===== PAGE 1 ===== IDEAS ON LIBERTY JANUARY 1959 Khrushchev’s Bogus Challenge . . . . William Henry Chamberlin 3 The Alternative to Competition>. . . . E. W,Dykes 1 How Green Is the Emerald Isle? . . . . William H. Peterson 16 Inflation Ahead + « + + « « + + HansF. Sennholz 20 Anyone for Apples? . . . . . . . Grace Bosworth 30 Coercion at the Local Level . . . . . Robert lefevre 32 Is Freedom the Liberty To Restrict? . . . Edward Coleson 37 Free Will and the Market Place . . . . Frank Chodorov 41 A Tale of Twolslands. . . . . . . Colm Brogan 51 Soviet Empire Tottering . . . . . . Lawrence Sullivan 55 A libertarian Manifesto . . . . . . Alexander St.-lvanyi 57 Twisted History . . . . . . . . . John Chamberlain 60 THE FOUNDATION FOR ECONOMIC EDUCATION, INC, Irvington-on-Hudson, New York ===== PAGE 2 ===== Cutting deep, intricately shaped slots in 175-ton rotors Ingersoll Adjustable Rail for central power plant generators is a tough milling Milling Machine, specially job. 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PoIrROT 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, 1959, 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 glven, except ‘Is Freedom the Liberty To Restrict?" Gi Any current article will be supplied in reprint form if there are enough rE Inquiries to justify the cost of the printing. ===== PAGE 5 ===== Those who practice and maintain their freedom need not be concerned about it. WILLIAM HENRY CHAMBERLIN IN THE INTERVALS between rattling nounced that Russia would get his rockets, boastful and garru- ahead of the United States in per lous Soviet dictator Nikita capita output of meat and dairy Khrushchev has been challenging products. His more recent boast, the United States to a legitimate after a trip to Hungary last peaceful competition as to which spring, was that the Soviet Union system, communism or capitalism, would surpass the United States in will provide better living condi- the output of consumer goods. tions for the people who live un- “Then we will see who eats better der it. This is a challenge which, and who has more clothing.” Still on the basis of past performance more recently Khrushchev declared and future prospects, we can that the figures of the new Soviet cheerfully and confidently accept. Seven Year Plan, which will run Some time ago the top boss of from 1958 until 1965, would all the Soviet republics, without ‘amaze the world.” being too specific about the date The superiority of the American when this would be realized, an- standard of living to the Soviet is —_— one of the biggest stumbling Mr. Chamberlin, Moscow correspondent for hlocks to Soviet propaganda. De- the Christian Science Monitor from 1922 to 1934, has also traveled in Russia since World ite th i i - War II. He has written numerous books and SP © the frantic and highly men magazine articles on Russia and other subjects dacious efforts of Soviet state- and is a regular contributor to the Wall Street . Journal. controlled newspapers to paint 3 ===== PAGE 6 ===== 4 THE FREEMAN January America as a country where the ship and some to actual starva- workers live in misery, victims tion, Stalin grandiloquently de- simultaneously of inflation and un- clared: employment (no mention of the “When we put the Soviet Union fact that unemployment compen- on an automobile and the peasant sation —our domestic brand of on a tractor, then let the worthy socialism — provides a much better capitalists, who boast so loudly standard of living than the aver- of their ‘civilization,’ try to over- age employed Soviet worker en- take us.” joys) most Russians know that It was an official Communist the United States is well ahead party slogan in Russia at that time of their own country in material ‘‘to overtake and outstrip well-being. America.” And a contraband joke The clothes worn by the aver- went the rounds by word of mouth age American tourist, the car of a humble Soviet citizen going which the occasional American up to a communist and whisper- drives into Russia, are more elo- ing: quent than any amount of Voice “Comrade, when we just come of America broadcasting. Millions abreast of America, let me off. I of Russians in uniform got into don’t want to go any further.” Germany and Austria after the Stalin did not live to see the day last war and many of them got an when the Soviet Union was ahead idea of the superior rations and of the United States in goods and pay of the American soldier. services provided for its people. And it is a safe prediction that A Soviet Obsession Khrushchev, to turn against him To get ahead of the American one of the homely peasant figures standard of living has long been of speech of which he is so fond, a matter of prestige, almost an will no more see the Soviet Union obsession with the Soviet leaders. ahead of America in output of Almost thirty years ago, just when food and consumer goods than he the first Five Year Plan —with will see his own ears. And this its expropriation of the peasants prediction also goes for Khrush- and its sacrifice of consumer goods chev’s successor, whoever he may in the present to building huge be. factories to produce tractors, ma- Some fainthearted and gullible chines, and chemicals in the persons in the United States have future — was condemning most been so impressed by Soviet suc- Soviet citizens to extreme hard- cess in putting earth satellites ===== PAGE 7 ===== 1959 KHRUSHCHEV’'S BOGUS CHALLENGE 5 (which add nothing to what people sion sets. This output, in terms can eat or wear) in orbit and by both of quality and quantity, is so greatly exaggerated reports of the far ahead of the Soviet that there efficiency of Soviet education is really no basis of comparison. (which has just been subjected to Money income comparisons be- a major overhaul) that they were tween the two countries are almost inclined to accept the probability meaningless because the rate of that Khrushchev might make good exchange for the Soviet ruble is on his ‘overtake and outstrip completely arbitrary and strictly America” program. But a few phony. Officially, four rubles are " comparative facts and figures, the equivalent of one dollar. An based on Soviet official sources, unskilled worker earns from 300 which many economists believe are rubles (the minimum wage) to computed on a basis calculated to 500 rubles a month; a skilled magnify achievements and mini- worker may go as high as 1,000 to mize deficiencies, show clearly that 1,200. The average wage is esti- the United States possesses such mated by John Gunther in Inside a tremendous lead in standard of Russia Today at 650-800 rubles. living that the Soviet Union could Here are some current prices of not hope to catch up in any pre- everyday goods, as reported partly dictable period of time. by Gunther, partly by a more re- cent visitor to Russia, Mr. Victor Freedom Outyields Coercion Meier, East European specialist In many ways, contrary to gen- for the Neue Zuercher Zeitung, eral belief, the United States is one of the most highly reputed further ahead of the Soviet Union newspapers in continental Europe. now than it was over forty years Nylon blouse — 320 rubles ago, when the Czar was over- Chocolate bar — 14.80 rubles thrown and Lenin and his Com- Washing machine (inferior munist party took charge. For small type) — 800 rubles year in and year out, even in times Man’s felt hat — 160 rubles of depression and .recession, the Butter — 28.50 rubles a kilo (2.2 United States, under its compara- pounds) tively free enterprise system, has Beef — 15 rubles a kilo been turning out an infinite Pair of shoes — 200-500 rubles variety of goods for the consumer, Man's shirt — 90-300 rubles including such expensive durables Set these and other similar as automobiles, refrigerators, prices for staple foodstuffs and washing machines, radios, televi- articles of clothing against an av- ===== PAGE 8 ===== 6 THE FREEMAN January erage monthly wage of 650 or much better dressed. A detail: even 800 rubles, and one sees that Eyeglasses, which are most diffi- the Soviet worker enjoys a pretty cult to obtain in the Soviet Union, meager standard of living, a stand- seem to be plentiful in Poland, and ard incomparably far below that dark glasses, in particular, for of the worker in America or in al- which exorbitant black market most all countries of Western prices are being paid in Moscow, Europe. apparently are no longer a luxury in Warsaw.” Gunther, with his well-known John Gunther, who almost leans reporter's camera eye, had these over backward in his attempt to observations on Moscow, which be fair, to give credit for Soviet has always been the show window achievements wherever credit is of the Soviet Union, far better due, reaches the conclusion: “The provided than the provincial great majority of the people are towns: sordidly poor.” “One reason why the streets are Victor Meier, who by his work is go thronged at night, even in win- quite familiar with the poverty ter, with crowds solidly marching which is general throughout East- down the boulevards in broad pha- ern Europe, sums up his impres- lanxes and men and women carry- sions of a visit to the Soviet Union ing infants swaddled to the eyes, is as follows: that homes are so unbelievably “As far as the people’s living crowded, squalid, and uncomfort- standards are concerned, we able. People, even after a hard thought we knew all about it be- day’s work, rush out of doors sim- fore we arrived here. But we ply because the circumstances of found the reality worse. Soviet life at home are so tedious, if not living standards are considerably unbearable.... below those of the satellite nations, “What contributes most to Mos- with the exception possibly of Ro- cow's superficial look of drabness mania, Bulgaria, and Albania. is people’s clothes. These have cer- Poland had impressed us as a poor tainly improved in the last few and suffering country when we years, but they are still revolting crossed it on our way to the Soviet ... Russians are, as a result, Union. It looked relatively pros- acutely conscious of the clothes perous to us on the way back. Its foreigners wear, particularly their fields seemed better tended, its shoes, and people on the street will flocks more numerous, its people offer to buy your shoes off your Poverty Persists behind Curtain ===== PAGE 9 ===== 1959 KHRUSHCHEV’S BOGUS CHALLENGE 7 feet. The whole country has a fixa- “cans are interested in is what they tion on shoes. Moscow is the city can buy in the shape of food, cars, where, if Marilyn Monroe should houses, household appliances, and walk down the street with nothing other consumables. Statistics are on but shoes, people would stare not something that can be worn at her feet first.” or eaten. It does the Muscovite, And in the sizable Black Sea crowded with his family in one or port of Novorossisk, what struck at best two rooms in a squalid ten- Gunther most was that “so far as ement, little good to tell him that we could tell, there was not a the government proposes to build single cafe in the whole city, not such and such a quantity of hous- a place to sit down in, chat with ing in 1965. our guide, who had a characteris- The argument which has im- tically Russian volubility, and pressed some impressionable visi- have a drink. We saw nothing but tors to Russia, that the Soviet the lean walls of factories and regime, if it has not “overtaken tenements, blotched with snow.” America,” has achieved wonders in transforming an economically retarded country, is also open to Soviet leaders in their official serious objection. For the assump- speeches and Soviet apologists tion is that Russia, under a dif- among foreign visitors try to di- ferent political and economic sys- vert attention from the deadly tem, would have stood still during drabness of Soviet daily life by the last forty years. And such an two methods. They pour out reams assumption is contrary to the and volumes of statistics about in- facts of Russian development be- creasing output of coal, iron, steel, fore the Revolution. cement, copper, and whatnot. And they point to new buildings, new Pre-Revolutionary Progress installations, subways, dams, hy- During the forty years before droelectric power plants, factories 1917, Russian businessmen and en- which have sprung up since the gineers, with the aid of foreign Revolution. capital, built a large network of But there is a fallacy in both railways, created centers of indus- these approaches. Few Americans, try that were quite up-to-date for except economic specialists, know the time, developed the coal and or care how much coal or steel or iron resources of the Donets Basin copper or electricity is produced and the Valley of the Volga. Rus- in the United States. What Ameri- sian grain, largely produced on Inedible Plans and Statistics ===== PAGE 10 ===== 8 THE FREEMAN January efficient private estates, flooded a bumbling, fumbling bureaucracy the markets of Europe. The money tries to replace the normal funec- received for this grain made pos- tioning of the free market with sible the importation of many Eu- arbitrary decrees regulating pro- ropean products that made daily duction, wages, and prices. life much easier for the average Russian. The Russian standard of living, low by West European A few indisputable facts and standards, was steadily rising. figures show how fantastic is the There were not enough schools, suggestion that, within any fu- but the number was steadily in- ture in sight, the Soviet Union creasing. Some of the most solid will provide better living for more apartment houses in Moscow and people than the United States does Leningrad, far better constructed at the present time. One-eighth of than the typical Soviet housing the American population, working project, bear dates between 1905 on farms with modern machinery and 1914. and improved agricultural meth- So there is every reason to as- ods, produces enough to feed the sume that during a period of forty whole country and even to pile up years Russia under a noncom- unmanageable surpluses, along munist political and economic sys- with exports for foreign markets. tem would have gone ahead and Over half the Soviet population, achieved most, if not all, the eco- employed in agriculture, produces nomic progress for which the ex- a distinctly skimpy diet for the isting regime likes to claim exclu- Soviet people —a limited privi- sive credit. There is also every leged upper class excepted. probability that this progress The United States normally pro- would have been achieved without duces about six million passenger certain accompaniments for which cars a year and has gone as high the Soviet regime bears exclusive as eight million. The Soviet Un- responsibility : famine, slave labor ion’s record output of motor ve- camps, and a prodigious discrep- hicles, in 1967, was 495,000, but ancy between what the people pro- most of these were trucks. There duce and what they receive. This were only 114,000 passenger cars. discrepancy is explained partly by So the motorcar advantage of the the obsession of the Soviet leaders United States is about fifty to one. with militarist development, partly Most Soviet cars are reserved for by the prodigious losses and waste the needs of the state and party motion which are inevitable when bureaucrats. Consider the Facts ===== PAGE 11 ===== 1959 KHRUSHCHEV'S BOGUS CHALLENGE 9 The holiday on the road is a sult of war bombing and negative commonplace for vast numbers of occupation policies. But Germany Americans, including a great many in recent years has been turning workers and farmers. And this out, by comparison with the So- type of holiday is being enjoyed viet Union, more than twice as more and more in Western Eu- many automobiles, three times as rope. But it is virtually unknown many cameras, almost three times in the Soviet Union. Visitors to as many motorcycles, and more Russia who have motored from watches and television sets. And the frontier to Moscow or from what West Germany actually put Moscow to the Crimea are im- up in housing in 1957 was very pressed by the absence of traffic close to what the Soviet Union on the roads. The arrival of a car, planned to build, although the So- especially a car of foreign make, viet population is four times the in a Soviet village arouses excite- German, and the Soviet need in ment and interest comparable with housing is almost indescribable. the circus coming to town. The United States reported over Giving People What They Want 60 million telephones in operation A dictatorship, able to conscript at the beginning of last year; the labor and concentrate all national last official figure for the Soviet resources on a single objective, Union was 861,000, only a little can always put over a crash pro- over the average annual number gram for building pyramids, auto of new installations in the United highways, sputniks, or whatever States. One of the first discov- may be the immediate desired ob- eries of the visitor in Moscow is jective. But only a free economy that there is no generally acces- can give its people a high stand- sible telephone book. ard of living. Such a standard of It is not only in comparison living never has and never will with the United States that the come about as a result of state Soviet Union comes off badly, on planning and allotment and allo- the showing of its own figures, in cation, of fixed wages and prices Khrushchev’s chosen field of com- and state directed labor. petition: economic well-being. The For a plausible definition of a Federal Republic of Germany, a high standard of living is giving speck on the map compared with people what they want. And this the Soviet Union, is much poorer can only be done when a large in natural resources and was flat number of producers, big and on its back ten years ago, as a re- small, are dependent for profit and ===== PAGE 12 ===== 10 THE FREEMAN January survival on satisfying the needs ion and other communist-ruled and desires of consumers, as ex- countries. This is why Soviet pressed through a free market, clothes are so shoddy and Soviet giving the individual not so many apartments often begin to show square yards of housing space, but cracks in the plaster as soon as the kind of house he wants, along they are put up and why John with a long list of other commodi- Gunther could not find a single ties and services. Only an econ- public cafe or tearoom in Novoros- omy operating on the powerful sisk where he could sit down and twin motors of the profit and wage relax. incentive system and the competi- Communism cannot give free- tive free market can give the in- dom, political or economic or cul- dividual the complex of material tural, without ceasing to be com- satisfactions that add up to what munism. That is why the Soviet is known as a high standard of Union will always lag far behind living. the United States in the enjoy- It is the failure to gear produc- ments and satisfactions which it tion to consumer needs and de- can give its people — unless Rus- sires that makes for the appalling sia scraps communism or the drabness which even friendly and United States persists in its aban- sympathetic observers usually re- donment of the basic principles of port after visiting the Soviet Un- the free individualistic economy. IDEAS OM A0BERTT Liberty at Stake THE SovIETS have tried to legislate the perfect society; and today the average Soviet citizen has little more freedom and less comfort than the inmates of American jails. The old American philosophy of government more effectively promoted the ideal of human free- dom, with greater material abundance for more people, than any social system ever propounded; freedom to live under the mini- mum of restraint — freedom to make your own mistakes if you will. The fundamental and ultimate issue at stake, therefore, is not merely our money. It is liberty itself: the excessive taxation of an overgrown government versus personal freedom; a least com- mon denominator of mediocrity against the proven progress of pioneering individualism; the free enterprise system or the cult of blind conformity; the robot or the free man. GENERAL DOUGLAS MACARTHUR, 1057 Report to Stockholders, Sperry Rand Corporation ===== PAGE 13 ===== " A . TO eltlion E. W. DYKES — FROM TIME TO TIME we are told doubt in one’s mind of its implied that competition is an evil thing. nature. Few among us will deny that it These ideas of the harmful certainly produces its trying effects of competition receive con- moments. There are, in fact, some siderable support from various persons who will argue that the sources. Many school systems have harm from competition far ex- eliminated grading on a competi- ceeds any possible good which may tive basis. Labor unions have un- result. dertaken to remove competition For example, they suggest that for jobs and to remove competi- the student who does not get good tion between individual workers grades suffers damage to his ego on specific jobs by setting stand- and may react in a most unsocia- ard rates for a standard output ble manner. I am sure there have which the least productive worker been cases of persons who have can meet. Some businessmen press failed in business and who have for “fair trade” laws which will become bitter and despondent — eliminate price competition on cer- perhaps even to the point of tain items. They may urge tariff suicide. Some will say that these barriers to protect them from the persons were victims of the urge rigors of foreign competition. to make a profit —a compulsion Farmers vote for subsidies and even worse than ordinary competi- acreage controls to escape the tion. “Cooperation,” they say, vagaries of the free market. And “—not competition —is what is so on and on, countless examples needed for the good society.” To might be written, all of which equate competition with “the law show how we try to escape com- of the jungle” is to leave little petition. Mr. Dykes is an architect from Canton, Ohio. I suspect that most people be- 11 ===== PAGE 14 ===== 12 THE FREEMAN January lieve competition to be neither tomorrow. At once there would be generally good nor generally bad, a mad rush of people from their but that a ‘“middle-of-the-road” present jobs to more glamorous process will most likely produce a or more highly paid jobs. Thou- healthy society. They are all for sands decide to be big league ball competition in a horse race or in players. Hundreds of thousands the American League or even decide to be movie stars. Those among the suppliers of the things ready to become bank presidents they have to buy, while going to are in oversupply. No one hauls no end of trouble to eliminate it, garbage. No one waits on tables by law if necessary, in their own or digs coal. And since price com- field as sellers. petition is eliminated, no one Regarding competition, per se, knows how much to charge or how they have no definite convictions. much to pay for a particular prod- But persons with definite convic- uct. As a matter of fact, the dis- tions about anything appear to be location would be so complete that in rather short supply. Strong be- the economy would come to a liefs are developed by intimate standstill. Clearly, competition knowledge of the true nature of cannot be eliminated overnight. A the subject. If this be true, then great deal of advance work would it follows that we need to find the be needed if such a move were true nature of competition and not to result in total confusion. then judge its merits. So let’s go at it another way. } Assume a society in which com- A Noncompeting Society? petition is to play no part from It is useful, at times, to examine the very beginning. Our first prob- the extreme point of view to show lem is to decide who will do what. the probable effects of a particular For instance, who will be the doc- policy or action and to indicate the tors? Who will write music? Sell direction most likely to produce shoes? Make shoes? What will desirable results. My study con- determine prices and wages? Who vinces me that there is but one decides all these things? Certainly “alternative” to competition. If I .not one person because he would can show what the “alternative” be a dictator. A committee, per- actually is, that may help the part- haps, but who shall choose the time competitors in making a committee? It’s difficult, indeed. clear-cut choice. It looks as though we'll have to Let us assume that we abandon have some competition — at least competition in our society as of enough to select a committee. And ===== PAGE 15 ===== 1959 THE ALTERNATIVE TO COMPETITION 13 so we have to select nominees, take easier. Now we are ready to select a vote, and of course, accept a de- the actual people to man these cision arrived at competitively. We occupations. will select those with the most “Everybody stand up and count votes. Now, perhaps, can’t we do off. The first 2,000 are doctors, the away with all competition? next 1,000,000 go to the factory suboffice and get divided up there.” Who Shall Be the Doctor? And so on. Ridiculous, isn’t it? Then the committee is faced Of course, that couldn’t be the with the questions: Who shall be way. “We'll give tests — aptitude doctors and who shall write music tests, of course.” And so a long and so on. Before they face up to series of aptitude tests are evolved that one, an infinitely more diffi- with thousands of subtests and cult problem faces them. How gradations in order to match as many shall be doctors? Will spe- easily as possible the many varia- cialization be allowed or shall that tions in a particular job category. become a subproblem after decid- Now, shall the “best” jobs be given ing how many doctors? And what to those with the highest grades? about fees, prices, and wages? How Or is that too competitive? will they be determined? Will any Finally, we decide that we must persons be appointed to act as in- introduce that much additional ventors? Will anyone be set apart competition. to occasionally don an asbestos suit and step into a flaming oil or Where Shall He Live? gas well out of control? Who will Where shall people live? Ob- become the lawmakers? This last viously, all the doctors can’t be may give a clue as to where the in one town or state and all the committee will locate itself. blacksmiths in another. The for- It is not necessary to labor the mula must be applied and all the point further to show that the jobs filled in the right proportion. committee has its hands full. But The committee, of course, must de- let us assume that a formula has cide who lives in what towns, too. been worked out by the committee. Well drillers can be easily placed, An extremely large catalog of pos- you see, because it’s well known sible occupations has been set up where oil can be found — isn’t it? which takes account of the -in- And this brings up an interesting numerable differences in jobs and point. Who decides precisely where which describes each in sufficient the bit shall bite? And how shall detail to render selection a little a test be devised to find that man? ===== PAGE 16 ===== 14 THE FREEMAN January On the inventors’ list, what shall nearer the socialized state. We we decide to have invented? And have taken far too many such if something amazing comes out steps already. The more we do of it, what will that do to the for- without competition the more mula? Dizzy? Then don’t get planned is the society. Admitting elected to the committee. for one reason or another that And I shouldn't want to sit on some persons of high potential are the subcommittee which sets occasionally and temporarily by- prices and wages either. That com- passed in the free, competitive mittee would have to bring wages society, it should appear clearly and prices into balance so that that the way to find the best of everything produced could be anything is to allow competition bought. How to decide how much to decide. Just as the best ball of even one single item should be players are competitively selected, produced almost defies comprehen- so it is for surgeons, professionals, sion. For instance, how many bank presidents, and playwrights. radios will be sold next month? The market place operates con- How would we decide how much stantly with millions — no, billions a doctor would be paid in contrast —of decisions each day to elevate with a day laborer — or would they the best to the top, and each of both get the same? The committee us may aspire to reach the top. must decide. There is no other Consumers, in their market deci- way — the law has been passed. sions, actually decide who or what shall succeed or fail. Good products Compete or Submit are selected by each of us, voting It should be clear from the fore- in the market place with pennies going that all matters which are and dollars as votes. High living not decided by competition must standards are the direct result of be decided by decree. In other competition. Competition, far from words, if wages, prices, produc- being the evil thing it is often tion, jobs, and successful inven- represented to be, is the guarantee tions are not set or selected by of the best for the least . . . the competition, then an authority has most often. to rule on them step by step. In other words, the “alterna- Opportunity for Cooperation tive” to competition can only be Now let us recall the brief refer- the planned society. Every suc- ence, early in the discussion, to the cessful attempt to rule out com- suggested need for cooperation petition in any area is but a step rather than for competition. To ===== PAGE 17 ===== 1959 THE ALTERNATIVE TO COMPETITION 15 search for a clear insight to this might be deserving of an essay. problem, ask yourself, “With Suffice to say that cooperation and whom shall I cooperate?” The competition, diverse though they anticompetition adherents will say, may seem to be, go hand in hand “With everyone, of course.” It is in the free society. The planned a pleasant idea, one with which society, as it eliminates competi- few will argue. It just happens to tion, eliminates the basis for vol- be impossible. For example, if you untary cooperation and substitutes purchase a Ford, the sellers of ‘planned cooperation,” whatever other makes would hardly decide that is. that you have cooperated with them. When a maiden selects her In planned societies the com- spouse, her other suitors must mittee is always replaced by the necessarily have been rejected. strong man — the dictator. Compe- Competition, you see, serves to tition and a planned society are in- select the persons with whom you compatible. Freedom and a planned would most like to cooperate — society are impossible. Free people and it leaves you free to decide for and competition are inseparable. yourself who they shall be. But The “alternative’ to competition this is a subject which, of itself, is to give up your freedom. © o e A Proposition in Lower Mathematics THE MEMBERS of the last generation that had to wrestle with the problem of the Highest Common Factor, seem now to be either dying or dead. It may therefore be desirable to recall the nature of the problem. The H.C.F. of 24 and 36 is 12. If we include 30 as a third member, it is 6. Taking in 21 reduces the H.C.F. to 3. With 23, it is unity. These facts point to some generalizations. Including further numbers can never raise the H.C.F. The best that can be hoped for is that it will not be lowered. This possibility starts against long odds which quickly reach infinity. With all numbers in, the H.C.F. is the smallest possible — which is one. The moral? If the common factor is intelligence and all numbers are in, the level of the Highest Common Factor is the level of the lowest intelligence. This is the outstanding feature of democracy. DOUGLAS SEYMOUR ===== PAGE 18 ===== How Gre is the Emerald ste? } ( a. Concerning the “orthodox’’ economic development of Ireland WILLIAM H. PETERSON CURRENTLY STRESSED by econo- ‘‘orthodoxy.” The orthodoxy gen- mists and statesmen concerned erally calls for exchange control, with economic matters is ‘“eco- inflationary schemes, tariff protec- nomic development.” The phrase tion, full employment policies, tax refers to planned economic growth gimmicks, government loans — in a for certain areas. The areas al- word, intervention, ranging all the most cover the globe, for practi- way to outright socialism. cally every nation of the world has The frustrations of applied eco- some sort of program for eco- nomic development are readily nomic development. In the United found in Ireland. The de Valera States, virtually every state and government has an aggressive major municipality is similarly development campaign underway. imbued. The drive is for new in- Advertising and brochures pro- dustry, new capital to provide claim the virtues of the Irish econ- jobs and tax revenues. omy and invite foreign capital. For the so-called “underdevel- For foreign investments the gov- oped” nations, the matter is espe- ernment will pay as much as the cially pressing. The clamor is to full cost of site and plant and half “catch up” with the advanced the cost of machinery and train- economies. Native populations de- ing. A statement in the brochure, mand the good things of life, and Opportunities for Industrialists in to a large degree a politician's se- Ireland, reads: “No income tax or curity depends on his getting corporation profits tax is payable them. How he gets them adds up on profits earned on new exports to what Economist P. T. Bauer of for a period which for the present Cambridge University labels an is five years.” The five-year period Dr. Peterson is Associnte Professor of Eco- has just been increased to ten. An nomics at New York University and a weekly contributor to the Wall Street Journal. He ro- 1rish Industrial Development Au- turned tly f E , In- . , . cluding — Ih Dublin, open tour, In thority has been established which 16 ===== PAGE 19 ===== 1959 HOW GREEN IS THE EMERALD ISLE? 17 includes a mission in the United to Ireland finds that all is not States to help drum up American green on the emerald isle. Take capital. the matter of language. Is Eng- lish assured? A tremendous ef- The Need for Capital fort is being made to restore the The Irish government has ancient tongue of Gaelic. Gaelic plenty of reasons to be hungry for study is compulsory in all public capital. Ireland is a poor country schools. Bar examinations require — its annual per capita gross Gaelic proficiency. Then the Irish national product is but $509 Revolution is still, seemingly, be- (Switzerland, by way of contrast, ing fought. Both parties, Fianna is $1,229; the U.S. is $2,343). Fail and Fine Gael, demand the Pockets of unemployment persist. end of “partition.” They want Marriages are delayed. The migra- union with the North — but under tory flight of Irish, mostly into Dublin rule of course. Unofficially, Britain, numbers around 40,000 a the IRA “army” of Irish patriots year. And Ireland’s greatest rival, conducts sporadic raids on mili- Northern Ireland, which has “kept tary and industrial installations in the link with Britain,” has long Northern Ireland and ammunition been more prosperous, recently depots in Britain, sometimes in- winning such additional foreign flicting great damage, while the investments as a Du Pont plant Irish government looks the other making neoprene synthetic rubber way. at Londonderry and a Chemstrand plant making “acrilan” fiber at Investors Are Discouraged Coleraine. The economic complications are And on the face of things, Irish even more significant. While ex- investment looks good. Labor is propriation of foreign capital is plentiful. Wages are among the forbidden by law, there is enough lowest in Western Europe. There’s nationalization around to worry a superabundance of water for in- the foreign investor about sub- dustrial use; a lot of relatively sidized competition. Completely cheap electricity from peat; good government-owned are electricity, deep-water ports; easy air access steel manufacturing, peat, and to the rest of Europe; and of im- rail and bus transport. The Irish portance to British, Canadian, and government is either the only American capital, English is an shareholder or the majority share- official language. holder in the following companies: But probing deeper, the visitor Irish Air Lines, Irish Shipping, ===== PAGE 20 ===== 18 THE FREEMAN January Irish Sugar, Irish Insurance. State, complete with public hous- Moreover, through its 100 per ing, social security, and state cent owned Industrial Credit Com- medicine. There's a progressive pany, the Irish government has income tax, ranging up to 80 per “assisted” many marginal enter- cent. There are pro-union labor prises — Irish copper mines, for laws. “All this constitutes a heavy example. In an interview, Mr. Sean burden on investment,” said a F. Lemass, Ireland’s Minister of leading Dublin banker privately, Commerce and Industry, when ‘and welfarism is hardly calcu- asked about the government take- lated to inspire the Irish people over of so many industries and to save and invest for their own companies, said: “Why not? future.” Might any of the wel- They're all making money, aren't farism be repealed? Not likely, they?” said the banker. “You must remem- The interventionist mentality is member that Ireland is a democ- seen in the government's land racy.” policy. A series of land acts has enabled the Irish government to [Inflation Is a Problem break up any large tracts of land Inflation, though not as bad as which the government considers in some of the Latin American as being run “unproductively.” republics, plagues Ireland. For The owners are reimbursed but quite some time the country has they must sell. Similarly, the gov- had deficit budgets and negative ernment has forcibly combined balances of payments (imports small farms into larger ‘‘eco- exceeding exports), key causes of nomic” units. The rub here is that inflation. An idea of the amount the government has had some of inflation may be inferred from trouble defining just what is an figures supplied by Ireland’s cen- “economic” farm unit. According tral bank. In 1939, the average to Mr. Lemass, the government total of Irish notes and coin in first figured on a farm that could circulation amounted to £17,605,- be worked by two horses. Now 098. By 1945, the average circu- there's an attempt to figure on a lation had jumped to £38,787,- tractor. But this raises questions: 459; by 19560 to £64,769,664; and How big a tractor; and how many by March 1958 to £ 80,498,768. poor Irish farmers own a tractor? Naturally, Irish prices have also Other economic complications sky-rocketed, disrupting invest- include inflation, protection, and ment, depreciation allowances, welfarism. Ireland is a Welfare long-term contracts, the purchas- ===== PAGE 21 ===== 1959 HOW GREEN IS THE EMERALD ISLE? 19 ing power of the Irish pound Common Market and the O.E.E.C. (down 30 per cent just since 1950), (Organization for European Eco- and so on. nomic Cooperation). If Ireland does not join, most of her exports would be cut off. If she does join, Perhaps the most incongruous her tariff protection within the part of the Irish development free trade area would have to go. story is Ireland’s insistence on Still, the partial abandonment high-tariff protection of Irish in- of protection could be a good dustry while it seeks capital to thing. Protection is an aspect of bolster exports to solve its balance intervention, and intervention has of payment difficulties. Protection, done little but harm for economic however, quite logically impedes development in the history of polit- Irish exporters and forces Irish ical economy. What Ireland ought consumers to buy high-cost do- to do to spur investment and “‘eco- mestic goods. “The government is nomic development,” the visitor to trying to ride two hobby horses Ireland concludes, is to create the at once,” says Professor G. A. basic conditions attractive to for- Duncan of Dublin's Trinity Col- eign and domestic capital — condi- lege, a student of economic devel- tions such as free trade, the gold opment and a critic of the gov- standard, and the dismantling of ernment’s policy. Protection may the Welfare State, the income tax, be doomed, however, for Ireland and nationalization. In short, the will probably be forced by circum- abandonment of intervention. Ad- stances to join the free trade area mittedly, this is hardly the “ortho- being created by the European dox” solution. 00 Knowledge, Wealth, and Trade 1 WISH EVERYONE in the whole world had more knowledge than I have. How much easier it would be for me to learn if that were the case. Barriers to Foreign Trade I also wish that everyone in the whole world had more wealth and property than I have. How much easier it would be for me to raise my own standards if I could trade what I have into such a pool of wealth. R. C. HOILES, President Freedom Newspapers, Inc. ===== PAGE 22 ===== Federal monetary policies and projected deficit spending warn of . . .. IWFLATION AHEAD WITHIN the past four years the American economy has undergone another boom and another reces- sion. And now again we are wit- nessing the numerous symptoms of a boom in its early stages. Throughout this period prices have been rising continuously. People often believe that high prices are inflation. This is put- ting the cart before the horse. In- flation is legalized counterfeiting. High prices are merely the effect of inflation. In ages gone by, governments often indulged in clipping coins. Today the methods are more com- plicated, but the effects are the same. Today the federal govern- ment goes into the red at a rate of 10 to 15 billion dollars and covers all or part of this deficit with new money. In the language of the economist, which sounds much less conspicuous, the government calls on the Federal Reserve System, which is its monetary agency, “to provide the bank reserves for the nation’s growing monetary needs.” Dr. Sennholz is Head of the Department of Economics, Grove City College, Pennsylvania. This article was written for initial distribution through the Deposit Guaranty Bank & Trust Company of Jackson, Mississippi, and appears HANS F. SENNHOLZ hero with their permission. A. Dovonoy, Inc. N. Y. ===== PAGE 23 ===== 1959 INFLATION AHEAD 21 Capital Depletion my consumption and my ability to What are the inevitable effects save. of such federal government defi- The government may even levy cits and inflationary methods of taxes on “profits” that in reality government financing? The most constitute no income at all. Inven- important although least percep- tory profits may be purely infla- tible effect is the loss and con- tionary. And yet, the government sumption of capital. demands a “share” which must be When the money supply is paid out of the net worth of the rapidly inflated, interest rates are company. The inflationary profit artificially low. Many projects and may even hide some real losses in expansion programs then started which case the government actu- depend on these low rates for ally taxes the losses. In all cases profitability. Therefore, when the capital is consumed and produc- interest rates rise again because tion impeded by the amount of the people begin to take the monetary capital lost. depreciation into consideration, these new production facilities Unwarranted Consumption may prove to be unprofitable. In The inflationary profits and im- other words, they are then called provements in income may also “excess capacity.” Economically, deceive the recipient. They may they are malinvestments that induce him to increase his con- cause some capital losses. sumption, which of course reduces But this is not the only situa- saving. Thus income is consumed tion resulting in capital consump- that otherwise would have en- tion. Through inflation the federal hanced the capital supply. government consumes an ever This inflation-induced consump- larger part of our income and re- tion, however, is partially offset duces our capacity to accumulate by the “forced savings” of all capital. Inflation lifts us into those who must restrict their con- higher and higher income brackets sumption on account of the infla- subject to progressive income tion. The price of consumers’ taxes. Although my income may goods tends to rise which fact not increase in purchasing power, forces some people to reduce their inflation will lift me into higher consumption, especially all fixed- income brackets where the gov- income receivers such as the aged ernment’s share will be larger in living on pensions and fixed bene- percentage. Thus my real income fits or people with stable salaries will decline which will reduce both or interest income. But this off- ===== PAGE 24 ===== 22 THE FREEMAN January getting effect is only partial be- governmentsavingsbonds,etcetera. cause it does not offset the capital Consequently, it is the masses of consumption but merely the addi- the people who are apt to suffer tional spending by the holders of from policies of monetary depre- the inflationary money. ciation. The rich in general are the owners of businesses, corpo- Creditors Also Lose rate stock, real estate, and other The ‘forced savings’ clearly re- claims to real wealth. veal that inflation inflicts losses on all fixed-income receivers. In The People Are Demoralized addition, there is another impor- The fact that the majority of tant class of people that suffers the American public is suffering losses: the creditors. They have from the effects of monetary de- claims on future money income preciation has far-reaching con- which inflation reduces in pur- sequences. chasing power. For instance, a The provident are penalized bondholder loses if the money he when their thrift and sacrifice receives in the future is of lower come to naught. Deprived of the value than that he himself paid full worth of their savings and for the purchase of the bond some jeered at by the spendthrifts, they time in the past. The same is true turn improvident themselves. They of all owners of money and claims become desperate and receptive to to money, such as time and de- radical ideas. Along with the mand deposits, life insurance poli- spendthrifts they learn to throw cies, mortgages, and so forth. themselves on the State for se- Many people don’t feel concern curity and support. Thus self-re- about these losses of creditors be- liance and independence become cause they erroneously believe rare virtues and people are condi- that the rich are the creditors and tioned to life under the Welfare therefore suffer the losses. This State. Our present trend towards may have been true during the socialism clearly feeds on infla- Middle Ages when the large ma- tion. jority of the people earned very While monetary depreciation little as compared with today and robs millions of people of their consequently also saved very little. hard-earned savings, it enriches In present-day America, however, some people at the expense of all the large majority of the people others. Who are these beneficiaries own some savings in the form of of inflation? There are the imme- life insurance, savings accounts, diate recipients of the inflation- ===== PAGE 25 ===== 1959 INFLATION AHEAD 23 created money. Let us assume that higher prices and buy the prod- the federal government spends it ucts and services he needs at the on arms and ammunition. Then old prices. On the other hand, a the armament producers and their person loses if he must buy in the workers have more money and inflated market but sell in a mar- purchasing power than they would ket that remains temporarily un- have otherwise. Or, the govern- affected by the inflation. It is ob- ment may increase the salaries of vious that these situations are its army of employees, the hand- only temporary. They come to an outs to its favored groups, or its end when the new money supply payments to public works con- has reached all sectors of the tractors, in which case these economy and the necessary eco- groups are the recipients and nomic adjustment has run its beneficiaries of the new money. course. Whoever first receives the money Finally, there is the large class that is newly created gains from of debtors who gain from mone- the money creation. tary depreciation. As the federal government is the greatest debtor Temporary Beneficiaries in the country, it is also the great- But these groups of people are est inflation profiteer. It gains bil- not the only beneficiaries. There lions of dollars through monetary are two others. When the first re- depreciation of its debts. And the cipients of the new money have bondholders who have entrusted spent it and consequently have their savings to the government caused the prices of some goods annually lose the very amount the to rise, the sellers of these goods government gains. Monetary de- profit from higher prices. While preciation in fact amounts to the rest of the economy has not gradual repudiation of the gov- yet adjusted to the inflation, the ernment debt. sellers of the inflation-affected goods obtain higher prices al- Business Cycles though they may still be able to Another disastrous effect of a buy their goods and materials at policy of monetary depreciation is pre-inflation prices. The differ- the recurrence of economic booms ence is the inflation gain. followed by sudden busts. The in- In other words, a person profits flation at first makes for feverish from inflation if his position in economic activity. Prices rise and the economy is such that he can business profits are attractive. But sell his products or services at soon also labor and other costs ===== PAGE 26 ===== 24 THE FREEMAN January tend to rise. They soar until busi- locity of money.” During the pe- ness becomes unprofitable at riod of active inflation people which point the recession begins. realize that prices are rising. If the government through its They now begin to reduce their monetary agency, the Federal Re- cash holdings. They buy readily serve System, accelerates the in- and quickly in anticipation of flation, the downturn can be higher prices. They may even go avoided temporarily. For as long into the red in order to take ad- as product prices rise faster than vantage of present prices before business costs, business will stay they rise again. Consumers’ in- profitable. Of course, the ultimate debtedness increases by leaps and outcome of such a policy of ac- bounds, and billions of dollars of celerated inflation must be the savings accumulated by banks and total destruction of the currency. other savings institutions are If, however, the money is stabi- channeled toward consumption. lized and the Federal Reserve re- It is obvious that consumers’ frains from further inflation, the prices must rise because of such currency is saved but a recession an inflationary sentiment which sooner or later sets in. constitutes a natural reaction to the actual inflation. And it is also The Time Lag of Recession understandable that this reaction The recession usually develops may even continue after the Fed- one to two years after the infla- eral Reserve inflation has come to tionary policy has been abandoned. a halt. Thus we can witness a There are two reasons for this de- short period in which our mone- lay. First, business costs are slow tary authorities refrain from in- in catching up with product prices. flation but prices continue to rise Wages and salaries, for instance, and the economy evidences all react to inflation more slowly than symptoms of inflation. The in- the prices of consumers’ goods. If evitable recession and readjust- business costs rose simultaneously ment finally sets in as soon as and to the same extent as product more and more people realize that prices, if for instance, all wages the inflation has temporarily come were immediately adjusted to the to a halt. cost of living, the recession would This slow reaction to a policy of follow the inflation immediately. monetary stabilization, which con- The second reason for the delay stitutes the source of many eco- is what in bad economic termi- nomic errors and fallacies, could nology is called “the rising ve- actually be witnessed in the years ===== PAGE 27 ===== 1959 INFLATION AHEAD 25 1956 and 1957. The active Federal whose prices have already risen Reserve inflation was abandoned on account of the inflation. in 1955, and yet, prices continued People often don’t realize this. to rise on account of people’s re- Especially are our labor leaders .duction of cash holdings and in- prone to forget it when they crease in consumers’ indebtedness. clamor for wage increases regard- When, during the latter part of less of inflationary effects. They 1957, it became clear to more and observe wage improvements in more people that the inflationary other industries that benefit from policies had been abandoned, cash inflation and consequently feel holdings began to increase again obliged to obtain the same im- and the increase in consumers’ in- provements for their own mem- debtedness began to slow down. bers. If this happens in an indus- This development together with try that actually suffers from in- the other recession reasons men- flation, the ensuing union de- tioned above then led to the recent mands merely add to the woes and business downtrend. troubles of the industry. And labor dissatisfaction and unrest Variations in Impact of Inflation usually result. Some people erroneously believe The product prices of some in- that inflation affects the economy dustries such as railroads and simultaneously and uniformly. The public utilities are controlled by notion prevails that inflation in- various government regulatory creases prices like rainfall raises bodies. Experience shows that the water level of a pond. This these industries suffer greatly notion is as fallacious at it is from inflation. While their costs popular. In reality inflation causes of operation, especially labor and price upheavals. It affects prices material, rise on account of infla- and wages differently and at dif- tion or union pressure, their own ferent times. As has been pointed prices are subject to government out, some industries and their supervision. The regulatory bod- workers may actually benefit from ies, however, like to keep prices inflation if their money income in- stable often in order to “counter- creases before other prices have act” inflation. Consequently, such risen. Other industries are bound an industry is squeezed between to suffer losses if they must con- rising operating costs and stable tinue to sell their products and ‘prices of its own products or serv- services in markets still unaffected ices, which of course results in by inflation but buy products losses and consumption of capital. ===== PAGE 28 ===== 26 THE FREEMAN January Usually these difficulties then lead money and inflate the money sup- to more government regulation ply. You and I would be held and supervision. punishable for counterfeiting if we were to produce a single dollar Further Steps toward Inflation bill. The most tragic of all inflation But while we appeal to the gov- effects is our tendency to advance ernment for protection from in- further toward socialism. When flation, we condone the very poli- prices rise and people suffer cies that are inflationary. We con- through no fault of their own, done the budgetary deficits of 10 they clamor for government pro- to 15 billion dollars and the “stim- tection from inflation. But they ulation” of the economy through often mistake the symptoms of in- Federal Reserve credit expansion. flation, the rising prices, for the This contradiction obviously must real inflation which is the Fed- lead to government policies that eral Reserve increase of the continue to be inflationary. And it money supply and of bank re- must lead to a ‘“fight” that is serves. Thus they favor remedies aimed at the symptoms rather that would merely attack the than at the inflation itself. But symptoms while the roots of the according to all rules of seman- evil are left untouched. This mis- tics, when the government fights take is often made during the pe- rising prices through price con- riod that immediately follows the trols, wage controls, and a series active Federal Reserve inflation of other controls, our system of when people continue to decrease economy ceases to be free. It falls their cash holdings and increase into the abyss of socialism. their indebtedness. During this period of rising prices our mone- Inflation Motivation tary authorities correctly point to What are the causes that induce their idle printing presses but our monetary authorities to em- mistakenly deny all responsibility bark again and again upon infla- for the inflation. tionary adventures? Most people The public cry for government pretend to oppose inflation. And protection from inflation appeals yet they clamor for the things to the very institution that alone that make inflation inevitable. can inflate and depreciate our In an analysis of the present money. Only the federal govern- day American predilection for ment through its agency, the Fed- policies that make inflation inevi- eral Reserve System, can print table, the following two groups ===== PAGE 29 ===== 1959 INFLATION AHEAD 27 must especially be mentioned as but also many other groups in having successfully pressured our high public repute. There are the monetary authorities into easy- veterans’ organizations constantly money policies on their behalf. pressuring the government for more liberal pensions and other costly benefits with utter disre- The first pressure group con- gard for the source of the money. sists of those people who continu- Hundreds of thousands of healthy ously clamor for federal aid and veterans are still receiving gov- spending for their own special in- ernment educational help. The terests. There is the Farm Bloc Veterans’ Administration has insisting on farm supports, gov- guaranteed or insured $23 billion ernment buying and storing of worth of home, farm, or business food, giving it away to foreign loans. It has loaned more than nations, or throwing it on the $700 million directly. All in all, world market at lower prices than total federal spending for veter- we Americans have to pay. There ans amounts to approximately $5 is the soil bank which is a scheme billion annually, or about seven of government subsidy for work cents of each tax dollar. Nearly not done. one-fifth of all federal spending If all these funds were raised other than for rearmament goes by taxing the people, no inflation to the veterans and their families. would result — merely a shift of spending power from the pockets Monetized Debt of all taxpayers to those of the If all this money is raised farmers. Often, however, our gov- through taxation, no inflation re- ernment is afraid to present us sults, merely a transfer of $5 bil- with the true bill for its lavish lion from the pockets of all tax- spending on the pressure groups. payers to those of veterans and Running deficits, it borrows the their families who make up ap- funds from the banks which in proximately one-half the Ameri- turn have received the necessary can population. But whenever the reserves from the Federal Re- federal government operates at a serve. This, then, constitutes in- deficit on account of these and flation. many other spending programs, But there are not only the the necessary funds usually are farmers who constantly clamor for made available through currency federal aid and support even if expansion. The fact that the veter- the money must first be created, ans’ organizations nevertheless in- Special Pleaders ===== PAGE 30 ===== 28 THE FREEMAN January sist on costly benefits regardless ues and spent by the government. of the effects on the nation’s cur- It is obvious that this amount rency and economy, makes them helped to pay for the various New a dangerous pressure group for Deal programs and thus prevented inflation. the government from inflating the There are the pressure groups nation’s currency by this very advocating multibillion dollar for- amount. eign aid programs, federal road In the future the situation will construction programs, public be quite different. An ever larger utility programs, federal housing number of taxpayers is reaching programs, and many others. retirement age and drawing old- Again, all these schemes would age benefits. But this is not the not be inflationary if all the only reason for an expected rise money were raised by taxation. in outlays. Since 1939 the bene- But in most years since 1930 the fits were broadened to provide for federal government operated with wives, widows, and dependent large deficits, the funds for which children of retired workers. Pay- were made available through ments were increased repeatedly credit expansion. in order to assure adequate sup- port. Each worker's old-age claim The Social Security Burden is no longer based on the amount There is one spending program of his contribution, but on our standing high in the public mind politicians’ definition of need and that in the future will constitute adequacy. a powerful reason and excuse for This criterion for benefits has inflation, although in the past it led, and must lead in the future, to even counteracted inflationary am- costly revisions of the program, bitions. This is the social security especially when the costs of living program. Since January 1, 1937, are rising. Each political party is an ever greater part of the work- tempted to bid for the votes of ing population has been taxed to the aged through higher old-age finance the Federal Old-Age and benefits. Consequently, rising ex- Survivors Insurance. For more penditures will require much than 20 years the annual intake higher taxes and, in case the of the Social Security Adminis- revenue should not be forthcoming tration exceeded the benefits paid promptly and sufficiently, also out. Consequently, a surplus of monetary expansion. The social more than $20 billion resulted that security program, which in the was merged with other tax reven- present fiscal year is expected to ===== PAGE 31 ===== 1959 INFLATION AHEAD 29 suffer its first deficit, therefore raised housing prices considerably. will constitute another reason for And while prices were rising, the inflation and monetary deprecia- demand for houses declined. Un- tion. employment of capital and labor resulted. Now, instead of shoulder- Labor Union Pressure ing the responsibility for this Our labor unions comprise the maladjustment, the labor unions second important pressure group clamor for easy-money policies advocating inflationary measures. which would supply the mortgage Through collective bargaining, money needed to sell more homes strikes, and many other methods at higher prices. In other words, of coercion they tend to lift wages they ask for inflation as a cure above the rates determined by a for maladjustment. free labor market. But whenever Even during recessions when wages are forced above those de- business suffers from unprofita- termined by competition in the bleness labor unions continuously market, unemployment inevitably raise business costs. Consequently, results. This in itself constitutes they increase unemployment. A no inflation, merely a maladjust- comparison between the unionized ment. But then the very unions North and the South with its less that bring about these harmful harassed labor relations clearly effects begin to clamor for federal demonstrates this causal connec- aid and easy-money policies. tion. Where are the 5 million Through their influence on public workers who presently are unem- opinion and their connections in ployed? They live in the industrial Congress they pressure the Board North that is plagued by union of Governors into inflationary activities. They live especially in money policies to provide relief for the union strongholds, in Chicago, their depressed industries. We can Detroit, Pittsburgh, New York, observe this phenomenon in all in- New England, etc. And where did dustries in which there are power- the last recession have its most ful labor unions. depressive impact? Every objec- Until recently the American tive observer will agree that it is residential building industry, for the unionized North that breeds instance, has been working at less recessions. than 70 per cent of capacity. For years powerful unions have pushed Trimming Wages through Inflation building industry wages far above Facing the dilemma of mass un- free market wages, which fact employment, our Washington ad- ===== PAGE 32 ===== 30 THE FREEMAN January ministration is called upon to comes to the rescue of the labor remedy the situation. It has two unions and their dominated indus- alternative policies at its disposal. tries through easy-money policies. It may oppose the multiplicity of It rescues the building and con- coercive labor union practices struction unions, for instance, through revoking the legal sanc- through more government guar- tity which New Deal legislation antees, easier terms of payment, has bestowed upon unions. Un- lower rates of interest, and other fortunately, this alternative is not ‘stimulating’ measures all of open to the large number of Con- which result in inflation. gressional representatives who owe In this respect inflation is a polit- their election to the labor leaders. ical expedient resorted to by weak The other alternative is much administrations. It is a device that more popular. Whenever the coun- hides temporarily the evil effects try suffers from unemployment of coercive union practices. But due to coercive union practices, while it does this, it bears its own our government immediately formidable effects. ® 00 Auyoune fort [pone 7 GRACE BOSWORTH It] 1 il LS. SLA NV AFTER LISTENING to the pro and happens, America will never again con discussions as to whether our see the apple stands of the last present economic plight indicates depression. that we have repealed certain eco- nomic laws or not, I made some The Lost Art studies in order to render an They were masterpieces of sim- opinion of my own. So far, only plicity; the owner acquired a big one fact is clear. No matter what crate, piled his apples on top of Mrs. Bosworth is a California housewife who it, and began an aggressive sales also does secretarial and editorial work. pitch. In the first place, our art ===== PAGE 33 ===== 1959 ANYONE FOR APPLES? 31 of selling has fallen into decline. ice of at least one tax consultant We rear our salesmen on the “soft to get those in order. The tax sell” to appeal to the buyer's man might consider accepting his hidden impulses, instead of telling fee in apples, but times would him out and out that we think he probably have to be very hard. should say he has a good product. Besides, there is some question if Today, to sell soap or cigarettes that would be legal or not. Then, or cars, you appeal to the poten- there are forms to be filed with tial customer’s “maleness” or the state in the event that you “femaleness’’ as the case may be. have, or do not have, other em- The tattooed hand and gossamer ployees. Usually this requires the gown are standard props for every- services of a competent book- thing from breakfast food for the keeper. family to flea powder and fish Insurance is also necessary. food for the family pets. Dealing with the public makes a good full coverage necessary, may- Don’t Forget Uncle and His Friends be a $100,000 minimum would do But even if we still used aggres- it....an insurance consultant, for sive selling, the apple stand a fee, will work that out. Aside couldn’t stage a comeback. Con- . from that, if the stand is going on servatively, I estimate that a man the city streets, there will be ap- with a capital of $3,000 might, if plications needed in City Hall, he were careful, establish an apple license fees and, of course, meet- stand today. Aside from the initial ing the requirements of city codes investment for his bag of apples with regard to health and safety and a crate, he would face other factors. costly factors. First, there is the These are just the beginnings matter of government agencies! of my findings, but it becomes As a small business owner he has evident that we simply cannot af- certain forms which must be sub- ford another depression until we mitted to both federal and state look over some of the laws govern- agencies. He would need the serv- ing small business. ® 0 0 Commerce vs. Politics IDEAS ON LIBERTY LET GOVERNMENTS have as little to do with one another as possible, and let people begin to have as much to do with one another as possible. JOHN MORLEY, The Life of Richard Cobden ===== PAGE 34 ===== Cloke chon LOCAL LEVEL ROBERT LEFEVRE WE ARE, it seems, so alarmed and period of eight long years. Why dismayed by the amounts of money do we quibble over the years or taken from us by our federal gov- the numbers of men involved? To ernment that we are prone to re- take one man by force and to hold sist the advance into socialism not him where he does not want to be, on the basis of principle, but on even for five minutes, is immoral. the basis of the numbers of dollars We do not object to having the we are losing. government run schools. We ob- We do not like to object to the ject because the government is in- income tax on principle. We pre- creasing the amounts of money it fer to object because the income takes from us to run the schools. tax is taking so much money. And now we object because the We do not like to object to the larger (federal) unit of govern- collectivist philosophy of labor ment is taking a more active part unions. We prefer to object to in our educational picture. But is unions because they have become ‘it all right when the local govern- such an enormous reservoir of fi- ments do the same things? nancial potency and because some It seems it is size that im- of their leaders have been found presses us, not fundamentals. If corrupt. the evil that confronts us appears We do not object to the draft. to be small in size, though deadly We raise our voices because 80 in its contradiction to the great many men are involved. Further, truths of life, we are prone to we object because our young men ignore it. What can a little thing are impressed into service for a like that do to harm us, we ask. — But when the evil has expanded, Mr. LeFevre is President of The Freedom . . . LC. School and is also responsible for the editorial not in violation of principle but fi tte Tel . . . poke of the Colorado Springs Garette Tele i gize relating to the numbers of 82 ===== PAGE 35 ===== 1959 COERCION AT THE LOCAL LEVEL 33 persons affected or the amounts ism in our state and local govern- of dollars involved, then we ‘be- ments. By comparison with the come alarmed. federal oligopoly, even such a We condoned the post office for giant state government as Cali- years not because the government fornia or New York stands ought to be running it but because dwarfed. And when we get down the government managed for to such puny administrative gov- about seventy-five years to keep ernmental units as counties, school the deficit rather small. Now that districts, and cities, we shrug and the deficit has grown to gigantic go on our way without a second size we are upset. But the direc- thought. tion of our cry of outrage is usu- What could any government as ally not to strike at the funda- small as one of these do toward mental violation of principle which advancing socialism? Also, such is inherent. It is rather to reduce governmental units are right un- the size of the deficit. And if the der our noses. The men and women size of the deficit is reduced, then, in them are local people. We know with the canker still working, we them. They are our neighbors. If subside with the illusion that we one or another of them gets out have wrought a cure. of line, we can always replace them. Socialists? Not for a min- Blind Devotion to Size ute. These are the backbone of It is this impressionistic devo- America. tion to mass, to Gargantua, which They are so much the backbone has Americans enthralled. That is of America, in fact, that with vir- why so many of us can see and tually one voice our local politicos clearly recognize socialism in our have beseeched Washington to federal government. It is there, pour more money into their coffers openly apparent, readily discerni- for their own pet projects. Of ble because the federal govern- course, all of this money, whether ment is huge. We require no mag- it is taken locally to be spent nifying glass to read the dark locally or taken nationally to be inscription of socialist rule and spent locally or taken locally to be ruin being written on our federal spent nationally, is still our money. wall. We can read it without our What we seem to object to is the glasses. seizing of our money nationally to This is the reason — it must be be spent internationally. But what the reason — so few of our fellow is this but an expansion of the Americans fail to recognize social- original violation of principle ===== PAGE 36 ===== 34 THE FREEMAN January which begins with the use of force really concerned about local in- and coercion locally for local proj- cursions via the income tax route, ects? it might be noted that in Penn- } sylvania (effective August 1, Universal Principles 1958) 25 first-class townships and Principles are discovered as they 505 school districts began collect- relate to individuals, not to masses ing income tax money. of people. Is something that is Consider farm subsidies. Is this wrong for an individual to do, exclusively a federal program? right when the wrong is multi- Again, it is not. Almost all the plied? Or is an action which is states have their own agricultural right for an individual, some way aid programs, which in numerous in error when more than one is instances are augmented with involved? A principle is univer- county funds. sally applicable, or it is not a prin- What about unemployment re- ciple. lief? States, counties, and even The federal government is not cities are in on this one. following a policy which is at odds So it is with pensions, educa- with the convictions of the rank tion, labor-management relations, and file of citizens. Despite some tariffs (remember the border clamor to the contrary, the evi- guards at California and Arizona dence reveals that the people of state lines, not to overlook the this nation want what they are so-called “ports of entry” in many getting at the hands of the spend- states), employment, welfare, gov- it boys in Washington. And the ernment-owned utilities and the cities, counties, and villages are ownership of various businesses emulating the program, albeit including golf clubs, zoos, peanut with less flair, less rakishness, less stands, recreational equipment, of an attitude of snap-the-fingers, airports, roads, cemeteries, hobby to-hell-with-the-people. shops, tourist attractions, and Consider the income tax. Is this what have you. the exclusive scheme of the Wash- ington crew? It is not. There are The Local Burden Grows at the moment 31 states with in- We might even point out- come taxes. Also, there are 266 though we do not mean to impress cities (including boroughs) which you with size — the National Tax are prying into the local purses Foundation reports that since and lifting out vast sums of money 1950, whereas the per family share’ in this same fashion. And if weare of the national debt has dropped ===== PAGE 37 ===== 1959 COERCION AT THE LOCAL LEVEL 35 by $188, the per family share of is exactly what we intend to do.” state debt has increased by $179. Nothing is said in the definition It is not this growth that indicates which requires that our property socialism, however; it is the fact and our means of production and of state and local confiscation in distribution, when taken from us, any amount that indicates it. must be transported great dis- In short, while it may be true tances or taken in quantity above that the federal government is a fixed amount. moving us toward national social- ism on a giant scale, most of our local governments are pursuing In the newspaper business we this same objective with as much have a slogan, “All business is vigor and intensity as they can local.” Newspapers are big busi- “All Business Is Local” muster. ness. But they are all big local business. It is true that almost all Socialism Taxes Individuals newspapers make an effort to ac- What is socialism? There are quire national advertising. But, many definitions. And without in the fact remains that the advertis- the least attempting to contrast ing rates of the newspapers are socialism with its more rabid twin, determined by the number of their communism, let us take the defini- local subscribers, and it is in the tion given by Marx. The core of hope that the local subscribers will the socialistic process, as he put purchase the nationally advertised it, was this: “From each accord- product that the advertiser buys ing to ability, to each according space. In other words, even the to need.” The point is that social- national distributor knows that ism is initiated at the “from each” all business is local. part of the process, not at the “to But, we are told, newspapers each” part of it. Yet we have so are not local. Do they not sub- long accustomed ourselves to ana- scribe to wire services, and is it lyzing socialism according to the not the fact that they are filled things governments do with the with national and international money they take from us, that we events which makes them read- have almost forgotten the purpose able? But what is national or in- of socialism is primarily served ternational news, except some- in the taking. As Marx put it in thing that is local somewhere? the Manifesto: “You accuse us of And isn’t the reader of a paper wishing to do away with your always a person who exists locally private property. Precisely. That at some place in space? Isn't that ===== PAGE 38 ===== 36 THE FREEMAN January person the one we strive to reach? The ultimate aim of all business And aren’t we best able to reach is the individual customer. Busi- him by a multiplication of all our ness hopes to please and satisfy local efforts? him. It is at the customer level Now, if we examine the defini- that businesses are injured by tion of socialism, we discover that socialism. True, our attention to the aim of the socialist is to do the socialistic process may first be away with private ownership and arrested when some law or regula- to substitute government owner- tion inhibits the normal business ship in its place. But the govern- judgment or action of the entre- ment need not be in any specified preneur. But this inhibition, if it place, of any specified size, nor can be survived at all, must be formed in any specified manner. passed on as an added cost, an in- Socialism begins when private ferior product or service, or even ownership is inhibited or killed. as a scarcity, to the customer. And What happens to the property if it cannot be survived, again, the after it has been wrested from fact that matters is that the cus- . its rightful owner is of academic tomer is hurt totally. Businessmen interest, it is true. But socialism believe that the harm falls on begins at the point of confiscation, them personally, as indeed it does. not at the point of amassment. But the harm is ultimately borne And the point of confiscation is by the customer, and without him, always local. It has to be. This is the business cannot survive. This the fact to which our preoccupa- is what is meant by “all business tion with bigness has nearly is local.” Any business activity blinded us. which precedes the purchase by the customer is simply a necessary The Customer Pays preliminary to getting the goods The nature of life is such that and services to him. each of us exists largely in a world of his own. We have our loyalties, Prorerty Rights Denied our enterprises, our convictions, The ultimate aim of all social- our obligations. Our radius of in- ism is to prevent the individual fluence may be large or small, but from owning property privately. essentially it is single hubbed. Any governmental activity which Even a man or a firm of enormous follows the plundering of the indi- influence or service will find that vidual is simply so much socialist it is dealing always with individ- window dressing, dedicated to the uals, and always at a local level. proposition that the government ===== PAGE 39 ===== 1959 COERCION AT THE LOCAL LEVEL 37 can manage your affairs and your Can we learn to see the dangers money better than you can. close at hand with the same per- Let us remember that city or spective? That is the question. local government ownership, oper- Internationally, we are begin- ation, or control of schools, hos- ning to see clearly. Nationally, a pitals, transportation facilities, number of persons have close to and countless other businesses in- 20-20 eyesight. It is at home that volves compulsion and to that ex- we develop astigmatism, blind tent denies the rights of individ- spots, myopic vision, and some- uals to own property and to dis- times total blindness. pose of their own as they see fit. The evil of socialism will never Of course, if the federal gov- vanish from this land if we fail to ernment does these things, many eradicate the local home-grown of us already know the dangers. variety. eo 00 IS FREEDOM THE LIBERTY TO ? EDWARD COLESON A MISSIONARY, so the story goes, for a brief inspection. Finally, one was building his station out in asked him what it was. the bush under the close scrutiny “That’s my watch,” he an- of the local natives who gathered swered. “It tells me when to get around to watch his every move. up in the morning, when to eat, They were fascinated with his when to begin my day's work, tools, materials, and procedures what time to quit working, and so and, like children, gave vent to forth.” their amazement. They were par- “Oh!” the native exclaimed. ticularly intrigued with a small, “Why don’t you throw it away and round, shiny, ticking object he do as you please?” took out of his pocket at intervals Now the basic decisions which —_— . . must be made in any and every Dr. Coleson is Professor of Social Studies at Huntington College, Indiana. This article is economic order — whether set up nomics, October 28, 1938. rom TAnsian = by Robinson Crusoe, Adam Smith, ===== PAGE 40 ===== 38 THE FREEMAN January Joe Stalin, Franklin Roosevelt, the farmer a bit, but the con- President Eisenhower, or yourself sumer didn’t worry about it. He —are one and the same. Somehow ate more eggs because they were it must be decided what and how cheaper, and helped to restore the much of each good or service we former price level. plan to produce, how resources and Men tended, subject to the limi- effort are going to be allocated tations of their training and and used in the productive proc- ability, to go into that line of ess, and how the resulting product work which paid them best, and will be divided up. Nor is there investors risked their capital on any way to side-step the necessity the same basis. In other words, of making these decisions. In prac- the economy ran itself as the con- tice this means that someone must sequence of the decisions of mil- decide how many acres should be lions of people. They made mis- devoted to onions, how many tur- takes, plenty of them, but their keys will be wanted next Thanks- individual errors tended to cancel giving, how many TV sets and each other out. The system worked red convertibles should be pro- so well that the agricultural “plan- duced, what resources should be ners” of our time chose the pre- available to each of these several World War I period as their productive efforts, and who should golden age, the basis of the parity work at what. At the end of the formula. Also, the industrialist line the onions and convertibles and financier are a bit nostalgic have to be parceled out to some- about the Horatio Alger era when body. a man could make a million and keep it, and if he played the game fairly, he was regarded as no Once upon a time the price sys- “robber baron” but a benefactor tem was supposed to make these of humanity. decisions for all of us. The farmer planned to have fewer pigs to turn Regulation and Control off in the fall because he antici- Now, of course, there's another pated they wouldn't bring very way to make all those necessary much. This tended to reduce out- decisions about production. A put and improve the price. If the board of planners in the Kremlin cost of eggs soared in the winter, — or in Washington for that mat- farmers raised more chickens in ter— can decide how many tons the spring and the price was of pig iron, bushels of wheat, gal- lower next year. This didn’t please lons of gasoline, and pairs of The Price Indicator ===== PAGE 41 ===== 1959 IS FREEDOM THE LIBERTY TO RESTRICT? 39 shoes will be needed next year, a choice that doesn’t exist. On the and can allocate the resources and basis of the world’s history to this manpower to the several produc- hour it would be hard to prove tive agencies charged with the that one could barter his freedom task of filling quotas. It involves for prosperity except, perhaps, as a fantastic amount of labor in try- a short-run delusion. The Rich ing to assemble the necessary data Man in Hell chose the world at and arrive at something like the the price of his soul, but ended right conclusions as to proper and up losing both, possible production goals, and re- quires a vast and all-powerful The System Won't Work bureaucracy to get it done. It is The oppressive nature of a perfectly possible to operate that planned economy has little to do way if you choose to, but there with the fact that the planners are some consequences of this grew up east of the Iron Curtain, policy. drink vodka, or even are evil and In the first place, the swarm of ruthless men. Plus or minus a functionaries necessary to run it, little, our benevolent bureaucrats who get in each other’s way as would have to operate the same well as everybody else’s, are no way or go out of business. It is better than locusts, if a free econ- inherent to the system. Free en- omy will run itself at least as well terprise has controls, too, and without them. Their record to they are pretty rugged. The free date isn’t impressive. In the sec- system has generally wrung more ‘ond place, the loss of freedom in- work out of people than a slave herent in such “planning” is so driver could with his whip. If you great that many of us would vote guess wrong, you may lose your against it if it worked twice as shirt. If you don’t work, neither well as the most enthusiastic shall you eat. utopian dreamer ever claimed it Actually, Americans don’t want would. either system; they shy away I'm tired of listening to those from the terror of totalitarianism folks who say that the “Good Old but refuse to accept the verdict of Free Enterprise System” was all demand and supply. right but if it can’t supply us with The consequences of thus tam- the luxuries and security we want, pering with the workings of natu- we, in this “modern age,” will ral forces may perhaps best be trade it off for a totalitarian model illustrated by analogy. The first which will. They are dreaming of steam engine, the one invented by ===== PAGE 42 ===== 40 THE FREEMAN January Thomas Newcomen in 1705, re- tariat. No country can long re- quired an operator to open and main “half slave and half free,” close the valves. One boy set at and we won’t either. this task found that by an ingeni- If our economy caved in tomor- ous system of cords he could get row, millions of people would cry the walking beam to open and that the free enterprise system close the valves for him, leaving had failed; and our intellectuals, him free to play. But, as with the preachers and all, would lead the economy, if one sabotaged the stampede to totalitarianism of one workings of natural forces — cut, sort or another. Huey Long once tangled, or snarled the strings — said, “It would be easy to sell he would be compelled to go back Americans fascism. Just call it to running the machine by hand, democracy.” He should have if it ran at all. known. It is true we have lived for No Stopping Place more than a generation in a sort Those who believe they can es- of uneasy no-man’s land where tablish their social order per- every group is permitted to com- manently at any point on a con- bine to loot the rest of us, artifi- tinuum between slavery and free- cially limit output, and make dom that suits their fancy, are de- prices what they please. If every luded. Artificial restrictions breed trade and profession restrict en- more regulations: witness the try into their field, obviously their “black markets” of every man- services will be overpriced, and aged economy. As the confusion millions of men will not be ab- and chaos inherent in trying to sorbed but will be left out in the serve two masters deepen, men in cold world of bread lines or dole. their despair almost inevitably Politicians can’t say “no” to any are only too glad to turn the prob- pressure group which can drum lem over to some loud-mouthed up a few votes, so the resulting demagogue who gives them the patchwork of policy —a sort of security of a prison. The problem economic crazy quilt—increases in of so-called democratic socialism complexity until the whole struc- ig that artificial controls which are ture falls of its own weight. The politically acceptable don’t control, right of powerful pressure groups and the brutal kind which gets to plunder the rest of us appar- things done doesn’t appeal to the ently can’t be challenged, but let's voters: hence the need for the so- not call it democracy — unless free- called dictatorship of the prole- dom isthe liberty to restrict. ® o o ===== PAGE 43 ===== FREE WILL += MAH: FRANK CHODOROV FREE WILL is the starting point if he makes his decisions accord- of all ethical thinking and it plays ingly. The Ten Commandments an equally important part in the have been called the Word of God; business of making a living. If they can also be described as na- man were not endowed with this tural law, and natural law has capacity for making choices, he been described as nature's way of could not be held accountable for applying means to ends. Thus, we his behavior, any more than could say that nature in her inscrutable a fish or a fowl — an amoral being, ways has determined that water a thing without a sense of morals. shall always run down hill, never So, if man were devoid of this up; that is a natural law, we say, capacity, his economics would be because it is without exception, confined to grubbing along on inevitable, and self-enforcing. whatever he found in nature. It Therefore, when we decide to build is because man is capable of taking ourselves a house, we set it at the thought, of making evaluations bottom of the hill so as to avail and decisions in favor of this or ourselves of a supply of water. If that course, that we have a dis- we put the house at the top of the cipline called economics. hill, nature will not cooperate in In making his ethical choices, our obstinacy and we shall not man is guided by a code believed have any water in the house; un- to have the sanction of God; and less, of course, we discover and experience has shown that the make use of some other natural good life to which his instinct law to overcome the force of impels him can be achieved only gravity. Mr. Chodorov is well known as both a writer That is to say, nature is boss and speaker in behalf of individualism. This gnd we had better heed her teach- article is adapted from an address before the . . American Farm Bureau's “Farm Family and ing when we make decisions or we Christi R »” ference at Madison, . Wisconsin, October 30, 1958, ° ™ shall not achieve the ends we de- 41 ===== PAGE 44 ===== 42 THE FREEMAN January sire. But, her teaching is not pediencies, leading us to no un- freely given; we must apply our- derstanding and no good end. I selves diligently to a study of her might add that the incongruities ways to find out what they are. of ethical life, such as divorce, The prerequisite for a successful juvenile delinquency, international investigation is to admit that na- friction, and so on, are largely the ture has the secret we are trying result of the current conceit that to uncover; if we begin by saying there is no warrant for ethics in that in this or that field nature has nature, no positive laws for moral no laws, that humans make their behavior; but that is another sub- own way without reference to na- ject. ture, we shall end up knowing I shall try to present some evi- nothing. dence that nature has her own If, for instance, we discard the rules and regulations in the field Ten Commandments, declaring of economics, indicating that we them to be mere man-made con- had better apply ourselves to ventions changeable at will, we learning about them if we would end in chaos and disorder — evi- avoid the obviously unsatisfactory dence that we are on the wrong results from relying on man’s in- track. Likewise, if we declare that genuity. Come with me into the God in his infinite wisdom chose laboratory of experience, which is to disregard economics, that in the source of much understanding. ordering the world he overlooked the ways and means for man’s The First Pioneer making a living, that in this par- Let us cast our mind’s eye back ticular field man has to work out to the time when there was no his own formulae, we will end up Madison, Wisconsin, or any other with a poor living. city west of the Alleghenies, when only the seed of a later social in- tegration was planted here — when And that is exactly what has a lone frontiersman decided to happened in the study of econom- settle on this spot of earth. The ics; many experts in this field are primary consideration which in- of the opinion that nature can fluenced his decision was the pos- tell us nothing about the business sibility of making a living here. of making a living; it's all a He selected what later became matter of human manipulation. Madison because the land was That is why economics is so often fertile, water was plentiful, the a meaningless hodgepodge of ex- forests abounded with wood for ““Economics’’ without Principles ===== PAGE 45 ===== 1959 FREE WILL AND THE MARKET PLACE . 43 his comfort, meat for his suste- Returning to our first pioneer, nance, and hides for his raiment. his initial wages are meager. That This was the workshop from which is because he is compelled by the he could expect good wages for condition of his existence to be a his efforts. Without benefit of eco-. jack-of-all-trades, proficient in nomic textbooks, he hit upon a none. He produces little and there- couple of economic laws: (1) that fore hag little. But he is not satis- production, or wealth, consists of fied with his lot for, unlike the useful things resulting from the beasts in the forest or the fish in application of human labor to the sea, man is not content merely natural resources; (2) that wages to exist. come from production. And here we hit upon a natural These laws, these precepts of law which plays a prime role in nature, are still in force and al- man’s economic life: He is the ways will be despite the efforts of insatiable animal, always dream- some ‘‘experts” to rescind them. ing of ways and means for im- Often the yearning for manna proving his circumstances and from heaven obscures the fact that widening his horizon. The cabin only by the application of labor to built by the pioneer to protect raw materials can economic goods himself from the elements was appear, but the yearning is so castle enough in the beginning; strong that men ask government but soon he begins to think of a to play God and reproduce the floor covering, of pictures on the miracle of the wilderness. wall, of a lean-to, of a clavichord Government, of course, can pro- to brighten his evenings at home duce nothing, let alone a miracle; and, at long last, of hot-and-cold and when it presumes to drop running water to relieve him of manna on its chosen people, it the laborious pumping. Were it simply takes what some produce not for man’s insatiability, there and hands it over to others; its would be no such study as eco- largess is never a free gift. And nomics. as for wages, they still come from production, even though there are 4A Neighbor Arrives sectarians who maintain that But the things the pioneer wages come from the safety vaults dreams about are unattainable as of a soulless boss. The conse- long as he is compelled to go it quences of disregarding these two alone. Along comes a second pio- dictates of nature are too well neer, and his choice of a place to known to call for discussion. work is based on the same con- ===== PAGE 46 ===== 44 THE FREEMAN January sideration that influenced his pred- ficient at it, far better than any of ecessor. What wages can he get his neighbors. In order for him out of the land? However, as be- to ply this trade the others must tween this location and others of agree to supply him with his needs. equal natural quality, this one is Since their skill at blacksmithing more desirable because of the is deficient, and since the time presence of a neighbor. This fact and effort they put into it is at alone assures a greater income, the expense of something they can because there are jobs that two do better, an agreement is not hard men can perform more easily than to reach. Thus comes the tailor, can one man alone, and some jobs the carpenter, the teacher, and a that one man simply cannot do. number of other specialists, each Their wages are mutually im- relieving the farmers of jobs that proved by cooperation. Each has interfere with their farming. Spe- more satisfactions. cialization increases the produc- Others come, and every accre- tivity of each; and where there tion to the population raises the was scarcity, there is now abun- wage level of the community. In dance. the building of homes, in fighting fires and other hazards, in satis- fying the need of entertainment The first condition necessary for or in the search for spiritual specialization is population. The solace, a dozen people working to- larger the population the greater gether can accomplish more than the possibility of the specialization twelve times what each one, work- which makes for a rising wage ing alone, can do. Still, the wage level in the community. There is, level of the community is rather however, another important con- low, for it is limited by the fact dition necessary for this division that all the workers are engaged of labor, and that is the presence in the primary business of exist- of capital. The pioneers have in ence on a self-sustaining, jack-of- their barns and pantries more all-trades basis. than they need for their immedi- At some point in the develop- ate sustenance, and are quite ment of the community it occurs willing to invest this superfluity to one of the pioneers that he has in other satisfactions. Their an aptitude for blacksmithing; savings enable them to employ the and if all the others would turn services of specialists; and the over to him their chores in this more they make use of these line, he could become very pro- services the more they can pro- Specialists with Capital ===== PAGE 47 ===== 1959 FREE WILL AND THE MARKET PLACE 45 duce and save, thus to employ surance that the producer can re- more specialists. tain for himself all he produces This matter of savings, or capi- in the way of savings. If this ex- tal, may be defined as that part cess of production over consump- of production not immediately tion is regularly taken from him, consumed, which is employed in by robbers or tax-collectors or the aiding further production, so that elements, the tendency is to pro- more consumable goods may be- duce no more than can be con- come available. In man’s search sumed immediately. In that case, for a more abundant life he has capital tends to disappear; and learned that he can improve his with the disappearance of capital, circumstances by producing more production declines, and so does than he can presently consume and man’s standard of living. putting this excess into the pro- From this fact we can deduce duction of greater satisfactions. another law of nature: that security in the possession and en- Respect for Property joyment of the fruit of one’s labor Man has always been a capital- is a necessary condition for capi- ist. In the beginning, he pro- tal accumulation. Putting it an- duced a wheel, something he could other way, where private property not eat or wear, but something is abolished, capital tends to dis- that made his labors easier and appear and production comes tum- more fruitful. His judgment told bling after. This law explains why him what to do, and of his own slaves are poor producers and why free will he chose to do it. That a society in which slavery is prac- makes him a capitalist, a maker ticed is a poor society. It also and user of capital. The wheel, gives the lie to the promise of after many centuries, became a socialism in all its forms; where wagon, an automobile, a train, and private property is denied, there an airplane —all aids in man’s you will find austerity rather than search for a better living. If man a functioning exchange economy. were not a capitalist, if he had chosen not to produce beyond re- The Trading Instinct quirements for immediate con- The possibility of specialization sumption — well, there would never as population increases is en- have been what we call civiliza- hanced by another peculiarly tion. human characteristic — the trad- However, a prerequisite for the ing instinct. A trade is the giving appearance of capital is the as- up of something one has in order ===== PAGE 48 ===== 46 THE FREEMAN January to acquire something one wants. So it must be in his search for The trader puts less worth on what a more abundant life. If in his he possesses than on what he de- search for a good life the human sires. This is what we call evalua- must be allowed to make use of his tion. free will, why should he not be It is not necessary here to go accorded the same right in the into the theory, or theories, of search for a more abundant life? value except to point out that Many of the persons who would evaluation is a psychological proc- abolish free choice in the market ess. It springs from the human place logically conclude that man capacity to judge the intensity of is not endowed with free will, various desires. The fisherman has that free will is a fiction, that man more fish than he cares to eat but is merely a product of his en- would like to add potatoes to his vironment. This premise ineluct- menu; he puts a lower value on ably leads them to the denial of fish than on potatoes. The farmer the soul and, of course, the denial is in the opposite position, his barn of God. being full of potatoes and his plate Those who rail against the mar- devoid of fish. If an exchange can ket place as if it were a den of be effected, both will profit, both iniquity, or against its techniques will acquire an added satisfaction. as being founded in man’s inhu- In every trade — provided neither manity, overlook the function of force nor fraud is involved — seller the market place in bringing peo- and buyer both profit. ple into closer contact with one Only man is a trader. No other another. Remember, the market creature is capable of estimating place makes specialization pos- the intensity of its desires and of sible, but specialization makes men giving up what it has in order interdependent. The first pioneer to get something it wants. Man somehow or other made his entire alone has the gift of free will. To cabin; but his son, having accus- be sure, he may go wrong in his tomed himself to hiring a profes- estimates and may make a trade sional carpenter, can hardly put that is to his disadvantage. In his up a single shelf in a cabin. And moral life, too, he may err. But, today, if some catastrophe should when he makes the wrong moral cut off Madison from the sur- choice, we hold that he should rounding farms, the citizens of suffer the consequences, and hope the city would starve. If the mar- that he will learn from the un- ket place were abolished, people pleasant experience. would still pass the time of day or ===== PAGE 49 ===== 1959 FREE WILL AND THE MARKET PLACE 47 exchange recipes or bits of news; In our lexicon we refer to a busi- but they would no longer be de- ness undertaking by the govern- pendent on one another, and their ment as a social service; but this self-sufficiency would tend to break is a misnomer, because we can down their society. For that rea- never be certain that the service son we can say that society and rendered by the government busi- the market place are two sides of ness is acceptable to society. So- the same coin. If God intended ciety is compelled to accept these man to be a social animal, he in- services, or to pay for them even tended him to have a market place. if unwanted. The element of force is never absent from a govern- Traders Serve One Another ment-managed business. On the But, let us return to our imagi- other hand, the private entrepre- nary experiment, We found that neur cannot exist unless society as the pioneer colony grew in num- voluntarily accepts what he has to bers, a tendency toward specializa- offer; he must render a social tion arose. It was found that by service or go out of business. this division of labor more could be produced. But this profusion Profits Come from Patrons from specialization would serve no Let us suppose that this shoe- purpose unless some way were maker is especially efficient, that found to distribute it. The way is many people in the community to trade. The shoemaker, for in- like his service and therefore stance, makes a lot of shoes of trade with him. He acquires what various sizes, but he is not inter- we call a profit. Has he done so at ested in shoes per se; after all, he the expense of his customers? Do can wear but one pair and of they lose because he has a profit? one particular size. He makes the Or, do they not gain in proportion other shoes because other people to the profit he makes? They want them and will give him in patronize him because the shoes exchange the things he wants: he offers’ are better than they bread, raiment, books, what not — could make themselves or could the things in which his interests get elsewhere, and for that reason naturally lie. He makes shoes in they are quite willing to trade with order to serve himself, but inorder him. They want what they get to serve himself he has to serve more than they want what they others. He has to render a social give up and therefore profit even service in order to pursue his own as he profits. search for a more abundant life. If he goes wrong in his esti- ===== PAGE 50 ===== 48 THE FREEMAN January mate of their requirements, if he through the instrumentality of its makes the wrong sizes, or styles price-indicator. On this instrument that are not wanted, or uses in- are recorded in unmistakable ferior materials, people will not terms just what the various mem- patronize him and he will suffer bers of society want, and how a loss. He will have no wage re- much they want it. If the hand on turn for the labor he puts in and this indicator goes up, if higher no return for the capital —the prices are bid for a certain com- hides and machinery — which he modity, the producers are advised uses in making his unwanted prod- that there is a demand for this uct. The best he can do under the commodity in excess of the sup- circumstances, in order to recoup ply, and they then know how best some of his investment, is to hold to invest their labors for their a bargain-basement sale. That is own profit and for the profit of the correlative of profits —losses. society. A lower price, on the other No entrepreneur is wise enough hand, tells them that there is a to predetermine the exact needs superfluity of a certain commod- or desires of the community he ity, and they know that to make hopes to serve and his errors of more of it would entail a loss be- judgment always come home to cause society has a sufficiency. plague him. But, the point to keep The price-indicator is an auto- in mind is that when an entrepre- matic device for recording the neur profits, he does so because he freely expressed wishes of the has served his community well; community members, the tally of and when he loses, the community their dollar ballots for this or that does not gain. A business that fails satisfaction, the spontaneous and does not prosper society. noncoercive regulator of produc- tive effort. One who chooses to tamper with this delicate instru- The market place not only fa- ment does so at the risk of pro- cilitates the distribution of abun- ducing a scarcity of the things dances — including the abundances wanted or an overabundance of that nature has spread all over unwanted things; for he disturbs the globe, like the coal of Pennsyl- the natural order. vania for the citrus fruit of Flor- ida, or the oil of Iran for the cof- Beneficiaries of Competition fee of Brazil — but it also directs One more social function of the the energies of all the specialists market place needs mentioning. It who make up society. This it does is the determinant of productive The Distributive Function ===== PAGE 51 ===== 1959 FREE WILL AND THE MARKET PLACE 49 efficiency, provided, of course, it is greater the fund of satisfactions permitted to operate according to in the market place. Oddly enough, the unimpeded motive power of the competitors do not suffer be- free will. In the primitive econ- cause the abundance resulting omy we have been examining, one from their improved efficiency at- shoemaker can take care of the tracts more shoe customers; “com- shoe needs of the community. Un- petition,” the old adage holds, “is der those conditions, the efficiency good for business.” of that server is determined by If, perchance, one of the com- his skill, his industry, and his petitors cannot keep up with the whim. He alone can fix the stand- improving standard of perform- ard of the service he renders his ance, he may find himself out of customers, or the prices he business; but the increased pro- charges. Assuming that they can ductive activity resulting from the go nowhere else for shoes, their competition means that there are only recourse if they do not like more productive jobs to be filled, his services or his prices is either and in all likelihood he can earn to go without or to make their more as a foreman for one of the own footwear. competitors than he could as an As the community grows in entrepreneur. Even those physi- size, another shoe specialist will cally unable to care for them- show up to share the trade with selves and dependent on others are the first one. With the appearance benefited by competition; when of a second shoemaker the stand- there is an abundance in the mar- ard of efficiency is no longer de- ket place, charity can be more termined by one producer. It is de- liberal. termined by the rivalry between them for the trade of the com- Immutable Laws Prevail munity. One offers to fix shoes I am not attempting here a com- “while you wait,” the other lowers plete course in economics. What I his prices, and the first one comes have tried to show is that in eco- back with a larger assortment of nomics, as in other disciplines, sizes or styles. This is competi- there are inflexible principles, in- tion. evitable consequences, immutable Now the beneficiaries of the im- laws written into the nature of proved services resulting from things. Exercising his free will, competition are the members of man can attempt to defy the law society. The more competition and of gravitation by jumping off a the keener the competition, the high place; but the law operates ===== PAGE 52 ===== 50 THE FREEMAN January without regard for his conceit, lowed any legal scheme to subsi- and he ends up with a broken neck. dize his inefficiency at the expense So, if the first pioneer had set of taxpayers. If early Madisonians up with force of arms a claim to had decreed to abolish the market everything produced in the Madi- place with its price-indicator, spe- son area, other pioneers would cialization and exchange would not have come near, and the com- have been thwarted and the econ- munity known as Madison would omy of Madison would have been never have been born. Or, if he characterized by scarcity. could have collected tribute, also The laws of economics, like by force of arms, from every pro- other natural laws, are self-en- ducer in the area, he would have forcing and carry built-in sanc- driven prospective specialists to tions. If these laws are either un- places where private property was known or not heeded, the inevi- respected. If the first shoemaker table eventual penalty will be an had established himself, with the economy of scarcity, a poor and help of law, as a monopolist, bar- uncoordinated society. Why? Be- ring competition, the shoes that cause the laws of nature are ex- Madisonians wore would have been pressions of the will of God. You of poor quality, scarce, and costly; cannot monkey with them without the same result would have fol- suffering the consequences. ® o eo | tosas @KN R(IBRRBJY Vocational Education EDUCATION . . . may be regarded as a means to economic work; reading, writing, and arithmetic are necessary for tradesmen. But when they are taught and learned only for that purpose, they are diverted from their natural use, which is to merge into liberal arts and be intrinsically liberal, since they employ and liberate the spirit. They should be taught, even in their elements, as arts, as games, as occasions for delight; and then their utility in the business world will not prevent them from remain- ing essentially liberal. Even if not pursued beyond their material occasions, they will retain an intellectual vitality and be play for the mind while they serve the world. GEORGE BANTAYANA, Dominations end Powers ===== PAGE 53 ===== A TALE OF // ISLANDS —- - - - . oC ~ —-— With a moral for all who plump for the Welfare State CoLM BROGAN THE JUSTICE and advisability of at times is impassable. In short, it using funds from the central tax- is an island where life would be ing power to finance purely local best maintained by a high degree projects with a purely local bene- of self-sufficiency. fit is naturally a much more im- But that is not the case, for portant issue in the federated Eigg is maintained by government United States than it is in Great and county subsidies; and the Britain with its unitary govern- economic and moral results are a ment. But if Britain has no Ten- wonder to behold. I spent some nessee Valleys, it nevertheless has time of the summer of 1945 on the its own small areas kept going and island during the election cam- improved by the general body of paign which ended in a great La- taxpayers who stand to gain noth- bour victory. There were three ing whatever for the subsidies candidates for the huge and scat- they pay. tered constituency, Socialist, La- For instance, there is the island bour, and Conservative. Each of of Eigg. People who sang in school the candidates paid a “duty” visit the Jacobite song, Over the Sea to to the island and addressed the Skye, will also remember that Eigg voters in the little school. The is- was one of the islands Bonnie lander I knew best was the most Prince Charlie passed on his way intelligent and most enterprising to exile. It is one of the nearest of man in the community. I asked the islands of the Inner Hebrides, him what he thought of the three but it is still separated from the candidates. He replied, “I didn’t mainland by twelve miles of very go to any of the meetings. Politi- deep and very stormy Sound that cians are all the same. They want Mr. Brogan is a well-known British journalist. US to do something for them, but 51 ===== PAGE 54 ===== 52 THE FREEMAN January what I want to know is — when is on it for two years.” That did not the government going to do some- in the least mean that he was in- thing for us?” different to his duties. He told me that he had recently made a strong and successful application to have It was a question that made me his salary increased. think. All goods destined for the Nevertheless, the state of the island were taken by a steamer of road was a source of vexation to the Highland line, unloaded into the inhabitants. They asked the a small lighter, and then landed on laird, a wealthy shipowner, to the island’s pier. Every single have it repaired for them. They parcel delivered carried a govern- told me with real indignation that ment subsidy. his reply to this modest sugges- There was a telephone exchange tion was distinctly offensive. He on the island, connected with the had ordered his estate workers to mainland by a cable under the smash up a considerable quantity deep Sound. Naturally, the ex- of road building stone and leave it change required an operator. in heaps along the roadside so that There were two telephones. There the islanders could get to work were three postal collections and and repair the road themselves. four deliveries every week, de- The islanders took this as a snub manding a part-time postman. He and left the crushed stone where never had a delivery or a collection it was. that he could not easily stick in his On another occasion the laird jacket pocket, except, of course, let them down in a similarly heart- for the odd parcel. I made a guess less fashion. It was generally that each letter cost the General agreed that the little pier was on Post Office something approaching the wrong side of the island and two shillings (28 cents). a public-spirited citizen organized The island had one road and a a strong communal effort to do man was paid an annual retainer something about it. According to to keep it in repair. The road was the story, the strong communal nothing better than a string of effort consisted in asking the laird potholes that left you up to the to build a pier for them. He re- ankles in water on a rainy day. I fused. And that was the end of asked the roadmender when he their effort. had last repaired the road. He The island had a population of said with beautiful simplicity, “I about 130 — men, women, and chil- haven’t been able to put a finger dren — one-third Catholic and two- Subsidies Everywhere ===== PAGE 55 ===== 1959 A TALE OF TWO ISLANDS 53 thirds Protestant. To meet their counted for by the absence of the religious needs, the mainland Catholic priest who was on vaca- maintained a Protestant minister tion. On the day of his return, he and a Catholic priest. To meet went out in his boat and came their educational needs, the main- back with enough fish for the land maintained a village school whole island. It was as easy as for a score or so of children from that, but the islanders had waited the age of five to the age of twelve. without fresh fish till he came At the age of twelve all the chil- back to catch some for them. dren were sent to board on the On the last day of my stay, I mainland for secondary education walked across the island with my at public expense. To meet their friend who had asked when the medical needs, there was a doctor, government would do something paid for by the government. for him. He pointed to a small glen which was a wilderness with The Unhappy Consequences the bracken growing eight feet It seemed to me that the eco- high. “When I was a boy,” he said, nomic basis of the island was a “there were several nice little solid foundation of subsidies, crofts [tenant farms] in that enough in quantity to provide in- glen.” He waved a sadly eloquent come for all the inhabitants. What hand. “Just look at it now.” It was were the results, apart from the certainly something to look at. I ruined road and the nonexistent could not see any trace or sign new pier? The children looked pale that the place had ever been in- and listless, which was hardly sur- habited. prising in view of their artificial diet largely supplied by the only Disaster Strikes shop. This was a Cooperative shop My experience on Eigg im- which the islanders had formerly pressed me much at the time, but run themselves; but they had sold it more or less slipped my memory out to the Wholesale Cooperative till a truly terrific storm hit the Society. For the first three weeks Orkney Islands some years later. of my stay, it was impossible to A wind of tornado force blew day get fish on the island, though the after day. The sea was totally im- sea around was stiff with fish. I passable and the islands were saw children buying tinned pil- beleaguered. Even when the wind chards in the shop —tinned pil- subsided, the seas were still moun- chards in the Hebrides. tains high, and aircraft spotters The absence of fish was ac- reported very heavy damage with ===== PAGE 56 ===== 54 THE FREEMAN January the almost total destruction of woman at first was puzzled; but many farm buildings. Manifestly, when the nature of his offer something must be done for the dawned on her, she brandished her Orcadians in their plight, and the broom and threatened to beat him Scottish Office in Edinburgh was about the head if he did not de- all set and eager to show what it part without a second’s delay. She could do. had been grossly insulted. As soon as it was possible to That was the spirit of the Or- take to sea, a ship set off with a cadians. They had endured storms Swiss-Family-Robinson cargo, before and would endure them containing everything that the Or- again; but they wanted no help, cadians could conceivably or in- except on a reciprocal basis from conceivably need. There were also their own kind. You can travel the experts thirsting to help and to Orkneys from end to end without advise, and carrying with them a finding an abandoned cottage considerable sum of money to meet buried in bracken. The Orkneys immediate cash requirements. are thriving. Eigg is dying. However, when they reached the Orkneys, they got a surprise. The When I read of the woman with work of repair and restoration her broom, my mind went back was already proceeding like light- to my friend on Eigg: “When will ning, each man helping himself the government do something for and lending a ready hand to his wus?’ The answer seemed sadly neighbor, This was truly a com- simple. munity effort, sparked by a “This is what the government genuine community spirit and has already done for you: The stout independence. death of initiative and effort, ab- One unfortunate civil servant, dication of responsibility, depend- bursting with good will, came to a ence on others —and the wilder- farmhouse door and asked the ness creeping in.” housewife to tell him exactly what There is no help for those who she needed, including money. The will not help themselves. eo eo eo | meas ®N 100eD0Y | Self-Help WHATEVER is done for men or classes, to a certain extent takes away the stimulus and necessity of doing for themselves; and where men are subjected to over-guidance and over-government, the inevitable tendency is to render them comparatively helpless. SAMUEL SMILES ===== PAGE 57 ===== Doviet - Lotteving fr LAWRENCE SULLIVAN As la DR. LIN YUTANG, the distinguished of communist imperialism and its Chinese historian, addresses his semantic development is titled The new chronicle of the Lenin-Stalin Secret Name, published by Farrar, years in Russia directly to the Straus and Cudahy, New York, at “penthouse communists of New $3.95. York.” Despite the fact that twenty na- It is the New York intellectuals tions already have been slugged and dilettanti, says Lin, who sus- into the black pit of Kremlin colo- tain doddering communism nialism, such nationalist charac- throughout the entire Western ters as Nehru of India, Sukarno Hemisphere. They are the only of Indonesia, and Nasser of Egypt people in the world today who have yet stand ready today to deliver missed the great historical fact their captive peoples into a new of the last decade, namely, that the cycle of “peaceful coexistence,” “Worker's Paradise” presented in just as Poland, Czechoslovakia, Karl Marx's psychopathic essays Romania, and China began, some of the mid-nineteenth century, is thirteen years ago. now the cruelest, most extensive, But fortunately, says Lin and most oppressive colonial em- Yutang, the immutable forces of pire in all human history. history — hunger and unquench- Throughout Khrushchev’s far- able nationalism —~now have flung firing-squad empire, the caught up with Kremlin promises. worker has been frozen to his job, “Personally, I have come to the reduced to abject slavery; and the conclusion that the Russian em- independent landowning farmer pire —the present Soviet regime has been obliterated from the face — will be destroyed by the prob- of the earth — all this in the name lems of its colonies first, and by of “the people’s democracy.” its own domestic class struggle Lin Yutang’s scholarly history later... . Soviet Russia today has — caught itself in an impossible di- Mr. Sullivan is Coordinator of Information, n . U.S. House of Representatives. lemma with regard to its twenty 55 ===== PAGE 58 ===== 56 THE FREEMAN January colonies. . . . Hungary is merely a third in forty years. The index of striking example. The storm is real wages, 100 in 1913, stood at gathering, not slackening. ... The 68 in 1937, and has declined dilemma is this: today Russian steadily during the last twenty communists can love Russia, but years, although no official figures Polish communists cannot love have been published by Moscow Poland first without being labeled since 1939. ‘traitors.’ Workers and peasants together “The fact is that Russia is get- make up 75 per cent of Russia's ting found out. Very gradually, its population, but they share only 62 true character behind its ideo- per cent of the national income. logical facade is being perceived. The next 35 per cent of income The judgments of the common goes to government bureaucrats people go upon deeds, not words and military personnel, who to- . it is in the nature of things gether make up only 15 per cent that a sham or a lie gets found of the population — the new ruling out if the people are given enough class. Slave labor accounts for 10 time. . . . The disintegration of per cent of the population and the Russian empire began in 1953. gets about 3 per cent of the na- . . . That is why, for Russia, the tional income. status of the East European coun- Thus, the communist bureauc- tries must unconditionally remain racy of some 8,000,000 officials a closed topic at any summit con- and army brass now constitutes ference. .. the lowering standards the new ruling caste, and “almost of living in Russia's occupied ter- nothing remains of the original ritories is insoluble. . . . It is a Marxism.” strange and sad sight to see the Thirty million people at the top governments of the Free World of the communist bureaucracy en- afraid to make an issue of the joy more than one-third of the freedom of the satellite countries.” gross national product, while the Within Russia proper, food other 170 million workers, peas- prices have multiplied by fifteen ants and slaves at the bottom of since the Bolshevik Revolution in the socialist pyramid, share the 1917, and monetary wages to fac- remaining two-thirds. Such are tory workers have multiplied by the forces which foretell the only ten. Thus, the purchasing eventual collapse of Russian com- power of the average worker's munism from within, says Lin wage under communism has di- Yutang. minished by approximately one- “This totalitarian regime has ===== PAGE 59 ===== 1959 SOVIET EMPIRE TOTTERING b7 resulted in a number of contra- peace of the world. The Kremlin dictions, in misery, despair, and dare not commit its military resentment among the masses, and forces away from home, lest the confusion and degeneracy among sullen, resentful workers and peas- the ruling privileged class.” ants tear the new two-gun ruling Happily for freedom, all these class to pieces in a revolt which explosive class pressures within would make 1917 look like a Sun- Russia today tend to stabilize the day school picnic. eo 0 N hy a TU Ton ww | A LIBERTARIAN MANIFESTO ALEXANDER ST.-IVANYI IT IS NOT an everyday occurrence liver six lectures on the philosophy that a country like Argentina, of liberty in Buenos Aires. (Pub- hardly out of the lethal embrace lished under the title, Why Not of a dictatorship Scylla, and ap- Try Freedom? The Foundation prehensive lest it fall under the for Economic Education, Inc, spell of a U.S. Charybdis, should 1958, 94 pp., $1.00.) The invita- turn for advice to an American. tion merits the compliment of Yet, the Centro De Difusion De every free man, directed both to La Economia Libre of that coun- Centro and to Mr. Read. try invited Leonard-E. Read to de- These lectures deserved, nay, Dr. St.Ivanyi is minister of the First Church they needed to be printed. They of Christ, Lancaster, Massachusetts. He is the are about as lucid and as convine- Unitarian Bishop Vicar of Hungary and ex- member of that country's Paslament He hes ing presentations of the libertari- ===== PAGE 60 ===== 58 THE FREEMAN January an point of view as this reviewer out,” speaking articulately and has yet seen. This is the reason without fear. why I cannot resist the temptation From the ideological angle, to call this book a Libertarian Read finds that “the goal of man’s Manifesto. True, the word ‘“mani- earthly striving” must be “viewed festo” carries unsavory memories within a moral and spiritual with it, reminding us of the Com- frame of reference.” Conse- munist Manifesto of Marx and quently, “any behavior, personal Engels. I have, however, another or collective, which tends to retard manifesto in mind, an older and man in his pursuit of the ideal life healthier manifesto than the 1848 is...ipso facto bad, evil or im- document. It is the Huguenot moral.” It is to be noted — with Manifesto I am thinking of, those great satisfaction on the part of touching appeals for sanity in a this reviewer — that Read dares to time when the ruling clique of return to the moral and spiritual France went berserk with intoler- frame of reference in this age of ance. In a similar vein, Read ap- materialistic sociology and a peals for sanity in a world where statesmanship of expediency. This all the winning cards seem to be return, however, is not based on in the hands of collectivist auto- empty traditionalism or pious ob- crats. scurantism. Read has solid ground under his feet. He develops his A Moral Frame of Reference thesis through man’s “own unique The book presents a well-rea- capacities” and their uninhibited soned and systematically devel- expression in ‘energy exchanges” oped argument for the libertarian and a “dependence on interdepend- world view. Yet, an impassioned ence,” in which process each indi- undertone can be detected between vidual’s unique capacities will aug- the lines. Sentences which are as ment and inspire the unique ca- beautiful as they are quotable, re- pacities of others. “Each individ- mind us of the author’s concern. ual has a vested interest in all “Like it or not, we are at the others being different,” points out mercy of our reasoning....Liberty Read in another fine and quotable ...is man freeing himself from his sentence. All this he demonstrates own negations. ...Liberty depends through recent electrobiochemical on eloquence.” And this book is findings of Millikan and Eulen- eloquent — not in an oratorical burg-Wiener. way, but in the original meaning It is to be expected that this of the word, i.e. it is “speaking book will be rewritten, partly be- ===== PAGE 61 ===== 1959 A LIBERTARIAN MANIFESTO 59 cause these lectures were beamed fluence of our fears, ignorance, at an Argentine audience and and superstitions. Through other partly because in one or two points writings of the author we suspect the author did not fully develop that he can answer this seeming his theme. One of the items where contradiction, but he had no space this reviewer would like to have to do that in this book. more clarification is the seeming Another example of this “lack contradiction between the above of explanation due to lack of “energy exchanges” and the state- space” is the author’s motto, “Go ment on page 28 that “inhibitory where you are called,” instead of influences...one’s ignorance, fears, “Preach ye upon the house-tops.” superstitions — are personal and Emerson is often misquoted into not social.” Whether we look at it saying: “If you build a better from the standpoint of modern mousetrap than your neighbor, psychology or from that of the the world will make a beaten path author’s very excellent insistence to your door.” What Emerson on “energy exchanges,” we must really said is this: “I trust a good admit that fears, superstitions, deal to common fame as we all and so forth, seldom develop in must. If a man has good corn... the individual without environ- or can build a better church organ mental influence. Our education, than anybody else, you will find a the family, the culture in which broad, hardbeaten road to his we were brought up have a large house, though it be in the woods.” share in developing superstition, Of course, “common fame” needs fear, and other maladjusted emo- better media of communication tional reaction patterns. Neither today than rural New England is this problem an academic one had in Emerson's time, even since the author lays great empha- though Emerson himself made use sis on an Emersonian ‘“self-reli- of preaching, lecturing exten- ance” in the second half of his sively, and writing in The Dial to book. Yet, Emerson himself knew create that “common fame.” In that “a man is a bundle of rela- other words, libertarianism must tions,” even though he was “pre- make use of the available channels psychological.” “Relations” are so- of communication today if we cial phenomena and so are fears want our collectivistically indoc- and superstitions to a large ex- trinated world to know about it. tent. We cannot be “self-reliant” Among other things, we need such if we mistakenly diagnose our lucid and well-reasoned books as weaknesses, i.e., the inhibitory in- Why Not Try Freedom? eo eo eo ===== PAGE 62 ===== A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN TWISTED HISTORY ACCORDING to Frank Freidel, who Mr. Root. But basically the Miller contributes the introduction, Wil- history is just more of the same liam Miller's A New History of thing. Following virtually all the the United States (Braziller, 474 precedents of recent historical pp., $5.00) “succeeds in escaping writing, it makes ‘money’ and entirely the pitfalls” of such “materialism” and “laissez faire” things as “crude” Marxism, or the villains of the piece, albeit strict economic determinism, or with certain suave disclaimers in Freudian iconoclasm. The book is matters of detail that do set it a offered as a “mellow” and “judi- bit apart from the “crude” Marx- cious” interweaving “in bright ism and “strict” economic deter- hues” of many of the theses of minism of the older texts. American history. Mr. Root’s book deals with the Coming up for air after a de- eleven textbooks that have been pressing experience with E. Mer- used in Evanston Township High rill Root’s Brainwashing in the School in Evanston, Illinois, which High Schools: An Examination of he takes as a representative sub- Eleven American History Text- urb. As Mr. Root puts it, at least books (Devin-Adair, 277 pp., ten of the eleven texts “interpret” $4.50), a reader would naturally the American story as a perpetual turn to a “judicious” and “mel- war of “evil” conservatives and low” history text with avidity. ‘“heart-of-gold” liberals. The treat- But, alas! The stereotypes which ment of the so-called Gilded Age have governed our historical writ- in these texts is significant: in ing for twenty-five years and more this period of American life “Big have become so deeply etched that Business” is represented as taking there seems to be no getting away over the dominant Republican from them. party and making it the servant Mr. Miller's book is compara- of “Mammon.” (Mr. Root is quot- tively mellow and comparatively ing from the text of David Saville judicious when one sets it off Muzzey.) The American story of against some of the texts cited by the post-Civil War period is re- 60 ===== PAGE 63 ===== 1959 TWISTED HISTORY 61 duced to a series of victories for that he has let other people estab- “the doctrine of laissez faire” (see lish his premises for him. His the text of Leon H. Canfield and chapter on the post-Civil War Howard B. Wilder) as against the period is written in sprightly “people.” The vital uses of capital fashion, but the thinking that un- (to put tools in the hands of derlies it has obviously been done workers and a steadily increasing by Professor Richard Hofstadter, supply of goods and services in who has recently tagged the the hands of consumers) is more Gilded Age as the creature of or less ignored as being entirely something known as “social Dar- beside the point. winism.” Taking his cue from . Hofstadter, Mr. Miller blames the The Wrong Premises flavor of the period on Herbert Instead of dealing with the Spencer and “Yale's notable Spen- Gilded Age in a really “mellow” cerian sociologist, William Graham and “judicious” way, Mr. Miller's Sumner.” These men, through “new” history boldly proclaims “analogies with Darwinian biol- that the post-Civil War period was ogy,” allegedly sought to sanction one of ‘tooth and claw in the a jungle philosophy of competi- world of business.” Well, no one tion—a “Calvinism conveniently would deny that there was con- bereft of conscience, a philosophy siderable financial buccaneering of success without the saving during the epoch of Jim Fisk and grace of stewardship.” Jay Gould. But the “tooth and claw” stereotype has become so in- Conscientious Objectors grained as a staple of historio- Now, it is true that in England graphy that Mr. Miller cannot see ‘‘Spencer forbade restrictive, the wrong he is doing to the crea- ‘meddling’ legislation” and that tive accomplishments of the late Sumner followed suit in America. nineteenth century when he comes But they did this because of “con- to distribute his emphases. It is science,” not in spite of it. Spen- only as an afterthought that Mr. cer’s attitude was conditioned by Miller refers to the “feat” of our a prolonged study of the histories railroad builders “in crossing the of two types of organization, the wild plains and the enormous “military” and the “industrial.” mountain ranges” as “one of the On the basis of his investigations, great engineering accomplish- he decided that state interference ments of history.” in the industrial process demanded The trouble with Mr. Miller is military justification to keep it ===== PAGE 64 ===== 62 THE FREEMAN January from becoming mere exploitation unfair things which they would of the people by an entrenched else do.” Of employers Spencer political elite. His conscience told said: “Conscious that trade unions him that the more the State in- are ever ready to act, they are tervened in industry, the closer more prompt to raise wages when we would approach a ‘coming trade is flourishing than they slavery.” And the new slavery would otherwise be; and when would be truly a “tooth and claw” there come times of depression, proposition — “Darwinism” at its they lower wages only when they crudest. cannot otherwise carry on their business.” Pioneers of Sociology Continuing in this vein, Spencer In reading Mr. Miller's refer- remarked that “social life at large ences to Spencer and Sumner, one is a progress in fitness for living wonders if the author of this and working together; and all the “new” history has ever actually minor societies of men formed read what the two pioneers of within a major society — a nation sociology really had to say. Far — subject their members to sets from exalting the Jay Gould-Jim of incentives and restraints which Fisk type of buccaneering, both increase their fitness. The in- Spencer and Sumner thought of duced habits of feeling and capitalism as a method of com- thought tend to make men more bining efforts to get the advan- available than they would else be, tages of more and more sophis- for such higher forms of social ticated types of cooperation. organization as will probably here- Spencer made a study of such after arise.” “gain-sharing” devices in indus- try as were utilized by companies Voluntary Assistance like the Yale and Towne Manufac- In brief, far from being an ad- turing Company of Connecticut. vocate of “tooth and claw’ prac- He preferred the word “gain- tices, Spencer was as much a de- sharing’ to “profit-sharing.” votee of “mutual aid” as Prince Moreover, he was one of the first Kropotkin. But he wanted the discerning historians of the Roch- practice of mutual aid to be vol- dale cooperative movement. He untary, or, if practiced under tacit even praised trade unions as ‘“na- duress as a matter of avoiding re- tural to the passing phase of so- taliation, to be carried on without cial evolution” in that they “pre- recourse to the political compul- vented” employers “from doing sion of the State. ===== PAGE 65 ===== 1959 TWISTED HISTORY 63 The Sumner that is invoked by moting highly pernicious restric- Mr. Miller is no more real than tive legislation that denied their the Spencer. “We are led by scien- own lip-service precepts of free- tific knowledge,” said Sumner, “to dom. But the “capitalists” were combine our efforts by cooperation not alone in their promotion of so that we can make them more abuses and ‘“‘steals.” Said Sumner: efficient.” But the combination, to ‘The abuse...is perpetrated by be useful, must be voluntary. In everybody. Capitalists try to get a his essays on “Earth Hunger,” protective tariff. They turn to the “Social Power,” and ‘“Concentra- laborers and say the tariff will tion of Wealth,” Sumner sought to raise their wages, and the laborers establish the relationship of ethics respond at once to the pocket and the “family system” to the argument. Everybody who can get economic system. He reached the a pension votes for pensions re- conclusion that economics was an gardless of justice, right, truth, extension of ethics. Organization public welfare, and all those other in industry promoted the “senses” noble things.” of ‘‘association” and ‘“coopera- tion.” Indeed, to Sumner, one of Capitalism Approved the great bequests of the nine- In criticizing the abuses of the teenth century to the twentieth ‘“plutocracy’” that sought special was an intricate tissue of many privileges, Sumner was careful, patterns of voluntary cooperation, however, not to throw the baby including trade unions and all the out with the dirty water. His forms of insurance. pages are filled with good things about the beneficence of capital Special Privilege Opposed when it is rightly used. And in his Does this sound like a sanction remarks about progress in the for the way in which Jay Gould “mechanic arts,” Sumner antici- and Jim Fisk behaved with the pates everything that is good in Erie Railroad? Always ethical in judging, Sumner regarded the worst features of the Gilded Age Any book reviewed in this Book Section (or as the product of an unfortunate ony other current book) supplied by return backsliding from a laissez faire mail. You pay only the bookstore price. Wo that would permit men to cooper- pay the postage anywhere in the world. ate without bringing in the gov- Cotalogue on request. ernment. He condemned the “plu- | yye sookmAILER, Box 101, New York 16 tocracy” of the period for pro- ===== PAGE 66 ===== 64 THE FREEMAN January Veblen’s pages about the “instinct not a significant departure from of workmanship” without being what has gone before it. The key led astray, as Veblen was, by the lies in Mr. Miller's treatment of temptations of an all-too-easy the Gilded Age — an age in which irony. American energies burst all Although he is entirely imita- bounds. Mr. Miller betrays a dis- tive in his misinterpretation of trust of inventiveness and fecun- Spencer and Sumner, Mr. Miller dity simply because they make for does not deal solely in the blacks disorder as well as plenty. A little and whites that one finds in the of the spirit of the late Garet history texts mentioned in Mr. Garrett's The American Story Root’s Brainwashing in the High would greatly have improved Mr. Schools. For all that, his book is Miller's text. eo 0 We invite your subscription to MODERN AGE A CONSERVATIVE REVIEW Published Quarterly Edited by RusseLL Kirk VoL. 3, No. 1 (Winter 1958-1959) Humane PovriTics Including contributions by Richard M. Weaver, Raymond English, Willmoore Kendall, Austin Warren $4.00 per year $1.25 per copy Address: 64 East Jackson Boulevard, Chicago 4, Illinois ===== PAGE 67 ===== THE FOUNDATION FOR ECONOMIC EDUCATION just off the press, in the series of ESSAYS ON LIBERTY. This brings to 5 the number of volumes in this set, including a total of 239 of the best essays and articles published by FEE since 1946 on the private property, free-exchange, limited government philosophy, by the most distinguished libertarian writers and thinkers of today and yesteryear. TO OWN: An invaluable addition to any libertarian’s library TO GIVE: A timely and helpful expression of faith in free men: | THE 5-VOLUME SET: Paper cover, $8.00; cloth, $11.00 Volumes | and Il, published in 1952 and 1954: Paper, $1.50 each; cloth, $2.50 each Single volumes: y mec 11, tv, and v, published in 1958: Paper, $2.00 each; cloth, $3.00 each ORDER NOW: For your own library, for business and public libraries, or as gifts to students, teachers, clergy, friends, business and professional associates. THE FOUNDATION FOR ECONOMIC EDUCATION, irvington-on-Hudson, New York ===== PAGE 68 ===== FROM A LIBERTARIAN’S LIBRARY W nenEVER I hear that the government is helping someone, I feel sorry for that person. Or whenever I find that someone, by a monopoly grant of power, has a sure market or a sure job, I feel sorry for him too. Even helping a person to help himself may be a disservice to him; for you will probably — perhaps uncon- sciously — compel him to do it your way. Charity, if needlessly bestowed, probably will have a vicious effect. People who are promised support will hardly work. All grants, all subsidies, all rewards for services not rendered have a deleterious effect on character; and if character is not of foremost consideration, what is? From the article, “Security May Betray Us” by Archibald Rutledge in Essays on Liberty, Vol. III, Foundation for Economic Education, Irvington-on-Hudson, N. Y. 448 pp. $2.00 paper, $3.00 cloth, THE FREEMAN may be forwarded any- where in the U. S. A. No wrapper required. PLACE : 4%-CENT FoR: POSTAGE HERE To: dC Tm pe street — = —————— Ty city ) o0n0 state