human being - the closest he can ever come to The Kingdom.

What is to be inferred from "The Kingdom"? If one posits, as I do, an Infinite Consciousness, an out-of-reach Ideal - Creation then Infinite Truth is The King dom. And the eternal challenge to imperfect man is that he bring himself into as much possession of Truth as he can. The key is familiar, though rarely understood as related to the ups and downs of societies: "Seek ye first the Kingdom of God and his Righteousness, and these things will be added unto you." This admonition is being ignored and thus lies in near obscurity. In other words, if one will first and foremost seek Truth (The Kingdom) and Righteousness (in tegrity), then these things - a societal rise being one of "these things" - will be the dividend. But, seek first the dividend, there by relegating Truth and Right eousness to an inferior position, 1971 THE KINGDOM ON EARTH 133 then the result surely will be a so ciety in decline. In the words of C. S. Lewis, "Aim at Heaven and you get earth thrown in. Aim at earth and you will get neither."2 Truth Is Righteousness Now to my point: Truth and Righteousness cannot be torn asunder without obliterating Truth; these are two sides of the same moral coin, that is, they are the inseparable components of The Kingdom on earth! To illustrate: It is a sin to feather my own nest at the expense of others. My high est conscience pronounces this as a Truth. For me to speak or write or act in a contrary manner is to in dulge in dissimulation, to flout Righteousness, to live a. lie, to deny the Truth that is within me.

With reference to the rise and decline of integrity, it is neces sary, at the outset, to re-empha size that whatever any individual's conscience dictates as Truth may not in fact be Truth but here, and here alone, reside such Truths as mankind possesses. One's highest conscience not only can but often does hold fallacies and errors to be Truths. No human being is or ever has been free from this flaw. Thus, even our most accurate reflections - integrity - pronounce fallacies 2 See Mere Christianity by C. S. Lewis. (London: Goeffrey Bles, Ltd., 1953), p. 106. and errors, perhaps more often than not. Reflect on the millions of people who make perfectly honest pro nouncements on subjects about which they know little, if anything at all. For instance, according. to the tenets I hold to be Truths, Karl Marx expounded numerous errors. Yet, he was - at some points - a man of integrity and in 1848 proudly claimed this vir tue for himself and his kind: "The communists disdain to conceal their views and aims." I like the young Marx for that!

AndI admire integrity in every one despite the fact that accurate reflection in word and deed pro jects an enormous amount of non sense. Consider those who speak or write or act contrary to what they believe to be Truth, those who practice dissimulation. Is nonsense thereby curbed? Indeed, it is not; it is multiplied. Were everyone to behave in this manner, Truth would have no way of coming to light - mankind confronted en tirely with falsehood! There are Truths and many are kno'wn, else we would not be here. But we must look upon man-per ceived Truths as extreme rarities when compared to Infinite Truth. These rare and precious gems of Truth, like diamonds, are mined - brought to the surface - for 134 THE FREEMAN March man's use in company with inordi nate amounts of useless residue. When integrity is the rule, fal lacies and errors are brought hon estly into the open, where they can be seen and discarded. Pre cisely as in mining, the waste is relegated to the slag pile!

"We are all dwarfs mounted upon the shoulders of giants."3 Who are the giants, the ones on whose shoulders all of us are mounted? Exclusively the ones who have, over the ages, combined Righteousness with such Truths as they apprehended - men of integ rity! Civilization, indeed the very existence of mankind, rests on in tegrity! Civilizations can rise only as that virtue is practiced and held sacred; they must decline when dissimulation is the mood and the mode. Wrong Procedures What of those who seek first the dividends rather than the King dom? What are "these things"? One need not look into the be havior of others in order to find this reversal of emphasis. I can look into the mirror and there are plenty of examples. True, some of these desires for "things" have been overcome, disciplined out of practice, but the scars remain and the memories persist as tempta3 Fulbert of Chartres (Eleventh Century) tions. However, they must be rec ognized for what they are - "these things" or dividends - if I am not to yield to them.

For instance, I wish to be favor ably received, by a certain schol arly, affluent individual who be lieves in the essentially free so ciety - except tariffs. Shall I con ceal from him my belief in free exchange, thus trying to win his approbation, or shall I reveal what my conscience dictates as Truth, inviting his enmity? This is a con siderable temptation. But if I were to yield, and everyone else did the same, freedom in transactions would be an unknown concept. To yield is dissimulation; not to yield is integrity. Or, take the thesis I'm pro pounding here. Suppose HThe Kingdom" were positively scorned by everyone else rather than sim ply ignored as it is today by those who proclaim that God is dead. Shall I reveal, or conceal, what my conscience dictates as Truth? One is tempted to "go along" with the crowd, rather than risk abuse and disgrace. "I must be practical" is among the most forbidding obstacles to Righteousness. When socialism is rampant, as now, there is the temptation to weasel, to com promise or, at best, to counsel a cautious and gradual retreat, thus condoning by implication the so1971 THE KINGDOM ON EARTH 135 cialistic thesis. I once asked a dis tinguished economist why he in serted one socialistic chapter in an otherwise excellent book. He thought it would save him from excessi ve condemna tion by the academic fraternity. There is the temptation not to stand alone with conscience; one fears being re garded as "a nut."

Fame, fortune, acclaim, popu larity, and the like are "these things." And to seek them first is to risk a substitution of dissimu lation for integrity. Seek Truth, then "these things" come along as the dividend. Admittedly, this basic admoni tion calls for faith in something beyond the obvious. Why my faith? Not Dangerous to Be Honest Twenty-six years ago, I came to New York City as the Executive Vice-President of the National In dustrial Conference Board. Short ly after arrival, I was invited to meet with a dozen top corporate executives, an ad hoc affair unre lated to the NICB. Following din ner, the purpose of the meeting was revealed : "We are here not to discuss the merits or demerits of the Full Employment Act; we are all opposed to it. The question is, what shall we do about it?" Im mediately, I resolved to be a listen er only. For how these men might appraise the newcomer would have much to do with my career.

For two hours I listened : "We must not reveal our position; in stead, we shall hire college pro fessors to appear before the Con gressional Committee and speak our piece." And so on. Finally, one of them asked my views. The thoughts that raced through my mind! If I tell these men what I really think, I am a goner. Not to tell them is to live a lie, to seek approval before men rather than God. I told them! There was dead silence, my fate seemingly sealed. Then one of them exclaimed, "Read is right!" As it turned out, their views were presented openly to the Con gress by one of them. As for me, this was among the most reward ing and instructive experiences of my life. Everyone of that group welcomed me as a friend, often seeking my counsel. Why? Each felt certain that I would tell him the truth as I saw it. Experience tells me it is not dangerous to be honest, to practice integrity. Indeed, accurate reflec tion of what one believes to be Truth engenders respect, trust, friendliness - assuming, of course, that one is not argumentative, abusive, cantankerous. And why should one be? I have no call to compel anyone to accept my views; my moral obligation is to express 136 THE FREEMAN March my thoughts honestly for what ever others may wish to make of them.

Truth for Its Own Salce While it is true that integrity breeds respect, trust, friendliness, and other desiderata, it is well to keep in mind that these are only dividends. Therefore, it is not for these that one is righteous but for Truth's sake, and that alone. It is simply a matter of getting the priorities in proper order. Finally, the individual who practices integrity is teachable for, by definition, he is a Truth seeker. The dissimulator, on the other hand is, at best, no more To Reverse the Direction than a dividend seeker. He has torn Truth and Righteousness apart and, thus, has alienated himself from such Truth as is within him. Until he reverses the priorities, he is not educable. As one reflects on this subject, it becomes obvious that when dis simulation is widespread, as it seems to be now, nations, socie ties, civilizations suffer decline. To reverse the direction requires only that integrity become the way, the mode, the style. Then Truth will out - not all at once, never fully to any man or any generation or even during any century, but bit by bit to those who persist in the eternal search., IDEAS ON LIBERTY ONE FREE MAN says frankly what he thinks and feels in the midst of thousands who by their actions and words maintain just the opposite. It might be supposed that the man who has frankly ex pressed his thought would remain isolated, yet in most cases it happens that all, or the majority, of the others have long thought and felt the same as he, only they have not expressed it. And what yesterday was the novel opinion of one man becomes to-day the general opinion of the majority. And as soon as this opinion is established, at once by imperceptible degrees but irresistibly, the conduct of mankind begins to alter.

LEO TOLSTOY. from the essay. "Patriotism and Christianity" (1894) HENRY HAZLITT The Poor Laws of En"land (Bettmann Archive) ONE WOULD GET the impression, reading most of the discussions in today's American newspapers and magazines, that no one had ever thought of doing anything for the poor until Franklin Roosevelt's New Deal in the 1930's, or even until President Johnson's "war on poverty" in the 1960's. Yet private charity is as old as mankind; and the history of governmental poor relief, even if we ignore the an cient world, can be traced back more than four centuries. In England the first poor law was enacted in 1536. In 1547 the city of London levied compulsory taxes for the support of the poor. In 1572, under Elizabeth, a comHenry Hazlitt is well-known to FREEMAN readers as author, columnist, editor, lecturer, and practitioner of freedom. This article will appear as a chapter in a forthcoming book, The Conquest of Poverty, to be published by Arlington House.

pulsory rate was imposed on a na tional scale. In 1576 the compul sion was imposed on local author ities to provide raw materials to give work to the unemployed. The Statute of 1601 compelled the Ov erseers of the Poor in every parish to buy "a convenient stock of flax, hemp, wool, thread, iron and other stuff to set the poor to work." It was not compassion alone, or perhaps even mainly, that led to these enactments. During the reign of Henry VIII, bands of "sturdy beggars" were robbing and terror izing the countryside, and it was hoped that the relief or the provi sion of work would mitigate this evil. Poor relief, once started, kept growing. According to the early statistician, Gregory King. (1648 1712), toward the end of the sev137 138 THE FREEMAN March enteenth century over one million persons, nearly a fifth of the whole English nation, were in occasional receipt of alms, mostly in the form of public relief paid by the parish.

The poor rate was a charge of nearly £800,000 a year on the country and rose to a million in the reign of Anne. "There was seldom any shame felt in receiving outdoor relief, and it was said to be given with a mischievous profusion. Richard Dunning declared that in 1698 the parish dole was often three times as much as a common labor er, having to maintain a wife and three children, could afford to ex pend upon himself; and that per sons once receiving outdoor relief refuse ever to work, and 'seldom drink other than the strongest ale house beer, or eat any bread save what is made of the finest wheat flour.' The statement must be re ceived with caution, but such was the nature of the complaint of some rate-payers and employers about the poor law."1 Guaranteed Income In 1795 a momentous step was taken that enormously aggravated the whole relief problem. The jus tices of Berkshire, meeting at Speenhamland, decided that wages below what they considered an ab1 G. M. Trevelyan. English Social His tory (David McKay, 1942), p. 278.

solute minimum should be supple mented by the parish in accord ance with the price of bread and the number of dependents a man had. Their decision received par liamentary confirmation the next year. In the succeeding 35 years this system (apparently the first "guaranteed minimum income") brought a train of evils. The most obvious to the taxpay ers was a geometric rise in the cost of relief. In 1785 the total cost of poor law administration was a little less than £2 million; by 1803 it had increased to a little more than £4 million; and by 1817 it had reached almost £8 million. This final figure was about one sixth of total public expenditure. Some parishes were particularly hard hit. One Buckinghamshire village reported in 1832 that its expenditure on poor relief was eight times what it had been in 1795 and more than the rental of the whole parish had been in that year. 2 One village, Cholesbury, be came bankrupt altogether, and others were within measurable distance of it.

But even the public expense was not the worst of the evil. Much grea ter was the increasing demor alization of labor, culminating in the riots and fires of 1830 and 1831. 2 Encyclopaedia Britannica, 1965. Ar ticle, "Poor Law." Vol. 18, p. 218.

1971 THE POOR LAWS OF ENGLAND 139 It was in the face of this situa tion tha t the Whig government decided to intervene. In 1832 a royal commission was appointed to inquire into the whole system. It sat for two years. The report and recommendations it brought in be came the basis of the reforms adopted in Parliament by a heavy majority (319 to 20 on the second reading) and embodied in the Poor Law Amendment Act of 1834. The report was signed by the nine commissioners. The secretary was Edwin Chadwick; one of the commissioners was the eminent economist, Nassau W. Senior. The text of the report itself ran to 362 pages; together with its appen dices it came to several bulky vol umes. It was widely regarded as a "masterly example of a thorough, comprehensive, and unbiased in quiry." As late as 1906, one Brit ish writer, W. A. Bailward, de scribed it as a "Blue-book which, as a study of social conditions, has become a classic."3 Repeating Ancient Errors But today the report is just as if it had never existed. Schemes are being proposed on all sides, which their sponsors assume to be brilliantly original, but which would restore the very relief and 3 J. St. Loe Strachey (ed.), The Manu facture of Paupers (London: John Mur ray, 1907), P. 108.

income-guarantee systems that failed so miserably in the late eighteenth and early nineteenth centuries, and which the report of 1834 so devastatingly analyzed. The Speenhamland plan, and schemes like it, endeavored to in sure that people were paid, not in accordance with the going rate of wages, or the market value of their services, but in accordance with their "needs," based on the size of their families. A married man was paid more than a single man, and paid still more on a scale upward in accordance with the number of his children. The government Le., the taxpayers - paid the dif ference between his market rate of wages and this scale of mini mums. One effect, of course, was to de press the market rate of wages, because the employer found he could reduce the wages he offered and let the taxpayers make up the deficiency. It made no difference to the worker himself who paid him how much of the fixed total that he got. Another effect was to de moralize the efficiency of labor, be cause a man was paid in accord ance with the size of his family and not in accordance with the worth of his efforts. The average unskilled laborer had nothing to gain by improving his efforts and efficiency, and nothing to lose -by relaxing them.

140 THE FREEMAN March Conditions in 1834 But let us turn to the text of the Commission's report, and let the following excerpts speak for them selves. They are taken almost at random: "The laborer under the existing system need not bestir himself to seek work; he need not study to please his master; he need not put any restraint upon his temper; he need not ask relief as a favor. He has all a slave's security for sub sistence, without his liability to punishment. As a single man, in deed, his income does not exceed a bare subsistence; but he has only to marry, and it increases. Even then it is unequal to the support of a family; but it rises on the birth of each child. If his family is numerous, the parish becomes his principal paymaster; but small as the usual allowance of 28. a head may be, yet when there are more than three children, it generally exceeds the average wages given in a pauperized district. A man with a wife and six children, en titled, according to the scale, to have his wages made up to 168. a week, in a parish where the wages paid by individuals do not exceed 108. or 128., is almost an irrespon sible being. All the other classes of society are exposed to the vicis situdes of hope and fear; he alone has nothing to lose or to gain ....

"The answer given by the magistrates, when a man's conduct is urged by the overseer against his relief, is: 'We cannot help that; his wife and family are not to suffer because the man has done wrong.' ... "Too frequently petty thieving, drunkenness, or impertinence to a master, throw able-bodied labor ers, perhaps with large families, on the parish funds, when relief is demanded as a right, and if re fused, enforced by a magistrate's order, without reference to the cause which produced his distress, viz., his own misconduct, which re mains as a barrier to his obtain ing any fresh situation, and leaves him a dead weight upon the hon esty and industry of his parish .... "It appears to the pauper that the government has undertaken to repeal, in his favor, the ordinary laws of nature; to enact that the children shall not suffer from the misconduct of their parents - the wife for that of the husband, or the husband for that of the wife: that no one shall lose the means of comfortable subsistence, whatever be his indolence, prodigality, or vice: in short, that the penalty which, after all, must be paid by some one for idleness and improvi dence, is to fall, not on the guilty person or on his family, but on the proprietors of the lands and houses encumbered by his settle ment ....

1971 THE POOR LAWS OF ENGLAND 141 " 'In the rape of Hastings,' says Mr. Majendie, 'the assistant over seers are reluctant to make com plaints for neglect of work, lest they should become marked men and their lives rendered uncom fortable or even unsafe. Farmers permi t their laborers to recei ve relief, founded on a calculation of a rate of wages lower than that actually paid: they are unwilling to put themselves in collision with the laborers, and will not give an account of earnings, or if they do, beg that their· names not be men tioned. . . . Farmers are afraid to express their opinions against a pauper who applies for relief, for fear their premises should be set fire to .... "'In Brede, the rates continue at an enormous amount. The over seer says much of the relief is al together unnecessary; but he is convinced that if an abatement was attempted, his life would not be safe.' . . . 'I found in Cam bridgeshire,' says Mr. Power, 'that the apprehension of this dreadful and easily perpetrated mischief [fire] has very generally affected the minds of the rural parish offi cers of this country, making the power of the paupers over the funds provided for their relief al most absolute, as regards any dis cretion on the part of the over seer.' .. 0 "Mr 0 Thorn, assistant overseer of the parish of Saint Giles, Crip plegate, London, says "'The outdoor relief [i. eo, re lief given outside of a poorhouse] in the city of London would re quire almost one man to .look after every half dozen of able-bodied men, and then he would only suc ceed imperfectly in preventing fraud. They cheat us on all hands ....

" 'By far the greater proportion of our new paupers are persons brought upon the parish by habits of intemperance. . . . After relief has been received at our board, a great portion of them proceed with the money to the palaces of gin shops, which abound in the neigh borhood. However diligent an as sistant overseer, or an officer for inquiry, may be, there are numer ous cases which will baffle his ut most diligence and sagacity .... " 'It is the study of bad paupers to deceive you all they can, and as they study their own cases more than any inquirer can study each of the whole mass of different cases which he has to inquire into, they are sure to be successful in a great many instances. The only protection for the parish is to make the parish the hardest task master and the worst paymaster than can be applied to.' " To economize space, my remain ing quotations from the Commis sioners' criticisms of the condi142 THE FREEMAN March tions they found must be few and brief.

In many parishes, "the pressure of the poor-rate [i. e., taxes on property] has reduced the rent to half, or to less than half, of what it would have been if the land had been situated in an unpauperized district, and some in which it has been impossible for the owner to find a tenant .... " "Says Mr. Cowell: 'The acquain tance I had with the practical op eration of the Poor Laws led me to suppose that the pressure of the sum annually raised upon the rate payers, and its progressive in crease, constituted the main in convenience of the Poor Law sys tem. The experience of a few weeks served to convince me that this evil, however great, sinks into in significance when compared with the dreadful effects which the sys tem produces on the morals and happiness of the lower orders .... ' " The relief system was found to encourage "bastardy." "To the woman, a single illegitimate child is seldom any expense, and two or three are a source of positive prof it.... The money she receives is more than sufficient to repay her for the loss her misconduct has occasioned her, and it really be comes a source of emolument ....

"The sum allowed to the mother of a bastard is generally greater than that given to the mother of a legitimate child; indeed the whole treatment of the former is a direct encouragement to vice.... "Witness mentioned a case within his own personal cogniz ance, of a young woman of four and-twenty, with four bastard chil dren; she is receiving 1s.6d. week ly for each of them. She told him herself, that if she had one more she should be very comfortable. Witness added, 'They don't in re ality keep the children; they let them run wild, and enjoy them selves with the money.' " Much Like Today Given a modernization of phras eology and an appropriate change in the monetary amounts men tioned, this description of relief conditions and consequences in the early years of the nineteenth cen tury could easily pass as a descrip tion of such conditions in, say, New York City in 1971. What, then, in the face of these results of the prior Poor Law, were the recommendations of the commission? It desired to assure "that no one need perish from want"; but at the same time it suggested imposing conditions to prevent the abuse of this assur ance.

"It may be assumed, that in the administration of relief, the pub lic is warranted in imposing such conditions on the individual re1971 THE POOR LAWS OF ENGLAND 148 lieved as are cond ucive to the bene fit either of the individual himself, or of the country at large, at whose expense he is to be relieved. "The first and most essential of all conditions ... is that his situa. tion on the whole shall not be made really or apparently so eligi ble [i. e., attractive] as the situa tion of the independent laborer of the lowest class. Throughout the evidence it is shown, that in pro portion as the condition of any pauper cla.ss is elevated above the condition of independent laborers, the condition of the independent class is depressed; their industry is impaired, their employment be comes unsteady, and its remunera tion in wages is diminished. Such persons, therefore, are under the strongest inducements to quit the less eligible class of laborers and enter the more eligible class of paupers .... Every penny be stowed, that tends to render the condition of the pauper more eli gible than that of the independent laborer, is a bounty on indolence and vice....

"We do not believe that a coun try in which ... every man, what ever his conduct or his character [is] ensured a comfortable subsist ence, can retain its prosperity, or even its civilization. "The main principle of a good Poor-Law administration [is] the restoration of the pauper to a position below that of the independ ent laborer." The report then followed with its detailed recommendations, which involve many administra tive complexities. The Workhouse System In 1841, seven years after the enactment of the new Poor Law, when a whole series of amend ments were being proposed to it by various members of Parlia ment, Nassau Senior, in an anony mous pamphlet signed merely "A Guardian," came to the defense of the original act, and explained its rationale perhaps in some ways better than did the original report. "In the first place," he wrote, "it was necessary to get rid of the allowance system - the system un der which relief and wages were blended into one sum, the laborer was left without motive to indus try, frugality, or good conduct, and the employer was forced, by the competition of those around him, to reduce the wages which came exclusively from his own pocket, and increase the allowance to which his neighbors contrib uted.

"Supposing this deep and wide ly extended evil to be .extirpated, and the poorer classes to be divid ed into two marked portions - in dependent laborers supported by wages and paupers supported by 144 THE FREEMAN March relief - there appeared to be only three modes by which the situa tion of the pauper could be ren dered the less attractive. "First, by giving to the pauper an inferior supply of the neces saries of life, by giving him worse food, worse clothing, and worse lodging than he could have ob tained from the average wages of his labor .... "A second mode is to require from the applicant for relief, toil more severe or more irksome than that endured by the independent laborer .... "The third mode is, to a certain degree, a combination of the two others, avoiding their defects. It is to require the man who demands to be supported by the industry and frugality of others to enter an abode provided for him by the public, where all the necessaries of life are amply provided, but ex citement and mere amusement are excluded - an abode where he is better lodged, better clothed, and more healthily fed than he would be in his own cottage, but is de prived of beer, tobacco, and spirits - is forced to submit to habits of order and cleanliness - is separa t ed from his usual associates and his usual pastimes, and is subject to labor, monotonous and uninter esting. This is the workhouse sys tem."

The Royal Commission, in defending that system, had argued that even if "relief in a well-regu lated workhouse" might be, "in some rare cases, a hardship, it ap pears from the evidence that it is a hardship to which the good of society requires the applicant to submit. The express or implied ground of his application is, that he is in danger of perishing from want. Requesting to be rescued from that danger out of the prop erty of others, he must accept as sistance on the terms, whatever they may be, which the common welfare requires. The bane of all pauper legislation has been the legislation for extreme cases. Ev ery exception, every violation of the general rule to meet a real case of unusual hardship, lets in a whole class of fraudulent cases, by which that rule must in time be destroyed. Where cases of real hardship occur, the remedy must be applied by individual charity, a virtue for which no system of compulsory relief can be or ought to be a substitute."

Destroying the Beneficiary To later generations the reforms introduced by the Poor Law Amendments of 1834 came to seem needlessly harsh and even heart less. But the Poor Law Commis sioners did courageously try to face up to a two-sided problem that the generation before them 1971 THE POOR LAWS OF ENGLAND 145 had ignored and many of the pres ent generation seem once more to ignore - "the difficult problem" as Nassau Senior put it, "how to af ford to the poorer classes adequate relief without material injury to their diligence or their provi dence." In his 1841 pamphlet we find him rebuking "the persons who would legislate for extreme cases - who would rather encour age any amount of debauchery, idleness, improvidence, or impos ture, than suffer a single applicant to be relieved in a manner which they think harsh .... [They] would reward the laborer for throwing himself out of work, by giving him food better, and more abun dant, than he obtained in inde pendence. . . . They are governed by what they call their feelings, and those feelings are all on one side. Their pity for the pauper ex cludes any for the laborer, or for the rate-payer. They sympathize with idleness and improvidence, not with industry, frugality, and independence. . . . It is scarcely necessary to remind the reader of the well-known principle, that if relief be afforded on terms which do not render it less eligible than independent labor, the demand for it will increase, while there is a particle of property left to appease it."

However the Poor Law reform of 1834 may be considered by many today, it proved sufficiently satis factory to successive British gov ernments to be retained with only minor changes until the end of the nineteenth century. But there was mounting sentiment against it a.s the· years wore on. Much of this was stirred up by the novels of Charles Dickens and others, with their lurid pictures of conditions in the workhouses. Toward the end of the century the more stringent regulations were gradu ally relaxed. In 1891 supplies of toys and books were permitted in the workhouses. In 1892 tobacco and snuff could be provided. In 1900 a government circular recom mended the grant of outdoor re lief (i. e., relief outside of the workhouses) for the aged of good character. A 1905 War on Poverty A new Royal Commission on the Poor Laws was set up in 1905. (One member was Beatrice Webb.) It brought in a report in 1909, but as the report was not unani mous, the Government took no ac tion on it. However, new "social legislation" continued to be en acted. An Old Age Pensions Act was passed in 1908. And in 1909 David Lloyd George, the radical chancellor of the exchequer, an ticipating President Lyndon John son's "war on poverty" by more than half a century, exclaimed in 146 THE FREEMAN March introducing his new budget: "This is a war budget for raising money to wage implacable warfare against poverty and squalidness."

Finally, the National Insurance Act of 1911, providing sickness and unemployment benefits on a contributory basis to a selected group of industrial workers, marked the birth of the modern Welfare State in England, which reached maturity with the enact ment of the Beveridge reforms in 1944. But the Poor Law Commission ers of 1834, and the Parliament that enacted their recommenda tions, had frankly recognized and faced a problem that their politi cal successors seem, as I have said, almost systematically to ignore "the difficult problem," to quote once more the words in which Nassau Senior stated it, "how to afford to the poorer classes ade quate relief without material in jury to their diligence or their providence." How to Afford Relief Without Destroying Incentives Is this problem soluble? Or does it present an inescapable dilemma? Can the state undertake to pro vide adequate relief to everybody who really needs and deserves it without finding itself supporting the idle, the improvident, and the swindlers? And can it frame rigid rules that would adequately pro tect it against fraud and impos ture without as a result denying help to some of those really in need? Can the state, again, pro vide really "adequate" relief for any extended period even to the originally "deserving" without un dermining or destroying their in centives to industry, frugality, and self-support? If people can get an adequate living without work ing, why work? Can the state, finally, provide "adequate" relief to all the unemployed, or, even more, guaranteed incomes for all, with out undermining by excessive tax ation the incentives of the work ing populatio,n that is forced to provide this support? Can the state, in sum, provide "adequate"

relief to all without gravely dis couraging and inhibiting the pro duction out of which all relief must come? - without letting loose a runaway inflation? - without go ing bankrupt? This apparent dilemma may be surmountable. But no relief sys tem or welfare-state system so far embarked upon has satisfactorily surmounted it; and the problem certainly cannot be solved until the alternatives it presents are can didly recognized and examined. ~ HANS F. SENNHOLZ RADICAL ECONOMICS OLD AND NEW MOST modern economists openly profess disinterest in ideological and political matters. They go about their studies, proclaiming ethical neutrality and freedom from bias, to specialize in a great many details of economic phenom ena. The profession is more and more divided into groups specializ ing in diverse kinds of research so that few members are able to un derstand the whole field or relate to it the work done in these spe cialties. The writing of compre hensive treatises on "principles of economics" has virtually ceased and few students are ever intro duced to the eternal principles of human action.

Yet, these same economists who claim the scientific dignity of ethi cal neutrality readily pass judg ment on social and political af fairs. In fact, they are busily unDr. Sennholz heads the Department of Eco nomics at Grove City College and is a noted writer and lecturer for freedom. dermining the classical economics that believed in the harmony of interests and social beneficence of the competitive private-property economy. Espousing the theory of "monopolistic competition," they condemn the structure and work ing of the market system and the power of private firms which are said to administer their outputs and selling prices and fix their payments to labor. The main body of the profession embraces "Keynes ian" doctrines and theories, which have dealt a severe blow to the economics of individual enter prise and promoted radical gov ernment intervention. Keynesians are convinced that the market economy fails to attain and main tain an appropriate flow of money through the system, or "effective demand" for all products, that it lacks over-all stability or steady growth. The system's grave liabil ity, they proclaim, is its. failure to automatically correct its own mal147 148 THE FREEMAN March adjustments which occur as de pressions and inflations.

These modern developments of economic theory contributed to the growth of new attitudes among the electorate and clamor for new public policies. Hence, the ideo logical and political trends toward new-style liberalism and control type socialism. And above all, a new radicalism bubbles through the profession. The old radicalism consisted of a few Marxian professors who had the rare courage to openly confess allegiance to the concepts and doc trines of their master. But while there are few professed Marxians in the American economic profes sion, a great deal of Marxism has swayed the thinking of countless economists. Marxian surplus value theory, commonly called "exploita tion theory," has been widely ac cepted in economic thought, in American legislation and labor policy. The Marxian theory of capital concentration and business monopoly is embraced by most Americans and is used as a guide post by the Department of Justice in its antitrust activities. Finally, Lenin's doctrine of capitalist co lonialism and imperialism is wide ly accepted as the explanation of foreign affairs, causing our gov ernment to help purge European colonialism from an corners of the world.

The new radicalism represented by an organization of younger economists in the Union for Rad ical Political Economics, with counterparts, in most other social sciences, demands drastic domes tic reforms and an end to the war in Vietnam. The private-property-individual enterprise order is summarily con demned in terms of Marxian anal ysis. In addition, it is criticized for its tendency to create such problems as inflation, urban decay, pollution, racial conflict, and many other ills of contemporary society. Even economists schooled in the classical tradition are joining the chorus of vocal critics. The pri vate enterprise system, they con tend, does not lead to maximum welfare because many social costs are ignored in the calculation of welfare. Large blocs of externali ties, which are social costs not in cluded in private costs, are charac teristic of the enterprise system. These extern alities are destroying our physical environment and pre cipitating disaster for the human race.

Robert U. Ayres and Allen V. Kneese make such charges in an essay on "Production, Consump tion and Externalities." (Ameri can Economic Review, June, 1969, pp. 282-297). Private businessmen are discharging wastes into the atmosphere and water courses 1971 RADICAL ECONOMICS, OLD AND NEW 149 without cost to themselves. And consumers do not fully use up, through the act of economic con sumption, the material elements that enter production. Almost 3 billion tons of residue are going back annually into our environ ment. This is becoming unbear able, especially in mass urban so cieties with growing populations and rising material output. Ad hoc taxes and government restrictions are not sufficient to cope with the growing problem. Central, or at least regional, control is needed; and above all, a new economics must be devised that considers waste disposal an integral part of the production and consumption process, and places it within the framework of general equilibrium analysis. "Under conditions of in tensive economic and population development the environmental media which can receive and as similate residual wastes are not free goods but natural resources of great value with respect to which voluntary exchange cannot operate because of their common property characteristics."

Such observations reflect an un bounded faith in the political and bureaucratic process. No matter what the grievance may be, the blame is always laid on private propertyand individual enterprise, and the solution is always more government! Who is Polluting? Even some of the facts are grossly misstated. The worst of fenders are not private business men in their search for profits, but government itself rendering eco nomic services in a primitive man ner. Urban communities are pol luted by an increasingly formid able cascade of solid waste, such as garbage and trash, rubbish and debris. According to a preliminary report made in 1968 by the Bureau of Solid Waste Management in the U. S. Public Health Service, only 64 per cent of the nation's people lived in communities that had ref use collection systems. About half of household wastes were collected by public agencies, and one-third by private collectors; the rest was disposed by householders them selves. Most commercial and in dustrial wastes were handled by private collectors. And most of the dumps and incinerators were oper ated by public authorities or li censed contractors working for public authorities.

These facts primarily indict government rather than profit seeking enterprise for our envi ronmental crisis. Or take the pollution of our waterways. Who is discharging pollutants into streams and rivers, lakes and oceans? Lake Erie, the most polluted inland body of watell"'"is an example. According to 150 THE FREEMAN March independent surveys, the city of Cleveland is by far the worst of fender, followed by Toledo and Buffalo and other cities. Numerous public sewer authorities discharge thousands of tons of waste into the lake every day. So filthy is Cleveland's Cuyahoga River that it catches fire occasionally and traps tugs and boats in its flames. Surely, Lake Erie would suffer no serious pollution were it not for sewer authorities established and operated by government. Under common law, the beds of navigable bodies of water are gov ernment property. Can it be sur prising then that government it self either is polluting the lakes and rivers or permits them to be polluted? To blame individual en terprise is an obvious distortion of facts.

It is true, public attitude toward government property usually dif fers from that toward private prop erty. While the latter is generally respected and the owner protected in its use, government property is treated as a common good without an owner . Unless it is guarded by a host of inspectors and policemen, it is used and abused by the citi zenry as if it were free. This com mon attitude can hardly be con strued as recommendation for more government ownership or control over environmental re sources. The Air We Breathe The third pollution that is often laid on the doorstep of profit-seek ing enterprise is the contamina tion of the air we breathe. In a stinging criticism of the "conven tional wisdom" of economics, E. J. Mishan of the London School of Economics and Political Science called the private automobile one of the great disasters of the hu man race. It pollutes the air, clogs city streets, and contributes to the destruction of natural beauty.

The economic growth it represents conflicts with social welfare. ("Economic Priority: Growth or Welfare" in Political Quarterly, January, 1969). Such a severe indictment of the automobile is tantamount to a re jection of one of the most splendid fruits of private enterprise. There are few, if any, private automo biles in collective economies, from Soviet Russia to Castro Cuba. The automobile means high standards of living, great individual mobility and productivity, and access to the countryside for recreation and en joyment. In rural America it is the only means of transportation that assures employment and income. Without it, the countryside would surely be depopulated and our cities far more congested than now. The air pollution in our cities, the smoke, haze, and smog, never1971 RADICAL ECONOMICS, OLD AND NEW 151 theless present grave health haz ards to millions of city dwellers.

Is individual enterprise that man ufactured those millions of auto mobiles not responsible for most of the city pollution? Zoning and Other Intervention Again, the blame for the in tolerable pollution of city air rests mainly with government. In par ticular, three well-established po litical practices have contributed to the environmental dilemma. First, zoning has become a popu lar legislative method of govern ment control over the use of land. Primarily applied in urban areas, zoning constitutes government planning along "orderly lines," to control congestion in houses and neighborhoods, height, size and appearance of buildings and their uses, density of population, and so on. Surely, zoning has shaped the growth of American cities ever since the 1920's when it became popular. Take Los Angeles, for instance. Radical zoning ordinances made it the largest U.S. city in area, a vast sprawling metropolis of more than 455 square miles in which transportation is an absolute ne cessity. The resident of Los An geles may travel a hundred miles every day to work, shop, eat, to attend school or church, or to seek recreation or entertainment. Public transportation cannot possibly meet the millionfold needs of Los Angeles transportation; only the private automobile can.

Secondly, in nearly all Ame-ri can cities public transportation has deteriorated to disgraceful levels of inefficiency and discom fort. The private companies that first provided the service were regulated and taxed into losses, and finally replaced by public au thorities. Under their control, mass transportation has generally deteriorated in quality and quan tity while the costs have soared, as in the New York City subways, for example. Public transport authorities are easy prey for militant unions. Pol iticiansor their appointees can not easily resist the demands of teamsters locals and their allies, despite the resultant inefficiency and high cost. The traveling pub lic is frequently left stranded by organized work stoppages, slow downs, and other union tactics. When public transportation is most urgently needed, in the vaca tion or holiday season, it is often struck by one of the unions.

The privately-owned mass trans portation media are taxed by a host of government authorities until their services deteriorate or even sputter to a halt. The ex amples are legion. But the recent bankruptcy of the Penn Central 152 THE FREEMAN March Railroad illustrates the point. Even in bankruptcy, public tax authorities are crowding the courts to force collection of their levies. While labor unions threaten nationwide walkouts, government tax collectors prey on railroad in come and assets. And when a com pany finally petitions its regula tory authority to halt some loss inflicting service, it may be denied the right to do so. If permission is granted, local courts· may order the company to continue the serv ice and bear the losses. Can it be surprising, then, that service re luctantly rendered is minimal and poor? When public transportation is dismal, undependable and ineffi cient, neglected and uncomforta ble, primitive and costly, people naturally provide their own trans portation. And millions of private automobiles are clogging the city streets adding their exhaust fumes to the city air.

Finally, there is the tendency to treat road and highway invest ments, no matter how huge, as "free goods" that are available to anyone without charge. City gov ernments endeavor to provide ade quate approach roads for unre stricted use of the automobile, continually constructing new ex pressways on the city's fringes. It is true, a great number of high way taxes are levied on those who use the highways. The Federal government collects taxes on gaso line, lubricating oil, new automo biles, tires and tubes. A highway trust fund established by the Highway Revenue Act of 1956 re ceives and expends· the excise tax es, which are the sole source of funds for the Federal aid highway systems. But as soon as an ex pressway is completed it is over crowded with countless automo biles speeding or crawling to the city. No matter how many millions of dollars were expended on its construction, it is "free" to the user who simply does not relate the ltax on his gasoline or tire to a pariicular trip to the city. But even If he were mindful of the tax cost~ to him,' the use value of the expressway, its convenience, speed and safety, may exceed by far the tax cost. Thus, millions of sub urban automobiles are rushing to or from the cities on billion-dollar highways, adding their exhaust fumes to our environment di lemma.

Ignoring Property Rights The problems of smoke, soot, noise, waste, and water pollution reveal unfortunate legal deficien cies in the protection of private property. The law has always been and continues to be inadequate in its treatment of property rights, in particular, the liability and in1971 RADICAL ECONOMICS, OLD AND NEW 153 demnification for damages caused by the owner's use of property. Ideally, the right of property as a market phenomenon entitles the owner to all the advantages of a given good, and charges him with all the disadvantages which the good may entail. Over the centuries governments have again and again restricted or even abolished the· rights of pri vate property. At other times the law, either by design or default, shielded the owner from some disadvantages of his property, and charged other people with some of the costs, the external costs. Obvi ously, if an owner does not reap all the benefits of his property, he will disregard such benefits in his actions; and if he is not charged with all its costs, he will ignore such costs.

During the nineteenth century, legislation and adjudication re flected enthusiasm for the rapid industrial and commercial devel opment. Legislators and judges understood the great importance of capital investment for economic betterment. They favored invest ments in industry and transporta tion and the productive employ ment of property. Unfortunately, they decided to hasten the eco nomic development through tariffs, subsidies, land grants, and relief from some external costs. Thus, as the tariffs and subsidies en couraged some production, so did the relief from externalities. Some investments were made and some consumption took place just be cause part of the costs was shifted from the owners to other people and their property. The pollution of air and water was overlooked as a "public price" for economic progress, that is, some costs were shifted from one owner to another to encourage economic activity favored by government.

The growing awareness of en vironmental problems/ is laudable indeed. But the explanations given by "experts" today are taken straight from the armory of po litical and economic radicalism. The private property order is summarily condemned, and gov ernment is hailed as the only saviour from our self-destruction. More taxes and regulations, or better yet, comprehensive govern ment planning and control, are to correct a deplorable situation. In reality, the no-man's-land of "pub lic property" and government ma nipulation of private property constitute the pollution problem. Only sincere respect for private property and its unbiased protec tion by the law can alleviate a deplorable situation. I) ~<3j(;( SUBSIDIZING q <x~~<i A CRISIS: The shocked surprise in the spring of 1970, when the graduating class suddenly found out that they had to go out and look for jobs, may thus have been the first sign of a typi cal "inventory crisis" - which always takes everybody by surprise. Whatever the eco nomic climate, the next few years will be years of sharp readjustment in the "careers market." The "career" boom of the 1960's is as much a thing of the past as the stock mar ket boom in "takeovers," "conglomerates,"

and "growth ventures." PETER F. DRUCKER The Public Interest (Fall, 1970) 154 GARY NORTH THE TEACHER GLUT, 1971 ADVOCATES of the free market as a tool for the efficient allocation of scarce resources have long been critical of the way in which educa tion is financed in the United States. A host of studies are avail able that deal with the lowering of quality, the uncreative uni formity, and the spiraling costs of public education.! Only in recent months have communities even conte.mplated the possibility of a system like Milton Friedman's voucher program, in which the parent would receive the educa tional subsidy rather than the 1 Cf. Benjamin A. Rogge, "Financing Higher Education in the United States," New Individualist Review, IV (Summer, 1965); available also from the Center for Independent Education, Wichita. E. G. West, Education and the State (London: Institute for Economic Affairs, 1967).

Roger A. Freeman, "Crisis in American Education," Christian Economics (Sept., 1970) . Mr. North is Secretary of Chalcedon, Inc., a nonprofit Christian educational organization, and a Ph. D. candidate at the University of Ca.lifornia, Riverside. local public schoo1.2 The obvious crises since 1965 in our public schools, coupled with the realiza tion on the part of black militants that educational pluralism is ad vantageous, have led to at least some rethinking of the assump tions of American public educa tion. With the realization that education is not neutral, some former advocates of racial, in tellectual, and cultural integration have come to the conclusion that "democratic education" has pro2 Milton Friedman, Capitalism and Freedom (University of Chicago Press, 1962), ch. 6; Robert L. Cunningham, "Education: Free and Public," New In dividualist Review, III (Summer, 1963). Governor Reagan of California mentioned the possibility of instituting a voucher system as an experiment; this, however, was in a campaign speech. The Center for the Study of Public Policy, located in Cambridge, Mass., has recommended the establishment of a 5-8 year experiment of 12,000 elementary students; the plan would cost $6-8 million. This was the conclusion in the Office of Economic Op portunity-financed study, Education Vouchers.

155 156 THE FREEMAN March duced a generation of uprooted graduates - drones and revolution aries - who are not really very different from Dustin Hoffman's caricature. This realization, however, has been a distinctly minority revela tion. The message has not come to the institutions of higher learn ing in this country. They have gone on as before, tinkering oc casionally with the curriculum, adding a handful of courses like Black Studies or Chicano Studies, but generally proceeding in a "busi ness as usual" fashion. Never theless, the violation of supply and demand that is fundamental in any system of subsidized edu cation has now resulted in some thing wholly unforeseen by the bulk of American educators: the perennial shortage of teachers came to an end, quite abruptly, in 1968. The shock waves of that event are only now registering on the bureaucratic structure of American higher education.

The Glut 01 the Degree Holders For how many years were Amer icans subjected to the perpetual hand-wringing of professional ed ucators over the teacher shortage? How many news releases from the National Education Association were printed, without any criti cism, by the public news media? It was one of the favorite themes of nearly everyone associated in any way with public educational institutions. Yet the myth was shattered in one academic year, 1968-69.3 The glut of teachers at all levels, from kindergarten to the graduate school, appeared al most overnight. The teacher-job "gap" simply was swallowed up in the outpouring of graduates in June of 1968; only in "special ed ucation" - the euphemism for the handicapped, the culturally de prived, and the retarded - is there a comparable gap, and the open ings there are being depleted by falling school revenues. This glut is not strictly an American phenomenon. It is as serious in the British Isles, per haps worse. The British teaching certificate is just that, a license to teach; it is not easily trans ferred to any other occupation.

The English have overbuilt their institutions of higher education, and the graduates are now reaping the whirlwind. Previously sacrosanct fields like physics are now oversupplied. The post-Sputnik era saw a seemingly endless barrage of propaganda in favor of expanding our pool of available scientific talent. The 3 Newsweek (June 29, 1970) reports that the first year in which a surplus existed was 1967-68. This was not mani fest at the time, however; it took a year for the glut to register as a permanent phenomenon.

1971 SUBSIDIZING A CRISIS 157 "science fairs" in the high schools, the Federal scholarships, the tele vised miracles of space travel all combined to convince American students that the ticket to guaran teed security was the engineering degree and the Ph.D. in physics. Easy Street has once again turned into a dead end, as too many peo ple crowded down its narrow path. Federal grants from such agencies as NASA have fallen dramatically; Federal loans to students have begun to dry up. Budget cutting has removed the fat from many Federal science programs, to the dismay of those scientists who have an ideological commitment to state-financed research. 4 The extent of the glut in physics can be seen through a very spe cific case. Heidelberg College in Ohio last year had an opening for a teacher in physics. It received a total of 361 applications. Tiny Dayton High School, in Dayton, Texas, received applications from 15 Ph.D.'s in physics, yet the school has only 455 students, and it offers only a single course. 5 Industry has been less and less willing to interview Ph.D.'s due 4 Cf. Michael D. Reagan, Science and the Federal Patron (New York: Oxford University Press, 1969). Reagan favors such patronage, but he shows the prob lems inherent in such a relationship. He also provides considerable economic data on the extent of the aid.

5 Time (June 29, 1970). to the highly specialized, unflexi ble nature of Ph.D. training. The cutbacks in aerospace have hurt the market for these trained spe cialists. An astounding 40 per. cent of the 1969 graduates in physics were on post-doctoral fel lowships in 1970.6 In the Social Sciences The situation in the humanities and social sciences is even worse. A fantastic 1,000 applicants ap plied for eight positions in the English Department of the Uni versity of Massachusetts. 7 A total of 29,000 Ph.D.'s were turned out in 1969-70, perhaps double the number needed for college teach ing posts. The Chronicle of Higher Education, a newspaper for college administrators, ran a series of articles on the crisis in late spring and early summer of 1970 dealing with the oversupply of teachers. It reported that the Cooperative College Registry, a nonprofit place ment service for some 300 Prot estant colleges, announced that in mid-May there were still 45 per cent of its 9,500 applicants·· with out offers. Some 55 per cent of the applicants had the Ph.D.; prior to 1970, 45 per cent had been the maximum.

The extent of the crisis may be 6 The Chronicle of Higher Education, IV (June 8, 1970), p. 8. 7 Time (June 29, 1970).

158 THE FREEMAN March estimated by the fact that the Cooperative College Register is the "last chance" employer registry. The colleges tend to be small, low prestige schools that can afford only below-average salaries. This normally makes them more flexi ble, however, since pay scales are more responsive to the conditions of supply and demand. A glut here indicates a crisis unrivaled since the mid-1950's. Causes of the Crisis A standard explanation offered by the educational establishment is tha t there really is no over supply of teachers, and there still is a shortage. However, the de mand has dried up, a direct cono sequence of shortsighted legis lators and angry citizens who keep rejecting bond issues. 8 In other words, the failure of the educational market to clear itself of all prospective teachers is in no way related to the excessive zeal of academic departments in ex panding course offerings and grad uate fellowships; it is due to the tight-fisted taxpayers who refuse to spend additional billions on ed ucational facilities, programs, and salaries.

8 Cf. statements by Cleo Craig and H. R. Rouse of the Wilson Scholarship Foun dation (whose Ford Foundation funds were recently cut off): Chronicle of Higher Education, IV (May 25, 1970), p.7. This makes for good propa ganda; economically, it skirts the real issue. Naturally, there is a limited supply of teachers. There is a limited supply of automobiles, televisions, diamonds, clean air, pure water, tortilla chips, and anything else that commands a price. We live in a world of scar city. A scarce good, by definition, is one for which there is greater demand than supply at zero price. Imbalances in any market can be blamed on high or low demand, just as they can be blamed on high or low supply. The problem arises when prices are not flexible, thus creating permanent imbalances. If the phrase, "shortage of teachers," .is to have any meaning at all, it must be qualified by the phrase, "at a particular wage level." There is no question about the fact that at present high wage levels, there is nothing resembling an under supply of teachers. There is no question that there is an imbalance of supply and demand at present wage levels.

Educators need to ask them selves two crucial questions. First, why are' wages so inflexible down ward? Second, why were those whose task it is to forecast the needs in education so short sighted? How did it happen, for example, that in 1963 the esti mated need for new teachers at the college level in history was set 1971 SUBSIDIZING A CRISIS 159 at 390 for 1969-70, whereas the actual need turned out to be 500, and the actual supply was 881?9 Why did so few graduate advisors take seriously the estimates pre sented by Clark Kerr, then Presi dent of the University of Cali fornia (1966), that only two thirds of the 1971 Ph.D.'s could be employed in the colleges ?10 Minimum Wage Floors About 75 per cent of those at tending institutions of higher learning are in tax-supported pub lic schools. By their very financing structure, these institutions are notoriously unresponsive to mar ket conditions of supply and de mand. For many decades, legisla tures have met the basic budget demands of the colleges in the United States, and this has tended to insolate the schools and scholars from external economic realities.

They are not paid to forecast mar ket conditions in the future, and they do not concern themselves with such matters, at least not at the graduate advisory level. The private schools, supported by foun dations and government research grants, are frequently as lax as 9 Chronicle (June 8, 1970), p. 1. 10 Kerr's estimate was revealed at a meeting of California Club, the student advisory body in the University of Cal ifornia. He was simply reporting the data gleaned in a study which apparently was available to all college administrators. the public schools. They are, in every sense of the word, guilds. Historically, guilds have resist ed price and wage competition. They speak of themselves as "quality-oriented," which implies an elitist perspective, since it is price competition which has al ways characterized production for a mass market. ll Educational in stitutions have been caught in a dilemma: they are supposed to maintain quality without compro mise, yet supply the needs of mass education. Schools are to be simul taneously democratic (supported by tax funds) and elitist (pre serving quality, ignoring "crass"

economic affairs). Higher educa tion in America is institutionally schizophrenic. A competitive market institu tion would respond rapidly to new conditions of oversupply of a fac tor of production by bidding down the price of the good. That is what faculties should do in the face of the Ph.D. glut. They should drop salaries at the start ing level. It would enable schools to hire more people, and it would make very plain to prospective Ph.D. students just what the eco nomic facts are in the employ ment market. But that is not the response of faculties. Faculties 11 Max Weber, General Economic His tory (New York: Collier, [1920] 1961), p.230.

160 THE FREEMAN March like high salaries for all those employed; it supposedly is a sign of institutional prestige to pay high wages, and thus prestigious to be employed by such institu tions. Faculties also have the. ultimate job security: tenure. This protects those who have tenure from being fired. Thus, any drop in demand must be exercised at the level of the new professors, fresh out of graduate school. But if their sal aries are lowered disproportional ly, considerable institutional con flict may result. It may even lead to the decision by the administra tion to lower the salaries of those men whom it cannot dismiss. There is a built-in preference, therefore, for high wages and low competition on a semiclosed mar ket. It is a guild-like attitude. Those outside the system have a hard time breaking in. Their chief economic weapon, namely, their willingness to take a lower wage, is not easily exercised.

This is especially true in state schools which have fixed wage floors set by the legislature or local junior college school district. The California junior colleges are the prime examples. Like the high schools from which they recruit their teachers, the junior colleges pay men in terms of formal edu cational achievement: so many units beyond the B.A~ yields so much extra pay. So much experi ence yields so much extra pay. The new Ph.D. has to be paid, in 1971, about $13,000; there is no bargaining possible. Few districts want to pay that much to a man who (1) may quit and go to a four-year college, (2) may em barrass a local administrator who holds only an M.A. in education, (3) may not teach the junior col lege's substandard students as well as a man who has taught high school for ten years. The Ph.D. is effectively locked out of junior college employment (un less he started as an M.A. and earned his degree while em ployed). There is simply no wage flexibility. As a result, junior col lege districts are permitting an opportunity to "upgrade" their faculties at less cost than before to slip through their administra tive fingers.

Tenure Tenure supposedly protects the professor from being fired for expressing opinions abhorrent to administrators, legislators, or lo cal citizens (including students). This was a keystone in Prussia, where state-supported higher ed ucation was pioneered in the nine teenth century. It ma~s very little sense today. As Robert Nis bet has argued in his iconoclastic and reasonable eS$ay on our Per1971 SUBSIDIZING A CRISIS 161 manent Professors, no one is fired for mental or moral incompetence any longer, the two chief ways of dismissing tenured men. The ex ceptional mobility of modern teachers removes any serious threat to academic freedom, since institutions are varied enough to let men find a platform to teach almost anything. The very guild structure promotes a basic uni formity of methodology today, in suring general agreement within most academic departments - or so we found until the mid-1960's.

Finally, Nisbet argues, if aca demic freedom is really the issue, why limit it? Why not let junior members have it? "On what logi cal grounds, then, do we claim exemption for age and rank, in certain respects the most feudal of all feudal qualities ?"12 Tenure, far from protecting men in their expression of contro versial opinions, has enabled men to express no opinions at all. Teaching has become lethargic as men pursue their academic ca reers in the academic journals (100,000 in the world toda y13) and their annual meetings. Tenure 12 Robert A. Nisbet, "The Permanent Professors: A Modest Proposal," (1965) in Nisbet, Tradition and Revolt (New York: Random House, 1968), P. 241. 13 M. King Hubbert, "Are We Retro gressing in Science," Geological Society of America Bulletin, LXXIV (1963), p.366. protects the man without the flair for teaching, the man who has no controversial opinions to distin guish his lectures, the man whose very biandness insures his pro tection from "academic witch hunters,h but who has never learned to compete in the world of student education. Tenure has turned the university over to the drone, the pedant, the writer _of overfootnoted, mindless articles.

It might even be true to say that the spirited junior teacher with controversial opinions has more to fear from his tenured, spine less, drab colleagues than from the outside public. And drones, it should be noted, are not known for their flexibility. Wage scales reflect this, especially when con ditions dictate a downward re vision. Institutional inflexibility rewards the inflexible. Nonmarket financing keeps the structures in flexible. The Subsidized Product The discussion above focused on the implications of the demand side of the equation. We must now turn to the supply side of the Ph.D. equation. Why are there so many of them being produced? Many reasons exist. A primary factor was the existence, until 1968, of the graduate school mili tary draft deferment. This func tioned as an indirect subsidy to 162 THE FREEMAN March graduate departments. "Canada" was as close as the nearest uni versity. Another factor is the tendency of all bureaucracies to expand to the limits of their fiscal capabilities. For example, aca demic departments in most state schools are funded in terms of student enrollment; this figure es tablishes the so-called FTE rat ing: Full Time Employees. In Cal ifornia, a fixed formula is used.

A 28-students-to-one-faculty-mem ber ratio operates, with lower di vision students rated 1, upper di vision students at 1.5, Master's Degree candidates at 2.5, and Ph.D. candidates at the maximum weighting, 3.5. As David Brene man comments: "Note that each advanced doctoral student enrolled brings the campus VS FTE faculty position."14 He adds that no strict mechanical relationship exists at the departmental level, but faculty appointments relate closely to weighted student enrollments. Furthermore, once the number of faculty appointments is estab lished, "other resources such as office space and nonacademic per sonnel can be functionally related to the faculty members."15 It pays 14 David W. Breneman, An Economic Theory of Ph.D. Production: The Case at Berkeley, mimeographed, June, 1970, a study sponsored by the Ford Foundation, p.49. 15 Ibid., p. 50. a department to expand graduate programs.

This does not mean that it pays departments to actually award a large percentage of degrees. On the contrary, departments must limi t s uch awards to those stu dents who will produce the great est prestige for the department in the academic community. Also, some science departments must provide access to sophisticated ex perimental equipment to Ph.D. students, so some attempt will be made to flunk out inferior stu dents at an earlier stage. This is not true, however, in the humani ties. Breneman's comments are illuminating: From the perspective of the French faculty, then, the graduate student must be viewed as a very valuable member of the department's econ omy. Not only does the graduate stu dent teach the dull introductory courses, but he is a source of student credit hours and demand for advanced instruction. Departmental technology is such that having graduate students in residence for several years is cost less to the faculty, and not without certain advantages .... Consequently, in this type of department faculty members have no incentives to make rapid decisions to terminate Ph.D.

aspirants.l 6 The taxpayers, of course, bear the major costs of this decision. The student may drop out for 16 Ibid., pp. 67-68.

1971 SUBSIDIZING A CRISIS 163 many reasons, but the longer he stays in, the closer he believes himself to be at the pay-off poil!t, the granting of the degree. In the humanities, the degree is all-im portant, since it is the union card for college level teaching, and in dustry has little need for highly specialized humanities students. Thus, departments get bloated with graduate students, and while the percentage of those who are awarded the degree may stay low, the absolute number of awards in creases. Jobs open up in other uni versities which are also expanding their graduate programs, thus cre ating demand for more Ph.D.'s. The entire structure is geared to the growth of graduate enroll ments. Colleges gain greater prestige by becoming full universities. If they do, they can gain access to Federal research funds, and these have expanded exponentially since 1950 (the cut-off came in 1968).

Fellowships and teaching assist antships were multiplied, while loan programs at low interest were made available to those students who did not become part-time em ployees of departments. These loans, especially under the Nation al Defense [the magic budgetary word in the mid-1950's] Education Act, could be canceled after five years of teaching of the recipient. Graduate students in the humanities do not generally under stand economics. They are not so aware of the employment situa tion, and as Breneman shows, de partments are often rewarded by keeping their students in the dark on this issue, thus encouraging them to stay in the program. Stu dents without the Ph.D. have few college teaching employment op portunities, so the opportunity costs of staying in the program are lower than, say, an engineer who can take his M.A. and get a good job in industry (again, be fore 1968). So the main concern for the student in a state univer sity is the size of his state-sup ported subsidy: the number of campus jobs, the size of tuition costs, the availability of loans.

Graduate education is costly. Obviously, in terms of faculty members employed, the Ph.D. stu dent is around three times as cost ly, especially if he does not as sume any teaching load as an as sistant. There is simply no way of estimating the cost per student per year, or so I am told by the uni versity budget department. French students cost less than physics students in applied physics, and possibly more than those in the oretical physics or mathematics. But it is possible to estimate in a crude fashion that it costs, at an average, $3,500 per student in the University of California; graduate 164 THE FREEMAN March students are more costly, though by how much it is difficult to say . But tuition, until 1970, covered at best less than 10 per cent of this, or $300. For the graduate student, the subsidy would be even greater. Subsidies Have Consequences Subsidize the production of a scarce economic good, and there will be an oversupply of that good in terms of true market demand.

That law is as applicable in the Ph.D. market as in that for sur plus wheat or Army fatigues. This is the fundamental cause of the oversupply of Ph.D.'s: planning was not made in terms of an un hampered market but rather in terms of a government-subsidized market. Demand was cut off sharply by falling school budgets, but candidates for the Ph.D. de gree are not rapidly responsive to this contraction: the other man may not be able to find a job, but each candidate believes that he will finish his dissertation and get the available position. A market geared to the dream of continual expansion has been cut short, and few persons within the structure are economically oriented enough to respond as rapidly as free mar ket participants are forced to do. Like the civilized Eskimos who have forgotten how to build an igloo, those supplying Ph.D.'s have forgotten the hard realities of a market characterized by uncer tainty. The result has been the teacher glut.

Market forces This market, like all markets, will eventually respond to the con ditions of supply and demand. De partments will cut back on enroll ments, especially as budgets are trimmed during a time of infla tion. Fellowships will shrink in number. Federal grants to the sci entists will not increase exponen tially any longer. In time, teaching loads will be increased in many universities; wage inflexibility downward will be compensated for through these increased teaching responsibilities. But it is unlikely that these changes will come over,night. It is likely that the glut will continue for some time. New grad uates will find it very difficult to break into their first jobs; pro fessors' mobility will drop, the in evitable result of wage inflexibil ity. One rigidity creates others. Inflation will continue to eat away at teachers' salaries, thus bring ing real wages into line with the conditions of supply and demand, and the oversupply of available talent will thwart attempts to unionize the profession - attempts which are on the increase now, as the Ph.D., in and of itself, no longer functions as an effective barrier to entry into the guild.

1971 SUBSIDIZING A CRISIS 16·5 What we are witnessing is a major transformation of the func tion of the Ph.D. degree itself. Once a prestige indicator and a monopolistic grant to the holder, today it is faltering in both ca paci ties. In the long run, this de velopment may be for the best. The mystique of the Ph.D. has for too long been unchallenged. It has degenerated into little more than an official certification of intellec tual drudgery. As E. Alden Dun ham of the Carnegie Corporation of New York has written: Every ill besetting our colleges and universities is related in one way or another to the Ph.D. degree - stu dent alienation, irrelevant curricula, uninspired teaching, ironclad adher ence to what may be outmoded tra ditions, absentee professors, extrava gantly high costs of research and graduate education .... [It is] in appropriate for most college teach ing jobs in this country, especially at the lower division level. Yet it remains the only respectable degree for college teachers as we move into an era of mass higher education. The percentage of Ph.D.'s on the faculty continues to be the index of quality.

Our system makes no sense.l 7 17 Dunham, quoted in The Chronicle of Higher Education, IV (March 16, 1970), pp. 1, 5. Edmund Wilson, in his devastat ing essay, The Fruits of the M.L.A. [Mod ern Language Association] (New York Review of Books Publication, 1969), writes that we missed our chance to abolish the Ph.D. as a "German atrocity" during World War I. Pluralistic Education For too long, to paraphrase a generally accepted slogan when it applies to the military, education has been in the hands of the edu cators. Monopoly grants continu ing over long periods of time tend to degenerate into less efficient units of service or production. Yet the crisis of the teacher glut is only one aspect of a maj or crisis in education. It is essentially a crisis of faith; relativism has led to irrelevance on the campus. Few students - few bright students are dazzled by the initials "Ph.D." after a name, at least not beyond the sophomore year. Noone knows where the educational crisis will lead us by 1980, but this seems certain: any crisis in financing will produce radical changes in the operation of any bureaucracy, even the educational bureaucracy.

Inflation will take its toll; so will the allocation problem with regard to the creation of Ph.D.'s. Radical students will strike the institution at a time of change, internal con fusion, and financial contraction. Few schools that have been caught up in the race for academic pres tige will escape the coming trans formation. There is cause for hope among people who have not clung to a philosophy of relativism as a means of academic salvation. If both public and private academic 166 THE FREEMAN March institutions that have embraced relativism are now reaping the whirlwind, parents and students are going to be looking for alterna tive educational structures. Pro spective teachers may not be able to compete in terms of price or academic degree on most academic markets, but they can compete in terms of both price and ideological commitment on those academic markets that are more openly com mitted to a particular view of the world. Pluralistic education has been stifled for almost a century by a philosophy of neutral educa tion grounded in relativism and enforced by the various academic guilds. But the fruits of that view of education are exploding on those campuses that have been the formulators of the creed. Colum bia, Harvard, Berkeley have all been hit precisely because the very bright students have seen through the myth of educational neutral ity. Pluralistic education can con ceivably be the ultimate bene ficiary of the institutional crisis which we face.

Since the vast majority of the people holding the Ph.D. and other higher degrees are not really com mitted to anything beyond the latest fad among the professorial guild, the serious man who holds a degree but who also holds a sys tematic philosophy of life now is in a position to distinguish himself from the hordes of other ap plicants for jobs. The savings in search costs that the Ph.D. once offered ("no non-Ph.D.'s need ap ply") no longer works in a glutted market. There is an oversupply of degree-holders, but not an over supply of free market advocates holding the degree. If the swing away from the intellectually cas trated philosophy of neutral edu cation (the only kind legally per mitted by state-financed schools) continues, there should be a new demand for men and women com mitted to a consistent view. Only with such a view can serious edu cation that is content-oriented rather than mere technique-ori ented, Le., liberal education in the traditional meaning, be main tained. Only value-oriented teach ing can pick up the institutional pieces. This should be the hope of those behind private educational institutions.

The Elfect of Controls There is one last consideration. The imposition of price and wage controls becomes more and more of a possibility. These controls have disastrous effects in the long run, but initially certain zones of the economy are favored. 18 One of 18 Gary North, "Price-Wage Controls: Effects and Counter-Effects," Commer cial and Financial Chronicle (Aug. 21, 1969) .

1971 SUBSIDIZING A CRISIS 167 these, as Prof. Hans Sennholz has pointed out, is private education. As money continues to be printed by the state and the state's central bank, it seeks markets. Controlled markets within the economy dry up, as capital and labor shift to the uncontrolled zones - collectors' markets, luxury goods, entertain ment, travel, and education. State financed '\ educational institutions are caught in the wage-price squeeze: legislatures and bond voters are tight-fisted (as their purchasing power continues to de cline). But the private schools reap at least an initial subsidy. State schools limit or close enroll ments, but people have money to spend, and these funds find their way increasingly into educational outlets. We should expect to see the expansion of private education of all kinds: high schools, colleges, night schools, cultural institu tions. A true opportunity for the establishment of truly universal, pluralistic education would make itself available. The shift away from the public educational mo]ohnF. Kennedy nopoly that is already showing signs of life would be subsidized by the very imposition of statist controls.

In the last analysis, the educa tional system has become overly dependent upon the state and the necessary educational philosophy of all state-financed education, i.e., the philosophy of neutral educa tion. Today we see the erosion of the monopolistic foundation of the professorial elite, as the overpro duction of members continues an overproduction financed through the taxation of the democratic masses. The masses are finally saying no with their funds. A glutted elite will feel the pinch, as only an elite which has never faced squarely the realities of sup ply and demand can feel an eco nomic pinch. The facts of econom ic scarcity can no longer be avoid ed in the ivy-covered halls. And that very fac~ may herald a new day for the advocates of value oriented education. Technocratic liberal arts departments are run ning out of funds. , IDEAS ON LIBERTY THE FREE MARKET is not only a more efficient decision maker than even the wisest central planning body, but even more important, the free market keeps economic power widely dispersed.

Quoted in the Wall Street Journal, October 3, 1962 ThomasCooper: EARLY LIBERTARIAN OSCAR W. COOLEY TWENTY YEARS before Frederic Bastiat wrote his parable of the broken window, Thomas Cooper was saying to his students at South Carolina College (now Uni versity of South Carolina) : "Suppose a. tailor to get into a law suit and to pay a .lawyer fifty dollars for successfully conducting his cause - or to break his leg and pay a surgeon fifty dollars for set ting it; these payments are pru dent, and the services rendered fully justify them; but is he the richer for these misfortunes? Even though the lawyer·and the surgeon should la.y out the fifty dollars with him for a suit of cloaths, it is no compensation, for he furMr. Cooley is Associate Professor of Economics, Ohio Northern University. 168 nishes the cloaths after having furnished also the money that pays for them. It is melancholy to think that these positions should require to be gravely argued, but the pres ent state of public opinion requires it."

Born in London and educated at Oxford, Cooper emigrated to the United States in 179'3. A man of strong opinions, he expressed him self freely on current public ques tions and was so critical of the Adams Administration that he was arrested and tried under the Sedition Act (the Alien a.nd Sedi tion acts are usually bracketed to gether). Cooper believed the act was unconstitutional, and the court so hela.He later wrote a book on freedom of speech.

1971 THOMAS COOPER: EARLY LIBERTARIAN 169 Cooper practiced law in Penn sylvania and beca.me a. judge. On recommendation of Thomas Jef ferson, he was appointed profes sor of natural science and law at the University of Virginia. From there he went to South Carolina College, where he taught chemis try and political economy. A man of parts, he was made president of the institution, a post he held for 12 years. Champion of Free Trade While head of South Carolina College, Cooper published his Lec tures on the Elements of Political Economy, a comprehensive treatise expounding the classical economics in a forthright manner. With es pecial vehemence, he championed free trade. One can imagine this did not detract from his popularity in a state that put great store upon the export of cotton to Great Britain .and the import therefrom of man uf~~tured goods. Indeed, Cooper aw,ears to have been hardly 198 influential than John C. CalhoWlllin egging on the South Carolinians to declare, in 1832, that the Federal tariff laws were null and void in their state. On the basis of the theory of state nullification, the doctrine of inter position has been put forward in recent years by Southerners who resented Washington's efforts to enforce racial integration.

For the most part, Cooper took his economics straight from Adam Smith. The private enterpriser knows best - far better than any government official - how to use his resources. Let self-interest reign. "If every man in the coun try trades beneficially for himself, he trades beneficially for the com munity, which does not exist inde pendently of the individuals who compose it."l Governments should be kept small. "The dreadful evil of all governments (I wish I could ex cept our own) is the evil of gov erning too much." All laws, suggested Cooper, should be reconsidered every ten years and, if found unnecessary, repealed. This recalls Jefferson's proposal that the Constitution should be reconsidered and over hauled every 20 years. Cooper warned especially of the "general welfare" clause of the Constitution: "There is no tyranny that it will not authorize." But it is against government strictures on foreign trade that he waxed most eloquent. "Shallow politicians have ... acted on the shopkeeping maxim that what one nation gains by commerce, some other loses. The fact is otherwise; each gets its wants supplied and both are gainers."

1 This and all other quotations in this article are from the Lectures (1826).

170 THE FREEMAN March He attacked the "infant indus try" argument for protective tariffs, saying that this theory seeks to justify injuring consum ers in the present for the hypo thetical benefit of producers that might be employed by the pro tected industry in future. Friedrich List, then sojourning in America, took critical notice of Cooper and his free trade opinions, implying that he was little less than an anarchist. List himself, it will be remembered, was an early promoter of the customs union which established free trade be tween the German states - but def initely not with the outside world. Champion of Foreign Trade Cooper felt that even Adam Smith had conceded too much to the protectionists. Smith had held that it might be advisable to pro tect an industry whose product promised to be of strategic impor tance in war. Cooper held that such products would not be wanting for they would be stockpiled by a provident government, and in any case, wars seldom if ever com pletely isolated a country from foreign sources of strategic goods.

The great service of the science of Political Economy, he said, was to teach the importance of free world trade. The following are hardly the words of an anarchist: "If Political Economy had rendered no other service to mankind than to make them just and rea sonable in this respect (in respect to foreign trade), it would be of incalculable benefit. It has taught us that human improvement and national prosperity are not pro moted in any particular nation by depressing every other but by aid ing, encouraging, and promoting the welfare of every nation around us; that we are all in turn cus tomers to each other, and that no man or nation can become wealthy by impoverishing his customers; (that) the richer other nations are, the more they are enabled to purchase, the cheaper they can af ford to sell, the more improved they become in all the arts of liv ing, in all intellectual acquirement, in everything desirable for other nations to imitate or improve upon; that if other nations become powerful by our assistance, we also of necessity become wealthy and powerful by our intercourse with them; and that peace and good neighborhoods are the means of mutual happiness among nations as among individuals .... "

In the Lectures Cooper ranged over the whole area of economic theory. On many facets of the sub ject, he was far ahead of his time. For example, cost of production, he said, does not determine value of a product. It must be in de mand. "No purchaser cares a cent 1971 THOMAS COOPER: EARLY LIBERTARIAN 171 what the prime cost of an article is; that is not his lookout. His only enquiry can be, .is it worth to me the price asked for it?" He admitted that the introduc tion of machines might create un employment but it would be tem porary. (He was, of course, as suming a free labor market). When printing presses were first put into operation in Paris, he said, 6,000 copyists lost their jobs, but "in Paris there are now 60,000 persons who live by printing." He attacked the policy of en dowing corporations with limited liability, holding that since the stockholders are allowed to enjoy unlimited profit, they should also endure whatever losses may be in curred.

Champion of Private Spending Rather Than Government Spending There were rudiments of a wel fare state even then, but Cooper would have none of it. "All relief to persons in this country able to work is absolutely indefensible and wrong," he said. "Even cases of disability should be left to pri vate charity .... " To combat pov erty, he urged the "modern remedy of Savings Banks," and suggested that the clergy teach people to save and accumulate deposits in such banks. He was, perhaps, aware that the first savings bank in the British Isles had been established by a Scottish dominie and that the first such banks in the United States were founded, not for profit, but for a charitable purpose. He condemned Sir Robert Peel's suggestion that a national debt might be a "national blessing" (Alexander Hamilton had averred as much) and argued that there was no merit in government spend ing as compared with private spending. To the extent that spending benefited the spender, it benefited society.

However, he was not averse to all public works. Whether govern ment should undertake a public work or not, he held, depends on how great a public benefit it is and whether it is too costly for in dividuals. Then follows a state ment which showed that he was quite familiar with the principle of cost-benefit analysis. "The guid ing rule ought to be that an under taking which is not likely at an early period of its completion to insure at least legal interest upon the capital expended after all de duction is not deserving of public encouragement. I think many of our canal schemes liable to this obj ection. Money can be laid out so as to produce this return. It is therefore misapplied when it does not. Wait until it will." Lawyer, chemist, political phi losopher, the versa tile Cooper was preeminently an economist. He 172 THE FREEMAN March saw the importance of "political economy" in determining the course of this country's history.

Written at a time when texts in that subject were few, his Lec tures must have made consider able impress on American think ing. Common Sense John Adams described him as "a learned, ingenious, scientific and talented madcap." Certainly he was outspoken. Unorthodox ut terances regarding religion are said to have brought about an end to his career at South Carolina College. He died in 1839. ~ IDEAS ON LIBERTY THE PERCENTAGE of correct decisions which individuals make is very high when they are risking their own money and their own future. The percentage of correct decisions is very low when made by politicians, so-called intellectuals, and others, regardless of their intelligence, who are not faced with the discipline of having to pay for their own mistakes with their own earnings. This is a major reason for the success of free enterprise and the free market. The percentage of correct decisions made by individ uals directly increases and is higher as they directly participate in the results of those decisions, whether good or bad. Individuals participating in this way quickly learn from their mistakes, and although they will make others, they will usually not make the same mistakes twice. This is common sense at work and only under the free enterprise system does common sense prevail.

A. W. STEWART From the "President's Column" of the Southern States Industrial Council Bulletin, January 1, 1971 ANTITRUSTHISTORY: The AmericanTobacco Case of 1911 D.T.ARMENTANO A LONG ACCEPTED assumption in the area of government and busi ness relations is that the "classic" monopoly cases of antitrust his tory clearly demonstrate the need for, and justify the existence of, the antitrust laws. The impression created by almost all the textbooks en this subject is that the busi ness monopolies or "trusts" in dicted in the past were - as the textbook theory suggests - actu ally raising prices, lowering out puts, exploiting suppliers, driving competitors from the market through predatory practices, and, generally, lowering consumer wel fare. Ironically, few if any of these same texts provide the stu dent of antitrust with the necesDr. Armentano is Assistant Professor of Eco nomics at the University of Hartford in Con necticut. This article is a chapter from his forth coming book, The Myth of Antitrust.

sary empirical information that might allow an independent judg ment as to the relative conduct and performance of these "mo nopolies." For the most part, the student is asked to accept the judgment of the author, without being permitted to scrutinize the "brief for the defendant." Such one-sidedness is the kind of poor economic history that leads, in evitably, to poor public policy. The following is a brief history of the American tobacco industry, and particularly of the American Tobacco Company, prior to the fa mous antitrust decision of 1911.1 Unlike many previous accounts, this one will attempt to explain and evaluate the conduct and per formance of the American Tobac1 United States v. American Tobacco Company, 221 U.S. 105. 173 174 THE FREEMAN March co Company in the full context of the tobacco industry between 1890 and 1907. While this history might be interesting for its own sake, the ultimate purpose is to demon strate that the court decisions against the American Tobacco Company prior to 1911 did not turn on any sophisticated economic analysis of that firm's market con duct or performance. The firm was eventually found guilty of violat ing the Sherman Act, but the de cision was not a consequence of any serious evaluation of the eco nomic costs and benefits of the firm's activities in the market place.

Cigarettes in America Although cigarettes appeared in America in the early 1850's, and were unpopular enough with the government to rate their own spe cial penalty tax of up to $5 per thousand by 1868, there was hard ly what could be termed a ciga rette manufacturing industry be fore the 1880 period. 2 Up to that 2 For information concerning the cig arette industry prior to 1911, see Meyer J acobstein, "The Tobacco Industry in the United States," Columbia University Studies, Vol. 26 (1907); ·Richard B. Ten nant, The American Cigarette Industry, (New Haven: Yale University Press, 1950); William H. Nicholls, Price Poli cies in the Cigarette Industry, (Nash ville: The Vanderbilt University Press, 1951); John W. Jenkins. James B. Duke: Master Builder, (New York: George H. Doren Company, 1927). point, the cigarette business had been concentrated in the New York City area where many small firms employed cheap immigrant labor to "hand roll" mostly Turkish blends of tobacco. But the raw material was rela tively expensive, and the hand rolling operation was relatively inefficient and cost ly. Besides, there appeared to be great popular reluctance to ac cept the small cigarettes. Conse quently, the outputs and markets were severely limited. Total output of all "manufactured" cigarettes was never more than 500 million in anyone year prior to 1880.

But the rather rapid shift in public taste to Virginia blends of tobacco, the slow adoption of ma chinery for manufacturing ciga rettes, and the extensive use of ad vertising to popularize particular brands or "blends" of tobacco, changed the industry radically be ginning in the 1880's. The use of rapidly improving machines that manufactured cig arettes quickly drove down the costs of manufacture and placed a profit premium on mechanization. Labor costs alone were reduced from 85 cents per thousand with out machines to 2 cents per thou sand with machines. 3 While an ex pert "hand roller" could make ap proximately 2,000 smokes a day, n 3 Tennant, The American Cigarette In dustry, pp. 17-18.

1971 ANTITRUST HISTORY 175 properly operating cigarette ma chine could make 100,000.4 A few leased cigarette machines - par ticularly the "Bonsack" machine -- could, in a matter of days, gen erate the entire yearly output of cigarettes. Thus, almost overnight, the optimum size of an efficient cigarette firm increased many fold, and almost the entire indus try emphasis shifted to creating or expanding demand for particu lar blends of "manufactured" cig arettes. Advertising and market ing expenditures began in earnest in the late 1880's, and it was not at all surprising to find only five large firms doing most of the trade in manufactured cigarettes by 1889. Though there were hundreds of small cigarette producers (most ly hand-rolled varieties) in that period, the firms of Goodwin and Company, William S. Kimball, Kinney Tobacco, Allen and Binter, and the W. Duke & Sons Company came to dominate the young in dustry and did an estimated 90 per cent of total domestic ciga rette sales. 5 The name of James B. Duke is almost synonymous with ciga rettes and the rapid rise of the to bacco industry in this country.

Though a relative newcomer to 4 Jenkins, James B. Duke: Master Builder, p. 66. 5 Tennant, The American Cigarette Industry, pp. 19-25. the cigarette industry (he entered in 1882), Duke quickly pushed his firm into industry leadership by rapid mechanization of all his op erations and, accordingly, huge ad vertising schemes to increase de mand for his increased outputs. 6 He took huge newspaper ads and rented billboard display space to push "Duke of Durham" and "Cameo" brands; he placed re deemable coupons inside his new and improved cigarette boxes to popularize "Cross Cut" and "Duke's Best"; and he enticed job bers and retailers with special bonus plans and gimmicks if they would handle and stress his prod ucts. This unusual marketing ap proach was extremely successful, and by 1889 DJ,lke's cigarette firm had over 30 per cent of industry output and wa.s netting almost $400,000 a year on gross sales of $4.5 million. Duke's firm was the largest and most profitable firm in the manufactured cigarette in dustry, and appeared to be grow ing much more quickly than its rivals could or would.

Consolidation in 1890 In January of 1890, the five leading cigarette firms came to gether to form the American To bacco Company and installed J. B. Duke as President. Although com6 Jenkins, James B. Duke: Master Builder, pp. 73-84.

176 THE FREEMAN March peti tion between the leading firms had been severe in the late 1880's, there is Iittle evidence that the combination was the direct conse quence of a "destructive trade war" as some accounts relate. 7 Rather, it was an almost inevita ble consequence of the economics of the cigarette industry in 1890. Potentially, the cigarette indus try appeared immensely profitable. The price of leaf tobacco, the raw material, was historically very low (about 4 cents per pound); the cost of manufacture - even with less than optimal utilization of equipment - was extremely low; and the existing market prices for cigarettes were already high enough to allow adequate profits. Two things alone remained to cloud the potential profits picture of the industry: maximum utiliza tion of the largest, most efficient machinery to drive the costs per unit down to an absolute mini mum; and an elimination or se7 Nicholls, Price Policies in the Ciga rette Industry, states flatly that The American Tobacco Company was formed in 1890 following an expensive business war begun by James B. Duke (p. 26).

But neither the Report of u.s. Commis sioner 0/ Corporations, Vol. I (Feb., 1909), which Nicholls indicates was his source, nor the lower court decision against American Tobacco in 1909, ap peared to bear this out. See William Z. Ripley, Trusts, Pools and Corporations, revised edition (Boston: Ginn & Com pany, 1916), pp. 269-270; and, see 164 Fed. Reporter 722. vere reduction in total advertising expendi tures as a per cent of total output or sales. Merger provided both of the last-mentioned economies. Con solidation would allow concentra tion on those blends of tobacco that could be produced most effi ciently. Consolidation would also allow great economies of scale to be realized in advertising expend itures. Thus, production and sell ing expenditures could be lowered per unit of output, and profits could grow accordingly. A combi nation or "trust" of small ciga rette firms was, thus, a natural and predictable economic arrange ment since it was clearly more ef ficient than a decentralized mar ket structure.

Diversif ication Between 1890 and 1907, Ameri can Tobacco or the "Tobacco Trust" diversified into a number of related industries. Diversifica tion was to be expected since ciga rettes, although extremely profit able, represented only 3 to 5 per cent of the entire tobacco industry in 1890.8 In addition, the public's changing tastes obsoleted particu8 Even in the 1900-1904 period, ciga rettes, by weight, represented only 2 per cent of all tobacco products consumed. See Nicholls, Price Policies in the Oiga rette Industry, p. 7. Cigarettes did not achieve any sort of national popularity until after World War 1.

1971 ANTITRUST HISTORY 177 lar brand names and even whole products rapidly and, thus, made any specialization extremely dan gerous. 9 Furthermore, there was a distinct prej udice against ma chine-made cigarettes and sales simply did not expand as rapidly as anticipated. While American Tobacco had produced slightly more than 3 billion cigarettes in 1893, they produced only 3.4 bil lion in 1899 and less than 3 billion annually between 1900 and 1905; American's production of ciga rettes in 1907 was only 3.9 billion. Even more importantly, Ameri can's share of domestic cigarette sales declined from over 90 per cent when the firm was formed in 1890 to 74 per cent in 1907.10 For the most part, A'merican Tobacco's diversification and growth in the tobacco industry was accomplished through the di rect purchase of existing firms with cash or stock. It is estimated that American may have bought as many as 250 firms between 1890 and 1907.11 A very few of these 9 Jenkins, James B. Duke: Master Builder, pp. 91-92.

10 U.S. Research and Brief, 221 U.S. 106, Appendix "F", p. 318. Also see Jones, The Trust Problem in the United States, p. 140. Higher percentage figures in some accounts (83 per cent is a common figure for 1907; see Nicholls, Price Policies in the Cigarette Industry) measure Ameri can's share of total output rather than output for domestic consumption. 11 Tennant, The American Cigarette Industry, p. 27. purchases were competitive ciga rette manufacturers - though the bulk of them were not. Most of these cigarette purchases were made, apparently, to acquire a successful brand-name, since brand-name loyalty was the great est asset of any tobacco firm. 12 The bulk of American Tobacco's pur chases, however, were firms pro ducing noncigarette tobacco prod ucts. For example, diversification into firms that made smoking to bacco, snuff, plug chewing tobac co, and cheroots was begun as early as 1891. These tobacco prod ucts were noncompetitive with cigarettes and with each other, and had their own particular mar kets and used their own particular kind of leaf tobacco. 13 In 1898, after many years of competitive low-price rivalrY,14 American purchased the leading plug manufacturers, including, at a later date, the large and impor tant Liggett & Myers Company.

They were subsequently organized into the Continental Tobacco Com pany, partially owned and com pletely controlled by Duke and American Tobacco interests. 12 Jenkins, James B. Duke: Master Builder, p. 149. 13 Transcript of Record, 221 U.S. 106, Volume I, p. 254. 14 It was not established at court that American Tobacco started this price war; see 164 Fed. Reporter 723, and 221 U.S. 160.

178 THE FREEMAN March Shortly after, in March, 1899, the Union Tobacco Company - manu facturer of the famous Bull Dur ham smoking tobacco - was pur chased. The American Snuff Com pany was then organized in March, 1901, with a paid in capital of 23 millions, and the stock was paid out to the three leading, for merly independent, snuff manufac turers. The American Cigar Com pany was also formed in 1901, and became the largest firm in that sector of the tobacco market. In addition, American purchased lic orice firms, bag firms, box firms, firms that made cigarette machin ery, tin foil, and processed scrap tobacco. By 1902, American Tobacco was manufacturing and selling a com plete line of tobacco and tobacco related products - including over 100 brands of cigarettes - and over 60 per cent of the nation's smoking and chewing tobacco, about 80 per cent of the nation's snuff, and 14 per cent of its cigars.

And when the newly organized Consolidated Tobacco Company., Continental Tobacco Company, and the American Tobacco Company all merged in October, 1904, to form the new American Tobacco Company, the last phase of the di versification and consolidation of tobacco properties was complete. The American Tobacco Company was now a major factor in all phases of the tobacco industry do mestically and internationally (al though relatively weak in cigars), and its position would be main tained (and even increased in plug chewing tobacco) until dissolu tion by the courts in 1911. The J890-J9 J0 Period: Acquisitions Though American Tobacco did acquire many firms in all phases of the tobacco business between 1890 and 1911, the total number of their acquisitions must be put in perspective. While over 200 ac quisitions appears high - and cre ates the impression that only a few independent tobacco firms re mained-the tobacco industry con tained thousands of independent firms in the period under consid eration. While American Tobacco did the great bulk of much of the tobacco industry in a few large manufacturing plants, thousands of smaller independent firms sold their 'products at a profit 'in the open market in competition with the "Trust."

For example, as many as 300 in dependent cigarette manufactur ers may have existed in 1910. 15 similarly, while the Trust p~o duced a great percentage of the nation's output of smoking tobac15 See Nicholls, Price Policies in the Cigarette Industry, p. 17. Jones mentions 528 independent plants in 1906; see Jones, The Trust Problem in the United States, p. 146.

1971 ANTITRUST HISTORY 179 co in fewer than 25 plants, there were as many as 3,000 plants man ufacturing smoking tobacco in 1910.16 In addition, the Trust ac counted for only about seven of the nation's estimated 70 snuff manufacturing plants. 17 And fi nally, the American Cigar Com pany operated just 29 manufac turing operations in 1906, while the cigar industry contained up wards of 20,000 independent firms.t 8 Thus, the tobacco indus try contained thousands of firms in spite of the acquisition activi ties of the "Trust." Entryand Economiesof Scale The major reason for the num bers of rival sellers is not difficult to discover. With or without the "Trust," entry into tobacco manu facture was relatively easy. The raw material was available to all at the going market rates and the Trust itself owned no tobacco land whatsoever. Anyone who wanted to compete could purchase the available raw materials and at tempt to sell his product in the open market. In addition, the Trust possessed neither discrimi natory transportation rates or re bates 19 nor any superior produc16 Nicholls, Price Policies in the Ciga rette Industry, p. 15.

17 Ibid. 18 Ibid. p. 13. Also, see· Ripley, Trusts, Pools, and Corporations, p. 295. 19 221 U.S. 129. tion method protected by patent. 20 Thus, it was not surprising to find many independent firms in an in dustry where neither the raw ma terial nor the efficient means of production were, or could have been, "monopolized." The major reason for the Amer ican Tobacco's policy of acquisi tions is not difficult to discover either: it made economic sense. For example, much emotional non sense has been made of the fact that American acquired firms and, subsequently, shut them down.21 The crucial point, of course, is that American concentrated to bacco production - and particu larly cigarette production with only two large plants in New York and Richmond - to achieve quite obvious and substantial scale econ omies. 22 Most of the acquired fa cilities were mechanically ineffi cient, and had been acquired only to secure the immensely more valuable competitive brand name.

Once acquired the product itself could be produced more efficiently in American's own modern and efficient facilities. Thus, it made 20 Jacobstein, "The Tobacco Industry in the United States," P. 10l. 21 Wilcox, Public Policies Towards Business (Homewood, Illinois: Richard D. Irwin, 1966), says that one of the Ameri can's "unfair" methods of competition was buying plants to shut them down (p. 139). 22 Transcript of Record, 221 U.S. 106, Volume I, pp. 208-211.

180 THE F,REEMAN March good sense and good economics to close down marginal manufactur ing operations, and no tears need be shed for the "dismantled fac tories." There is no evidence that any of the former owners shed such tears since American Tobac co's terms (stock in the Trust or cash) were admitted to be gen erous to all concerned. Thus, the plants were not acquired just to shut them down. Other Economies Achieved Other economies of the acquisi tion policy were achieved in im portant though not so obvious ways. For example, American's huge production made the owner ship of its own foil, box, and bag firms almost mandatory, and the advantages and savings to be re alized by accurate and continuous deliveries of these products made economic sense. Its acquisition of MacAndrews & Forbes and Mell & Rittenhouse, the two leading manufacturers of licorice paste, was predicated on possible econo mies and on the very real fact that the Japanese-Russian War threat ened Near East licorice supplies and, consequently, American To bacco's expansion of plug tobac CO.23 Independent foil, box, and bag firms still remained in the market place, and at least 4 other manufacturers sold licorice paste 23 Ibid., pp. 227-231, independent of the American To bacco firms. There is also no evi dence that American's paste firms refused to sell to anyone who wanted licorice at the going mar ket prices. Thus, this aspect of the vertical integration of Amer ican Tobacco was economically logical and certainly cannot be condemned as necessarily restrain ing trade.

American's integration into dis tribution also realized economies. With the virtual elimination of the middleman, the jobbers not unhealthy margin could be realized by the tobacco manufacturer. 24 Wholly owned retail establish ments could also push particular brands more effectively and be come an important advertising and marketing innovation. American Tobacco's United Cigar Stores, the most famous and effective tobacco product's retail chain - with over , 1,000 stores by 1910 and at least 300 in New York City alone were certainly important in this respect. There were still other more sub tle economies. A certain amount of inefficient cross-hauling or cross-freighting was automatically elimina ted since American Tobac co could fill orders for finished tobacco products from a number of different manufacturing loca24 Tennant, The American Cigarette Industry, pp. 51-52.

1971 ANTITRUST HISTORY 181 tions. 25 In those modernly equipped factories labored nonunion help, and this saved American from 10 to 20 per cent on its wage ex penses vis-a-vis most of its com petitors which employed Tobacco Workers Union labor. 26 The To bacco Trust could demand prompt settlement of all outstanding ac counts (30 days), while it was quite common for smaller manu facturers to wait two to four months for payment. 27 It could employ fewer salesmen per prod uct since many of its brands were long established; orders could even be filled by mail without agents of any sort. 28 And, lastly, it could employ, and did employ, some of the keenest managerial talent in the industry,29 and they proceeded to implement and extend the potential economies already discussed above. Consumers and Competitors But while the "Tobacco Trust" enjoyed "economies," what became of the tobacco consumer and of the "Trust's" competitors? Did American Tobacco simply act like a "classical" monopolist by re stricting output and raising price?

Or did American act like a "preda25 Jacobstein, "The Tobacco Industry in the United States," p. 126. 26 Ibid., pp. 125-126. 27 Ibid., p. 127. 28 Ibid., p. 128. 29 Ibid., p. 123. tory" monopolist and use its mar ket power to lower prices, and, consequently, drive its competi tion from the market? Actually, there is little evidence that Amer ican Tobacco followed either mo nopolistic-like conduct: they nei ther restricted outputs nor raised prices, nor· engaged - as a general rule - in predatory pricing prac tices designed to eliminate their competition. 30 For example, Amer ican Tobacco's cigarettes (per thousand, less tax) sold for $2.77 in 1895, $2.29 in 1902, and $2.20 in 1907; fine cut (per pound, less tax) sold for 27 cents in 1895, 33 cents in 1902, and 30 cents in 1907; smoking tobacco sold for 25 cents (per pound, less tax) in 1895, 26.7 cents in 1902, and 30.1 cents in 1907; plug sold for 15.5 cents (per pound, less tax) in 1895, 27.7 cents in 1902, and 3004 cents in 1907; and little cigars sold for $4.60 (per thousand, less tax) in 1895, $4.37 in 1902, and $3.60 in 1907.31 In the same period (1895-1907), the price of leaf tobacco per pound rose from 6 to 10.5 cents. 32 Thus, the pricing record indicated above on tobacco products was accomplished during a period when the price of the es30 Tennant, The American Cigarette Industry, pp. 49-57.

31 U.S. Research and Brief, 221 U.S. 106, Appendix "P," p. 329. 32 Tennant, The American Cigarette Industry, p. 53.

182 THE FREEMAN March sential raw material had increased about 40 per cent. Predatory practices are expen sive, and it is not usually profita ble to attempt to eliminate com petition through this technique. This would be especially true in an industry where entry was rela tively easy, where nonprice com petitive factors were crucial, and where there were hundreds - even thousands - of competitive sellers already in existence. Such a gen eral policy on the part of Amer ican Tobacco would have been fool ish and foolhardy, and no such gen eral policy was attempted. Although there may have been some isolated instances where price-cutting played an important part in merg er or consolidation,33 such prac tices were not the rule. 33 The "plug war" (1894-1898) is prob ably the most famous example. During this "war," American sold plug at a loss until the large independent plug manu facturers defaulted. The "independents"

came together to form the Continental Tobacco Company whose president was James B. Duke. But some additional facts complicate an easy interpretation of this "war." In the first place, it was not established that American started the "plug war." Sec ondly, the price reductions were limited to only a few "fighting brands"; while American Tobacco lost money on plug, all the large independent plug manufac turers continued to earn a profit. Lastly, pIug sales increared from 9 million pounds in 1894 to 38 million pounds in 1897. See Tennant, The American Ciga rette Industry, p. 29. The Lower Court Decision The comments concerning Amer ican Tobacco's efficiency and price policy related above are certainly not original. Amazingly, the same sort of comments can be discovered in a reading of the Circuit Court decision (U.S. v. American Tobac co, 164 Federal Reporter, 1908) that first determined that Amer can Tobacco had violated the Sherman Act. Although Circuit Judge Lacombe found American guilty of violating the Sherman Act, he stated, with respect to the economic issues involved that: "The record in this case does not indicate that there has been any in crease in the price of tobacco products to the consumer. There is an absence of persuasive evidence that by unfair competition or improper practices in dependent dealers have been dra gooned into 'giving up their individual enterprises and selling out to the principal defendant .... During the existence of the American Tobacco Company new enterprises have been started, some with small capital, in competition with it, and have thriven.

The price of leaf tobacco - the raw material - except for one brief period of abnormal conditions, has steadily increased, until it has nearly doubled, while at the same time 150,000 addi tional acres have been devoted to tobacco crops and the consumption of leaf has greatly increased. Through the enterprise of defendant and at a large expense, new markets for Amer1971 ANTITRUST HISTORY 183 ican tobacco have been opened or de veloped in India, China, and else where." (Italics added.) 34 Circuit Court Judge Noyes, while concurring with Judge La combe in American Tobacco's guilt, also appeared to concur in the economic issues involved. "Insofar as combinations result from the operation of economic prin ciples, it may be doubtful whether they should be stayed at all by legis lation .... It may be that the present antitrust statute should be amended and made applicable only to those combinations which unreasonably re strain trade - that it should draw a line between those combinations which work for good and those which work for evil. But these are all legislative, and not judicial, questions."35 It was J udge Ward (dissent ing), however, who crystallized the economic issues in the case.

"So far as the volume of trade in tobacco is concerned, the proofs show that it has enormously increased from the raw material to the manufactured product since the combinations, and, so far as the price of the product is concerned, that it has not been in c'}"eased to the consumer and has varied only as the price of the raw material of leaf tobacco has varied. The purpose of the combination was not to restrain trade or present competition ... but, by intelligent economies, to increase the volume and 34 164. Fed. Reporter, pp. 702-703. 35 Ibid., p. 712. the profits of the business in which the parties engaged." ( Italics added.) 36 "A perusal of the record satisfied me that their [American Tobacco) purpose and conduct were not illegal or oppressive, but that they strove, as every businessman strives, to increase their business, and that their great success is a natural growth resulting from industry, intelligence, and econ omy, doubtless largely helped by the volume of business done and the great capital at command."37 Yet, although three of the four Circuit Court judges admitted that there was evidence to indi cate that American Tobacco was efficient, had not raised prices, had expanded outputs, had not de pressed leaf prices, and had not "dragooned" competitors, Judge Coxe joined Judges Lacombe and Noyes in concurring that Ameri can Tobacco violated the Sherman Act! Clearly the conduct and eco nomic performance of the defend ant had nothing to do with the decision. American Tobacco was convicted in spite of its economic record because its mergers and ac quisitions inherently restrained trade between the now merged or a.cquired firms, and that violated the Sherman Act as interpreted in 1908. Judge Lacombe made the majority's position explicit: 36 Ibid., p. 726.

37 Ibid., p. 728.

184 THE FREEMAN March "... every aggregation of individu als or corporations, formerly inde pendent, immediately upon its forma tion terminated an exisUng competi tion, whether or not some other com petition may subsequently arise. The act as above construed Sherman Act prohibits every contract or combina tion in restraint of competition. Size is not made the test: two individuals who have been driving rival express wagons between villages in two con tiguous states, who enter into a com bination to join forces and operate a single line, restrain an existing com petition .... "Accepting this construction of the statute, as it would seem this Court must accept it, there can be little doubt that it has been violated in this case ... the present American Tobac co Company was formed by subse quent merger of the original company with the Continental Tobacco Com pany and the Consolidated Tobacco Company, and when that merger be came complete two of its existing competitors in the tobacco business were eliminated."38 (Italics added.) It was irrelevant to inquire into the benefits of the combination, argued Judge Laconibe. It was "not material" to consider subse quent business methods or the effect of the combination on pro duction or prices. The· fact that American Tobacco had not abused competitors, tobacco growers, or consumers was "immaterial." The 38 Ibid., p. 702.

only issue that was material was that: "Each one of these purchases of existing concerns complained of in the petition was a contract and com bination in restraint of competition existing when it was entered into and that is sufficient to bring it within the ban of this drastic statute."39 (Italics added.) And, thus, the three judges (with Judge Ward dissenting) ruled that the American Tobacco Company must be divested. The Supreme Court Decision of 1911 40 The Supreme Court decision handed down in the American To bacco case by Justice White in 1911 is a virtual replay of the Standard Oil decision of the same year. Again, White suggests that a "rule of reason" be applied to the undisputed facts concerning the activities of the American To bacco Company.41 But, again, that "rule of reason" does not include a careful economic analysis of the Tobacco Trust's conduct-perform ance in the period under consid eration. All the Supreme Court did (again) was to detail the history of the tobacco industry be tween 1890 and 1907,42 and infer 39 Ibid., p. 703.

40 United States v. American Tobacco Company 221 U.S. 105. 41 Ibid., pp. 155, 178-179. 42 Ibid., pp. 155-175.

1971 ANTITRUST HISTORY 185 from these undisputed facts that the intent and "wrongful purpose" of American Tobacco must have . been to acquire a monopolistic position in the tobacco industry.43 This conclusion was "inevitable," said White,44 and could be "over whelmingly established" by refer ence to the following facts: (a) the original combination of ciga rette firms in 1890 was "impelled" by a trade war; (b) an "intention existed to use the power of the combination as a vantage ground to further monopolize the trade in tobacco," and the power was used, Le., the "plug and snuff wars"; (c) the Trust attempted to con ceal the extent of its "control" with secret agreements and bogus independents; . (d) American To bacco's policy of vertical integra tion served as a "barrier to the entry of others into the tobacco trade" ; ( e) American Tobacco expended millions of dollars to purchase plants, "not for the pur pose of utilizing them, but in order to close them up and render them useless for the purposes of trade" ; (f) there were some agreements not to compete between American and some formerly independent tobacco manufacturers. 45 With these "facts" in mind, the conclu sion was inevitable: 43 Ibid., pp. 181-184.

44 Ibid., p. 182. 45 Ibid., pp. 182-183. "Indeed, when the results of the undisputed proof which we have stated are fully apprehended, and the wrongful acts which they exhibit are considered, there comes inevitably to the mind the conviction that it was the danger which -it was deemed would aTise to individual liberty and the public well-being from acts like those which this record exhibits, which led the legislative mind to conceive and enact the antitrust act.... " (Italics added.) 46 But, as has been demonstrated in our review of the American Tobacco Company, whether such "acts" are a. danger to "individual liberty" and the "public well being" is a matter of dispute. To inevitably infer, for exa.mple, that purchasing plants and closing them down endangers liberty or the public well-being, without an eco non/vic analysis of the costs and benefits of such an action, is an unwarranted and faulty inference.

If the agreements to secure these "plants" were voluntarily arrived at, then "individual liberty" was not endangered; if the plants closed down by American Tobacco were inefficient, and if the prod ucts continued to be produced at larger, more efficient factories, then the danger to the public well being is not obvious. The same kind of questions can be raised about the rest of the "undisputed 46 Ibid., p. 183.

186 THE FREEMAN March facts" and "inevitable inferences" in this case. Conclusion Unfortunately, the Supreme Court in the Ameri.can Tobacco case did not choose to analyze the economic issues involved, nor choose to use the rule of reason as an economic standard to see whether the public well-being had been harmed. Such an analysis, if performed, would have involved a discussion of prices, outputs, econ omies associated with merger, growth of competitors (especially in cigarette manufacture), and a host of related issues; no such discussion is discovered in this case. American Tobacco was con victed of violating the Sherman Act because its acts, contracts, agreements, and combinations were of such "an unusual and wrong ful character as to bring them within the prohibitions of the law."47 The Circuit Court was directed to devise a plan of dis47 Ibid., p. 181. (Italics added.) solving the illegal combination, and "recreating" a new market structure that would not violate the antitrust law.

The fundamental purpose of this study has been to demonstrate that the famous American Tobac co decision of 1911 did not turn on any sort of sophisticated eco nomic analysis of actual market conduct or performance. An even wider purpose, however, has been to suggest by example that struc tural changes a priori prove pre cious little about consumer welfare and that it is not always safe to assume that "bad" structure leads inevitably to "bad" conduct or "bad" performance. Since the present trend in antitrust think ing appears to be moving toward an almost complete reliance on structural factors,48. the implicit danger of such an approach should be obvious. , 48 Samuel A. Smith, "Antitrust and the Monopoly Problem: Towards a more Relevant Legal Analysis," Antitrust Law & Economics Review, Volume 2, No.4 (Summer, 1969), pp. 19-58. IDEAS ON LIBERTY Obstacle to Progress THERE IS A NATURAL OBSTACLE to progress in abstract thought, which has often delayed rational inquiry; an erroneous concept or theory may be expressed in terms which embody the error, so that thinking is blocked until the misleading words are discarded from the given context.

ISABEL PATTERSON, The God of the Machine So Who Are You,Young Man? Rebellious Youth with anger burdened, Cease awhile from protestations. Halt dissents and demonstrations. Stop and think. Ponder on the fact that you, Like all your mentors, first to last, Are but an echo of the past And Iittle more. A heritage from Fate, you are A complex of regeneration, The old made new through reclamation. The fruit of salvage. Your growing bones, and flesh, and brain Were all controlled by DNA With guiding genes that got away From predecessors. All you've learned was known before you. All you know is what was taught you By your elders who have brought you Where you are. To the stern 'world of Experience Where convictions are diluted And raw knowledge is transmuted Into wisdom. 187 188 THE FREEMAN Where absolutes are stuff for dreams And almost never are attained While worthy ends are quickest gained Through compromise.

All you've angrily condemned All the grievances bewailed Have persistently prevailed Throughout the ages. The System or Establishment, To you, a faceless monster who Forever stalls long overdue Utopia. Assaying the Establishment, The seeker for the truth will find A fair cross-section of Mankind Like you and me. Just Man with all his weaknesses, His greed, his fears, his self-concern, His strivings, with good deeds, to earn Some commendation. So, Rebel Youth, when you commence Your crusade for the right and good, It seems the reformation should Begin with Man. So may it be. JULIAN CHASE Mr. Chase, in his 93rd year, was for many years vice-president of the Chilton Company and directing editor of its automotive division. March A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN The Silent Revolutionin England THE MAIN POI~T of John W. Os borne's The Silent Revolution: The Industrial Revolution in Eng land as a Source of Social Change (Scribner's, $7.95) is that if there hadn't been capitalism, there wouldn't be any funds for modern welfare. In many ways Professor Osborne's useful little book sup plements and amplifies the papers read at the Mont Pelerin Society meeting held at Beauvallon in France in 1951, and subsequently published in a volume edited by Professor F. A. Hayek, Cap,italism and the Historians. With the same attention to detail that was supplied by T. S. Ashton and W.

H. Hutt, two of Hayek's contributors, Professor Osborne makes a convincing case that the lot of man in England was considerably improved by the industrial revo lution. Unfortunately, the Osborne book doesn't go on to the next question: just how far can the welfare state be pushed without milking the capitalist cow, the source of high modern produc tivity, to death? After a brave beginning, The Silent Revolu,tion trails off; it· is not governed by any rigorous economic thinking. But before Professor Osborne comes to what amounts to a non conclusion, there is much to support the Mises-Hayek-Ashton contention that our standard his189 190 THE FREEMAN March torians of the industrial revolu tion failed to do their homework. It was Marx's collaborator, Fried rich Engels, who established the stereotype about the idyllic Eng land of pre-capitalist times. Rely ing on government reports of a highly selective nature, Engels, along with J. L. and Barbara Hammond of The Town Labourer fame, contrasted the world of the early factories with the "merry England" of supposed tradition.

The only trouble with the contrast is that pre-industrial England supported a small population of eight to ten million mostly at a poor subsistence level. Industrial ism enabled the population to quadruple, and it was a more humane and better fed population than the pre-ind ustrial age had ever known. "Bucolic" England It was a coarse and brutal Eng land that existed in eighteenth century times. The roads were impassable for much of the year; people were bound by the village horizon. The criminal code was harsh; pickpockets could be pun ished by execution, and the crowds regarded a hanging as a sport ing event. The ordinary English man, says Osborne, "was illiterate and uncouth ... his conduct swayed between extremes of bois terous good nature or sullen violence. . . . Devoid of letters, with his body warped by hunger and illness and his spirit clouded by worry and personal tragedy, this ordinary Englishman was not worse off than his counterparts either in E urope at the time or in Africa or Asia today." The ordinary Englishman was fatalis tic about his politics, which gave a conservative tone to public life.

In short, the picture of Merry England of the Greenwood was something that existed in Fried rich Engels' imagination; the re ality of bucolic England was often the reality of scratching for a dole under the old poor laws. Chil dren starved out of sight in rural hovels; and the pre-industrial towns, lacking gas lighting and a decent water supply, were at least as bad as anything that came with the factory system. Like T. S. Ashton before him, Professor Osborne blames the crowded conditions of Manchester not on "capitalist greed" but on the Napoleonic wars. For a full generation very little housing was built: wartime interest rates were too high, window space and bricks and tiles were heavily taxed, iron had to be used for cannon instead of pipe, and the war inflation had made the purchase of oak and fir prohibitive. Yet even the crowded warrens of Manchester were pref erable to life in the countryside; 1971 THE SILENT REVOLUTION 191 if they hadn't been, people wouldn't have moved to take ad vantage of factory wages.

Enter: Industrial Capitalism The great textile manufactur ing inventions of Arkwright, Crompton, Cartwright, Kay, and Hargreaves, supporting each other as spinning caught up with weav ing, combined with the Watt steam engine to give Britain a jump on the outer world. With affluence a possibility, people got the idea that their troubles could be amelio rated. This, says Professor Os borne, gave the reformers their cue. The new Factory Acts, the child labor laws, the extension of the franchise, the growth of schools, the establishment of hos pitals, and the very rise of Fabian socialism itself, were all possible because the wealth was there to pay the bills. Professor Osborne's idea is that the moral climate changed from the coarseness and drunkenness of eighteenth century society to the regularity and prudery of Victori anism largely because industrial ism and its superstructure of modern business demanded re sponsibility. The old spasmodic rhythm of working with the sea sons gave way to a regular ly spaced rhythm of working with the clock. Disciplined work was followed by disciplined sport. The new capitalistic toll roads broke down the parochial England of the village, and the railroads, after the coaching age of Charles Dick ens, completed the job.

Robert Owen - Capitalist Turned Reformer If industrial capitalism was needed to support a new humani tarian England, one would think that Professor Osborne would be at pains to warn the socialists against putting too heavy a charge on it. After all, there must be profits and a continued spirit of innovation to sustain the taxa tion that pays for welfare. Pro fessor Osborne, however, doesn't seem particularly concerned with this problem. He misses the true significance of Robert Owen, the early nineteenth century capital ist of the New Lanark mills. Long before Henry Ford, Owen decided that a healthy, educated, and rea sonably well-paid working force would improve both productivity and profits in his factory. And so it proved: Owen, by treating his workers well, became a rich man. Then, in one of the great social non sequiturs of his age, he turned collectivist reformer. His attempt to found a socialist community in America came to grief, and his pompous politicking in Britain got him nowhere. If he had spent his energies on converting other 192 THE FREEMAN March manufacturers to a Henry Ford view of economics, he would have done much more for England.

One wishes that Professor Os borne had made something of the regression in modern Britain that has accompanied the rejec tion of nineteenth century capi talist values. He says that "be tween 1700 and 1825, no less than one hundred and fifty-four hospitals and dispensaries were founded in the British Isles." Under the modern British socialized medical schemes, the rate of hos pital building has fallen to a whisper. Doesn't this convey some thing? Industrialism got its start in England, as Professor Osborne points out, because of the prior existence of English freedoms. The state hadn't become absolute as it had in France. But now the state grows. I wish Professor Os borne had drawn the proper con clusion. I HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each Order from: THE FOUNDATION fOR ECONOMIC EDUCATION, INC. IRVINGTON·ON·HUDSON, NEW YORK 10533 the Freeman VOL. 22, NO.4. APRIL 1971 Some Thoughts on Violence Edmund A. Opitz 195 A diagnosis of today's cult of violence and an appeal for a return to reason - the divine spark in man.

Uneven Inflation George Hagedorn 200 The uneven response of various prices and incomes introduces distortions and inequities into the economy. The Worrycrats Leonard E. Read 203 A special breed of bureaucratic worriers for whom all citizens are compelled to pay. "Thou Shalt Not Drink" Mary Bennett Peterson 208 The story of Prohibition and Repeal and its lesson for modern regulators. The VoucherSystem - Trap for the Unwary Robert Patton 211 Not a way out, but more of the same government regulation and control of the learning process. Poor ReHef in Ancient Rome Henry Hazlitt 215 Another example of the way in which relief programs get out of hand and destroy the economy, including the intended beneficiaries. Educationfor Privacy Marten ten Hoor 220 A plea for education for privacy when so many are occupied with the improvement of others. Revenue Sharing A new name for inflation. Paul L Poirot 235 The Biology of Behavior Roger J. Williams 239 Our biological differences should convince us that uniformity is not a rule of life.

Property James Madison 248 Property embraces everything to which a man may attach a value and have a right, and which leavesto everyoneelse the like advantage. Book Reviews: "Christianity and the Class Struggle" by Harold O. J. Brown "The Theory of Money and Credit" by ludwig von Mises Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding. 251 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 linlited 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, 1971, 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. Articles from this journal are abstracted and indexed in Historical Abstracts and/or America: History and Life. THE FREEMAN also Is available on microfilm, Xerox University Microfilms, Ann Arbor, Mich· igan 48106. Permission granted to reprint any article from this issue, with appropriate credit, except" 'Thou Shalt Not Drink,' " "Poor Relief in Ancient Rome,'I "Education for Privacy," and "The Biology of Behavior."

SOME THOUGHTS ON EDMUND A. OPITZ MOST HUMAN differences are set tled peacefully. Collisions of in terest occur sporadically, but when intelligence and good-will com bine we work out a modus vi vendi. Conflicting opinions are resolved by an appeal to reason; patience and persuasion ease the frictions arising out of personal encounters. Thus it is in most areas; we carve out survival pat terns and get along with each other. But there are periods of history more violent than others when arbitration works poorly and conflict intensifies; we are living through one such. Warfare of unusual ferocity has plagued the West for· more than half a century - despite lip service to peace in the form of nominal pacifism and humanitariThe Reverend Mr. Opitz is a member of the staff of the Foundation for Economic Educa tion. This article, slightly abridged, appeared in The Lutheran Scholar, October, 1970.

anism. But international strife is not the only plague; domestic ten sions break out of bounds with increasing frequency; riots, dem onstrations, assault, kidnappings, bombings, strikes, and acts of sabotage barely make the front pages, so commonplace have they become. Out of the woodwork come spellbinders to lecture uni versity audiences on gunbarrel politics, revolution for its own sake, and the beauties of violence. Professors of philosophy are in voked to provide a specious ration ale for destructionism. A cult of violence and systematic terror comes into being. There's no longer time to take thought, we are told; men must act. Incessant and strident calls to action are directed toward the base emotions of hatred and fear, drowning out quiet appeals to the mind. The demand that we do something re195 196 THE FREEMAN April suIts in thoughtless action, and mindless violence breeds more of the same.

Violence Displaces Reason What has brought about this state of affairs? How shall we ac count for the increased violence that mars our land? It is obvious that violence and the cult of vio lence expands as faith in reason declines - only when people are convinced that differences cannot be worked out intelligently do they resort to force. The restoration of reason to its proper role in human affairs is essential if we would live in peace, but first we must try to understand what has caused men of the modern era to distrust reason. History is not simply what Gib bon called it, a catalogue of "the crimes, follies, and misfortunes of mankind"; but the human record is spotty and there has been vio lence in every era. People differ, and occasional conflict is thus a built-in feature of human action. The species could not have sur vived, of course, were there not a preponderance of cooperation and mutual aid in human affairs, but traces of friction remain even un der the best of co'i1ditions. Abra sive contacts between men may be eased by good will plus a disposi tion to argue it out rather than fight it out, but when all stratagems fail and flight is impossible human beings do resort to force.

Violence, in other words, is an cient in human experience - but as a last resort. It is today's cult of violence that needs diagnosing. A collision of interests devel ops between two evenly rnatched men. Before any blows are struck one man says to his adversary, "Come let us reason together," or words to that effect. If this offer is accepted it is because both men hold certain assumptions in com mon. Each man takes it for granted that he is a finite and fallible human being; he entertains a set of convictions on grounds he deems reasonable, but he has no im mediate access to Universal Rea son which might assure certitude. It is assumed that men are gifted with a divine spark, reason - a valid instrument for getting at the truth when used properly, that is, with due regard for logic and in good faith. Finally, it is assumed that the universe is ra tionally structured, in the main, so that there is a correspondence bet,veen correct reasoning and the nature of things, enabling men who start from different places to think their way through to common ground.

The human reason, employed within these rules, may thus re duce tensions and resolve conflict. It may firm up one's own convic1971 SOME THOUGHTS ON VIOLENCE 197 tions, enhance appreciation of the opponent's views, and persuade a man to ponder the rich diversity of mankind. Admittedly, even un der the best of conditions men may not find a reasonable modus vivendi,. words may lead to blows. But violence, if it occurs, is at any rate postponed to the last stage. It is not condoned. Imagine another encounter. The antagonists this time do not share a common faith in the ef ficacy of reason. Skeptical of rea son as a useful means for thrash ing out differences of opinion they are prepared to accept the alternative that differences can be settled only by the forced imposi tion of one man's or one party's will over the other. Everything that denies or diminishes Mind, everything that downgrades rea son, transforms a point of view which is reasonable or amenable to reason - into a nonnegotiable demand for submission to supe rior force. Men have a condition rather than an opinion; two states of mind confront each other.

Slogans to live By The True Believer does not en tertain conclusions arrived at by marshalling the relevant evidence and drawing from it the correct inferences; to the contrary, he has been programmed with a set of armed doctrines picked up ready to use from the nearest intellec tual arsenal-newspaper, TV, lib eral journal, college, or whatever. Instead of ideas which might en lighten, there are slogans, catch words, and labels - a new set every few years - that nerve both sides for combat. When the pre vailing ideology deters men from ventilating their differences rea sonably they fight about their differences, hence the depressing increase of violence in our time. And the proceedings are rational ized; hence the cult of violence. Faith in reason is at a low ebb in modern man; Mind is bogged down in the snarled ideological skein of the twentieth century. The low estate of things mental is the consequence of a trend which has brought several sets of ideas together.

• Philosophical materialism and mechanism assumes that the ul timate reality is nonmental; only bits of matter or electrical charges or whatever are, in the final analysis, rea1. If so, then thought is but a. reflex of neural events. "Our mental conditions," wrote T. H. Huxley, "are simply the symbols in consciousness of the changes which take place auto matically in the organism." Fare well to free will, if "the brain secretes thought as the liver se cretes bile," as one materialist put it.

198 THE FREEMAN April • Evolutionism, popularly under stood, conveys the idea that living things began as a. stirring in the primeval ooze and became what they are now by random inter action with the physicochemical environment, moved by no pur pose, aiming at no goal. "Darwin banished Mind from the uni verse," cried Samuel Butler. Man, wrote Bertrand Russell, is "but the outcome of accidental colloca tions of atoms." • From popular psychology comes the notion that reason is but ra tionalization, that conscious men tal processes are but a gloss for primitive and irrational impulses erupting from the unconscious mind. Psychoanalysis discredits mind by subordinating intellect to the Id. • From Marxism comes the no tion that class interest dictates a man's thinking. There is one logic for the proletariat and another for the bourgeoisie, and the mode of production governs the philosoph ical systems men erect, and their life goals as well. The unfortu nately placed middle class forever gropes in darkness, unable to share the light revealed to Marx and his votaries.

These are some of the battle lines where men must fight to vindicate themselves as reasoning beings, possessed of free will, ca pable of guiding their lives with intelligence and idealism. The Mind must be restored to its rightful place in the total scheme of things, and that place is central for, if the Mind be deemed un trustworthy, who can then trust any conclusion? The centrality of Mind must be the keystone of any philosophy worth the allegiance of rational creatures, and this is the battle line behind all the others. • Overarching all other causes for the flight from reason is the decline of theism - an interpreta tion of the cosmos which finds a mental or spiritual principle be yond nature. If there is no God the cosmos is only, in the final analysis, brute fact, and a man's thoughts are reduced to a· bodily function. The thinking part of a man is validated ultimately by its kinship with the Divine Mind.

Theism contends, as a. mini mum, that a Conscious Intelli gence sustains all things, working out its purposes through man, na ture, and society. This is to say that the universe is rationally structured, and this is why cor rect reasoning pans a few pre cious nuggets of truth. Restora tion of faith in the efficacy of rea son and a revival of theism go hand in hand. But this is not all. Acceptance of the Creator re minds men of their own finitude; no man can believe in his own om1971 SOME THOUGHTS ON VIOLENCE 199 nipotence who has any sense of God's power. And finite men, aware of their limited vision, have a strong inducement to enrich their own outlook by cross fertili zation from other points of view. A revival of theism, in the third place, will curb utopianism. Men vainly dream that some combinaCivil Disobedient:e tion of political and scientific ex pertise will usher in a heaven on earth, and they use this future possibility as an excuse for pres ent tyranny. Under theism, they modestly seek to improve them selves and their grasp of truth, thus making the human situation more tolerable, confident that the final issue is in God's hands. I IDEAS ON LIBERTY WHILE THE IDEA of civil disobedience may evoke sympathy where the claim is made that the cause is just, once we accept such a doubtful doctrine we legitimatize it for other causes which we might reject. We must be even more careful in the sympathetic case because, in effect, that sets the standard of conduct which then becomes acceptable for cases not as appealing or for groups not as responsible. Thus, we substitute pressure for persuasion and squander the carefully nurtured value of self-restraint and jeopardize the system of law....

The plain fact of human nature is that the organized disobedi ence of masses stirs up the primitive. This has been true of a soccer crowd and a lynch mob. Psychologically and psychiatrically it is very clear that no man - no matter how well intentioned can keep group passions in control. MORRIS I. LEIBMAN UNEVEN INFLATION GEORGE HAGEDORN IF, as of midnight on a certain date, every dollar were to count as two dollars, and every. price, wage rate, etc. were doubled, the result ing "inflation" would make abso lutely no. difference to anybody. The only problem might be to ad just our financial arithmetic. In practice, inflation does not, and cannot, ever happen that way. It occurs as a process spread out over time. And it affects incomes, prices, and the value of assets unevenly over the time scale. At any given stage of the process, some people are ahead of the game and some are behind. Even when the process is all over, some will still be behind and others still ahead.

This is an elementary and perMr. Hagedorn is Vice-President and Chief Economist of the National Association of Manufacturers. This column appeared in NAM Reports, January 11, 1971. 200 haps a rather pedantic line of thought. But it is often ignored in practice. Inflation is discussed as though its chief evil lay in the general rise in prices and incomes. The real evil of inflation lies in the fact that it is not general enough. The uneven response of various prices and incomes intro duces distortions and inequities into the economy. The position of various sectors of the economy relative to each other is changed. As the process proceeds the rela tive position of the goods sector vs. the service sector, of employ ers vs. employees, of organized labor vs. unorganized labor, of borrowers vs. lenders, of pension ers vs. active workers, etc., etc., keeps changing. Naturally, as this goes on, it provokes strong feelings among those affected. The groups that 1971 UNEVEN INFLATION 201 fall behind, relatively, are em bittered. But those who have gained ground are not likely to feel especially favored - they are more likely to conclude simply that at last they have got their due.

Thus, the balance between satis faction and dissatisfaction with the inflationary developments is not an even one. The Function of Prices But the effect of the inflation on intergroup equity, or subjective feelings of equity, is not the only problem involved. The relation ship among various incomes and prices is the mechanism which keeps our economy going as an efficient producer of goods and services. Goods can't be produced if their costs exceed their market price. And if costs and prices are so related that a profit can be made on almost anything, no mat ter how inefficiently it is produced, manpower and capital are not allo cated to the most useful purposes. The relationships among prices (in the broadest sense of the word) are more important in maintaining a workable economy than the absolute level of prices. Thus, during the inflationary process, patterns of economic ac tivity are distorted. This might not be too bad, but the temporary effect of changed price-income re lationships is often interpreted as a permanent change in demand patterns. Capital is invested to s'upply goods that may not be wanted later - and is not invested where it will be needed. Workers are hired and trained for jobs that may not exist beyond the infla tionary period.

This is not anyone's fault in particular. The price-income sig nal system which we rely on to control the economic traffic is thrown out of kilter by the un even inflationary process. When the inflation ends - as all inflations must - the process is thrown into reverse. Not that prices and incomes generally go down, but those which· have been behind tend to catch up. This proc ess, too, is a slow and uneven one. At the end it is usually incomplete. Malinvestments During 800m The process of "disinflation" is even more painful than the slow and uneven process of inflation. Those who maybe catching up are still bitter because they were be hind so long. Those who had gained ground begin to feel a vested right in· their new position, and will resent losing their tem porary relative advantage. But the most unpleasant aspect of a disinflation period is that we are left with a heritage of the misdirected investment and man power from the preceding infla202 THE FREEMAN April tion. It remains to be seen j list how serious a problem this will be if, and as, we liquidate the infla tion of the late 1960's. In the opin ion of this writer it will not be ,catastrophic (although it could become so if the inflation is re activated). But it is already a painful problem and we should not deceive ourselves on that score. The nation took an inflation "trip" and we are only now learn ing how bad a trip it was.

In pointing out that the real problem of inflation is not the general price-income increase, but its unevenness, we hope it is clear that we are not advocating an at titude of complacency toward in flation. We are not suggesting that inflation should be tolerated, and our efforts should be merely to insure that everything responds simultaneously and proportionately to it. Our economic institutions are not geared to perform in that way and it is hard to conceive of any set of institutions that would. Universal automatic escalation, if it were possible, would destroy the meaningfulness of our most basic Stand.by Controls institution - money. The only way to avoid the kind of distortions and inequities we have described is to avoid inflation. Price Controls Assure '''Worst of Both Wor/ds" Our theme does, however, have a bearing on an important na tional question. Those who believe that the evil of inflation lies in the general rise of prices and incomes have a simple solution. All you have to do, they say, is freeze all prices and incomes at their pres ent levels by government decree.

The effect would be to freeze all the distortions and inequities pro duced by inflation permanently in to the system. The temporary ad vantage8 of some groups over others would be preserved as long as the freeze endures. The process of unwinding the inflation, and re storing a more rational pattern of price and income relationships, would be stopped dead. A price level which is kept from rising by jamming the internal mechanism of our economy is the real "worst of both worlds." , IDEAS ON LIBERTY To ENACT stand-by controls would mean putting into the law of the land a permanent endorsement of a basic tenet of socialism - the principle that control of the vital mainstreams of commerce and confiscation of the rights of private property are sound and just practices. F. A. HARPER EVEN when government is limited to codifying the taboos, invoking a common justice, and keeping the peace, there is and has to be an operating staff: a bureaucracy, as we call it. Routine procedures of a bureaucracy offer a legal way to administer a police department, as distinguished from arbitrary rule.!

Worrycrats, as I call them, are a special breed of totalitarian bu reaucrats who spawn rapidly as society is socialized. These people concern themselves with our health, education, welfare, auto safety, drug intake, diet, and what have you. Worrycrats today out number any other professionals in history, so rapidly have they pro liferated. We might say that theirs is in deed big business, except that the activities of these worrycrats in no way resemble a free market op eration. Freedom in transactions has no part in this political pro cedure. Citizens are coerced to pay these professional worriers wheth er they want their services or not. A nongovernmental operation of similar nature would be called a racket. While the worrycrat has never ranked higher in my esteem than any other practitioner of chican1 See Bureaucracy by Ludwig von Mises (New Rochelle, N. Y.: Arlington House, 1969).

THE WORRYCRATS LEONARD E. READ ery, it took two successive observa. tions to "turn me on." Driving north on the Merritt Parkway, I observed a brilliantly painted road way sign: ARE YOU DYING FOR A SMOKE? While designed to discourage smoking at the wheel, it brought to mind the recurrent messages beamed to us by worry crats. Perhaps I would have dismissed the thought had I not read in the next morning's paper about the World Health Organization, op erating out of Geneva, announcing 203 204 THE FREEMAN April its plans "to step up its campaign against cigarettes by reducing the world's production of tobacco." How? By getting farmers, the world over, to switch to other crops !2 Mine is not an argument in fa vor of smoking or against anyone quitting; whether you smoke or not is none of my business. Rather, I question the propriety of our be ing coerced to pay worrycrats to worry about us. We worry enough on our own without paying to have our worries multiplied. George Robert Sims wrote a truism: For one that big misfortunes slay, Ten die of little worries.

An experience comes to mind. In 1947 I visited Houston for the first time. There were fifty VIP's at the dinner. Seated next to me was an elderly gentleman. The next noon, he remarked, "Leonard, you were nervous before you spoke and you drank far too much coffee. That's not good for you." Admitting to both the nervous ness and excessive coffee, I sug gested - perhaps incorrectly - that, short of accidents, we are born, more or less, with our time tags; that my excesses might make a year or two difference, but why fret about that! "I never thought of it that way 2 See New York Times, January 31, 1971, First Section, p. 12. before," said he, "but now that you mention it, here's a. piece of evi dence in your support. Fifty-some years ago sixteen couples, all in our early twenties, arrived in Houston. We became close friends, and I confess we smoked, drank a lot of coffee, and even some alco hol. We worked hard but we had fun. Then, when we reached forty or thereabouts, all, except myself and one other, began worrying about when they were going to die.

Having a fretful eye on reaching a ripe old age, they quit these things, watched their diet, and otherwise prepared for longevity. You know, all except that other fellow and me have gone to their reward !" The Competence of Worriers Observe the massive outpour ings of the worrycrats - over TV, radio, and in the press - about lung cancer, heart failure, mer cury, cranberries, cyclomates, seat belts, groceries, and so on. Unless one sees through all of these un solicited oral and verbal counsels, he is going to be unnecessarily concerned. It is my contention that tens of millions have had their or dinary fears and worries substan tially multiplied by reason of these professional do-gooders. Millions of people who never gave longevity more than a second thought are now worrying about it. Fear and 1971 THE WORRYCRATS 205 worry are far deadlier menaces than all the things th~ worrycrats pretend to protect us from. But before trying to substantiate this point, let us raise a few pertinent questions.

Are these political saviors really concerned about your welfare and mine? Actually, they do not know that you or I exist. Nor will they know when we cease to exist. What, then, is their motivation? The truth is that I know as little about their motivations as they know about what is good or bad for me. But let us suppose that they are worried about you and me. Who are they and what is their compe tence? Certainly, lovely ladies serve a purpose, but they are not experts when it comes to your wel fare or mine. Nor are publicists, propagandists, the folks of Madi son Avenue - all of these people who prepare the worry words we hear and read. Or, let us further suppose that these worrycrats are the world's most advanced physicians and sci entists. Would they know enough of what is injurious or helpful to you or me to justify forcing this information upon us or frighten ing us about it ? You and I are in no way alike; each individual is unique, extraordinary, different.

Were this not the case, my doctor could examine me and apply the same findings to you and all others. Examination of one would suffice for everyone. No Two the Same As a matter of fact, individuals vary widely. For instance, an asso ciate of mine must strenuously ex ercise to live. The same exertion by most people would do them in. A late friend of mine passed on at 95. He had observed a rule all his life: never move except when nec essary. Similar inactivity for most of us would bring about an early demise. There are drugs which can save your life but would kill me. This is why pharmaceutical houses publish long lists of contra indica tions for each drug they manu facture. Dr. Roger Williams, a noted bio chemist at the University of Tex as, blamed a physician for the death of a patient because he treated her as an average person - when there is no average person! This led Dr. Williams into the study of human variation and re sulted in three remarkable books: Free and Unequal (1953), The Bio chemical Basis of Individuality (1956), and You Are Extraordi nary (1967).3 For a striking ex3 Free and Unequal, Austin: Univer sity of Texas Press.

The Biochemical Basis of Individuality, Austin: University of Texas Press. You Are Extraordinary, New York: Random House.

206 THE FREEMAN April ample among his findings: some persons can imbibe twenty times as much alcohol as can certain others, and be no more inebriated! A later study of his revealed that even "identical twins" are far from identical. I care not who sits behind the worrycratic desk, whether a dull ard or an Aristotle. When anyone thus tries to fathom our ills, de ficiencies, excesses, he is staring into absolute darkness. Prescrib ing for and presiding over 200 mil lion distinctive, unique individuals is no more within man's compe tence than si tting atop the Cosmos and directing the Universe. Con trary to socialist doctrine, we are discrete beings - not a mass, a col lective, a lump of dough to be kneaded, baked, and consumed! Death Hastened by Fears of Psychosomatic Origin Now, what about fears, anxie ties, worries? Are they killers? One scarcely needs modern science to find support for the idea that most ills are psychosomatic in ori gin. Go back well over two millen nia and ,there it is: "As a man thinketh in his heart, so is he."4 Here is modern support: For instance, a patient whose par ents have both died of heart disease will be anxious about his own heart.

4 Proverbs 23: 7. When then a normal diencephalic re sponse to an emotion causes the heart to beat faster or when gastric disten sion pushes his heart out of its usual position, he will be inclined to inter pret what he feels as the beginning of the disease which killed his par ents, thinking that he has inherited a weak heart. At once all his fears cluster like a swarm of angry bees on his heart, a vicious cycle is established and thus anxious cortical supervision may eventually lead to organic le sions. He and his family will then be convinced that he did indeed inherit a weak heart, yet this is not at all true. The above is taken from Man's Presumptuous Brain by A. T. W. Simeons, M.D.5 This is but one of many illustrations of how death is hastened through fears, anxieties, rage, worries, a physiologic and pathologic process set in motion by a psychosomatic origin. In brief, unless one would speed the process, let him not fear death.

I repeat, the outpourings of the worrycrats tend to multiply our stresses, anxieties, worries; in stead of rescuing us from our way wardness, they are literally scar ing us to death. Ideally, there is a role for gov5 First published in 1961 by E. P. Dut ton & Co., New York. See also: The Stress of Life by Hans Seyle, M.D. (New York: McGraw-HilI Co., 1956). The Myth of Mental Illness by Thomas S. Szasz, M.D. (London: Martin Seeker & Warburg, Ltd., 1962).

1971 THE WORRYCRATS 207 ernment with respect to health, education, welfare. That role is to inhibit misrepresentation, fraud, violence, predation, whether by doctors, educators, restaurateurs, pharmaceutical manufacturers, la bor unions, or others. No false la bels; no coercive impositions on anyone! This is to say that all of us should be prohibited from injur ing others. Actions that harm others - not what one does to self The Reform Process - define the limits of the social problem and of governmental scope. You know yourself better than anyone else does. Better that you turn yourself toward what you think is your advantage than be turned by a worrycrat toward what he thinks is your advantage. You at least know something, whereas he knows nothing of you as an in dividual. (j IDEAS ON LIBERTY MEN LIVE their lives within a framework of customary relations and patterns for achieving their ends and solving their problems.

In the absence of positive force, they have worked out and ac cepted these patterns voluntarily, or they submit to them will ingly. Any alteration of these by government involves the use or threat of force, for that is how governments operate. The old order must be replaced by a new order for the reform to be achieved. The result of the forceful effort to do this is disorder .... Men may adjust to the new disorder, resume the course of their lives as best they can, and submit more or less to conditions. In time, they may even forget that the system is maintained by force, or that things could be otherwise. After all, most peoples at most times have lived under varying degrees of oppression. Nonethe less, ameliorative reform introduces violence into life. The force charged with keeping the peace becomes the disturber of the peace. Traditional relationships are disrupted. Liberty is re stricted and reduced.

CLARENCE B. CARSON The Flight from Reality "tEbou ~balt Jlot 1Brink" MARY BENNETT PETERSON FIFTY-ONE years ago the United States embarked upon a Noble Ex periment: a millennium of social betterment could be brought about by Constitutional amendment and repeal of the law of supply and demand. It was the time the Eight eenth Amendment began, and Pro hibition became the law of the land. The late newspapers of January 16, 1920 - the very day Prohibition went into effect - reported that trucks loaded with contraband liquor had been seized in Peoria, Illinois, and New York City by Fed eral agents. Other first-day accounts told of clandestine stills being raided in Indiana and Michigan, and the issuance of warrants for arrest of violators of the liquor law throughout New York State. Mrs. Peterson is a free lance author and re viewer. This article is an abstract of a chapter from her forthcoming book, The Regulated Consumer, Nash Publishing Company.

208 The Prohibition movement be gan in earnest around the turn of the century. Hatchet-wielding Carry Nation, with public prayers ~nd condemnations of Demon Rum, set out with her pre-Women's Lib disciples on a whiskey-bottle beer keg smashing crusade through the nation's saloons. Other Drys, led by two powerful lobbies - the Anti-Saloon League and the Woman's Christian Temperance Union - steadily built up political power in Congress and state legis latures. The movement was ready for a show of strength when President Wilson in 1919 vetoed the Volstead National Prohibition bill, origi nally a World War I food conser vation measure. Congress prompt ly overrode the veto, rejecting the President's forebodings of na tional scandals and Federal en1971 "THOU SHALT NOT DRINK" 209 forcement fiascos. Later the requi ~~{e g~ ~tat~~ ratHt~d the new law, which read simply enough: "The manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the juris diction thereof for beverage pur poses is hereby prohibited."

Prohibition was hailed by the triumphant Drys as the dawn of a new era, a time of a new moral code of decency and sobriety. "The reign of tears is over," declared the nation's No.1 evangelist, Dr. Billy Sunday, and added: "The slums will soon be only a memory. We will turn our prisons into fac tories and our jails into store houses and corncribs. Men will walk upright now, women will smile and the children will laugh. Hell will be forever for rent." The Age of the Gangster But somehow experience did not follow this happy prognosis nor the jubilant prediction of the Anti Saloon League of New York that America was about to enter an age of "clear thinking and clean liv ing." Instead it became an age of the gangster and the rum-runner, the bootlegger and the hij acker, the bathtub gin artist and the crooked judge. Millions drank who never drank before. Alcholism, always a prob lem, became practically a national disease - and a national killer. Of 480,000 gallons of booze confis cated in New York in one "dry"

year and subjected to chemical analysis, 98 per cent was found to contain poison. A vast illicit industry on land and sea arose as supply attempted to meet demand. The Coast Guard became known as "Carry Nation's Navy" as it pursued the sleek and swift, armed and armoured craft of Rum Row inside the 12-mile limit. Corruption and scandal dogged politician and policeman alike. During the first four dry years, some 140 Prohibition agents were jailed. In April 1925, a Fed eral jury in Cincinnati convicted 58 agents and policemen (two Pull man cars were needed to haul the miscreants to the Atlanta Peniten tiary), and in the same month the Prohibition director for Ohio was found guilty of conspiracy with the underworld. Underworld figures became na tional celebrities. Just about every one knew about Waxey Gordon, Dutch Schultz, Lucky Luciano, and Al Capone. Capone, not always en joying his fame, complained: "I call myself a businessman. I make money by supplying a popular de mand. If I break the law, my cus tomers are as guilty as I am. When I sell liquor, it's bootlegging. When 210 THE FREEMAN April my patrons serve it on silver trays on Lake Shore Drive, it's hospi tality."

Eventual Repeal As lawlessness came to charac terize the Roaring Twenties, the army of Wets and Prohibition's disaffected grew. Ardent Prohibi tionists joined the Association Against the Prohibition Amend ment and the Women's Organiza tion for National Prohibition Re form (known among the Drys as the Bacchantian Maidens). And, if war paved the way into Prohibition, depression paved its exit. The Wets, displaying not ex actly sound economic thinking, blamed the Great Depression on the Noble Experiment, arguing, among other things, that Prohibition was foreclosing thousands of jobs and costing the taxpayer mil lions of dollars in fruitless en forcement and lost liquor taxes. In 1932 both Presidential can didates Roosevelt and Hoover called for repeal. In April 1933, beer of not more than 3.2 per cent alcohol was authorized by Con gress and later that year the Twenty-first Repeal Amendment became law. Prohibition was dead.

If any lessons can be drawn from Prohibition, it may be that the easy call to "pass a law" to bring about a millennium does not always work, that the supposed cure can be worse than the disease, and that the economic law of sup ply and demand can be a lot more pervasive than the countervailing legislated law of the land. , IDEAS ON LIBERTY Dependence or Liberty THE TWO NOTIONS - one to regulate things by a committee of con trol, and the other to let things regulate themselves by the conflict of interests between free men - are diametrically opposed; and the former is corrupting to free institutions, because men who are taught to expect Government inspectors to come and take care of them lose all true education in liberty. If we have been all wrong for the last three hundred years in aiming at a fuller reali zation of individual liberty, as a condition of general and widely diffused happiness, then we must turn back to paternalism, disci pline, and authority; but to have a combination of liberty and dependence is impossible.

WILLIAM GRAHAM SUMNER, What Social Classes Owe to Each Other TRAP FOR THE UNWARY ROBERT PATTON MANY ADVOCATES of liberty have recently responded with enthusi asm to the proposal of a voucher plan for primary and secondary education. Under this proposal, parents of school-age children would be given vouchers which could be redeemed at local public schools or be used as part or full payment of tuition at a private or parochial school. When used to pay for private education, the vouchers would have a specific cash value. Proponents of the plan argue that it would offer several ad vantages over the existing system of tax-supported education in the United States. Parents would be free to enroll their children in a private school without the burden of paying tuition over and above the taxes they pay to support pubMr. Patton is a graduate student and part time lecturer in physics at Hunter College in New York City.

lie education. Public schools, forced to compete for the tax dol lars they now receive automatical ly, would be under pressure to im prove their services. Furthermore, once the state educational monop oly had been broken, the "private sector," infused with the vitality of a free market, would begin to perform minor miracles in attend ing to the educational needs of America. So say proponents. On the other hand, some say that, if implemented, the voucher plan would virtually eliminate public elementary and secondary education; public schools would be at a serious disadvantage if forced to compete with private institu tions for tax dollars since their rigid bureaucratic structure would not permit them to respond to the demands of a free market in edu cation. No less an advocate of pub lic education than Albert Shanker has predicted that "the adoption 211 212 THE FREEMAN April of such a plan would lead to the end of public education."

A strong opponent of the voucher plan, Shanker bases his opposition on allegations that support for such a system comes only from parochial school interests making a grab for public funds, from those who wish to put their hands in the public till to send their chil dren to segregated schools, from various revolutionary groups who hope to disseminate their ideas in tax-supported institutions, and from selfish taxpayers who believe that the implementation of a voucher system would result in a cutback in future allocations of Federal and state funds to edu cation. Those who oppose the use of the coercive power of the state for so called social purposes are conspic uously omitted from Shanker's analysis. One cannot resist point ing out that Shanker himself is the representative of an extremely powerful special interest group that has a strong vested interest in the continuance of the present system of public education.

The Promise Is Illusory Given the apparent advantages of the voucher proposal and the nature of the opposition, it is tempting for those who favor liberty to rush into the breach and support it with unrestrained enthusiasm. Unfortunately, the promise that some -see in the voucher system is illusory. If such a plan were ever adopt ed, powerful interests would im mediately begin lobbying in sup port of restrictive legislation that would undercut the element of free choice in the plan as it now stands. Under pressure from strong special interest groups such as Shanker's United Federa tion of Teachers, laws might be passed to require that teachers in private schools meet standardized licensing requirements and that the physical plant of private schools meet arbitrary standards established by the government. Laws could (and would) follow laws, self-proclaimed reformers would come to advocate the imposi tion, on private schools, of what they would term "academic stand ards"; and, just as we now have a costly system of public educa tion that wears the label "free,"

we may easily end up with a sys tem of state education that bears the appellation "private." There is a descriptive term that applies to an economic system in which business is nominally un der private ownership while the state maintains an absolute con trol over "private" business ac tivities; that term is fascist. Is this what we want for American education?

1971 THE VOUCHER SYSTEM-TRAP FOR THE UNWARY 213 Why, then, have many advocates of liperty supported the voucher proposal? The magic word here seems to be "choice." But if the possible consequences of the voucher system that I have out lined ever were to become a real ity, the parent who wished to send his child to a school free of gov ernment control would have a smaller choice than he has at present - or no choice at all. The Unseen Coercion Behind the Good Intentions At this point, many readers will remain unconvinced that the voucher system is a step in the wrong direction, that is, away from liberty. They might argue that the dismal possibilities I have cited are simply potential pitfalls, not necessary consequences; if we anticipate these statist measures, they can be fought and defeated. Therefore, they might conclude, the voucher system can be a con structive step toward the elimina tionofcoercive government con trol of our pocketbooks and of our children's minds.

To answer this argument, let us examine the nature of the "choice" that the proponents of the voucher system offer. In blunt terms the so-called element of choice amounts to offering the parents of school-age children options in how they may spend the money of others that has been expropri ated by the state. In principle, the freedom of choice offered by the voucher sys tem is no different from the "free dom" demanded by some welfare recipients to spend public monies on such things as liquor as well as on the necessities of life. The unfortunate fact is that when the state takes over any market func tion, its citizens soon come to re gard this as a natural and proper state of affairs; "conservative" citizens are no more immunized against this syndrome than any others. Just as the liberal may seek an expansion of welfare serv ices on the grounds that present programs fail to meet the full needs of the people, so many "con servatives" are falling into the trap of advocating an expansion of the state's role in education be cause their needs are not satisfied by the present system.

Those proponents of liberty who advocate the voucher system fail to recognize that, in so doing, they are giving an implicit en dorsement to a principle that they profess to oppose. The fundamen tal premise of the voucher plan is identical to that underlying the present system of state education. The coercive power of the state (which in the final analysis means the threat or use of the gun) will still be used to seize the property 214 THE FREEMAN April of private individuals in the name of an undefinable public good. Those who support the voucher proposal are playing the game that, in freshman political science courses, is called "democratic plu ralism." In plain language, this term describes a society composed of rival gangs - each fighting the others for a bigger cut of the tax collector's booty. Subsidies Are Not a Stepping-Stone to Editorial Freedom There is one more argument ad vanced in support of vouchers that has not yet been answered. If lib erty is ever to be regained in the field of education, runs the argu ment, it will not come overnight.

If the present coercive system of primary and secondary education were abolished on the first of next month, many think the result would be chaos. Private schools are just not capable of taking over the massive job of educating all of our children on 30-days' no tice. Moreover, parents who have been complacently letting Big Brother bear the burden of seeing to the education of their children are ill-prepared to accept that re sponsibility themselves. What is needed, according to such an ap praisal, is some sort of transition plan whereby education can be taken out of the hands of the state and responsibility placed whe~e it belongs - with the parents. Many voucher advocates see the plan as playing just this sort of role; they view it as a stepping stone to educational freedom. But here too, they have allowed them selves to be deceived. We have seen how any build-up in the pri vate sector of education fostered by the voucher plan will almost certainly be accompanied by an equal or greater build-up of state control over nominally pri vate educational institutions. This is hardly the type of "transition"

that a libertarian would knowing ly advocate. Furthermore, rather than shifting the financial burden of education to the consumers of this service, the plan will remove some of the responsibility from those who have already should ered it. And finally, the voucher system fails utterly to challenge the premise that the ultimate re sponsibility for education rests with the state. If education is ever to be truly free, it is this premise that must be overturned. ~ INSTANCESof government relief to the poor can be found from the earliest times. Though the records are vague in important particu lars, we do know a good deal about what happened in ancient Rome. A study of that case may enable us to draw a few lessons for our own day. Roman "social reform" appears to have begun in the period of the Republic, under the rule of the Gracchi. Tiberius Gracchus (c. 163-133 B.C.) brought forward an agrarian law providing that no person should own more than 500 jugera of land (about 300 acres), except the father of two sons, who might hold an additional 250 jugera for each. At about the same Henry Hazlitt is well-known to FREEMAN readers as author, columnist, editor, lecturer, and practitioner of freedom. This article will appear as a chapter in a forthcoming book, The Conquest of Poverty, to be published by Arlington House.

Poor Relie' in Aneient Rome HENRY HAZLITT time that this bill was passed, Attalus III of Pergamum be queathed his kingdom and all his property to the Roman people. On the proposal of Gracchus, part of this legacy was divided among the poor, to help them buy farm imple ments and the like. The new agrar ian law was popular, and even survived Tiberius's public assassi nation. He was succeeded by his younger brother Gaius Gracchus (158-122 B.C.). In the ancient world transport difficulties were responsible for famines and for wild fluctuations in wheat prices. Among the reforms that Gaius proposed was that the government procure an adequate supply of wheat to be sold at a low and fixed price to everyone who was willing I to stand in line for his allotment once a month at one of the public 215 216 THE FREEMAN April granaries that Gaius had ordered to be built. The wheat was sold be low the normal price - historians have rather generally guessed at about half-price.

The record is not clear concern ing precisely who paid for this generosity, but the burden was ap parently shifted as time went on. Part of the cost seems to have been borne by Rome's richer citi zens, more of it seems to have been raised by taxes levied in kind on the provinces, or by forced sales to the state at the lower prices, or eventually by outright seizures. Though Gaius Gracchus met a fate similar to his brother's - he was slain in a riot with 3,000 of his followers - "the custom of feeding the Roman mob at the cost of the provinces," as the historian Rostovtzeff sums it up, "survived not only Gracchus but the Repub lic itself, though," as he adds iron ically, "perhaps Gracchus himself looked upon the law as a temporary weapon in the strife, which would secure him the support of the lower classes, his main source of strength."l Bread and Circuses: The New Deal in Old Rame An excellent account of the sub sequent history of the grain dole can be found in H. J. Haskell's 1 History of the Ancient World, Vol.

2, p. 112. book, The New Deal in Old Rome. 2 I summarize this history here: There was no means test. Any one willing to stand in the bread line could take advantage of the low prices. Perhaps 50,000 applied at first, but the number kept in creasing. The senate, although it had been responsible for the death of Gaius Gracchus, did not dare abolish the sale of cheap wheat. A conservative government under Sulla did withdraw the cheap wheat, but shortly afterward, in a period of great unrest, restored it, and 200,000 persons appeared as purchasers. Then a politician named Claudius ran for tribune on a free-wheat platform, and won. A decade later, when Julius Caesar came to power, he found 320,000 persons on grain relief. He succeeded in having the relief rolls cut to 150,000 by applying a means test. After his death the rolls climbed once again to 320,000. Augustus once more introduced a means test and reduced the num ber to 200,000.

Thereafter during the Imperial prosperity the numbers on relief continued at about this figure. Nearly 300 years later, under the Emperor Aurelian, the dole was extended and made hereditary. Two pounds of bread were issued daily to all registered citizens who applied. In addition, pork, olive 2 New York: Knopf, 1939.

1971 POOR RELIEF IN ANCIENT ROME 217 oil, and salt were distributed free at regular intervals. When Con stantinople was founded, the right to relief was attached to new houses in order to encourage build ing. The Right to a Handout The political lesson was plain. Mass relief, once granted, created a political pressure group that no body dared to oppose. The long run tendency of relief was to grow and grow. The historian Rostov tzeff explains how the process worked: "The administration of the city of Rome was a heavy burden on the Roman state. Besides the ne cessity of making Rome a beauti ful city, worthy of its position as the capital of the world ... there was the enormous expense of feed ing and amusing the population of Rome. The hundreds of thousands of Roman citizens who lived in Rome cared little for political rights. They readily acquiesced in the gradual reduction of the popu lar assembly under Augustus to a pure formality, they offered no protest when Tiberius suppressed even this formality, but they in sisted on their right, acquired dur ing the civil war, to be fed and amused by the government.

"None of the emperors, not even Caesar or Augustus, dared to en croach on this sacred right of the Roman proletariate. They limited themselves to reducing and fixing the numbers of the participants in the distribution of corn and to organizing an efficient system of distribution. They fixed also the number of days on which the pop ulation of Rome was entitled to a good spectacle in the theaters, cir cuses, and amphitheaters. But they never attacked the institution it self. Not that they were afraid of the Roman rabble; they had at hand their praetorian guard to quell any rebellion that might arise. But they preferred to keep the population of Rome in good humour. By having among the Roman citizens a large group of privileged pensioners of the state numbering about 200,000 men, members of the ancient Roman tribes, the emperors secured for themselves an enthusiastic recep tion on the days when they ap peared among the crowd celebrat ing a triumph, performing sacri fices, presiding over the circus races or over the gladiatorial games. From time to time, how ever, it was necessary to have a specially enthusiastic reception, and for this purpose they organ ized extraordinary shows, supple mentary largesses of corn and money, banquets for hundreds of thousands, and distributions of various articles. By such devices the population was kept in good 218 THE FREEMAN April temper and the 'public opinion' of the city of Rome was 'organized.' "3 The Dole, Among Other Causes of the fall of the Empire The decline and fall of the Roman Empire has been attributed by historians to a bewildering va riety of causes, from the rise of Christianity to luxurious living.

We must avoid any temptation to attribute all of it to the dole. There were too many other factors at work - among them, most notably, the institution of slavery. The Roman armies freely made slaves of the peoples they conquered. The economy was at length based on slave labor. Estimates of the slave population in Rome itself range all the way from one in five to three to one in the period between the conquest of Greece (146 B.C.) and the reign of Alexander Seve rus (A.D. 222-235) . The abundance of slaves created great and continuing unemploy ment. It checked the demand for free labor and for labor-saving de vices. Independent farmers could not compete with the big slave operated estates. In practically all productive lines, slave competition kept wages close to the subsistence level. 3 M. Rostovtzeff, The Social and Eco nomic History of the Roman Empire (Oxford: Clarendon Press, second edi tion, 1957), pp. 81-2.

Yet the dole became an integral part of the whole complex of eco nomic causes that brought the eventual collapse of Roman civili zation. It undermined the old Roman virtues of self-reliance. It schooled people to expect some thing for nothing. "The creation of new cities," writes Rostovtzeff, "meant the creation of new hives of drones." The necessity of feed ing the soldiers and the idlers in the cities led to strangling and de structive taxation. Because of the lethargy of slaves and undernour ished free workmen, industrial progress ceased. There were periodic exactions from the rich and frequent confis cations of property. The better-off inhabitants of the towns were forced to provide food, lodging, and transport for the troops. Sol diers were allowed to loot the dis tricts through which they p3:ss~d. Production was everywhere dis couraged and in some places brought to a halt.

Ruinous taxation eventually de stroyed the sources of revenue. It could no longer cover the state's huge expenditures, and a raging inflation set in. There are no con sumer-price indexes by which we can measure this, but we can get some rough notion from the price of wheat in Egypt. This was sur prisingly steady, Rostovtzeff tells us, in the first and second cen1971 POOR RELIEF IN ANCIENT ROME 219 turies, especially in the second: it amounted to 7 or 8 drachmae for one artaba (about a bushel). In the difficult times at the end of the second century it was 17 or 18 drachmae, almost a famine price, and in the first half of the third it varied between 12 and 20 drach mae. The depreciation of money and the rise in prices continued, with the result that in the time of the Emperor Diocletian one artaba cost 120,000 drachmae. This means that the price was about 15,000 times as high as in the second cen tury.

In 301 Diocletian compounded the evil by his price-fixing edict, which punished evasion with death. Out of fear, nothing was offered for sale and the scarcity grew much worse. After a dozen Calvin Coolidge years and many executions, the law was repealed. The growing burden of the dole was obviously responsible for a great part of this chain of evils, and at least two lessons can be drawn. The first, which we meet again and again in history, is that once the dole or similar relief pro grams are introduced, they seem almost inevitably - unless sur rounded by the most rigid restric tions - to get out of hand. The sec ond lesson is that once this hap pens, the poor become more num erous and worse off than they were before, not only because they have lost self-reliance, but because the sources of wealth and production on which they depended for either doles or jobs are diminished or destroyed. ~ IDEAS ON LIBERTY A REVOLUTION is taking place which will leave the people depend ent upon the government and place the government where it must decide questions that are far better left to the people to decide for themselves. Finding markets will develop into fixing prices, and finding employment will develop into fixing wages. The next step will be to furnish markets and employment, or in default pay a bounty and dole. Those who look with apprehension on these ten dencies do not lack humanity, but are influenced by the belief that the result of such measures will be to deprive the people of char acter and liberty.

Reported in The New York Tribune, June 20, 1931.

EDUCATION FOR PRIVACY MARTEN TEN HOOR IN VIEW of the hundreds of con ferences which have been held on liberal education, it would seem to be impossible· to say anything new on the subject. Since there seems to be nothing new to say, one must, in order to be original, be contrary, eccentric, or partisan. I have chosen to be partisan. The proposition to be defended is, frankly, a half-truth. If it can be established, there will be some cause for satisfaction; for the es tablishment of a half-truth is not a bad average in this complex and confused world. There is the justi fication, moreover, that the other, and possibly the better, half has in our day had practically all of the attention. Stated concretely, the proposi tion is this: Never in the history Marten ten Hoor was Dean of the College of Arts and Sciences and Professor of Philosophy at the University of Alabama when this ar ticle was first published in The American Scholar, Winter, 1953-54.

220 of the world have there been so many people occupied with the im provement of so few. To sharpen the point by a specific example: Never have there been so many people making a good living by showing the other fellow how to make a better one. If you are skep tical, I recommend that you try this exercise - add up, as of the current date, the social workers, planners, and reformers; the col lege presidents, deans, and profes sors; the editors of magazines, journals, and newspapers (not for getting college newspapers); al most everybody in Washington, D. C., during recent years; and the tens of thousands of miscel laneous social-minded folks who attend conferences, workshops, and institutes organized for the im provement of the human race. Sub tract that figure from the total population of this country, and compare this figure with a corre1971 EDUCATION FOR PRIVACY 221 sponding figure for, say, the year 1900. You will then see what I mean when I say that this is the era of undiscriminating allegiance to good causes. To come nearer home, compute the sum of all col lege and university presidents, deans, and professors who have in the last five years attended meet ings devoted to the improvement of education. Compare that figure with the number of those who re mained on the campus working, and you will find proof even in academia.

What Is an Expert? As further evidence, and as a striking symptom, there is the re cent popularity of educational sur veys. Most states and many insti tutions have experienced several. I have lived through eleven, with out noticeable improvement in my self or my neighbors. Note the procedure and the technique, for there you will find the moral. The surveyors are always from an other state or another institution. This is in accordance with the well-known principle that an ex pert is an ordinary person who is away from home. These outsiders are brought in because of their objectivity, objectivity being the capacity for discovering faults abroad which you cannot recog nize at home. To be a good educa tional surveyor - or any kind of social analyst, for that matter you must have a sharp eye for for eign motes but a dull one for do mestic beams. You must be a con tented extrovert, so that, after diagnosing the faults of others, you can continue to live in perfect comfort with your own.

Too few followers I must confess that I view all this indiscriminate altruism with a jaundiced eye. It does seem to me that these days there are too many leaders and too few follow ers; too many preachers and too few sinners - self-conscious sin ners, that is. If this were an illus trated article, I would insert at this point a wonderful cartoon I saw not long ago. A little boy was asking an obviously astounded and embarrassed father, "But if we're here to help others, what are the others here for?" Nobody has time these days to improve him self, so busy is he with attempts to improve his neighbor. There is something wrong with that equa tion. It seems to me that it is time to try to balance it. I suggest that this can be done by shifting some weight from one side to the other, by shifting the emphasis from so cial improvement to self-improve ment. I suggest that over the door of every academic cubicle there should hang the sign which Thor eau had over the door of his hut: 222 THE FREEMAN April "My destiny mended here, not yours." In short, I propose to make a plea for education for pri vacy.

How to Feel Virtuous Before undertaking to identify some of the elements of this type of education, I should like to offer some justification of my skepti cism concerning the present em phasis on social-mindedness in ed ucation. To begin with, it is so easy to assume that your neigh bor is much worse off than your self. The universality of this tend ency is undoubtedly accounted for psychologically by its attractive by-products. The assumption pro duces a feeling of comfort. If there is some slight suspicion that all is not well within, it is compensating to concentrate on the plight of one's neighbor. Since attention to him is distracting, it keeps the in dividual from worrying about himself. To do something about a neighbor's ignorance also makes one feel virtuous. This absorbing concern for the improvement of one's neighbor is undoubtedly a product of civilization. It is doubt ful if primitive man worried much about it. The cannibal, in fact, represents the other extreme: he uses his neighbor solely for his own improvement.

In the second place, I doubt if the reformer always has the wisdom necessary to direct the lives of so many people - but this is certainly assumed. How many peo ple are there who have demon strated the capacity to prescribe for others? If an individual makes a mistake in trying to improve himself, this is not so serious; but consider the consequences if he has induced all his neighbors to do the same thing. History is filled with examples of self-con fident leaders who led their fol lowers straight to a common ca tastrophe. The fact is that we still know so little about human per sonality in the concrete. To be sure, there are excellent textbook pictures, with revealing analytical tables and graphs. But this is per sonali ty in the abstract. Any phy sician will tell you that he rarely finds a textbook picture in a pa tient. Not only is every human be ing a complex with variations, but there are the environment in which that complex functions and the accidental circumstances which confuse the vision and disrupt life.

Nor has the reformer too much reason for assuming that he has discerned the good life for his neighbors. Let us take as a fa miliar example the characteristic projection by parents into the lives of their children. This is some thing we can readily understand and, because it is suffused with parental affection, forgive. But 1971 EDUCATION FOR PRIVACY 223 how many parents are there who realize that each child iB to Bome extent a new complex of elements and who can bring themselves to substitute that confounding re ality for the fond subjective crea tion? Too often the recommenda tion of a way of life is nothing more than the advocacy of a per sonal preference. From subjectivism in this sense of the term there is no complete escape. Even leadership is person alized in an individual. Hitler was an individual: he spun his fantas tic and criminal notions out of his own warped private personality.

It is, therefore, terribly important that everything shall be right in the reformer before he undertakes to reform others. "Nobody," says a character in Norman Douglas' S outh Wind, "has the right to call himself well disposed towards so ciety until he has grasped the ele mentary fact that the only way to improve society is to improve one self." And may I suggest in this connection that a major in the so cial sciences does not automati cally qualify a student for social leadership? Selfish Unselfishness Further reason for doubt is to be found in the characteristic re actions of the hypersocial-minded. They become so indignant when people resist their ministrations. They are so determinedly selfish in their unselfishness. Ideas, par ticularly ideas designed for the improvement of others, so quickly become inflated. In extreme cases they devour themselves. How an tagonistic even educators become over professional differences as to how the ignorant should be ren dered less so!N ote the bitterness between rival reform groups. Let us not forget that human beings have killed one another in the mass even on the authority of their religions. Note how political leaders fall out, quarrel, conspire, inj ure one another in their unsel fish efforts to save the country.

In the absence of sophistication and modesty, reform notions grow into delusions; their advocates become more and more autocratic; leadership becomes pathological; the desire to help one's fellow men is transformed into fanaticism and tyranny - and societies be come authoritarian. Everybody Is an Individual Here lies the explanation of the tendency of hypersocial-minded ness to suppress individualism and to produce too much uniformity. There are good reasons for doubt ing the wisdom of this lack of in terest in the individual as a unique personality. There, is, to begin with, the obvious and inescapable fact that everybody is an individ224 THE FREEMAN April uaI. The higher the scale of life, the more individuals differ and the greater their potentialities for dif fering. Society must make provi sion for individual differences. Authoritarianisms of the type of national socialism and com munism are primitivistic; for they propose to turn back the course of social change and to establish so cieties in which individuals shall have a status more closely resem bling that of ants, bees, or even of atoms or electrons than of hu man personalities. They have for gotten, or propose to ignore, the incontrovertible fact that the great works of art, literature, music, philosophy, religion, and science - that is, the world's great mani festations of excellence and leader ship - were the products of in tensely individual persons. Indeed, some of the world's great geniuses have been self-centered, unsocial and iconoclastic, with little or no interest in the improvement of their fellow men.

But society can well afford that. A regimented society will not only suppress and possibly ultimately breed out these "exaggerated" in dividuals, but will generally dis courage the manifestations of the adventurous and original spirit. Government and education de signed to do this will bring about a tragic cultural impoverishment in human life; for individual differences enrich life, they stimu late the intelligence and the imagi nation, and they invite compari son and criticism. They keep the individual alive as an i,ndividual, and not merely as a bearer of the racial genius or a servant of the state. Some Laws Necessary It is true that modern life re quires a certain amount of regi mentation. Individuals obviously cannot be permitted to run amuck. At least the great majority of persons must adapt themselves to other persons. Mechanical contriv ances, such as traffic lights, must replace individual judgment; laws are to some extent substitutes for individual choice. But let us not forget that it is not the basic pur pose of these substitutes to repress individuality, but rather to make possible a more general and richer realization of individuality. It is not the purpose of social organiza tion to reduce man to the subhu man, but to create more favorable opportunities for the realization of what is uniquely human.

The need of complex societies for a high degree of organization is one reason why so much atten tion is focused on the improvement of the other fellow. Especially in a democracy, where everyone is more or less free to advocate schemes for the improvement of 1971 EDUCATION FOR PRIVACY 225 society, lively and self-confident mjna~ are inclined to expend their intellectual and emotional poten tial on reform movements. The at t(!ntion of the reformer is conse quently drawn away from contemplation of the state of his own soul. Since he is so happily exer cised in improving others, the habit of self-examination gradu ally atrophies. How then can he be sure that he is the right person to prescribe for his neighbors? Should he not stop now and then to take an inventory of his re sources? Does he in fact have these resources? It is because I have serious doubts of this sort, and because of the increasing neg lect in education of attention to the accumulation of these re sources, that I feel it time to make a plea for education for privacy.

A Plea for Privacy What now are the essential ele ments of this education for pri vacy? In speaking of elements it is, of course, implied that the ideal construct of these elements con stitutes an organized whole, a personality. It is this ideal at which we aim, though we know full well that in any concrete in dividual, no matter how well edu cated after the formula which we shall propose, one or the other de sirable characteristic is certain to be under-or over-emphasized. The first requirement, clearly, is to learn how to think - not out loud or in print, but privately. 'rhe thinker himself, not his neighbor, is to be the beneficiary. To think does not mean to spend hours in idle daydreaming or in vagrant imaginings, or to make occasional impulsive sallies at ideas which happen to appear before the atten tion. The reference is certainly not to the semi-somnolent and comfortable ruminations which go on in the wandering mind of an inattentive student in the class room. What is meant is systematic reflection, the constant purpose of which is to bring order out of the multiplicity and variety of things in which the human being is im mersed.

Experience Without Understanding To be sure, many people go through life with their senses ,alert, observing and savoring in generous measure the richness of the world about them. But what they experience they retain only in the form of materials for recol lection. The mind gradually ac cumulates a. rich inventory of goods, which can be brought out on display when there is socal op portunity for it. But the relation ship of these resources in the mind is one of mere contiguity, like that of goods in a department store. Experience has not resulted in an 226 THE FREEMAN April over-all understanding· because it has not been systematically thought about. Such individuals ... see all sights from pole to pole, And glance, and nod, and bustle by, And never once possess (their) soul Before (they) die. To possess one's soul in an intel lectual sense means to have found some answer, or partial answer, to the questions: What is the na ture of this world in which I find myself, what is my place in it, and what must be my attitude toward it? The problem is one of intellectual and spiritual orienta tion.

A Disorganized Mind The benefits of such intellectual and spiritual adaption have been extolled by the wise men of all ages and all countries. A "view of life" prepares us for what life brings us, for what happens to us in our physical environment, and most important of all, for what people turn out to be and for what they do. To be spiritually and in tellectually lost in the world, on the contrary, is to be unarmed and helpless. A disorganized mind is unpre pared for reality and easily frus trated. The fate that awaits the individual so afflicted is to be al ways a stranger and a wanderer in the world. The "lost soul" of literature, the ultimate in tragic creation, suffers from this great spiritual illness. It may be unfortunate, but it is a fact that the sharper and livelier the intelligence and the more sen sitive the spirit, the more serious the danger of disorientation. The simple-minded find life simple.

Plants find t.hemselves easy to live with, no doubt; for it cannot be difficult to vegetate successfully. It is not likely that the cow's ru minations are philosophical. Man, for better or worse, is a rational animal. The more he thinks, the greater the need of or ganization among his ideas. The more subjects a student studies in college, the more extensive the po tential disorder of his mind. It is not surprising that the scholarly mind, lost in a Babel of learning, seeks escape into a clearly defined specialty, and the practical mind, as soon as its owner has permis sion, into the comforts of a busi ness, a profession, or domesticity. To be sure, we must integrate the curriculum. But what good is this if the professor's mind remains perched on its gaunt pinnacle or secluded in the laboratory? The system atic way to the at tainment of the organization of ideas is through philosophy and religion. It is true that the great intellectual constructions of the metaphysicians are not available 1971 EDUCATION FOR PRIVACY 227 to all men, and that even to the initiated they BometjmeB offer but poor comfort. Moreover, all of us have known individuals of great simplicity and humbleness of mind, quite untutored in dialectic, who somehow and in the simplest terms have. securely located them selves in the cosmos.

Especially in the realm of reli gious experience do we find ex amples of this. The spirit seems to have found peace in terms of some all-embracing conviction or great renunciation. But this is not often possible for the inquisitive and analytical mind. Need for Philosophy To cast all burdens upon the Lord in one grand resolve some times implies ignorance of the nature of those burdens. There is only consciousness of their op pressive weight, but no under standing of their nature or causes. To be sure, the critical intelligence may also come ultimately to make this renunciation; but it will not feel justified in doing so until it has reflected upon causes and re lationships and seen the problem of human trouble and sorrow whole. The solution must be a con quest, not an escape. For this, the mind certainly needs philosophy, sacred or secu lar. No learned profession, how ever, can offer the inquiring mind an official formula which every man need only apply in order to be permanently on understanding terms with the world. To be sure, there are systems of metaphysics, sacred and secular, from which the troubled spirit can choose a ready made synthesis. But this does not make the chosen system of ideas an integral part of the inner per sonality. Intellectual orientation to the world must be something more than an acquisition; it must be an organic growth. The student should by all means seek out the great religious and philosophical thinkers, study their systems, and add their insights to his own. But in the last analysis he must work out his own solution, for such a solution must be the end product of his own reflection in the con text of his own experience. Only through the alchemy of private re flection do philosophical ideas be come private resources. Only then will they be available in time of crisis. When the normal course of existence is interrupted by con flict and frustration, it is a bit late to begin developing fundamental guiding ideas; that is the time to apply them.

Admiral Byrd Alone A dramatic example of the sav ing grace of such resources is re lated by Admiral Byrd in his book on his expedition to the South 228 TItE FR.EEMAN April Pole, entitled Alone. He had been left behind by the expedition in a dugout located several feet below the surface of the icecap. From this he periodically emerged through a vertical tunnel to make scientific observations. It hap pened that the heater in his sub terranean shelter developed a leak of which he was not aware. Before he realized it, he had been dan gerously poisoned, and he became seriously ill. During his convalescence he found himself struggling to over come not only the physical damage done to his body, but also a deep spiritual depression, an obstinate conviction of the meaninglessness of life, which threatened to over whelm him. There was no physi cian or psychoanalyst or cleric a.vailable. His fellow-explorers would not return for months. He was absolutely alone. He had to guide himself out of this slough of despair. This he did, after many agonizing days, by steady think ing, by "digging down into" his intellectual resources. And it was then, to use his own homely but vivid phrase, that he "uncovered the pay-dirt of philosophy." He did not then collect the materials of his readj ustment; he used them to recover his sanity. In this cri sis, what would he have done with out these resources?

But periods of crisis are not the only time when man needs an or derly mind. If a ship is to hold its course, it needs a steady helm in good weather as well as in bad. I hasten to remark that this figure of speech has serious limitations, for a navigator has his chart pre pared when he begins his voyage. Man, on the contrary, is faced with the problem of making a chart as he goes along. As a matter of fact, the plan of life is, for every man to some extent, an unconscious precipitate of his experience. We are not completely free agents; compulsion and fate, in the form of the physical world, our fellow men and social institutions, push the individual this way and that. What happens to him and what he becomes are clearly the result of a complex of inner and outer com pulsions, over many of which he has no control. The Greek Chorus We are not here primarily con cerned with action, however, but with interpretation. In philosophi cal reflection, the individual to some extent plays the part of the Greek chorus. He observes him self as actor in a cosmic setting.

If he does so systematically, he will gradually discern not only his own role, but the direction of the whole drama. Only when he under stands the meaning of the play can he orient himself in it. Such 1971 EDUCATION FOR PRIVACY 229 an understanding, vague and in f!omvlete thoUflh it may be, will enable him to achieve his own view of life. If he is so fortunate as to see (what seems to him) the truth and to see it whole, he will thence forth have a vision of the future as well as an understanding of the present and the past. If a rational man does not do that, why should he consider himself the crown of creation? If he does accomplish this, he can exult with the poet Dyer: My mind to me a kingdom is; Such present joys therein I find As far exceeds all earthly hliss * * * Look, what I lack my mind supplies. Lo, thus I triumph like a king, Content with that my mind doth bring. The Uneasy Conscience In education for privacy, how ever, more is involved than philo sophical orientation to the cosmos.

There is equally urgent need for education in the establishment and maintenance of moral harmony. From the days of primitive re ligion, through Greek tragedy, the Christian epic of sin and salvation, and modern psychology, Freudian and non-Freudian, to contempo rary existentialism, there runs the theme of the uneasy conscience. The dramatic specter of moral guilt is the principal character in many of the greatest creations of li terary geni us. No matter what the learned ex planation, the psychological s.tate is one of inner moral disharmony. Though it may have outer causes, it is a private affliction and must be cured privately. In moments of despair or periods of cynicism we may doubt the existence or· dis cernibility of moral meaning in the universe; but such a conclu sion does not relieve the indi vid ual of the necessity for solving his personal moral problem. Even complete moral negativism, if not itself a moral philosophy, leaves the individual no recourse but to establish a private moral order in his life of action and reflection.

Moral Resources Here again, the more sensitive the individual, the greater the potentiality for disorganization. It is the sensitive who are the most deeply wounded by moral indif ference, disorder, and brutality. The predisposing causes of moral disorganization may be in the peo ple and the things we love, in the institutions which demand that we conform to their customs and ta boos, in the great world which so often mocks our need for moral significance and order. But a vi sion of the good life, the spirit must have; for devoid of it, the imagination is without moral per230 THE FREEMAN April spective, conduct without guiding principles, and action without trustworthy habits. For an individual so unpre pared for life, confusion will efface meaning and create frustration, with the onset in the case of the unusually sensitive spirit of patho logical disturbances which may for a period or for a lifetime destroy happiness. Education for privacy must therefore include the educa tion of the moral personality, the gradual acquisition by the self of moral resources. Here, too, there are available to the student in generous measure the works of the great philosophical and re ligious thinkers; for probably no one of the persistent problems of life has had more of their system atic and concentrated attention. It is relevant here to note that the previously discussed philosophical orientation to the world is some times the foundation for moral orientation.

Emotional Stability A third requirement in the edu cation of the personality is the development of emotional stabil ity. Of all the immediate causes of unhappiness, emotional dis order is unquestionably the most serious and the most common. Currently there is a feeling that under the pressures of modern life its incidence is steadily increasing. Unfortunately, emotions are the component of the personality about which we know the least, as modern science has come to real ize. Our ignorance is largely a consequence of the fact that tradi tionally the emotions have been considered to be effects rather than causes. Preoccupation with the flatter ing conviction that man is a. ra. tional animal has been attended with the assumption that there fore our emotions are under the domination of the reason. This ass umption has been one of the basic tenets of formal education, though puzzled parents and self conscious adults no doubt have all along had their suspicions. In our day, educators are being enlight ened by psychology and the medi cal sciences on the subject of the devastating power of the emo tions. Moreover, the modern con ception of the integrated person ality has redirected our approach to this subject, so that now we hypothesize and investigate in terms of interrelations and inter actions. The simple classical vision of the reason enthroned in the psyche, making judgments, issu ing commands, and directing the conscious life of the individual, is difficult to maintain in the face of the past record and the current spectacle of human behavior.

Let us grant that the contem1971 EDUCATION FOR PRIVACY 231 porary individual lives in an age iK «ihit!.h~ fUI GlJQthQ out it "hu. mani ty twists and turns like a person on a sickbed trying to find a comfortable position." To offset this, however, he has the advan tage of a better understanding of the compulsive and disruptive power of the emotions. He is aware of their insidious tendency to direct his thinking and affect his judgment. He knows that they feed on themselves and that, if they are of the destructive kind, they can bring him to the verge of despair. He knows that they can completely disorient him, isolating him from the friendship and sympathy of his fellow men, and estranging him from the beauty and utility of the world. He must learn that there is little he can do to remove the external causes, the irritants in his social and physical environment. In order to maintain or, restore emotional stability within himself, he must learn to control the effects of these irri tants on himself. Education of the emotions is education in self-con trol, in equanimity and serenity.

Live with Yourself To these three objectives of edu cation for privacy - the attain ment of a philosophical point of view, a steady vision of the good life, and serenity of spirit - I should like to add one more: the individual should be able to live entertainingly with himself. He should accumulate resources on which he can draw when he is at leisure. The universal symptom of the absence of such resources is the homely but hapless state of boredom. It is an anomalous con dition of the spirit, a state of in difference lying between pain and pleasure. Neither the mind nor the hands can find anything interest ing to do. In contrast with the other troubles of the spirit which have been mentioned, there is little excuse for this great emptiness. For there is a marvelous cure for boredom, universally available, readily tapped, and virtually in exhaustible: the fine arts. This claim hardly needs defense.

Nor is it necessary to enumerate the arts and to identify their re spective potentialities for beguil ing the mind and the heart. For illustrative purposes, however, let us consider one form of art enjoy ment which is available to virtu ally every normal human being, young or old, learned or simple, saint or sinner - reading. Its great virtue for education for privacy is that it is a strictly private ex perience. No other human being is necessary to the reader at the moment of reading. He can take his book with him to the jungle or the desert, on the ocean, or the mountaintop. He can select his 232 THE FREEMAN April company at will, and rid himself of it by a turn of the hand. It is potentially an inexhaustible re source: all ages of history; all countries; all varieties of human beings, and even of animals and plants and physical things; the entire range of human thoughts and feelings, hopes and fears, con quests and failures, victories and defeats; the real and the ideal all are available at the turn of a page for the reader's contempla tion and understanding.

The Arts When we measure the impov erishment of him to whom this world is literally and figuratively a closed book, whose ear is deaf to music and whose eye blind to the glories of painting and sculp ture, we come to realize the re sponsibility of liberal education for instruction in the arts. I say instruction purposely, because I believe that the presentation of opportunities for enjoyment and training in appreciation are not enough: there should also be in struction and encouragement in the production of art. As even the bungling amateur knows, there is no greater source of pleasure than creative activity. The training of the most modest talent is an enrichment of a per sonality and develops another pri vate resource for leisure hours. Even the unsuccessful attempt to create art, moreover', clarifies the understanding of art. To be sure, just as it is not necessary to trou ble our friends with our thoughts, so it is not necessary to bore our friends with our productions. It is, after all, not the improvement of the neighbor but the improve ment of oneself that is the immedi ate object of education for pri vacy.

An understanding of the world, a vision of the good life, serenity of spirit, appreciation and prac tice of the fine arts - these, then, are the elements of the integrated personality, the development of which is the immediate object of liberal education. These are the resources which are accumulated in the course of education for pri vacy. Why, now, is it so important for every individual to possess these resources? In the first place, simply because he is going to need them. We never know when we are going to lose our external re sources, our public possessions. Without private resources the individual has nothing to turn to when disappointment, frustration, or misfortune become his lot. In the great depression which is still vivid in our memories, there were many individuals who possessed only external resources. When they lost these, life was over for them. They could not go on living 1971 EDUCATION FOR PRIVACY 233 with themselves because of their ~nl~ll~~tu.!ll. 111lH~!l1. ~m(Jti(Jnfll. flnd artistic poverty. He who possessed these resources, however, could ex claim with Thoreau: "Oh, how I laugh when I think of my vague, indefinite riches! No run on the bank can drain it, for my wealth is not possession but enjoyment."

Resources of the spirit are like savings: they must be accumu lated before they are needed. When they are needed, there is no substitute for them. Sooner or later, the individual fa.ces the world alone, and that moment may overwhelm him if he has no re sources within himself. Distraction helps but little and betrays us when we least expect it. We can escape our physical en vironment and our neighbors, but we cannot escape ourselves. Every one with any maturity of experi ence and self-knowledge knows that the loneliest moments are sometimes experienced in the midst of the greatest crowds and the most elaborate entertainments. "The man at war with himself is at war, though he sits in a garden surrounded by flowers and singing birds," says the novelist Cloete in Congo Song. The Psychopathic Leader And now, in conclusion, I wish again to pay my respects to the other half-truth, the improvement of others, which was so cav alierly dismissed in the beginning of this essay. That objective, to gether with the other objective, self-improvement, compose the whole truth, which is the grand objective of liberal education. Ed ucation for privacy and education for public service constitute edu ation of the whole personality. He who is not educated for privacy is ha.rdly fit to educate others. The blind cannot lead the blind. The man who is not at peace with him self cannot be trusted to lead his fellow men in the ways of peace.

The unbalanced leader is cer tain to unbalance the society in which he functions. Even, the lead er who is intent on the side of the good but who is a fanatic will stimulate fanaticism in his fol lowers, arouse dogmatism and big otry, and induce oppression and cruelty. When he is on the side of evil, he will lead his followers into such excesses and wickedness as will shame all humanity, and which even the innocent will wish to forget as soon as possible. Social pathology must in the last analysis be focused on the sickness of the individuals who compose the so ciety. It is pure imagination, if not nonsense, to ascribe the ignor ance, unbalance, and wickedness of a collection of human beings to a mysterious social entity such as the group mind or the social or234 THE FREEMAN April ganism. We might as well divorce the concept of an epidemic from the notion of the individuals who are ill, or ascribe hunger to a so cietal stomach. People mislead one another exactly as they infect one another. The psychopathic leader is potentially as dangerous as the carrier of an infectious disease.

The Safe Leader The safe leader, in terms of the elements of education for privacy, is one who understands his place in the world and can thus envisage the place of his fellow men; who can morally respect himself and can thus be respected by others; who has learned to control his emotions and can thus be trusted to exert control over others; who has learned to live in peace and contentment with himself and can thus with propriety urge others to do likewise. We are living in a world and in a time when powerful leaders with millions of fanatical followers are committed to the forcible regimen tation of their fellow men, accord ing to formulas which have no initial authority but that of their own private dogmatism. They not only refuse to recognize the right of private thought and personal conscience to be considered in the management of public affairs, but they have abolished the con cept of the individual as a private personality and have reduced him to the level of the bee in the hive.

To restore the individual to his former dignity as a human being is the urgent need of the day. This, in my opinion, should be the special objective of contemporary education. But liberal education must so educate the individual that he is manifestly worthy of having his dignity recognized. If he wishes to lead his fellows, he must first learn to lead himself. Without education for privacy he will neither merit leadership nor learn to recognize it in others. He will strive in vain for happiness and success in private or public life until he has achieved understand ing, goodness, serenity, and con tentment within himself. That, according to my exegesis, is in this connection the meaning of the Biblical text: "For what is a man profited, if he shall gain the whole world, and lose his own soul?" It is surely what Thomas Hardy meant when he wrote: He who is with himself dissatisfied, Though all the world find satisfaction in him, Is like a rainbow-coloured bird gone blind, That gives delight it shares not.

I Reprints available 8 for $1.00 THE STORY is told of an American newsman discussing matters with his counterpart from Moscow. "As I understand it," said the Ameri can, "the basic idea of communism is to divide everything with your neighbor." "Not quite," came the rejoinder. "The basic idea is to make your neighbor divide everything with you." "Revenue sharing" is something like that - meaning different things to different, people. In pro posing to Congress early in 1971 a $5 billion program of General Revenue Sharing, President Nixon described it as a measure to "re store the confidence of the people in the capacities of their govern ment. I believe the way to begin this work is by taking bold measRevenue Sharing PAUL L. POIROT ures to strengthen state and local governments - by providing them with new sources of revenue and a new sense of responsibility." The program presumably should correct a "fiscal mismatch": Fed eral tax receipts, based largely on the income tax, allegedly grow faster than the economy; at the local level the reverse is said to be true; state and local revenues, based largely on sales and property taxes, do not keep pace with economic growth, while expendi ture requirements for education, health, welfare, and other local services tend to exceed such growth.

Rudyard Kipling described the political process of "revenue shar ing" somewhat more poetically and profoundly: 235 236 THE FREEMAN April In the Carboniferous Epoch we were promised abundance for all, By robbing selected Peter to pay for collective Paul; But, though we had plenty of money, there was nothing our rnoney could buy, And the Gods of the Copybook Headings said, "If you don't work you die." In those lines, Kipling very nearly said it all. Our Federal gov ernment can and does indeed cre ate money at a pace that exceeds the capacity of individuals to sup ply goods and services in the mar ket place. State and local govern ments resemble individuals in the sense that they are unable to create new money at will; but they resemble the Federal government in promising "abundance for all." Hence, the inordinate growth of the "public sector," which rather consistently between the Civil.War and World War I took about 9 cents from each dollar of the peo ple's earnings and today takes 43 cents of each dollar earned. In other words, government at all levels in the United States is now drawing out of the market place 43 per cent of available goods and services, leaving plenty of money in the "private sector" but rela tively less to buy.

An Empty Federal Treasury A sober look at the record re veals the sorry condition of the Federal Treasury. Instead of an alleged overflow of tax receipts to be shared, the Federal debt has shown an increase in everyone of the past twenty years, $114 billion greater in 1970 than in 1950. So where is the Federal tax revenue that presumably is to be shared with debt-ridden state and local governments? Incidentally, the total indebted ness of all state and local govern ments in the United States also has risen by some $114 billion over the past twenty years - but not because they have been getting rela tively smaller shares of total tax receipts. On the contrary, state and local tax receipts have been increasing more rapidly than have Federal tax receipts since 1950. And taxes at all levels have been biting ever more deeply into the taxpayer's total earnings. In light of these· sorry facts, it should be clear that the proposal for Federal revenue sharing is simply a prediction of further in flation. The Federal government will monetize its deficit, through the centralized, fractional-reserve banking system, and give some of the newly printed money to state and local governments.

1971 REVENUE SHARING 237 Unfortunately, the printing of ltddition!ll qU!lntitiQg of money does not increase the supplies of goods and services that consum ers want. It simply enables the Federal government and its rev enue-sharing counterparts down the line to draw an increasing proportion of goods and services out of the market place, for distri bution and use according to bu reaucratic decision rather than individual choice. It may be argued, of course, that it should be no great concern of the individual whether he buys groceries with food stamps or with his own earnings so long as he eats; whether his rent is paid by other taxpayers or by himself so long as he is housed; whether his medical care comes socialized or private so long as he gets the care; and so on and on. And that would be a powerful argument, if resources were inexhaustably abundant and sharing the wealth were the only problem.

The Scarcity of Resources Relative to Human Wants That is not the· only problem, however. It isn't even close to the real problem. Kipling came closer: "If you don't work you die." The perennial problem - past, present, and future - is the scarcity of re sources relative to human wants. And the solution is through efficient production and use of goods and services. Whether it is called revenue sharing or inflation or commu nism or public-sector spending or whatever - governmental with drawalof goods and services from the market tends to be wasteful of scarce resources. It is strictly a consuming process, whether· it be a war against communism in for eign lands or a domestic war against crime, smut, poverty, dis ease, pollution, slum conditions, or other "social" problems. Warlike or coercive force tends to be waste ful in any event, and especially when the coercion is used to do what otherwise would have been done voluntarily.

Besides the consumption and waste of resources characteristic of government spending, this draining of resources from the private sector of the market leaves ever less available for saving and investment in the tools of capi talistic enterprise. And this loss of the tools and even the incentive to produce is what brings a tax burdened people to the fate Kip ling foresaw: "If you don't work you die." The Decline of Morality Meanwhile, the steady attrition of resources and incentives wears away the morality of individuals and destroys their sense of self238 THE FREEMAN April responsibility. This breakdown tends to spread throughout the society. The private counterpart of governmental revenue sharing was described by staff reporter Richard Martin in The Wall Street Journal of February 9, 1971: "Nobody can be sure how much money employee thefts are cost ing companies annually, but inSelf-Help surance men and security special ists say the best guesses range upwards from $400 million a year."

The basic idea of revenue shar ing is to make your neighbor di vide everything with you. But this "dirty neighbor" game always ends the same: "If you don't work uou die." ~ IDEAS ON LIBERTY IT MAY BE of comparatively little consequence how a man is gov erned from without, whilst every thing depends upon how he gov erns himself from within. The greatest slave is not he who is ruled by a despot, great though that evil be, but he who is the thrall of his own moral ignorance, selfishness, and vice. Nations who are thus enslaved at heart can not be freed by any mere changes of masters or of institutions; and so long as the fatal delusion prevails, that liberty solely depends upon and consists in government, so long will such changes, no matter at what cost they may be effected, have as little practical and lasting result as the shifting of the figures in a phantasmagoria. The solid foundations. of liberty must rest upon individual character; which is also the only sure guaranty for social security and national progress. John Stuart Mill truly observes that "even despotism does not produce its worst effects so long as individuality exists under it; and whatever crushes individuality is despotism, by whatever name it is called."

SAMUEL SMILES, From the book, Self-Help, published in 1859.

ROGER J. WILLIAMS THE PREVALENCEof student rebel lions throughout the world makes one wonder just how effectively modern education relates to real human problems. To approach the problems of generic man from a biological standpoint may be far too superficial in this scientific age with its tremendous advances in technology; yet, could not the general weakness of human sci ence be the basis for the comment by Robert Frost: "Poets like Shakespeare knew more about psychiatry than any $25-an-hour man"? Biologically, each member of the human family possesses inborn differences based on his brain Dr. Williams is professor of chemistry at the University of Texas at Austin and consultant to the Clayton Foundation's Biochemical Institute. His latest book, The Environmental Prevention of Disease (Pitman Publishing), will appear in April. This article is reprinted by permission from Saturday Review, January 30, 1971. Copyright 1971, Saturday Review, Inc.

structure and on his vast mosaic of endocrine glands - in fact, on every aspect of his physical being. Each of us has a distinctive set of drives - for physical activity, for food, for sexual expression, for power. Each one has his own mind qualities: abilities, ways of think ing, and patterns of mental con ditions. Each one has his own emotional setup and his leanings toward music and art in its vari ous forms, including literature. All these leanings are subject to change and development, but there is certainly no mass movement to ward uniformity. Noone ever "re covers" from the fact that he was born an individual. When a husband and wife dis agree on the temperature of the soup or on the amount of bed cov erings, or if their sleep patterns do not jibe, this is evidence of in born differences in physiology. If 239 240 THE FREEMAN April one child loves to read or is inter ested in science and another has strong likings for sports or for art, this is probably due to inborn differences in makeup. If two peo ple disagree about food or drink, they should not disregard the fact that taste and smell reactions of ten widely differ and are inherited.

If we see a person wearing loud clothing without apparent taste, we need to remember, in line with the investigations of Pickford in England, that each individual has a color vision all his own; some may deviate markedly from the pack. The inborn leanings of Mozart were evident by age three, and he began composing when he was four. Capablanca was already a good chess player - good enough to beat his father - when at age five he played his first game. For many centuries, Indian philoso phers have recognized innate in dividuality, which they explain on the basis of experience in previous incarnations. Inborn Individuality Biology has always recognized inborn individuality. If this in born distincti veness had not al ways been the rule in biology, evo lution could never have happened. It is a commonplace fact in biol ogy that every living organism needs a heredity and a suitable environment. Unfortunately, in the minds of most intellectuals biolog ical considerations have been pushed aside.

Professor Jerry Hirsch, a psy chologist at the University of Illi nois, has protested in Science that "the opinion makers of two gen era tions have literally excomm uni cated heredity from the behavioral sciences." This neglect of the study of heredity has effectively pro duced a wide gap between biology and psychology. Biology deals with living things, and psychology is logically an important phase of biology. Bernard Rimland, director of the Institute for Child Behavior Research in San Diego, in review ing my book, You Are Extraor dinary in American Psychologist, wrote: "Since between-group dif ferences are commonly a small fraction of the enormous, impor tant, and very interesting within group (individual) difference, psychology's focus on average values for heterogenous groups represents, as Williams indicates, a chronic case of throwing out the babies with the bath water. 'Throw ing out the babies' is bad enough, but we psychologists have the du bious distinction of making this error not only repeatedly but on purpose."

Social solidarity exists and so cial problems are pressing, but we 1971 THE BIOLOGY ,OF BEHAVIOR 241 cannot hope to deal with these successfully by considering only generic man, that is, average val ues for heterogenous groups. We need a better understanding of men. A Firm Foundation The basic problem of generic man is how to achieve "life, lib erty, and the pursuit of happi ness." The writers of our Declara tion of Independence were on solid ground, biologically speaking, when they took the position that each human being has inalienable rights and that no one has, by virtue of his imagined "royal blood," the right to rule over an other. In their emphasis on man kind as individuals, Jefferson and his co-authors were closer to bio logical reality than are those of our time who divorce psychology from biology and center their at tention on that statistical artifact, the average man.

Because each of us is distinc tive, we lean in different direc tions in achieving life, liberty, and the pursuit of happiness. Happi ness may come to individual peo ple in vastly different ways, and so the human problem of achieving life and the pursuit of happiness resolves itself, more than it is comfortable to admit, into a series of highly individual human prob lems. We need to take this consideration into account in attempt ing to build an advanced society. In understanding the scope of human desires, it is worthwhile to consider briefly the problems that real - as opposed to theoretical people face. These may be grouped under four headings: 1) making a livelihood; 2) maintaining health; 3) getting along with others; and 4) getting along with one's self. These four categories, singly or in combination, cover most of the familiar human problems - mar riage and divorce, crime, disease, war, housing, air and water pol lution, urban congestion, race re lations, poverty, the population explosion, the all-pervading prob lem of education, and the building of an abundant life.

Making a Livelihood The importance of approaching the problem of making a liveli hood from the individual's stand point lies in the fact that in our complex society a multitude of ways exist - an estimated 23,000 - in which people can make a liv ing. People are not by any means interchangeable parts in society. While some might function well in anyone of a large number of ca pacities, many others might be highly restricted in their capabil ities and yet be extremely valuable members of society. The idea that it is all a matter of education and 242 THE FREEMAN April training cannot possibly be squared with the hard biological facts of inborn individuality. This perversion of education perpetu ates the banishment of heredity an ever present biological fact from our thinking. Fitting to gether people and jobs is just as real and compelling as fitting shoes to people. People sometimes suffer from ill-fitting shoes; they suffer more often from ill-fitting jobs.

The maintenance of health both physical and mental-involves individual problems to such a de gree that it is difficult to exagger ate their role. Ever since the days of Hippocrates it has been known in a vague way that "different sorts of people have different mal adies," but we are only beginning to learn how to sort people on the basis of their inborn individual characteristics. When we have be come expert in this area, vast progress will result, particularly in the prevention of metabolic and psychosomatic diseases, Le., those not resulting from infection. As long as we dodge the biological fact of inborn individuality, we remain relatively impotent in the handling of diseases that arise from within individual consti tutions. The problem of getting along with others is a very broad one, in which individual problems are basic. If husbands and wives and members of the same family al ways get along well together, we would have some reason to be sur prised when squabbles break out within business, religious, or po litical groups. If all these kinds of squabbles were nonexistent, we would have a basis for being sur prised at the phenomenon of war.

Distinctive Qualities While self-interest and differ ences in training are vital factors in these common conflicts, another factor should not be overlooked: the inborn individuality of the participants. There is a mass of evidence to support the thesis that every individual, by virtue of his or her unique brain structure and peripheral nervous system, is psy chologically condition able in a dis tinctive manner. Thus, a person's unique nervous system picks up distinctive sets of impulses, and because his interpretive apparatus is also unique he learns different things and interprets the world in a distinctive manner. Even if two individuals were to have exactly the same learning opportunities, each would think differently and not quite like anyone else. This is the basis for the observation by Santayana: "Friendship is almost always the union of a part of one mind with another; people are friends in spots."

1971 THE BIOLOGY OF BEHAVIOR 243 In spite of our attempts to do so, individual minds cannot be compared on a quantitative basis. The minds of Shakespeare and Einstein cannot be weighed one against the other; there were many facets to the minds of each. At birth the two minds were equally blank, but as they ma tured, each saw, perceived, and paid attention to different aspects of the world around it. Each was conditionable in a unique way. Each Mind Unique The recognition of the unique ness of human minds is essential to human understanding. By de veloping expertness in this area, psychology will eventually become far more valuable. In an advanced society with a growing population and closer associations, it is ob viously essential that we learn bet ter how to get along with each other. When we are unaware of the innate differences that reside within each of us, it becomes very easy to think of one who disagrees with us as a "nitwit" or a "jerk,"

or perhaps as belonging to the "lunatic fringe." When we appre ciate the existence of innate dif ferences, we are far more likely to be understanding and charit able. Strife will not be automati cally eliminated, but tensions can be decreased immeasurably. Individual problems are at the root of the problem of crime. Many years ago, James Devon placed his finger on the crucial point. "There is only one principle in penology that is worth any consideration: It is to find out why a man does wrong and make it not worth his while." The question, "Why does a particular man commit crime?" is a cogent one; the question, "Why does man turn to crime?" is rela tively nonsensical. Since all human beings are in dividual by nature, they do not tick in a uniform way nor for the same reasons. Broadly speaking, however, many doubtless turn to crime because society has not pro vided other outlets for their en ergies. If we could find a suitable job for every individual, the prob lem of crime would largely vanish.

The problem of crime is thoroughly permeated with individual prob lems; it cannot be blamed solely on social conditions, because as the studies of Sheldon and Eleanor Glueck have shown, highly re spected citizens may come from areas where these conditions are the worst. A Race of Individuals Racial relations would ease tre mendously if we faced squarely the biological facts of individual ity. If we were all educated to know that all whites are not the same, that all Negroes do not fit 244 THE FREEMAN April in the same pattern, that all Latins are not identical, that all Ameri can Indians are individuals, and that all Jews do not fit a stereo type, it would help us to treat every member of the human race as an individual. It is no denial of the existence of racial problems to assert that individual problems need to be stressed more than they are. For individual Negroes and individual whites, the pursuit of happiness is by no means a uniform pursuit.

Doubtless, although there are whites and Negroes who would think they had reached utopia if they had a decent shelter and were assured three meals a day, this would not satisfy millions of others for whom striving and a sense of accomplishment are para mount. "The Negro problem" or "the white problem" - depending on one's point of view - is shot through with a host of individual problems. Learning to live with one's self is certainly an individual problem, and will be greatly eased by rec ognition of inborn individuality. Much unhappiness and many sui cides can be traced to misguided desire to be something other than one's self. Each of us as an in dividual has the problem of find ing his way through life as best he can. Knowing one's self as a dis tinctive individual should be an important goal of education; it will help pave the road each of us travels in his pursuit of happiness.

Dangers of Oversimplification Why have these facts of in..; dividuality not been generally ac cepted as a backdrop in every con sideration of human problems? For one thing, many people, in cluding scholars, like being grandi ose and self-inflationary. To make sweeping pronouncements about "man" sounds more impressive than to express more limited con cerns. Simplicity, too, has an at tractiveness; if life could be made to fit a simple formula, this might be regarded as a happy outcome. One excuse for excommuni cating inheritance from the be havioral sciences for two genera tions has been the fact that in heritance in mammals is recog nized by careful students as being exceedingly complex and difficult to interpret. It is true that some few characteristics may be inherit ed through the operation of sin gle genes or a few recognizable ones. But other characteristics those that differ in quantity - are considered to be inherited in ob scure and indefinable ways com monly ascribed to multiple genes of indefinite number and char acter. These multiple-gene char acteristics include, to quote the geneticists Snyder and David, 1971 THE BIOLOGY OF BEHAVIOR 245 "the more deep-seated characters of a race, such as form, yield, in telligence, speed, fertility, strength, development of parts, and so on." To say that a particular characteristic is inherited through the mediation of multiple genes is to admit that we are largely ignor ant of how this inheritance comes about.

Identical Twins? Recently, some light has been thrown on this problem by experi ments carried out in our labora tories. These experiments in volved armadillos, which are un usual mammals in that they com monly produce litters of four monozygous ("identical") quad ruplets that are necessarily all males or all females. By making measurements and studying sixteen sets of these ani mals at birth, it became evident that although they develop from identical genes, they are not iden tical at all. Organ weights may differ by as much as twofold, the free amino acids in the brain may vary fivefold, and certain hormone levels may vary as much as seven-, sixteen-, or even thirty-twofold. These findings clearly suggest that inheritance comes not by genes alone but by cytoplasmic factors that help govern the size of organs (including endocrine glands) and the cellular. makeup of the central nervous system.

"Identical" twins are not identi cal except with respect to the genes in the nucleus of the egg cell from which they developed. One of the most interesting sug gestions arising out of this study is the probability that individual brain structures, which have been known to have "enormous" differ ences since the investigations of Lashley more than twenty years ago, are made distinctive by the same mechanisms that make for differences in organ weights. The size, number, and distributions of neurons in normal brains vary greatly; this is biologically in line with the uniqueness of human minds. The further elucidation of this type of inheritance should help to focus more attention on heredity. If this line of thought is valid it makes even more ridiculous the invitation issued by the Ford Foundation to the biological sci ences to stay out of the precinct of human behavior. The expres sion "behavioral science" came into being many years ago as a result of the formulation of the Ford Foundation-supported· pro grams. Biochemistry and genetics, for example, were kept apart from the "scientific activities designed to increase knowledge of factors which influence or determine hu man conduct."

246 THE FREEMAN April What can be done to bridge the gap between psychology and biol ogy? More importantly, how can we develop expertise in dealing with the human problems that plague us but at present go un solved? Differential Psychology A broad, long-range, and prac tical strategy for learning how to deal more effectively with human problems is to explore, problem by problem, the inborn human char acteristics that are pertinent to each one. Differential psychology, for example, needs to be intensi fied and greatly expanded; this can probably be done most effec tively in connection with a series of problem-centered explorations. Some of the specific problem areas that require study from the standpoint of how inborn charac teristics come into play are: de linquency and crime, alcoholism, drug addiction, unemployability, accident proneness, cancer, heart disease, arthritic disease, mental disease, and broadest of all, educa tion. Each of these problems could be vastly better understood as the result of interdisciplinary study of the influences of inborn char acteristics. Such study would in clude differential psychology when applicable, combined with exten sive and intensive biochemical and physiological examinations, for example, of blood, saliva, urine, and biopsy materials. To expedite these investigations, automated equip ment and computer techniques would be used extensively to help interpret the complex data.

It is not likely that these ex plorations will find that some in dividuals are born criminals, others alcoholics, etc. Once we recognize the unique leanings that are a part of each of us, we will see how, by adjusting the en vironment, these leanings can be turned toward ends that are so cially constructive. Every inher ited factor can be influenced by an appropriate adj ustment of the en vironment. All this should not be made to sound too easy; it may be more difficult than going to the moon, but it will be far more worthwhile. One of these specific problems alcoholism - has been of special interest to me. After about twen ty-five years of study, I am con vinced that inborn biochemical characteristics are basic to this disease, but that expert applica tion of knowledge about cellular nutrition (which is not far off) will make it scientifically possible to prevent the disease completely and to correct the condition if the application of corrective measures is not too long delayed.

Inborn inherited characteristics have a direct bearing on the cur1971 THE BIOLOGY OF BEHAVIOR 247 rent revolt against the Establish ment. If biology had not been ban ished from behavioral science, and if students and other intellectuals were well aware of the biological, roots of their existence, it would be taken for granted that con formity is not a rule of life. Recognizing Our Differences Can Lead to Harmony If all that we human beings in herit is our humanity, then we all should be reaching for the same uniform goal: becoming a thor oughly representative and respect able specimen of Homo sapiens. There is rebellion against this idea. Revolters want to do "their thing." The revolt takes on many forms because many unique in dividuals are involved. If nonconformity had a better status in the eyes of the Establish ment (and it would have if our thinking were more biologically oriented), exhibitionism would be diminished and the desire of each individual to live his own life could be fostered in a natural way.

Human beings are not carbon copies of one another. Students and others who are in revolt have found this out. Perhaps without fully recognizing it, they are pleading for a recognition of in born individuality. This is essen tially a legitimate plea, but it can take the form of disastrous an archy. A peaceful means of help ing resolve the ideological .mess we are in is to recognize heredity by having a happy marriage of biology and behavioral science.' IDEAS ON LIBERTY Agreement to Disagree A "UNITED STATES" was only possible if men could agree to dis agree about a great many things. What was expedient for them is, however, an essential of liberty. Theoretically, it might be desirable for all men to agree on every thing, though I doubt it. Practically, such agreement would only be possible if all individual wills were crushed and subjected to a single wilL The effort to do this is always in the direction of the well traveled road to despotism. The alternatives are agree.ment to disagree or despotism.

CLARENCE B. CARSON, The American Tradition PROPERTY JAMES MADISON THIS TERM, in its particular appli ca tion, means· "that dominion which one man claims and exer cises over the external things of the world, in exclusion of every other individual." In its larger and juster mean ing, it embraces everything to which a man may attach a value and have a right, and which leaves to everyone else the like advantage. In the former sense, a man's land, or merchandise, or money, is called his property. In the latter sense, a man has a property in his opinions and the free communication of them. He has a property of peculiar vaiue in his religious opinions, and in the profession and practice dic tated by them. He has a property very dear to him in the safety and liberty of his person. He has an equal property in the 248 free use of his faculties, and free choice of the objects on which to employ them.

In a word, as a man is said to have a right to his property, he may be equally said to have a property in his rights. Where an excess of power pre vails, property of no sort is duly respected. No man is safe in his opinions, his person, his faculties, or his possessions. Where there is an excess of lib erty, the effect is the same, though from an opposite cause. Government is instituted to pro tect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly ex presses. This being the end of government, that alone is a just government which impartially se cures to every man whatever is his own.

1971 PROPERTY 249 According to this standard of merit, the praise of affording a just security to property should be sparingly bestowed on a gov ernment which, however scrupu lously guarding the possessions of individuals, does not protect them in the enjoyment and communica tion of their opinions, in which they have an equal, and, in the estimation of some, a more valu able property. More sparingly should this praise be allowed to a government where a man's religious rights are vio lated by penalties, or fettered by tests, or taxed by a hierarchy. Conscience is the most sacred of all property; other property depending in part on positive law, the exercise of that being a na tural and unalienable right. To guard a man's house as his castle, to pay public and enforce private debts with the most exact faith, can give no title to invade a man's conscience, which is more sacred than his castle, or to withhold from it that debt of protection for which the public faith is pledged by the very nature and original conditions of the social pact.

That is not a just government, nor is property secure under it, ,;vhere the property which a man has in his personal safety and per sonal liberty is violated by arbi trary seizures of one class of citi zens for the service of the rest. A magistrate issuing his warrants to a press-gang would be in his proper functions in Turkey or In dostan, under appellations prover bial of the most· complete despo tism. That is not a just government, nor is property secure under it, where arbitrary restrictions, ex emptions, and monopolies deny to part of its citizens that free use of their faculties and free choice of their occupations which not only constitute their property in the general sense of the word, but are the means of acquiring property strictly so called. What must be the spirit of legis lation where a manufacturer of linen cloth is forbidden to bury his own child in a linen shroud, in order to favour his neighbour who manufactures woolen cloth; where the manufacturer and weaver of woolen cloth are again forbidden the economical use of buttons of that material, in favor of the man ufacturer of buttons of other ma terials!

A just security to property is not afforded by that government, under which unequal taxes oppress one species of property and re ward another species; where arbi trary taxes invade the domestic sanctuaries of the rich, and·· ex cessive taxes grind the faces of the poor; where the keenness and competi tions of want are deemed 250 THE FREEMAN April an insufficient spur to labor, and taxes are again applied by an un feeling policy, as another spur, in violation of that sacred property which Heaven, in decreeing man to earn his bread by the sweat of his brow, kindly reserved to him in the small repose that could be spared from the supply of his nec essities. If there be a government, then, which prides itself in maintaining the inviolability of property; which provides that none shall be taken directly, even for public use, without indemnification to the owner, and yet directly violates the property which individuals have in their opinions, their reli gion, their passions, and their fac ulties - nay, more, which indi rectly violates their property in their actual possessions, in the labor that acquires their daily sub sistence, and in the hallowed rem nant of time which ought to relieve their fatigues and soothe their cares - the inference will have been anticipated that such a gov ernment is not a pattern for the United States.

If the United States mean to ob tain or deserve the full praise due to wise and just governments, they will equally respect the rights of property and the property in rights; they will rival the gov ernment that most sacredly guards the former, and by repelling its example in violating the latter, will make themselves a pattern to that and all other governments. t) March 27th, 1792. From the Works of Madi son, Vol. IV, pp. 478-80. IDEAS ON LIBERTY Abraham Lincoln, on Property PROPERTY is the fruit of labor. Property is desirable, is a positive good in the world. That some should be rich shows that others may become rich and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another, but let him work diligently to build one for himself, thus by example assuring that his own shall be safe from violence .... I take it that it is best for all to leave each man free to acquire property as fast as he can. Some will get wealthy. I don't believe in a law to prevent a man from getting rich; it would do more harm than good.

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Christianityand the Closs Struggle In Christianity and the Class Struggle (Arlington House, $7.00), the Reverend Harold O. J. Brown has addressed himself to that ever-growing band of masochists, nominally Christian, who think that guilt can be "collective." The heresy to which Dr. Brown takes exception comes in many guises. The "capitalists" are to blame for oppressing the "masses." The "Germans" were collectively guilty of murdering the Jews. The mod ern "white" population of Amer ica must pay reparations for what their forebears did to the blacks in enslaving them. The "over thir ties" have wronged the "under twenties" by bringing them into a defective world of war and pol lution. Everything gets reduced to a terrible and absolutely unreal simplicity. To the true Christian the theory that a collectivity can be guilty denies the proposition that all men are human, each with his share of original sin, and each with his varying propensity to redeem himself. Only individuals may be held responsible. The "class war"

solves nothing in Christian, or human, terms for the simple rea son that it seeks an external change that has no relation to the individual. When the "up" class is abolished, the "down" class be comes, in Djilas's phrase, the "new class." It not only perpetuates all the old wrongs, but it actually in tensifies them. As Max Nomad once said, "the Kaiser and Czar were liberals" in comparison to the national socialistic and prole tarian tyrants that came after them. Dr. Brown accurately notes that the theory of the class struggle has ceased to serve the Marxists in most of the "developed" na tions. The "capitalists" were never the vicious oppressors that Marx and Engels originally thought them to be, but even granting for 251 252 THE FREEMAN April the sake of argument they had been, the supposed "exploitation" of nineteenth century days is now very far behind us. The "masses" in the Western nations now par take of a general well-being that can't be matched in "Marxist" so cieties. It is hard to nurse a grudge against the man with a Cadillac if you yourself are dri ving a Chevy or a Plymouth to your own pleasures. So the "class struggle"

no longer serves as a useful revo lutionary prod in the Western democracies. Marxism is now a cure in search of a problem. Nevertheless, the professional dividers among us, including many Christians who should know bet ter, have found convenient substi tutes for the concept of class war. There is now the "race war:" Or, if not that, there is the genera tional war. These are the "New Left" substitutes for the older, and now ineffective, propaganda of the "class struggle." Race War Is Suicide Since racial differences are in eradicable unless we assume a few generations of worldwide inter marriages, it is, in Dr. Brown's opinion, a "heinous crime" to pro mote any theory of race war. Ra cial differences must be accepted or they will end in de~.th and des truction to the weaker side. The Christian, according to Dr. Brown, must accept man as man, trying to ameliorate problems on individ ual terms. Dr. Brown is extremely critical of his co-religionists who, acting on the theory that all Chris tians were guilty for what hap pened before the Civil War, ac cepted James Forman's demand for money reparations to be paid by the churches to the National Black Economic Development Council. The idea of "reparations"

is, to Dr. Brown, sheer extortion. The money, if paid over, wouldn't go to the original victims who had suffered the ignominy and cruelty of being enslaved. Nor would the truly guilty parties, the slave raiders (both black and white) who tore men away from their an cestral homes in Africa, be paying the reparations. Church members whose grandfathers and grand mothers weren't even living in America in the early nineteenth century would be the victims of the extortion plot. And there would be no guarantee that the money would be used in a way to benefit the black community. The practicing Christian, says Dr. Brown, who feels he must do something about the blacks, or the central cities, or whatever, would do better to invest in businesses that are "color blind" in their hir ing policies. Or, if he is so minded as a charitable individual, he could give his own money to a Negro 1971 CHRISTIANITY AND THE CLASS STRUGGLE 253 college, or to the National Associ ation for the Advancement of Col ored People. The point is that the individual must feel for the in dividual if the ideals of Christ are to be upheld.

Parents and Children The "generation war" makes even less sense to Dr. Brown than the race war. There can be no per manent lines of battle in a gen erational war, for today's "youth" are in all too short a time tomor row's "middle-aged." If the mem bers of a single generation could bluff their fathers into giving them power, would they, in turn, be likely to relinquish that power at age thirty to the next wave of oncoming youth? It is hardly likely. The class struggle and the vari ous substitutes for it are, in Dr. Brown's description, "the devil's program." They set men against each other not in fruitful compe tition but in the delusion that evil can be destroyed by destroying human beings. You think you are doing something for "humanity" and you end by killing three mil lion kulaks whose knowledge might have saved other millions from periodic famine. If you fol low Jerry Rubin's advice to kill your parents, you can have no logical objection if your children, in turn, decide to murder you. And if you preach Black Power in the race war sense, you risk a revival of the Ku Klux Klan mentality in a numerically superior portion of the population. This, of course, is a sure recipe for suicide.

Dr. Brown's book comes with an introductory note by Billy Gra ham. Its evangelical imagery may put off some readers in our secular civilization, but its substance is eternally true. The problem facing the world is not one that can be solved by "revolution," for in rev olution the ugly means take over and Decome the perman ently evil ends. What we need is reforma tion, which begins with the indi vidual. This is not only true for orthodox Christians, it is also true for all believers in the traditions of the West. .. THE THEORY OF MONEY AND CREDIT by Ludwig von Mises (Irvington-on-Hudson, N. Y.: The Foundation for Economic Educa tion, new printing, 1971), 493 pp. $4.00 Reviewed by Hans F. Sennholz FEW BOOKS have contributed more to the advancement of monetary theory than Mises' Theory of Money and Credit. And yet, few serious books have had such little impact on contemporary thought and policy as this treatise. The world continues to ignore or reject it while it is clinging to antiquated 254 THE FREEMAN April notions and practices. Of course, it is more pleasing and popular for governments to follow the advice of statists and inflationists than to heed the warnings of economists like Professor Ludwig von Mises.

N early all contempora:ry econ omists adhere to holistic theories that are utterly futile and sterile for an understanding of monetary phenomena. There is the popular "income-expenditure analysis" which swayed economic thought during the 1930's with the publica tion of the General Theory of Em ployment, Interest and Money by John Maynard Keynes. According to Keynesian analy sis, there is an ideal level of mone tary expenditure at which the na tional economy achieves full em ployment under stable price condi tions. In its search for this ideal level the income-expenditure analysis endeavors to trace the flow of money payments through the economy. As income is quanti tatively the largest source of funds spent, an analysis of its determi nation and disposition is basic to the approach. In addition, funds for spending may be derived from existing reserves of currency and demand deposits, time deposits, and other liquid assets that are easily converted to cash. And finally, when the ideal level of total spending has not yet been reached, newly created money, preferably demand deposits created through bank credit expansion, may be used to achieve the desired total.

In short, it is the principal role of Inonetary authorities to ensure growth in the monetary reserve base sufficient to facilitate credit expansion for full employment. As a holistic theory Cfrom the standpoint of the whole rather than the parts) it does not profess to be concerned with individual economic actions, merely with policy guidelines for governments seeking economic growth and full employment. But even in this limited objective it has failed con spicuously wherever it was tried. For massive unemployment con tinues to be with us after more than thirty years of Keynesian policies. And finally, there are the "mone tarists" of the Chicago School whose holistic theories resemble the Keynesian doctrines. The fa mous "equation of exchange," as developed by Professors Fisher, Marshall, and Pigou, provides their starting point CPT == MV, or P == MV IT). As the price level can not be expected to remain stable for various reasons, which renders the market system rather unstable, they call on government to take Ineasures to stabilize the level and thus cure the business cycle.

It is true, the economists of the Chicago School reject the compen1971 OTHER BOOKS 255 satory fiscal policies prescribed by the Keynesians because they real ize the futility of continuous fine tuning. But they recommend long term stabilization through a steady 3 to 4 per cent expansion of the money supply. They have no special trade cycle theory, merely th~ "pr~scr{"pt{on -tor goveyanment to "hold it steady." "If there is a recession issue more money, and if there is inflation take some out !" Both schools of thought, the in come-expenditure analysts as well as the monetarists, are unalterably opposed to the gold standard. Its discipline is rejected in favor of governmental power over money. Von Mises' subjective theory makes individual choice and ac tion the center of his investiga tion. On the cornerstone laid by Carl Menger's theory of the nature and origin of money Professor Mises, in his Theory of Money and Credit, built a comprehensive fully integrated structure. With the help of his notable regression theory he completed the subjective theory of money, which had frus trated other economists before him.

Professor Mises demonstrated that the individual demand for money springs from the fact that it is the most marketable good a person can acquire. It is true, money is not suitable to satisfy directly anyone's needs. But its possession permits him to acquire consumers' or producers' goods in the near or more distant future. People want to keep a. store of money to provide exchange power for an uncertain future. Some are satisfied with relatively small hold inR;s, others prefer to hoard larger supplies. And we all change fre quently our holdings in accordance with our changing appraisals of future conditions. Money is never "idle," nor is it just "in circula tion"; it is always in the posses sion or under the control of some one. The demand for money is sub ject to the same consideration as that for all other goods and serv ices. People expend labor or fore go the enjoyment of goods and services in order to acquire money.

This is why individual demand and supply ultimately determine the purchasing power of money in the same .. way as they determine the mutual exchange ratios of all other goods. The quantity theory of money as understood by Professor Mises is merely another case of the general theory of demand and supply. However, he rejects the quantity theory as commonly pre sented by the "monetarists" and other contemporary economists as a sterile aberration that proceeds holistically and arrives at empty equations and models.

256 THE FREEMAN April Professor Mises' trade cycle theory integrated the sphere of money and that of real goods. If the monetary authorities expand credit and thereby lower the in terest in the loan market below the natural rate of interest, eco nomic production is distorted. At first, it generates overinvestment in capital goods and causes their prices to rise while production of consumers' goods is necessarily neglected. But because of lack of real capital the investment boom is bound to run aground. The boom causes factor prices to rise, which are business costs. When profit margins finally falter, a recession develops in the capital goods indus try. During the recession a new readjustment takes place: the mal investments are abandoned or cor rected, and the long neglected con sumers' goods industries attract more resources in accordance with the true state of public saving and spending.

This Mises theory has explained numerous economic booms and busts ever since 1912 when the first edition of The Theory of Money and Credit appeared in print. And it continues to provide the only explanation of the rapid succession of booms and reces sions that continue to plague our system. The subjective theory of Pro fessor Mises also points up the desirability of money that is not managed by government. The or thodox gold standard or gold-coin standard is such money, the value of which is independent of gov ernment. It is true, it cannot achieve the unattainable ideal of an absolutely stable currency. There is no such thing as stability and unchangeability of purchasing power. But the gold standard pro tects the monetary system from the influence of governments as the quantity of gold in existence is utterly independent of the wish es and manipulations .of govern ment officials and politicians, par ties and pressure groups. There are no "rules of the game," no arbitrary rules which people must learn to observe. It is a social in stitution that is controlled by in exorable economic law.

For nearly 60 years of world wide inflation and credit expan sion, depreciations and devalua tions, feverish booms and violent busts, Ludwig von Mises' Theory of Money and Credit has given light in the growing darkness of monetary thought and policy. The world should be grateful that the light is maintained through a new printing of this remarkable analysis. , the Freeman VOL. 21, NO.5'· MAY 1971 For the Young in Heart, Mind, and Spirit John C. Sparks Some suggestions of new worlds to conquer for the young who are not pleased with the one they find. 259 267 271 The Market-or Else! Paul L. Poirot The real warmongers in our society are those who want to deal outside the peaceful processes of the market. ) ~\Transportation: Regulation vs. Competition George Hagedorn '\ Government regulation of transportation has resulted in injury, rather than benefit, to the industries regulated and to the public.

The Impact of Intervention Clarence B. Carson Government intervention dams up and diverts the energies of the people; freedom releases them to constructive purposes. 274 Tell the Truth A teacher tells how he came upon a new idea about liberty. Ray L. Colvard 285 Why I Left England Edward L. McNeil, M.D. 290 Why a doctor prefers the private practice of medicine. Speak for Yourself, John Leonard E. Read 297 The importance of thinking for self and voicmg ,me's convictions in politico economic affairs. Downward Price Flexibilityand Economic Growth Gary North 302 Men who will not look to the market for money and pricing are doomed to disaster. Book Review: 317 liThe Crisis in Construction: There is an Answer" by M. R. Lefkoe Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwardmg.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON·HUDSON. N. Y. 10533 TEL.: (914) 591-7230 LEONARD E. READ PAUL L. POI ROT 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 linlited 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, 1971, The Foundation for Economic EducCl'tion, 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.

Articles from this journal are abstracted and indexed in Historical Abstracts and/or America: History and Life. THE FREEMAN also Is available on microfilm, Xerox University Microfilms, Ann Arbor, Mich igan 48106. Permission granted to reprint any article from this Issue, with appropriate credit, except "Why I Left England."

JOHN C. SPARKS g in heart, mind, and spirit ENTHUSIASM, vitality, zeal charac terize the youth of every genera tion. Theirs always is a new vision of problems and opportunities. It comes naturally for them to be righters of wrongs, or at least to try. But the eternal fires of youth seem lately to have fanned into an exceptional and alarming gen eration gap. Perhaps the young of recent years have been more reactive to the evil and the imperfect. Tele vision instantly and vividly com municates sights and sounds un known to earlier generations. An other factor could be the unusual run of prosperity for so many American families since 1940. Without sound instruction, it would be easy for the children to Mr. Sparks is an executive of an Ohio manu facturing company and a frequent contributor to THE FREEMAN. gain the impression that financial success comes without effort or struggle, that there exists a never ending source of economic goods, and that only a new "law of dis tribution" is needed to assure abundance for all.

To expect these young to be less sensitive than they are to prob lems would be to expect the most exuberant part of the human race to lack the normal human emo tions. Their boundless energy and intelligence seek the direction that will move mankind upward and onward. But bluster and noise are not suitable replacements for hard effort and moral judgment. De pending upon the direction taken, mankind will either step forward or slip backward on the evolution ary incline. The young welcome a challenge. But in the current confusion, many 260 THE FREEMAN May real challenges are going unrecog nized, challenges that should test the courage and ingenuity of the very best. These challenges offer great excitement, stiff obstacles, few immediate rewards, many dis appointments - and unlimited po tential for progress. While still a young man, Alexan der the Great is said to have ex pressed keen disappointment that there were for him no new worlds left to conquer. From our vantage point of the twentieth century, we may smile at this great one of the past who could not perceive the little distance he had covered from the starting toward the finish line.

Yet, how is anyone, especially the youth of today, to be free of such blindness? It may seem inappropriate for a representative of today's older generation to offer suggestions of worthy challenges. The credentials need to be checked. How have we performed as adults? We did many things quite well. In many crucial respects, however, our generation has failed. We virtually abandoned our qualities of self-reliance, self responsibility, mutual respect, and love of fellow man. We sought to shift our own responsibilities and refused to see ourselves as the cause of the poor results. As par ents, we tried to hold others re sponsible for the welfare of our families, the education of our children. Did we expect our neighbors to do this for us? No, of course not, for they, too, were busy shifting their burdens to others. Just "others," faceless nonentities such as the state board of education, county welfare, unemployment service, social security, entrenched wealth, big business. Surely, our generation has slipped from the path that leads toward human progress. But our experiences should afford a great lesson for those with the intelligence and courage to investigate the causes and consequences.

Untold numbers of "new worlds," waiting eons of time to be con quered, lie before the current crop of youth - and most of these worlds will remain untouched many centuries after these young ones have gone. Yet these fantastic se crets are ready to be released, new worlds just waiting to serve man kind whenever some real challeng ers come forth to conquer them. The Opening Challenge Why not start with the puzzling problem of equality? Logic denies that all men are created equal. Quite the contrary: not only un equal, but not one like any other. Each is born with his own distinc tive characteristics. His race and color, his genes and chromosomes, his fingerprints, his physical appear ance, his relatives, his occupancy 1971 FOR THE YOUNG IN HEART, MIND, AND SPIRIT 261 of a particular place and point in time, his economic and cultural en vironment all proclaim his unique ness! There are no duplicates - no two persons alike, no two situa tions the same. Yet, we frequently find that "equality" is held unde batable as a desirable objective for all people. Many discussions of thought-provoking issues are short-circuited by a misconception of equality.

Just what kind of equality is de sirable? Only the naive would claim that each person must be equal in every detail with every other person. The answer that al most everyone knows in our mod ern civilization, of course, is equal ity before the law. But what does that mean? Does it mean that each person should be lawfully compen sated if his earnings fail to bring him up to a certain economic level? Or should he be compensated ac cording to circumstances: the pov erty of his parents, the place where he was born, his intelligence quo tient, parental overindulgence or protection - an endless list of neg ative factors? But suppose that somehow it can be ascertained who is unequal and the precise amount required to catch up the difference. How long should support be pro vided? Is there a responsibility on the part of the recipient to try to overcome his inequality? Who is obligated to provide the necessary support? And what about equality for him?

As for the recipient, will he be helped or harmed by having a con tinual crutch? It is possible that he simply doesn't care to earn all he can, that he is satisfied with less than others deem necessary. Though capable in all respects, his preference and interests could be a simpler life, if not in Tahiti, then maybe in Cleveland, St. Louis, or a small rural community. On the other hand, his potential skills and capacities may never develop if the force that drives many toward achievement is partially bridged by government intervention. This is no mere academic exer cise. This is the real world. Bear in mind that numerous Federal and state laws are based on attempts to equalize various segments of the population - rich and poor, old and young, large families and small families, the responsible and the irresponsible, one occupation group and another, the successful and the unsuccessful, and so on.

Is it a logical objective to equate equality before the law with equal ity of the level of income, wealth, or economic capabilities? Or might equality be better approached as a negative concept? Somewhere the idea of the absence of coercion might fit into this puzzle. Acknowl edging that each person is differ ent, it may be that we should seek 262 THE FREEMAN May a way to peacefully and success fully utilize such differences, not letting anyone stand coercively in the way of another. The Next Challenge If one should tentatively accept the previous challenge, his inclina tion might be to employ various tools of the democratic process especially that of voting. But the misleading concepts surrounding equality are closely akin to those surrounding majority rule and the "magic" of voting. If one has blindly accepted the idea of maj 01"' ity rule, he should take a more careful look. Here is a question to help place this point in perspective: Under what conditions and to what ex tent might you be willing to be restricted, your actions determined by the decisions of others than yourself? Are you willing to ac cept the decisions of others in the selection of your husband or your wife, naming your child, determin ing the food you should eat, the clothes you wear, the friends you may have, the beneficiaries of your kindnesses, the persons with whom you may trade or contract, the pro visions of the contract? Many of today's youth have loudly and persistently demonstrated that they will not allow the customs of their elders to dictate styles of hair or dress. How significant are such matters in the full scale of values which affect their lives?

This is not to say that harmful results of numerous invasions of privacy have gone unrecognized. Protests have been launched against these galling coercive in trusions - some loud and violent, some quiet and peaceful, others simply in thoughtful contempla tion of the prevailing situation. There probably are as many persons coerced into acting, not as they want, but as others want, through majority rule as through totalitarian dictatorship. The chal lenge here is to find out the limi tations of majority rule, lest it become the pervading principle for solving all problems. One ap proach is to examine the alterna tive to majority rule. Is it minor ity rule? Possibly; but what about individual rule as the alternative? Thomas Jefferson had something to say about this. "That govern ment which governs least, governs best" was Jefferson's idea of al lowing each person the exciting opportunity to govern himself.

This creative thought deserves better than to be forgotten. The magic of the voting process seems to have perverted our judg ment in political matters. We seem to believe that the total number of votes cast is more important than the outcome of the balloting - that it is better to rely upon the opin1971 FOR THE YOUNG IN HEART, MIND, AND SPIRIT 263 ions of citizens who hardly care enough to vote than to have a matter decided by those concerned. We become so obsessed with vot ing politically that we tend to de prive ourselves of choice in the market place. The man who would govern him self and extend to every other per son the same opportunity - a chal lenge worthy of the most intelli gent, courageous, and moral indi vidual - must study carefully this matter of voting. Are there logical limitations for voting? Should an other person vote on a matter that pertains not to him, but only to me? Should another's vote deter mine the use of my property when no property of his own is affected by the vote? Should the privilege of voting be earned by meeting certain requirements - not age, not color, not race - but such as proof of responsibility for the support of oneself and his own family?

To seriously review the short comings of the older generation surely must challenge the youth of America to think of equality in terms that will not prevent any individual from being his own man. To meet this challenge calls :or better understanding of the Itructure of government - and uch mechanisms as voting and najority rule - so that govern lent may not be turned against the need and desire of the indi vidual to be self-responsible. The Final Area of Challenge I t has been observed by· philoso phers and historians that the need for strong safeguards against the loss of freedom is recognized more readily by those who have just won freedom than by those who have inherited it; the latter tend to take freedom for granted and allow the safeguards to be re moved. The framework of government should have built into it safeguard mechanisms that require much time and effort to remove. The de lay will allow the more alert citi zens to review and emphasize to others the reasons why such safe guard mechanisms were instituted in the first place. Certain mech anisms of this kind were well con ceived and placed into the Consti tution of the United States, to pre vent the government itself from interfering with personal freedom while providing necessary defense and establishing justice. These mechanisms set one branch of gov ernment as a check upon another.

To protect against sudden ma jority responses to popular causes of the moment, they required greater than simple majority votes to amend the Constitution and to override vetoes; they provided for electing certain officeholders to 264 THE FREEMAN May longer terms than others, and for appointing certain officials to life terms. These mechanisms were alarms. For a century and longer these Constitutional safeguards of 1789 worked very well. In recent decades, however, we seem deter mined to prove that those who in herit freedom eventually take it for granted and allow its safe guards to be removed. One lesson of history calls for special attention by the young: op pression does not always come in severe doses. The oppressors do not always wear black hats and ride black horses to distinguish them selves from the good guys. Instead, they sometimes appear to be more sincere and more concerned than others who quietly go about mind ing their own business. So it is that oppression is likely to come with gradual erosions of personal freedom. Not many notice, for the alarm is no louder than a whisper.

A callus lets us live with a pinch ing shoe, and in much the same way we grow accustomed to a gov ernment that has slipped into au thoritarian ways; private decision making gradually disappears. Obviously, the original safe guards built into the Constitution have not sufficed. New and better safeguards and alarms are needed. Here is the most exciting chal lenge of them all-calling out to the young in heart, mind, and spirit. Independence has been a way of life for the American. In his pri vate and public life he picks and chooses, he accepts and rejects. If he dislikes the association he has with his employer, or with his church, or with his fraternal group, he can resign. If one spouse mistreats the other, the remedy may be to dissolve the union. If a youngster has been subjected to heavy-handed treatment by his parents, when he becomes an adult he has the choice to quit the family. The fact that such choice~ exist has a leavening eft'ect or those in the positions of control This applies to practically all hu man action. Whether or not on continues to patronize his lawyeJ doctor, dentist, the boy who mow the lawn, the dry cleaner, or tl: butcher will depend upon the ml tual satisfaction of the two pa ties involved. When either becom, dissatisfied, he simply quits.

No Way to Quit Not so, however, when the d satisfied party is the citizen several layers of governme When I become unhappy with ( of these layers, such as gove ment postal service, it is futile me to resign from that service rangement. There is no reasonl replacement available for me 1971 FOR THE YOUNG IN HEART, MIND, AND SPIRIT 265 use; and even if there were I would gtill be obliged to gubgidize the old one through taxes. When government officials decide that every young man from 18 through 26 shall be eligible fot military service and subj ected to unde clared war in foreign lands, no reasonable alternative seems to exist for him. Though history tells of persecuted people who fled their country rather than continue to bear the improper authority of governmen t, such remedy can hardly be considered reasonable. It is not reasonable that to object successfully against the tyranny of the late Hitler or the current red regime of East Germany, one must uproot himself and his fam ily and, leaving behind his posses sions, try to sneak unobserved across the boundary with the lives of himself and his family at stake.

The way to avoid becoming trapped in such evil circumstances, of course, is to understand so com pletely and to articulate so clearly the virtues of liberty and the pain fulness of oppression, that one will convince enough of his fellow citi zens to oppose such attempts to grab authoritarian power. This approach is no little task. And, as a practical matter, it may consti tute no remedy at all. Doubtless it is easier to "fire" one's dry cleaner who charges too much or other wise fails to give satisfactory service, than to "fire" the layer of government under which one is op pressed. So what is the answer? Where lies the solution to this challenge? Look to the Market It seems possible, at least theo retically, that one could contract privately for all services now ren dered by governments except for that specialized service of national defense against either foreign or domestic aggressors. If govern ment were thus limited to provid ing for the defense of the United States of America and all other services were to be private, pre sumably one other national re sponsibility would then exist the guarantee to each citizen that no other government service would be constitutional, whether at the national, state, county, or munici pal level. To fulfill such guarantee, the Federal government would be authorized and given the power to protect the people from any at tempt whatsover by any person or group to use coercive or govern ment-like methods to require their participation or action.

What might be the advantages of such an arrangement? For one thing, a Federal government, limited to national defense and to carrying out the above guarantee, would have little prospect of growth through promises of some266 THE FREEMAN May thing for nothing or any program of tax-spend-and-elect. Since' no other enforced services would be permitted within the nation, pri vate organizations would flourish strictly according to the will of satisfied customers. Unwarranted attempts by any such organization to raise fees arbitrarily (the way governments raise taxes) or to cut the quality of its services could re sult in loss of clientele. Other beneficial effects to be an ticipated from this removal of co ercive powers from would-be mas ters of men would be the maxi mizing of individual effort and re ward, a resurgence of genuine charity in ministering to the needs of others, a more stable economy not subject to arbitrary manipula tion by government, and countless other blessings. Isn't this a worthy challenge!

Even to outline so nebulous a theory must trigger many ques tions: "But, how would the court sys tem function? "What about police, fines, and imprisonment? "How would one gain recogni tion of ownership of property? "How would a contract be en forced? "Who would own the roads and highways? "Who would be responsible for a system of money?" These questions express the puz zle - just how low the level of gov ernmental coercion should be to allow the maximum freedom of the market place, and yet not re sult in anarchy and violence. I have suggested the barest mini mum of government coercion. It may be too little. And yet the real danger, as evidenced throu'gh his tory, has been that man chooses too much government and too little freedom. He is more apt to under shoot the peak of freedom than to overshoot it. This, young men and women, is part of the great, exciting chal lenge. Let anyone who wishes to supply an answer be free to try!

Keep in mind that failure will hurt only those few who subscribe to a wrong answer, and then perhaps only momentarily, while success will profit many far and wide. It is tempting to continue with a long list of challenges for young people encompassing the areas of physical science, metaphysical sci ence, medicine, industry, astron omy and space, among others. But these are subjects that would be neither overrated nor underrated in a true society of free men. The great challenge is to maximize the freedom of every individual. Suc ceed there, and success must fol low in every conceivable area of human activity. , PAUL L. POIROT HARSH though the fact may seem to some, the scarce and valuable resources of the world are gen erally staked out and claimed. Somebody owns them, no matter how much others might want them. If this were not the case, the first order of business would be to make it so. For there is no way in the world to assure the efficient use and rea.sonable conservation of scarce resources until they are brought under private ownership and control. What belongs to everyone belongs to no one, and waste is not felt to be a personal loss.

This is not to say that private ownership, in and of itself, is a sufficient condition for harmonious human relationships. The owner, having once staked a claim, may not thereafter sit on his property with a dog-in-the-manger attitude toward others. His right is by their consent, so to speak. Unless one's neighbors generally approve the use he makes of his property, they will not rush to help him de fend it. Indeed, they may be the first to trespass or otherwise chal lenge his title. This is not to con done unneighborly conduct or the tendency to trespass, but to stress the owner's responsibility to put his property to productive use which others may understand and approve. So, it behooves an owner to practice what might be termed an open-door policy as distinguished from a closed shop. In other words, unless he is prepared to defend his claim behind a Great Wall with armed guards, he will rely upon a "For Sale" sign, daily proving anew in the market his right to his property. The open market recog nizes no special privileges on the part of any owner. Each market participant or trader bids against all others, and the property goes 267 268 THE FREEMAN May to the highest bidder. And every one who would trade has a vested interest in keeping the market open, in policing the market against thieves and robbers and any coercive intervention with the person or the property of any peaceful trader.

The point bears repeating: the allocation or ownership of property is most wisely determined in the open market; the proper function ing of the market requires polic ing and the protection of private property; but this does not mean protectionism or special privilege for any owner by way of govern ment intervention. The latter amounts to a closing of the market against peaceful traders - a rever sion to barbarism and war. Not that any given owner is so all-wise that he alone knows best how to use and conserve scarce resources. But he does have a sense of values and his o\\yn order of priorities to which any customer in the market may appeal with a bid or an offer to buy. It is possi ble, of course, that none of these offers would appeal to the owner at a given time, in which case he would retain possession until of fered something better or until his own needs and priorities had shifted enough to make him will ing to trade. Bear in mind that no one can earn a living simply by hoarding; eventually he must sell or otherwise convert some of his hoard into something to eat. So, he is quite as dependent on others as they may be dependent on him.

And it is this interdependence, re flected in market pricing and trad ing, that ultimately attends to the most efficient use and conservation of scarce and valuable resources - that transfers ownership into the most capable hands. Modern markets are a far cry from the simple barter of earlier times. Sophisticated traders usu ally make their deals in terms of money. So let us examine the role of money as a medium of exchange and see how monetary policies affect the market and the course of trade. Monetary Manipulations Anyone with the slightest knowledge of monetary history knows very well how the ancient goldsmiths used to issue more warehouse receipts for gold than there was gold in the warehouse. Our modern systems of fractional reserve banking employ the same principle. We know about this. Yet, many of us never quite grasp the sig nificance of what we seem to know. These slips of fiat money flowing from the banking system are claim checks we presumably bring to market to exchange for the goods and services available there. But 1971 THE MARKET - OR ELSE! 269 if we stop to think about it, we soon see that there is no real mar ket demand for these claim checks as such. The only reason why any one wants any of them is that they might help him get the goods or services he wants. What every trader in the market wants are goods or services more valuable to him than those he offers in ex change. He hopes to find the mar ket place full of goods and serv ices, rather than lots of monetary claim checks to be redeemed.

The salesman may not realize it, but the smile on his face when a millionaire enters the store is not for the million claim checks the customer might have in his pocket. The smile goes back to the pile of goods and services that had to be released in the market before that customer could acquire a million claim checks. Otherwise, those checks are the work of a counter feiter, a "customer" welcomed by no bona fide supplier of goods and services. In one sense, the welfare client who enters the market with a bundle of food stamps is like a counterfeiter: neither is bringing any useful goods or services into the market; each plans to draw against the available supplies; and some supplier is bound to come out on the short end of such one-way "trade." The same holds true whenever any customer enters the market with a pocketful of money which has not been earned by sup plying goods and services.

Barred from the Market Perhaps the tax collector - the mailed fist within the velvet glove of the welfare state - most clearly symbolizes the claimant of some thing for nothing. True, he has legally been hired to perform a job. But his task is to withdraw goods and services from suppliers - from the market - without the arduous necessity of offering other marketable items in trade. The tax collector, in other words, controls entrance to the market, exacting tolls of varying magni tude from certain customers as they enter or leave with their ob jects of trade. Nor is that all. Some of those very same customers, and certain others with no visible means of support or trade, are in a sense deputized to collect taxes in their own behalf - a welfare payment, subsidy, exemption, or "free pass" of some sort. These are not simple beggars waiting for crumbs outside the gates of the market. However peaceful may seem to be their ex actions from would-be traders, these tax collectors and deputies are armed with the full force of the law, prepared for whatever violence is necessary to enforce their one-way transactions. Their 270 THE FREEMAN May picket signs also serve as clubs.

These activities outside the gates are marked by violence, always threatened and often invoked. The taxpayer who seeks any re turn on the goods and services taxed from him must seek outside the market - look to political chan nels to get back "his share" - per haps in outer space, or in Vietnam, or in Appalachia, or in the urban ghettos, or in the mailbox, or on the highway, or in the crowded schoolroom, or hospital, or jail. In other words, the taxpayer tends to be driven from the market, to the extent that he is taxed for other than the minimal requirements for policing the market. And outside the market, the game or the strug gle is strictly violent; to the victor belong the spoils. "Publi~ Sector" Wars The names may be somewhat misleading, but the peaceful trans actions or voluntary exchanges within the market are sometimes referred to as occurring in "the private sector"; and the so-called "public sector" encompasses those coercive activities outside the mar ket - wars of one kind or another: against foreign aggressors, against communists, against capi talists, against poverty, against ignorance, against prejudice, against bias, against every con ceivable obstacle that stands be tween any man and the something he wants without earning it.

Their names are legion who pro fess good will toward man in their schemes to channel ever more re sources and individuals into the "public sector." But whether or not they know it, they are the war mongers in our society. They are condemning everyone involved, in cluding their intended benefici aries, to violent methods and to the results of violence. If one tires of the class struggle and conflict and violence charac teristic of men trying to function in the public sector, if he realistic ally seeks peace, then he must search for it in the private sector. A condition for admission to the market is that one enter and oper ate through peaceful means only. And only through peaceful means can peace be achieved. The happy dividend is more goods and serv ices available to all men than under any other arrangement. , GEORGE HAGEDORN THE RECENT economic reports of the President, and of his Council of Economic Advisers, have been the occasion of much discussion and controversy. This week we want to call attention to a section of the council's report which has attracted relatively little notice, but which contains some profound economic wisdom. This is a rather brief section headed "Transporta tion," which appears as one part of a chapter entitled "Economic Growth and the Efficient Use of Resources."

The council's discussion of the economics of the transportation industry is in a low key. Conclu sions are suggested rather than a.sserted and no firm recommenda tions for changes in government policy are offered. Mr. Hagedorn is Vice-President and Chief Economist of the National Association of Man ufacturers. This column appeared in NAM Reports, March 1, 1971. Yet, the message of the council's comments is clear. It is this: Gov ernment regulation of transporta tion has resulted in injury, rather than benefit, both to the industries which provide transportation serv ices and to the public which de pends on them. All would be better off if more reliance were placed on competition and less on regu lation. Government intervention in this critical sector of our economy has resulted in an inefficient use of resources. The history of the Interstate Commerce Commission, first es tablished in 1887, has been one of increasing extension of its pow ers, and increasing futility in their exercise. The end result has been that the country has an un economic transportation system uneconomic in the sense that more manpower and capital are devoted to that purpose than need be and 271 272 THE FREEMAN May they are used less efficiently than they might be.

The commission was originally established at a time when rail roads had a near monopoly of freight transportation. Its object was to protect shippers against this monopoly power. But early in this century, the commission was given the additional power to en force minimum freight rates - in other words, to suppress any rate competition that might break out among the roads. When a competi tive form of freight transporta tion - trucking - did emerge it was placed under the regulatory power of the commission. The Bureaucratic Procedure Cannot Stand Competition We do not believe that there is necessarily anything sinister or corrupt in that history. It is in the nature of government economic intervention to develop in that way. When a public body is estab lished to oversee an industry it cannot rely on something so nebu lous and unpredictable as compe tition. It will inevitably view com petition - whose effects are never foreseeable in detail - as an ob stacle to the attainment of the ex plicit objectives the public body was intended to serve.

Competition has a way of break ing out, no matter how much you try to suppress it. But suppression of competition usually results in turning it into uneconomic chan nels. The pattern of development in an industry is distorted in ways that are disadvantageous both to the industry and to the public. An illustration of this is the effect of the suppression of rate competition in the transportation industry. The rivalry among car riers took the form of attempts to offer better and mqre frequent service. The council's economic report points out that: "This is one reason why the transportation industry as a whole has more ca paci ty than the total traffic re quires. . . ." This overcapacity is a burden on the carriers and a misallocation of our national economic resources. From the point of view of the shippers, it might seem that bet ter and more frequent service is a good thing. But wouldn't it be still better to let the market decide whether the shippers might prefer lower rates to this additional serv ice?

Regulation of air transportation by the Civil Aeronautics Board seems to have had similar effects. During the period of rapid growth in air traffic during the 1960's the airlines were prohibited from com peting with each other by cutting rates. They thereupon competed by Qffering increased service and this} resulted in uneconomic in1971 TRANSPORTATION: REGULATION VS. COMPETITION 273 vestment in facilities and equip ment - a problem plaguing them severely at present. Direct and Indirect Effects What is at stake in the question of regulation vs. competidon is not merely an abstract principle. An unpublished government study estimates that, as a result of de regulation, a reduction of at least 10 per cent could be expected in cost to shippers of freight trans portation by common carriers. The distortion introduced by , regulation into the pattern of transportation costs can also have undesirable social effects. The economic report of the council ar gues that it has been a contribut ing factor in the joint problems of rural depopulation and urban con gestion. As a result of regulation, transportation costs on finished goods tend to be higher than rates on shipments of raw materials.

This causes fabricators to locate close to their urban markets rather than close to their sources of ma terials, or somewhere in between. One of the worst effects of reg ulation, and one which makes es cape from it very difficult, is that in its course vested interests a.re established. These might be dam aged as a result of deregulation. We use the term "vested inter ests" in no deprecatory sense. A trucker who holds an ICC certifi cate has a thing of value. He has acquired it in good faith because he has to have it to conduct his business. In the normal course of business transactions he may have bought and paid for it just like any other asset. Opening trucking to unlimited competition might greatly reduce the value of that asset - depriving the certifica te holder of part of his property. We do not know of any solution to these inequities. They could be mitigated, but not eliminated, by phasing deregulation over a long period. The lesson is that, in the course of government regulation, a tangled web is woven - from which it is impossible to escape without some pain and injustice.

We surmise that the Adminis tration, after laying this intellec tual groundwork, may offer legis lative proposals for a move toward deregulation in the transportation industry. But perhaps the larger import of the discussion is that govern ment regulation of any phase of economic life, no matter how well intended, may create more prob lems than it solves. The intended beneficiaries often are hurt as much as those who are regulated. Advocates of Federal legislation for the protection of consumers might take notice. , CLARENCE B. CARSON GOVERNMENT INTERVENTION in railroading has had a devastating impact over the years. A vital in dustry has been transformed by it into a declining industry. Many services once performed are no longer performed or poorly pro vided. Competition has greatly de clined, costs have risen, profits have usually been low, and labor trouble is endemic. What has gone before (Throttli,ng the Railroads, concluded in the February, 1971 FREEMAN) shows clearly the rela tionship of government interven tion to all sorts of untoward de velopments in railroading.

If government intervention had elsewhere been attended with great success and had failed sigDr. Carson is a frequent contributor to THE FREEMAN and other journals and the author of several books. He is Chairman of the Social Science Department at Okaloosa-Walton Col lege in Florida. 274 nally only in its effects on the rail roads, we might be warranted in concluding that it had failed only because of inept and unintelligent application. The United States government appears to be operat ing on some such assumption as this presently. The government is beginning to shift from its long term policy of restriction toward subsidization. Actually, those who offer apologies for such shifts in policy would not be likely to ad mit that the earlier intervention was inept and unintelligent. Their apology would be a little more complex. They would announce that times have changed, and that new conditions call for new solu tions. The assumption would be that subsidies in the early years of railroading were justified, that later regulation and restriction was necessary, and that now new 1971 THE IMPACT OF INTERVENTION 275 subsidies are warranted. We can be reasonably sure that this would be the line because the arguments for relief from taxes, removal of restrictions, and the making of loans or the provision of other sorts of subsidies are frequently made on the basis that older prac tices are outmoded.

The argument from changing circumstances begs the question. The question is whether earlier intervention worked as it was sup posed to. If it did not, as has been shown to be the case with the rail roads, why did it not? Was it be cause of the ineptitude of the in tervention? Or was it because gov ernment intervention, by its very nature, produces such conse quences? The effects of interven tion elsewhere offer a partial an swer to the question. Obvious Results of Intervention The debilitating effects of inter vention on the railroads is not an isolated instance of such effects. My own studies and reading have confirmed for me that it is gen erally the case. Sometimes, the effects of intervention are so di rect in producing the opposite of what was wanted that they are readily apparent. Such has been the case with the New Deal farm programs and the later extensions of them. These programs were supposed to aid the small farmer and to reverse the flow of popula tion from the farms into the cities.

The results have been just the op posite: the benefits have gone, in the main, to large farmers, and the flow of population into the cities was accelerated. The impact of some interven tions have clear and predictable results. For example, the establish ment of price controls with the maximum price below what the market price would be results in shortages. Contrariwise, the sup port of prices above what the mar ket price would be results in sur pluses. When wages are thus sup ported, there is a surplus of labor, i. e., unemployment. The increase of the money supply, other things remaining equal, will result in higher prices. These and other such economic principles can be illustrated with a hundred his torical examples. Some interventions have results that branch off in a variety of di rections, some results being fairly obvious, others more or less ob scure. Such have been the conse quences of government interven tion on behalf of labor unions. The most obvious results are increased unionization, effective strikes, the tying up of industries, higher wages and prices. There are many other less obvious results: the pricing of some products out of the market, the pricing of some 276 THE FREEMAN May workmen out of the market (un employment), the arraying of workmen against workmen in strikes, the political pressures of labor unions for government pro grams that will reduce the avail able labor supply, and so on.

Unseen Consequences Some interventions even appear to have salutary results because so many of their effects are hidden from view. This has frequently been the case with government's increase of the money supply (monetary inflation). Much that is attractive follows from this activ ity. Prices rise; debts contracted earlier can more readily be paid; money is much more plentiful, and a sense of economic well-being may be widespread among the populace. Investments of ready capital ex pand industries and offer higher levels of employment. The conse quences follow in ways that are not usually readily identifiable with the cause. A contraction of the money supply - something that was bound to occur in the fairly short run so long as the monetary expansion had occurred by way of an increase of bank deposits when banks both operated on fractional reserve and men could demand gold for their currency - reverses the above effects and produces what is called a depression. If the money supply is not contracted, the eventual result will be an inflationary level that will make money, and all things ex pressed in it, worthless. But there are numerous intermediate effects of inflation. Inflation discourages saving, because money loses value as it is held. Those who have already saved will have the value of that saving dwindle away. Con tracts expressed in monetary terms are only partially fulfilled.

Government regulation restricts, confines, diverts, focuses, makes inflexible, and alters the course of men's actions in hundreds of ways. Government programs are almost invariably predicated on the notion that a single cause will have· a single and predictable ef f ect. If prices rise, the answer to this, simplistically, is price con trols. But it is not. For there are then shortages of whatever is controlled. Producers turn their prod uction into uncontrolled areas. Energies are diverted into a hun dred channels to evade the re straint. Government regulation can be likened to an attempt to dam a river on a vast and ex tensive plain. Build a dam athwart the path of the river and it will overflow its banks and follow new courses, perhaps many where there was once one. A series of new dams will only be followed by the same results, multiplied once again, most likely. Eventually, it 1971 THE IMPACT OF INTERVENTION 277 will appear that the only way to dam the stream would be to build a dam from mountain to moun tain, though it must be a thousand miles across to accomplish the purpose. In human affairs, such a constriction of the energies of a people is called totalitarianism, and it is this toward which gov ernment regulation and restra.int tend.

The Nature of Government Government regulation fails in the attainment of its purported object - often produces the oppo site result - because of the nature of government, the nature of man, and the nature of economy. The nature of government is, or should be, very clear. It is that body, or those bodies, charged with the exclusive authority to employ force in a given jurisdiction. Force may be employed in two ways upon people. It may be used in support of prohibitions against certain kinds of actions. For ex ample, murder may be-prohibited, and force may be used to appre hend murderers or those caught in the act of attempting it, to hold them in j ail, to bring them to trial, and to mete out punishment to those convicted. Or, force can be used to induce people to act in ways contrary to those to which they are bent. For example, force may be used on railroads to compel them to keep open stations which they would otherwise have closed.

A rather conclusive case can be made that governments can and ought to prohibit certain kinds of actions and punish offenders, a case as conclusive as any is likely to be in social matters. That is, an exceedingly strong case can be made that a body charged with the power to do so is necessary to the protection of life, liberty, and property and with the 'settlement of disputes which arise among men. A similar case can be made that the government so charged must have the power to compel the necessary support from those un der its jurisdiction for the per formance of its tasks. That is, government may collect taxes and may even compel peaceful men to take up arms to aid in the per formance of these legitimate func tions. (Of course, a government may be constitutionally limited as to how it goes about these things.) Where foree Is Wasteful No such conclusive case can be made for the use of government power to induce certain behavior in economic matters. On the con trary, men have quite sufficient inducement in the very nature of things to beha ve economically.

Economy has to do with the fru gal use of the elements of produe278 THE FREEMAN May tion -land, labor, and capital-to provide the goods and services most wanted. Everyman is inclined to do it this way. He is inclined to do as little work as possible to get the job done in the manner de sired, to spend as little as he can to attain the quantity and quality of goods and services sought, and to use as Iittle of his natural re sources as will suffice. Indeed, he is inclined to use most frugally whichever of these are scarcest and to use most prodigally those which are in greatest supply. It is in his interest so to do. Force is superfluous so far as it might be used to compel men to do what they would tend to do anyway by interest and inclina tion. It would not only be superflu ous; it would be positively waste ful, for all the costs to provide the force would be above and beyond those necessary to get the job done.

Of course, governments do not employ force to get men to act in accord with their interests and inclinations. Government interven tion into economy is an employ ment of force to induce men to do what would otherwise be contrary to their interests and inclinations. Even a superficial look at inter ventionist policies shows that this is their character. Governments intervene to induce companies to deal with labor unions, to induce men to join labor unions, to induce lenders to lend money at a lower rate than they could otherwise get, to induce employers to pay more than they would have to do to get employees, to induce com panies to provide services which they would discontinue, to induce landlords to provide facilities at rates which are less profitable than they could get in the market, to induce men to charge more or less than it is in their interest to do. Distorting the Facts Most of the government inter ventions in railroading have been of this character. Government in tervened to compel railroads to deal with unions, to fix railroad rates below the market level, to compel the provision of unprofita ble services, to induce railroads not to compete with one another in significant ways, to induce them to set up certain work rules, to induce them to share their facili ties, and so on, through a story already told.

Men do not cease to pursue their interests when government intervenes; they continue to do that as vigorously as ever. There is a very important difference, however. When men pursue their interests economically, they pro duce and provide the goods and services most wanted with the 1971 THE IMPACT OF INTERVENTION 279 least use of resources. Government intervention changes both what appears to be most wanted and what appears to be the scarcest or most plentiful of resources. For example, when government offered a subsidy for the production of cotton above the market price, it made cotton appear to be in great er demand than it was. When it restricted acreage to be planted to cotton simultaneously, it made land appear to be scarcer than it was. The result was that farmers, who were in a position to do so, devoted much more capital to the production of cotton, thus produc ing more cotton than could be sold at the supported price, hence sur pIuses of cotton.

The setting of a price or rate ceiling below the market price makes it appear that less of a good or service is wanted than actually is the case. This, of course, has happened with rail rates. One of the results has been the declining investment in the railroads. An other has been the reduction of services. Yet another was the meet ing of the real demand for service by newer and other means of transport. If wages are raised above the market price, this gives an ap pearance that labor is in shorter supply than, say, capital, though, in fact, there may be widespread une·mployment. The tendency will be for labor to be replaced by machines, perhaps, at an accel erated pace, or, perhaps, by great er usage of natural resources. To put the matter in the broadest perspective, when government in tervenes in one area, men shift their energies and attention to areas still left free or which may be relatively freer. For example, as the railroads were restricted and restrained, men turned more and more of their attention to the development of trucks, buses, au tomobiles, airplanes, and so forth.

As the commercial uses of these have been increasingly regulated and restrained, the pri vate trans portation devices have been ever more extensively used. Coddling the Criminal There are impacts to interven tion which go beyond just the economic effects, though these are often devastating enough. Over the last several decades interven tion in the economy has been growing and spreading. Govern ment has turned more and more from its protective and prohibitive role toward a role as inducer and regulator. Laws for the protec tion of life, liberty, and property are still on the books in many instances, of course. The police still apprehend violators on nu merous occasions. Juries still try and, as the case may be, convict 280 THE FREEMAN May those charged with such offenses. Beyond this point, however, the use of force to protect the citi zenry has begun to break down. There is a widely expressed view that prisons are only for the re habilitation of criminals, not for their punishment. TheTe' are even those who claim that punishment does not deter the commission of crimes (though some would re strict this view to crimes of pas sion). Once admit these premises, the criminal becomes an object of solicitude, and the use by govern ment of force upon him becomes aggression. This is especially the case when it is also believed that the criminal is a victim of the society in which he has grown up.

For these and whatever other reasons there may be, many of the courts have taken to treating those charged with committing crimes with great solicitude. Their rights are ever more carefully protected in trials. Capital pun ishment has virtually disappeared. Probation after a short period of incarceration is commonplace, and suspended sentences are the order of the day. This has occurred while govern ment's use of force to intervene in economic matters has mounted. Statute books, state and national, are filled with minute and massive iJlterventions ranging from the silly to the near catastrophic. The present writer has never encoun tered arguments to the effect that the threat of punishment will not induce people to pay their taxes, to obtain licenses, to refrain from forming trusts, to plant only the allotted acreage to crops, to obey the rulings of the Interstate Com merce Commission, to accept fiat money in payment of .debts, to pay the minimum wage, to recog nize and deal with the union certi fied by the National Labor Rela tions Board, and so on, and on.

Indeed, it is everywhere apparent that the threat of punishment must induce men to comply with a great maze of laws, many of which clearly run counter to their economic interest. Government as Plunderer In recent decades, crimes of aggressions by individuals and groups have increased much faster than has the population. Such crimes as rape, aggravated assault, intimidation, robbery, and murder have become rampant. If trespass upon property were as strictly defined as it once was, the amount of violations would no doubt be much greater than it is. Intimi datory groups have frequently been permitted to terrorize se lected peoples with impunity. The connections between inter vention in economic activities, on the one hand, and the tendency 1971 THE IMPACT OF INTERVENTION 281 toward the breakdown of tradi tional law and order lie beneath the surface of things and are difficult to ferret out. One of them is the revolutionary thrust which gives impetus to the intervention.

It is the desire to make over American society in an egalitarian fashion, and traditional protec tions of the individual must be broken down for the new society to emerge. Another connection is that the enforcement of the fan tastic array of interventions over burdens government and leaves it weakened for its traditional tasks. Yet another is that the increasing force exercised by government has tended to disintegrate society so that social restraints on aggres sive beha.vior are not as effective as formerly. The impact of intervention, then, is disintegrating in its ef fects upon society, disruptive and diversive in men's efforts at econ omy, interferes with voluntary co operation among individuals and groups, inhibits and redirects in dividual efforts, and is productive of confusion in industrial life. All too often, intervention produces the opposite of what would be wanted, produces an ineffective railroad system rather than a vital one, drives farmers from rural areas rather than making it pos sible for them to make a living, creates unemployment, takes away the value of men's savings, turns them away from serving one an other to taking advantage of one another under the cover of gov ernmental programs. Government intervention begets more govern ment intervention. Just as a dam built across a river on an exten sive plain will result in numerous rivulets which must in turn be dammed, so government interven tion diverts men's energies into the remaining areas of freedom which must, in turn, be reduced in the vain hope that the earlier pro grams can be made to work. When an industry has finally been brought to heel in this fashion, it can no longer effectively perform its tasks. Government may then take over the industry directly or may subsidize it as an intermedi ate step to taking it over. Even now, this denouement is being act ed out with the railroads.

Release Human Energy There is an alternative to inter vention. To see it clearly we must redirect our sights. Government intervention proceeds by using force to induce men to act con trary to their interests. This, men will hardly do, though Draconian measures be applied against them. There is, however, a vast amount of energy to be found in people, energy which is only potential at its inception. A child at play shows 282 THE FREEMAN May how great is the energy available. Parents must have ever remarked that they wished they had only a fraction of the energy the child re leases. The child runs first to this and then to that, whoops and hol lers, invents some game which fas cinates him for a moment, be comes bored quickly and turns to some other diversion. This is hu man energy in its raw state, giv ing the appearance of being boun tiful because it is undisciplined and unrestrained.

The energy potential in man is great for either destruction or construction. No other being on this planet has ever shown the adeptness for destruction that men can do when they put their minds to it. They can burn whole cities, destroy crops, rape, pillage, kill, and lay waste. When they are bent upon construction, they can devise and build such works of beauty and utility as no other creature could even imagine. They can build, heal, transport, provide food and raiment, manufacture, compute, educate, and use their brains and hands in thousands of ways wondrous to behold. Or, they can be so restricted and restrained by force that they neither destroy nor build with any will. Whole populations can be so enslaved or enserfed that their works do not live after them and their lives are little above brute level. Each of these potentialities of man has been fulfilled many times in the brief span of 4,000 years or so of recorded history.

Discipline and Organization Two things are necessary for the vast energy potential in men to be applied constructively. One is for the energy to be released. The other is for it to be disci plined so that it can be effectively applied. There is a major clue to the release of energy in the child at play. The child is following his own bent; he is interested in what he is doing, or, what he is doing interests him. To change this with a young child, it is necessary only to assign him. to some task which he would call work. He will become tired almost at once. The abun dant energy which he was just displaying will quickly disappear. He is no longer interested in what he is doing. Men are like that, too, though "interest" has become something much more extensive and comprehensive than it was for a child. Interest is not simply what gives him immediate pleas ure. He has learned to defer im mediate gratification for expected future gratifications. He works because it is in his interest to do so. He is interested not only in himself but in his wife, his chil dren, perchance his parents, fu ture grandchildren, and a broader 1971 THE IMPACT OF INTERVENTION 283 community which aids and pro tects him. He is interested in his rights and his possessions - his lands, houses, vehicles, and a hun dred and one things which he owns or desires. His energies are readily released in defense of and in pur suit of a multitude of interests.

To release the energies of a man it is necessary to secure to him the fruits of his labor and the pro tection of his possessions. He will not willingly act against his inter ests, nor can he be readily induced to do so. Government intervention does, however, lead him to dissi pate great quantities of energy to protect and advance his interests. Virtually all of this is so much waste. Americans today waste vast quantities of energy either in com plying with government restric tions or finding ways to evade them. Not only that, but some of the regulations positively inhibit the employment of energy. Discipline and its social corol lary, organization, are essential to the constructive employment of energy. The broadened conception of his interests may lead a man to submit himself to discipline. A child may be trained to discipline and direct his energies. So may men in social organizations. Great constructive activities frequently require that men cooperate with one another. This they find ways to do if they are restrained from inj uring one another and are left free to pursue their own interests.

Much of the trouble in America today, as well as in much of the rest of the world, is that many organi zations are arrayed against one another and some are deeply divid ed from within so that rather than facilitating constructive ac tivities they are inhibiting them and dissipating energy in contests. Labor unions pit employees against employers. As American affairs have become more and more politi calized much of the energy of many organizations is devoted to gaining favors for the members, favors of wealth taken from the general populace by taxation. Both force and the possibilities of gain ing such favors must be denied to organizations before they devote themselves to constructive-activi ties once again. The Alternative 15 liberty The alternative to government intervention, then, is individual liberty. It is the release of the vast energies which men contain to constructive purposes. There is much that serves to help discipline man, but an invaluable support of self-discipline is the facility it gives him when he is able to pur sue his interest. There are people today who would like to see pas senger trains serving Americans at large once again. Some of these 284 THE FREEMAN May people believe that the way to achieve this end is to have gov ernment intervene. Yet interven tion contains and diverts the ener gies of a people. It provides pas senger trains at the expense of giving up other uses which people might prefer for their money. If there is a market sufficiently large to warrant passenger trains in America, it is most likely that railroads would provide them if the energies of their personnel were freed from the present confining restraints. If rate control were removed and investors could see clearly once again what was in demand, they would release funds in that direction. So it would be for a great range of goods and services which commer cial establishments can hardly provide because of the restraints upon them.

Government intervention dams up and diverts the energies of the people; freedom releases them to constructive purposes. ~ by CLARENCE B. CARSON Now available as a book l $4.00 clothbound $2.00 paperback (1/3 discount on orders of 5 or more copies) The foregoing article, "The Impact of Intervention," was pre pared as an epilogue for the book. Dr. Carson's entire series on railroads is now available and may be ordered from: THE FOUNDATION FOR ECONOMIC EDUCATION, INC. IRVINGTON-ON-HUDSON, NEW YORK 10533 Grover Cleveland. ROBERT L. HEILBRONER in the in troduction to The Worldly Philos ophers observed that among the great economic thinkers in his books were "a madman, a parson and a stockbroker, a revolutionary and a nobleman, an aesthete and a tramp." The significant trait they shared was curiosity. Last August I had an opportunity to participate in a seminar at FEE. Although none of my fellow seminar partici pants that particular week fitted Professor Heilbroner's more bi zarre categories, the notable curi osity of the philosophers was, I found, lavishly distributed. Many of us had, as teachers, searched for comfortable, noncontroversial positions between the ideological extremes labeled "freedorn" and Mr. Colvard teaches at Clairemont High Scbool in San Diego.

Tell the TRUTH RAY L. COLVARD "equality" or "individualism" and "collectivism." Like Plato, so long ago, we questioned whether or not true democracy must inevitably lead to irresponsible anarchy and aristocracy to privileged oligarchy. Much of our effort that frenzied week at Irvington-on-Hudson was concerned with pinpointing the "good" economics philosophy. A new concept of liberty was suggested by the speaker one afternoon - freedom from pater nalism. That was a· troublesome idea to me. How was it possible to deny the obvious historic merits of the Square Deal, New Deal, and Great Society? Could we dare not to license our government to save American businessmen from for eign competition, not subsidize "infant" industries, not guarantee fair wages for workers, parity for 285 286 THE FREEMAN May farmers, and profits for investors? Could we reasonably expect aver age citizens, without the minis trations of benevolent government, to anticipate the financial hazards of ill-health and old age? This, then, was the crux : Was paternal ism our answer or was it, in grim reality, alienation from initiative and opportunity?

The flow of ideas came rapidly that week at FEE. Fortunately for me a mental rest stop was available in the guise of an op tional classroom session. Here the real students in the seminar had an opportunity to direct more definitive questions to the lecturer, and slow learners, like myself, found time to rescue Adam Smith from the bosom of the Adams family and to determine that the writings of John Stuart Mill were different from those of C. Wright Mills. The poet Horace, I recalled, wrote: "Get money, by fair means if you can; if not, get money." This had been the continuing war cry of those whose hands reach to ward the national treasury. Each President was thrust by them into the role of vault guardian or of dispenser of largess. "After all," one of the seminar participants pointed out, "it's only government money to a President, but it's the life's blood of politics from county seat to Capitol Hill. No politician can withstand the party bosses and pressure groups who consider him 'their' man."

"There was one who could, and did:" the seminar lecturer ob served, "Grover Cleveland." One Version of the Man From the "facts" which had been learned in my U. S. history courses Cleveland had been fat, stubborn, and honest, but no hero. He fathered an illegitimate son. He vetoed veterans' bonus bills. He married a girl half his age. He ordered Federal troops to break strikes. He thought manifest destiny was dead. He was "the stuffed prophet of naked conservatism." The terrible-tempered editor of The Iconoclast, William Cowper Brann, was widely quoted by the "debunkers" school of history: ... Caesar and Napoleon treated the people's representatives with al most Clevelandesque discourtesy; but neither sent a substitute - a hired assassin - to the front to do his fight ing, while he played pinocle for the beer and wallowed around in fourth class bawdy houses with disreputable widows ....

. . . Instead of making the White House the resort of authors, poets, painters, philosophers and scientists, it is the rendezvous of female necro mancers and nigger mascots.

1971 TELL THE TRUTH 287 Integrity and Responsibility Neither scholarship nor orIgI nality is implied by this resume. It is merely a look into a single facet of the Cleveland character, honesty. The historian, Allan Nev ins, concluded his monumental bi ography by stating: Weare surrounded on every hand by leaders who compromise here and waver there. Even the great among them are too often found to have a breaking-point, to be ready to sur render part of an eternal principle in order to obtain a temporary gain. From such leaders it is pleasant to turn to the memory of Cleveland. . . such an example of iron fortitude is better than to have swayed parlia ments or to have won battles or to have annexed provinces. The Cleveland dimensions of bravery in his stand on personal integrity and public responsibility makes him a man for all seasons. Without the brilliance of Jefferson or the mystique of Lincoln his in domitable will made him their peer. Cleveland, tongue in cheek, no doubt, said: "It is no credit to me to do right. I am never under any temptation to do wrong." That ironic witticism, more than any display of righteous anger, gives us a glimpse of the sensitive hu man behind the bold public figure.

His enemies were vocal and color ful. "Pitchfork Ben" Tillman ranted: "Send me to Washington, and I'll tickle Cleveland's fat ribs with my pitchfork!" A Midwest ern "Silverite" shouted: "I detest him so much I don't even think his wife is beautiful." Except for a catastrophic phys ical crisis Grover Cleveland's uni versal order to his supporters was, "Tell the Truth." His illness and the removal of malignant palate and upper jaw during the summer of 1892 remained a virtual secret from the public for a quarter cen tury. About this tragic event Cleveland probably lied more than he did on all other issues through out his lifetime. He told the truth "without fear or favor," but as the Indianapolis Sentinel stated in 1896: . .. No president was ever so per sistently and malignantly lied about as Grover Cleveland has been. The judgment of thousands of men has been warped by whispered stories that are too silly to discuss.

The Dangers of Paternalism The historic lessons of econom ics and politics must be re-learned by each generation. Cleveland could teach them only for his time. The market, not government, he held, must determine economic di rection. Paternalism by govern ment destroyed the initiative of the people. The lessons of paternalism ought to be unlearned and the better les288 THE FREEMAN May son taught that while the people should patriotically and cheerfully support their Government, its func tions do not include the support of the people .... Demands for pensions by profes sional patriots during Cleveland's administrations are paralleled to day, to a remarkable degree, by "Welfare Rights" advocates. Cleve land signed far more private pen sion bills for Civil War veterans and their dependents than he ve toed. The significance of his heroic stand is that no earlier President had vetoed one. Cleveland's vetoes were for benefits to dead pension ers, to widows long ago remarried, to wartime deserters, and to indi viduals who would have enlisted if the war had not ended so soon.

One bill which he vetoed demand ed a pension for all Union soldiers on the grounds that each one had come out of the war physically weaker than he had entered it. He virtually stood alone in saving the national treasury from the greed of the Grand Army of the Repub lic. The collective strength of po litical, special interest groups was not great enough to defeat him. Warnings Against Collectivism Cleveland's warning against col lectivism is timely now. Modern economists like Robert L. Heil broner and Kenneth Galbraith point out that the "communism" of wealth and capital already is here. Businessmen are now openly pressuring for more government investments in aircraft, railroads, and securities. Socialism is widely advocated by industrialists, entre preneurs, and educators under the euphemism, "social capitalism." Cleveland spoke to the nation at the end of his first term: Communism is a hateful thing and a menace to peace and organized government; but the communism of combined wealth and capital, the out growth of overwhelming cupidity and selfishness, which insidiously under mines the justice and integrity of free institutions is not less dangerous than the communism of oppressed poverty and toil, which, exasperated by jus tice and discontent attacks with wild disorder the citadel of rule.

In today's economic j argon, when national wealth is measured in "gross national cost" and the na tion's money evaluated in terms of "credit," Cleveland's warning against communism may seem ata vistic, just as a superficial analy sis of his decision to return to a sound dollar may appear as a Pyrrhic victory. Nearly a billion dollars in fiat money and Civil War greenbacks in commercial channels provided an endless nonreversible conveyor belt for moving Ameri can gold into European banks. Cleveland called a hostile Congress into special session. "Fiat" was not and never could be equivalent 1971 TELL THE TRUTH 289 to intrinsic value. He said, "The people of the United States are en titled to a sound and stable cur rency, to money recognized as such on every exchange and in every market of the world." In spite of William Jennings Bryan's emo tional counter appeal for the "un numbered throng," "work-worn,"

and "dust-begrimed," Cleveland and the nation won. The Silver Purchase Act was repealed. The battle for sound money was won for his generation. As reported by The N ew York Times: ... at that moment, as often before, between the lasting interests of the nation and the cowardice of some, the craft of others, in his party, the sole barrier was the enlightened con science and iron firmness of Mr. Cleveland. The Democratic Party in 1896 repudiated his leadership. The paradoxical Republican triumph of William McKinley was Cleveland's last great victory. The Baltimore News stated it succinctly. When the history of the present time comes to be seriously written, the name of the hero of this cam paign will be that of a man who was not a candidate, not a manager, not an orator; the fight which has just been won was made possible by the noble service of one steadfast and heroic citizen, and the crowning achievement of his great record ....

It is impossible to overestimate the value of the service Grover Cleveland has done through his twelve years of unswerving fidelity to the cause of honest money. Here I rest my thesis. I am grateful to the member of FEE's staff whose answer sparked my curiosity. I think I understand the character of Grover Cleveland more fully now than I did several months ago. I think I also under stand something more about FEE. I would attempt to excuse the dull ness of my perception except for a highly comforting observation in Leonard E. Read's Talking to My self: The only thing new about an idea is its newness to anyone of us. And it is never new prior to the point of apprehension - that is, until it has hatched and, thus, become one's own.... Getting results on behalf of the freedom philosophy here and now, in this context, is any shift toward en lightenment that takes place in a lifetime. Patience! ~ I AM OFTEN ASKED why I left Eng land and the National Health Serv ice to come to this country. There is no simple answer like "money,"

"opportunity," "politics," or "cli mate," but if I describe the con ditions under which I found my self practicing medicine in Eng land, the reader m.ay find his own answers. When I qualified as a physician and surgeon, the NHS had been established for five years and there was virtually no private practice of medicine in England. The prac tice of medicine in wartime did not offer any relevant basis for comparison with the system I found myself involved in; nor did the practice of medicine before Dr. McNeil came from England several years ago to the private practice of medicine in the United States. His article is reprinted by per mission from the January, 1971 issue of the magazine, Private Practice. 290 Why I Left England EDWARD L. McNEIL, M.D. 1939 as, in retrospect, that was another era about which the older practitioners were reluctant to talk. (I naturally suspected the old system of private practice wasn't good.) My only knowledge of private practice in the U.S.A. was from a small number of patients and friends who had been there and reported that medical care was very expensive and that one had to establish credit at a hospital before being treated or admitted.

It was not until I had been in my own solo practice in Yonkers, New York, for about two years that I realized the tremendous ad vantages of the private practice system. As a student I had always been more inclined toward the surgical disciplines, so my first "house job" was as House Surgeon in a Lon1971 WHY I LEFT ENGLAND 291 don hospital with two surgical wards, 36 male beds, and 36 fe male beds. There was also a small er ward of about 10 beds which was used to isolate clean ortho pedic cases and serve as a spare ward for overflows of one or the other sex. There was rarely an empty bed and I had the unpleas ant task of turning down at least two out of three requests by GP's for emergency admissions. Selec tive surgery cases had their ad missions arranged through the waiting lists compiled by OPD clinics. I later learned what it was like to be a GP trying to have a patient admitted for an emergency condi tion, telephoning five or six dif ferent hospitals without success, then, in frustration, sending the patient to the emergency depart ment of a hospital that had al ready turned down a request for admission, and hoping for the best.

In later years, London had what was called the Emergency Bed Service to which a GP could direct his requests for admission and they would call all the hospitals for him, then force the hospital they considered most able to adapt to an extra admission to take the patient. (This system was fine in theory, but in practice it would often take the EBS six to twelve hours to find a bed, and some patients could not wait that long.) As the only house surgeon for at least 80 surgical patients, in cluding some in the pediatric ward, I worked very hard but appreci ated the technical experience which I crammed into six months. Within two months of qualifying, I was performing laparotomies in the middle of the night, relying entirely on my own diagnostic abilities, relying on the house phy sician or obstetric house surgeon (also newly qualified) to give the anesthetic, and relying on only one scrub nurse for my surgical assist ance. (Before 5 P.M. I did have an Indian surgical registrar - a senior resident who was an ex cellent surgical tutor - to guide me, and the two attending sur geons did "rounds" every other day and a rushed "round" after their operating sessions.) Clinic Y5. G. P.

What humility I had as a "new boy" receded very quickly with the volume of experience, and I soon found myself agreeing with the other house staff that those doc tors out there in GP land had minimal medical knowledge and no manners. Fancy an experienced GP sending a patient to the Cas ualty Department with a scribbled note saying, "Please see and treat," with no history noted or any attempt at diagnosis; and such bad manners, when I had already 292 THE FREEMAN May told him on the telephone that I didn't have any empty beds and we had seven extra beds up in the corridors and down the middle of the ward! Assisting the Chief and the Registrar at the surgical clinic also put me in the position of ad vising GP's with decades of ex perience about the diagnosis and management of their patients. The conceit of youth! At the clin ics, the Chief would see the least number of patients and those most potentially interesting. The Reg istrar would share the remainder with the house surgeon. From the patients' point of view, it was pot luck whether they saw a real sur geon or me.

(Only a few years later, I found myself as a GP referring cases to the clinic and waiting a few months for a letter from a newly qualified pipsqueak house surgeon telling nle that the diagnosis had been considered to be "so and so," "such and such" had been done, and the patient was referred back to me on "such and such" medi cation.) I quite naturally came to the opinion that a newly qualified phy sician was at the peak of nledical knowledge and know-how and there after it was a steady decline in his knowledge and ability. I took com fort in the excellence of my medi cal training but was repeatedly surprised at meeting situations I had not been taught about and finding patients didn't all respond to treatment as they should. Some thing seemed wrong with the system. Little Prospect for Advancement as a Surgeon As previously mentioned, I was surgically inclined and considered I would eventually become a sur geon. A look at the prospects of surgical colleagues who were five or six years ahead of me in the race made me realize I might as well forget it. I knew many who had spent over five years in the specialty only to quit and go into general practice because the chances of becoming an attending surgeon (known as a Consultant) were so slim. A hospital of over 200 beds would only have one or two surgeons of consultant status and often the same surgeons would cover other hospitals as well. The only vacancies for consultantship occurred when a surgeon died or retired at the age of 65.

The situation in 1956 was that for every vacancy there would be about 70 applications for the post, each applicant having had con siderable experience in surgery, holding an FRCS and many also having a Masters Degree in Sur gery. Many of the vacancies would be in localities one wouldn't 1971 WHY I LEFT ENGLAND 293 rationally choose as a. place to live and bring up a family. (1 have heard that the situation has altered over the last few years and the competition for the posts is not as frustrating. This is because so many of the trained surgeons have emigrated. For many years, over 500 doctors were leaving the United Kingdom each year. Last year approximately 400 left.) After my first surgical job, 1 became the house physician in the lovely Wiltshire market town of Salisbury near to Stone Henge. I enjoyed the experience and the six days off I received in the six months. One of the doctors in the hospital had just returned from a residency in the U.S.A., and from him I caught a glimmer th,at there were other ways to practice hos pital medicine - and combine it with general practice.

However ,my roots were in England and in its system, and one year of experience was not enough to say it didn't suit me. I entered general practice in a working class suburb of London in close proximity to where I had been the house surgeon. It did not take me long to question the attitudes and infallibility of the hospital-based doctors when I was wearing the GP's shoes. If I visited my pa tients who had been admitted to hospital on myoId 'wards, I found I was less than welcome. Other GP's informed me that I would be considered to be interfering if I did visit them. To supplement my income and get my foot in the door of a hos pital, I obtained a post as clinical assistant in the OPD of the Royal National Throat, Nose, and Ear Hospital in London. There, at least, I was able to order some follow-up studies and see some X-rays. One of my duties in the ENT clinic was to help re-evaluate those children on the waiting list to have their tonsils removed, to see if they should be moved up the list or onto the list with less priority. S'ome had been on the list six years! (At the time I left, the theoretical waiting time on the day the child's name went on the list was 10 years. This reckon ing was with the assumption there would be no modification of pri orities, no child would leave the area, and no tonsils would recover without surgery.) Make the Patient Wait An ex-minister of health, The right honorable J. Enoch Powell, admitted in his book, Medicine and Politics, that the only effective method for putting a brake on the unlimited demand for medical services was making patients wait for services. Many elective SUf294 THE FREEMAN May gical procedures such as chole cystectomy and herniorrhaphy have a waiting list for admission.

One to two years is not an un common time to wait for these procedures. The "novel" method of using "payment for services" be it only a small price - has been little used as a brake on unlimited demand for services. Some years ago, when prescrip tion costs were soaring and the NHS was under a greater financial strain than usual, a token charge of approximately 25 cents was placed on each prescription in stead of the medication being "free." During the six months following the initiation of this charge, the number of prescrip tions decreased by almost 30 per cent. With an election in the of fing, the government in power at the time interpreted this decrease as meaning that 30 per cent of the patients receiving a prescription from a doctor could not afford 25 cents (the cost of one-third of a packet of cigarets)! The charge was then discontinued. Much Hard WorkOften Wholly Unnecessary To return to the subject of my year in general practice, I was already used to working hard and long so the volume of patients seen in the office and on house calls didn't bother me too much until I realized that at least one quarter of the patients needn't have come to see me at all on the occasion on which they did. The patient load fluctuated too closely with the midweek soccer games being played at home and with the preholiday seasons.

Certificates for sickness absence (after the fact) were always tricky and frequent. If I hinted that I suspected some hanky panky, the patient usually stuck to the story that he had come to my office but there were too many patients waiting and he felt too sick to sit there and wait. I usu ally handled the situation by giv ing the patient the certificate and saying, "Of course, I'm sure YOU were sick but some people use my certificates improperly and they may get me into lots of trouble." Not having any X-ray facilities in the office, less than meager lab equipment, and little or no time for work-up tests, any patient seen who needed those tests had to be referred to the hospital clin ics. A very few simple tests could be referred directly to the hospital lab (mainly those concerned with the diagnosis and treatment of TB) but anything approaching a blood chemistry, an EKG, or an X-ray could not be ordered by the GP directly, so the patient had to be referred to the appropriate clinic for those doctors running 1971 WHY I LEFT ENGLAND 295 the clinic to decide on the tests and order them.

The result of this angle of the system, plus the difficulty of ob taining a hospital bed for acute conditions such as myocardial in farction, pneumonia, and stroke (especially stroke), meant that a GP treated many of these condi tions in the patient's home with out any of the ancilliary diagnos tic aids which would be routine in a hospital. I recognized the satis faction of "curing" a condition with minimal help of diagnostic equipment and lab tests but there was always that sneaking suspi cion at the back of my mind that the patient may not have had the condition I thought I had cured. Without this confirming knowl edge, there was no testing of one's diagnostic and therapeutic ability and so improving one's effective ness as a physician. With my pres ent knowledge of cardiac ar rhythmias which can be prevented or ameliorated by information only to be gained from ancilliary equipment, I shudder at the risks the patients ran under my care.

Toward the end of my year in general practice it became clear to me that if I remained a GP under the NHS, I would be prac tising medicine at an unsatis factory level both from the point of view of my own lack of oppor tunities to improve my abilities, and from the point of view of my patients, as there seemed few ways of improving the quality of medi cal care being given. The urge to see the practice of medicine on the other side of the Atlantic in creased so that when the sub-dean of my medical school asked me if I would be interested in a surgical residency in New York, I was on the boat in less than a month. A Second Look After a year in New York which opened my eyes to the tremendous opportunities here and the ad vantages of private practice, I returned to England for a time to clear up personal matters and to see if I had been mistaken about the NHS. I spent a year as Cas ualty Surgeon in a North Devon hospital in a charming small town from which part of. the English fleet sailed to meet the Spanish Armada. My pay ($45 a week) was three times as much as when I was a house surgeon and I was given a nicely furnished apart ment, but the bureaucratic ad ministration of· the hospital was irksome and wasteful.

The GP's in the area had de cided advantages over those in the metropolis and other big cities, insofar as they. held appointments as surgeons, internists, and anes thetists on the hospital staff. How ever, as these men retired or died, 296 THE FREEMAN May their posts were filled with full time specialists so the future as regards becoming an attending surgeon or a GP with hospital pri vileges was the same as else where in the country. Although the hospital was small (less than 200 beds) there was a veritable army of administrative assistants. Before nationalization, there had been a maintenance employee who looked after the heating system, lighting, and me chanical appliances, with occasion al help from outside private firms. At the time I was there, they had a chief plumber, electrician, heat ing engineer, and other special ists, all under a chief maintenance officer, all complete with offices, desks, and secretaries, and in ventory clerk. The hospital sec retary also had a secretary. A few miles away was the governing hos pital of the area, with a large administrative staff to pass on or ders to the hospitals in the group; and, of course, they were passing on orders from the Ministry of Health in London.

The town badly needed a new hospital with a modern building, and the chance of one being built was nil. Since the inception of the NHS in 1948, only three new hospitals have been completed in the whole country. I would be sur prised if there were any counties in the U.S.A. that have not had at least one new hospital since 1948. Within two years of returning to this country, Twas in private practice and on the staff of three hospitals, and enjoying the im mense amount of post-graduate education available in those hos pitals. My office was equipped in a manner that would have been only a dream in England. The advantages of having a lab, X-ray equipment, physiotherapy equip ment, an ERG machine, and an examining table that was designed to allow proper posturing of the patient, were great luxuries to me. They allowed me to offer serv ices to my patients that to obtain under the NHS, they would have had to sh ume from clinic to clinic and hospital to hospital, hardly ever knowing who the doctor was who examined them.

I have been here permanently for 13 years now and I often won der what sort of a physician I would be now if I had remained in England. A few years ago, my old medical school sent a list of all the old students. Reading down the list and noting their present addresses, I counted that more than half of those that grad uated in my class had left England or the practice of medicine. Others must have thought as I did. ~ Speak for Bourself.John LEONARD E. READ MILLIONS of Americans realize that our politico-economic situa tion is askew. Yet, few are speak ing their minds, that is, consulting the conscience and then saying openly and honestly what they truly think. They leave the task of speaking out to organizations and professionals and, by so doing, gain a false sense of discharging their social responsibility. My pur pose here is to examine this error. The limited role of organiza tions, when delving into politico economic affairs, is rarely recog nized by their supporters and all too seldom ,by the persons in charge of operations. Unless these limitations are known, such in stitutions must head down the wrong road - their efforts ren dered useless. Happily, the poten tialities for usefulness are tre mendous, once the limitations are known.

An experience may help to illus trate my thesis. I had been asked to a southern city to lecture to some fifty'invited guests. Among them was a brilliant, hard-headed business executive - more or less unfamiliar with our efforts. As the three-hour lecture and discussion session drew to a close, he asked in all sincerity, "I am sympathetic with your philosophy, but what is it you really want?" My reply: "You!" Obviously puzzled, he asked, "You mean you are not looking for money?" "No. This is not essentially a money problem but one of brains - if I may use such loose phras ing."! "Well, you can buy brains with money, can't you?" "Not the kind I am talking 1 Of course, organizations have to be financed. I, however, believe no more in "looking" for money than "reaching" for converts. If the work is needed, and well enough done, adequate financing will be volunteered by those who value the efforts.

297 298 THE FREEMAN May about. The intellectual qualities required to cope with the social problems we have been discussing can no more be coaxed or cajoled into existence by money than can friendship or patriotism." Overspecia Iization This executive, dedicated to his own business and typical of count less thousands of highly positioned individuals, is carrying the prac tice of specialization a bit too far. He has been assuming that the politico-economic waywardness of the U.S.A. can be corrected with out him, that organizations can be structured to do the job, that he can give them some financial support, that there is nothing else to it! His only responsibility is check writing. When financial backers believe this, and when those who establish and operate organizations enter tain notions that they are cast in the role of helmsmen to steer the ship of state, the inevitable result is failure. Better that there be neither supporters nor organiza tions for this wholly unrealistic view of how improvement can be achieved. This assessment is why I replied "You" to the business executive's question. For it is you, whoever you are, not organiza tions, to whom we must look for solutions to politico-economic problems.

First, let us recognize what or ganizations cannot do. My critical conclusion stems from intimate experiences spanning 44 years: secretary of two small chambers of commerce, a decade with the National Chamber, general man ager of the country's largest cham ber, a brief spell as executive vice president of the National Indus trial Conference Board, and the past 25 years as the operating head of FEE. I have learned about the limitation of organizations the hard way: organizational voices broadcast to the public or at legis latures go pretty much unheeded, claims to the contrary notwith standing. Might as well howl at the moon.2 There is reason aplenty for the indifference and apathy that greets organizational pronouncements. Organizations designed to deal with the politico-economic realm are typed. They mayor may not truly stand for any particular interest or doctrine, but they at least pretend to do so. This has been said of FEE no less tha~ of ADA. Fence straddlers or oppo nents, the ones these eager and 2 Some readers, observing the enor mous influence of labor unions, for in stance, may think this conclusion in error. Merely bear in mind that my re marks are directed only to the process of advancing enlightenment, not to the techniques of coercion, violence, warfare.

In the latter case, the more troops, the more likely is "victory."

1971 SPEAK FOR YOURSELF, JOHN 299 misdirected organizations "try to reach," heed them not. Why? Be cause these organizations are sus pected of having an axe to grind! There is, moreover, a compel ling reason why pronouncements ground out by committee proce dures - a common organizational feature-deserve no hearing. Hav ing, on one occasion, 200 commit tees in my organization, leads me to share the harsh criticism lev eled at the process by Leo Tolstoy: From the day when the first mem bers of councils placed exterior au thority higher than interior, that is to say, recognized the decision of men united in councils as more im portant and more sacred than reason and conscience,. on that day began the lies that caused the loss of mil lions of human beings and which continue their unhappy work to the present day. Mindless Organizations Reason and conscience originate in and find expression only in and through you or other discrete in dividua.ls. Committee resolutions or organizational positions, on the other hand, are the outcroppings of men united in council. As a rule, they represent whatever com promises are necessary to gain majority acceptance. These com promises are but stabs in the dark aimed at a position not too dis agreeable and, in consequence, they form an amalgam or pot pourri substantially divorced from reason and conscience. 3 Once we recognize that our so cial waywardness stands no chance of improvement, let alone correc tion, unless reason and conscience come to the rescue, and when we see that these qualities of the in tellect have their source only in you, then it logically follows that you must speak for yourself. Not FEE! Not any organization! YOU!

Just before I began this trea tise, two illuminating examples of you in action came to my atten tion. The first was from a college president, a man of unusual in sight and understanding. He sent along an article of his that was about to be published. In this ar ticle he had broken his silence on our politico-economic dilemma; this was an honest, forthright ex pression of his insights and re actions. Integrity glowed through every word of it! Here we have reason and conscience applied worth more than all the committee resolutions ever written. Who knows! Perhaps others will follow his exemplary conduct. If they do, we will witness a turn toward a sound economy. 3 For a treatise of this, see the chap ter, "Appoint a Committee" in my Any thing That's Peaceful (lrvington-on Hudson, N. Y.: The Foundation for Eco nomic Education, Inc., 1964), pp. 89-107.

300 THE FREEMAN May The second has to do with a cliche that has been thrown in our face for the past 40 years: "If socialism is so bad, as you folks claim, why does it work so effec tively in Sweden?" We have known all the time that socialism has never worked in Sweden; indeed, we know that it can never work anywhere. But try to prove it! It took a you to do it, in this in stance an individual on the other side of the ideological fence. The celebrated Swedish socialist, Gun nar Myrdal, remarked, "The or ganized welfare state has gone mad."4 You Must Decide Suppose FEE had been on TV all of these years and had repeat edly broadcast these very words. Effect? Probably the opposite of that desired. But let the renowned Dr. Myrdal make the acknowledg ment and we can cite an authority on how Swedish socialism is not working. Having, at least to my satisfac tion, settled upon you with your reason and conscience as the sole source of any effective change for the better, it is plain why we at FEE have, over the years, turned a deaf ear to the. countless pleas 4 See "White Collar Strike Forces Swedes to Question Welfare State's Fu ture." The New York Times, February 26, 1971, p. 3.

publicly to speak for you. Over and over again: go on TV, speak over the radio, get your works in the Reader's Digest, sell the masses, reform the heretics, set the politicians right, and so· on! And we say in reply, "Speak for yourself, John!" Well, where does this kind of an attitude leave FEE? What re mains for us to do? Actually, a task bigger than we can ever ade quately perform, a field with pos sibilities and challenges unlimited. What can that be? Rendering a service to YOU! Division of labor - specializa tion - does, in fact, apply here but caution must be exercised lest per sonal responsibility be lost in some subdivision. Responsibility for a society featuring freedom of choice - freedom to create, to produce, to exchange, the right to the fruits of one's own labor, limit ed government, along with moral and spiritual antecedents - can no more appropriately be delegated than can responsibility for self.

Your society is no less your prob lem than is your own life and wel fare, thus your social responsibil ity can be discharged only by thinking for self and speaking for self. The requirement, I repeat, is you! What goes on in society - good, bad, or indifferent - has its origin in you. It follows that you must 1971 SPEAK FOR YOURSELF, JOHN 301 assume responsibilities for what ever delegating is done. What sort of thing can you appropriately as sign to others? Not your thinking - which is nontransferable -nor your speaking - which should re flect your convictions. Such as signment is alienation, a divorce ment from one's own responsibili ties.What then? Not you or I or anyone else can ever go it alone in the freedom philosophy, for it is as broad as wisdom and deep as understandingL Thus, everyone of us requires helpers. It is there fore appropriate to delegate to others such chores as befits one's own requirements: the gathering of facts and ideas, searching for the best there is in ideals and moral goals, and related aids. In a word, it is the leg work, as we say, that can appropriately be del egated, as when one selects a tutor or teacher.

A Service Role FEE's role is of this sort, that is, FEE is not an institutional spokesman nor an organization trying to "reach" anyone. Rather, ours is, one might say, no more than an agency offering such services as you may think of value in your own search and personal growth. This and nothing more! Once we who labor within such institutional frameworks realize our humble place in the total scheme of things, then countless potentialities burst into view. The opportunities for achievement can now be seen as limitless which is by way of saying that the pur suit of excellence is a road with out end. Instead of playing the utterly futile game of trying to "reach" others, we can concen trate on getting enough into our own· mentalities and improving our services to the point where others will reach for us. And, by the way, we have a fair means of measuring how well we are doing: the extent to which we can, at any given time, look up to those who once looked up to us. The excel lence of a teacher can be judged by the students who finally excel him. You find it useful to reach for us now and, who knows, we may soon be reaching for you!

All of this is more than likely when enough individuals heed the admonition, uSpeak for yourself, John." ~ Downward Price Flexibility and Economic Growth GARY NORTH It would appear that the rea sons commonly advanced as a proof that the quantity of the cir culating medium should vary as production increases or decreases are entirely unfounded. It would a,ppear also that the fall of prices 'proportionate to the increase in productivity, which necessarily follows when, the amount of money remaining the same, pro duction increases, is not only en tirely harmless, but in fact the only means of avoiding misdirec tions of production. F.A. HAYEK, Prices and Production, p. 105 302 ECONOMIC GROWTH is one of the chief fetishes of modern life. Hardly anyone would challenge the contemporary commitment to the aggregate expansion of goods and services. This is true of so cialists, interventionists, and free enterprise advocates; if it is a question of "more" as opposed to "less," the demonstrated prefer ence of the vast bulk of humanity is in favor of the former.

To keep the idea of growth from becoming the modern equivalent of the holy grail, the supporter of the free market is forced to add certain key qualifications to the general demand for expansion. First, that all costs of the growth process be paid for by those who by virtue of their ownership of the means of production gain ac cess to the fruits of production. This implies that society has the right to protect itself from un wanted "spill over" effects like pollution, i.e., that the so-called social costs be converted into pri vate costs whenever possible.! Sec ond, that economic growth be in duced by the voluntary activities of men cooperating on a private 1 Cf. R. H. Coase, "The Problem of So cial Cost," The Journal of Law and Eco nomics, III (Oct., 1960). pp. 1-44; C. R. Batten, "The Tragedy of the Commons," THE FREEMAN (Oct., 1970). Mr. North is Secretary of Chalcedon. Inc., a nonprofit Christian educational organization.

and a Ph. D. candidate at the University of California, Riverside.

1971 DOWNWARD PRICE FLEXIBILITY AND ECONOMIC GROWTH 303 market. The state-sponsored proj ects of "growthmanship," espe cially growth induced through in flationary deficit budgets, are to be avoided. 2 Third, that growth not be viewed as a potentially un limi ted process over time, as if resources were in unlimited sup ply.3 In short, aggregate economic growth should be the product of the activities of individual men and firms acting in concert accord ing to the impersonal dictates of a competitive market economy. It should be the goal of national gov ernmen ts only in the limited sense of policies that favor individual initiative and the smooth opera tion of the market, such as legal guarantees supporting voluntary contracts, the prohibition of vio lence, and so forth. Monetary Policy The "and so forth" is a constant source of intellectual as well as political conflict. One of the more heated areas of contention among free market economists is the is2 Colin Clark," 'Growthsmanship': Fact and Fallacy," The Intercollegiate Review (Jan., 1965), and published in booklet form by the National Association of Man ufacturers. On the dangers of govern ment-sponsored growth, see also Murray N. Rothbard, Man, Economy and State (Princeton: Van Nostrand, 1962), II, pp. 837 £f.

a Gary North, "The Theology of the Exponential Curve," THE FREEMAN (May, 1970) . sue of monetary policy. The ma jority of those calling themselves free market economists believe that monetary policy should not be the autonomous creation of voluntary market agreements. In stead, they favor various govern mental or quasi-governmental poli cies that would oversee the creation of money and credit on a national, centralized scale. Monetary policy in this perspective is an "exog enous factor" in the marketplace - something that the market must respond to rather than an inter nally produced, "endogenous fac tor" that stems from the market itself. The money supply is there fore only indirectly related to mar ket processes; it is controlled by the central governments acting through the central bank, or else it is the automatic creation of a central bank on a fixed percentage increase per day and therefore not subject to "fine-tuning" oper ations of the political authorities.

A smaller number of free mar ket advocates (myself among them) are convinced that such monopoly powers of money crea tion are going to be used. Power is never neutral; it is exercised according to the value standards of those who possess it.4 Money 4 F. A. Hayek, The Road to Serfdom (University of Chicago, 1944), is by far the best· treatment of the unneutral na ture of state planning boards.

304 THE FREEMAN is power, for it enables the bearer to purchase the tools of power, whether guns or votes. Govern ments have an almost insatiable lust for power, or at least for the right to exercise power. If they are granted the right to finance political expenditures through def icits in the visible tax schedules, they are empowered to redistrib ute wealth in the direction of the state through the invisible tax of inflation. 5 Money, given this fear of the political monopoly of the state, should ideally be the creation of market forces. Whatever scarce economic goods that men volun tarily use as a means of facilitat ing market exchanges - goods that are durable, divisible, transport able, and above all scarce - are sufficient to allow men to cooper ate in economic production. Money came into existence this way; the state only sanctioned an already prevalent practice. 6 Generally, the two goods that have functioned best as money have been gold and silver: they both possess great 5 Murray N. Rojhbard, "Money, the State, and Modern Mercantilism," in Hel mut Schoeck and James Wiggens (eds.), Central Planning and N eomercantilism (Princeton: Van Nostrand, 1964), PP.

140-43. 6 Ludwig von Mises, The Theory of Money and Credit (New Haven, Conn.: Yale University Press, 1953; reprinted 1971 by the Foundation for Economic Education), pp. 97-123. historic value, though not intrin sic value (since no commodity pos sesses intrinsic value).7 Banking, of course, also provides for the creation of new money. But as Professor Mises argues, truly competitive banking - free bank ing - keeps the crea tion of new credit at a minimum, since bank ers do not really trust each other, and they will demand payment in gold or silver from banks that are suspected of insolvency.8 Thus, the creation of new money on a free market would stem primarily from the discoveries of new ore deposits or new metallurgical tech niques that would make available greater supplies of scarce money metals than would have been eco nomically feasible before. It is quite possible to imagine a free market system operating in terms of nonpolitical money. The prin ciple of voluntarism should not be excluded, a priori, from the realm of monetary policy.

Sovereignty I Efficiency,Catastrophe There are several crucial issues involved in the theoretical dispute between those favoring central ized monetary control and free market voluntarists. First, the 7 Gary North, "The Fallacy of 'Intrin sic Value'," THE FREEMAN (June, 1969). 8 Ludwig von Mises, Human Action (New Haven, Conn.: Yale University Press, 1949), pp. 440-45.

1971 DOWNWARD PRICE FLEXIBILITY AND ECONOMIC GROWTH 305 question of constitutional sover eignty: which sphere, civil gov ernment or the market, is respon sible for the administration of money? Second, the question of economic efficiency: would the plurality of market institutions interfere with the creation of a rational monetary framework? Third, and most important for this paper, is not a fundamental requirement for the growth of economic production the creation of a money supply sufficient to keep pace, proportionately, with aggregate productivity? The constitutional question, his torically, is easier to answer than the other two. The Constitution says very little about the govern ing of monetary affairs. The Con gress is granted the authority to borrow money on the credit of the United States, a factor which has subsequently become an engine of inflation, given the legalized posi tion of the central bank in its activity of money creation. The Congress also has the power "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures" (Article II, Section 8).

Furthermore, the states are pro hibited to coin money, emit bills of credit, or "make any Thing but gold and silver Coin a Tender in Payment of Debts" (Article II, Section 9). The Constitutional Question The interpretation of these pas sages has become increasingly statist since the 1860's. Gerald T. Dunne describes his book, M one tary Decisions of the Supreme Court, in these terms: "This work traces a series of decisions of the Supreme Court which have raised the monetary power of the United States government from relative insignificance to almost unlimited authority." He goes on to write: "... the Founding Fathers regard ed political control of monetary in stitutions with an abhorrence born of bitter experience, and they seri ously considered writing a sharp limitation on such governmental activity into the Constitution it self. Yet they did not, and by "speaking in silences" gave the government they founded the near absolute authority over currency and coinage that has always been considered the necessary conse quence of national sovereignty."9 The great push toward centrali zation came, understandably, with the Civil War, the first truly mod ern total war, with its need of new taxes and new power. From that point on, there has been a continual war of the Federal gov ernment against the limitations 9 Gerald T. Dunne) Monetary Decisions of the Supreme Court (New Brunswick, N. J.: Rutgers University Press, 1960), preface.

306 THE FREEMAN May imposed by a full gold coin stand ard of money.l0 It is all too clear ly an issue of sovereignty: the sovereignty of the political sphere against that of individuals operat ing in terms of voluntary economic transacti ons. The Matter of Efficiency The second question is more difficult to answer. Would the plurality of monetary sovereign ties within the over-all sovereignty of a competitive market necessari ly be less efficient than a money system created by central political sovereignty? As a corollary, are the time, capital, and energy ex pended in gold and silver mining worse spent than if they had gone into the production of consumer goods? In the short run and in certain localized areas, plural monetary sovereignties might not be com petitive. A local bank could con ceivably flood a local region with unbacked fiat currency. But these so-called wildcat banking opera tions, unless legally sanctioned by state fractional reserve licenses (deceptively called limitations), do not last very long. People discount 10 Paul Bakewell. a lawyer who has specialized in the history of monetary law in the United States, has chronicled this warfare in What Are We Using for Money? (Princeton: Van Nostrand, 1952) and 13 Curious Errors About Money (Caldwell, Idaho: Caxton, 1962).

the value of these fiat bills, or else make a run on the bank's vaults. The bank is not shielded by polit ical sovereignty against the de mands of its creditors. In the long run it must stay competitive, earn ing its income from services rather than the creation of fiat money. With the development of modern communications that are almost instantaneous in nature, frauds of this kind become more difficult. The free market is astoundingly efficient in communicating knowl edge. The activity of the stock market, for example, in' response to new information about a gov ernment policy or a new discovery, indicates the speed of the transfer of knowledge, as prices are rapid ly raised or lowered in terms of the discounted value that is ex pected to accrue because of the new conditions. ll The very flexi bility of prices allows new infor mation to be assimilated in an economically efficient manner.

Why, then, are changes affecting the value of the various monetary units assumed to be less efficiently transmitted by the free market's mechanism than by the political sovereign? Why is the enforced 11 The best book on the free market and knowledge transmission is Henry G. Manne, Insider Trading and the Stock Market (New York: Free Press, 1966). Cf. Manne, "Insider Trading and the Law Professors," Vanderbilt Law Review, XXIII (1970), pp. 547-630.

1971 DOWNWARD PRICE FLEXIBILITY AND ECONOMIC GROWTH 307 stability of fixed monetary ratios so very efficient and the enforced stability of fixed prices on any other market so embarrassingly inefficient? Why is the market incapable of arbitrating the value of gold and silver coins (domestic vs. domestic, domestic vs. for eign) , when it is thought to be so efficient at arbitrating the value of gold and silver jewelry? Why is the market incapable of reg istering efficiently the value of gold in comparison to a currency supposedly fixed in relation to gold? The Market Way The answer should be obvious: it is because the market is so effi cient at registering subtle shifts in values between scarce economic goods that the political sovereigns ban the establishment of' plural monetary sovereignties. It is be cause any disparity economically between the value of fiat currency supposedly linked to gold and the market value of gold exposes the ludicrous nature of the hypothet ical legal connection, which in fact is a legal fiction, that the political sovereignty assumes for itself a monopoly of money creation. It is not the inefficiency of the market in registering the value of money but rather its incomparable effi ciency that has led to its position of imposed isolation in monetary affairs. Legal fictions are far more difficult to impose on men if the absurdity of that fiction is ex posed, hour by hour, by an auton omous free market mechanism.

VVould there not be a chaos of competing coins, weights, and fineness of monies? Perhaps, for brief periods of time and in local, semi-isolated regions. But the market has been able to produce light bulbs that fit into sockets throughout America, and plugs that fit into wall sockets, and rail road tracks that match many com panies' engines and cars. To state, a priori, that the market is incap able of regulating coins equally well is, at best, a dangerous state ment that is protected from crit ical examination only by the em pirical fact of our contemporary political affairs. Changes in the stock of gold and silver are generally slow. Changes in the "velocity of mon ey" - the number of exchanges within a given time period - are also slow, unless the public ex pects some drastic change, like a devaluation of the monetary unit by the political authority. These changes can be predicted within calculable limits; in short, the eco nomic impact of such changes can be discounted. They are relatively fixed in magnitude in comparison to the flexibility provided by a government printing press or a 308 THE FREEMAN May central bank's brand new IBM computer. The limits imposed by the costs of mining provide a con tinuity to economic affairs com pared to which the "rational plan ning" of central political authori ties is laughable.

What the costs of mining pro duce for society is a restrained state. We expend time and capital and energy in order to dig metals out of the ground. Some of these metals can be used for ornament, or electronic circuits, or for ex change purposes; the market tells men what each use is worth to his fellows, and the seller can respond accordingly. The existence of a free coinage restrains the capabil ities of political authorities to redistribute wealth, through fiat money creation, in the direction of the state. That such a restraint might be available for the few mil lions spent in mining gold and silver out of the ground represents the greatest potential economic and political bargain in the his tory of man. To paraphrase an other patriot: "Millions for min ing, but not one cent in tribute." Possibilities of Prediction By reducing the parameters of the money supply by limiting money to those scarce economic goods accepted voluntarily in ex change, prediction becomes a real possibility. Prices are the free market's greatest achievement in reducing the irrationality of hu man affairs. They enable us to predict the future. Profits reward the successful predictors, losses greet the inefficient forecasters, thus reducing the extent of their influence. The subtle day-to-day shifts in the value of the various monies would, like the equally sub tle day-to-day shifts in value of all other goods and services, be reflected in the various prices of monies, vis-a-vis each other. Pro fessional speculators (predictors) could act as arbitrators between monies. The price of buying pounds sterling or silver dollars with my gold dollar would be available on request, probably published daily in the newspaper.

Since any price today reflects the supply and demand of the two goods to be exchanged, and since this in turn reflects the expecta tions of all participants of the value of the items in the future, discounted to the present, free pricing brings thousands and even millions of forecasters into the market. Every pri,ce reflects the composite of all predictors' expec tations. What better means could men devise to unlock the secrets of the future? Yet monetary cen tralists would have us believe that in monetary affairs, the state's ex perts are the best source of eco nomic continuity, and that they 1971 DOWNWARD PRICE FLEXIBILITY AND ECONOMIC GROWTH 309 are more efficient in setting the value of currencies as they relate to each other than the market could be. What we find in the price-fixing of currencies is exactly what we find in the price-fixing of all other commodities: periods of inflexible, politically imposed "stability" in terspersed with great economic discontinuities. The old price shifts to some wholly new, wholly unpredictable, politically imposed price, for which few men have been able to take precautions. It is a rigid stability broken by radical shifts to some new rigid ity. It has nothing to do with the fluid continuity of flexible market pricing. Discontinuous "stability"

is the plaque of politically imposed prices, as devaluations come in response to some disastrous polit ical necessity, often international ly centered, involving the prestige of many national governments. It brings the rule of law into dis repute, both domestically and in ternationally. Sooner or later domestic inflation comes into con flict with the requirements of in ternational solvency.I:! For those who prefer tidal waves to the splashing of the surf, for those who prefer earth quakes to slowly shifting earth 12 Gary North, "Domestic Inflation versus International Solvency," THE FREEMAN (Feb., 1967). movements, the rationale of the political monopoly of money may appear sane. It is strange that anyone else believes in it. Instead of the localized discontinuities as sociated with private counterfeit ing, the state's planners substitute complete, centralized discontinui ties. The predictable market losses of fraud (which can be insured against for a fee) are regarded as intolerable, yet periodic na tional monetary catastrophes like inflation, depression, and devalua tion are accepted as the "inevit able" costs of creative capitalism.

It is a peculiar ideology. Flexible or Inflexible Prices The third problem seems to baffle many well-meaning free market supporters. How can a privately established monetary system linked to gold and silver expand rapidly enough to facilitate busi ness in a modern economy? How can new gold and silver enter the market rapidly enough to "keep pace," proportionately, with an ex panding number of free market transactions? The answer seems too obvious: the expansion of a specie-founded currency system cannot possibly grow as fast as business has grown in the last cen tury. Since the answer is so obvi ous, something must be wrong with the question. There is some thing wrong; it has to do with the 310 THE FREEMAN May invariable underlying assumption of the question: today's prices are downwardly inflexible. It is a fact that many prices are inflexible in a downward direction, or at least very, very "sticky."

For example, wages in industries covered by minimum wage legisla tion are as downwardly inflexible as the legislatures that have set them. Furthermore, wages in industries covered by the labor union provi sions of the Wagner Act of 1935 are downwardly inflexible, for such unions are legally permitted to exclude competing laborers who would work for lower wages. Prod ucts that come under laws estab lishing "fair trade" prices, or products undergirded by price floors established by law, are not responsive to economic conditions requiring a downward revision of prices. The common feature of the majority of downwardly inflexible prices is the intervention of the political sovereignty. The logic of economic expansion should be clear enough: if it takes place within a relatively fixed Inon etary structure, either the velocity of money will increase (and there are limits here) or else prices in the aggregate will have to fall. If prices are not permitted to fall, then many factors of production will be found to be uneconomic and therefore unemployable. The evi dence in favor of this law of economics is found every time a de pression comes around (and they come around just as regularly as the government-sponsored mone tary expansions that invariably precede them 13 ). Few people in terpret the evidence intelligently.

Labor union leaders do not like unemployed members. They do not care very much about unemployed nonmembers, since these men are unemployed in order to permit the higher wages of those within the union. Business owners and man agers do not like to see unem ployed capital, but they want high rates of return on their capital in vestments even if it should mean bankruptcy for competitors. So when falling prices appear neces sary for a marginal firm to stay competitive, but when it is not ef ficient enough to compete in terms of the new lower prices for its products, the appeal goes out to the state for "protection." Protec tion is needed from nasty custom ers who are going to spend their hard-earned cash or credit else where. Each group resists lower returns on its investment - labor or financial - even in the face of the biggest risk of aU: total un employment. And if the state in tervenes to protect these vested 13 Mises, Human Action, ch.20. For a survey of the literature generated by Mises' theory, see Gary North, "Re pressed Depression,"THE FREEMAN (April, 1969).

1971 DOWNWARD PRICE FLEXIBILITY AND ECONOMIC GROWTH 311 interests, it is forced to take steps to insure the continued operation of the firms. It does so through the means of an expansion of the money supply. It steps in to set up price and wage floors; for example, the work of the NRA in the early years of the Roosevelt administration. Then the inflation of the money supply raises aggregate prices (or at least keeps them from falling), lowers the real income from the fixed money returns, and therefore "saves" business and labor. This was the "genius" of the Keynesian recovery, only it took the psycho logical inducement of total war to allow the governments to inflate the currencies sufficiently to re duce real wages sufficiently to keep all employed, while simultaneously creating an atmosphere favoring the imposition of price and wage controls in order to "repress" the visible signs of the inflation, i.e., even higher money prices. So prices no longer allocated efficient ly; ration stamps, priority slips, and other "hunting licenses" took the place of an integrated market pricing system. So did the black market.

Repressed Depression Postwar inflationary pressures ha ve prevented us from falling into reality. Citizens will not face the possibility that the depression of the 1930's is being repressed through the expansion of the mon ey supply, an expansion which is now threatening to become ex ponential. 14 No, we seem to prefer the blight of inflation to the neces sity of an orderly, generally pre dictable downward drift of ag gregate prices. Most people resist change. That, in spite of the hopes and foot noted articles by liberal sociolo gists who enjoy the security of tenure. Those people who do wel come change have in mind familiar change, potentially controllable change, change that does not rush in with destruction. Stability, law, order: these are the catchwords even in our own culture, a culture that has thrived on change so ex tensive that nothing in the history of man can compare with it. It should not be surprising that the siren's slogan of "a stable price level" should have lured so many into the rocks of economic 'inflexi bility and monetary inflation.

Yet a stable price level requires, logically, stable conditions: static tastes, static technology, static re sources, static population. In short, stable prices demand the end of history. The same people who de mand stable prices, whether so cialist, interventionist, or mone tarist, simultaneously call for in creased economic production. What 14 North, "Theology," op. cit.

312 THE FREEMAN May they want is the fulfillment of that vision restricted to the drunken of the Old Testament: "... tomorrow shall be as this day, and much more abundant" (Isaiah 56 :12). The fantasy is still fantasy; to morrow will not be as today, and neither will tomorrow's price structure. Fantasy in economic affairs can lead to present euphoria and ulti mate miscalculation. Prices change. Tastes change. Productivity chang es. To interfere with those chang es is to reduce the efficiency of the market; only if your goal is to reduce market efficiency would the imposition of controls be rational. To argue that upward prices, downward prices, or stable prices should be the proper arrangement for any industry over time is to argue nonsense. An official price can be imposed for a time, of course, but the result is th~ mis allocation of scarce resources, a misallocation that is mitigated only by the creation of a black market.

Stable Priees There is one sense in which the concept of stable prices has valid ity. Prices on a free market ought to change in a stable, generally predictable, continuous manner. Price (or quality) changes should be continual .(since economic con ditions change) and hopefully continuous (as distinguished from dis continuous, radical) in nature. Only if some exogenous catas trophe strikes the society should the market display radical shifts in pricing. Monetary policy, ideally, should contribute no discontinu ities of its own - no disastrous, aggregate unpredictabilities. This is the only social stability worth preserving in life: the stability of reasonably predictable change. The free market, by decentraliz ing the decision-making process, by rewarding the successful pre dictors and eliminating (or at least restricting the economic power of) the inefficient forecasters, and by providing a whole complex of mar kets, including specialized markets of valuable information of many kinds, is perhaps the greatest en gine of economic continuity ever developed by men. That continuity is its genius. It is a continuity based, ultimately, on its flexibility in pricing its scarce economic re sources. To destroy that flexibility is to invite disaster.

The myth of the stable price level has captured the minds of the inflationists, who seek to impose price and wage controls in order to reduce-the visibility of the ef fects of monetary expansion. On the other hand, stable prices have appeared as economic nirvana to conservatives who have thought it important to oppose price in1971 DOWNWARD PRICE FLEXIBILITY AND ECONOMIC GROWTH 313 flation. They have mistaken a tac tical slogan - stable prices - for the strategic goal. They have lost sight of the true requirement of a free market, namely, flexible prices. They have joined forces with Keynesians and neo-Keynesians; they all want to enforce stability on the "bad" increasing prices (labor costs if you're a conserva tive, consumer prices if you're a liberal), and they want few re straints on the "good" upward prices (welfare benefits if you're a liberal, the Dow Jones average if you're a conservative). Everyone is willing to call in the assistance of the state's authorities in order to guarantee these effects. The au thorities respond.

What we see is the "ratchet ef fect." A wage or price once at tained for any length of time suf ficient to convince the beneficiaries that such a return is "normal" cannot, by agreed definition,· be lowered again. The price cannot slip back. It must be defended. It must be supported. It becomes an ethical imperative. Then it be comes the object of a political campaign. At that point the mar ket is threatened. Conclusion The defense of the free market must be in terms of its capacity to expand the range of choices open to free men. It is an ethical defense. Economic growth that does not expand the range of men's choices is a false hope. The goal is not simply the expansion of the aggregate number of goods and services. It is no doubt true that the free market is the best means of expanding output and increas ing efficiency, but it is change that is constant in human life, not ex pansion or linear development.

There are limits on secular expan sion. 15 Still, it is reasonable to expect that the growth in the number of goods and services in a free mar ket will exceed the number of new gold and silver discoveries. If so, then it is equally reasonable to ex pect to see prices in the aggregate in a slow decline. In fact, by call ing for increased production, we are calling for lower prices, if the market is to clear itself of all goods and services offered for sale. Falling prices are no less desirable in the aggregate than increasing aggregate productivity. They are economic complements. Businessmen are frequently heard to say that their employees are incapable of understanding that money wages are not the im portant thing, but real income is. Yet these same employers seem 15 p. T. Bauer, Economic Analysis and Policy in Underdeveloped Countries (Cambridge and Duke University Press es, 1957), p. 113.

314 THE FREEMAN May incapable of comprehending that profits are not dependent upon an increasing aggregate price level. It does not matter for aggregate profits whether the price level is falling, rising, or stable. What does matter is the entrepreneur's ability to forecast future economic conditions, including the direction of prices relevant to his business. Every price today includes a com ponent based on the forecast of buyer and seller concerning the state of conditions in the future. If a man on a fixed income wants to buy a product, and he expects the price to rise tomorrow, he logically should buy today; if he expects the price to fall, he should wait. Thus, the key to economic success is the accuracy of one's discounting, for every price re flects in part the future price, dis counted to the present. The ag grega te level of prices is irrele vant; what is relevant is one's ability to forecast particular prices.

It is quite likely that a falling price level (due to increased pro duction of non-monetary goods and services) would require more monetary units of a smaller de nomination. But this is not the same as an increase of the aggre gate money supply. It is not monetary inflation. Four quarters can be added to the money supply without inflation so long as a paper one dollar bill is destroyed. The effects are not the same as a simple addition of the four quarters to the money supply. The first example conveys no increase of purchasing power to anyone; the second does. In the first ex ample, no one on a fixed income has to face an increased price level or an empty space on a store's shelf due to someone else's pur chase. The second example forces a redistribution of wealth, from the man who did not have access to the four new quarters into the possession of the man who did. The first example does not set up a boom-bust cycle; the second does.16 Prices Would Not Fall to Zero Prices in the aggregate can fall to zero only if searei ty is entirely eliminated from the world, Le., if all demand can be met for all goods and services at zero price.

That is not our world. Thus, we can safely assume that prices will not fall to zero. We can also as sume that there are limits on pro duction. The same set of' facts assures both results: scarcity guarantees a limit on falling prices and a limit on aggregate production. But there is nothing incompatible between economic growth and falling prices. Far 16 North, "Repressed Depression," op. cit.

1971 DOWNW ARD PRICE FLEXIBILITY AND ECONOMIC GROWTH 315 from being incompatible, they are complementary. There should be no need to call for an expansion of the money supply "at a rate propor tional to increasing productivity." It is a good thing that such an expansion is not necessary, since it would be impossible to measure such proportional rates. It would require whole armies of govern ment-paid statisticians to con struct an infinite number of price indexes. If this were possible, then socialism would be as effi cient as the free market. 17 Infinite knowledge is not given to men, not even to government statistical boards. Even Arthur Ross, the Department of Labor's commis sioner of labor statistics, and a man who thinks the index number is a usable device, has to admit that it is an inexact science at best. I8 Government statistical in dexes are used, in the last analy sis, to expand the government's 17 F. A. Hayek (ed.), Collectivist Eco nomic Planning (London: Routledge & Kegan Paul, 1935). This line of reasoning was first introduced to a wide audience by Mises. Cf. Mises, Socialism (New Haven, Conn.: Yale University Press, 1951), pt. II, sect. I. For a survey of this literature, see Gary North, Marx's Re ligion of Revolution (Nutley, N. J.: Craig Press, 1968), pp. 173-94.

18 Arthur M. Ross, "Measuring Prices: An Inexact Science." The Wall Street Journal (Feb. 10. 1966). Cf. Melchior Palyi, An Inflation Primer (Chicago: Regnery, 1962), p. 4. control of economic affairs. That is why the government needs so many statistics. 19 State Control 01 Money a Major Cause of Instability The quest for the neutral mone tary system, the commodity dol lar, price index money, and all other variations on this theme has been as fruitless a quest as social ists, Keynesians, social credit ad vocates, and government statisti cians have ever embarked on. It presupposes a sovereign political state with a monopoly of money creation. It presupposes an omni science on the part of the state and its functionaries that is utopi an. It has awarded to the state, by default, the right to control the central mechanism of all modern market transactions, the money supply. It has led to the night mare of inflation that has plagued the modern world, just as this same sovereignty plagued Rome in its declining years. But at least in the case of Rome it was a reasonable claim, given the theo logical presupposition of the an cient world (excluding the He brews and the Christians) that the state is divine, either in and of itself or as a function of the divinity of the ruler. Rulers were 19 Murray N. Rothbard, "Statistics: Achilles' Heel of Government," THE FREE MAN (June 1961).

316 THE FREEMAN May theoretically omniscient in those days. - Even with omnISCIence, their monetary systems were sub ject to ruinous collapse. Odd that men would expect a better show ing from an officially secular state that recognizes no divinity over it or under it. Then again, per haps a state like this assumes the function of the older, theocratic state. It recognizes no sovereignty apart from itself. And like the ancient kingdoms, the sign of sovereignty is exhibited in the monopoly over money.20 , 20 On the use of the coinage by the Roman emperors to announce their own divine apotheoses, see Ethelbert Stauff er, Christ and the Caesars (Philadelphia: Westminster Press, 1955). The ry Money Credit by LUDWIG VON MISES New printing by The Foundation for Economic Education, Inc. 493 pages, fully indexed cloth $4.00 A great many other theories of money and credit have been advanced and tried in practice since 1912, which marked the first German edition of The Theory of Money and Credit by Dr. Ludwig von Mises.

The inflation raging throughout the world today attests to the fail ure of those monetary theories that have most appealed to political demagogues intent upon the short run. The only thing these wasteful experiments have proved is the soundness of the theory advanced by Mises - proved that in the long run it will stand, though governments and politicians fail. This is not a primer for casual reading. It is a study in depth for serious students of monetary theory. ORDER FROM: THE FOUNDATION FOR ECONOMIC EDUCATION IRVINGTON-aN-HUDSON, NEW YORK 10533 A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN I IS I THIRTY YEARS AGO Thurman Arn old, the great trust buster who was by no means a coddler of capitalists, used to prove his ob jectivity by excoriating the labor unions in the building trades for their own monopolistic practices. On the surface there hasn't been much change in the construction industry since Arnold's heyday, as M. R. Lefkoe makes plain in his The Crisis in Construction: There Is An Answer (Bureau of Nation al Affairs, Inc., BN A Books, Washington, D. C., $12.50). How ever, Mr. Lefkoe happens to be more solution-minded than Thur man Arnold ever was, which may make a difference.

The first part of Mr. Lefkoe's study lists the "labor-related prob lems" in the industry and gives a long and lugubrious explanation of the major causes of the prob lems. The problems include a drastic shortage of skilled manpower, escalating wage rates, the exces sive cost of overtime, loss of man agement control, unethical prac tices, and special government in terference (though this particular problem may be mitigated by the recent suspension of the Davis Bacon Act, which has required the Federal government to match on its own projects the highest pay in any given area). The causes of the problems are mainly bound up with the frag mented nature of the industry. Contractors don't ordinarily "sell" their services; they wait for the orders to come, and then, if they are in the general contract ing business, they assemble the needed skills by paying subcon tractors to carry out the various phases of the on-site work. The general contractor has to take labor as he finds it; he finds him317 318 THE FREEMAN May self dealing with a whole host of craft unions that have their own jurisdictional disputes.

Simply because he is merely an assembler of subcontractors, the general contractor does not train his own labor. The crafts control their own apprentice systems. And, since they are better organ ized than their employers, the crafts maintain a more effective political lobby. Not only do they artificially restrict the available supply of labor, they also put their political clout behind maintaining all sorts of code restrictions on the type of building methods and materials that may be used. In addition to the code restrictions there are such things as the li censing of plumbers and electri cians. Finally, there are our one sided labor laws which tell the unions that they have the right to do things that are prohibited to management under the anti trust laws. Wide-Ranging Problems Boil Down to Coercive Power Mr. Lefkoe's recital of the causes of the problems is wide ranging, but most every problem is aggravated by the coercive pow er which the unions get from gov ernment. Indeed, coercive power seems to be the only problem.

Even the seasonal shut-downs, which waste as much as two months of the year in the north ern United States, derive from the fact that the unions turn their face against the use of prefabri cated sections that would enable the builder to erect basic weather proof shells during breaks in the winter cold. "Municipal building codes," so Mr. Lefkoe quotes from an official report, "sometimes need lessly restrict the use of mater ials or methods that would facili tate cold weather construction." The root trouble in the indus try comes from union control of the manpower supply, which is permitted by the government des pite the fact that the Taft-Hart ley Act supposedly outlawed the closed shop. By running their own restrictive apprentice system, the construction unions limit the number of newcomers in the vari ous . crafts. By keeping skilled labor scarce, the unions make sure of both high hourly wages and really cushy overtime. The excuse is that the overtime is needed to make up for the lack of employment in the winter. But the excuse doesn't help the client who must pay the bills on a man-hour basis that pertains only to his particu lar building job. By limiting the apprentices, the unions deny the Negroes, latecomers to our north ern centers of population, the op portunity to become skilled work ers. So we have a social problem 1971 THE CRISIS IN CONSTRUCTION 319 piled on top of an economic prob lem.

New Role for Contractor Taking the bull by the horns, Mr. Lefkoe urges an entirely new approach to the basic problem of construction manpower recruit ment. He suggests that the gen eral contractor had better assume total responsibility for the proj ects he undertakes. Under this scheme the contractor would hire and train all his specialists, both on-and off-site. By using the "sys tems" approach, the new-style con tractor would run his own material development programs, his own apprentice schools, his own mar ket research. Instead of waiting for jobs he would plan and erect buildings on his own for rental, or for selling. In short, he would act as a modern business enterpriser, not as someone who merely hangs out his shingle and waits for the client to come to him. Finally, the new-style contractor would form his own Construction Industry Ac tion Organization and get busy with a campaign to rid the land of archaic building codes.

The beauty of Mr. Lefkoe's pro posa.I is that it would by-pass the problem of changing the Taft Hartley Act and the Landrum Griffin Act. Nobody could stop a new-style contractor from doing his own hiring and training if he was prepared to do an across-the board job of providing the client with all the necessary skills and crafts. The jurisdictional element would disappear. Industrial union ism might, of course, replace craft unionism under the new-style con tractor. But the hiring hall would have disappeared. Even in cases where labor might bargain suc cessfully for a union shop, the new-style contractor would be able to keep it an open union by hiring as many new people as he wanted and then turning them over to union membership after the ap prentice period was completed. Signs of Change Is this all a dream? Mr. Lefkoe admits the difficulties, but notes that a few contractors are experi menting in his direction. And non construction companies that need a lot of new plant expansion are also in the business of doing their own construction by hiring and training their own building crews.

Though Mr. Lefkoe is unrelent ing in blaming the government for the woes of the construction industry, he misses one salient point. The shortage of skilled la bor, and the high costs that result from this, are not entirely to be blamed on the unions' govern ment-protected apprentice system. They can be blamed in part on the plethora of government building 320 THE FREEMAN May projects that have come in with the growth of the Wel:f}are State. If we had had less public housing ("the slums of tomorrow") there would have been less competition with the private market for the available labor supply. Again, the suspension of the Davis-Bacon Act, a suspension that will lower the cost of government construc tion, may mitigate this somewhat. But the failure to deal with the question of government building elephantiasis is the one weak spot in Mr. Lefkoe's generally excel lent study. ~ IDEAS ON LlBERTY The Trend-and the Alternative IF WE CONTINUE along the route marked by such legislation as Robinson-Patman and Landrum-Griffin, we shall, I believe, even tually break down in one way or another. We shall either strangle ourselves in bureaucratic red tape, corrupt our bureaucracy so that we can get something done, or so hamper the activity of our private associations that full socialism will seem the only reason able way out.

The realistic alternative is to rid ourselves of special privilege and the companion welfare-state idea that government is an all purpose device fit to solve all our problems. In order to do this it is necessary to refute all totalitarian ideas, whether of the Marx ian or Keynesian varieties, and to take up again the development of free-market principles with a full understanding of the theory and practice of the free society. SYLVESTER PETRO, "Union Power and Government Aid," THE FREEMAN, July, 1960 the Freeman VOL. 21, NO.6. JUNE 1971 The Problem of Poverty Henry Hazlitt 323 The history of famine conditions and their alleviation through creative capitalism. The High Price of Protectionism Paul L. Poirot 329 Paying men not to work is just one of the ways of closing the market and wasting scarce resources. Am I Constantly Correcting? Leonard E. Read 332 Self-improvement is a process of constantly correcting; the market signals the opportun ities.

Soviet Dissent: Heat without Light Melvin D. Barger 337 Freedom of the press a lost cause once socialistic interventions are introduced. To a Student from Abroad Arthur R. Hercz 342 Do the best you can in the circumstances, and judge your success by those who choose to follow your example. The Law School and Legal Training Sylvester Petro 344 How legal training and legal systems relate to the survival and the progress of the free society. The Individualin Society Ludwig von Mises 349 "No government ... can guarantee and bring about freedom otherwise than by supporting and defending the fundamental institutions of the market economy." Individual Liberty and the Rule of Law Ridgway K. Foley, Jr. 357 Tracing the role of the law, and the limitations upon government, for the maximization of liberty. Book Reviews: 379 "The Red Decade" by Eugene Lyons "Student Violence" by Edward Bloomberg Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

tIle 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 AIanaging 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'~ work. Copyright, 1971, 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.

Articles from this journal are abstracted and indexed in Historical Abstracts and/or America: History and Life. THE FREEMAN also Is available on microfilm, Xerox University Microfilms, Ann Arbor, Mich igan 48106. Permission granted to reprint any article from this Issue, with appropriate credit, except "The Problem of Poverty" and "Individ ual Liberty and the Rule of Law."

The problem of povert~ HENRY HAZLITT THE HISTORY of poverty is almost the history of mankind. The an cient writers have left us few spe cific accounts of it. They took it for granted. Poverty was the nor mal lot. The ancient world of Greece and Rome, as modern historians re construct it, was a world where houses had no chimneys, and houses heated in cold weather by a fire on a hearth or a fire-pan in the center of the room, were filled with smoke whenever a fire was started, and where consequently the walls, ceiling, and furniture were blackened and more or less covered by soot at all times; where light was supplied by smoky oil lamps which, like the houses in which they were used, had no Henry Hazlitt is well known to FREEMAN readers as author, columnist, editor, lecturer, and practitioner of freedom. This article will appear as a chapter in a forthcoming book, The Conquest of Poverty. to be published by Arlington House.

chimneys, and where eye-trouble as a result of all this smoke was general. Greek dwellings had no heat in winter, no adequate sani tary arrangements, and no wash ing facilities. 1 Above all there was hunger and famine, so chronic that only the worst examples were recorded. We learn from the Bible how Joseph advised the pharaohs on famine relief measures in ancient Egypt. In a famine in Rome in 436 B.C., thousands of starving people threw themselves into the Tiber. Conditions in the Middle Ages were no better: "The dwellings of medieval la borers were hovels - the walls made of a few boards cemented with mud and leaves. Rushes and reeds or heather made the thatch 1 E. Parmalee Prentice, Hunger and History (Harper & Bros., 1939), pp. 39-40. 323 324 THE FREEMAN June for the roof. Inside the houses there was a single room, or in some cases two rooms, not plas tered and without floor, ceiling, chimney, fireplace, or bed, and here the owner, his family, and his ani mals lived and died. There was no sewage for the houses, no drain age, except surface drainage for the streets, no water supply beyond that provided by the town pump, and no knowledge of the simplest forms of sanitation. 'Rye and oats furnished the bread and drink of the great body of the peo ple of Europe.' ... 'Precariousness of livelihood, alternations between feasting and starvation, droughts, scarcities, famines, crime, vio lence, murrains, scurvy, leprosy, typhoid diseases, wars, pestilences and plagues' - made part of medi eval life to a degree with which we are wholly unacquainted in the western world of the present day."2 Frequent Famines And, ever-recurring, there was famine: "In the eleventh and twelfth centuries famine [in England] is recorded every fourteen years, on an average, and the people suf fered twenty years of famine in two hundred years. In the thir teenth century the list exhibits the same proportion of famine; the addition of high prices made the 2 Ibid., Pp. 15-16.

proportion greater. Upon the whole, scarcities decreased during the three following centuries; but the average from 1201 to 1600 is the same, namely, seven famines and ten years of famine in a cen tury."3 One writer has compiled a de tailed summary of twenty-two famines in the thirteenth century in the British Isles, with such typi cal entries as: "1235: Famine and plague in England; 20,000 persons die in London; people eat horse flesh, bark of trees, grass, etc."4 But recurrent starvation runs through the whole of human his tory. The Encyclopaedia Britannica lists thirty-one major famines from ancient times down to 1960. Let us look first at those from the Middle Ages to the end of the eighteenth century: 1005: famine in England. 1016: famine throughout Europe. 1064 72: seven years' famine in Egypt. 1148-59: eleven years' famine in India. 1344-45: great famine in India. 1396-1407: the Durga Devi famine in India, lasting twelve years. 1586: famine in England 3 William Farr, "The Influence of Scarcities and of the High Prices of Wheat on the Mortality of the People of England," Journal of the Royal Statis tical Society, Feb. 16, 1846, Vol. IX, p. 158.

4 Cornelius Walford, "The Famines of the World," Journal of the Royal Sta tistical Society, March 19, 1878, Vol. 41, p.433.

1971 THE PROBLEM OF POVERTY 325 giving rise to the Poor Law sys tem. 1661: famine in India; no rain fell for two years. 1769-70: great famine in Bengal; a third of the population - 10 million persons - perished. 1783: the Chalisa fam ine in India. 1790-92: the Dej i Bara, or skull famine in India, so called because the dead were too numerous to be buried. 5 This list is very incomplete as probably any list would be. In the winter of 1709, for example, in France, more than a million per sons, according to the figures of the time, died out of a population of 20 millions. 6 In the eighteenth century, in fact, France suffered eight famines, culminating in the short crops of 1788, which were one of the causes of the Revolu tion. I am sorry to be dwelling in such detail on so much human misery. I do so only because mass starva tion is the most obvious and in tense form of poverty, and this chronicle is needed to remind us of the appalling dimensions and persistence of the evil.

Thomas R. Malthus In 1798, a young English coun try parson, Thomas R. Malthus, delving into this sad history, anonymously published an Essay 5 Article "Famine," 1965 edition. 6 Gaston Bouthoul, La population dans la monde, pp. 142-43. on the Principles of Population as it at!ects the Future Improvement of Society. His central doctrine was that there is a constant tend ency for population to outgrow food supply and production. Unless checked by self-restraint, popula tion will always expand to the limit of subsistence, and will be held there by disease, war, and ulti mately famine. Malthus was an economic pessimist, viewing pov erty as man's inescapable lot. He influenced Ricardo and the other classical economists of his time, and it was the general tone of their writings that led Carlyle to de nounce political economy as "the Dismal Science." Malthus had in fact uncovered a truth of epoch-making import ance. His work first set Charles Darwin on the chain of reasoning which led to the promulgation of the theory of evolution by natural selection. But Malthus greatly overstated his case, and neglected to make essential qualifications.

He failed to see that, once men in any place (it happened to be his own England) succeeded in earn ing and saving a little surplus, made even a moderate capital ac cumulation, and lived in an era of political freedom and protection for property, their liberated in dustry, thought, and invention could at last make it possible for them enormously and accelera326 THE FREEMAN June tively to multiply per capita pro duction beyond anything achieved or dreamed of in the past. Malthus announced his pessimistic conclu sions just in the era when they were about to be falsified. The Indu.strial Revolution had begun, but nobody had yet recog nized or named it. One of the consequences of the increased pro duction it led to was to make pos sible an unparalleled increase in population. The population of Eng land and Wales in 1700 is esti mated to have been about 5,500, 000; by 1750 it had reached some 6,500,000. When the first census was taken in 1801 it was 9,000,000; by 1831 it had reached 14,000,000. In the second half of the eighteenth century population had thus increased by 40 per cent, and in the first three decades of the nineteenth century by more than 50 per cent. This was not the result of any marked change in the birth rate, but of an almost continuous fall in the death rate.

People were now producing the food supply and other means to support a greater number of them. 7 This accelerating growth in population continued. Theenor mous forward spurt of the world's population in the nineteenth cen7 T. S. Ashton. The Industrial Revo lution (1760-1830) (Oxford University Press, 1948.), pp. 3-4. tury was unprecedented in human experience. "In one century, hu manity added much more to its total volume than it had been able to add during the previous million years."s Starvation in Recent Times But we are getting ahead of our story. We are here concerned with the long history of human poverty and starvation, rather than with the short history of how mankind began to emerge from it. Let us come back to the chronicle of fam ines, this time from the beginning of the nineteenth century: 1838: intense famine in North Western Provinces (Uttar Prad esh), India; 800,000 perished.

1846-47: famine in Ireland, re sulting from the failure of the potato crop. 1861: famine in northwest India. 1866: famine in Bengal and Orissa; 1,000,000 per ished. 1869: intense famine in Rajputana; 1,500,000 perished. 1874: famine in Bihar, India. 1876-78: famine in Bombay, Ma dras, and Mysore; 5,000,000 per ished. 1877-78: famine in north China; 9,500,000 said to have per ished. 1887-89: famine in China. 1891-92: famine in Russia. 1897: famine in India; 1,000,000 per ished. 1905: famine in Russia. 8 Henry Pratt Fairchild, "When Pop ulfltion Levels Off," H(l1'per's Magazine, May, 1938, Vol. 176, p. 596.

1971 THE PROBLEM OF POVERTY 327 1916: famine in China. 1921 : famine in the U.S.S.R., brought on by communist economic poli cies; at least 10,000,000 persons seemed doomed to die, until the American Relief Administration, headed by Herbert Hoover, came in and reduced direct deaths to about 500,000. 1932-33: famine again in the U.S.S.R., brought on by Stalin's farm collectivization policies; "millions of deaths." 1943: famine in Bengal; about 1,500,000 perished. 1960-61: fam ine in the Congo.9 Industrialization Prevents Famine in Western World We can bring this dismal his tory down to date by mentioning the famines in recent years in Communist China and the war created famine of 1968-70 in Biafra. The record of famines since the end of the eighteenth century does, however, reveal one striking difference from the record up to that point. Mass starvation did not fall on a single country in the now industrialized Western world.

(The sole exception is the potato famine in Ireland; and even that is a doubtful exception because the Industrial Revolution had barely touched mid-nineteenth 9 From articles "Famine" and "Rus sia," Encyclopedia Britannica, 1965 edi tion. century Ireland - still a one-crop agricultural country.) It is not that there have ceased to be droughts, pests, plant dis eases, and crop failures in the modern Western world, but that when they occur there is no fam ine, because the stricken countries are quickly able to import food stuffs from abroad, not only be cause the modern means of trans port exist, but because, out of their industrial production, these countries have the means to pay for such foodstuffs. In the Western world today, in other words, poverty and hunger - until the mid-eighteenth century the normal condition of mankind have been reduced to a residual problem affecting only a minority; and that minority is being steadily reduced.

But the poverty and hunger still prevailing in the rest of the world, in most of Asia, of Central and South America, and of Africa - in short, even now afflicting the grea t maj ori ty of mankind - show the appalling dimensions of the problems still to be solved. And what has happened and is still happening in many countries today serves to warn us how fatal ly easy it is to destroy all the economic progress that has al ready been achieved. Foolish gov ernmental interferences led the Ar gentine, once the world's principal 328 THE FREEMAN June producer and exporter of beef, to forbid in 1971 even domestic sale of beef on alternate weeks. Soviet Russia, one of whose chief economic problems before it was communized was to find an export market for its huge surplus of grains, has been forced to import grains from the capitalist countries. One could go on to cite scores of other examples, with ruinous consequences, all brought on by shortsighted gov ernmental policies.

More than thirty years ago, E. Parmalee Prentice was pointing out that mankind has been rescued from a world of want so quickly that the sons do not know how their fathers lived: "Here, indeed, is an explanation of the dissatisfaction with conditions of life so often expressed, since men who never knew want such as that in which the world lived during many by-gone cen turies, are unable to value at its true worth such abundance as now exists, and are unhappy because it is not greater."lO How prophetic of the attitude of rebellious youth in the 1970's! The great present danger is that impatience and ignorance may combine to destroy in a single generation the progress that it took untold generations of man kind to achieve. "Those who cannot remember the past are condemned to repeat it." , 10 Hun,ger and History (Harper & Bros., 1939), P. 236. IDEAS ON LIBERTY Creative Energy AT ONE TIME or another, every conceivable form of authority has been tried, but each has failed for the simple reasons that: 1. Only an individual human being can generate human energy.

2. Only an individual human being can control the energy he generates. The lack of understanding of these simple, basic truths has, for over 6,000 years, stagnated human progress and kept the vast maj ority of people underfed, poorly clothed, embroiled in wars, and dying from famine and pestilence. HENRY GRADY WEAVER. The Mainspring of Human Progress PAUL L. POIROT UNLESS you use tires on your car, the headline might have meant nothing to you : Michelin Unit Pays Union $250,000 for Not Working.t The French tire manufacturing company estimated the man hours it would take for union workers to assemble tire-making machinery in its plants being built at Granton and Bridgewater in Canada, and agreed to pay the union $250,000 if the men stop insisting that they do the job. Michelin wanted its own experi enced workers to install the spe cialized machinery and equipment, rather than have it done by the millwrights of Local 1178 of the United Brotherhood of Carpenters and Joiners. The payment was offered to the union, on behalf of some 60 millwrights, to avert the possible loss of several million dol1 Wall Street Journal, April 9, 1971.

lars. due to the direct and indirect repercussions of threatened strike action. Just what does it mean to a tire user if one of the manufacturers - in this case, a Canadian branch of a French firm - spends $250,000 to avoid the possible loss of several million dollars? Does it mean higher-priced tires, or lower-priced tires, or what? We probably can't know for sure. Is this Canadian branch of Michelin Tire the mar ginal producer who would be driven out of business by costly strike action? If so, his going out of business might well have re sulted in higher-priced tires. And paying 60 union members not to work, if it kept a marginal pro ducer in business, might mean tires at lower prices than other wise would have prevailed. It's not that easy to judge the impact on 329 330 THE FREEMAN June the market of the action taken by Michelin in this instance. All we can judge, with reasonable assur ance, is that Michelin management used available resources as best it knew how, at its own risk, to sup ply quality tires to consumers at the least possible cost.

The Waste of Resources If paying union members not to work seems like a funny way to run a tire business, save some of the chuckles for the untold num bers of other firms in countless lines of business in all parts of the world who face similar problems each day they operate. And try to understand that in the final analy sis it's invariably the customer who pays - either in higher prices, or in purchases never consum mated - whenever labor unions or other quasi-governmental agencies of coercion indulge in the sort of monkey business that tends to cor ner or close off some segment of tJ-:1e market, thus disrupting peace ful production and trade. If the $250,000 payment by Michelin to keep the union from striking its business seems like a flagrant waste of scarce resources, consider the $150,000,000,000 six hundred thousand times as much - currently turned over by government to various welfare programs in the United States in a year. Every dollar's worth of goods and services coercively di verted from the market for each and everyone of the governmental welfare programs - just like the $250,000 payment by Michelin is, in effect, paying somebody not to work. Such intervention with draws scarce resources from the market and diverts those resources to purposes for which consumers presumably are unable or unwill ing to pay_ And so far as the pay ing customers are concerned, such a diversion of resources amounts to waste. They just aren't getting any tires, or anything else they want, for those expenditures. Such diverted resources go instead to "buy off" the union, or some other politically powerful pressure group, in order that the Michelins and other market operators may continue to function peacefully to serve willing customers.

Closing the Market This is not to condone feather bedding and various other make work practices by labor unions under their grants of special priv ilege by government. But the total amount of extortion and waste and disruption due to union practices under government sanction is a mere trifle in comparison to the amount of direct government in tervention now undertaken in the name of the "general welfare." The government not only winks at 1971 THE HIGH PRICE OF PROTECTIONISM 331 and condones the $250,000 dab of extortion exacted from Michelin by the United Brotherhood of Car penters and Joiners; it not only fails in its proper function of pro tecting the lives and property of peaceful citizens; but, worse yet, the government itself has usurped the role of chief extortioner, in Canada, in the United States, in deed in every nation where gov ernmental activities are currently withdrawing from the market somewhere between a third and a half of all economic resources. In other words, instead of allowing peaceful and productive individ uals maximum opportunity to spe cialize and trade in their own best interest, the government takes a third to a half of what each pro duces and diverts it to purposes the producer had not intended, re distributes some of it to those who have produced little, if anything, of value to consumers. From a third to a half of the market is closed - a third to a half of scarce resources literally are wasted.

This is not to deny that there is a proper role for government - the role of policing the market and protecting lives and property. It is to assert that governments every where today have largely forsaken their proper role - they are not protecting lives and property instead, they are plundering peace ful and productive persons and subsidizing wastrels and trouble makers. Paying tribute to coercionists is indeed a sorry way to operate a business. But citizens who will let their own government close the market, sell protectionism to powerful lobby groups, and other wise abandon its principled role, scarcelydeserve a better fate, for they have given no thought and no support to freedom. , IDEAS ON ~ ' \\. \..... LIBERTY The Apprenticeship of Liberty NOTHING is more fertile in prodigies than the art of being free; but there is nothing more arduous than the apprenticeship of lib erty .... Liberty is generally established with difficulty in the midst of storms; it is perfected by civil discords; and its benefits cannot be appreciated until it is already old....

The advantages that freedom brings are shown only by the lapse of time, and it is always easy to mistake the cause in which they originate. ALEXIS DE TOCQUEVILLE, Democracy in America (1835) AmI Constantly Correcting? EVERYTHING that happens - pleas ant or unpleasant - has a lesson to teach, provided instruction is sought in every event. Here is an example of how two words, dropped in more or less idle conversation, conveyed an important lesson to me. Having discovered that 'my new found friend had a plane of his own, I inquired. as to his flying experience. He began by telling about his pilot's license to fly small craft in good weather: VFR (vis ual flight rules). That, however, was not enough for him; he wished to qualify for the kind of all-weather flying allowed com mercial airline pilots. Therefore, as a minimum, he had to obtain an IFR (instrument flight rules) rat ing. During the final briefing, prior to the official IFR exam, the in332 LEONARD E. READ structor explained why he was so intently observing every move: "I am not checking as to whether you are on course or off but only to make absolutely certain that you are scanning those instruments and constantly correcting."

Constantly correcting! That in structor probably had not thought of himself as a philosopher. Yet, it seems to me, he made a pro found philosophic point: the disci pline required for flying by instru ments also applies to living by numerous, basic guidelines. To live the good life requires constant correcting, achieved by a constant and faithful scanning of the guide lines. Learning to fly within seeing distance of a runway in clear weather is possible for anyone competent to drive a car. But learning to fly long distances over 1971 AM I CONSTANTLY CORRECTING? 333 unfamiliar territory, by day or by night, and in all kinds of weather, is quite a different matter. The further one ventures from what can be easily observed, the greater is the chance of error - of getting off course - and the more neces sary is constant and skillful cor rection. Truly, those of a venture BOme Bpirit expand their horizons, provided they observe the rule: constant correction.

Analogous to simple flying is the life of primitive peoples. Not much in the way of correction is re quired of Kalahari bushmen, for instance; they only forage. These little people have no trouble stay ing on course for they have few courses to pursue beyond chasing wild animals or finding their way to nature's scant offerings of nuts, roots, herbs, water. At their level of life, there is little, if anything, requiring correction. However, not everyone has been content with primitive life. Mil lions, with a somewhat venture some spirit, have chosen to broad en their horizons. In doing so, they have to strike out into new, unfamiliar, and increasingly com plex relationships. And the more they break with simple ways and traditions, the less there is to go by - off "into the wild, blue yon der," as an Air Force song has it. They must learn to fly by instru ments. The further they venture, the greater the risk of getting off course; each must keep asking himself, "Am I constantly cor recting?"

Individual vs. Collective To sustain a complex society we must observe numerous basic guidelines: political, economic, moral-ethical, spiritual. For example, the Golden Rule is the oldest, ethical guideline of dis tincti ve universal character. Many people are capable of abiding by this nonviolence rule in simple re lationships or close at home, as we say. But note how difficult it is to practice this basic precept in so cieties featured by special interest groups: axe-grinding collectives. More and more the tendency is to try to rule over others rather than to respect and treat them justly. Only the individual has com bined powers of reason and self control by which to refrain from doing to others that which he would not have another do unto him. Such personal attention to responsibility tends to be lost when individuals are absorbed in to special interest groups; these collectives have no perceptual pow ers, none whatsoever!

How did we stray so disastrously off course and wander into this special interest, collectivistic situ ation in the first place? Quite sim pIe! Individuals - millions of them 334 THE FREEMAN June - failed constantly to correct their moral and ethical positions as they ventured toward expanding hori zons. By taking their eyes off one of the most important guidelines, they surrendered their individu ality and lost themselves in the numerous collectives. A collective can no more practice the Golden Rule than it can think, and the same is true of persons who allow themselves to become collectivized. There are other guidelines on the societal instrument panel which must be scrupulously heed ed if we would stay on course. Among them are the Ten Com mandments. I shall choose two at random, sufficient to make my point. Take "Thou shalt not steal" and note how easy it is to stray off course unless one is constantly correcting. How many among us will personally rob another? Per haps one in ten thousand! The vast majority of us would starve before snatching another's purse.

Personal observance of this Com mandment is so much a part of our heritage that honest behavior is little more than doing what comes naturally. And who will contend that it should be otherwise? Such a person can hardly be found; nearly everyone believes that this is a good guideline. But observe what has happened to these "honest" millions, the ones in the United States. The vast majority who would not snatch a purse to gain a few dollars will now advocate schemes taking not less than $150 billion annually. They will take a substantial part of each other's income and capital and do so without the slightest qualm. Most of them, as they feather their own nests at the ex pense of others, will think of these actions as righteous rather than sinful. Why so far off course? Depersonalizing the Act First, is the depersonalization of the action; the taking is not done on anyone's personal respon sibility but in the name of some so-called social good or group. Sec ond, this taking has been legalized which, to nonthinkers, makes the action seem all right. And third, these people apparently have had no instructor who said, "I am not checking as to whether you are on course or off but only to make ab solutely certain that you are con stantly correcting." They have taken their eyes off the instru ment panel - off this guideline and are now so far into "the wild, blue yonder" that they regard tak ing each other's substance as benevolence. Petty thievery they rej ect; coercive taking from each other on the grand scale they ac cept. "Thou shalt not steal" has become a mere Biblical tag line in1971 AM I CONSTANTLY CORRECTING? 335 stead of a hazard-avoiding guide line.

What about "Thou shalt not kill"? No need to labor the an swer, for to do so would be a repe tition of the stealing explanation. Few, indeed, would personally commit murder, any more than a wolf will kill his kind. 1 Yet, peo ple in the most "advanced" nations will engage in mass slaughter and, if proficient enough, receive med als for so doing! And for precisely the same reasons that they steal from each other on the grand scale: failure to look to this guide line on the societal instrument panel and constantly correct. That most people from all walks of life really believe in this Command ment as a correct guideline is at tested by their strict observance of it in personal relationships. Market Pricing Let us now refer to one among numerous economic guidelines: If exchange is voluntary, everybody gains; otherwise, one man's gain is another's loss. Behind this re markable guideline lies the sub jective theory of value. This was no invention but a discovery. Carl 1 See "Morals and Weapons," the final chapter in King Solomon's Ring by Kon rad Z. Lorenz who, according to Julian Huxley, is "one of the outstanding nat uralists of our times." In paperback (New York: Thomas Y. Crowell Co., 1961) .

Menger (1870) merely observed how people behave among them selves when free to act voluntarily. What he discovered is as simple as the Golden Rule: The value of any good or service is whatever an other or others will give in willing exchange. If I swap two hours of my labor for your goose, the value of my labor is your goose and the value of your goose is my labor. Observe that each of us - sub jectively, that is, in our respective judgments - gains by the ex change. I value the goose more than my labor and you value my labor more than your goose or we would not trade one for the other. Even a child can understand this basic economic guideline if it is ex plained correctly. 2 The free market of voluntary exchanges, based on each person's judgment or choice of values, af fords the pricing information each participant needs to tell him in stantly what is relatively scarce or relatively abundant, whether to consume or to save, to buy or to sell, to produce more or less of 2 For an explanation of why the sub jective theory of value is not more gen erally comprehended, see "The Dilemma of Value," in Talking to Myself (The Foundation for Economic Education, Inc., Irvington-on-Hudson, N. Y., 1970), pp. 81-88. And for a suggestion as to how this theory can be taught to children, see "Economics for Boys and Girls."

Copy on request.

336 THE FREEMAN June this or that - market price guide lines for constant correcting. Today, millions of exchanges are not willingly but coercively made. Samples: The part I have been forced to pay for the Gate "vay Arch, urban renewal and "full employment" projects, going to the moon, and so on. Reflect on the unwilling exchanges labor unions coerci vely exact from their own members as well as employers. The individual's judgment of value and desire to trade are disregarded. Exchanges are unwillingly effect ed. This is a substitution of war like, antagonistic relationships for the peaceful, harmonious ways of the free market. This sort of ex change can no more persist or survive than can a society of thieves. Such a dog-eat-dog ar rangement has to spell disaster. Why this economic nonsense? We have been staring into "the wild, blue yonder" and failing to heed this and other simple guide lines on the societal instrument panel. Ours is a miserable record because we are not constantly cor recting.

Finally, it makes little differ ence what aspect of life one ex amines; the further we venture from the ordinary, the traditional, the habitual, the greater the risk of losing our way. Take my own case, for instance. I have been delving into the free market, private ownership, limit ed government way of life, along with its moral and spiritual ante cedents for four decad.es, and the more I probe, the easier it is to get off course. As one explores the wonderful potentialities of the free society, the further one de parts in his thinking from the so cialistic world in which we live. It gets pretty misty up here in the ivory tower - the ideal - and un less one is constantly correcting that is, forever referring to the societal instrument panel with its accurate guidelines - one is hope lessly lost. If we would edge our way out of the political interventionist hodge podge in which we presently find ourselves, we need to heed the basic guidelines. The way we live our lives at the personal level is demonstration enough that we be lieve in the accuracy of these in struments. So, regardless of how far we venture, now on course and then off, constantly correct!

This is the way to continuously expand our horizons in safety. ~ Soviet Dissent: Heat without Light MELVIN D. BARGER You COULD FEEL passion and spirit in the storm of protest rolling over the world intellectual community when it was announced last N0 vember that Soviet Novelist Alek sandr SoIzhenitsyn would not be allowed to accept his Nobel prize in person. Like Boris Pasternak 12 years before him, the brilliant Solzhen itsyn beca.me an instant martyr. His case was hot news in the west ern press, a cause celebre among the intelligentsia. His plight was one more depressing example of the Soviets' heavy-handed ap proach to the arts. It raised fears that the mild liberties of the post Stalin era were fading, that a new period of harsh subjugation was setting in. Would it now be more concentration camps and terror ism, repea ts of the thing SolzMr. Barger is a public relations representative in Jackson, Michigan.

henitsyn wrote about so well in his best-selling One Day in the Life of Ivan Denisovich? There was also speculation of a hopeful nature. Solzhenitsyn and his fellow artists, so this thread of reasoning went, were really driv ing a thin wedge of freedom in Russia. This thin wedge would some day split apart the Kremlin walls, opening the way for real freedom of expression. But to anybody who has studied the Soviet Union, both the fears and the hopes of the Solzhenitsyn case are unrealistic and naive. It makes good newspaper copy, but little difference in Soviet life. It also ignores the realities of social ism. It is heat without light. One problem of the Solzheni tsyn case is that most of his champions are socialists themselves, leaning towards government ownership or control of production facilities. 337 338 THE FREEMAN June They do not understand the role of private property in the imple mentation of intellectual freedom.

There is also a certain snobbish ness in this defense of a distin guished author. In other words, the Soviets are wrong in suppress ing a creative person, but entirely justified in regimenting factory workers and collective farmers. Finally, the intellectuals do not understand why the Soviet govern ment, and probably any govern ment organized along socialist lines, must curtail intellectual freedom. Outside My Field This lack of understanding was revealed in the remarks of the noted Russian cellist, Mstislav Rostropovich, who not only de fended Solzhenitsyn but also per mitted the author to share his home. Rostropovich said, "The po litical and economic questions of our country are not my business. There are people who know these fields better than I. But please ex.. plain to me why in our literature and art the decisive word comes so often from people who are absolutely unqualified."

Rostropovich gave away the ball game by conceding that the politi cal and economic questions were not his business. In agreeing to the right of the Soviet dictator ship to run the country from top to bottom, owning and controlling most property, he in effect signs away his right to make decisions in the fields of literature and art. Being a product of the Soviet Un ion and its educational system, he can be excused for this erroneous reasoning. But what can be said for his fellow intellectuals and artists in the Western nations who should know better, and yet con stantly work to impose socialism on the rest of the world? A large number of them care fully avoid any argument that lays the restrictions of Soviet artists at the door of socialism. The vil lain is the man Stalin, rather than socialism itself. Hence the fre quent use of the term "Stalinism." The aim of this apparent differ entiation may be to suggest that Stalinism is wrong and hateful, while socialism can be decent and humanitarian.

But the Soviet leaders them selves, whatever their other short comings, make little attempt to cooperate with this theory. They unashamedly require artists and writers to serve the system and to present only what is called social ist realism. In actual practice, this turns out to be work that fol lows the party line at a particular time. As for the writers and art ists themselves, they must be peo ple who do not give signs of be coming troublesome.

1971 SOVIET DISSENT: HEAT WITHOUT LIGHT 339 The Reality of Power Solzhenitsyn was rather unique among Soviet writers in being allowed to publish One Day in the Life of Ivan Denisovich, an attack on the prison camps of Stalinist days. This was interpreted in the West as the beginning of a change in the rigidities of socialist real ism. But that was only because Western intellectuals do not under stand the realism of socialists in power. There was a need, on Nikita Khrushchev's part, to assign Sovi et crimes to the ghost of Stalin, and the Solzhenitsyn book helped serve that end. Khrushchev had not become so liberal that he would have permitted publication of a book attacking his own programs. Nor would a book have been per mitted if it argued that socialism itself had been the evil behind the concentration camps. Far from being a change in the Soviet system itself, the liberal ism of the Khrushchev days was just a minor adj ustment. There was no intention at any time of permitting anything like real in tellectual freedom or freedom of the press. It is doubtful that such . concepts ever were understood in the Soviet Union. The men in pow er would no more permit an author to publish freely than they would permit a factory manager to use machines to produce and sell prod ucts under his own brand name.

This kind of thing is not perceived as being consistent with socialist realism. In fact, one could even argue quite convincingly that Soviet leaders would be derelict in their duty if they permitted authors to publish freely. The Soviet state owns all the newspapers, maga zines, and printing plants in the USSR. This is an immense publish ing network which annually turns out thousands of newspapers, more than 4,000 magazines, and at least 80,000 different books and pamph lets. Like most owners of publish ing facilities, the Soviet state prints the materials that get of ficial approval, and rej ects the rest. Private publishers in Ameri ca and Europe do the same thing, but with a great deal more sophis tication and for different purposes. A private publisher in America, for example, may print material he dislikes, if he knows that it will sell. Or he will print letters and other writings that oppose his point of view, the rationale being that it gets readership and also presents him as a fair person.

But the profit aims and fairness practices need not be observed in a socialist state where there are no alternate publishing sources. It is even doubtful that we would find all points of view. being pub lished in the United States if the government became the single 340 THE FREEMAN June owner or regulator of all printing. Despite our long traditions of free speech and expression, a great deal of material would end up in the ash can if the U.S. Government Printing Office were the sole pub lisher. The author in the United States has the protection of the First Amendment, but this would be virtually meaningless if all of his likely publishers were under government ownership. It is the di versity of publishing sources as well as the First Amendment that helps advance freedom of the press. No Credit to Private Enterprise The astonishing thing, however, is that private enterprise gets virtually none of the credit for the free expression enjoyed by intel lectuals in the Western nations.

There's also irony in the fact that some of the outstanding works of Soviet writers never would have reached printed form without the hated capitalist press. Pasternak's Doctor Zhivago, for example, was first published in Italy by a pri vate publisher with socialist views. Worse yet, even the fallen Khrush chev, though never repudiating the socialist philosophy, finally had to deal with private publishers in order to print his memoirs. One wonders how any of these people would have found self-expression had the socialist goal of worldwide state ownership of produc tion been reached. The writers in Western nations, if they give the matter any thought, apparently feel that a socialist America or England will always provide for the expression of different points of view. They are under this delusion because they have been accustomed to the free market place of publishing in their own countries. They easily forget that hard economic deci sions are necessary in all publish ing, and that somebody must de cide to allocate scarce resources for the production of a certain book or pamphlet.

In the harsh Soviet regime, those decisions a.re made by party leaders who are guided by social ist realism rather than the profit motive. But how would publishing decisions be made in the United States or England if all ownership rights resided in the government? Like it or not, these government publishing officials would have to be guided by socialist realism. In the early stages, they would prob ably make a token show of pre senting all points of view. But with the consolidation of their power and the arrogance typical of social reformers, they ,would soon find the will and suitable ra tionalizations for rejecting work they did not like. We can see the beginnings of 1971 SOVIET DISSENT: HEAT WITHOUT LIGHT 341 such practices today in the social ists who want to extend the gov ernment's control over advertising and the television networks. There is a great deal of pressure to establish government guidelines on TV programs for children. It does not take a lot of imagina tion to see that such controls, if accepted for one group, will soon be en larged to include other groups.

There is always a high-sounding purpose behind such measures, but they are not greatly different from socialist realism. In a government owned or -controlled communica tions system, the aims must al ways be the service of the state, and only secondarily the self expression of the creative artists. This is as true for the United States as it is for Russia or Red China. That being the case, it is likely that we will continue having pro tests on behalf of the Soviet Un ion's Pasternaks and Solzhenit syns, but no way will be found to implement the writer's freedom in Russia. It takes more than heated protest to provide effective dissent. It also requires the light of under standing; in this case, an under standing of how the free market place works and how it automati cally provides for the expression of many points of view. More than most people, artists and writers need the commercial world that many of them detest.

They need the free market place, because the market place for goods and services is also the market place for literary and artistic works. They need to live and work in a climate of freedom - freedom for everybody, and not just privi leges for the favored few who serve the regime. Until the world's intellectuals insist on that kind of freedom for the Soviet Union, they are wasting their time defending men like Solzhenitsyn. And nobody knows that fact better than the socialist realists who hold the real power in the Soviet Union. ~ IDEAS ON ¢ LIBERTY The Question of Freedom WE SHOULD REMEMBER that in an area controlled by such a proc ess as national socialism, or any similar philosophy of govern mental direction, the question and definition of what human personality is, and what human rights and fundamental freedoms are, rest with the dominant political power. RUSSELL J. CLINCHY, "Human Rights and the United Nations"

Dear--I am glad to hear that you are enjoying your stay in this country and are profiting by your schooling. You say you are impressed by our great cities, the wealth of our ordinary citizens and their friend liness. This is not surprising, considering that you come fro'm a relatively more primitive land. America was like that not long ago. You say you would like to stay and live here'; but if you did you would probably find that our people are much like those everywhere else. There are a few bad ones, some energetic ones who try to improve things according to their own various ideas, and a great majority who passively accept the leadership and example of one or the other of these natural leaders. You were sent here, not so much to learn our ways, as to learn how to help improve your own country. You cannot convert your community into a replica of America, nor is there any reason why you should try. The people of each community have their own characteristics, standards, and ideals. Rather than try to imitate America as it is now, I suggest you study our early and frontier development to find what lessons, methods, and institutions were successfully used then in the process of our development. Some of these methods may be adaptable to the objectives and conditions of your own country. Hopefully, other ideas will suggest themselves to you which are specifically applicable in your own case.

Don't expect, when you return, that people will eagerly await your words of wisdom, all set to work and promptly convert the 342 1971 TO A STUDENT FROM ABROAD 343 area into the idealized model you have in mind for them. There will he some positive opposition to· change, a lot of indifference, and in some cases older and more experienced heads who have different ideas as good as yours, if not better. To start, I would suggest that you exert your influence by setting a personal example. Fix up your own home according to the stand ards of order, convenience, and sanitation you have learned. De velop a craft or product or provide a service which will be in demand. Start with something simple and well within your capa bility, and maintain it at a high standard. If others start imitating you and give you competition, hopefully with improvements of their own, feel flattered that you have succeeded, not only in providing the service, but in creating a demand for it. If possible, after one success, branch out similarly into other fields. Your schooling here should start you off on many ideas. Pick the ones most appropriate to your community.

Some of your projects won't work out. In that case, drop them and try something else. Many of your efforts will be ridiculed, especially when they fail. When they do succeed, someone else will try to take the credit. Don't let this discourage you. If you succeed in your programs and manage to raise your own standard of living above that of the rest of the people, envy and jealousy are likely to cause disagreeable incidents. This is the inevitable reaction of those who want the benefits of progress without contributing to it. You will have to take your satisfaction by observing the progress of your imitators and the benefits derived from the use of your innovations. I do wish you every success. Sincerely, Arthur R. Hercz Mr. Hercz, retired after 26 years of Army service, recently earned a Master's degree in History in preparation for teaching.

The Law School and Legal Training SYLVESTERPETRO WHEN PEOPLE ask, "What do law schools do?" the impatient say: "Why, they turn out lawyers, of course!" But such an answer is much too short, for law schools do both more and less than turn out lawyers. The word "lawyer" is a loose term referring to those persons who engage in one or another as pect of the complex set of activi ties known as the practice of law. In order to become a lawyer, let alone a good lawyer, you will have to do a great deal more than spend three years, however studiously, in law school. On the other hand, such training as you acquire can serve you well even though you Dr. Petro is Professor of Law at New York Uni versity School of Law. He has written a number of books, and is a frequent contributor to THE FREEMAN and other journals of law, economics, and political science. This article is based upon his talk to entering freshmen at the School of Law in September, 1970.

344 are never admitted to the bar or never practice law a day in your life. It used to be that gentlemen who did not know what else to do with themselves in their early twenties went to law school merely in order to continue their educa tion, or even only to pass the time. It wasn't a bad idea then and isn't now. Many legally trained persons have become outstanding men of business or politicians or writers or actors or sailors or teachers and even more unlikely things. There is no reason to suppose that such careers will be closed to present or future law students. On the contrary. What law schools do, what they must do because they are not phys ically capable of doing anything else as long as they are staffed by lawyers and attended mainly by 1971 THE LAW SCHOOL AND LEGAL TRAINING 345 students who want to become .law yers-what they do is impart legal training. In order to understand what that means you will first have to see law schools in their social setting generally and in relation to the legal system particularly.

The Purpose 01 the Legal System The legal system is that set of institutions, armed with physical force and directed by reason and good sense, which mankind asks to formulate and apply the norms necessary at least to the survival and at most to the progress of so ciety. Church, school, home, and a vast number of other experiences all share in the task of forming public opinion on right and wrong, good and bad, desirable and un desirable. Neither the legal system as a whole nor the law schools have any monopoly on virtue, any exclusive competence or expertise in matters of morality or social utiHty. That private property should be protected, contracts en forced, and wrongful injury to the person compensated - these prin ciples emerged from the minds of human beings long before the legal profession did; indeed they brought legal systems into exist ence. It was not the other way round.

The legal system and its per sonnel may and do contribute to the development of moral and ethical principles. But their main business is to see that society's norms are effectuated - their unique expertise, if any, is dis played to the extent that they do so consistently, coherently, and efficiently. Society demands com pliance with and enforcement of its basic norms; the legal system purports to supply that enforce ment. And the law schools necessarily preoccupy themselves with study and teaching of the ways in which the legal system goes about its tasks. Among the elements of legal training which you will acquire in law school, then, is a grasp of the "machinery of justice" and how it works. Just as every person is in part what his genetic equipment makes him, so too does history play a significant role in the make-up of society, quintessentially so in the structure and operation of the le gal system. Those who patroniz ingly say, "That's only legal his tory," miss a big point about law.

Law can no more dissociate itself from its history than you can from your genes. The History 01 the Law All the law that human beings can study is historical law, com posed of and shaped by yet more antecedent ideas and experience. It is law made in the past - re member, yesterday is already past 346 THE FREEMAN June - that rules the future. "Time present and time past are con tained in time future, and all time is eternally present," the poet said, rightly. You will read many old cases in law school. Try not to be impatient with them. Approach them receptively and you will gain greatly. Human society did not begin the day you were born. And Somerset Maugham may have been right when he said that the central truths about mankind were much too important to its survival to go long undiscovered. The decalogue broods silently but potently among all law studies. As you study cases, statutes, and learned commentaries, all com posing the long historical sweep and evolution of legal institutions, you will become aware that human affairs are inordinately compli cated and that governing those affairs is a correspondingly com plex operation, challenging the highest faculties of mind and char acter. Your powers of reason, of identification and discrimination, of analysis and synthesis, will be tried, probably, as they have never been before. Unlike mathematics, the structure of which is shared by the formal, logical side of law, the legal system is forever deal ing in empirical fact - and em pirical fact involving, at that, the most complex activities known to man: his own.

No two transactions, no two re lationships, hence no two cases, are ever identical. A rule or doc trine or formula which disposes beautifully of one set of facts meting out what everybody agrees is perfect justice under law to the parties involved in that case may founder if the facts change only a little. How far does a rule reach? Ah, that is the question. Before you get through law school you will be "reconciling," "distin guishing," and "harmonizing" de cisions all over the place. You will have made at least a start in mastering the lawyerly arts and skills: imaginatively constructing cogent theories and developing a sense of which facts are critical, which relevant, and which irrele vant. And all this despite the prob ability that you will never be able to formulate these processes sat isfactorily because they are so subtle and complex. As a matter of fact, perhaps most litigation occurs because lawyers differ on the questions whether this case is ruled by that, which theory is applicable, and therefore which facts are relevant.

It is a serious mistake to accept the common notion that law is a haven for the dull and the uni maginative. No area of human action provides a richer field for the subtle play of intellect and imagination.

1971 THE LAW SCHOOL AND LEGAL TRAINING 347 DO not fall into the error, how ever, of believing, because some areas of law are dubious and un clear and because some disputes can be resolved only in court, that there is no such thing as law, or that it is absolutely plastic. Like all great institutions, the law is working quietly all the time, at its best when most quietly, mainly outside the courtroom. Of the un told billions of human relation ships, voluntary and involuntary, only an infinitesimally small frac tion are resolved by direct recourse to the machinery of justice, and it is well that this is so; for any legal system which had to in tervene physically into every hu man relationship would soon rup ture itself. Our system of law is in the main cogent and clear and widely understood and respected. Were it not, we should be finding chaos at the center rather than at the fringes of our daily lives. Part of your legal training is concerned with going to court. All of it should be helping you to stay out of court, if your clients will co operate.

The Study of Human Action In performing the services which society and the legal system demand of them, the law schools must perforce attend dominantly to the kinds of tasks implicit in the foregoing; but a strange thing happens in the process. Wane you are dragging yourself through thousands of cases, statutes, hypo thetical problems - all the while compelled to make some kind of sense of them, to understand them, and to learn how to use them - in the course of this sometimes op pressive process, you will acquire a grasp of human action, human nature, and human society exceed ing in comprehensiveness and de tail anything offered by any other formal course of study . You will see the plot of human life unfold in ways that make all but the greatest novels and plays seem pitifully thin. More than that, you will have the opportunity to devel op habits of self-discipline, of pre cise thought, of tenacity in fact analysis, and of coherent theoriz ing, which are universally useful, not only in law practice but in every phase of life in the complex, free society. Indeed, the survival and the progress of the free soci ety are peculiarly the responsi bili ty of the legally trained, for they are most intimately involved in the operation of its machinery.

When law school gets a bit much for you, as it likely will more than once, remember what Alexis de Tocqueville said : "Nothing is more fertile in prodigies than the art of being free - and nothing is more arduous than the apprenticeship of liberty."

348 THE FREEMAN June I have emphasized the historical and the theoretical, the informa tional and the ratiocinative aspects of legal training because, as I have said, they comprehend the contributions that law schools are uniquely qualified to make. Many believe that the law schools should preoccupy themselves less with "technical training" and more with efforts to "improve the law" and thus become more "relevant." May be so. Society, the legal system, and the law schools are all in need of improvement, and more and more irrelevancies :have crept into law-school curricula over the years, especially the recent years. However, that same legal training which has served so well in so many occupations is also the nec essary prerequisite to genuine, stable progress in the law. It is fatuous to suppose that anything so infernally complicated as hu man society can be made to re spond productively to ideas struck off impulsively by unqualified, unskilled, and immature persons.

Durable improvement in any com plex field can come only from per sons profoundly conversant with that field. Cool, sustained study, knowledge as wide and full as possible, and a well-disciplined mind are indispensable to any solid contribution to the progress of society. Legal training in the classical sense is an unexcelled ve hicle to the attainment of those consummately desirable objectives. If you are bound and determined while in la.w school to "reform" or "improve" things, try turning your energies to the improvement of your own legal training. You'll never regret it. For you will then, as all competent people finally do, learn how to focus your energies efficiently. You will curtly dismiss most "reform proposals," because most will be ill-considered, and you will concentrate on the few solid programs which, if you are for tunate, you will encounter in your life. I) IDEAS ON LIBERTY Private Property WITHOUT a society in which life and property are to some extent secure, existence can continue only at the lowest levels - you can not have a good life for those you love, nor can you devote your energies to activity on the higher level.

ALFRED NORTH WHITEHEAD, Adventures of Ideas thepdividual in &ciet y LUDWIG VON MISES THE WORDS freedom and liberty signified for the most eminent representatives of mankind one of the most precious and desirable goods. Today it is fashionable to sneer at them. They are, trumpets the modern sage, "slippery" no tions and "bourgeois" prej udices. Freedom and liberty are not to be found in nature. In nature there is no phenomenon to which these terms could be meaningfully applied. Whatever man does, he can never free himself from the restraints which nature imposes upon him. If he wants to succeed in acting, he must submit uncon ditionally to the laws of nature. Freedom and liberty always re fer to interhuman relations. A Dr. Mises, now retired from active teaching, is the outstanding representative of the "Austrian school" of economics. He is a part-time advisor, consultant, and staff member of The Founda tion for Economic Education.

This article is extracted from his book, H u man Action (Yale University Press, 1949: 3rd ed. Regnery, 1966). man is free as far as he can live and get on without being at the mercy of arbitrary decisions on the part of other people. In the frame of society everybody de pends upon his fellow citizens. Social man cannot become inde pendent without forsaking all the advantages of social cooperation. The fundamental social phe nomenon is the division of labor and its counterpart - human co operation. Experience teaches man that co operative action is more efficient and productive than isolated action of self-sufficient individuals. The natural conditions determining man's life and effort are such that the division of labor increases output per unit of labor expended. These natural facts are: (1) the innate inequality of men with re gard to their ability to perform various kinds of labor, and (2) the 349 -350 THE FREEMAN June unequal distribution of the nature given, nonhuman opportunities of production on the surface of the earth. One may as well consider these two facts as one and the same fact, namely, the manifold ness of nature which makes the universe a complex of infinite varieties.

Innate Inequality The division of labor is the out come of man's conscious reaction to the multiplicity of natural con ditions. On the other hand, it is itself a factor bringing about dif ferentiation. It assigns to the vari ous geographic areas specific func tions in the complex of the proc esses of production. It makes some areas urban, others rural; it lo cates the various branches of man ufacturing, mining, and agricul ture in different places. Still more important, however, is the fact that it intensifies the innate ine quality of men. Exercise and practice of specific tasks adj ust individuals better to the require ments of their performance; men develop some of their inborn facul ties and stunt the development of others. Vocational types emerge, people become specialists. The division of labor splits the various processes of production into minute tasks, many of which can be performed by mechanical devices. It is this fact that made the use of machinery possible and brought about the amazing im provements in technical methods of production. Mechanization is the fruit of the division of labor, its most beneficial achievement, not its motive and fountain spring.

Power-driven specialized machin ery could be employed only in a social environment under the di vision of labor. Every step for ward on the road toward the use of more specialized, more refined, and more productive machines re quires a further specialization of tasks. Within Sodety S~en from the point of view of the individual, society is the great means for the attainment of all his ends. The preservation of so ciety is an essential condition of any plans an individual may want to realize by any action whatever. Even the refractory delinquent who fails to adjust his conduct to the requirements of life within the societal system of cooperation does not want to miss any of the advantages derived from the di vision of labor. He does not con sciously aim at the destruction of society. He wants to lay his hands on a greater portion of the jointly produced wealth than the social order assigns to him. He would feel miserable if antisocial be havior were to become universal 1971 THE INDIVIDUAL IN SOCIETY 351 and its inevitable outcome, the return to primitive indigence, resulted.

Liberty and freedom are the conditions of man within a con tractual society. Social cooperation under a system of private owner ship of the means of production means that within the range of the market the individual is not bound to obey and to serve an overlord. As far as he gives and serves other people, he does so of his own accord in order to be rewarded and served by the re ceivers. He exchanges goods and services, he does not do compulsory labor and does not pay tribute. He is certainly not independent. He depends on the other members of society. But this dependence is mutual. The buyer depends on the seller and the seller on the buyer. Self-Interest The main concern of many wri t ers of the nineteenth and twen tieth centuries was to misrepre sent and to distort this obvious state of affairs. The workers, they said, are at the mercy of their employers. Now, it is true that the employer has the right to fire the employee. But if he makes use of this right in order to indulge in his whims, he hurts his own interests. It is to his own disad vantage if he discharges a better man in order to hire a less efficient one. The market does not directly prevent anybody from ar bitrarily inflicting harm on his fellow citizens; it only puts a penalty upon such conduct. The shopkeeper is free to be rude to his customers provided he is ready to bear the consequences. The consumers are free to boycott a purveyor provided they are ready to pay the costs. What impels every man to the utmost exertion in the service of his fellow men and curbs innate tendencies toward arbitrariness and malice is, in the market, not compulsion and co ercion on the part of gendarmes, hangmen, and penal courts; it is self-interest. The member of a contractual society is free because he serves others only in serving himself. What restrains him is only the inevitable natural phe nomenon of scarcity. For the rest he is free in the range of the market.

In the market economy the in dividual is free to act within the orbit of private property and the market. His choices are final. For his fellow men his actions are data which they must take into account in their own acting. The coordina tion of the autonomous actions of all individuals is accomplished by the operation of the market. So ciety does not tell a man what to do and what not to do. There is no need to enforce cooperation by 352 THE FREEMAN June special orders or, prohibitions. Non-cooperation penalizes itself. Adj ustment to the requirements of society's productive effort and the pursuit of the individual's own concerns are not in conflict. Con sequently no agency is required to settle such conflicts. The system can work and accomplish its tasks without the interference of an authority issuing special orders and prohibitions and punishing those who do not comply. Compulsion and Coercion Beyond the sphere of private property and the market lies the sphere of compulsion and coercion; here are the dams which organ ized society has built for the pro tection of private property and the market against violence, malice, and fraud. This is the realm of constraint as distinguished from the realm of freedom. Here are rules discriminating between what is legal and what is illegal, what is permitted and what is pro hibited. And here is a grim ma chine of arms, prisons, and gal lows and the men operating it, ready to crush those who dare to disobey.

It is important to remember that government interference al ways means either violent action or the threat of such action. Gov ernment is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning. Those who are asking for more government interference are ask ing ultimately for more compul sion and less freedom. Liberty and freedom are terms employed for the description of the social conditions of the indi vidual members of a market so ciety in which the power of the indispensable hegemonic bond, the state, is curbed lest the operation of the market be endangered. In a totalitarian system there is noth ing to which the attribute "free" could be attached but the unlim ited arbitrariness of the dictator. There would be no need to dwell upon this obvious fact if the champions of the abolition of lib erty had not purposely brought about a semantic confusion. They realized that it was hopeless for them to fight openly and sincerely for restraint and servitude. The notions liberty and freedom had such prestige that no propaganda could shake their popularity. Since time immemorial in the realm of Western civilization liberty has been considered as the most precious good. What gave to the West its eminence was precisely its concern about liberty, a social ideal foreign to the oriental peo1971 THE INDIVIDUAL IN SOCIETY 353 pIes. The social philosophy of the Occident is essentially a philoso phy of freedom. The main content of the history of Europe and the communities founded by European emigrants and their descendants in other parts of the world was the struggle for liberty. "Rugged"

individualism is the signature of our civilization. No open attack upon the freedom of the individual had any prospect of success. New Definitions, Reversing the Meaning of Words Thus the advocates of totalitari anism chose other tactics. They reversed the meaning of words. They call true or genuine liberty the condition of the individuals under a system in which they have no right other than to obey orders. They call themselves true liberals because they strive after such a social order. They call de mocracy the Russian methods of dictatorial government. They call the labor union methods of vio lence and coercion "industrial de mocracy." They call freedom of the press a state of affairs in which only the government is free to publish books and newspapers. They define liberty as the oppor tunity to do the "right" things, and, of course, they arrogate to themselves the determination of what is right and what is not. In their eyes government omnipotence means full liberty. To free the police power from all re straints is the true meaning of their struggle for freedom.

The market economy, say these self-styled liberals, grants liberty only to a parasitic class of ex ploiters, the bourgeoisie; that these scoundrels enjoy the free dom to enslave the masses; that the wage earner is not free; that he must toil for the sole benefit of his masters, the employers; that the capitalists appropriate to them selves what according to the in alienable rights of man should belong to the worker; that under socialism the worker will enjoy freedom and human dignity be cause he will no longer have to slave for a capitalist; that social ism means the emancipation of the common man, means freedom for all; that it means, moreover, riches for all. These doctrines have been able to triumph because they did not encounter effective rational criti cism. It is useless to stand upon an alleged "natural" right of indi viduals to own property if other people assert that the foremost "natural" right is that of income equality. Such disputes can never be settled. It is beside the point to criticize nonessential, attendant features of the socialist program.

One does not refute socialism by attacking the socialists' stand on 354 THE FREEMAN June religion, marriage, birth control, and art. A New Subterfuge In spite of these serious short comings of the defenders of eco nomic freedom it was impossible to fool all the people all the time about the essential features of socialism. The most fanatical plan ners were forced to admit that their projects involve the abolition of many freedoms people enjoy under capitalism and "pluto de mocracy." Pressed hard, they re sorted to a new subterfuge. The freedom to be abolished, they emphasize, is merely the spurious "economic" freedom of the capi talists that harms the common man; that outside the "economic sphere" freedom will not only be fully preserved, but considerably expanded. "Planning for Freedom" has lately become the most popular slogan of the champions of totali tarian government and the Russi fication of all nations.

The fallacy of this argument stems from the spurious distinc tion between two realms of human life and action, the "economic" sphere and the "noneconomic" sphere. Strictly speaking, people do not long for tangible goods as such, but for the services which these goods are fitted to render them. They want to attain the increment in well-being which these services are able to convey. It is a fact that people, in dealing on the market, are moti vated not only by the desire to get food, shelter, and sexual enjoyment, but also by manifold "ideal" urges. Acting man is always concerned both with "material" and "ideal" things. He chooses between various alterna tives, no matter whether they are to be classified as material or ideal. In the actual scales of value, ma terial and ideal things are jum bled together. Preserving the Market Freedom, as people enjoyed it in the democratic countries of Western civilization in the years of the old liberalism's triumph, was not a product of constitutions, bills of rights, laws, and statutes.

Those documents aimed only at safeguarding liberty and freedom, firmly established by the opera tion of the market economy, against encroachments on the part of officeholders. No government and no civil law can guarantee and bring about freedom other wise than by supporting and de fending the fundamental institu tions of the market economy. Government means always coer cion and compulsion and is by necessity the opposite of liberty. Government is a guarantor of liberty and is compatible with liberty only if its range is ade1971 THE INDIVIDUAL IN SOCIETY 355 quately restricted to the preserva tion of economic freedom. Where there is no market economy, the best intentioned provisions of con stitutions and laws remain a dead letter. Competition The freedom of man under cap italism is an effect of competition. The worker does not depend on the good graces of an employer. If his employer discharges him, he finds another employer. The consumer is not at the mercy of the shop keeper. He is free to patronize another shop if he likes. Nobody must kiss other people's hands or fear their pisfavor. Interpersonal relations are businesslike. The ex change of goods and services is mutual; it is not a favor to sell or to buy, it is a transaction dic tated by selfishness on either side.

It is true that in his capacity as a producer every man depends either directly, as does the en trepreneur, or indirectly, as does the hired worker, on the demands of the consumers. However, this dependence upon the supremacy of the consumers is not unlimited. If a man has a weighty reason for defying the sovereignty of the consumers, he can try it. There is in the range of the market a very substantial and effective right to resist oppression. Nobody is forced to go into the liquor industry or into a gun factory if his conscience objects. He may have to pay a price for his conviction; there are in this world no ends the attainment of which is gratuitous. But it is left to a man's own de cision to choose between a ma terial advantage and the call of what he believes to be his duty. In the market economy the individual alone is the supreme arbiter in matters of his satisfaction. Consumers Choose Capitalist society has no means of compelling a man to change his occupation or his place of work other than to reward those com plying with the wants of the con sumers by higher pay. It is pre cisely this kind of pressure which many people consider as unbear able and hope to see abolished under socialism. They ,are too dull to realize that the only alternative is to convey to the authorities full power to determine in what branch and at what place a man should work.

In his capacity as a consumer man is no less free. He alone de cides what is more and what is less important for him. He chooses how to spend his money according to his own will. The substitution of economic planning for the market economy removes all freedom and leaves to the individual merely the right to 356 THE FREEMAN June obey. The authority directing all economic matters controls all aspects of a man's life and activi ties. It is the only employer. All labor becomes compulsory labor because the employee must accept what the chief deigns to offer him. The economic tsar determines what and how much of each the consumer may consume. There is no sector of human life in which a decision is left to the individu al's value judgments. The author ity assigns a definite task to him, trains him for this job, and em ploys him at the place and in the manner it deems expedient. As soon as the economic free dom which the market economy grants to its members is removed, all political liberties and bills of rights become humbug. Habeas corpus and trial by jury are a sham if, under the pretext of economic expediency, the author ity has full power to relegate every citizen it dislikes to the arctic or to a desert and to assign him "hard labor" for life. Freedom of the press is a mere blind if the authority controls all printing of fices and paper plants. And so are all the other rights of men.

A man has freedom as far as he shapes his life according to his own plans. A man whose fate is determined by the plans of a su perior authority, in which the exclusive power to plan is vested, is not free in the sense in which the term "free" was used and un derstood by all people until the semantic revolution of our day brought about a confusion of tongues. , Reprints available, 10 cents each A Bibliographical Listing of THE WORKS OF LUDWIGvon MISES A listofthe books and articles by Dr. Mises in their several editions and translations, prepared by Bettina Bien. 60 pages $1.00 Order from: The Foundation for Economic Education, Inc. Irvington-on-Hudson, New York 10533 CONTEMPORARY Western society places high value upon two ideals: individual libertyl and the rule of law. Cursory examination of these concepts seemingly reveals the clear instance of inevitably war ring propositions. The current mi lieu of high rebellion versus "law and order," of do-your-own-thing vers us the sancti ty of the tradi tional,2 bringing into conflict per sonal action and public authority, does little to disabuse the notion.

If law is defined as restraint on hu man action and liberty as the abI 1 I use the terms "liberty" and "freedom" interchangeably in this article. Ber lin suggests that there have been over 200 recorded definitions of liberty, Isaiah Berlin, Two Concepts of Liberty (Oxford University Press, 1958) 6; I do not intend to catalog or examine all these defini tions. Rather, this article is concerned with the search for a precise, valid defini tion of liberty, one which reveals and cor rects the current deterioration of the concept. Berlin, id 16, does not believe such a deterioration is taking place, but see, contra, Lon L. Fuller, "Freedom - A Suggested Analysis" 68 Harv. L. Rev. 1305 RIDGWAY K. FOLEY, JR. (1955). See for a different analysis, Glanville Williams, "The Concept of Legal Liberty," Essays in Legal Philosophy (University of California Press, 1968, Summers ed.), 121-145. I Ridgway K. Foley, Jr., is an attorney associ ated with the firm of Souther, Spaulding, Kin sey, Williamson & Schwabe and practices law in Portland, Oregon.

This article is scheduled for publication in the November 1971 issue of The WilIamette Law Journal and is printed here with the ex press permission of Willamette University, Salem, Oregon. 2 What the existent generation pres ently sanctifies as traditional and sacred may not normally represent the great value judgments and normative concepts of the past. Today's nominal conservative may well mimic the radical of 30 years ago. Witness the acceptance, by all but the strict libertarian or voluntarist, of social security, union monopolies, and the Federal Reserve System. 357 358 THE FREEMAN June sence of restraint, the concepts are inimical and conciliation impos sible. This article proposes briefly to scrutinize individual freedom and the rule of law, to determine if the working definitions are accu rate, and to decide if overgeneral ization has obscured the whole truth of partially valid tenets.

On the first blush, it may appear singular for a law review to con sider the general quantity and quality of the law. Such considera tions should have been long ago made and laid to rest. It is much more exciting to consider what the law can do to and for man, with or without his consent. Eradica tion of poverty, improvement of the environment, and assurance of economic equality for all men ring a more responsive chord in the breast of the sympathetic lawyer than cold, jurisprudential analysis. The existence of past analysis does not mean that the present re iteration and refinement of essen tial ideas is unrewarding; we may need a gentle reminder of the past, and demonstration of its applica bility to the dynamic present. It is the use of law for laudable goals at the possible expense of human freedom which commands re-ex amination. After all, most men agree that clean air, good housing, and a commodious job are desir able goals. The inquiry is not of goals, but of the means to secure the goals; the end pre-exists in the means. 3 If the rule of law can de stroy human action, such a tact should be trumpeted to all con cerned; before man surrenders his freedom for an end, he may want to know (1) if the suggested ac tion will achieve the end sought and, if so, (2) if the end is worth the price.

Definitions of Liberty and Law The first step toward under standing and analysis is the devel opment of working definitions of the concepts to be studied. (1) Elements of liberty A meaningful concept of liberty presupposes a living, purposive, choosing human being. 4 An inani mate object may be described as being in a "free state" and yet it would be singular to characterize it as possessing liberty in the sense that a man is free. A man, how ever, imprisoned in Salem, cannot be in Paris or Rome or, indeed, in any place but his cell, so he is prop erly described as unfree or re strained. 3 Leonard Read amplifies and refines this truth orginally enunciated by Ralph Waldo Emerson. See, e.g., Leonard E. Read, Let Freedom Reign (The Founda tion for Economic Education, Inc., Irving ton-on-Hudson, New York, 1969), 78 et seq. 4 See Fuller, Ope cit., at 1306-1307, for comments upon how the "scientific meth od" trend encourages thinkers to "play down" purpose.

1971 INDIVIDUAL LIBERTY AND THE RULE OF LAW 359 The prisoner example indicates a second prerequisite for liberty: the human actor must have a meaningful range of alternatives. The choice between remaining in prison or being shot while attempt ing to escape presents little real choice at all, but it remains a choice. It becomes viable if condi tions in prison deteriorate to the progressively intolerable. How ever, freedom does not presuppose an infinite variety of choices. 5 One may live in London, or Paris, or Rome, but he cannot be present in all three places at the same in stant, nor can he be on Saturn or Uranus (at this stage of space travel). Despite these limitations, an individual can be described as free. Man may be. free despite his finity; one is not denuded of lib erty merely because he cannot think like Albert Einstein, leap over buildings like Superman, or play basketball like Bill Russel1.6 5 See Berlin, op. cit., 7, and Fuller, id 1309-1310. Careful analysis of this re quirement destroys the naive "economic slavery" argument. But see Marshall Co hen, "Berlin and the Liberal Tradition,"

10 Phil. Quar. 216,225 (1960). 6 Thus, the specious argument concern ing maximization of human freedom by rendering all men "equal" is bared. Man can be free, meaningfully free, and not possess the identical natural attributes and choices of his fellows. Those who would fit all men in a Procrustean bed not only perform a disservice to those stretched and squashed, but also mock the meaning of freedom by using law in A third essential element of in dividual freedom is a relationship to at least one other human being. A person is meaningfully free only where his choice of alternatives is unrestricted by deliberate human interference, notwithstanding his subservience to physical or bio logical limitations. Robinson Cru soe, alone on his island, is neither free nor restrained. Only when he encounters natives on his rustic shore will the question of freedom arise, because only then is there possibility of deliberate human in terference with individual actions.

Fourth, some element of intern al and external restraint adheres in the very definition of liberty;7 it is ineffective to equate liberty solely with the absence of restraint because such a definition could also apply to a state of lack of freedom. Robinson Crusoe could be subj ect to no deliberate human interven tion when he subdued the inhabi tants of his world and became ab solute monarch, but he could not be styled free if he were subject to uncontrollable fits of passion or impulsive action which he could not restrain. Thus, the internal aspect of restraint, be it denoted self-control, morality, or conthe name of freedom to perform restrain ing acrobatics. 7 See J. Ebbinghaus, "The Law of Hu manity and the Limits of State Power," 3 Phil. Quar. 14, 15 (1953).

360 THE FREEMAN June science, is implied in the very defi ni tion of liberty. 8 Some thinkers have also recog nized that unlimited power of hu man action without external re straint could result in license, an archy, and civil chaos. In such a society, the "inferior" persons would have only the freedom of action permitted by their more powerful neighbors; the "superior" beings might virtually enslave their less fortunate fellows, but they, too, would be unfree to the extent that they were forced to devote their time to coercive, as opposed to creative, endeavors. To the extent that the predator must dissipate his creative powers in use of force upon others, he, too, is restrained, although his re restraint is self-imposed and by his own choice. Berlin's analysis separates lib erty into "positive" and "negative" aspects; negative liberty is con cerned with the inquiry, "In what area is man left free to do what he 8 See Edmund A. Opitz, "Defining Free dom," THE FREEMAN, Vol. 12, No.9 (Sep tember 1962), 3, 5: "Rather than freedom being the mere absence of restraint we begin to see that freedom is indeed the acknowledgment of certain kinds of re straints - or constraints. Inwardly a man is free when he is self-determined and self-controlling. Outwardly, a man is free in society ... when the limitations he accepts for his own actions are no greater than needed to meet the requirement that every other individual have like liberty."

wishes without interference by other men, singly or in the collec tive ?"9 Implicit in this question concerning liberty is the premise that some restraint on human ac tion exists compatibly with free dom. To the extent that this area of noninterference is contracted, the individual is coerced and un free, but the very concept of an area of noninterference presup poses some limitation. The external restraint implicit in liberty is a recognition of free dom of action as an equal right of all purposive beings in society.tO The necessary implication is that liberty is not the total absence of restraint. The quest is for the per missible limits of restraint. In the words of Bastiat, liberty is "the freedom of every person to make full use of his faculties, so long as he does not harm other persons while doing so . . . [and] the re stricting of the law only to its ra tional sphere of organizing the right of the individual to lawful self-defense. . . ."11 Thus, the 9 See generally, Berlin, op. cit., 6.

10 See Fuller, op. cit., at 1322. Both Berlin, id' 8, and Fuller, at 1310-1313, criticize Mill for believing all forms of social order were undesirable; I wonder if that is the correct interpretation. Ful ler claims that some order is necessary to make choice meaningful, but query, the relevancy of his examples. 11 Frederic Bastiat, The Law (Dean Russell Translation, The Foundation for 1971 INDIVIDUAL LIBERTY AND THE RULE OF LAW 361 workable ideal of liberty is a range of individual choice unhampered by deliberate human interference except insofar as intervention is necessary to assure equal liberty to all individuals. Liberty has meaning because man possesses the power to choose, that is, the ability to observe, measure, test, evaluate, and select from alternatives. 12 But this does not mean that choice is meaning less unless liberty is also measured in terms of power to accomplish ends. 13 The freedom to do some thing does not imply success; it in cludes freedom to try and fail.

Freedom to undertake a venture may well be of profound impor tance to the individual sans suc cess in the ultimate endeavor. Hayek has wisely observed I4 that Economic Education, Inc., 1950), 51. See, also, p. 6. The Law also appears in Fred eric Bastiat, Selected Essays on Political Economy (D. Van Nostrand Company, Inc., Princeton, New Jersey, 1964),51-96. 12 W. E. Sprague, "What Is 'Freedom'?" THE FREEMAN, Vol. 12, No. 1 (January 1962), 38, 44; see also John C. Sparks, "Freedom to Decide," THE FREEMAN, Vol. 12, No. 10 (October 1962), 38. Berlin, Ope cit., 15, Note 1, indicates some of the many variables to be considered in measuring the amount of freedom a human being possesses in a given situation. 13 This would seem to be the suggestion in Oscar and Mary Handlin, The Dimen sions of Liberty (Harv. U. Press, 1961), 11,18. 14 F. A. Hayek, "A Case for Freedom" THE FREEMAN, Vol. 10, No. 10 (October 1960), 32, 34. See generally Professor the concept of liberty cannot be re stricted to areas where we know the result will be "good" because that is not necessarily freedom; freedom is required to attend to the unpredictable and unknown, and is desirable because the favor able results will far outstrip the unfavorable. The libertarian 15 is not utopian; he only asserts that liberty is the best condition for the realization of the multiple goals sought by purposive individuals.

He would not impose his choice upon others; he merely asks that others not interfere with his vol untary choice. Individual freedom is the lack of formal or informal external re straints imposed by one man or group of men upon another, save for the collective coercion aimed at preventing individuals from acting forcibly or fraudulently against th#eir neighbors. It is the absence of human impediment to the vol untary action of fellow human be ings. The permissible limitation on free choice is the recognition of Hayek's monumental work, The Constitu tion of Liberty (University of Chicago Press, 1960). 15 This term is utilized to avoid a con fusion of labels fostered by the statist prostitution of the nineteenth century concept "liberal"; "Libertarian" or "Vol untarist" includes Mill (in his earlier years), Constant, De Tocqueville, Bastiat, the neoclassical economists, members of the Austrian free market school of eco nomics, and persons in like tradition.

362 THE FREEMAN June an equal ambit of choice to all other men. (2) The elements of law I do not propose here to isolate and analyze the phenomena de noted "law." For the purposes of this article, it is sufficient to iden tify several classes of law, well ac cepted as such in the contempo rary United States, and to limit our analysis accordingly. This in no way pretends that the proffered classification is exclusive. In general, law is a method of control of human behavior, ordi narily accomplished by policies, rules, orders, decisions, and regu lations, operative within a given territorial unit; its ultimate au thority resides in the monopoly of coercion possessed by the state. 16 Coercion as an essential element of the legal system cannot be un derstated, even where compliance with law may be secured either by mere threat of force or by subtle forms of coercion. 16 The ongoing jurisprudential anal ysis of the concept of law cannot be ig nored or treated lightly. Although sub ject to criticism and disagreement, the work of H. L. A. Hart stands tall among his fellows; his influence must be acknowledged. See, generally, Hart, H.

L. A., The Concept of Law (Oxford at the Clarendon Press, 1961), passim. See also Ronald M. Dworkin, "Is Law a Sys tem of Rules?" Essays in Legal Philos ophy (University of California Press, 1968 [Summers ed.]) , 25-60. The law is coercive insofar as it delimits the range of alternatives otherwise open to the individual actor, whether the results of non compliance are penal sanctions in the traditional sense, or the fore closing of legal processes for re dress to the noncomplying indi vid ual. As indicated in the discussion of external restraints inherent in the definition of liberty, freedom not only presupposes a system of law but also could not survive in the. absence of law.17 However, an equally valid proposition is that liberty may be destroyed by the misuse of law.18 Throughout the remainder of this article, by ex ample and analysis, the interrela tionship of law and liberty and the application of these two proposi tions will be explored.

Law and the Ambush of Liberty Analysis of the relationship be tween law and liberty is compli cated by the fact that laws which operate in society under the guise of liberty may, in fact, be inimical to the freedom ideal. All law actu ally premised upon such masquer ading concepts may obstruct in dividual liberty, but the possibil ity of erosion of the concept is so likely that it is necessary to un17 See Fuller, Ope cit., 1314, Berlin, Ope cit.,5. 18 Bastiat, Frederic, The Law, Ope cit., 11.

1971 INDIVIDUAL LIBERTY AND THE RULE OF LAW 363 mask some of the most common interlopers. (1) Strange bedfellows: Liberty, Equality, and Fraternity When liberty is properly defined as the absence of human interfer ence with the actions of a pur posive individual except to the ex tent required to assure like liberty to all other individuals in society, liberty and equality become singu larly discordant companions. Lib erty has long survived the grave yard of dogma because the liber tarian accepts man as he finds him, an extraordinarily complex, voli tional being, capable of creation or destruction, searching for muitiple goals; 19 equality is curiously in compatible with both liberty and the nature of man, because the egalitarian refuses to accept man as he finds him. The egalitarian all too often bottoms his view on the premise that mankind is es sentially brutish and incompetent, incapable of betterment and unde serving of salvation, although the same thinker may posit that man acting in the collective somehow achieves great creative powers. 20 19 See Wendell J. Brown, "What Lib erty Is," 47 ABA J 290, 291 (1961).

20 Witness the modern egalitarian lib eral. He gives lip service to the concept that all men are created (or must be made) equal, yet he distrusts man and his capacity to choose; he would fore close choice or impose his choice upon Liberty is both a desirable and achievable goal; equality is nei ther, unless equality means "equal ity before the law," equal treat ment of saint and sinner found in the same posture or circumstance. This confusion of concepts is partially caused by the association of the word "equality" with the American and French revolutions of the eighteenth century, tradiother men. His goal seems to be to seize control of governmental apparatus and choose for an unwilling multitude that which they "need" or "should choose," apparently if they understood the prob lem as well as the egalitarian liberal thinks he does. (Yet these same demented members of the mass apparently have enough native intelligence to elect our liberals to office.) Apparently it is right to help your fellow man; apparently also, to the liberal, free individuals do not as sist their unfortunate brothers; there fore, the liberal 'takes charge and makes the choice (who and how much to help) and a swelling welfare system is nurtured and sanctioned by law.

Again, the liberal cannot accept the possibility that free individuals could carry the mail safely, quickly, and more efficiently than a public service, and thus a governmental mail system lives on at an amazing cost and grinding inefficiency. For examples of "governmental" func tions which could and have been per formed more adequately by private in dividuals, see the interesting little book recently published, William C. Wooldridge, Uncle Sam, The Monopoly Man (Arling ton House, New Rochelle, New York, 1970). For two views of the American liberal in his element, see M. Stanton Evans, The Liberal Establishment (The Devin-Adair Company, New York, 1965) and William F. Buckley, Jr., Up From Liberalism (Hillman Periodicals, Inc., New York, 1961).

364 THE FREEMAN June tionally associated with the search for freedom. A literal application of the egalitarian concept may be utilized to level society by fitting men of varying potentialities to a Procrustean bed measured to the least fit. Those possessed of the least measurable potential might be made happier by this process, but the result would not be free dom. Equality is consonant with liberty only in a limited sense; the equality comprehended by the Declaration of Independence and the libertarian tradition was equality of birth, without vested privileges provided by the state, and equality before the law, an equal liberty to utilize one's facul ties and potential to his own ends, to succeed or fail, to determine his own destiny without special favor of discrimination. 21 Fraternity possesses a subtler but very real possibility of shroud ing liberty. Berlin has clearly in dicated that the cries of oppressed classes and nationalities for "lib erty" often obscures their real de sire, that of recognition by other men of one's own human worth. 22 This search for status may lead to the worst kind of demagoguery and oppression, since the individ21 An excellent article dealing with the true nature of equality is to be found in R. Carter Pittman, "Equality Versus Lib erty: The Eternal Conflict," 46 ABA J.

873 (1960). 22 Berlin, Ope cit., 39-47. ual sacrifices his liberty for the realization of group status, and in return receives recognition by the group. It is not the motive to be recognized by one's fellow man which is wrong, for this is a very real human desire. Rather, it is the sacrifice of voluntary action in the name of liberty which results in illiberal acts committed in the name of liberty which is wrong; the submission of the individual to the group renders him less human by his escape from moral responsi bility for his acts, placing re sponsibility· and choice in the hands of the will of the group, which normally means the will of the loudest or the most violent. The fallacy lies in the fact that fraternity consonant with true lib erty cannot be enforced - it must be voluntary.23 (2) Liberty and self-government: Berlin's positive libe1'ty Another concept masquerading as liberty is the natural desire to be self-governing, or "democracy."

Berlin has analyzed the problem of liberty as confusing the ques tion of "to what extent shall I be free in my actions from the delib erate intervention of others 1" with the inquiry, "To the extent that I am to be coerced by others, who should coerce me 1"24 Cohen has taken issue with this analysis, 23 Bastiat, OPt cit., 25. 24 Berlin, OPt cit., 6-19 generally.

1971 INDIVIDUAL LIBERTY AND THE RULE OF LAW 365 terming it "academic, inflated and obscure."25 He argues that Berlin confuses the positive-negative lib erty distinction with a distinction between individual liberty and public authority, and that the tra ditional libertarian thought was identified not only with a search for "negative" liberty, but also with the development of self-gov ernment. 26 Despite these criticisms, there is a distinction between the form of the state and the area of nonin terference. 27 Democracy can be as subvertive of liberty as autocracy; 51 per cent of the electorate could vote to plunder and pillage the re25 Cohen, Ope cit., 216. 26 Cohen, id generally, especially 217. Of course these are not the only argu ments advanced against Berlin's thesis in this well-written article. For example, at page 222, Cohe~ claims that economic tyranny parades as a negative liberty concept, and that people have a drive to be "free" from this oppression; it is ob vious that Cohen has fallen into the eco nomic slavery fallacy here.

27 Of course, there is nothing new in what Berlin says; Bastiat, writing in 1848, stated, Ope cit., 16: "In fact, if laws are restricted to pro tecting all persons, all liberties, and all properties; and if law were nothing more than the organized combination of the individual's right to self-defense; if law were the obstacle, the check, the punisher of all oppression and plunderis it likely that the citizens would then argue much about the extent of the franchise?" See also Berlin's contentions, Ope cit., on the confusion between liberty and sov ereignty, pp. 47-52. maining 49 per cent; a progressive income tax obviously limits the freedom of those in the higher brackets for the alleged benefit of the majority who reside in the lower brackets. On the other hand, it is possible to hypothesize an ab solute monarch who governs solely within a strictly limited sphere of state action, preventing fraud and violence, and providing for the set tlement of private disputes.

Once this basic distinction is recognized, Cohen's criticism is rendered less vital. To acknowl edge the distinction between lib erty and self-government, and to admit the possibility of perversion of democracy into mob rule of might-makes-right, is entirely dis tinct from contending that self government is undesirable or less favorable than another govern mental system. Certainly libertar ian tradition has consistently con cluded that self-government not only fulfills the basic human de sire to be master of oneself, but also provides the most likely form by which to secure the condition of liberty. But, Berlin asserts a salient proposition that the desire to be master of one's own self can de generate into the worst kind of totalitarianism. 28 The demented 28 Id 16-19, 25-29. Again Bastiat was over a century ahead of Berlin on recog nizing the dangers presented by Rous366 THE FREEMAN June idealist glorification of the state influenced two vicious forms of state barbarianism in this century, national socialism and commu nism. Yet this very idealism com menced with the premise of a nat ural desire to master one's own destiny; it was perverted when it became hopelessly confused with the belief that the ends of each man, rationally measured, would always coincide with those of ev ery other man. Therefore, the gen eral will represented the "rational choice" of each member of society, although a given individual mem ber might be blind to his "real self" and therefore his choice would have to be made for him by a master more rational than he.29 This is, of course, the same tired argument of all tyrants, that the state must do for man what he cannot do for himself. Since the state is a coercive, not a creative, force, there is nothing it can do, except use force, that man, singly or in voluntary association, cannot do for himself. It may, however, do things a volitional individual would not do ;30 this reveals anseau's philosophy; compare Berlin, ibid.

48-49, with Bastiat, Ope cit. 44-46; see also Pittman, Ope cit., generally. 29 Berlin, id 29-39, especially p. 39, showing how liberty and authority tend to become identical. 30 For example, under the specious ar gument that "men cannot do this for themselves" the state may coercively deother evil, since an individual rec ognizes less responsibility for the consequences of a choice where his personal choice is one step removed from the effecting cause. On a somewhat lesser, but no less pernicious, plane, the Fabian ism sweeping the West 31 today proceeds upon the same illogic, idolizing the expert and the plan ner who know better than the cit izenry what the latter "wants" done in a given situation. The lib ertarian recognizes the vital truth that not only are the ends of man in potential conflict32 but also that individual voluntary action is the only 'method by which one's des tiny can be completely and morally determined, even if the determina tion so chosen might appear "ir rational" to an observer. 33 To be free is to be allowed to make one's own mistakes.

prive individuals of their property (tax es) and enter into an uneconomic project - it is likely that this is the rational analysis of federal space exploration. See how private action can solve, and has solved, many problems which are posited as "necessary state action" in Wooldridge, Ope cit., 20. 31 Exemplified, for instance, in the works of John Kenneth Galbraith. 32 See Berlin, Ope cit., especially 52-57. 33 Note, I do not say "disinterested" observer. Quite often we neglect analysis of the interest of those persons who want to do something "for" us, those who pose as unbiased and disinterested experts. Their real interest is often anathema to the cause of voluntarism.

1971 INDIVIDUAL LIBERTY AND THE RULE OF LAW 367 (3) Liberty and security Security, occasionally mislabeled "liberty," is a common end sought by man. Security might be said to be the barter of freedom in order to satisfy a desire to avoid choice, agreeing to acquiesce in the choice of another. Although liberty in herently posits individual choice for oneself, it does not prevent the choice for "security" in all in stances. Security is inimicable to liberty where one not only chooses not to choose, but his choice, or dinarily in the collective with other similarly situated, operates by some sanction to force that choice upon another unwilling in dividua1.34 Man commonly desires to plan for his retirement or old age; it is not a perversion of lib erty to choose to enter a voluntary arrangement whereby a private in surer plans a retirement program for consideration. However, where 51 per cent of the voters choose a state-enforced program binding all present and future citizens, it is clear that the quest for security has resulted in a deprivation to the liberty of the unwilling who 34 Mr. Sollitt concisely describes the situation: "We invented a fascinating new parlor game in which we all stand in a circle, each with his hand in the next person's pocket, all seeking to get richer thereby." Kenneth W. Sollitt, "Four Foundations of Freedom," VIII Essays on Liberty, 176, 181 (The Foun dation for Economic Education, Inc., Irv ington-on-Hudson, New York, 1961).

wish no program at all, or, more likely, wish to plan for the future in accordance with their unique situation. An amazing example of confu sion of terms in high places is the illogical shift in the infamous "four freedoms" speech. 35 Coupled with the two accepted adjunct freedoms, expression and religion, are two interlopers, freedom from want and freedom from fear. More amazing still is the fact that these false freedoms have wormed their way into accepted political pro grams without criticism, accepted as respectable as though they could be achieved in fact. "Freedom from want and fear" may repre sent basic human desires but to call them freedom is foolish. 36 (4) Enforced orthodoxy Again, liberty may be confused with a system of enforced ortho35 See Frederick A. Manchester, "The Tricky Four Freedoms," VII Essays on Liberty (The Foundation for Economic Education, Inc., Irvington-on-Hudson, New York, 1960), 272.

36 Unless man earnestly desires the bottled-baby routine of a brave new world, I seriously question whether "free dom from fear and freedom from want" are possible. "Fear" is a singularly in ternal matter which cannot be cured by state-sanctioned bread and circuses; and, as I studied economics, that whole en deavor was based upon the major premise that man's wants are insatiable and that the supply of goods is limited, so it would seem that "want" cannot be satisfied by autocratic or bureaucratic fiat.

368 THE FREEMAN June doxy, sometimes signified the "con sensus" fallacy, which provides for such a limited range of choice that the individual is not really free at all. Sunday laws are a common ex ample of this concept, where re ligious freedom means freedom to be religious in the manner recog nized by the community. Compul sory franchise laws, existent in both Eastern and Western nations, provide another example where a citizen must vote, although he may have a real, not a perfunctory, choice between candidates who may represent diverse positions. Freedom must include freedom to abstain or it cannot be freedom; to claim that the Soviet hegemony has free elections is a mockery. The most obvious example appears in the enforced othodoxy of con scription, now under some sem blance of attack in the halls of Congress. 37 The concept of a con script fighting for freedom could be humorous if the milieu were not so deadly serious. The cause of freedom has suffered much in making the world safe for democ racy.

37 While the "conservative" libertarian has long recognized the diminution of freedom inherent in the Universal Mili tary Training Act (see Candidate Gold water's recommendations for an all volunteer army in the 1964 presidential campaign), it is only recently that the idea has found favor with the liberal politicians and media. Now that the con cept is popular, many rush for a seat on the bandwagon. (5) The question is: Freedom for whom? Liberty achieves its true station when it is equally applicable to each individual in society;38 this is implicit in the definition of lib erty as the absence of human in terference with individual actions except as is necessary to insure equal freedom for all. Yet, an "un equal liberty" may parade under the mask of liberty; this inter loper may partake of some attri butes of liberty, but only for a lim ited group of persons. For ex ample, a slave society might be found ·where the ideal of liberty existed for the ruling class alone;.

to the extent of slavery enforced by coercion, that society is re strained, not free. In fact, the rul ing class is itself less free, albeit by deliberate choice, in two senses: (a) it must allocate part of its resources to the continuation .of slavery, instead of releasing these forces for creative endeavor, and (b) to the extent that the enslaved class does not operate to its crea tive potential because of the op pression, the rulers suffer the loss of that potential outflowing of pro ductivity. When examining a restrictive norm allegedly enacted or adduced to advance freedom, a relevant in38 But what of the defective, aged, and insane who must be incarcerated "for their own good"?

1971 INDIVIDUAL LIBERTY AND THE RULE OF LAW 369 quiry is "freedom for whom?" If the law extends privileges to one group at the expense of others, and is not founded upon the legiti mate state function of preventing fra ud and violence and providing for the adjudication of private disputes, then it does not achieve liberty.39 In our legitimate concern over the mistreatment of colored per sons for two centuries, we now fail to see that the liberty of the employer is restricted when he is forced to hire a Negro applicant against his will, and the liberty of a storekeeper is limited when he is forced to serve those he does not wish to serve at his lunch counter. An entirely different inquiry is presented when white persons, singly or collectively, with or with out authority of law, coerce col ored persons and prevent them from voting, breach the doors of their church and harrass their peaceful meeting, or fail to pro vide an equal administration of justice for persons of all races by excluding qualified Negroes from the venire.

39 It would seem that some of the prob lems pres en ted may be reduced to the question of advisability of prior re straint, that is, whether a restrictive law ought not to be enacted because if that la~ is not passed there is a possibility of abuse of freedom. I think Hayek's argument, op. cit., would sufficiently an swer this contention. (6) The divisibility fallacy Statist philosophy often ob scures the essential fact that lib erty is indivisible. Failure to educe this element tends to lead the less sophisticated apologist for unwarranted state intervention to justify governmental extension on the grounds that "human rights take precedence over property rights." So stated, the proposition is clearly unsound and a negation, because of the identity of subject and object. "Property" possesses no rights, any more than air, or dogs, or cinnamon possess rights; rights inhere only in individual, volitional beings. Property rights are human rights. 40 Thus, the con tention really means that the lib erty of some persons must be cur tailed and in some mystical way the liberty of other persons will be expanded.

What those propounding this argument truly mean is that cer tain aspects of liberty should be restricted while others remain un molested (for the time being), but emotive words are utilized to se crete the true justification. Thus, while the United States currently witnesses a growing recognition and sanction of the constitutional ly specified freedoms of speech, press, association, and religion, an 40 See William Tolisches, "Private Property and Freedom," THE FREEMAN, Vol. 11, No.2 (February 1961), 46.

370 THE FREEMAN June over-all diminution of liberty oc curs. 41 The clearest present deprivation of liberty is to be found in the market place where state interven tion has whittled down the indi vidual's choice of alternatives. Be cause of the artificial human rights-property -rights distincti on, there has been acceptance of the tenet that freedoms of association, speech, press, and religion can somehow survive without economic freedom. This is preposterous: as the market becomes more con trolled, these adj unct freedoms lose strength. Freedom of the press means little where the state controls the supply of newsprint; freedom of speech and association are fine unless the state owns all the available meeting places; free dom of religion can be destroyed if land and building materials for the construction of structures of worship belong to the state, since the state affixes conditions of use to that which it owns or controls.

The rights of freedom of speech, press, association, and religion are all dependent upon economic free dom because, to be effective, they must utilize the product of the market, and where the state con41 Dean Russell, "Freedom Follows the Free Market," X Esso,ys on Liberty (The Foundation for Economic Educa tion, Inc., Irvington-on-Hudson, New York, 1963), 198, 200-201. troIs production and distribution, it controls ultimate use. Market control is not price control or rent control - it is people contro1.42 Liberty: Encouraged or Destroyed by Law To ascertain the relationship between liberty and the various functions which law performs as a device for securing social order, it is desirable to separate several ob vious types of laws and examine their peculiar relationship to lib erty, noting how each class of law can either encourage or destroy individual freedom. 43 (1) Criminal duty-imposing rules Criminal law provides for the redress of harm done to individ uals when the harm is such that its existence threatens the very structure of society and all per42 See, generally, Russell, id, and also his article, "Basis of Liberty," THE FREE MAN, Vol. 12, No, 7 (July 1962), 9, See also, Sparks; op, cit, 44, There is a cur rent argument advanced that desirable characteristics can blossom in a severely restricted society which restrains indi vidual liberty; this contention is sup posed to obviate the contention that lib erty is necessary for the morality and productivity of man. It seems clear, how ever, that creation in the restrictive so ciety is not caused by state intervention but in spite of it.

43 Bastiat, op. cit., 8-9, attributed the destruction of liberty to greed or to false philan thropy.

1971 INDIVIDUAL LIBERTY AND THE RULE OF LAW 371 sons situate therein. Criminal laws are absolutely necessary to the ex istence of liberty because their function is to protect the individ ual, by deterrence and penalty, from infringements on individual liberty by those who would tres pass upon the equal freedoms of others. If nothing else is achieved by the state, it should at least iso late those who would forcibly and fraudulently deprive their neigh bors of life, liberty, or property. It is difficult to imagine a system where liberty could flourish with out institutions to prevent indi vidual or collective force and fraud against one's neighbors. Criminal laws restrict liberty to the extent that they inhibit the individual from his free choice. Thus, this limitation of liberty is necessary and desirable for liberty to survive. It may seem curious to assert that criminal law, customarily so devoted to the equal protection of individual life, liberty, and prop erty from the transgressions of others, could be perverted into a destroyer of freedom. However, a legal system which fostered plun der of property by making individ ual resistance thereto unlawful certainly would restrict liberty.

Freedom is unduly inhibited where the criminal laws utilize and sanc tion that which is proper human action, not interfering with the equal liberty of all, such as Sun day laws, usury laws, consensual crimes between adults not in the public view, and minimum wage laws. 44 (2) Civil duty-imposing laws The law performs another es sential function by providing in stitutions for civil recovery of individual restraints on human ac tion, commonly denoted the "ad ministration of justice." Conduct restricted mayor may not also be criminal. For example, P's free dom is obstructed when D negli gently strikes him with an auto mobile, to the extent that P's life may be shortened, his freedom of movement hampered by a broken leg, or his property taken for the payment of medical bills. There fore, D's freedom of action is justly restricted to the limit of 44 Ayn Rand's epic, Atlas Shrugged (Random House, New York, 1957), graphically described a system where the criminal laws were perverted to destroy liberty.

Usury laws may be civil or criminal; in either milieu, they are untenable restric tions on voluntary action. Why should I be limited by the state in the amount I can charge for the use of my money? It is my property, after all; if the borrower doesn't want to pay the price, he can (1) go elsewhere, or (2) refuse to borrow. He need not deal with me. The recent eco nomic upheaval in the United States has aptly demonstrated the superciliousness of usury laws. The recent prime rate high point exceeded the allowable maximum rate of interest in some jurisdictions.

372 THE FREEMAN June taking some of his property at P's instance to compensate P for his loss; D's freedom of action is re stricted but only by the conse quences of his volitional act. There is no proper penalty for negligence; a restriction of lib erty is valid only where D is at fault and that fault causes the deprivation of another's freedom. 45 If, however, D intentionally struck P, he might be both civilly and criminally liable; not only would D restrict P's freedom of choice and action but also he would con stitute a danger to society as a whole. Civil-duty laws destroy liberty where liability is imposed upon D without any fault, or without any causal connection between his ac tions and P's injuries. Thus, laws providing for status or absolute liabilitY,46 justified only on the basis of the "deep-pocket" doc trine, or the theory of "enterprise liability," represent legally sanc tioned deprivations of liberty, as does the trend toward state-en forced insurance and compensation 45 See, concerning the doctrine of fault in tort law, Foley, Ridgway K., Jr., "The Doctrine of Fault; The Foundation of Ex Delicto Jurisprudence," 36 Ins. Counsel J.

338-346 (1969). 46 See, concerning the development of the absolute liability of seaworthiness in maritime law, Foley, Ridgway K., Jr., "A Survey of the Maritime Doctrine of Sea worthiness," 46 Or. L. Rev., 369-421 (1967). schemes. Where an individual is mulcted for results not of his mak ing, where he is not "at fault," his liberty is unfairly restricted and the society falls short of the ideal of freedom. Where the individual is made to pay for the conse quences of acts volitionally done (his fault), the lessening of liberty is justified. (3) Laws channeling or confer ring powers Rules providing procedures by which the individual can achieve the results of his voluntary and consensual associations with other persons may augment the ideal of liberty. Law in the early United States, by the development of many of these rules, fostered the nineteenth century outburst of creative energy.47 Even a frontier society required a law providing for the recordation of land titles,48 and norms for enforcing individ ual agreements voluntarily reached, as well as rules for the adjudication of private disputes.

Power-conferring rules restrict liberty when they deny enforce ment procedures for individual ac47 See, Handlin, op. cit., c. IV; see, also, an excellent little book, James Will ard Hurst, Law and the Conditions of Freedom in the 19th Century United States CD. of Wis. Press, 1956). 48 But query, could not this be achieved privately, without state intervention ex cept to sanction the agreements and de cide disputes?

1971 INDIVIDUAL LIBERTY AND THE RULE OF LAW 373 tion not following prescribed pro cedures; they do not prevent vol untary individual resolution of problems by other means if en forcement is not required. There is no prohibition of a sale of Blackacre by oral agreement be tween Band S, if both parties carry out their bargain - it is only when one party reneges that the statute of frauds prevents enforce ment. Again, the law-conferring powers will not penalize B for fail ure to record title to Blackacre, and if no other claimants appear, B's title is secure. The power-con ferring rules destroy liberty only when they are used to restrict hu man endeavor, to 'allocate market resources, or to promote favorit ism. Curiously, many writers have considered the nineteenth century United States as a laissez-faire economy where freedom was given free rein, and the government per formed only the functions of a night watchman. Proceeding from this naive premise, they draw the equally absurd conclusion that law must positively restrict individual freedom in order to prevent real or imagined evils flowing from the "libertarian experiment."49 First, nineteenth century Amer ica clearly enjoyed less restriction 49 This seems to be a common argu ment justifying the modern welfare state.

on human action than any earlier society in history; however, the claim that the limitations were only those of a policeman prevent ing malum in se crimes ignores historical fact. Writing at mid century, Bastiat indicated two particular areas of restraint, slav ery and protective tariffs. 50 To these can be added, by way of nonexhaustive example, the in ternal improvement schemes of Henry Clay; the fostering of pub lic education; the grant of monop oly power to private groups in the "public interest"; national control of finance; licensing and regula tion of navigation and improve ment of harbors; and direct or indirect encouragement of trans portation; not to mention state tinkering with money, coinage, and banking in relation to the finance powers. 51 Moreover, the argument falsely focuses only up on the Federal government, which, admittedly, was more concerned with the problems of federalism prior to the Civil War. One cannot overlook state and local restrictive activities, including commercial regulation, licensing, subsidies, and monopoly grants under an ex50 Bastiat, op. cit., 19.

51 For a discussion of many areas of governmental action in the nineteenth century, see Hurst, op. cit., generally, and especially 6-9, 41, and 51-53. See also, Handlin, op. cit., generally.

374 THE FREEMAN June panding concept of the police power. 52 Second, the "Golden Age"53 ar gument assumes that individual liberty was responsible for "abuses" of the nineteenth cen tury, proceeding from the un tenable tacit assumption that lib erty was meant to be a panacea leading to utopia. The libertarian contention is only that volunta rism is the best system for a fal lible but improvable mankind. 52 It is too often forgotten that state governments in the United States gen erally possess a residuum of power and their Constitutions merely carve out a minimum area of noninterference, while the Federal Constitution, in theory, strictly limits the exercise of national power by the concept of delegated pow ers. It is submitted that a residuum of power ought to vest in the individual, not in the state or local government, in order to secure the ideal of freedom. To fail to see this is to fall into the traditionalist trap of Henry George and Albert Jay Nock, who apparently believed that if the government were close to the people it would not likely abuse its powers; not only does this confuse Berlin's positive and negative liberty, but also it betrays a lack of perception of the real world.

53 Berlin, among others, has treated individual liberty as a recent develop ment, primarily limited to the North American Continent and Northern Eu rope, beginning with the late eighteenth century. Yet, certain salient aspects of individual liberty are present in some an cient cultures in the East, and certainly it is unwise to overlook the Sarcenic de velopment; see Henry Grady Weaver, The Mainspring of Human Progress (The Foundation for Economic Educa tion, Inc., Irvington-on-Hudson, New York, 1953). Likewise, the conclusion that lib erty caused abuse is untenable; empirically, most "abuses" were conditioned by law, not liberty, and flow from failure to properly provide sanctions against trespass on liberties or unwarranted inter diction of human freedom, direct ly or by delegation to private groups. Third, the argument overlooks the positive function performed by the law in the nineteenth· cen tury; for example, the Federal judiciary under the Interstate Commerce Clause prevented the erection of internal barriers to free trade by mercantilist states at the behest of favored local busi nesses, and the states followed a liberal policy of granting charters to associations and providing a remedy for failure of subscribers to a capital pooling venture to carry ou their voluntarily entered bargains. 54 (4) Adjudicative laws The development of individual freedom requires a body of law relating to the administration and settlement of private disputes.

Without adjudicative rules, there would be great difficulty in effect ing the rules imposing civil or criminal duties, or conferring powers, since there would be no 54 See Hurst, op. cit., and Handlin, op. cit., generally.

1971 INDIVIDUAL LIBERTY AND THE RULE OF LAW 375 organized institution of enforce ment. Common examples of ajudi cative rules are regulations relat ing to the. qualifications, selection, and tenure of a judge, conciliation commmission or arbitrator, rules of evidence and procedure for guiding the presentation of the dispute and enforcing the official determination. 55 Adjudicative rules restrict indi vidual liberty by narrowing the choice of alternatives in the choice of court, judge, procedure, and evidence, and excluding the choice of self-help, but they are justified on the ground of making choice meaningful. Absent the central administration of justice, civil chaos would reign. However, the ideal of liberty is perverted when adjudicative rules are used to dis criminate against some persons seeking legal redress or where the law is used to unduly restrict lib erty. For example, where colored people are customarily excluded from the venire, liberty is im periled. Likewise, where the legal system no longer requires proof of fault or causation for civil re covery, but only that the defend55 Id, generally. The "lawless" nine teenth century certainly produced some marked improvement in this category of law, for example, the Field Code, which attempted to limit the common-law tech nicalities and assure that all persons could quickly bring their disputes before an official tribunal.

ant possess a deeper pocket, and upon such proof authorizes and enforces recovery, the law is mis used and reduces the defendant's freedom. (5) Laws for making laws Closely related to adjudicative rules are the lawmaking laws; adjudicative rules make law in the sense of the law of the case and in the sense of precedent; law making laws provide procedures and qualifications for the passage of general laws, limitations on lawmaking powers, and grants of lawmaking powers. Common ex amples of lawmaking laws are those setting forth qualifications and tenure of public officials; local initiative, referendum and recall; home rule; rules of procedure within legislative, executive, or administrative bodies; rules of court; and the procedural appa ratus for publicizing laws. Lawmaking laws also include rules against potential laws and the abuse of lawmaking power by providing a line beyond which there is no lawmaking power extant. For example, constitu tional prohibitions against taking property for public use without just compensation, impairing the obligation of contracts, and the whole gamut of provisions in the Bill of Rights contain absolute restrictions to protect the indi376 THE FREEMAN June vidual from collective interference.

Additional norms within the category of lawmaking laws are rules prescribing the proper func tions of the state; here the great est destruction of individual free dom has occurred. Where restric tions against state interference with individual liberty are per verted by legislative fiat or judicial interpretation, so as to permit the state to become a producer in the market, as occurred in the devel opment of the Tennessee Valley Authority or Social Security Pro grams, individual liberty suffers as a consequence. 56 The Value of Liberty and the Role of Law To this point I have proceeded upon the major premise that a maximum ideal of individual lib56 To belabor the obvious, when one is compelled to participate in a bankrupt state insurance scheme, his freedom is lessened; he loses property to the state and he effectively loses his choice to plan his own future. Again, when the state co-opts the pow erproducing and distribution system in an area, the individual no longer has a choice of suppliers if he wishes to use electricity, nor does he have the oppor tunity of entering the business in compe tition with the state. And, he must pay over part of his property, through taxa tion, to support the system and pay through subsidy for the current used by his neighbors.

Of course, the examples suggested are but two of many intrusions into the mar ket by an expanding state. erty is desirable and the proper role of the law is to foster and protect that ideal. Some reasons for this premise follow: (1) Only under conditions of individual liberty can man be a truly responsible moral agent. 57 Choice presupposes responsibility and fosters it; if a mati is unable to choose because of restraint he is, to that extent, dehumanized. The choice not to choose at all but to pass that choice to a nonre sponsible collective is a choice per se and the burden for the conse quences of the allocation by the collective must rest, in last analy sis, upon the ultimate choice maker,. the individual who refused or refrained from choosing. (2) Only with the conditions of maxi mum liberty can man's creative nature have full sway in the solu tion of his problems; liberty is a singular concept, having no fixed ends in itself, and presupposing that ends are open and only the individual can best choose for himself. 58 (3) With maximum lib57 See, Sollitt, op. cit.; Clarence B. Car son, "Individual Liberty in the Crucible of History: 6. A Rebirth of Liberty," THE FREEMAN, Vol. 12, No. 10 (October 19~2), 3; Sprague, op. cit.; Dean Russell. "What Freedom Means," THE FREEMAN, Vol. 11, No. 12 (December 1961),18.

58 See Sylvester Petro, "Freedom and the Nature of Man," THE FREEMAN, Vol. 11, No.9 (September 1961), 9; Brown, op. cit.; Hayek, op. cit.; Russell, "Basis of Liberty," op. cit. See also, Hurst, op.

1971 INDIVIDU AL LIBERTY AND THE RULE OF LAW 377 erty and the concurrent release of individual creative power, man will produce the greatest abun dance of material, as well as spir itual, wealth possible. 59 In summary, then, what is indi vidual freedom and what is the proper function of law? Liberty is the absence of human interven tion with the endeavors of an in dividual to utilize his life, liberty, cit., 5-6 where he recognizes this as a major premise of the nineteenth century political thought. For further elucidation, see generally, Leonard E. Read, The Com ing Aristocracy (The Foundation for Eco nomic Education, Inc., Irvington-on-Hud'son, New York, 1969); Leonard E. Read, Talking to Myself (The Foundation for Economic Education, Inc., Irvington-on Hudson, New York, 1970). No man is able to understand the vari ables and influences present in the deci sion-making milieu facing any other hu man being; only the actor is capable of a reasoned choice. This is not to say that it will always be the "best" or the "right"

choice when viewed by a third-party ob server. It is to say, however, that it is the best and right choice for the actor, cer tainly superior to the judgment of any other man or collective at that time. And even if the choice were not the best, it would still be desirable to allow the actor to chose, because (1) it is his destiny at stake, and (2) no group or collective is better positioned to make the choice. As Nock wrote: "The practical reason for freedom, then, is that freedom seems to be the only condition under which any kind of substantial moral fibre can be developed," Cogitations from Albert Jay Nock (The Nockian Society, Irvington on-Hudson, New York, 1970, Thorton ed.) 63. 59 Id, Note 57. and property (and all adj unct rights flowing therefrom) as he sees fit and for the ends he de sires, limited only by the equal liberty of all other individuals in society .. To accomplish this ideal of liberty, law must be restricted to its proper role; prevention of use of force and fraud against any individual or group by any individual or group60 or by the state, except where necessary to prevent the actor from invading the equal freedom of another; provision of processes and insti tutions for adjudication and en forced settlement of private dis putes; and, provision of reasona ble channeling procedures through which private individuals may utilize their voluntarily chosen ends. , 60 Spatial limitations prohibit an ex amination of the relation between law, liberty, and the association. As Fuller points out, op. cit. 1316-1322, the prob lems of freedom occur in all multiple hu man relationships. There is a trend away from considering the problem of freedom in "Man v. State" terms, and in consider ing the relationship the group or the association bears to the situation. For some varying viewpoints on this situa tion, see Fuller, op. cit. 1316 if.; Clarence B. Carson, "Individual Liberty in the Crucible of History: 3. Circumstances Hostile to Liberty," THE FREEMAN, Vol.

12, No.7 (July, 1962), 11; Handlin, op. cit., c V and VI; Cohen, op. cit., particu larly 221-225. See also, Louis B. Schwartz, "Institutional Size and Indi vidual Liberty: Authoritarian Aspects of Bigness," 55 NW. L. Rev. 4 (1960); and 378 THE FREEMAN June Bayless Manning, "Corporate Power and Individual Freedom: Some General Anal ysis and Particular Reservations," 55 NW. L. Rev. 38 (1960). Unfortunately, too many analysts are not adept at careful study in this area and fail to comprehend important dis tinctions. For example, Fuller seems to say that the solution is to provide indi vidual freedom within the association and associational freedom within the so ciety, and Schwartz seems to lump all forms of organization into a single pot; but what these and similar thinkers overlook is the concept of voluntarism. There is a distinction of magnitude be tween associating by mutual consent and choosing to submit to agreed terms and consequences, and an association which is compelled by the sanction of loss of an essential choice. Thus, much of the bigness in society has been fostered by unwarranted and unwise governmental interference into the affairs of man; the government-inspired monopoly (rail roads, utility) becomes large and powerThe Rule of Law ful much more so than if these associa tions lacked state backing and favor; to combat this growth, the state itself looms larger. No libertarian objects to volun tary association in any group, union, church, club, or society, so long as both the membership and the individual mem bers have rights to voluntary withdrawal and so long as society is not a criminal conspirator, such as the Mafia or the Ku-Klux-Klan, bent on doing violence to the rights and properties of others; what we do object to is government favoritism and intervention and involuntary associ ation; a common example of lack of as sociational freedom is the forcing of one to become a member of a labor union. A person can hardly contend that the Ore gon lawyer is free when he is compelled to belong to, and support, the integrated Oregon State Bar, particularly when that association takes moral and political stands with which the dissenting mem bers disagree. See the interesting strug gle posed, and the questionable solution in Lathrop v. Donahue, 367 U.S. 820 (1961).

IDEAS ON LIBERTY THE END of the law is, not to abolish or restrain, but to pre serve and enlarge freedom. For in all the states of created beings capable of laws, where there is no law there is no freedom. For liberty is to be free from restraint and violence from others; which cannot be where there is no law; and is not, as we are told, a liberty for every man to do what he lists (For who could be free when every other man's humour might domineer over him?) But a liberty to dispose, and order as he lists,. his person, actions, possessions, and his whole property, within the allowance of those laws under which he is, and therein not to be the subj ect of the arbitrary will of another, but freely follow his own. JOH N LOCKE, Second Treatise A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN THE RED DECADE THERE ARE affinities between the nineteen thirties and the nineteen sixties. There are also some sig nificant differences. Nobody has, as yet, done a searching compara tive essay on the two benighted epochs, but in default of the omis sion the republication of Eugene Lyon's study of the thirties, The Red Decade (Arlington House, $8.95), after being out of print for thirty years, offers the best possible perch from which to view the disastrous period that is just behind us.

The parallelism between the two decades is apt. In the thirties we had terrible domestic troubles and the growth of an isolationist spirit. But the rise of European Fascism and the ferociously mili tant expansion of Japan broke in upon our home-grown concerns. We were induced, partly by fear and partly by feckless diplomacy that set the stage for Pearl Harbor, to substitute Dr. Win-the War (Franklin Delano Roosevelt's characterization) for Dr. New Deal. During the whole period, as Gene Lyons points out, our cul tural life was subjected to the Machiavellian penetrations of a foreign power that used a bewild ering variety of "Innocents Clubs" and "transmission belts" and other "fronts" to lead artists, journal ists, scientists, teachers, labor leaders, and important political figures around by the nose. We ended up in a war for "democ racy" that enabled the malevolent Josef Stalin to move further to the West in Europe than the Turk had ever been. We frustrated the Japanese attempt to dominate the Asian mainland only to see China fall to Mao Tse-tung, who believes that all power comes from the bar rel of a gun and is bent on putting that gun in the hands of Red guer379 380 THE FREEMAN June rillas everywhere from Tierra del Fuego to Timbuktu.

The New Isolationism In the sixties our domestic troubles were of a different order, but their impact on our spirit was even more appalling than the effect of the street corner apple-selling and the CIa strikes of the thirties. The new isolationism grew as our difficulties in maintaining the 1945 division of the world became more onerous. We haven't had to face a big confrontation with the Mos cow or Peking totalitarians, but that will come (with either a Munich or a war) if we lose faith and credibility in Vietnam and the eastern Mediterranean. Meanwhile our cultural life is subjected to the Machiavellian penetration of polycentric radicals who owe spir itual allegiance to Brezhnev, to Chairman Mao, or to Fidel Castro and the shade of Che Guevara. The modern "Innocents Clubs" are manipulated by a variety of off shore interests, which makes for a confusion but does not lessen the danger. Both the confusion and the danger are compounded by the insidious growth of the drug cul ture, which spreads an apathy that hurts the possibility of a return to sanity.

Oddly enough, one reads Gene Lyons's study of the thirties with a good bit of nostalgia for a period that combined, in Max Eastman's description, "the charms of the South Sea Bubble and the insane pathos of the Children's Crusade." As Mr. Lyons says in his author's preface to the new edition, "liter ally millions of Americans, some knowingly and most innocently, allowed themselves to be manipu lated by a small group under tight control from Kremlin headquar ters." But the Muscovite Comrades could not have pulled the wool over the eyes of thousands of liberals from Eleanor Roosevelt on down if the Idealisms of the thirties hadn't been compelling. After all, Hitler was a monster. From a safe distance at a Manhattan cocktail party held to raise funds for Loyalist Spain one could feel that in offering money to support the Abraham Lincoln Brigade one was doing the work of the Lord. It was only after the courageous John Dos Passos had come back from Spain with the report that the Stalinists had usurped control of the Republican armies that one could see how the American lib erals had been gulled. In reading or rereading Lyons it is the sur face innocence of the thirties that induces the nostalgia. Bliss was it in that dawn to have been inno cent. It took time for most of us to discover what was going on in the depths.

1971 THE RED DECADE 381 The Unmentionable Famine Three Million Starve My own disillusionment with the Soviet utopia came in the middle thirties when Walter Duranty, the cynical Moscow correspondent of The New York Times, remarked casually to Simeon Strunsky and myself in the Times eleva tor one day that three million Russian peasants had died in a man-made famine in the Ukraine in 1932-33. The magnitude of Mr. Duranty's figures was appalling, but even more appalling to me, as an ideal istic young journalist, was the fact that Duranty had never breathed a word about the famine in print. (After all, he had his return visa to Russia to consider, and what did the truth matter as against that.) Mr. Lyons lets the worst about all of us in the thirties be set down for posterity by printing the lists of those who signed the petitions and open letters that characterized the age. He is always generous, however, in telling when a Clifton Fadiman, or an Edmund Wilson, or a John Dewey, came to his senses and got off the Musco vite train. He dates my own con version to common sense accu rately, even though he wasn't aware of the reason for it.

The communists in the thirties had a virtually unshakeable grip on New York publishing, the American Newspaper Guild, the CIa unions in plants with a mili tary defense potential, the youth movement, the liberal magazines, and some of the New Deal bu reaucracies. Sometimes the grip was exercised directly, through card-carrying operatives. But more often the control was indirectly applied through trusted fellow travelers, as I came to know as a member of the Time, Inc., News paper Guild unit. Stalin Joins Hitler Saws Off Liberal Limb One could say, as it was often said in the thirties, that collabora tion with the communists in a "front" was both honorable and harmless as long as it was a mat ter of fighting Nazis. But the day came when the perfidious Stalin signed his notorious pact with Hitler. On that day it was too late for the "four hundred fools" to recall their letter to the Nation expressing an ineffable trust in Stalin, a letter which happened to appear on the newsstands at the very time the headlines in the dailies were proclaiming the news of Stalin's abrupt switch. Gene Lyons extracts the last bit of far cical comedy from the discomfi ture of the Stalinoid liberals in 1939 when their master sawed off the limb on which they were crowded. But Lyons is also aware of the tragedy involved when the 382 THE FREEMAN June supposed cream of a country's in telligentsia can be deluded into thinking thistles can grow figs.

Let us come back to the sixties, when the figs-from-thistles illu sion started to take hold all over again. The big question is what happened to an educational system that failed to make use of Mr. Lyons's book during all those years between 1940 and 1971. If it had been read in the colleges, wouldn't there have been a little more skepticism among the young about the aims and uses of the New Left? Since the gods them selves contend in vain against thick-headedness, the availability of one good book probably would not have made a tremendous dif ference. But it might have saved a few promising boys and girls from going along with the move ment that wrecked Columbia Uni versity and precipitated the trag edy at Kent State. Again, if Gene Lyons's account of the euphoria that accompanied the birth of the Popular Front in 1935 had been digested by our leaders, would we now be taken in by the ping pong diplomacy of the Red Chinese? Ping pong may be useful to us to the end of driv ing a wedge between Peking and Moscow, but Mr. Lyons warns us to be sure of our motivations whenever we deal with totalitar ians.

~ STUDENT VIOLENCE by Ed ward Bloomberg (Washington, D.C.: Public Affairs Press, 1970, 91 pp. $3.25) Reviewed by Allan C. Brownfeld MOST ANALYSTS of campus turmoil seek to locate responsibility for it off campus. They blame the war, or the "Establishment," or "the system." But Professor Bloom berg, of the University of Cali fornia at Davis, decla.res that campus violence is the natural consequence of a generation of teachers who have indoctrinated students with relativism, envi ronmental determinism, and a re j ection of the past. Most professors do not condemn violence for "absolute relativism is the fashion right now. Few intellectuals would be prepared to defend anything as absolutely true or absolutely good. The result is that many feel - without knowing precisely why - that nothing can be really false or eviL Therefore nothing is absolutely forbidden." What, then, is the connection between the relativism of the col lege faculties and the absolutism and dogmatism of the radicals. In this instance, Professor Bloom berg points out, "the former en courages the latter. The relativism of adults prevents them from con demning any behavior at all, even their own vilification. Students are 1971 OTHER BOOKS 383 thus free to follow their own inclinations wherever they lead."

The unfortunate result is that many academicians are not even prepared to speak in behalf of academic freedom, which has been destroyed at too many campuses. Those who believe in relativism, charges Professor Bloomberg, have abandoned the mission of the Academy: "reason is now in low repute with the New Left. It is relativism and its result, authoritarianism, which have giv en reason such a bad name. In relativism there is no truth. How, therefore, can reason, as it claims, discover truth? In authoritarian ism, truth is absolute, but only authority can discover it. As there will inevitably be a conflict be tween authority and reason, the former rejects the latter." Thus, the barbarians storm the academy, and the faculties, devoutly believ ing that nothing is right and noth ing is wrong, do nothing to de fend it. Professor Bloomberg carefully examines other logical contradic tions and double standards in the New Left lexicon. Unlike radicals of the thirties who compared the American society to the allegedly idyllic life in Russia, today's radi cals use no culture, past or present, as a point of comparison. When asked to what they are comparing American institutions, radicals have no answer. "It is," Professor Bloomberg declares, "to their dreams that they are comparing them." He notes: "Here we see an obvious contradiction, for they insist on the one hand that if the United States is not perfect, it is perfectly corrupt (which of course does not follow), while demanding no such perfection of themselves.

... One cannot penetrate radical 'thought' without understanding that it applies relative - and ex tremely lenient - moral standards to radicals, but r..bsolute - and in transigent - ones to society (the 'system') . Radicals generally couch their complaints in Marxist terms .... This explains the amus ing references to the exploited workers, supposed allies of the students in the revolution. There is of course no group less revolu tionary (or less exploited) than American workers, but when you accept a dogma you cannot make an exception of its fundamental thesis." Dr. Bloomberg is especially good in his analysis of environ mental determinism. If "we" are wholly innocent and yet the situ ation is so very bad, our troubles must be the fault of "the system"; human nature has been corrupted by evil institutions. This Rous sea uistic theory has always bred violence, leading those who em brace it to conclude that their 384 THE FREEMAN June societies must be destroyed at all costs in order that human nature might display its pristine good ness. Student violence in con temporary America is sparked by a theory few students understand and fewer apply.

Students for a Democratic So ciety and others of the New Left are inconsistent when they con demn everyone in the so-called "Establishment." "Logically, they (the Establishment) too should be seen as victims of society rather than perpetrators of evil. This contradiction points up one of the strangest aberrations of the SDS: They arrive at two humanities, the good 'people' and the evil 'pigs,' in the fashion of those who believe man is evil. This permits them to treat 'pigs' as totalitari ans treat the general population. Since, in fact, practically all Amer icans do fit into the pig category (most of us favor the system and own property), most of us are only getting what we deserve when we are treated violently. Pigs 'should be put in pig pens,' as SDS members are wont to say. Love becomes hate, and utopia becomes a concentration camp." Professor Bloomberg demolishes a number of other such building blocks of radical philosophy. But the blame for campus violence does not rest with students who are immature and uninformed about both political systems and political theory. The responsibility lies elsewhere, and it is to his colleagues on the nation's college faculties that Professor Bloom berg turns in assessing the real responsibility. Wrong ideas have gained ascendancy, and our col leges cannot resume their true educational function until sounder ideas replace them. ~ HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each Order from: THE FOUNDATION FOR ECONOMIC EDUCATION, INC.

IRVINGTON-ON-HUDSON, NEW YORK 10533 the Freeman VOL. 21, NO.7. JULY 1971 Winter of Decision:1775·1776 A government of laws or of men? Clarence B. Carson 387 When RationingComes Leonard E. Read 391 Tracing present interventions to their logical conclusion should persuade us of the need to return to freedom. I Pledge Myself to Help StrengthenAmerica One man's answer to everyman's question: IIWhat can I do?" W. H. Graham 398 Market Closed! Paul L. Poirot 401 In view of the consequences of intervention, why should responsible adults ever want to price themselves out of the market? PollutionParanoia John W. Campbell 407 Of the three kinds of pollution - actual, political, and hysterical - the latter two make it harder to attend to the real problem. Povertyand Population Henry Hazlitt 414 Malthus might have projected food and population trends unduly, but he clearly understood that the solution lies in freedom.

Freedom:Antidoteto PoliticalPower Haven Gow 423 Central to the survival of any society is a delicate balance between freedom and order, tradition and change. Morals and Liberty F. A. Harper 426 Testing the Welfare State idea against five fundamental ethical concepts. Are Schools Necessary? It's easier to get a college degree than an education. Book Review: liThe left-leaning Antenna" by Joseph Keeley V. Orval Watts 442 445 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. POI ROT 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, 1971, 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.

Articles from this journal are abstracted and indexed in Historical Abstracts and/or America: History and Life. THE FREEMAN also Is available on microfilm, Xerox University Microfilms, Ann Arbor, Mich· igan 48106. Permission granted to reprint any article from this Issue, with appropriate credit, except "Pollution Paranoia" and "Poverty and Population."

A GOVERNMENTOF LAW rather than of men is hardly a recent idea. It was not even a new notion in the fateful winter of 1775-1776 that had been suddenly conceived by rebellious American colonists as a pretext for revolution. There were precedents and antecedents for this belief in government by law in the British tradition, in medi eval thought and practice, and among Roman thinkers in classical antiquity. But whether government should have its source in law or in men was no pretty abstract question to be pondered by contemplative philosophers for Americans dur ing this winter. It was rooted in problems which were practical, pressing, and immediate. Govern ment by men had resolved itself into the question of whether or not they should any longer be gov erned by a single man, King George III. It was a question that burned itself into the center of the customs, habits, loyalties, rights, and prerogatives of Amer icans.

How hard it was to decide what to do! Blood had already been spilled in anger: the battles of Dr. Carson, well known to FREEMAN readers is Chairman of the Social Science Department of Okaloosa-Walton Junior College in Nice ville, Florida. This article is reprinted by permission from t?e Winter 1971 issue of My Country, pub lished by My Country Society, Inc., of Litch field, Connecticut. WINTER of DECISION 1775-1776 CLARENCE B. CARSON Lexington and Concord, and of Bunker Hill had already been fought. A continental army was encamped against a British army. The Second Continental Congress had been in session since May of 1775. It had already taken action which led almost irrevocably to rupture between England and America. George Washington had been appointed commander of the continental force. Congress had authorized an expedition against Quebec, approved of the construc tion of a navy, and sent a com mission abroad to seek friends among other countries. Yet the 387 388 THE FREEMAN July "shot heard round the world" had apparently ceased reverberating.

Congress affirmed its loyalty to the King of England, and George Washington and his officers toast ed the health of the King during that winter. The Right to Tax Step by step, over a period of ten years, leaders of the colonists had edged toward separation from England. When :Parliament passed the Stamp Act, they had taken the position that it was unlawful be cause Parliament did not have the authority to levy an internal tax. When Parliament retreated to ad vance along a different line with the Townshend Duties, colonists took the position that Parliament could not levy external duties for the purpose of raising revenue. A chastened Parliament repealed most of these duties but then at tempted to give the East India Company a monopoly of the sale of tea in the American colonies. Faced by this action, colonists denied the rightfulness of the cre ation of a monopoly. By 1774-1775, such varied men as James Wilson, Thomas Jefferson, and John Adams questioned that Parlia ment should have any legislative authority over America.

But from 1765 to 1775 it was always the powers of Parliament that were at issue. Protests were always made within the frame work of preserving the connection with Britain and a professed loy alty to the King. Why, we may well ask, did the colonists have so much trouble focusing their ire upon the King? It is likely that had a poll been taken among those who had given thought to the matter that an overwhelming number of Amer icans would have opted for gov ernment by law. And what better symbol of arbitrary government could have been found than that of monarchy? Hardly a century had passed since the Stuart kings had claimed that all authority stemmed from them by divine right. Were not most of the gov ernors "royal" governors ? Were not the customs agents who be set the colonists, agents of the "crown" in the final analysis? Were not the very soldiers en camped against Americans, sol diers of the king? Government by men could be traced finally .to government by a man.

But the matter was not so sim ple. For it was not only that a few hateful laws were promulgated in the name of the king. Cherished rights and liberties could be traced to the same source. A title search for the ownership of property in colonial times would lead one back ward to the source of that title the monarch who had granted the 1971 WINTER OF DECISION 389 land to some company or ·propri etor from whom a colonist had acquired it. It was no different with those liberties which the col onists loved. Many of the charters upon which the colonies had been founded specifically stated that those who settled in America should retain all their rights and liberties as if they had remained in England. The right of govern ing themselves traced back to the rights recognized by kings in times past. If they should cast off their ties to the monarch, what then would be the status of their property and their liberties? Thus far they had based their opposition upon the unconstitutionality of the action taken by parliament, upon their position that their rights as Eng lishmen had been violated. If they cast off this last tie with England, how then would they defend their life, liberty, and prop erty?

The answer was lying ready to hand, of course. It was to be found in the arguments of the Roman Stoics, familiar to American think ers. It had been given fairly re cent statement by John Locke in his justification of the Glorious Revolution in England. The French philosophes had em broidered upon it. Many Amer icans had embraced - philosophi cally - beliefs which would provide anew foundation for liber ties. This new foundation was that this universe is ruled by nat ural law, that this is a law above and· beyond the power of man to alter, and that it requires no hu man sanction for it to prevail. The most that man can do is to recognize it and live in accord with it. Common Sense In that winter of decision, then, all that was needed was for the breath of life to pass into these new foundations. It required only that abstract ideas be given the force of human will and be made relevant to the American situa tion. That man, more than any other, who performed this task for America was Thomas Paine. Paine had only lately come to America.

He could be aptly described as a man with a nose for revolution an itinerant revolutionist. He pub lished a pamphlet called Common Sense in January, 1776. It sold by the tens of thousands, spreading like a wildfire through the colo nies, confirming men in a new determination and galvanizing them to action. Paine went to the heart of the matter, minting deep philosophical beliefs into the coin of slogans and shibboleths. He hacked into shreds the argu ments against the final break. "But Britain is the parent coun390 THE FREEMAN July try, say some. Then the more shame upon her conduct. Even brutes do not devour their young nor savages make war upon their families .... " More, "Ye that tell us of harmony and reconciliation, can ye restore to us the time that is past? Can ye give to prostitu tion its former innocence? Nei ther can ye reconcile Britain and America. The last cord now is broken, the people of England are presenting addresses against us."

As for the matter of a king, Paine went straight to the jugular vein. "But where, say some, is the king of America? I'll tell you, friend, he reigns above, and does not make havoc of mankind like the royal brute of Britain." Let the world know, he declares, - and this is the crux of his argument "that in America the law is king. For as in absolute governments the king is law, so in free coun tries the law ought to be king; and there ought to be no other." We do not know after what readings, following which discus sions, after what lonely contem plation, particular Americans made their decisions. We do know that when a resolution was intro duced to Congress in 1776 for in dependence that the Congress ap proved. We know that a committee was appointed to draw up a dec laration, and that the task of pre paring a draft fell to Thomas Jefferson. And we know that Jef ferson based his declaration upon the new foundations, and cast into unforgettable phrases the argu ment for government by law.

Read again the introductory paragraphs of the Declaration of Independence: "When in the Course of Human events it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the sep arate and equal station to which the Laws of Nature and Nature's God entitle them, a decent respect to the opinions of mankind re quires that they should declare the causes which impel them to the separation. "We hold these truths to be self-evident, that all men are cre ated equal, that they are endowed by their Creator with certain un alienable Rights, that among these are Life, Liberty, and the pursuit of Happiness .... " With the adoption of this dec laration, the Continental Congress and with them - as it turned out the American people, turned their back on the last relics of govern ment by men and turned their faces toward the rule of govern ment by law.

That was the decision which had issued from that winter of deliberation. f) When rationing comes LEONARD E. READ o () () PERHAPS the most effective way to begin a commentary on the rapidly deteriorating plight of the indi vidual in our society is to trace present policies to their logical conclusion. For unless there be general awareness of the utter disaster that lies ahead, assuming no change in direction, we will continue merrily along to a com plete loss of freedom. National doom, as some would say, but, more important I believe, self destruction of the individual. The course we are on must lead inev·itably to rationing. Such a prognosis does not frighten many people· these days. Americans do not appear upset by the prospect, and even the people most strictly rationed - doubtless the Russians, where the rule is to obey or lose your life - no more resent rationing than they regret the lack of automobiles. Why?

These are conditions of life into which they were born and to which they have grown accustomed. Ra tioning is no more deplored by Russians than are speed limits by Americans. Why are Americans so Iittle dis turbed by the threat of rationing? Partly because we have had so little experience with this type of repressive law, but mostly because rationing laws have rarely been obeyed or enforced here. There was some rationing during World War I and much more during World War II; but obedience, such as existed, was cushioned by the patriotic fervor that attends some wars. I repeat, rationing has worked slight hardship because it was never made "to work" in the U.S.A. As with all nonsensical law - prohibition, for instance~Q1 392 THE FREEMAN July rationing has resulted in mass "underground" movements. Black markets thrived. And otherwise first-rate citizens by the millions became lawbreakers, schemers, liars, and looked upon their depar tures from rectitude with approval and humor - as an outguessing game!

Painless, yes; costless, no! The long-run cost would be far less had we obeyed and suffered the pain of these politico-economic outrages. Had we obeyed, we would now despise and fear rationing and would do all in our power to avoid a recurrence of this ultimate in authoritarianism. We chose the painless but costly course: a lower ing of the exemplary standards. Hardly any virtue --- not even hon esty - remained sacred. And this is disastrous: to abandon every thing sacred is to forego the pos sibilities of a society in which in dividuals thrive best. A Shocking Contrast People who have no fear of ra tioning - the vast majority - can be said to lack a politico-economic turn of mind. Obviously, such per sons cannot relate what they do not understand to-that which has not happened. Only a sharp and shocking contrast could bring this horror acutely to their apprecia tion. Let us imagine an instant transplant of a typical American fam ily from Omaha to Omsk - take them from where they are and from what they are accustomed to and drop them suddenly into that authoritarian situation of which rationing is a logical and inevit able part. The first order of busi ness would be to secure food.

Mother would have no phone; but that \vould not matter, for there are no deliveries. She is without a car to go shopping; cars are rationed to commissars and their aides. No taxies! So she walks to a government store and lines up at the end of a queue. At long last, it's her turn. What are the choices? She can either accept or refuse the rationed items and in the quantities set by government. What a contrast from yesterda~ in the U.S.A.! Mother, in that case would understand what rationin! means. Shocking, to say the least No need to labor the point Father would experience the sam thing, as would the children. Fo anyone who can read the langaug of economic cause and effect, rl tioning is failure on pa.rade! Why are most goods and servicf rationed in Russia? Because tl Russian economy is a failure; is not productive. Why will gool and services be similarly ration in the U.S.A. if we continue t present course? For precisely t same reason that the last bar: 19'11 WHEN RATIONING COMES 393 of water is rationed on a ship lost at sea: short supply - that is, not enough to go around. Socialism the planned economy and welfare state - is woefully lacking in pro ductivity; it results in scarcity.

When we in the U.S.A. substitute socialism for free market practices to the extent the Russians have, our failure will match theirs; pro ductivity will be no greater here than there. There won't be enough to go around. It Can't Happen Here! The attempted rebuttal runs thus: Americans will no more heed rationing regulations in the future than they have in the past. No gov ernment can ever do this to us we think! Such optimistic fore casting is naive. When the real crunch comes, there will be no choice. Americans could flout rationing in the past and get away with it because there was private owner ship. Sugar or gasoline or what ever was always obtainable for some black market price. Such markets, however, presuppose something more than a barrel of water for a lot of thirsty people; they presuppose each having some thing of his own to trade! When and if real scarcity ob tains in our country, as in Russia, rationing will be made "to work."

There will be no alternative except to abandon the entire socialistic rigmarole. Otherwise, any political hierarchy too tenderhearted to use the required violence to en force rationing will be run out of office by those who are indifferent to human life. The worst, as Hayek says, will get to the top.! Given real scarcity, it has to be this way. Why do people accept rationing? Those who envision its debilitat ing effect on individuals may wish to explore its antecedents in se quential order. For causes cannot be removed until they are known, which is to say that rationing is inevitable unless we know its deri vation. Rationing is the effect of a cause" but that cause is the effect of a prior cause, and so on. What then is the cause that immediately pre cedes rationing? Scarcity, as al ready suggested! Scarcity a Fact of Nature Now, scarcity is one of the facts of nature, in the sense that life is always a struggle. Largely by trial and error, some men at some times and in some parts of the globe have hit upon specialization and trade, voluntary cooperation in market fashion, to make the best 1 See "Why the Worst Get on Top,"

in The Road to Serfdom by F. A. Hayek (Chicago: The University of Chicago Press, 1967),pp. 134-152.

394 THE FREEMAN July possible use of scarce resources. In other words, they have devel oped the principles and practices of private ownership and free trade, with government limited to keeping the peace - no man-con cocted restraints against the re lease of creative energy: freedom! But not all men subjected to the competition of the market are con tent with the results. And their efforts to by-pass the market, or do away with it, result inevitably in what I would call a contrived scarcity. This is what we witness in Russia and will experience here short of a turnabout. This kind of scarcity emerges from coercive in terventions in the market: state ownership and control of the means as well as the results of production. Socialism! Contrived scarcity, the cause of rationing, is itself an effect of still another cause. What is its im mediate antecedent - that is, what are the components of coercive in tervention? Wage, price, produc tion, and exchange controls !

A few samples will suffice to make my point. Import embargoes and their variants, quotas and tariffs, make for scarcity. Impose embargoes on all exchange, domes tic as well as foreign, and every one, except the few who could sur vive by foraging, would perish. Contrived scarcity! Minimum wage laws and arbitrary labor union wage rates make for unemployment and, thus, lower production. More contrived scarcity! Paying farmers not to farm is an instance of production control - a political contribution to scar city. Medicare, where government, not the patients, pay the ever increasing prices, is already mak ing for a scarcity of hospital beds and, as socialized medicine pro gresses, there will be a scarcity of doctors. 2 Holding Prices Down These and countless other polit ical interventions are a form of price control-contrived scarcity driving prices upward. Sooner or later, as this trend becomes in tolerable, government will "come to the rescue" with the opposite and generally accepted concept of price controls -.limiting prices, that is, holding them down. Rent control falls in this latter category.

Merely observe - whether such controls are invoked in France, Sweden, or New York City - that a housing scarcity follows. 3 This form of price control can 2 See "Why I Left England" by Dr. Edward L. McNeil, THE FREEMAN, May, 1971. 3 For an enlightening study of rent control and its effects in France, see No Vacancies by Bertrand de J ouvenel. Copy on request.

1971 WHEN RATIONING COMES 395 no longer be taken lightly. Con gress has given the President powers to invoke these counteract ing controls at his discretion. Al ready, threats of such imposition have been directed at certain "key" industries. As prices continue to soar, we can expect the applica tion of controls to all aspects of the economy. So long as present trends prevail, there is no political alterna tivee Controls are invoked to cope with the constantly rising prices of which consumers complain. What, it may be asked, brings on these inordinate prices? Seeking the cause which is pushing all prices upward we come to the next antecedent, inflation. The Nature of Inflation Inflation is a dilution of the medi urn of exchange, an artificial expansion of the money supply. Inflation differs from counterfeit ing in that it is legal and, also, it is an .act of government rather than of individuals. But. whether the money results from inflation or from counterfeiting, a dollar is a purchase order, and no one in quires into its source. A transac tion involving counterfeit or in flation dollars is not an exchange of goods. and services for goods and services but an exchange of paper money for goods and serv ices. As the volume of paper money increases and as the quan tity of goods and services de creases, everything else being equal, prices correspondingly rise.

The equation is simple: Assume goods and services to be what they are now. Double the amount of money and prices will be twice as high. However, inflation itself is the effect of a cause. What is its ante cedent? The answer: excessive governmental expenditures! Whenever governmental expen ditures rise beyond the point where it is no longer politically expedient to defray them by di rect tax levies, governments have only two choices: (1) go into non repayable debt or (2) inflate the money supply. The latter, a means of siphoning personal savings into the coffers of government, is the better political expedient because it is less understood and, thus, not so much opposed. Added to the billions collected by direct tax levies are these additional billions of expropriated private property. This is how overextended govern ments "balance" their budgets. Testimony to the general aware ness that inflation. depletes private savings is the attempt by millions of citizens "to hedge against in flation."

Overextended government is the weightiest of all the causes of scarcity for it lies at the very root 396 THE FREEMAN July of the formidable and dreaded ra tioning that looms ahead. Govern ment doing the wrong things is the origin of all the aforemen tioned effects. Does out-of-bounds government, in turn, have a causal antecedent? If so, it cannot be stated with any more precision than a reference to the vagaries of human nature! Why is it that human beings behave as they do? Vagaries of Human Nature As this is written, I read of many distinguished men, reputedly free enterprisers to the core, who are pleading for Federal aid to bail out their ailing industry or community, or to compensate them for losses inflicted by droughts, or whatever. It seems that "private enterprisers" in trouble are, with few exceptions, as prone to turn to government as the socialists who revel in utopian dreams!

The tendency of those who say they favor private enterprise and related institutions is to blame socialists, communists, liberals, welfare staters, and the like for our deteriorating situation. Yet, when the chips are down and the going gets tough, the critics can hardly be distinguished from those they criticize. The former run to the Federal trough and turn the U.S.A. toward socialism as much as the latter. Such observations pronounce ·a harsh but humble verdict: we are well advised to look to ourselves as a major part of the problem. Why do we behave this way? Doubtless, there are more explanations than anyone knows, but here are a few sus pected reasons. • The tendency to satisfy desires along the lines of least resist ance, regardless of where such a course leads; in other words, a breakdown or failure of moral discipline. • An inability to reason from cause to consequence, from means to ends.

• A failure to understand that government is essentially or ganized force, the uses of which are limited at best; in brief, no discernment as to what is or is not the appropriate role of gov ernment. • The naive assumption that gov ernment has funds of its own a bottomless pot of gold - avail able for the asking. • The notion that feathering one's own nest at the expense of others· is not robbery if it is legalized or has political sanc tion. • The wishful thinking that others have a moral obligation to cover our mistakes and satisfy our wants; that wishes are rights. • A faith in socialism because the alternative is unknown, which is to say, an ignorance of the mira1971 WHEN RATIONING COMES 397 cles that are wrought by men functioning freely in the mar ket. • And then there is the tug of tradition, the heritage of politi cal authoritarianism which with rare and brief exceptions, has featured human existence since the dawn of social organization.

It is the ageless urge for se curity sought from a king; it is the reluctance to take the risks of self-responsibility, the refusal to become one's own man. Perhaps there is nothing better we can do about the current di lemma. than for each to openly acknowledge: "The fault is mine." For who among us adequately un derstands and can competently ex plain the freedom way of life we would uphold. Not one! I have tried here to pose the likelihood of rationing if we con tinue on the present course, and then to examine the cause of each effect - going backwards, so to speak, to where we now are. Ad mittedly, cause and effect are not always as precisely ordered as I have made them out to be; they are confusingly intertwined at times. But generally they follow in this sequence: (1) the vagaries of human nature ranging from "I want to be king" to "I want a king," (2) excessive government, (3) inflation, (4) controls, (5) scarcity, and (6) rationing with its stifling of individual growth and creativity, its smothering of the human spirit.

A recognition of where the pres ent course leads should be enough to bring about a change in course, to do away with these numerous layers of intervention, to put gov ernment in its proper pla.ce, and to restore a reliance on the free market. Men free to produce and trade as they choose need not rely on rations for subsistence. ~ IDEAS ON $ LIBERTY Thoughts and Details on Scarcity OF ALL THINGS, an indiscreet tampering with the trade of provi sions is the most dangerous, and it is always worst in the time when men are most disposed to it: - that is, in the time of scarc ity. Because there is nothing on which the passions of men are so violent, and their judgment so weak, and on which there exists such a multitude of ill-founded popular prejudices. As presented by EDMUND BURKE in 1795 to the Right Hon. William Pitt w. H. GRAHAM I Pledge Myself to Help Strengthen America 1 will honor God.

Acknowledging the imperfections of human society and the fallibility of man, I will rely on my personal concept of the Creator, remember ing Him as the source and repository of all that which is good, true, and beautiful. 1 will respect law and order. I know that true freedom is possible only in an ordered society, and I will accept the necessity of complete obedience - in spirit as well as in letter - of the civil statutes which bind my American society together. I recognize that this in no way prevents me from peace fully working for the changes I feel should be made in improper or unjust laws, but I will at all times obey statutes while they are in effect. lwill instruct my children in the principles of moral order. Drawing from the Judeo-Christian traditions, I will lay for my children a foundation of morality from which all right human action - private and public - must spring. I will not default on this 'paren tal responsibility and leave it to chance in the public schools or in the churches.

I will strive always to be fina11JCiallyindependent. I will look first to providing for myself and my family. Thereafter, I will recognize my responsibilities in charity to others. I will seek at all costs to avoid becoming partly or wholly dependent upon public welfare. This article is reprinted by permission as a column from The Lovin4ton Daily Leader (New Mexico) of which Mr. Graham is publisher. 398 1971 1 PLEDGE M.YSELF 399 I will help protect my country's fiscal integrity - by rendering full value for the things I sell, whether they be my labor, my goods, or my intellect. I will prevail upon my elected repre sentatives to engage in no deficit spending. I will set aside in savings some of my earnings, and I will purchase only those things for which I have a real need, or am in a financial position to afford. I will ask my elected representatives to have first consideration for the benefit and welfare of the nation as a· whole, and to place less emphasis on sectional demands. I will not request nor applaud pork barrel politics.

I will make economic opportunity my first rule of· business - and will place tax advantage at a secondary place in the scale of criteria for making business decisions. I will do this even under the penalty of tax disadvantage in order to help wean American business and industry away from dependence on the social engineers who have written the present American tax laws. I will not give aid and comfort to my country's enemie·s. I will not contribute to the financial support of those who would subvert our American culture with alien ideas. I will not purchase publications which predominantly feature writers who mock our institutions, our moral values, or our cultural heritage. I will refuse to attend theater and motion pictures which deprave American social norms, American ideals, and which legitimatize degeneracy. I will respect my personal image. Although costume and appearance is· not the final determinant of what a person is, I believe that unkemptness is a mark of indifference toward the best in life. I will therefore strive for cleanness and neat ness in my personal appearance. I will take particular pains that I accept nothing in my style and habits that will emulate or honor the extreme practices of those who have made slovenly appearance a badge of protest and dissent.

I will restrain my personal appetites - keeping my bodily and psychological desires in rein. I recognize them as healthy drives, but only when I control them; not when they control me.

400 THE FREEMAN I will reflect a good image. By my speech and demeanor, I will strive to recapture the true image of the American citizen: a person of confidence, kindness, good manners, and a willing worker. I will not desecrate the landscape. In all my activities I will ever be mindful of my stewardship of the land. I will keep my private property in a neat and orderly appear ance. I will respect the private property of others. I will not damage my interest in public property through acts of vandalism, careless ness, or neglect. I will pay my taxes willingly. In recognition that there is a price to be paid to maintain a safe America, I will pay every tax legally levied upon my produce and my property. I will work to reform those taxes I believe unjust, un necessary, or inequitable. I will be an informed citizen - acquiring knowledge on matters of public interest. I recognize that education is a continuing process, and I will read about and discuss with others matters that are important to the preservation and on going of my country. I will maintain regular contact with my elected representatives.

I will maintain an active membership in my church - and will not surrender it to the theological radicals, social mil itants, and other disruptive elements whose presence is only a pass ing phase in two thousand years of church history. I will do my part to return charity to its rightful place - by involving myself in some good work where I personally know the people and the problems involved. I will give willingly and joyfully that others might know the reality of human compassion and concern. I will be a good steward of time - refusing to waste it in idleness, unprofitable conversation, or fool ish and vain activities. I will say a good word for my country wherever I may have the oppor~~ ~ PAUL L. POIROT THIS LITTLE PIGGY went to market. But the market was closed - in definitely - by order of the gov ernment. There had been a lot of com plaints about the market: • It takes a person at his word and holds him responsible for his ac tions.

• It allows unwanted resources to go unclaimed and unused. • It permits scarce and valuable resources to be owned and con trolled by the highest bidder. • It allows foreigners to compete on equal terms with domestic suppliers and buyers. • It lets prices for goods and ser vices rise or fall in response to demand and supply. • It permits people to hire or to work for one another on terms mutually agreeable. • It lets buyers and sellers use any thing they please as money. • It lets the owner consume, save, offer for sale, or otherwise use, waste, pollute, or abuse his prop erty as he chooses. • It allows a person to succeed or fail in accordance with his deci sions and actions. • It allows a person to specialize in any business or profession, or to live a life of self-subsistence, as he chooses. • It allows people to congregate in centers of trade and culture. In short, the market respects the dignity of every human being and lets him do just as he pleases with what is properly his own, leaving him free to reap the bene fits and suffer the consequences of his own actions.

A market economy can hardly be described as a natural develop ment, such as might be found among plants, bees, birds, or ani mals in the wild. It is the result, rather, of human reason applied 401 402 THE FREEMAN July to the problems of the individual in society. The theory or premise behind the market is that the most practicable and desirable form of society is one that maximizes per sonal freedom of choice and mini mizes violence among men. Inso far as possible, let man do as he pleases, acting alone or in strictly voluntary association with others. And this is the purpose of the mar ket: to facilitate voluntary asso ciation and trade. However, by definition and by nature, a voluntary association is unable to police itself, has no means of enforcing the rules of the association within its own membership and no means of pro tecting itself from nonmembers. The market, for instance, has no market method of coping with a buyer or a seller who resorts to coercion or fraud to effect a trade, no way to keep the market open and operating in the face of those who would close it by violent methods.

So, the human reason that calls for a market economy, in order to maximize the exercise of personal freedom of choice, also demands a framework of government, a gov ernment strictly limited in scope and function to policing the mar ket, protecting the life and prop erty of everyone who comes to trade in peace, and making sure that no person or group is permitted to block any peaceful trader from the market. This appears to be the minim urn governmental force required to police the market and thus maximize the freedom of the individual, release his crea tive energies for peaceful produc tion and trade, reduce his incen tive and temptation to resort to violence to obtain or defend what he wants. In other words, the optimum re lease of creative human energy requires a framework - or perhaps a leavening - of organized police power, a government of strictly limited scope and purpose to mini mize violence among men. If this reasoning be correct, it suggests a corollary proposition: Any ex pansion or extension of govern mental force beyond the minimum required to police the market nec essarily and inevitably drives in dividuals and groups to acts of violence against one another. Such aggravated violence involves de struction of human and other re sources that might otherwise have been turned to peaceful and con structi ve use.

The Ultimate Intervention Such was the situation on the fateful day our hypothetical "little. piggy" went to market and found it closed. Not satisfied with the risks and pressures of open com petition, this and that person and 1971 MARKET CLOSED! 403 group had sought and obtained government intervention in its own behalf: - protection against foreign sup pliers of goods and services. - a special license or exclusive trading privilege. - a right to strike and keep com petitors from taking the job va cated. - zoning ordinances to force neighbors to keep their distance. - unlimited supplies of money and credit. - fair trade laws to prevent price cutting. - minimum wage laws. - laws to hold prices up, or to hold prices down. - rent control laws. - low-cost public housing projects. - guaranteed income in old age, or at any age. - free schooling, medical care, den tal care, legal aid, food stamps.

- a little privilege here, a little pressure there, and so forth and so on. Yet, the more the government is asked to intervene on behalf of some persons and groups at the expense of others, the more diffi cult it is for anyone to compete in the open market to serve himself by peacefully serving others. No sooner is a special privilege granted by government to a par ticular person or group than other persons or groups begin fighting to obtain ·"their fair share." And whatever the grant of privilege or power, it is never enough; the beneficiaries demand more, and turn to violence to get it. from Violence to Famine The market cannot cope with violence, which destroys savings and investments, tools and facili ties of production, the incentive to specialize and trade. This coer cive detour of the market leads back toward conditions of famine and starvation chronically suffered by slaves, serfs, and socialists.

People unfree or unwilling to com pete in the market for possession and use of scarce resources inevit ably find themselves trying to sub sist on rations. Instead of faring each according to his ability and his effort, each hopes to share ac cording to his need. The individ ual ceases to be responsible for what he produces or consumes; these choices are made for him by someone else. He stands to gain or lose nothing by producing more or less. Nor is it to his advantage to save, since his savings would be confiscated. The share rationed to him is in proportion to his lack of productivity. When violence closes the market, famine cannot be far behind. One need not rely on theory or imagination to test the procedures 404 THE FREEMAN July and effects of closing the market. In the Communist Manifesto of 1848, Karl Marx drew up the blue print, spelled out various of the most important measures "to cen tralize all instruments of produc tion in the hands of the state."

The blueprint has been followed, the measures applied, in Russia, China, Cuba, and other lands. The markets have been closed, dis placed by coercive collectivism. And the inevitable consequence in each case has been degrading poverty and famine. In a sense, and in the light of the trend of developments in the United States in recent decades, Marx seems to have been remark ably prophetic in his list of ten steps toward compulsory collec tivism. On the other hand, it should have required no great flash of insight by some genius, even as far back as 1848, to foresee what might be some of the consequences if a system of coercion were to displace the market system of open competition and voluntary ex change. Experiences in Agriculture In any event, whether or not Marx realized what he was doing, understood what he was saying, or knew where his ideas were leading in 1848, there would seem to be little excuse for confusion about the results of coercion in the latter part of the twentieth century. Indeed, one need not look beyond quite recent domestic ex periments and experiences in agri culture for necessary proof of the failure of coercive practices and the reasons why nothing is to be gained by any person or group through further ventures in that direction.

What, for instance, have the cotton growers of the United States gained for their efforts over the past fifty years to get more for their product than the competitive market would allow? True, they have gotten some sub sidy payments from taxpayers, but along with the subsidies have come stringent government regulations and controls and quotas and re straints of one kind and another. The values of quotas and allot ments have been built into the price of the land to which they are tied, and that higher priced land carries ever higher taxes. Further, the withholding of American grown cotton from the market has opened the door inadvertently, not only to foreign growers of cotton but more especially to domestic producers of rayon, nylon, and a host of other synthetic fibers. In stead of competing in the open mar ket, American cotton growers are finding themselves more or less bound and gagged on an arti ficial political pedestal, their own 1971 MARKET CLOSED! 405 political power dwindling and no bright prospect of a large bloc of satisfied consumers from whom political support might be forth coming.

Similar, if not identical, experi ences could be reported for Amer ican growers of wheat, corn, to bacco, rice, peanuts, sugar cane and beets, various fruits, vegeta bles, nuts, and other specialty crops under marketing orders, agreements, or cartel grants of one . kind and another . Nor does the attempted producer-monopoly seem to hold up with greater success when bolstered by international commodity agreements such as those for wheat, cotton, sugar, coffee, and so on. The mathematics of political power simply doesn't work out right to give a relatively small group of specialized pro ducers a great and generous hand out from a larger group of frus trated consumers. A Caulillower Cartel Aside from the political imprac ticality, consider the simple eco nomics of the producer-cartel or monopoly. For the sake of argu ment or illustration, let's suppose there are 1,000 growers of cauli flower in the United States. Why shouldn't they form an association for the more orderly marketing of high quality cauliflower? In other words, put their heads together and form a monopoly in order to hold supplies from the market and thus obtain higher prices!

Of these thousand growers, one of them is the largest and one the smallest commercial producer of cauliflower in the nation. And there's every likelihood that the larger one achieved his position through efficient production. Chances are tha t the relati vely few of the very large growers are the low-cost, efficient ones, whereas several of the smaller producers may be operating at no profit, per haps at a loss. (Size, of course, does not necessarily mark suc cess; the point is that some grow ers are more efficient than others.) Of the thousand growers, no doubt the majority of smaller producers would be very happy to see the few larger ones cut back their out put. But why should any large, efficient grower want to thus re strict trade or take himself out of the market? And if he did, what would stop 10,000 other farmers from trying to supply the cauli flower market he had j ust vacated?

Of course, a law would be needed to prohibit cauliflower production by those who could show no pre vious records of production. And it also would be necessary to pro hibit imports of cauliflower from abroad, if the domestic monopoly were to be effective. So, there would be production 406 THE FREEMAN July and marketing quotas for each of the 1,000 privileged growers, not to mention endless quality controls and other governmental rules and regulations. An efficient cauli flower grower should want no pa--rt of any such "protective" arrange ment. And if he only knew it, neither should the inefficient loser among the growers wish to be artificially shielded from or blinded to his failure. Far better to know the truth, so that he might turn his labor and other resources immediately to something more potentially profitable to him than cauliflower growing. Finally, it is not to be supposed that a cauliflower monopoly begins and ends with cauliflower growers.

This coercive action affects other persons and groups, some seeking a comparable special privilege for themselves, others seeking oppor tunities to return to the open mar ket. If all the devious consequences of coercive intervention could be foreseen and understood, it seems unlikely that mature and responsi ble adults would ever want to try to price themselves out of the market. Free Market: Who Needs It? Many people will not be greatly concerned about the producers who may suffer as a consequence of closing the market. Their professed concern is rather for the poor. Who cares about a few producers, some of whom had accumulated sizable fortunes! Why keep the market open for that type of person? Why not try some form of profit-sharing or dividing the wealth or other so cialistic program to give the mil lions of the poor a. better chance? The fact is that the successful businessman or entrepreneur prob ably would make out pretty well for himself under any system.

Whatever "the rules of the game," he'd find his way toward the top. And, sad to say, the poor within a market economy would still be the poor, for the most part, under any other arrangement. So, it is the poor who stand to lose the most, comparatively, as a consequence of closing the market. The competitive ma.rket economy is the only system that channels the creative efforts of the most aggres sive and capable individuals into serving the needs and wants of the poor. That is really why we can't afford to let the market be closed., JOHN W. CAMPBELL SOMEONE writing a letter to Chem i,eal & Engineering News came up with a definition of three kinds of pollution - "actual, political, and hysterical." The gentleman is ob viously correct. The extent of the hysterical class of pollution has made the subject of immense emotive force leading to almost unlimited politi cal pollution. The vote-getting pub licity-achieving possibilities lead to the Instant Authority syndrome in hundreds of would-be-important nonentities.

And that is a major disaster; there is real pollution, and curing it becomes enormously harder be cause of the wolf-crying about un real pollution. Energies are divert ed from real problems to unreal and meaningless pseudo-problems. An editorial, slightly condensed, from the May, 1971, issue of ANALOG: Copyright © 1971 by the Conde Nast Publications, Inc. The latest example of hysterical pollution was the recent hoorah set off by discovering mercury in canned tuna fish. A certain fact was demonstra ted: canned tuna fish contained quantities of mer cury up to and beyond the Fed erally allowable limits set by the Food & Drug Administration. (The FDA, of course, has been known to go off half-cocked before this.) This fact was immediately widely publicized, and thousands of dollars worth of canned tuna were declared toxic, forcing can ners to recall their product, food merchant operations to go into high-speed reverse, and worrying people aU over the country.

And, of course, increasing the political pollution about those aw ful, wicked, selfish, uncaring man ufacturers who knowingly dump their poisonous wastes in our seas. The problem of pollution is a 407 408 THE FREEMAN July problem which demands some very honest witnesses - and a recogni tion of that fundamental law of the Universe: You cannot get something for nothing. There Is a Costand It May Be Disaster In the effort to solve pollution problems, a second fundamental law of reality must be recognized; you can get what you want if you can pay the necessary cost - but you will pay that cost, like it or not, willynilly, if you try to take what you want. And the cost may bankrupt you - and the bank ruptcy penalty imposed by the Universe is Disaster. A great and arrogant star, burning its hydro gen fuel profligately at 10,000 times Sol's rate, can shine bold and dominant for a while; bank ruptcy in this case is called "a supernova explosion." It leaves a shriveled remnant ten or so miles in diameter called a neutron star, a shrunken corpse rapidly cooling into cold death.

You can't get something for nothing. You can get what you want pro vided you can pay for it in the Universe's terms of time and en ergy; if you can't pay the fee, Disaster collects. Therefore, it's essential that judgment be used; you've got to balance the cost and the gain, and forsake the hope you'll get it for nothing. The elephant's immense size and strength means he need not fear lions, tigers, or other car nivores - but it also means he can not cross a six-foot deep ditch, because of that size. He can't stand a six-foot drop, and if the ditch is wider than he can stride across - he's helpless. A mouse, on the other hand, can stand an unlimited fall-a fall from 20,000 feet wouldn't damage him appreciably. His small size and weight mean that air resist ance to his fall will allow him to land at a speed within the shock absorption capability of his bones and muscles. Of course, he does have trouble with owls in the air, and cats when he lands.

You pay for what you get, in other words. And if you don't use judgment, the payment is almost certain to be Disaster. But the essence of judgment is to balance all the factors-not just the ones you like. Youmust get both sides of the question, or all sides, for many times there are far more than two factors. Mercury in Tuna The FDA and the political pol luters joined in with the hysterical polluters on that mercury-in-tuna business without making even a 1971 POLLUTION PARANOIA 409 half-hearted effort to get the full story before blasting off in all directions. The thing looked decidedly fishy to me from the start - and I don't mean just tuna-fishy. Item: mer cury has been used in medicines for centuries. Item: sodium cya nide is terrifically deadly, and this does not mean that sodium is poi sonous. Item: methyl mercury, it has recently been discovered, is highly toxic, and is produced by living bacteria in contact with metallic mercury. Itern: there is, and always has been, mercury in seawater - and it's known that mercuric chloride is highly toxic.

With some 35,000,000 tons of mer cury in the sea, and the sea full of chloride, the sea remains "the mother of life." Just because mercury is in tuna does not automatically mean that it must be toxic; there's sodium in tuna, too, and as I say, sodium cya nide is terribly poisonous. I'll even go further; sodium cyanide is made up of sodium, carbon, and nitrogen, and they're all in your tuna-fish salad sandwich! Perhaps the most familiar mer cury medication is Mercurochrome - which has been used as a sys temic antiseptic by direct injec tion into the bloodstream. Mer curous chloride - OUB not ic! - has been taken by mouth as a remedy for many centuries. Lord knows how many doses of mercury metal have been swallowed by children who chewed on the familiar fever thermometers. It just didn't seem that that re port of 50 parts per million of mercury in tuna was all that dev astating ....

So, after a few weeks of study and research, the boys finally got around to the conclusion that they'd really goofed high, wide, and handsome. Tuna fish naturally contains from 10 to 100 parts of mercury per million - and always has. Studies of tuna canned forty-five years ago showed the same level of mercury. Study of a preserved, dehydrated tuna from a museum collection, known to be about sev enty years old, showed the same level. An organism that lives at the top end of a food chain, with all its food base swimming in a sea containing mercury, tends to ac cumulate some of the mercury. If it couldn't handle that much mer cury, it wouldn't have evolved to sit on top of that food chain. The tuna is way, way up on the food chain; he gets into our cans be cause we're one step higher! That tuna-fish scare is a Grade A # 1 example of political and hys terical pollution taking off when there was no actual pollution.

For the planet Earth, mercury 410 THE FREEMAN July in the environment is normal natural. That does not deny that exces sive local concentrations of mer cury are being caused by certain industrial wastes. However, let's be a little judi cious, and stay alive longer. Men of good will pulled a maj or boner in screaming "Pollution!" when they found that tuna contained mercury; men of equally good will - and equally blank ignorance pulled an exactly similar ignorant boner by dumping metallic mer cury in streams and lakes and say ing, "No pollution." They had no information that the mercury could be dangerous; metallic mercury is quite inert, not exceedingly toxic, and accord ing to all then-known scientific data, would simply sink harmless ly into the mud. The industrial polluters were no more guilty of their ignorance than the FDA was guilty of ignor ance in their screams of "Pollu tion!" in the tuna. And . . . no less guilty.

They're Called Volcanoes The greatest trouble with the pollution problem is recognizing the basic laws of nothing-for nothing, and you-can-if-you accepta-cost. Consider the matter of sulfur dioxide pollution. Sulfur dioxide is poured into the Earth's atmosphere by the cubic mile, in stupendous quantities. It is being dumped into the atmos phere, and the thing we must remember and weigh is that it al.. ways has been - from chimneys thousands of feet high, and miles in diameter. They're called vol canoes. Belching out of these im mense throats come vast quanti ties of carbon dioxide, carbon mon oxide, and the even more poison ous hydrogen sulfide. And I don't mean dribbles - I mean quantities on a planetary, not a mere indus trial scale! Every living organism is abso lutely dependent on sulfur in its metabolism; most of your proteins depend on sulfur-bond cross-link ages to hold them in shape. Quite literally, a little sulfur's good for a man!

But anything in excess is poi sonous - including oxygen, nitro gen, water, sugar, salt - any thing. Sugar and salt are used for preserving foods, because in concentration they kill almost all living cells. And no organism can live without them. Balance and judgment are re quired - and what we get in the current political and hysterical pollution is imbalance and insan ity. Actual pollution is lost sight of, and practical balanc~s that could be achieved are being made lfJ71 rOLLUTION PARANOIA 411 impossible by the hysterical de mands of absolute elimination. You want pure water to drink? O.K., friend - try the flavor of laboratory standard pure water, "conductivity water" so pure that it is an insulator. You don't want pure water; you want a reasonable amount of fla voring substances added - some air, carbon dioxide, va.rious salts and minerals -:- the kind of water your species evolved on!

Solar Pollution Let's consider a Perfect Power Plant. Ideally, it would burn no fuel whatever, deliver power of the type we want directly, have no ex haust whatever, weigh nothing, and occupy no space. You want to wait for it? Well, how about a power plant that delivers immense quantities of power, causes no sulfur, carbon dioxide, carbon monoxide, or hy drocarbon pollution, and requires no attention but simply sends out its floods of power unceasingly, while we don't have to supply any fuel to keep it going? That one's available right now. It's called the Sun, and isn't very portable, and does cause a. great deal of radiation pollution - it keeps throwing out X rays, cos mic rays, high-energy particle radiation, and lethal photons of ultraviolet. The, shielding we have is inadequate; the ultraviolet that leaks through is known to cause considerable cancer, and the par ticle radiation is also known to cause thousands of mutations and cancers, and to produce aging ef fects in human beings.

So we really ought to do some thing about that pollution, and order the Sun turned off? Moreover, the Earth itself has been very badly constructed; many of the atoms it's built of - potas sium, thorium, and uranium in the common granites, for instance, and in seawater - are poorly con structed and keep falling apart. They give off lethal radiation, and the heavier ones keep contaminat ing the air with an exceedingly toxic gas, radon, which, on being inhaled, causes radiation damage inside the body. People living on the Colorado Plateau get a considerable dosage from the uranium and thorium deposits in the local rocks; they should force the Original Con structor of the place to replace the defective atoms with good ones, maybe? Let's get really hysterical about this pollution business and throw all judgment out, and demand ab solute perfection, and see what sort of system we wind up with, .

shall we? Now we can't tolerate the min ing and burning of coal, because 412 THE FREEMAN July coal contains radioactive material that's been safely buried away under thick rock. When it's mined and burned, it releases radioactive materials into our air, water, and ground. And because everybody knows radioactivity is terribly dangerous, we'll enact laws to stop that poisoning of our environment. Then since oil and gas release hydrocarbons into the air and water, and those produce smog which is very toxic, we'll have to stop all use of those dangerous, polluting materials. Of course we can't have nuclear power plants; everybody knows radioactivity causes cancer and mutations, and we can't have that. And we'll just have to do some thing about the radiation pollution the Sun is causing, and cut off those carcinogenic ultraviolet rays. So move the Earth into inter galactic space - and drop dead.

You can't take the hazards of life. One antiradiation hysteric fa natic - he has a degree in science, which means. he knows facts, but evidently doesn't use much judg ment - says the present AEC standards of permissible radiation from nuclear power plants would cause some tens of thousands of added mutation· deaths per year in the United States. I doubt-his figures, to begin with; nobody knows enough to make any such guesses. Dr. Hermann Muller, the Nobel medalist in genetics, given for his studies of radiation-induced mutations, was deeply concerned about radio active mutations because, while the total organism can tolerate some radiation, and make repairs, he was sure that when radiation damaged a gene, there would, necessarily, be a mutation - that genetic cells could tolerate no dam age from radiation; that, there fore, the only permissible radia tion dosage for genetic cells would have to be zero.

That was his position just after WW II, when the atomic problems were just being studied - and be fore the RNA-DN A chemistry of genes was discovered. We now know that genes have built-in self-repair kits, and can very rapidly and neatly repair damage to the genes caused by radiation or other disruptive forces - within limits, of course! What those limits are, we don't know - and the bird who comes out with figures on· how many mutations and cancers a given amount of radiation will cause has no more solid data than Dr. Muller had. The "reasonable level of radiation" obviously must be greater than zero - there is self repair. But nobody knows what it is, and we're a long way from finding out. Moreover, remember the second PGl.l.UTrON P A.RA.NOIA. 418 basic law - you can get what you want if you can pay the cost. We want electric power. The cost is not just so many dollars; it, like the automobile, will have a cost in terms of human Iives.

And don't think you can escape it. Even the Sun takes a toll in lives, with its radiations causing deaths, mutations, and cancers. (And deaths by exposure to its heat, too.) Let's assume that the wild-guess figure of 30,000 deaths, mutations, et cetera, a year resulted from widespread use of nuclear power plants. (That's a wild assumption, completely unprovable, and almost certainly wrong - but assume it for discussion.) Compare those 30,000 deaths and maimings per year with the life-cost per year of the auto mobile. And the way things are going, it's evident that we hold that the mobility that the auto mobile gives us would be cheap at twice the price; the death rate is rising, and yet no one says any thing about banning the use of the deadly machines. Of course, the automobile is the principal cause of death by smog, too. There's great to-do about anti pollution devices to attach to the car - but nobody is proposing laws that end the problem once and completely by banning the auto mobile.

With respect to the automobile, in other words, there is none of the hysterical absolutistic, all-one sided solution of "Ban the car!" But the hysterical and political pollution on the "Ban the power plant!" is going great guns. Of course, we demand our full quota of electric power; we just want them to give it to us from a power plant that produces no pol lution whatever, and we want it now. Too bad. Even God's design of power plant gives off radiation leakage. May I suggest that we'll get a lot better results if we accept that the Universe gives nothing for nothing, and that there will be a cost for every worthwhile thing. That there is no such thing as a Perfect Solution, and the use of good judgment and design are an Optimum Enginering Compromise. As of right now, there is a lot of far-from-optimum design in use; it can be cleaned up and damned well has to be before we start paying the bankruptcy price the Universe charges those who don't acknowledge their bills. Di sastrous Collapse.

But we can not. solve the actual pollution problem with either po litical or hysterical pollution. It calls for judgment - not paranoia on the subject. (I 8 POVERTY and POPULATiOn HENRY HAZLITT SINCE THE END of the eighteenth century every meaningful study of the causes of poverty has at some point referred to the growth of the population. It was the achieve ment of Malthus to have pointed out the connection in so impres sive a way that it could never again be ignored. The thesis of his first Essay on Population, published in 1798, was that dreams of universal affluence were in vain, because there was an inevitable tendency of popula tion to exceed the food supply. "Population, when unchecked, in creases in a geometrical ratio. Subsistence increases only in an arithmetical ratio." There is a fixed limit to the supply of land Henry Hazlitt is well known to FREEMAN readers as author, columnist, editor, lecturer, and practitioner of freedom. This article will appear as a chapter in a forthcoming book, The Conqf.1est of Poverty, to be published by Arlington House.

414 and the size of the crop that can be grown per acre. Malthus spells out what he sees as the fateful consequences of this dispropor tion: "In the United States of Amer ica, where the means of subsist ence have been more ample ... than in any of the modern states of Europe, the population has been found to double itself in twenty five years .... We will take as our rule, and say, that population, when unchecked, goes on doubling itself every twenty-five years, or increases in a geometrical ratio. . .. Taking the population of the world at any number, a thousand millions, for instance, the human species would increase in the ratio of - 1, 2, 4, 8, 16, 32, 64, 128, 156, 512, &c. and subsistence as - 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, &c. In two centuries and a quarter the popu~ 1971 rOYBltTY AND rOP1JLA"I1Q'N lation would be to the means of subsistence as 512 to 10: in three centuries as 4096 to 13," etc.

This fearful arithmetic led Malthus to a despairing conclu sion. He had started with two postulates: "First, that food is necessary to the existence of man. Secondly, that the passion between the sexes is necessary and will re main nearly in its present state." And as he saw no voluntary way, except a "continence" which he did not believe was possible, to prevent the geometrical increase in popu lation, he concluded that popula tion will always tend to expand to the limit of subsistence and be held there by misery, war, pesti lence, and famine. "That popula tion does invariably increase where there are the means of subsistence, the history of every people that ever existed will abundantly prove." Malthus Made a Concession The appearance of this Essay brought down on the author's head a storm of criticism and vitu peration. As a result, Malthus pub lished five years later, in 1803, a second edition of the Essay. It was much longer, in effect an entirely new book, and it became the basis of the six subsequent editions.

There were two main changes. Malthus attempted to support his original thesis with a great mass of factual data on population growth and checks taken not only from history but from contempo rary conditions in a score of other countries. But in addition to bring ing in this supporting evidence, Malthus made a concession. "Throughout the whole of the present work," he wrote in the preface to his second edition, "I have so far differed in principle from the former, as to suppose the action of another check to popula tion which does not come under the head either of vice or misery." This other check was "moral re straint" - that is, "the restraint from marriage which is not fol lowed by irregular gratifications" - the deliberate restraint of the great majority of mankind, by the use of forethought, prudence, and reason, from giving birth as in dividual couples to an excessive number of children. In contem porary Europe, Malthus now found, moral restraint "was the most powerful of the checks on population."

The Principle Stands Hostile critics have contended that in making this concession Malthus in effect abandoned his theory altogether. "The introduc tion of the prudential check ('moral restraint') ," wrote Joseph A. Schumpeter, "makes all the dif ference .... All the theory gains thereby is orderly retreat with the 416 THE FREEMAN July artillery 10st."1 Even a more sym pathetic critic like Gertrude Him melfarb writes: "Thus the principle of popula tion ceased to be a fatal obstacle to man's ',dreams and ideals. In deed the principle itself was no longer as inexorable as he had earlier suggested. It now appeared that population did not necessarily outrun food supply, or necessarily keep up with every increase in food. . . . Men were no longer at the mercy of forces outside their control: 'Each individual has, to a great degree, the power of avoid ing the evil consequences to him self and society resulting from it [the principle of population] by the practice of a virtue dictated to him by the light of nature, and sanctioned by revealed religion.' Liberated from the eternal men ace of overpopulation and the eter nal evils of misery and vice, so ciety could now look forward to the union of 'the two grand de siderata, a great actual population and a state of society in which ab j ect poverty and dependence are comparatively but little known; two objects which are far from be ing incompatible.' "2 Yet in spite of these quotations 1 History of Economic Analysis, (Ox ford University Press, 1954), p. 580.

2 Introduction to Modern Library edi tion (1960) of Thomas Robert Malthus, On Population, p. xxx. from MaIthus himself, the con trast between the first and subse quent editions of the Essay was not as great as these critics imply. The change in tone was greater than the change in substance. Mal thus had been stunned by the sav agery of the attacks on his des pairing conclusions, and wanted to blunt this by emphasizing as much as he could any element of hope. In his first edition he had failed to admit the possibility of a really effective "moral restraint" on the part of the great majority of man kind; in his subsequent editions he did admit that possibility but certainly not that probability. In fact, as he would have been ap palled by the "vice" of our modern mechanical and chemical methods of birth control (now ironically called "neo-Malthusianism"), even if he had foreseen them, how could he have believed in the probability of the almost life-long refrainment from sexual relations necessary to prevent each couple, without "birth control" methods, from having no more than two or three children?

What Did He Say? The trouble with most discus sions of Malthus is that they have either tried to prove him wholly right on wholly wrong. Let us try to see, rather, exactly what he did contribute, and both what was right and what was wrong with it.

1971 POVERTY AND POPULATION 417 The great contribution of Mal thus was to be the first to state clearly, and in relation to each other, two very important proposi tions. The first was the tendency of all. populations, animal and hu man, to increase in the absence of checks at a geometrical ratio - or, in more modern technical terms, at an exponential rate. Malthus spoke of populations doubling every 25 years, in the United States of his day, or every 40 years, say, in the England of his day. He wrote of rates of growth as measured in generations. Today demographers usually discuss pop ulation growth in terms of an an nual rate. But any percentage rate, if continued, is compounded. A population growing at a rate of "only" 2 per cent annually would double itself every 35 years; a population growing at a rate of 3 per cent annually would double it self in 24 years; and so on. Some hostile critics of Malthus have at tempted to dismiss this proposi tion as "trivial" or "obvious." Its implications are anything but triv ial, and it was obvious only after Malthus pointed it out.

Law of DiminishingReturns Malthus's second great proposi tion, based on the limited supply and productivity of land, was in fact the first clear though crude statement in English of· what afterwards came to be known as "the law of diminishing returns." No statement of this law is to be found in Adam Smith. (A remark ably good formulation of it was made by the French economist, Turgot, in 1767, but Malthus ap pears not to have been familiar with it.) By the time we get to John Stuart Mill's Principles of Political Economy in 1848, how ever, we find a careful and quali fied statement: "Land differs from the other elements of production, labor and capital, in not being susceptible of indefinite increase. Its extent is limited, and the extent of the more productive kinds of it more limited still. It is also evident that the quantity of produce capable of be ing raised on any given piece of land is not indefinite ....

"It is commonly thought ... that for the present limitation of pro duction or population from this source is at an indefinite distance, and that ages must elapse before any practical necessity arises for taking the limiting principle into serious consideration. "I apprehend this to be not only an error, but the most serious one to be found in the whole field of political economy. The question is more important and fundamental than any other; it involves the whole subject of the causes of poverty ....

418 THE FREEMAN July "After a certain, and not very advanced, stage in the progress of agriculture, it is the law of pro duction from the land, that in any given state of agricultural skill and knowledge [italics sup plied], by increasing the labor, the prod uce is not increased in an equal degree; or, to express the same thing in other words, every increase of produce is obtained by a more than proportional increase in the application of labor to the land. "This general law of agricul tural industry is the most impor tant proposition in political econ omy.... "The produce of land increases, caeteris paribus, in a diminishing ratio to the increase in the labor employed."3 Advancing Technology Several points are to be noticed about this formulation. It discards the unrealistic 1-2-3 "arithmeti cal" rate of increase of subsistence postulated by Malthus for a more generalized and accurate state ment. And it includes the indispen sable qualification that I have ital icized. The law of diminishing re turns applies only to a given state of technical knowledge. Mill con stantly emphasized this: "There is another agency in habitual antago nism to the law of diminishing re3 Mill's Principles, Book I, Chap. XII.

turn from land"; this is "no other than the progress of civilization," especially "the progress of agricul tural knowledge, skill, and inven tion." It is because Malthus overlooked this vital qualification that "Mal thusianism" fell into disrepute about half a century after his book appeared and then remained so for a full century. For he was writing practically at the beginning of the Industrial Revolution. During that Revolution (about 1760 to 1830) there was an unprecedented in crease in the British population and at the same time an unprece dented increase in per capita pro duction. Both of these increases were made possible by the rela tively sudden introduction of new productive inventions and tech niques. As Malthus's statement had utterly failed to allow for this, the law of diminishing returns was thought to have been proved untenable. Fears of excessive popu lation growth were dismissed as groundless.

It should be pointed out here parenthetically that the law of diminishing returns as applied to land is now seen to be only a spe cial case of a much wider principle governing both increasing and de creasing returns. Decreasing re turns do not apply solely to agri culture and mining, as the mid nineteenth century economists 19ft POVERTY AND POPULATION 419 thought, nor increasing returns specifically to manufacturing. In its modern form, the law of re turns simply points out that the're is an optimum ratio in which, in any given state of technique, two or more complementary factors of production can be employed for maximum output; and that when we deviate from this optimal com bination by, say, increasing the quantity of one factor without in creasing the quantity of the others, we may indeed get an increase in production, but it will be less than proportionate. The law can be most satisfactorily stated in algebraic form. 4 But the old law of dimin ishing returns from land, properly qualified, remains valid as a spe cial case.

To resume: Malthus was right in postulating a tendency for popu lation, if unchecked, to increase at a "geometrical" rate. He was right in postulating a law of diminishing returns from land. But he was wrong in refusing (in his first edition) to recognize the possi bilities of voluntary population re straint. He failed to foresee the possibilities of contraception by 4 See, e. g., Ludwig von Mises, Human Action (Henry Regnery, 1966 edition), pp. 127-31 and 341-50; Murray N. Roth bard, Man, Economy, and State (D. Van Nostrand, 1962), pp. 28-32, and Joseph A. Schumpeter, Hi8tory .0/ Economic Analysis (Oxford University Press, 1954), p. 587, and pa88im. mechanical and chemical means. He was wrong, again, when he formulated his law of diminishing returns, in failing to recognize the enormous potentialities of techni cal progress. So developments in the United States and Europe, in the century and three-quarters since his book appeared, have made Malthus look in some respects like the worst prophet ever. Population in these "developed" countries has in creased at an unparalleled rate, yet per capita economic welfare has also been advancing to levels once undreamed of. There are no signs that this rate of technical prog ress will diminish. Professor Dudley Kirk of the Food Research Institute at Stanford University, insisted in 1968, for example, that "far from facing starvation, the world has the best food out look in a generation." lie at tributed this to a new "green revo lution," based on new seed grains and wider fertilizer use.

A New Hysteria In spite of the serious errors in Malthus, we have witnessed in the last decade an outburst of "neo Malthusianism," a new widespread fear, sometimes verging on hys teria, about a world "population explosion." Paul Erlich, professor of biology at Stanford Univer sity, in a book entitled The Popu420 THE FREEMAN July latioOn Bomb, warns us that we are all doomed if we do not control population growth. Professor Den nis Meadows of the Massachusetts Institute of Technology says: "It used to take 1,500 years to double the world's population. Now it takes about 30 years .... Man kind is facing mass starvation, epidemics, uncontrollable pollu tion and wars if we don't discover new methods of population and in dustrial control and do it fast. If our society hasn't succeeded in ten years in coming to grips with these problems, I think it will be too late."5 Even the usual current esti mates are almost as alarming.

They run something like this: It was not until about 1830 that the world's population had reached a billion. By 1930 it had reached two billion. Now there are about three and-a-half billion. President Nixon estimated in 1970 that, at present rates of growth, world population will be seven billion at· the end of the century and thereafter an ad ditional billion would be added every five years or less. Most of these predictions are reached by simply extrapolating recent annual growth rates and assuming that they will continue, come what may. When we look at the projections country by coun try, however, we find that the real ~ational Enquirer, May 16, 1971. problem is created by what is hap pening, not in Europe and in the United States, but in the so-called "underdeveloped" countries in Asia, Africa, and Latin America. Based not on simple progres sion but on calculations of chang ing birth and death rates and other factors, the United Nations, in its Bulletin of Statistics, esti mated in April, 1971, that Main land China's population, assumed to have been 740 million in 1969, would rise to 1,165 million in the year 2000. India is expected to leap from 537 mill~on in 1969 to 1,084 million in 2000. By the year 2000 the U. N. statisticians esti mate that the world population will reach 6,494 million - but 5,040 million will be in the less devel oped countries, and only 1,454 mil lion in the more developed. In other words, the study foresees an average growth rate of only about 1 per cent a year in the more de veloped countries, but of about 2.2 per cent in the less developed countries - i.e., most of Asia, Africa, and Latin America.

At the Edge of Subsistence This outlook is at least a partial vindication of Malthus. His cen tral thesis, supported in the later editions of his Essay by a wealth of research, was that every ad vance in the arts of increasing subsistence had been absorbed in 1871 POVERTY AND POPULATION 421 the past by a consequent increase of population, thus preventing any rise in the general level of living. He was right regarding the past; he is still right in his forecasts so far as most of the world is con cerned. It is widely estimated that of the world's present three-and a-half billion people, nearly two billion are underfed. And it seems to be precisely where they are al ready underfed. that they tend to multiply fastest, to the edge of subsistence. Though the problem of popula tion growth is most urgent in the backward countries, it exists ev erywhere. Those who are most concerned about overpopulation in the advanced countries today see it less as an immediate menace to the food supply than as a menace to "the quality of life." They foresee overcrowding, still bigger cities, "urban sprawl," more automo biles, more roads, more traffic jams, more waste products, more gar bage, more sewage, more smoke, more noxious fumes, more pollu tants, contaminants, and poisons.

Though these fears may be ex aggerated, they have a rational basis. We may take it as a reason able assumption that in most parts of the world today, even in the ad vanced countries, population has already reached or passed its op timum level in purely economic terms. In other words, there are very few places left in which it is probable that additional hands would lead to a more than propor tionate increase in returns. The opposite is nearly everywhere more likely. Therefore we may as sume that any increase in popu lation will reduce per capita pro duction, not necessarily in abso lute amount, but in comparison with what it could be without a further population growth. From this standpoint the problem of overpopulation is not merely one for some distant future, even in the advanced countries, but one that exists now. The Macro Solution, by Government Coercion What, then, is the solution?

Most of the neo-Malthusians, un fortunately, are collectivist in their thinking; they want to solve the problem in the aggregate, and by government coercion. They not only want governments to flood their countries with propaganda for The Pill, The Loop, and other methods of contraception, encour aging even abortion; they want to sterilize men and women. They de mand "Zero Population Growth Now." A professor of "human ecology" at the University of Cali fornia declares that the com muni ty cannot "watch children starve." Therefore: "If the com munity has the responsibility of 422 THE FREEMAN July keeping children alive it must also have the power to decide when they may be procreated. Only so can we save ourselves from the degradation of runaway popula tion growth."6 The professor surely has the courage of his premises. It is the great merit of Malthus to have been not only the first to see the problem clearly but also the first to propose the proper path to its solution. He was a re lentless critic of the poor-laws of his day: "The poor laws of England tend to depress the general conditions of the poor .... Their first obvious tendency is to increase population without increasing the food for its support. A poor man may marry with little or no prospect of being able to support a family without parish assistance. They may be said, therefore, to create the poor which they maintain. . . .

"If it be taught that all who are born have a, right to support on the land, whatever be their num ber, and that there is no occasion to exercise any prudence in the affair of marriage so as to check this number, the temptations, ac cording to all the known princi pIes of human nature, will inevita bly be yielded to, and more and more will gradually become de6 Garrett Hardin in The New York Times, May 6, 1971. pendent on parish assistance."7 Malthus's strictures did influ ence the Poor L3.W Reform of 1834. But no government in the world today is willing to accept his unpalatable conclusions. Near ly all continue to subsidize and re ward indigent mothers or families in direct proportion to the num ber of children they bring into the world, legitimately or illegitimate ly, and cannot support. Malthus was an individualist and a libertarian. His own pro posed remedy for overpopulation was both voluntary and simple: "I see no harm in drawing the picture of a society in which each individual is supposed strictly to fulfill his duties. . .. The happi ness of the whole is to be the re sult of the happiness of individu als, and to begin first with them.

No cooperation is required. Every step tells. He who performs his duty faithfully will reap the full fruits of it, whatever be the num ber of others who faiL This duty is intelligible to the humblest ca pacity. It is merely that he is not to bring beings into the world for whom he cannot find the means of support."s If each of us adhered to this principle, no overpopulation prob l'em would exist. ~ 1 Essay on Population, Book III, Chaps. VI and VII. S Ibid., Book IV, Chap. III.

SERIOUS PROPONENTS of liberty long have warned that cultural, eco nomic, and especially political power must be diffused, balanced, and limited. When too much power is concentrated in the hands of the government, we find a correspond ing dissolution of personal free dom. What has happened in this country, especially in the past decade, has served to reinforce the suspicion of concentrated power. Robert Nisbet in his important and valuable work, The Quest for Community, tells us that increas ing atomization exists in our so ciety because the government, un fettered by sufficient restraints upon its power, has implemented urban renewal programs which have tended to destroy cultural diversity and centers of commun ity life. Dr. Edward Banfield of Harvard University in The Un heavenly City and Jane Jacobs in Mr. Gow is a junior, majoring in English and Philosophy, at Southeastern Massachusetts Uni versity.

HAVEN Gow The Death and Life of Great American Cities explain how gov ernmental programs, intended to help the poor, have rather added to the woes of the unfortunate. There is a growing awareness among scholars that political in terventions fail to accomplish their proclaimed economic ends. Peter Drucker, for example, tells us in The Age of Discontinuity that the only thing that the gov ernment has been able to do effec tively is wage war and inflate the currency. What increasing num bers are saying is that the aug mentation of governmental power inexorably leads to the diminution of personal freedom. Implicit in this view of govern ment's limited role is the rejection of the notion that all problems are reducible to the politico-economic sphere, and therefore demand politico-economic solutions. It holds, rather, to Irving Babbitt's view that the economic problem blends into the political, the polit423 424 THE FREEMAN July ical into the philosophical, and the philosophical into the religious.

But during the past decade we have been innundated with talk about how legislation and socio economic planning would help create "The Great Society." Enact the civil rights bills, we were led to believe, and there will be an end to race problems that have drained the moral resources of our nation for over a hundred years. Increase the GNP and provide material benefits to our citizens so that happiness and peace of mind will prevail in our society. Unfortu nately, the passage of civil rights legislation, though successful in achieving some goals, has not made blacks and whites love one another nor has it secured domes tic tranquillity. And, regrettably, all the material benefits that young people enjoy have not made them realize that drug-taking, thrill seeking, and "free sex" are merely substitutes (tedious, at best) for the ultimately more rewarding pleasures that emanate from self discipline, self-restraint, self-cul tivation. Ever mindful of the de mands of man's nature, the pro ponent of liberty recognizes that most of the problems facing man can be dealt with only through a resuscitation of the human spirit.

To be sure, it is a sad mistake to assume that politico-economic remedies can resolve what really are disorders of the mind and spirit requiring philosophical and religious solutions. As Burke so trenchantly observed, you cannot resolve the agonizing problem of evil by merely decreeing that monarchies shall no longer exist. Natural Inequality in Matters of Body, Mind, and Spirit The proponent of liberty also has recognized that there exists among men a natural inequality in most matters of body, mind, and spirit. As a consequence, he has not been deluded by visionary schemes which have as their pur pose the leveling of men. Moti vated by the leveling impulse, ideologues within the past ten years have attempted through leg islation and socio-economic plan ning to create a synthetic equality. But the natural distinctions among men persist, for the only genuine equality is metaphysical. John Adams recognized this when he said: That all men are born to equal rights is true. Every being has a right to his own, as clear, as moral, as any sacred being has. This is as indubitable as a moral government in the universe. But to teach that all men are born with equal influence in society, to equal property and ad vantages through life, is as gross a fraud, as glaring an imposition on the credulity of the people as ever 1971 FREEDOM: ANTIDOTE TO POLITICAL POWER 425 was practiced by monks, by Druids, by Brahmins, by priests of the immortal Lama, or by the self-styled philoso phers of the French revolution.!

In line with the recognition of the natural inequality among men is the realization that any society requires leaders who have devel oped the ethical and intellectual refinement needed to distinguish between truth and error, right and wrong, the permanent and the purely ephemeral. This is a func tion of education, as Dr. Russell Kirk sees it: The function of the college is not to gratify the immediate appetite, but rather to introduce the rising gen era tion to long views. The function of the college is not to rouse young people to revolt against the nature of things, but rather to acquaint them with the wisdom of our ancestors. The function of the college is not to promulgate an impractical ideal of human perfectibility, but rather to teach us what Unumuno called the tragic view of life - the greatness and fallibility of man, as described in humane letters. The function of the college is not to inflame the passion, but rather to lead us toward right reason through philosophy.2 However, when educators at our great colleges and universities be come intoxicated with the mania of ideology and relinquish their 1 The Works of John Adams, Volume VI, pp. 453-4.

2 National Review, June 18, 1968. responsibilities as intellectual mid wives and transmitters of the im mense cultural heritage of the West, we see the tragic conse quences: riots at Berkeley; the burning of important research papers; the illicit and forcible oc cupation of buildings; the shout ings of slogans and obscenities; Columbia University; Kent State; and the bombing at Harvard Uni versity and the University of Wis consin. A Delicate Balance Central to the survival of any society is a delicate balance be tween freedom and order, tradi tion and change. It is essential that we observe the norms and traditions of civility. For when there is an inordinate emphasis on either freedom or order, when thinking in slogans and speaking with bul lets replace rational discourse, when speakers are shouted down, and when the spirit of religion and the spirit of the gentleman are considered "behind the times," we see, as we have witnessed in this nation, the alarming disintegra tion of the civil social order.

Perhaps the events of recent years may bring a new apprecia tion of the vital necessity of per sonal freedom under limited gov ernmen t. Let us hope and pray that if and when this happens, the hour will not already be too late. t> ******* MORALS and LIBERTY ******* F. A. HARPER To MANY PERSONS, the Welfare State has become a symbol of morality and righteousness. This makes those who favor the Wel fare State appear to be the true architects of a better world; those who oppose it, immoral rascals who might be expected to' rob banks or to do most anything in defiance of ethical conduct. But is this so? Is the banner of moral ity, when applied to the concept of the Welfare State, one that is true or false? Now what is the test of morality or immorality to be applied to the Welfare State idea? I should like to pose five fundamental ethical concepts, as postulates, by which to test it. They are the ethical Dr. Harper, long a member of the staff of the Foundation for Economic Education, con tinues his research, writing, and teaching as president of the Institute for Humane Studies.

Reprints of this article can be obtained from the Institute for Humane Studies, Inc., 1134 Crane Street, Menlo Park, California 94025. 426 precepts found in the true Chris tian religion - true to its original foundations; and they are likewise found in other religious faiths, wherever and under whatever name these other religious con cepts assist persons to perceive and practice the moral truths of human conduct. Moral Postulate No.1 Economics and morals are both parts of one inseparable body of truth. They must, therefore, be in harmony with one another. What is right morally must also be right economically, and vice versa. Since morals are a guide to betterment and to self-protection, economic policies that violate Moral Truth, will, with certainty, cause degeneration and self-de struction. This postulate may seem simple and self-evident. Yet many econo1971 MORALS AND LIBERTY 427 mists and others of my acquaint ance, including one who was a most capable and admired teacher, presume to draw some kind of an impassable line of distinction be tween morals and economics. Such persons fail to test their economic concepts against their moral pre cepts. Some even scorn the moral base for testing economic concepts, as though it would somehow pol lute their economic purity.

An unusually capable minister recently said that only a short time before, for the first time, he had come to realize the close con nection and inter-harmony that exist between morals and eco nomics. He had always tried to reserve one compartment for his religious thought and another separate one for his economic thought. "Fortunately," he said, in essence, "my economic thinking happened to be in harmony with my religious beliefs; but it frightens me now to realize the risk I was taking in ignoring the harmony that must exist between the two." This viewpoint - that there is no necessary connection between morals and economics - is all too prevalent. It explains, I believe, why immoral economic acts are tolerated, if not actively promoted, by persons of high repute who otherwise may be considered to be persons of high moral standards. Moral Postulate No.2 There is a force in the uni verse which no mortal can alter.

Neither you nor I nor any earthly potentate with all his laws and edicts can alter this rule of the universe, no matter how great one's popularity in his position of power. Some call this force God. Others call it Natural Law. Stin others call it the Supernatural. But no matter how one may wish to name it, there is a force which rules without surrender to any mortal man or group of men - a force that is oblivious to anyone who presumes to elevate himself and his wishes above its rule. This concept is the basis for all relationships of cause and conse quence - all science - whether it be something already discovered or something yet to be discovered. Its scope includes phenomena such as those of physics and chemistry; it also includes those of human conduct. The so-called Law of Gravity is one expression of Nat ural Law. Scientific discovery means the unveiling to human per ception of something that has al ways existed. If it had not existed prior to the discovery - even though we were ignorant of it it could not have been there to be discovered. That is the meaning of the concept of Natural Law.

This view - there exists a Nat ural Law which rules over the 428 THE FREEMAN July affairs of human conduct - will be challenged by some who point out that man possesses the capacity for choice; that man's activity re flects a quality lacking in the chemistry of a stone and in the physical principle of the lever. But this trait of man - this capacity for choice - does not release him from the rule of cause and effect, which he can neither veto nor alter. What the capacity for choice means, instead, is that he is there by enabled, by his own choice, to act either wisely or unwisely that is, in either accord or discord with the truths of Natural Law. But once he has made his choice, the inviolate rule of cause and consequence takes over with an iron hand of justice, and renders unto the doer either a prize or a penalty, as the consequence of his choice. It is important, at this point, to note that morality presumes the existence of choice. One cannot be truly moral except as there exists the option of being immoral, and except as he selects the moral rather than the immoral option.

In the admi·rable words of Thomas Davidson: "That which is not free is not responsible, and that which is not responsible is not moral." This means that free choice is a prerequis,ite of morality. If I surrender my freedom of choice to a ruler - by vote or otherwise - I am still subject to the superior rule of Natural Law or Moral Law. Although I am subservient to the ruler who or ders me to violate Truth, I must still pay the penalty for the evil or foolish a.cts in which I engage at his command. Under this postulate-that there is a force in the universe which no mortal can alter - ignorance of Moral Law is no excuse to those who violate it, because Moral Law rules over the consequences of ig norance the same as over the conse quences of wisdom. This is true whether the ignorance is a.ccom panied by good intentions or not; whether it is carried out under the name of some religion or the Wel fare State or whatnot.

What, then, is the content of a basic moral code? What are the rules which, if followed, will better the condition of men? Moral Postulate No.3 The Golden Rule and the Deca logue, and their near equivalents in other great religions, provide the basic moral codes for man's conduct. The Golden Rule and the Decalogue are basic moral guides having priority over all other con siderations. It is these which have guided the conduct of man in all progressive civilizations. With their violation has come the down fall of individuals and civilizations.

1971 MORALS AND LIBERTY 429 Some may prefer as a moral code something like: "Do as God would have us do," or "Do as Jesus would have done." But such as these, alone, are not adequate guides to conduct unless they are explained further, or unless they serve as symbolic of a deeper specific meaning. What would God have us do? What would Jesus have done? Only by adding some guides such as the Golden Rule and the Ten Commandments can we know the answers to these questions. The Golden Rule - the rule of refraining from imposing on oth ers what I would not have them impose on me - means that moral conduct for one is moral conduct for another; that there is not one set of moral guides for Jones and another for Smith; that the con cept of equality under Moral Law is a part of morality itself. This alone is held by many to be an adequate moral code. But in spite of its importance as part of the moral code of conduct in this respect, the Golden Rule is not, it seems to me, sufficient unto itself.

It is no more sufficient than the mere admonition, "Do good," which leaves undefined what is good and what is evil. The mur derer, who at the time of the crime felt justified in committing it, can quote the Golden Rule in self-defense: "If I had done what that so-and-so did, and had acted as he acted, I would consider it fair and proper for someone to murder me." And likewise the thief may argue that if he were like the one he has robbed, or if he were a bank harboring all those "ill-gotten gains," he would consider himself the proper object of robbery. Some claim that justi fication for the Welfare State, too, is to be found in the Golden Rule. So, in addition to the Golden Rule, further rules are needed as guides for moral conduct. The Decalogue embodies the needed guides on which the Gold en Rule can function. But within the Ten Commandments, the two with which we shall be especially concerned herein are: (1) Thou shalt not steal. (2) Thou shalt not covet.

The Decalogue serves as a guide to moral conduct which, if violated, brings upon the violator a com mensurate penalty. There may be other guides to moral conduct which one might wish to add to the Golden Rule and the Deca logue, as supplements or substi tutes. But they serve as the basis on which others are built. Their essence, in one form or another, seems to run through all great religions. That, I believe, is not a happenstance, because if we em brace them as a guide to our conduct, our conduct will be both 430 THE FREEMAN July morally and economically sound. This third postulate embodies what are judged to be the princi ples which should guide individual conduct as infallibly as the com pass should guide the mariner. "Being practical" is a common popular guide to conduct; princi ples are scorned, if not forgotten. Those who scorn principles assert that it is foolish to concern our selves with them; that it is hope less to expect their complete adop tion by everyone. But does this fact make a principle worthless?

Are we to conclude that the moral code against murder is worthless because of its occasional violation? Or that the compass is worthless because not everyone pursues to the ultimate the direction which it indicates? Or that the Law of Gravity is made impractical or inoperative by someone walking off a cliff and meeting death be cause of his ignorance of this principle? No. A principle remains a principle in spite of its being ignored or violated - or even un known. A principle, like a compass, gives one a better sense of direc tion, if he is wise enough to know and to follow its guidance. Moral Postulate No.4 Moral principles are not sub ject to compromise. The Golden Rule and the Decalogue, as repre senting moral principles, are precise and strict. They are not a code of convenience. A principle can be broken, but it cannot be bent. If the Golden Rule and the Decalogue were to be accepted as a code of convenience, to be laid aside or modified whenever "ne cessity seems to justify it" (when ever , that is, one desires to act in violation of them) , they would not then be serving as moral guides. A moral guide which is to be fol lowed only when one would so conduct himself anyhow, in its absence, has no effect on his con duct, and is not a guide to him at all.

The unbending rule of a moral principle can be illustrated by some simple applications. Accord ing to one Commandment, it is wholly wrong to steal all your neighbor's cow; it is also wholly wrong to steal half your neigh bor's cow, not half wrong to steal half your neighbor's cow. Robbing a bank is wrong in principle, whether the thief makes off with a million dollars or a hundred dol lars or one cent. A person can rob a bank of half its money, but in the sense of moral principle there is no way to half rob a bank; you either rob it or you do not rob it. In like manner, the Law of Gravity is precise and indivisible. One either acts in harmony with this law or he does not. There is 1971 MORALS AND LIBERTY 431 no sense in saying that one has only half observed the Law of Gravity if he falls off a cliff only half as high as another cliff off which he might have fallen. Moral laws are strict. They rule without flexibility. They know not the language of man; they are not conversant with him in the sense of compassion. They employ no man-made devices like the sus pended sentence-"Guilty" or "Not guilty" is the verdict of judgment by a moral principle.

As moral guides, the Golden Rule and the Decalogue are not evil and dangerous things, like a painkilling drug, to be taken in cautious moderation, if at all. Presuming them to be the basic guides of what is right and good for civilized man, one cannot over indulge in them. Good need not be practiced in moderation. Moral Postulate No.5 Good ends cannot be attained by evil means. As stated in the second postulate, there is a force controlling cause and consequence which no mortal can alter, in spite of any position of influence or power which he may hold. Cause and consequence are linked in separably. An evil begets an evil conse quence; a good, a good conse quence. Good intentions cannot alter this relationship. Nor can ignorance of the consequence change its form. Nor can words. For one to say, after committing an evil act, "I'm sorry, I made a mistake," changes not one iota the consequence of the act; repent ance, at best, can serve only to prevent repetition of the evil act, and perhaps assure the rep enter a more preferred place in a Here after. But repentance alone does not bring back to life a murdered person, nor return the loot to the one who was robbed. Nor does it, I L0lieve, fully obliterate the scars of evil on the doer himself.

Nor does saying, "He told me to do it," change the consequence of an evil act into a good one. For an evildoer to assert, "But it was the law of my government, the decree of my ruler," fails to de throne God or to frustrate the rule of Natural Law. The belief that good ends are attainable through evil means is one of the most vicious concepts of the ages. The political blue print, The Prince, written around the year 1500 by Machiavelli, out lined this notorious doctrine. And for the past century it has been part and parcel of the kit of tools used by the Marxian comm unist socialists to mislead people. Its use probably is as old as the conflict between temptation and con science, because it affords a seem ingly rational and pleasant detour 432 THE FREEMAN July around the inconveniences of one's conscience. We know how power-hungry persons have gained political con trol over others by claiming that they somehow possess a special dispensation from God to do good through the exercise of means which our moral code identifies as evil. Thus arises a multiple stand ard of morals. It is the device by which immoral persons attempt to discredit the Golden Rule and the Decalogue, and make them inoper ative.

Yet if one will stop to ponder the question just a little, he must surely see the unimpeachable logic of this postulate: Good ends can not be attained by evil means. This is because the end pre-exists in the means, just as in the biological field we know tha t the seed of continued likeness pre-exists in the parent. Likewise in the moral realm, there is a similar moral re production wherein like begets like. This precludes the possibility of evil means leading to good ends. Good begets good; evil, evil. Im moral means cannot beget a good end, any more than snakes can beget roses. The concept of the Welfare State can now be tested against the background of these five postu lates : (1) Harmony exists be tween moral principles and wise economic practices. (2) There is a Universal Law of Cause and Effect, even in the areas of morals and economics. (3) A basic moral code exists in the form of the Golden Rule and the Decalogue.

(4) These moral guides are of an uncompromising nature. (5) Good ends are attainable only through good means. Moral Right to Private Property Not all the Decalogue, as has been· said, is directly relevant to the issue of the Welfare State. Its program is an economic one, and the only parts of the moral code which are directly and specifically relevant are these: (1) Thou shalt not steal. (2) Thou shalt not covet. Steal what? Covet what? Pri vate property, of course. What else could I steal from you, or covet of what is yours? I cannot steal from you or covet what you do not own as private property. As Dr. D. Elton Trueblood has aptly said: "Stealing is evil be cause ownership is good." Thus we find that the individual's right to private property is an unstated assumption which underlies the Decalogue. Otherwise these two admonitions would be empty of either purpose or meaning. The right to have and to hold private property is not to be con fused with the recovery of stolen property. If someone steals your car, it is still-by this moral right 1971 MORALS AND LIBERTY 433 - your car rather than his; and for you to repossess it is merely to bring its presence back into harmony with its ownership. The same reasoning applies to the re covery of equivalent value if the stolen item itself is no longer returnable; and it applies to the recompense for damage done to one's own property by trespass or other willful destruction of pri vate property. These .means of protecting the possession of pri vate property, and its use, are part of the mechanisms used to protect the moral right to private property.

Another point of possible con fusion has to do with coveting the private property of another. There is nothing morally wrong in the admiration of something. that is the property of another. Such admiration may be a stimulus to work for the means with which to buy it, or one like it. The moral consideration embodied in this Commandment has to do with thoughts and acts leading to the violation of the other Command ment, though still short of actual theft. The moral right to private prop erty, therefore, is consistent with the moral codes of all the great religious beliefs. It is likely that a concept of this type was in the mind of David Hume, the moral philosopher, who believed that the right to own private property is the basis for the modern concept of justice in morals. Nor is it surprising to discover that two of history's leading ex ponents of the Welfare State con cept found it necessary to de nounce this moral code completely.

Marx said: "Religion is the opium of the people." And Lenin said: "Any religious idea, any idea of a 'good God' ... is an abominably nasty thing." Of course they would have to say these things about religious beliefs. This is because the moral code of these great re ligions, as we have seen, strikes at the very heart of their immoral economic scheme. Not only does their Welfare State scheme deny the moral right to private proper ty, but it also denies other under lying bases of the moral code, as we shall see. Moral Right to Work and to Have Stealing and coveting are con demned in the Decalogue as viola tions of the basic moral code. It follows, then, that the concepts of stealing and coveting presume the right to private property, which then automatically becomes an im plied part of the basic moral code. But where does private property come from? Pri vate property comes from what one has saved out of what he has produced, or has earned as 434 THE FREEMAN July a productive employee of another person. One may also, of course, obtain private property through gifts and inheritances; but in the absence of theft, precluded by this moral code, gifts come from those who have produced or earned what is given. So the right of private property, and also the right to have whatever one has produced or earned, underlies the admoni tions in the Decalogue about steal ing and coveting. Nobody has the moral right to take by force from the producer anything he has pro duced or earned, for any purpose whatsoever - even for a good pur pose, as he thinks of it.

If one is free to have what he has produced and earned, it then follows that he also has the moral right to be free to choose his work. He should be· free to choose his work, that is, so long as he does not violate the moral code in doing so by using in his produc tive efforts the property of an other person through theft or trespass. Otherwise he is free to work as he will, at what he will, and to change his work when he will. Nobody has the moral right to force him to work when he does not choose to do so, or to force him to remain idle when he wishes to work, or to force him to work at a certain job when he wishes to work at some other available job. The belief of the master that his judgment is superior to that of the slave or vassal, and that con trol is "for his own good," is not a moral justification for the idea of the Welfare State. We are told that some mis doings occurred in a Garden of Eden, which signify the evil in man. And I would concede that no mortal man is totally wise and good. But it is my belief that peo ple generally, up and down the road, are intuitively and predom inantly moral. By this I mean that if persons are confronted with a clear and simple decision involv ing basic morals, most of us will conduct ourselves morally. Most everyone, without being a learned scholar of moral philosophy, seems to have a sort of innate sense of what is right, and tends to do what is moral unless and until he becomes confused by circum stances which obscure the moral issue that is involved.

Immorality Is News The content of many magazines and newspapers with widespread circulations would seem to con tradict my belief that most people are moral most of the time. They headline impressive and unusual events on the seamy side of life, which· might lead one to believe that these events are characteris tic of everyday human affairs. It is to be noted, however, that their 1971 MORALS AND LIBERTY 435 content is in sharp contrast to the local, home-town daily or weekly with its emphasis on the folksy reports of the comings and goings of friends. Why the difference? Those with large circulations find that the common denominator of news interest in their audience is events on the rare, seamy side of life; widely scattered millions are not interested in knowing that in Centerville, Sally attended Susie's birthday party last Tuesday. It is the rarity of evil conduct that makes it impressive news for millions. Papers report the event of yesterday's murder, theft, or assault, together with the name, address, age, marital status, re ligious affiliation, and other de scriptive features of the guilty party because these are the events of the day that are unusual enough to be newsworthy. What would be the demand for a newspaper which published all the names and iden tifications of all the persons who yesterday failed to murder, steal, or assault? If it were as rare for persons to act morally as it is now rare for them to act immorally, the then rare instances of moral conduct would presumably become the news of the day. So we may conclude that evil is news because it is so rare; that being moral is not news because it is so prevalent.

But does not this still prove the dominance of evil in· persons ? Or, since magazines and newspapers print what finds a ready reader ship in the market, does not that prove the evilness of those who read of evil? I believe not. It is more like the millions who attend zoos, and view with fascination the monkeys and the snakes; these spectators are not themselves mon keys or snakes, nor do they want to be; they are merely expressing an interest in the unusual, with out envy. Do not most of us read of a bank robbery or a fire with out wishing to be robbers or ar sonists? What else dominates the news paper space, and gives us our dominant impressions about the quality of persons outside our circle of immediate personal ac quaintance? It is mostly about the problems of political power; about those who have power or are grasping for power, diluted with a little about those who are fighting against power. Lord Acton said: "Power tends to corrupt, and absolute' power corrupts ab solutely." This dictum seems to be true, as history has proved and is proving over and over again. So we can then translate it into a description of much of the news of the day: News is heavily load ed with items about persons who, as Lord Acton said, are either cor rupt or are in the process of be coming more corrupt.

436 THE FREEMAN July If one is not careful in expos ing himself to the daily news-if he fails to keep his balance and forgets how it contrasts with all those persons who comprise his family, his neighbors, his busi ness associates, and his friends he is likely to conclude falsely that people are predominantly immoral. This poses a serious problem for historians and historical novelists to the extent that their source of informaion is the news of a for mer day - especially if they do not interpret it with caution. To Steal or Not to Steal As a means of specifically veri fying my impression about the basic, intuitive morality of per sons, I would pose this test of three questions: 1. Would you steal your neigh bor's cow to provide for your pres ent needs? Would you steal it for any need reasonably within your expectation or comprehension? It should be remembered that, in stead of stealing his cow, you may explore with your neighbor the possible solution to your case of need; you might arrange to do some sort of work for him, or to borrow from him for later repay ment, or perhaps even plead with him for an outright gift.

2. Would you steal your neigh bor's cow to provide for a known case of another neighbor's need? 3. Would you try to induce a third party to do the stealing of the cow, to be given to this needy neighbor? And do you believe that you would likely succeed in induc ing him to engage in the theft? I believe that the almost uni versal answer to all these ques tions would be: "N0." Yet the facts of the case are that all of us are participating in theft ev ery day. How? By supporting the actions of the collective agent which does the stealing as part of the Welfare State program already far advanced in the United States. By this device, Peter is robbed to "benefit" Paul, with the acquiescence if not the active sup port of all of us as taxpayers and citizens. We not only participate in the stealing - and share' in the division of the loot - but as its victims we also meekly submit to the thievery.

Isn't it a strange thing that if you select any three fundamental ly moral persons and combine them into a collective for the doing of good, they are Hable at once to become three immoral persons in their collective activities? The moral principles with which they seem to be intuitively endowed are somehow lost in the confusing processes of the collective. None of the three would steal the cow from one of his fellow members as an individual, but collectively 1971 MORALS AND LIBERTY 437 they all steal cows from each oth er. The reason is, I believe, that the Welfare State - a confusing collective device which is believed by many to be moral and right eous .:.-. has been falsely labeled. This false label has caused the belief that the Welfare State can do no wrong, that it cannot commit immoral acts, especially if those acts are approved or tolerated by more than half of the people, "democratically. "

This sidetracking of moral con duct is like the belief of an earlier day: The king can do no wrong. In its place we have now substi tuted this belief: The majority can do no wrong. It is as though one were to assert that a sheep which has been killed by a pack of wolves is not really dead, pro vided that more than half of the wolves have participated in the killing. All these excuses for im moral conduct are, of course, non sense. They are nonsense when tested against the basic moral code of the five postulates. Thiev ery is thievery, whether done by one person alone or by many in a pack - or by one who has been se lected by the members of the pack as their agent. "Thou Shalt Not Steal, Except . .. .11 It seems that wherever the Wel fare State is involved, the moral precept, "Thou shalt not steal," becomes altered to say: "Thou shalt not steal, except for what thou deemest to be a worthy cause, where thou thinkest that thou canst use the loot for a bet ter purpose than wouldst the vic tim of the theft."

And the precept about covetous ness, under the administration of the Welfare State, seems to be come: "Thou shalt not covet, ex cept what thou wouldst have from thy neighbor who owns it." Both of these alterations of the Decalogue result in complete abro gation of the two moral admoni tions - theft and covetousness which deal directly with economic matters. Not even the motto, "In God we trust," stamped by the government on money taken by force in violation of the Decalogue to pay for the various programs of the Welfare State, can trans form this immoral act into a moral one. Herein lies the principal moral and economic danger facing us in these critical times: Many of us, albeit with good intentions but in a hurry to do good because of the urgency of the occasion, have be come victims of moral schizophre nia. While we are good and right eous persons in our individual conduct in our home community and in our basic moral code, we have become thieves and coveters in the collective activities of the 438 THE FREEMAN July Welfare State in which we par ticipate and which many of us extol.

Typical of our times is what usually happens when there is a major catastrophe, destroying pri vate property or inj uring many persons. The news circulates, and generates widespread sympathy for the victims. So what is done about it? Through the mechan isms of the collective, the good in tentions take the form of reaching into the other fellow's pocket for the money with which to make a gift. The Decalogue says, in effect: 'Reach into your own pocket - not into your neighbor's pocket - to finance your acts of compassion; good cannot be done with the loot that comes from theft." The pick pocket, in other words, is a thief even though he puts the proceeds in the collection box on Sunday, or uses it to buy bread for the poor. Being an involuntary Good Samaritan is a contradiction in terms. When thievery is resorted to for the means with which to do good, compassion is killed. Those who would do good with the loot then lose their capacity for self reliance, the same as a thief's self-reliance atrophies rapidly when he subsists on food that is stolen. And those who are repeat edly robbed of their property si multaneously lose their capacity for compassion. The chronic vic tims of robbery are under great temptation to join the gang and share in the loot. They come to feel that the voluntary way of life will no longer suffice for needs; that to subsist, they must rob and be robbed. They abhor violence, of course, but approve of robbing by "peaceful means." It is this peculiar immoral distinction which many try to draw between the Welfare State of Russia. and that of Britain: The Russian brand of violence, they believe, is bad; that of Britain, good. This version of an altered Commandment would be: "Thou shalt not steal, except from nonresisting victims."

Under the Welfare State, this process of theft has spread from its use in alleviating catastrophe, to anticipating catastrophe, to con juring up catastrophe, to the "need" for "luxuries .for those who have them not. The acceptance of the practice of thus violating the Decalogue has become so wide spread that if the Sermon on the Mount were to appear in our day in the form of an address or pub lication, it would most likely be scorned as "reactionary, and not objective on the realistic problems of the day." Forgotten, it seems, by many who so much admire Christ, is the fact that he did not resort to theft in acquiring the means of his material benefac1971 MORALS AND LIBERTY 439 tions. Nor did he advocate theft for any purpose - even for those uses most dear to his beliefs. Progress of Moral Decay Violation of the two economic Commandments - theft and covet ousness - under the program of the Welfare State, will spread to the other Commandments; it will destroy faith in, and observance of, our entire basic moral code. We have seen this happen in many countries. It seems to have been happening here. We note how im morality, as tested by the two economic Commandments, has been spreading in high places.

Moral decay has. already spread to such an extent that violations of all other parts of the Decalogue, and of the Golden Rule, have be come accepted as commonplace even proper and worthy of emu lation. And what about the effective ness of a crime investigation con ducted under a Welfare State gov ernment ? We may question the presumed capability of such a gov ernment - as distinct from certain investigators who are admittedly moral individuals - to judge these moral· issues. We may also ques tion the wisdom of bothering to investigate the picayune amounts of private gambling, willingly en gaged in by the participants with their own money, when untold billions are being taken from the people repeatedly by the investi gating agent to finance its own immoral program. This is a cer tain loss, not even a gamble. Once.a right to collective loot ing has been substituted for the right of each person to have what ever he has produced, it is not at all surprising· to find the official dispensers deciding that it is right for them to loot the loot - for a "worthy" purpose, of course. Then we have the loot used by the in siders to buy votes so that they may stay in power; we have polit ical pork barrels and lobbying for the contents; we have political patronage for political loyalty even for loyalty to immoral con duct; we have deep freezers and mink coats given to political or personal favorites, and bribes for the opportunity to do privileged business with those who hold and dispense the loot. Why not? If it is right to loot, it is also right to loot the loot. If the latter is wrong, so also is the former.

If we are to accept Lord Acton's axiom about the corrupting effect of power - and also the reasoning ofProfesor Hayek in his book, The Road to Serfdom, about why the worst get to the top in a Wel fare State - then corruption and low moral standards in high polit ical places should not be surpris ing. But when the citizens come 440 THE FREEMAN July more and more to laugh and joke about it, rather than to remove the crown of power and dismantle the throne, a nation is well on its way to moral rot, reminiscent of the fall of the Roman Empire and others. Nor should we be surprised that there is some juvenile delinquency where adult delinquency is so ram pant, and where the absence of any basic moral code among adults precludes even the possibility of their effectively teaching a moral code that will prevent delinquency in the young. If, as adults, we practice collective thievery through the Welfare State, and advocate it as right and good, how can we question the logic of the youths who likewise form gangs and rob the candy store? If demonstration is the best teacher, we adults must start with the practice of morality ourselves, rather than hiring some presumed specialist to study the causes of similar conduct among the youngsters; their conduct is the symptom, not the disease.

Thievery and covetousness will persist and grow, and the basic morals of ourselves, our children, and our children's children will continue to deteriorate unless we destroy the virus of immorali ty that is embedded in the concept of the Welfare State; unless we come to understand how the moral code of individual conduct must apply also to collective conduct, because the collective is composed solely of individuals. Moral indi vidual conduct cannot persist in the face of collective immorality under the Welfare State program. One side or the other of the dou ble standard of morals will have to be surrendered. Appendix: The Welfare State Idea The concept of the Welfare State appears in our everyday life in the form of a long list of labels and programs such as: Social Securi ty; parity or fair prices; reason able profits; the living wage; the TVA, MVA, eVA; Federal aid to states, to education, to bankrupt corporations; and so on.

But all these names and details of the Welfare State program tend only to obscure its essential na ture. They are well-sounding labels for a laudable objective - the re lief of distressing need, preven tion of starvation, and the like. But how best is starvation and distress to be prevented ? It is well, too, that prices, profits, and wages be fair and equitable. But what is to be the test of fairness and equity? Laudable objectives alone do not assure the success of any program; a fair appraisal of the program must include an anal ysis of the means of its attain ment.

1971 MORALS AND LIBERTY 441 The Welfare State is a name that has been substituted as a more acceptable one for commu nism-socialism wherever, as in the United States, these names are in general disrepute. The Welfare State plan, viewed in full bloom of completeness, is one where the state prohibits the individual from having any right of choice in the conditions and place of his work; it takes owner ship of the product of his labor; it prohibits private property. All these are done ostensibly to help those whose rights have been taken over by the Welfare State. But these characteristics of con trolled employment and confisca tion of income are not those used in promotion of the idea of the Welfare State. What are usually advertised, instead, are the "ben efits" of the Welfare State - the grants of food and housing and whatnot - which the state "gives" to the people. But all these "ben efits" are merely the other side of the forfeited rights to choose one's own occupation and to keep what ever one is able to prod uce. In the same sense that the Welfare State grants benefits, the slave-master grants to his slaves certain allot ments of food and other economic goods. In fact, slavery might be described as just another form of Welfare State, because of its like ness in restrictions and "benefits."

Yet the state, as such, produces nothing with which to supply these "benefits." Persons produce everything which the Welfare State takes, before it gives some back as "benefits"; but in the process, the bureaucracy takes its cut. Only by thus confiscating what persons have produced can the Welfare State "satisfy the needs of the people." So, the nec essary and essential idea. of the Welfare State is to control the economic actions of the vassals of the state, to take from pro ducers what they produce, and to prevent their ever being able to attain economic independence from the state and from their fellow men through ownership of prop erty. To whatever extent an individ ual is still allowed freedom in any of these respects while living un der a government like the present one in the United States, then to that extent the development of the program of the Welfare State is as yet not fully completed. Or perhaps it is an instance of a temporary grant of freedom by the Welfare State such as when a master allows his slave a day off from work to spend as he likes; but the person who is permitted some freedom by the Welfare State is still a vassal of that state just as a. slave is still a slave on his day off from .work. ~ ARE SCHOOLS NECESSARY?

V. ORVAL WATTS ABE LINCOLN never went to high school or college. In fact, he spent very Iittle time in any kind of "educational institution." But was he uneducated? On the contrary, he ranks high among the well-educated men of all centuries, including our own. When Benj amin Franklin first went to Paris as envoy from the newly formed Confederacy of American States, crowds lined the street to see him ride to and from his lodgings. This was not because he represented an upstart little na tion fighting for its independence. Instead, it was because he was al ready world famous as a scholar, Dr. Watts is Director of Economic Education, Northwood Institute, Midland, Michigan. Among his numerous publications is his Free Market or Famine (Midland, Mich.: Pendell Publishing Co., 1967). 442 scientist, and philosopher. Of formal schooling he had almost none; but even by today's stand ards, he was a highly educated man.

Does this mean that the great complex of "educational institu tions" in this country represents only wasted effort and wealth? Not altogether, of course. No doubt a Ben Franklin could profit greatly from an opportunity to use the equipment of a modern labora tory, and a teacher might save him from electrocuting himself and shorten his learning time by dem onstrating the use of the equip ment. But one excuse often heard for the vast expenditures on compul sory, institutionalized schooling I should like to question. It is said that few young people have the thirst for learning or the genius of a Franklin or Lincoln, and that because of this we need schools and school teachers to make learn ing easier and even to compel the "average" individual to travel part way on the road to an education. Too often, however, I believe that institutionalized schooling has precisely the opposite effect. In stead of starting students on the road to education, it tends to rob parents and young people of their sense of responsibility for devel oping the individual's powers of self -development.

1971 ARE SCHOOLS NECESSARY? 443 How Schools Cripple Students A conversation with a young graduate from a high-prestige eastern college illustrates this point. He was enrolled in the train ing program of a large grocery chain and was currently working as an assistant manager of one of the branch stores. I asked him how he liked his work. "I don't," he said. "Then why don't you quit and try something else?" I asked. "Well," he admitted, "I really would like to get into advertising." "What's keeping you from it?" His reply points to a fatal flaw in our modern craze for institu tionalizing the educational process. Sadly he said, "I never had a course in advertising." Sixteen years of "the best schools" in the country had given this young man a sense of depend ency that would cripple him for life if he did not somehow discover the secret of Ben Franklin's schol arship or of Abe Lincoln's high level of literacy and breadth of learning: a,n individual becomes truly educated only as he learns to educate himself.

Schools and colleges cannot cram education into the heads of passive pupils as we pour water into an empty pitcher. Too often, the young victims of mass schooling get the habit of depending on their teachers to predigest the assigned readings, cor rect their bad guesses on tests, and pass them on to the next grade at the end of the school year with little or no regard to the students' progress in knowledge, skills, or habits of work. This is not an edu cational process. By moderately attentive listen ing in class, with perhaps a hasty skimming of a prepared digest of the readings, the average student in many of our "educational insti tutions" can get a high school cer tificate or even a college diploma with little or no serious mental effort. When a college does what it should - as some do - it serves as a correctional institution rather than a diploma mill. It seeks to de velop healthy attitudes toward work and responsibility rather than to cram the students' minds with facts.

The easy road to a diploma or degree does not develop the ability or habits of study, and, as Douglas Woodruff says, "a college degree is a poor substitute for an edu cation." Education requires effort on the part of the student, and the quality of his educa tion is directly propor tional to the effort he puts forth. Ability and willingness to study, to work hard at acquiring new knowledge and new skills, are es sential for the life-long, self-pro444 THE FREEMAN July pelling educational process that makes human life meaningful and worthwhile. It is easy to understand that some learning ability may be nec essary to hold a job in this age of rapid technological change; and it may help to improve one's place and status in industry or social life. Education, a Life-long Process But why, one may ask, is con tinued learning necessary to give value and meaning to life apart from its occupational or social usefulness?

The answer, I think, is a simple one. The habit and skills of learn ing give the individual hope that his future may be better than the present, and "it is hope alone that makes us willing to live." For man, the pursuit of happi ness means the pursuit of life promoting goals that keep advanc ing even as we near them. The theory that ed uca tion should always be "fun," "interest ing," "enjoyable" may be useful in devising ways to keep young peo ple in school longer, but it bars the way to an education for anyone who holds it. The notion that sweat and strain have no necessary place in a good life, that responsibilities cause only ulcers and high blood pressure, is producing youthful drop outs from school and adult drop outs from the continuing, organ ized effort necessary to maintain a humane existence. It condemns its victims to the hell of boredom, self-doubt, and pursuit of life-de stroying dissipations.

Enduring interests develop as we exert effort to learn, to under stand, and to acquire new skills so that we may solve new problems and accomplish more difficult tasks. Appreciation of the worth of hard work is one necessary ele ment in true education. Developing the habits of strenuous effort is the other side of the coin of good living. Both come to our young people only as they find human ex amples of such living and as they come to understand its meaning and worth. A school or college worthy of the name, therefore, must choose its teachers for character and wis dom, as well as for their fund of knowledge as attested by degrees or length of service. Someone has well said, "Educa tion is what you retain after you have forgotten everything you learned." In other words, educa tion is not a fund of facts so much as habits, attitudes, and principles that we call character, personality, and wisdom that should develop as the years advance. I) A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN I WAS in Chicago for the week of the 1968 Democratic Convention.

What I saw on TV and in the streets and hotels were two differ ent things. The TV coverage, com ing in for climactic shots, invari a.bly missed the provocations that led to the violence. Continuity was utterly ignored in the TV conven tion week "story." Moreover, one had to be there in person to ex perience the ghastly smells that pervaded the besieged Conrad Hil ton lobby due to the spreading of some not easily eradicated chem ical. If I had not realized it before, I knew then that pictures often convey less than meets a person armed not only with sight but with all the other senses. It was borne in on me that it is simply not true that a picture is worth a thousand words, for words can convey the evidence of the five senses as images on a screen can not. If the "medi urn is the mes sage," then the Age of Gutenberg provided us with a better medium - and more truthful messages. It is too bad that Gutenberg is no longer considered "with it"; he could have saved us from many of our troubles.

In The Left-Leaning Antenna (Arlington, $8.95) Joseph Keeley, former editor of the American Legion Magazine, confines himself to the subject of political bias in television. The bias obviously stems from the fact that most of the people who work in TV news rooms and in developing the vari445 446 THE FREEMAN July ous shows are liberal in the mod ern, or nonclassical, sense. The news, as he says, gets "pre-cooked" by left-leaning network staffs, so that even when it is read by an unbiased broadcaster it comes out skewed. What Spiro Agnew - and TV Guide's Edith Efron before Agnew - said about the subjective twist imparted to TV news cov erage is absolutely true. But this does not get to the root of the matter, which is that TV is not a good medium for instruction even when it is in well-disposed hands. TV Is Show Business Mr. Keeley senses this w·hen he says that TV is primarily show business. Since show business de mands the spectacular, a Wood stock rock festival, with its weird costume effects and its sense of being a latter-day tribal rite, is obviously worth more to the TV cameraman than a familiar Boy Scout jamboree. Jerry Rubin, Ab bie Hoffman, and Rennie Davis have become the self-annointed TV spokesmen for their generation be cause they accurately diagnosed the networks' natural craving for theater. The cameramen could pre sumably have discovered an over whelming majority of sober citi zens in the Chicago of August, 1968, but would they have lent themselves to the portrayal of a good show? Obviously not.

So it isn't just that the studios are under the control of "liberals." Mr. Keeley has an interesting chapter on TV news coverage of Vietnam, called "The War Away From Home." In part, it is the "liberal" bias of the media that has made the Vietnam War seem "immoral." Well, all wars are murderous and thus break the Commandment. But if you get right down to it this war is actu ally less immoral than some other wars we have fought. One does not need to apologize for our motives in trying to save any part of the world from communism, which is an immoral form of society. The Mexican War, which was a grab for territory, was less justified than our Vietnam venture. And, by comparison with Vietnam, our Indian wars were really genocidal. Nevertheless, Vietnam has af fronted the American people as no other war in our history has af fronted them. The prime reason, again, is that the TV coverage of the war has been a. matter of cli mactic shots without bothering with provocation or motivation or continuity. As Mr. Keeley points out, we see our troops burning villages while old men, women, and children stare and weep. What we don't see is General Giap or Mao Tse-tung or Lin Piao elaborating the guerrilla strategy that has com pelled us to wipe out a village in 1971 A SLANTED PICTURE 447 order to remove a focal point of poison.

The bigger question is whether TV could have covered the war with an honest concern for provo cation, motivation, and continuity even if the cameramen had been veritable saints of objectivity. One doubts it; the camera doesn't act tha t way. From now on all wars, even those that are most justified, will seem morally insupportable unless a strict censorship is in voked and the cameramen are ban ished from the front. The Sight of the Camera Modifies the Subject Another trouble with getting the truth about society from the camera is that it is hard to sneak a picture. The TV paraphernalia advertises the approach of the pic torial reporter, and this automati cally transforms the scene into a stage. It brings out the ham even in shy people. Would Abbie Hoff man and Jerry Rubin have become what they are if they had been limited to answering questions off camera? Would they have attract ed an army of followers?

Unlike the camera reporter, the old-style journalist could mingle with a crowd incognito. He could listen to people talking among themselves and expressing their natural fears and hopes. He could take part in conversations without revealing his occupation, drawing out the multi-faceted truth that can be conveyed only in words. By being a bit of a snoop, the old fashioned reporter could, paradox ically, remain an honest man. Con trariwise, the cameraman, work ing in the open, is condemned to telling an essentially dishonest story. Mr. Keeley does not do much philosophizing about the funda mental shortcomings of the cam era other than to indicate that TV in war can't get behind the lines into enemy territory. He is more hopeful than I am that TV could balance its coverage of the Rubins and Hoffmans by taking "positive" pictures of sane happenings. While it is perfectly true that the TV networks could carry out their functions with more decency and sobriety than has been the custom, there is a built-in reason why they must always be defective carriers of the truth.

Take Kent State, for example. The radical planning that eventu ally forced the confrontation with the National Guard had been in the works for a couple of years before the final tragedy. An SDS activist, Terry Robbins, had been given much of the responsibility for radicalizing the campus. But there were hundreds of other campuses in a state of turmoil in 1969 and 1970, and how would TV 448 THE FREEMAN July know which one was destined to boil up into something that would end in the killing of four students? The point is that the TV camera. couldn't be there to catch Terry Robbins' activities in their early stages. A word man such as James Michener, however, could go in and, by sitting around and "rap ping" with many people, students and townsmen, get at a many faceted truth. Mr. Keeley's study of bias in TV is first-rate. His proposals for keeping a tighter watch on the application of the fairness doc trine are all good. But he doesn't answer the larger .question of whether it will ever be possible to get the truth out of pictures. , HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each ORDER FROM: THE FOUNDATION FOR ECONOMIC EDUCATION IRVINGTON-ON-HUDSON, NEW YORK 10533 the Freeman VOL. 21, NO.8. AUGUST 1971 The Foundingof the American Republic: 1. The American Epic-1760-1800 Clarence B. Carson 451 Introducing a series on the unique American experiment in freedom under limited government.

Buying Up Surpluses George Hagedorn 460 Pricing goods or services out of the market always raises the problem of what to do about the "surplus." IMF: World InflationFactory Henry Hazlitt 463 The trouble with the Idea of an International Monetary Fund in 1949 is still the trouble in 1971. Root of All Evil Robert G. Anderson 472 Concerning the nature and depth of the causes of inflation and the prospects of a cure. The DisasterLobby Thomas R. Shepard, Jr. 477 The greatest danger we face is from those who would save us from ourselves. Who Pays for Clean Air and Water? Francis H. Aspinwall 487 In the market economy, competition obliges producers to supply what consumers most want. Ownershipand Freedom Dean Russell 490 Private property is the foundation upon which all freedoms rest. Two Ways to Slavery James M. Rogers 495 When delegatingpower and authorityto l'good" men, remember that the power is apt to be inherited by "bad" men.

Early Warning Nassau Senior 508 A mid-nineteenth century analysis of the evil consequences of government Ilcharity." Book Review: 509 IlFrederic Bastiat: A Man Alone" by George Charles Roche III 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 $10,000-as the means of maintaining and extending the Foundation's work. Copyright, 1971, 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.

Articles from this journal are abstracted and indexed in Historical Abstracts and/or America: History and Life. THE FREEMAN also Is available on microfilm, Xerox University Microfilms, Ann Arbor, Mich· igan 48106. Permission granted to reprint any article from this Issue, with appropriate credit, except "IMF: World Inflation Factory" and "The Disaster lobby."

CLARENCE B. CARSON THE FOUNDING OF THE AMERICAN REPUBLIC 1 The American Epic: 1760-1800 Several years ago, I introduced and undertook to teach a college course called "The Founding of the American Republic." Several things moved me to do it. One was my long term interest in the pe riod. Another was the belief that such a course would offer one of the best means for covering the basic political principles on which these United States were founded, covering them with sufficient de tail that they would be more likely to be remembered by students than the usual much briefer coverage in broader courses. Yet another rea son was an idea that there was some sort of unity within these years that warranted treating them in a separate course. One difficulty, of sorts, present ed itself to offering such a course effectively. There was not a text book which dealt with the period I had in mind in a unitary fashion.

This could be attributed, in part, to the fact that I proposed to take the course down to the year 1800. Books which looked by their titles as if they might be appropriate did not do this. For example, Mer rill Jensen's The Founding of a Nation covers the years 1763-1776, while Forrest McDonald's The Formation of the American ReDr. Carson is Chairman, Social Science De partment, Okaloosa-Walton College. He is a noted lecturer and author, his latest book en titled Throttling the Railroads. 451 452 THE FREEMAN August public deals mainly with the years 1776-1790. Books which treat the American Revolution mostly deal in detail with only a small portion of the period. Richard B. Morris's The American Revolution concen trates on the years 1763-1783, and John R. Alden's The American Revolution covers the years 1775 1783. Books of readings cover a shorter period, too, as a rule. For example, Jack P. Greene has edit ed two extensive anthologies Colonies to Nation and The Rein terpretation of the American Rev olution - both of which are for the years 1763-1789.

A Time to Remember There are numerous books that deal with some aspect of this pe riod: the background to it, the coming of the revolt, the Declara tion of Independence, the War for Independence, the years under the Articles of Confederation, the Constitutional Convention, and the early years of the Republic. In ad dition there are biographies of most of the leading figures of the period, numerous monographs on such specialized subjects as reli gion, economics, ideas, and so on. It may well be the most written about period of American history; most certainly, the period has been most extensively mined for docu ments to collect and reprint. A few titles will suggest something of the depth in which it has been covered: Max Savelle, Seeds of Liberty and The Colonial Origins of American Thought; Robert A. Rutland, The Birth of the Bill of Rights; Nathan Schachner, The Founding Fathers; Leslie F. S.

Upton, Revolutionary versus Loy alist; Peter N. Carroll, ed., Re ligion and the Coming of the American Revolution; Douglas S. Freeman, George Washington in seven volumes. Moreover, the events, move ments, developments, and men of this time have been the subject of a great variety of interpretations and some of the most active con troversies among historians. Pro fessor Greene divides the older in terpretations into three broad cat egories: the Whig Conception, the Imperial Conception, and the Progressive Conception. To this, he would add a panorama of inter pretations that have come since World War II, many of which are revisions of earlier interpreta tions. He says that the "new investi gations have focused upon seven major problems: (1) the nature of the relationship between Brit ain and the colonies prior to 1763; (2) the nature of social and polit ical life within the colonies and its relationship to the coming of the Revolution; (3) the reasons for the estrangement of the colonies 1971 THE AMERICAN EPIC - 1760-1800 453 from Britain between 1763 and 1776; (4) the explanations for the behavior of the British govern ment and its supporters in the colonies between 1763 and the loss of the colonies in 1783; (5) the revolutionary consequences of the Revolution; (6) the character of the movement for the Constitution of 1787 and its relationship to the Revolution; (7) the nature and meaning of the Revolution to the men who lived through it."!

This list shows, too, how frag mented and specialized the study of this period has become. Inter pretations have not generally been of the whole period but of some briefer span within it. Such ques tions as the following have been subjected to intensive study. What was the impact of British mer cantilism on the American move ment for independence? How many people from what areas and which segments of the population voted for delegations to ratifica tion conventions in the states? What was the role of merchants in fomenting revolt against the Brit ish? Just to touch upon the outlines of some of the interpretations that have been made will suggest some of the angles from which the happenings of these years have 1 Jack P. Greene, ed., The Reinterpre tation of the American Revolution (New York: Harper and Row, 1968), pp. 18-19. been viewed. Many of these focus upon why the colonies· broke from England, and upon the years 1763 1776. The oldest and most endur ing interpretation is that it was a movement for liberty and from British oppression - a view that is sometimes called the Whig the ory. There is a mercantile thesis, which may include the idea that the British followed a policy of "salutary neglect" during most of the colonial period, only to reverse this policy a decade or so before the revolt. Or, the mercantile the ory may deal much more com plexly with the inner contradic tions of mercantilism, their ad verse effects on trade and relations among nations. There is the ma turity thesis - vigorously set forth by Lawrence H. Gipson - which holds that many of the American colonies had reached such a level of political and economic maturity that they no longer needed or wanted the British connection.

A Class Struggle A major effort has been made to subsume the whole of this epoch into a class struggle theory. The inception of the conflict is par ticularly difficult to place in this framework, but there is some thing to go on in pitting the Brit ish landed class against the mer chant class both in England and America. From some such point of 454 THE FREEMAN August view, the struggle might have arisen from the efforts of Ameri cans both to resist mercantile re strictions and the payment of their debts. Much more fertile, for class struggle theorists, was the con flict within individual colonies be tween tidewater aristocrats and piedmont yeomen, particularly in North Carolina. On this view the revolt from England was accom panied by a civil war within the colonies. The contest continued over the years and involved such questions as easy money, a mora tori um on debts, the powers of the states versus the Confederation, and eventually split the country over the question of ratifying the Constitution.

Many historians in the twenti eth century have insisted upon telling the story of the years 1763-1800 in the context of a series of contests between Liberals and Conservatives. The terms were not in use at the time, and those who pursue their use must have some of their characters reversing their positions from time to time in ways that the men need not have been conscious of doing, if they did. Still, those who wanted to break from England 1774-1776 must be, by these writers, denomi nated "Liberals," while those fa voring continuing the British con nection would be "Conservatives." Those who favored ratification of the Constitution of 1787 would be "Conservatives," while those op posing it would be "Liberals." There have been other interpre tations, but the above examples give some idea of what has gone on. The epic character of the founding period of American his tory has frequently been obscured by the attention focused on con tending interpretations, by the dredging up of selected facts which serve as grist for the mills for some partial view, by the con centration on minutiae which re sults in losing sight of the forest amidst the trees and shrubs, by the amplification of debates which had frequently long since been de cently interred before the partici pants were themselves, by the quest for failings among great men and the search for imperfec tions among people, and by the fragmenting into parts of some thing which has a basic unity.

History Hangs on a Philosophy Many of these tendencies have been aggravated by the tendency among historians toward empirical data unillumined by philosophy but given its meaning by ideology. This is not to be taken to mean that facts are not indispensable to history, nor that the work of find ing and substantiating details is not valuable, nor that anyone at tempting to write an account of 1971 THE AMERICAN EPIC - 1760-1800 455 these years can be anything but gratefUl for the scholarship that has gone before. It is rather to observe that the fruits of research and study have so often been pre sented in such a way that the mind loses hold or does not grasp much that is momentous about the founding of these United States. There is no need, of course, to go to the opposite extreme, to ig nore the debates and the divisions, to glorify riotous behavior, to de scribe the Founders as if they had not personal interests involved in their decisions, or to pretend that there was unity where there was diversity. The epic character of these years does not depend upon the purity of all the participants nor the disinterestedness of their behavior. It depends upon grasp ing what they wrought by pursu ing a course over the period of a generation despite their imperfec tions, their divisions, their selfish ness, and their shortsightedness.

By their fruits ye shall know them, we are told in Scripture, and it is these fruits which give unity to an era and an epic cast to what was done. The Story Unfinished in J789 The American epic occurred be tween 1763-1800, with a back ground laid before that time and some filling out occurring after. The political foundations of these United States were set during these years. Seventeen eighty-nine does not make a good terminal date for the founding of the Re public; the Constitution was at that point only a "piece of paper." It had not yet had the breath of life breathed into it by the deter mination and actions of men; it did not even have a Bill of Rights. An experiment began to become an actuality within the next dec ade or so, and the story needs to be continued for several years be yond the inauguration of the gov ernment in 1789. Strictly speaking, there is no American epic, or, if there is, it is according to the fifth meaning in the American College Dictionary, i. e., "something worthy to form the subject of an epic." An epic, essentially, is a "poetic composi tion in which a series of heroic achievements or events, usually of a hero, is dealt with at length as a continuous narrative in elevated style." The models for the epic in Western Civilization are the Iliad and the Odyssey. Epics frequently have as their subject the founding of a city, a nation, or the coalesc ing of a people. They usually have to do with legends and myths, with early accounts of a people that go back before any historical record, accounts that have been passed along by word of mouth.

But this serves mainly to point 456 THE FREEMAN August up the differences between the founding of the United States and most countries which had preceded it in history. The origins of most nations are available to us mainly in myths and legends; they go back to a time when the memory of man does not run contrary to their existence. Little enough is known of the coming of the Anglo Saxon peoples to what then be came England, much less about their antecedents on the continent. The establishment of English mon archy is, for us, a tangled web of chronicle, legend, lore, and his torical glimpses of shadowy fig ures who had acquired such sobri quets as Ethelred the Redeless. Even more so was this the case with Rome and Greece, and it is only somewhat less so with France and Spain. The Characters Were Real These United States, by con trast, came into being in what is for us modern times with what that connotes of literary record, events substantiated from many independent sources, and the char acters definitely historical ones with not even a shadow of a doubt that some of them might have been mythical or combinations of several actual persons.

Poetry has rough going in deal ing with prosaic factual materials. Heroes can hardly surface or survive the minute probing of their lives by modern biographical tech niques. Elegant language requires an informing vision which has not fared well in the midst of a nat uralistic outlook. Prosaic history under the tutelage of professionals has replaced epic poetry; irreduci ble facts which will stand careful scrutiny have tended to supplant elegantly worded narratives. We have gained in exact knowledge quite often at the expense of im poverishing the spirit; those who seek sustenance from the past have asked for bread and been tendered a stone instead. Even so, there are the makings of an epic in the men, events, docu ments, and developments of the years 1763-1800. Every schoolboy once learned the rudiments of the stuff of epics: "Give me liberty or give me death"; the midnight ride of Paul Revere; "the shot heard round the world"; "Taxa tion without representation is tyranny"; the making of the flag by Betsy Ross; Nathan Hale's "I regret that I have but one life to give for my country"; the heroism of George Washington: at Kip's Bay, crossing the Delaware, at Valley Forge; the villainous trea son of Benedict Arnold; "millions for defense but not one cent for tribute," and so on.

An epic is not for schoolboys alone; hence, it must probe more 1971 THE AMERICAN EPIC - 1760-1800 457 deeply into the background of a people. These years had an unu sual crop of men, major and minor characters who would fit well amidst the elegant language of an epic: James Otis, Patrick Henry, Samuel Adams, John Dickinson, Benj amin Franklin, George Wash ington' John Hancock, Thomas Paine, Thomas Jefferson, Gouver neur Morris, Horatio Gates, Baron von Steuben, Marquis de Lafay ette, James Madison, John Adams, Alexander Hamilton, John Mar shall, and many, many others who have been well called Founding Fathers. Events abound, many of which have a symbolic ring to them, events which call to mind crises, resolutions, and climaxes, such as: the Stamp Act, the Stamp Act Congress, the Boston Massacre, the Tea Act, the Boston Tea Party, the Coercive Acts, Lexington and Concord, the meeting of the Sec ond Continental Congress, the de claring of independence, the Battle of Saratoga, the Franco-American Alliance, the Battle of Yorktown, the Treaty of Paris, Shay's Re bellion, the Constitutional Conven tion, the XYZ Affair.

Even the documents of these years have an epic quality to them: the elegance of the lan guage, their philosophical tone, and the vision with which they call an imperial rule to account as well as set forth the new direction for a people. The story of these years is encapsulated in the documents for which these titles stand: the Suffolk Resolves, the Circular Letters, Letters from a Pennsyl vania Farmer, the Novanglus Let ters, the Olive Branch Petition, Summary View of the Rights of Bribish America, Common Sense, the Declaration of Independence, The Crisis, the Articles of Con federation, the Virginia Bill of Religious Liberty, the Constitu tion, the Federalist, Hamilton's Report on Manufactures, Wash ington's Farewell Address, and the Virginia and Kentucky Resolu tions. Conflicting Ideas at Work What gives dramatic character to any series of episodes which make up an epic is conflict. Of conflicts, there were more than enough during these years: Par liament versus colonial assemblies, King against American con gresses, the opposition of loyalists to revolutionaries, Redcoats against Continentals, Federalists versus anti-Federalists, Conserva tives (or whatever they should be called) against Jacobins, the par tisan conflict between Federalists and Jeffersonian Republicans, and nationalists versus states-righters, not to mention such more subtle conflicts as those between establish458 THE FREEMAN August mentarians (or antidisestablish mentarians) and disestablishmen tarians or between mercantilists and proponents of laissez-faire.

What was right and who wrong may not always have been as clear as partisans liked to think, but many of the conflicts were worthy of the combatants. What takes these men, events, documents, developments, and con flicts out of the ordinary and raises them to epic proportions are the great ideas which were espoused, which informed and en livened them. Professor Clinton Rossiter has noted the habit the people of this time had "of 're curring to first principles,' of ap pealing to basic doctrines .... Few men were willing to argue about a specific issue ... without first call ing upon rules of justice that were considered to apply to all men everywhere."2 The following are some of these ideas: natural law, natural rights, balance of power, separation of power, limited gov ernment, freedom of conscience, free trade, federalism, and repub lican forms of government. As Rossiter says, "The great political philosophy of the Western world enjoyed one of its proudest sea sons in this time of resistance and 2 Clinton Rossiter, The Political Thought of the American Revolution (New York: Harcourt, Brace and World, 1963), p. 52.

revolution."3 To which should be added, it had its finest season in the laying of the political founda tions during the constitution mak ing years. Perhaps the greatest wonder of all during these years is what these men wrought out of revolu tion. The modern era has had rev olution aplenty, and then some. All too often they have followed what is by now a familiar pattern, that is, great proclamations of liberty and fraternity, the casting off of the old rules and restrictions, the subsequent loosening of authority, the disintegration of the society, and the turning to a dictator to bring a more confining order. Though some have tried to tell the story of America during these years along such lines, the inter preta tions are always strained. Clearly, the Americans avoided most of the excesses associated with revolutions. Building Upon a Heritage Many things may help to explain this, but one thing is essential to any explanation. Americans did not cut themselves off from their past experience, from ideas and prac tices of long standing, or from older traditions and institutions.

In their building they relied ex tensively upon ancient and mod ern history and that which had 3 Ibid.

1971 THE AMERICAN EPIC - 1760-1800 459 come to them through the ages. What separates this as an epic from abortive revolutions is that these men brought to a fertile junction their heritage - which contained several great streams, namely, the Classical, the Chris tian, and the English -:-, their ex perience, and contemporary ideas. The Founders stood on the should ers of giants, though it sometimes requires giants also to attain such heights. An epic poem might well ignore these antecedents in order to at tribute all that was accomplished to the heroes of the time. An his torical account - even one which acknowledges the epic proportions of what occurred - cannot well do so. Thus, it is appropriate now to relate something of the heritage and experience which went into the founding of the American Re public. , Next: The English Heritage Also by CLARENCE B. CARSON THE AMERICAN TRADITION 316 pages. Cloth $5.00; paper $2.00 Dr. Carson, Professor of American History, carefully examines and lucidly ex plains these and other facets of the tradition: Constitutionalism, Higher Law, Republican Government, Federalism, Individualism, Equality, Rights and Respon sibilities, Voluntarism, Civilizing of Groups, Free Economic Intercourse, Interna tionalism, Virtue, and Morality.

Best of all are his constructive suggestions for restoring and building upon tradition, so that freedom may survive the twentieth century trend toward collectivism. THE FLIGHT FROM REALITY 568 pages. Cloth $5.00; paper $2.50 An excellent companion volume to The American Tradition, explaining how the dreams of unrealistic reformers have been transformed into the sword of un limited power. Order from: THE FOUNDATION FOR ECONOMIC EDUCATION, INC. IRVINGTON-ON-HUDSON, NEW YORK 10533 GEORGE HAGEDORN Buyingup SURPLUSES THERE ARE presently before Con gress two proposals which make an interesting combination. One proposed measure would seek to relieve unemployment by creating large numbers of public service jobs; this would involve the ex penditure of some $4 billion in government money during the next four years. The other pro posal would raise the statutory minimum wage from its present level of $1.60 to $2 an hour (or even more in some variants).

What this combination reminds us of is the course of action gov ernment pursued for many years / in the field of agriculture price supports. Prices of certain agri cultural products were set at a higher level than they could have commanded in the market without Mr. Hagedorn is Vice-President and Chief Economist of the National Association of Man ufacturers. This column appeared in N AM Reports, May 24, 1971. government intervention. This meant that more was produced than markets would absorb at that price. The "solution" was for gov ernment to buy up the surplus at the taxpayers' expense and store it away. The two proposals we have men tioned as currently before Con gress would, in combination, have a similar effect on the labor mar ket. The increase in the legal mini mum wage would maintain an artificially high price for labor particularly the unskilled segment of the labor force. The resulting surplus of labor would then be taken off the market by govern ment and assigned to public serv ice jobs, at the taxpayers' ex pense. The public would be paying to buy up surplus labor in much the same way as it has paid to buy up surplus grain.

We would regard enactment of 460 1971 BUYING UP SURPLUSES 461 either of these two proposed meas ures as a ser{OUB nliBtake in eco nomic policy. The two together represent an approach to man power problems which is both costly and futile. The nation would simultaneously be making un skilled labor less employable in the private sector, and offering them make-work jobs in government. It is hard to see how anyone would be better off, and the taxpayer would most certainly be worse off. With Friends Like These . ... Both proposals are advocated by the reputed "friends of labor." But we wonder why anyone who desires to create more job oppor tunities for unskilled labor would advocate making it more expen sive - which would be the obvious effect of an increase in the mini mum wage. The labor market is not exempt from the elementary rule which applies to any market - the more costly you make whatever it is you wish to sell, the less you are likely to sell of it. Raising the price which must be paid for an hour's work by an unskilled worker is the surest way of cutting down on his chances for employment.

The proposal for creating new public service jobs, although it seems to have been primarily in tended to help the unskilled mem bers of the labor force, also provides that up to one-third of the jobs in any area may be filled by unemployed professionals - with annual salaries up to $12,000. The argument used by support ers of this approach is that, since there are useful things that could be done in the public sector, and since there are unemployed people in the country, it is a good idea to bring the two together. In that way the unemployed people would have jobs and would be doing something that needs to be done. But we must assume that the services these people would be per forming would be of very low priority and impossible to justify by any ordinary comparison of costs and benefits. If that were not so, the case should have been made for them in the ordinary process of budget making.

The answer to this may be that it is better for people to be per forming low-priority functions than to be doing nothing at all. That answer might have some validity if it were not for the fact that government make-work jobs impede the process by which job opportunities are created in the private sector. Their effect is to preserve, rather than correct, the economic distortions which led to unemployment in the first place. Buying up surpluses is a way of insuring that surpluses will con tinue.

462 THE FREEMAN August Keeping unemployment to a minimum may be simply described as preserving a reasonable balance between supply and demand in the labor market. And this requires a reasonable balance between what employers can get for their output and what they have to pay for their labor . We won't try to de scribe all the factors which may affect that relationship - they range over the whole subject of economics. But one thing is sure: providing a protected refuge in government employment for work ers who are displaced by imbal ances between labor costs and prices in the private sector is a good way of preventing the imbal ances from ever disappearing. Where Does It End? Government programs for tak ing surpluses off the market whether of farm products or of labor - are easy to start but hard to terminate. We would fear that measures for creating large num bers of "public service" jobs, al though proposed as an emergency measure, might become a perma nent burden on the taxpayer.

Their effect would not be that more jobs would be available, but that more of the available jobs would be in government and fewer in the private sector. More people would be performing low-priority functions in government, and fewer would be working in the private sector where the market enforces more exacting standards of usefulness. The analogy with the farm price-support program suggests some other disturbing possibilities. In both cases, a government com mitment to take surpluses off the market clearly necessitates gov ernment restraints on the custom ary freedoms of individuals. When the government under took to support the prices of cer tain farm products, they were eventually forced to impose acre age restrictions to keep supply down to manageable proportions. This amounted to -a rationing among farmers of the right to produce certain products. Will we, as the logical consequence of a government undertaking to sup port the labor market, see a ra tioning of the right to hold a job?

~ HENRY HAZLITT WORLD INFLATION FACTORY THE LATEST CRISIS in the foreign exchanges illustrates once more the inherent unsoundness of the International Monetary Fund system. That should have been obvious when it was first set up at Bretton Woods, N. H., in 1944. The system not only permits and encourages but almost compels world inflation. There follows a reprint of the article I wrote in Newsweek of October 3, 1949, at the time of another major world monetary crisis. I do this to emphasize that today's crisis could have been predicted twenty years ago. It is not merely the result of mis takes in the recent economic and monetary policies of individual nations, but a consequence of the inherently inflationary insti tutions set up in 1944 under the leadership of Lord Keynes of England and Harry Dexter White of the United States. In an epilogue I discuss the measures needed to extricate our selves from the present international monetary crisis and to prevent a repetition.

463 464 THE FREEMAN WORLD INFLATION FACTORY August The World Monetary Earthquake Copyright Newsweek, Inc., October 3, 1949. Reprinted by permission. W ITHIN a single week 25 nations have deliberately slashed the values of their currencies. Nothing quite comparable with this has ever happened before in the history of the world. This world monetary earthquake will carry many lessons. It ought to destroy forever the superstitious modern faith in the wisdom of governmental economic planners and monetary managers. This sud den and violent reversal proves that the monetary bureaucrats did not understand what they were doing in the preceding five years. Unfortunately, it gives no good ground for supposing that they under stand what they are doing now. This column has been insisting for years, with perhaps tiresome reiteration, on the evil consequences of overvalued currencies. On Dec. 18, 1946, the International Monetary Fund contended that the trade deficits of European countries "would not be appreciably nar rowed by changes in their currency parities." I wrote in Newsweek of March 3, 1947: "It is precisely because their currencies are ridicu lously overvalued that the imports of these countries are overencour aged and their export industries cannot get started." In the issue of Sept. 8, 1947, as well as in my book, Will Dollars Save the World?

I wrote: "Nearly every currency in the world (with a fe\v exceptions like the Swiss franc) is overvalued in terms of the dollar. It is pre cisely this overvaluation which brings about the so-called dollar scarcity." Y ET until Sept. 18 of this year the European bureaucrats continued to insist that their currencies were not overvalued and that even if they were this had nothing to do, or negligibly little to do, with 1971 IMF: WORLD INFLATION FACTORY 465 their trade deficits and the <C dollar shortage" that they continued to blame on America. And the tragedy was that former Secretary of State Marshall, the President, and Congress, completely misunder standing the real situation, accepted this European theory and poured billions of the American taxpayers' dollars into the hands of European governments to finance the trade deficits that they themselves wer~ bringing about by their socialism and exchange controls with over valued currencies.

In time the managers of the Monetary Fund learned half the lesson. They recognized that most European currencies were overvalued. They recognized that this overvaluation was a real factor in causing the so-called Hdollar shortage" and unbalancing and choking world trade. But they proposed the wrong cure. They did not ask for the simple abolition of exchange controls. (Their own organization in its very origin was tied up with the main tenance of exchange controls.) They proposed instead that official currency valuations be made Hrealistic." But the only "realistic" cur rency valuation (as long as a currency is not made freely convertible into a definite weight of gold) is the valuation that a free market would place upon it. Free.;,market rates are the only rates that keep demand and supply constantly in balance. They are the only rates that permit full and free convertibility of paper currencies into each other at all times.

Sir Stafford Cripps fought to the last against the idea that the rate of the pound had anything to do with the deepening British crisis. Trying to look and talk as much like God as possible, he dismissed all such contentions with celestial disdain. But at the eleventh hour he underwent an intellectual conversion that was almost appallingly complete. We Hmust try and create conditions," he said, "in which the sterling area is not prevented from earning the dollars we need. This change in the rate of exc'hange is one of those conditions and the most important one" (my italics). And on the theory that what's worth doing is worth overdoing, he slashed the par value of the pound over night from $4.03 to $2.80. There are strong reasons (which space does not permit me to spell out at this time) for concluding that the new pound parity he adopted was well below what the real free-market level of widely usable ster ling was or would have been on the day he made the change. What he did, in other words, was not merely to adjust the pound to its market value as of Sept. 18 but to make a real devaluation.

The first consequence was to let loose a world scramble for com466 THE FREEMAN August petitive devaluation far beyond anything witnessed in the '30s. Most nations fixed new rates lower than their existing real price and cost levels called for. These countries, therefore, will now undergo still another epidemic of suppressed inflation. Their internal prices and living costs will start to soar. Unions will strike for higher wages. And if the past (or Sir Stafford's Sept. 18 talk) is any guide, the gov ernments will try to combat this by more internal price-fixing and rationing, continued or increased food subsidies, unbalanced budgets, and wage fixing. I N this country, on the contrary, the tendency will be to drag down our price level somewhat by lowering the dollar price of imported commodities and forcing reductions in the dollar price of export commodities. This will increase our problems at a time when the unions are pressing for a wage increase in the camouflaged form of insurance-pension benefits.

It will be necessary to re-examine our whole foreign economic policy in the light of the new exchange rates. Marshall-plan aid with overvalued European currencies was largely futile; Marshall-plan aid with undervalued European currencies should be unnecessary. In fact, we may soon witness the reversal of the world flow of gold. For the first time since 1933 (if we omit the war years 1944 and 1945) gold may move away from, instead of toward, our shores. But getting rid of overvalued currencies, even in the wrong way, is nonetheless a tremendous gain. The chief barrier that has held up a two-way flow of world trade in the last five years has at last been broken. The chief excuses for maintaining. the strangling worldwide network of trade restrictions and controls have at last been destroyed. Were it not for the echoes of the atomic explosion in Russia, the out look for world economic freedom would at last be brighter.

The best British comment I have read since the devaluation comes from The London Daily Express: "Let every foreign country pay what it thinks the pound is worth . . . But the socialists will never consent to free the pound. It would mean abandonment of their system of controls .... If you set money free you set the people free."

1971 IMF: WORLD INFLATION FACTORY 467 WORLD INFLATION FACTORY Epilogue 1971 THE PREDICTION made in this 1949 piece, that the flow of gold would be reversed, proved correct. The deficit in our balance of payments, in fact, began in 1950. Our 1949 gold stock of nearly $25 billion proved to be its high point. There after it declined. The decline accel erated after 1957 when our bal ance-of-payments deficits started to reach maj or proportions. But all this should not have been too difficult to predict. For on top of the great world realignment of currency values in 1949, our mone tary authorities began to inflate our own currency at a greatly in creased rate. The dollar "shortage" disappeared, and was soon succeed ed by a dollar flood. What would otherwise have been a slight tend ency for our prices to fall was offset by an expansion of our money supply. In September, 1947, two years before the 1949 crisis, the U. S. money stock (currency in the hands of the public plus demand bank deposits) was $111.9 billion. In September, 1949, it was only $110 billion. But by December 1950 it had reached $115.2 billion, and by December, 1951, $122 bil lion. The figure at the end of May, 1971, was $225 billion.

It is important to remember that the present world monetary system is not a natural growth, like the old international gold standard, but an arbitrary scheme devised by a handful of monetary bureaucrats who did not even agree with each other. Some of them wanted incon vertible paper currencies free to fluctuate in the foreign exchange markets and "managed" by each country's own bureaucrats solely in accordance with "the needs of the domestic economy." Others wanted "exchange stability," which meant fixed values for each currency in relation to the others. But none of them wanted constant convertibility of his country's cur rency by any holder into a fixed 468 THE FREEMAN August weight of gold on demand. That had been the essence of the classic gold standard. So a compromise was adopted. The American dollar alone was to be convertible into a fixed amount (one thirty-fifth of an ounce) of gold on demand. But only on the demand of official central banks, not of private holders of dollars.

In fact, private citizens were for bidden to ask for or even to own gold. Then every other nation but the U. S. was to fix a "par value" of its currency unit in terms of the dollar; and it was to maintain this fixed value by agreeing either to buy or sell dollars to whatever extent necessary to maintain its currency in the market within 1 per cent of its parity. The Burden of Responsibility Thus there was devised a. sys tem which appeared to "stabilize" all currencies by tying them up at fixed rates to each other - and even indirectly, through the dol lar, tying them at a fixed ratio to gold. This system seemed to have also the great virtue of "econ omizing" gold. If you could not call it a gold standard, you could at least call it a gold-exchange standard, or a dollar-exchange standard. But the system, precisely be cause it "economized reserves," also permitted an enormous inflationary expansion in the supply of nearly all currencies. Even this expansion might have had a defi nite limit if the U. S. monetary managers had constantly recog nized the awesome burdens and responsibilities that the system put upon the dollar. Other coun tries could go on inflationary sprees without hurting anybody but themselves; but the new sys tem assumed that the American managers, at least, must always stay sober. They would refrain from anything but the most mod erate expansion to keep the dollar constantly convertible into gold.

But the system was not such as to keep the managers responsible. Under the old gold standard, if a country overexpanded its money and credit and pushed down inter est rates, it immediately began to lose gold. This forced it to raise interest rates again and contract its currency and credit. A "deficit in the balance of payments" was quickly and almost automatically corrected. The debtor country lost what the creditor country gained. Just Print Another Billion But under the gold-exchange or dollar standard, the debtor coun try does not lose what the creditor country gains. If the U. S. owes $1 billion to West Germany, it simply ships over a billion paper dollars. The U. S. loses nothing, 1971 IMF: WORLD INFLATION FACTORY 469 because in effect it either prints the b{tH.cn:~ d.ottars or re:plaee.~ iho~e shipped by printing another bil lion dollars. The German Bundes bank then uses these paper dollars, these American 1. O. D.'s, as "re serves" against which it can issue more D-marks.

This "gold-exchange" system be gan to grow up in 1920 and 1921. But the Bretton Woods agree ments of 1944 made things much worse. Under these agreements each country pledged itself to ac cept other countries' currencies at par. When holders of dollars shipped them into Germany, the Bundesbank had to buy them up to any amount at par with D marks. Germany could do this, in effect, by printing more paper marks to buy more paper dollars. The transaction increased both Germany's "reserves" and its do mestic currency supply. So while our monetary authori ties were boasting that the Amer ican inflation was at least less than some inflations in Europe and elsewhere, they forgot that some of these foreign inflations were at least in part the result of our own inflation. Part of the dol lars we were printing were not pushing up our own prices at home because they went abroad and pushed up prices abroad.

The IMF system, in brief, has been at least partly responsible for the world inflation of the last twenty-five years, with its increas ingly ominous economic, political, and moral consequences. What Should Be Done Now? As long as the world's currencies continue to consist of inconvert ible paper there is no point in setting new fixed parities for them. What is a "realistic" rate for any currency today (in terms of others) will be an unrealistic one tomorrow, because each coun try will be inflating at a different rate. The first step to be taken is the one that West Germany and a few others have already taken. No country should any longer be obliged to keep its currency at par by the device of buying and sell ing the dollar or any other paper currency at par. Paper currencies should be allowed to "float," with their prices determined by supply and demand on the market .. This will tend to keep them always "in equilibrium," and the market will daily show which currencies are getting stronger and which are getting weaker. The daily changes in prices will serve as early warn ing signals both to the nationals of each country and to its mone tary managers.

Floating rates will be to some extent disorderly and unsettling; but they will be much less so in 470 THE FREEMAN August the long run than pegged rates supported by secret government buying and selling operations. Floating rates, would, moreover, most likely prove a transitional system. It is unlikely that the businessmen of any major nation will long tolerate a paper money fluctuating in value daily. The next monetary reform step should be for the central banks of all countries. to agree at least not to add further to their hold ings of paper dollars, pounds, or other "reserve" currencies. Let Citizens Own Gold The next step applies to the U. S. alone. There appears to be no alternative now to our govern ment doing frankly and de jure what for the last three years it has been doing without acknowl edgment but de facto: it should openly announce that it can no longer undertake to convert dol lars into gold at $35 an ounce.

It owns only about $1 in gold for every $45 paper dollars outstand ing. Its dollar obligations to for eign central banks alone are now more than twice its holdings of gold. If it really allowed free con version it would be bailed out of its remaining gold holdings with in a week. The government should also an nounce that until further notice it will neither buy nor sell gold. Simultaneously, however, the United States should repeal all prohibitions against its citizens owning, buying, selling, or mak ing contracts in gold. This would mean the restoration of a really free gold market here. Inciden tally, because of distrust of float ing paper currencies, it would mean that international trade and investment would soon be increas ingly conducted in terms of gold, with a weight of gold as the unit of account. Gold, even if not "monetized" by any government, would become an international money, if not the international money. On the foreign-exchange markets national paper curren cies would be quoted in terms of gold. Even if there were no for mal international agreement, this would prepare the way for the re turn of national currencies, coun try by country, to a gold standard.

Stop the Reckless Government Spending that Brings Inflation All this concerns technique. What chiefly matters is national economic and monetary policy. What is essential is that the in flation in the U. S. and elsewhere be brought to a halt. Government spending must be slashed ; the budget must be consistently bal anced; monetary managers as well as private banks must be deprived of the power of constantly and 197.1 IMF: WORLD INFLATION FACTORY 471 recklessly increasing the money supply. Only abstention from inflating can make a gold standard work able; but a gold standard, in turn, provides the indispensable disci pline to enforce abstention from inflating. David Ricardo summed up this reciprocal relation more than 160 years ago: "Though it [paper money J has no intrinsic value, yet, by limit ing its quantity, its value in ex change is as great as an equal Misplaced Trust denomination of coin, or of bullion in that coin ....

"Experience, however, shows that neither a' state nor a bank ever has had the unrestricted power of issuing paper money without abusing that power; in all states, therefore, the issue of paper money ought to be under some check and control; and none seems so proper for that purpose as that of subjecting the issuers of paper money to the obligation of paying their notes either in gold coin or bullion." I) IDEAS ON LIBERTY A SENTIMENT of trust in the legal money of the state is so deeply implanted in the citizens of all countries that they cannot but believe that some day this money must recover a part at least of its former value. To their minds it appears that value is inherent in money as such, and they do not apprehend that the real wealth, which this money might have stood for, has been dissipated once and for all. This sentiment is supported by the various legal regu lations with which the Governments endeavor to control internal prices, and so to preserve some purchasing power for their legal tender. Thus the force of law preserves a measure of immediate purchasing power over some comlTIoditiesand the force of senti ment and custom maintains, especially amongst peasants, a will ingness to hoard paper which is really worthless.

JOHN MAYNARD KEYNES, The Economic Consequences of the Peace (1920) ROBERT G. ANDERSON BY ANY MEASURE of contemporary comment or activity, the inevita bility of inflation seems assured. True, political commentary often seems to indicate a concern over the effects of inflation as great shows of consternation accompany every announcement of a new rise in prices. Rhetoric against infla tion is popular, and promises abound of future stability. The arguments are always the same; our past excesses are lamented and a call is made for future temper ance, much like the solemn pledge of the reforming drunk ... tomor row morning! The attack, of course, is always against the rising prices that ac company inflation. The popular misconception that rising prices and inflation are synonymous gives rise to the heated debates that rage today. It is higher prices that Professor Anderson teaches economics at Hills dale College in Michigan.

472 are condemned and concern over the effects of inflation that gains our attention. The failure to distinguish cause from effect in the discussion of inflation is leading to disastrous consequences. This concentration on rising prices brings "solutions" that are complicating the problem ana resolving nothing. The danger in defining inflation as a general rise in prices is that it commingles inflation with many other eco nomic phenomena that could have had the same effect. This erroneous concept of infla tion (rising prices) leads to pro posals for wage and price controls -lately referred to as National Incomes Policy-foreign exchange controls, "government guidelines," and other such socialistic "reme dies." The insidious nature of these proposals lies in the illusion that, if they were adopted, they would eliminate inflation. As Pro1971 ROOT OF ALL EVIL 473 fessor Ludwig von Mises has long contended, th{~ ~al~e undeY'etand ing of inflation can lead only to false remedies.! Following such "remedies" yields a more collec tivized society, where individual effort is stifled, thus resulting in net losses in productive capacity.

But unfortunately, inflation will still be very much with us! The paradox is that while inflation's effects are unpopular, its cause, an increase in the quantity of money, goes largely unchallenged. Not Whether to Inflate, but How Much? Whether increases in the quan tity of money will continue is no longer even seriously debated in economic circles. Opinion favoring "monetarism" (manipulation of the money supply) is so over whelming in the academic com munity that the only current con troversy concerns when, and by how much, the money supply should be expanded or contracted. An understanding of the forces leading to this state of affairs is essential in order to grasp why inflation seems to be here to stay. Inflation is not something that happens because we like its effects. It is not something to be charged to the acts of devious and sinister 1 Ludwig von Mises, Planning for Freedom (South Holland, Illinois: Liber tarian Press, 1952), p. 78.

men. To seek base motives for the exi~tene~ of inft.ation would be futile. Inflation exists because the body politic sees it as an effective solution to another problem - a problem fundamental to the statist society - that of government fi nancing. Governments are not of them selves productive, wealth-creating entities. They derive their eco nomic capacity from their power to extract resources from the pri vate, productive segment of soci ety, Le., working individuals and businesses. The point is that gov ernments can give nothing to any one without first taking it from someone. In order to spend, gov ernments must tax! Further, it appears to be in the nature of governments to seek ever more power and, thus, ever more revenue. Eventually, the gov ernmental burden exceeds the will ingness of citizens (or subjects) to contribute by the traditional methods of taxation. Given these two facts, the obvious result is disguised taxation ... inflation!

Government Expansion The problem is well illustrated in a study of the growth of public finance in the United States in this century. In 1902, total gov ernment expenditure as a per centage of gross national product was slightly more than 8 per cent.

474 THE FREEMAN August By the mid-1950's the figure was in excess of 30 per cent, and it continues to rise. 2 Traditional forms of direct tax ation such as income taxes, sales taxes, property taxes, poll taxes, excise taxes, gift and inheritance taxes, and tariffs, simply will not be tolerated to finance government operations of this magnitude. We have reached a point where the marginal utility for financing more government ventures di rectly through taxes is no longer acceptable to the political ma jority. While the demand for more gov ernment services continues, the way or will to pay for those serv ices has vanished. A spendthrift government is produc~ng a "tax payer revolt." The stories are legion of pol iticians ;consistently voting for appropriation bills and against revenue bills. Partisan political demands require a responsiveness to the clamor for more government and no taxes. Such demagogy has devastating consequences, yet the impact of such actions is borne not by the demagogue but by the whole of society. Fiscal dishonesty seems to be no barrier to staying in political power.

The point, of course, is that if 2 J. M. Buchanan, The Public Finances (Homewood, Illinois: Richard D. Irwin, Inc.) third edition, p. 46. you cannot get the money by taxes, then print it! When the govern mental burden on a society be comes excessive, inflation is the only politically expedient means remaining for government to fi nance its activities. A Whole New Point of View To seriously believe that infla tion will fade away requires a radi cal departure from current statist trends. It presumes an abandon ment of collectivist ideology and welfare concepts which have now become the "American Way of Life." As long as the state is viewed as "provider," the source of limitless benefits, inflation will be a part of our lives. Yet, there are some who will argue that these errors of under standing can be corrected, and that proper political insight and statesmanship can halt inflation.

But to wage a successful war on inflation requires far more than mere statesmanship. It requires refutation of the theoretical argu ments of the "new" economists who unabashedly declare that in flation (an increase in the quan tity of money) is economically desirable. The fetish is economic growth. The economic community is permeated today with the no tion that money supply increases are fundamental to the growth of the economy.

1971 ROOT OF ALL EVIL 475 Dr. Frederick Hayek has ac l!ur!lt~lY' d~f!.(!rib~d aur Vfoblem as llthe defense of our civilization against intellectual error ."3 Let us realize that people act on what they believe to be true, not what is true. And the fact is that this inflationist doctrine is so firmly imbedded in contemporary eco nomic literature that even many "free market" economists proclaim its validity.4 Monetary Manipulation The almost universal acceptance of the inflationist doctrine has made it the "new" ideology! "But everyone agrees that a rising g.n.p. without an increase in M [moneyJ will tend to raise interest rates and thus limit the growth of g.n.p. Thus, it is important that M [money] grow gradually over the long pull.... "5 To repeat, the ideology is so firmly imbedded that the only controversy concerns when and how much inflation we should havee Whether to stop tampering with the money supply is not even given consideration by the "new"

monetary theorists! 3 What's Past Is Prologue (Irvington, New York: Foundation for Economic Education, 1968), p. 37. 4 See "Downward Price Flexibility and Economic Growth" by Gary North, THE FREEMAN, May, 1971. 5 G. L. Bach, Economics (New York: Prentice-Hall), fifth edition, P. 181. The "new" economist who wish es to manipulate money has failed to grasp its economic function. Since the function of money is in its utility as a medium of ex change, supply changes will affect only the purchasing power of mon ey, and thus only can detract from its original utility.6 Today's monetary theorist, con cerning himself with specialized mathematical equations, apparent ly has no grasp of the historical origins of money. He seems totally unaware that a free market in money evolved out of freely acting individuals exchanging their val ues in an open market. Further, this ancient origin of crude com modity money in the form of gold, silver, and copper was, and is, the base upon which modern money systems are founded.

Money was in the beginning, and still remains, an economic good. The attractiveness, then and now, of commodities such as gold, silver, and copper as money lies in their resistance to manipula tions of supply. It is precisely for this reason that the "new" econo mist is so critical of the gold standard, or any commodity stand ard that the free market may establish. Obviously, his urge to manipulate the supply of money 6 See Murray N. Rothbard, lVhat Has Government Done to Our Money? (Santa Ana, California: Pine Tree Press, 1963).

476 THE FREEMAN August would be frustrated by limitations inherent in a commodity standard. False Wealth Destroys the Real The clamor for increasing the supply of money is founded on a failure to distinguish between an economic "boom" and economic growth, a failure to understand the nature and cause of economic improvement. In the early stages of inflation the increased supply of money causes an artificially lower rate of interest. This lowered interest rate causes an increase in borrow ing, which correspondingly causes an increase in the use or the spending of money. However, this accelerated "spending" only forces up future prices, and as future .consumption is limited by earlier borrowings, the ultimate conse quence of this inflation-kindled "boom" must be the inevitable "bust." All that has been accom plished has been a disequilibrium of economic resources, with cor respondent erratic fluctuations in economic activity. Rather than a gain in real wealth occurring, there has been an erosion of wealth. The consequences are not unlike the January "belt-tighten ing" following the excesses of the December holidays.

Sustained economic growth, however, is only attainable through greater production. The notion that supply creates its own de mand is not only theoretically valid; it is obvious to anyone who looks about him. To think that we can consume before we produce is an absurdity - a non sequitur. The history of economic growth has been a history of the substi tution of capital for human en ergy. Savings, productively em ployed, are essential in the replace ment of and addition to our capi tal stock. An environment hostile to productive investment inevi tably suffers in terms of material welfare. Because inflation has introduced a false wealth into the economy, real wealth has been eroded and capital accumulation has suffered. Any real growth that still occ~rs in our society is in spite of in flation and not because of it! Ad ditional doses of inflation will most assuredly destroy this economic development by obliterating profit margins and consuming capital.

The conclusion is obvious. At tacks on higher prices as the means for ending inflation can bring only "false remedies" in the form of more socialism. If infla tion is to be ended, it will require corrective action at its origins. And these two, the realities of statist financing and the inflation ist ideology, make formidable ad versaries indeed! ~ L Eft THOMAS R. SHEPARD, JR. ONE MORNING last fall, I left my office in New York and hailed a cab for Kennedy Airport. The driver had the radio tuned to one of those daytime talk shows where the participants take turns com plaining about how terrible every thing is. Air pollution. Water pol lution. Noise pollution. Racial un rest. Campus unrest. Overpopula tion. Underemployment. You name it, they agonized over it. This went on all the way to Kennedy and as we pulled up at the terminal the driver turned to me and said: "If things are all that bad, how come I feel so good?"

I wonder how many Americans, pelted day after day by the voices of doom, ever ask themselves that question: "If things are all that Slightly condensed from a speech by Mr. Shepard, publisher of Look magazine, at the 44th annual meeting of the Soap and Detergent Association in New York City, January 28, 1971. bad, how come I feel so good?" Well, I think I have the answer. We feel good because things aren't that bad. I would like to tell you how wrong the pessimists are, and to focus an overdue spotlight on the pessimists themselves. These are the people who, in the name of ecology or consumerism or some other ology or ism, are laying siege to our state and Federal governments, demanding laws to regulate industry on the premise that the United States is on the brink of catastrophe and only a brand new socio-economic system can save us. I call these people The Disaster Lobby, and I regard them as the most dangerous men and women in America today.

Dangerous not only to the insti tutions they seek to destroy but to the consumers they are sup posed to protect. 477 478 THE FREEMAN August Why Not the Truth? Let's begin with a close-in look at that drumbeat of despair I heard in the taxicab and that all of us hear almost every day. Just how much truth is there to the Disaster Lobby's complaints? Take the one about the oxygen we breathe. The Disaster folks tell us that the burning of fuels by industry is using up the earth's oxygen and that, eventually, there won't be any left and we'll suffo cate. False. The National Science Foundation recently collected air samples at seventy-eight sites around the world and compared them with samples taken sixty-one years ago. Result? There is today precisely the same amount of oxy gen in the air as there was in 1910 - 20.95 per cent. But what about air pollution? You can't deny that our air is getting more fouled up all the time, says the Disaster Lobby.

Wrong. I can deny it. Our air is getting less fouled up all the time, in city after city. In New York City, for example. New York's Department of Air Resources re ports a year-by-year decrease in air pollutants since 1965. What's more, the New York City air is immeasurably cleaner today than it was a hundred years ago, when people burned soft coal and you could cut the smog with a knife. Which brings us to water pollution. The Disaster Lobby recalls that, back in the days before America was industrialized, our rivers and lakes were crystal clear. True. And those crystal clear riv ers and lakes were the source of the worst cholera, yellow fever, and typhoid epidemics the world has ever known. Just one of these epidemics - in 1793 - killed one of every five residents of Phila delphia. Our waterways may not be as pretty as they used to be, but they aren't as deadly either. In fact, the water we drink is the safest in the world. What's more, we're making progress cosmetical ly. Many of our streams will soon look as wholesome as they are.

Perhaps it's the fear of over population that's getting you down. Well, cheer up. The birth rate in the United States has been dropping continuously since 1955 and is now at the lowest point in history. If the trend continues, it is remotely possible that by the year four thousand there won't be anyone left in the country. But I wouldn't fret about underpopula tion either. Populations have a way of adjusting to conditions, and I have no doubt that our birth rate will pick up in due course. I now come to the case of the mercury in the tuna fish. How did it get there? The Disaster Lobby says it came from American fac tories, but then the Disaster Lob1971 THE DISASTER LOBBY 479 by believes that all the evils in the world come from American factories. The truth, as scientists will tell you, is that the mercury came from deposits in nature. To attribute pollution of entire oceans to the nine hundred tons of mercury released into the en vironment each year by industry - that's less than forty carloads is like blaming a boy with a water pistol for the Johnstown Flood.

Further proof? Fish caught forty four years ago and just analyzed contain twice as much mercury as any fish processed this year. Speaking of fish, what about the charge that our greed and care lessness are killing off species of animals? Well, it's true that about fifty species of wildlife wiU be come extinct this century. But it's also true that fifty species be cam~ extinct last century. And the century before that. And the cen tury before that. In fact, says Dr. T. H. Jukes of the University of California, some one hundred million species of animal life have become extinct since the world began. Animals come and animals go, as Mr. Darwin noted, and to blame ourselves for evolution would be the height of foolishness. From Drugs to Unemployment Then there is the drug situa tion. Isn't it a fact that we are becoming a nation of addicts? No, it is not. Historically, we are be coming a nation of non-addicts.

Seventy years ago, one of every four hundred Americans was hooked on hard drugs. Today, it's one in three thousand. So, despite recent experimentation with drugs by teenagers, the long-range trend is downward, not upward. Another crisis constructed of pure poppycock is the so-called youth rebellion, to which the Di saster Lobby points with mingled alarm and glee. But once you examine the scene in depth - once you probe behind a very small gaggle of young troublemakers who are sorely in need of an edu cation, a spanking, and a bath, not necessarily in that order you can't find any rebellion worth talking about. A while back Look commissioned Gallup to do a study on the mood of America. Gallup found that, on virtually every is sue, the views of teenagers coin cided with those of adults. And on those issues where the kids did not see eye-to-eye with their el ders, the youngsters often tended to be more conservative.

The same assessment can be made of the putative black rebel lion. There isn't any. Oh, there are the rantings of a lunatic fringe a few paranoid militants who in any other country would be behind bars and whose continued freedom here is testimony to the fact that 480 THE FREEMAN August we are the most liberated and least racist nation on earth. But the vast majority of black Americans, as that same Gallup study re vealed, are stanch believers in this nation. How about unemployment? The Disaster people regard it as a grave problem. Well, I suppose even one unemployed person is a grave problem, but the record book tells us that the current out-of work level of 6 per cent is about par . We've had less, but we've also had more - much more. During the Kennedy Administration un employment topped 7 per cent. And back in the recovery period of Franklin Roosevelt's second term, unemployment reached 25 per cent. So let's not panic over this one.

In the Good Old Days We Couldn't Have Survived Tha t word "panic" brings me to the H-bomb. Some people have let the gloom-mongers scare them beyond rational response with talk about atomic annihilation. I can't guarantee immunity from the bomb, but I offer the following. as food for thought. Since World War II, over one billion human beings who worried about A bombs and H-bombs died of other causes. They worried for nothing. It's something to think about. One final comment on the subj ect. Members of the Disaster Lobby look back with fond nos talgia to the "good old days" when there weren't any nasty factories to pollute the air and kill the ani mals and drive people to distrac tion with misleading advertise ments. But what was life really like in America a hundred and fifty years ago? For one thing, it was very brief. Life expectancy was thirty-eight years for males. And it was a gruelling thirty eight years. The work week was seventy-two hours. The average pay was $300. Per year, that is.

The women had it worse. House wives worked ninety-eight hours a week, and there wasn't a dish washer or vacuum cleaner to be had. The food was monotonous and scarce. The clothes were rags. In the winter you froze and in the summer you sweltered and when an epidemic came - and they came almost every year - it would prob ably carry off someone in your family. Chances are that in your entire lifetime you would never hear the sound of an orchestra or own a book or travel more than twenty miles from the place you were born. Whatever American business men have done to bring us out of tha t paradise of a hundred and fifty years ago, I say let's give them a grateful pat on the back not a knife in it.

1971 THE DISASTER LOBBY 481 A Word lor DDT Now I'm not a Pollyanna. I am aware of the problems we face and of the need to find solutions and put them into effect. And I have nothing but praise for the many dedicated Americans who are de voting their lives to making this a better nation in a better world. The point I am trying to make is that we are solving most of our problems ... that conditions are getting better, not worse . . . that American industry is spending over three billion dollars a year to clean up the environment and ad ditional billions to develop prod ucts that will keep it clean . . . and that the real danger today is not from the free enterprise Es tablishment that has made ours the most prosperous, most power ful, and most charitable nation on earth. No, the danger today re sides in the Disaster Lobby - those crape-hangers who, for personal gain or out of sheer ignorance, are' undermining the American system and threatening the lives and for tunes of the American people.

When I speak of a threat to lives, I mean it literally. A classic example of the dire things that can happen when the Disaster Lobby gets busy is the DDT story. It begins during World War II when a safe, cheap, and potent new insecticide made its debut. Known as DDT, it proved its value almost overnight. Grain fields once rav aged by insects began producing bumper crops. Marshland became habitable. And the death rate in many countries fell sharply. Ac cording to the World Health Or ganization, malaria fatalities dropped from four million a year in the nineteen thirties to less than a million by 1968. Other in sect-borne diseases also loosened their grip. Encephalitis. Yellow fever. Typhus. Wherever DDT was used, the ailment abated. It has been estimated that a hundred million human beings who would have died of one of these afflic tions are alive today because of DDT. But that's not the whole story.

In many countries, famine was once a periodic visitor. Then, largely because of food surpluses made possible by DDT, famines became relatively rare. So you can credit this insecticide with saving additional hundreds of mil lions of lives. Then in 1962, Rachel Carson wrote a book called Silent Spring, in which she charged that DDT had killed some fish and some birds. That's all the Disaster Lob by needed. It pounced on the book, embraced its claims - many of them still unsubstantiated - and ran off to Washington to demand a ban on DDT. And Washington meekly gave them their ban, in 482 THE FREEMAN August the form of a gradual DDT phase out. Other countries followed the U.S. lead. The effects were not long in coming. Malaria, virtually con quered throughout the world, is having a resurgence. Food pro duction is down in many areas. And such pests as the gypsy moth, in hiding since the nineteen for ties, are now munching away at American forests.

In some countries - among them Ceylon, Venezuela, and Sweden the renaissance of insects has been so devastating that laws against DDT have been repealed or amend.ed. But in our country the use of DDT, down to 10 per cent of its former level, may soon be pro hibited entirely. The tragedy is that DDT, while it probably did kill a few birds and fish, never harmed a single human being except by accidental misuse. When the ultimate report is written, it may show that the opponents of DDT - despite the best of intentions - contributed to the deaths of more human beings than did all of the natural disas ters in history. Can We Afford It? In addition to endangering hu man life, the Disaster Lobbyists are making things as difficult as possible for us survivors. By pre venting electric companies from building new power plants, they have caused most of those black outs we've been experiencing.

By winning ·the fight for com pulsory seat belts in automobiles, they have forced the 67 per cent of all Americans who do not use seat belts to waste two hundred and fifty million dollars a year buying them anyway. By demanding fewer sizes in packaged goods on the ground that this will make shopping easier for the handful of dumbbells in our society, they are preventing the intelligent majority of housewives from buying merchandise in the quantities most convenient and most efficient for their needs. And I need hardly remind you what the Disaster crowd has done and is doing to make washday a nightmare in millions of Ameri can homes. By having the sale of detergents banned in some areas and by stirring up needless fears throughout the country, they have created the kind of chaos that may set cleanliness back two genera tions. And again, as in everything they do, they have missed the point entirely. As Vice-President Charles Bueltman of the Soap and D.etergent Association recently pointed out, detergents with phos phates are perfectly safe, emi nently effective, and admirably cheap. And if they foam up the water supply in some communities, 197"1 THE DISASTER LOBBY 483 the obvious remedy is an improved sewer system. To ban detergents is the kind of overkill that might be compared with burning down your house to get rid of termites.

A System Worth Saving But of all activities of the Dis aster Lobbyists, the most insidi ous are their attempts to destroy our free enterprise system. And they are succeeding only too well. According to Professor Yale Bro zen of the University of Chicago, free enterprise in the United States is only half alive. He cited as evidence our government's con trol of the mail, water supplies, schools, airlines, railroads, high ways, banks, farms, utilities, and insurance companies, along with its regulatory involvement in other industries. And his statement was made prior to introduction in Congress last year of a hundred and fifty bills designed to broaden govern ment influence over private busi ness. Fortunately, most of the bills were defeated or died in commit tee. But they will be baek in the hopper this year - along with some new bills. If so many important people are against free enterprise, is it worth saving? I think it is. With all its faults, it is by far the be.st sys tem yet devised for the produc tion, distribution, and widespread enjoyment of goods and services.

It is more than coincidence that virtually all of mankind's scientific progress came in the two centuries when free enterprise was opera tive in the Western world, and that most of that progress was achieved in the nation regarded as the leading exponent of free enterprise: the United States of America. For in the past two hundred years - an eyeblink in history an America geared to private in dustry has conquered communic able diseases, abolished starvation, brought literacy to the masses, transported men to another planet, and expanded the horizons of its citizens to' an almost incredible degree by giving them wheels and wings and electronic extensions of their eyes, their ears, their hands, even their brains. It has made available to the average American luxuries that a short time ago were beyond the reach of the wealthiest plutocrat. And by de veloping quick-cook meals and labor-saving appliances, it has cut kitchen chores in most homes from five hours a, day to an hour and a half.

But the practical benefits of free enterprise are not my prin cipal reason for wanting to pre serve the system. To me, the chief advantage of free enterprise is in the word "free." "Free" as op484 THE FREEMAN August posed to controlled. "Free" as op posed to repressed. "Free" as in "freedom." The Assault on Freedom I am always amazed that mem bers of the Disaster Lobby - lib ertarians who champion the cause of freedom from every podium, who insist on everyone's right to dissent . . . to demonstrate . . . to curse policemen and smoke pot and burn draft cards and fly the flags of our enemies while tram pling our own - these jealous guardians of every citizen's pre rogative to act and speak without government restraint are also the most outspoken advocates of elim inating freedom in one area. When it comes to commerce, to the mak ing and marketing of goods, our liberty-loving Disaster Lobby is in favor of replacing freedom with rigid controls.

And let us not minimize the value of this freedom of com merce to every man, woman, and child in our country. . This is the freedom that makes it possible for the consumer to buy one quart of milk at a time even though a government econo mist may think gallon containers are more efficient and quarts should be abolished. This is the freedom that enables the consumer to buy rye bread if he prefers the taste - although someone in Washington may feel that whole wheat is· more nutri tious and rye should be outlawed. This is the freedom that allows the consumer to buy a refriger ator in avocado green despite some bureaucrat's desire to have all refrigerators made in white because it would be more econom ical that way. For in a free economy, the con sumer - through his pocketbook - determines what is made and what is sold. The consumer dic tates the sizes, the shapes, the quality, the color, even the price.

And anyone who doubts the im portance of this element of free dom ought to visit one of those grim, drab countries where the government decides what should and what should not be marketed. But this is the direction in which the Disaster Lobby is push ing our country. What surprises me is how few of us seem to rec ognize the enormity of the threat. Instead of fighting back, we keep giving in to each inane demand of the consumerists - in the hope, I suppose, that if we are accommo dating enough, the danger will go away. Well, it won't go away. So let's start fighting back! It's not an im possible task because the Disaster Lobby is, by and large, not too bright and far too preposterous. All we have to do to win over the 1971 THE DISASTER LOBBY 485 American people is acquaint them with the facts. We must show them that the consumerists are for the most part devout snobs who believe that the average man is too stupid to make his own selections in a free mar ketplace.

Our Disaster group opponents also have the most cockeyed set of priorities I have ever encountered. To save a few trees, they would prevent construction of a power plant that could provide essential electricity to scores of hospitals and schools. To protect some birds, they would deprive mankind of food. To keep fish healthy, they would allow human beings to be come sick. Signs of Immaturity One curious feature of the Di saster Lobby is an almost total lack of ethics. I say "curious" be cause these are the people who de mand the maximum in ethics from private industry. Not long ago, an organization favoring clean air ran an ad soliciting funds from New Yorkers. It was full of half truths and non-truths, including this sentence: "The longer you live with New York's polluted air and the worse it gets, the better your chances of dying from it." But we know that New York's air is not getting worse. Just let some private company run that ad and see how fast the consumerism boys would have a complaint on file with the FTC.

Imma turi ty is also a character istic of the Disaster man. His fa vorite question is, Why can't we have everything? Why can't we have simon-pure air and plentiful electricity and low utility rates, all at the same time? Why can't we have ample food and a ban on pest icides? I recommend the same an swer you would give a not-too-in telligent five-year-old who asks, "Why can't I eat that cookie and still have it?" You explain that you just can't under our present technology. Just recently, the Coca-Cola Company felt it necessary to reply to environmentalists who demand immediate replacement of glass and metal soft drink containers with something that will self-de struct. "A degradable soft drink container sounds like a fine idea," said Coca-Cola, "but it doesn't exist. And the chances are that one can't be made." And Edward Cole, president of General Motors, responding to a government mandate for drastic reductions in exhaust emissions within the next four years, stated: "The technology does not exist at this time - inside or outside the automobile industry - to meet these stringent emission levels in the specified time."

486 THE FREEMAN August This inability of the Disaster people to accept reality is reflected in their frequent complaint that mankind interferes with nature. Such a thing is patently impos sible. Man is part of nature. We didn't come here from some other planet. Anything we do, we do as card-carrying instruments of na ture. You don't accuse a beaver of interfering with nature when it chops down a tree to build a dam. Then why condemn human beings for chopping down a lot of trees to build a lot of dams ... or to do anything else that will make their lives safer or longer or more en joyable? When it comes to a choice be tween saving human lives and sav ing some fish, I will sacrifice the fish without a whimper. It's not that I'm anti-fish; it's just that I am pro-people. The Disaster Lobbyist's imma turity shows up again and again in his unwillingness to compro mise ... to understand that man must settle for less than perfec tion, for less than zero risk, if he is to flourish. Failing to under stand, they demand what they call "adequate testing" before any new product is released to the public.

But what they mean by adequate testing would, if carried out, de stroy all progress. If penicillin had been tested the way the Di saster Lobby wants all products tested - not only on the current generation but on future genera tions, to determine hereditary ef fects - this wonder drug would not be in use today. And millions of people whose lives have been saved by penicillin would be dead. We simply cannot test every as pect of human endeavor, genera tion after generation, to make ab solutely certain that everyth'ing we do is totally guaranteed not to harm anybody to any degree what soever. We must take an occasion al risk to do the greater good for the greater number. But that is a rational, mature evaluation something of which the Disaster Lobby seems utterly incapable. So this is the face of the enemy. Not a very impressive face. Not even a pleasant face. We have nothing to lose, therefore, by ex posing it to the American people for what it is.

Let the Facts Se Known The time for surrender and ac commodation is past. We must let the American public know that, once free enterprise succumbs to the attacks of the consumerists and the ecologists and the rest of the Disaster Lobby, the freedom of the consumer goes with it. His freedom to live the way he wants and to buy the things he wants without some Big Brother in Washington telling him he can't.

1971 THE DISASTER LOBBY 487 Truth and justice and common sense are on our side. And Ameri cans have a history of responding to those arguments. All we have to do is get the story out ... as often as possible, in as many forms as possible. And let's not vitiate our efforts by talking to each other - one businessman to a fel low businessman. The people we must reach are the consumers of America, and they're out there right now listening to propaganda from the other side ... and, as often as not, agreeing with it. But why shouldn't they? They have yet to hear the truth. It's a bit late to make a New Year's Resolution, but I suggest this one for anyone willing to chip in with a tardy entry. Let us resolve that 1971 will be the year we help convince the people of America that our nation is a great one, that our future is a bright one, and that the Disaster Lobby is precisely what the name implies.

A disaster. I) WHOPAYS for clean airandwater? Dear : I enjoyed our recent discussion on the subject of pollution and have been thinking further about the position so many people are taking these days: In years past, greedy free-enterprise producers have heed lessly ignored the public good in order to increase their profits; for example, by pouring their industrial wastes into the air or water. Imagine if you will the situation in 1900 in some highly competitive business such as coal mining. For simplicity, assume there were five producers. And, as would be true in any competitive industry, their costs of production would differ, depending on capital available, em ployee efficiency, location, and the like: 488 THE FREEMAN August Production Cost Selling Profit, Producer per ton Price % of sales A $3.50 $5.00 30 B 4.00 5.00 20 C 4.50 5.00 10 D 4.75 5.00 5 E 5.00 5.00 0 Bear in mind that the price of any commodity of a given quality in a competitive market is determined, not necessarily by the producer whose profits are largest, but by the one willing to sell for the least, whether he is enjoying a profit or suffering a loss. All others either meet that price or lose their market. So, in our illustration Producer E sets the price, and the others merely meet the competition.

Now, suppose that in 1901 the government had imposed strict laws against dumping acid wastes from mines into streams. Let's say the effect would be to raise costs 25 cents a ton for each producer, which means that the selling price would have to advance to $5.25 a ton if E were to continue in business just breaking even: Production Cost Selling Profit, Producer per ton Price % of sales A $3.75 $5.25 28.6 B 4.25 5.25 19.0 C 4.75 5.25 9.5 D 5.00 5.25 4.8 E 5.25 5.25 0 The only way the selling price of $5.00 could be maintained is for E to take a loss of 25 cents for every ton he produces. If he chooses not to do so (a near certainty), then the price goes to $5.25 and everyone's profit margin remains about the same as before.

1971 WHO PAYS FOR CLEAN AIR AND WATER? 489 If E decides to go out of the coal business, the over-all supply of coal is reduced accordingly, and the tendency is for the price of coal to rise, probably more than 25 cents a ton until the supply/demand equation gains a new equilibrium. In any case, the cost of fighting pollution is passed on to the con sumer; there simply is no way to force the producer to absorb govern ment nlandated industry-wide costs such as the installation of anti pollution facilities. Nor, in the "bad old days," was there any way for the producer to profit from dumping wastes into the air or water; competition obliged him to pass any savings back to the consuming public. So, if someone is to be blamed for ignoring the "public good," it will have to be the consumer who demanded coal instead of antipollution for his money. Suppose that producer A had been public spirited and had voluntarily installed antipollution equipment without being pushed by government.

Would consumers have been willing to pay him $5.25 for coal which other more "profit oriented" producers were still offering at $5.00? This is a simplification of a complex supply/demand situation in the open market. But I think it is a valid model. There is no way, in a competitive market, for any producer to gain a monetary advantage for himself by polluting the air and water, assuming that government enforces its antipollution statutes evenhandedly. And this is always true in a free market for all producers, whether they mine coal, pump oil, cut timber, manufacture automobiles, or whatever. When consumers want to buy clean air and water, producers will surely arrange for abundant supplies in whatever form customers will pay for. Cordially yours, Francis H. Aspinwall Mr. Aspinwall is a Surveyor and Civil Engineer of Skaneateles, New York.

DEAN RUSSELL Freedom is based on ownership. If it is possible for a person to own land and machines and build ings, it is also possible for him to have freedom of press, speech, and religion. But if it is impossible for a person to buy and sell land and other resources, then it is also impossible for him to have peace ful access to any effective means of disagreeing with the decisions of his government. Thus my con tention is that, in the final analy sis, human freedom stands or falls with the market economy of pri vate ownership of the means of production and distribution. True enough, freedom may be temporarily suppressed to some considerable extent by various forms of censorship under a sys tem of private property; but, at least, there is still discussion about it (and even objection to it) in the Dr. Russell is Director of the Graduate Pro gram in Management, Dominican College, Racine, Wisconsin.

490 privately owned newspapers. In contrast, my thesis is that the issue of censorship can't even arise in a society in which all the means of production and distribu tion are owned in common by all the people. Thus, "ownership" is the key to any discussion of free dom. For example, no one disputes the fact that a slave is still not free even when he is permitted several legal "freedoms." The slave owns nothing that he can use to protest - neither a printing press nor a pulpit nor a speaking platform. Everyone understands that the slave's owner is still in charge, primarily because he can deprive his slave of all material possessions. But few people appear to understand the similar correla tion between freedom of religion in general and the ownership of the church buildings. Yet it should be obvious that if all churches and seminaries are owned in common 1971 OWNERSHIP AND FREEDOM 491 through the government, freedom of religion as we know it in the United States (and in France and similar countries) cannot exist.

True enough, various "free doms" in this area may be per mitted by the governmental owners, sometimes referred to as the "managers of. the people's property." And, of course, it is always possible for anyone to be a secret believer. But freedom for a person to disagree completely and openly with the religious beliefs \ of all other people - and to an nounce and establish a new reli gion - is simply not possible in a society where all resources are owned in common,. instead of by individuals or groups of individ uals. An entire nation of "in com mon" owners simply will not per mit their leaders to allocate scarce "food and housing" resources to the building of seminaries and churches for misguided individuals who believe that the best repre sentation of God is a black woman, or that God is an omnipotent en tity who directly interferes in the daily activities of persons who please or displease him. And un der a system of governmental ownership of the means of pro duction and distribution, surely it is obvious that there can be no seminaries and churches for those strange people who believe that "in common" or governmental ownership is contrary to the teach ings of a Supreme Being who em phasizes individual responsibility, voluntary association, and per sonal salvation.

Conditions Consistent with Freedom of the Press 'If freedom of the press is to have any substance, it must in clude the following arrangement: Every person (if he is willing to pay a modest price) has easy ac cess to a printing press, and the government itself protects his right to distribute his written messages of total disagreement with various governmental policies and officials. Surely, no one is fool ish enough to imagine that this "free press" arrangement can ex ist when all of the printing ma chinery is owned in common by the people through their govern ment. No rational person has ever seriously suggested that Castro should promote an anti-Castro press in Cuba. But even if he were willing to tolerate the establish ing of a privately owned "opposi tion newspaper" in Havana, there is simply no mechanism to procure the needed factors of production and distribution for a private com pany in a "command economy,"

Le., an economy that is operated by the government for the benefit of all the people who own every492 THE FREEMAN August thing in common. Actually, when one tries to imagine a mechanism or system to permit the operation of a privately owned newspaper in an economy of common (govern mental) ownership, he invariably visualizes some form of a market economy wherein individual owners determine what is to be printed and how it will be dis tributed. This, of course, supports my thesis that no freedom of the press is possible in an economy that is owned by everyone and is operated by the government for the benefit of all. Private Ownership the Key My theory is that freedom of press, speech, and religion are likely to flourish wherever the means of production and distribu tion are owned by individuals and are operated for profit. (Note that detractors of the press in the United States don't deny that the owner is printing what he wants to print; these objectors merely disagree with what the owner chooses to print and why he does it.) But in any nation where all the means of production and dis tribution are owned in common by the government, there is no possi ble way for writers, speakers, clergymen, and people in general to express peacefully and publicly their total disagreement with the governmental "managers."

Test this idea empirically by looking at the nations around the world with "command" economies of common ownership and the na tions with some recognizable form of "market" economy wherein the primary motivation for production is the hope of profit. My "mere theory" of a necessary relation ship between the free market econ omy of private ownership - and freedom of press,' speech, and re ligion - will be empirically vali dated. Does censorship of privately owned newspapers, e.g., in Spain and South Africa, invalidate my thesis on ownership and freedom? Well, the mechanism for peaceful dissent (private ownership) still exists in both nations. And thus dissent is at least possible - at a relatively high cost to the dis senter, of course. Even so, there is still an encouraging amount of newspaper disagreement with gov ernmental policies in Spain and South Africa. But, in contrast, in Russia where newspapers are owned in common by all of the people, the possibility of editorial dissent doesn't even exist. Since the managers of the people's econ omy are also the managers of the people's newspapers, obviously they are not going to denounce themselves and their political and economic decisions in their own press.

1971 OWNERSHIP AND FREEDOM 493 There should be nothing sur prising about that fact; the pub lisher of The New York Times doesn't denounce himself in his own newspaper - any more than do the publishers of Pravda, i.e., the leaders of the Communist Party. The private owners of The Washington Post are free to ad vocate the abolition of private ownership, if they wish to do so. It is literally impossible, however, for the governmental owners of I zvestia to advocate that news papers be turned over to private ownership in Russia; for there simply is no way to implement such a procedure. Nor does "who's on top" make any difference what ever; for as long as the "common ownership" arrangement contin ues, the press must necessarily reflect the "in common" policies of the nation, whatever they may be. Ownership in Common Sets Stage for Pollution Most people are usually im pressed by their empirical com parisons of freedom of press, speech, and religion in East and West Germany, in China and Ja pan, and in various other nations all around the world. They can readily see that, in practice and for whatever reasons, there does seem to be a positive relationship between freedom to dissent and the ownership of the press, and so on. And a few will finally acknowl edge the fact that the owners of a newspaper in any country - Rus sia or the United States - simply cannot make a decision and, simul taneously, write an editorial de nouncing themselves and their de cision.

Even those few, however, are still prone to worry about the "pol lution and slums and discrimina tion and fraud and false advertis ing that are caused by the free market economy." It should be obvious, however, that "pollution" is not peculiar to the free market economy of pri vate ownership. The same problem exists in a command economy of ownership in common; in fact, pollution has now become an ex.. ceedingly serious problem in in dustrialized Russia with its huge hydro-dams and gigantic river diversions. Since this issue of pollution is clearly and necessarily an "in common" problem under any economic system, it must be solved through the "in common" government - whether it be a dic tatorship or a democracy. For neither the government-owned Tennessee Valley Authority nor the privately-owned Consolidated Edison Company should be per mitted to continue practices which destroy the land and pollute the atmosphere.

494 THE FREEMAN August Problems in Paradise As for racial and religious dis crimination, one of the most vicious examples of it exists in the Soviet Union. I am, of course, referring to the "Jewish people" in Com munist Russia where the syna gogues, as well as the steel mills, are owned in common by the peo ple for the benefit of all. Under a system of ownership in common, it is usually even impossible for a person to leave the country! Dis crimination against races and re ligions is not in any sense a "free market" problem; in fact, the mar ket economy of private ownership of resources may well be the only arrangement that can possibly ac commodate these historical and emotional issues in a workable manner over a significant period of time. Slums and slum conditions exist, of course, in Moscow and other communist cities around the world. And even in Sweden - where there are no slums in the ordinary sense and where the government has as sumed almost total responsibility for providing the people with places to live - the acute housing shortage is perhaps the most con troversial issue in the nation. "In common" ownership offers no so lution whatever to housing prob lems, either in New York City or in Peking.

Nor is "fraud" peculiar to a mar ket economy; since this is a char acter-defect that inheres only in individuals, it exists under all forms of ownership. And false and misleading advertising is ob viously an "in common" problem which must be solved by law, Le., the legislatures and courts of the governments of the people - any people and any government. Actually, the accusations so fre quently directed against the free market economy - pollution, false advertising, violence in various forms and degrees, including war - are generally misdirected; those social ills are mostly the result of corrupt or apathetic or deluded or power-mad governmental offi cials who are not even capable of performing their primary func tions of maintaining the peace, suppressing fraud, and attending to other obvious functions that are clearly of an "in common" con cern to everyone. Well, that's what I mean by the free market economy of private ownership of the means of pro duction and distribution. I'm for it because I am convinced that all freedoms must necessarily disap pear soon after the market system of producing and distributing goods and services is abolished or allowed to decay. ~ Two Ways to Slavery James M. Rogers When delegating power and authority to "good" men, re member that the power is apt to be inherited by "bad" men IN THE Old Testament, there are two thought-provoking stories' of how a people brought about their own enslavement. While both ex amples show that slavery is a moral issue, for the most part the sto ries use economic and political events and decisions to record the degree of bondage and how it came about. The real lesson lies in the fact that these people became slaves through a sequence of events which, at the time, seemed to be a good course for them to follow.

Since we're making these same mistakes in America today to an alarming degree, these two stories hold for us a significant lesson. The first of the events took place very early in the history of the He brew people - our philosophical forefathers. Most of us are aware of the fact that when Moses came upon the scene in Egypt, the Israel ites were enjoying the dubious dis tinction of being among the most downtrodden slaves in that part of the world. But few of us seem to have any idea how they got that way. We remember that these Israelites weren't always the slaves of the Egyptians, but the events leading up to this dark period have not been given enough emphasis in most studies of the Bible. The leading character in this tragedy was the man of "the coat of many colors" fame, Joseph. He was the eleventh son of old Jacob who, in his youth, had tricked his brother Esau out of his birthright.

THE FIRST scene in the dr_ama really takes place on the plains at Shechem - near the vale of He bron on the land of Jacob - where we find ten of the sons of Jacob tending the flocks. They are fed up with their brother Joseph. He had announced to them some time be fore that he had a dream telling him that his brothers were all go ing to be his subjects one of these fine days. This, added to the fact that their father had made no se cret of his special affection for the The late Jame8 M. Rogers was formerly a member of the staff of the Foundation for Economic Education. His essay, first published in 1955, is well worth reading again. 495 496 THE FREEMAN August boy, is too much for the brothers. They gang up on Joseph and throw him into a pit until they can decide what to do with him. Through a series of coincidences - combined with the compassion of one brother, Reuben - Joseph is sold into slavery to a merchant go ing into Egypt. There he is sold again and ends up, finally, in jail because of a married woman who thinks she can't live without him.

While Joseph is a prisoner, his knack for interpreting dreams is brought to the attention of Phar aoh, King of Egypt. The King has had a dream which has defied in terpretation by his magicians. Someone tells him of the prisoner Joseph who, it is said, can give him the meaning of the dream. Joseph is sent for and tells the King that the dream is a warning. It means that the country will en joy seven years of bountiful har vests, which will be followed by seven years of great famine. Joseph says further that the dream is a warning to Egypt to store up food during the seven good years, in preparation for the seven bad ones which are to follow. The King is so overj oyed at Joseph's ability to bring forth this wonderful interpretation that he puts him in charge of the en tire operation. That is how Joseph became the first OPA administra tor in history. INCIDENTALLY, it was this Bible story which was actually used by some politicians in America to sell price stabilization and the "ever normal granary" to, the American people. The real punch line of the story - the scene where the people became slaves of the man control ling the granary - was never in cluded in those Bible quoting ses sions of the early Thirties. This is how it happened.

The seven good years in Egypt rolled by on schedule, and the stor ing of grain went according to plan. Then canle the bad years. There is nothing in the story to in dicate how the government of Egypt gained control of the excess crops in the good years, but the way the government distributed the crops in the bad years is made very clear. Joseph forced the Egyp tians to pay for every bushel of grain they got from the govern ment. Finally the people had noth ing left with which to buy the food they so desperately needed. So he demanded of them that they bring him the deeds to their lands. On the appointed day they did; then he made the awful pronouncement which is never referred to when the story is retold by politicians to the American people today. When the Egyptians laid the deeds to their land at his feet, Joseph said to them: "Behold, I have bought you this day ..."

1971 TWO WAYS TO SLAVERY 497 In our day, the land is rapidly coming under the ownership of the government which already owns, outright, 25 per cent of the land in the United States. While govern ment ownership of the rest of the land is not presently being estab lished through an open "bring me the deeds to your land" approach, such ownership is being constantly established nonetheless. Men who may not even realize it are becom ing modern Josephs. Ordinarily, they do not openly ask for deeds. But surely some of them are smart enough to know that ownership is much more a matter of who has the power of decision over the property than of who happens to be listed as the owner with the County Recorder's office. This in dication of ownership in the Re corder's office may only enti tIe the so-called owner to the dubious pleasure of paying taxes on the land. The. real owner of a property is the one who calls the shots on how the land is to be used: What can be raised on it? To whom and for what price can the produce be sold?

How are the profits to be divided? On that basis, ownership of Amer ica's farm lands is quite different from what the Recorders' books may indicate. * Actually, the full plight of farmers is not fully stated when we show that they no longer own the land. Joseph really put the picture in focus with his "I have bought you," for whoever owns the land also owns the people of the land. MANY YEARS after his brothers had sold Joseph into slavery, they were still back on the plains of Shechem with their flocks. Because they had robbed themselves of the insight of Joseph, they didn't bother to put any surplus aside dur ing those fat years, acting as though the good times would never end. Then when the lean years came along, they suddenly found themselves faced with starvation. Rumor had it that grain could be found in the land of Pharaoh. The sons of Jacob journeyed there to buy wheat, which is referred to in the Bible as corn. When they ar rived in this far off land, they be gan to bargain over the precious foodstuff with a person they thought was a shrewd Egyptian.

Not one of them suspected that he was their brother Joseph whom they had long since thought dead. The chapter that tells of the rev elation of Joseph's true identity, and the subsequent arrangement to have Jacob and all the rest of the *For a specific example of how this works in the United States, a reading of Agrarian Reform by Paul Poirot would be most illuminating. (Foundation for Economic Education, Irvington on-Hudson, N. Y.; single copy free.) 498 THE FREEMAN August family brought to Egypt for J 0 seph to look after, is indeed a touch ing story. Those parts of the story have been told and told again as examples of how one so wronged can - and should - forgive his tormentors. However, as in the case of "Behold, I have bought you this day," the sad end of the Israel ites through the paternalism of their brother Joseph always seems to get left out of the story. You see, before Joseph permit ted his father, his brothers, and their families to participate in this wonderful system to save the world from famine, they had to place themselves in the same position as the Egyptians. So in addition to owning the Egyptians, Joseph also became master over his parents and his brothers and their families.

At the time, this was no source of concern to the Israelites, for was not Joseph their beloved brother and son? Was this not the one who had been able to forgive his broth ers for their horrible deed of years ago? What possible harm could come from agreeing that their brother Joseph should have this fearful power over them? How many times throughout his tory this same mistake has been made: Power given to someone who is trusted; then another, to whom the people would never have given power, inherits that which was given to a trusted one. You can guess what happened. Joseph died. An Egyptian inher ited the power that had been Jo seph's. He didn't assume any power that had not been in the hands of the kind and compassionate Jo seph. The only difference was that he used it differently. He used it to make of the Israelites the abject slaves described in the Bible. TODAY we have empowered peo ple in our own government to do things for us without realizing the fearful extent of that power. We don't yet realize it because the peo ple who now hold it have generally not chosen to exercise it in all the awfulness implicit in it. When they do, we will wonder how we could ever have been foolish enough to have given that power to anyone.

The market place is literally jammed with examples of how we have surrendered powers over our jobs, incomes, production facilities, and trade channels. We have also surrendered certain powers in other areas in ways we probably don't even imagine. In the State of New York, for example, the people have empow ered the governor of the State to determine the nature of right and wrong as it is to be taught to the children in our schools. The people don't yet realize the full meaning of this; but you may be sure that sooner or later the realization will 1971 TWO WAYS TO SLAVERY 499 come, and they will say: "How could we have done this?" HERE IS how we surrendered a large part of our responsibility over the minds and morals of our children: We have given the gov ernor the power to appoint a Board of Regents which, in turn, has the power to approve or disapprove every textbook to be used in the schools of the entire State. If they do not always choose to exercise the power, it is still nonetheless true. We have further permitted this same Board of Regents to set the standards of learning which must be met by a child before he may be passed from one class to the next. This is true not only of a knowledge of subjects like arith metic, reading, and spelling, but also of such matters as the proper functions of government.

If you were to offer only one of the offices of our land to those who could change this Republic to some thing we hate, they would be com pletely satisfied to have no other power than control of the one just referred to: the power over edu cation. You may say: "Yes, but the men who are in· possession of that power are fine people." This is quite likely true, even though I find my self in disagreement with certain of the ideas and principles they conclude to be morally right, and which they are causing to be taught to our children. But· that is not what's worrying me. l\::Iy fear is that, at some time in the future, a man who has the power of appoint ing that Board of Regents will, lit tle by Iittle, destroy the younger generation's resistance to tyranny by causing them to be taught ideas and principles which are indirect conflict with our Declaration of In dependence and Constitution. Some of those questionable principles are already apparent in a number of textbooks. They have to do with world government, foreign wars, government ownership of the means of production, and other similar issues.

And if you think you will "vote the rascals out" if the government tries to take full control over our children's education, I have news for you: The government already has full control. And so far as I can determine, most people want it that way. True, the government still permits private schools - un der government supervision. And there is still some controversy as to whether the federal government or the state government shall ex ercise the major control over the education of our children, but that is merely a temporary sop for peo ple who enjoy arguing details rather than principles. That is just one of the ways we have given power to people slowly and over a long period of 500 THE FREEMAN August time - because we have confidence in them. The issue behind the Bricker Amendment is another ex ample of this same process. One of the main arguments against the Bricker Amendment is: "Don't you trust the President 1" And the an swer could be that the children of Israel trusted Joseph too, but that was of small comfort to them after another person inherited the power and then did something with it that Joseph would never have done. The lesson we should learn from the Israelites is this: In deciding whether or not to give power over you to your most trusted friend, imagine that his authority might eventually be held by your worst enemy. Then act accordingly; for although the friend may never mis use it, there's no way of telling who might inherit it from him.

THE BONDAGE in Egypt was the first period of slavery for the Israelites. It was not the last, how ever, nor in some ways was it the worst. The next period of their slavery did not take place until many years later; not until after Moses had come along and led them out of the land of bondage and across the wilderness for some forty or more years; until they haq. finally entered the Promised Land under the leadership of Joshua. Those early years in Canaan were wonderful ones. Here was a people who had never really ac complished anything as a nation. They were the offspring of these twelve brothers, the sons of Jacob. They had been suffering or run ning away from something almost ever since they came into existence. The peoples they had to fight in order to get their place in the al ready overcrowded fertile crescent were of such famous names in the family of world tribes as the Hit tites - the great fighters, the dis coverers of iron swords - the Amorites, and also the Canaanites.

These were all accomplished tribes or nations which had tradition and history in their favor. The Israel ites were nothing more than a ragged group of desert nomads. There was one significant differ ence, however. This seemingly un organized group of desert waifs had a most unique type of govern ment. They had no king to com mand and control them. Long since, these people had learned that there is a great source of wisdom which guides the universe and, although their knowledge of it was quite primi tive, and their method of reaching this great source of wis dom and power left much to be de sired, they had a motivation which was head and shoulders above all the tribes around them. It was not a case of each man contacting this power for himself and in his own way; they were still 1971 TWO WAYS TO SLAVERY 501 too primitive for that. Instead, they had selected from among their group one upon whom they felt a special mantle of their God, Jeho vah, had fallen. And it was his job to interpret to the rest of them the will of Jehovah.

By this seemingly simple and childlike system, these people were able to overcome almost insur mountable odds. While all the other tribes were thinking and working only on the level of the mind of man, or satisfying a multiplicity of unknown spirits which seemed to work mostly against them, the Israeli tes were actually trying desperately - although· sometimes foolishly and mistakenly - to know the will of the force that was di recting all of creation. You don't have to be very good to be best at something if you are the only one who's trying it at all! THE ONE selected to guide the chil dren of Israel in the way of J eho vah was called the judge. Their form of "government" might be called a theocracy. But it was com pletely unlike the theocratic socie ties which came about in later years, when men like Oliver Crom well and others who thought them selves to be part god, ruled people in a dictatorial fashion. The social organization of the Israelites was the honest attempt of a people to be governed by God. It was more than an honest attempt; it was the most successful venture to date in that part of the world.

During those early years in Canaan, the children of Israel made progress such as has seldom been made in the whole history of the world. The tribes increased; their flocks increased; suitable settle ments were made with the Canaan ites who recognized something quite unusual and unique in these people; and the responsibility of judgeship passed through several hands until, finally, it rested with one of the greatest judges of all: Samuel. SAMUEL HAD served the children of Israel through many difficult times, accurately interpreting the will of Jehovah. But he had be come an old man. The time had come for him to begin thinking in terms of his successor. He had high hopes that one of his two sons would show signs that would make him the choice of Jehovah. But how would he ever know? Samuel di vided a small portion of the coun try in half, putting one son as judge over one part and the other son as judge of the other part.

Everything was against these two boys. They were young; they were the easy prey of tempters who offered them money; they had some extremely bad examples being set before them by the Oriental poten502 THE FREEMAN August tates on every side. To put it sim ply, they performed very badly. The elders of the several cities were watching all of this with much interest. They saw in these two ir responsible young men their next judge, and the prospect did not please them. So, at a prearranged time, they met with Samuel at Ramah. There the elders told him that as they observed the experi ment, it was apparent the sons were not wise in the ways of Samuel; and Israel did not look forward to having either of them as a judge. Then the elders told Samuel that what they really wanted was a king to rule over them in the fashion of other nations. They asked him to appoint one. THIS WAS a great shock to Sam ueL To him it was an indication that they were not satisfied with his judgments. As was his custom in time of trouble, he stalled for time, then took the matter to a quiet place where he was accus tomed to talking with Jehovah.

As you read this in the First Book of Samuel, it almost seems as though Jehovah anticipated Sam uel's feelings because Jehovah told him that he was wrong to feel so bad. It was not Samuel they were rejecting, but Jehovah. He also said there was nothing, really, that ei ther he or Samuel could do. If these people really wanted a king, they were going to have one; and it would be wise for Samuel to make the best possible choice. Jehovah said there were some things, however, that he wanted the people to know before they turned to a king for guidance in matters which theretofore had always been left to their God. He wanted them to know the inevitable results which come to pass whenever men give to other men powers that should be left in the hands of their Creator. So he told Samuel to tell it to them straight. He said to tell them that this king who would replace him would at first need only about 10 per cent of all their sons and daughters and manservants and maidservants, and 10 per cent of the produce of their work to sup port his efforts; but that would be only the beginning. The implica tion was that it would eventually be 25 per cent and then 50 per cent, then more and more, because he concluded by saying that they would all become virtual slaves of this king they would put in the place of Jehovah.

His parting instruction to Sam uel was to tell them: "And ye shall cry out in that day because of your king which ye shall have chosen: And the Lord will not hear you in that day." The accuracy of that prophecy was very quick to make itself 1971 TWO WAYS TO SLAVERY 503 known. Saul, the first king, taxed the people about 10 per cent. David took care of at least 25 per cent more. Solomon, his son, required about 50 per cent. Along with this destructive taxation, all of these kings were performing various and sundry other evil acts upon the peo ple - just as Jehovah had pre dicted. Then, in rapid succession, a rather feeble assortment of kings called upon them to give the rest of their possessions to support a series of foolish and wasteful wars. It was the end of the Israelites as a nation. From that time on, un til they became so scattered over the face of the earth that it's really difficult to know what happened to them, they were constantly the slaves of either their own or some foreign king.

THE EXPERIENCE of the Israelites early in the history of the world, proved the truth of this fact about governmen t: When the people turn to the source of creation for leader ship - instead of to the authori tarian arrangement whereby the mind of man rules men - they have a chance to accomplish great things. This wonderful idea of govern ment was never really tried again for many hundreds of years. It was only after many nations of men had collapsed under the weight of their so-called divine kings, and had become a rubble over which succeed ing generations and armies had trampled, that a handful of people finally crossed the wide expanses of the great sea to America. Here this idea was to have a chance to work its wonders again. In this new climate, there were still many persons who thought it would be sure death to the people if they did not have a king to whom they might look for leadership. So they maintained allegiance for many years to their traditional kings across the sea. But when the king began to increase his take of the percentage of their productive efforts - and continually called upon them to support and fight his useless wars - some of the wiser people in this new land saw the po tential of permitting God to do most of the ruling.

THIs NEW experiment was to be quite different from the first one in Canaan. The early Americans had learned that it was not neces sary to have a judge to intercede with God for them. They had learned that every man might ap proach this great source of power and wisdom if he so desired. Every man was potentially capable of finding his own answers. And so, essentially, that was the way they decided to run the country. The lion's share of government was to be a matter between the individual 504 THE FREEMAN August and whatever he found to be his Jehovah. In fact, about all they de cided to leave to organized and for malized government was the power to restrain those persons who in jured other persons. Vast areas which had theretofore always been the province of a ruler of the peo ple, were going to be handled in this new and revolutionary manner of individual authority and responsi bility.

Just think of it! All aspects of the individual's life and his right to live it; all aspects of the indi vidual's liberty and his right to be a free man; all aspects of the things he would decide to do for the pursuit of happiness; all these things were going to be governed in this revolutionary fashion out side the authority of formalized government whereby some men have always directed and controlled other men! It was to be chiefly a most un usual kind of theocracy. God would be ruling the nation, not through anyone man but through each man as he knew his own God. The results of this revolutionary concept of government were extra ordinary. The people prospered as no people had ever prospered before them. They grew strong - both materially and spiritually.· They in vited the poor and downtrodden of all nations to leave their man-ruled societies and move to this land of freedom under God where every man was his own master and re sponsible for his own actions. The freedom-hungry foreigners poured in by the millions. The old and the new lived together, worked to gether, worshipped together, and prospered together. They were free and unafraid. As long as they held to the original concept of a part nership between God and man, all went well.

BUT SOMEWHERE along the way the people faltered. They began to lose their faith. They began to fear the consequences of their own free choices. Without even realizing it, they began to rej ect God and per sonal responsibility, and to clamor for a man-ruler to look out for their welfare and bear their burdens for them. Had this covenant between God and man been dissolved by man in one fell swoop, maybe Jehovah would have ordained some "Sam uel" through whom he would have passed the same judgment on these Americans that he did on the Israelites when they dissolved the arrangement. However, the Amer icans began doing it a little at a time. They did not start right off and say they were going to have a king to rule in all the areas which were originally reserved to the in dividual and his Jehovah. They made this decision piecemeal.

1971 TWO WAYS TO SLAVERY 505 When the people first began turn ing their responsibilities over to government on a small scale, they didn't realize that they were actu ally dissolving their relationship with God; but they were. And the judgment which was passed on that group of Israelite elders clear back at Ramah, began to settle on them. Little by little, these Americans be gan to become slaves of the men to whom they were giving God's job. At first it wasn't much, just a matter of two or three per cent of the total productive effort of the people that was being assigned to those who were going to assume Jehovah's responsibility. This money was to be used by the offi cials for the general welfare, such as charity, education, public works - "things which all men of good will ought to be doing anyway." But then it was 10 per cent. Then 25 per cent, and more. At the same time, millions of our young men were drafted against their wills and sent to fight foreign wars which didn't concern them:;':-As we look at it now, it seems strange that more of the people - especially the religious leaders - didn't see the connection between this and the judgment at Ramah. But the transfer of responsibility and authority continued and the percentage of slavery increased: x··>:TODAY, as this is being written, we are presently a little over 36 per cent the economic slaves of those to whom we have transferred the control of our market places, our incomes, and our responsibilities to act like children of God. How far will we go in the changing of the rules which made possible the won derful progress we enjoyed under conditions of freedom?

All along the way, many persons have realized that something is ter ribly wrong and have tried to show that we are bound for chaos be cause of the absence of freedom in the market place. They have in sisted that this absence of freedom in the market place makes for less production than we could have, more shortages than we need to have, and a final absence of wealth. Of this there is no doubt. But the time when it becomes obvious to all can often be removed some distance from the act which caused it to happen. To be sure, every Israelite could eventually testify to the pov erty and slavery which became his lot because of what the people had done in rejecting Jehovah. But ac*For a full discussion of this, see The Conscription Idea by Dean Russell. (Foundation for Economic Education, Irvington-on-Hudson, N. Y.; single copy free.) **For a method of measuring this, see Liberty: A Path to Its Recovery by F. A. Harper.

(Foundation for Economic Education, Irvington-on-Hudson, N. Y.; 159 pp., $1.50 paper bound.) 506 THE FREEMAN August tually, the full effect of earlier de cisions did not come to pass for quite some time. While they were existing under a partial system of slavery during the reigns of David and Solomon, it would have been hard for them to believe that the poverty and destruction which was in store for them was just around the corner. Like present-day Amer icans, the Israelites also "never had it so good." When the fires of an economy have been well stoked by the en ergy of freedom, it's often quite surprising how well that fire holds, and how much heat it can give off even after the source of that fuel is gone. B,ut the fact remains that whenever and wherever we trans fer authority and power over us to any organization or person, we thereby enter into a form of bond age, a degree of slavery. While this is seen most clearly when the organization is government, the principle still works for other or· ganizations as well.

Take the case of the worker who transfers to some union organiza tion authority over his right to pur sue the happiness he receives from his work. Just as soon as that trans fer is completed, a kind of slavery exists at once in some degree. Where, before, he was free to exer cise his own judgment, he's now de pendent on the new authority the union organization. When the time comes that a majority of those in power decide that the individual shall not go to work the next day, then he has no say in the matter and this very important facet of his right to the pursuit of happiness is gone. He has thereby become in some degree the slave of a master; no longer is it a matter which he may talk over with the Creator from whom he has inherited the right. He has empowered another to assume the position of Jehovah. He's fired Jehovah from that job. SLAVERY EXISTS whenever we give men the power over our lives which rightly belongs with the Creator.

This word "slavery" - or the softer term of "bondage" - might strike many people· as harsh and without relationship to anything in our day. Slavery is more often thought of in connection with the situation existing in the South be fore the Civil War. We only delude ourselves, however, when we fail to see that whenever our productive effort is controlled by other men, without our consent even though they achieve the power legally, it is still slavery. Periods of slavery in which government was the master are many. The people of Germany and Italy will attest to the slavery they experienced under Hitler and Mussolini. Yet both men seem to have arranged things in a legal fashion. Are the people of Russia 1971 TWO WAYS TO SLAVERY 507 any the less slaves because their productive effort is owned by their governmen t instead of by a man? There are two ways to slavery. This is not to say there aren't oth ers. But these two ways as shown in the history of the Israelites have been set before us to examine: Here we see a truly great people who made a fearful mistake, and then upon being given a second chance, made such a final blunder that it actually wiped the nation from the face of the earth.

TODAY we're combining both of these ways to a frightening degree here in the United States. We're empowering some people to be mas ters over us when we know it's not the sort of power we would ever give to someone we distrust. That's the mistake that was made at the time of Joseph. The condition in which Moses found the children of Israel is ample testimony to the re sult of such a mistake. Their next mistake was in demanding that a man be selected to rule over them and to .decide for them what they should be forced to do in unison. We are now in the process of dis solving that part of our New WorId concept of government which made it different from the conditions of Europe. It was this difference which caused people who were nothing in the old climate to be come inventive and resourceful and creative and productive in the new. The essential difference was that the only power men were to have over other men was the power to prevent them from injuring each other, which is a very small part of the decisions that make up the whole of life. In effect, all the rest of living was to be self-government between the individual and his God - a new theocracy.

IT IS not yet too late for the American people to return to our original concept of individual free dom and personal responsibility un der God. But if we aren't worried now, just when will we realize the truth of the judgment of God as it was passed on the Israelites at Ramah? If not when we are 36 per cent slaves, will it be when the slavery is 50 per cent, or 75 per cent? Will we be so blind that the truth of that judgment will not come to us until it is too late, un til we, like the Israelites, have been dissolved as a nation and scattered over the face of the earth, perhaps never to be called together again? For the final judgment was: "And ye shall cry out in that day because of your king which ye shall have chosen: And the Lord will not hear you in that day.'" f) Reprints of this article available in pamphlet form, 8 for $1.00.

Observations concerning the failure of the "welfare state" by Nassau Senior, English econom,ist (1790-1864), based on a visit in France about 1850. MEN, whose reasoning faculties are either uncultivated, or per verted by their feelings or their imaginations, see the great power of the State, and do not perceive its limits. They see it disposes of great resources, and do not per ceive how easily these resources may be not only exhausted but dried up. They are struck by the contrast between great superfluity and great indigence, between lives shortened by indolence and lives shortened by toil, by wealth squandered unproductively while 508 cultivable lands lie waste and la bourers ask in vain for employ ment. When excited by such a spectacle, what is more natural than to propose laws, by which the toil which appears to them exces sive shall be forbidden, by which the government shall provide the strong with employment and the weak with relief; and obtain the necessary funds, partly from the superfluity of the rich, and partly by taking possession of the pro ductive instruments which their present owners are too idle or too timid to turn to the best advan tage? It requires a long train of reasoning to show that the capital on which the miracles of civiliza tion depend is the slow and pain ful creation of the economy and en'terprise of the few, and of the industry of the many, and is de stroyed, or driven away, or pre vented from arising, by any causes which diminish or render insecure the profits of the capitalist, or deaden the activity of the labour er; and that the State, by reliev ing idleness, improvidence, or mis conduct from the punishment, and depriving abstinence and foresight of the reward, which have been provided for them by nature, may indeed destroy wealth, but most certainly will aggravate. poverty. , Journals Kept in France and Italy from 1848 #52.

A REVIEWER'S NOTEBOOK Bastiat's Life JOHN CHAMBERLAIN and Times THE YEAR was 1848. The country was not the United States, it was France. The man who was calling upon the government to become the employer of last resort was not Jacob J avits or Eugene McCarthy, he was Louis Blanc. The leader who endorsed the principles of freedom in general, yet who championed more and more interventionist social welfare laws in particular, was not Richard Nixon, he was the post-legislator Lamartine. And the mobs in the streets, including the students, were like the modern SDS or May Day Tribe, even though they weren't known to the headline writers by any of the acronyms or nicknames that bewilder us today. In a period very much like the present, France, in 1848, was em barked on the short-lived experi ment of the Second Republic. The experiment failed for the very sim ple reason that few Frenchmen had any workable theory of the limitations of government. The middle classes had been living off the state, by a complicated system of subsidies and protected monopo lies; the workers, angered by the favoritism, wanted to cut in on the distribution of the goodies. The na tion's administration was centered in Paris, and the provinces were sullen but not yet mutinous. As for the aristocrats, whose still living members had been impoverished by the Great Revolution, the wars of Napoleon and the overthrow of 509 510 THE FREEMAN August the Bourbons in 1830, they were powerless to take the responsibility which their forebears had flubbed throughout the eighteenth century.

With more and more people at tempting to live by government bounty, there was simply not enough tax money to pay the costs of Louis Blanc's National Work shops. The socialists - and they were pre-Marxian socialists - who had taken over France had run things into the ground. And the dictatorship of Louis Napoleon "Napoleon the Little" - was just around the corner. Who, at the time, had a thorough grasp of what was going on? Alexis de Tocqueville, who had studied the American adventure in limited government for his Democracy in A merica, had some inkling of the causes of the tragedy that was un folding. But only one man, the political economist and philosopher who is now the subject of George Charles Roche Ill's Frederic Bas tiat: A Man Alone (Arlington House, $6.95), had the wide-rang ing intelligence to trace effects back to their real causes in imper fect human understanding of the proper role of government. The life and the thought of Frederic Bas tiat are convincingly set forth by Dr. Roche in a study that benefits greatly from the author's ability to swing back and forth between two ages that are so very similar.

A Time of Preparation If the "life" aspects of this study are not very exciting insofar as Bastiat's younger years are concerned, the fault is not Dr. Roche's. For Bastiat, from the time of his birth in southwestern France in 1801 up until the early eighteen forties, lived the quiet and mainly contemplative life of a country gentleman. He dabbled in scientific agriculture without much aptitude for it; he acted as a justice of the peace; he married briefly (the circumstances of his union with a country girl do not come clear from the extant rec ords); and he traveled in Spain and Portugal. This was his "ac tive" life during his younger ca reer; his real life was in the mind - and it is Dr. Roche's exploration of a mind that makes this book an exciting document for a period that needs Bastiat's thinking just as much as it was needed during the turbulence of the late eighteen forties in France.

Bastiat was, by temperament, a man who valued truth more than comfort. He had the ability that is given to few men of divining the secondary consequences of an ac tion when the first consequences are bemusing almost everybody into thinking a problem has been solved rather than compounded. The port of Bayonne, where Bas tiat went to school, had suffered 1971 BASTIAT'S LIFE AND TIMES 511 by the English blockade during the Napoleonic wars, and after 1815 the controls imposed by the French government on commerce didn't seem to effect much of an improvement. Seeking an explana tion for the continuing depression, Bastiat found it in the works of Jean-Baptiste Say and Adam Smith. He might have left it at that if, after his return to his family country seat at Mugron, he had found nobody but clods with whom to converse. But, as luck would have it, a brilliant young intellec tual, Felix Coudroy, lived on a neighboring estate. Coudroy was a socialist, a follower of Rousseau, and, as George Roche puts it, "a challenging specimen of every thing wrong with nineteenth-cen tury French thought." But he was amenable to reason, and in the end Bastiat converted him to the "freedom philosophy."

Then Bastiat Was IICalled ll For twenty years Coudroy and Bastiat studied and conversed on a daily basis. Bastiat had no idea that this long novitiate in careful analysis and exposition would ever have any practical application. But the upheaval in the eighteen forties would not leave quiet scholars alone. Bastiat suddenly found himself in the middle of an argument about the British free trade movement. He wrote an arti cle about the influences of English and French tariffs on the future of the two countries, the article was printed, and the country gen tleman of Mugron forthwith dis covered that he had a mission in life. The mission necessarily involved a move to Paris, which had always drained the provinces of their talents. In his subsequent career as journalist, legislator, organizer of a free trade movement, and au thor of systematic works on polit ical economy, Bastiat eventually came to value the pursuit of truth more than he valued life itself. He literally burned up his lungs in his efforts to warn his fellow citizens of the eighteen forties against the effects of the preachings of Louis Blanc, Proudhon, Blanqui, and a whole rabble of socialists and an archists. Instead of taking care of himself during the early stages of tuberculosis, Bastiat wrote around the clock. His marvelously aphoristic work, harvested in a few brilliant volumes (Economic Harmonies, Economic Sophisms, The Law) , did not convince enough Frenchmen in time to avoid the revolutionary excesses oJ the Sec ond Republic or the' dictatorship of Louis Napoleon (history re peating itself on the plane of farce, as Karl Marx described it), but it has provided a standard to which 512 THE FREEMAN August we may rally in our own day, hopefully in time to prevent the coming to Washington of a Louis Napoleon in late-twentieth cen tury "mod" dress.

A Faith in Freedom Dr. Roche, out of his own sub stantial scholarship, does a bril liant job of "penetrating the twisted trail of 'conservative libertarian' thought as reflected in Bastiat." Bastiat was not quite an Edmund Burke, for he cared less about tradition than Burke. On the other hand, he was not one to insist on imposing rational blueprints, even those of his own devising, on anybody by the polit ical means. He believed in prog ress, but not in the idea that the human race could perfect itself. God had put us here on earth to choose between good and evil, and the prime hope was that, in the generations to come, we might choose a little more of the good. But the choice had to be left to the individual. If "planners" were allowed to impose their concep tions of "virtue" on the rest of us, they would be usurping the place of God. This is not something that fallible man should ever be per mitted to do.

American conservative thought in recent times has given too much to Edmund Burke and not enough to Bastiat. Without taking any credit away from Burke, it re mains true that Bastiat's thought is more in the American, or Madi sonian, vein. Lacking a feudal background, we have always been more of a libertarian than a con servative people. Dr. Roche's study brings this home to us anew, and one hopes that it will be widely read, particularly with an eye to salvaging that wing of the New Left that has some native libertarian instincts and might be converted to the "freedom philos ophy" as Bastiat once converted Felix Coudroy. t) the Freeman VOL. 21, NO.9· SEPTEMBER 1971 Ownership, Responsibility,and the Child Gary North 515 Concerning parental practice of the principles of freedom in the home. Independence A personification of an ideal. Jacquelyn Till 521 The Foundingof the American Republic: 2. The English Heritage Clarence B. Carson 524 The British tradition persisted and was preserved and developed in many ways in the new Republic.

Freedom to Change Howard Callaway 536 Why the political methods of col!ectivism are unsuited to the practice of freedom. DefiningPoverty Much depends upon what you plan to do to the poor fellow. Henry Hazlitt 539 Crime in America David Walter 546 The suppression of criminal activities must depend largely on self-improvement. What About Sin? Paul L. Poirot 550 Concerning the futility of coercive measures to correct the sins of ignorance where others are not injured. Restrictionson InternationalTrade: Why Do They Persist? The politics of protectionism, and how it hurts consumers. W. Marshall Curtiss 554 To Abdicate or Not Leonard E. Read 562 A tribute to Professor Ludwig von Mises - for the wisdom to reject political power. Book Reviews: 566 "Throttling the Railroads" by Clarence B. Carson "The Theory of Education in the United states" by Albert Jay Nock "The Decline of Radicalism: Reflections on America Today" by Daniel Boorstin 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, It"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 linlited 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, 1971, 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.

Articles from this journal are abstracted and indexed In Historical Abstracts and/or America: History and Life. THE FREEMAN also Is available on microfilm, Xerox University Microfilms, Ann Arbor, Mich· igan 48106. Permission granted to reprint any article from this Issue, with appropriate credit, except "Defining Poverty."

Owner~hip Re~pon~ibility and the Child GARY NORTH DEFENDERS of the free enterprise system may be rare, but there are a lot more of them than of those who practice freedom. There are always more entrepreneurs around than free enterprise advocates, but I am not talking about entrepre neurs. I am talking about the de pressingly short supply of free enterprise defenders who make micro-economic decisions in terms of a philosophy of open competi tion on a price-oriented market. The temptation of temporary eco nomic advantage lures capitalist after capitalist into the arms of the statist regulating agencies. The micro-economic decisions at the level of the indi vidual and the firm are the crucial ones, and it is Dr. North recently completed graduate studies at the University of California, Riverside, and currently serves as Director of Seminars at the Foundation for Economic Education. precisely here that the war against statism is being lost.

Yet, if the firm seems to be an area of retreat, the family is a philosophical disaster area. Men and women who are personally committed to the idea of the moral superiority of the voluntary mar ket and private ownership seem incapable of grasping the parental role of imparting their faith to their children. The family is the training ground for children in every sphere of their young lives. Why should the concept of private ownership and personal responsi bility be deferred until the child reaches his teens? If the first eight years are the crucial ones in the development of the child's per ception of things, the establish ment of his habits, the beginning of his intellectual tools, and the FilFi 516 THE FREEMAN September channeling of his emotions, then why are these years so ignored by parents as a time of training in the ideas of property? Is there any concept that a child learns more rapidly than the con cept of "mine"? I know virtually nothing of Soviet education at the preschool level, but I am cer tain that "correcting" this concept gives the teachers at the child day-care centers their most diffi cult intellectual problem. Unfortu nately, the child does not seem to learn the equally important con cept of "yours" with anything like the same facility. It would seem to be a moral problem with the child, not an intellectual one. That is why the authority of the parent is so vital in getting the child to acknowledge the validity of both of these interlocked concepts.

Children learn at astonishing rates of speed. All parents take pride in this fact, yet not one parent in a hundred really seems to understand just how fast his child does learn. The ability of a child to understand and act in terms of the most subtle human nuances - the look, the change of voice, a parent's weariness - is so great that it puts to shame whole teams of social psychologists and their computer cards. Children are connivers; they are seldom stupid. At times they seem to affect stu pidity in order to better expedite their conniving. Parents who fail to see the signs of an infant's con job only confirm the child in any lack of respect he may have for the family. Children see and they remember differences between stated principles and demon strated action. That is a child's means of survival, and he learns it very well and very early. Parents for centuries have used the phrase, "Do as I say and not as I do," as a cover for their own moral weaknesses. A child may do just as his parent says, but in all likelihood he is thinking something very different. The mind of the child must be challenged by some thing more than brute force as he grows older; the sooner his mind is challenged, the better. Force, used to conquer a child's rebellious will, does not guarantee anything about the state of the child's thoughts. Yet, in the long run, the parent's real battle is for the mind of his child; and there are inn u merable competing institutions that are in the business of intel lectual conversion. The competi tion begins the day the child goes to school.

The Responsibility of Ownership If the concept of private prop erty is worth defending, and if personal responsibility is the mo ral basis of private property, then the family must be the scene of 1971 OWNERSHIP, RESPONSIBILITY, AND THE CHILD 517 the child's introduction to the re sponsibilities of ownership. Sadly, most parents have been so utterly compromised - morally compro mised - by the collectivistic con cept of "the well-integrated child" that they fail to take advantage of a marvelous opportunity to teach their children the meaning of re sponsible ownership. These same parents are later shocked to dis cover that their teenager has abandoned "bourgeois concepts of property and morality." The child drops out of his tax-supported uni versity, joins a commune, and openly defies the parent to stop him. Of course he has no respect for such bourgeois concepts; he was never expected to adopt them!

The family structure that pro duced him never rewarded him in terms of those concepts. He might have been expected to do well individually outside the family in school, in athletics, and' so forth - but not inside the family. Take, for example, the idea of "sharing." All well-integrated chil dren share their toys with their brothers and sisters and with all the other boys and girls they play with. "Let Billy play with your airplane, sweetheart." Now "sweetheart" may know very well that Billy is a semiprofessional demolitionist, but he is supposed to let Billy play with his airplane, whether or not it took him a week to build it. Or maybe "sweetheart" is just another Ebenezer Scrooge. It really does not matter one way or the other. If Mama enforces her request that Billy be allowed to play with the airplane, she has begun to undercut the idea of ownership in the mind of her child. A request is one thing; en forcement is another. The child should be given the right to ig nore the request without physical reprisal from his mother or Billy.

The Child's Decision The parent can always give a whole barrage of cogent reasons why sharing is preferable to stinginess: people do not like sel fish people, people will not share their toys with selfish people (which is, I think, the really ef fective argument), selfish people are mean, selfish people become social outcasts. Yet, the child is simultaneously informed that it is impossible to buy people's friend ship. It is up to him to balance these competing propositions in his own mind. (If the parent thinks this is a tough knot to untie, wait until he tries to ex plain that God's favor cannot be purchased, but that faith without works is dead.) In any case, the decision ought to be the child's. If there are social costs associated with being selfish, let the child find out for himself, and let him 518 THE FREEMAN September evaluate them in terms of his own psychic needs. Maybe he likes toys better than friends. Maybe he will grow up to be like Howard Hughes. But it will have been his option, and he will have borne the costs. That is what the free soci ety is all about. It cannot guaran tee that everyone will grow up liked (or even well-liked, as Willie Loman saw life's goal), but it can see to it that everyone pays his own share.

Group Relationships Children are not stupid concern ing group relationships. They un derstand why and how their peers operate. They have a larger stake in this kind of understanding than their parents could have; parental memories grow increasingly dim with age, and parents often have many other things to worry about. A child's concentration is focused. He learns to predict how his ac tions will be received. He may not act in terms of what he knows, but he is continually learning. If he thinks that he ought to share with others, he will. He can test his parents' remarks about the benefits of sharing. If he likes the results, fine; if not, he bears the costs. It is a very good, and from the parent's point of view, very inexpensive form of training. If the parent continually inter feres with the right of the child to do what he wants with his own property, he is setting up the child for every kind of collectivist pan acea. He will learn that titles to property are less valid than the ability to manipulate the authori ties to your own purposes. He will learn that the authorities cannot be trusted to fulfil their promises with respect to ownership. He will learn that "yours" really is not that fundamental a concept, since "mine" is not enforced either. He will learn very early of the reali ties of what Ayn Rand has called "the economy of pull."

In Matters of Property If a child is not taught the meaning of personal responsibility from the beginning, the family has failed in part of its function. That is why enforced sharing is so insidious. It destroys the links between ownership, power, and responsibility . The parent who makes his child share anything with anyone for any reason (other than disciplinary action for an infraction against another child's right of ownership) is courting long-run rebellion. He can sug gest; he dare not enforce. It should come as no surprise that violation of the rights of property by a parent brings with it an immediate punishment. I have seen parents spend whole evenings trying to straighten out 1971 OWNERSHIP, RESPONSIBILITY, AND THE CHILD 519 what can only be described as property disputes among children. Hours and hours of listening to "Johnny took my fire engine," and "Bobby took my Baby Jane Throw-up Doll," and -"Well, she won't give me back my Franken stein monster." It must drive them crazy, as it does me; but I can go home later on. Kids are manipulaters by trade, as all peo ple without power have to be; if the parent sets himself up as the allocator of children's scarce re sources, he can expect to spend a lot of time at that task.

Children can disrupt the family for so many reasons. They hit each other, tease each other, knock each other down stairs, compete for parental affection. That is what they do collectively; indi vidually they can be equally try ing on a parent. "When they're quiet, I worry," is a universal sentiment among mothers. So when the property issue is added to the long list of parental har rassment devices, it ought to be shut off from the start. Each child must learn very early that the rights of his brothers must be respected, and that when the par ent learns of an infraction, pun ishment follows with the regu larity of a machine. Not that the parent comes in and settles the dispute in a friendly way, but that he comes in and settles it by swift justice. If the parent is only a friendly mediator, he will be a ha~agged mediator; no kid will cooperate with his brother when he thinks the authorities will only restore the status quo ante. He has nothing to lose and the toy to gain, and his brother knows it.

But if he knows that the minute the story of his infraction gets to the parent, he will be punished, he may begin to see the advantages of self-discipline. He may begin to mature. (If states would see the truth of this with respect to medi ating labor-management disputes, there would be fewer strikes and fewer nonnegotiable demands i.e., there would be more industrial maturity.) Watch the Vigilante There is one justification that is used by children for every kind of deviation: "He wouldn't give my toy to me, so I .... " A parent who stands ready to enforce the right of property in his household will not have to listen to that one; he can punish both the thief (for that is what he is) and the vigi lante who retaliated. He can en courage victims to come to him because they can trust him to up hold them in their arguments. We expect that much as adults from the civil authorities; we should provide it in that sphere where we are the officials. We should be 520 THE FREEMAN September able to be trusted, day in and day out, to render justice, whether we are tired, happy, sour, busy. The regularity of justice, the very predictability of it, is more re spected by the child than any theories that a parent might spin in those rare heart-to-heart talks.

It takes self-discipline in an adult to provide this kind of regularity; that is why there is truth to the phrase that delinquent parents are the chief cause of delinquent chil dren. The lack of self-dircipline becomes a heritage of families throughout several generations. Buy It Yourself A judicious use of the weekly allowance should be started as soon as the child can say, "Buy it for me" at the supermarket. He learns what buying means very early. That is why supermarket psychologists set up the candy counters by the check-out stands, and at eye level for tots. They know that few mothers have the moral fiber to say no to a squalling child; at least, they will not do it every time. The best argument to "Get it for me," is "Shut up or I'll tan your hide" (if it is meant) ; the second best answer is "Buy it yourself." The older the child, the better is the second answer. One of the appalling things I have witnessed over the years is the sight of parents at church giving their children money to put in the collection plate. They think they are teaching their children to sacrifice for God. They under rate the child's intelligence. He knows quite well the difference between "giving" and acting as a financial broker for a parent. If a parent plays this game, the child should be told that he can keep every cent of it to use as he would his other income. Then the child can learn what sacrifice is. If the parents hold to the ancient and respected custom of tithing, then the child should be encouraged to tithe his income. But the only justification for a parent's requir ing the child to tithe would be that the elders over the parent have the same institutional option. If he is not institutionally obligated to tithe, then the old rule holds: do as I say and as I do, for they are of one piece. The child should not be forced to tithe. The Bible says that God honors a cheerful giver; that is what the child should be taught to be.

Applying the Principles The defense of the free market cannot be made simply in terms of charts and graphs and technical explanations of market efficiency by professional economists. It must be defended by a willingness on the part of its supporters to understand its principles and 1971 OWNERSHIP, RESPONSIBILITY, AND THE CHILD 521 apply them in all the relevant spheres of their personal lives. "But be ye doers of the word, and not hearers only, deceiving your own selves," wrote the Apostle James. Indeed; if a parent is not -willing to take the tinle to apply the principles that he professes to hold most dear within the con fines of the institution that he holds most dear, he is not serious about his commitment to those Iud INDEPENDENCE is a tough, leath ery word, ram-rod straight and strong. If it were a person it would have been my "Papa," a man whose very existence was "in dependence." You could not sep arate the two - as though the word were created, if not by him, then at least for him. He was "in dependence" walking around for all to see if they were of a mind to look.

Mrs. Till is a housewife in Houston. Her article is reprinted, by permission, from the Republi can Banner. principles. If parent~ use the fam ily as a zone of safety from the responsibility of laboring to apply basic moral principles, then they should be ready to see their chil dren on television during the mass arreBtB at the local university. If the principles of private owner ship and personal responsibility are not worth teaching by word and example to one's children, they are not worth teaching at all. ~ ne JACQUELYN TILL It seems I remember him best in hot weather. Perhaps because it was in summer I saw him most; or maybe because that's the best time of year and we remember things we like best at t,imes we like best. Anyway, on a hot sum mer day about 11 :30, after setting the table, I would run to the field to tell him that it was almost "dinner time." Not that it was nec essary for he was always at the house by noon. Never a noonday passed that he didn't listen to Gab riel Heater give the news.

522 THE FREEMAN September Yet, I would go because this time of walking to the house with him was a glorious time. It was then Papa would talk. Not exact ly to me because I was a child and he really didn't know how to have "meaningful discussions" (as mod ern psychologists \vould say) with one so small. But talk he would. And since there was only me to hear him, it was a special time, indeed. I would have to walk fast, almost run, to keep up with his long strides. Too, I was trying to step on patches of grass where I could because black Texas dirt scorches bare feet. Along we went, the t,vo of us, never holding hands (I was always two or three steps behind) ,never touching. He talked and I absorbed every word, never speaking. I didn't need to, for at these times I was part of his soul. Remembering Things During these walks I found that he had played in the Alamo when he was small like me, before it had been restored by the Daugh ters of the Republic of Texas. He would tell of pretending he was Bowie or Crockett or Travis, but mostly Bowie. Dh, how I longed to have been there then. He had slept in packing-crates many nights be cause he had left home so young.

Though I wouldn't have said so, I was glad I wasn't there then. Once Papa said he didn't remember having a pair of shoes until he was nearly thirteen. As I wig gled my toes in the hot dirt, I thought that would be nice for I did hate to wear shoes. Then he went on to say how he would sell papers and stand on the grate in front of the Bank in winter so the heated air would keep his feet warm. Tears almost came as I thought of him with no shoes in the cold - thought of my own feet in winter when I jumped into bed between icy sheets before the bed got warm. No, it would not be nice to be without shoes. He told how one day a man, a complete stranger, took him off the street and bought him a pair of shoes without so much as "by-your leave." I loved that man, whoever he was. I discovered Papa could count and say all kinds of funny sound ing words in Spanish and that he taught himself to read and do numbers. That was why he whis pered to himself when he read and pointed to the words sometimes even though he was grown, some thing we were never allowed to do in school, not even use a marker anymore. He talked of men, too, like Jefferson and Benjamin Franklin and Sam Houston. He talked about William Tell who wouldn't bow to another man's hat and how that was the most impor tant part of the story, not the 1971 INDEPENDENCE 523 part about shooting an apple off his son's head. I couldn't see why, but Papa said it, so I knew it was so.

A Greater Vision t1ach -Um.e, about mid-way to the house, Papa would stop and look out across the land and I would stop and look too. All I could see were pastures, fields, a few cows, and heat making it look wavy. I would look up at Papa again and then look back across the countryside because it seemed he saw something so wonderful out there; but all I had missed on my first look were a few bees buzz ing in a "Black-eyed-Susan." It wasn't until much later, when Papa lived only in my heart, that I realized he was telling me on these walks, the best way he knew how, of this country where a boy could have so little and still be come a man that could do so much. He was telling me of this country where one man was as good as another regardless of his mone tary wealth or position and where he could achieve whatever he set out to achieve. He need pay homage to no man. He was telling me of this country where men helped others in need, not because they had to, but simply because they wanted to; because it was the right thing to do.

Yes, I realized then that this tough, leathery farmer, ram-rod straight and strong, knew that great as the legacy of freedom was, it was not quite enough for his granddaughter. He had been giving me that greatest of gifts - an awareness of it all. He knew one day in the future I would put together these pieces he had placed in my mind. On that day, when I stood barefoot again to feel the hot, black dirt, looking out across this same country, remembering those long ago days, I finally saw what he had so often seen. This time, when Papa was standing not in front of me but within me, I was able to see through his eyes the wondrousness of this country. The gift he had been giving throughout the years was now totally mine. And I knew, at last, why I so love the word "Independ ence." , CLARENCE B. CARSON THE FOUNDING OF THE AMERICAN REPUBLIC 2 The English Heritage 524 ONE of the major elements in the complex of experience and back ground which the Americans brought to their founding activi ties was their English heritage.

The majority of the colonists were of English lineage, and they were preponderantly British in origin, since the latter designation would include those of Scotch and Irish descent. What the Americans con structed when they got the oppor tunity was mainly alterations and reshapings of their English her itage. Nonetheless, there was consider able ambiguity in the attitude of the colonists toward their English background. Indeed, this am biguity has attended the attitudes of those who have come from Europe over the centuries to settle in America. On the one hand, they have rejected the Old World, the most obvious sort of rejection being their very coming to the New World. Many who came have fled from one kind or another of persecution or oppression. The Old World has often been described by those who betook themselves to the New as a seat of persecution and corruption. Certainly, Amer ican colonists of the latter part of the eighteenth century readily identified the English Church and Dr. Carson is Chairman, Social Science De partment, Okaloosa-Walton College. He is a noted lecturer and author, his latest book en titled Throttling the Railroads.

1971 THE ENGLISH HERITAGE 525 government with corruption - the Church with its pampered hier archy and impoverished parish priests, and the government with its rotten boroughs and members of Parliament whose votes were bOUght by the monarch with sine cures. And yet, however ambiguous their attitude toward it may have been at times, the Americans did not basically reject their English heritage. Instead, they valued it essentially, made great efforts to preserve it, treasured its outlines, and, when the time came, builded upon it. From first to last, over a colonial period of a little less than two hundred years these settlers showed their attachment to and dependence upon England. Fathers who could afford it frequently sent their sons to be educated in Eng land. They read English books, watched English plays, if any, and consumed English-produced goods. A Pro-British Bias In many ways, the settlers showed their preference for things English, both in words and deeds. Professor Samuel E. Mori son says that two early New Eng land writers, Nathaniel Morton and Edward Winslow, declared that one of the main reasons the Pilgrims left Holland for the New World was the fear that their children would lose their language and nationality) One historian has recently shown how devoted the Puritans were to their Eng lish background. He says, "They were hardly more worried that their laws should be 'scriptural,' that is approved by the Bible, than that they should be sufficiently English; and that any changes in English laws should have ample warrant in local needs."2 Even more strongly, he declares: Scholarly dispute as to whether early New England law was primarily scriptural or primarily English is beside the point. For early New Eng landers these two turned out to be pretty much the same. Very little of their early legal literature attempted to construct new institutions from Biblical materials. They were trying, for the most part, to demonstrate the coincidence between what the scrip tures required and what English law had already provided. 3 A case could be made, however, that the New Englanders were among the least devoted to their English heritage of the American colonists. They were dissenters from the Church, developed a con siderable literature of their own, were opposed to such things as 1 William Bradford, Of Plymouth Plan tation, Samuel E. Morison, ed. (New York: Modern Library, 1967). p. 25.

2 Daniel J. Boorstin, The Americans: The Colonial Experience (New York: Vintage Books, 1958), p. 21. 3 Ibid., p. 24.

526 THE FREEMAN September plays, had colleges of their own, and had more latitude than was usual in developing their govern ments. Certainly, many of the other colonies conformed much more closely to English ways. A Virginian, writing in 1728, con trasted that colony with others, and proclaimed that "Virginia may be justly esteemed the happy Retreat of true Britons and true Churchmen."4 Statements affirm ing the connection between Brit ain and America can be found in abundance all the way up to the Declaration of Independence. Some Pressure to Conform Not all the affirmations of ad miration for things English nor all the reliance on Britain should be taken at face value as indicat ing the real state of sentiment or that everything that was done was voluntary. Colonists were under a variety of pressures and restraints which bent them toward such con formity. The charters under which they were supposed to operate usually required that their laws not be contrary to English law.

For example, the General Court of Massachusetts was authorized by the charter to make laws for the inhabitants, with the proviso that they be "not contrairie to the 4 Hugh Jones, The Present State of Virginia (New York: Joseph Sabin, 1856) , p. 48. Lawes of this our Realme of Eng land."5 The Maryland charter pro vided that the proprietor "was to make no laws incompatible with those of England, and none with out the consent of the freemen or their representatives."6 Since others usually had similar provi sions, colonists found it in their interest not only to conform to the British pattern but to profess to do so as well. A dependence on Britain for many things was engendered by British regulations. In general, they were encouraged over the years to buy various products from the mother country because of re strictions on their manufacture in the colonies. Such· restriction def initely hampered the development of an American literature by lim iting printing opportunities. An American printer could rarely un dertake the publication of a book because of the scarcity of type.

"In England the supply had been limited as part of the control of the press; a Star Chamber Decree of 1637 allowed only four persons, each with a limited number of apprentices, to operate type-found ries at anyone time. Not until the Revolution could American printers buy type of American 5 Quoted in Boorstin, Opt cit., p. 20. 6 T. Harry Williams. et. ai., A History of the United States, I (New York: Al fred A. Knopf, 1959),34.

1971 THE ENGLISH HERITAGE 527 manufacture."7 In the late seven teenth century, the King provided the Governor of Virginia with orders "that no person be per mitted to use any press for print ing upon any occasion whatso ~v~r."8 Not !l.ll th~ dependence of the colonies upon England was by choice, it is clear. Even so, the Americans did re vere the essentials of their Eng lish heritage. They could hardly have done otherwise; to reject it out of hand would have been to repudiate much of themselves as they were. The furniture of their minds was made up largely of British conceptions. Their angle of vision was set to see things the way one of such descendance would see them. The best proof that they revered the heritage, however, is that they kept so much of it when they had an opportunity following the revolt to dispense with it. To see that this was so, it will be use ful to call up the outlines of the English systems and ways.

British Conservatism A profound ingredient of the English heritage is the conserva tive cast of mind. In a general sense, this may not distinguish British peoples from most others. It is quite likely that most peoples at most times have been prepon7 Boorstin. Ope cit., p. 319. 8 Ibid., p. 332. derantly conservative, though not necessarily in a discriminating way. It could even be argued that man is by nature conservative (as are also the lower animals) in that he usually prefers to continue to do things in the same way he has done them. Small children tend to be conservative in insisting on ritualizing activities and in their intolerance toward things or peo ple that are different. Such con servatism is undifferentiated in its posture toward things familiar, reveres them for their familiarity alone. British conservatism is some thing different from and more than what might well be called "brute conservatism." If it were not, it should hardly have come to our attention, for it would only be a universal condition, one which would be no more worthwhile to announce than that Englishmen have two legs. The particularities of British conservatism took shape over many centuries of experience, took shape in the Middle Ages as a people defended their ways against Danish and Norman mon archs, as the classes battled against arbitrary and despotic kings, as the thrust of change was blunted by the persistent clinging to ancient rights and privileges.

British conservatism was a re ality long before Edmund Burke so elegantly gave it a set of articu528 THE FREEMAN September lated concepts and a language. Englishmen over many centuries harked back to the Magna Charta as the fount of their privileges. Parliament for its first several cen turies did not claim to legislate; it claimed only the power to par ticipate in declaring what the law 'was, and the law was, most fre quently, what it had been since the memory of man runneth not to the contrary. When the English Church broke from the Roman Church, the least changes were made in it of all the churches born out of the Protestant Reforma tion. The English had a revolu tion, of sorts, in the middle of the seventeenth century, but in short order they returned to their older arrangements. This is not to say that the British did not change; it is rather to affirm that when they changed they kept much more than they changed, and they were given to defending their changes on the grounds that they were restoring an earlier condi tion. It was this that the Ameri cans inherited and brought with them to their constitution-making and their attitudes toward insti tutions.

The Literary Heritage One of the most important of the things the colonists derived from England was the literary heritage. The vehicle through which it was transmitted was the English language, which became the tongue of the continental colonies. It is easy to ignore the significance of so common a thing as language, to imagine that what language one uses does not matter. It is quite otherwise, of course, for each language has its nuances, shades of meaning, rhythms, and tones. A language embodies much of the history and experience of a people; it embraces their values and transmits their culture. The English language was just becoming an effective literary language when the English colo nies were settled in the seven teenth century. The Renaissance and Reformation were the major movements out of which English was developed into a literary lan guage. Latin had been the lan guage used by peoples of Western Europe for formal and elegant secular writings, as well as those of the Church. The break with the Roman Church hastened the de velopment of national languages, and the Renaissance gave great impetus to growth of an imagin ative and scientific literature. The English language came into its own with Elizabethan poets and dramatists, the King James Ver sion of the Bible (1611), and the scientific writings of the seven teenth century. Hence, English men going forth into the wilder1971 THE ENGLISH HERITAGE 529 ness of the New World brought with them a potent and virile vehicle of communication.

It was through this language, too, that they imbibed the litera ture. One historian of ideas notes t.h!lt. if Am.~l'ie9..ng gh9..r~d with Great Britain the balladry and the more formal literature of the motherland. But the literary legacy was greater than this, for it was through English and Scotch channels that the Graeco-Roman classics and the literature of the Renaissance were transmitted to the American people.... The Brit ish newspaper, pamphlet, broad side, and magazine likewise pro vided colonial Americans with models."9 By the time of the American re volt, they had at the least four major categories of literary in fluence from Britain. The first of these to reach its fruition was that of the English Renaissance. Out standing works were produced by Thomas More, Edmund Spenser, Thomas Kyd, Christopher Mar lowe, and, preeminently, William Shakespeare. Spanning a much greater period of time and encom passing a much more diverse bounty of offerings was the Eng lish Reformation literature. It ranges from the writings of John 9 Merle· Curti, The Growth of Ameri can Thought (New York: Harper, 1951, 2nd ed.), p. 4.

Wyclif in the late fourteenth cen tury to John Wesley in the late eighteenth century, and includes those of Hugh Latimer, Miles Coverdale, John Tyndale, Robert Browne, Richard Hooker, John Buwyan., John M.\\'ton, G~otg~ Fc>x, and so forth. A third category was the seventeenth century philosophi cal and scientific literature which included the works of Francis Bacon, Thomas Hobbes, Isaac Newton, Roger Boyle, Edmund Halley, and John Locke. The lit erary heritage which had the most direct impact on founding the American Republic was that of political writings. This was a rich literature indeed, for it included the contributions of James Har rington, Edward Coke, Thomas Hobbes (not much referred to by Americans but an essential part of the justification of government because of the nature of man), Algernon Sidney, John Lilburne, John Milton, John Locke, John Trenchard, Earl of Shaftesbury, Thomas Gordon, William Black stone, and Joseph Addison, among many others.

Customs and Mores The British tradition included a complex of social arrangements, customs, institutions, and mores. Some of these had the sanction of law, and in some cases there were attempts to establish and maintain 530 THE FREEMAN September these relationships by law. Indeed, it would be difficult to name an institution that was not in some way buttressed by the power of government in seventeenth cen tury England. The Church was established, supported by taxation, and attendance at its services re- . quired. Economic organizations were usually chartered by govern ment, given monopolies for trade or manufacture in some jurisdic tion, their activities viewed as adjuncts of government. Manu factures were restricted as to where they might be carried on, wages controlled (usually in an attempt to keep them lower than the market price), and prices of goods frequently fixed. The devel opment of libertarian ideas in America (as well as in England) is given greater meaning with such a background in mind.

Marriage, the family, and prop erty were tangled in a web of restrictions and prescriptions. Ac cording to law, the landed inherit ance must go to the eldest son, a system known as primogeniture. In like manner, estates were fre quently entailed so as to prevent their being _broken up and dis posed of during the lifetime of the owner. Both these practices were widely established in the Ameri can colonies. Moreover, in Eng land, according to ancient practice, tenants had claims, in perpetuity, to the lands which they rented. A strong case could be made that these, and similar practices, but tressed the family as an institu tion. Not only did the eldest son inherit the estate (or other claims to property) but also the respon sibilities of the father, such as, to look after the widowed mother, to take care of unattached females in the family and any others who might not be able to provide for themselves.

Classless America Probably, though, these regula tions and prescriptions had much more directly the purpose of main taining a class system. Certainly, England had a class system in the seventeenth and eighteenth cen turies, though it had become more flexible, more subtle, and more complex than it had been in earlier centuries. There was an aristocra cy made up of the titled nobility and the upper clergy, whose mem bers had the privilege and respon sibility of sitting in the House of Lords. There was what has been most commonly referred to as a middle class composed of the landed gentry and merchants and tradesmen. The gentry were reck oned by their rent rolls, but the merchants were not so formally recognized. The merchants were a class primarily because they had been granted government privi1971 THE ENGLISH HERITAGE 531 leges, patents, and monopolies in trade and manufacture. There were assorted other free men be neath these in the scale, yeoman farmers, mechanics, parish priests, and so on. Below these were the disfranchised, those who did not have the basic political privileges and had insufficient economic priv ileges to be independent. An at tempt was made to transfer the outlines of this system to America.

Government Chartered Activities There were all sorts of insti tu tions which derived from England, but perhaps the main outlines and character of many of them can be suggested by the idea of the corp oration. A corporation, most bas ically, is some organization author ized by the sovereign. It might be a political organization such as the town, an economic one such as a trading company, or an edu cational one such as a college. The monarch authorized such organi zations by granting to them char ters or patents which spelled out their privileges, the scope of their activities, and might include vari ous limitations. Such corporations were relics of the Middle Ages, but they were given new vitality at the time of the settling of America by the founding of col onies on the basis of such charters. The tendency of this method of establishing organizations was to make all activity hinge on govern ment and be controlled by gov ernment.

The Sritish Constitution British political institutions and practices had the most direct bear ing on the founding of the United States, and it was from these that the most extensive borrowings were made. The most basic of these was the constitution itself. Some examination of it will clar ify the relation between British and American political organiza tions. It is no simple matter to de scribe the English constitution. It cannot be read in a single docu ment as can the United States Constitution. Indeed, much of it is nowhere written down in a document or collection of docu ments. It is a combination of sev eral sorts of things: the first of these is the way things are done in government, the procedures, practices, and customs; the second would be great acts which have altered these or fixed them more firmly, such as the Act of Su premacy of 1534 which placed the leadership of the Church in the hands of the monarch, or the Res toration Settlement of 1660 and the immediately succeeding years; a third kind would be great docu ments which have limited the king, such as the Magna Charta, 582 THE FREEMAN September the Petition of Right, and the Bill of Rights; fourth, would be court decisions which built up a body of law.

What the Americans learned or deduced from the existence of the English Constitution was a par ticular fortification of the idea of a higher law. There were other sources of the American belief in the higher law than the British constitution, but this was the main embodiment of it with which they were familiar. Americans learned over a long colonial period how one set of laws could be used to limit and restrict their own gov ernments. Many of them did not miss the point, either, that such restrictions could be protective of their rights and privileges, for however much the colonists might resent certain restrictions, the re quirements that their laws must conform to British laws secured to them their rights and priv ileges as citizens within an em pire. The best proof of this is that some of the same ways they had been restrained as colonies under the English constitution were re introd uced as restraints on the states in the United States Con stitution.

Separation and Balance of Power The principle of separation and balance of power among the branches was embodied in British government for Americans, as it ,vas for the Frenchman, Montes quieu. Of the three branches, it might be supposed that Americans were least attracted to monarchy. So they were, if monarchy be con sidered only in its manifestation of the trappings of royalty, the apex of an aristocratic structure, and hereditary rule. Such trap pings are only historical accidents, an Aristotelian might say; the essence of monarchy is rule by one. Americans did not abandon the monarchical principle, as we shall see; they trim.med away the superficial aspects of it, kept it under different guises or names, and counterbalanced it with other principles of disposing of power. Rule by one - limited by being circumscribed - was kept in the office of governor and president. Not only did Americans keep the monarchical principle, but they kept many of the functions that the English monarch had per formed. In England,' the king was chief executive; so are the gov ernor' and the President. The king appointed officers under him, took the leadership in forming and ex ecuting foreign policy, W~lS in con trol of the military forces, and had the prerogative of mercy, as well as being ceremonial head of state. All these powers, the Presi dent may exercise. Of course, there are some which were 1971 THE ENGLISH HERITAGE 533 sloughed off, such as head of a state church and all those that have to do with the hereditary principle.

Governmental Instruments The debt of Americans to the English legislative system is much better known than that to the monarchical principle. The most obvious borrowing is of the two house legislature. In like manner, there are similarities between the House of Commons and the United States House of Representatives: each is composed of members elected by district, each is the more numerous body, and each has the power of origination of revenue measures. The House of Lords and the Senate have both similarities and differences: the Lords are hereditary largely, while the members of the Senate were originally chosen by. state legislatures and still have fixed terms; each body is the smaller of the two; the Lords had more court functions, while the Senate has more to do with appointments in the executive branch. One court function of Parliament is pre served for Congress in the power of impeachment, another in the investigative powers.

Much of the English legal sys tem was established in the Amer ican colonies and some of it con tinued after the break. The most basic principle of justice, which the British had long labored to establish, was government by law. It is frequently described as a government of laws rather than of men. The fundamental require ment for this to prevail is that men be tried by standing laws, that they lose life, liberty, or property only after having been convicted of violating some law which was on the books preceding the committing of the act. A variety of procedures in Eng lish law supported this principle. The underlying one was the right to a writ of habeas corpus, the right of a person being held to demand that he be charged with violating some law or be released. As one historian notes, "Meant to serve as an effective check on arbitrary power, the writ was clearly established by Parliament in the late seventeenth century as a means of releasing a person un lawfully imprisoned."lo Independent Judiciary Another English principle which influenced Americans was that of having an independent judiciary.

This principle was fairly well es tablished before the end of the seventeenth century. The main threat to the independence of the 10 Robert A. Rutland, The Birth of the Bill of Rights (New York: Collier Books, 1962) , p. 15.

534 THE FREEMAN September judiciary had been the monarch, who had from time immemorial tried to use the courts as ex tensions and instruments of him self. The way to do this was through the power of appointment and dismissal. Several of the Stu art kings were notorious for sub duing the courts by these devices. Following the Glorious Revolution (1688-89), monarchs could no longer dismiss judges, and in the course of the eighteenth century kings abandoned the practice of appointing new judges upon their accession to the throne. England had an independent judiciary; judges could serve during good behavior, subject to dismissal only by both houses of Parliament. Grounded in Common Law The cornerstone of English law was the common law. The common law had taken shape during the Middle Ages as a result of deci sions of the king's courts who sought to find the common ele ments in the diverse customs and practices among the English peo ple. It arose as an edifice from judicial decisions over many cen turies and was a depository of legal experience for a people. Un doubtedly, the common law was, and is, a mixed bag; one can find somewhere in it rulings along al most any line sought. It is ordi narily seen as having much more consistency than that, however, because in any given era the rul ings fall into a pattern. It is pro foundly conservative, for the law is resistant to change; courts are ordinarily considered to be bound by precedents, and legislative en actments are usually only frivo lously suggestive and tentative be side it. By the time the judges have brought a legislative act within the confines of existing law, any radical character which the act might have had originally will usually have been lost. The common law is the main device by which the courts counterbal ance legislatures in the English system. Among the protections of individuals under the common law, were the following, according to one account: "due process of law, habeas corpus, and an ad monition 'that no man ought to be imprisoned, but for some cer tain cause .... ' The common law also offered accused persons the expectation that they would readi ly be 'tried in the county where the fact is committed.' Double jeopardy for the accused was for bidden .... "11 Trial by Jury Trial by jury was common prac tice in England long before Euro peans became aware of the Amer icas. Courts are, after all, instru11 Ibid., pp. 19-20.

1971 THE ENGLISH HERITAGE 535 ments of government, judges fre quently appointed by the executive power. Juries, by contrast, are made up of private citizens, peo ple in like condition to whoever is being tried in that they are of the ruled. They are charged with determination of the facts, but these must ever be viewed in the light of the penalty to be assessed if the person is found guilty. The jury may also have most directly in mind the future peace of the community. Hence, trial by jury was venerated both by the English and their American descendants. The English heritage, then, was a rich one. Many had left England to come to America for one reason or another. Yet, their coming they would rarely construe as a repudi ation of their heritage. Those things that drove them from Eng land could be and usually were thought of as aberrations from the traditions. The Church of England was a corruption of orig inal Christianity; therefore, it needed to be purified. The tyran nies of monarchs were violations of the constitution. In this view, the colonists were frequently joined by a numerous body of the English people and could find their ideas substantiated by British thinkers.

Of course, the Americans made innovations in the English herit age. They grew away from the English system in many ways and, at the least, became devoted to their interpretation of it. What they chose to preserve of it was that attenuation of it that pre vailed in America, that which had become a part of themselves out of long experience. It is time now to examine that experience. ~ Next: The 'Colonial Religious Experience ALSO BY CLARENCE B. CARSON THE AMERICAN TRADITION 316 pages - cloth $5.00; paper $2.00 THE FLIGHT FROM REALITY 568 pages - cloth $5.00; paper $2.50 Order from: The Foundation for Economic Education, Inc. Irvington-on-Hudson, New York 10533 HOWARD CALLAWAY DURING the past several years there has arisen in this country a great deal of discontent and a dreary pessimism concerning the prospects for happier times. The most persistent explanation is that the government, "the system,'" has failed to meet the needs and as pirations of various large groups of people. And this is exactly what has happened. To admit the fact, however, is not to justify the ful fillment of such "needs" and de sires.

For a long time, an undisputed article of faith widely held in this nation is that government can and must see to the needs of the peo ple. Among those who recognize that government is incapable of such a task, it should come as no surprise that the result of endless promises would be frustration and Mr. Callaway is pursuing graduate studies in philosophy at Temple University. 536 discontent. If people are told and come to believe that they have a right to the unearned, a right to "personal fulfillment," which then fails to materialize, small wonder that they become frustrated and sullen. There is, however, another source of the discontent and pes simism so prevalent today. Expec tations inflated out of all propor tions have lead to frustration, and this frustration has been increas ingly focused upon the political system in a demand for funda mental changes. The welfare state alone is not enough, they believe; thus, a more radical reorganiza tion of society will be required before various important goals can be achieved. Their demands for change in this direction have been resisted to some extent, which is the second source of discontent I mentioned. The advocates of col lectivism are attempting to change the "system" through various po litical means.

My point is that political means - ranging from party politics to mass rallies - cannot effectively bring about a reorganization of society. The people of this country are by no means of one mind in regard to the changes which the collectivist would like to see; so the problem is to change the minds of those who disagree. Such an ob jective, I think, cannot be accom1971 FREEDOM TO CHANGE 537 pUshed by political methods. It is possible, of course, to silence dis agreement and to intimidate ac tive resistance by political tech niques, but it cannot be done effectively in a society with rela tive freedom, where civil liberties persist. Political means, involving the use or threat of force and the at tempt to gain "power" or the legal right to use such force against others, will not change anyone's thinking. Thus, political tech niques bring about further frus tration when the objectives are fundamental intellectual and cul tural changes.

Where the rights of the individ ual are neither recognized nor re spected, politics is simply formal ized and legalized plunder. As Chairman Mao tells us, "political power proceeds from the barrel of a gun." This is the necessary re sult of ignoring man's nature, of ignoring man's rights. In a sim ilar way, the attempt to change society through political means, or through the use of force, what ever it might be called or in what ever form, is also an attempt to ignore man's nature. Man is the rational animal and all those cre ations which are specifically hu man are the product of the human mind. To be rational means to fol low the evidence available and according to the dictates of logic. Thus, the attempt to force a change in society treats those who must be coerced as less than hu man, as irrational beings. Through Voluntary Agreements The creation of civilization, of a rationally ordered society, is one of mankind's greatest achieve ments. Insofar as it has been achieved, it has been done through voluntary agreements among ra tional men. The great efficiency of capitalism springs from the fact that under such a system men are free to use their energies produc tively and to voluntarily associate with other men to create a freely chosen and dynamic order. The overt structure of civilization re flects this order in the form of those institutions within which men agree to cooperate. Obviously then, a free society, a human so ciety, cannot be created through the methods of politics, for there is a definite relationship between ends and means.

In view of the nature of a free society, those who advocate such a society must recognize that the methods for bringing it about must necessarily differ from polit ical methods developed and used by the advocates of collectivism. The greatest strength of a rela tively free society lies in the free and voluntary institutions which constitute its overt form. Free so588 THE FREEMAN September cieties are weakened by disorder and disruption in the same way and for the same reasons that the economy is weakened by any sort of intervention. Collectivism, on the other hand, breeds on the de cay of civilized, ordered institu tions. This is why power blocs, mass uprisings, demagoguery, and vicious rhetoric are such fit weapons for the establishment of any form of collectivism. Progress Toward Freedom Builds on the Voluntary Order The path toward freedom is en tirely different. Those who advo cate freedom must attempt to build upon the voluntary order of society rather than to weaken or destroy it. One must act in accord with man's nature as a rational being if anything human is to be accomplished. Claiming a right to defend oneself against looters is one thing. To think that physical force, whether openly or covertly employed, can create an atmo sphere conducive to a free society is quite another thing. The most efficient and practical way to im prove society is wide open to the serious student with a dedication to liberty. There can be no good society until there are good men, and the improvement of men is manifestly an intellectual project.

There are always those who call for "direct action," and "do it now." This can mean anything from getting involved in party politics to fomenting revolution. However, this urge springs from a basic misunderstanding of man and his potential. This urge ig nores man's intellectual nature, the ability of individuals and of men in general to improve them selves through the use of their minds. Freedom can only be pre served or extended if it becomes a vital issue which will engage the best minds in every field of endeavor. It is no accident that the concept of property rights has fallen into disrepute at a time when the term "intellectual" has come to be used as a synonym for "socialist." To understand the philosophical case for freedom is not merely a first step in a long march; such understanding sup plies the cultural underpinnings of society, and it is the entire battle. To change a society, requires a change in the way people think.

People may choose freedom, but this will not happen unless they come to see its value, see why they should abandon the philosophies and ideologies of collectivism. Armies of destruction may move on their bellies and political move ments on the strength of num bers; but man, insofar as he is human, is moved by the power of ideas. ~ Defining Povert~ HENRY HAZLITT ANY STUDY of poverty should log ically begin with a definition of the problem we are trying to solve. Precisely what is poverty? Of the thousands of books and articles on the subject that have appeared over the last two cen turies, it is astonishing how few have troubled to ask this question. Their wri ters have taken it for granted that both they and their readers knew precisely what was being discussed. Yet popularly the term is very vague. It is nearly always employed in a relative rather than an absolute sense. In Victorian England it became the fashion for some politicians to say that "the Rich and the Poor form Two Nations." But as every fam ily's income, if arranged on a scale according to its dollar amount, would probably form a dot on a continuous smooth curve, the diHenry Hazlitt is well-known to FREEMAN readers as author, columnist, editor, lecturer, and practitioner of freedom. This article will appear as a chapter in a forthcoming book, The Conquest of Poverty, to be published by Arling ton House.

viding line between the poor and the not-poor would be an arbi trary one. Is the poorer half of the population anywhere to be called the Poor, and the richer half the Rich? The discussion today is con ducted dominantly in these com parative terms. Our reformers are constantly telling us that we must improve the condition of the low est fifth or the lowest third of the population. This way of discussing the subject was made fashionable by President Franklin D. Roose velt in his Second Inaugural ad dress in January, 1937: "I see one-third of a nation ill-housed, ill-clad, ill-nourished." (The ob jective standards on which this statement was based were never specified. ) It is obvious, however, that all merely relative definitions of pov erty make the problem insoluble. If we were to double the real in come of everybody, or triple it, there would still be a lowest third, 539 540 THE FREEMAN September a lowest fifth, or a lowest tenth.

Comparative definitions lead us, in fact, into endless difficulties. If poverty means having less than one wants, nearly all of us are poor. If poverty means being worse off than somebody else, then all but one of us is poor. An enormous number of us are, in fact, subjectively deprived. As one writer on poverty succinctly put it nearly sixty years ago: "It is part of man's nature never to be satis fied as long as he sees other peo ple better off than himself."! Attempt at Definition A discussion of the role that envy plays in economic and all human affairs can be deferred to another place. In any case we are driven to try to find an absolute or objective definition of poverty. This turns out to be more difficult than it might at first seem. Sup pose we say that a man is in pov erty when he has less than enough income, or less than enough in nutrition (and shelter and cloth ing), to maintain himself in nor mal health and strength. We soon find that the objective determina tion of this amount is by no means simple.

Let us turn to some of the recent "official" definitions in the United States. In January, 1964, 1 Hartley Withers, Poverty and Waste (1914), p. 4. when President Johnson was launching his "war on poverty," the annual report of the Council of Economic Advisers contained a long section on the problem. This offered not one but several defini tions of poverty. One was relative: "One fifth of our families and nearly one-fifth of our total popu lation are poor." A second was at least partly subjective: "By the poor we mean those who are not now maintaining a decent stand ard of living - those whose basic needs exceed their means to satis fy them." Each of us might have his own conception of a "decent" standard, and every family might have its own ideas of its "needs." A third definition was: "Poverty is the inability to satisfy mini mum needs." The Council of Economic Ad visers, basing its estimates on "low-cost" food budgets compiled by the Social Security Admini stration, decided that the poverty "boundary line" was established by "a family whose annual money income from all sources was $3,000 (before taxes and expressed in 1962 prices)." Yet, on the very next page the Council report de clared that in 1962 "5.4 million families, containing more than 17 million persons, had total incomes below $2,000." How could these 17 million persons exist and sur vive if they had so much less than 1971 DEFINING POVERTY 541 enough "to satisfy minimum needs" ?

In a 50-page study published in 1965,2 Rose D. Friedman subjected these Council estimates to a thor ough analysis. Using precisely the same data and the same concept of "nutritive adequacy" as the Coun cil, she found that the dividing line between the poor and the not poor would be not $3,000, but a figure around $2,200 as the rele vant income for a nonfarm family of four. Where the Council on the basis of its figure estimated that 20 per cent of all American fam ilies in 1962 were poor, Mrs. Friedman found that on her ad justed calculation only about 10 per cent were poor. I must refer the interested reader to the full text of her study for the details of her excellent analysis, but two of her disclos ures will be enough to illustrate the carelessness of the Council's own estimates. One astonishing error by the Council was to use its $3,000 a year estimate as the "poverty boundary" for all families of any size. Mrs. Friedman's estimates ranged from $1,295 for 2-person households, to $2,195 for 4-person households, to $3,155 for house holds of seven persons or more.

2 Poverty: Definition and Perspective. American Enterprise Institute, Wash ington, D.C. (The official "poverty line" esti mates now also specify a similar range of differences for families of different sizes.) A second error of the Council was equally astonishing. Based on a previous official estimate that a poor family of four needed about $1,000 a year in 1962 for adequate nutrition, the Council multiplied this amount arbitrarily by three to get what the family needed for all purposes. But it is notorious that pooorer families spend a larg er proportion of their income on food than do richer families. Mrs. Friedman found that this multiple of three was much higher than the level at which three-fourths of the families concerned did get along on and still get an adequate diet. She found that the amount actu ally spent for food, on the aver age, by a family of four with an income of $2,200 was about $1,250 a year. In other words, the frac tion of income spent on food at this level was about 60 per cent and not 33 per cent. Yet the of ficial "poverty line" estimates, at this writing, are still kept unreal istically high by continuing to be implicitly based on this arbitrary multiple of three times adequate diet costs.

One of the great problems in volved in arriving at any objective standard of poverty is the con stantly changing concept of what 542 THE FREEMAN September constitutes "adequate" nutrition. This was once measured in cal ories. As time has gone on, and scientific research has continued, it has been insisted that adequacy also requires certain amounts of protein, calciurn, iron, Vitamin A, thiamine, riboflavin, niacin, ascorbic acid, etc. The newest in sistence has been on the need for a multitude of amino acids. Re cently a nutrition survey done at Pennsylvania State College con cluded that "only one person in a thousand escapes malnutrition 1"3 On this basis even affluence is no assurance of nutritional adequacy. Yet compare this scientific ideal not only with the historic situa tion before the present century, when getting enough to eat was the major problem of the great majority of the populace of the world, but with the conditions that still prevail among that majority.

Compared with a supposed sub sistence minimum of 3,500 cal ories, half the people of the world today still get less than 2,250 cal ories per day, and live on a diet primarily of cereal in the form of millet, wheat, or rice. Another 20 per cent get less than 2,750 cal ories per person per day. Only the well-to-do three-tenths of the hu man race today get more than S Foundation for Nutrition and Stress Research. Redwood City, Calif. Bulletin No.1, July, 1968. 2,750 calories as well as a varied diet which provides the calories that not only satisfy hunger but also maintain health.4: Official estimates of "poverty threshold" income by Federal bur eaus are still unrealistically high. -I quote from a recent official bulletin: "The decade of the sixties has witnesseda. sizable reduction in the number of persons living in poverty. Since 1959, the first year for which data on poverty are available, there has been an aver age annual decline of 4.9 per cent in the number of poor persons.

However, between 1969 and 1970, the number of poor persons in creased by about 1.2 million, or 5.1 per cent. This is the first time that there has been a significant increase in the poverty popula tion. In 1970, about 25.5 million persons, or 13 per cent of the population, were below the poverty level, according to the results of the Current Population Survey conducted in March, 1971 by the Bureau of the Census." Yet though the estimate of the poor was then only 13 per cent of the population compared with about 20 per cent in 1962, the government statisticians were still using their old high estimate. for 4 Rose D. Friedman. op. cit .• and M. K. Bennett. The TVorld's Food (New York: Harper & Bros., 1954).

1971 DEFINING POVERTY 543 1962 - and writing up the dollar amount year by year to correspond with increases in the Consumer Price Index. The same bulletin quoted above informs us: "The poverty threshold for a nonfarm family of four was $3,968 in 1970 and $2,973 in 1959.5 If Mrs. Fried man's more careful calculations had been used, the "poverty thresh old" for a nonfarm family of four would have been closer to $2,900 than to $3,968 in 1970 and the percentage of "the poor" would have been closer to 7 per cent than to 12.6. In fact, an earlier bulle tin of the Bureau of the Census,6 which had estimated that "about lout of 10 families were poor in 1969, compared with about lout of 5 in 1959," informs us that if the Bureau's various "poverty thresholds" for families of differ ent sizes were decreased to 75 per cent of its existing estimates (Le., to approximately the levels suggested by Mrs. Friedman's cal culations), then "the number of poor persons would drop by 40 per cent in 1969, and the poverty rate for persons would drop from 12 per cent to 7 per cent."

It is clear from all this that government bureaucrats can make the numbers and percentage of 5 May 7, 1971, U. S. Department of Commerce, Bureau of the Census. Con sumer Income, Series P-60, No. 77. 6 Series P-60, No. 76, December 16,1970. "the poor," and hence the dimen sions of the problem of poverty, almost whatever they wish, simply by shifting the definition. Changing the Answer And some of our American bu reaucrats have been doing just that. On December 20, 1970, for example, the Bureau of Labor Statistics announced that, as of the spring of that year, it took a gross income of $12,134 to main tain a family of four on a "mod erate" standard of living in the New York northeastern New i ersey area. The implication was that any family of four with a smaller income than that was less than "moderately" well off and presumably the taxpayers should be forced to do something about it.

Yet the median income of a typical American famiIy7 was esti mated by the Bureau of the Cen sus to be only $9,433 in 1969. This means that half of the number of American families were receiving less than that. Clearly a good deal less than half of American fami lies were lucky enough to be re7 Not necessarily a family of four. The term "family" as used by the Bureau for this calculation "refers to a group of two or more persons related by blood, mar riage, or adoption and residing together; all such persons are considered members of the same family." Economic Report of the President, February, 1971, Table C-20, p.220.

544 THE FREEMAN September ceiving the "moderate" income of $12,134. Most of those who try to frame a definition of poverty no doubt have in mind some practical pur pose to be served by such a defini tion. The purpose of the Federal bureaucracy is to suggest that any income below its definition consti tutes a problem requiring govern ment relief, presumably by taxing the families who earn higher in comes to supplement or subsidize the lower. If the present official U. S. definitions of poverty were applied to a country like India, we would have to label as poverty· stricken the overwhelming maj or ity of its population. But we do not have to go to India for such an example. If we go back only a little more than forty years ago in our own country, we find that in the so-called prosperous year 1929, more than half of the people in the United States would have been labeled "poor" if the "pov erty-threshold" income since de veloped by the Council of Eco nomic Advisers had then been applied. (This is based on statis tical comparisons that fully allow for the changes in the price level in the meantime.) 8 8 Source: Jeanette M. Fitzwilliams, "Size Distribution of Income in 1962,"

Survey of Current Business, April, 1963, TEl,bIe 3; Herman P. Miller, Rif'h Man Poor Man, (New American Library, 1964), p. 47. Let us look at one more example of the consequences of establish ing an excessive or merely rela tive definition of poverty: "The term poverty may connote hunger, but this is not what is usually meant in discussions about poverty in America. Consider, for example, the facilities available to the poor. Tunica County, Mis sissippi, is the poorest county in our poorest state. About eight out of every ten families in this coun ty had incomes under $3,000 in 1960 [Le., under the official "pov erty-threshold" level] and most of them were poor by national stand ards; yet 52 per cent owned tele vision sets, 46 per cent owned automobiles, and 37 per cent owned washing machines. These families might have been deprived of hope and poor in spirit, but their ma terial possessions) though low by American standards, would be the envy of the majority of mankind today.9 Preserving the Incentive To sum up: It is difficult, and perhaps impossible, to frame a completely objective definition of poverty. Our conception of pover ty necessarily involves a value judgment. People in different ages, in different countries, in different 9 Herman P. Miller, Rich Man, Poor Man (New York: Thomas Y. Crowell Co.

1971), pp. 110-111.

1971 DEFINING POVERTY 545 personal circumstances, will have different ideas of what constitutes poverty, depending on the range of conditions to which they them selves are accustomed. But while the conception of poverty will nec essarily be to some extent relative and even individual, we should make every effort to keep it as objective as we can. Otherwise if, for example, our national income in real terms continues to rise as much in the next forty years as in the past forty years, our social reformers will tend to raise cor respondingly their standard of what constitutes "poverty." And if this happens, the paradoxical result will be that the problem of poverty will seem to them to be getting larger all the time when it is .really getting smaller all the time. One writer has seriously sug gested that we "define as poor any family with an income less than one-half that of the median fam ily."lo But on this definition, if the income of all groups increased more or less proportionately, as in the past, and by no matter what rate or what multiple, the percentage of "the poor" would never go down, while the implied absolute amount of relief required would keep ~oaring.

Our definition obviously should not be such ,as to make our prob lem perpetual and insoluble. We must avoid any definition that implies the need of a level of help or any method of help that would tempt the recipient to become per manently dependent on it, and un dermine his incentives to self support. This is likely to happen whenever we offer an able-bodied adult in charity or relief more than or even as much as he could earn by working. What he needs is a level of subsistence sufficient to maintain reasonable health and strength. This subsistence level must constitute our working defi.. nition of the poverty line. Any relief program that tries to pro vide more than this for idle able bodied adults will in the end do more harm than good to the whole community~ 10 Victor Fuchs, "Toward a Theory of Poverty," in U.S. Chamber of Commerce, The Concept of Poverty, Washington, D. C., 1965, p. 74.

CRIME in America DAVID WALTER IT IS with considerable dismay that one notes the increasing in cidence of criminal activities in the United States. After all, do not people living in the United States have the highest standard of liv ing in the world and the most op portunity for advancement thanks to the operation of the free enterprise system? Why, then, the increase in crime? Many persons believe that fear of punishment has a direct effect on the rate of crime, and that leniency tends to encourage more crime; whereas others argue that harsh treatment by police or judg es may drive the criminal to more brutal crimes in a desire to "get even" or "strike back at the op pressors." Still others contend that crime Mr. Walter is a Cost Accountant in Phi1a~ delphia and editor of Society for Individual Liberty News. 546 is committed by those "kept poor by the system" and that welfare, not punishment, will stem the causes of crime. However, the record suggests to me that bribery or blackmail payments in the form of urban renewal, government handouts, and poverty programs unwittingly promote and become the justification for the commis sion of crimes. So, I believe we must examine further the basic causes of crime before prescrib ing more punishment as a solution.

The American tradition has been for the people to delegate to government the responsibility to combat crime through its police and judicial arms. Citizens sup porting these government func tions want a society of individuals content to leave their neighbors in peace. Police, and courts are sup posed to deal effectively with those few individuals who seek to obtain 1971 CRIME IN AMERICA 547 possessions from others by initi ating force and denying rights of ownership. Government Unbounded If one is to understand the fail ure of government to check the crime wave, one must first recog nize that government has taken to itself or been urged to assume many additional functions which are difficult to distinguish from outright criminal activity. Gov ernment, on all levels, is infring ing upon the rights of individuals and taking their property by force. Government is increasingly seeking to control, without permis sion, those businessmen, entrepre neurs, and hard-working individ uals who provide our high stand ard of living through the free market. If these same interven tions were visited upon citizens by private persons, the actions would be clearly identified as crimes. But government, by "legalized" meth ods, now manages to deprive citi zens of some 43 per cent of their own earnings. And many persons condone this system; they see the similarity of actions, but feel that coercion for "the right reasons"

(to benefit the collective) is per missible while similar action for personal gain is not. Those who believe in individ ual rights and the efficacy of the free market should understand why and how the government plunderbund encourages crime. The increasing attacks on private property - by criminals, govern ments, politicians, activist minis ters, welfarists, students, and philosophers - indicate that re spect for private property has been replaced or has diminished as a moral value among responsible people. This change in the basic attitude toward private property (which may be defined as the individual's life and all those things one has acquired to sustain it through voluntary transactions) explains the rise in crime. Other wise, if more and more people were accepting the ideal of private property, surely the remaining criminals could not step up their activities sufficiently to raise the over-all level of crime.

The Looter Philosophy Any society will have its prin ciples reflected in i.ts government, its mores, and its problems. It is not surprising to note an increase in crime in conjunction with an increased acceptance of collectivist principles of human action. For the widespread and popular ac ceptance. of a looter phiJosophy is bound to bring forth a rash of looters. Unfortunately for believers in liberty, many of the policies of government in the United States, 548 THE FREEMAN September as in other countries today, are based on the superiority of the group over the individual. We are told that the group (or the "pub lic interest") demands subordina tion of individuals to the collec tive will. One might ask where these powers originate, since no individual holds such rights over another. But licensed philosophers of the new faith stand ready to answer that such powers spring like a will-o'-the-wisp from a suf ficient grouping of individuals.

Government, under the collec tivist philosophy, consists alleged ly of the people who have superior insight into the everyday needs of the typical citizen. They decide how to distribute the nation's total output of goods among the masses for the common good. In America, this idea has been most dominant since the New Deal era, though it has governed to some extent every society previously known. Sorrow fully, today's debate concerns only how much to take, at what time, and for what purpose. Whether it is right and proper to take any thing at all seems no longer to be questioned. A whole new genera tion has learned to turn these no tions for their own benefit. Labor unions, pressure groups, looter groups such as the Welfare "Rights" Organization, political parties, and even business organi zations and industrial concerns are all engaged in organized, sophisticated taking of other peo ples' property. All this has come to be more or less accepted as part of the current political process.

Instant Justice Nor are people entirely content to play according to the political rules. Why, they ask, should they wait for some greedy bureaucrat to get around to giving them the money "everyone" recognizes as having no rightful owner? Buf feted by government restrictions, or recipients of a poor public edu cation, or unskilled and out of work due to minimum wage laws, or kept in a ghetto by urban re newal and building codes, these people decide to take "what is theirs by right" (or, at the very least, belongs to no one except he who can take it and hold it). So, cutting out the middleman, the thugs take to roaming the streets in search of loot and victims. They read about graft in public con struction, war and pillage, infla tion, labor union violence, and ad vice from the thought leaders about redistributing the wealth. Absorbing the society's predilec tions for violation of private prop erty rights, they decide not to wait their turn in the political process because they have been waiting too long already.

Can the student who, in the 1971 CRIME IN AMERICA 549 morning, devotes his free period to working for a group which urges the workers to seize the fac tories complain when, in the eve ning, he is mugged as he leaves the campus? Can the labor union leader or the tariff advocate or the trust buster or the Presidential aspirant deny to criminals the "rights" they themselves demand to the IiveIihood of others? In a word, no. To be consistent with their own preachings, those who advocate to any degree a collec tivist program have no right to complain about criminals tram pling the rights of individuals. If they wonder why there are gangs roaming the streets, let them re alize that those gangs are only doing what the collectivists pious ly demanded. The hoodlums do not wear dinner jackets nor do they speak from the podiums of great universities; they do not ob serve the niceties of "proper"

political procedure or claim divine inspiration; they do not ask for the sanction of their victim; and they look upon politicians as fools who preach human liberty while doing everything in their power to enforce conformity and obedi ence to the welfare state. Order, stability, and civilization (prerequisites of the free market) require far more than punishment, bribery, and blackmail in an at tempt to gain good behavior. It is up to those who believe in private property and individual liberty to set an example for others by liv ing what they preach. Each of us must root out from his own be havior those actions which run counter to voluntary trade among men. We must forswear any at tempt to force others to our will. And, if we succeed with applying consistent principles of morality to our own lives, then perhaps oth ers will be inspired to do likewise. Crime will decrease only to the extent that individuals begin to accept the principles of the free society where each man lives his life as he wishes, trades volun tarily with whom he pleases, and respects the right of other men to do the same. ~ IDEAS ON LIBERTY A Risk Worth Taking THE LIBERTY of going wrong is the seamy side of the priceless privilege of going right by free choice rather than by compulsion.

WILLIAM ERNEST HOCKING, The Coming World Civilization WHAT ABOUT ?. To OUTLAW sin or to tax it, that seems to be the question. But the answer depends on one's definition of sin and his understanding of the nature and purpose of govern ment. There are among honorable men vast differences of opinion as to what constitutes sin and what government can and should do about such things. It seems reasonably clear and undebatable that what government can do about anything is to apply force, even if men may disagree as to whether a particular appli cation of force is aggressive, or defensive, or of some other kind. In the final analysis, government is force. From one point of view, the question is settled then and there: any resort to force is sinful by this view, and among the greatest of sins is a reliance on government 550 PAUL L. POIROT for any purpose whatsoever; so, there should be no governmental agency to either outlaw sin or tax it. That's well and good for the saintly who have the character and courage absolutely to resist not evil - to turn the other cheek whatever the provocation. But it only confuses the issue and ag gravates the problem for those who believe that force can and should be used in defense of life and prop erty - to say nothing of those who would apply coercion for any other purposes they deem worthy.

For instance, I believe that the most practicable and desirable form of society is one that maxi mizes personal freedom of choice and minimizes violence among men. That is, I believe in a free market to facilitate voluntary as sociation and trade. But I also be lieve that the optimum release of 1971 WHAT ABOUT SIN? 551 creative human energy - through voluntary association and trade requires a framework of organized force or police power, a govern ment of strictly limited scope and purpose to minimize violence among men, protecting the life and property of everyone who comes to trade in peace, permit ting no person or group to block any peaceful trader from the mar ket. Such a faith in a market econ omy is said by some to be a sin, and they would outlaw competi tion, or tax it, or both. If faith in competition be a sin, surely it must be less deadly than mayhem and murder, lying, cheat ing, stealing, corrupting the lives and polluting or destroying the property of others. But the rang ing of "sins" in order of their seriousness raises the interesting question of how or where to rank the love of money, the sin of pride, drinking, smoking, drug use, obes ity, dancing, gambling, and an endless host of other questionable practices.

Are Innocent Persons Injured? One approach to this problem of identifying sin and how to cope with it is to determine if the al leged sin does injury to the life or property of an innocent person be having peacefully and self-respon sibly. If so, should he not have full recourse under the law to recover damages sustained and to prevent further injurious action to himself and his property? And there probably should be govern mental provisions for dealing with cases of child abuse, corruption of minors, and similar injurious ac tions against those considered to be incapable of caring for them selves - too immature or irrespon sible to vote. Respect for human life and be lief in the dignity of the individ ual are by no means so universal and unanimous in the United States today as to preclude further debate. Note the sincere and vig orous differences of opinion on the matter of abortion, for instance, or on the methods involved in waging war in Vietnam. Yet, there would seem to be an overwhelming consensus against murder and other deliberate or careless acts of violence against the lives of in nocent peaceful persons. Is there any reasonable doubt that killing and maiming others, deliberately or negligently and without due cause and provocation, is a punish able offense against man and so ciety? Is there any reasonable ob jection to outlawing such antiso cial actions and employing the full force of government to prevent and discourage such activities by individuals or groups against the lives of peaceful citizens?

It would seem equally proper to 552 THE FREEMAN September prevent and discourage acts of ag gression against the property of any peaceful person. Yet, there is by no means the degree of un animity of understanding and re spect for private property in the United States as generally pre vails in regard to human life. Con siderably more educational effort is needed before it becomes uni versally clear that a man's honest ly and peacefully acquired prop erty is due the same respect from others as is his life itself; his property is but an extension of his life, his to use as he chooses so long as he chooses not to use it to the deliberate or negligent injury of other peaceful persons. Which Attitude Toward Property? The attitude toward private property may well be the key to the great puzzle over sin and what the government ought to do about it. If a man's property is viewed as something gained by inj uring others, then it must seem just to retrieve it from the present owner (obviously, the rich) and redis tribute it among those presumed to have been injured (obviously, the poor). But if one looks upon John Doe's property as that which others have freely given him, as outright gifts or for services rend ered to them, the seizure and re distribution of such property would seem to be saying that services ought not be rendered ac cording to the wishes of the cus tomers, that no one should be free to own or buy or sell what he chooses. And the question boils down to this: Which attitude to ward private property really re flects a respect for the life and dignity of the individual?

The logical answer would seem to call for the mutual respect and the common defense of private property, as acquired through peaceful productive effort and vol untary exchange. To shorten or diminish a man's life by stealing some or all of his property would seem to be the same kind of sin as maiming or killing him. But this, of course, is not the attitude or answer of those who advocate and condone the socialistic practice of taxing the rich for redistribution among the poor. It is the accumu lation of property - saving really - that seems sinful to them; and the children of grace would be the deserving poor, no matter how well-deserved their poverty. The Sin of Ignorance We have been discussing actions injurious to the lives or property of innocent, peaceful persons, argu ing that it is an appropriate func tion of government to protect the innocent and to prevent such crim inal acts. But what about those sins of self-abuse that do not 1971 WHAT ABOUT SIN? 553 threaten or harm any innocent and peaceful person - drinking, smok ing, gambling, and so on? What should government do about that kind of sin?

"That kind of sin" really boils down to the sin of ignorance - not knowing or caring that there are better ways to use one's faculties and other private property. And in the United States a decision was made a long time ago as to what the government ought to do about ignorance: compulsory education! Outlaw ignorance, and tax every body to pay for government schooling! Had there been no early decision for compulsory edu cation, one can imagine the prob lems that might otherwise have arisen to confront today's citizen ry: widespread drinking, smoking, gambling, pornography, sexual promiscuity and perversion, irre sponsible proliferation among the poor, slum conditions, looting and rioting, trespassing and destruc tion of property, disrespect for law, old people unable to care for themselves, masses of able-bodied men and women reduced to beg gary, children roaming the streets dressed in rags and carrying guns and knives, moral and spiritual and intellectual and physical deg radation on every hand, not to mention the waste and pollution of other scarce resources.

The harsh fact is that we have had an all-out government cam paign against ignorance - and we do have all these other conditions, too - in the United States of America, in 1971. And the sober conclusion can no longer be es caped: perhaps the worst of the sins of ignorance is the belief that ignorance can and should be out lawed, that people can be forced to behave as if they were wise. If one finds his own ignorance intol erable, then he has already taken the first essential step toward cor rection. To the extent that he suc ceeds with his own problem, he will learn to tolerate what he had presumed to be ignorance in others, leaving to them the sweet and the bitter consequences of their own actions and the full re sponsibility for their own conduct. Unless one is prepared to tol erate the ignorance of the poor or the rich - and leave them to their just rewards, he can have no logical complaint against those who would seize his property for their own "better" purpose. As for the sins of ignorance, it is im portant not to outlaw them and not to tax them. But most impor tant of all is not to subsidize them.

~ LUDWIG VON MISES, Human Action W. MARSHALL CURTISS A businessman is always under the necessity of adjusting the conduct of his business to the institutional conditions of his country. In the long run he is, in his capacity as entrepreneur and capitalist, neither favored nor injured by tariffs or the absence of tariffs. IF THERE is one point of fairly general agreement among econo mists throughout the world and throughout time, it is that trade should remain free from all sorts of governmental restrictions and interventions. It would seem un necessary to repeat over and over why the material welfare of indi viduals is enhanced through the division of labor and freedom to trade. But restrictions still exist! Tar iffs and other barriers to trade seem to move through cycles, re laxed at times, and then reapplied. Dr. Curtiss is Executive Secretary of the Foun dation for Economic Education. This essay is from the "Mises 90th Birthday Collection,"

copyright by The Institute for Humane Studies. 554 Why, in the face of reasoned ar guments by leading intellectuals, do, restrictions to trade have such an appeal to lawmakers? In other words, who is it and what is it that moves the lawmakers to take such action? The cry for protection comes in many voices. A glove manufac turer resents finding imported gloves in the market. It is natural for any firm to take any legal steps available to sustain profits and remain in business. If a way can be found to eliminate this for eign competition, perhaps convince the government to raise some sort of barrier to the foreign gloves a tariff, or a quota, or an embargo 1971 RESTRICTIONS ON INTERNATIONAL TRADE 555 - then the glovemaker might be able to continue in business, com peting with domestic firms as al ways, but avoiding the foreign competitor. The glove industry may main tain a lobby in Washington to try to convince the lawmakers that unless protection is provided, thousands of jobs will be lost, un employment will rise, and com panies will go bankrupt. And it may all be true! At least it often is convincing enough to the law makers.

What happened to the logical argument of the economists who said protection hurts the consum er ? Well, the argument stands, but the consumer's voice is faint. What if it does cost a few pennies more to buy a pair of gloves? Com pared with the loss of a job or a failing company, this is nothing! Or so it seems to those seeking protection. We Accept Domestic Competition Now, suppose a domestic firm is in financial trouble, in no way caused by imports. Does it send a lobby to Washington and ask for help? Not ordinarily. In domestic trade, we accept the idea that a firm must compete without special favors. True enough, companies do fail; men do lose their jobs; but the consumer is not penalized by interventions that reduce production and make things cost more. If the failure of the Edsel auto mobile had been because of for eign competition, it might have been argued that a tariff on im ports would have saved the car and preserved thousands of jobs.

Had the maker been a one-product firm, it might have been saved from bankruptcy. But, no; it was a domestic firm that misjudged consumer acceptance of a product; and that was that! The Edsel is reported to have cost the Ford Motor Company $250 million. A more recent example is that of Corfa.m which the du Pont Com pany developed to compete with natural leather for footwear. After seven years and a reported $100 million, du Pont discontinued pro duction of Cor/am. Only the size of these write-offs makes these two items news worthy. Thousands of new prod ucts are tried each year, and there are many failures. Unless a com pany has other profitable items which will carry such losses, the company may fail, as many do. The testing of consumer prefer ences goes on constantly. Ordi narily, we wouldn't think of ask ing the government to prevent the failure of a given product. We ac cept such failure as one of the regulatory aspects of competition and the market. But let the compe tition be from a foreign country, 556 THE FREEMAN September even though it benefit consumers the same as domestic competition, and there arises a clamor to erect some sort of barrier to save jobs, or to save firms, or to build a fence around our high standard of living, or whatever.

Politics of International Trade The justifications for tariffs and other forms of protection in clude the arguments that they keep our wages high, prevent un employment, protect infant indus tries, help with national defense, prohibit trade with the enemy, dis courage dumping, and so on. Trade barriers or threats of trade barriers are often used in the formulation of foreign policy. "We will reduce our restrictions if you will do likewise." Or: "Let us reduce our restrictions against underdeveloped countries so that they can benefit from sales to us." Or: "Let us stop buying chrome from an African nation whose in ternal policies we do not approve." Among the reasons for trade re strictions must be included for eign policy. Or, as one author re cently stated, "trade policy in the United States is a political mat ter." But of all the pressures upon the members of Congress and the Executive to enact trade restric tions, few are greater than those exerted by business firms or associations representing business firms. Individual consumers who have the most to gain through the reduction or elimination of trade barriers, and who have voting power enough to elect or defeat any candidate for office, are prac tically power less in comparison with business lobbies.

An as illustration, note the re sults of recent attempts to cut back certain phases of defense spending. Now, the production of something to be destroyed in com bat obviously is worthless so far as contributing to the level of liv ing of a people is concerned. If those workers and resources were used to produce housing, build highways, provide medical care, teaching, plumbing,. auto repairs, and the like, then consumers would be that much better off. But let it be suggested that we shut down our war machine and the protests are deafening. Work ers will lose their jobs; companies will fail; the entire economy will suffer. Granted, there are difficult ad justments to be made. But the fact that a worker is not ,needed in an airplane factory shouldn't preclude his finding a productive job else where. One sympathizes with a worker in an industry that is be ing "wound down," especially in a one-industry community. In the re cent discussion of continuing re1971 RESTRICTIONS ON INTERNATIONAL TRADE 557 search and development of the SST, many in Congress, and many members of the press based their argument chiefly on the fact that thousands of workers would be disemployed and business firms would fail. The same arguments have been used in trying to main tain our outer space program.

Such arguments have a strong emotional appeal and carry con siderable persuasive force. Many of the same arguments are used to establish trade restric tions, and with equally disastrous economic consequences. Five Basic Principles In discussing foreign trade, it is well to keep in mind certain basic principles: (1) Trade between t,wo ind,ivid uals, entered into freely, always results in benefits to both parties. Otherwise, why should they trade? Wha t anyone else may think of their judgment is beside the point. (2) There always is a comparative advantage in producing some products and importing others. Produc tion costs in one nation may be lower than in another nation for every item produced in either na tion. But the people of these re spective nations may still find it profitable to trade with one an other. It is often thought that only nations like Great Britain or other maritime nations benefit by trade, simply because there are so many things they do not produce do mestically. True, the United States could close its borders to all im ports .and exports and still there might be a relatively high level of living for its citizens; but not as high as would be possible through trade with foreigners.

(3) Consumption is the sole pur pose of production. Adam Smith explained this nearly 200 years ago. Production is to supply con sumers' wants. It is not to make jobs, or to keep a business solvent, or to make one nation dependent on another. Naturally, some of these things happen as a by-prod uct of production and trade, but that should not be the objective. (4) Trade ordinarily will be most satisfactory to all concerned when individuals or their agents who have something to trade deal with other individuals or their agents who want the other si,de of that trade. Governments should be in volved as little as possible; first, beca use they are not concerned, and secondly, because there is al ways the temptation to use the trade for purposes other than satisfying consumers. If an individual in this country wanted to trade some of his own property for something offered by a Russian citizen, we would think little about it, knowing that each 558 THE FREEMAN September party to the trade considered he was better off than before. But if government enters one or both sides of such a trade, there is often the suspicion, sometimes justified, that one party is seeking a military or political advantage.

(5) Imports require exports. For eign trade appears complicated be cause it often takes an indirect or roundabout route through sev eral nations. In addition, monies of several nations with complex exchange rates are usually in volved. But it finally boils down to the fact that a nation which im ports must export something in exchange. Many people appear to believe that we might eventually be inun dated with imports to the extent that practically all production in this country, all jobs, all business firms, might be wiped out. They fail to see that foreign· goods can not continue to come into this country unless something goes out to pay for them. The Reciprocity Argument A popular argument in support of tariffs is that we will reduce our obstacles to trade if other na tions will reduce theirs. In other words, we must do it together. The lack of understanding of international trade and the effect of restrictions is reflected in this press release in The New York Times for March 31, 1971. "The European Economic Community decided today to give generalized trade preferences to developing coun'tries beginning July 1." The implication is: "If you are poor, we will let you sell to us." The truth, of course, is that voluntary exchange, whether the partici pants be rich or poor, benefits the buyer as well as the seller. Had the "developing country" previ ously been subject to trade restric tions, then, of course, it would gain from the relaxation of those restrictions. But the increased trade also would be of benefit to the "affluent" buying nation.

When diplomats from different countries discuss the reduction of trade barriers, it almost always has the appearance of a high-level bargaining session. How little can we give up in reducing our restric tions on imports in order to gain some reduction in their restric tions against our exports? It never seems to occur to them that we stand to gain by opening our gates entirely, whatever the other nation does. Certainly our consumers would stand to benefit. But, always of diplomatic concern is the effect on firms and on jobs. A great deal of consideration is given to "most favored nation" re ductions. If we give one nation the "benefit" of our reduction, then all nations are entitled to this 1971 RESTRICTIONS ON INTERNATIONAL TRADE 559 great benefaction. Actually, uni lateral action in reducing our re strictions against imports would benefit our consumers, and might end most of the seemingly endless bargaining over reduction by other countries in return.

Who knows? It might soon be discovered that trade policy should not be a political issue but that free trade between citizens of all nations, rich and poor alike, bene fits all consumers. How Can Free Trade Be Achieved? Politicians, in the legislative as well as the executive branches of government, respond to pressures of various kinds from their con stitutents. So long as the pressure for trade restrictions exceeds that for free trade, we can expect re strictions to continue. Considerable attention just now is directed at textiles, especially the textile trade with Japan. Had such trade been strictly between in dividuals without the intrusion of governments, many of our present problems would have been avoided. Following World War II, our gov ernment made concessions to help rebuild the Japanese economy. It delivered cotton for less than our own textile manufacturers had to pay for it; it practically gave new textile mills to the Japanese. Little wonder that American textile manufacturers resented this unfair competition and sought to re strict imports from Japan. Now, a quarter of a century after the war, while the effects of. that kind of "foreign policy" may have worn off, the arguments against Japa nese textiles persist and carry weight with legislators.

Over the years, many economic injustices, including misuse of capital and labor, have resulted from trade restrictions. To remove them all at once and go back to free trade is bound to require dif ficult adjustments on the part of business firms. No wonder they try, in any legal way they can, to protect any remaining shelters or even increase their protection. Who Speaks for the Consumer? From the standpoint of a man ... ufacturer, the so-called benefits of protection and disadvantages of free trade are short-run and dis appear once adjustments to the changed situation are made. The firm still must compete with other domestic firms as well as with im ports, even if over a tariff wall. But it is these short-run adjust ments that the legislators hear about - the layoff of workers, the reduced profits, and even business failures. The longer-run genuine benefits of free trade to consumers arouse little excitement. This is especially true in a country like the United States where imports 560 THE FREEMAN September are a relatively small part of all trade. Who is there to speak for the consumers? The professional protectors seem so interested in auto seat belts, unit pricing, pack aging, advertising, truth-in-Iend ing, and ecology that they aren't likely to get to the matter of free trade for .some time.

Most families present a com bination of consumer and producer interests, interests which may seem to be in conflict with regard to trade restrictions. For example, suppose two members of the fam ily work in the local textile mill. The most important day-to-day problem to the family is making certain that these two mill work ers are employed and bring home their weekly pay checks. So, if they are convinced that imported textiles may eliminate their jobs, then they are apt to be protection ists. Attesting to this is a story in a recent Sunday supplement head lined "Twilight of a Textile Town." In this article, it was re ported that a mill which had been the town's leading industry for 70 years went bankrupt and put 844 textile workers out of work. Fur thermore, "50 textile plants in the South have shut down since 1969. The Department of Labor has esti mated that 27,200 Southern textile workers lost their jobs in 1970 alone."

This is a serious situation, apparently calling for a political solution. What is not so obvious is that even if all imports of textiles were stopped, after a short period of adj ustment, domestic firms would find strong competition with each other and marginal firms would continue to face failure. Adjusting to Change An illustration of how adjust ments can be made to a declining industry is related in the New England Letter for April, 1971, published by The First National Bank of Boston. The study shows how, in the early 1950's, many tex tile mills were liquidated and a basic weakness was shown in the leather and shoe industries. Some of the textile mills are now among those in trouble in the South. Had the problem been handled with political solutions, no doubt New England textiles could have been "protected" in a way that would have kept the mills going with employment and jobs as usual.

But, instead, New England in dustry changed, in part, to the manufacture of transportation equipment, electrical equipment, and instruments, to name only three. This new type of manufac turing is more export-oriented and enjoys a better international com petitive position. It has the greater "comparative advantage" that economists have been talking 1971 RESTRICTIONS ON INTERNATIONAL TRADE 561 about. It uses higher skills from its workers, and the "value added in manufacturing" is relatively high. Thus, in the long run, the return to labor stands to exceed what it was and what it might have been in the production of tex tiles, shoes, and leather goods. True, some of the newer types of industry have been closely tied to government defense contracts, and with a recent cutback, unemploy ment increased. However, a basis for export and for increased pro duction for consumers is there. Adj ustments to changes like these are often difficult and must not be passed off lightly. But such changes in an expanding and progressive economy are always going on. Attempts to stop them with artificial restraints are cer tain to be more painful than is the process of adjusting.

Man Must Choose Between Freedom and Protectionism As observed earlier, most econ omists agree that protectionism is unsound. The consumer is served best by allowing people to trade freely with each other, not only domestically but world wide. But restrictions continue to persist, placed there for political reasons. The incentive to erect barriers to trade is a political response to pressure from individuals, groups of workers, industrial groups, and others who think they will gain from protective measures such as tariffs, quotas, and the like. Because the consumer is the dis advantaged party, it may be argued that the solution lies in his education. But as previously shown, the consumer's stake as consumer of a protected product often is much less important to him than his job as a producer of a potentially protected product. Therefore, it seems doubtful that consumers, as a group, can be effective in bringing political pres sure on lawmakers to offset the pressure for protection exerted by other groups.

After two centuries and more of expounding the advantages of free trade, it must seem trite to say that education must be relied upon to bring about a correction of the wrongs caused by protec tionism. Nevertheless, there seems to be no short cut. While the con sumer, qua consumer, must be in cluded among those educated, it would· seem that emphasis should be placed on convincing lawmakers of the advantages of free trade so that they can better withstand the pressures put upon them by their constituents who think they need and deserve protection from com petitors. t) TO Rbdicate or Not... LEONARD E. READ f\f\f\f\ LIFE is a process of selection and rejection; knowing what to re nounce in life and what to em brace are distinguishing marks of a wise man. My theme is Mises and his exemplary achievements in this respect - as much to be noted and honored as the economic enlightenment on which his fame so solidly rests.

Professor Ludwig von Mises arrived in America during 1940. My acquaintance with him began a year or two later when he ad dressed a luncheon meeting of the Los Angeles Chamber of Com merce of which I was General Manager. That evening he dined at my home with renowned econ omists, Dr. Benjamin M. Ander son and Professor Thomas Nixon Carver, and several businessmen This essay is from the "Mises 90th Birthday Collection," copyright by the Institute for Humane Studies. 562 such as W. C. Mullendore, all first rate thinkers in political economy. What I would not give for a re cording of that memorable dis cussion! The final question was posed at midnight: "Professor Mises, I agree with you that we are headed for troublous times. Now, let us suppose you were the dictator of these United States. What would you do?" Quick as a flash came the reply, HI would abdicate!" Here we have the renunciation side of wisdom: man knowing he should not lord it over his fellows and rejecting even the thought.

Few among us are wise enough to know how little we know. Ignor ance of limitations is to be ex pected from everyone who does not see beyond himself. The wise man, on the other hand, achieves a measure of self-transcendence: 1971 TO ABDICATE OR NOT 563 he sees beyond himself, even be yond his environment. Knowing far more than the mill run of us, he measures his knowledge against what might be known and con fesses to knowing nearly nothing. Such a rare individual weighs his finite knowledge on the scale of infinite truth, and his awareness of his limitations tells him never to lord it over others. Such a per son would renounce any position of authoritarian rulership he might be proffered or, if acciden tally finding himself in such a position, he would abdicate forthwith! Barriers to Creativity Really, no one ever rules an other. The most that is achieved by a Simon Legree, a Hitler, Stal in, or any of our own little dicta tors of economic affairs, is to keep others from being themselves.

True, there is a role for a societal agency to play in keeping others from being themselves if it be their nature to commit theft, mur der, deception, violence, and the like. I am not alluding, however, to the retarding of wrongdoing but, rather, to a person's freedom to be himself creatively. The authori tarian mentality is concerned not with inhibiting destructive actions but with the control and direction of creative actions. This no dicta tor can do; he can only suppress, deaden, destroy such actions. Cre ative actions can never be ruled but only ruled out! The wise man, regardless of his superiority among men, realizes that his knowledge is but infinites simal; that his light, however bright, is but a wee candle in the over-all luminosity; that were all others to be made precisely in his image, all would perish. To illustrate the fractional na ture of one's knowledge, sit behind the wheel of your automobile and ask yourself, what part have I had in the making of this remarkable gadget? The answer, be you the President of the United States or of General Motors, is that you have played very little part, if any.

Ask next, what do I know how to do that might have played any part in the making of this rna.. chine? Your answer remains sub stantially the same. To my point: Last year several million automo biles were· manufactured in the U.S.A. How come? From whence came the knowledge that does not exist, even incipiently, in any dis crete human being? It had to come from somewhere. The knowledge that makes the automobile possible exists in what I choose to call the over-all lumi nosity. This is composed of tril lions times trillions of tiny illumi nations, discoveries, inventions, insights, intuitive flashes, think564 THE FREEMAN September of-thats - an accumulation that had its beginning with the dawn of mankind. The cave man who discovered how to harness fire played his part. So did the Arab who invented the concept of zero. Without each of these, the auto mobile is inconceivable. These men, whoever they were, had as much a part as Charles Goodyear did in 1839 when he invented the hot vulcanization of rubber. Or those men who treated paper with a mixture of ferricyanide and am monium ferric citrate and brought forth blueprint paper. Or those who found out how to make paper!

The over-all luminosity that makes possible our automobiles, stoves, pencils, and a million or so other things by which we live and thrive is handed down or, better yet, made available to us in count less ways: memory, teaching, books, tradition, folklore, to men tion a few. It is a storehouse of unimaginable enormity; no indi vidual can perceive a trillionth of it! The wisdom in knowing that we know not is sometimes glimpsed in relation to things. For instance, it is easily demonstrable that no single person has the knowledge to make a simple pencil, let alone a jet plane or that fantastic wind shield through which the pilot peers. Even so, the realm of things is pestered with know-it-alls, persons who seem unable to relate their tiny glimmers to the over all luminosity and cannot there fore keep themselves in their place. Where Angels Fear to Tread However, it is when we move from the realm of things to the realm of humanity - man and so ciety - that authoritarians prolif erate. Even many who would con fess to an ignorance of how to make a dynamo will, with no hesi tancy whatsoever, boast of know ing how man and society should be made to perform. Failing to dis cern that men and their relation ships are vastly more complex than any thing or things, they en tertain no doubts about their com petency to rule mankind.

In the realm of humanity, as in the realm of things, an over-all luminosity presides or rules. In so cial affairs, this may be referred to as "the consensus." Professor Hayek uses "Knowledge in soci ety"; Edmund Burke called it "Immemorial heritage"; others re fer to it as "Culture" or "Custom." By whatever name, it is a body of underlying assumptions, of ideas taken for granted and held more or less in common; it is the resid ual legatee of mankind's history or, as James Coolidge Carter phrased it, "the imperishable rec ord of the wisdom of the illimit able past reaching back to the in1971 TO ABDICATE OR NOT 565 fancy of the race." It is what is handed down to us plus what we, who live on its growing edge, put into it. Professor Mises knows that he does not or cannot rule; thus, he abdicates from even the idea of rulership. Knowing what phase of life to renounce is one side of wis dom.

But knowing what phase of life to embrace - to get ever deeper into, from which never to abdi cate - is the other side of wisdom. And in this phase, as in the for mer, we have no exemplar who ex cels Mises. This being my analysis, I shall use my own rather than Mises' phrasing: the ruling consensus, I repeat, is what is handed down to us, plus what we put into it. What we put into it is the key. The improvement of the ruling consensus by you or me requires that our own thoughts and actions be, at the very least, a confirma tion of the best that has been handed down to us or, hopefully, an improvement on what the con sensus already contains. On Power IDEAS ON We who live on its growing edge can put nothing into the con sensus that is not within our selves. It follows, if we would put anything into it, that life must be devoted to the improvement of what is within us, rather than wasted on the futile attempt to re form others.

I am unaware of any individual who is less the reformer or propa gandist than Mises. To the con trary, his life is and always has been distinguished by a search for truth. His remarkable and un matched economic works are testi mony to many virtues but espe cially to his two-sided wisdom: knowing what phase of life to re nounce and what phase of life to embrace. There are numerous examples in history that lend credence to my prophecy. The seminal think ing of Mises - the improvements he has added to the consensus, manifested in his works over a span of seventy years - gives a light with so much radiance that it will penetrate the centuries mirror itself through the ages. ~ LIBEHTY POWER tends to corrupt and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority. LORD ACTON, in letter to Creighton, April 5, 1887 A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Throttling the Railroads IF the United States were really a pragmatic country, believing that the proof of the pudding is in the eating, the fate of the rail roads under the Interstate Com merce Commission would have caused an implacable uprising against government intervention in the marketplace. But, alas, we are ruled by ideologues who are put into office by romantics who do not believe in cause-and-effect relationships. So we plunge on from mistake to mistake. A possi bly "saving remnant," however, is given to seeing through the hoax of our phony pragmatism, and among the most clear-sighted of this remnant is Clarence B. Car son, whose Throttling the Rail roads, which ran serially in THE FREEMAN, has just been published by the Liberty Fund of Indianap olis, Indiana, for distribution by 566 the Foundation for Economic Ed ucation (FEE).

As Dr. Carson sees it, our pres ent railroad mess is entirely gov ernment-made and can only be compounded by the "cures" that invoke the "public corporation" sort of thing that will mean more government involvement in mass transit, "Amtrak," et cetera. The Federal government took the first really fateful steps in the eighteen eighties with the creation of the Interstate Commerce Commission. Before that there had been rail road subsidies, usually taking the form of gifts of land and govern ment loans secured by first mort gages on railroad property. These resulted in premature building, but the results would not have been disastrous once bankruptcy had squeezed the water out of the more shaky enterprises. Subsidies 1971 THROTTLING THE RAILROADS 567 are bad enough, but in our first flush of railroad building their main deleterious effect was to drain capital from areas that might have given U.S. citizens more satisfactions. Undoubtedly they led to depressions, but the depressions of the nineteenth cen tury cured themselves. Permanent regulation is another matter, as Dr. Carson demonstrates beyond cavil.

Three-Way Intervention By Government The "throttling" of the rail roads by government, as Dr. Car son says, occurred in three main ways. Restrictive regulation took away "crucial managerial author ity," which naturally weakened the power of the railroads to make sound competitive decisions. Sec ondly, after the government had withdrawn from its original pro gram of subsidizing the rails, it turned to giving huge competitive favors to barge lines, the automo bile, and the airplane. Thirdly, the government embarked on a policy of giving monopoly status to the railway unions. The "throttling" continues despite everything, as I know to my own personal cost as I ride the decrepit New Haven line (now part of the bankrupt Penn Central system), to work on tracks that parallel the heavily subsi dized New England Thruway over which the trucks roar in an unend ing stream. The distinguishing thing about Dr. Carson's thinking is his un willingness to accept even the most hallowed cliches. In the eighties and the nineties of the past century there was a tremen dous outcry against such things as charging more for a short haul than for a long haul, or giving preferential rates to large ship pers, or favoring some shipping points over others. These prac tices were condemned as "pref erential'" and the case was seem ingly irrefutably established that "justice" required their abandon ment.

Dr. Carson, however, says that the railroads were entirely justi fied in their supposedly discrim inatory practices. A railroad usu ally has high fixed costs and low variable costs. To recover the fixed costs, it must be able to increase its income by taking advantage of the low variable costs. Other wise it may not be able to remain in business to service the whole community of consumers. Since it costs a railroad less per ton mile to carry things over big distances than over small (most of the fixed costs are in loading and unload ing), it can afford to charge less per-unit and per-distance for the long haul. Any other way of set ting rates must make it difficult 568 THE FREEMAN September for people at a distance to get their goods to market at a low enough cost to compete with those producers who happen to be closer to where the customer lives. Most of the allegedly nefarious practices of the nineteenth cen tury railroad derived from the nature of competition, and the consumer actually benefited from them. The execrated rebate was a competitive cure for the monop olistic "pool." The "rate war," a "horror of competition," was in actuality a way of clearing the market, in no way different from bargain sales in the dry goods business. If something hadn't been allowed for the "long haul,"

growers of grains and vegetables who lived at immense distances from their markets would not have been able to carry their mort gages. When the long and short haul rules went into effect, it actually promoted a nonintegrated national rail system, for there was no incentive to link the long haul western railroads with the short-haul eastern systems. A transcontinental railroad would have had to tie what had been profitable long haul rates to short haul rates in such a way either to incur great losses in the short haul business or to price itself out of long haul traffic. The effect of the Interstate Commerce Commission regulation dampened the ingenuity and the desire of the railroads to find new ways of serving their customers. Made lethargic by the inevitable impact of government interven tion, they were at a double disad vantage when forced to compete with the automobile and the air plane. The trucker had to pay gasoline taxes and user fees, but he did not have to invest in his right of way. The airplane had to load and unload like a railroad train; but the air, unlike the rail road bed, was free.

The unions put the finishing touches on the general railroad debacle. Protected by the govern ment, they have been able to insist on·their featherbedding practices. The railroads have been frustrated in their attempts to substitute automation and the use of labor saving technology in general for the "full crews" that were once needed when steam engines were in use. Dr. Carson tells about the height of absurdity that was reached when the unions insisted that crews of five men be hired to operate a one-man small auto de livery unit running on flanged wheels to carry passengers on a branch line. Dr. Carson's recipe for un throttling the railroads is simple: he would remove the dead hand of the ICC and the state regulatory commissions, he would takeaway 1971 THROTTLINGTHE RAILROADS 569 special privileges from the unions, and he would stop subsidizing competitive modes of transporta tion. Unfortunately, governments don't abandon their interventions easily. A few more years of gov ernment-protected chaos, however, might convince us that our "prag matism" just isn't pragmatic.

How long, 0 Lord, how long? EDITOR'S NOTE: The following "extra" analysis of Dr. Car son's book is in no sense to imply an inadequacy in John Chamberlain's review. Rather, it is to afford the additional point of view of an "insider." Mr. Canfield worked many years in the field of Industrial Traffic Management. He is now manager of the Commodity Code Group of the Uniform Classification Committee in Chicago. • THROTTLING THE RAILROADS by Clarence B. Carson. (Irvington on-Hudson, N.Y., Liberty Fund, for F.E.E., 1971. 143 pages. $4.00 cloth, $2.00 paperback). Reviewed by Joseph M. Canfield HUNDREDS of books have been written on the railroad problem. Dr. Carson's Throttling the Rail roads, consisting of only 143 pages, is refreshing because it clears the air of a number of cliches. This is accomplished by rigidly applying the libertarian "yardstick" of nonintervention to the railroad situation. When this yardstick is used, most railroad students, especially true libertari ans, have to acknowledge that their thinking has been inhibited by interventionist cliches.

In chapter four, Dr. Carson de molished the "right" of the com munity to "common carriage" and its other face, the "common car rier" obligation of the transpor tation company to serve all. Meas ured by the libertarian standard, this right-obligation should be relegated to limbo, along with that spurious "right to a free educa tion." Students in years past .had drilled into them the development of the common law obligation of wharfingers, carters, innkeepers, and ferrymen to serve all. When these "rights" to common service - actually compulsory service originated in medieval times, the free market economy wasn't al lowed to function and compulsion was needed as motivation. To have this concept carried into an in dustrial society shows how hard it is to shake obsolete ideas. The common carrier obligation has lost much of its meaning. It really isn't practical and cannot possibly be enforced. Most rail roads are common carriers only to those who offer 6,000 pounds or more of freight at one time. Le gally, most truck lines are com mon carriers, obligated to serve 570 THE FREEMAN September all the public. Practically, that doesn't mean a thing. For years, I was with one of the largest firms in the country. We were served by some regular truckers. But just try to get service from some com mon carrier we didn't regularly do business with or get someone to haul to a point that wasn't one of our regular destinations. Truck ers would merrily decline their "ccmmon carrier" obligation, and there wasn't a thing the company could do. The truckers were com pletely practical and more realistic than the law.

And, of course, pipelines are common carriers; common to any one who has a tank farm at each end of the line and can offer, say, 50,000 barrels of oil as one ship ment. To use the same legal con cept for a modern "big inch" pipeline as for a medieval boatman whose punt wasn't much longer than the pipeline's diameter, bor ders on the ludicrous. Our trans portation system is shackled with such obsolete thinking. Until I read Dr. Carson's book, I had always defended the rail road land grants. My reasons were, first, that they accelerated the transfer of land from government to private hands. Second, the rail roads in return for the grants, carried government freight at 50 per cent of the commercial rates. The saving, up to the end of the concession in 1940, exceeded by many times the price of the lands so granted. In chapter three, Dr. Carson shows that even in land grants government intervention is inter ference which is upsetting. The upsets spread like ripples in a pond. We rail men have been so impressed by the story of laying ten miles of track in a day during the building of the Union Pacific and Central Pacific, that we forgot our libertarian economics.

The effects of intervention spread somewhat in this order: 1. Railroads built without econom ic justification. 2. Government aid fostered corrupt practices in the railroads. 3. Farms were developed too soon and on poor soil. 4. The Indian problems were ag gravated. 5. The buffalo was almost exter minated. 6. Agricultural prices were de pressed. 7. Pressure for railroad regula tion was accelerated. And the dust bowl of the 1930's may even be a subsidiary effect. But, say objectors, private capi tal would never have any incentive to build into undeveloped areas without government aid. Canadi ans tried to copy our method of sup porting railroad extension. Their experience with the Canadian Pa1971 THROTTLINGTHE RAILROADS 571 cific Railway made them think they could get away with that sort of thing. When the same methods were repeated in the early 1900's, the Grand Trunk and Canadian Northern Railways overbuilt and collapsed. As a result, there has been over 50 years of government spending in an effort to straighten out the mess.

Private capital did go into many areas in Africa, Asia, and South America and build railroads, sometimes aided by some degree of government support. The only broad study of these efforts, made in 1928 by ICC Commissioner Splawn,! makes the point that government action doesn't produce success in the absence of economic justification for building a rail road. The willingness of American firms to pour money /into rail roads, such as the Quebec, North Shore and Labrador in recent years to reach iron ore deposits, confirms the libertarian doctrine that capital will move according to economic necessity. If there are no goods to move, the railroad won't be built. The itch to get something from government, to use government to provide something beyond our means, has always been with us. 1 Walter M. W. Splawn, Government Ownership and Operation of Railroads (New York: Macmillan Co., 1928). Many New England towns, hot beds of "rugged indi vidualism,"

used town funds to build branch railroads. These had no economic justification, but often were built for personal spite or town pride. This misuse of town funds con tributed to the rot that brought about the collapse of the New Haven and the Boston and Maine, even though the day of reckoning was postponed for many years. In my own studies of the trolley lines in the Midwest,2 I found case after case where promoters whipped up enthusiasm for trol ley lines that were completed only by the infusion of village or coun ty funds collected from the tax payers. The trolley cars had hard ly started running before the officials yielded to another wave of enthusiasm and had the tax payers pay for paved roads which destroyed the investment in the trolley lines. (The trolley is a form of transportation which can be a valuable tool, but one which has suffered from intervention more than any other transport medium - to the detriment of the commun ity.) In chapter six, a question we have often raised about railroad 2 Joseph M. Canfield, Electric Rail roads of Northeastern Ohio (1965); West Penn Traction (1968); Badger Traction (1969). All published by Central Electric Railfans Association, Chicago, Illinois 60690.

572 THE FREEMAN September mergers receives a likely answer. Why have there been no end-to end mergers? Dr. Carson suggests that they would be more vulner able to the restriction of the Long and-Short Haul Clause of the In terstate Commerce Act (Fourth Section). This provision, pride of early regulators, is an American aberration which even the Vic torian regulators of British rail ways never invented. Designed to protect one-railroad, intermediate towns (e.g., Tyrone, Pa.), it as sumed that justice required that lineal miles take precedence over market requirements in rate mak ing. End-to-end mergers would produce more situations where this restriction might apply. Actually, it may cost more to serve an intermediate city, espe cially if it must be served by local freights which are operated under present work rules. The recent newspaper ad, showing the avail able work force of Tyrone offering themselves, suggests that even 80 years of protection by the long short clause is of limited value in the face of economic reality.

Utilization of America's com petitive railway network has re sulted in wholesale exceptions to literal enforcement of the long and-short-haul clause. So-called Fourth Section Relief orders granted by the ICC have been nec essary to maintain a semblance of reality in the face of a legislative limitation. These orders must be published in the tariffs where they apply and add complication and expense. The tariffs are difficult to compile, publish, and interpret. And make no mistake, rail and motor truck tariffs, required by the regulatory system, are com plicated. Probably they are the most complicated publications re ceiving day-to~day widespread use. Having spent much of my work ing life interpreting tariffs, I found the mental gymnastics stim ulating, particularly when I spotted the right rate on the first try. But the cost to railroads and shippers of wrong rates runs into millions of d~llars annually.

Foes of deregulation fear that one result would be rates which would vary like stock market prices. Users of transportation want and negotiate for the lowest possible rates. However, most large shippers are now handling shipping doc~ments through data processing systems where the cost of entering needless fluctuations of rates would be prohibitive. In today's picture we could expect negotiated rates without wild fluctuation. Regulation, like all other forms of intervention, has failed to pro vide utopia. The interventionist mentality tries to blame every thing and everybody for the con1971 THROTTLING THE RAILROADS 573 tinuing problems. "Deregulation" proposals have been offered which would put ratemaking under anti trust rules, an economic strait jacket of the first order. A typical freight shipment represents one buyer, the shipper, dealing with many sellers, the various lines which handle the shipment. Col lective ratemaking is the only realistic approach to be used in our national transportation sys tem.

Dr. Carson's book is not a study in depth, but it is a study which adheres to the principles of free dom. All students of railroads and railroad problems should go back to work and review their conclu sions in the light of the principles clearly laid down in Throttling the Railroads. More important, the whole country would gain if these principles could be applied to the present mess. Dr. Carson's mes sage should receive the widest possible circulation. ~ THE THEORY OF EDUCATION IN THE UNITED STATES by Albert J. Nock (New York: Arno Press and the New York Times, 1969) 160 pp., $6.50. Reviewed by Dr. Jacques Barzun, University Professor at Columbia University. ONE IS GLAD tha t he left these luminous pages in their pristine form of lectures (he begs indulgence for doing it), because that form shows him off at his best: full of charm, candid in his pre judices, elegant in diction, a nat ural ironist, and a man in whom thinking is clearly a familiar ex ercise.

I remember picking up the book soon after its appearance in 1932, at a little book shop on Broadway near 115th Street. I am afraid it was a remaindered copy, very cheap, like the novels of E. M. Forster and the two-volume set of Henry James's letters. It was my first acquaintance with Nock and I was delighted with my discovery. I felt elated even after my in credulous irritation at what I found him saying on pp. 76-77. That is the passage where Nock, who throughout his lectures claims a connection with Columbia Uni versity, repeats some libelous non sense about Columbia College, based on Abraham Flexner's then recent study of American and other universities. According to both these unver ifying men, it was possible to ob tain a bachelor of arts degree in Columbia College by offering such subjects as advertising layout, practical poultry-raising, elemen tary stenography, wrestling and self-defense, and half a dozen other s ubvoca tional exertions.

Nock recurs with relish to this list of depravities (including book-re574 THE FREEMAN September viewing) two or three times again in the later lectures. It is enough to make one doubt his common sense - or his familiarity with the educational scene of his own day. As a graduate of Columbia Col lege in 1927, who began teaching there that same year and for many more thereafter, I knew from in side knowledge that Nock's state ment was a fantasy. The require ments for the degree permi tted no such high-jinks as Nock al leged. What is worse, he goes on to say that by "some sort of traffic arrangement with a sister insti tution" the Columbia College un dergraduate "may also count as leading to a degree, courses in . . . cookery, clothing decoration, danc ing for men," and so on through a second half -dozen of domestic or social accomplishments. The fact is that permission to take any courses outside the Columbia Col lege catalogue was extremely diffi cult to obtain. These enumerated frills (presumably froril the Teach ers College Home Economics de partment) would have been dis allowed by the Columbia College dean, sitting with his Committee on Instruction.

The paradox is that if Nock had but known it, Columbia College in his day was the nearest approxi mation to the ideal set forth in his lectures. The curriculum did not require Latin and Greek, to be sure, but it turned its back on the free elective system and imposed strict requirements in history, mathematics, science, English, and modern foreign languages. The "majors" had to be approved so as to prevent a frivolous scattering of effort among elementary courses, and (as I said) there was no straying off the reservation into easy Extension or Teachers Col lege courses. Arguing with friends from Yale, Princeton, and Harvard showed that they lived far more under the loose dispensation that Nock reprobated. Wha t was in fact his connection with Columbia? Research shows that from 1930 to 1932, he taught American History and Politics at St. Stephen's College, then a dis tant affiliate, later independent as Bard College. Reading his book suggests that Nock was there chiefly to bait President Butler, whose pronouncements he studied with the feral eye of a ruthless attorney. Nock, for example, is not above twisting one of Butler's phrases about the "new type of university organization." He makes it stand in a sinister way for the nonintellectual, nonformative sub jects he castigated before. That is not what Butler was referring to, much less advocating. For Butler was a humanist, too, in his way as good a one as Nock.

And Nock, one must also add, 1971 OTHER BOOKS 575 was a little blinded by his just cause into forgetting some truths about the Great Tradition he praised and preached. His medi eval uni versi ties were not as he represented them. Had he stopped to use his wonderful imagination, he could have inferred that the old Faculties of Law and Medicine were nothing but vocational schools - Medicine especially. And even Letters and Theology were largely dedicated to the "prepara tion for life" which he deprecates - making clerics and scribes and pedagogues. The Abelards and Oc cams are always rare and never the average. Universities are good enough when they permit them to thrive and collect disciples. Nock was entirely right, of course, in his main thesis and his prophecy as well. We have been seeing the final degradation of the institution whose misdirected aim he denounced with such deadly ur banity. It would be good to have from him a section XV to add to the fourteen in his neat little book.

It would be on Relevance and So cial Consciousness in the Free Politicalized University. If I had a ouija-board, I'd spend a few eve nings trying to take down the text of it from the authentic source. Albert Jay Nock's book is back in print at $6.50, and may be ordered from The Nockian Society, 30 South Broadway, Irvington-on Hudson, New York 10533. ~ THE DECLINE OF RADICAL ISM: REFLECTIONS ON AMER ICA TODAY, by Daniel Boorstin (New York: Random House), 141 pp., $4.95. Reviewed by Robert M. Thornton THE OLDER RADICALS had some thing to say; sometimes it was something that needed to be said, and occasionally they said it well. Not so the New Barbarians, as Professor Boorstin calls them, who may be found at all levels of so ciety but especially among the ov erschooled. Boorstin refers to "the conform ity of dissent .... Dissent," he writes, "has tended to become the conformity of our most schooled classes. In those circles to say that the prevailing ways of the com munity are not 'evil' requires more courage than to run with the dis senting pack.

"The affirmations of different ness and feeling apart cannot hold a society together. In fact these tend to destroy the institutions which make fertile disagreement possible and fertile institutions de cent. A sniper's bullet is an elo quent expression of dissent, of feeling apart. It does not express disagreement. It is formless, in articulate, unproductive. A society of disagreers is a free and fertile and productive society. A society 576 THE FREEMAN September of dissenters is a chaos leading only to dissention." The fragmentation of society worsens as it passes through the news media. "Since dissent is more dramatic and more newsworthy than agreement, media inevitably multiply and emphasize dissent. It is an easier job to make a news story of men who are fighting one another than it is to describe their peaceful living together." People tend to act in terms of what they believe themselves to be, and the self-image of many is formed for them by what they see and read of vicious actions by a tiny fraction of the populace. Thus do newspapers and television, used in an unprincipled way, contribute to the emergence of the New Barbarians in our midst. "While they are not numerous anywhere - comprising perhaps less than 2 per cent of our two hundred mil lion Americans - they pose a spe cial threat precisely because they are diffuse, wild, and disorganized.

They have no one or two head quarters to be surveyed, no one or two philosophies to be combated. But they are no less rude, wild, and uncivilized than if they had come from the land of the Visi goths or the Vandals. The fact that they come from within - and are somehow a product of - our society makes them terrifying, but it does not make them any the less barbarians." t) HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each ORDER FROM: THE FOUNDATION FOR ECONOMIC EDUCATION IRVINGTON-ON-HUDSON, NEW YORK 10533 the Freeman VOL. 21, NO. 10 • OCTOBER 1971 A Letter from Down-Under Stanley Yankus 579 Concerning the importance of self·improvement in the search for freedom. Changing Concepts of Private Property Bertel M. Sparks 583 How far can we dissipate the rights of ownership before we are back to feudalistic restrictions on tenure? Ownership as a Social Function Paul L. Poirot 599 The market allocates property to those who most efficiently serve consumers, so the best a government can do to protect life and property is to keep the market open.

The Distributionof Income Henry Hazlitt 605 The tendency of capitalism is to benefit the masses even more than the rich. Escaping the Mob Mentality "Here I stand - I can do no other." Robert G. Bearce 618 The Founding of the American Republic: 3. The Colonial Religious Experience Clarence B. Carson 621 Experiences in the colonies that eventually displaced the idea of the "established" church. Individual Freedom An early warning against the evils of protectionism. Book Review "Contra Marcuse" by Eliseo Vivas Thomas F. Bayard 635 637 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 LIBERT't 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, 1971, 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.

Articles from this journal are abstracted and indexed In Historical Abstracts and/or America: History and Life. THE FREEMAN also Is available on microfilm, Xerox University Microfilms, Ann Arbor, Mich· igan 48106. Permission granted to reprint any article from this Issue, with appropriate credit, except liThe Distribution of Income."

STANLEY YANKUS A TIME COMES to most everyone when he tries to improve his situ ation by packing his belongings and moving across the prairies, mountains, and rivers. The free dom to move from one place to another is a valuable right. Ob serve how eagerly dictators sup press the free movement of people. No doubt about it, governments find it more difficult to saddle peo ple with oppressive controls and taxes when freedom of movement affords an escape. Twelve years ago my family and I migrated from the U.S.A. to Australia in reaction to govern ment interference with my farm ing methods in Michigan. Since my arrival in Australia, hundreds of Americans have exchanged let ters with me, discussing the pros and cons of migration. Parts of this correspondence may interest students of liberty who are explor ing the possibilities of a fresh start in the Land Down-Under. Freedom was the magnetic idea which attracted hundreds of thou sands of migrants to the U.S.A.

from other parts of the world in years past. So, let's have a look at the prospects for finding freedom in Australia: Dear ----: Your letter reminds me of my struggle when I decided to migrate to Australia. I can appreciate your strong desire to find a nice quiet spot on this troubled earth where freedom is regarded as a good idea by your neighbors. During the past twelve years of my life, I have thoroughly enjoyed the adventure of living the good 579 580 THE FREEMAN October life in Australia. Although I'm enthusiastic about the land of the kangaroos, kookaburras, and koala bears, I never tell any Americans to migrate here. You may wonder about that, so please let me ex plain: Thousands of American mi grants have already arrived in Australia and more are on the way. Some have succeeded in es tablishing homes, finding jobs, and making friends with their new neighbors. Others, finding numer ous faults and becoming con vinced they made a mistake, have returned to the U.S.A. Now if you want a good opinion of Australia, you can get it by asking an Ameri can who stayed here; and if you want a bad opinion of Australia you ask one of those who returned to the U.S.A. You can have your choice of good or bad opinions from people who are altogether sincere.

But please note: There are not two different Australias. The rea son for the difference of opinion about Australia lies within each person's character - not in the ex ternal environment. Some people buckle at the knees when con fronted with a problem that is heavier than a feather. Others are resourceful and self-reliant. So, a program of self-improvement is important in your life, no matter where you live. I have often been asked, "Do the Australians like Americans?" Such a generality is quite mean ingless. Obviously, not all of the Australians nor all of the Ameri cans are going to like each other. Furthermore, not every Australian likes each of his fellow Austral ians, and the same can be said for every nationality in the world. The question we are really con cerned with is, "What must I do to get others to like me?" If you pet a dog, he will respond by wagging his tail in appreciation, and if you kick the same dog he will respond by snarling or biting you. Likewise, a given person may be kind to you or bad-tempered with you. If you want people to like you, it is best to practice kindness and other qualities of self-improvement.

"What is the condition of the economy in Australia?" is some thing migrants want to know. Now let us suppose that economic con ditions in Australia were the best ever, but here is a poor fellow recently hit by a truck while cross ing the street, resulting in loss of the use of his legs. Furthermore, he has cancer and rheumatism and he lost his life's savings in a com pany that went bankrupt. As you can plainly see, the. buoyant condi tion of the economy means nothing at all to this unfortunate fellow, nor does it mean that much to 1971 A LETTER FROM DOWN-UNDER 581 you. If you are industrious and follow a program of self-improve ment, you will also have enough self-confidence to find a way to earn a living in Australia. You well know that we don't get things in life from Santa Claus; we have to earn what we get. You are not going to find freedom in Australia; you will have to earn it by practicing self-improvement.

However, some of my acquaint ances haven't been able to see a connection between freedom and self-improvement. When they think of self-improvement, they think of learning how to fix cars, or writing legibly, or being courteous, or dressing neatly, and so on. "How is that going to promote the cause of freedom?" they ask. Perhaps I can illustrate the close relationship between freedom and self-improvement by quoting a prospective migrant who wrote to me: "I'm fed up with government controls, high taxes, and inflation in the U.S.A. and I want to mi grate to Australia." A few lines later he asked, "How much money will the Australian government pay toward my assisted passage to Australia?" If this fellow had practiced self-improvement and be come self-supporting, he would have realized that the Australian government has no money of its own to give him. The only way the Australian government can provide migrants with assisted pas sage money is by imposing higher taxes or more inflation, or both, on the Australian taxpayers.

I have often been asked if there is more freedom in the U.S.A. or in Australia. If you put all the law books of the U.S.A. in one pile and all the law books of Aus tralia in another, you would have two big piles of restrictions. The quickest way to reduce the number of restrictive laws, and thereby increase. freedom, is through self improvement. Self-improvement really means teaching yourself to be good. Good people do not re quire restrictive laws, nor do they impose them on others. Another American wrote to me, saying, "When I arrive in Aus tralia, I won't have enough money to travel all over the place. Can you tell me the best place in Aus tralia to live 1" I replied, "I will gladly tell you the best place to live in Australia, but first you must tell me the best place in the U.S.A." Of course, he never an swered my question because there is no such thing as the best place. In selecting a new place to live, we try to find as many as we can of the conditions we like best. A teacher will want to live near schools; a vegetarian will want to live near fruits and vegetables; a sailor will want to live near the sea; and so on.

582 THE FREEMAN October No Paradise on Earth You will never find a Paradise which affords exactly what you want. If you asked a hundred peo ple to individually describe the ideal place to live, its name would be "Chaos." What is the ideal house, car, dog, school, job, food, or whatever? There are disagree ments galore! No matter where you migrate, you will find people who disagree with one another. The best way to get along with others and the best way to pro mote freedom is to mind one's own business and practice self-improve ment. If that doesn't work, nothing will. A correspondent from Rhode Island writes: "We cannot afford to pull up stakes here and move to Australia and then decide we don't like it, and move back. We just don't have the money to do this." This man's problem reminds me of the comment by one of our neighbors in Michigan as we were leaving for Australia: "I don't see how you can move to Australia with your family when you don't know anything about the place.

How do you know you will like it there ?" "When I got married," I re plieo, "I didn't know if everything would turn out all right. I took a risk then, and I'm going to take another risk by moving to Aus tralia." Every time we read a new book, or get a new job, or meet a new acquaintance, or taste an apple, or any of a thousand other events, there is a risk that we won't like our experience. Risk-taking is a condition imposed on us by Cre ation; the future is unknown to us. Unexpected events frequently occur. The fear of taking risks drives many people into govern ment-guaranteed welfare schemes which are so destructive to free dom. Governments seem to be far more effective in eliminating free dom than in removing risk. I gladly accepted the risk of solving these problems - I certainly didn't want the government to select my job, my home, or my friends. Nor do I assume you really want to avoid such risks.

After settling in South Aus tralia, I heard good reports about the States of Western Australia and Queensland. No matter how excellent the conditions of life, we imagine they could be much better elsewhere. Herbert Shelton, one of my favorite authors, shrewdly ob serves: "Wherever you choose a place [to live] you will wish ever after that you had chosen a dif ferent one." My experience tells me that perpetual dissatisfaction is part of human nature. If we were completely satisfied with everything, we would cease to ex plore, and to discover, and to live. I Changingconcoptsof ••••• ••• •• •• •• PRIVATEPROPERTY BERTEL M. SPARKS IN THE ENTIRE HISTORY of civil ized society there never has been a time when the concept of private property was not undergoing change, and it is unlikely that there ever will be such a time. Since the concept of private prop erty is a legal concept, it is ap propriate to add that civilized society cannot exist without law and that law cannot exist without property. While some may doubt that last statement, it is believed that such doubts will be removed upon a few moments reflection.

For whether the legal topic under consideration is the Code of Ham murabi or the most recent pro nouncement from the nearest local court, the rule of law involved is Bertel M. Sparks is Professor of Law at Duke University School of Law, Durham, N.C. likely to be concerned primarily with the relations of individuals to things. That is to say, it will concern some· concrete application of society's attitude toward or understanding of property. All this leads to the conclusion that any complete story of the changing concepts of private prop erty would include a complete his tory of civilized society. No such Herculean task is undertaken here. This paper will be limited to a consideration of the multiple nature of property rights and the power of the state to add to or subtract from those rights. Par ticular emphasis will be focused upon the owner's right to transfer his property interests regardless of how those interests may be defined.

583 584 THE FREEMAN October Property, a Bundle of Rights As stated earlier, the concept of private property is a legal con cept. That fact calls for some pre liminary explanation. When the layman uses the word property, he ordinarily thinks of houses and lands, articles of clothing, tools, machinery, and other things capa ble of being owned. To the lawyer the word property has an entirely different meaning. When the law yer uses the word property, he is not thinking of a man's posses sions or holdings. Instead he is thinking of a man's legal rights with respect to those things. There is the right to use, the right to exclude others, the right to sell, the right to mortgage or pledge, and many others. The legal pro fession has rarely ever attempted any complete catalogue of these rights. As lawyers they deal with particular rights as they present themselves without too much thought concerning other rights that may exist in the same object.

A man's "property" in a given object consists of the total bundle of rights he has in that object. This bundle of rights may be broken up and divided into its component parts in much the same way that a bundle of sticks may be broken into the individual sticks of which the bundle is com posed. The use of the term "private property" necessarily refers to the rights individual_ persons have in or to that particular thing. But no analysis of such private rights is complete without some atten tion being given to the rights of the group. It is the rights of the group, either real or pretended, that often places restrictions upon the rights that may exist in the individual. The expertise of the lawyer must be called upon to provide a working definition of the boundary between the rights of the private owner and the pow er of the state to regulate the use and enjoyment of those rights. Individual vs. Groups In his efforts to layout that boundary the lawyer is faced with the fundamental question whether the rights of dominion and control over the wealth of the world should rest in the individual or in the group. If such rights rest ultimately in the group, then we have common ownership which places title to the earth's re sources in the state and gives the individual only such rights of user as the state chooses to confer upon him. That theory is antag onistic and foreign to Western traditions, if not in fact to all civilized traditions. Nevertheless, it is a theory which, if not under stood, is in danger of being un wittingly accepted.

1971 CHANGING CONCEPTS OF PRIVATE PROPERTY 585 No Absolute Right Almost every American is ready to declare a strong belief in pri vate property but very few Amer icans can give any intelligible explanation of what they mean by private property. Sir William Blackstone, a famous legal scholar who has had tremendous influence upon Anglo-American institutions, began his definition of property by calling it an "absolute right ... which consists in the free use, enjoyment, and disposal of all [a person's] acquisitions without any control or diminution .... "1 Most Americans who have not given serious thought to the matter would probably be satisfied to end the definition there and to accept it as absolute dogma. But any careful examination of that in complete definition will convince us that it is insufficient standing alone. We know that that absolute right does not actually exist. The presence of a property tax, how ever small, places somequalifica tion upon it. But there are other qualifications. Our pious assertion that a man may do as he pleases with that which is his own is always qualified by the equally pious assertion that a man may not use his own in a manner to injure that of another. Blackstone 1 1 Blackstone, Commentaries 138 (Sharswood ed. 1874).

recognized that the right was less than absolute but neither he nor anyone else has ever been able to state clearly how much less. Blackstone completed his defini tion. by adding a phrase that tends to make his entire statement sound paradoxical. He said proper ty was an "absolute right ... with out any control or diminution, save only by the laws of the land." There is the rub. A man's prop erty in a given object includes absolute dominion over that ob ject except in so far as that dominion is qualified by the laws of the land. To what extent is that dominion qualified by the laws of the land? A more fundamental question could be, to what extent may it be so qualified? These are not hypothetical or purely academic questions. They are questions that are being en countered daily in the market place within the context of con crete cases. And when so en countered they must be answered.

The primary responsibility for providing the answers rests upon the legal profession, but at least some of that responsibility must be shared by every responsible citizen. When the state attempts to remove a particular right from that bundle of rights constituting private ownership, it is the lawyer who is called upon to decide whether that right is removable 586 THE FREEMAN October while private property remains, but it is the citizen whose right is being taken who must bear the consequences. If private property is a bundle of rights, the lawyer must search for the source of those rights before he can analyze any possible restriction upon their exercise. He must ask, from whence comes this right of private property anyway? Is it a funda mental, inalienable right or is it a mere privilege granted by the state as a matter of grace? If it is a mere pri vilege, it may be withdrawn by the state. If it may be withdrawn with impunity, the citizens are little more than slaves.

"Before and Higher Than Any Constitutional Sanction ll Numerous state constitutions have sought to give expression to the right of private property as being something that is funda mental and beyond the reach of political power in a free society. One of the strongest of such state ments is that found in the Consti tution of Arkansas where it is declared that "the right of prop erty is before and higher than any constitutional sanction."2 But that declaration probably does more to intensify than to solve the inquiry into the true source of this right that is "before and higher than any constitutional sanction." 2 Ark. Const. art. 2, sec. 22. John Locke, whose writings were well known and highly re garded by the founders of the American Republic, found a phil osophical basis for private prop erty in man's right to the integri ty of his own body. Locke inter preted the Holy Scriptures, which he considered binding upon all men, as granting all wealth of the earth to mankind in common. But Locke regarded every man as hav ing a prope~ty in his own person, in his own labor. He then con cluded that a man could by his labor remove a thing from its state of nature and place it within his private domain. 3 Locke's anal ysis of this point was accepted by Blackstone 4 and through him be came a part of the thinking of ordinary citizens of this country.

The extent to which this approach was diffused among all levels of the citizenry a few generations ago is illustrated by the fact that it was included as part of the grade school reading material pro vided in one of the most widely used series of texts available dur ing the latter part of the nine teenth and the early part of the twentieth centuries.!> 3 Locke, Two Treatises on Civil Gov ernment, Bk. II, c. V (George Routledge & Sons, 2nd ed. 1887). 4 2 Blackstone, Commen taries 1-15 (Sharswood ed. 1874). 5 McGuffey, Sixth Eclectic Reader410 415 (rev.ed. 1879).

1971 CHANGING CONCEPTS OF PRIVATE PROPERTY 587 Qualifications Upon the Rights of Ownership But Locke, Blackstone, and the state constitutions all recognize that property ownership is some thing less than absolute domin ion. Reference has already been made to .the qualification ex pressed by Blackstone. When the writers of the Arkansas Consti tution declared the right of prop erty to be "before and higher than any constitutional sanction," they hastened to add that "private property shall not be taken . . . without just compensation,"6 thus recognizing that there were cir cumstances under which private property could be taken. And when Locke set forth his doctrine con cerning a man's right to assert his private dominion over the earth's resources by joining his labor to those resources, he has tened to add the precaution that this is true, "at least where there is enough and as good left."7 Thus there is implicit in every analysis available thus far a recognition of a basic conflict between private ownership and public control.

There is an awareness that owner ship of a thing does not necessar ily mean absolute dominion over that thing. 6 Ark. Canst. art. 2, sec. 22. 7 Locke, Two Treatises on Civil Gov ernment, Bk. II, c. V. sec. 27 (George Routledge & Sons, 2d ed. 1887). What Incidents of Ownership Does the Law Recognize? All this leads to an inquiry into the meaning of ownership. A man's property in a thing has al ready been described as a bundle of rights with reference to that thing. Each right in the bundle of rights may be described as an incident of ownership. In so far as particular rights may be added to or subtracted from that bundle without destroying the bundle, ownership is an arbitrary term. Its meaning depends upon what incidents of ownership the law recognizes. The law's recognition of these incidents has never been a constant or a static thing. There has been a continuous change, and each change has brought with it a change in the meaning of owner ship and has thereby caused an alteration in the basic concept of private property.

Even during the early feudal period in England it was said that the man occupying and using a given tract of land owned it, but his ownership was a very limited one. It was a system of land ten ure under which, in the strictest sense, land was "held" but not "owned." The occupant or "own er" on the land actually held it under a superior lord to whom he owed certain obligations. The lord in turn usually held under a still higher lord and so on in an ascend588 THE FREEMAN October ing pyramid with the crown at the apex as chief lord who, in legal theory, owned all the land in Eng land. In a very real sense the "owner" actually on the land till ing the soil was bound to that land. He could not sell it without the lord's consent. 8 It was thought that this was necessary to avoid the possibility of having the lord's enemy installed on the land. The right of inheritance was restricted in that, when the owner died, his heir could not take up the estate until he was of age and then only upon payment of the approp~iate fees.

There were other incidents of feudal tenure which tended to re strict the meaning of ownership but it was the restrictions upon the freedom to transfer that held the center of the stage. Even in this tenurial system men occupying the land were called freemen but in fact they were not free. The restrictions upon the individual's right to transfer his holdings lit erally tied him to the land. His station in life was determined more by his status with reference 8 The exact extent and nature of this restriction upon alienability is a bit un certain but it is clear that restrictions did exist. In this connection it is interesting to note that in 1256 Henry III issued a writ declaring it an invasion of Royal rights to sell without his consent lands held under him. See 1 Pollock & Maitland, History of English Law, sec. 9 (2d ed. 1923). to the land than by his own efforts and ingenuity. Of course the intermediate lord was under a similar burden so far as his efforts to transfer his own holdings were concerned. But his position was different in that his holdings were larger and of a higher order. He was economically secure and had a comfortable in come. It was the fellow who had the least that was under the heav iest burden, for until the man higher up let loose, there was nothing available for the man at the bottom to acquire. And wheth er a clog on the right to sell is labeled a medieval doctrine of feudal tenure or some civil rights act of the twentieth century, its effect in the market place is the same and the man at the bottom is always the loser.

Political freedom and the whole gamut of civil rights were impos sible until there existed the free dom of property which emerged as the burdens of feudal tenure were cast off. While these burdens were not cast off at a single stroke, what is probably the most signifi cant step along the way took place in 1290 when an act of Parliament extended to every free man the right to sell his lands or any part thereof without any interference from any intermediate lord. 9 Even !l "Statute Quia Emptores," 18 Edw. I, CC. 1-3 (1290).

1971 CHANGING CONCEPTS OF PRIVATE PROPERTY 589 after this enactment numerous burdensome incidents remained. Prominent among these were the control the lord had over the es tates of infant heirs and the ob ligation of the heir to pay a fee prior to taking up his inheritance. The Struggle Toward Freedom But with the single leap for ward taken in 1290 there began a step-by-step process which reached its climax when the last substan tial burden imposed by the ten urial system inaugurated by the Normans who conquered. England in 1066 was finally abolished in 1660.10 But it should be remem bered that it was truly a step-by step process and tha t each step was characterized by a bitter struggle. The legal history of that entire period can be quite accu ratelydescribed as a struggle for more incidents of ownership in the individual. Burdens and restric tions were being removed and new rights were being acquired by the owner. The bundle of private rights was expanding.

But the right to sell, including the right to give away or dissipate according to the owner's own wishes, continued to hold the cen ter of the stage. That right to sell, that economic mobility, or in the 10 "Statute Abolishing the Court of Wards and Liveries," 12 CaT. II, c. 24 (1660), jargon of the legal profession that freedom of alienation soon became the chief factor in the develop ment of individual freedom of all kinds. It also stimulated the eco nomic use of property. When the occupant of land became free to sell at a price agreeable to him without seeking the consent of his lord and without paying a fine to his lord for having done so, he began to take on the coloration of a free man in the true sense of that word. Ownership took on new meaning. It included a power to cash in as well as a power to use. And when that freedom was achieved, men no longer remained serfs, they no longer remained slaves, and the economy no longer remained static.

It is no mystery that the real beneficiaries of this political and economic transition were those who possessed the least; it was the "have nots" rather than the "haves." In any society those who are already wealthy, who are al ready entrenched, who "have it made" are more likely to be in terested in preserving their wealth than they are in searching for easier means of transferring it. Those of lesser means are the ones who are in a position to gain from freedom of exchange. And as soon as free economic mobility was achieved, the fellow at the very bottom of the feudal pyramid 590 THE FREEMAN October could exchange his services for a share of what was held by the man near the top. In this system of free exchange, not only was there no necessity for serfs or slaves, but there ceased to be any place for para sites. Property tended to shift to those who put it to the most eco nomic use. And there emerged the day of plenty which, although it is unique in the history of the world and is to this day confined to a comparatively smaIl part of the earth's surface, is so taken for granted in this country that there is a tendency to forget its source.

Restraints on future Use But as soon as man became free to transfer his property by either deed or wiIl without interference from the state, other kinds of in terference began to appear. There developed a theory of absolute ownership whose very existence tended toward its own destruction. If property ownership meant ab solute dominion, it was only log ical to assume that it included the power of the owner to dispose or transfer on his own terms. He could create any estate or interest he chose and the fact that the es tate or interest chosen tied up the property in an unproductive use long after the transferor had ceased to live appeared to make no difference. Property became tied up in families and became unavail able to future generations. The ty ing up of property in this manner is an exercise of freedom of the wiIl, a· favorite freedom of John Locke, but a fair question to ask is freedom of whose will? It be came a freedom of the dead to control the economic affairs of the living.

Both the advantages of freedom and the manner in which that freedom could be used to tie up property in a most unfortunate way can be iIlustrated by imagin ing some Sir Galahad emerging from the feudal period and finding himself the owner of a farm. What does that ownership mean? The farm, that is the soil, was there before Sir Galahad came; it will be there after he is gone. Sir Gal aha d's ownership, his property, does not refer to the soil. It refers to the rights Sir Galahad has in that soil. What are those rights? He has the important right of rais ing crops of his own choosing. He may erect whatever buildings he is capable of erecting. He may live in and occupy those buildings. He may exclude others from them. In addition to all these, and stiIl other rights, he has the right to trans fer his ownership to another. He may sell it or even give it away if he chooses. He may do either with out consulting any overlord or any one else other than his transferee.

1971 CHANGING CONCEPTS OF PRIVATE PROPERTY 591 He sells his farm and buys an other. He sells that one and buys still another. He finds that this freedom of alienation which is now an attribute of ownership is one of his most important free doms. It gives him mobility. It gives him freedom to change his occupation, to move his home to a new location. He is no longer bound to the land. Sir Galahad is a diligent worker and a shrewd businessman. His farming opera tions prosper. He invests and re invests. He buys and sells at a profit until he becomes the wealth iest man in the community. Sir Galahad acquired his vast holdings through the exercise of his own ingenuity in a free econ omy. It was the annexation of his own labor and his own skill to the wealth involved that made it his own. It would seem that he should be perfectly free to dispose of it, not only to a person of his own choosing, but upon conditions of his own choosing. Suppose he chooses to dispose of it through a system of complicated contingent and conditional schemes some of which might not become absolute for three or four generations. The motive for such a plan might be nothing more sinister than a de sire to keep that which has been earned by the sweat of the brow within the family blood line.

But if this is permitted in unlimited measure, the freedom to dispose tends to become a freedom to tie up which in turn becomes a freedom to prevent rather than encourage future development. If the possessory owner has a mere life estate or some other restricted interest, he will have little inter est in making permanent improve ments which will endure beyond his period of ownership. And even if he is so inclined, it is unlikely that he will have the ability to do so. He is not in a position to give the kind of .mortgage necessary to get a favorable loan. Under these circumstances the freedom en joyed by Sir Galahad extends be yond his own lifetime and re stricts the freedom of future gen erations. Rules Against Perpetuities But a people who had made great personal sacrifice to free themselves of one kind of restric tion upon their right to deal with the fruits of their own labor could hardly be expected to remain pas sive about accepting the same or similar restraints in another form. Having freed themselves from so many stultifying public restraints imposed by a system of feudal tenure, Englishmen were well prepared to resist any effort to impose the same restrictions through private arrangements. The result was a modification of the 592 THE FREEMAN October law of entails and the invention of numerous rules designed to pre vent any private interference with economic mobility.

It was in this atmosphere that those rules known to lawyers as the destructibility rule and the rules against perpetuities, accum ulations, and restraints on aliena tion came into being. While a sub stantial body of rather complex law has grown up around the op eration of these rules, in their es sence they are nothing more than efforts to secure to the living gen eration control of the world's as sets without interfering with the freedom of alienation any more than is absolutely essential to the accomplishing of that purpose. Thus it was that the freedom of alienation, that is the individual's freedom to buy and sell as he sees fit, became the policy goal that gave birth to numerous rules of property law that persist to this day. In addition to its being the sole justification for the rules referred to above, much of the modern law of conveyancing is law designed to foster the free transferability of property. It is a frequent topic for discussions at bar association meetings and legal institutes. Title standards are adopted and marketable title legis lation is enacted for this purpose.

The American Founding Fa thers and those concerned with the framing of state constitutions appear to have been thoroughly convinced that the free institution of property was the cornerstone upon which all other freedoms de pend. This fact is demonstrated by the frequency with which provi sions were inserted into their statutes, or even their constitu tions, declaring that all lands are allodial, that is free, and that feu dal tenures of every kind are for ever prohibited. ll They looked upon the right to cash in on the product of one's own labor as an essential element of any meaning ful concept of a free man. They saw it as the right to elevate the human personality from a position of status where one's social and economic course is predetermined to a position of contract where each one is free to determine his own course. Or as a more recent writer has expressed it, "in or ganized societies the degree of liberty among human beings is measured by the right to own and manage property, to buy and sell it, to contract."12 freedom of Movement Experience has shown that where free movement of property 11 E.g., Minn. Const. art 1, sec. 15; Wis. Const. art. 1, sec. 14. See generally, 1 Powell, Real Property. par. 158 (1949).

12 Garber, Of Men and Not of Law, 34 (1966) .

1971 CHANGING CONCEPTS OF PRIVATE PROPERTY 593 has existed the economy has pros pered and the wealth, especially the wealth of the least wealthy, has multiplied. This is not a sur prising result. It is merely the normal and natural result of giv ing a man an opportunity to em ploy his talents in. a way most pleasing to him and to enjoy the fruits of his efforts in the manner he selects. If he is denied the right to make his own choice, society is denied the benefit of the produc tive efforts that choice would de mand. The productive capacity of the individual, and hence the pro ductivecapacity of society as a whole, will tend to decline. This principle is implicit in the state ment of Jeremy Bentham that "no man can be so good a judge as the man himself, what it is gives him pleasure or displeasure."13 The same idea is supported by Ludwig von Mises' declaration that "the average man is both better in formed and less corruptible in the decisions he makes as a consumer than as a voter in political .elec tions."14 But this long history of the ex pansion of individual rights to property does not mean that pri vate dominion has now become ab solute. It never has been absolute and it is doubtful if anyone will 13 Bentham, Principles of Morals and Legislation, 172 (Oxford at the Claren don Press, 1879).

14 Mises, Socialism, 21 (1951). seriously contend that it should be made absolute. The state still does, and it is believed it must, retain some control. Property taxes are still collected. The right of emi nent domain is still exercised. Dur ing times of war or other national emergency, property has been req uisitioned or expropriated when necessary to the state's defense. These acts by the state are neces sarily encroachments upon the in dividual's dominion over the things he acquires. The significant question to ask is. how far may these encroachments extend? Zoning and Planning Fundamentally, it is a problem of defining the point· at which the inalienable rights of the private owner end and the inherent power of the state begins. It is not too much to say that that question presents the most challenging problem facing the legal profes sion, and in fact the entire Ameri can society, at the present time.

The future 'course of man's prog ress toward personal liberty, hu man dignity, and civil rights de pends upon how he answers that question. In recent years zoning and city planning have become important parts of American law .. It is not within the scope of this paper to make any judgment as to whether that development is good or bad.

594 THE FREEMAN October But it is within the scope of this paper to· point out that it is a de velopment that constitutes a di rect encroachment upon the free dom of the individual to do as he pleases with his own property. Where such schemes are in opera tion the individual owner is not free to devote his property to the uses most suitable to his needs. An incident of property ownership has been removed. An important right has been taken from the bundle of rights constituting the owner's property in a given tract of land. Rent Control Other rights are slipping from the bundle from time to time. It is conceivable that in some in stances the loss might be neces sary to the well-being of society. The distressing thing is that the loss often goes unnoticed. During World War I it was felt neces sary to place statutory restric tions upon the amount of rent a man could receive for a given housing unit. After the war most of these regulations were removed.

During World War II rent con trols were again inaugurated and this time they have been a little slower in their disappearance. Some are still in effect. And in some quarters statutory rent con trol is now being accepted as a permanent institution. Effect on the Landlord This paper is not an appropriate place to debate the merits or de meri ts of this kind of legislation but it is an appropriate place to call attention to its meaning. It was first presented to the public as an emergency war measure but more recently it has been referred to as an instrument for the crea tion of a new type of tenancy. It has been said that the "statutory tenant," that is a tenant whose rent is determined by a, statute rather than by the market, has a new type of estate hitherto un known to the law. He probably does. But that kind of analysis· is incomplete unless it goes further and identifies the kind of estate held by the "statutory landlord."

And this second step has rarely ever been taken. If the question is raised at all, the answer is likely to be that the landlord has a fee simple which is defined as the highest estate, that is the highest kind of ownership, known to the law. If that answer is ac cepted as satisfactory, then it must be admitted that the owner of the highest estate known to the law is denied the privilege of using his holdings in the manner most desirable to him. He is not permitted to rent at a price mu tually agreeable to him and his tenant. A substantial incident of ownership has been removed.

1971 CHANGING CONCEPTS OF PRIVATE PROPERTY 595 In 1948 the Supreme Court of the United States struck at the very heart of private ownership as traditionally understood. Although the decision received wide pub licity, very few people gave any indication of being disturbed; or if they were disturbed, it was for reasons other than the court's at tack upon private ownership. Prior to 1948 the power to dispose of real property included the power to make certain covenants mutually agreeable to the buyer and seller. Prior to 1948 these covenants were said to run with the land and to be binding upon subsequent owners. The existence of such covenants became a part of the title itself and entered into the calculation of property values. But in 1948, in the case of Shelley v. Kraemer,15 the Supreme Court of the United States was faced with a covenant against sale or lease to members of a par ticular race. Such covenants had long been inserted in deeds and had become quite common in all sections of the United States.

Nevertheless, the Supreme Court chose to ignore the covenant's ex istence. The fact that property values depended upon the cove nant and that mortgage loans might have been extended in re liance upon it made no difference. This might possibly have been an 15 334 U.S. 1 (1948). appropriate time for a judicial determination that covenants of this particular kind were incon sistent with American public policy and therefore without any legal effect. No position is taken here as to whether such a deci sion would have been wise or un wise. But in any event that route was not taken. Instead, the court, in an opinion written by the Chief Justice, displayed a total lack of concern for private property by declaring that the covenant was valid but would not be enforced. Any effort to rationalize the 1948 decision on the theory of state action is antagonistic to civ ilized society unless that society is ready to deny recognition of private property altogether and adopt absolute group ownership. A man does not have a property in anything unless he has a right which the state will protect. As soon as the state extends any pro tection there is clearly a case of state action. If protection is with held while the right is officially recognized, there is an express in vitation to self help where the law of the jungle prevails.

"Open Housing" An even more serious inroad on private ownership has appeared in recent years in the so-called "open housing" legislation. When this type of enactment appeared 596 THE FREEMAN October on the local scene in New York City in 1957,lG it caused very little excitement among the nominal ad herents of the free market con cept. This in spite of the fact that it almost completely abandoned the theory. of freedom of aliena tion by taking away from the seller the 'right to choose his own customers. More specifically, it prohibited sellers in certain clas sifications from discriminating among buyers because of the buyers' race or religion. Freedom of alienation was theoretically preserved, but anyone who has had any experience in buying or selling real estate knows that freedom of alienation has very little meaning if it does. not in clude the freedom to choose one's own customers.

The freedom that was preserved by this legislation is remarkably similar to the freedom that pre vailed in England prior to 1290 when the property owner was free to sell except that the lord (the king being the supreme lord) had a veto power over the choice of a buyer. Nevertheless, the legisla tion in varying forms became popular, spread to other states, and found its way into a Federal enactment in 1968. 17 Prior to its enactment on the Federal level 16 Local Laws, City of N.Y., 1957, No. 80. 17 42 U.S.C.A. sees. 3601-3619 (1970). testimony before the Senate Sub committee on Constitutional Rights pointed out that its effect in the market place would be to reduce the amount of new housing available in coming years and to decrease rather than increase the access of minority groups to that which was available. 18 It would be a mistake to attribute the recent decline (some might prefer to say crisis) in the hous ing industry to that cause alone but it would also be a mistake to ignore the possibility that it might have been a contributing factor.

Back to Feudalism The concept of private property appears to be moving in a circle that is almost closed. The feudal ages found "freemen" in virtual serfdom. Private ownership ex isted but it was a very limited concept. The incidents of owner ship were comparatively few and such as existed were substantially restricted by the recognized power of the state. But that period was a period of struggle for more and more freedom and more civil rights in the individual. Men were demanding more control over their own destiny - more of the fruits of their own labor. The result was a steady increase in the inci dents of private ownership and a corresponding reduction in the IS 112 Congo Record, 14715-14717 (1966), 1971 CHANGING CONCEPTS OF PRIVATE PROPERTY 597 state's power to control. The sig nificant legal developments were centered around efforts of the law to preserve the freedom of move ment of private property. This trend continued until very recent times when the individual's free dom both to use and to dispose of the fruits of his own labor seemed virtually secure.

But throughout this period of development there never was any clear line between the conflicting forces, that is to say, between the incidents of ownership sacred to the individual on the one hand and the rights exercised by the state on the other. Eventually the trend toward individual freedom found itself in reverse. The bundle of rights constituting ownership began to shrink. Sticks were withdrawn from the bundle and handed over to the state. The state took a more active part in con trolling the use of things still owned by individuals. The owner lost his right to fix the price at which he was willing to rent. He lost the right to dispose of prop erty on terms of his own choosing. He lost the right to select his own customers. Default Rather than Design Why is this decline in the im portance of the indi vidual to gether with the corresponding in crease in the function of the state taking place? It could be the re sult of a conscious choice by a so ciety which believes it has· gone too far in the direction of private ownership and that a retreat is desirable. It is doubtful if that is the case. It is doubtful that any such conscious choice is being made.

What is more likely is that the transition is going more by de fault than by design. We have concerned ourselves so much with other things that we have almost forgotten that there is a right of property which "is before and higher than any constitutional sanction." We talk about such things as freedom of speech, freedom of the press, freedom of religion, and freedom from false arrest, without giving much at tention to the foundation upon which all these freedoms rest. We have forgotten that these are but the symbols, the ornaments, and the outward manifestations of a solid structure without which none of them could exist. We have become so interested in the cake's icing that we have ignored the cake. We have become victimized by the often repeated but abso lutely false assertion that there is a conflict between property rights and human rights. The truth is that private ownership of prop erty is the greatest instrument of freedom ever designed and it is 598 THE FREEMAN October sheer folly to speak of granting a man freedom while withholding that instrument from him.

Facing the Issue It is a long way from the serf dom of the medieval manor to the American statutes and constitu tions abolishing feudal tenures. Americans have arrived at an age when freedom of ownership is so taken for granted that there is a danger that we might inadver tantly allow it to slip out of our hands. If our freedom is to be taken seriously, we must acquaint ourselves with what is actually happening in the name of social justice, equal protection of the law, and other glittering generali ties that are without meaning until they are given meaning in the context of human experience. "Social justice" can become a slo gan used to promote both social and personal injustice. "Equal protection of the laws" can be used as a mask for universal op pression through law. As we move from one age to an other there is but one fundamen tal change in the concept of pri vate property. The rate of the change as well as the direction of the change may shift from time to time. But the question is al ways one of deciding what inci dents of ownership rest in the in dividual and what incidents are claimed by the state. If human freedom is to be preserved, that question must be faced squarely.

Questions concerning zoning, rent control, restrictive covenants, and all the others cannot be intelli gently answered until they are placed within the context of that basic issue. When they are placed within that context, it is likely that the most vocal proponents of some of these new schemes will become their most violent critics. ~ IDEAS ON LIBERTY The Source of Wealth IT IS the great multiplication of the productions of all the dif ferent arts, in consequence of the division of labour, which oc casions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. ADAM SMITH Wealth of Nations, 1776 OWNERSHIP as a SOCIALFUNCTION PAUL L. POIROT In the market society the proprietors of capital and land can enjoy their property only by employing it for the satisfaction of other people's wants. They must serve the consumers in order to have any advantage from what is their own. The very fact that they own means of production fO'/'ces them to submit to the wishes of the public. Ownership is an asset only for those who know how to employ it in the best possible way for the benefit of the· consumers. It is a sooial function.

LUDWIG VON MISES, Human Action IF ONE were obliged to list a single cause of our age of revolution, it might be this: the irresponsible use of private property. Serious enough is the problem of stewardship and responsibility for disposition of one's own prop erty. Infinitely greater are the problems created in the so-called charitable disposition of other peo ple's property, when one votes to tax others for funds to be dis tributed to the "worthy" poor. By this process, whole classes of "beneficiaries" may be deprived of their human dignity and of the This essay is from the "Mises 90th Birthday Collection," copyright by The Institute for Humane Studies. opportunity to live as responsible, mature individuals: - the young, publicly schooled to "sit in" and picket for favors; - the aged, socially secured against prod ucti ve use of their talents; - hypochondriacs, medicared into terminal illness; - the indolent, paid not to work; - unwed mothers, seduced by subsidy to fuel the population ex plosion; - farmers, paid to grow surplus crops, or not to farm at all; - businessmen, sheltered by tariffs and embargoes and protection ism generally; 599 600 THE FREEMAN October - craftsmen and other profes sionals guarded against compe tition through a union or asso ciation or licensing arrangement of one kind or another; - an endless list of personal fail ures, financed at the expense of everyone else.

Even so, to speak of the irre sponsible use of private property immediately calls to mind the widely publicized charges of mis beha vior leveled against "mer chant princes" and "robber ba rons" of an earlier century. And it well may be true that some in dividuals in those days made some mistakes. In his definitive history of prop erty rights (In Defense of Prop erty, Regnery, 1963), Professor Gottfried Dietze points out that: "In the nineteenth century, pri vate property enjoyed greater pro tection than ever before ... prop erty rights received far-reaching protection through legislation, adjudication and juridical sci ence." In other words, the full force of law and order and govern ment protection had been must ered in support. of the fundamen tal right of the owner to do with his property as he pleased. That was the juristic attitude toward property rights, nor should it be altogether surprising to find such property-protecting governments occasionally granting to various owners or groups a· bit of special privilege and political power. In any event, it is clear that individ ualism generally was favored over collectivism in America and much of Europe during the nineteenth century - and that the tide now runs strongly in the other direc tion.

The point at issue here is whether or not the owner's right to his· property carries with it any corresponding duty or responsi bility toward others. And the tend ency of the law in the nineteenth century was to say no; let the owner do with his property as he pleases so long as he doesn't inter fere with the property rights of others. Dangerous Protectionism While such a view toward prop erty may be economically and morally sound, it probably reflects poor political strategy. There is every logical reason, in a market oriented economy, why decisions concerning the use of property are best left to the owner. But the owner may properly be accused of negligence if he relies heavily upon the government to defend his title and does not try to explain to others the general blessings of private ownership and open com petition. Without that explanation, and understanding by the people, 1971 OWNERSHIP AS A SOCIAL FUNCTION 601 the same governmental force used to protect property can be pervert ed into a weapon for plundering, a perversion well advanced in the twentieth century. Owners who would protect private property are now obliged to explain to plund erers why property rights should not thus be violated.

The .term "private property" often is narrowly used to signify only the material possessions of the wealthier members of society. But in a broader and more con structive sense, "property rights" are synonymous with "freedom" and include the individual's right of self-control, self-respect, self responsibility, and personal choice as to how he'll use his own life. A man without property rights without the right to the product of his own labor and without re spect for the equal right of every other person - is not a free man. How, then, does one explain to would-be plunderers that their own and the public interest are best served by private ownership rather than public ownership of scarce resources? Perhaps the most likely point of agreement would be this: one does not use a club to explain a good idea to a reasonable person. The point is of great importance: the general wel fare is served by reducing violence and fighting to a minimum. Once men agree to stop plundering one another, they are in a position to consider and to act in other ways to satisfy their wants.

For the Best Management of Scarce Resources When reasonable persons give thought to the ever-lengthening list of unsatisfied human wants, the impressive fact comes clear that resources are scarce. It is of utmost importance that resources be used efficiently, rather than wasted, if the satisfaction of wants is to be maximized. The reasonable person also must real ize that the maximum satisfaction of human wants involves thought for the morrow as well as provi sion for immediate consumption. This means that some resources must be saved today and used as the tools and raw materials of fur ther production for the optimum ultimate service of consumers. The important question, then, among reasonable men, concerns who should own the scarce resources of the world in order to assure the best possible service of the needs of the sovereign consumer, each the judge of his own needs. And the most reasonable answer, in the light of experience to date, is that an unhampered competitive mar ket economy most effectively and efficiently places the ownership of scarce resources .in those hands that best serve consumers.

602 THE FREEMAN October Producers and Consumers A word about ownership may be appropriate here. Is the owner a producer or a consumer; are we speaking of production goods or consumption goods? As far as the goods are concerned, it doesn't rnatter . What rnatters is the owner's purpose, the reason why he wants possession. And the in evitable answer is that he is trying to satisfy his wants. The person who trades or participates in the market economy is both producer and consumer, nor is there any way he can be more one than the other in an open competitive so ciety.A king or dictator or slave master might pretend to be all consumer, leaving the production to others, but that situation does not spell freedom. Instead of dividing the owner ship of all land and tools and other factors of production equally among all men, the general wel fare depends upon directing such ownership and control into the hands of the most efficient pro ducers of the goods and services wanted by consumers. Day in and day out, in the market place, con sumers are expressing their latest preferences, handsomely reward ing some producers and letting others know they have failed. In the market economy, every owner is continuously obliged to justify, through service, his right to retain control of the resources he claims. Otherwise, consumers peacefully transfer the ownership and control into more capable, more productive, more serviceable hands. How is such transfer effected? Through the market sys tem of recording supply and de mand conditions in terms of prices that may be relied upon for the economic calculation of profit or loss. Consumers thereby direct the production of what best serves their needs, placing the ownership of property in the most capable hands.

Not all consumers, of course, are aware of the economic power they can effectively wield in their own interest through the open market. Some of them, forgetful or un aware of the inevitable scarcity of resources and the terrible cost of waste, are forever looking toward a political redistribution of prop erty in the expectation of having more for themselves for immedi ate consumption. They fail to see that any such political redistribu tion thwarts the production they had ordered by way of prices bid in the market. Nor is this dis placement of economic or market power by political power a simple qu.id pro quo - a foot gained for a foot lost. The tools of production are like a lever or a pry pole. It is possible to cut off a stove length from the lever for immediate use 1971 OWNERSHIP AS A SOCIAL FUNCTION 603 as firewood, but at a tremendous loss of leverage. It is rarely, if ever, in the consumer's best in terest to destroy the tools of pro duction.

Market Affords No Permanent Security to the Owners As previously mentioned, gov ernments of the nineteenth cen tury may have been somewhat overzealous in the protection of property, trying to maintain the prevailing pattern of ownership even if the market indicated the desirability of change. Producers, once they have served the market demand and acquired title to a considerable block of resources, are not necessarily pleased to see a competitor come forth with a better idea to serve consumers. Established owners sometimes seek governmental protection, to exclude would-be competitors from the market. Such protectionism also curbs production and distorts or weakens the signals consumers send to market. A conservatism on the part of property owners that would use governmental force to frustrate consumer demand in the market is a socialistic form of conservatism, not in the general welfare.

In other words, the market af fords no permanent security to the owner. Rather, it obliges him to prove himself over and over and over - endlessly. Consumers en trust property to his use, reward him handsomely if he serves them well, ruthlessly abandon him and reallocate the property the moment he fails to serve them. The market simply will not countenance the idea of property as an exclusive privilege of the owner. The mar ket insists that property rights belong to those who best use the property to serve consumers. The point for which we are striving here is that the present owners of property are not neces sarily the ones one might expect to uphold and defend the competi tive open economy - the market system. They are only human, and might well prefer the sort of pro tectionism nineteenth-century gov ernment gave property owners. So, it behooves the least of the property owners to protect his own interest in the market economy his interest as a consumer. The man who brings his goods or ser vices to market, in trade for prop erty. he would consume, is inter ested in the mobility of property for easy conversion to his pur poses, not protectionism and stag nation in formerly profitable uses - and not a political diversion of property to uses no one is willing to pay for.

The market has been severely, and unjustly, condemned of late for allowing or even encouraging 604 THE FREEMAN October the waste of natural resources and the serious pollution of air, water, morals, and other requisites for clean living. But closer inspection will reveal that the properties thus polluted are those not clearly sub ject to private ownership and con trol: the atmosphere, rivers, lakes, oceans, parks, streets, schools, Appalachia, the body politic. They have been treated as public prop erty, the responsibility of govern ment, nobody's business in particAn Open Society ular. Hopefully, it may be realized in time that such things as air and water and human virtue are scarce and valuable resources, that they should be subject to private ownership and control, and that government's sole responsibility is to protect the owner against rob bers and vandals and at the same time hold him responsible if he uses his property in ways injuri ous to others. Private ownership is a social function. I) IDEAS ON ~ LIBERTY CAPITALISM presupposes an open society in which the ends are determined by individuals, or by voluntary associations. of indi viduals. It is fundamentally incompatible with the idea of an all encompassing State purpose, or a single official Manifest Destiny - though it is thoroughly compatible with a church whose own purposes are extra-governmental, either "not of this world," or, if of this world, devoted to leadership, mediation, and charity in the realms which do not belong to Caesar.

Theoretically, of course, it is quite conceivable that capitalism could flourish without a legal framework, either under pure anarchism, or under a beneficent landlordism, or .with the bless ings of a "let alone" monarch. But, as we shall see, it was· James Madison, the scholar among the Founding Fathers, who put his finger unerringly on the need for a device which will put auto matic checks on government if any freedoms are to flourish. Purely as a practical matter the institutions of an open society demand the safeguards of a limited government. J 0 H N C HAM B E R L A IN, The Roots of Capitalism HENRY HAZLITT FOR. MORE than a century socialist writers have leveled two main charges against capitalism: 1. It is not productive (or only waste fully productive, or far less pro ductive than some imaginable so cialist system would be). 2. It leads to a flagrantly unjust "dis tribution" of the wealth that it does produce; the workers .are sys tematically exploited; "the rich get richer and the poor get poorer."

Let us consider these charges. That the capitalist system could ever have been accused of being unproductive, or of being very in efficiently productive, will seem incredible to most economic stu dents of the present day, familiar Henry Hazlitt is well known to FREEMAN readers as author, columnist, editor, lecturer, and practitioner of freedom. This article will appear as a chapter in a forthcoming book, The Conquest of Poverty, to be published by Arlington· House. with the record of the last gen eration. It will seem even more incredible to those familiar with the record since the middle of the eighteenth century. Yet the im provement in that early period remained hidden even from some astute contemporary observers. Thomas Malthus in 1798 (the date of the first edition of his Essay on Popula,tion) seemed hardly aware of the productive transformation already achieved in the first half of the Industrial Revolution.!

Yet much earlier, in 1776, Adam Smith had shown keen awareness of improvement: "The uniform, constant, and uninterrupted effort of every man to better his condi tion . . . is frequently powerful enough to maintain the natural progress of things toward im1 See "The Problem of Poverty" in THE FREEMAN, June, 1971. pp. 325-6. 605 606 THE FREEMAN October provement, in spite of the extrav agance of government, and of the greatest errors of administra tion."2 Smith rightly attributed this progress to the steady increase of capital brought about by private saving - to the "addition and im provement to those machines and instruments which facilitate and abridge labor." "To form a right judgment" of this progress, he continued, "one must compare the state of the country at periods somewhat dis tant from one another. [So as not to be deceived by short periods of recession.] ... The annual prod uce of the land and labor of Eng land, for example, is certainly much greater than it was a little more than a century ago at the restoration of Charles 11." And this again was certainly much greater "than we can suppose it to have been about a hundred years before, at the accession of Elizabeth." Quite early in The Wealth of Nations we find Smith referring to the conditions of his own period as being compara tively, as a result of the increas ing division of labor, a period of "universal opulence which extends itself to the lowest ranks of the people."3 2 The Wealth of Nations, Book II, Ch.

III. 3 Book I, Ch. 1. If we leap ahead another cen tury, we find the economist Alfred Marshall writing in the 1890's: "The hope that poverty and ig norance may gradually be extin guished, derives indeed much sup port from the steady progress of the working classes during the nineteenth century. The steam engine has relieved them of much exhausting and degrading toil ; wages have risen; education has been improved and become more general. ... A great part of the artisans have ceased to belong to the 'lower classes' in the sense in which the term was originally used; and some of them lead a more refined and noble life than did the majority of the upper classes even a century ago."4 Statistical Comparisons For more recent years we have the great advantage of getting be yond more or less impressionistic comparisons of economic progress to fairly reliable statistical com parisons. Our chief care here must be to avoid making such compari sons in terms of dollar income at current prices. Because of the con tinuous monetary inflation in the United States since the 1930's, this would give a very misleading impression. To get a true picture of the real improvement in pro4 Principles of Economics, Eighth edi tion, pp. 3-4.

1971 THE DISTRIBUTION OF INCOME 607 Source: Department of Commerce. 5 Based on estimates by the Depart ment of Commerce expressed in "con stant" (1958) dollars. In the ten years from 1939 to 1949, then, the real gross national product of the country increased 55 per cent; in the twenty years from ·1939 to 1959 it increased 127 duction and welfare, in so far as these are measurable, allowance must be made for price increases. Statisticians do this by deflating recent prices and incomes in ac cordance with index numbers of average prices - in other words, by making their comparisons in terms of so-called "constant" dol lars. Let us begin with some over-all figures. In the 59 years between 1910 and 1969 it is estimated that the real gross national product of the United States (the GNP) in creased at an average rate of 3.1 per cent a year compounded. 5 At such a rate the production of the country has been more than doub ling every 24 years.

Let us see how this has looked expressed in billions of 1958 dol lars: Which Groups Gain Most? The foregoing figures do noth ing, it is true, to answer the charge that capitalism distributes Source: Department of Commerce. Year Per capita income 1929 $1,236 1939 1,190 1949 1,547 1959 1,881 1969 2,517 In other words, disposable per capita personal income at con stant prices increased 112 per cent - or more than doubled - in the generation from 1939 to 1969. This disposes effectively of the charge that capitalism is unpro ductive, or unacceptably slow in increasing production. In the thirty years from 1939 to 1969 the United States was still the most capitalistic country in the world; and the world had never before witnessed anything comparable with this vast production of the necessities and· amenities of life. per cent; in the thirty years from 1939 to 1969 it increased 242 per cent.

If we now express this in terms of disposable per capita personal income (at 1958 prices) for these same years, the comparison is less striking because we are allowing for the growth in population, but the progress is still remarkable: GNP $203.6 209.4 324.1 475.9 727.1 Year 1929 1939 1949 1959 1969 608 THE FREEMAN October Source: Department of Labor. So, far from wages failing to keep pace with increases in living costs, real wages rose lOS per cent in this thirty-year period. Was the worker getting his "fair share," however, in the gen eral increase in production - or was he getting a smaller share compared with, say, the owners of industry? Dividing the Pie Let us begin by looking at the sources of personal income. Of the nation's total personal income of $801 billion in 1970, $570.5 billion, or 71 per cent, was in wages and salaries and other labor income. Income from farming came to $16.2 billion, or 2 per cent; busi ness and professional income was $51.4 billion, or 6.4 per cent.

Rental income received by persons was $22.7. billion, or 2:S per cent; dividends came to $25.2 billion, or 3.1 per cent; interest received by persons was $65.2· billion, or 8.1 per cent. (Source: Economic In dictators, June, 1971,Council of Economic Advisers.) If. we total these last three items we get its gains unjustly - that it bene fits only the already rich, and leaves the poor, at best, no better off than they were before. These charges are at least partly an swered, however, as soon as we compare the median incomes of families in constant (1969) prices: Families Median Year (millions) Income 1949 39.3 $4,779 1959 45.1 6,808 1969 51.2 9,433 Source: Department of Commerce. As the median income means that there were just as many families earning .more than the amount cited as those earning less, it follows that the 97 per cent increase of median real incomes in this twenty-year period must have been shared in by the mass of the people.

Other sets of figures confirm this conclusion. If we compare weekly wages paid in manufactur ing, we find that these rose from $23.64 in 1939 to $129.51 in 1969 - an increase of 448 per cent. As the cost of living was constantly' rising during this period, this of course greatly exaggerates labor's gains. Yet even after we restate these wages in terms of constant (1967) prices, we find the follow ing changes in average gross weekly earnings: Year 1939 1949 1959 1969 Wages (in 1967 prices) $56.83 75.46 101.10 117.95 1971 THE DISTRIBUTION OF INCOME 609 $113.1 billion, or 14.1 per cent, of "unearned" income. (The income from farming and from. business was partly "earned" and partly "unearned," in undeterminable proportions. ) It is doubtful how much all this tells us about the distribution of income between the "rich" and the "poor." Total wage and salary dis bursements include the salaries of high-paid executives and of tele vision and motion-pic~ure stars.

On the other hand, reltals, divi dends, and interest pa;ments in clude many millions ofj moderate sized individual sums 1that may represent the major phrt or the sole means of support of widows and orphans and persons too old or too ill to work. (There are some 30 million American stockholders, for example, and 25 million sav ings-bank accounts.) A very significant figure, how ever, is the comparison of how much the employees get from the corporations with how much the owners get. Let us look first at a few facts about profits. In the five year period 1965 to 1969 inclusive, all manufacturing corporations of the United States· earned profits after Federal income taxes of only 5.2 cents per dollar of sales. Manu facturing corporation profits af ter taxes as a percentage of stock holders' equity look a little better - they averaged 12.3 per cent for the same five years. (Source: Eco nomic Report of the President, February, 1971, p. 284.) Both of these figures, however, overstate the real profits of the corporations. In a period of con tinuous inflation like the present, the corporations are forced by the tax laws to make inadequate de ductions for depreciation of plant and equipment, based on original cost, and not sufficient to cover re placement costs. Profits as a per centage of equity are overstated for still another reason: they are stated in dollars of depreciated purchasing power compared with the dollars that were originally in vested.

Lion's Share to Employees What is more significant (and constantly forgotten) is that the employees of the corporations draw far more from them than the owners. This is exactly the op posite of what is commonly be lieved. Surveys by the Opinion Re search Corporation have found that the median opinion of those polled was that the employees of American corporations receive only 25 cents out of each dollar available for division between the employees and the owners, and that the remaining 75 cents goes to profits. The facts are quite the opposite. In 1970, for example, of the U. S. corporation income avail610 THE FREEMAN October Year 1970 1969 1968 1967 1966 1960 1955 able for distribution between the workers and the owners, nine tenths went to the workers and only one-tenth to the owners. Here is how, in billions of dollars, the division appeared over a series of years: DIVISION OF U.S. CORPOR.ATE INCOME BETWEEN EMPLOYEES AND STOCKHOLDERS Profits % for AfterTax Payrolls Payroll $36.4 $366.0 91.0 40.0 350.5 89.8 44.2 319.2 87.8 43.0 291.8 87.2 46.7 275.5 85.5 24.8 188.8 88.4 25.4 144.6 85.1 Derived from Office of Business Economics, U.S. Department of Commerce.

If we average out the five years from 1966 to 1970, we find that compensation to employees came to 88.2 per cent of the corporation income available for division, and only 11.8 per cent, or less than an eighth, went to profits available for share owners. So if American workers are be ing "exploited" by the capitalists, it is certainly not evident from the figures. One important fact that the anticapitalist mentality so often forgets is that corporation earnings do not constitute a com mon pool. If manufacturing corpo rations earn an average of 12 per cent on their equity, it does not mean that every corporation earns this average profit margin. Some will earn 20 per cent on equity, some 10 per cent, some 3 per cent - and many will suffer losses. (Over a 40-year period an average of 45 per cent of companies - by number - reported losses annually. As a general rule, small companies suffered losses more frequently than did the large corporations.) Another point to be kept in mind: When profits are large, it does not mean that they are at the expense of the workers. The op posi te· is more likely to be true.

In 1932 and 1933, for example, the t,vo years when the nation's cor porations as a whole showed a net loss, the workers also suffered their worst years from unemploy ment and wage cuts. In a competi tive capitalistic economy, aggre gate profits and aggregate wages tend to go up or down together. It is to the long-run interest of the workers as well as of stock holders for profits to be high. A Look at Family Incomes Turning from the sources of in come, we come now to increases in family incomes over recent years and to the division of in come as between various segments of the population. Because of ris ing prices, comparisons between different years of family incomes in current dollars have little mean ing. Here is a comparison, how1971 THE DISTRIBUTION OF INCOME 611 Source: U. S. Department of Commerce, Bureau of the Census. Source: U. S. Department of Commerce, Bureau of the Census.

ever, of the per cent distribution of white families by income level, in constant (1968) dollars, be tween 1950 and 1968: The sharp drop in the percent age of families with "constant" in comes under $3,000 is especially noteworthy. The rise in the over all "real" median income in this eighteen-year period was 79 per cent. The per cent of aggregate in come received by each fifth. of the number of families in the country, and the per cent of aggregate in come received by the top 5 per cent of families, has changed much less over the years, but such change as has occurred has been toward a more equal distribution: % of Income Received 5.7 12.4 17.7 23.7 40.6 14.0 5.0 Income Range Under $4,600 $4,600-$7,400 $7,400-$10,000 $10,000-$13,500 $13,500and over $23,000and over $42,500and over Derived from Herman P. Miller, Rich Man, Poor Man (Crowell, 1971.) p. 15. How Government Intervention Affects Each Group A study published on March 18, 1971 by two Census Bureau stat isticians, Herman P. Miller, di rector of the Census Bureau's population studies, and Roger A.

Herriot, concluded that the proc esses of government now shift in come from rich to poor with sub stantially greater effect than is commonly believed. They contended that most families pay direct and indirect taxes at about the same rate - 30 per cent - regardless of income level; but that when pay ments from government (such as unemployment insurance) are taken into account, the result is a Families Lowest fifth Second fifth Middle fifth Fourth fifth Highestfifth Top 5 per cent Top 1 per cent If the reader wishes to know how the various fifths of the popu lation ranged in actual incomes in 1968, and in which fifth or bracket his own family income fell, he can learn it from the fol lowing table: 1968 5.7% 12.4 17.7 23.7 40.6 14.0 1968 8.9% 11.0 14.3 24.0 26.1 15.7 $8,936 1960 4.9% 12.0 17.6 23.6 42.0 16.8 1950 23.4% 26.8 22.9 16.6 10.2 I $4,985 1947 5.0% 11.8 17.0 23.1 43.0 17.2 Families Lowest fifth Second fifth Middle fifth Fourth fifth Highestfifth Top 5 per cent Family Income Under $3,000 $3,000-$4,999 $5,000-$6,999 $7,000-$9,999 $10,000-$14,999 $15,000 and over Median income 612 THE FREEMAN October markedly progressive redistribu tion of income. For example, fam ilies with earned income of less than $2,000 a year in 1968, ac cording to the study, paid an esti mated 50 per cent of their income for all taxes - but got back 106.5 per cent in government payments.

So their "net" tax was not a tax at all, but a, benefit of 57 per cent. Families with over $50,000 a year, meanwhile, paid 45 per cent in to tal· taxes and got back less than 1 per cent. So their net tax was 44.7 per cent of income. 6 The income comparisons here presented fail to give any support whatever to the socialist conten tion that under a capitalist system the tendency is for the rich to get richer and for the poor to get poorer - or at any· rate for the proportional "gap" between the rich and poor to increase. What the figures show, on the contrary, is that in a healthy, expanding capitalist economy the tendency is for both the rich and the poor to get richer more or less propor tionately. If anything, the posi tion· of .the poor tends to improve better than proportionately. This becomes even clearer if, instead of merely comparing in6 The estimate that families with earned incomes of less than $2,000 a year paid a total in taxes of 50 per cent of their income seems on its face extremely high, but I cite the conclusions of the study as given.

comes in terms of dollars, we look at the comparative gains of the poor that have been brought about by the technological· progress that has in turn to so large an extent been brought about by capitalism and capital accumulation. As Herman P. Miller has pointed out: "Looking back, there is good reason to wonder why the 1920's were ever regarded as a golden age .... Take for· example a sim ple matter like electric power. To day electricity in the home is taken for granted as a more or less inalienable right of every Amer ican. Practically every home - on the farm as well as in the city is electrified. Even on southern farms, ninety-eight out of every hundred homes have electricity. In 1930, nine out of every ten farm homes were without this 'neces sity.' And the country was much more rural than it is now. "A more striking example is provided by the presence of a toilet in the home. . . . As recently as 1940, about 10 per cent of city homes and 90 per cent of farms lacked toilet facilities within the structure. This is not Russia or China that is being described, but these United States only thirty years ago."7 Even the skeptical Paul Sam uelson conceded in 1961 that "the 7 Rich Man, Poor Man (New York: Thomas Y.Crowell Co., 1971), pp. 44-45.

1971 THE DISTRIBUTION OF INCOME 613 Source: U. S. Department of Commerce, Bureau of the Census. American income pyramid is be coming less unequal."s 8 Economics: An Introductory Analy sis, 5th edition (New York: McGraw Hill Book Co.), P. 114. In view of the fact that govern ment statisticians officially placed the "poverty threshold" for 1969 at $3,721 fora family of four, and $4,386 for a family of five, the percentage of families with in comes less than this who own cars and appliances is remarkable. In 1969, in addition, 90 per cent of all American households had tele phone service. To these figures on the distri bution of physical appliances we must add many intangibles. The most important of these is the enormous increase in the number of those who have enjoyed the ad vantage of an education. Broadly speaking, the percentage increase has been greatest for those at the bottom of the pyramid. A century ago (1870), only 57 per cent of all children between 5 and 17 years of age attended school. By the turn of the century this had risen to 76 per cent, by 1920 to 82 per cent, and by 1960 to 89 per cent.

It was as low as this in 1960 only because children were starting school at 6 years of age instead of at 5. Nearly 97 per cent of all children. between 7 and 17 years of age were in school in 1960. Even more dramatic are the fig ures on schooling at a higher level. In 1870, only 2 per cent. of the relevant age group graduated from high school. This tripled to 6 per cent by 1900, tripled again to 17 per cent by 1920, and again to 50 per cent by 1940.· It had reached 62 per cent by 1956. En rollment in institutions of higher ANNUAL INCOME GROUPS All Under $3,000Households $3,000 $3,999 79.6% 44.7% 67.0% 79.0 77.5 83.5 31.9 9.5 16.9 70.0 49.8 60.9 82.6 75.0 76.8 One or more cars TV, B&W TV, Color Washingmachine Refrig.or freezer Technological Progress There can be little doubt that the technological progress of the last two generations has meant more to the families at the bottom of this pyramid than to those at the top. It is the overwhelming majority of Americans that now enjoy the advantages of running water, central heating, telephones, automobiles, refrigerators, wash ing machines, phonographs, ra dios, television sets - amenities that millionaires and kings did not enjoy a few generations ago.

Here are some of the figures of the percentage of American house holds owning cars and appliances in 1969: 614 THE FREEMAN October education junior colleges, col leges, and universities - was less than 2 per cent of the relevant age group in 1870, and more than 30 per cent in 1960.9 Serving the Masses The long-run historical tendency of capitalism has been to benefit the masses even more than the rich. Before the Industrial Revo lution the prevailing trades ca tered almost exclusively to the wants of the well-to-do. But mass production could only succeed by catering to the needs of the masses. And this could be done only by dramatically reducing the costs and prices of goods to bring them within the buying power of the masses. So modern capitalism benefited the masses in a double way - both by greatly increasing the wages of the· masses of work ers and greatly reducing the real prices they had to pay for what was produced.

Under the feudal system, and nearly everywhere before the In dustrial Revolution, a man's eco nomic position was largely deter mined by the economic position of his parents. To what extent is this true in the United States of the present day? This is a difficult 9 Author's source: Rose D. Friedman, Poverty: Definition and Perspective (Washington: American Enterprise In stitute, 1965), p. 11. question to answer in quantitative terms, because one of the intangi bles a man tends to "inherit" from his parents is his educational level, which so largely influences his adult earning power. But some of the partial answers we do have to this question are surprising. Her man P. Miller tells us: "In 1968 fewer than one family out of a hundred in the top income group lived entirely on unearned income-interest, dividends, rents, royalties, and the like. The. other ninety-nine· did paid work or were self-employed in a business or pro fession. Nearly all of these fam ilies were headed by a man who worked at a full-time job. In 1968 over four-fifths of these men worked full time throughout the year."lO They also seemed to work longer hours than the average worker.

Among the rich, also, "relatively few admit to having inherited a substantial proportion of their assets. Even among the very rich - those with assets of $500,000 or more-only one-third reported that they had inherited a substantial proportion of their assets; 39 per cent claimed to have made it en tirely on their own, and an addi tional 24 per cent admitted to hav ing inherited a small proportion of their assets."ll 10 Rich Man, Poor Man, p. ·150. 11 Ibid. p. 157.

1971 THE DISTRIBUTION OF INCOME 615 International Comparisons I have said nothing so far of the comparison of American in comes with those of other nations. In absolute figures - in gross na tional product per capita, in own ership of passenger cars and TV sets, in use of telephones, in work ing time required to buy a meal these comparisons have been all heavily in favor of the United States. In 1968, the per capita gross national product of the country came to $4,379, compared with $3,315 in Sweden, $2,997 in Canada, $2,537. in France, $1,861 in the United Kingdom, $1,418 in Italy, $1,404 in Japan, $566 in Mexico, and $80 in India. 12 More immediately relevant to our subject is a comparison of the distribution of income in the United States with that in other countries. In this respect also the result has been largely in favor of the United States. A compari son of conditions in the 1950's made by Simon Kuznets found that the top 5 per cent of families recei ved 20 per cent of the U. S.

national income. Industrialized countries like Sweden, Denmark, and Great Britain showed approx imately the same percentage. It was in the "underdeveloped" coun tries .where the greatest internal disparities existed in incomes. For 12 Statistical Abstract of the United States, 1970, p. 810. example, in EI Salvador the top 5 per cent of families received 36 per cent of the national income, in Mexico 37 per cent, in Colombia 42 per cent. This comparison is one more evidence that capitalism and industrialization tend to re duce inequalities of income. I have entitled this article "The Distribution of Income," and have been using that phrase through out; but I have done so with re luctance. The phrase is mislead ing. It implies to many people that income is first produced, and then "distributed"- according to some arbitrary and probably unjust ar rangement. A Misleading Phrase Something like this idea ap pears to have been in the back of the minds of the older economists who first began to arrange their textbooks under these headings.

Thus, Book I of John Stuart Mill's Principles of Political Economy (1848) is entitled "Production," and Book II, "Distribution." Mill wrote, at the beginning of this second book: "The principles which have been set forth in the first part of this Treatise are, in certain respects, strongly distinguished from those on the consideration of which we are now about to enter. The laws and conditions of the production of wealth partake of the character 616 THE FREEMAN October of physical truths.' There is noth ing optional or arbitrary in them .... "It is not so with the Distribu tion of Wealth. That is a matter of human institution solely. The things once there, mankind, indi vidually or collectively, can do with them as they like. . . . The dis tribution of wealth, therefore, de pends on the laws and customs of society." This distinction, if not alto gether false, is greatly overstated.

Production in a great society could not take place - on the farms, in the extraction of raw mate rials, in the many stages of proc essing into finished goods, in trans portation, marketing, saving, capi tal accumulation, guidance by price and cost and supply and de mand - without the existence of security, la\v and order, and rec ognized property rights -the same rules and laws that enable each to keep the fruits of his labor or enterprise. Goods come on the mar ket as the property of those who produced them. They are not first produced and then distributed, as they would be in some imagined socialist society. The "things" are not "once there." The period of production is never completed, to be followed by some· separate pe riod of distribution. At any given moment production is in all stages. In the automobile industry, for example, some material is being mined, some exists in the form of raw mate.rials, some in finished or semifinished parts; some cars are going through the assembly line, some are on the factory lots await ing shipment, some are in trans port, some are in dealers' hands, some are being driven off by the ultimate buyers; most are in use, in various stages of depreciation and wear and need of replacement.

Everyone Gains In brief, production, distribu tion, and consumption all go on continuously and concurrently. What is produced, and how much of it, and by what method, and by whom, depends at all times on the relative sums that those engaged in the process are receiving or ex pect to receive in profits or wages or other compensation. Production depends no less than distribution on "the laws and customs of so ciety." If farmer Smith raises 100 bushels of potatoes and farmer Jones 200 bushels, and both sell them for the same price per bushel, Jones does not have twice as much income as Smith because it has been "distributed" to him. Each has got the market value of what he produced. It would be better to speak of the variation between individual incomes than of their "distribu tion." I have used the latter term 1971 THE DISTRIBUTION OF INCOME 617 only because it is customary and therefore more readily understood.

But it can be, to repeat, seriously misleading. It tends to lead to the prevalent idea that the solution to the problem of poverty consists in finding how to expropriate part of the income of those ·who· have earned "more than they need" in order to "distribute" it to those who have not earned enough. The real solution to the problem of poverty, on the contrary, consists in finding how to increase the em ployment and earning power of the poor. , IDEAS ON ~ LIBERTY Next Month: The Story of Negro Gains The Civilizing Process AT THIS STAGE in history even the most highly civilized among us wear only a thin veneer of civilization. This can be tested easily by trying to take from our civilized fellowman something that he values highly. It is likely that his thin veneer of civilization will become even thinner. Could we not then all agree that the object of the game is, as we live, to try to contribute to, not take away from, the civilizing process?

Here in America, for reasons known to most, but apparently not all of us, men have developed a political and economic system that works better,than any other in history. It works, functions, better because it affords the opportunity for each man to rise as high as ability, talent, training and energy can take him. Every American, if he tries, can do better in the world than his father did before him, because the opportunities in America are con stantly increasing and expanding. This freedom to rise, multiplied. by the countless millions of Americans who have used it, has built (and continues to build) the economic miracle of history, a nation with the most stable institutions in history. It should be unnecessary to say that all Americans, black and white, have far more to gain by using and being a part of the system than by pulling and working against it. FRANK WALLACE, from the pamphlet, "To Insure Domestic Tranquility," copyright 1971.

IN correspondence dated 1789, Thomas Jefferson observed, "I am not a federalist, because I never submitted the whole system of my opinions to the creed of any party of men whatever in religion, in philosophy, in politics or in any thing else, where I was capable of thinking for myself. Such an addiction, is the last degradation of a free and moral agent. If I could not go to heaven but with a party, I would not go there at a1L"1 The general thrust of J effer son's personal creed here is in dJividualism - personal independ ence in thought and action as opposed to the inevitable corrup tion of a collective creed. Mob Mentality - the collective complex - is what Jefferson was protesting. This creeping conta gion lurks today in the heart of many an individual - yes, even that individual who espouses per1 "Personal Faith," in Thomas J effer son on Democracy, edited by Saul K. Pad over (D. Appleton-Century Co., 1939), p.122.

Mr. Bearce is a freelance writer in Houston, Texas. 618 ROBERT G. BEARCE sonal freedom and responsibility over state paternalism. This af fliction is not always easily recog nized or diagnosed, but certain symptoms can be isolated: atti tudes of gloom and impotence, pessimism, and a mania for or ganizing. Each individual must be his own physician - through self examination - if the disease is to be eradicated and the devotees of personal freedom and individual accountability are to nurture the freedom faith. Many a person is deeply dis turbed that his country appears to be sinking ever further into the mire of socialism, but he ration alizes that his own individual ac tion is dependent upon the accom panying action of others. He for gets that a man is solely respon sible for his own, not the actions and attitudes of other men. To the extent that he surrenders respon sibility for individual initiative, to that extent he enslaves himself to Mob Mentality. Whenever a per sonal endeavor challenges him to live the freedom faith, he para1971 ESCAPING THE MOB MENTALITY 619 lyzes himself with a weak: "There's no hope. The hour is too late for a revival of freedom.

Freedom is dying." He groans that everyone is too saturated with myths and fallacies to pay any attention to his vast store of wisdom. "I'm a lone wolf in a des ert of ignorance. Nobody'll listen." That last remark is his down fall. His potential for individual action is smothered by Mob Men tality. Maybe his fellow man won't appreciate his efforts for freedom, but that isn't a burden he must bear. If his understanding of free dom is constructed upon serious reflection, sincerUy, humility, and honesty, then he should be content to allow the Truth of freedom to fight its own battles against apathy and ignorance. His initial effort - not the collective's appro bation or lack of it - ought to be his chief preoccupation. Another common symptom of the Mob Mentality is a fondness for "organizing" and organiza tions. It must be acknowledged, of course, that the organizing spirit has its place in the defense of freedom. Individuals can develop new friendships through club work. Often five people working in conj unction can accomplish more than the indi vidual alone.

Organizations enable profound discussions to be held, thus deep ening each member's insight into common goals. Material and in formation can be propagated through clubs and organizations. Efforts can be coordinated and strengthened. The organizing spirit per se is not to be condemned, but each in dividual who adds his name to a club's membership roll should keep this maxim ever in mind: Eternal v'igilance is the price of liberty! For, within the spirit of organi zing lurks the threat of Mob Men tality. Membership in the organization creates an obsession for labels that can nearly paralyze one's ef forts for freedom. Why, he is a member of the Righteous Order of Patriots - with a national mem bership of 43,281! Unfortunately, not everyone of those thousands will have been a credit to the organization. The criticism of those deviates by out siders might indeed be unj ust, vile, and slanderous; but each member should ask himself just how much he gains, or loses, by stubbornly adhering to the respective label of his own particular group . . . es pecially when such an obsession causes outsiders to pigeonhole him along with the black sheep of the group. He should ask himself whether his position on freedom will be judged for its inherent worth or whether it will be smothered under abuse of the 620 THE FREEMAN October label. Such is the challenge to be faced by individuals of various freedom sects today: "Conserva tives," "Libertarians," "Objec tivists," "Classical Liberals," and so on.

J\n acceptance of proven truths - propagated by the "organiza tion" - should never become an ab solute substitute for individual in quiry. It is one thing to possess a humility willing to accept the hard-earned wisdom of others ... but something else entirely to allow that wisdom to discourage one's own ventures into the un known. Thus, organizational mem bership has a tendency to absorb the individual, diluting his own creativity and ingenuity. If each individual practices "eternal vigilance" and protects his identity against Mob Men tality, then his organization or as sociation with other free men will indeed prosper. Each member will contribute his individual talents, wisdom, and energies. If "eternal vigilance" is not the watchword, each individual will be reduced to the lowest common denominator as legalism, tradition, and obedience become the club chant. Mob Mentality sometimes reaps its victims in ··greatest number at the level of Political Parties. Here the individual must forsake in tegritY,honesty, and the right to be himself ... that is, unless he is a real stalwart and practitioner of "eternal vigilance." Always hover ing above the individual who ven tures into the dangerous waters of political party officialdom is the admonition that he is no longer an individual. Wherever men sac rifice personal conviction for the collective creed, there you will find the germs of Mob Mentality glee fully destroying the individual ...

even under the slogans of "the people's will," "democracy," and "for the good of society." Today, the advocates of freedom and the free market remain on the defensive, mainly because they are preoccupied with the extending tide of socialism, collectivism, and statism. Although our efforts for freedom should be directed at countering these forces, so too should we devote more of our en ergies to self-examination, lest we find ourselves debilitated by Mob Mentality. The commission of free men to day .is to sow the good seed of truth, not glancing over the shoulder at the mass flight of hu manity toward the pit of apathy and collectivism. Freedom will fight its own battles and free men will reap the blessings of freedom only so long as the individual de votees of freedom are willing to declare along with Luther: "Here I stand . .. I can do no other." ~ CLARENCE B. CARSON THE FOUNDING OF THE AMERICAN REPUBLIC 3 The Colonial Religious Experience THE ENGLISH HERITAGEwas modi fied and transfigured by colonists out of nearly 170 years of experi ence. It is frequently asserted that the United States is a young na tion, as such things go, and the people are sometimes described as being in their youth. Such notions, if taken to mean that Americans are short on experience, will not hold up on examination. Ameri cans have had not only the experi ence of the human race before them - such of it as they carried with them as furniture in their minds or recalled in the literature with which they were familiar but also a broader and more cos mopolitan experience than a homogeneous people who have re mained in their homeland. More over, they had a .long colonial ex perience which was quite varied since the colonies grew up distinct from one another. The two facets of that experience to have most direct bearing on the founding of the United States were the re ligious and the political.

The religious background and experience will be taken up first because it is most basic. A reading of the United States Constitution, however, could easily mislead any one as to the religious disposition Dr. Carson is Chairman, Social Science De partment, Okaloosa-Walton College. He is a noted .lecturer and author, his latest book en titled Throttling the Railroads. 621 622 THE FREEMAN October of the Founders. There is nowhere in it even a mention of God. The only direct references to religion are those prohibiting the estab lishment of religion and prohibit ing religious tests for office both negative in character. In ad dition, a case could be made that several of the leaders among the Founders were Deists - that is, held only such residues of religious beliefs as they could square with human reason. One historian notes the importance of religion in the coming of the revolt in this way: "Yet if we realize that the eight eenth century, for all its enlight ened rationalism, remained an age of faith, the religious background of the Revolution becomes instruc tive. This is not to say, of course, that religious grievances or re ligious ideology caused the Revo lution. . . . But the subterranean forces which motivate political be havior can be found within the more general atmosphere of the times. On the eve of the Revolu tion, the Protestant religion con stituted a fundamental aspect of American culture."1 To which needs to be added that the religious framework not only underlay the move for independence but under girded the way it was done, the 1 Peter N. Carroll, ed., Religion and the Coming of the American Revolution (Waltham, Mass.: Ginn-Blaisdell, 1970), p.xi.

statements of the day, the consti tutions that were drawn, and the Republic that was founded. How fundamental religion was to them can be made clearer by examining a little into the background. It is widely held that the Amer ican Revolution was not very revo lutionary - a view to which this writer subscribes -, that in com parison with the French Revolu tion, the Bolshevik Revolution, or even the Puritan Revolution in England in the seventeenth cen tury, the American one was not nearly so radical or was basically conservative. What contributed to this, as already indicated, was a considerable reliance on the Eng lish heritage, as well as a general dependence on experience and ex perienced men. But there was something else which made Amer icans shy about radical experi ments in social reconstruction. It has not been put this way before, I think, and a. new thesis deserves more extensive treatment, but it is very germane to this background.

Let it be stated baldly, then. Americans had already had their try at revolution before they came to break with England. Now I do not mean what Clinton Rossiter meant when he referred to The First American Revolubion. 2 His 2 This is the title of a paperback ver sion of the first part of his book, Seed time of the Republic.

1971 THE COLONIAL RELIGIOUS EXPERIENCE 623 meaning was that a revolution in outlook in the decades before 1776 preceded the declaring of inde pendence. What I mean is that when some of the colonists left England and arrived in America they attempted a revolutionary re construction of the social and political order. This could be con ceived as a revolution only by contrasting what they attempted to do in America with the order that prevailed in the land from which they came. Ordinarily, his torians think of a revolution in terms of a prior situation in some country in contrast with what was done in that same country. This may account for their not per ceiving the revolutionary content of the changes between England and America during the earlier colonial period. Be that as it may, there were some rather drastic ex periments attempted in America in several colonies. They failed, by and large, and their failure meant that the bulk of Americans were not inclined toward radical recon struction when they broke with England.

The Frontier Thesis What has impressed many his torians in more recent times has been the impact of the physical environment of America on set tlers from Europe. The thesis re garding this impact is known as the frontier thesis. The frontier thesis was first most persuasively presented by Frederick Jackson Turner in the 1890's. It holds that American culture can be explained largely in terms of a succession of encounters with the moving fron tier. Undoubtedly, those who came to the New World had to contend with the physical environment, and, undoubtedly, they developed ways which were different in some respects from those of Europe in dealing with it. (Those who have held to the frontier thesis have meant much more than this, of course, for they have generally been determinists, holding that the environment actually shaped Americans.) Yet many of the early settlers struggled with something much less plastic than the physi cal environment, and from their unsuccessful wrestling with it must have drawn conclusions which joined them once again to the age-old experience of man. In several of the early communities, those who came wrestled with hu man nature itself, conceived and elaborated systems which would eventuate in new societies. They were much more impressed with the potentialities of a cultural frontier than of a physical one.

What they discovered - perhaps, better, came to accept - was the Old Adam in man which is not ex orcised by a new setting. This 624 THE FREEMAN October needs to be filled out with some particulars, but first the religious background needs to be covered. Religious Background Those Europeans who came to settle in America were preponder antly Christians, nominally, habit ually, or devoutly. The few who were not were probably theists and people of the Book, i.e., Jews. They were Christians whose churches and sects were known by such varied names as Baptists, Brown ists, Moravians, Quakers, Presby terians' Congregationalists, and Catholics. Though it was their dif ferences which stood out at the time and over which they wran gled, they nonetheless shared a basic outlook which transcended their differences and evidenced their common heritage. As Christians, they accepted God as Creator, as Provider, and Disposer. Life was viewed within a dualistic framework of Time and Eternity. Time was that dimen sion within which man lived out his allotted years; however brief they might be, they were fraught with ultimate significance as the span within which the decision for eternity was made. Christians had, and have, a historical framework implicit in their religion, one which is bounded by time and is marked off by several transcendent events: the Creation, the Fall, the Incarnation, the Second Coming and the Last Judgment. These are the great landmarks of sacred his tory, past and future. Not every one"who has gone by the name of Christian has felt the impact of their deeper meaning, yet to be Christian has meant, to say the least, the acceptance of the Incar nation as the entering of God more directly into history through Jesus Christ, the providing of a way of salvation through His grace, and the setting in motion of events which will culminate with His re turn. To be a Christian has ever meant, too, that man does not give meaning to his life; instead, God gives meaning to it.

The Founders of these United States would have rejected out of hand any suggestion that they write any such credo into the Con stitution. Yet their rejection of it would not have signified in most cases that they rejected the beliefs involved. Indeed, they conceived themselves to be "doing something much less than and different from pronouncing upon th~.ological questions: they were erecting a frame of government. The kind of government they erected, however, was undergirded and informed by theistic and Christian concepts. It was a government which did not have as its object the salvation of man, the bringing of Heaven to earth, or anything of the sort.

1971 THE COLONIAL RELIGIOUS EXPERIENCE 625 These things could well be left to their own realm and men could be left free regarding them because they were in the domain and hands of God. Men without such a faith can leave no area of freedom, for to be free without God is a chaos of wills. The Protestant Reformation Most of those who came to America from Europe in the first two centuries of settlement along the East coast were Protestants. To speak of a Protestant faith or doctrine is to speak loosely, for Protestants have their doctrines and beliefs within particular churches and sects, and these dif fer greatly from one another. Yet, here again there is a common bond, acknowledged by the very use of the term, Protestant, and it goes beyond opposition to the Roman Catholic Church, though it is usually definecl in contrast with that body. The seventeenth century settle ment of America occurred while the tides from the Protestant Re formation were still flowing strongly. The religious wars, spawned by the Reformation and Counter-Reformation, took place in the midst of the seventeenth century. Doctrines were still pick ing up adherents; there was a great vitality to religious matters, and many men were deeply concerned about correct belief. This is to say that at the time of the early settlements there was pro found interest in and concern about religion. Several currents of ideas were sweeping toward their crests. This was true of those called Puritans as well as a host of sectarians.

One thing that Protestants gen erally shared was an emphasis on the Bible as the sole source of their beliefs. This was in contrast with the Roman Catholic Church which used in addition to the Bible such other sources as church tradi tion and the writings of the Church Fathers. Undoubtedly, Protestants subsumed much of this tradition into their versions of Christianity. The Anglican Church kept a goodly amount of the older tradition. But Protes tants in general insisted upon a biblical foundation for their be liefs. This central role of the Bible provided a major underlying sup port to the idea of having a writ ten constitution. By analogy; the English constitution was like the Roman Catholic Church in relying mainly on tradition; the United States Constitution is Protestant like in being the written word. Another most important differ ence between Protestants and Catholics was in the position toward monasticism. In the Catho lic Church, a person with a re626 THE FREEMAN October ligious vocation went into one of the religious orders: if he was a man, he became a member of the secular clergy - those who served in such capacities as pastors and priests to the laity - or the regu lar clergy - those living under rules as monks; if a woman, she became a nun. Protestants re nounced, denounced, and, where they could, abolished monasticism.

Though Anglicans. differed from other Protestants in many re spects, on this issue they were agreed. Renouncing the world, to Protestants, was a renouncing of the duties and responsibilities God had placed on men when they were born into it; it was a retreat from the necessary engagement with the Adversary who tested one's mettle. The Impact of the Puritan Ethic To devout Protestants, the things of the world are a snare and a delusion. Yet, we are called to grapple with them, possess them, live out our lives in the midst of them, and keep them in their proper perspectives - as things to be used rather than to be used by them. Out of this subtle and somewhat ambigu0l!s attitude toward life in the world came the Protestant ethic, an ethic fre quently referred to as the Puritan ethic but actually one shared by most Protestants, though less tenaciously by Anglicans and Lu therans at times. This ethic in volved a particular posture toward the workaday world. It is seen most clearly in the Puritan Doc trine of the Calling. According to this doctrine, God calls to useful employment all those whom He elects to salvation. This calling might be any lawful undertaking which compensated not only the person engaged in it but served others as well. One showed forth the character of his faith by the quality of his work. Though other denominations might be less ex plicit, the whole Protestant move ment was permeated by the drive to perform well by the fact that most religious people were en gaged in worldly undertakings rather than withdrawing from them into a life apart.

Person~J piety tended to replace for committed Protestants the per sonal devotions of the religious among Roman Catholics. This is often mistaken for a rigid moral posture toward everything both by observers and undoubtedly by some of the practitioners. Piety, however, is a vesting of all things and all acceptable activities with religious significance, a signifi cance that derives from their im pact on the condition of the soul of the person involved with them. Anything that cannot be done to 1971 THE COLONIAL RELIGIOUS EXPERIENCE 627 the glory of God cannot be right fully done. Protestants tended to repudiate the specializations of the Catholic Church: special or ders of religious people, holy days (Puritans castigated a great variety of Christmas activities as pagan), numerous sacraments, the collection of religious relics, and so on. No day was more holy than any other (except, the critic may observe, the Sabbath, which was the major Protestant concession to specialization, a day set aside for religious devotion, that which, in general, Protestants had down graded), no work more a calling than any other, no thing more worthy of veneration than an other. This was the tendency of the Protestant movement, and the outreaches were experienced in vigorous trade and productive ac tivities, insistence on public and private virtue, and a great deal of fervor going into many under takings which those who discrim inated according to a different ethos would reckon to be of little account. That much of this fervor would be obnoxious and repugnant to those of a different faith should be obvious, though men do not or dinarily concede that differences which do not attract them may de rive from a great faith, but any one who would understand Ameri can history must come to grips with this moving vitality which stems from a pious attitude toward the Creation.

Community Experiments English settlements in America grew up separate from one an other, as a rule. These settlements were originally called plantations, came to be known as colonies, and most of them eventually became states within the United States. The separation was owing in part to the accident of the location of grants from the king, in part to the difficulties of land travel in those days, in part to British mer cantile policy, and in considerable part to religious differences. Most seventeenth century colonies were conceived of and took shape as re ligious communities, though those who came to them may have had a variety of motives. That they were conceived as religious communities means that they were to be made up of people of the same faith (wi th a few notable exceptions) and that religion was believed to be the glue that held them to gether as well as sometimes that which distinguished them from the others.

There may be, there undoubt edly is, a strong individualistic strain in Christianity. Individuals are saved, not communities nor nations, according to Christian teaching. Protestants were more individualistic than Catholics, at 628 THE FREEMAN October least in their insistence upon a direct relationship between God and man, one which neither re quired nor could use a human in termediary. Moreover, Christian ity is a missionary religion, that is, the Gospel is to be preached to all nations and peoples. It is not an exclusive religion as is, say, the Hebrew religion. Therefore, religious community in an exclu sive or collective sense would be alien to Christianity or to the main thrust of it. Of course, con gregations or communities within organizations universal in their purported extent would not be alien. The Protestant Reformation eventuated in the breakup of the uni ty of Western Christendom and in the founding of numerous de nominations. The initial direction was the founding of national churches as the religion of the people was dictated by the religion of the prince. These national churches were sometimes distinct from any other, most notably the Church of England, and usually required that all those within the country adhere to them. Religion was probably more deeply en tangled with political power than it had been before the Reforma tion. At any rate, to be able to practice any religion freelY,it was necessary almost everywhere to hold political power.

Escape from a State Church Hardly anyone cpuld conceive of a community or nation existing at the beginning of the seven teenth century which did not have one established religion and did not proscribe all others. After all, religion undergirded all institu tions, laws, and other establish ments. One might as well speak of a people living together under several different systems of laws as with several different religions, so people generally thought. In such a framework, the freedom to practice one's particular religion entailed the lack of freedom of anyone else to practice his in the same community. The Protestant Reformation not only spawned national churches but also a great deal of religious questioning and vigorous searches for the one true religion. Once a man had discovered the true re ligion - or the true doctrines and practices within the Christian re ligion - he must needs live accord ing to his belief, else his soul would surely be forfeit. America was a land of opportunity in the seventeenth as well as later cen turies, a land where converts of the true faith might come and set up communities where their faith could prevail.

It was this character to some of the settlements in America which made their coming and their ac1971 THE COLONIAL RELIGIOUS EXPERIENCE 629 tivities in America a revolution, of sorts. Several religious groups in England revolted, in effect, against the Church of England. The Separatists, of whom the Pil grims who came to Plymouth were a branch, definitely would not ac cept worship in the Church of England. The Puritans, when pressed to conform, were in tacit revolt against the established church. Something of the same could be said for the Quakers and a goodly number of members of other sects not only in England but also in other lands. Those who came to America were usually successful in their revolt, in that they were able to practice their religion in the New World. The Massachusetts Experiment What was more revolutionary' than this was the kind of society some of them tried to set up. The example which comes most readily to mind is that of the Puritans who settled in Massachusetts in large number in the 1630's. These had greater opportunity than did most settlers to .innovate because they brought their charter with them and a controlling group of stockholders as well. The Puritans were not utopians, nor were they redistributionists by doctrine.

They did, however, conceive of the good society as one ruled by the saints, that is, ruled by the elect. They were Calvinists in deriva tion, and believed in the doctrine that God has elected some to sal vation and the rest to damnation. It is His will, so they thought, that the redeemed, so far as they could be discovered, should rule. And, in their rule, they tried to run the government and order society so as to remove all wrongdoing and leave men free only to do good. The Puritans established their church in Massachusetts, and branch-offs from it were estab lished in other places in New Eng land, with the notable exception of Rhode Island. The church was supported by taxation, attendance upon its services was required of all inhabitants, and the moral pro hibitions enforced by the civil authorities.· The Puritans enforced an orthodoxy in public utterance as well as in moral behavior. Those who would not conform were ban ished from the colony. They had not come, they said, to form a debating society.

The Puritans' insistence on orthodoxy may have had political sources, in part. They had a diffi cult time in justifying the rule of the saints and the prescription of the same regimen for both saved and damned. Since all of their theologians could agree that a moral life could in no wise attain salvation for one, it was not at all clear why the saints should con630 THE FREEMAN October cern themselves with church at tendance and what are ordinarily referred to as the private morals of. the unredeemed. The Massachu setts Puritans had a dogma to fill this apparent vacuum; it was known as "preparation for salva tion."3 This was the doctrine that one could be prepared for the re ceiving of grace for salvation by hearing sermons, attending church, and good conduct. This justified, in their minds, the 'use of force or power in religious mat ters; it provided an ultimate sanc tion to the mundane business of intertwining church and state.

The Puritan experiment failed; everyone seems to agree on this point. Their preachers never tired of telling their congregations that they had fallen away from the zeal of their fathers. Their small farm ing towns founded on an abstrac tion of the manor failed to contain a population, much of which turned to the sea for a livelihood. A Half-way Covenant in the latter part of the seventeenth century admitted the children of the "saints" to church membership and political participation without requiring of them all the signs of election. The charter was revoked 3 See Perry Miller, "'Preparation for Salvation' in Seventeenth-Century New England," Essays in American Colonial History, Paul Goodman, ed. (New York: Holt, Rinehart and Winston, 1967), pp. 152-183. in the 1680's. The witchcraft per secutions of the 1690's made many doubt the validity of theocracy. The Congregational church was not finally and fully disestablished in Massachusetts until the 1830's, but the theocratic concept of a Holy Commonwealth had long been abandoned. There were, of course, powerful residues from it. The covenant idea went into a stream of ideas which supported a writ ten constitution as a pact between the governors and the governed.

The idea of reconstructing society for the good of all has not died, either; it has gone through many mutations in American history. But many New Englanders had enough of such drastic experi ments by the eighteenth century. Communal Failures There is not space here to dis cuss in any detail the many dif ferent community experiments of the colonial period; it would take a good sized book to do so. There were experiments in communal storehouses and disposal of land. The earliest of these was at Jamestown; it was such a dismal failure that it was very shortly abandoned. A similar fate met the Plymouth experiment in the 1620's. This did not deter the founders of Georgia from attempt ing an even more extensive experi ment along these lines in the 1971 THE COLONIAL RELIGIOUS EXPERIENCE 631 1730's and 1740's. They attempted to plan the economy and control the morals of the inhabitants: small parcels of land were distrib uted to householders; an attempt was made to produce silk; they selected the inhabitants according to need and other criteria; and an act of 1735 declared that "no Rum, Brandies, Spirits or Strong Waters" could be imported or sold in the colony.4By mid-century just about everyone had had enough of this experiment, including the trustees. Of this experiment in philanthropy, historian Daniel Boorstin notes that "a project which had been lavishly supported by individual charity and public philanthropy, had come to a dismal end. It is· uncertain how much of the population had deserted Georgia for the freer opportuni ties of Carolina and the other colo nies by the middle of the century.

... But many had left, and there was more than romance or malice in the notion that Georgia was on the W8Y to becoming a deserted colony."5 The Quaker Colony These were not strictly religious experiments, but the effort of· the Quaker colony of Pennsylvania 4 Daniel J. Boorstin, The Americans: The Colonial Experience (New York: Vintage Books, 1958), p. 82. 5 Ibid., pp. 94-95. was more nearly so. The Quakers departed radically from Christian tradition. They abandoned the in herited forms of Christianity, in deed, professed to despise them, eschewed liturgy, theology, or a specialized clergy, believed that each man was illumined by an inner light, and were confirmed pacifists. Also, in the early years, their zeal was almost unbounded, as is illustrated by the determina tion of some of their number to be martyred in Massachusetts. (The authorities there finally de cided to oblige them.) They re fused to be sworn in courts or take oaths of office in conventional manner. They believed that if· the Indians were treated fairly there would be no trouble with them.

How such a people with such be liefs could govern is difficult to fathom. Government has to do with monopolizing and using force, if it is to be employed at all. Yet here were a people loath to bear arms. Boorstin observes that "almost from the beginning the Quakers realized that their re ligious doctrines ... would put difficulties in the way of running a government. It was one thing to live by Quaker principles, quite another to rule by them."6 Over a good many years in the mid eighteenth century Quaker legis lators hampered the government 6 Ibid., p. 43.

632 THE FREEMAN 'October from preparing to defend against Indians on the frontier. The mat ter came to a head during the French and Indian War when In dians rampaged over western Pennsylvania. After much debate and soul searching, most of the Quakers who adhered to a rigid pacifism withdrew from apoliti cal activities in 1756. Most of those who remained in the legis lature were willing to compromise on the issue. 7 By the middle of the eighteenth century most Americans had been weaned away from visionary ideas; their experience in the New World had brought them closer to that of the Old World, even as they were growing away from political connections with the old. Many were of a mind to learn from the wisdom of the ages. The Great Awakening: Churchly People vs. Sectarians American experience was tend ing to wean people away from es tablished churches, too. The most generally established body was the Church of England. It was most vigorously established by law in Virginia, where it was not only supported by taxation but other denolninations were scarcely tolerated. This attempt to make the church not only the cement of community but also the support of 7 See ibid., pp. 61-62.

monarchy and other aristocratic es tablishments had largely failed. Many Virginians disliked having such an establishment, held the clergy in low esteem, and were quite willing to part with it when the opportunity offered itself. In many of the other colonies the es tablished church was only one among many other denominations. In such circumstances, it was not very convincing to argue that all the people of a commonwealth must be of the same faith else the community would fall apart. This was clearly not the case. Several colonies did not even have an es tablished church, and some of these were as cohesive as those which did. There was more to the tendency away from established churches, however, than an unfavorable ex perience with them. There were principled objections which even tuated in new conceptions of the relation between government and religion and between the individ ual and society. The two major sources of these were the sectarian denominations and the Great Awakening.

The American population in the colonial period could be divided into two major religious group ings: the churchly people and the sectarians. Churchly people were those who had or sought to have an established church. Sectarians 1971 THE COLONIAL RELIGIOUS EXPERIENCE 633 were those who neither had nor in principle desired an established church. The first of the sectarians to hold power was Roger Williams in Rhode Island. Williams denied that there was any efficacy to en forced religion. God chose whom he would and rejected the others; no good works or any other human agency or action could affect God's choice. Both the saved and the damned must live in society with one another, and government was necessary to that end. But it would be an abomination to attempt to enforce the dictates of religion on those not elected; it would disturb the peace of the community, give decision over religious matters to unqualified men in government, and would dangerously intertwine matters of this world and the next in ways that they could be dis tinguished and kept separate. 8 There were other sectarians, some of whom did not trace from Calvinism. The Quakers were the most prominent. They did not be lieve that religion should be forced, and where they had au thority there was religious tolera tion. Many German sectarians came over in the eighteenth cen tury to settle in the areas where they would not be bothered or where there was religious tolera8 See Alan Simpson, "How Democratic was Roger Williams?" in Goodman, op.

cit., pp. 188-89. tion. Among them were Mora vians, Mennonites, Amish, and so on. The Great Awakening, however, played an even more prominent role in the breakdown of the ties between church and state. The Great Awakening was a revival movement which swept through the colonies in the 1740's and whose impetus continued through the latter part of the eighteenth century. The most prominent preachers ·were George Whitefield, Jonathan Edwards, and Gilbert Tennent. Whitefield was an Eng lishman who preached throughout the colonies with great impact. It was through this movement that evangelical piety began its move to become the dominant mode of American religion. The evangelical movement took the emphasis away from doctrine, from forms, from ritual, and from what may be called in more gen eral terms "churchiness." What was essential was not outward conformity to religious prescripts but inward conversion, a new heart, and a new man. To such an outlook, an established church tended to be only so much dead weight. The revival movement stressed individual conversion and individual piety and the improve ment of society by way of im proved individuals. The way to community was not through gov634 THE FREEMAN October ernment power but by changed men. The Great Awakening di vided the older churches between those who accepted the new re vivalist emphasis and those who championed the rational approach.

An established church became, quite often, an anachronism, when what was no longer involved was a single church. Moreover, the Great Awakening cut across the bounds of colonies and religion to provide a common ground in reli gion to inhabitants throughout the colonies. By the latter part of the eight eenth century, then, men were chastened by their experience with attempts at reconstructing society, by the use of government to achieve some religious end. They had also been enlivened by a new concept of the role of religion in society. For some Americans, re ligion may have become less im portant than it was to their fore bears. To many others, it was still of utmost importance, so impor tant that it should not be cor rupted and stinted by the expedi ency of the exercise of power. To virtually all Americans, their re ligious background provided the framework through which they winnowed their ideas and in terms of which they buiIded. f) Next: Colonial Political Experience A Formula lor Freedom IDEAS ON $ LIBERTY THE COLONISTS didn't have to contend with a politicalized Church, and later wrote the First Amendment to prevent such a develop ment. The eighteenth-century pulpit in America stood staunchly for freedom. "The Americans," wrote Alexis de Tocqueville, "com bine the notions of Christianity and liberty so intimately in their minds that it is impossible to make them conceive the one without the other."

The framers of our basic political documents and the people for whom they spoke were end products of the long religious and cultural heritage of Christendom. They willed religious, political, and social liberty as a necessary corollary of their religious com mitment, and our relatively free society was, in part, a projection of the teaching of the colonial churches. ED M U N D A. 0 PIT z, Religion and Capitalism: Allies Not Enemies Individual Freedom THOMASF. BAYARD I HAVE WITNESSED the insatiable growth of that form of state so cialism styled "Protection," which I believe has done more to foster class legislation and create in equality of fortune, to corrupt public life, to banish men of inde pendent mind and character from the public councils, to lower the tone of national representation, blunt public conscience, create false standards in the popular mind, to familiarize it with reliance upon state aid, divorce ethics from poli tics, and place politics upon the low level of a mercenary scramble, than any other single cause.

Step by step, and largely owing to the confusion of civil strife, it has succeeded in obtaining control of the sovereign power of taxa tion; never hesitating at any alFrom an address by the Honorable Thomas F. Bayard before the Edinburgh Philosophical Institution, circa 1897. liance, or the resort to any com bination that promises to assist its purpose of perverting public taxation from its only true justi fication and function of creating revenue for the support of a gov ernment of the whole people, into an engine for the selfish and pri vate profits of allied beneficiaries and combinations called "Trusts." Under its dictation individual enterprise and independence have been oppressed, and the energy of discovery and invention debili,;. tated and discouraged. It has un hesitatingly allied itself with every policy which tends to commercial isolation, dangerously depletes the Treasury, and saps the popular conscience by a scheme of cor rupting favor and largesse to spe cial classes, whose support is there by attracted ....

It is incorrect to speak of "Pro tection" as a national policy, for 635 636 THE FREEMAN October that it can never be; because it can never be other than the fos tering of special interests at the expense of the rest; and this over throws the great principle of equality before the law, and that resultant sense of justice and equity in the administration of sovereign powers which is the true cause of domestic tranquility and human contentment. The value of "protective" legislation to its bene ficiaries consists in its inequality; for without discrimination in fa vor of someone there is no advan tage to anyone, and if the tax is equally laid on all, all will be kept upon the relative level from which they started; and this simply means a high scale of living to all, high cost of production of every thing, and consequent inability to compete anywhere outside the or bit of such restrictive laws.

But the enfeeblement of indi vidual energies and the impair ment of manly self-reliance are necessarily involved; and the be lief in mysterious powers of the state and a reliance upon them to take the place of individual exer tion, fosters the growth of state socialism, and personal liberty ceases to be the great end of gov ernment. I) IDEAS ON LIBERTY The Curbing of Factions SO STRONG is this propensity of mankind to fall into mutual ani mosities that where no substantial occasion presents itself the most frivolous and fanciful distinctions have been sufficient to kindle their unfriendly passions and excite their most violent conflicts. But the most common and durable source of factions has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society. Those who are creditors, and those who are debtors, fall under a like discrimination. A landed in terest, a manufacturing interest, a mercantile interest, a moneyed interest, with many lesser interests, grow up of necessity in civil ized nations, and divide them into different classes, actuated by different sentiments and views. The regulation of these various and interfering interests forms the principal task of modern legis lation and involves the spirit of party and faction in the neces sary and ordinary operations of the government.

JAMES MADISON, from No. 10 of The Federalist Papers A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Contra SINCE I find the prose of Herbert Marcuse to be an almost impene trable thicket, maybe I am not the best person in the world to render an informed opinion on the quality of Dr. Eliseo Vivas's critical view of his subject in Contra Marcuse (Arlington House, $8.95). But Dr. Vivas has his own troubles with what he calls the "merciless jar gon" which passes for style in the. Marcusean world. He has done the best he can. So I will do the best I can to act as a collaborator in an effort to clarify what must, in the nature of things, resist trans lation. Like Dr. Vivas, I know what the "kids" get out of Mar cuse: it is permission to "wreck the joint." I happen to share with Dr. Vivas at least a qualified fond ness for "the joint" (meaning Western civilization), so I feel Marcuse justified in regarding Marcuse as an evil influence even though I do not fully understand his motiva tions, his analyses, his grammar, and his rhetoric.

As I get it from the behavior of his disciples, Dr. Marcuse wants to level capitalistic society (and Soviet communist society, too) in hopes that "liberation" can some how be found by the dwellers in the ruins. But this is to assume that human nature would behave differently in the future if it could only begin over again with a total ly clean slate. Like Dr. Vivas, I consider such an assumption to be utterly crazy. 'Human beings are as they are, a most variegated bunch. As Schopenhauer (quoted by Dr. Vivas) puts it, they are "gregarious porcupines"; they want to get along with each other, 637 638 THE FREEMAN October but they find the going tough from time to time, particularly at close quarters. In Oriental societies, the "porcupines" have traditionally turned over the job of quill-pull ing to tyrants (see Karl Wittfo gel's devastating explorations of Asiatic "hydraulic societies") . But in the West, where the principles of voluntary association are at least dimly understood and partially ac cepted, the porcupines have devel oped some ability in choosing en vironments (Burke's "little pla toons") that enable them to con trol their quills. Marcuse, who can't tolerate freedom to choose one's own associates, is, of course, anti-Burke. He is also anti-porcu pine - i.e., anti-human - at least in his net effect on those who pro fess to understand him.

"Play and Display" I confess that Marcuse's distinc tions, if taken literally, make no contact with the world that I know. He thinks, or appears to think, that our vaunted tolerance is "re pressive" of the Left. But I con cur with Dr. Vivas that Dr. Mar cuse's own academic world is, in general, repressive of the Right. Again, Dr. Marcuse thinks that our technology, our Puritan work habits, and our addiction to "affluence" (meaning a multiplica tion of gadgets), all combine to keep us from being "liberated" to "play and display." But this is nonsense. If we didn't have a high technology and an ability to work at creating the conditions of affluence, we would be left in a starveling condition. Few. people would have the energy to "play and display." What does Dr. Marcuse mean by "playing" and "displaying," any way? A man watching a pro foot ball game on a Sunday afternoon, a beer can in his hand, is indulg ing his playful instincts in a spec tatorial way. The players them selves are engaged in display of a most skillful kind. My wife's mod ern dance students take their di rections from a most playful na ture, and they learn an art and a technique of display that must please them or they would not de vote so many hours to master what they call the vocabulary of move ment. I see "play and display" all around me, on skating rinks, ten nis courts, and at small boat ma rinas. I also see it on city streets where a "liberated" public has suddenly taken to making life a huge costume party. Anything goes in dress or wigs; I see Beau Brummel walking down East Forty-fifth Street in New York City with Kit Carson or Jim Beck wourth, the Mountain Man. Beau Brummel looks in one direction to ogle a girl wearing hot pants; Jim Beckwourth prefers a more un1971 CONTRA MARCUSE 639 kempt lass in torn blue jeans and a sweat shirt. The scene· has its esthetic drawbacks, but a univer sal costume party can hardly be considered "repressive." It also happens to be financed by our af fluence, which supports a whole new industry of wig makers, hair weavers, and anti-barbers.

The Three Mis of Coercion The West, being generally vol untaristic, will pass on from its costume party phase to something else. But Dr. Marcuse will not be pleased. Dr. Vivas calls him one of the "three M's," the two other be ing Marx and Mao. In their zeal to change the "relations of produc tion" (whatever that may mean), the "three M's" have all been will ing to accept a philosophy of al leged progress that depends on sending recalcitrants to the wall. But what has this to do with free ing men to "play and display"? Dr. Vivas asks a nice question: "In view of the way men seem to be eager to give up their freedom to despots and demagogues in ex change for promissory notes whose only collateral is the rhe toric which they are offered, on what ground does Marcuse say that the true interest of the indi vidual is the interest in freedom ?" The individual in the West has the protection of his institutions, which are those of a pluralistic society. Different groups have wanted different freedoms ("Eng lish liberties"), and, in fighting for rights, even class rights, they have achieved a precarious bal ance that permits the more eccen tric to find special niches for them selves in the interstices. I like it that way, so I don't like Marcuse.

A Study in Nonsense This is not to say that I under stand him. I only understand the effect he has on others. His use of words, to me, defies common sense. When he says that we must reject "the tyranny of the genital" and "re-eroticize" ourselves in con formance with something called "polymorphous" (or many-shaped) sexuality, I can only think that he is in favor of turning human be ings into eunuchs. The reproduc tive drive is present in all animals, indeed, in all nature. So how get rid of the "tyranny of the genital" without getting rid of the human race? Dr. Vivas, with his own common sense, remarks that Dr. Marcuse doesn't know what he is talking about when he speaks of the "tyranny of the genital" any way. Recalling a "proto-Kinsey survey" published in the middle twenties, Dr. Vivas dryly observes that "the variations of sexual needs among people" are "quite wide." The best things in Dr. Vivas's 640 THE FREEMAN October book are the pages in which he defends our civilization against all the tabula rasa wreckers, whether they are Marcusean, Marxian or Maoist. It is true, says Dr. Vivas, that "Big Brother"

(meaning the Big State with its computers) has our finger prints and our dossiers. But nobody suff ers from prosecution for calling Lyndon Johnson "Old Corn Pone" or alleging that Richard Nixon has broken faith with conservaA. Magic Word tives. If one were to call Brezhnev "Old Corn Pone" in front of Len in's tomb, it would mean Siberia. In Richard Daley's Chicago the worst that could happen to a pub lic name-caller would be a charge of disorderly conduct. Quite a dif ference, says Dr. Vivas. The meas ure of Dr. Marcuse's stupidity is that in his "colossal'self-right eousness" he can't perceive that there is any difference at all. ~ IDEAS ON ~ LIBERTY An alarming percentage of our citizens, it is to be feared, stop with the word "education" itself. It is for them a kind of con juror's word, which is expected to work miracles by the very utter ance. If politics becomes selfish and shortsighted, the cure that comes to mind is "education." If juvenile delinquency is rampant, "education" is expected to provide the remedy. If the cultural level of popular entertainment declines, "education" is thought of hope fully as the means of arresting the downward trend. People expect to be saved by a word when they cannot even give content to the word.

RICH ARD WEAVER, Life Without Prejudice the Freeman VOL. 21, NO. 11 • NOVEMBER 1971 VoluntaryParameters Leonard E. Read 643 A commentary on terminology used to camouflage the latest round of inflation and controls. Economicsand Etbics: Search for a Moral Order Edward P. Coleson 646 A history of material progress under Natural Law and the need to return to its rule. Man and His Environment Does modern agriculture pollute or improve the environment? Samuel R. Aldrich 661 The Foundingof the AmericanRepublic 4. The ColonialPolitica.1Experience Clarence B. Carson 667 Training for self-government, but subject, as always, to the wisdom to do it well. Bad Money Drives Out Good! Paul L. Poirot 678 Gresham's Law prevails, regardless of government controls in the attempt to counte ract inflationary policies. Conflictof Whose Interests? Bertel M. Sparks 682 Concerning political grants of special privilege as a scheme for buying votes.

The Storyof Negro Gains Not special favors or discrimination,but to each his own. Henry Hazlitt 694 Book Reviews: IlDividing the Wealth: Are You Getting Your Share?" by Howard E. Kershner IlUncle Sam, Monopoly Man" by William C. Wooldridge Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding. 700 the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON·HUDSON, N. Y. 10533 TEL.: (914) 591-7230 LEONARD E. READ PAUL L. POI ROT 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, 1971, 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. Articles from this journal are abstracted and indexed in Historical Abstracts and/or America: History and Life. THE FREEMAN also Is available on microfilm, Xerox University Microfilms, Ann Arbor, Mich igan 48106. Permission granted to reprint any article from this Issue, with appropriate credit, except "Man and His Environment," and "The story of Negro Gains."

PARAMETERS LEONARDE. READ My OBJECT here is to examine and comment upon a statement made by the Secretary of the Treasury: "We are at the end of an era in in our economic policy. It will be the disposition of the American people to have as few constraints as possible after the 90-day freeze period, and if we can get voluntary compliance now we can avoid stringent controls later. But it would be unwise to think we can go back to where we were before. American business and labor may have to get used to the idea of living within certain parameters."! First, what is a parameter with in which we may hav~ to live? The simplest definition to be found in the dictionary: 1 The New York Times, August 29, 1971, p. 1. ... a quantity or constant whose value varies with the circum stances of its application, as the radius line of a group of con centric circles, which varies with the circle under considera tion.

There are only a few in the whole nation who even know what parameters are, let alone how to live within them. Why the use of such a strange word? I suspect it is used for precisely the same rea son that the Chairmanof the Fed eral Reserve Board, some months earlier, borrowed and broadcast a British term, "incomes policy": to lessen the shock effect. The same applies to the more recent refer ences to a "Stabilization Board." To be open and above board about it, that is, to bluntly an643 644 THE FREEMAN November nounce that we are in for wage and price controls and then ration ing and that these mean an end to free market, private ownership practices, would not set well with a substantial number of citizens. So, what is the political approach? To ease into the statism being pre pared for us by employing terms so vague that hardly anyone knows what the intentions are. "Parameters" and "incomes pol icy" are perfect examples of this beating around the bush.

Contradictory Terms What are we to make of "volun tary compliance"? This is an ab solute contradiction in terms. Put it this way: If you will not volun tarily jump out of the window, I shall take sterner measures to . accomplish the same effect. Vol untary means something given or done by one's own free choice, the exercise of free will. Compliance means just the opposite: acquies cence or giving in. In the days to come, this means that you yourself will either freeze wages and prices - regardless of supply and demand and what you would freely choose to do in the circumstances - or you will be compelled to do so. Respond to the threat of force, or down comes the force upon you! Voluntary, instead of meaning an exercise of one's own free will, turned around to mean that you are to behave according to somebody else's arbi trary will! "Weare at the end of an era in our economic policy." Most gov ernment officials believe we are, as do many businessmen, some col umnists and so-called economists, and millions of others. Perhaps we are! But this verdict should not be glossed over and accepted light ly. At least, let us be aware of its meaning.

First, note that the antecedent of the rationing to come is the wage and price controls presently imposed. The antecedent of these controls is inflation brought on by excessive governmental expendi tures and money issue - and these, in turn, caused by millions of mis guided people looking to govern ment for security, welfare, and prosperity. Second, note that current official pronouncements make no mention of the above sequence of causes or the need for removing them. This merely means that the wel fare state and its concomitant, the planned economy, are accepted and assumed as a fait accompli,· the new order is here - the total state! Buy this, and we are, indeed, at the end of an era. Russia, China, Cuba, and others have beat us to it, of course, in this century. But the history of price-fixing extends back at least 46 centuries in 1971 VOLUNTARY PARAMETERS 645 Egypt, China, Athens, Rome, Brit ain, India, the·' colonial experience in America, to mention a few always with the same sad report: the end of an era. 2 "It would be unwise to think we can go back to where we were be fore." Was it unwise for England, following the Napoleonic Wars, to abandon mercantilism by repeal ing three-fourths of some 18,000 laws restricting production, ex change, and pricing? There fol lowed the greatest outburst of creative energy and mass well being ever known up to that time.

On the contrary, the restrictive laws under which England is again falling would seem to be what is most unwise. Sack to freedom True, the ideal free economy has never existed anywhere. The nearest approximation has been in the U.S.A. Wisdom suggests that we turn back in that direc2 See "Food Control During Forty-Six Centuries" by Mary G. Lacy. Copy on request. Ever the Same tion, doing everything within our power to head off any move to the contrary. Economics, the study of hpw to mitigate the effects of scarcity, concerns the search for answers to what should be produced and in what amounts and whose satis factions are to be served. The free market, featuring open competi tion and free entry, has the con sumer as king. Each decides what he wants, in what quantities, and at what prices, where he shall work, how many hours, and at what wage. With free, unrestrict ed pricing as the guidelines, the free market is .always working to ward a balance of supply and de mand. The free market works automatically and "shortages" and "surpluses" are not in its lexicon.

Abandon the free market, and not the consumer but the politi cian becomes king. In the "new era," that king, rather than you and I, decides what shall be pro duced, what we shall have, in what quantities, and at what price. Can that be wise? ~ IDEAS ON $ LIBERTY IT IS EVER the same. When a government inflates the money or some other cause pushes prices upward, attempts are made to con ceal the symptoms, rather than to attack inflation at its source or otherwise get at the root-cause. F. A.· H A R PER. Stand-by Controls ECONOMICSandETHICS SEARCH FOR A MORAL ORDER EDWARD P. COLESON THE WORLD was inexpressibly shocked a quarter century ago, when, at the close of one of the most ghastly wars in history, the evidences of Nazi brutality became common knowledge. Without try ing to excuse ourselves, the Bomb which we loosed on mankind could still be justified more easily than the mass liquidation of six million Jewish civilians. The Nuremberg Trials and subsequent soul search ings have never quite answered the question of why they did it or why many other things with which they had no connection have also happened in this civilized world.

This has been even more of a mys tery because, according to modern Western social theory, man is in herently good. Beginning with Rousseau a couple of centuries ago, philosophers, social theorists, Dr. Coleson is Professor of Social Science at Spring Arbor College in Michigan. 646 and even theologians had decided that human beings were really very nice creatures and that their known failings could be readily eradicated by education and cul ture, because mankind was almost infinitely perfectible. In the late Victorian period with nearly a cen tury of relative peace in Europe since Waterloo, with increasingly democratic governments on every hand, with decades of social and political reform an accomplished fact, and with many improvements which resulted from a host of sci entific achievements in medicine and engineering, the utopian dreams of the ages seemed on the verge of fulfillment. It became the fashion then for people to look back with horror and amazement on the atrocities committed in the dark ages of the past. The follow ing quotation from a popular writ er of the "Gay Nineties" well illus1971 ECONOMICS AND ETHICS 647 trates this attitude: The world contains no sadder me morial of man's inhumanity to man than London Tower. For centuries it was the home of sorrow and despair.

The record of the victims of despotic cruelty who have endured imprison ment and suffered death within its walls renders one sick at heart, until he realizes that increasing civiliza tion has at last made such atrocities impossible. 1 Increasing civilization - nonsense! Any vicious, diabolical act perpe trated on mankind in the history of the world has been re-enacted in our time and on a mass produc tion scale. The burning questions are why it has happened and what we can do to prevent further dis asters. The Classical Tradition of Natural Law Our present dilemma is strange ly reminiscent of other crises in history. After the Golden Age of . Athens in the midst of the fifth century B.C. the Greek city states fell to fighting among themselves and well-nigh destroyed Greek civilization. After such a glorious epoch the collapse was a dramatic contrast, indeed, and the Greeks, always the theoreticians, busied themselves trying to figure out why the glory had so swiftly fad1 John L. Stoddard's Lectures, Vol. IX, p.259.

ed. It was then that the aged Soc rates and his youthful student, Plato, attempted to diagnose the Greek ills and prescribe a remedy. Out of their soul searching and the later work of Plato's pupil, Aristotle, came the foundations of Western social, political, and eco nomic theory. One aspect of this pioneer effort is of particular in terest to us - the birth of the tra dition of Natural Law. The con cept of a Higher Law was not wholly new to Greek thought: years before, Sophocles had his heroine, Antigone, assure her mon arch: Thy writ, 0 King, Hath not such potence as will overweigh The laws of God ... fixed From everlasting to eternity. During the so-called Golden Age, however, a new breed of thinkers, the Sophists, had undermined the Greek character by teaching their students to be clever rather than ethical. Moral standards were re jected: "Man is the measure of all things." The people of the time were well aware of the decline in character and there was the usual urge to return to the "good old days," but the decay was not ar rested although they understood their problem. They seemed to be quite aware that the new relativ istic code of the Sophists was their undoing: "Whirl is king," said 648 THE FREEMAN November Aristophanes, "having deposed Zeus." Therefore, with Plato and Aristotle we find the urge to dis cover a norm for human conduct which would be stable and perma nent, a standard above a'nd beyond ourselves. Aristotle 2 urged that "God and Reason alone [should] rule, . . . he who bids man rule adds an element of the beast .... "

The tradition of the Natural Moral Law was continued by the Greek Stoic philosophers who passed it on to the Romans. One of the fin est statements of legal philosophy was written by Cicero, the great orator, who lived when the Roman Republic was in its death throes. He speaks of a Higher Lavv that ... cannot be contradicted by any other law, [which] neither the Sen ate nor the people can give us any dispensation for not obeying .... It is not one thing at Rome, and another at Athens; one thing today, and an other tomorrow.... God himself is its author, its promulgator, its en forcer. 3 The Christian Church and the Higher Law With the rise of the Church within the Roman Empire it be came the task of Christian think ers to decide what they were going to do with Greek, to them pagan, 2 Brendan F. Brown, The Natural Law Reader, p. 51. 3 Ibid., p. 54. philosophy (the Christians back then were much less given to play ing "follow the leader" than they have been more recently). The Natural Moral Law sounded ac ceptably pious but the Greeks and Romans derived their guidance from "right reason," while the Hebrew-Christian tradition went back to the giving of the Law of God to Moses in the midst of thun der, earthquake, and smoke on Mount Sinai. The first was the prod uct of ded ucti ve reasoning and conscience for the most part but the latter was simply given given by God himself. Centuries later St. Thomas Aquinas (1225? 1274 ?) resolved the dilemma by an ingenious synthesis of both traditio'ns ~ Thomas Aquinas made four cate gories of all law. At the top of his legal hierarchy he placed the Eternal Law of God which comprehended ev erything else. Beneath this was that portion of the Eternal Law which was revealed in the Bible and the Church. Next came Natural Law which was that part of the Eternal Law which man could comprehend by unaided reason. Finally, at the bottom, he placed the laws of par ticular governments which might be called Human Law. 4 Back in 1215, however, before Saint Thomas was born, some 4 Irving E. Howard, "The Theology of the Declaration of Independence," Chris tian Economics (June 11, 1957), p. 1.

1971 ECONOMICS AND ETHICS 649 practical Englishmen took affairs in their own h-ands and wrested an historic document from their des potic king. This, of course, was the Magna Charta and the tyrant was King John, the Norman king of England, but even this was not a wholly pragmatic affair. Soon Henry de Bracton was to supply the theological foundation: "The King is under God and under the Law." Centuries later Englishmen would appeal to Bracton when they resisted Charles and James. It is interesting to note that the American colonists two hundred years ago used William Black stone's Commen.taries on the Laws of England in much the same way in their quarrel with George III. The first volume of Blackstone's famous Commentaries came from the press in 1765 but the Ameri can colonists were so cordial in their reception of his ideas that a decade later Edmund Burke could tell Parliament on the eve of the American Revolution that "they have sold nearly as many of Black stone's Commentaries in America as in England." The appeal was Blackstone's doctrine of Natural Law: This law of nature ... dictated by God himself, is of course superior in obligation to any other. It is binding over all the globe in all countries, and at all times: no human laws are of any validity, if contrary to this; and such of them as are valid derive all their force, and all their authority ...

from this origina1. 5 When Hitler came to power a few hardy Germans reminded him that God was their "Fuehrer," but the Higher Law was well-nigh for gotten and Hitler had his way with the German people. It is high ly disturbing to compare the ease with which despots take over na tions today as compared with the heroic resistance of our fathers to tyranny in the past. Evidently the iron has gone out of the soul of modern man. As William Penn said: "If men will not be governed by God, then they must be gov erned by tyrants." God's Law and Economics Now it would be a mistake to assume that back in some golden age there was a Christian com monwealth in which all the virtues flourished and men lived together as brothers. Every system devised by man since the beginning of time has been disfigured to some degree with the marks of human frailty. Nevertheless, we need not give up in despair: mere mortals have done quite well at times and no doubt could do so again. It is interesting to note that the great conscious attempt to let the eco nomic life of the nations conform 5 William Blackstone, Commentaries on the Laws of England, Vol. I, p. 31.

650 THE FREEMAN November to some abstract Higher Law was not during the Reformation era or the Puritan period in England, for instance, when men were presum ably doeeply concerned about fol lowing the divine mandate, but during the Age of Reason when theology was out of fashion. The religion of the times was Deism, a rather detached belief in a Su preme Being who created the uni verse and set it going according to Newton's Laws of Motion. Asa result of the scientific revolution in astronomy and physics, dating back to Copernicus, Kepler, and Galileo which became the basis of the so-called Newtonian Synthesis somewhat later, the social philos ophers of the time were convinced that there were also laws of hu man behavior, both individual and in the mass. Their belief in "law and order" contrasts strangely with the relativistic philosophies of our time as the familiar lines by Alexander Pope so clearly show: Nature and Nature's laws lay hid in night.

God said, "Let Newton be!" and there was light. One of our clever contemporaries brought the couplet up to date: But not for long. The devil howling, "Ho! Let Einstein be!" restored the status quo.6 ---6 Richard C. Bernhard, Economics, P. 733. An Orderly Universe The pioneer economists believed that there are abiding principles in all of life, "laws" which man did not make and cannot alter. By con trast, as the second couplet sug gests, our contemporaries believe that all is rela tive, that they can make up their rules as they go along and that, like prices nowa days, they are "subject to change without notice." It is beginning to appear that certain time-honored principles such as Gresham's Law are still with us and are rising from the rubble of our shattered schemes to mock us. Perhaps we will find that our Fathers were right after all. Akin to the doctrine of Nat ural Law in human affairs was the conviction that there is a Nat ural Order, what should and could be a harmonious working to gether of everyone's interests, if each would play the game of life fairly. This concept reminds one of the familiar Balance of Na ture, much talked about by ecol ogists today who fear we are up setting Nature's plan. Much the same idea is expressed by St. Paul in the familiar dictum that "all things work together for good," if we but obey the Supreme Law giver (Romans 8: 28). If the econ omy would run by itself, better than any Keynesian bureaucrat ever could succeed in running it, 1971 ECONOMICS AND ETHICS 651 let's let Nature do it for us then.

The government - Jefferson's "simple, frugal affair" - could then retire to the side lines to serve as "umpire" with the rule being simply "no force and no fraud," as Robert M. Thornton 7 wrote re cently. It was upon this self-regulating Natural Order that Adam Smith based his economics: "There is an astonished tone in his work, as if he could hardly believe his own discoveries and sensed a quality of magic in them," as Richard C. Cornuelle 8 wrote a few years ago. There is impressive evidence, both positive and negative, to suggest that just perhaps Adam Smith was right after all-Victorian prosperi ty a century ago and the "German Economic Miracle" un der Erhard after World War II as proof of what the free economy can accomplish and the dismal failure of a lot of socialist schemes as examples of the alternative ap proach. Virtues of Self-Reliance In an age of disintegrating so cial, political, and economic pro grams - New Deals, Great Leaps, and Five Year Plans - the claims 7 Robert M. Thornton, "The War on the Poor," Religion and Society (Dec.

1970) , p. 24. 8 Richard C. Gornuelle, Reclaiming the American Dream, p. 48. of the self-regulating free economy deserve further consideration. In addition to the simplicity and econ omy of the approach, there is the very important fact that self-re liance and personal responsibility are encouraged. Like Horatio Alger, people take out their frus trations working instead of riot ing, since they don't expect the government to take care of them. This approach maximizes produc tivity and minimizes violence: with famine a global threat and strikes, riots, and war a present reality, we could certainly use more productivity and less vio lence. Almost inevitably if people have been schooled to expect the good things of life in ever increasing quantity from the hands of gov ernment, they will rebel when the promised abundance is not forth coming - and if they sit and wait for it to come, it won't be forth coming. People do not shoot the weatherman when there is a drought, because they don't think he is to blame. If people believed once more that God is the source of material blessings and that "God helps those who help them selves," violence would cease to be a factor in politics - we survived the Depression with little of it.

Adam Smith's thesis that the eco nomic problem will find its solu tion, as well as any human prob652 THE FREEMAN November lem ever is solved, when men work diligently and efficiently, and are fair in their dealings, is a propo sition .that deserves serious con sideration once more,' since alter native approaches have failed so miserably. In an age when most people be lieve that the right is somehow impractical and unworkable, a noble ideal but hardly a guide for everyday action in business or on the international scene, Adam Smith's doctrine of the harmoni ous outworking of the true self interest of all of us can scarcely be emphasized too strongly. What is truly good for labor is good for management, too, and the appro priate international economic pol icy for us would be good for our neighbors - Germany, Japan, and the rest. In the popular mind free enterprise means Darwin's doc trine of "survival of the fittest," a brutal struggle to the death, but The W ealth of Nati·ons was pub lished in 1776 and the Origin of Species did not appear until 1859.

A few years before Darwin the famous French economist, Fred eric Bastiat, 9 asked: "How could God have willed that men should attain prosperity only through in justice and war?" To Bastiat, this doctrine of conflict is based on the "frightful blasphemy" that God 9 Frederic Bastiat, Economic Sophisms, p.88. created the world in such a fashion that decency and humanity are im possible. This is the Great Divide, the basic difference between mer cantilism, ancient and modern, and laissez faire economics in the original meaning of that much misconstrued and misunderstood French phrase for the market economy. As the dean of American free enterprisers, the distin guished Austrian economist, Lud wig von Mises, wrote a few years ago, Adam Smith and the classical economists believed that . . . harmony prevails among the rightly understood or long term in terests of all individuals and groups of individuals. Earlier ages had la bored under the misapprehension that no man or group of men can profit but by the loss of others. In entirely demolishing this fallacy, economics paved the way for the un precedented achievements of modern Western civilization.I 0 Capitalism: Debits and Credits The question always arises why, if free enterprise was that good, the system did not continue to this hour. A number of circumstances, mostly beyond the early econo mists' power to alter, conspired to give laissez faire a bad public im age. The part of the difficulty 10 Ludwig von Mises, "Economic Free dom in the Present-day World," Christian Economics (Oct. 14, 1958), p. 1.

1971 ECONOMICS AND ETHICS 653 which was of their own making we will dispose of first: Smith's fol lowers, much more pessimistic than he, dreamed up "Iron Laws" of starvation wages and the like which soon gave economics its rep utation as "that dismal science" (the economists of·that era should have been aware that this was hardly good public relations). Other things happened they couldn't prevent, but capitalism (to use Marx's phrase) got the blame. For instance, there were nearly twenty-five years of war between the fall of the Bastille in 1789 and Waterloo in 1815 - in deed, a global war. These years were hard for most people. This was followed by a severe postwar depression, as has commonly hap pened after modern wars. The In dustrial Revolution was still in the primary stage of heavy invest ment (their children and grand children were to reap the benefits many years later). Then, of course, industrialists did take advantage of their help when they could, just as the hired man has taken ad vantage of the boss when. he was able to do so more recently.

Many tears have been shed over such things as sanitary conditions which they neglected, in part through ignorance (Lister did not perform the first antiseptic opera tion in the history of the world until 1865); and also long hours of labor which seemed less shock ing to ex-farmers back then than to generations of city slickers more recently (also the long labor day is misleading - the people back then tended to work in spurts and were not very steady on the job). All in all, they had problems back then, although their socialist grandchildren may have worried more about it than the folks who survived this rather difficult pe riod of history. Because of the real and imaginary failures of these old industrialists, the Capitalist era was relatively short. But be fore we take a look at the "Wel fare State," which has its prob lems, too, we need to summarize the accomplishments of the Capi talist era and note how it was in itiated in the first place.

Free Trade for England We are perhaps inclined to be lieve that free enterprise sprouted spontaneously in England the day after Adam Smith's Wealth of Nations came from the press in 1776. The book was popular and greatly enhanced the author's rep, utation but it did not make much difference in practical policy until many years later. Although things had been loosening up for some time, the truly dramatic switch in English policy came with the Re peal of the Corn Laws in 1846, which led to a policy of free trade 654 THE FREEMAN November in general shortly thereafter. The Corn Laws were Britain's "farm program," a tariff policy that kept out foreign grain and thus made food unnecessarily expensive in England. With considerable help from a natural calamity, the tragic Irish Potato Famine, the Anti Corn. Law League, under the lead ership of Richard Cobden and John Bright, succeeded in getting Peel's government to repeal the protective tariffs on grain. To Cobden and Bright this was a holy crusade, a campaign to make bread cheap and abundant for the mass es as this ancient poem, dedicated to "R. Cobden," clearly shows: God said, "Let there be light"; and 10, Light sprang forth at His word.

God said, "Let there be bread"; but no, l\Ian heeded not the Lord. But Cobden rose like wisdom's star Ii·trom knowledge's bright sea, And knaves were hush'd and tyrants crush'd And labour's bread was free. The other nations of Western Eu rope followed the British lead and for a few decades in the latter part of the last century there was relatively free trade throughout much of the world. The relationship of the United States to the open markets of Western Europe is most fascinat ing in view of our historic prefer ence for protective tariffs. Actually we gained greatly by their deci sion to let us in. By some happy chance the opening up of the Eu ropean market to foreign. food stuffs came just as we were get ting ready to deliver a flood of it to them. About the time they de cided to let our new -found abun dance come in, we developed the tools to produce and market it. To mention a few innovations, a new plow was invented by John Deere which would break the prairie sod, and a reaper by McCormick which made commercial grain produc tion possible; in the meantime a railroad system was laid out across the country which would get the crops to market. For in stance, in 1853 Chicago ll handled six million bushels of wheat, in 1855 the figure jumped to sixteen million bushels which then almost doubled to thirty-one million by 1860 (little wonder that Malthu sian pessimism went out of fash ion about 1850, as Lord Keynes tells us) .12 All Nations Gain But we must remember that Eu ropean free trade made much of this possible: we would have had a staggering "agricultural sur plus" by 1860 if all of this had 11 John Chamberlain, The Enterprising Americans, p. 98.

12 John Maynard Keynes, The Econom ic Consequences of the Peace, p. 10.

1971 ECONOMICS AND ETHICS 655 stayed home. Many tears have been shed over the sad plight of the European farmers who could not compete, but little Denmark, for merly a poverty-stricken grain producer, demonstrated that it was possible to shift to a cow-pig chicken type of mixed farming, using cheap American grain as feed, and much to their profit. The common laborers of Western Eu rope were now eating better than they ever had in the history of the world in spite of a population ex plosion. Nor were the Europeans and Americans the only ones that bene fited: for instance, the British simply rolled out a railroad system across the Humid Pampa of the Argentine and took beef in return as :payment. Heavy British for eign investment speeded economic development all over the world, including the United States. Al though they sometimes lost money on these ventures, again including some they invested in the United States, part of them were profit able, too, which provided capital for a continuing cycle of economic development in the backward areas of the world. Little wonder that the optimists of that day foresaw a glorious future for the human family. Many Evangelical Christians in the late Victorian period were even certain that the Millennium, that blessed era when the Lord would reign in righteous ness and we would "beat our swords into plowshares," was upon us. But it would be a mistake to assume that everyone was that pleased with the status quo back then; the dissenters were soon going to have their try at ri.ght ing the wrongs of the world.

Socialism, Christian and Otherwise As already mentioned, the obvi ous and simple system of natural liberty which Adam Smith 13 advo cated in 1776, did not fully be come a reality until the years immediately following the Repeal of the Corn Laws in 1846. It is most interesting to note that Marx's and Engels'Communist Manifesto was published in 1848, jp.st as laissez faire came into its own. Of course, there had been plenty of anticapitalist dissent long before this. The .new industrial age was hardly started in the latter part of the eighteenth century, the con sequence of Arkwright's and Watt's inventions, before enraged hand spinners and weavers turned out en masse to destroy the hated contraptions which were putting them out of work. Since they were certain that there was already overproduction, these new devices could only lead to economic di saster (how they could believe 13 Adam Smith, Wealth of Nations (Modern Library edition), p. 651.

656 THE FREEMAN November they had a surplus back then is almost incomprehensible, but then, fears are often irrational). Of course, what saved the day for the textile industry was the willingness of the ladies, and the rest of us, to enlarge our ward robes as cloth became more abun dant and cheap. But that was the next chapter in the economic his tory of the West. Both workers and intellectuals hated the "dark Satanic mills" springing up in the new factory towns and this, along with industrial growing pains plus the Napoleonic Wars and postwar depression, gave dissenters plenty of ammunition for their war on laissez faire economics. The new crop of businessmen and industri alists had enough personal fail ings, made enough blunders and enemies, and in a number of ways alienated the general public suf ficiently to give rise to a growing protest movement. Although Marx was militantly atheistic and hence repelled many devout people, Christian socialism emerged as the ethical answer to the problem of human need: to them Christianity was the religion of which socialism was the prac tice. The social gospel movement emerged in the latter part of the last century and it is no secret that the Church has had a large leftist element ever since, often in high places. This is in no small part the failure of disillusioned men of good will to see that social ism would create, as the late Rein hold Niebuhr 14 finally realized, "pools of excessive power in the hands of those who manage both its economic and political proc esses" - if businessmen could not be trusted with power over their little segment of the national life, what about bureaucrats' who have us all at their mercy?

We had to learn the hard way, too, that socialism is not efficient. Perhaps today, having lived with socialism and communism as well as capitalism these many years, we are now in a position to re evaluate the whole question of ethics as it relates to business and government in a way that our fathers could not. One wonders if we had another crisis like the Crash of '29 and the Great De pression, would people still blame this on the failure of Free Enter prise, or realize that the welfare state might with some logic share part of the blame? Caesar or God? Our Puritan ancestors believed that they, like the early Israelites, were people of the Covenant: obey God and all would be well. The men of the Enlightenment, less devout, believed if we obeyed the 14 Kenneth W. Ingwalson (ed.), Your Church - Their Target, p. 47.

1971 ECONOMICS AND ETHICS 657 laws of "Nature and of Nature's God," we would have the best possible world men could arrange down here below. Most of our contemporaries believe that Adam Smith was an anarchist. Indeed, many people see no possible phil osophical position between laissez faire anarchism and totalitarian ism. It has not always been so. Our Founding Fathers believed in liberty under law - God's Law. It is true that men with tender con sciences who took the Bible seri ously have disagreed on the poli cies they extracted therefrom just as scientists have disagreed on their conclusions, using the ex perimental method. There are some across the ages who have argued that Peter's communal ar rangements after Pentecostl 5 set up socialism as the Christian standard, but there are· others who feel that the experiment collapsed quite quickly just as the Pilgrim attempt at Plymouth did right after 1620. As evidence, St. Paul was engaged in gathering up re lief funds for the Church at Jeru salem later which is a suspicious circumstance - we do not common ly raise money on the mission field to support the home church; also, Paul was eloquent in urging work and personal responsibility.

Whatever the confusion of the saints, religion has been a force 15 Acts 4: 34-37. against totalitarianism over the ages, and there is impressive evi dence to support the contention (the familiar "Weber Thesis" with its "Protestant Ethic") that perhaps the "gospel" of hard work, personal responsibility, and stew ardship of time and money may have had as much to do with the explosive progress of the West in the recent past as did laissez faire economics it la Adam Smith. In deed, would political and economic freedom have been possible with out the moral base? What is the Christian viewpoint in economics and government, by any fair stand ard of interpretation? With the heavy emphasis on humanitarian and ethical values by the Left in our time, these are important ques tions. We simply permitted our selves to be outflanked by the enemy. The defense of free enterprise has commonly been in pragmatic terms - profit and production but not principle. According toAyn Rand, ... capitalism's classical defenders and modern apologists ... are respon sible - by default - for capitalism's destruction .. The default consisted of their inability or unwillingness to fight the battle where it had to be fought: on moral-philosophical grounds,16 16 Ayn Rand, Capitalism: the Unknown I deal, p. vii.

658 THE FREEMAN November I would agree with her contention, though I am not a Randian my self. Since we have been so very busy trying to make a little money in spite of mounting taxes or fight ing a rather ineffective rear guard action against socialism, we have not done our "home work" and have let the socialists get by with a lot of misrepresentations which have been exceedingly damaging to the market economy - we have mostly been content to brag about how many high-powered automo biles and color TV sets we can produce as compared with the rest of the world. Capitalism Not Based on Greed It is a common fallacy that cap italism was founded on greed. Max Weber 17 pointed out long years ago: "Unlimited greed for gain is not in the least identical with capitalism. . . ." Indeed, as he insisted, "absolute unscrupu lousness in the pursuit of selfish interests" has been most domi nant in the lands that are most backward, where capitalism has not yet developed as a system and, one might add, perhaps can not, due to the lack of a moral base. Anyone who has traveled in those countries knows how right Weber was.

17 Max Weber, The Protestant Ethic and the Spirit of Capitalism, pp. 17 and 56-57. A kindred delusion is that Big Government is for the little fel low, that· but for the intervention of a benevolent state Big Business would gobble us up. Since most of us identify with the underdog and hate bullies, this is good po litical propaganda, but may be a long way from the truth. There is considerable evidence to sup port the contention of Walter Adams 18 of Michigan State Uni versity and others who have stud ied the problem that the govern ment has done more to encourage industrial and commercial "ele phantiasis" than to promote Small Business. This has been the his tory of the Farm Program, also, another scheme to rescue the "little fellow." What has resulted instead has been what Clarence Carson has called The War on the Poor, as he entitled a recent book. If the welfare state's campaign for "social justice" has failed on the homefront, what about our attempts to save the starving millions overseas? Evidently our global give-away program has too often been a grab bag for crooked politicians or so I have been told when I traveled in the so-called "backward areas" of the wor ld and by competent observers, both native and American. Further18 Walter Adams and Horace M. Gray, Monopoly in America: The Government as Promoter.

1971 ECONOMICS AND ETHICS 659 more, foreign aid has fallen woe fully short of world need, accord ing to those sympa thetic to the program, and the enthusiasm of the American taxpayer is dimin ishing. A few years ago Josue de Castro 19 complained that "foreign capital invested in the underde veloped regions is less than $6 billion, whereas ... a minimum of $15 billion would be required" each year to begin to meet the need. Private Investment Abroad But there has been a better way to do this, too. According to pre President Richard M. Nixon,20 writing more than a dozen years ago, the United States alone would have invested $30 billion abroad in 1958 instead of the trifling $4 billion we did loan that year, if we had been investing at the rate the British did in 1910. Think what this would have meant in the way of employment and economic development across the seas, if we had been so doing.

Unfortunately, there are almost no decent places to invest any more. Because of turbulent social conditions, political instability, and outright thievery on the part of governments which will na19 Josue de Castro, The Black Book of Hunger, p. 49. 20 Richard M. Nixon, The Challenges We Face, p. 73. tionalize your investments as soon as you get something profitable started, finding a place to invest is as difficult for the "haves" as finding investment capital is for the "have-nots." They ought to get together on this, and could, if they could learn to trust one an other again - which brings us right back to the moral question once more. Unfortunately, this means that large areas of the world which are poor and back ward, where people are hungry and desperate, must remain that way; they cannot hope to make progress until they straighten out their ethics and economics, for the right is also the expedient in the long run. A wee glimpse of the Victorian age with its free trade and free enterprise, its propriety and progress, its stability and certainty, is quite revealing, as the following quotation which ap peared in 1882 in The Specta.tor, a "sedate, middle-of-the-road mag azine," so eloquently tells us: Britain as a whole was never more tranquil and happy. No class is at war with society or the government; there is no disaffection anywhere, the Treas ury is fairly full, the accumulations of capital are vast. 21 Just as a fascinating experiment, substitute today and the U.S.A.

21 Albert H. Hobbs, "Welfarism and Orwell's Reversal," Intercollegiate Re view (Spring, 1970), p. 107.

660 THE FREEMAN November for 1882 and Britain in the above quotation. Perhaps the "Faith of Our Fathers" was not so misplaced after all. Rebuilding the Foundations It would be a pity to end on such a note of despair. Actually, I am not that discouraged: the very bankruptcy of modern man's utopian schemes has left a vacuum which someone will try to fill. What better time to urge a return to ethical standards, freedom un der law, personal responsibility and the values which made West ern civilization great? We launch space ships according to God's Law; then why not consult Him about reordering this chaotic world down here below? As Ben jamin M.Anderson wrote shortly after the second World War, com menting on Germany's violation of her treaty guaranteeing the neutrality of Belgium in 1914, that famous "scrap of paper" which has been the model of most recent treaties: The greatest and most important task of the next few decades must be to rebuild· the shattered fabric of national and international good faith.

IVIen and nations must learn to trust one another again. Political good faith must be restored. Treaties must become sacred again. A world in which all men are up right and in which all nations are voluntarily decent in their inter :national relations is, of course, too much to expect, but a world in which the ill-intentioned fear the condem nation of the well-intentioned we can rebuild~ The same basic human na ture which created the fabric of na tional and international good faith on which we relied in the century preced ing 1914 exists today - just as we have discovered that the same human nature which animated the Assyrian conquerors and the hordes of Genghis Khan exists today. The raw stuff of human nature is immensely plastic. ... There is no certainty that we can recreate the fabric of good faith which we have destroyed, but there is no higher duty than to make the effort. 22 ~ 22 Benjamin M. Anderson, Economics and the Public Welfare, pp. 4-5.

IDEAS ON $ LIBERTY What Is a "Less-Developed" Country? AMONG the "less-developed" countries, as the term is most often used, almost all have at least one thing in common. They are coun tries that desire capital but have not yet put into practice the methods of capitalism. H A R 0 L D F L E MIN G, States, Contracts and Progress SAMUEL R. ALDRICH MAN and his Environment AGRICULTURE has a tremendous impact on the environment. The farmer's goal, in fact, is to man age .the environment for the long term benefit of mankind. This he has done with eminent success. Decisions about farming to this point in time have been based mainly upon economic considera tions. To put it bluntly, if it paid, we did it (with minor restrictions for known hazards). Recently a new dimension has been added. Society is insisting that long-term effects on all aspects of the en vironment be considered in decid ing practices to be followed.

The image of a.griculture is poor in the minds of environmentalists. Ecologists generally view farmers, Dr. Aldrich is a member of the Illinois Pollu tion Control Board, on leave from the Univer sity of Illinois where he is Professor of Soil Fertility Extension. This is a paper delivered before the Foundation for American Agricul ture in Chicago, December 2, 1970. agribusiness, and agricultural sci entists as interested only in mak ing a. profit and as having little knowledge of or concern for ef fects on the environment and even human health. Ecologists and so cial scientists feel that they must, therefore, assume responsibility for saving the environment. In contrast, persons in agricul ture perceive themselves as being responsible for producing high quality food at a reasonable price and thus contributing to the wel fare of mankind. They view ecolo gists as idealists without practi cal knowledge of agriculture, hence capable neither of suggest ing acceptable changes nor of fore seeing the disastrous effects of some simple solutions they sug gest.

D.uring the past few years when the attitudes of society were being 661 662 THE FREEMAN November formulated, ecologists and many social scientists were effectively using the news media to mold pub lic opinion. Meanwhile, we in agri culture were mainly going about the business of efficient produc tion. Consequently, there is both lack of information and much mis information about the effects of agriculture. Every school child has heard about the pervasive effects of DDT and the claim that nitrogen and phosphorus from fertilizers are destroying streams and lakes. Most everyone has· heard of the "con centration of DDT in the food chain." I submit that there is a corollary: "The concentration of unsubstantiated opinions in the information chain." We should not blame environ mentalists and the media entirely for this state of affairs. We sim ply have been remiss in analyzing the over-all, long-term effects of practices and making them known to scientists in other disciplines and to the public through the news media.

Many persons have been led to believe that science and technology have caused the problems and therefore must be restricted in a wholesale manner. The fact is that, though science and tech nology in agriculture and else where have created certain envi ronmental problems (along with tremendous benefits), only more science and technology correctly applied can solve the problems! More Effective Communication We are experiencing an unusual phenomenon. A substantial num ber of people, especially young peo ple, believe that we are on the verge of catastrophe unless we im mediately stop many forms of pol lution including the use of fer tilizers and pesticides. Since a lot of people hold that view, it should not surprise us that some drastic measures to curb pollution are be ing suggested. Desperate persons are susceptible to radical ideas. Those engaged in agriculture and members of society in general would benefit from a thorough un derstanding of the effects, both fa vorable and unfavorable, of mod ern agriculture on the environ ment. But there is a, barrier to ef fective communication. How do you reach persons whose views are already firmly set and who there fore interpret your sincere at tempts at objective presentations as merely defending continued use of fertilizers, pesticides, and so on, for personal gain?

There are two ways to react to environmentalists whom you be lieve to be wrong: a. Watch for their mistakes and then "slap them down." The trouble with that course 1971 MAN AND HIS ENVIRONMENT 663 is that charges make the front page headlines where as rebuttals are put on the back pages near the want ads. b. Assume they are sincere and try to work with them before they have interpreted their data, made up their minds, and published their mistakes. This is a more mature and effective course of action. The Fads About Nitrates There are three false impres sions about nitrogen that are gen erally held by environmentalists and widely accepted by the public: 1. That nitrate in water is in creasing at an alarming rate. 2. That commercial fertilizer is the cause. 3. That returning to· legumes, animal manure, and soil hu mus for nitrogen would cor rect the supposed situation. The nitrate content of the Mis sissippi River at Chester, Illinois, has not increased over the past ten years. Nitrate in the Illinois and Wabash Rivers appears to have increased slightly since 1956. The Kaskaskia near its confluence with the Mississippi has not increased in nitrate concentration since 1946.

This river, through an unfortunate error in data summary, is the basis for the widely disseminated idea that nitrates tripled between 1946 and 1966. Specific cases of high nitrates and rapid increases in small rivers and streams can be found, and undoubtedly nitro gen fertilizer is a contributing cause. There are also instances of decreases in nitrates. We should continue to be concerned about ni trates and to increase surveillance of streams but not assume that nitrates have generally reached alarming levels. Impressions 2 and 3 are predi cated on the belief that nitrogen from commercial fertilizer be haves differently than nitrogen from animal manure, legumes, or soil humus. Regardless of source, near ly all of the nitrogen used by crops is in the ammonium (NHt) form prior to conversion by nitri fying soil organisms to nitrate (NOi). Nitrate derived from fertilizer is neither more nor less leachable than nitrate from man ure, legumes, or soil humus; and regardless of source, a definite amount of nitrate nitrogen is re quired to produce 100 bushels of corn. The potential for excessive nitrates in the environment is de termined by the crop yield goal.

The undesirable effects of agri cultural technology have been ex tensively analyzed, though not al ways accurately or in proper perspective, in both popular and scientific literature and through the news media.

664 THE FREEMAN November Technology Works Both Ways The beneficial effects of tech nology on the environment have not received the attention they deserve! The usual approach in supporting continued use of fer tilizers, pesticides, and antibiotics is quite logically that they are es sential for the production of ade quate amounts of high quality food at a reasonable price. But I feel that technology properly used is justified because of its positive effects on the environment. Data. from the Morrow Plots on the campus of the University of . Illinois illustrate the effect of dif ferent levels of fertility. The plots have been under cultivation and study for nearly a century; hence they are a valid index of long term effects. Illinois grows about 10 million acres of corn with intensive use of modern technology. The Mor row Plots data indicate that if only manure, lime, and phosphorus were applied in a continuous corn system, 14 million acres would be required. If no fertility treat ments were applied, the need would increase to 27 million acres.

An alternative cropping system of corn-oats-Iegume hay with ma nure, lime, and phosphorus would require 14 million acres to produce usable therms of energy equal to 10 million acres of corn with full treatment (nitrogen, phosphorus, potassium, limestone) and 30 mil lion if no fertility treatments 'were applied. These are, of course, extreme and unrealistic alternatives but they illustrate the point that fer tility treatments minimize the cropland acres needed for food production. What, then, would be the effect on the environment of greatly reducing or giving up fer tilizers? It would be a disaster. Without nitrogen, phosphorus, potassium, and limestone applica tions our. soil resource could not be preserved and future-genera tions would reap a tragic harvest of famine. Nitrogen is the key to maintaining soil organic matter in intensive cropping systems. Soil organic matter is a key to maintaining surface structure and water infiltration c.apacity.

The increased acres needed for food production as a result of lower acre yields would increase \vater runoff, floods, and erosion, thus accelerating pollution due to sediment, phosphorus, pesticides, and organic matter. Two con tributing causes would be: a) in creased acres of cropland, and b) more cropland on sloping fields. Increasing the acres of crop land would further reduce the small areas of woodland, wildlife habitat, and recreational land in much of the Midwest.

1971 MAN AND HIS ENVIRONMENT 665 I have used fertilizers to show that technology has ,a positive ef fectbecause it minimizes the acres required for food produc tion. The principle applies to all of agriculture. The facts that one modern dairy cow replaces two of a few generations ago or that a broiler now can be grown on little more than one-half as much feed as before reduce the undesirable impact of man's demands upon the environment. No Simple Solutions; Intertwining Practices There are few if any simple solutions to the control of pollu ti on. In ,agriculture, as in the ecosystem as a whole or among the facets of a. free enterprise economic system, practices are in tricately intertwined. Restrictions on the use of science and tech nology in agriculture must he ap proached with caution and with broad understanding of the side effects lest the cure be worse than the disease. Henry Hazlitt in his epilogue to The Art of Th1inki.ng eNash Pub lishing Corp., 1969) makes some comments that I feel could well guide anyone who wants to con tribute to environmental improve ment.

". . . no man can hope to do original work or even profitable thinking in any science or branch of knowledge until he has gone to the trouble to learn what has al ready been discovered in that branch of knowledge. He must know the previous state 0 f the question. Then he will see whether he can make any contribution of his own. "When the great Isaac Newton was asked how he had been able to make such tremendous contri butions to human knowledge and thought, and to see so much far ther than other men, he answered modestly: 'I stood on the shoul ders of giants.' In other words, he was able to build on what his pre decessors had discovered. "We who live today are in one respect in a more enviable posi tion than any other generation in history. We stand on the shoul ders of giants .... So an intelli gent college student today is· in a position to learn more about cal culus than Newton, more about economics than Adam Smith, more about evolution than Darwin,"

and, may I add, more about the environment than any ~cientist to this point in time. I am convinced that concern for the environment will continue to grow but will likely receive less attention from the news media and politicians. Though agricul ture is presently a target for criti cism, I believe that by choosing the right strategy the interest 666 THE FREEMAN November that has been generated in agri cultural practices can be used for the betterment of agriculture and society as a whole. I have a positive, constructive attitude toward our economic sys tem. It has prod uced miracles within a framework of limited objectives. I feel that it is unfair and serves no purpose to blame previous generations for blind"Every Man a King" ness, ruthlessness, or sheer greed in their use of the environment. They had as many thoughtful, sensitive citizens as we have. But we have the advantage of observ ing the cumulative effects of our activities over a longer period of time. Consequently, we evaluate some practices differently now than then, and should act ac cordingly. I) IDEAS ON L$ LIBERTY LIBERTY, or the right to act as one wills according to his wisdom and conscience, is sometimes charged with being "license" and totally irresponsible conduct. But, on the contrary, responsibility of the highest order is required in a liberal society. What social design could be more challenging, in terms of responsibility, self discipline, and self-control, than that of liberalism in its require ments of self-restraint; in avoiding trespass on the rights and the property of others; in its respect for the rights of others to dis agree without precipitating conflict? Liberty requir'es the highest order of conduct in its P1\actice.

The disciplines of liberty, however, have their rewards. "Every man a king" has had great appeal as a political slogan. The near est possible approach to it is to be found in a liberal society, in which everyone is king over his own affairs to the greatest possible extent. At the other extreme, one man is king over all men instead of every man being king to a degree. F. A. HARPER, Liberty: A Path to Its Recovery CLARENCE B. CARSON THE FOUNDING OF THE AMERICAN REPUBLIC 4 The Colonial Political Experience I HAVE OFTEN asked a class at the beginning of a course in history if they have heard the saying, "Ex perience is the best teacher." Us ually, all or most of them indicate that they have. To confound them, I tell them that what they have heard is most likely a debasement of an older and possibly much wiser epigram. Benjamin Frank lin gave this formulation to it: "Experience keeps a dear school; the fool will learn in no other."

This is a prelude to making a case for the study of history to my classes. The point is that it is quite costly to learn by personal experience, while it is much less expensive to learn from the ex perience of others. Actually, however, the case for vicarious historical versus per sonal experience is not as con clusive as I tend to make it. Per sonal experience usually makes a much stronger and lasting im pression than do accounts of the experience of others. Any retell ing of an experience is to a large extent an abstraction which leaves out the warp and woof of life. The difference between vicarious and personal experience is quite often like the difference between travel folders of an area and the actual Dr. Carson is Chairman. Social Science De partment, Okaloosa-Walton College. He is a noted lecturer and author, his latest book en titled Throttling the Railroads. 667 668 THE FREEMAN November vacation experience - a chasm of considerable dimensions. Still, there is much that has to be learned, if it is to be learned at all, from the experiences of others because of the limi ted career of an individual and because some things - e. g., drowning - are likely to be· experienced only once, and all experience ceases.

Political experience - both vi carious and personal - is of .par ticular urgency for those who would erect governments and gov ern. This is so because govern ment is both essential and poten tially man's most dangerous instrument, most dangerous be cause it can muster all other in struments and bring them to bear in the pursuit of whatever end those who govern may have. Gov ernment is that body charged with the monopoly of the use of force in a given jurisdiction. Politics is the arena of contest over who shall employ the force for what ends. Each of us is prey to the notion that if we had power we would exercise it only for the good of those who fell within our jurisdiction. Without experience, we can easily concoct plans whose fulfillment we would achieve if we could get the reins of power. The plans may have all the beauty of any abstraction, but they usu ally ignore the reality of the con...

test of wills by which power is actually gained and exercised, con tests in which the man with a vision imputes evil to those of a different view, seeks power at first for the good he would do, then seeks power because he thinks he is good, and eventually seeks power for itself alone. There is a human tendency for anyone in power to concentrate it in his hands and absolutize it. Constraints Upon Power There is, however, a counter tendency at work in most govern ments at most times. It arises, in the first place, out of the difficulty which any ruler experiences of putting into effect personally his edicts. Authority must be parceled out. Those who exercise it incline to arrogate to themselves that particular authority. Moreover, it is easier to do anything if it is made into a routine. Routines be come customs, and customs as sume the character of law in the course of time. Hence, power is balanced and constrained to some extent and as a rule at most times and in most places. This can be prevented from happening only by relentless terror, a terror of a kind which is unusual.

Political experience is experi ence of the contest of many wills, of routine and custom become law, of devices by which power is con strained, of compromise, of the 1971 THE COLONIAL POLITICAL EXPERIENCE 669 gap between conception •and exe cution because both those who rule and those who are ruled have wills. A. deep reading of history may acquaint one with these proc esses and actualities; personal ex perience will be even more likely to do so. Americans in the colonies had a goodly amount of political experi ence before they broke from Eng land, experience with the uses and abuses of power. They had it in what is probably the best way to gain experience with the use of power; the power at their disposal was limited and constrained. The colonists gained experience within the confines of the English con stitution, in the first place. Their laws were supposed to conform to those of England. To make sure that they did, the system provided that court cases could be appealed to the Privy Council in England.

Restrictive Charters The colonists were restricted in what they could do also by their charters. Most of the colonies had originally been founded as com mercial ventures, though a few were founded as proprietaries which harked back to the feudal system for models, and one - Geor 'gia - was a trust. In any case, they were founded on the basis of charters. These spelled out the territory to be occupied, the financial arrangements, and the rights and privileges of the settlers. Or dinarily, the settlers were per mitted to participate in the mak ing of laws, and such laws as were passed had to be in keeping with and not contrary to English law. It would be correct to say that the colonists were both' restrained and enfranchised by their charters. The colonies were restricted also in that they were a part of the British Empire. In that ca pacity, they fell under the author ity of the government of England (after 1707, the United Kingdom) and were subject to certain of the acts of the Crownin-Parliament.

Before discussing this relation ship, however, it will be useful to note some major changes that had occurred in the English govern ment in the last years of the seventeenth century, the changes associated with the Glorious Rev olution. These changes raised questions about· the extent of par liamentary authority over the col onies under the constitution as it had developed, questions that were not finally pushed to the point of irreconcilable contradiction until the 1770's. At the time when most of the colonies were chartered and founded, England was more or less of an absolute monarchy. Parlia ment was, for the Tudors and the 670 THE FREEMAN November early Stuarts, an auxiliary to them in the exercise of their power. In theory, and usually in practice, Parliament was that body which enabled the monarch to make al terations from time to time in the contract with his subjects whom he ruled by Divine right. Ordinar ily, he could and did rule without consultations with Parliament. If some change were wanted by the monarch - e. g., a new tax meas ure - then he might call a session in order to get the needed legisla tion. If he could get by on es tablished revenues and laws, he had usually foregone the nuisance of having Parliament meet.

The Stuart Kings and Parlia ment were at odds for most of the seventeenth century over their re spective powers. The issues were resolved by the Glorious Revolu tion and its aftermath, resolved in favor of Parliament. As one his torian summarizes the conse quences of this Revolution, it "de molished the doctrine of the divine right of kings. . . . After that momentous victory Parliament slowly and gradually, yet remorse lessly and irresistibly, extended its power in all directions."! An other sums up the changes this way: 1 Curtis P. Nettels, The Roots of Amer ican Civilization (New York: Appleton Century-Crofts, 1963, 2nd ed.), p. 543. William III began his reign with a clear recognition on his part that the royal office had been shorn of exten sive powers. As it has been expressed by a distinguished historian of the constitution: "The king was distinct hT below statute; he was to have no power to suspend statutes or to dis pense with statutes; he could not by his proclamations create any new of fence; he could not keep a standing army in the realm in time of peace without the consent of parliament; parliament had begun to appropriate supplies; the military tenures were gone; he had no powers of purvey ance and preemption; he could not try men by martial law; the judges were no longer to hold office during hj/:) good pleasure .... " We may add: he could make no laws without the consent of the nation's representa tives; he could lay no taxes; he could claim no kingship by divine right .... 2 In short, Parliament had come to occupy much of the ground for merly held by the monarch and would in the course of the eight eenth century gain much more control over affairs. England had a constitutional monarchy.

Parliamentary Powers These changes affected Ameri cans in two most important ways. One of them is that Parliament's powers were neither clear ly de2 George B. Adams, Constitutional His tory of England, Rev. by Robert L. Schuyler (New York: Holt, Rinehart and Winston, 1962), p. 366.

1971 THE COLONIAL POLITICAL EXPERIENCE 671 !ineated nor restricted. The Brit ish had spent much energy over the centuries in limiting the king. This was now as well accomplished as it might be without making him impotent. In doing so, how ever, a new power had been loosed - Parliament. It is true that the House of Commons is restrained by having its members stand for election. This was so, however, only for England and then the United Kingdom. The other import of this for Americans was related, for it had to do with what the power of Parliament over colonials would be. The colonists had no repre sentatives in the House of Com mons, nor were there any Ameri can bishops or nobles sitting in the House of Lords. Moreover, nothing comparable to the Glori ous Revolution occurred in the colonies. Parliament proceeded to pass acts affecting the colonies, though there was now doubtful constitutional warrant for such measures. For a long time the is sue was not pushed with vigor by either side; it lay dormant ready to spring to life when differences between the colonists and the mother country rose to the point where constitutional questions would come into focus.

One reason that the issue did not come to the fore was that Parliament exercisjed restraint in legislating for the colonies until the 1760's. Parliamentary acts known as statutes of the· realm usually applied only to England, Wales, and to Scotland after 1707. "Inasmuch as both Parliament and the colonial assemblies exercised the lawmaking power, a rather in definite distinction between in ternal and external legislation was allowed to develop. Parliament generally confined itself to the regulation of the external affairs of the colonies (trade, currency, etc.) and permitted the colonial assemblies to legislate for do mestic concerns."3 This policy is sometimes referred to as one of "salutary neglect." Why it should be so called except by a partisan of British rule and Parliament is not clear; it suggests that the colonies were neglected and that Parliament had the authority to impose its will over the colonies - both doubtful propositions.

If there was "neglect," it was in the neglectful manner of the founding of the colonies, not so much in their later governance. The Stuart kings probably had two prime motives· in authorizing plantations. One was to benefit England commercially; the other was to be rid of troublesome, un desirable, or, in the case of Roman Catholics to whom they were sym pathetic, persecuted elements. The 3 Nettels, Ope cit., p. 546.

672 THE FREEMAN November latitude that many of them were given in matters of religion sug gests that the monarchs did not expect the growth of large, peace ful societies under their dominion. At any rate, a strong case can be made that over the years the British government was less and less "neglectful" and more and more concerned to tie the colonies close to England and make them conform to the British pattern. It is certain that over the years more and more laws were passed, and more and more attention was given to imposing the British will over the colonies. Trend Toward Royal Control One way to see the trend toward greater British control is to look at the types of colonial govern ments and changes in them. There were three types of governments in the colonies: royal or crown, proprietary, and charter. A royal colony was one in which the colony fell directly under the king: the governor was appointed by the monarch; he was an agent of the king, in effect, acted in the place of the king, and he, in turn, ap pointed lesser officers. A proprie tary colony was one in which the proprietor appointed the governor and otherwise had authority rem iniscent of a feudal lord. He, in turn, was a kind of vassal of the king. A charter colony was one operating on the basis of a char ter; in effect, the members of the colony were members of a corpor ation, and the electors among them controlled the government on the basis of the charter.

The trend over the years was for England to extinguish the charters and proprietorships, which the original colonies had been, and to make of them royal colonies. By the middle of the eighteenth century, there were only three proprietary colonies and two charter colonies. The meaning of this is made clearer by this contemporary comment on the power of the people in the charter colonies: "The people in these Colonies chuse their Gover nors, Judges, Assemblymen, Coun sellors, and all the rest of their Officers; and the King and Parlia ment have as much influence there as in the wilds of Tartary."4t This is an exaggeration, but it does indicate that the trend toward royal colonies was a trend toward greater British control. Despite the fact that the colo nies had grown up to considerable degree separate from one another, they had a similar form of gov ernment to one another and to that of England. Each of them had a governor, whose powers 4 Quoted in Clinton Rossiter, The First American Revolution (New York: Har court, Brace and World, 1956), p. 103.

1971 THE COLONIAL POLITICAL EXPERIENCE 673 were modeled on those of the English monarch. The extent to which the English attempted to gain or maintain control of colon ial development is indicated both by the fact that most colonies were made royal colonies and by the extensive powers of the gov ernor. He "was the personal repre sentative of the king and the sym bol of the empire in the colony, 'endowed with vice-regal· powers, analogous though inferior in de gree to those of the monarch.' As such he was the commander-in chief of the military forces in the colony and the chief among the agents of the crown. He had the power to appoint judges in the vice-admiralty court, where there was such a court in his colony, and judges, justices of the peace, and sheriffs in the administration of civil justice. He also had the power to nominate members of the executive council ... , and the power to veto acts passed by the legislature. . . ."5 He could sum mon, adj ourn, and dissolve the legislature, and he could pardon those who had been convicted of offenses. "The governor's powers were thus fourfold, for he was at once a Crown agent and the effec tive head of the executive, the IS Max SavelIe, A History of Colonial America, Rev. by Robert Middlekauf (New York: Holt, Rinehart and Win sten, 1964), p. 402.

legislative, and the judicial arms of government."6 A colony ordinarily had one or more councils, but usually there was a single council which served in several capacities. These were men chosen from among natives who were usually men of wealth and position in their communities. In one of their capacities, they were a sort of governor's cabinet, assisting him in governing by ad vice and in other ways. In another capacity, they might serve as a court of appeals. And, they were the nearest thing to an upper house of the legislature that the colonies had. In this capacity, they were analogous to the House of Lords. Many colonials got experi ence in governing by serving on councils. However, most of the colonial political experience was gained by serving in the legislative assem bly. This body was known by dif ferent names from colony to col ony - i. e., House of Delegates, General Court, House of Burgess es, and so forth-but each of the colonies had one. It was the fount of popular government in the col onies, the only body at the level of colony that was chosen by the freeholders. In theory, it was sub ordinate to the governor in royal and proprietary colonies, awaiting on his call, subject to his dis6 Ibid.

674 THE FREEMAN November. missal, even subject to being dis solved in favor of the election of a new one, and its acts subject to his absolute veto. It could almost be said that it existed at the pleas ure of the governor. Colonies Develop Self-Government in Subtle Ways Theory is often one thing, how ever, practice another, and this was certainly so for the colonial assemblies. In their service in as semblies colonials learned. the sub tleties by which power is counter balanced and the maneuvers by which power can be gained. The way they worked, in general, is described by one scholar in this passage: One is impressed with the rather prosaic manner in which the lower houses went about the task of extend ing their authority, with the infre quency of dramatic conflict. They gained much of their power in the course of routine business, quietly and simply extending and consolidat ing their authority by passing laws and establishing practices, the impli cations of which escaped both colo nial executive and imperial authori ties and were not always fully rec ognized even by the lower houses themselves. In this way they grad ually extended their financial author ity to include the powers to audit accounts of all public officers,to share in disbursing public funds, and even tually even to appoint officials concerned in collecting and handling revenues. 7 Some of the devices by which they gained power are interesting and were quite valuable experi ence for colonists. One position from which they gained leverage over governors was that the salary of most of the governors was paid by their respective colonies. This meant that the legislature had to appropriate it. If they would· only appropriate it on an annual basis, the governor would find it expedi ent to call the legislature into session each year. If they made the appropriation of his salary the last item of business before they were ready to adj ourn, he could be, and was, effectively stripped of his powers to prorogue the assembly. "Not content with reducing the governors' legisla tive power, the assemblies ... used their control over the purse to usurp many executive functions, insisting, that certain conditions be met before appropriation bills were sanctioned. Thus the assem blies extended their sway over financial matters by stating in detail how money was to be spent, by appointing provincial treasur ers . . . , by naming collectors of 7 Jack P. Greene, "The Role of the Lower Houses of Assembly in Eight eenth-Century Politics," Essays in Amer ican Colonial History, Paul Goodman, ed.

(New York: Holt, Rinehart and Win ston, 1967), pp. 431-32.

1971 THE COLONIAL POLITICAL EXPERIENCE 675 the revenues ... , and by setting up committees to supervise the spending of money appropriated."8 Colonists got political experi ence at two other levels than that of colony. One level that did not involve many people directly but was nonetheless important was as agent for a colony to the govern ment in England. An agent was sent from most colonies toward the end of the coloni~l period to England to explain to various gov erning bodies the situation in the particular colony, the attitudes of the inhabitants, .and the effects laws and other English actions might have. Sometimes both a governor and a legislature would send such an -agent. He would have no official standing. in Eng land, but he would be valued for his service both by the mother countries and the colonies and would gain much valuable experi ence. Benj amin Franklin undoubt edly got the most experience as agent, for he represented several colonies at one time; through this experience, he was prepared for the yeoman work he would later perform as diplomat for the United States.

The other level was local gov ernments. Of their importance, Clinton Rossiter says: "In gen eral, the central governments of the colonies exercised even less 8 N ettels, op. cit., p. 563. control over local institutions than did the mother country over the colonies."9 That is, they managed most governmental affairs locally by institutions that were in keep ing with the locale. In New Eng land, town government was the most important level, and the town meeting the device by which the electorate directed affairs. In other parts of the country, county and parish government handled most local affairs. These were the fea tures of local governments Ros siter thought particularly worthy of note: "the broader suffrage for local than for colony-wide elec tions; the multiplicity of unpaid offices and duties, a system under which a much larger percentage of citizens performed some sort of public duty than is the case today .... " In short, a large num ber of colonists had political ex perience while they were under nominal British control.

The British government did not neglect the colonists in the last hundred years or so of the colonial period. They set over most of them an arrangement that should, in theory, have brought them un der the will of those who governed in England. There were governors with comprehensive appointive powers, numerous agents of a variety of boards and committees were sent to America, and Ameri9 Rossiter, op. cit., p. 119.

676 THE FREEMAN November cans were in some ways more clear ly under the dominion of the king than were the inhabitants of the United Kingdom. Short of taking from the Americans their institutions of government, it is not clear how they could have been prevented from developing as they did. Evolving Institutions Nonetheless, the American col onies did evolve away from the British pattern, even as, to a lesser extent, the government in the homeland was evolving away from its older pattern. Americans today do not feel great unfamili arity with colonial institutions and practices as they had developed by 1765. They would, however, if they understood them, find most of the institutions that were originally transplanted unfamiliar and for eign. Many of these institutions were medieval in character when they had been set up. For example, a town was a corporation with definite bounds, with privileges for its inhabitants, with powers to exclude others from them, with monopolistic powers, with an ex clusive and delimited character.

This had so far broken down by the end of the colonial period that men could generally come and go, move in or out, and go about their business without much onerous restriction. In a similar and related manner, there was an attempt to maintain class arrangements and prescrip tions in America. In the middle of the seventeenth century, the Gen eral Court of Massachusetts for bade the wearing of certain cloth .. ing to the lower orders. Yet, such efforts were of little avail, and long before the end of the colonial period it was commonly observed that respect for and distinctions among classes were disappearing. When confronted with the Puri tan demands for the abolition of episcopacy, James I declared, "No bishop, no king." His prophecy proved correct for America. Though there were several col onies in which the Anglican Church was established, there was never a bishop in America. The Bishop of London was appointed over the American colonies, and he was represented from time to time in particular colonies by a commissary, a man appointed to perform some of the overseeing functions of the bishop. But there was no clerical hierarchy that amounted to anything in America.

Hence, even in Anglican colonies, the control of church affairs tended to slip out of the hands of the clergy and into that of the vestry. Of course, in several of the colonies, the prevailing de nominations neither had any hier archy nor approved of it as an 1971 THE COLONIAL POLITICAL EXPERIENCE 677 institution. The religious supports for rule by an hierarchical order were missing. In the same manner, there was never any titled nobility in the colonies to speak of. There is a saying that "Dukes don't mi grate," and it is substantially true. For decades on end most Ameri cans never saw a titled noble, and if they did, he was most likely a royal governor. No native Ameri cans were ever raised to such rank, to my knowledge, nor is it likely that they aspired to it. Americans who acquired extensive possessions aspired· to the life of a country· gentleman, so far as we can tell, and would have been aliens in their own country had they been titled.

The effect of this is that Amer;,. ica-ns turned away from the old sources of authority and political power even more than did their counterparts in England. Author ity, for them, did not extend from the top downward; it derived from the place they were accorded by their peers .. Americans looked up to men who had acquired posses sions by their own efforts or that of their immediate forebears and, among these, to those who showed ability at managing their affairs. Birth counted for little; achieve ment counted most. Probably, Americans had more extensive experience in governing in legislatures, in towns, in coun ties, and as councilors than did any people anywhere in the world at that time. True, it was limited experience. They had little experi ence as chief executives or in for eign affairs, and they operated within the limitations of the Brit ish constitution and the empire. Even so, they were probably better prepared for popular government than anyone else, unless it was the English people themselves.

It is possible, however, to over rate experience. There are experi enced thieves and murderers. There are experienced dema gogues, and there are politicians with a vast amount of experience at gaining more and more power by plundering the populace. Ex perience can be useful in attain ing any end, but it does not dis criminate among ends. That is determined by what a people, or some portion of them, value. And values are a resultant of ideas held and cherished. It was not enough for Americans that their experience had turned them away from monarchy, from hierarchies, and from authoritarian govern ment. If their experience was to stand them in good stead, they must be drawn to something con structive to take the place of these things. Americans were, and de velopments in ideas prepared the way for this shift. If) t PAUL L. POIROT WHY GRESHAM omitted the "s" when he drafted his famous law is not clear. What is painfully clear to U. S. citizens caught in the wage-price freeze of 1971, however, is that Gresham's Law remains in force: bad money drives good money into hiding.

People will hang onto their good money and meet their financial obligations with bad money so long as the government declares the bad money to be legal tender. What makes money "good" is its redeemability or its purchasing power in terms of goods and serv ices; sellers are happy to receive it in exchange for their wares. So, what the bad money really drives away from the market are the suppliers of goods, the savers and investors of the capital that ac counts for employment opportuni ties. These people will hoard their current holdings or else take them to some other mar ket where a bet ter money can be had in exchange. The President's problem, or 678 rather, the problem of the people of the United States, is that bad paper money has flooded the coun try. The Federal government is printing this money to pay its ob ligations. Another name for the process is i,njlation: monetization of the Federal deficit.

Now, when people recognize that dollars are rapidJy depreci ating, their first response is to get rid of their bad money just as fast as they can, spending it for almost anything in the way of tangible goods or services. Of course, they still try to find bar gains; and it may happen that for eign suppliers afford the best bar gains. Why would that be the case? Why, because in a somewhat strange and roundabout way for eign suppliers had, up to the time of the freeze, been able to claim payment for their wares in "good" money rather than bad. In effect, they were buying gold from the United States at the price set in 1934 - $35 an ounce. Because that 1971 BAD MONEY DRIVES OUT GOODS 679 bargain was available to them in the U.S., they were most willing and anxious to exchange cars and steel and textiles and all sorts of goods and services at prices Amer ican customers recognized as bar gains.

Because the American people responded as they did to protect themselves against inflation, the Federal government was obliged either to outlaw such response or else stop its deficit spending and expansion of the money supply. Quite contrary to most of the pub licity, the wage-price freeze of August 15, 1971, announced the intention of the Federal govern ment to persist in its policy of in flation - not stop it, but step it up; reduce some taxes, cut down the supplies of foreign goods, and make it illegal for an American citizen to offer more bad money for any product than he had paid for a similar item before the freeze. Certainly, there could be no reason for such measures if the government meant to stop print ing bad money and balance the Federal budget. The mislabeled "balance of pay ments" problem, implying that for eigners aren't paying us what our exports are worth, is simply the strictly domestic problem of an unbalanced Federal budget...:: defi cits printed out as money. It's hardly the sin of foreign governments if they show greater fiscal responsibility than does our own; that sin is ours, for urging or al lowing our government to spend more than it collects from us in taxes. Unless other national gov ernments sin in sympathy and un balance their budgets to match our reckless rate of inflation, we can't long maintain the fiction that our paper money is as good as theirs. They may continue to sell us their goods at our inflated prices but will not be so anxious to buy our goods at our inflated prices; they'd much prefer gold, if they could get it, at $35 an ounce; hence, a so-called "balance of payments" problem, all of our own making.

If the Federal government were seriously determined to stop infla tion - that is, balance its budget then it would have to seek politi cally possible ways to shut off the spending. The process is simple enough to describe: identify which subsidies or spending programs are least attractive to U.S. voters and repeal them in that order. Whether that would be the War in Vietnam, the exploration of outer space, foreign aid, farm supports, environmental improvement, un employment compensation, urban renewal, medicare, compulsory un ionism, or any of hundreds of other uneconomic and unprincipled governmental ventures is strictly 680 THE FREEMAN November a political decision. But one thing is certain, there is no way to main tain U. S. credit in the world mar ket without curbing domestic in flation,and the only way to do that is to whittle off some of the Fed eral boondoggles. If politicians in power believe in voluntary con trols, let them voluntarily curb their spending. They then should find neither reason nor excuse to control ours.

The Frozen Laborer Government control of prices and wages, as distinguished from market determination in open competition, boils down in reality to control of people. l Peaceful per sons are compelled by the govern ment to use their lives and their property for purposes or in ways other than they might have chosen. The most common justification given for wage and price control is inflation; people are said to be investing or spending their lives and .property recklessly, causing prices to rise. But the fact is that inflation is simply another form of people control-a process by which government takes scarce and valuable resources from pri vate owners in exchange for ir redeemable promises to pay. Infla1 See "Government should control prices but not people," by Dean Russell, Cliches of Socialism (Irvington, N. Y.: Foundation for Economic Education, 1970), p. 222. tion is effective as a form of peo ple control so long as, and to the extent that, people believe the gov ernment will redeem its promises in whole or in part; they accept and hold money today in faith that it may later purchase at least as much as now, and possibly more.

The people are controlled through their blind faith, their property taken without their knowledge. Once the people open their eyes to the nature and effect of infla tion, lose faith in the govern ment's promise to pay, then gov ernment must resort to sterner measures such as a price and wage freeze if it expects to control the people, take their property with out their consent. The government, no doubt, will continue to print and spend money for its purposes, while denying individuals the right to spend their money for their own purposes. In other words, governmental control of prices and wages reduces the own er's bundle of rights concerning the use and disposition of private property; that is a long step back toward feudalism. 2 Private property exists in many shapes and sizes, but one of the , most neglected and perhaps most important forms pertains to the right of the individual to direct 2 See "Changing Concepts of Private Property," by Bertel M. Sparks, THE FREEMAN, October, 1971, p. 583.

1971 BAD MONEY DRIVES OUT GOODS 681 and control his own efforts, to sell his services for the most attrac tive bid in the market as distin guished from involuntary servi tude. The so-called Industrial Revolu tion, involving specialization, trade, saving, investment, and nu merous job opportunities in vari ous industries, did much to free the laborer from the lowly status of serfdom - a steadily strength enedand expanded bundle of rights to his own efforts. Then, government was asked, or volun teered, to intervene on the labor er's behalf - and, in the process, damage was done to his rights. The labor union that was em powered to help him bargain exer cised that political power to bar gain for him, without his express consent. The power of the union to arbitrarily exclude ,any laborer from bargaining for a given job opportunity diminishes that labor er's property and his right to his own efforts. One laborer's political power to strike or picket a given job opportunity jeopardizes every laborer's right of access to the job opportunity of his own choice.

Laws such as the Wagner and Taft-Hartley Acts in the United States extend political privilege to union bosses and the favored few, but at the expense of the property rights of laborers in general. Vari ous State and Federal minimum wage laws exclude from the mar ket those least skilled laborers un able or unwilling to earn the mini mum wage, thereby diminishing rather than enhancing their bun dle of rights. The regressive social security tax discriminates against laborers in the lower wage brack ets. And what some refer to as "the Welfare State against the Negro" really concerns the mod ern infringement of government regulation and control upon the property rights of the least skilled and lowest paid laborers. The government attempts too much in its various welfare meas ures, spending more, much more, than it dare try to collect through direct taxation of the supposed beneficiaries. Such deficit spend ing, Federal borrowing from its captive banking system, is the process of inflation which in due course manifests itself in what is called wage control and what is in reality the regulation and control of the laborer - much as in the days of feudalism.

Laborers and others who would defend their lives and property against inflation and controls and confiscation must first insist that government mind none but its own business: policing the market to keep it open. And in any event, Gresham's Law does prevail: bad money drives out goods. ~ Conflict of WHOSE interests? BERTEL M. SPARKS A FEW YEARS AGO the president of one of America's major manufac turing corporations was named Secretary of Defense. Prior to his assuming the duties of his new job he was called upon, not only to resign his position as corporate president, but to arrange for the disposition of all his stock in the corporation. It was felt that this was necessary in order to avoid a possible conflict of interests. Even after he had disposed of his holdings, he continued to be the subject of much criticism because of his former business connec tions. It seemed that every major decision he made in his capacity as Secretary of Defense was care fully examined with a view toward finding some reason to believe that it might have been influenced by Berte! M. Sparks is Professor of Law at Duke University School of Law, Durham, North Carolina.

682 the "corporate mind." On one oc casion the Secretary offered as a defense for his position a state ment that what was good for the corporation he had previously headed was good for the country. The reaction of the press was im mediate. The Secretary's state ment made headlines in most of the major newspapers of the coun try. It was cited as a prime ex ample of both the ignorance and the arrogance of successful busi nessmen in government. The experience of the corporate president who became Secretary of Defense is illustrative of a grow ing trend of our times. The cry of "conflict of interests" as a chal lenge to qualification for the per formance of certain civil and polit ical responsibilities is being heard with increasing frequency. Occa sionally it has been directed at elected officials but it has been par1971 CONFLICT OF WHOSE INTERESTS? 683 ticularly noticeable where ap pointive ones are concerned. The idea seems to be abroad in the land that any substantial degree of suc cess in business constitutes an au tomatic disqualification for public office. Experience in manufactur ing, particularly if it is in heavy industry, is interpreted as a sure sign of unfitness for high position in the Defense Department. By the same standard a man who has had wide experience in banking or other types of financial manage ment is automatically disqualified for service as Secretary of the Treasury. Similar reasoning has led others to conclude that a per son who owns stock in American industry should not be allowed to sit as judge on an American court.

Who Is Qualified? In view of the above observa tions, one might wonder where he should look to find suitable public officials. If experience in financial management disqualifies one from becoming a treasury official, then what is the appropriate back ground for the job? If manage ment of a large manufacturing en terprise renders one ineligible for the Defense Department, who is eligible? And what is there about personal ownership of a financial stake in the continued survival and prosperity of American so ciety that disqualifies one for service as a judge in the courts of that society? Critics might suggest that questions such as these do not go to the heart of the matter since they are related only to the tech nical competence or skill for the proposed job and fail to resolve the problem of personal interests that might tend to conflict with public duty. But that problem can not be resolved without inquiring into just what personal interests are involved and what is the na ture of the public duty with which these interests conflict.

The interests of a businessman in his capacity as a businessman necessarily have something to do with the success of his business. He is interested in increasing his profits. He is interested in produc ing his product at the lowest pos sible cost and selling it at the highest obtainable price. His de sire to keep costs down includes a desire that his plant be shielded from violence and that it be filled with satisfied, contented workers. His desire to get a favorable price for his product includes a desire for a continuing stream of satis fied customers with money in their pockets. This adds up to nothing more and nothing less than a de sire for a peaceful and prosperous society. Such a desire does not con flict in any way with the desired goals for society as a whole. In fact, the two are identical.

684 THE FREEMAN November Governments are established for the purpose of maintaining order. That means that the true function of government is to maintain an environment wherein a peaceful and prosperous society is possible. It means a society where volun tary exchange is permitted, where contracts are enforced, and where fraud, deception, and violence are punished. All human beings except those few who hope to become the beneficiaries of fraud, deception, and violence desire these same goals. And if the degree of the intensity of the desire may be measured by the extent of the particular person's personal or self ish interest, the desire is keenest among the most successful busi nessmen. It is they who stand to lose most· if contracts are not en forced and if theft, burglary, and other forms of violence are not restrained. At the same time it is their selfish interests operating peacefully in a free economy that tend to bring the greatest material benefits to all. This is the normal and natural result of a free mar ket operation because the greater the number of producers who are competing peacefully for customer attention, the wider will be the range of choice available to each customer and the greater will be the likelihood that the peculiar tastes of each one will be satisfied at the lowest possible cost.

The Founders Understood The unity of interests between the businessman and society as a whole was clearly understood by the founders of the American Re public. The vast majority of the signers of the Declaration of Inde pendence were well-to-do or even wealthy businessmen who saw as their primary task that .of estab lishing a government under which freedom and order could be main tained. Their rebellion was not a rebellion against an established order but a rebellion against the efforts of a government to impose trade restrictions upon some and to grant special privileges to others, the latter being those who happened to be favorites of a par liamentary majority. For the most part the Founding Fathers served without pay and when they pledged their lives, their fortunes, and their sacred honor, their for tunes were more than mere inci dental parts of that pledge. These were men of substantial means.

They had much to lose and most of them actually suffered the 10SS.1 They did so because they placed high value upon the long-term benefits to be derived from the 1 A vivid account of the backgrounds of the men who signed the Declaration of Independence and the suffering, both per sonal and financial, they endured as a re sult of their having done so is presented in summary form in Fehrenbach, Great ness to Spare (1968).

1971 CONFLICT OF WHOSE INTERESTS? 685 preservation of ordered liberty where individual freedom of choice could be maintained and where voluntary exchange of goods and services could be practiced with out any intervention or coercion from governmental authority. They understood, as did the recent Secretary of Defense, that what is good for business is good for the country. Tariffs "Protect" Producers at the Expense of Consumers But a government can he so or dered and the governmental func tion so conceived that the private interests of particular individuals or particular business enterprises do conflict with public duties. This occurs most frequently when sub sidies, tariffs, or other forms of special privileges are established. A steel manufacturer might reap substantial short-term benefits from a tariff law imposing a duty on imported steel. When such du ties are imposed, the price of the imported product will have to go up or else the product will have to leave the market. In either event the domestic producer will be given an opportunity to sell at a higher price than would be ob tainable under free market condi tions. While this might be of im mediate benefit to the domestic producer, it will mean higher prices for the consumer of steel products and therefore a detri ment to such consumers.

But the detriment to the imme dia te users of steel is not the end of the story. The cost of every thing dependent upon the use of steel will tend to rise. When this happens, the quantity of consum able goods the ordinary citizen can afford will tend to decline. For even if he can find some desired goods that have no direct relation ship to steel (a supposition that is itself unlikely), the fact that he has had to spend more for those goods that do have that relation ship will reduce the amount of money he will have available for the unrelated products. This is but another way of saying that there will be a decline in the general standard of living, or if not an ac tual decline, the standard will not be permitted to rise to the levels that would otherwise be achieved. What has been said about the steel industry is equally applicable to every other item of commerce upon which import duties are im posed. A tariff on imported textile products might be of immediate benefit to the domestic textile pro ducers, including the employees in that industry, but it is hardly beneficial to either the 20-year-old office girl or the 70-year-old widow living on a fixed income when both ladies are trying to outfit them selves with garments appropriate 686 THE FREEMAN November to their respective needs. And a tariff law that can keep a foreign automobile off the domestic mar ket might appear advantageous to the domestic producer, whether he is the president of the company, a stockholder, or a laborer on the assembly line, but it is less than helpful to the school teacher seek ing low-cost transportation.

Special Privileges The common characteristic of each of the illustrations cited above is that in each instance a particular individual or a particu lar industry is seeking a special privilege. In each instance some body is trying to escape the rig orous discipline-of the free mar ket. The market is a system that tends to reward those who pro duce the things people want at the lowest possible price. In that sense it is a system that rewards the best producers. It is a system in which the only way one can serve himself is by serving others, by producing the things or offering the services others want. But the erection of a tariff barrier is a means of artificially keeping the most desired goods or the most de sired services beyond the reach of the customer. It is a system under which the customer is coerced into accepting something less than his first choice, a system for keeping marginal and substandard producers in business at the expense of consumers.

Thus it becomes clear that in the tariff cases there is a private in terest that conflicts with the best interests of the public. But in each instance it is a conflict created by the departure of government from its proper function of maintaining the peace and its entry into the nongovernmental role of interfer ing with the operation of the mar ket. It is a conflict created by at tempts to use force rather than customer choice to dictate the pro duction and distribution of goods. The proper way out of this pre dicament is to get rid of the law creating the conflict and permit government to return to its proper function of maintaining order, thereby enabling its citizens to peacefully pursue their own hap piness in the manner pleasing to them. But until that step is taken the presence of the conflict must be recognized. And if the conflict is to be avoided, the particular businessman reaping a benefit from a particular tariff law must not be permitted to participate in any decision concerning the rate or the administration of the tariff involved. Neither should he be per mitted to vote for or against can didates who might be called upon to participate in such decisions.

Such a regulation of the fran chise would be cumbersome indeed.

1971 CONFLICT OF WHOSE INTERESTS? 687 It might even prove to be totally unworkable in its operation but it is an essential part of the opera tion if conflict of interests is to be avoided while the tariff law re mains. And it should be kept clearly in mind that what is being dealt with is, not the interests of businessmen as a. group, but the special privilege the government is extending to a particular business man or a particular group of busi nessmen at the expense of all other businessmen and of society as a whole. The Farm Bloc What has been said about the tariff laws is equally applicable to all forms of subsidies and produc tion controls the government might attempt to impose. When farmers are being subsidized for growing certain crops or when they are being paid not to grow others, the funds from which they are paid must be taken from other members of society. From whom shall such funds be taken and who is to decide when, how, and how much to take? These are political questions to be decided in the po litical arena.. And any serious con cern about conflict of interests would appear to dictate that farm ers be excluded from the electorate when these special privileges for farmers are being voted upon either directly or indirectly.

If this were done, it would no longer be possible for legislators from the farming regions to win elections by promising their con stituents to support laws impos ing heavier burdens upon city laborers in order to hand out greater rewards to farmers. This is but another way of saying that candidates for office would no longer be permitted to use the tax laws to raise funds to support their own campaign efforts and to perpetuate themselves in office. Farmers would be left to seek their rewards by producing in the most efficient manner of which they are capable the products people actu ally want. Their rewards would be for more efficient production rather than for the precarious cir cumstance of being represented in legislative halls by friendly but unscrupulous power-grabbing poli ticians. ... and Other Subsidies But the so-called "farm pro gram" is only one example of spe cial privilege being supported by government at the present time.

Similar discriminatory advantages are being extended on a large scale to selected individuals or groups at all levels, Federa.l, state, and local. Exclusive franchises to power and transportation compa nies, subsidies for airport con struction, Federal support to rural 688 THE FREEMAN November cooperatives operating electric, telephone, or other business enter prises, direct financial help to cer tain segments of the housing in dustry, government guaranteed loans to individuals or business enterprises within certain classi fications, and numerous other il lustrations that could be cited are instances where the taxpayers are being forced to sacrifice their own well-being in order to support in dividuals or industrial organiza tions the taxpayers have not volun tarily chosen to support. The truth is that in most in stances where these discrimina tory practices prevail the benefi ciaries of the special privileges are individuals or organizations whom the taxpayers, acting in their ca pacity as consumers in the market place, have already affirmatively rejected in favor of others who are offering goods and services more in accord with consumer wishes. If this were not so, the special privilege would not be needed. And aside from the wis dom of the sage remark of Ludwig von Mises that "the average man is both better informed and less corruptible in the decisions he makes as a consumer than as a voter in political elections,"2 a de cent respect for simple human dig nity would seem to demand that the individual person should be 2 Socialism 21 (1951).

permitted to spend his own earn ings for the goods and services that are most pleasing to him. The Vote-Buying Process If all the concern about conflict of interests were both genuine and informed, it is doubtful if any of the recipients of special privilege would be permitted to vote in po litical elections. It seems a little ridiculous to permit one group of citizens to vote themselves sub sidies at the expense of other citi zens. Permitting them to do so ex tends to them the opportunity of using the power of the state, the state being the only agencyauthor ized to use force, to impose their wills upon the nonprivileged group without regjard to whether they are performing any services that are needed or desired by the non privileged citizens. Under such a coercive system the continued production of un wanted products is inevitable and so is the perpetuation of incompe tent and inefficient producers. It is far different from the free market where only the most efficient pro ducers of the most wanted prod ucts can survive, where the only reward is that of a voluntary pur chase by a willing customer.

A business enterprise might suf fer financial embarrassment be cause of inefficient management or because it has misjudged market 1971 CONFLICT OF WHOSE INTERESTS? 689 demand or for any number of other reasons. Regardless of the reason for the difficulty, if the rules of the market are permitted to oper ate, that enterprise will have to either reform its approach or go out of business and that right early. But if government can be depended upon to rescue a failing business, the need for improvement is removed. Inefficient mana,gement is left free to continue in opera tion and unwanted products may continue to be produced. In either event the profits earned by the ef ficient producers of products the citizens want will be expropriated to subsidize the continued opera tion of the incompetent producers or the producers of products the citizens do not want. Consumers will be compelled to buy less, com petition in foreign markets will become more difficult, and the gen erallevel of industrial activity will be forced to decline. In the short run all this will be beneficial to the inefficient producer of unwanted goods, but in the long run it will benefit no one.

Withhold the Right to Vote The proper solution to this de structive and debilitating situation is to abolish special privileges and return to the constitutional prin ciple of giving all citizens equal treatment before the law. But until that is done, it would seem appropriate to at least take more seri ously the much-vaunted abhor rence of conflict of interests. A suitable beginning place would ap pear to be that of withdrawing the right to vote from persons to whom the government is extending spe cial advantages above and beyond those that are accorded to other citizens. This doctrine should be . applied to all citizens who are re ceiving special privileges of any kind and the term special privilege should include any privilege that is offered on an individual or group basis but not extended to the citi zenry as a whole. Presumably all citizens are enti tled to the benefits of protection from murderers, thieves, marauders, or robbers. It is protection pro vided by government but it is pro tection offered to all citizens. Even the murderer is entitled to protec tion against being murdered.

Therefore, this kind of protection is not a special pri vilege. It is not discriminatory. It is a privilege of fered to all citizens equally. But suppose the law against murder applied only to the killing of members of a particular occupa tion, religion, race, economic classi fication, or other identifiable group. In that rather ridiculous imaginary situation it would be discrimina tory to call upon the unprotected groups to pay taxes to support a police department for the benefit 690 THE FREEMAN November of the recipients of the privilege of protection. It would be equally ridiculous to permit the members of the protected group to cast their ballots to decide whether the cost of their special protection should be shared by the unprotected citi zens. Unwarranted Discrimination It is easy to comprehend the dis criminatory nature of the imagi nary law against murder that is re stricted to the killing 0 of a particu lar group while treating the vast majority as free game to be plun dered and slain at will. But the fact that precisely the same type of dis crimination is actually practiced in numerous other areas is often overlooked. Whether it is the manu facturer calling for a tariff law to give his product an advantage his customers have already decided it isn't worth, a farmer asking for "parity" prices which his skill and judgment as a farmer cannot main tain, or a failing business asking the government to use its power of coercion to provide it with a low cost loan which its business per formance is unable to justify, all are alike in that they are all asking that the power of the state be used to enable them to obtain by force that which they could not obtain by willing exchange. And a more di rect illustration of conflict of inter ests could hardly be imagined than that of allowing the recipient of anyone of these special privileges to vote for the granting or the con tinuation of the privilege.

One of the clearest illustrations of conflict of interests is that of giving the right to vote to persons on the welfare rolls. The illustra tion is perfect because the conflict is direct. It is permitting a nono worker who is receiving a direct subsidy at the expense of the work ing members of the community to participate in a decision as to whether or not the workers should have their real wages reduced in order that the special advantage to the nonworker may be continued or enlarged. So long as the nonworker is permitted to participate in the decision there can be little doubt as to how his vote will be cast. And the influence of even a small number on the welfare rolls or other special-privilege cate'gory should not be underestimated. A significant feature of the two party system, a system that has dominated the political process in the United States throughout most of its history, is that in most po litical campaigns the contest is be tween two parties whose constit uencies have usually been fairly evenly divided. Several years ago office seekers learned that if a par ticular group could be singled out for special privilege and if an ap peal on its behalf could be made on 1971 CONFLICT OF WHOSE INTERESTS? 691 humanitarian grounds, either real or imagined, the-favored group could be won almost unanimously without significantly upsetting the balance within other groups. This meant that the purveyor of special privilege could be reasonably sure of victory. As the nonprivileged citizens became more aware of the discrimination being practiced upon them, resentments began to accumulate. The political remedy presenting itself to the officeholder was that of enlarging the privi leged group in order to stay in power.

This has been done with great regularity. The spiraling effect has continued at an accelerating rate as each party has tried to outdo the other in its promises of special privilege. It is the easiest and least expensive means of win ning elections. The result has been that the number of privileged groups has multiplied and the population within each group has grown. In the meantime the politi cal process has become largely a game in which the winner is little more than the fellow who can demonstrate the greatest degree of skill in selecting for special favors such groups and classifications as will round out a majority while leaving in the nonfavored, working group a sufficiently productive body of 'citizens to provide the favors. Raising the IIPoverty Level ll In any welfare system some fig ure must be chosen as the income level at which subsidies will begin. Regardless of what that figure is, it is inevitable that there will be at least some fully employed work ers whose earnings are only slightly above that level. As the meager incomes of this low-in come group are expropriated for the benefit of the nonworkers, the low-income workers can hardly be expected to escape discourage ment. They cannot be blamed if they begin to ahandon their jobs in favor of a march to the welfare office. In that way they can have more leisure time and often enjoy even higher incomes at the same time. They can claim their maxi mum welfare benefits while keep ing themselves available for the earning of additional income as handymen, yardmen, domestic workers, seasonal agricultural em ployees, and similar positions taken on an irregular and unre ported basis. In this way they can avoid income tax worries and en joy a real income substantially above that of their employed friends who continue to work at regular jobs.

Under this system the cost of government will go up but the poli tician knows that taxes are un popular; therefore, he will prefer deficit spending to current financ692 THE FREEMAN November ing. As the government debt in creases, the supply of money will increase without a comparable in crease in the supply of goods. The result is higher prices. Welfare benefits at the established level will become less attractive. But the officeholder must remain in power at all costs; therefore, he proposes an increase in benefits. This invades a still higher level of the comparatively low-income workers. They now find it advan tageous to give up their jobs for the dole, thus starting another round of the boresome process on its way. Each round of increases will be come larger and will move from one phase to the next with increas ing rapidity. To see the process in operation in its most carefree, runaway form one need look no further than the United States of the 1960's. That was a time when the political parties in power (and in some sections of the country that meant one party and in some sections another) were claiming unparalleled prosperity while wel fare rolls were increasing at an unparalleled rate. The reasons for this inconsistent situation are not . difficult to see nor was its develop ment difficult to predict. In fact it was inevitable. It is equally easy to predict both the increasing ac celeration and the ultimate conse quences if established policies are continued. The next development to expect is an economically fatal but politically attractive system of wage and price controls. 3 From there the move is toward the ra tioning of goods and the drying up of production as scarcity mounts and the point is eventually reached when there are no longer any goods to ration. 4 Trends Can Change But none of this has to happen.

The trend can be stopped. History teaches that there is little likeli hood that it will be stopped short of disaster but history also teaches that all the necessary means for changing the course while still on safe ground are readily at hand. The downward trend is actually the fruit of man-made schemes for interfering with the productive ca pacity of individuals. The free operation of the market is being replaced by the coercive power of the state. And as soon as the power of the state is applied to tinker with any segment of the market in any degree, some citizen some where is being given a special benefit which could not exist if it were not being expropriated from citizens who are actively engaged 3 This article was written prior to President Nixon's announcement of the wage-price freeze on August 15, 1971. Ed. 4 For an outline of the route to ration ing see Read, "When Rationing Comes,"

THE FREEMAN, July, 1971.

1971 CONFLICT OF WHOSE INTERESTS? 693 in the production of wanted goods. And if the power to tinker is ac cepted as a proper function of government, the temptation to use the power is too strong. for the politician to resist. Its use enables him to expand his popularity, and hence his personal power base, by the simple technique of enlarging the area of benefit while charging the cost to the productive citizens who are made the victims of the crudest form of discrimination. Special benefits are extended to an ever enlarging group of citizens. But every time a citizen is added to the special privilege category one is removed from the produc tive sector. Production declines. The politician's tenure in office comes to depend, not upon his in tegrity or his skill in statecraft, but upon his shrewdness and his skill in the selection of the favored groups to become the recipients of the state's bounty. But as the groups are shifted and as their numbers increase, as they inevita bly must, the number left to sup ply the benefits is constantly di minished and the arrival at the breaking point is only a matter of time.

The overriding characteristic of this seemingly irreversible course is that production is being penal ized and nonproduction is being rewarded. That is the crux of the matter and that is the point to touch if the trend is to be re versed. This can be done by an honest enforcement of a rule against conflict of interests. But enforcement will not come until there is recognition of the con flict. Let those who are receiving special privilege be excluded from the decision-making process. If they complain that they are being deprived of their political rights, remind them that they have re moved themselves from the politi cal arena and that they may re store themselves by abandoning their special privilege and joining with other citizens in a willing ness to be treated equally before the law. And if a rule against con flict of interests is to be applied, its application should begin where the conflict is most direct and therefore most indisputable. If that were done the office seeker could no longer use the dole or any other form of special privilege as a scheme for buying votes. The temptation to use the power of the state to frustrate the operation of the market would decline. The in flexible rule of freedom, which is a rule that the only way one can serve himself is by serving others, might be allowed to assert itself and a period of burgeoning pros perity and well-being, such as has characterized all periods of maxi mum freedom in· past ages, might be seen again. ~ The SIOEY of NegEo Gains HENRY HAZLITT THE MYTH still assiduously culti vated in some quarters is that the Negro community has been sunk in hopeless poverty and despair, because it has not been allowed to participate in the general eco nomic prosperity of the last ten or twenty years. The actual record does not support this.

What we find, in fact, is that the Negroes as a whole have not only made great absolute economic gains in this period, but gains at least fully proportional to those made by the white population. The median income of Negro families in 1949 (calculated in 1969 prices) was $2,538. In 1959 this had risen to $3,661, and in 1969 to $6,191. Thus the median income had risen 44 per cent in the ten years from 1949 to 1959, Henry Hazli tt is well known to FREEMAN readers as author, columnist, editor, lecturer, and practitioner of freedom. This article will appear as a chapter in a forthcoming book, The Conquest of Poverty, to be published by Arlington House. 694 and 144 per cent in the twenty years to 1969. This was a real gain in "constant" dollars and therefore owed nothing to the steep rise in prices during the period. The percentage of Negro families with incomes under $3,000 (also calculated in constant 1969 dollars) fell from 58.1 per cent in 1949 to 41.9 per cent in 1959 and to 20.4 per cent in 1969.

Th us the Negroes not only shared proportionately with the whites in the economic improve ment of the twenty-year period, but somewhat better than propor tionately. Compared with the 144 per cent increase in Negro family "real" incomes between 1949 and 1969, white family real incomes in the same period increased only 97 per cent. 1 1 Source: Department of Commerce, Bureau of the Census; Economic Report of the President, February 1971, Table C-20, p. 220.

1971 THE STORY OF NEGRO GAINS 695 Interpreting the Statistics I have presented the figures in this way in order to emphasize the real economic progress made by the blacks in this twenty-year per iod. But these figures standing by themselves could give a misleading inlpression. They fail to call at tention to the big gap still remain ing between the incomes of white and black families. In 1949, when the median income of Negro fam ilies was $2,538 (in 1969 prices) the median income of white fami lies was $4,973. In 1969, when the median income of black families had risen to $6,191, that of white families had risen to $9,794. Thus the median income of black fami lies, which averaged only 51 per cent of that of white families in 1949, had advanced to no more than 63 per cent in 1969. This, of course, is still far from satisfactory; but the comparison should not lead us to depreciate the extent of the blacks' real gains.

Some writers talk as if the only gain worth talking about that the blacks have made is this gain in comparison with increased white incomes. But this is a captious and confused way of looking at the matter, and leads to some paradoxical results. Suppose in this twenty-year period the gains of Negro families had been the same as they were in absolute terms, but that the real incomes of white families had shown no im provement whatever. Then though only 20.4 per cent of Negro fam ilies would haye had incomes un der $3,000 in 1969, 23.4 per cent of white families would still have had such low incomes, as they did in 1949. And though the median income of Negro families would have been $6,191 in 1969, the median income of white families (in 1969 prices) would have been only $4,973, as it was in 1949. In both respects the Negro families, though with no better incomes in absolute terms than they actually had in 1969, would have been better off than the white families.

Could this be seriously regarded as a more desirable all-around sit uation? In still other ways the Negro has made great progress in the last ten or twenty years. A leading example is in the field of educa tion. In 1957, the median years of school completed by nonwhite men (who were eighteen years of age and over, and who were in the labor force) stood at 8.0 years; for white men the corresponding figure was 11.5 years, a gap of 3.5 years. By 1967, however, the median yea.rs of schooling for nonwhite men increased to 10.2 years, and for white men the figure had increased to 12.3 years, reducing the difference to 2.1 years.

696 THE FREEMAN November Differences Within Groups One trouble with all the com parisons I have made so far is that, because they arbitrarily group all whites together on the one hand, and all blacks together on the other (for the sa.ke of making over-all comparisons) , they may help to encourage the naive tendency of many people to think of the black community as a homo geneous, undifferentiated group all in the same circumstances and with the same outlook. But as Negro leaders have reminded us, for example: "Young Negroes are at least as hostile toward their elders as white New Leftists are toward their liberal parents."2 In addition Negroes are separated by great gaps in experience - North ern from Southern, urban from rural - and great differences in income. In 1967, for example, the relative spread in incomes among the nonwhite population was even greater than among the whites. The lowest fifth of white families received 5.8 per cent of the total income of such families, the high est fifth received 40.7 per cent, and the top 5 per cent of families 14.9 per cent. But among non white families, the lowest fifth received only 4.4 per cent of the total income of such families, the highest fifth 44.7 per cent, and the 2 Bayard Rustin in Harper's Magazine, January, 1970.

top 5 per cent received 17.5 per cent. These differences are empha sized further when we compare selected groups of black families, from different regions, with the corresponding white groups. In 1969, for the nation as a whole, black families earned 61 per cent as much as their white counter parts (compared with 54 per cent in 1960). But in the North and West, black families over-all earned 75 per cent as much as white families. More striking, Northern black families with the husband and wife under a.ge 35 both present, averaged an $8,900 annual income in 1969, or 91 per cent of the average of their white counterparts, compared with only a 62 per cent average in 1960. Still more striking, Northern black families with the husband and wife under age 24 averaged 107 per cent of the income of their white counterparts. (The Census Bureau thinks this is probably the result of a sampling error. But that the income of such black families is at least equal to that of their white counterparts is sug gested by the result of a similar sampling in 1968 ; this showed such black family incomes averag ing 99 per cent of corresponding white incomes.) It is significant that where we find the Negroes making the least 1971 THE STORY OF NEGRO .GAINS 697 / progress co:mparatively is in the area.s where the free market is not allowed to operate. This is par ticularly striking in labor union membership. In the unionized trades the unwritten rule seems to be that the higher the pay, the harder it is for blacks to get in.

They make up 11 per cent of the labor force. But at latest count, in such high-paying trades as plumb ers, sheet-metal workers, electrical workers, and elevator construc tors, less than 1 per cent of the workers are black. 3 Minimum Wage Laws and Other Interventions Cause Unemployment In one important respect, the posi tion of the Negroes has retro gressed. An increasing gap has developed between the respecti ye rates of unemployment of whites and blacks. In June of 1971, the over-all rate of unemployment among whites was 5.2 per/cent, among Negroes 9.4 per cent. A difference of this sort has long existed. For example, even in the relatively good employment years 1950 to 1954 inclusive, when the white unemployment rate averaged 3.7 per cent, the rate for Negroes averaged 6.8 per cent. Part of this difference probably reflected dis crimination by employers, and part of it the exclusion of Negroes from unions. In those five years 3 Author's source: Time, April 6, 1970.

unemployment among teenagers (16 to 19) was also higher, as it is now, than in the working force as a whole. But the gap in this respect between white and black teenagers was comparatively small. Unemployment among white teen agers in 1950 to 1954 averaged 10.3 per cent, and among black teenagers 11.1 per cent. Since that time the situation has been steadily deteriorating. In June of 1971 the unemployment rate among white teenagers was 13.5 per cent, while among black teenagers it reached the appalling level of 33.8 per cent. By far the main cause of this has been the Federal minimum wage law. Minimum wage legisla tion has been on the books since 1938, but in March 1956 the min imum rate was jacked up from 75 cents to $1 an hour, and it has since been raised by successive jumps to $1.60 an hour in Febru ary 1968. But the law cannot make a worker worth a given amount by making it illegal for anyone to offer him less. It can merely make it unprofitahle for employers to hire workers of low skills, and therefore forces such workers into unemployment. One of the greatest helps we could give the Negro today would be to repeal the statu tory minimum wage.

What our politicians still do not realize is that the greatest coun698 THE FREEMAN November teracting force to racial discrim ina tion is the free market. As the economist W. H. Hutt has put it, "The market is color-blind." If an employer can make a greater profit by employing a Negro than a white man at a given job, he is likely to do it. Even the militant Negro Marcus Garvey recognized this, though in a somewhat cynical manner: "It seems strange and a para dox, but the only convenient friend the Negro worker or laborer has in America at the present time is the white capitalist. The capitalist being selfish - seeking only the largest profit out of labor - is willing and glad to use Negro labor wherever possible on a scale reasonably below the standard union wage ... but if the Negro unionizes himself to the level of the white worker, the choice and preference of employment is given to the white worker. 4 In a free market, however, Ne gro employment does not neces sarily depend on acceptance of a lower wage rate. If a Negro - say an outstanding professional base ball player or musician - is clear ly superior to the best white com petitor, he is likely to be employed in preference, at an even higher rate, because the employer expects to make a greater profit on him.

4 Quoted by Bayard Rustin, Harper's Magazine, January 1970. Not a Separate "Black Economy" but Full Admission to the Market The chief hope for the economic progress of the Negroes lies not in some dream-world effort to form a separate "black economy," but in their becoming and being accepted as a more fully inte grated part of a great expanding capitalist economy. In spite of the discrimination that still exists, the economic position of the Negro in the United States is not only in comparably higher than in Haiti or in any of the all-black coun tries of Africa, but higher than most whites even in the industri alized countries of Europe. For what the best available sta tistical. comparisons are worth, here they are: As compared with a median annual income of $2,138 for Negro unrelated individuals in 1968, the per capital gross na tional product for that year was $91 in Haiti, $238 in Ghana, $298 in Zambia, and $304 in the Ivory Coast. In Chad, the Congo, Mali, Niger, and Nigeria, it ranged from a low of $63 to a high of $88.5 Turning to European compari sons: In the early 1960's, when it was calculated that some 44 per cent of America's nonwhite popu lation was below the so-called pov erty line of $3,000 a year, it de veloped that some 75 per cent of 5 Source: Statistical Abstract, 1970, p.

810.

1971 THE STORY OF NEGRO GAINS 699 Britain's entire, predominantly white, population was also below that line. 6 The $2,138 median in come for American unrelated Ne groes in 1968 compares· with a per capita gross national product for that year of $1,544 in Austria, $2,154 in Belgium, $2,206 in West Germany, $1,418 in Italy, and 6 Author's source: M. Stanton Evans in National Review Bulletin, February 3, 1970. $1,861 in the United Kingdom. What chiefly counts is the pro ductivity of the whole economy; what counts is the maximization of the incentives to that produc tivity. And those incentives are maximized when opportunities are maximized - when we neither fa vor nor discriminate against any man because of his color, but treat everyone according to his merits as an individual. ~ IDEAS ON L$ LIBERTY They Constantly Clamor THERE ARE PERSONS who constantly clamor. They complain of oppression, speculation, and pernicious influence of accumulated wealth. They cry out loudly against all banks and corporations and all means by which small capitalists become united in order to produce important and beneficial results. They carryon mad hostility against all established institutions. They would choke the fountain of industry and dry all streams. In a country of unbounded liberty, they clamor against oppression. In a country of perfect equality, they would move heaven and earth against privilege and monopoly. In a country where property is more evenly divided than anywhere else, they rend the air shouting agrarian doctrines. In a country where wages of labor are high beyond parallel, they would teach the laborer that he is but an oppressed slave.

DANIEL WEBSTER, in the Senate in 1833 A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Dividing the Wealth ECONOMICS, as a science, is sup posed to be "value free." But, after one has pursued the subject through all its ramifications, it turns out that if men are permitted to make their own voluntary decisions about production, with the state relegated to the role of policing contractsa.nd maintaining an hon est currency, the creation of wealth, of value itself, rises to a higher pitch and more people get more goods, services, and oppor tunities. So, paradoxically, a "value free" subject leads one into an in evitable discussion of values. A free economic system is worth pearls and rubies when compared to any of the many permutations of socialism that more and more afflict our globe. Howard E. Kershner, who helped found the Christian Freedom Foundation and is editor of its journal, Christian Economics, tumbled long ago to the fact that, as Edmund Opitz puts it, religion 700 and the free economic system of cap italism are natural allies, not ene mies. Christian voluntarism goes hand in hand with economic volun tarism; their values support and en hance each other. One can only be Christian if one is voluntarily choosing between good and evil.

And it is a positive good if, as a Christian, one chooses the specific economic system of capitalism, which, if it can't exactly reproduce the miracle of manna from Heaven, at least does the next thing to it. People have more scope for free dom under capitalism, and freedom is at the heart of Christianity. Dr. Kershner's Div,iding the Wealth: A re You Getting Your Share? (Devin-Adair, $5.50 cloth; $2.25 paper), makes the case that free economics is a natural ex pression of Christian order. But his case, as set forth here, is an implicit case; in his study of "the means by which the production of wealth for individuals and for 1971 DIVIDING THE WEALTH 701 countries can be accelerated or re tarded," Dr. Kershner limits his theological speculation to the state ment that if you "put God first," then "the other things will be add ed, as the history of our country shows." The rest of the book, which is an uncommonly lucid one, is nicely divided into chapters that show, on the one hand, how free dom increases the capital available to each and every individual and how socialism,· on the other hand, results in "decapitalizing our selves."

The Workers' Share Dr. Kershner begins his story with an account of a hoax perpe trated way back in 1905 by the so cialist firebrand, Daniel De Leon. In a famous speech delivered in Minneapolis, De Leon produced a chart that "proved" that the Amer ican workingman in 1900 received only 17 per cent of the total na tional production of more than $13 billion. Going back to the Civil War, De Leon concluded that, on the average, the owners of Ameri can industry grabbed off 80 per cent of the wealth produced in their factories, while the workers got only 20 per ce.nt. De Leon's great error resided in his assumption that the manufac turer got everything in the final selling price of an article that was not paid out to labor in his own factory. This, of course, failed to reckon with such items as rent, in terest, the cost of raw material~, the parts made by other manufac turers, taxes, accounting overhead, and the cost of sales. Since labor costs make up a large part of al most every item in the list, De Leon had monstrously perverted things.

Taking the economic process as a whole, labor gets 87.5 cents out of every dollar divided between own ers and workers, lea.ving 12.5 cents to be reserved for company growth and for dividends. These are U. S. Department of Commerce figures. In 1968 dividends accounted for only 6.7 cents of the gross dollar. The importance of the De Leon hoax is that it still colors the thinking of the AFL-CIO and a majority of people who are polled from time to time by Dr. Gallup. In his chapter on "What Ups Prices - Wages or Profits?," Dr. Kersh ner quotes a, statement put out by the AFL-CIO at its 1969 winter meeting in Florida,. Between 1960 and 1968, so the AFL-CIO declared, profits rose 91 per cent, before-tax dividends to stockholders 84 per cent, while the after-tax take-home pay of the average nonsupervisory worker rose by only 31 per cent. Wha.t theAFL-CI 0 didn't say was that 60 per cent more capital was in use in 1968 than in 1960, and that the amount of profit per dollar of sales on a much larger volume of 702 THE FREEMAN November business had merely remained stable. The rate of return on the stockholders' equity was actually lower in 1968 than in 1960.

Professor Milton Friedman keeps saying that wage increases, even beyond productivity, do not cause inflation. Technically, of course, he is right; it is only an increase in the money and credit supply that causes inflation. But uneconomic wage increases would result in a shrinking market and consequent unemployment if the money supply were not expanded, and where is the political party that can afford to go into an election year without validating the wage increases by flushing the currency? When pro ductivity does not keep pace, it is, as Dr. Kershner says, "the higher the wage the higher the price, and the smaller the quantity of goods that can be sold." Government Intervention Precludes Voluntary Bargaining and Trade Instead of trying to exact huge wage increases to offset a rise in the cost of living, Dr. Kershner thinks that labor ought to exercise a little Christian forbearance in favor of relating wage demands to productivity. But since such for bearance will probably not be forth coming, something will have to be done to change "legislation favor ing unions" and so help restore flexibility to the competitive systern. How can employers resist un economic wage demands when com petition is destroy'ed by bureau cratic rulings that make uncoerced collective bargaining impossible?

"We are in a vicious circle," says Dr. Kershner. "To get out we must find a way to stop the growth of the money supply and to keep labor costs per unit of production from rising." The AFL-CIO's George Meany says labor would be willing to forego some of its efforts to get "more" if the manufacturers would restrain profits. But for the past five years, as Dr. Kershner says, the return on stockholders' equity "is only about 3.9 per cent." And it follows that "you can't do much about reducing prices by working on this 3.9 per cent. It is so small in comparison with the wage fac tor in prices that it would make little difference if eliminated en tirely.As an average figure, em ployee compensation is seven or eight times greater than profits." Besides, as Dr. Kershner shows, it is the drive for profits that makes the mare go. Little, if any, profit is generated by pinching wages or by overcharging the consumer.

Profit, in any nonmonopolistic sit uation, is something taken out of costs. If goods are not extensively used, there will be no profit, and no expanded factories employing more labor. Profit, says Dr. Kershner, "is proof that there has been ex1971 DIVIDING THE WEALTH 703 tensive use," which is good for everybody. If George Meany only knew, he is hurting both labor and the consumer when he attacks profit. Dr. Kershner is not hopeful for the short run. He sees us "decapi talizing ourselves" by an inflation that compels enterprisers to replace a depreciated machine that origi;.. nally cost $25,000 with a new ma chine costing $50,000. The cost of replacement means more debt and less money for expanding the eco nomic system as a whole. Mean while the population keeps grow ing. We have reached the horren dous point where we owe more than $3 trillion, which is 50 per cent more "than our entire worth as a nation and a people." "How rich,"

so Dr. Kershner asks, "is a man who owes 50 per cent more than his entire wealth ?" There used to be a word for it - it was bankruptcy. This assumes, of course, that the man couldn't work it off, as is un likely, given all our current trends. ~ UNCLE SAM, MONOPOLY MAN by William C. Wooldridge (New Rochelle: Arlington House, 1970), 160 pp., $6.95. Reviewed by Haven Bradford Gow THE POST OFFICE is a monopoly, and service deteriorates as a re sult, while deficits accumulate. Could the private sector handle the various delivery services now preempted by government, doing the job more efficiently while showing a profit? Of course, re plies Mr. Wooldridge, in a chapter describing the mess government has made of the mails, and the improvements several entrepre neurs have made· in various kinds of delivery in competition with the postal system. Another chapter tackles the government school structure and describes what the free market can ,accomplish in the field of ed ucation. Harlem Prep is a dra matic illustration. Encouraged by parents, community leaders, and charitable organizations, a pri vate school was established in Harlem. Students - most of them former dropouts - are busily studying math, English, history, and even branching out into Plato and Aristotle. In 1968, twenty seven former' dropouts received their diplomas from Harlem Prep.

All received full or partial schol arships to attend such colleges as Harvard, Vassar, Wesleyan, Ford ham, and the University of Cali fornia. In 1969, seventy-one grad uates were accepted by thirty seven colleges and universities. One of those who received his di ploma, Charles Trahan, aptly summed up the feelings of the graduates: "Next September I will 704 THE FREEMAN November be a freshmen at Wesleyan. Last year I was blind and lost. NOw I have a scholarship." This is ,a lucid book, written in an engaging style. By precept and example, the author demonstrates the suffocating power of an over grown government, and the happy consequences of relying on the creative resources of private in genuity and enterprise. He shows what the private sector can do even in such areas as highway development, arbitration, and coin age. The author is less successful, however, in his chapter on polic ing, failing to realize that policing is a unique kind of performance.

Policing deals in acts of force blows from a club or shots from a gun - and these are not the peaceful and voluntary interper sonal actions which is the market in action. The reviewer heartily concurs with the author's conclusion that "independent action encroaches on ancient habits, laws, and fiefdoms, which grew up unremarked while generations argued over whether the state should help those who wanted help. The coming genera tion is already struggling instead over whether the state can step aside when individuals prefer to serve themselves." ~ HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each ORDER FROM: THE FOUNDATION FOR ECONOMIC EDUCATION IRVINGTON-ON-HUDSON, NEW YORK 10533 the Freeman VOL. 21, NO. 12 • DECEMBER 1971 The Tale of Two Students A great teacher presents the case against price controls. Frank Chodorov 707 Charity and the Welfare State Brian Summers 712 Why not relinquish to the individual the responsibility and opportunity to be charitable?

Miseducation About American Business Anne Wortha,m 714 A call for a new series of textbooks to help the youth of America to a better appreciation of the role of business. Subsidized Unemployment W. Marshall Curtiss 726 Concerning the tendency of the Social Security program to promote unemployment. The Founding of the American Republic: 5. The EnlightenmentImpetus Clarence B. Carson 731 An emphasis on reason, natural law, and balance, with a thrust toward liberty. lIMonopolist"-Can He Charge "Anything He Wants"? John A. Sparks 743 Concerning some forms of market competition often overlooked. Harmonizingto Each His Own Leonard E. Read 747 How variation, with freedom, can bring human interests into harmony. Genera.l or Specific Welfare? Hannibal Cundari 754 Government attempts to provide for favored persons or groups are always detrimental to the general welfare. Book Review: 757 "Then Truth Will Out" by Leonard E. Read.

Index for 1971 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding. 761 ttle 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 Educ~tion 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, 1971, 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. Articles from this journal are abstracted and Indexed in Historical Abstracts and/or America: History and Life. THE FREEMAN also Is available on microfilm, Xerox University Microfilms, Ann Arbor, Mich· Igan 48106. Permission granted to reprint any article from this Issue, with appropriate credit, except liThe Tale of Two Students."

FRANK CHODOROV The Tale of Two Students THEY WERE members of the debat ing club at a local college, and would we please help them pre pare for the debate: Resolved, that the Federal government should adopt a permanent program of wage and price control. They had good reason for com ing to us. Human Events had made editorial comment on this debate topic in a recent issue, and the students inferred that we were something of an authority. We are not immune to flattery, and the coed debater was pleasant to talk to. To bring the matter up to date: The late Frank Chodorov, former editor of THE FREEMAN, was as sociate editor of Human Events when this article first appeared there, November 28, 1951. The question of price controls has been debated for several thou sand .years but seems to plague anew each succeeding generation. Before the college season opens, some five hundred colleges submit to a central committee their ideas on what ought to be debated. The committ~e consists of faculty rep resentatives from four intercol legiate fraternities and a member of the American Society of Speech.

These five sift the suggested sub jects and draft four resolutions that seem to embrace the maj or ideas. The four resolutions are submitted to the member colleges; the one receiving the highest vote becomes the debate of the year. Our editorial comment on the topic for 1951-1952 was that it is "loaded" - the mere statement im plies the acceptance of a question able premise. The premise is that a wage and price control program is not only practical but even de sirable; that goes without saying, and the only matter left open for discussion is the desirability of a permanent program. We pointed 707 708 THE FREEMAN December out, also, that in the current text books, with which we are familiar, the idea of controls is favorably trea.ted, so that the debaters on the negative side would be argu ing against what they had learned in class. If they debated well, how would they fare in their economics examinations?

The notebooks were made ready. We adopted the Socratic method. What is the purpose of price con troIs? we asked. "To keep prices down, of course." What made them high? "A shortage of goods and a great demand." Or an abundance of money, we volunteered. The controls won't bring more goods to market and they are not intended to reduce the amount of money in circula tion. They simply aim to compel sellers to accept, and buyers to quote, prices lower than those pre vailing in the free market. "You are implying," said the young lady, "that there is an im mutable law .of supply and de mand. One of my books says there is no such law." Immutable, we ventured, is a long word leading to a long argu ment. Would she be good enough to tell me what she would do, were she a dressmaker, if the fixed price of dresses were below her costs? "I'd quit making dresses." Unless she reluctantly accepted prices forced upon her by women who disregarded the law, we added.

However, if she went out of busi ness, there would be fewer dresses on the market. Would the price of dresses then go up or down? The question, she suggested, answered itself. So, we jumped to the Q.E.D.: that price controls· had the effect of creating shortages and thus raising the prices they were de signed to lower. She demurred: "The govern ment could go into the business." And could sell dresses at a loss which would be made up by taxing the buyers of dresses. "Can't enforcement agencies hold prices down?" We traced the course of a pork chop from litter to the butcher shop, just to pick up the number of points at which prices would have to be fixed and surveillance maintained, not overlooking the hide's trip from slaughterhouse to the glove shop. Would it be wrong to estimate that the number of cops needed to enforce price con trols in general would come to at least a tenth of the population?

Would not the withdrawal of these men from productive work result in lessening the supply of goods? And, who would watch the cops? "Well, then, are you in favor of the black market?" We are in favor of the true mar ket, even if it is labeled "black."

1971 THE TALE OF TWO STUDENTS 709 The true market never can be sup pressed .•Even the ruthless Soviet commissars cannot do it. The stu dents were surprised at this re mark, so we related how, when the Russians reduced the value of the ruble several years ago, they gave as their reason the large fortunes that had been built up by "profit eers" -- which was an admission thatan illegal market had been in operation. (Patronized by law enforcement agents.) The Loophole Economy "But, Americans are law-abid ing. Didn't the OPA hold down prices during the war?" They were too young to remem ber, and their textbooks do not record the shenanigans under OPA: how butchers would be "fresh out" if you asked them to weigh the meat before your eyes; how the tails of men's shirts were cut short to meet the fixed prices; how you had to buy an accessory you didn't want, at an outrageous price, in order to get an automo bile at the legal price.

"If wages are held in line, prices would automatically follow." Under wage controls, we ex plained,both employer and em ployee become criminals if one of fers and the other accepts an in crease in wages. During the war, to avoid putting everybody in jail, the War Labor Board hit on the device of upgrading jobs so as to make increases in pay legal. But applications for permission to in crease were too numerous for the Board .to handle, and the employ ers in desperation resorted to un der-the-counter wage boosts, in order to hold their employees (so as to fill defense orders). "You mean that neither prices nor wages can be controlled?" Yes, they can; in the army or in prison. The Argument for Controls When There Is No Case "Wait a minute," the coed inter jected, "I've got to take the affirm ative side. I need arguments in favor of controls." That was a chore. How does one support· what one holds to be a fallacy ? Well, underlying every fallacy is a doctrine, and if you accept the doctrine, the fallacy seems to melt away. In this case, the doctrine is that political power can make the market place jump through a hoop; there are no laws of economics to hamper the strong arm of the state. We had to accept that position, if we were to beaf any help to the affirmative side.

Sticking to the Socratic method, we asked: what is the advertised social purpose of controls? "To distribute equitably what ever is in short supply." Like the father, we suggested, 710 THE FREEMAN December who sees to it that none of his children gets more than the oth ers. That is what we call "egali tarianism." To argue the affirma tive in this debate, we said, you must accept egalitarianism as an' ideal and a possibility; you must assume that the state has the right, the capacity, and the duty to allocate production and equalize consumption. "Hold on; you're preaching so cialism." Maybe statism, we volunteered, is a better word. But, why get dis turbed over a na.me? "We don't dare mention social ism. The students don't like it, and neither does the faculty adviser." Then we remembered that in the textbooks this controlled economy business is described as "demo cratic." Socialism is not men tioned. Putting nomenclature aside, we pointed out that the af firmative in this debate must rest its case on the goal of abolishing inequalities in the distribution of wealth and the state's ability to do so.

"What about the rights of the citizens ?" Pure fiction, we sneered. The only rights the citizens have are the privileges given him, on lend lease, by the state. "You mean the worker does not have the right to sell his services to the highest bidder?" Of course not. We must keep in mind that the good of society, as determined by the state, takes precedence over the good of the in dividual. After all, if the worker insists on fending for himself, how can the state take care of his in terests? "But, surely, if a farmer has put his back into a bushel of po tatoes, those potatoes belong to him and he has a right to sell them for whatever is offered." Property Rights Rejected It was the young man who brought up the'right of property, and we had to argue that that, too, is fiction. In his textbooks, we said, he would learn that in our highly integrated economy the individual worker produces nothing; society is the only producer. If society produces everything, the state has a first claim on everything, and is entirely within its rights when it confiscates property (by taxation) and distributes it for the general good.

They were perturbed. This was hard to take. "You mean to say that to support the affirmative in this debate we have to take the position that the 'individual has no rights? That the state is su preme?" That's your basic premise, we insisted. Once you admit that the individual has rights which the 1971 THE TALE OF TWO STUDENTS 711 state must respect, the case for controls is lost. The students had come to us without prejudice. They were in terested only in winning a debate, whichever side they took. But, when the argument for controls was related to the underlying doc trine of statism, their sensibilities were aroused. The debate took on a new meaning; it was not an im personal verbal joust; it was a Lost Freedoms battle of values, a contest between right and wrong - and neutrality was impossible. When they left, we felt that freedom is not' a lost cause. It is rooted in the human soul; it can not be eradicated by sophistry, nor obfuscated by erudition. Once it is spelled out, youth will recognize freedom, embrace it, and, if need be, fight for it. t) IDEAS ON L$ LIBERTY I WILL NOT undertake to list all of the many freedoms we have surrendered in the United States - the restraints against freedom of choice that we have voted against ourselves. But such a list would include controls over farmers, businessmen, industrial workers, bankers, foreign traders, and other groups. It would include price controls, wage controls, rent controls, raw materials controls, controlled rates of interest, inflated money, artificially cheap credit, and controlled production. Each of these measures has the effect of preventing honest persons from doing what they want to do or of forcing honest persons to do something that they do not want to do. As such, each is a clear-cut denial of freedom.

Else why has freedom been forsaken and forbidden in these vast areas of our daily activities? To me, the sad part of these controls is that, even if we disre gard the moral issues involved, I believe they will not accomplish what they are designed to do. I can find no evidence in history that they will work and I believe the reason is clear. It is not, as is claimed, an attempt to control prices or materials; it is always an attempt to control persons. ADMIRAL BEN MOREELL, In Search of Freedom (1951) BRIAN SUMMERS 712 CHARITY is a virtuous act of conscience whereby an individual voluntarily gives of himself in the belief that he is helping his fellow men. Neither the psyche of the benefactor nor the merits of his beneficiary need concern us here. The point is that an act of charity is a willful deed of an individual prodded only by his concern for others. It is in this light that the Welfare State appears most ob scene, for it replaces charity with the confiscation and redistri bution of wealth. This is not charity because there are bene ficiaries with no corresponding benefactors! The taxpayers as a group are not the benefactor because collectives can't have consciences any more than they can have headaches. Individ uals and only individuals can have consciences. The voluntary bestowers of charity are replaced with involuntary payers of taxes, many of whom now contemplate their own trips to the feeding place. The beneficiaries, no longer having any individ uals to thank for their gains, come to view them no longer as gifts, but as "rights." Thus does the Welfare State replace the noble acts of individuals gratuitously aiding one another with Mr. Summers is a graduate student in mathematics at the State University of New York at Stony Brook.

a demoralizing confiscation of private property and an immoral, ever-swelling crush at the trough. Aside from this corrupting influence of the Welfare State, there is the more pragmatic matter of selecting the benefici aries. A charitable person will usually carefully screen the candidates. After all, it is his own property that he is giving away~ Not so the bureaucrats of the Welfare State. They are doling out the confiscated property of others, and are thus not motivated to be so choosy. They act accordingly. Could this be taken to mean that I favor tossing all Wel fare State beneficiaries into self-reliance under the free en terprise system? For some beneficiaries this would be good. It might surprise many statists how many of them would land on their feet. Concerning the truly helpless, let me offer the reader an observation and a challenge. The observation is that an abolition of the Welfare State would drastically cut the need for taxes, and thus leave more wealth for present benefactors ..fi J to distribute. It would also enable new people to enjoy the suhjective benefits of performing charitable works. My challenge is for the reader, having paid all his taxes, to send off a check to his favorite charity. ~ 713 MIS E 0 ANNE WORTHAM THE CONSISTENT misrepresenta tion of the principles of political a.nd economic freedom has reached its zenith. The result is a genera tion of young people who have come to believe: - that men are basically irra tional and not to be trusted to act in their best interest; - that ideas are impotent and have no relevance to reality; - that government control is needed to make men free; - that capitalism is synonymous with political pull; - that an unearned share of an other's property is a moral right; - that competition is a threat to freedom; Following graduation from Tuskegee Institute, Miss Wortham served a term in the Peace Corps and has worked since in the communica tions industry. As a freelance information re searcher, she presently is contracted to IBM World Trade Corporation.

714 ·can Business - that businessmen are natural conspirators against freedom; - that the need of one man is his claim to the productivity of another. The latest decade of the Ameri can Story marks the emergence of young people whose ideals are an tithetical to everything ba.sic in the development of the freest na tion on earth. The idealism ascribed to the youth of the early sixties had, by the turn of the decade, been trans formed into rebellion against America's productive forces. Many business organizations, firms, and universities responded with pro posals that they and the youth come together and sort out their differences. On June 11, 1968, while university campuses erupted with student 1971 MISEDUCATION ABOUT AMERICAN BUSINESS 715 demonstrations and violence, the National Association of Manufac turers held a joint conference of students and industrialists for a possible meeting of the minds. But there was little meeting of the minds between these people who otherwise would have come to gether as producers and consumers - sellers and. buyers - potential workers and employers. Instead they came together as traditional enemies of one another: the ex ploiters and the exploited.

Their meeting typified the dia logue that can be heard screaming across ·the land even now - mark ing the beginning of but another wretched chapter of the anticapi talist campaign. It was but a re peat of past times when the Amer ican businessman was made the scapegoat for the failures of such government intervention as Wil son's "New Freedom," Roosevelt's "New Deal," Truman's "Fair Deal," Kennedy's "New Frontier," and Johnson's "Great Society." Once again, the businessmen at the NAM conference did little to de fend their stand. I received this report from a friend who was there: "One of the student panelists hurled the accusation of material ism at the businessmen. He re sented the fact that businessmen expect a university to educate and graduate students who are adequately prepared for the responsi bilities and opportunities that in dustry has available for them. This emphasis on career orientation un dercuts the idealism of young peo ple and brings about a material istic society - which the young panelist strongly condemned.

"Unfortunately, no one present was willing to step forward and rebut this and other student com ments. One other accusation was that businessmen have failed to bring about the 'good society.' No one in the audience bothered to ask what a 'good society' is, whether a 'good society' had ever been achieved in any country in which businessmen have not been allowed to exist. No one pointed out that if a man wants to do things for people, he first has to know how to get things done; and he really won't get things done un less he likes the doing itself that is, work. "The students made it abund antly clear that their goal was not work, but power. 'We want total re-evaluation of the existing struc ture,' one of them announced, while another echoed, 'We want a new political institution to deter mine what society needs.' "A new political institution is what they called for. However, no one pointed out that any political institution that sets itself as the arbiter of what society needs in716 THE FREEMAN December variably ends up dictating which needs and Iwhose are to be satis fied . . . and whose lives and/or property must be sacrificed .in the process."

The Advocates of Force Three years later, the predic tion of power leading to force has come true. A counterculture of young people dedicated to mysti cism and force has emerged to carry one step .further the assault against the businessman. They are engaged ina. new life style called "ripping off." According to aNew York Times Magazine article (Au gust 8, 1971) by Michael Drosnin, ripping off - stealing, to the un initiated - is rapidly becoming as much a part of the counterculture as drugs and rock music. Summing up the philosophy of these young thieves, Mr. Drosnin writes: "Behind the new morality of theft-without-guilt is a radical ideology . . . which sees America as a society based on the rip-off, its most respected citizens busi nessmen who have most success fully held up the most people. Stealing from these robber barons, runs the argument, is certainly more moral than working for them. It may be called a crime, but it's only a justified redistribu tion of the wealth."

I must disagree with Mr. Drosnin. There's nothing radical about the ideology of these young Robin Hoods. The idea of stealing from others what one cannot or will not produce himself is as old as man. But history records the fall of societies permeated by the morality of the thief. Fortunately, these young people do not constitute a majority of today's youth who, like it or not, will inherit the responsibility of carrying on "the American way of life." But the mere fact that these young larcenists exist says some thing rather negative about this country's moral, political, and eco nomic health. To quote Goethe: "The destiny of any nation, at any given time, depends on the opinions of its young men under five-and-twenty." Illustratively, in 1968 the students berated the free enterprise system and material property; they proclaimed as their goal a new society in which power, self -sacrifice, and semiconscious ness would determine man's state of affairs. Today's young looters have followed them as field agents, acting out the goals stated by radi cals of earlier years. The young radicals of the sixties made ex plicit the values and goals of those who, for the last century, have been campaigning against reason and free trade in favor of faith and force. The plunder and looting going on· today is the end result of that campaign.

1971 MISEDUCATION ABOUT AMERICAN BUSINESS 717 Surely, this ironic state of af fairs - where the acquisition of material goods by force is the rule of thumb for free, middle-class youth - is a saq commentary on the future of this country. The Irony of Their Existence It is ironic that these young peo ple who have never known what it is like to be without wonder drugs, space age time-saving de vices, mass transport, and instant communication should be among industry's most outspoken antag onists. It is ironic that they, the receivers of industry's massive output, should so diligently cam paign to put American business men out of commission. It is ironic that statism should be the ideal of young people whose livelihood is the product of whatever degree of free enterprise there remains in this country. It is ironic, but not so difficult to understand. Dr. Ludwig von Mises explains it this way: "Peo ple do not ask for socialism be cause they know that socialism will improve their conditions, and they do not reject capitalism because they know that it is a system pre judicial to their interests. They are socialists because they believe that socialism will improve their conditions, and they hate capital ism because they believe that it harms them. They are socialists because they are blinded by envy and ignorance."!

How is it that today's youth have come to consider the busi nessman their arch enemy? One of the reasons is that young peo ple have not been taught to see the man who believes in a free market for what he is. Indeed, they have not been adequately taught the very ideas of free enterprise. To compound the situation further, these youth have only experienced an economy that has moved far ther and farther away from capi talism. They have been exposed to a citizenry for whom it has be come commonplace to blame busi nessmen for the faults of the wel fare state in which they exist. Most American businessmen are not capitalistic; most believe in some form of government regula tion of their property and work. But it is the resiliency of the free market that has allowed these be trayers of the system to continue doing business. Conversely, how ever, it is also the objectivity of the free market that finally bucks them and sends them to the bank ruptcy courts. If they continue to function ina market that has ren dered them unworthy, it is only because of privileges andsubsi dies granted them by the govern1 Ludwig von Mises, The AntiCapital istic Mentality (New York: D. Van Nos trand Company, Inc., 1956).

718 THE FREEMAN December ment. And in this respect, receiv ing a government guarantee of a share in the market place is just as despicable and unjust as the act of taking unearned goods from a supermarket or being guaran teed an unearned share of the market as a consumer through government relief. However, today's youth seem unable to make this distinction among businessmen and they don't trust the free market to weed out the bad from the good. When the market place renders justice to an unstable business and the govern ment counteracts that verdict with a loan (taxpayers' money) to rein state that business, thoughtless youths then accuse all business men of bribing and controlling the government. They see all business men as an evil and dangerous force. And they trust nothing, short of government intervention, to rid them of what they think is their enemy. But they have unwit tingly made American business the scapegoat for the unrealistic policies and bungling actions of a government that, to say the least, is itself too big. They do not see big government as the oppressor of business; rather they see the government as the protector that stands between them and big busi ness. They see themselves as the exploited and the businessman as the ubiquitous exploiter. They seem to be unaware of the many ways in which their own freedom is jeopardized when government curtails the economic power of the business community.

Unfamiliar with the Principles My contention is that those young people downgrade the ideas of free enterprise because they are unfamiliar with the principles on which the virtue of produc tivity is based. All they know about the kind of productivity con sonant with free enterprise amounts to a misinterpretation passed on to them by their fami lies, schools, community, and civic leaders. Their outrage is due to the fact tha t everything they have been taught says that the materialistic ideals of capitalism to which many of the older generation still cling cannot be practiced in reality. They have been saturated by an intellectual onslaught against busi ness. And not having heard any other dialogue, they are rare to question and quick to join in pro test. On the one hand we have seen American business produce at rates unheard of before in the his tory of mankind. But on the other hand, the development of young Americans committed· to the prin ciples of free enterprise has seem ingly decreased. An anticapitalist 1971 MISEDUCATION ABOUT AMERICAN BUSINESS 719 attitude has been taking shape in this country during the last half century, particularly within the past three decades. The American businessman has stood by trying to appease every intellectual straw in the wind, only to see the straws pile higher and higher, until now he feels himself the needle in the haystack, lost and with no visi bility.

And so they summon the young saying: "Here we are. See us for what we are-not as your enemies but as your allies." How Is He to Know? But what is a twenty-year-old supposed to think of the American businessman if all he remembers from his high school history courses are the reported bribes of robber barons and all he knows about a free economy is that gov ernment intervention was neces sary to relieve the country of a depression allegedly caused by in dustry and big business? How is he to look at the businessman as anything else than a monster if his parents are heard saying that wars are supported by big busi ness because of the profits it can make from selling to the military? How is he to understand the bless ings of a free economy if his grandfather boasts of a farm sub sidy that got him through "those tough years" - or his uncle lauds Roosevelt for a WP A program he claims kept him alive? And at the age of eighteen how is he to vote for a man who calls for less gov ernment spending, when for all of his eighteen years he has survived by the grace of a welfare check?

How is he to understand the fail ures of his government when all he hears in school, at home, and on television is that big business is to blame for high prices and unemployment? As young men and women begin to earn their own salaries and enter the ma.rket place as consum ers, what are they to think except what they have been taught: a dis tinct distrust of those who make the products their money will buy? What are they to think if they have accepted the rationali zation for government interven tion into our nation's economy as reported in high school and col lege textbooks? Wha t are they to think if their thoughts are based on the average citizen's fear that big business is a. threat to his freedom? In their ignorance, they are to think the very worst and respond with the very worst kind of be havior toward free enterprise: be havior aimed toward destruction. How do we stop this vicious cycle so that the opinions of our young men five-and-twenty will not cause us to shake our heads 720 THE FREEMAN December in doubt about our country's fu ture? I suggest the first step is to get to the source of the misinter pretation - and my conclusion, as an under-thirty young person, is that the source is the American textbook.

Learning Distortions and Falsehoods I have selected sections of my own high school and college texts to dramatize the gross misinter pretations of the free market that are passed on to American youth. In the Applied Economics (James Henry Dodd) textbook used in my high school, I find the following: "Capitalism does not approve of monopolies. It hords that where monopolies actually exist, so that there is little or no competition, such businesses should be regu lated by the government." There is no hint here that the only kind of monopoly that threat ens the free market is the coer cive monopoly held by the govern ment. The student is told that too much individual political freedom sometimes results in selfish "dog eat-dog" practices. The author goes on to say that "as the division of labor increases and ways of mak ing a living become more special ized, new laws to prevent certain groups from taking advantage of others have become necessary."

This is the rationale offered for the regulation of big business and labor unions. In other words, the more freedom a man obtains due to the optimum use of his skills, the more control there must be on his labor and on the employer who agrees to pay him for his labor. From this,. a student might easily conclude that if left alone men will take advantage of each other; tha t the only way to prevent men from acting against their best in terest is to control them. The stu dents in my classes would hardly have questioned the conclusion that freedom is preserved by means of regulations and controls. In defining the American politi cal economy, the author states: "Probably the truth of the mat ter is that we have what we might call American capitalism. It is not the laissez-faire type of capitalism that was talked about so much a hundred years ago or more. In deed, as we have said, we have never felt that government should pursue completely a hands-off policy with regard to business."

And then comes this clincher: "To arm ourselves against com munism, certain controls over business have become necessary." In a chapter entitled "Big Busi ness and Little Business," the author focuses on "the evils that have resulted from the growth of big business."

1971 MISEDUCATION ABOUT AMERICAN BUSINESS 721 "Under the spur of competition for profits, there is always the possibility that some concerns ... will take advantage of their com petitors." The chapter on "Competition and Monopoly" ends on the follow ing note: "We have never had a pure capitalistic system. Competition has always been imperfect, and always some business concerns have enjoyed advantages over others. Furthermore, it is not so cially desirable or practicable to rely on competition to fix f~tir prices for the use of railroads and telephones. The prices of these things are controlled in part by government. . . . The question, therefore, is not whether we shall have perfect competition or pure monopoly as a method of deter mining the prices of the things we buy. Rather it is a question of how much unrestrainedcompeti tion is desirable ... shall business be controlled by means of govern ment ownership or by regulation ?"

Control or regulation! These are the alternatives, two sides of the same ideology: communism or fascism. These are what the un suspecting student is asked to choose from. History? In a college-level American His tory handbook (American History at a Glance by Marshall Smelser), used by many students at my col lege, no distinction is made be tween the giants of American in dustry who were believers in an unregulated economy and the jus tice of the free market and those men who sought political pull and government subsidies. J. P. Mor gan and Andrew Carnegie are de scribed, along with the Big Four of the Central Pacific Railroad, as a threat to competition. The eco nomic revolution that followed the Civil War is depicted as the cause of the years of economic disloca tion that ensued. The ill fate of the American farmer is blamed on industry. The student reading this sum mary of American history would have to conclude from it that dur ing the post-Civil War years until the height of the Progressive Movement of the early 1900's, American free enterprise was al ways in danger as a result of the actions of businessmen. Indeed, the student is told that the decline of the pro-business atmosphere and the increasing interest in reform came about because there was a "feeling" that the political and economic direction of American life had been given into the hands of a few or had been seized.

What of the consequences of taking the country's economy out of the market place and placing it 722 THE FREEMAN December in the hands of government bu reaucrats? There is no way for the student to know from reading this particular handbook. Booker T. Washington Portrayed an "Uncle Tom" Turn now to the Negro history book (From Slavery to Freedom, rev. ed., 1956) required as a· text at my college and still used exten sively in most southern Negro col leges. The author, John Hope Franklin, has the following to say about the role of the American businessman: "Perhaps the great est failure of Reconstruction was economic .... In the North, where their [Negro] lot was substantially better, they had not yet learned to cope with the powerful indus trialists who were using political agencies as their most reliable al lies and bribing officials with greater regularity than they paid their employees. While the white leaders of the South were preoccu pied with questions of Negro suf frage and civil rights, Northern financiers and industrialists took advantage of the opportunity to impose their economic control on the South. And it has endured to this day."

In his section entitled "Age of Booker T. Washington," Franklin criticizes Washington, a man who was easily the most sensible Negro of his time, if not one of the mo~t rational intellectuals of the post Civil War period. Washington be lieved that all races have gotten on their feet largely by laying an economic foundation. On one occa sion, in answer to his opponents, he said, "I would set no limits to the attainment of the Negro in arts, in letters or salesmanship, but I believe the surest way to reach those ends is by laying the foundation in the little things of life that lie immediately about one's door. I plead for industrial education and development for the Negro not because I want to cramp him, but because I want to free him. I want to see him enter the all-powerful business and com mercial world." He held the strikingly practical and rational view of economic freedom as a prerequisite of polit ical freedom; essentially his be lief was that economic freedom was self -ini tia ted and maintained in the market place rather than through handouts. In regard to these views, the author passes on the following interpretation of Washington's brand. of capitalism to students: "While there was much to be said for the position that Wash ington took, his doctrine contained some weaknesses that are perhaps more obvious now than they were 40 years ago. He accepted uncri t ically the dominant philosophy of 1971 MISEDUCATION ABOUT AMERICAN BUSINESS 723 American business when he in sisted that everyone had his future in his own hands, 'that success came to him who was worthy of it, and the greater the obstacles, the greater the victory over them.' It was a doctrine of triumphant com mercialism, which was strength ened by his contact with ...

wealthy American businessmen." In his final criticism, Franklin interprets Booker T. Washington's philosophy as being "an adapta tion of the theories of free compe tition and political individualism that had been taught by the school of classical political economy and was becoming more fictitious than ever by 1900." According to Franklin, the alleged concentration of economic power in the hands of a few dis credited the idea that a man of small capital could raise himself to affluence and power through hard work and thrift. That Wash ington could have believed other wise, says Franklin, showed his lack of understanding of that real ity as he developed a program of industrial education for the eco nomic salvation of Negroes. It is no wonder that many young people with whom I attended Tuskegee Institute in the early sixties began to refer to its founder as an "Uncle Tom." Stu dents who were benefiting from the industry of Booker T. Washington remembered him not for his ideas of individualism,eco nomic self-determination, and free competition; instead they remem bered him as the "Great Compro miser."

Political Science Anticapitalistic Version The textbook of my Political Science course was American Democracy in Theory and Practice by Robert Carr, Marvel" H. Bern stein, and Donald H. Morrison. In their assessment of the relations between government and business, the authors demonstrate the trend toward increasing governmental regulation of economic life. They concede government's role in pro tecting property rights. However, they add to this function of gov ernment four others which they say are the means by which gov ernment promotes business. In their view these functions are: (1) direct aid to business; (2) maintenance of competition; (3) public utility regulation; (4) fi nancial controls. After a detailed explanation of these alleged functions, the au thors tell the unsuspecting student that government regulation and the growth of public powers have been inevitable results of indus trialism and the spread of democ racy. Regulation, they say, is de signed to protect the public against 724 THE FREEMAN December the excesses of arbitrary economic power which develops in a highly industrialized society.

It must be remembered that these conclusions presented to the student are done with the best in tentions. Government regulation is described as being supportive of free enterprise - not obstructive to it. To quote Ludwig von Mises: "This assumption takes for granted the fundamental socialist idea that economic interests of the masses are hurt by the operation of capitalism for the sole benefit of the 'exploiters' and that social ism will improve the common man's standard of living."2 It is interesting that of the 810 pages of text the authors devote one-and-a-half pages to the ideol ogies of fascism and communism without defining the basic princi ples of these anticapitalistic ideas. And if the student has no concept of these opposing ideas, how is he to know that many of the claims made by the authors are them selves adherent to the principles of socialism? How is he to know that for some 115 pages, instead of explaining the theory and prac tice of free enterprise as pro claimed, the authors instead have dwelt upon the theory and prac tice of a version of socialism? How is the student, who is enjoying the blessings of liberty, to know that 2 The AntiCapitalistic Mentality.

the reason that his general welfare is among the highest of the world's peoples is not because of govern ment regulation-but in spite of it? How is he to know this if his text book clearly states that it is be cause of government control (of business) that private enterprise is maintained? What does he have to counter act six long chapters of text reiter ating the position that the Amer ican economy "depends substan tially upon government activity and control to safeguard and pro mote the public interest and to maintain private enterprise"? Conclusion I have presented the above ex cerpts from books that were a part of my own educational experience to show to what degree the tools for teaching the ideas of free en terprise were lacking in that ex perience. And I think my experi ence was not unique. It is my con tention that the young person who calls a large corporation fascist doesn't do so because he knows what fascism is; rather he does so because he doesn't recognize free enterprise when he sees it. And this is the danger - that many young people in our school systems will never know the very principles upon which their lives and liveli hood depend. They will be cheated of a means to distinguish between 1971 MISEDUCATION ABOUT AMERICAN BUSINESS 725 statist principles and laissez-faire principles. I am fully aware how rare it is these days to see any thing that looks remotely like a laissez-faire undertaking. But that does not excuse the inability of an entire generation to see these rare instances of man glorified by his productivity. That does not excuse the inability of young people to distinguish between an altruistic principle against their lives and a capitalistic principle in support of their lives.

It is, in my opinion, time for new textbooks to appear in the American 'classroom. Either we supply young minds with an accu rate means of comparison or we will continue to be subjected to the actions they take based on the dis torted ideas they now hold. ~ IDEAS ON ~ LIBERTY The World of Make-Believe IN ALL PLACES it is visible, that while people talk of a common wealth, every man seeks his own wealth; but there, where no man has any property, all men zealously pursue the good of the public: and, indeed, it is no wonder to see men act so differently; for in other commonwealths every man knows that unless he provides for himself, how flourishing soever the commonwealth may be, he must die of hunger; so that he-sees the necessity of preferring his own concerns to the public; but in Utopia, where every man has a right to everything, they all know that if care is taken to keep the public stores full, no private man can want anything; for among them there is no une.qual distribution, so that no man is poor, none in necessity; and though no man has anything, yet they are all rich; for what can make a man so rich as to lead a serene and cheerful life, free from anxieties ....

SIR THOMAS MORE, Utopia W. MARSHALL CURTISS SVBS:I.DI:ZED llXE:N.PZ-OY:N.EN'l' HAVE YOU ever tried to employ· an "older" person and gotten this reply: "I would be glad to work part time, but if I earn more than $140 in any month my social se curity that month will· be reduced 50 cents for every additional dollar I earn." If he earned $240 in a month, half of the extra $100 would be deducted from his social security check. In other words, he would give up $50 to earn $100. Furthermore, the $100 is taxable income whereas his social security check is not. The earned income also is apt to be subject to a deduc tion of around 10 per cent for social security taxes. But let's go on. Whatever a social security claima.nt earns above $240 in a month is deducted from his social security check, dollar for dollar up to the total Dr. Curtiss is Executive Secretary of The Foun dation for Economic Education.

726 amount of his social security check. Say his social security check is $140 a month. He has a full time job that pays him $330 a month. He would have to give up all of his social security check; in addition, his withholding for Fed eral taxes would be $20.30 (with two exemptions) and the social security tax on his $330 would be about $34, contributed half by his employer and half by himself. In all then, it would cost him nearly $200 a month to earn $330, where as he could get his $140 social security check by doing nothing. Not a very attractive job, is it! Of course, some people would rather work than be idle in spite of the low return. Because the mathematics of this is figured month by month, a person might work full time for only a few months during which time he would receive no social security, 1971 SUBSIDIZED UNEMPLOYMENT 727 then remain idle or earn no more than $140 a month and thus draw full social security for the balance of the year.

As a person's earnings rise, say to $500 or $800 a month, then working becomes more attractive. And one can look forward to age 72 when he will be able to receive all of his social security check without penalty, regardless of ea.rnings. That Some May Be Subsidized, Others Are Taxed At its beginning, in the mid 1930's, social security was por trayed as an insurance plan to enable retired people to live com fortably after their earning da.ys had passed. The benefits were often called annuities and the withholding referred to as premi ums. It was described as a funded plan with a large trust fund. Most knowledgeable persons today real ize that social security is pa.y-as you-go rather than a funded plan, with workers currently taxed to pay benefits to those who qualify. It is of little avail to suggest that a young worker could more eco nomically build up his own retire ment through a private insurance company. Such .options are seldom available to taxpayers. One might suggest that it would be less ex pensive to educate one's children in independent schools than to pay school taxes year after year, but that is not an open option.

The question we are examining here is why the formula for pay ing benefits is subject to the work income rule. If social security were an annuity plan for elderly per sons who had purchased their rights with premiums, why with hold some or all of the benefits if the person earned more than a given income? The Incentive to Retire The reason for the work-income test is not difficult to discover. In the mid-1930's, unemployment was high. Those who spoke for labor, then as now, seemed to believe that there were just so many jobs available-not enough to go round. A solution, given their premise, was to remove some of the avail able workers from the· work force. How better than to use both the carrot and the stick? The carrot was the social secur ity handouts offered qualified per sons over 65; and in the first sev eral decades of the program the benefits far exceeded the value of prior contributions by employer and employee. The stick wa.s the work-income rule which effectively removed many able-bodied work ers from the work force. In effect the plan said : "We will give you so much a month if you will agree not to work - at least, not very 728 THE FREEMAN December much." In 1961, in the face of increased unemployment, a, fur ther attempt was made to reduce the total work force by permitting men to start drawing .social se curity payments at age 62 instead of 65.

The plan worked, after a fash ion. In 1947, nearly 48 per cent of men 65 years of age and over were in the labor force. By 1970, only 27 per cent of those 65 and older were in the labor force. Oth er factors such as the end of the war, compulsory retirement from business, and a general increase in affluence helped bring the decline. But with the work-income rule re moved at age 72, we find the per centage of men in the work force increasing from 31 per cent at age 71 to 35 per cent at age 73. Making Jobs for Nonworkers The attempt to control unem ployment by regulating the size of the work force or the number of jobs has taken many forms. In the early days of the Industrial Rev olution in England, weaving ma chines were destroyed in the belief that the number of available jobs otherwise would be reduced. In the 1930's in this country, especially in the rubber industry, the work week was reduced to 35 hours to create more jobs - to spread the work. Tightly controlled labor un ions have attempted to limit the number of workers by apprentice regulations, thus hoping to main tain higher wages than would oth erwise prevail.

More subtle ways of limiting the size of the labor force include minimum wage laws. These have effectively kept young workers, especially those from minority groups, from being gainfully em ployed. Given a. free labor market with willing buyers and willing sellers of labor at wages agree able to both, those who want to be employed can get a job. A free labor market creates a tendency toward full employment. 1 In any consideration of employ ment opportunities, one must bear in mind that wants of individuals will always exceed the means of satisfaction however high the level of affluence. The philosophy of the song, "If I Were a Rich Man," seems to deny this. How often one hears from the young, "The day I reach a salary of $10,000 a year, I'll have it made!" But hu man nature doesn't work that way. Achieve one economic goal and an other springs up. So it is with persons who have started drawing social security.

Even though their -incomes pro vide adequate food, clothing, and shelter, most have additional wants 1 See Ludwig von Mises, "The Econom ics and Politics of My Job." Irvington~on Hudson, N. Y.: The Foundation for Eco nomic Education.

1971 SUBSIDIZED UNEMPLOYMENT 729 for the satisfaction of which they are willing and able to work. Does It Hurt ~e If You Work? Now, if they work, who suffers from it? Political interventionists would have us think that other workers would be thrown out of jobs - that one man's productivity is another man's poverty. Of course, this makes no sense in a relatively free economy. Unless someone earns more than enough for his subsistence, there can be no employment opportunity for anyone else. Let's further examine this point. Suppose I am over 65 and drawing social security. I'd like a little more income, so I take a job as a bookkeeper for a, local firm. To be sure, the accounting I do is not done by anyone else, and it might appear that I have kept someone from a productive job. However, my reason for work ing is to earn enough to buy addi tional goods or services - perhaps for a vacation, or better medical attention, or books to read, or to support my hobby of photography.

What matters is that I will spend the money for something - pos sibly an investment - and the ef fect will be to provide employ ment for others, including the person who might otherwise have had my bookkeeping job. This suggests another basic principle of economics: the total welfare of a people is the sum of their productive efforts as individ uals. Those who do not work add nothing to this total of productiv ity, do nothing to help raise the average level of living. The level of living of an individual or his family depends on his working in a productive way in an economy where the capital invested per worker is relatively high. This is the key to a prosperous economy. To arbitrarily preclude anyone from working, whether a . teen ager or someone retired on social security, is to reduce the level of living below its potential. Who Threw the Monkey Wrench? A situation such as developed in the 1930's cannot be explained as a lack of work to be done or as too few jobs to go round. The ex planation must be sought in the unfreedoms or the interventions which keep the buyer and seller from trading to their mutual ben efit.

There may be political reasons for encouraging social security recipients not to work. It has been argued that if social security pay ments were not diminished to those who earn more than $140 a month, then there would be less to payout to other recipients. It is also argued that if the work-in come test were removed, some 730 THE FREEMAN December would receive benefits for which they have "no real social need." This is not an attempt to ap praise the entire social security system. Our purpose is merely to show the absurdity of paying per sons to remain idle. For they might otherwise be gainfully em ployed, to the advantage of themselves in the service of others and to no one's harm. Whatever the stated purpose of social security, whether a compul sory scheme to redistribute wealth, or an actuarially sound retirement system, it currently functions in part to subsidize unemployment.

~ IDEAS ON LIBERTY "Purchasing Power Create's Jobs" SINCE 1930 and our government's deliberate policy of maintain ing wages above the free market level, peacetime unemployment has become our most persistent economic problem .... All the "consumer purchasing power" in the world cannot create even one permanent job in an economy where the return on cap ital is negligible or nothing. That is, if every person in the world had twice as much money as he now has to spend, not one job would thereby be created unless the owners of the factories be lieved they could earn adeq?ate profits. It is the actual and an ticipated return on capital, not consume:;:- purchasing power as such, that causes investment in new buildings and machines, and the resulting creation of more production and more jobs. Thus, laws and coercive union policies that increase wages at the ex pense of profits do not create jobs; they destroy them.

From Cliches of Socialism, No. 37, by Dean Russell CLARENCE B. CARSON THE FOUNDING OF THE AMERICAN REPUBLIC 5 The Enlightenment Impetus FROM THE EARLY 1760's to the mid-1770's, as colonial resistance to British rule mounted, ebbed, and flowed, colonists referred over and over again to the Brit ish constitution, to the rights of Englishmen, to the charters on which the colonies were founded, and so on. This they could do so long as they were attempting to alter British policy and retain ex isting relationships. But once they decided to break the connection with England they could no longer hinge their action on the British constitution nor any longer sup port their institutions with it. Ex perience could be utilized; forms and practices could be abstracted from the British pattern; but all these would have to have a new foundation and new justifications. The new foundation on which they built was the natural law philosophy. This is not to say that the natural law philosophy was new or that Americans had just become acquainted with it.

On the contrary, the natural law philosophy, or its underpinnings, is nearly as old as Western civili zation; it had been greatly re vived in English political dis course in the seventeenth century; and American thinkers were Dr. Carson is Chairman, Social Science De partment, Okaloosa-Walton College. He is a noted lecturer and author, his latest book en· titled Throttling the Railroads. 731 732 THE FREEMAN December widely familiar with it long be fore the break from England. But it had got new impetus behind it in the past century and a half, and the doctrines out of it were being brought to a fruition at just the time that Americans turned to it to justify their ac tions and undergird· their institu tions. If James Madison had been aware of intellectual history in this way, he might have remarked about the occurrence of this frui tion of the natural law philosophy at just this juncture of history in the same vein he did about an other matter in these words: "It is impossible for the man of pious reflection not to perceive in it a finger of that Almighty hand which has been so frequently and signally extended to our relief in the critical stages of the revolu tion."

The Natural Law Philosophy Documents, writings, and ad dresses of the revolutionary pe riod are replete with references to the natural law philosophy and ideas derived from it. Jefferson based his argument in the Dec laration of Independence on "Na ture's laws." Thomas Paine ar gued both that independence was called for as a natural right and that the resulting country should be founded on underlying law. State constitutions frequently listed a number of rights which were "natural." The United States Con stitution was implicitly framed from an order explicit in the natu ral law philosophy. As Clinton Rossiter has said: "The principles in which they placed their special trust were . . . those of . . . the school of natural law." They "sought limits [on political pow erJ more uni versal than those staked out in laws, charters, and constitutions. The great philoso phy that preached the reality of moral restraints on power had al ways been a part of their Anglo Christian heritage. Now, in their time of trial, the colonists sum moned it to their defense."!

The natural law philosophy is grounded in metaphysics. That is, it is grounded in something be yond the physical ; it is not acces sible to the senses directly. No one can see, hear, taste, feel (tac tilely), or smell natural laws. If they are real, their reality is vouchsafed in some fashion other than through direct sensual con tact. Their reality should not be understood as a becoming, either, as made up of ideals which may be fulfilled in the course of time. The founders of these United States were not idealists in this 1 Clinton Rossiter, The Political Thought of the American Revolution (New York: Harcourt, Brace and World, 1963) , p. 78.

1971 THE ENLIGHTENMENT IMPETUS 733 sense; they did not conceive of natural laws as something it would be desirable to see estab lished. On the contrary, they were understood as being already every where established, inviolable, and finished. Self-evident Truths Intellectual developments since the eighteenth century have made it increasingly difficult to under stand the natural law philosophy, and the meaning of this is that it has become increasingly difficult to understand that on which these United States were founded. The difficulty can be exposed by ex amining a familiar phrase from the Declaration of tndependence, the one which reads: "We hold these truths to be self-evident, that all men are created equal. ..." The phrase has been so often heard and seen that it has at tained that status for us of an idea which is so familiar that it nei ther shocks nor calls forth any examination of it. Probably, in our day, most people hear not the words but a translation of· them which would go something like this: We hold it as an ideal that all men should be made equal. Yet, that is not what the words say, nor is it reasonable to render them in this fashion.

In the first place, what does it mean that "these truths" are "self-evident"? Today, the phrase "self-evident" is often used as if it were a synonym of "obvious" or "apparent." This is probably a way, unconsciously adopted, of avoiding the difficulty for us of the term. "Self-evident" means that the statement contains its own evidence. To turn it around, it means that there is no external evidence for the truth of the state ment, or that none is being ad duced. It can be made clear that in the instant case no evidence either is or can be adduced for the validity of the statement. All the evidence that I know of indi cates that all men are not created equal. Each person is different from every other at birth, dif ferent in appearance, different in capacities, different in circum stance, and different in what he inherits. Jefferson's statement is one which, if true, must be "self evident."

This is not to say that there is no evidence for the reality of natural laws ; it is rather to affirm that such evidence as there is is indirect. Thomas Jefferson was working out of a long-established philosophical tradition when he wrote the Declaration of Inde pendence. This tradition was du alistic, holding .that there are two realms of being. They can most directly be described as the realms of the physical and the metaphy734 THE FREEMAN December sical. The physical realm may al so be described as the realm of the existential, the changing, the historical, and of appearances. The metaphysical may be· called the realm of forms, of essences, of fixities, and of the real. It is, of course, the realm of natural law. It is that underlying order which gives shape, form, predictability, and their character to things. Greek and Roman Influences The philosophical roots of the natural law philosophy reach down deeply into Western thought from its early beginnings. The Greek thinkers of classical an tiquity were early taken up with the difference between appear ance and reality. To appearance, all things seemed to change; in deed, all physical objects undergo alteration and corruption with the passage of time. This led some men to conclude, such as Heracli tus, that all is flux, that there is only change. Others held, how ever, that the changing is only an appearance, that underlying it is fixity and order.

Philosophy, as we understand it, had its beginnings with efforts to find the primal stuff from which all else comes. It was commonly believed for a long time that there were four elements - earth, .air, fire, and water - from which all else is made. This search begot yet another one, the search for that which gives form and order to things, to that which causes them to assume the shapes that they do, to follow the· course that they do in their development, and to behave as they do when im pinged upon by something else. Men have, for as long as they have had settled modes of living at the least, been aware of numerous regularities and ·predictabilities in the world about them. Philosophy - by which is meant here its most abstruse branch - has been con cerned with trying to make a co herent explanation of these. Metaphysical thought reached a plateau with a line of Greeks which commences with Socrates, goes through Plato, and culmin ates with Aristotle, a plateau which it has ever since been diffi cult to reach or to rise above. New reaches in philosophy was only one of the achievements in the ancient world, of course, though these may have been the keystone.

The Greek achievements were spread about the Mediterranean in what has since been known as the Hellenistic Age, and were taken up by the Romans who ex panded and developed that por tion of Greek culture which ap pealed to them. Roman thinkers were the first to set forth the natural law philosophy exten1971 THE ENLIGHTENMENT IMPETUS 735 sively. They did so both to under gird the edifice of Roman law and to justify the spread of that law over a· vast empire. Their ac quaintance with a multiplicity of peoples of diverse cultures led some of them to seek for common features underlying the differ ences which would be of the order of law everywhere applicable. Revivals of the Natural Law Philosophy during Middle Ages So impressive were the varied achievements of the Ancients that men refused to forget them even after the empires fell and Europe broke up once again. There were many revivals and renascences over the years. Two major efforts to revive the learn ingof the Greeks and Romans oc curred in the Middle Ages: the first is known as the Carolingian Renais sance, and the second took place in the twelfth and thirteenth cen turies. There was an almost con tin uous renaissance in the Modern era from the fifteenth into the eighteenth century. There was a neoclassical revival in literature in the seventeenth century, and the music of the eighteenth cen tury is frequently described as classical. If what is meant by classical is an emphasis upon order, harmony, balance, .modera tion, reason, and form, then the eighteenth century was the preeminent neoclassical age of our era.

The natural law philosophy was revived in Europe in the seven teenth century. On the continent exponents of it in the political and legal realm included Hugo Grotius, Jean Bodin, and Samuel Pufen dorf. English writers in this stream would include Thomas Hooker, Harry Vane, Richard Hooker, James Harrington, Al gernon Sidney, and John Locke. Much of the English thought was produced during the constitutional struggles of the seventeenth cen tury, struggles which culminated in the Glorious Revolution. This body of thought was most useful to Americans when they came to revolt, because they were able to hinge much of their case on Eng lish thinkers. The natural law philosophy in general got a great boost in the seventeenth century from what we call scientific developments. These developments which are as socia ted with the names of Francis Bacon, Rene Descartes, Galileo, J0 hannes Kepler, Leibniz, Spinoza, and Isaac Newton were both spawned by the revived natural law philosophy and gave new im petus to it. The central features of this development were the empha sis upon the rationality of the uni verse, the rationality of man, and mathematically expressible laws 736 THE FREEMAN December governing the behavior of objects.

Ways were worked out for dis covering the laws, and these and other men experienced phenom enal success in the work of ex posing them. Alexander Pope wrote: Nature, and nature's laws lay hid in night, God said, Let Newton be, and all was light. So impressive was the natural order revealed by scientists that renewed efforts were made to dis cover more precisely the natural order as it applied to man and his affairs. The effort 'to do this in the political, social, economic, reli gious, and artistic realm has come generally to be .called the En lightenment of the eighteenth century. The title contains a con siderable measure of presumption in it: it suggests that men were coming to be enlightened while those who had gone before had been in the dark. This is pointed up, too, by the conscious slough ing off of the reliance on the an cient thinkers and attempts to discredit them. A case can be made that the thought of the En lightenment was deeply influenced by classical antiquity even as that age was no longer venerated. An equally strong case can be made that there was in the Enlighten ment a potentially fundamental break with tradition which would cut men off from their past. Both these things are true.

New Emphasis on Reason It was with some trepidation that I used the term Enlighten ment in the title of this install ment. There is no doubt that Americans at the time of their revolt were under the sway of the natural law philosophy, but there is reason to doubt that they were under the sway of the En lightenment. This doubt is occa sioned, I think, because of the course of developments in France. Many historians of the Enlighten ment have focused on French thinkers, on Voltaire, Diderot, Quesnay, Montesquieu, d'Alem bert, Rousseau, and so forth. The French were the most dramatic proponents of the Enlightenment, the most daring and iconoclastic of thinkers, the ones who broke most emphatically with the past. In France, too, centuries-old anticlericalism shifted toward op position to all the formal religions and became, for some, outright atheism. The repute of the En lightenment has been tarnished, too, because in its wake came the French Revolution with all that entailed.

Now some Americans were in fluenced by French thinkers. Probably all Americans who knew 1971 THE ENLIGHTENMENT IMPETUS 737 of it were favorably influenced by Montesquieu's arguments for a separation and balance of pow ers in The Spirit of the Laws. The affinities between the French and Benj amin Franklin, Thomas Jef ferson' and Thomas Paine, as ma jor examples, are well enough es tablished. But the Enlightenment was not an exclusively French af fair, nor the directions in which some of the French took it an in evitable one. The Enlightenment can be considered a much broader development encompassing the em phasis on reason, natural law, and balanced with a thrust toward liberty. In this sense, Americans shared in its fruits, and used the ideas associated with it. The bulk of Americans did not accept the more radical breaks with the past nor become antireligious as a re sult of their thinking . Americans tended to counterbalance abstract ideas with reference to experience and by the use of common sense.

II A State of Nature" There are several concepts basic to the natural law philosophy. The most basic concept is that of a state of nature. Thinkers in the seventeenth and eighteenth cen turies were given to beginning some statement with the phrase, "Man, in a state of nature .... " Anthropologists of the nineteenth and twentieth centuries have pointed out that man is nowhere discoverable· in a state of nature, that, on the contrary, he always exists in a social state. As is fre quently the case when men of one era take on those of another in controversy, those of a later date have misunderstood the position, whether intentionally or not we do not know. The thinkers of an earlier day did not mean that man had ever existed in a state of na ture historically, or that he could somewhere be found in that .state at any time. The concept is essen tial, hypothetical, and imaginary. To know the nature of anything, it is necessary to strip away all that is peculiar and particular to that thing, all that has been acci dentally added, and view it in terms of the common features it shares with all others of its kind.

To know the nature of man, then, is to know him in a state of nature, that is, to know him stripped of all cultural accretions. Stripped of his culture, a creature is only potentially a man, of course. It is a work of the imagin ation to discover man in a state of nature. It is an hypothesis from which to reason to other conclusions. It is man reduced to his essence that is discovered in this fashion. It is, as understood by the men about whom we have been talking, man as he really is. Thus, it can be affirmed that man is a 738 THE FREEMAN December rational animal - i. e., that he is capable of reason, that his poten tiality for reason separates him from other creatures. If reason were something acquired from the culture, then all other creatures in the culture could acquire it. The state of nature concept, then, is used to discover the na ture of things. Everything has its nature, men of the Enlighten ment held, has its form, shape, and potentialities. This could be affirmed of government, of so ciety, of economy, and so on. Nor was the state of nature a neutral concept in the Enlightenment. The nature of a thing was believed to be implanted there by God, and it behooved man and all institutions to conform to their natures. On this view, everything is either natural or artificial. Herein lies the most revolutionary side of the natural law philosophy. One can follow a line of reasoning that all culture and all artifice violates na ture and must be destroyed. (This was the tendency of Rousseau's thought.) Or, this line of thinking may be followed in a more dis criminating fashion and lead to conclusions that some cultural de velopments run athwart the na ture of the thing - such as mer cantile regulations, for example, while others do not, as, for ex ample, the institution of mar riage. The founders of these United States tended to be quite conserv ative in their interpretation of the relation of their institutions to the nature of things.

liThe Social Contract" Another basic concept of the natural law philosophy could form a counterbalance to the revolu tionary tendency of the state of nature concept. This is the con cept of the social contract or com pact. It will be useful here to dis tinguish between the essential and the existential social contract, even though such a distinction was not usually carefully em ployed in the eighteenth century. The essential social contract is timeless and universal; it is that contract which must exist if men are to live at peace in society. It is an enduring contract which one perforce enters at birth and quits only when he leaves society. As I have noted elsewhere, the social contract "is that tacit, essential, and necessary agreement which binds man to man, members of a family to one another, members of communities together, binds gen eration to generation, binds peo ple to government and govern ment to people. It is everyman's tacit agreement not to use vio lence to get his way, to leave others to the enjoyment of the fruits of their labor, not to trespass upon the property of others, to fulfill 1971 THE ENLIGHTENMENT IMPETUS 739 the terms of his individually en tered into agreements, to honor his parents, to succor his chil dren, to keep his word, to meet his obligations - to family, to community, to country -, to keep all treaties, and to observe the amenities of his culture."2 It should be clear that the accept ance of such a social contract would mean that drastic changes would not be made in the social fabric, for to do so would be to violate the social contract. Ameri cans accepted some such concep tion, as most peoples at most times do, whether they are aware of it or not.

The existential social contract is the particular one which pre vails in a given society. When men referred to it they had in mind usually the compact between the governed and the governors. Any constitution would be such a contract, whether it had been written out or not, and whether or not both parties had formally ratified it. Americans in 1775 had a considerable history of dealing with such compacts. There was the British constitution, the co lonial charters, the Mayflower Compact, the Fundamental Orders of Connecticut. In the natural law philosophy, if the rulers vio2 The Flight from Reality (Irvington: Foundation for Economic Educatiorl, 1969), p. 498. lated the existing social compact basically and consistently, a peo ple could revert to their condition prior to their rulers and work out some new agreement. This is what Jefferson argued in the Declaration of Independence. "Natural Rights"

Probably the most potent con cept derived from natural law theory for the American colonists was the doctrine of natural rights. This is the doctrine that men have by nature, and as a gift of God, certain rights. They have been most commonly categorized as the right to ·life, liberty, and property. John Adams described the position this way: All men are born free and independ ent, and have certain natural, essen tial, and unalienable rights, among which may. be reckoned the right of enjoying and defending their lives and liberties; that of acquiring, pos sessing, and protecting property; in fine, that of seeking and obtaining their safety and happiness.3 It was in their claim to rights that Jefferson was saying all men are created equal in the Declaration of Independence. He followed his famous phrase about equality with this one: "that they are endowed by their Creator 3 George A. Peek, Jr., ed., The Political Writings of John Adams (New York: Liberal Arts Press, 1954), p. 96.

740 THE FREEMAN December with certain unalienable rights. " It should be clear that this statement cannot be validated by an appeal to historical evidence. History is replete with instances of violations of the rights of indi viduals to their life, liberty, and property. Murder, suppression, and trespass have been all too common throughout history, nor would sur veys anywhere at any time have been likely to turn up the fact that all were equally protected in the enjoyment of their rights. But Jefferson did not appeal to historical evidence; he said that the truth of the position is "self evident." The effective meaning of this is that the truth of the statement follows from the na ture of man and of conditions on earth. What does it mean that one is entitled to life? It means that no one has a prior claim to it, that no one may take it without provo cation, that it is his to whom it has been given. In the nature of things it is clear that no one could have established a claim on . the life of another at birth or thereafter.

In a similar manner, man has a natural right to liberty, that is, to the free use of his faculties (with the commonly stated proviso that he do no inj ury to others in his use of them). In the very nature of things, no one may constructively employ the mind, the senses, and the limbs of a person but that person himself. It follows that he to whom they belong does so by prior right which. it is impossible for him to alienate. The right to property is shorthand for the right to the fruits of one's labor. It is self evident that a person who has pro duced something by his own labor with his materials on his own time has a rightful claim to it. The right to property is the better phrase, however, for it encompasses the subtleties of distribution by which the fruits of one's labor may be determined in complex situations which usually prevail. An Ordered Universe The natural law philosophy mightily buttressed a belief in liberty. It also provided methods for discovering liberties and the means for establishing and main taining them. The Enlightenment gave added impetus to making such discoveries and an urgency to acting upon them.

The concept of an ordered uni verse provided the most profound basis for liberty. Seventeenth cen tury scientists had affirmed that the universe was governed by laws capable of precise formulation. Newton's statement of the law of gravity explained how the great bodies in the solar system are 1971 THE ENLIGHTENMENT IMPETUS 741 kept in their orbits by a combina tion of the motion of freely falling bodies and the attraction of the bodies to one another. All sorts of other phenomena were shown to operate according to law. These laws were believed to be the crea tion of God and to be immutable. As thinkers extended their ac tivities into the social realm they discovered a natural order there as well. It is an order modified, however, by the free will of man. Man not only can reason but he can will as well, and he can will to do wrong to others. Hence, gov ernment is necessary, and certain prohibitions by it are essential to enable men to live fruitfully in society. But the existence of an order prior to government means that the role of government can be limited and restrained. It is not to be expected that everything will come apart if some human agency does not control and direct it; on the contrary, things will operate as they are supposed to ordinarily without some compulsive force.

Separation and Balance 0' Powers To restrain government to its proper role, power must be sep arated into its various functions, and powers must be counterbal anced against one another to pre vent those who govern from ex ceeding their bounds. The sep aration and balance of powers concept was a paradigm of New ton's description of the universe itself. The heavenly bodies are kept from flying off into space by mutual attraction. On the other hand, they are prevented by their own motion from being drawn into the sun and consumed. A basic separation and a delicate balance between thrusts and pulls holds them in their orbit. This is one of the models for the separation of powers in government by which it may be kept to its task. There is not space here to de scribe in detail the arguments for and justifications of liberty that derived from this outlook. Some of them will be described at other points. Suffice it to say that Amer icans were impressed wherever they looked with the felicitous pos sibilities for liberty. The broad lines of the insight went something like this: Compulsion is not necessary to make men sociable; man is a social creature by nature.

He needs the society of others to satisfy his wants and will seek· out the company of others. To have that company, he will be under pressure to behave in ways accept able to others .. There is an eco nomic order which men willingly take part in without being com pelled to do so or without being told what to do. Man is religious by nature. He cannot be compelled to believe what he does not be742 THE FREEMAN December lieve. By nature this is impossible. But he might be expected to wor ship with others of like mind if left to his own devices. By the time the crisis between Britain and America came, Ameri cans were prepared by the natural law philosophy in three most im portant ways. With it they had ready to hand a foundation to sub stitute for the British constitu tion, one which undergirded that institution and transcended it in its universal validity. And they .were impelled toward liberty as a temporal object. The diversity of the colonies had once had the unity of a common British back ground. When they struck off the British connection they kept much of their diversity but thrust to a new unity on the basis of the natural law philosophy. Independ ence, liberty, unity, and diversity found shelter within the broad framework of natural law. t) Next: The Mercantile Impasse Nalure' s Way IDEAS ON LIBERTY EQUILIBRIUM is nature's scheme and she maintains it by the use of power, which is developed from strain, which, in turn, is cre ated by inequality.

Nature has never permitted stability in any form of life. Man will be going against nature if he seeks stability in his own affairs. It is strain that makes life not only worth while but actually possible, because from strain comes the only available power for individual development. From The William Feather Magazine, July, 19'71 CAN HECHARGE t:t\NYTHINGHE WANTS"? JOHN A. SPARKS To THEIR FIRST COURSE in eco nomic principles, college students bring a wide assortment of mis understandings. The "nature of competition," in particular, is a subject where there is almost al ways confusion. During a recent classroom discussion one student, who is representative, said: "This idea of rivalry between producers is fine, but what if there is only one producer of a product, for example, only one dairyman in a town. Then, it seems to me that he would have a monopoly and could successfully charge any price he wanted to charge." The class nodded a general assent.

The fallacy that the exclusive producer of a good or service holds the enviable power to charge Professor Sparks is Acting Chairman, Depart ment of Economics and Business Administra tion, Hillsdale College in Michigan. "anything he wants" has been ex posed and refuted. 1 Yet, most members of the class assumed that in the absence of other "flesh and blood" competitors there would be no curbs upon the pric ing practices of the single seller. Preoccupied with "competition by competitors," the class neglected other important kinds of compe tition. They are not alone. "When competition is named as a regulator of enterprise outputs and prices, it is usually the com petition among the firms already established in this or that indus try which is emphasized . . . Most studies of individual industries refer, when discussing competi tion, almost entirely to rivalry 1 Hans F. Sennholz, "The' Phantom Called Monopoly," Essays on Liberty VII, (Irvington, N. Y.: Foundation for Eco nomic Education, 1960), p. 295.

743 744 THE FREEMAN Deoember the alternatives to by competitors"? keep the lone pro charging "anything among established phasis mine) What are "competition What forces ducer from he wants"? firms."2 (Em-film substitute well for cellophane. Peanuts can replace popcorn. The power of the consumer to substi tute presents a continuous threat to the sole seller of a product who believes that he can charge "anything he wants." Competition by Substitution In order to start class discus sion, I asked one girl if she would buy milk from the hypothetical dairy at $5.00 a gallon. "No!" she said without hesitation. "I'd buy canned juices instead or maybe even powdered milk." The young lady's common sense revealed some doubt that a .single seller can successfully charge "anything he wants." Her answer indicates that sole sellers, no matter how powerful they think themselves to be, confront a very real kind of competition - competition by sub stitution.

In the classroom example the price of whole milk had become exorbitant. No other whole milk competitors were in sight, but re sort could be made to powdered milk or other drinks. What econ omists call the "substitution ef fect" occurs in many areas. As a building material, steel can be supplanted by concrete and cer tain plastics. Glassine and plio2 Joe S, Bain, Barriers to New Compe tition (Cambridge, Mass.: Harvard Uni versity Press, 1956), pp. 1-2. Demand Elasticity Another student interjected, "To me there is no real substitute for milk. I don't like powdered milk and I never drink fruit juices. Substitution isn't open to a per son like me." Consumers, who for various reasons are unable or un willing to substitute, may never theless have a sizable impact on the single seller who arbitrarily attempts to charge "anything he wants." Simple curtailment of product use by such a consumer can seri ously cut into the revenues of the overconfident exclusive producer.

Buyers who have no alternative products available to them are nevertheless often able to cut back on current consumption. When consumer responses to a price rise are substantial and widespread... "elastic" - the single seller's price increase will actually yield him lower revenues than before be cause total consumer outlays for the product will decrease. 3 The 3 Murray N. Rothbard, Man, Economy and State (Princeton, New Jersey: D. Van Nostrand, Inc., 1962), Vol I, p. 110.

1971 "MONOPOLIST" - CAN HE CHARGE "ANYTHING HE WANTS"? 745 single seller charging anything he wants in disregard of this "de mand elasticity" may bring disas ter upon himself· in the market place. It is said that although con sumer demand for many products is "elastic," the demand for "ne cessities" is less changeable, that is "inelastic." The argument goes that since consumer response to price increases for "necessities" is so sluggish and limited, the single producer of such products escapes the discipline of demand elastic ity. However, it has been esti mated in studies of the demand for water that a doubling of prices would within a year reduce domestic household water con sumption by about 30 to 50 per cent. 4 Even a price increase of so necessary a commodity as water would result in quite a decrease in gallons demanded by users within a relatively short time. At best, the sole seller is taking a serious risk when he theorizes that his product is a "necessity"

and therefore immune from the exercise of consumer buying re straint. Potential Competition The young man who had trig4 Armen A. Alchian and William R. Allen, University Economics (Belmont, California: Wadsworth Publishing Com pany, 1969), 2nd edition, p. 58. gered .the whole discussion restat ed his argument: "I suppose it is unlikely, but what if consumers could neither find substitutes for the highly priced good nor could they significantly reduce their consumption of it? Then the sin gle seller would be able to charge anything he wanted, wouldn't he?" "Wait a minute," interrupted another student. "If the dairy owner is able to do so well, that is, successfully charge $5.00 a gal lon for milk, I just might start a dairy, too. People in town could buy milk from me instead of him and for less." Potential competitors wait in the wings, as it were, to make their entrance onto the business stage. Today, companies large and small are in search of profitable products and markets. They have instant capital and "know-how"

available. The threat of such new entrants is an unseen force with real impact on the single seller. Not only do potential competitors come from the outside, they often come from within a company. An employee of the single seller may become convinced that he can "split off" and produce the highly demanded product at a lower price than is currently being asked. The technical computer field has wit nessed this pattern over and over. In all industries, high profits serve as a signal flare attracting com746 THE FREEMAN December petitors to the scene. Entic~ng as 'such profits may be to the single seller, he knows that they must certainly be shared if he contin ues to ask a high price. Conclusion Can the seller who is without actual competitors really "charge anything he wants"? Some may believe, as the class did, that this is so. But, the threat of substitutes, the flexibility of consumer demand, and the eagerness of would-be competitors work to gether to firmly guide the exclu sive producer of a good or service away from arbitrarily high prices toward the realism of the market.

Charging "anything he wants" and receiving it is a seller's dream, but certainly not the real ity with which he must contin ually deal. t) IDEAS ON LIBERTY Danger to Competitors WHAT IS TO HAPPEN to a country in which success in the market place is to be a signal for prosecution by politicians anxious to curry public favor? It is a serious question, prompted by the sit uation which prevails today. Danger of antitrust prosecution threatens any firm that manages to grow and to out-produce its competitors. It would really be a comfort to know that each business was doing its utmost to get as much of the market as it possibly could, that each firm was striving to put out the greatest pos sible production at the lowest possible cost, that, in short, it was being directed in accordance with the public good. But be cause of so many interventionist devices, the measuring sticks provided by a free market are no longer available. You can't be sure that a move or a failure to move on the part of a business is dictated by economic considerations in response to the desires of the people.

SYLVESTER PETRO, "Do Antitrust Laws Preserve Competition~'"

Harmonizinlj 10 Each His Own LEONARD E. READ Weep not that the world changes did it keep a stable, changeless state, 'twere cause indeed to weep. -BRYANT MAN COULD NOT LIVE, let alone im prove his lot, were all static as a rock. Change releases the hidden strength of men. Out of change comes variation and in this diver sity are unique potentialities real ized. Creative dissimilarities emerge and account for our moral, spiritual, intellectual, and mate rial wealth. Change is of the very essence of life, and freedom to change is both an economic and a biologic necessity. The enormity and persistence of change and variation is recog nized and welcomed by some, though most persons tend to dis like it. "Change, indeed, is pain ful, yet ever needed," said Car lyle; inevitahle and necessary but, nonetheless, much resented. This feature of human nature poses a major politico-economic problem and substantially accounts for the continuing debate over freedom versus coercive collectivism.

The main reason for resenting change, I suspect, originates in a misunderstanding of how security is best obtained. Individuals, with rare exceptions, are interested first· and foremost in securing life and livelihood. Security is indeed desirable but, contrary to general belief, it is a dividend of natural change and variation - each pur suing his own uniqueness. There is no security to be found in bringing change and variation to 747 748 THE FREEMAN December a halt; nothing is so at odds with security as freezing or solidifying the status quo. Seek first security and there will be neither security nor change. Seek first the dy namic' improving life and secur ity is thrown in as a rewarding outcome.! To intelligently approach the politico-economic problem here posed requires, first of all, that we fully grasp just how fantastic our variations really are, else we will not know what the problem is or the meaning of "to each his own." Gloss over our variations, think of them as less than they are, and we will behave as un witting, mindless persons.

On Being Human - and Different Let us face a few facts. We re semble each other in outward ap pearance only: beings with two eyes, one nose, ten fingers, two arms, standing upright on two 1 Change, as I am extolling it, refers only to those forms induced in the exer cise of free choice. The enormous tech nological changes resulting from present coercive practices - moon ventures, for example - are, in my view, disruptive, unbalancing, and uneconomic. They lead creativity toward "national goals" or political designs and away from subjec tive value judgments; they make for in security. The trouble is, we see the moon craft and generally adjudge it wonderful. What we fail to see are the inevitable and disastrous consequences of - reac tions to - the coercion which brought this fantastic gadget into being. legs, and somewhat alike in other superficial ways. Even in these ways the variation is fantastic, "identical twins" being far from identical. 2 Human beings are distinguished from the animal world by the pos session of such traits as the abil ity to reason, to evaluate different causes of action, to make rational choices, to will their own behav iors, and even to transcend them selves. So varied are these poten tiali ties and their mode of reali zation that resemblances diminish sharply; we go every which way, in as many directions as each per son takes in a lifetime multiplied by all the human beings who ever lived. Chaos, seemingly!

The human scene holds no such thing as a changeless, single per formance with which to compare, to identify, to judge our works. At the human level there are as many kinds and qualities of perfor mances as there are viewpoints. Thus, the variety of performances equals all the people who have ever Iived times all the changing viewpoints each person ever ex periences. Trillions times trillions! This assertion itself is a per sonal viewpoint or evaluation and argues that the eye of the be holder is determinative. "Were 2 See various works by -Roger Wil liams, especially You Are Extraordinary (New York: Random House, 1967).

1971 HARMONIZING TO EACH HIS OWN 749 the eye not attuned to the Sun, the Sun could never be seen by it," wrote Goethe. Viewpoints, by and large, are based on major and easily observed distinctions. For instance, I glance ,at a. smiling face and a moment later at the same face when angry. The dis tinction evokes two evaluations, varying viewpoints easily come by. But widen the aperture to increase sensitivity to infinitesi mal changes, and even assuming no change in outward demeanor: the face is known to be older; the lighting is different; I have aged; and my vision has changed. The world of anyone sensitive to a wide range of variations is a far larger world than exists for those who are not so graced, that is, his viewpoints and evaluations are greatly multiplied. Or reflect on what the world means to a farmer and to an as tronomer. A particular farmer may be satisfied with treading the surface of our planet and scratching it with a plow; his world is a road, some furrows, and a field of' grain. The astronomer's wor ld, on the other hand, requires that he determine exactly the place that it 'occupies at each in stant within sidereal space; from the standpoint of exactness he is forced to convert our globe into a mathematical abstraction, into a case of universal gravitation. We might say that the farmer and the astronomer "are worlds apart."3 Infinite Variation In order to picture the enor mity of variation, consider the vary ing evaluations or viewpoints of each farmer times all the farmers there a.re and then of all the as tronomers since Copernicus and Galileo times all their changing viewpoints during these past four centuries. And last, contemplate all the performances there have been beyond the farmer and the astronomer and all the perform ances that lie between these two and all the varying evaluations thereof!

We can now see that it is the point of view that creates the variation panorama: an infinitude of performances in a constant flux. No person can do more than to become aware of this complexity; few even do this. To encompass this multiplicity, to bring it with in anyone's comprehension, is out of the question. Initially, such awareness cannot help but breed confusion. How can harmony ever be brought out of this social mael strom! Confusion, however, does not end here. It starts anew with 3 The idea and some of the phrasing in this paragraph are from an essay, "Adan en el Paraiso" (Adam in Paradise) by Jose Ortega y Gasset, 1910.

750 THE FREEMAN December countless attempts at harmonizing our variations. The confusion ap pears to stem from a fact seldom recognized in clarity: man is at once a social and an individualis tic being. Confronting each of us are the we and the lor, one might say, association and isolation. Not only is there myself to cope with: to grow, emerge, evolve, to be come what I am not yet; equally challenging, I must find out how to live in harmony with my fellow men. My life and welfare depend not only on what I make of me but also on how I associate myself with others upon whom I am also rigorously dependent, a depend ence from which there is no escape. Except in association, I perish! No need to labor this point. Psychological and Sociological Thus, two extremely intricate problems are posed. The first is psychological in nature: freeing self from superstitions, imperfec tions, ignorance, fears. We know far less about this than is gen erally acknowledged. The second is sociological, that is, freeing men from the restraints and impositions which we in our ignorance are in clined to inflict on each other. Un less the latter is reasonably re solved, the former cannot flourish at its best. Yet, a resolution of the latter is impossible without a flourishing of the former. Boxed in by a paradox! Or are we?

There are, broadly, two opposed theories as to how the sociological maelstrom should be resolved. The first - authoritarian - is steeped in tradition, as aged as humanity, and presently gaining ground all over the world. It is the old, old master-slave arrangement that has always stifled human progress and diverted man's ef forts to fighting, either to force his will on others or to combat the tyrant's army. The second freedom - is brand new as history goes, all too seldom understood or accepted. Perhaps no statement more openly and honestly reveals the authoritarian confusion than this: Only a moron would believe that the millions of private economic de cisions being made independently of each other will somehow harmonize in the end and bring us out where we want to be.4 Merged Into the Collective Where we want to be! Here is the authoritarian position set forth in crystal clarity: an I pre tending to be a we. It is safe to assume that no earthly person wants to be what the author wanted to be at the mom.ent of this phrasing. One knows, without 4 The late Walter Reuther. See New York Times, June 30, 1962.

1971 HARMONIZING TO EACH HIS OWN 751 looking at the record, that this author experienced a constant shifting in what he wanted to be during every day of his life. The same can be said of Napoleon or any of our numerous political au thoritarians, precisely as can be said of you or me. No living per son ever stays put; as to our aspirations, all of us are in flight, on the wing, in orbit. We need do no more than look about us to con firm this fact. The point is that no person who ever lived - not even Socrates has observed more than an in finitesimal fraction of the total universe. Each gazes through a tiny peekhole into infinity, glimpsing hardly any of it. Did Hitler see the farmer's furrow or what Galileo saw or what I see as I write or you see as you read these scribblings? Of course not! The authoritarian vision is lim ited and blurred at best. Pressed to a Single Mold What then must be the outcome of the authoritarian's solution to social problems, assuming that his will is invoked? Simple: all of us compelled to abide by what he sees through his unique and tiny peek hole which, of course, is next to nothing. All of us, if his will pre vails, restricted by his oblique view of reality.

Most appraisals of authoritarian ism are not as harsh as mine because no one has ever witnessed the horrible principle in more than partial practice. We observe peo ple living, a few rather prosper ously, in Russia, China, Uruguay, and falsely credit such of the good life as there is to the authoritari anism. To the contrary, it is in spi te of it! All that is good - no exception - springs from creative human energy obeying its nature, that is, freely flowing when not squelched. Like lightning, it zigs and zags along the line of least resistance, finding its way through or around the commands and stric tures of him-who-knows-next-to nothing. A harsh appraisal of the authoritarian ? No; that rating ap plies to all of us ! A supervisor of schools, attend ing one of our workshops recent ly, made this observation concern ing freedom as a solution to social problems: I came to your summer seminar with a hazy and limited knowledge of the principles of economics and the free market. You have helped me to see the simplicity and self-evidence of these basic concepts of freedom.

What most amazes me now is that anyone can fail to understand and put these ideas into practice. Yes, the simplicity of freedom in action copes with infinite hu man variation and works its won ders! Amazing indeed that so 752 THE FREEMAN December many are unaware of these prin ciples and thus have no faith in them. Parenthetically, any pro posed solution to the social and individualistic aspects of human ity that is not simple has nothing to commend it. This is another w.ay of saying that we should stick to what we know best - our own knitting - which, as already sug gested, is not very much. Each Free to Choose Let me now return to the asser tion, "Only a moron would believe that the millions of private econ omic decisions being made inde pendently of each other will some how harmonize in the end and bring us out where we want to be." I read this statement nine years ago and not until now did I realize that the author was sub stantially correct. Why? Only a person deficient in reasoning pow ers - not necessarily a moron could possibly believe that any scheme can "bring us out where we want to be." This is an I posing as we - absurd! The flowering so ciety, the only kind that merits our interest, is one that will not stand in the way of bringing you out where you want to be, while permitting the same opportunities for everyone else. And this is defi nitely a prospect when millions yes, trillions - of decisions are made independently of each other - that is, a situation in which freedom of choice prevails.

It is an observed fact that vari ation obtains throughout the nat ural order; it is a distinguishing feature of the universal scheme of things ranging from atoms and their components to galaxies which are but tiny parts of who knows what. No two things are identical - no two snowflakes or stars or sunsets or tidal waves. Everything at all times and in all places and in all circumstances is in motion. But note that instead of chaos there is order and sta bility - an incomprehensible har mony - and because of a mysteri 0us principle at work: All the phenomena of astronomy, which had baffled the acutest minds since the dawn of history, the move ment of the heavens, of the sun and the moon, the very complex movement of the planets, suddenly tumble to gether and become intelligible in terms of the one staggering assum p tion, this mysterious "attractive force."5 These variations we observe in nature, by reason of this "mys terious attractive force," gravitate into a harmony; that is, there is an inexplicable magnetism con stantly, everlastingly exerting it self. And precisely this· same force 5 See Science Is a Sacred Cow by An thony Standen (New York: E. P. Dutton and Company, Inc., 1950), pp. 63-64.

1971 HARMONIZING TO EACH HIS OWN 753 operates in exactly the same man ner on the fantastically varied out croppings of the human cortex: viewpoints, evaluations, inven tions, insights, intuitive flashes, think-of-thats. Freedom Can Worle Wonders, If Not Restrained Who understands creative hu man energy? Who can define it? No one! It is as mysterious and indefinable as electrical energy. Indeed, the two behave in much the same manner: they naturally flow along the lines of least re sistance. The point is, we live without understanding Creation or life; electricity and gravitation serve even though we haven't the slightest idea as to what they are; the same is true of creative human energy - provided we leave it free to flow. What at first blush appears as utter chaos - a veritable hurricane of flighty performances - turns out to be precisely the opposite: an ha.rmonic whole in the absence of I's trying to play we. You to your knitting, I to mine, each pur suing his unique potential, be it farming or astronomy or what ever. For only in this m,anner am I able to draw on your and every one else's unique realizations, others possessing countless ideas, enlightenments, goods, services hardly anyone of which is within my own potential. When freedom prevails, we can think of our situa tion as a vast human grid, sup plies responding to demands in a perpetual willing exchange. A harmonizing of to ea,ch h,is own! "

We cannot know how freedom, any more than Creation, works its wonders. Nor do we need to know the how of it. We need only know (1) that freedom does work won ders - the evidence is common place and all about us - and (2) that freedom exists in the absence of man-concocted restraints against the release of creative· en ergy. And observe how simple and realistic·- this is: it does not presuppose a single know-it-all! ~ IDEAS ON LIBERTY Principles of Prosperity IN THE FIRST PLACE, two people can work to produce more than twice as many valuable things as one can. In the second place, two people, simply by exchanging things they have, can each end up with more of the things they want. HART BUCK, "Freedom to Shop Around"

HANNIBAL CUNDARI WHAT WOULD this country be like in 1971 had government, in 1787, been instituted to "promote the general welfare" as interpreted by today's misguided humanitarians? Suppose the government had at that time disregarded the promo tion of economic freedom as the real meaning and intent of the "general welfare" clause of the Constitution! We need only to con sider the increase of our national debt in the past thirty years and the hordes of individuals and agencies that qualify under pres ent government standards as be ing in poverty to realize that this nation would long since have per ished had such views prevailed from its beginning. Aware that such a fate inevit ably stalks an unlimited governMr. Cundari is a me<:hanical engineer. He also serves as Bergen County Chairman of the New Jersey Conservative Union. 754 ment - one having power to direct the daily actions of individuals our Founding Fathers declared in the Constitution that "We, the people . . . will promote the gen eral welfare." Nowhere does it state that government shall pro mote personal welfare or provide it. Yet, misguided individuals mis interpret the "promote the gen eral welfare" cIause as a license to provide welfare.

Having suffered from the abuses and usurpations by coercive gov ernment, the framers of our Con stitution could never have empow ered any government to provide welfare to specific individuals. The encouragement of individ ual freedom was the principal ob jective set forth in the Preamble to the Constitution, and it cannot be doubted that individual free dom is preferred by all people to 1971 GENERAL OR SPECIFIC WELFARE? 755 enslavement. Whatever promotes individual freedom also promotes the general welfare. By the same token, one who toils to add ma terial goods to society by his pro ductive efforts also promotes the general welfare. Yet, when he is penalized through confiscation of his rewards for productive toil, to that extent he becomes a slave, losing his individual freedom. Fur thermore, his contribution to the general welfare is diminished by the a1p.ount government confiscates from him. In such cases, govern ment works to the detriment of the general welfare by its very ef forts to provide specific welfare.

Impartial Justice The Constitution contains no reference to specific welfare for individuals by government. The clause refers to the general pro tection offered by government as a referee in dispensing justice im partially; to promote tranquillity and to ensure that one does not encroach upon the private prop erty of others; to guarantee that one party is not favored over an other and that no one receives special .privileges. Justice is not served when government allocates to the so-called poor the resources and property of others; to thus legalize inj ustice simply serves as warning that confiscation and re distribution of one's possessioas is the fate to be expected when one endeavors to promote his own and thus the general welfare. Shall one praise our govern ment today, for instance, for its so-called promotion of the general welfare through the process of in flation? Or do these inflationary welfare measures simply place ex tra and unwarranted stumbling blocks in the path to personal free dom and economic well-being?

How often have "public benefac tors" caused the very problems and distortions their policies were supposed to cure! Witness the shortage of housing since the con trolling government agency in fused billions of dollars into the economy to "alleviate" housing shortages. Witness the increase in unemployment for those who are classed as underprivileged and who were to become the benefici aries of the minimum wage law the law which denied those most in need of employment the oppor tunity to compete and work for lower than "minimum" wages. Witness the shortage of rental housing where rent control laws drove investors out of the "land lord" business and thereby aggra vated the conditions in slum areas. Nevertheless, such detrimental leg islation remains on the books, and bureaucracy continues to wield its deadly hand against the general welfare.

756 THE FREEMAN December How is the general welfare to be promoted by government-im posed price-wage controls, import duties, restrictions on foreign in vestments, and scores of restraints upon the economic freedom of in dividuals to determine their own actions? Just how is an additional 10 per cent tariff against imports supposed to promote the welfare or increase the buying power of American citizens? Regardless of rationalizations, such governmen tal interferences with the free market most surely result in the impoverishment of many individ uals. The spirit of the general wel fare clause was to limit the gov ernment to actions of a general nature, applicable to everyone rather than to privileged individ uals or selective classes of people. It· was an insurance against the use of the coercive force of govNo Federal Aid ernment to fracture freedom. If it had been the intent of the Con stitutional framers, would not wel fare programs have proliferated then as they do today? But gov ernment-provided welfare was nonexistent in those days! Does this not lend proof that those who framed the clause had no such desire for the government to pro vide for the needs or wants of privileged individuals or groups?

Abdication of our rights to life, liberty, and property is the price we pay for liberalizing our limi tation of government, for relaxing our eternal vigilance. The spoilers could not have perverted the wel fare clause while those who framed it were still alive. They had to wait until a later generation had come to take freedom for granted. Now, it remains for the living to learn anew how to promote the general welfare. ~ iDEAS ON L$ LiBERTY THE 'FRIENDLINESSand charity of our countrymen can always be relied upon to relieve their fellow-citizens in misfortune. This has been repeatedly and quite lately demonstrated. Federal aid in such cases encourages the expectation of paternal care on the part of the Government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of t:p.at kindly sentiment and conduct which strengthens the bonds of a common brotherhood.

GROVER CLEVELAND, Veto message, February 16, 1887 ARE V lEW E R'S NOT EB 00 K JOHN CHAMBERLAIN Then Truth 'Will Out LEONARD READ has a phrase for the man who, while extolling free enterprise in general, makes one or two - or three or four - excep tions to the rule of freedom. Such a man, says Leonard, "leaks." There are all sorts of gradations in this business of "leaking," from the libertarian who makes excuses for government-subsidized theater or dance to the industrialist who is willing to compete at home pro vided he has a tariff wall to pro tect himself against the foreigner. As might be expected, Mr. Read's Then Truth Will Out (Foundation for Economic Edu cation, $3.00 cloth, $2.00 paper) is the work of a practically leak proof man. I consider myself a stalwart devotee of the "freedom philosophy," but in this book Leonard Read has compelled me to check my sights in a couple of matters. There is this business of the "voucher system" for educa tion, for example.

The idea of refunding tax mon ey in the form of vouchers to in dividuals for use as payment to the private school of their choice has been offered by Yale Brazen and Milton Friedman as a ·turn from the socialism of the public school. Leonard Read denies that such a scheme is "any escape from socialism." It would be only a mat ter of time, says Leonard, before the government moves to dictate the curricula of a voucher-sus tained private school. "He. who pays the fiddler calls the tune." Since I have been a supporter of the voucher idea, Leonard Read's caveat brings me up short. Am I indulging in rationalization when I argue that the educational voucher does not mean that the government is supporting the pri vate school? The voucher, so I 757 758 THE FREEMAN December have thought, should be consid ered a partial restitution of money that was taken by legalized theft in the first place, and the condition imposed upon its use should be that there can be no condition!

Is this an unrealistic hope? It seems to me that a parochial school, cashing vouchers at the Federal Treasury, could invoke the protection of the religious clause of the First Amendment against any governmental effort to interfere with curriculum matters. And couldn't the nonsectarian school, with no religious bulwark to fall back on, plead the Free Speech clause of the First Amend ment, saying that its teachers have a constitutional right to con duct their classes as they, in con sultation with the school authori ties, see fit? All of this, of course, assumes that the voucher is simply a form of money that has been reclaimed by the individual from a Robber State. The voucher money would not be a gift of the government, it would be grudging recognition that it is wrong to force anybody who chooses a private school to pay twice for his education. Equity is involved here, not government charity.

Having stated my viewpoint, I must admit that Leonard Read's fear of government control of the private school has a sound grounding in history. States do not neces sarily interpret their own consti tutions with any regard to the plain meaning of language, and, despite the First Amendment, conditions could be imposed on the use of the voucher. Yale Brozen, Milton Friedman, and the Ameri can Conservative Union, all vouch er proponents, will have to think this one over, and, at the very least, hire canny legal draftsmen to frame the bills calling for voucher legislation. The Market as Conservator Leonard Read is a gentle man, and he never tries to cram things down your throat. He lets an im peccable logic, dressed in some frequently delicious phraseology, do his work of conversion. He reaches his most persuasive peak in his ecological essay, "A Con servationist Looks at Freedom," which is a magnificent statement of the case for the private market as conservator. Far from destroy ing our forests, it is our private timberland owners, with their spe cialized knowledge of seed, spac ing, fertilization, thinning, and other sustained yield practices, who have been keeping our nation in trees. "Today," says Leonard Read, "61 per cent more wood is being grown than is harvested and lost to fire, insects, and disease."

Put together with Mr. Read's pre1971 THEN TRUTH WILL OUT 759 vious remark that "a conservation policy ... counsels the use of trees for homes," this is the definitive answer to Mr. Justice William O. Douglas's claim that our lumber companies have been raping the continent. As for the more extreme pres ervationists (who want nature to remain in a completely pristine state), Mr. Read offers them the witty observation that "had man kind been around throughout the ages and succeeded in preserva tion - 'retention undisturbed' dinosaurs would still be with us." This is a forceful way of saying not all change in nature is bad. Lest Leonard Read be accused of having a bias against wild ani mals, let the reader ponder his further statement that "there are now thousands of bison under pri vate ownership - far from ex tinct." In addition to the bison, we also happen to have 109,000,000 head of cattle on our modern range. For the animal lover, it is a case of "all this and Heaven, too." Plus, of course, a good pro tein diet for millions.

Ralph Nader, now the frenetic apostle of a state-enforced "con sumerism," once contributed a very sound argument against pub lic housing to THE FREEMAN. Do I fancy that Mr. Read's essay on "A Consumer Looks at Freedom" is directed (more in sorrow than in anger) at his ex-contributor? If Ralph Nader reany cares for the consumer, he should listen to Mr. Read's point that the ,"welfare state way of life is adverse to con sumer interest: unemployment compensation, low-income hous ing, tax-financed· education, aid to dependent children, medicare, dis ability payments, food stamps, in short, the whole so-called welfare program." The inflation and taxes needed to sustain the welfare state way of life means that most peo ple can only afford shoddy goods, which is what they get when in dustry, forced by labor union co ercion to pay above-market wages, has to skimp on quality in order to maintain volume.

Rooted in Reality It is as a consumer that Mr. Read cringes when business execu tives pay more attention to the welfarist's "social goals" than they do to alleviating poverty by manufacturing and selling a good product for the lowest possible price. The universal concern with "image" seems a mischievous trend to Mr. Read, for it takes away from a concern with per formance. The irony is that, "when the emphasis is on the image rather than the performance, not only will the performance deterio rate, but so will the image." Leonard Read does not often get 760 THE FREEMAN December personal, but in his essay titled "A Laborer Looks at Freedom" he divulges some details about his past that were previously un known to me (and I have known him for a quarter-century!) Mak ing a point against government in terference, he says that "happily" he grew up prior to the child labor laws. His work week from age eleven to age eighteen was 102 hours, "up every morning at four 0'clock, cleaning stables, milking cows, six hours at school, and evening chores, and clerking in the village store until nine o'clock week days ..." During World War I he served, often around the clock, as an airplane mechanic. Such a novitiate made Leonard Read a fact-minded and thing-minded man, which means that his later career as a word man has been soundly rooted in the realities which are necessary to give verbal symbols any true meaning. Today, alas, we shield our children from work. And all too often they grow up to be indifferent, even danger ous, philosophers. * HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each ORDER FROM: THE FOUNDATION FOR ECONOMIC EDUCATION IRVINGTON-ON-HUDSON, NEW YORK 10533 THE FREEMAN - Volume 21, January-December1971 Prepared by BETTINA BIEN GREAVES of the Foundation staff NOTE: In page references, the number preceding the colon designates the month those follow ing refer to pages. All articles have at least three entries-author, subject, and tit:1e-except in a few cases when title clearly indicates subject matter. Books reviewed are listed on page 768.

A ACADEMIC freedom, tenure Subsidizing a crisis: the teacher glut, 1971 (North) 3:154-167 AGRICULTURE and government programs Conflict of whose interests? (D. M. Sparks) 11:682-693 Man and his environment (Aldrich) 11:661-666 Market closed! (Poirot) 7:401-406 Poor relief in old Rome (Hazlitt) 4:215-219 Poverty and population (Hazlitt) 7:414-422 ALDRICH, Samuel R. Man and his environment. 11: 661-666 AM I constantly correcting? (Read) 6:332-336 ANDERSON, Robert G. Root of all evil. 8:472-476 ANTITRUST history: the American Tobacco case of 1911 (Armentano) 3:173-186 ARE schools necessary? (Watts) 7:442-444 ARMENTANO, D. T. Antitrust history: the American Tobacco case of 1911. 3: 173-186 ASPINWALL, Francis H. Who pays for clean air and water? 8:487-489 AUSTRALIA A letter from down-under ( Yankus) 10: 579-582 B BAD money drives out goods ... (Poirot) 11:678-681 BARGER, Melvin D. Soviet dissent: heat without light. 6:337-341 BARZUN, Jacques. See Book reviews (Nock) BAYARD, Thomas F.

Individual fl'eedom. 10: 635-636 BEARCE, Robert G. EMa:ping the mob mentality. 10:618-620 BERLIN, Isaiah - ideas of Individual liberty and the rule of law (Foley) 6:357-378 BIEN, Bettina Liberation of women, The: thoughts on reading some old cookbooks. 2:87-92 BIOLOGY of behavior, The (Williams) 4:239-247 BROWNFELD, Allan C. See Book reviews ( Bloomberg) BRUNK, Max E. Consumerism. 2: 71-81 BUREAUCRACY, bureaucractic management Consumerism (Brunk) 2:71-81 On institutional senescence (Jacobson) 2:82-86 Transportation: regulation vs. competition (Hagedorn) 5:271-273 Worrycrats, The (Read) 4:203-207 BUYING up surpluses (Hagedorn) 8:460-462 C CALLAWAY, Howard Freedom to change. 9: 536-538 CAMPBELL, John W. Pollution paranoia. 7:407-413 CANFIELD, Joseph M. See Book reviews (Carson) CAPITALISM, creative thrust of (Rukeyser) 1:33-38 CARSON, Clarence B. Founding of the American republic,· The: (1) American epic, The: 1760-1800.

8:451-459 (2) English heritage, The. 9: 524-535 ( 3 ) Colonial religious experience, The. 10: 621-634 ( 4 ) Colonial political experience, The. 11:667-677 (5) Enlightenment impetus, The. 12:731-742 Throttling the railroads: (9) Future of the railroads, The. 1: 39-47 (Epilogue) Impact of intervention, The. 5:274-284 Winter of decision, 1775-1776. 7:387-390 CHAMBERLAIN, John. See Book reviews. CHANGING concepts of private property (B. M. Sparks) 10: 583-598 CHARITY and the welfare state (Summers) 12:712-713 CHASE, Julian So who are you, young man? (a poem) 3: 187-188 761 762 THE FREEMAN December CHINA (Taiwan and Mainland) Creative thrust of capitalism, The (Rukeyser) 1:33-38 CHODOROV, Frank Tale of two students, The. 12:707-711 CLEVELAND, Grover - integrity of Tell the truth (Colvard) 5:285-289 COERCION / compulsion, governmental Freedom: antidote to political power (Gow) 7: 423-425 Freedom to change (Callaway) 9:536-538 Two ways to slavery (Rogers) 8:495-507 What about sin? (Poirot) 9:550-553 COLESON, Edward P.

Economics and ethics: search for a moral order. 11: 646-660 COLLEGE/university education Freedom: antidote to political power (Gow) 7: 423-425 Law school and legal training, The (Petro) 6:344-348 Medical market place, The (Pruit) 2: 93-103 Miseducation about American business (Wortham) 12:714-725 Protesters, The (Paton) 1:51-59 Radical economics, old and new (Sennholz) 3: 147-153 Subsidizing a crisis: the teacher glut, 1971. (North) 3:154-167 Tale of two students, The (Chodorov) 12:707-711 COL V ARD, Ray L. Tell the truth. 5: 285-289 COMMON Cause (John Gardner) On institutional senescence (Jacobson) 2:82-86 COMMUNISM. See Russia; Welfare state COMPETITION and consumer sovereignty Consumerism (Brunk) 2:71-81 Disaster lobby, The (Shepard) 8:477-487 Individual in society, The (Mises) 6:349-356 Market, The - or else! (Poirot) 5:267-270 "Monopolist" - can he charge "anything he wants"? (J. A. Sparks) 12:743-746 Transportation: regulation vs. competition (Hagedorn) 5: 271-273 CONFLICT of whose interests?

(B. M. Sparks) 11: 682-693 CONSUMERISM (Brunk) 2:71-81 COOLEY, Oscar W. Thomas Cooper: early libertarian. 3: 168-172 COOPERATION, interpersonal Biology of behavior, The (Williams) 4:239-247 Individual in society, The (Mises) 6: 349-356 COST-PLUS pricing (Poirot) 1:48-50 CREA TIVE thrust of capitalism, The (Rukeyser) 1: 33-38 CRIME and moral decadence Impact of intervention, The (Carson) 5 :274-284 Revenue sharing (Poirot) 4:235-238 "Thou shalt not drink" ( Peterson) 4:208-210 What about sin? (Poirot) 9:550-553 See also Moral/religious principles CRIME in America (Walter) 9:546-549 CUNDARI, Hannibal General or specific welfare? 12: 754-756 CURTISS, W. Marshall Restrictions on international trade: why do they persist'! 9: 554-561 Subsidized unemployment. 12: 726-730 D DeCAMP, C. Austin Man and miracle. 2: 67-70 DEFINING poverty (Hazlitt) 9:539-545 DISASTER lobby, The (Shepard) 8:477-487 DISTRIBUTION of income, The (Hazlitt) 10: 605-617 DOWNWARD price flexibility and economic growth (North) 5:302-316 E EARL Y warning ( Senior) 8: 508 ECONOMIC development/progress Distribution of income, The (Hazlitt) 10: 605-617 Economics and ethics: search for a moral order (Coleson) 11 : 646-660 Problem of poverty, The (Hazlitt) 6:323-328 To a student from abroad (Hercz) 6:342-343 Woes of the underdeveloped nations, The (Kuehnelt-Leddihn) 1:21-32 ECONOMIC growth, downward price flexibility and (North) 5:302-316 ECONOMICS and ethics: search for a moral order (Coleson) 11 : 646-660 ECONOMICS, radical, old and new ( Sennholz) 3: 147-153 EDUCATION for privacy (ten Hoor) 4:220-234 EDUCATION /schooling, government and Are schools necessary'? (Watts) 7: 442-444 Subsidizing a crisis: the teacher glut, 1971 (North) 3:154-167 Two ways to slavery (Rogers) 8:495-507 Voucher system, The - trap for the unwary (Patton) 4:211-214 See also College/university education 1971 INDEX 763 ENGLAND. See Great Britain ESCAPING the mob mentality (Bearce) 10: 618-620 F FALSE remedies for poverty (Hazlitt) 2:107-11'9 FAMILY life, parental influence Independence (Till) 9:521-523 Ownership, responsibility, and the child (North) 9:515-521 FEMININE· mistake, The: the economics of Women's Liberation (North) 1:3-14 FOLEY, Ridgway K., Jr.

Individual liberty and the rule of law. 6:357-378 FOR the young in heart, mind, and spirit (J. C. Sparks) 5:259-266 FOREIGN investment vs. foreign aid Creative thrust of capitalism, The (Rukeyser) 1:33-38 Woes of the underdeveloped nations, The ( Kuehnelt-Leddihn) 1: 21-32 FOUNDING of the American republic, The. See Carson. FREEDOM: antidote to political power ( Gow) 7: 423-425 FREEDOM/liberty Harmonizing to each his own (Read) 12 :747-753 Individual in society, The (Mises) 6:349-356 Individual liberty and the rule of law (Foley) 6:357-378 FREEDOM of the press/speech/thought Escaping the mob mentality (Bearce) 10: 618-620 Ownership and freedom (Russell) 8:490-494 Soviet dissent: heat without light (Barger) 6:337-341 FREEDOM to change (Callaway) 9:536-538 G GENERAL or specific welfare? (Cundari) 12:754-756 GOVERNMENT intervention/regulation/ control Changing concepts of private property (B. M. Sparks) 10:583-598 Crime in America (Walter) 9:546-549 Disaster lobby, The (Shepard) 8:477-487 Impact of intervention, The (Carson) 5:274-284 Market closed! (Poirot) 7 :401-406 Medical market place, The (Pruit) 2: 93-103 Government intervention (continued) "Thou shalt not drink" (Peterson) 4:208-210 Transportation: regulation vs. competition (Hagedorn) 5:271-273 When rationing comes (Read) 7:391-397 GOVERNMENT, role of Founding of the American republic, The (Carson) #2, 9:524-535; #5, 12:731-742 Individual liberty and the rule of law (Foley) 6:357-378 Law school and legal training, The (Petro) 6:344-348 Property (Madison) 4: 248-250 Who should vote? (Poirot) 2:120-124 GOW, Haven Bradford Freedom: antidote to political power.

7:423-425 See also Book reviews (Wooldridge) GRAHAM, W. H. I pledge myself to help strengthen America. 7:398-400 GREAT BRITAIN Founding of the American republic, The (Carson) #2, 9:524-535; #4, 11:667-677 Poor laws of England, The (Hazlitt) 3: 137-146 Why I left England (McNeil) 5: 290-296 H HAGEDORN, George Buying up surpluses. 8: 460-462 Transportation: regulation vs. competition. 5:271-273 Uneven inflation. 4: 200-202 HARMONIZING to each his own (Read) 12:747-753 HARPER, F. A. Morals and liberty. 7:426-441 HAZLITT, Henry Defining poverty. 9: 539-545 Distribution of income. 10: 605-617 False remedies for poverty. 2: 107-119 IMF: world inflation factory. 8:463-471 Poor laws of England, The. 3:137-146 Poor relief in ancient Rome. 4:215-219 Poverty and population. 7: 414-422 Problem of poverty, The. 6: 323-328 Story of Negro gains, The. 11: 694-699 HERCZ, Arthur R. To a student from abroad. 6: 342-343 HIGH price of protectionism (Poirot) 6: 329-331 HOW to be a benefactor (Read) 1:15-20 I I pledge myself to help strengthen America (Graham) 7: 398-400 IMPACT of intervention, The (Carson) 5:274-284 764 THE FREEMAN December INDEPENDENCE (Till) 9:521-523 INDIVIDUAL freedom (Bayard) 10:635-636 INDIVIDUAL in society, The (Mises) 6: 349-356 INDIVIDUAL liberty and the rule of law (Foley) 6:357-378 INDIVIDUAL rights Changing concepts of private property (B. M. Sparks) 10:583-598 Morals and liberty (Harper) 7:426-441 Property (Madison) 4: 248-250 Tale of two students, The (Chodorov) 12:707-711 INDIVIDU AL/individuality /inequality Biology of behavior, The (Williams) 4:239-247 Escaping the mob mentality (Bearce) 10: 618-620 Galley THREE INDEX 1971 9a....'mahe For the young in heart,· mind, and spirit (J. C. Sparks) 5:259-266 Freedom: antidote to political power (Gow) 7:423-425 Freedom to change (Callaway) 9:536-538 Harmonizing to each his own (Read) 12:747-753 Individual in society, The (Mises) 6:349-356 To abdicate or not ... (Read) 9:562-565 Worrycrats, The (Read) 4:203-207 INSTITUTIONAL senescence, On (Jacobson) 2:82-86 INTERNATIONAL Monetary Fund (IMF): world inflation factory (Hazlitt) 8:463-471 J JACOBSON, Paul H.

On institutional senescence. 2: 82-86 K KINGDOM on earth, The. (Read) 3:131-136 KUEHNELT-LEDDIHN, Erik von Woes of the underdeveloped nations, The. 1:21-32 l LABOR/wages/ employment Bad money drives out goods. . . (Poirot) 11:678-681 Buying up surpluses (Hagedorn) 8: 460-462 False remedies for poverty (Hazlitt) 2: 107-119 Feminine mistake, The (North) 1:3-14 High price of protectionism, The (Poirot) 6 :329-331 Story of Negro gains, The (Hazlitt) 11:694-699 Subsidized unemployment (Curtiss) 12:726-730 Subsidizing a crisis: the teacher glut, 1971 (North) 3:154-167 LAND - ownership and use of Changing concepts of private property (B. M. Sparks) 10: 583-598 Two ways to slavery (Rogers) 8: 495-507 LAW school and legal training, The (Petro) 6:344-348 LEININGER, Kurt V. Lure of nonprofitable service, The. 2: 104-106 LETTER from down-under, A (Yankus) 10: 579-582 LIBERA TION of women, The: thoughts on reading some old cookbooks (Bien) 2:87-92 LIBERTARIAN, early: Thomas Cooper (Cooley) 3: 168-172 LURE of nonprofitable service, The (Leininger) 2: 104-106 M MADISON, James Property. 4: 248-250 MAN and his environment (Aldrich) 11:661-666 MAN and miracle (DeCamp) 2:67-70 MARKET closed! (Poirot) 7:401-406 MARKET, The - or else! (Poirot) 5:267-270 McNEIL, Edward L. (M.D.) Why I left England. 5 :290-296 MEDICAL market place, The (Pruit) 2: 93-103 MEDICINE, medical practice Why I left England (McNeil) 5:290-296 METHODOLOGY, libertarian Kingdom on earth, The (Read) 3:131-136 Speak for yourself, John (Read) 5:297-301 MIGRATION, freedom to move Letter from down-under, A (Yankus) 10: 579-582 MISEDUCA TION about American business (Wortham) 12: 714-725 MISES, Ludwig von Individual in society, The. 6: 349-356 MISES, Ludwig von - Essays in Honor of 90th birthday Ownership as a social function (Poi rot ) 10: 599-604 Restrictions on international trade: why do they persist'? (Curtiss) 9:554-561 To abdicate or not ... (Read) 9:562-565 MONEY /inflation/credit expansion Bad money drives out goods ... (Poirot) 11: 678-681 Downward price flexibility and economic growth (North) 5:302-316 IMF: world inflation factory (Hazlitt) 8:463-471 Root of all evil (Anderson) 8:472-476 Uneven inflation (Hagedorn) 4:200-202 "MONOPOLIST" - can he charge "anything he wants"? (J. A. Sparks) 12:743-746 1971 INDEX 765 MORAL/religious principles Economics and ethics: search for a moral order (Coleson) 11: 646-660 Founding of the American republic, The (Carson) #3, 10:621-634 Morals and liberty (Harper) 7: 426-441 Some thoughts on violence (Opitz) 4:195-199 Two ways to slavery (Rogers) 8:495-507 What about sin? (Poirot) 9:550-553 Woes of the underdeveloped nations, The (Kuehnelt-Leddihn) 1:21-32 See also Crime and moral disintegration MORALS and liberty (Harper) 7:426-441 N NATURAL law/order Economics and ethics: search for a moral order (Coleson) 11 : 646-660 Harmonizing to each his own (Read) 12 :747-753 Morals and liberty (Harper) 7: 426-441 Founding of the American republic, The (Carson) #5, 12:731-742 NEGROES, history of Miseducation about American business (Wortham) 12: 714-725 Story of Negro gains, The (Hazlitt) 11:694-699 NORTH, Gary Downward price flexibility and economic growth. 5: 302-316 Feminine mistake, The: the economics of Women's Liberation. 1: 3-14 Ownership, responsibility, and the child.

9: 515-521 Subsidizing a crisis: the teacher glut, 1971. 3: 154-167 o OCCUPATIONAL guidance Law school and legal training, The (Petro) 6: 344-348 Lure of nonprofitable service, The (Leininger) 2:104-106 ON institutional senescence (Jacobson) 2: 82-86 OPITZ, Edmund A. Some thoughts on violence. 4: 195-199 See also Book reviews (Schuettinger) OWNERSHIP and freedom (Russell) 8: 490-494 OWNERSHIP as a social function (Poirot) 10 :599-604 OWNERSHIP, responsibility, and the child (North) 9:515-521 P PARAMETERS, voluntary (Read) 11:643-645 PATON, W.A. Protesters, The. 1 :51-59 PATTON, Robert Voucher system, The-trap for the unwary. 4:211-214 PETERSON, Mary Bennett "Thou shalt not drink." 4:208-210 PETRO, Sylvester Law school and legal training, The. 6:344-348 POETRY Lilliput Levee (Matthew Browne, pseudo for Wm. Brightly Rands). See Paton. 1: 51-59 So who are you, young man? (Chase) 3: 187-188 POIROT, Paul L.

Bad money drives out goods ... 11: 678-681 Cost-plus pricing. 1: 48-50 High price of protectionism, The. 6: 329-331 Market, The - or else! 5:267-270 Market closed! 7 :401-406 Ownership as a social function. 10: 599-604 Revenue sharing. 4:235-238 What about sin? 9: 550-553 Who should vote? 2: 120-124 POLL UTION and the environment Disaster lobby, The (Shepard) 8:477-487 Lure of nonprofitable service, The (Leininger) 2:104-106 Man and his environment (Aldrich) 11: 661-666 Ownership and freedom (Russell) 8:490-494 Pollution paranoia ( Camp bell) 7: 407-413 Radical economics, old and new (Sennholz) 3:147-153 'Who pays for clean air and water? (Aspinwall) 8:487-489 POPULATION Poverty and population (Hazlitt) 7:414-422 Problem of poverty, The (Hazlitt) 6: 323-328 POVERTY, gQvernment programs and Defining poverty (Hazlitt) 9: 539-545 False remedies for poverty (Hazlitt) 2:107-119 Poor laws of England, The (Hazlitt) 3: 137-146 Poor relief in ancient Rome (Hazlitt) 4: 215-219 Poverty and population (Hazlitt) 7:414-422 Problem of poverty, The (Hazlitt) 6 :323-328 PRICES/pricing Am I constantly correcting? (Read) 6: 332-336 Buying up surpluses (Hagedorn) 8: 460-462 Consumerism (Brunk) 2:71-81 766 THE FREEMAN December Prices/pricing (continued) Cost-plus pricing (Poirot) 1: 48-50 Downward price flexibility and economic growth (North) 5:302-316 False remedies for poverty (Hazlitt) 2: 107-119 "Monopolist" - can he charge "anything he wants'''! (J. A. Sparks) 12:743-746 Uneven inflation (Hagedorn) 4: 200-202 Who pays for clean air and water?

(Aspinwall) 8:487-489 PRICE and wage controls Bad money drives out goods ... (Poirot) 11:678-681 False remedies for poverty (Hazlitt) 2: 107-119 Tale of two students, The (Chodorov) 12:707-711 Voluntary parameters (Read) 11:643-645 When rationing comes (Read) 7:391-397 PRIV ATE property Changing concepts of private property (B. M. Sparks) 10:583-598 Ownership and freedom (Russell) 8:490-494 Ownership as a social function ( Poirot) 10:599-604 Radical. economics, old and new (Sennholz) 3:147-153 PROBLEM of poverty, The (Hazlitt) 6:323-328 PROHIBITION "Thou shalt not drink" ( Peterson) 4:208-210 PROPERTY (Madison) 4:248-250 PROTECTION jprotectionism Conflict of whose interests? (B. M. Sparks) 11:682-693 High price of protectionism, The ( Poirot) 6: 329-331 Individual freedom (Bayard) 10:635-636 Restrictions on international trade: why do they persist? ( Curtiss) 9: 554-561 PROTESTERS, The (Paton) 1 :51-59 PRUIT, A. R. (M.D.) Medical market place, The. 2: 93-103 R RADICAL economics, old and new (Sennholz) 3: 147-153 RAILROADS, throttling the. See Carson.

READ, Leonard E. Am I constantly correcting? 6: 332-336 Harmonizing to each his own. 12:747-753 How to be a benefactor. 1: 15-20 Kingdom on earth, The: 25th anniversary of FEE. 3: 131-136 Speak for yourself, John. 5:297-301 To abdicate or not. . . 9: 562-565 Read, Leonard E. (continued) V oluntary parameters. 11: 643-645 When rationing comes. 7: 391-397 Worrycrats, The. 4: 203-207 RESPONSIBILITY, individual. Crime in America (Walter) 9:546-549 For the young in heart, mind, and spirit (J. C. Sparks) 5:259-266 How to be a benefactor (Read) 1: 15-20 Independence (Till) 9: 521-523 Ownership, responsibility, and the child (North) 9:515-521 RESTRICTIONS on international trade: why do they persist? (Curtiss) 9: 554-561 REVENUE sharing (Poirot) 4: 235-238 ROCHE, George C. III. See Book reviews (Dietze) ROGERS, James M. Two ways to slavery. 8:495-507 ROME, poor relief in (Hazlitt) 4:215-219 ROOT of all evil (Anderson) 8:472-476 RUKEYSER, Merryle Stanley Creative thrust of capitalism, The.

1:33-38 RUSSELL, Dean Ownership and freedom. 8: 490-494 RUSSIA False remedies for poverty ( Hazlitt) 2:107-119 Soviet dissent: heat without light (Barger) 6: 337-341 s SAVINGS and investment Early warning (Senior) 8:508 Liberation of women, The: thoughts on reading some old cookbooks (Bien) 2: 87-92 SCIENCE, scientific research Lure of nonprofitable service, The (Leininger) 2: 104-106 Medical market place, The (Pruit) 2 :93-103 Pollution paranoia (Campbell) 7:407-413 SELF -IMPRO VEMENT / self-education Am I constantly correcting? (Read) 6:332-336 Are schools necessary? (Watts) 7:442-444 Education for privacy (ten Hoor) 4:220-234 I pledge myself to help strengthen America (Graham) 7:398-400 How to be a benefactor (Read) 1: 15-20 Letter from down-under, A (Yankus) 10:579-582 Ownership, .responsibility, and the child (North) 9:515-521 1971 INDEX 767 SENIOR, Nassau - ideas of Early warning. 8:508 Poor laws of England, The (Hazlitt) 3: 137-146 SENNHOLZ, Hans F.

Radical economics, old and new. 3:147-153 See also Book reviews (Mises) SHEPARD, Thomas R., Jr. Disaster lobby, The. 8:477-487 SLA VES/slavery Poor relief in ancient Rome (Hazlitt) 4:215-219 . Two ways to slavery (Rogers) 8: 495-507 SO who are you, young man? (Chase) A poem. 3:187-188 SOCIAL security Subsidized unemployment (Curtiss) 12 :726-730 SOCIALISM See Russia; Welfare State SOME thoughts on violence (Opitz) 4: 195-199 SOVIET dissent: heat without light (Barger) 6:337-341 SPARKS, Bertel M. Changing concepts of private property 10:583-598 Conflict of whose interests? 11: 682-693 SPARKS, John A. "Monopolist" - can he charge "anything he wants"? 12:743-746 SPARKS, John C. For the young in heart, mind, and spirit. 5:259-266 SPEAK for yourself, John (Read) 5:297-301 STORY of Negro gains, The (Hazlitt) 11 :694-699 SUBSIDIZING a crisis: the teacher glut, 1971 (North) 3:154-167 SUBSIDIZED unemployment (Curtiss) 12:726-730 SUMMERS, Brian Charity and the welfare state. 12: 712-713 SWEDEN - Gunnar Myrdal, quoted Speak for yourself, John (Read) 5 :297 u 301 T TALE of two students, The (Chodorov) 12:707-711 TAXATION, principles of False remedies for poverty (Hazlitt) 2: 107-119 Market, The - or else! (Poirot) 5:267-270 Revenue sharing (Poirot) 4:235-238 Two ways to slavery (Rogers) 8: 495-507 TELL the truth (Colvard) 5: 285-289 TEN HOOR, Marten Education for privacy. 4: 220-234 THOMAS Cooper: early libertarian (Cooley) 3: 168-172 THORNTON, Robert M.

See Book reviews (Boors tin) "THOU shalt not drink" (Peterson) 4:208-210 THROTTLING the railroads (Carson) 1:39-47; 5:274-284 TILL, Jacquelyn Independence. 9: 521-523 TO a student from abroad (Hercz) 6:342-343 TO abdicate or not... (Read) 9:562-565 TOLSTOY, Leo - quoted Speak for yourself, John (Read) 5:297-301 TRADE, international Thomas Cooper: early libertarian (Cooley) 3: 168-172 Restrictions on international trade: why do they persist? ( Curtiss) 9: 554-561 TRANSPORTATION Radical economics, old and new (Sennholz) 3: 147-153 Throttling the railroads (Carson) 1:39-47; 5:274-284 Transportation: regulation vs. competition (Hagedorn) 5: 271-273 TRUTH/honesty /integrity Kingdom on earth, The (Read) 3:131-136 Man and miracle (DeCamp) 2:67-70 Tell the truth (Colvard) 5:285-289 TWO ways to slavery (Rogers) 8:495-507 U UNDERDEVELOPED nations, woes of (Kuehnelt-Leddihn) 1 :21-32 UNEVEN inflation (Hagedorn) 4:200-202 U. S. HISTORY Antitrust history: the American Tobacco case of 1911 (Armentano) 3:173-186 Founding of the American republic, The.

See Carson. Man and miracle (DeCamp) 2:67-70 Miseducation about American business (Wortham) 12:714-725 Winter of decision, 1775-1776 (Carson) 7:387-390 V VIOLENCE, some thoughts on (Opitz) 4: 195-199 VOLUNTARY parameters (Read) 11:643-645 V OTIN G/ suffrage/ electorate Conflict of whose interests? (B. M. Sparks) 11: 682-693 For the young in heart, mind, and spirit (J. C. Sparks) 5:259-266 Who should vote? (Poirot) 2: 120-124 VOUCHER system, The - trap for the unwary (Patton) 4:211-214 768 THE FREEMAN December w WALTER, David Crime in America. 9: 546-549 WATTS, V. Orval Are schools necessary'? 7: 442-444 WELFARE STATE philosophy Charity and the welfare state (Summers) 12:712-713 Early warning (Senior) 8:508 Morals and liberty (Harper) 7:426-441 False remedies for poverty (Hazlitt) 2: 107-119 General or specific welfare'? (Cundari) 12: 754-756 Revenue sharing (Poirot) 4:235-238 Tale of two students, The (Chodorov) 12:707-711 WHA T about sin'? (Poirot) 9: 550-553 WHEN rationing comes (Read) 7:391-397 WHO pays for clean air and water'?

(Aspinwall) 8:487-489 WHO should vote? (Poirot) 2:120-124 WHY I left England (McNeil) 5:290-296 WILLIAMS, Roger J. Biology of behavior, The. 4 :239-247 WINTER of decision, 1775-1776 (Carson) 7: 387-390 WOES of the underdeveloped nations, The (Kuehnelt-Leddihn) 1: 21-32 WOMEN, liberation of Feminine mistake, The: the economics of Women's Liberation (North) 1:3-14 Liberation of women: thoughts on reading some old cookbooks (Bien) 2:87-92 WORRYCRATS, The (Read) 4:203-207 WORTHAM, Anne Miseducation about American business. 12: 714-725 v YANKUS, Stanley A letter from down-under. 10: 579-582 YOUTH - ideals and ideas of For the young in heart, mind, and spirit (J. C. Sparks) 5: 259-266 Miseducation about American business (Wortham) 12: 714-725 So who are you, young man? ( Chase) a poem. 3: 187-188 z ZONING Changing concepts of private property (B. M. Sparks) 10:583-598 Radical economics, old and new (Sennholz) 3: 147-153 BOOK REVIEWS (Reviewers name in parentheses) BLOOMBERG, Edward. Student violence (Brownfeld) 6: 382-384 BOORSTIN, Daniel. The decline of radical ism: reflections on America today (Thorn ton) 9:575-576 BROWN, Harold O. J. Christianity and the class struggle (Chamberlain) 4:251-253 BUCKLEY, Wm. F., Jr. Did you ever see a dream walking? (Chamberlain) 2: 125-128 CARSON, Clarence B. Throttling the rail roads (Chamberlain) 9:566-569; (Canfield) 9:569-573 DIETZE, Gottfried. Youth, university, and democracy (Roche) 1: 63-64 KEELEY, Joseph. The left-leaning antenna (Chamberlain) 7:445-448 KERSHNER, Howard E. Dividing the wealth: are you getting your share? (Chamberlain) 11: 700-703 LEFKOE, M. R. The crisis in construction: there is an answer (Chamberlain) 5:317 320 LYONS, Eugene. The red decade (Chamber lain) 6: 379-382 MISES, Ludwig von. The theory of money and credit (Sennholz) 4:253-256 NOCK, Albert J. The theory of education in the United States (Barzun) 9:573-575 OSBORNE, John W. The silent revolution: the industrial revolution in England as a source of social change (Chamberlain) 3: 189-192 READ, Leonard E. Then truth will out (Chamberlain) 12: 757-760 ROCHE, George Charles III. Frederic Bas tiat: a man alone (Chamberlain) 8:509 512 SCHOECK, Helmut. Envy (Chamberlain) 1: 60-63 SCHUETTINGER, Robert, ed. The conserva tive tradition in European thought (Opitz) 2: 128 VIV AS, Eliseo. Contra Marcuse (Chamber lain) 10:637-640 WOOLDRIDGE, William C. Uncle Sam, monopoly man (Gow) 11:703-704

About this edition

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Title: The Freeman 1971

Author: Foundation for Economic Education

First published: 1950

Series: The Freeman, volume 21

Source file: The Freeman 1971.pdf

Source page: https://freecapitalists.org/books/the-freeman-1971/

Converted: 2026-08-09 by The Liberty Archive (freecapitalists.org), converter v6

Table of Contents

The Freeman 1971

- The Femine Mistake; G. North

- How to Be a Benefactor; L.E. Read

- The Woes of the Underdeveloped Nations; E. von Kuehnelt-Leddihn

- The Creative Thrust of Capitalism; M. S. Rukeyser

- Throttling the Railroads; C. Carson
- Cost-Plus Pricing; P.L. Poirot
- The Protestors; W. A. Paton
- Book Reviews

February

- Man and Miracle; C. A. de Camp
- Consumerism; M. E. Brunk
- On Institutional Senescence; P.H. Jacobson
- The Liberation of Women; B. Bien
- The Medical Market Place; A.R. Pruit, M.D.

- The Lure of Nonprofitable Service; K. V. Leininger

- False Remedies for Poverty; H. Hazlitt
- Who Should Vote? P.L. Poirot
- Book Reviews

March

- The Kingdom on Earth; L.E. Read
- The Poor Laws of England; H. Hazlitt
- Radical Economics Old and New; H. Sennholz
- Subsidizing a Crisis; G. North
- Thomas Cooper; O. Cooley

- Anitrust History: The American Tobacco Case of 1911; D. T. Armstrong

- So who are You, Young Men?

- Book Reviews

April

- Some Thoughts on Violence; E. Opitz
- Uneven Inflation; G. Hagedorn
- The Worrycats; L.E. Read
- Thou Shalt Not Drink; M. B. Peterson
- The Voucher System; R. Patton
- Poor Relief in Ancient Rome; H. Hazlitt
- Education for Privacy; M. Ten Hoor
- Revenue Sharing; P.L. Poirot
- The Biology of Behavior; R. Williams
- Property; J. Madison
- Book Reviews

May

- For the Young in heart, mind, and spirit; J.C. Sparks

- The Market - or else! P.L. Poirot

- Transportation: Regulation vs. Competition; G. Hagedorn

- The Impact of Intervention; C. Carson
- Throttling the Railroads; C. Carson
- Tell the Truth; R. L. Colvard
- Why I left England; E. McNeil, M.D.
- Speak for yourself, John; L.E. Read
- Downward Price Flexibility; G. North
- Book Reviews

June

- The Problem of Poverty; H. Hazlitt

- The High Price of Protectionism; P.L. Poirot

- Am I Constantly Correcting? L.E. Read
- Soviet Dissent; M. Barger
- To a Student from Abroad
- The Law School and Legal Training; S. Petro
- The Individual in Society; L. von Mises

- Individual Liberty and the Rule of Law; R. Foley, Jr.

- Book Reviews

July

- Winter of Decision; C. Carson

- When Rationing Comes; L.E. Read

- I Pledge Myself to Helo Strengthen America; W. H. Graham

- Market Closed; P.L. Poirot
- Pollution Paranoia; J.W. Campbell
- Poverty and Population; H. Hazlitt

- Freedom: Antidote to Political Power; H. Gow

- Morals and Liberty; F. A. Harper
- Are Schools Necessary; V. Orval Watts
- Book Reviews

August

- The Founding of the American Republic 1. C. Carson

- Building Up Surpluses; G. Hagedorn
- World Inflation Factory; H. Hazlitt
- Root of All Evil; R. G. Anderson
- The Disaster Lobby; T. R. Shepard, Jr.
- Ownership and Freedom; D. Russell
- Two Ways to Slavery; J. W. Rogers
- Early Warning
- Book Reviews

September

- Ownership Responsibility and the Child; G. North

- Independence; J. Till

- The Founding of the American Republic 2; C. Carson

- Freedom to Change; H. Callaway
- Defining Poverty; H. Hazlitt
- Crime in America; D. Walter
- What about Sin? P.L. Poirot

- Restructions on International Trade; L. von Mises

- To Abdicate or Not; L.E. Read

- Book Reviews

October

- A Letter from Down Under; S. Yankus

- Changing Concepts of Private Property; B. Sparks

- Ownership as a Social Functionl P.L. Poirot
- The Distribution of Income; H. Hazlitt
- Escaping the Mob Mentality; R. Bearce

- The Founding of the American Republic 3; C. Carson

- Individual Freedom; T. Bayard

- Book Reviews

November

- Voluntary Parameters; L.E. Read
- Economics and Ethics; E. P. Coleson
- Man and his Environment; S. Aldrich

- The Founding of the American Republic 4; C. Carson

- Bad Money Drives Out Goods; P.L. Poirot
- Conflict of Whose Interests? B. Sparks
- The Story of Negro Gains; H. Hazlitt
- Book Reviews

December

- A Tale of Two Students

- Charity and the Welfare State; B. Summers

- Miseducation About American Business; A Wortham

- Subsidized Unemployment; W. Curtiss

- The Founding of the American Republic 5; C. Carson

- Monopolist; J.A. Sparks

- Harmonizing to Each His Own; Leonard E. Read

- General or Specific Welfare? H. Cundari

- Book Reviews

Index
Book Reviews
About this edition