===== PAGE 1 ===== PINEISE NCCI APRIL 1958 DEAS ON LIBERTY In Another Recession . . . . . . . HansF. Sennholz 5 Wage Ratesand Jobs . . , , . . . HenryHazlitt n Profitsand Jobs . . . . . . . . . Barron's 13 Training the Young To Be Capitalists. . . F. A. Harper 16 Employer's Resignation «+ + + + + + Gracelee Kenyon 23 Education and Community Life . . . . W.C. Mullendore 24 Mot Victories for Communism. . . . . W.H. Chamberlin 32 No License for Derek Wiscombe . . . . Diogenes 39 Justice vs. Restrictions on Trade . . . . Frederic Bastiat 40 When free Men Speak . . . . . . . VollieTripp 41 The Sources of Invention . . . . . . John Jewkes 45 A Capitalist Manifesto? . . . . . . John Chamberlain 58 Other Books . . . . . . . . . . 62 THE FOUNDATION PLE) FOR ECONOMIC EDUCATION, INC. irvingfon-on-Hudson, Now Yerlt ===== PAGE 2 ===== How your tax dollars turn into doughnuts ART of the tax dollars you pay Washington are earmarked for local improvements. They're supposed to come back to your com- munity to pay for things like new roads and bridges. But too many of these dollars never come back. They have to stay in Washington to pay for the enormous bureaucratic expenses salaries, office rent, typewriters, red tape, etc. These tax dollars might as well be dough- nuts because you can’t buy a dollars worth of roads for 50¢. If you agree, why not let your Congressman know you prefer to have the Federal Government handle the really federal functions like defense, the F.B.I. and the post office. And leave local improvements right where they belong —at home. The Timken Roller Bearing Company Canton 6, Ohio ===== PAGE 3 ===== Would you call this fair play? Umpire gives “Visitors” a special laws, several million families and advantage by tagging out a “Home” businesses escape paying most of team runner at the plate. “Home” the taxes in their electric bills that team has to play by the regular you pay in yours. They are people rules. Would you call this fair play? whose electricity comes from fed- Hardly—yet you and most Ameri- €ral government electric systems. cans face that same kind of unfair- And you have to help make up ness with some of your taxes. the taxes they escape. About 23 cents out of every dol- Most Americans think everyone lar you pay for electricity goes for should pay his fair share of taxes. taxes. But because of present tax Don’t you agree? America’s Independent Electric Light and Power Companies * * Company nomes on request through this magozine ===== PAGE 4 ===== An cconomical answer to reducing the cost of timing gear housings for tractor engines. A group analyzed what was involved in machin- Specially designed ; mi ar h ines fi rpillar and built for ing timing gear housings for Cate pilla D9 Caterpillar Tractor Co. Tractors. Their combined thinking and experi- Peoria, Ill. ence devised a unique fixture. It held this fragile part in a new way that permitted milling to Machine for rough and sige ” within .008". finish milling timing gear | N G E R S (® ) housings using magnetic THE L L Sixtures for clamping and supporting the part. An Ingersoll Rotary Milling MILLING MACHINE COMPANY ROCKFORD, ILLINOIS ===== PAGE 5 ===== ‘THE feeman APRIL 1958 Vol. 8 No.4 LEONARD E. READ President, Foundation for Economic Education PAUL L. POIROT Managing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non- political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited government, founded in 1946, with offices at Irvington-on-Hudson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in- cluding THE FREEMAN, are met through volun- tary donations, Total expenses average $12.50 a year per person on the mailing list. Donations are invited in any amount — $5.00 to $10,000 — as the means of maintaining and extending the Foundation’s work. Accepted as controlled circulation publication at Irvington, N. Y., with additional entry at New York, N. Y. Copyright, 1958, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 25 or more, 20 cents each. Permission is hereby granted to anyone to reprint any article in whole or in part, providing customary credit is given, except ‘Wage Rates and Jobs,” ‘Profits and Jobs,”* ‘‘No License for Derek Wiscombe,” and “The Sources of Invention." FYE Any current article will be supplied in reprint form if there are enough E inquiries to justify the cost of the printing. ===== PAGE 6 ===== — 4 MAXIMUM RETURN on your investment with SAFETY, through progressive, yet conservative manage- ment — plus insurance on each account. FEDERAL AVAILABILITY | Offers LEGAL INVESTMENT Po for trust funds. Savings J in all transactions assured by use of | Air Mail. (We pay postage both ways). PER ANNUM RESOURCES OVER ONE Carrony | QUARTER BILLION DOLLARS | RESERVES over $24 milion. “LET'S GET ACQUAINTED"— | Write today for this booklet and financial statement, to: | COAST FEDERAL SAVINGS \ od VA R E TY DEPARTMENT H \ | of accounts, Individual, Joint, Trust and 9th and HILL A | Corporation, LOS ANGELES 14, CALIF. NAL orporatio Member~—Federal Home Loan Bank—Federal Savings and Loan Insurance Corp. v APPREIN aed ar | COAST FEDERAL SAVINGS | JOE CRAIL, PRESIDENT ¢ |8 ===== PAGE 7 ===== IN ANOTHER RECESSION ARCO T= GOOCH L UNEMPLOYMENT INSURANCE Hans F. SENNHOLZ NE of the most widely pro- recession, industrial production claimed objectives of govern- fell by 12 per cent and unemploy- ment interventionism is economic ment climbed to 3,724,000 in stability. The government is to as- March of 1954. sure full employment, steadily ris- Now, once more, our daily pa- ing consumption, and growth of pers are full of gloomy reports on the economy. declining commodity prices, de- The present recession is an- clining steel operating rates, lower other reminder that intervention- oil production, fewer freight car ism often leads to the very oppo- loadings, and rising unemploy- site of what it sets out to achieve. ment. The public is at a loss to Indeed it has given our era its understand this unplanned decline. economic characteristic: unprece- The explanations offered by var- dented instability in the shape of a ious “experts” reveal a garbled rapid sequence of booms and re- collection of economic ideas and cessions. notions. One explanation traces We are now in the third postwar present difficulties to the “lack of recession. From 1948 to 1950, in- sufficient new orders to maintain dustrial production declined some current rates of production and 10 per cent and unemployment shipments.” And this, in turn, is rose to 4,684,000 in February of attributed to the cutbacks of out- 1950. Three years later, in another standing defense orders and the Dr. Sennholz is Professor of Economics at Grove City College, Pennsylvania ===== PAGE 8 ===== 6 THE FREEMAN April withholding of new armament or- employment, caused by the reces- ders. These experts urge that gov- sion — the recession caused itself! ernment spend more on military More capacity than orders is the hardware and ammunition in order reason for the decline, say others. to boost the economy. There has been a growing gap be- In the first place, such an ex- tween actual operations and capac- planation contradicts reality. The ity. Manufacturing operations federal government spent more average less than 80 per cent of money on national security in 1957 capacity. Every major industry is than in 1956; and the sputniks operating below the full-employ- have caused acceleration of arma- ment rate. And it seems likely that ment spending. factory output will level off while But even if armament spending capacity continues to rise, which had declined, total cash expendi- will further widen the gap be- tures of the federal government tween capacity and operations. were higher in 1957 than in any This answer must be rejected on other year since World War II. grounds that it merely describes a They exceeded $79 billion, which situation. It neither explains the was $7 billion more than in 1956 causes for the growing gap be- and $9 billion more than in 1955. tween operations and capacity nor These facts would suggest that a analyzes the factors that determine substantial increase in govern- capacity and factory output. It is ment spending doesn’t necessarily the most superficial of all answers. prevent an economic slump. Labor unions offer a simple ex- planation of their own. Labor is Excessive Inventories underpaid, they say. Employers Another explanation runs as fol- are withholding part of the right- lows: Businessmen are trying to ful wages, so their employees can- cut down on unnecessary inven- not buy back the product. They tory accumulations. Inventories therefore recommend higher pay were rising throughout 1957 in and a shorter work week. In the expectation of future sales. But words of O. A. Knight, president sales have been disappointing on of the Oil, Chemical and Atomic account of wages lost through lay- Workers Union: “We should begin offs. preparing now for a shorter work This reasoning moves in vicious week to be applied when needed circles. The recession is caused by instead of waiting until there are inventory adjustments, caused by several million unemployed.” disappointing sales, caused by un- This explanation disregards two ===== PAGE 9 ===== 1958 IN ANOTHER RECESSION 7 hundred years of economic pleasant state of affairs and the thought and returns to the ancient economic policies that preceded to- fallacy of exploitation and class day’s recession. It must go back to struggle — which has been ex- the boom and the monetary poli- ploded numerous times but is kept cies that created it. alive because it constitutes the All three postwar recessions ideological basis of unionism. were preceded by feverish booms In a market economy there can with soaring prices and wages. Ac- be no exploitation of labor. Compe- cording to the Bureau of Labor tition between actual and poten- Statistics, the index of consumer tial employers always tends to lift prices rose from 83.4 in 1946 to a man’s wages to the point of his 102.8 in 1948. Commodity prices productive contribution. If his rose from 78.7 to 104.4. The 1948- wage should fall below this point, 1950 recession then followed, with his services indeed would consti- 4.7 million unemployed. tute a bargain. Consequently, The 1953-54 recession was pre- many bargain-hunting employers ceded by similar developments. Be- would compete for his services, tween 1950 and 1952 consumer and this again would lift his wage prices soared from 102.8 to 113.5 to the point of his productivity. and commodity prices from 103.1 If the labor union recommenda- to 111.6. tions were enacted, disaster simi- The present recession was initi- lar to that of the great depression ated by a similar boom that lasted would engulf the whole economy. from 1955 to the summer of 1957. Both higher pay and a shorter Consumer prices rose from 114.5 work week constitute higher busi- in 1955 to 121 in August of 1957. ness costs. And higher costs make During the same period commod- for lower business earnings, or ity prices rose from 110.7 to 118.4: possibly losses, which in turn cause There cannot be any doubt that business contractions and unem- all three recessions were preceded ployment. by feverish booms with rising prices and wages. They were pe- Cherchez la Boom riods of great optimism about the A scientific analysis of the rea- prosperous future, vast expansion sons for the present recession must of the apparatus of production, search for more than shrinking and full employment of capital and backlogs, inventory adjustments, labor. or the old shibboleth of labor ex- The causal connection between ploitation. It must go back to the booms and recessions is found in ===== PAGE 10 ===== 8 THE FREEMAN April the money and credit policies con- serve requirements, and lower dis- ducted by our monetary authori- count rates, it not only expanded ties. They inflate the money supply the quantity of currency and de- which initiates the boom stage of posits, but also facilitated credit the business cycle. Then, when expansion on the part of all banks. prices and costs of living rise in When the volume of currency reflection of the expanded money and bank credit is thus arbitrarily supply, our authorities become con- increased, the market rates of in- cerned about the inflation and re- terest tend to decline. When credit frain from further monetary ex- is abundant and interest rates are pansion. At this time the symp- low, many a businessman is temp- toms of boom disappear and the ted to expand with improvements economy begins to adjust to the and new projects that appear prof- policy of stabilization. Further- itable. But these very projects more, the malinvestment and mal- whose profitability depends on low distribution of the boom period interest rates must become un- must be brought back into line profitable as soon as the economy with economic reality. The period begins to adjust to the latest during which this readjustment round of inflation. They constitute takes place is called recession or malinvestments insofar as they depression. withdraw scarce labor and capital Federal Reserve statistics dem- from other profitable uses. onstrate the inflationary nature of the monetary policies that created Rising Prices and Costs the booms. Between 1946 and 1948 The economic response to in- the total adjusted deposits and flation involves feverish business currency held by all banks rose bidding for labor and capital for from about $150 billion to more expansion. Prices of raw materi- than $170 billion. During the 1951- als, wages, and interest rates rise 1952 boom period they rose from rapidly. They continue to rise un- $177 billion to $195 billion. And til one enterprise after another be- during the last boom they rose to comes unprofitable. $221 billion in July of 1957, with The first indications of the com- bank loans climbing to $112 billion. ing recession include postpone- This monetary expansion was ments of expansion plans, lower achieved through easy-money poli- sales of structural steel, cutbacks cies on the part of the Federal of tool and die making and of Reserve system. Through open- other production connected with market purchases, lower bank re- business cxpansion. Then, other ===== PAGE 11 ===== 1958 IN ANOTHER RECESSION 9 malinvestments become apparent tically unknown in those times. in the shape of “excess capacity,” But in our time, business costs which simply means that in terms seem to have lost their facility for of product prices and business downward adjustment. The poli- costs the operation is unprofitable. cies of the government and of The construction of “excess capac- labor unions have made wages ity” during the boom, therefore, extraordinarily rigid. Minimum was based on certain hopes and ex- wage laws and various other gov- pectations of profitableness that ernmental decrees actually pro- were shattered by rising business hibit certain adjustments. And the costs. labor unions exert their tremen- The unprofitability of business dous political power to force wage and the urgent need of funds for rigidity, if not higher labor costs. fixed obligations induce many com- They militantly defend all wage panies to reduce their inventories. increases which the preceding Unemployment rises and many boom and its maladjustments have product prices fall. Business ac- provided. tivity declines until the adjust- ment has run its course to the The “Built-in Stabilizers” point that production becomes There is little doubt as to what profitable again. the political response will be to the In an unhampered market econ- present business recession. The omy the readjustment takes the “built-in stabilizers” will be acti- form of falling business costs. vated, and the lot of them can be Falling product prices and reduced encompassed in a word: inflation. profits, along with competition The only answer which our inter- among workmen, exert a pressure ventionist government can give to on wages until they decline by a the problem of recession is further few per cent. Projects constituting inflation. No matter under what malinvestment are abandoned, set- label or disguise, inflation tends ting capital and labor free for em- to release credit, raise product ployment in other profitable enter- prices, and lower real wages. Con- prises. After business costs are sequently, prospects for business thus reduced, some operations be- profits improve and a new boom is come profitable again. The depres- initiated. sions of the nineteenth century This new inflation has already generally involved this kind of begun. Last November — and again readjustment — rapidly enough so in January — the Federal Reserve that mass unemployment was prac- system lowered its discount rate ===== PAGE 12 ===== 10 THE FREEMAN April in order to encourage bank bor- savings accounts, government rowing and bank credit expansion. bonds, and the like, will continue Reserve requirements were re- to depreciate. Fixed income re- duced. And it bought government ceivers will suffer. And the busi- bonds in the open market in order ness cycle with its inevitable re- to increase bank reserves. Futher- cession will start all over again. more, government officials and politicians contemplate other meas- The Growth of Socialism ures that involve more govern- But the inevitable consequence ment spending, or that reduce that exceeds all others in tragic government receipts while spend- significance is the growth of so- ing remains unchanged. The House cialism. During the three postwar Banking Committee is ready to boom periods many people have push schemes for federal handouts learned to recognize inflation. Hav- to “depressed areas.” Other legis- ing also learned to rely on gov- lators plan stepped-up aid for ernment as the source from which “slum clearance.” Small business all earthly blessings flow, they are partisans favor handouts to their clamoring for protection from the clients. General tax cuts are being disastrous effects of inflation. considered simultaneously with Vote-conscious planners in Wash- big new spending programs. Infla- ington are most anxious to “fight” tionary financing is supposed to inflation. They are ready to face cover growing budgetary deficits. the problem head-on through com- It remains to be seen whether pulsory socialistic price and wage or not the combination of all these controls. measures will have the desired ef- During the last boom President fect — whether product prices will Eisenhower repeatedly discussed resume their rise, make business the possibility of federal controls profitable again, and reduce the over business and labor. The Sec- unemployment. But even if these retary of State, the Secretary of measures “succeed” once more, the Labor, and many other high gov- inflation will have its well-known ernment officials in the Admin- effects. The dollar which already istration and in Congress have has been more than halved in value proclaimed the desirability of con- since 1940, will continue to lose trols. Such talk makes one wonder purchasing power. Debtors again if the institutionsof personal free- will be favored at the expense of dom, private property, and a free creditors. The people's savings in market can survive another burst the form of life insurance claims, of inflation. * 00 ===== PAGE 13 ===== AND 4 J08S fi HENRY HAzLITT AY does not pass now with- inflationists want a comparatively out someone in Washington mild dose — just enough to achieve proposing a new inflationary “full employment,” but not enough scheme. All of these schemes are to bring “true” inflation. The based on a common set of assump- lunatic fringe wants to spend tions. It is taken for granted that money with a steam shovel and to under no conditions can the print it on a rotary press. government permit a recession or But all these groups are wrong even a comparatively mild read- in their fundamental assumptions. justment. It is taken for granted The truth is that neither govern- that it is a “responsibility” of ment spending nor an increase in government to maintain “full em- the money supply is either a ployment” at all times. It is taken necessary or a sufficient condition for granted that the government for the existence of full employ- not only has the power to do this, ment. What is necessary for full but knows exactly how to do it. It employment and prosperity is a can be done, it is assumed, either proper relation among the prices by heavy government spending, or of different kinds of goods and a heavy deficits, or forcing down in- proper balance between costs and terest rates, or an increase in the prices, particularly between wages money supply, or all four. and prices. When this balance The sole point of dispute among exists, so that the prospect for these inflationist groups concerns profits exists, full employment the exact dose of added spending, and maximized production and tax reductions, or money creation prosperity will follow. When this that is necessary to maintain “full balance does not exist, when wage employment.” The “conservative” rates are pushed above the mar- 11 ===== PAGE 14 ===== 12 THE FREEMAN April ginal productivity of labor, and to raise prices. The unions, going profit margins are doubtful or farther, insist that not only must disappear, there will be unemploy- wage rates never be reduced under ment. The presence or absence of any circumstances, but that they monetary inflation is by itself ir- must be advanced each year, in relevant. monetary terms, especially when If the proper relationship exists things get bad, for that will “in- between costs of production and crease purchasing power.” prices, between wage rates and This argument is, of course, prices, there can be full employ- wholly fallacious. It confuses wage ment without inflation. And there rates with total wage payments; will be unemployment even with it confuses a price with an income. a rampant inflation if wage rates Higher wage rates, by excessively are too high as compared with raising costs of production and prices so that profits are distorted wiping out profit margins, may or on net balance negative. create unemployment, and so re- What leads to the great contem- duce total labor income. It is in porary faith in inflation as the the interest of the whole body of cure-all for unemployment and labor itself that equilibrium wage other economic ills is the fact that rates should be established that under special conditions inflation maximize employment and labor may raise prices more than wage income. rates and so restore comparative But today opinion is confused. equilibrium and workable profit One school of thought believes margins. After an inflationary that wage rates ought not to be boom, there may be a depression reduced under any circumstances; accompanied by a collapse of another school holds that in fact prices. If labor unions then refuse they will not be reduced because to accept corresponding reductions unions will never accept a reduc- in wage rates, a money-and-credit tion. That is why, unwilling to inflation, if not accompanied by a face up to the need for curbing the further rise in wage rates, may union monopoly powers that our raise prices enough to restore labor laws have conferred in the profit margins, production, and last generation, so many people employment. can see no way out but the dan- But today, we are given to un- gerous and desperate road of more derstand, economic adjustment is inflation. oo 0 never to be made by reducing wage rates, but always by more inflation Newsweek, February 17, 1968 ===== PAGE 15 ===== OF ALL the elements which go to fallacies in the national thinking make up the system of pri- has been underscored again of late. vate enterprise, the one which en- Thus, with an obvious eye toward joys perhaps the least understand- future bargaining sessions, George ing—or approval—is profits. In- Meany, president of the AFL-CIO, deed in the U. S., very citadel of recently charged that the Depart- capitalism, an observer these days ment of Commerce, in its official aptly might say that a profit is al- reports, was understating the true most without honor. For years, ac- magnitude of business earnings. cording to many a dreary survey, Similiarly, in unveiling his 1958- the man in the street has enter- model demands, Walter Reuther, tained exaggerated and critical no- head of the United Auto Workers, tions regarding profit margins. In called upon the auto industry to Washington, which never need share most of its profits with em- worry about meeting a payroll, ployees and customers. Finally, in profits as a rule either tend to be forecasting a balanced budget for ignored completely or, during a the coming fiscal year, the Ad- crisis, hastily labeled “excess” for ministration, in effect, has chosen purposes of taxation. To organ- to ignore the deepening recession ized labor, of course, corporate and its probable impact on corpo- earning power is merely the goose rate accounts. Whatever their dif- which, at annual contract time, ferences, the foregoing episodes can be made to lay a new and have one thing in common: a larger golden egg. striking inability or unwillingness The amazing persistence of such to face the facts of economic life. From Barron's, January 20, 1958. Robert M. Bleiberg, Editor. 13 ===== PAGE 16 ===== 14 THE FREEMAN April One is that profits can go down as to make. If such sums are added to well as up. In a free society, prof- reported earnings, he argues, the its also happen to be the moving so-called squeeze on profits quickly force behind business activity. In disappears. the U. S., in short, labor as well as It is perfectly true that under capital has a major stake in the the former methods of deprecia- business of risk and reward. tion, current profits would com- pare more favorably with those of Shrinking Profits earlier years. However, that is not To those who grasp the connec- the point. Whether by the old tion between investment and em- yardstick or the new, earnings ployment, the current trend of during the past 12 months (the earning is disquieting. For the period in question) unmistakably figures reveal that profits have have dwindled. As to the longer been shrinking steadily for more pull, Mr. Meany is equally wrong. than a year. According to the For owing to postwar inflation, Department of Commerce, net in- the cost of replacing an asset has come of all U. S. corporations, exceeded by a country mile that of after taxes, reached a high of building it originally. Until the $22.3 billion per year in the fourth recent fiscal reforms (to which quarter of 1956. By the second labor now objects so strenuously), quarter of 1957, earnings were corporations were compelled to running at an annual rate of $20.5 report wholly inadequate allow- billion, a showing which failed to ances for depreciation. In short, match that of the like 1956 period. for a decade or more business has The annual reports for 1957 overstated, not understated, its plainly suggest that the slippage profits. continued in the second half as well. Labor Demands More The government data, to be sure, Here is a formidable misconcep- have not gone unchallenged. In tion indeed. However, in this particular, Mr. Meany, speaking realm George Meany is matched, for the AFL-CIO, has attacked if not surpassed, by his vice-presi- the estimates of the Department dent and possible successor, Walter of Commerce. In the main, he Reuther. In advance of the forth- faults them for failing to take into coming wage negotiations with account the increased deductions the auto industry, the U. A. W. which industry, in writing off head disclosed his intention of plant facilities, now is permitted seeking a massive profit-sharing ===== PAGE 17 ===== 1958 PROFITS AND JOBS 15 plan. Under this scheme — which was recognized by the Executive even the union admits is an “un- Council of the A.F.L., which usual approach to collective bar- nearly twenty years ago went on gaining” — motordom would be en- record as saying: “We have titled to a net return of 4.8 per learned the lesson that when op- cent on its invested capital. Any- portunities for profits diminish, thing above that amount would be opportunities for jobs likewise deemed an “excess” profit, of disappear.” Today, however, labor which one-fourth would be paid as apparently has chosen to ignore a bonus to the workers (with an this simple truth. equal share going as a rebate to Nor is labor alone in such folly. the car-buying public). The same may be said of all those who, at the first sign of recession, would have the government launch The proposal may be criticized upon a massive program of pump- on many grounds, not least that it priming. Contrary to the views would give the union a powerful held by some, inflation is the mor- voice in what is properly the con- tal enemy of economic progress. cern of stockholders and manage- For it tends to cover up ineffi- ment. But perhaps its worst — and ciency and waste; to reward the most revealing — feature is the speculator rather than the pro- formula which would grant in- ducer; and, not least, to encourage dustrial concerns, subject as they excessive wage demands. Sooner are to whims of the market place, or later, under the mounting bur- a return lower than 6 per cent or den of costs, profits — as well as more currently enjoyed by regu- trade and employment — inevitably lated public utilities. Such terms suffer. This is what has happened would be ruinous, not merely to to the U. S. in recent months. In capital, which must look for re- the circumstances, efforts to revive wards commensurate to the risks, inflation surely would not be wise. but also, in the end, to all those The U. S. will regain its prosper- seeking jobs which only the invest- ity only as it restores the condi- ment of capital can provide. The tions under which the risk-taker vital link between the two once can thrive. eo To the Ruination of All NoTE: Turn again to F. A. Harper's “On Sharing Profits” (THE FREEMAN, January 1958) for further study of the implications of the UAW proposal. ===== PAGE 18 ===== TRAINING THE YOUNG TO BE A CAPITALISTS F. A. HARPER I' IS A TRAGIC FACT that there are stance, the average college and so few real believers in capi- university instructor now gets less talism among the younger genera- pay than the average wageworker; tion of Americans. Surveys of the average full professor gets opinions and beliefs of high school only 55 per cent more than the students reveal this clearly, show- wageworker despite his large in- ing how most of them believe pri- vestment of time and funds in ob- vate capitalism to be some sort of taining a license to practice his social sin, as also is communism profession. In Russia, by contrast, in their view. And all sorts of po- the average full professor gets 700 litical action continues to indicatea per cent more than the average dominant opposition to capitalism. wageworker, as contrasted with Perhaps this situation is not sur- the 55 per cent in the United prising when we consider the ex- States.! tent to which teaching in the One wonders, in view of this schools and colleges has become a and despite all Russia’s other au- socialized profession. Equalism is thoritarian impositions, whether rampant there. The best and the the concept of opportunity and re- poorest teachers share about alike ward for extraordinary accom- under the tenure system, in the de- plishment may not become better mand for their services, and in understood and taught in Russia irr ay. _— the ates of pay . Source: Department of Economics, Mc- In the United States, for in- graw-Hil Publishing Company, Dr. Harper is a member of the staff of the Foundation for Economic Education. 16 ===== PAGE 19 ===== 1958 TRAINING THE YOUNG TO BE CAPITALISTS 17 than in the United States. Those not enough and will be slow at best. teachers who themselves experi- We must also look for all sorts of ence economic reward for excel- other ways of teaching and instil- lence are the ones most likely to ling in our children an understand- extol it in their teaching and in- ing of and sympathy for the con- fluence on young minds, and to cepts of capitalism. This means condemn equalism. opportunity for exceptional attain- Unfortunately we are not going ment, the right to have the rewards to change this situation overnight. therefrom, and the right of the The educational practices so earner himself to dispose of these strongly entrenched in our school- rewards as he deems wise — know- ing in the United States are likely ing that without a thing’s being to continue for quite a time. A bit produced in the first place, there may be accomplished here and can be no problem of its disposal. there, of course, especially in the Above all, we should search for nongovernment schools and col- ways of teaching capitalist ideals leges where it is easier to recog- in the home as a part of the home nize merit and reward superior ac- life of the child. This is where complishment among teachers. To most of the teaching of funda- the extent we are still free to make mentals will be done anyhow, if such choices, we can lend our fi- at all, through precept, practice, nancial support to the schools and demonstration. For one thing, which do this, so as to help them it is basic to teach the child the pay the costs it entails. And we processes and rewards of thrift can send our children to such in- and ownership. For unless he stitutions to be taught, paying learns this and finds it a satisfy- without stint the tuition and full ing practice, he will never really costs involved, rather than sup- become a capitalist in the sense of porting institutions of learning personal opportunity, responsibil- where we all send to each other the ity, and reward for wisdom and bills for the socialized costs of diligence. socialist education for our chil- dren. Ventures into Business All these things can be done by How can the child be taught us as individuals, to be sure, and thrift and the merits of ownership perhaps we can thereby slowly in the home? There are surely change the climate of educational countless ways, far beyond my in- practice. But working through the genuity to discover. Having the established educational system is child pursue his urge to embark ===== PAGE 20 ===== 18 THE FREEMAN April on some childhood business ven- ventures that are already in op- ture of his own is good in some eration and proved to be success- respects, but it also has some ful and going concerns. I refer to weaknesses. For instance, a child’s ownership participation in corpo- dream of a business venture is rations, through the purchase and usually less likely of success, even, ownership of equity shares. than is the average experience of The ownership and participation ventures of more mature and ex- can be started at a very young age perienced persons where a high _ should be, in fact. I know from percentage never make the grade. experience that a child of four or Yet we can learn from failures, if five years of age can begin to it doesn’t kill our spirit. grasp the essentials of ownership So a ready kit of first aid in participation in this way. event of failure, or perhaps less One approach is as follows: success than he probably antici- Have the child invest his own pates, should be ready to soothe money in some equity ownership, the youthful venturer. Even so, I preferably money earned by him would support and cheer all such doing some useful tasks. Allowance childhood ventures, especially money, if the parent is convinced those giving promise of success in of the wisdom of giving a child a noncharitable market. The ob- unearned income in that way, may jectives of Junior Achievement, as be used but I feel it to be misedu- well as the Jaycees’ admirable cation to give the young child overt project of Self-Reliance Awards to gifts of money to purchase equity high school students, are all of shares. If he is given capital funds good purpose. — different in a way from giving } him food to keep alive — it blocks Shares in Going Concerns his mind a bit to the correct lesson But the approach intended for of earned ownership. This he special attention here, as having ghould learn well at the outset, if at least a major place in the train- he is to be taught to reject the ing of a child to become a worthy prevalent attitude that the world capitalist, is one less speculative or some major part thereof owes than the ordinary childhood ven- him luxuries of living merely be- ture, more certain of moderate cause he happens to exist. success and adapted to being started at a younger age and on a The Urge to Earn smaller scale. And that is to help Before a child can invest his the child participate in business earnings, of course, he must have ===== PAGE 21 ===== 1958 TRAINING THE YOUNG TO BE CAPITALISTS 19 earned something and have saved own earnings into ownership of the part he is 'to invest. How can going business concerns. Person- he be induced to do that? This is ally, I prefer some sound invest- an important first question. But it ment trust for this particular pur- is one I am not going to tackle pose. It gives the safety of wide here, beyond a few brief points. diversity of ownership as con- It is clear that before the child trasted to the greater risks of any will work to earn something, his one corporation. It avoids the ne- wants must exceed their fulfill- cessity of switching from one cor- ment. His wants must exceed the poration to another as the chang- promise of their immediate fulfill- ing winds of economic climate ment from the hand of a fond and alter prospects for its continuing doting parent who is ever generous success. Investment trust shares to the extreme. Only then will he can more safely be left quietly to have any reason to work as a way work for the long pull of time be- to get something he wants. cause the management of the in- Things the child wants for joy vestment trust takes care of all the of immediate consumption doubt- trading in individual corporate lessly carry the strongest urge at shares as a service for its owners. the outset. This may be a candy This reduces the temptation of the bar which he must forego until he child to venture into some highly has earned its price, or a toy, or risky speculations of individual something of the sort. stocks. Then the child can slowly be Many a promising capitalist has weaned to earn and save for things had his early faith in the capitalist more enduring and distant in his system killed and buried in the desires. Soon he will become will- crowded cemetery of “rare oppor- ing to provide for things only tunities to get rich quickly,” where vaguely foreseen as desires, things investment neophytes so often not yet of precise form but as- meet their doom. The child should sumed to be needs that will be- be encouraged to begin his educa- come clear later. He is then ready tion as a capitalist in a way that to be led into investing his earn- will minimize this sort of risk. ings in corporate ownership be- Forays into those ‘golden op- cause that is its nature. portunities” of risky, new cor- porate ventures not his own is a Investment Trusts game warranting only mature and So the child should be urged and experienced minds. That game induced to put savings from his should be left to persons of means ===== PAGE 22 ===== 20 THE FREEMAN April who can afford the high mortality deal between the two of you. Then rate such ventures entail. he can continue to buy additional fractions just as fast as he can Beginning Young save each one-tenth of the current It is easy to wait too long to be- price. gin such a program, and to under- As dividends are paid, they will estimate the early age at which come to you as parents, in whose the child can begin to learn im- name the shares are registered. portant lessons from the experi- You then pay the child his divi- ence of equity ownership. It is a dend share as you receive it each temptation to delay the beginning quarter year. If the quarterly divi- because the child will have only dend is 30 cents, the child would be bits of money to invest, and be- given for one-tenth of a share his cause the commissions for buying dividend of 3 cents. The amount small quantities become an exces- may seem trivial to us as adults sive added cost. who deal in much larger figures, But this problem can easily be but it is significant to a child and handled in another way. Since the important as a device for teaching child is a minor anyway, and you how the capitalist system works — as parents are his legal guardians, how one can gain rewards from the purchase can be a private ar- savings he has put to work for rangement between you and the him in many business concerns of child until he reaches a more ad- the nation. The feel of the income vanced age — perhaps until he he receives as reward for past reaches maturity. Let us assume thrift and investment will be a that you already own shares of the matter of great and worthy pride XYZ Investment Corporation. You to the child. can allow the child, as he progres- sively accumulates enough savings, LessonsThat Can Be Taught to buy individual or even frac- Each time when the child is tional shares. I find that one-tenth given the dividend his investment of a share, for instance, is an has earned, you will have a rare easily workable fraction to use, al- opportunity for all sorts of lessons lowing the child to become a cap- about how the capitalist system italist at a young age. If shares works. I know from repeated ex- are selling at $20.00 a share at a perience that it is a powerful time when the child has $2.00 teaching tool with the young mind. saved, the child can buy from you Suppose, for instance, the fam- one-tenth of a share as a private ily is on a trip. As the hours of ===== PAGE 23 ===== 1958 TRAINING THE YOUNG TO BE CAPITALISTS 21 travel become long and you try to quired. This may well be true, and think of ways to reduce the child’s worth the cost and trouble. For the tedium, try teaching him about the child to see his name on the certif- capitalism of which he is now a icate, and to receive quarterly div- part. Even if he owns only one- idend checks made out to him is tenth of a share in some good in- surely more real and vivid to the vestment trust, you can hardly go child than to have it come through a mile without being able to point the parent. The extra trouble and out some business along the road expense may be worth it. in which he is a part owner. “You However you handle the details own a little of that,” you can tell of such a program, you can watch him, swelling his chest with the the child’s interest in capitalism just pride of ownership from his grow and grow from such teach- own savings and investment. Even ing. Endless lessons can be wired though we know that the amount into his interests. The appeal of of his ownership is so trivial that his ownership is ideal for learning a microscope would be needed to the lessons of private capitalism find it, its size is not so important vs. collective socialism. If you avail as is the fact. yourself properly of all these op- At a very young age the child portunities to teach him, you will can also begin to understand the have little or no reason to worry growth pattern of compounded, that the child will succumb to the reinvested earnings. He can under- wiles of socialism as he goes along stand and appreciate that admir- through school. He may, in fact, able little story of Arkad whose be able to help teach the teacher basic argument for saving was a little, if he has also properly this: “A part of all you earn is mastered the arts of tact and pro- yours to keep,” so keep it, along priety. with the earnings on the earnings.? For purposes of a feeling of par- Education Begins at Home ticipation in the process of owner- ship, some may argue that it is better to have the shares regis- tered directly in the name of the child whenever full shares are ac- This is only one way that private capitalism — its methods and its merits — can be taught effectively in the home to the coming genera- tion. Do you have others to sug- gest? We had better learn how *Clason, George S. The Richest Man in pretty soon. If we continue to go Babylon. Englewood Cliffs, N.J.: Prentice- alist. it il be b , Hall, Inc. Special Publications Depart- Socialist, IL wi e ecause we ment, have not taught our own children ===== PAGE 24 ===== 22 THE FREEMAN April properly in the home, so that the paraphrase their ideas and express forces of collective resignation en- them in my own way: gulf them as in a tide. The current Inborn in the nature of man, it educational mode is part of this seems, is the drive for attainment. tide. Primary resistance, there- It can be commonly observed, as fore, will for a time at least have Schweitzer points out, that those to come from parents and a few who have little personal property exceptional teachers who can teach that they can call their own fre- the meaning and purpose of pri- quently express this urge in the vate ownership and self-responsi- form of pure ego. Others, if de- bility. nied the opportunity of accumu- We need not, in my opinion, lating private property, will strug- harbor any shame about teaching gle instead for personal status in our youth that it is both moral and forms such as political power over good to acquire honestly some cap- their fellow men. The right to ac- ital as private property. Each of quire and keep what one has pro- us must reason out its virtue for duced or justly acquired, there- himself, so that he fully under- fore, is a harmless vent for a ter- stands it and truly feels it. But in rific human urge, of a sort that thinking the matter through, I forces no other person to sacrifice have found helpful some ideas for in order that he shall attain pri- which I can thank especially David vate ownership of things of worth. Hume, Professor Elton Trueblood, and Albert Schweitzer. IT shall That is doubtlessly why private 3Aiken, Henry D. Hume's Moral and Po- ownership of property was the litical Philosophy, Book III. New York: basis for the modern concept of Hafner Publishing Co., 1948. moral justice. From an early day, Trueblood, Elton. Foundations for Recon- . ie a struction. New York: Harper & Brothers, this concept found support nt ules 1946. p. 87. of conduct such as the admonitions Schweitzer, Albert, Civilization and Eth- against theft and covetousness ex- oa York ¢ Macmillan Co 2 pressed in the Decalogue. o o eo Exemplary Education A SOUND EDUCATION takes its source and receives assistance more from good example than from admonition and instruction. ADAMANTIUS CORALS (1748-1833) ===== PAGE 25 ===== Employers Resignation GRACE LEE KENYON WHY THEN are you always grousing, Growing more and more ing? H, MY “CHILDREN,” poor demanding? employees, Why then, when we face recession, Listen to these words of wisdom, Do you bid me share my ’taters? Listen to these words of warning Wherefore should I raid my cellar, From your sorely-tried employer, Pass out what are my potatoes, From the farmer who would feed Just because you hoed and weeded, you. Wasn't that as per your contract? I AM WEARY of your grumbling, Weary of your dull complaining, Of your slacking and your backaches, I HAVE PURCHASED fertile acres, On these acres paid high taxes, Purchased sprays and fertilizers, Likewise bags of seed potatoes, Of your calluses and blisters, Plus the tools to weed and harrow. So I now lay down this burden. I HAVE PAID you hourly wages, LET the Legion of the Lazy Paid you duly, as per contract, Take up farming as a hobby, Paid you, although drought or Take the risks that Mother Nature, tempest Has in store for all her children, Spoiled the crop and cut my profits, Let them hoe and weed and water, Paid you, spite of blight and insect, Or else hire disgruntled workers, Risk I took on my own shoulders, Let them cope with all these Risk that farmers, down the ages, problems, Must assume in every season. That — or do without potatoes! Mrs. Kenyon is a Connecticut housewife with a pen ever-ready against the ‘Legion of the Lazy” who would let freedom go by default. This supplement to Longfellow’s ‘*“Hiawatha’’ was inspired by Dr. Harper's reflections “On Sharing Profits’ (The Freeman, January 1958). 23 ===== PAGE 26 ===== Y(hcation and ommuhity Life W. C. MULLENDORE N THE EXCITEMENT about our failure to beat the Russians to the launching of a satellite, our educational system is coming in for a share of the blame. To the issue as to “Why young Johnny can’t read” is added that of “Why older Johnny didn’t beat Sputnik.” At this juncture in human affairs, there is no more vital, far- reaching, rapidly developing, and baffling subject than that of “Edu- cation and Community Life.” Let us start with the general proposition that the aim of educa- tion is to prepare students to play their part in the human situation. The individual human being is an | autonomous organism, in a limited + physical sense, but this individual must live as a member of society | and of interrelated groups within = that society. Education in the | broad sense should prepare the in- dividual to live in both his physical and social environment. Zz Mr. Mullendore is Chairman of the Board of } the Southern California Edison Company. This uv article is condensed from an address at the = Sixty-sixth Anniversary Dinner of La Verne College in California. ===== PAGE 27 ===== 1958 EDUCATION AND COMMUNITY LIFE 25 The continuity of the chain or their earliest days are utterly help- stream of life in its lower forms less and utterly dependent upon — plant life, insect, and animal — mother and dad, grandparents, and is protected by Nature and the in- others. In short, they must start herent safeguards of instinct. But, from scratch. They have every- in human evolution, the stage was thing to learn. reached wherein there was no such The most remarkable capacity built-in protection of the conti- with which the baby is endowed is nuity of life. God gave to man as the capacity to learn. The rapidity an individual the freedom to with which the child learns is choose what he would do with the amazing. He or she sets out at a gift of life and his great potential very early age to put this capacity faculties and capabilities. The for learning to use. They investi- price of man’s freedom of choice gate everything. “Why?” — “What was an enormous responsibility — is that?” is their constant refrain. a responsibility placed first upon But they must learn fast because the parents and family groupings, there is so much they must know. upon educational and other com- What the baby, the child, the munity institutions to impart youth learns determines the fate knowledge to, and to train and dis- of each culture and civilization. It cipline the growing child. Then, as is a most profound, basic, and sig- the child grows to maturity, the nificant fact that the continued burden of responsibility for his existence of all human institutions life and what he will make of it is is utterly dependent upon the com- transferred more and more to him munication or transmission of or her as an individual. right knowledge from one genera- tion to another. Break that chain Aim and Purpose of Education of communication —let the torch of Is Orientation knowledge, understanding, and The human being on his arrival meaning go out, so that the minds in the world knows nothing. Even of the oncoming generation are our grandchildren (of course, the not enlightened with the accumu- most wonderful of all children) lated right knowledge and wisdom know nothing at birth. They arrive of the older generation, and the equipped with remarkable capacity culture or civilization goes into and ability, but it is all potential. eclipse. Aside from the built-in knowledge This problem of communication of the autonomic nervous system, between generations is further which is unconscious, babies in complicated by the rapid addition ===== PAGE 28 ===== 26 THE FREEMAN April to the body of knowledge through the jet engine. Now comes the discovery, invention, and growth in fearful destructive potential of human preception and understand- the atomic age, space travel, in- ing of the universe in which we tercontinental missiles, and other live. Accelerated change in periods means and forces beyond our imag- like the present makes for diffi- ination. The end is clearly not yet culty and confusion in communica- —or is it? tion between generations. Let us Accompanying, and in part as a here note just a few of the changes result of, these changes in the ex- in environment during the past ternal order of things, human two-thirds of a century and the ideas, ideologies, ambition, desire, impact thereof on our lives and greed, and emotions have engen- our institutions, with special ref- dered war and world-wide revolu- erence to our educational institu- tion which have dethroned kings, tions and community life. destroyed empires, established ruthless dictatorships, changed au- The Problem of Change tocracies into democracies, democ- We of the older generation racies into welfare states, and the whose memories reach back to the tyranny of autocratic rulers into last decades of the nineteenth cen- the more terrible tyranny and tor- tury can scarcely exaggerate the tured enslavement of communism. breadth and depth, the complete- Notably, and of greatest signifi- ness and complexity of the changes cance to us, government interven- which have occurred in our life- tions in our lives have gone far time. In the physical world, the In- toward destruction of individual dustrial Revolution of the eight- freedom. eenth and nineteenth centuries with its development and applica- Wherein Are We Failing? tion of steam power to factories, So we come to the next question: printing presses, transportation, Are we now meeting our respon- and other industries, together with sibility in this radically altered telegraphy and other improve- human situation? If not, wherein ments in communication, was su- are we failing? Thus far, the facts perseded and eclipsed by the elec- reviewed would seem to point to tric age, the internal combustion two conclusions: First, that the engine, the automobile, the air- aim and purpose and function of plane, and then by electronics, education should be to prepare the radio, radar, television, machines individual for life in the world, which “think,” automation, and and to this end the child and youth ===== PAGE 29 ===== 1958 EDUCATION AND COMMUNITY LIFE 27 must, each for himself, learn what dependent for our own comprehen- life is all about, its meaning, its sion, understanding, and guidance values, and its aims. Second, this in his situation. No one can per- generation of humanity is con- ceive and understand the universe fronted with a rapidly changing and your relation to it, for you. and confusing world, in the throes Perception, understanding, knowl- of humanity’s greatest crisis, and edge, and wisdom can be achieved an open conflict between two basic by each of us only through our own philosophies of life. effort and accomplishment. We might prefer not to be bothered. We may wish for the simpler and more peaceful days The general conclusion drawn by of the past. But we are living now, many students of the situation is and merely to live requires that that the weaknesses and com- we face up to the problems and plaints and failures which are most the powerful good and evil forces frequently lodged against the for change now rampant in our schools and educators, are equally human world. applicable to the aims, purposes, It does not necessarily follow and achievement of the community that because we have learned how as a whole (including our national to make living more complicated, and international communities we have also learned how to adjust in that finding). For example, to the new complexities. The hu- Laura Huddleston Galbraith, in a man mind is the most wonderful recent article appearing in the Los instrument on earth. God equipped Angeles Times, says: us with it that we might make “Public school education today contact with, comprehend, and ad- finds itself the whipping boy of an just to the physical universe in undisciplined nation —a nation which he gave us life. But the in- grown complacent by the produc- dividual human mind nevertheless tivity of its industrial genius. ...” The Whole Community Is Involved has its limitations; and, in our ego- And she agrees with many tism, we are prone to ignore those others also in this finding: limitations. While our total human “A distorted sense of values has situation is the combined and cu- been the primary cause for the lag mulative result of the creative, in American education.” productive, and destructive effort A further similarity between of millions of minds and billions criticism and complaints against of hands, it is the individual mind education and against our culture alone upon which each of us is asa whole appears in these points: ===== PAGE 30 ===== 28 THE FREEMAN April 1. Both are accused of having lost sight of their ends and aims because they are absorbed in methods and means: The people as a whole are primarily concerned with consumption — their material standard of living. Industry is ab- sorbed in improvement of tech- nology, equipment, and produc- tivity. Education, it is charged, largely emphasizes methodology at the expense of the quality and con- tent of what is taught. 2. Both are emphasizing the col- lective rather than the individual — looking upon the individual as a means and the collective product as the end and aim, without having any clear idea of why they thus subordinate and sacrifice the indi- vidual to the crowd. 3. Both are neglecting the moral and spiritual values and are em- phasizing progress in the physical field — growth in attendance, popu- lation and numbers generally, and improvement of equipment and of buildings and physical structures — at the expense of the real pur- pose of their existence, which is contribution to the development of finer and better human beings, spiritually and morally, as well as physically. Means and Ends Now, there is nothing wrong with new buildings, fine residences, the latest models in automobiles, and other things. Transportation systems, water systems, sewage systems, school and office build- ings, and other physical structures must be provided. But these are only means — means which should be designed and limited to the pro- motion of a higher aim — the at- tainment of a higher goal — better and finer human beings and human relations, and a more “beloved community.” We have a right to be proud of our achievements in the control and modification of our environ- ment so that the rigors of climate, the filth and disease, the extreme poverty and enslaving toil which made existence miserable and re- volting for masses of the people through the past millennia, are in the process of elimination. There is good reason why those hundreds of millions in the underdeveloped areas of the world look with envy and hope to the United States of America. And we need not apolo- gize for it. At the same time, we must not become so absorbed in our admira- tion and enjoyment of our success in this one area of life, so enam- ored of our partial and compara- tive success in the material realm, that we lose sight of our failures and the perils which confront us elsewhere. Just now we seem obsessed with the idea that nothing matters ex- ul ===== PAGE 31 ===== 1958 EDUCATION AND COMMUNITY LIFE 29 cept science, engineering, and tech- which we did not want to face. We nology. We are berating ourselves tried to promote peace by spend- and blaming each other because ing money. We relaxed discipline the Russians succeeded where we not alone in the school, but in the had failed in launching a satellite; home, in the workshop, and all and we fear they may have an in- along the line. We incurred such tercontinental ballistic missile, if public debts and such private debts not now, at least before we develop as to exhaust our credit resources. one. This, we say, is our greatest We lived for today and let tomor- defeat since Pearl Harbor, an ir- row take care of itself. reparable blow to our prestige, This has been the failure in our and, worst of all, a terrible threat time —and it was a failure not to our safety. alone in formal education, but also Some of this may unfortunately in the home, in office and factory, be true. But are we not waking up in the labor union, and in the de- a bit late? Are we not possibly velopment of the community. We getting our values and our per- became confused in our values and spective twisted? Is this really our in the things we held to be most basic and most serious failure? worth-while in our lives. Essentially, the failure which The Failure in Our Time threatens us is in the moral and We were enjoying prosperity, spiritual realm. We have been de- and we did not want anything to voting ourselves, if not exclusively, interfere with that enjoyment. We at least much too closely, to our were enjoying our increasing lei- material pursuits, pleasures, and sure, and increasing automation leisure. Yes, we have been “fiddling which freed us from work; and we while Rome burned.” For too long did not want to listen to any “sour- a time, we have been neglecting puss” or pessimist or alarmist who the education of the whole person suggested that maybe there was — the development of that insight, an ultimate and overshadowing spiritual awareness, and moral challenge developing in our world courage, wherein lies the superi- to which we should be paying more ority of the free world of the West attention. Instead of responding as over the slave world of Russia and a nation normally does when its China. life is threatened in war, we em- We have created our own human ployed to the full and as never be- system and environment. In doing fore that dangerous power of the so, we have frequently ignored and human mind to shut out facts violated laws of the moral and ===== PAGE 32 ===== 30 THE FREEMAN April spiritual order. We have, for ex- knowledge and in our equipment, ample, claimed rights before per- and we are properly determined to forming the obligations from stay ahead. which those rights are derived. We But is it in science that the real have chosen to change the natural ‘crash program” is called for? environment, to build a man-made Dare we place all our reliance in environment and system, upon the science alone for our physical maintenance and operation of strength? Science is important. It which our life depends. Then we must not be neglected, but it is have abused that system through not primarily on the scientific self-indulgence, and through many front that the enemy threatens us. excesses. Millions are trying to We should not be misled. The com- “get by” without doing their part munist leaders from Lenin to in maintaining and contributing Khrushchev have openly avowed to the operation of this economic, that their principal reliance in social, and governmental system. their campaign to destroy us is In short, there has been wide- upon subversion from within. They spread and prolonged cheating, have said they would destroy us lying, stealing, and other violations economically by stimulating over- of the moral code to which we are spending and inflation, and the all subject in this life. growth of class, group, and racial dissension which their agents A Crash Program would help promote from within; What, then, shall we do? There and that thus we would be so de- are many suggestions for “crash bilitated in physical strength that programs” — for the launching of the force required to complete the a satellite, for the development of job would be much reduced. And an intercontinental ballistic mis- we should by now be aware that sile, and for the education of scien- in this program of subversion, the tists in quantity and quality suffi- enemy has not been altogether un- cient to overwhelm the Russians. successful. There is much talk of our failure Our need today — our greatest to match the Russians in scientific and most urgent need — is for the education and achievement. regeneration of our American We can all agree that we must heritage and the rebirth of our not neglect this vital area of our Christian faith. We are hearing too defense. And thus far the evidence much about the need for more is that we are, from the over-all science, and far too little about the standpoint, still ahead both in our need for more religion — for an ===== PAGE 33 ===== 1958 EDUCATION AND COMMUNITY LIFE 31 immediate, an intense, and an en- and secure America may be long during revival of moral and spirit- and weary and dangerous, but we ual life and strength. God has not can find it if we will follow the di- forsaken us. We have forsaken rections written plainly in the him. records of our past. We cannot reclaim the Christian heritage nor the rights and bless- The hour is very late; but we ings of a free people until and un- must be persuaded that it is not less we have a rebirth of righteous too late. Neither dare we despair, and conscientious performance of nor, while mending our slovenly our moral and spiritual obliga- ways, must we abandon our scien- tions. Man cannot concoct a system tific and physical defenses. What under which he can escape the we must abandon is our inordinate Higher Law. If we wish to regain attention to pleasure and comfort our freedom, we must not only ~ our ways of life which make us confess our error, but, by positive dependent and soft. We must in- action, we must mend our ways. deed awaken and gird on that The blessings of liberty must be armor of truth and faith which earned, and they can be retained the enemy spurns, and by such only so long as we play the part of spurning gives us our greatest ad- self-reliant, responsible human vantage and our certain hope in beings. The road back to a free this hour of decision. oo 0 A HUMAN BEING is a member of the community, not as a limb is a member of the body, or as a wheel is a part of a machine, in- tended only to contribute to some general, joint result. He was created, not to be merged in the whole, as a drop in the ocean, or as a particle of sand on the seashore, and to aid only in com- posing a mass. He is an ultimate being, made for his own per- fection as the highest end, made to maintain an individual existence, and to serve others only as far as consists with his own virtue and progress.... No man, I affirm, will serve his fellow-beings so effectually, so fervently, as he who is not their slave; as he who, casting off every other yoke, subjects himself to the law of duty in his own mind. . .. Individuality or moral self-subsistence is the surest foundation of an all-comprehending love. No man so multiplies his bonds with the community as he who watches most jealously over his own perfection. WILLIAM ELLERY CHANNING, May 26, 1830 ===== PAGE 34 ===== \ WILLIAM HENRY CHAMBERLIN L. Ce HE OBVIOUS military threat of a balanced budget as at some- from the launching of the So- thing as obsolete as the Model T viet sputnik is not the projection Ford. In taking this attitude they of an earth satellite into space, but prove, not their sophistication, but the likelihood that capacity to do their inability to learn from the this implies capacity to launch an long history of the disastrous con- extremely formidable military sequences of inflation. weapon, the intercontinental bal- Second, there is at least the be- listic missile. Along with this ob- ginning of an assumption that, be- vious threat, which has been wide- cause the Soviet government beat ly canvassed in Congress and in us to the gun in launching an public discussion, there are two earth satellite, there must be some more subtle and indirect dangers superiority in the Soviet political which have received less attention. and economic system. Such a line First, there is the unmistakable of thinking, if pursued far enough, trend to use the Soviet earth satel- might suggest that compulsion is lite as an excuse for indiscrimi- superior to voluntarism as a mo- nate spending, nonmilitary as well tivating factor in economic pro- as military. Grabs at the taxpay- - duction. er’s pocketbook are in prospect for So it may be a good idea to take everything, from federal aid to a close look at those fields where education to United States aid to Soviet success has been most pro- subsidizing the socialistic econom- nounced in order to see whether ic development schemes of rather these successes were achieved by unfriendly neutralist nations in methods that have any relation to Asia. Some columnists and com- communist egalitarian philosophy. mentators sneer at the very idea These fields are (1) military pow- Mr. Chamberlin is author of the definitive two-volume history of the Russian Revolution and numerous other hooks and articles on world affairs. 32 ===== PAGE 35 ===== 1958 NOT VICTORIES FOR COMMUNISM 33 er, (2) educational training for science and technology, (3) quan- tity industrial production, (4) rapid catching up with the United States in know-how for the pro- duction of nuclear weapons and forging ahead in the manufacture of guided missiles. A lopsided Economy There are many other fields in which Soviet standards of achieve- ment are far behind those of the United States and of all but the most backward countries of West- ern Europe. Take a few concrete illustrations. The vast majority of the Soviet people subsist on a limited diet of coarse food, wear shoddy clothing, live in indecently crowded housing. The exceptions to this rule are to be found in the top layer of the ruling party and its managerial bureaucracy, at a liberal estimate not a higher proportion of the population than the recipients of an annual income of $20,000 or more would be of the American population. Soviet per capita output of auto- mobiles is negligible compared with the American and is far sur- passed in Great Britain, Germany, France, and England. This means, of course, that the mobility of the Soviet citizen for work or recrea- tion is very much restricted. Approximately half of the Soviet population, employed In farming, tries, with indifferent success, to feed the nation. About one-eighth of the American popu- lation, engaged in agriculture, not only produces enough to give the whole American population a much higher standard of living than the Russian, but, in addition piles up unsalable and unmanageable sur- pluses — at least unsalable and un- manageable under our clumsy sys- tem of massive state intervention and artificial price support. The United States consumer standard of living, highest in the world, is made possible by the ex- istence of a competitive free mar- ket, geared to serve the customer, and supplemented by billions of dollars worth of comforts and luxuries from abroad, imported without restriction except for the payment of tariff duty. By com- parison the Soviet consumer is be- hind the eight ball conspicuously in two ways. Soviet industries and stores are run by state appointed bureau- crats who are not in the least in- terested in consumer needs, who are, indeed, under specific instruc- tions to give the “heavy” indus- tries, most essential from a mili- tary standpoint, priority over the needs of the “light” industries which produce goods of evervday consumption. And the inflow of foreign consumer goods is negli- ===== PAGE 36 ===== 34 THE FREEMAN April gible because the government Russian losses in killed, wounded, strictly controls every item and and imprisoned were prodigious. gives preference to those which Then Czarism was overthrown minister to strategic needs. in March 1917. Nicholas IT abdi- The American, the West Euro- cated. A well-meaning but weak pean, is free to travel when and and inexperienced provisional gov- where he pleases. The chance of ernment, uncertain of its power a Soviet citizen, unless he is tapped and hesitant in the exercise of its for a state mission, being able to authority, came into being. To the see any part of the world outside Russian peasant soldier the Czar, the Soviet Union, is very, very the only symbol of authority he small. The citizen of a free coun- knew and recognized, had disap- try, even if he stays at home, can peared. He felt instinctively that learn a good deal about foreign there was no longer a firm hand lands by buying and reading their of government authority which newspapers and magazines. For- would jail or shoot him if he dis- eign publications, unless they are obeyed orders. Then, before long, communist, are strictly contra- agitators began to appear, telling band in the Soviet Union. him that he had no quarrel with Putting aside these and many the Germans, that the capitalists other points in which the balance on both sides were responsible for of comparison inclines heavily to the war, that he should go home the side of the West, how did the and divide up the large estates rulers of the Soviet Union achieve with his fellow-peasants. relative success in the four fields As this kind of propaganda ap- which have been listed? pealed to the peasant’s own in- stincts, it met with increasing suc- 1. The Armed Forces cess. By the time the communists, The Soviet regime came into or Bolsheviks, as they were then power forty years ago on a tide called, struck for power in Novem- of social upheaval in which one of ber the armed forces were so com- the biggest elements was a gigan- pletely disintegrated that the pro- tic mutiny of the Russian Army. visional government had no armed For three years the predominantly force on which it could rely. peasant Russian army had been “Land” and “Peace” were the fighting an unequal war against magic slogans in the revolution German armies that were better led by Lenin and Trotsky. When armed and equipped and more cap- the new Soviet regime began to ably officered and commanded. create an army of its own to fight ===== PAGE 37 ===== 1958 NOT VICTORIES FOR COMMUNISM 35 the counterrevolutionaries who cess in building up a formidable opposed communism, their first military machine had nothing to idea was to make it as unlike the do with the ideal of communism. Czarist army as possible. Distinc- Even the propaganda during the tion between officers and privates war was along Russian nationalist, was reduced to a minimum. The rather than revolutionary lines. very word “officer,” along with the titles of “Marshal,” “General,” 2 Education and “Admiral” was abolished; The first communist idea about fancy epaulettes were eliminated; the schools was to turn the old the only title of respect in the new order, one of strict discipline, up- Red Army was “Comrade Com- side down. The most extreme per- mander.” missive methods were intro- Some modifications of this ex- duced; authority, so far as there periment took place in the thirties, was any, was vested in pupils’ including the restoration of the councils. Marks, examinations, and title of Marshal. But the whole formal instruction according to idea of an egalitarian army, with subjects all went down the drain. officers and men very much on the Maximum self-expression was en- same level, was scrapped under couraged; exact knowledge was the severe test of World War II. treated with contempt. Officers again acquired orderlies. The Soviet school children of Generals began to clank with this period acquired a kind of medals. The difference in pay and scrap heap and rag-bag knowledge, rations between officers and men learning a few facts here and became greater than in the Ameri- there, getting a plentiful dose of can army. The Soviet officer was communist indoctrination but even given the right of inflicting little systematic instruction. There summary execution. The Soviet was another characteristic of the armed forces, as they were formed Soviet universities and higher during World War II and as they schools at this time: class favori- exist today, are not unlike the old- tism on an upside down basis. fashioned Czarist army in general While children of landowners, set-up and in exacting marks of businessmen, and other members respect and distinction for the offi- of what the Soviet leaders called cers. Nothing is left of the early the bourgeoisie, no matter how revolutionary idea of an army of bright, could not gain admission equals. except by stealth and deception, In other words, the Soviet suc- manual workers and children of ===== PAGE 38 ===== 36 THE FREEMAN April workers, with little regard for not by class origin. Scholarships scholastic qualification, were given were assigned to the brightest, not preference in admission. Academic to the neediest. Driving hard life in Russian universities was work, closely graded and meas- probably never on such a low in- ured, became the characteristic of tellectual level as at that time. the Soviet educational system, The Soviet educational system from primary school to university of that time, turning out half- or higher technical institute. For baked products in the elementary more than a quarter of a century schools and making admission to Soviet scientists, engineers, tech- higher institutions depend on class nicians have been coming out of origin and political reliability, not this kind of educational regime. on merit, could never have pro- The Soviet education system duced the trained engineers and has not produced independent technicians needed for operating a minded citizens, familiar with a modern industrial system, much variety of political, social, and eco- less scientists of the quality essen- nomic ideas. This was not its pur- tial for the mastery of nuclear pose. The design was to turn out physics and related subjects. specialists who would be service- This perception must have come able to the Soviet State. And here to Josef Stalin during the first considerable success has been Five Year Plan, which began in achieved. A managerial and tech- the latter part of 1928 and was nical class capable of managing pronounced finished at the end of and operating a much expanded 1932, for at this time the Soviet modern industrial plant has come school was completely made over. into existence. But such success Back came the authority of the as has been achieved in this direc- teacher, marks, examinations, tion is due to rejection of com- even uniforms. Pupils were taught munist techniques in favor of the to stand up when the teacher conservative pattern of education entered the room. Troublemakers which was adopted in the early were bounced out of the schools. thirties. Stiff compulsory courses, taught by subjects, replaced the wander- 3. Industrial Production ing in the fields of experimenta- The ideal of communism was tion. once stated in the slogan: “From There were cqually important each according to his abilities, to changes in higher education. Ap- each according to his needs.” plicants were judged by ability, Lenin summed up his forecast of ===== PAGE 39 ===== 1958 NOT VICTORIES FOR COMMUNISM 37 life under communism in the fol- tioning of the peasants’ surplus lowing formula: produce. “All society will be one office These specific concessions were and one factory, with equality of temporary and were withdrawn labor and equality of pay.” And when Stalin went over to a com- equality was one of the trump pletely planned economy. But then cards of communist propaganda more fundamental and permanent in 1917. There were to be no more inequalities entered into the pic- rich and poor; the peasants were ture. The principle of unequal pay to take over the land of the big for work of unequal value began estates and divide it equally to prevail throughout the whole among themselves. The workers Soviet economy. The spread in the were to take over the factories, spendable income of various pro- mines, and railways “in their own fessions and groups is in many horny hands,” to recall a catch- cases greater in the Soviet Union phrase of communist agitation. than in Western countries. This is There was a terrific downward especially true as regards the com- leveling because all sources of pri- parative pay of professors and un- vate wealth disappeared. Land, skilled workers, of factory man- houses, factories, stores were na- agers and workers, of officers and tionalized. No more interest was privates. paid on public or private obliga- In short, so long as communist tions. Savings became worthless theoretical principles were main- because the ruble experienced a tained, the Soviet economy was a catastrophic inflation. A kind of shambles. It was when these prin- equality of universal misery was ciples were tossed overboard that characteristic of the first years big advances in quantity produc- of the Soviet regime. tion began to be chalked up. But compulsory equality made no wheels turn and did not pro- 4. Nuclear Weapons and Guided duce the food and clothing which Missiles the ruined country desperately These observations also hold needed. So Lenin ordered the eco- good for the treatment of the nomic retreat known as the New scientists, Russian and foreign, Economic Policy, which relieved who have been responsible for the the distress by restoring freedom nuclear and missile projects. No of internal trade and small indus- expense is spared to give them try and substituted a system of most comfortable living conditions taxation for the former requisi- and the best scientific equipment. ===== PAGE 40 ===== 38 THE FREEMAN April So the Soviet achievements here on a combination of very wrong may fairly be reckoned as victo- and immoral ideas, dogmatic athe- ries for Russian scientific and in- ism, class war and class hate, ventive genius, but not for the wholesale spoliation, and denial of principles of communism. the right of private property, the Indeed it is an unvarying rule United States was founded on that the Soviet regime has been right and moral principles: re- most successful where it has spect for a Divine Author of the departed from communist theory universe, government of divided and provided, so far as this is pos- and limited powers, individual sible within the Soviet system, the freedom safeguarded by many incentives of superior rank for specific sanctions, equality of superior achievement, differential American citizens in rights and reward for work of unequal value, obligations before the law and in special rewards for those groups opportunity, but no compulsory and classes which are most useful, leveling between those who make from the standpoint of the re- good use of their opportunities gime: scientists, engineers, indus- and those who do not. trial managers, writers, artists, Neither power has been abso- and musicians of some talent who lutely consistent in adhering to its toe the party line in ideological own original principles. Whereas matters. the Soviet Union has gained in The conspicuous failures of the strength by scrapping or shelving Soviet economy, the inadequate some of its most unworkable dog- production of food, the wretched mas, we have lost strength by di- housing, the poor service to the luting and in some cases gravely consumer, could be cured quickly compromising the principles of by one simple remedy: proclama- the Founding Fathers, substitut- tion of the right of the Soviet ing welfare statism for individual citizen to own land and industrial responsibility and opportunity, enterprises. But it is most unlikely softening our educational require- that the Soviet government will ments to the lowest common de- ever consent to this, for two rea- nominator just when the Soviet sons. It would remove the last Union was toughening its school bases of a communist economy, requirements. Our best answer to and it would stimulate the desire the Soviet challenge is to get back for political freedom by giving the to the basic principles of the Con- Soviet people economic freedom. stitution as thoroughly and as fast As the Soviet Union was founded as possible. oo 0 ===== PAGE 41 ===== for Derek Wiscombe |) ve WISCOMBE, in the town In the Britain of today, hard of Jarrow [England], has work has become a dirty phrase. built up a delivery service with a The thing to do is to shuffle by horse and cart. But the horse has somehow, and to suppress anybody aged, as we all do. Derek, how- else who is willing to work. The ever, has saved up enough money country is sick and failing from to buy a lorry. Recently, he went this prevalent outlook; and it will before a Traffic Commissioner’s perish from it unless we undergo Tribunal to ask for a carrier’s the salutary change necessary to license so that he could move and revive the virtues of our fathers. carry furniture. It might have been supposed And then the vested interests that the Traffic Commissioner’s got to work. The nationalized Pick- Tribunal would have been very ford’s objected to the grant of a outspoken on this matter. It could license. Derek, they said, was “too have said to Pickford’s — “Do you enterprising.” Not more enter- thus scorn the base ladder by prising than Pickford’s had been which you did ascend?” It might in the remote past! For Pick- have said to Tyneside Removals ford’s began with a single horse —~ “Is your concern — large and and cart! Nobody, it seems, must well-established — so fearful, so follow the trail that Pickford’s inefficient, so distrustful of its own blazed — least of all a boy of 17! capacities, that it fears the com- Then — and here I quote from petition of a boy of 17, whose cnly the ‘Recorder of 16 November: sin is that he is prepared to work ‘...a big firm called Tyneside hard? Could not your men work Removals objected on the aston- as hard as he is willing to do? ishing ground that ‘Wiscombe is Must the whole machinery of the a person who will work round the modern, mighty State be invoked clock, and would be a threat to to prevent this lad swapping a our business if he were granted horse for a lorry?” this license. In five years he might There might have been made by replace us in this town.” ” the Traffic Commissioner's Tri- 39 ===== PAGE 42 ===== 40 THE FREEMAN April bunal a parable of this case, a Lord Hailsham goes around parable of universal application ringing bells. But I recall a verse in this, our England. from one of the poets, which suit- But what did the Tribunal do? ably adapted seems not inappro- 1t refused Derek Wiscombe a priate here: license. That will teach him that "Pwould ring the bells of heaven the unforgivable sin in the eyes The wildest peal for years of nationalized industries and big If Commissioners lost their senses private firms is to work too hard. And people came to theirs...! What, in the light of this case, be- ¢ 0 0 comes of the conservative belief ——— . . From the column by “Diogenes” in the in the virtues of private enter- British weekly, Time & Tide, November prise? 23, 1957. JUSTIGE VERSUS RESTRICTIONS ON TRADE FREDERIC BASTIAT (1801-1850) that national interest is in conflict . . . with justice. Come WITH ME into one of those The government has absolute con- wooden cabins that cling to the .5) gyer the lives of consumers and French side of the Pyrenees [in seq these consumers in the name of 1846]. . ] national industry. This is an en- We discover that the father of the oy oachment upon their liberty. The family has not been able to earn 1, forbids the people to exchange much in that mountainous section of {hair goods and services for the the country. His poorly-clothed chil- g40ds and services of their neighbors dren shiver in the icy blast. The fire on the other side of the frontier. is out and the table bare. Since the willing exchange of goods On the other side of the mountain and services is not immoral, then the in Spain, there are wool, firewood, law commits an act of injustice. and corn. But the poor father is for- The writers of the ‘‘protectionist bidden to use them because they are school” claim that this is necessary grown in another country! to protect national industry and pub- By law, the foreign pine may not lic prosperity. Thus the advocates of warm his cabin: his children may not tariffs and other restrictions against taste the Spanish corn; the wool of trade are faced with this sad con- Navarre may not warm their cold clusion: Justice and the public in- bodies. terest are incompatible. We are told that national interest ——— wD . OT : Translated by Dean Russell from Selected (general utility) demands this. If Works of Frederic Bastiat, Volume 1. Paris: this is so, then it must be admitted Guillaumin, 1863. pn. 87-88. ===== PAGE 43 ===== WHEN FREE MEN SPEAK VOLLIE TRIPP HUMAN BEING is an amazing move in. The county is growing at and amusing critter. He is the rate of 700 a day. amazing in numberless ways. But So we find the Texan bragging the oddity which meets our pur- about Texas, for the most part a pose just now is his ability to like vast dreary plain, by turns fiercely what he gets. hot and bitterly cold, and usually This is not true of all humans, dusty. Take the city of Las Vegas, of course. But it is sufficiently true Kalamazoo, Cedar Rapids, Butte of humans, as a whole, to be set — name any town, any place you down as a definitely human trait. want. You will find the people Shall we prove it? panting to prove to you that their Millions of people live under village, their county, or neighbor- conditions which are, on the face hood, is literally the best on earth. of it, abominable. Yet, so well have Out here in the West we love our they become adjusted to these desert, with its terrible heat, pau- abominations that they like them city of life, its implacable hostility and stoutly sing their praises to to man and beast. Why do we love all who will listen. it? We have the desert. We can’t Los Angeles, with her eye- get rid of it. I know of no other smarting smog, noise, crime, cor- reason. But the first-time Eastern ruption, congestion, high taxes, visitor usually finds in it all that and hard water, certainly is not a is ugly, monotonous, and unlovely. heaven-on-earth, anymore. Yet An- After a time, when he has “had it” gelenos, most of them, have a few years, he, too, loves the learned to like these conditions, desert. and are eagerly striving to create What is true of localities is more of them. A few folks get dis- equally true of other conditions — gusted and leave, it’s true. But for social, political, economic. For everyone who leaves, about two years the American people have Mr. Tripp, retired from the building business, now devotes full time to travel, writing, and promo- tion of free enterprise. 41 ===== PAGE 44 ===== 42 THE FREEMAN April been at loss to understand why the tems. But she seems intent on try- Russian slaves have not revolted, ing to make men as happy as cir- cast off their cruel yokes. The only cumstances will permit. So she has plausible answer is that the Rus- given him this unique ability to sian people, as a whole, like what adjust to things, to find delight they have and are not eager to be and satisfaction in some things free. that are highly disagreeable, per Were this not so, surely they se. Without this priceless gift, could have contrived to find escape, most of us would go berserk and in forty years. Civil disobedience. blow out our brains. Sabotage. Malingering. Many However, a few individuals can ways have been open and are still always be found in revolt against open. Yes, the Russians must like the usual, normal order of things, what they have. At any rate, they even against nature herself. Some- like it against a background of thing within prevents their liking anything they ever knew. what is dished out to them by fate. They cannot, or will not, like what The People Approve they are supposed to like or what We have here at home many con- the majority likes. ditions that are astonishing to But, far from the misery and foreigners and a source of anger frustration we might expect to and disgust to a healthy minority: find in this group, these folks are the arrogance and lawlessness of not miserable, at all. They are free, labor unions, the corruption and or, what is almost as good, valiant- inefficiency of many officials, a ly striving to make themselves growing crime element. We could free. Here again the nature of man — that is, the majority could — has come to the rescue with its quickly rectify these conditions. Law of Compensation. And free- Why don’t we? Only one answer dom compensates for much. makes sense. The people, as a whole, approve of these things. Or, Free To Do One's Best they don’t disapprove enough to But what is freedom? Many right them. things, of course, and I shall not Far from being an evil in itself, be so foolish as to attempt a this capacity of man to like what definition that would please every- he has, or quickly adjust to it, has one. But one aspect of freedom de- probably been his salvation. Na- serves to be dealt with at some ture herself is not particularly in- length, for it relates directly to our terested in political or social sys- theme here. Among other things, ===== PAGE 45 ===== 1958 WHEN FREE MEN SPEAK 43 freedom is the power to remain ular ideas and values. To admit a perpetually in revolt against things bitter truth, I'm afraid he’s not abhorrent to the spirit, without very popular. He works and going off the trolley. preaches freedom, the better to Thus the man who refuses to preserve his own, and because he compromise with evil and error, believes freedom is the right of refuses to “like what he gets,” and every man. continues to work and hope for While history is full of martyrs what he thinks is best, is free, at to freedom, it is doubtful if mar- least immeasurably freer than the tyrdom can greatly aid freedom’s man who surrenders, drifts hope- cause today, even if the necessary lessly, and permits nature to have martyrs could be found. Fortu- her way. His body may be im- nately, here in America we can prisoned, his voice stilled. Even still speak, write, preach, and, so, he’s still freer than the slave more important, live the role of whose mind is chained. Were it free men, without fear of liquida- possible to measure such things, tion. That day may come, but it is he’s probably happier, too. not yet. While our free men, by the na- A Minority Position ture of their philosophy, can never From the evidence at hand it be happy in the sense a protected would seem that freedom of the cow is happy, they know certain spirit, the only kind worth bother- deep satisfactions and lofty vistas ing about, is for the few, rather forever denied the slave. On the than the many. There are several whole, this seems vastly prefer- reasons for this. One is that the able to the thin gruel promised by technique of those who would en- a paternalistic Lord Protector, the slave us is always aimed at masses State. of people, rather than at the in- Our free man, sage and prophet dividual. So the individual, if he though he is, is usually a pretty is fairly agile, escapes the barrage practical fellow, in a discriminat- aimed at the flock. ing sort of way, not at all adverse Then, too, freedom demands in- to enjoying life. He knows that telligence and a willingness to put economic freedom is a distinct aid forth effort somewhat above the to all other kinds, including an norm. The free man has no awe at emancipated spirit. multitudes, and the fact that he is So, in a surprising number of usually in a minority worries him cases he has taken steps to insure not at all. He looks askance at pop- his economic freedom, or is pre- ===== PAGE 46 ===== 44 THE FREEMAN April paring to do so. This may be a few will someday be shared by through building a greater in- many, when the multitude has come, becoming less dependent on raised its intelligence a few points. money, or a combination of both. “Ye shall know the truth, and the Having no faith in the power or truth shall make you free.” It will intent of others to solve his prob- not come by fiat or proclamation. lems, he has learned to depend on It will come when the “common himself, and often succeeds. man,” the “masses” have had a His wider outlook gives him a glimpse of better things and de- sense of patience, tolerance for mand those things for themselves. those who hold mistaken beliefs, though he has no tolerance for the Meanwhile, a man can hold the belief itself. Being free, he seeks door open, extend the invitation to to enslave no man, and denies that all men, everywhere. Come out into anyone has the power to enslave the light! Lean no longer on that him. He knows that the tyrant, the odd provision of nature which dictator, the despot, is more truly makes bad things tolerable, and enslaved than his victims, in the finally, desirable. Instead, demand final accounting of things. He those things which are inherently knows, too, that freedom can be good and right. Claim the heritage forced on no man against his will. that awaits you, and was yours, The freedom enjoyed today by from the Beginning. eo 0 | eas ®0 L0BGRIY To Live Appropriately HAVE You Not LIVED? That is not only the fundamental but the most illustrious of your occupations. Have you been able to think out and manage your life? You have performed the greatest work of all, To compose our character is our duty, not to compose books, and to win, not battles and provinces, but order and tranquility in our conduct. Our great and glorious masterpiece is to live appropriately. All other things — to rule, to lay up treasure, to build — are at most but little appendices and props. MONTAIGNE (1633-1602) ===== PAGE 47 ===== THE SOURCES OF 74 JOHN JEWKES I’ SEEMS to be almost universally assumed that the launching of the space satellites was made pos- sible only by employing vast teams writings on this subject, published of technicians working together in in 1903, were those of a Russian large research institutions under schoolmaster, K. E. Ziolkowsky. He close central guidance and with un- made many fundamental contribu- limited resources and equipment. tions to rocket technology. (Russia This may be true, although nobody was probably further ahead of in the Western world can actually other countries in thought and know that it is so. Any suggestion work on rockets in 1903 than now). that the difference between failure Perhaps the most important scien- and success might have resulted tific contribution to rocket theory, from a pathbreaking discovery by however, was made by Hermann - some worker not in a large institu- Oberth, a teacher of mathematics tion and perhaps not even inter- in Transylvania, who in 1923 pub- ested primarily in high-altitude lished his classic, By Rocket into rockets would, nearly everywhere, Interplanetary Space. be instantly dismissed as ludicrous. Between the two world wars All this is indicative of the degree practical interest was maintained to which we are now dominated by by a group of young German ama- the doctrine that technical prog- teurs, some of whom were destined ress can come only from mass at- to become later outstanding fig- tacks upon set problems. ures in this field. During the war In fact, a glance at the history of the German military authorities the high-altitude rocket hardly took up the development of the supports such a theory. Some of the rocket and finally produced the more important early scientific V2, which covered a distance of The author is Professor of Economic Organization in the University of Oxford. This article is reprinted by permission from the January 1958 issue of Lloyds Bank Review. 45 ===== PAGE 48 ===== 46 THE FREEMAN April 120 miles with a deflection of only began to be strongly advocated 214 miles from the target, reached only during the 1930’s. Before a speed of 3,000 miles per hour that time, it will be recalled, it was and a height of nearly 60 miles. commonly believed that the prob- When Germany was finally over- lem of production was solved and run, the Peenemiinde experts were that the distribution of wealth was scattered. Some went to the United the important task to be dealt States and Britain; more finished with; that technical progress was up in Russia. perhaps going on too quickly and Considering the rapid progress that scientists and technologists made by Germany in a relatively were probably doing more harm short period during the war, the than good in the world.) development of high-altitude rock- The new doctrines really amount ets since that time seems to have to a claim that the world has sud- been fairly slow everywhere; for denly become a different kind of by 1945 there was no doubt that a place, that the lessons of the past satellite could be placed in the sky have largely become irrelevant and by the use of rockets and there that we must all now adjust our- was no great mystery about how, selves and our thinking accord- in general, this could be done. The ingly. This “modern” view can be fundamental discoveries in regard summarized as follows. to high-altitude rocket propulsion, In the nineteenth century, most as distinct from the refinement inventions came from the individ- and development of these ideas, ual inventor who had little or no were made by independent enthus- scientific training and who worked iasts working with limited re- largely with simple equipment and sources under discouraging con- by empirical methods and unsys- ditions and for long ridiculed or tematic hunches. The link between ignored by the main bodies of or- science and technology was slight. ganized science and technology. In the twentieth century, the argument runs on, the character- A New Theory of Progress istic features of the nineteenth Even, however, before atomic century are rapidly passing away. energy and the sputniks, new no- The individual inventor is becom- tions had been gaining ground ing rare; men with the power of about how inventions could best be originating are largely absorbed stimulated and how scientists and into research institutions of one technologists might be employed kind or another where they must to the best effect. (These ideas have expensive equipment for ===== PAGE 49 ===== 1958 THE SOURCES OF INVENTION 47 their work. Useful invention, in personally have doubts about this particular, is to an ever-increasing but I cannot enlarge upon them degree issuing from the research here. laboratories of large firms which Further, the study was con- alone can afford to operate on an fined to inventions as contrasted appropriate scale. There is in- with the development of those in- creasingly close contact now be- ventions; it was concerned with tween science and technology. The the early crucial periods of radical consequence is that invention has innovation and not the later become more automatic, less the stages of improvement and exploi- result of intuition or flashes of tation of the original discoveries. genius and more a matter of It is, of course, impossible to draw deliberate design. The growing a sharp dividing line between the power to invent, combined with two. On the other hand, it would the increased resources devoted be futile to deny that some new to it, has produced a spurt of tech- ideas are more revolutionary than nical progress to which no obvious others, that certain conceptions limit is to be seen. start a long chain of consequential In this article are set down improvements and that, unless the some of the results of an inquiry, flow of these seminal ideas can be shortly to be published in full,’ maintained, technical progress will designed to test these opinions finally come to a stop. against the observable facts. It ’ was hoped in this way to make Twentieth-Century Inventions some contribution to a better The first task was to pick out a understanding of the dynamics of group of twentieth century inven- industrial societies. The study, it tions which might be regarded as must be repeated, covered a pe- a fair cross-section of the tech- riod before atomic energy and nical progress of the past fifty space satellites. It may be that years; to make as detailed a study these latest spectacular discover- as possible of the conditions under ies, and the circumstances in which they had arisen and, in which they have arisen, rob ear- particular, to try to identify the lier experience of all pertinence respective parts played by individ- for thinking about the future. I ual inventors, the research ac- Jewkes, J., Sawers, D., and Stillerman, tivities of firms of varying size, of R. The Sources of Invention. London: universities, and of other institu- Macmillan, Jan. 1958. Available in the tions where research is con- U.S. through St. Martin's Press, Inc, : . . 103 Park Ave., New York 17, N. Y. $6.75. ducted. A list of about sixty inven- ===== PAGE 50 ===== 48 THE FREEMAN April tions was studied, ranging from resources and assistance or, where acrylic fibers to the zip fastener, the inventors were employed in from air conditioning to xero- institutions, these institutions graphy.” were, as in the case of univer- The clearest conclusion emerg- sities, of such a kind that the in- ing from the inquiry was that dividuals were autonomous. simple generalizations are not pos- The jet engine was invented sible. The important twentieth and carried through the early century inventions have arisen in stages of development almost si- all sorts of ways and through the multaneously in Great Britain activity of all the different pos- and Germany by men who were sible agencies. More than one-half either individual inventors uncon- of the cases can be ranked as in- nected with the aircraft industry dividual invention in the sense or who worked on the airframe that much of the pioneering work side of the industry and were not was carried through by men who specialists in engine design; the were working on their own behalf aircraft engine manufacturers without the backing of research in- came in only after much pioneer- stitutions and often with limited ing had been carried on. The gyro- compass was invented by a young “Acrylic Fibres, Air Conditioning, Auto. NaN who was neither a scientist matic Transmissions, Bakelite, Ball-point nor a sailor but had some scien- Pen, Catalytic Cracking of Petroleum, tific backer 1 and , co Cellophane, Cellophane Tape, Chromium tlic background and was inter- Plating, Cinerama, Continuous Casting ested in art and exploration, of Steel, Continuous Hot Strip Rolling, . Cotton Picker, Crease-Resisting Fabrics, The process of transforming Cyclotron, DDT, Diescl-Electric Railway liquid fats by hardening them for Traction, Domestic Gas Refrigeration, . . . Duco Lacquers, Electric Precipitation, US€ In soap, margarine, and other Electron Microscope, Fluorescent Light- foods was discovered by a chemist ing, Freon Refrigerants, Gyro-Compuass, 0 . oo. i Hardening of Liquid Fats, Helicopter, working in an oil industry, who Insulin, Jet Engine, Kodachrome, Krili- pursued his researchers and his um, Long-Playing Record, Magnetic Re- Ca cording, Methyl Methacrylate Polymers, efforts to get the process adopted, Modern Artificial Lighting, Neoprene, singlechanded. The devices which Nylon and Perlon, Penicillin, ‘Polaroid , i Land Camera, Polyethylene, Power made practicable the hydraulic Steering, Quick Freezing, Radar, Radio, ower steering of motor hicles Rockets, Safety Razor, Self-winding pe stee Na or vehicles Wrist Watch, Shell Molding, Silicones, were primarily the work of two Stainless Steels, Streptomycin, Sulzer men. o 3 ‘ho I- go Loom, Synthetic Detergents, Synthetic ¢ » ne of wh m worked strictly Light Polariser, Television, ‘Terylene’ on his own, while the other was Polvester Fibre, Tetruethyl Lead, Tita- the head of a small engineering nium, Transistor, Tungsten Carbide, Xerography, Zip Fastener, company. ===== PAGE 51 ===== 1958 THE SOURCES OF INVENTION 49 The foundations of the radio in- by a metallurgist working in his dustry were laid by scientists; own laboratory. but the majority of the basic in- In the application of automatic ventions came from individual in- transmissions to motor vehicles, ventors who had no connection the credit for mechanical novelty with established firms in the com- has to be shared between individ- munications industry or who ual inventors and companies, but worked for, or had themselves the former should probably rank created, new small firms. In the above the latter; actually, the case of magnetic recording, the ideas of a shipbuilding engineer early crucial invention came from lie behind much of the modern an independent worker, as did a progress, but both in Britain and number of the major inventive the United States inventors work- improvements; the interest of the ing singlehanded have contributed companies arose much later. The a great deal to the present-day first successful system for the mechanisms. Up to 1938, only one catalytic cracking of petroleum, large aircraft manufacturer had which opened up the way for taken much interest in the heli- many later advances, was the prod- copter and even that only as the uct of a well-to-do engineer who result of the personal interest of was able to sell his ideas for de- the head of the firm: the progress velopment to the oil companies. was made by the enthusiasm of individual inventors, usually with No Standard Pattern limited resources, obtaining back- The history of the evolution of ing in unlikely quarters in a man- the cotton picker reveals two main ner which would parallel the many lines of progress: in each case, in- stories of “heroic” invention in dividual inventors working with the nineteenth century. limited resources were able to To mention one or two inven- take their ideas to the point where tions from the field of consumer large firms were prepared to buy goods, the groundwork for the or license their patents for subse- successful Kodachrome process quent development. Bakelite, the was laid by two young collabor- first of the thermosetting plastics, ators, both musicians, whose ideas was produced by a brilliant sole were taken up by a large photo- investigator. The first, and still graphic firm; the safety razor the most important, commercially came from two individuals who practicable method of producing struggled through financial and ductile titanium was conceived of technical doldrums to great suc- ===== PAGE 52 ===== 50 THE FREEMAN April cess; the zip fastener came from developed a similar fiber, Perlon. the minds of two engineers and Several firms, all large, in Ger- was only taken up for large-scale many and the United States have production many years later; the devised methods of producing sue- self-winding wrist watch was in- cessful acrylic fibers. Freon re- vented by a British watch re- frigerants and tetraethyl lead pairer. were both produced in General The list next contains several Motors by small groups under important inventions emerging Midgley and Kettering; the cases from firms which were small or of are interesting in that a motor only moderate size. Terylene was engineering firm made these two discovered by a small research important contributions in the group in the laboratory of a firm chemical field and in that their which had no direct interest in discovery involved a strong ele- the production of new fibers. The ment of chance. continuous hot strip rolling of steel In the story of television, one sheets was conceived of by an in- outstanding figure was an em- ventor who might well be con- ployee of the Radio Corporation sidered an individual inventor of America, but a number of the and perfected in one of the smal- crucial inventions were made by a ler American steel companies. second American inventor who The crease-resisting process worked independently; and the emerged from a medium-sized first complete system for tele- firm in the Lancashire cotton in- vision broadcasting was created dustry. Cellophane tape was the for the British Broadcasting product of what was virtually a Corporation by a British firm of one-man effort in a then small modest size. The transistor was American firm. The virtues of produced in the Bell Telephone DDT were found by a Swiss chemi- Laboratories, a case which comes cal firm which, for that industry, nearer than most to research di- was of modest dimensions. rected towards a predetermined Some outstanding successes result. arose out of the research of very Polyethylene was discovered, in large firms. Nylon was discovered the course of some very broad sci- by a small research group, headed entific studies and as the immedi- by an outstanding chemist, in the ate outcome of a fortunate acci- laboratories of du Pont. Slightly dent, in the laboratories of Im- later another very large firm, I. perial Chemical Industries and de- G. Farbenindustrie, produced and veloped by them; but methods of ===== PAGE 53 ===== 1958 THE SOURCES OF INVENTION 51 producing polyethylene at low tions which were taken up by a pressures were later discovered at large chemical firm and carried about the same time in one of the much further by them to a suc- Max Planck Institutes in Germany cessful conclusion. and by American companies. Kril- Finally, some of the cases quite ium was the discovery of research defied classification: where a re- workers in the Monsanto Chemical search worker in an industrial Company, the result being at- laboratory produced an invention tained by a combination of chance outside his own professional field; and a systematic search of a very where an individual inventor and wide field. In the discovery of the a company reached much the same methyl methacrylate polymers, results at the same time; where a known variously as Perspex, Lu- government research station, an cite, and Plexiglas, two large firms industrial company, scientists in were primarily involved: I.C.I. and the universities, and individual in- Rohm & Haas; but an independent ventors all made important con- research student appears to have tributions to the final result, and made an important contribution. so on. Such cases, of course, The diesel-electric locomotive heighten the impression of a pic- probably embodied less inventive ture which admits of no simple effort than many of those men- explanation. tioned above; it represented the The cases taken as a whole re- development by European and veal that no one country has a American firms, and especially by monopoly of inventive power. The General Motors in the United outstanding names and groups are States, of nineteenth century in- widely spread over many indus- ventions. trial countries. The recent remarkable growth in the use of silicones represents the discovery of practical applica- One significant exception is that, tions for compounds produced by in none of the sixty cases studied, a British university scientist, the had contributions been made by usefulness of which was first real- Russian workers subsequent to ized by scientists in an American the Revolution. Before that date, company. The discovery of Neo- numerous names of distinguished prene is a romantic story in which Russian contributors crop up: the a priest, occupying a chair in early Russian work in rockets has chemistry in an American univer- already been mentioned; in the sity, was responsible for observa- early efforts linked with television The Communists Had None ===== PAGE 54 ===== 52 THE FREEMAN April occurs the name of Rosing; Zwory- stumbled by accident upon some- kin, who later on in the United thing worth-while but were invari- States was to make one of the vital ably robbed of their due rewards contributions to the perfection of by predatory financiers? television, acquired his interests in Such a picture seems to be a this field in St. Petersburg before travesty of the facts. The links be- the first world war; Sikorsky, the tween science and inventive tech- great American helicopter pioneer, nology were often close. There had in fact built two helicopters in were many distinguished scientists Russia as far back as 1909. who were also important inven- But, after the Revolution, it tors: Kelvin, Joule, Davy, Dewar, seems clear that Russia made no Hofmann, Bunsen, Babbage, and important contributions in radar, Playfair. It was frequently true television, the jet engine, the anti- that those inventors who were not biotics, the man-made fibers, the formally trained in science showed newer metals, the catalytic crack- a high respect for scientific knowl- ing of petroleum, the continuous edge and an anxiety to acquire it. hot strip rolling of steel, silicones James Watt spent much of his or detergents, until others had time with the most distinguished shown the way and revealed what scientists of the day; Charles Par- could be done. sons was a university graduate and the son of a President of the Facts about Earlier Inventions Royal Society; Trevithick, of the The twentieth century has, high pressure steam engine, con- therefore, been much enriched by sorted with members of the Royal many inventions attributable to Society; Cartwright was a Fellow men who have worked under the of Magdalen College; Henry kind of conditions associated, by Maudsley was a close friend of long tradition, with the “heroic Faraday; Wheatstone and Morse age” of invention in the nine- were professors; W. H. Perkin teenth century. The next step in was a student at the Royal College the inquiry was to look once again of Chemistry; Edison made use of at what happened during the last the Princeton University labora- century. Was this an age when un- tories and worked closely with educated inventors, ignorant of many scientists; C. F. Cross, the science, working in isolation in inventor of the viscose process, garrets and cellars, blindly and was a consulting chemist. This is unsystematically tried one thing to mention only some of the more after another and occasionally famous names; the list could be ===== PAGE 55 ===== 1958 THE SOURCES OF INVENTION 53 greatly extended of nineteenth of the forces which influence the century inventors with similar sci- flow of innovations is more evi- entific contacts and interests. dence in a field of study up to now Many of these men collaborated sadly neglected. But the findings in ways which, in these days, have some bearing upon major would be dignified as teamwork. questions to which industrial so- Nor is it the whole truth that in- cieties ought properly to be ad- vention in the nineteenth century dressing themselves. was merely empirical and acci- We are in these days caught up dental whilst that of the twentieth in a great boom in industrial re- century has become scientific. It is search and development which, in far too large a subject to be argued its present intensity, may be tran- in full here, but it is at least a sient and in some ways artificial. tenable view that there has been It has been greatly stimulated by just as much “accidental” inven- defense needs in the past year or tion and discovery in the present two. It has been fostered by what century as in the last. are probably over-sanguine views The evidence, therefore, sug- about the value of science and tech- gests that much of the history of nology in increasing the profits of invention written up to the present individual firms or in raising gen- day, by somewhat distorting the eral standards of living. But even picture of what occurred in the when full allowance has been made nineteenth century and by then dis- for all this, there still remains a torting it in the opposite sense for strong and newly-found belief that, the twentieth century, has exag- by taking thought, it ought to be gerated the fundamental differ- possible to increase the flow of new ences between the two periods and and useful technical and scientific has understressed the continuity ideas and to make fuller and more which runs through the whole rapid use of them for material im- story. Perhaps the world, in the provement. matter of technical progress, is not The policies which, in conse- such a new place as it is sometimes quence, are being pressed have al- made out to be. ready been referred to. The maxi- mum number of people should be In Matters of Policy given a basic training in technical It was not the purpose of the in- matters; the different specialists quiry to concern itself with policy; must be encouraged or forced to for what is needed, first and fore- share their knowledge and ideas in most, for a better understanding cooperative teams; scientists and ===== PAGE 56 ===== 54 THE FREEMAN April technologists should be employed march towards doing without intel- in large research institutions lect, and supplying our deficiency where, secure from the vicissitudes of giants by the united efforts of a of the life of the independent in- constantly increasing multitude of ventor and provided with ample dwarfs.” In trying to strike a bal- equipment, guidance can be given ance here it is worth-while looking to the main lines of their interests. at the side of the shield which in That, in fact, is what is happen- these days is so frequently ignored. ing in varying degrees everywhere. First, men with great powers of In Russia, we are informed, the originality are in many ways a whole body of scientists and tech- race apart. Like any other group, nologists pursue their labors with- of course, they differ between in a framework of purposes laid themselves, but on the whole they down by the central authority, be- are constitutionally more averse to nign but all-seeing. But, even in cooperation than the rest of us. “I the Western world, the institution- am a horse for single harness,” alization of research and invention wrote Einstein, “and not cut out is going on apace. A steadily in- for landau or teamwork.” This creasing proportion of those with follows because their great gifts scientific and technical training arise from the habit of calling are now employed under conditions everything, even the simplest as- in which they are not free to fol- sumptions, into question; because low their own bents and hunches; they are in the grip of inner com- they are tied men. In some coun- pulsions which lead them to as- tries, even the autonomy of the sume the right of deciding how universities is being threatened by their special powers should be em- their heavy dependence upon ad ployed and how best a task should hoc grants for specified tasks. be approached, to resent interfer- ence, and to be thrown out of bal- Inventors Are a Race Apart ance by it. Many of them are, by Are these conditions most favor- temperament, wholly unsuitable able to the flow of really new for work in any research institu- ideas? Or are they the conditions tion which is formally organized. which, while perhaps increasing And, beyond that, it is even con- the number of minor improve- ceivable that, in many cases, their ments, will finally stifle original- native powers of innovation might ity? As John Stuart Mill once put be weakened or destroyed by over- it, the question is “whether our prolonged scientific or technical ed- march of intellect be not rather a ucation. ===== PAGE 57 ===== 1958 THE SOURCES OF INVENTION 55 Second, it seems to be possibleto with it a countervailing loss of exaggerate the virtues of team- power inevitable when several work. Of course, as knowledge minds are groping towards mutual grows and forces more specializa- understanding. And the loss be- tion upon scientists and technolo- comes the greater the larger the gists, systems of communication team and the less voluntary it is in between the specialists must be character. progressively strengthened. And it Nor must it be overlooked that is true that in some directions in the members of a team must al- recent years small teams are tend- ways go the same way; that the ing to replace the individual work- strength of a team may be deter- er, although this is often because mined by its weakest link; that the man of original powers is given friction even in small groups of more assistance for his routine men with original powers of mind tasks. is not uncommon ; that all coopera- It is, however, a far ery from tion consumes time; and that a the useful, voluntary collaboration large team is essentially a commit- of a few like-minded people to the tee and thereby suffers from the popular conception of serried ranks habit, common to all committees of Ph.D’s moving forward into the but especially harmful where re- scientific unknown as an army search is concerned, of brushing guided by some common purpose. aside hunches and intuitions in The working groups even in a large favor of ideas that can be more industrial research laboratory are systematically articulated. normally small. The real moving Third; it is erroneous to suppose spirits are few and the rest pedes- that those techniques of large-scale trian, although of course useful, operation and administration supporters. Quantity cannot make which have produced such remark- up for quality. able results in some branches of The reasons for the limitation of industrial manufacture can be ap- teamwork are obvious. Teamwork plied with equal success to efforts is always a second best. There isno to foster new ideas. The two kinds kind of organized, or even volun- of organization are subject to quite tary, co-ordination which ap- different laws. In the one case the proaches in effectiveness the syn- aim is to achieve smooth, routine, thesizing which goes on in one hu- and faultless repetition, in the man mind. Because of the growing other to break through the bonds specialization, teamwork undoubt- of routine and of accepted ideas. So edly is inescapable. But it carries that large research organizations ===== PAGE 58 ===== 56 THE FREEMAN April can perhaps more easily become ing the pace, as it was recently put self-stultifying than any other type by one research director: of large organization, since in a We find the self-directed individ- measure they are trying to or- yg} peing largely replaced by highly ganize what is least organizable. organized team attack in which we The director of a large research employ many people who, if left en- institution is confronted with what tirely to their own devices, might not is perhaps the most subtle task to really be research-minded. In other be found in the whole field of ad- words, we hire people to be curious ministration; a task which calls as a group ... we are undertaking for a rare combination of quali- to create research capability by the ties, scientific ability commanding Sheer pressure of money ... the respect of colleagues, and also On the other hand are the fears an aptitude for organizing a group. of those, at present much in the There are many cases to support minority, who suspect that such the conclusion that a large re- forcing tactics will mean that we search organization may itself may frustrate the awkward, lonely, prove to be an obstacle to change. inquiring, critical individuals who, Ideas emanating from outside may to judge by past experience, have be belittled or passed over. “Is not so much to give but can so easily every new discovery a slur upon be impeded. To pose the question the sagacity of those who over- in concrete form: the last time looked it?” And it will always be that a new form of propulsion, the seductive for an established or- jet engine, came to be conceived it ganization to take the smaller was pressed forward by individual risks and more prudent routes workers who had to meet frustra- when the rare and larger prizes tions and indifference, even resist- are likely to be found in other di- ance, on the part of established rections. institutions. We are, presumably, not at the end of such innovations; Can the Pace Be Forced? there may be other new forms of Here, then, is the dilemma which motive power to come. confronts any community trying And if, on some future occasion, to make the best of the native sci- the initiative comes in much the entific and technical originality same way, do we resign ourselves of its members. On the one side to the idea that it must once again are the views of those, at the mo- run the gauntlet of resistances ment it seems in the majority, who from established interests? Are we conceive of the possibility of forc- further prepared to resign our- ===== PAGE 59 ===== 1958 THE SOURCES OF INVENTION 57 selves to the thought that, as re- or destroy it. But, in seeking to search becomes more highly or- provide a social framework con- ganized and the subject of insti- ducive to innovation, there would tutional effort, any outside inven- seem to be great virtues in eclecti- tor will in the future have even cism. If past experience is any- less chance than in the past to thing to judge by, crucial discov- force his ideas upon reluctant au- eries may spring up at practically - thority ? any point and at any time. It may be that there are no As contrasted with the ideal clear-cut answers to such weighty ways of organizing effort in other questions. But the study of the in- fields, what is needed for maximiz- ventions of the twentieth century ing the flow of ideas is plenty of would seem to support the follow- overlapping, healthy duplication of ing generalizations. Knowledge efforts, lots of the so-called wastes about innovation is so slender that of competition, and all the vigor- it is almost an impertinence to ous untidiness so foreign to the speculate concerning the conditions planners who like to be sure of the and institutions which may foster future. eo 0 Knowledge of Good and Evil IT COULD BE ARGUED that what we need, in the present state of the world, is not just more and more scientists and technolo- gists, but more people whose understanding has been broadened, whose minds have been illumined and sympathies deepened through education in the humanities and the liberal arts.... Perhaps the quality most in short supply is not technical compe- tence but human understanding, not intelligence but wisdom. A great British scholar, Sir Richard Livingstone, said in 1941: “We cannot have too much science, technology, economics, but they lose their usefulness unless we see clearly the ends for which we intend to use them, and unless those ends are worthy of man. They deal with means and not with ends, and the more we have of them the more we need to strengthen, in both educa- tion and life, those studies whose subject is ‘the knowledge of good and evil.” ” From the Review of The Institute of Public Af- fairs, Victoria, Australia, October-December, 1957. ===== PAGE 60 ===== A REVIEWER'S NOTEBOOK John Chamberlain A Capitalist Manifesto? F The Capitalist Manifesto, by major contribution to the wealth Louis O. Kelso, a San Francisco producing process, retrieve only a corporation lawyer, and Mortimer minor fraction of the total as com- J. Adler, a peripatetic philosopher pensation for their role. In other (Random House, 265 pp., $3.75), words, it is the capitalists who are is significant of a trend, then its being robbed of their surplus value importance far transcends its in- by predatory labor unions. trinsic worth as a blueprinted This is turning Marx and Engels “cure” for what the authors call upside down with a vengeance. our ‘mixed capitalist” system. But at this point Kelso and Adler The book itself seems to embody cringe before their own logic: several fallacies along with many they realize that it would be social worth-while observations. But fal- suicide to suggest that labor be lacies or no, the very fact that a cut back from its present high commercial publisher can now, percentage of the rewards of ma- after these many years, dare to chine production to a mere 10 per use the word “capitalist” in a non- cent. If labor were to get its “just derogatory title is an immensely desserts” in a period in which the heartening straw in the wind. machine itself is the prime agent The Messrs, Kelso and Adler are of increasing efficiency, there as daring as they are ingenious. would be nobody to take our vast They turn the tables on practically flow of refrigerators, washing all the so-called “liberal” commen- machines, and automobiles off the tators on economics by insisting market. Automation equipment that more than 90 per cent of the does not ride around in cars, wear newly produced wealth of the na- new clothes, and take trips to tion is accounted for by the capital Miami in the winter. And the instruments brought into being by owners of the new automation the savings of corporation owners, equipment can’t possibly consume i. e., stockholders. These modern the stuff which the marvelous ma- capitalists, however, despite their chines turn out. 58 ===== PAGE 61 ===== 1958 A REVIEWER'S NOTEBOOK 59 Without ever entertaining a sec- present mixture. True, many of ond thought about the soundness the devices for spreading owner- of their theory that labor is cur- ship which Kelso and Adler pro- rently getting far more than its pose are seemingly gentle enough. competitive reward, the Messrs. Nonetheless, the iron hand rests Kelso and Adler plunge wildly inexorably within the velvet glove: ahead into a “distributist’” utopia a ceiling on ownership would that would put Gilbert Chesterton necessarily function as an arbi- and Hilaire Belloc to shame. Real- trary capital levy. izing that consumption must be If it is true that capitalism can- - kept going on some basis if capi- not function without some meas- talism is to prosper, the authors ure of State coercion designed to suggest that the State step in to diffuse the wealth, then the Messrs. force, not a “laboristic” division Kelso and Adler have a case for cf the product of the machine, but their enforced stock distribution. a relatively equalitarian division Within its limits this distribution of stock ownership. Thus a diffu- would permit a greater freedom sion of dividends might be than can be found under any of prompted to replace our present the modern allotropes of Marxian method of spreading consumption socialism. via high wages. For the Robin Fortunately for those who in- Hood labor union (which they sist that progress is best achieved condemn), the Messrs. Kelso and by voluntary methods, however, Adler would substitute a Robin the Kelso-Adler analysis of our Hood law which would put top plight is itself at fault. It is limits on what any given house- true that many modern labor hold could own in the way of stocks unions have monopolistic power, and bonds. and it is also true that the unions have recently managed to push Force Mixed with Freedom wages to uneconomic levels. But Though one Robin Hoodism it does not follow that the vast may be as good or as bad as an- rise in the wage level since the other, a reader with a sharp sense Civil War has in itself been uneco- of logic will at once want to ask nomic. As F. A. Harper has shown the authors of this book why they in his recent Why Wages Rise, the call their system of compulsion American wage has tended to in- “pure” capitalism when it involves crease with the productivity of the a “mixture” of force and freedom machine no matter what the con- that is just as pronounced as the temporary status of unionism. And ===== PAGE 62 ===== 60 THE FREEMAN April it has increased for one reason: whole complex of tool and die the competition of capitalists for makers, advertisers, dealers, road labor. The “market” has up to builders, resort managers, garage very recently prevailed. proprietors, service station me- What Kelso and Adler have chanics, oil companies, and so on. done is to repeat Ricardo’s old mis- Men who used to machine the cyl- take: they have confused wages inder block by slow methods have, with the cost of labor. It may be in effect, been released by automa- perfectly true, as they say, that tion to run motels in Florida. the physical contribution of labor =~ Kelso and Adler make little of to the production of new wealth is this phenomenon, which is “non- extremely small in the modern laboristic’”” to the extent that factory as compared with that of motel owners and dealers are capital instruments. But the mar- small capitalists themselves. Just velous modern capital equipment how the release of men into non- has enabled factory owners to pay factory work effects the statistics present workers well by dispens- of property ownership I do not ing with the hordes of unskilled know — but it seems a matter of “hands” which they once paid mere common-sense deduction that poorly. The individual wage has modern American society is far risen; the cost of labor in the more “distributist” than Kelso and mass has gone down. No matter Adler are prepared to admit. what the unions may do, this is As part of their campaign for the secular trend. spreading ownership, Kelso and Adler suggest that the “mature” The Service Industries corporation be required by law to One consequence of this trend pay out all of its net income to the is that our economy as a whole stockholders. Just how this would has become less “laboristic” and tend to diffuse ownership is a lit- more ‘middle class.” It is not the tle hard to imagine. As things worker in the factory who has stand at present, retained profits skimmed the cream of progress; ordinarily are reflected in a mar- it is the man who no longer has to ket rise of securities: the stock- look to the factory directly for a holder can get his share of the job. retained net any time he wants For example, the automobile in- merely by selling his stock. Under dustry does not support its present tax law many a security workers and its owners alone; it owner does better that way, for also supports — by extension — a the net that is reflected in a profit ===== PAGE 63 ===== 1958 A REVIEWER'S NOTEBOOK 61 on a rise in capital values is taxed into homes, or hi-fi sets, or a not as income at a high rate but weekend cabin at the lake. Some, as a capital gain at 25 per cent. with a passion for liquidity, like No matter how they might choose savings banks. There are many to take their share of the net, pres- ways of augmenting one’s “estate” ent stockholders could only help without going in for stock owner- “diffuse” ownership by giving ship. some of their income away to sons or nephews to buy stock. If they With the broad Kelso-Adler aim bought new stock themselves with there can be little cavil. It would the proceeds from old stock, it be a good thing for the economy would change nothing. if there were more equity-shar- ing plans in industry, more en- Marginal Ownership couragement to turn profit-shar- As for the Kelso-Adler sugges- ing into stock purchases. It would tion that stock purchases be be a good thing if the corporate financed by credit corporations, income tax were abolished, and if just how would that add anything inheritance taxes were drastically to facilities which are already scaled down. Moreover, there is available to the borrower? If one too much truth for comfort in the wants to buy stock on margin, Kelso-Adler insistence that our sympathetic brokers stand ready fetish of full employment at all to put up 50 per cent of the pur- costs has led to much useless chase price. Once upon a time a featherbedding throughout the would-be stock owner could “fi- economy. nance” the purchase of a security Finally, it is incontestable that merely by putting up 10 per cent the ‘countervailing power” of of the price. This may have ‘“dif- government has been put all too fused” ownership for a period, indiscriminately behind unions but that glorious day came to a which seek to impose impossible sudden end in October of 1929. conditions on marginal employers. The trouble with the Kelso- For pointing to such “laboristic” Adler program for the diffusion abuses, and for suggesting cer- of ownership is that it assumes tain needed reforms in the tax everybody is just aching to take a structure, The Capitalist Mani- chance on stocks. But there is little festo should be welcomed. But the warrant for thinking this. Some authors should have a second go at people prefer to buy insurance; the central thesis of their stimu- some prefer to put their money lating book. eo 00 ===== PAGE 64 ===== 62 THE FREEMAN April «= The American Cause and vice, honesty and dishonesty, By Russell Kirk. Chicago: Henry honor and dishonor. The second of Regnery Company, 1957. 172 pp. these bodies of principle is the set $3.50 of political convictions which a peo- Russell Kirk's latest book is an ple hold: their ideas about justice appropriate tract for the times. It and injustice, freedom and tyran- is a statement — brief but full of ny, personal rights and power, and conviction —of the principles the whole complex problem of liv- undergirding American society; ing together peaceably. The third and it provides sober answers to of these bodies of principle is the check the barrage of communist set of economic convictions which propaganda. The book is readable 2 people hold: their ideas about enough to appeal to a high school wealth and property, public and student, and intelligent enough so Private responsibilities in the af- that the more mature reader will fair of making a living, ‘and the not be shortchanged. distribution of goods and services.” The characteristics which dis- The next six chapters, two tinguish one society from another apiece, are devoted to these three reflect the general ideas by which bodies of principles. Our institu- the conduct of each society is tions and way of life, Kirk shows, governed. Americans make certain are intimately related to the basic moral and intellectual assumptions dogmas of the Christian religion. which distinguish us from other From this faith we derive our no- peoples, but so much do we take tions of the meaning of life, the our premises for granted that moral order, the dignity of per- they are frequently overlooked. Dr. sons, and the rights and responsi- Kirk’s book is an apt reminder of bilities of individuals. Ours is a the beliefs we live by. religious society, but it has its “Three groups of ideas, or bodies counterpart in our secular state. of principles,” writes the author, The Constitution forbids an offi- “invisibly control any people, cial church, an act which permits whether those people are Austral- religion to exercise its unique ian bushmen or highly civilized authority directly, unhampered by modern nations. The first, and most ecclesiasticism. important, of these bodies of prin- The founders of our republican ciple is the set of moral convic- form of government were not vi- tions which a people hold: their sionaries. Their work was histori- ideas about the relationship be- cally grounded on English com- tween God and man, about virtue mon law, English constitutional ===== PAGE 65 ===== 1958 A REVIEWER'S NOTEBOOK 63 practice, and English political We are being saddled with these theory, and they had the model latter limitations because lovers of the ancient Roman republic in of freedom, misunderstanding the mind also. “Their political as- nature of the case, do not unite in sumptions were compounded of strengthening the point in the line Jewish religious doctrines, Chris- which is now sustaining the brunt tian teachings, classical philoso- of the attack against freedom — phy, medieval learning, and Eng- the economic order. lish literature.” The chief French Free economic enterprise, which revolutionaries, by contrast, “set our American economy approxi- out to establish what they thought mates more closely than any other, would be a completely rational “is important not merely for its and completely new political order, own sake: its real importance is independent of Providence and the contribution it makes to our historical experience. In place of justice and order and freedom, the old ideals of justice, order, and our ability to live in dignity as freedom, they shouted a novel truly human persons... . (It) al- slogan: ‘Liberty, equality, frater- lows men and women to make their nity.” ”’ own principal choices in life; . . . After a brief description of the reinforces political liberty; structure of our federal republic, adequately supplies the necessities Dr. Kirk goes on to devote the next of life; . .. recognizes and guides two chapters to the principles of beneficiently the deep-seated hu- the free economy, which he en- man longing for competition and dorses on the ground that “a free mensurable accomplishment.” economy is a support of all free- All human societies are imper- dom.” This makes his book espe- fect. “The American economy,” cially valuable because many other- writes Dr. Kirk, “has its faults; wise able proponents of religious but they are faults which may be and political liberty do not under- modified. The faults of commu- stand that economic liberty is an nism are so profound that they integral part of the general theory cannot be ameliorated.” The book of freedom. If the peaceful exer- closes with two chapters which de- cise of a man’s creative energies flate the claims of communism and in his store, shop, or office may rebut its attacks on capitalist be curbed on principle, the same America. principle can be successfully in- This is a modest little book, voked to curb man’s freedom in without a trace of smugness, the pulpit, press, and classroom. whose tone never rises above that ===== PAGE 66 ===== 64 THE FREEMAN April of intelligent conversation. On commerce, and to any “potentially these and other counts it will be navigable stream,” i.e., any appreciated, as B. E. Hutchinson gtream. writes, by those who “are tired of These decisions have held that being harassed by zealots.” an executive agreement between EDMUND A. OPITZ the President and a foreign power is sufficient to alter the fixed and =) The Supreme Court settled law of a state and deprive By Bernard Schwartz. New York: its citizens of rights vested in The Ronald Press Company. 429 them by the laws of that state. The pp. $6.50. Court has given a blank check to SINCE the 1937 decision upholding administrative agencies in pro- the Oregon minimum wage law in cedure not directly governed by West Coast Hotel Co. v. Parrish, congressional mandate and coun- the United States Supreme Court tenanced administrative hearings has fashioned a new jurisprudence that seem clearly to deny due proc- dubbed by the author, a ‘“consti- ess of law to the persons involved. tutional revolution.” In several In the area of federal-state re- ways the Court returned to solid lations the decisions have deprived early principles which had been the states of many necessary resid- ignored by it from 1880 to 1937, ual powers, allowed federal taxa- but in many other instances the tion of states’ proprietary func- Supreme Court has adopted new tions, and struck down settled principles which do not accord with state laws on the theory of fed- the basic concepts of the Ameri- eral “preemption of the field.” can polity, particularly in the This useful summary of impor- areas of interstate commerce, the tant cases since 1937 unfortunate- conduct of foreign affairs, admin- ly does not cover the last two istrative agencies, and federal- court terms when such controver- state relations. sial issues as desegregation were The decisions of the post-1937 before it. FRANK M. COVEY, JR. Supreme Court have, for instance, extended the power of Congress over interstate commerce to in- ing firm that cleans the windows mail, You poy only the bookstore price. We of people engaged in interstate one one anywhere in the world. commerce, to janitors in a building | tue sookMAILER, Box 101, New York 16 that stores goods for interstate ===== PAGE 67 ===== vi 7 . y. fed ow Sl “ | si i i Cami Jones & Laughlin STEEL CORPORATION: PITTSBURGH STEEL ===== PAGE 68 ===== IDEAS ON LIBERTY 0 A person's concept of the cosmic order will ultimately dictate his view of human nature as well as his understanding of the ethical code which should guide his relationships to others. When men rightly apprehend their relationship with the nature of things and with each other, there is harmony and growth. But misunderstanding portends trouble, leading possibly to the collapse of a civilization if the wrong ideas are widely shared. 0 The Foundation for Economic Education works within the framework of the spiritual and ethical understanding embodied in the heritage of Western Civilization. Its conviction is that this heritage, in its social aspects, spells out into the philosophy of limited government and free market economics. Political liberty and economic freedom, in turn, are important in man’s quest for material sufficiency and spiritual growth, 0 The Foundation’s monthly publication, THE FREEMAN, prints articles dealing mainly with current efforts to restrain economic and political liberty, with the misunderstandings and fallacies which cause well- meaning people to invoke these restraints. On the positive side, it attempts to explore ways in which men in freedom resolve their economic and political problems,