===== PAGE 1 ===== IDEAS ON LIBERTY NOVEMBER 1964 When Wishes Become Rights . . . . . leonard E. Read 3 Authority Minus Responsibility . . . . Jess Raley 9 Why Speculators? . . . , . . . . Percy L. Greaves, Jr. 12 Moonlighting «+ + w+ + « . W.M. Curtiss 21 The Flight from Reality: 2. The Symptoms of the Flight . . . Clarence B. Carson 24 Free Speech . . . . . , . . . . Dean Russell 35 What Price Freedom? . . . . . . | Leopold Schwarzschild 37 The Road Is Better than the Inn. . . . Manos 47 On Minding One's Own Business . . . William Graham Sumner 49 The Invisible Hand . . . . . . . . Wyatt B. Durrette, Jr. 54 Books: The Case for the Free Market. . . . . John Chamberlain 56 Other Books . . . . . . . . . . 59 THE FOUNDATION FOR ECONOMIC EDUCATION, INC. Irvington-on-Hudson, New York 10533 ===== PAGE 2 ===== OUTSTANDING ADVANTAGES FOR COAST FEDERAL SAVERS FINANCIAL STRENGTH — Assets over half a billion dollars. Strong reserves and high ratio of cash and government bonds to assure with- drawal of savings immediately on request. HIGHER EARNINGS — Earnings for first six months of 1964 paid at 4.99% per year. SAVE-BY-MAIL — We pay postage. MEMBER: y |: ah Federal Savings and Loan Insurance Corp. fat! ERE oi Federal Home Loan Bank. IF IT'S SAFETY YOU WANT MOST— MAIN OFFICE OPEN YOUR SAVINGS ACCOUNT AT COAST 9th & Hill, Los Angeles “A Businessman Looks at Communism Vs. Capitalism” For your courtesy copy of President Joe Crail's speech, write to: Coast Federal Savings Post Office Box 5150A Los Angeles 55, California COAST FEDERAL SAVINGS | AND LOAN ASSOCIATION ===== PAGE 3 ===== »” To have wishes come true, without + Those who insist upon beginning to effort or cost, says Leonard Read, live in tomorrow's utopia face the sad must result in far more harm than prospect of not living at all. ...p. 47 good to mankind. .... ........ ... ..... p. 3 »# Jess Raley sees in the so-called 1» Our old friend, William Graham race riots the natural consequence of Sumner, advises once more that a welfare state policies that deny in- man's great duty to society is to mind dividual responsibility. ................ P. 9 his own business. .................... p. 49 » There's more than meets the eye to the recent closing of the Cotton 1 A part-time job in college affords a Exchange, alleges Percy Greaves, as clear example of the compatibility he shows the vital role of the specu- between self-interest and service to lator... P. 12 others. coi p. 54 » The more laws there are to limit a man's achievement in a given job, the + In the new book, Anything That's more he'll turn to ‘“‘moonlighting’’ and Peaceful by Leonard Read, John secondary sources of income. ...p. 21 Chamberiain finds renewal for his » In this chapter of his series on faith in free men and the free marke “The Flight from Reality,”” Dr. Carson details some of the outstanding symp- toms of the flight as revealed in po- + Monsieur Rueff, in The Age of In- litical actions to resolve economic flation, calls attention to serious problems. p. 24 problems facing monetary managers » Those who demand free speech, everywhere. .................. ...... p. 59 thinks Dean Russell, should be pre- } pared to accept the consequences » And Arthur Moor gains insight and when they speak out. ................ p. 35 inspiration from Buckminster Fuller's . dl ities. ............... . 61 » A distinguished refugee from Hit- Ideas and Integrities P ler's Germany offers a plea for free- dom and a solemn warning to those » Half a dozen of the best of the re- basking in the illusion that “it can’t cent books on conservatism are brief- happen here.” ....................... p. 37 ly reviewed by Edmund Opitz.....p. 62 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding. ===== PAGE 4 ===== nN THE Teemdn A MONTHLY JOURNAL OF IDEAS ON LIBERTY NOVEMBER 1964 Vol. 14, No. 11 LEONARD E. READ President, Foundation for Economic Education PAuL L. POIROT Managing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non- political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited government, founded in 1946, with offices at Irvington-on-Hudson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in- cluding THE FREEMAN, are met through volun- tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount — $5.00 to $10,000 — as the means of maintaining and extending the Foundation’s work. Copyright, 1964, The Foundation for Economic Education, Inc.-Printed In U.S.A, Additional copies, postpald, 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 fn whole FE or in part, providing customary credit Is given, except ‘The Flight from Reallty,” ‘What Price Freedom?'’' and “The Road Is Better Than The Inn.” Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing. ===== PAGE 5 ===== WHEN WISHES BECOME AA GEHTS \ ) LEONARD E. READ ER pe ’ REFLECT on the “backward” coun- you be willing to assume the role tries in the world; the “distressed of Aladdin and bestow benefac- areas” in the U.S.A.; the many in- tions like manna from heaven? dividuals who are poverty stricken, Perhaps you are among the lame, blind. Then add all the un- very few whose answer would be fulfilled desires and yearnings of an emphatic “No!” There are nearly 200 million Americans, those few who would immediately ranging from better food, hous- sense the consequences of such ing, clothing, medicine, hospitals, reckless “humanitarianism’”: no mink coats, and automobiles to more farming; the closing of all putting three men on the moon. factories and stores; trains and What a field for the would-be planes coming to a stop; students philanthropist if all these wants no longer studying; a heaven on were within his power to fulfill! earth —a veritable Shangri-La! No Let us imagine that you have more problems; labor passé; self- been offered a magic power to sat- responsibility “old hat”; effort isfy everyone’s material wishes relegated to the decadent past; all with no effort on your part. Sup- obstacles overcome for mankind! pose, for instance, that you had These few know that when there Aladdin’s lamp and could call up is no exercise and flexing of the a jinni that would confer any faculties, atrophy follows as a mat- good or service on anyone you ter of course and our species dis- might choose to help. If you could appears —all because everyone is thus satisfy desires for material granted riches for nothing more things with neither cost nor ef- than the wishing! fort on the part of anyone, would If this sort of magic were only 3 ===== PAGE 6 ===== 4 THE FREEMAN November half practiced, would the result sell it short; it is unbelievably still be bad? “Yes!” answered clever. Benjamin Franklin, “If man could Aladdin’s jinni performed only have Half his Wishes, he would on call; it responded to wishes double his Troubles.” We may in- when requested. This modern fer from this that if a man’s ob- American version, on the other jectives could be achieved for hand, displays zealous initiative in nothing more than wishes, no that it: good would be served, deteriora- tion would ensue. Struggle, earn- ing one’s spurs, conscious effort, calling on one’s potentialities and bringing them into use are essen- tial to survival — to say nothing of (3) progress. This is crystal clear to a few. But not to the many! (1) invents wishes for people; (2) persuades people that these wishes are their own and, then, actively solicits their gratification; convinces people that these wishes are among their natu- ral rights, and The Modern Jinni (4) casts itself in the role of : . LL | xr A majority of Americans, to- helper day, would accept the magic lamp. Mythology in its heyday never For it is obvious that most per- came up with a jinni to equal this. sons who would gratify a wish at Golden goals for people to the expense of others would more adopt? It was this jinni, not the readily do so at mo expense to people of the Tennessee Valley, others. Such wishers are among us that initiated TVA with its below- by the millions, all in pursuit of cost pricing. It was this jinni that something for nothing — effortless conceived ‘social security,” the wish gratification — at someone Peace Corps, and so on.! else’s expense. Further, the jinni insinuates its These many Americans have golden goals into the minds of found their magic lamp in the people as wishes capable of fulfill- Federal political apparatus, and ment. The jinni appears in nearly what a jinni! Aladdin's lamp every community of the nation and evoked a jinni of supernatural in many countries of the world powers; but this modern jinni is selling its wishing wares. Federal a composite of quite ordinary hu- — man beings and, as a consequence, | TE BOE CER BEY, TU IY it relies on the earthly ways of pemands...?” Sec THE FREEMAN, Au- humans. Even so, we must never gust, 1964, ===== PAGE 7 ===== 1964 WHEN WISHES BECOME RIGHTS 5 urban renewal projects are pro- Enjoyment of the arts and partici- moted far more by the bureauc- pation in them are among man’s racy in Washington than by local natural rights and essential to his citizens. Federal largess is urged full development as a civilized per- upon the citizenry. Of course, the son. One of the reasons governments reason is clear enough: urban re- hi instituted pein men is to make newal is an integral part of the this right a reality. numerous Federal “full employ- Except in this political never- ment” projects required as cover- never land, it would be absurd to ups of the unemployment caused labor the point that a mere wish by other Federal policies.2 for material betterment does not create a right to its fulfillment; that is, a wish does not, in any But it would hardly do for this moral or ethical sense, establish a Jinni to gratify wishes were the claim on someone else’s property. performance attended by any sense Yet, transparent as is such double- of guilt on the people’s part. So, think, this is precisely what is ac- how does the jinni dispose of this cepted by a majority of our coun- hazard? Simple! It transmutes trymen. When the intellectual, wishes into “rights,” and remains quoted above, insists that “enjoy- above suspicion in this legerde- ment of the arts and participation main. Do you wish a restoration in them are among man’s natural of your decaying downtown? Very rights,” he is not referring to a well; that wish is a right. Do you right to attend the opera provided wish lower rates for power and the citizen can buy his own ticket: light? Presto! The wish is aright. he means that the citizen has a Do you wish a better price for claim on the property of others to your tobacco, a better job, a better build opera houses and to stage education than can be had by your performances for his enjoyment. own efforts in willing exchange? Labor unions with their right-to- These wishes are now your rights. a-job concept and businessmen As one spokesman for the Federal with their right-to-a-market idea jinni so eloquently phrased it: (outlawing competition) are deal- —_— ing in the same category of false rights. Indeed, this can be said for Remove All Sense of Guilt 2 For a development of this point, see the chapter, “How Pressure Groups Cause Inflation” in my Anything That's Peaceful. (Irvington-on-Hudson, New Logs one Commonweal, August 23, York: The Foundation for Economic » P ’ Education, Inc., 243 pp. $2.50 paper; 4 See “Can Opera Be Grand If So- $3.50 cloth.) cialized 7” THE FREEMAN, September, 1962. ===== PAGE 8 ===== 6 THE FREEMAN November all of socialism — without execep- into rights will, in this you-and- tion! me situation, answer the above Rights, in the context under ex- questions in the negative. What amination, are claims. When we escapes them is that the problem say we have a right to life and is not altered one whit by adding liberty, we are staking out our one person or a hundred or a mil- claim to them. We find our sanc- lion of them. And, if it be con- tion for this in the self-evident tended that numbers do matter, fact that life and liberty are an then, pray tell, what is the magic endowment of the Creator, not of number? A majority? Must we not society or the collective or govern- infer from this majoritarian cliché ment. the indefensible proposition that But, when people say they have might makes right? Once we ac- a right to a job or to enjoy the cept the fallacy that a wish is a arts or to lower power and light right which, in turn, has to be rates or to an education or to a founded on the error that might decent standard of living, they are makes right, we are led, logically, staking out a claim to the fruits to the syllogistic conclusion that of the iabor of others. Where rests a wish is might. And what could the sanction for this claim? It be less rational than that? simply comes from the notion that a wish is a right. A Benevolent Role The absurdity of this wish-is- The modern jinni, however, a-right sanction comes clear if we must go on to even greater magic. reduce the problem to manageable For it is not adequate merely to proportions: a you-and-me situa- dream up wishes for people, to sell tion. Do I have a just or rational them on accepting the wishes, and or moral or ethical claim to use to solicit the gratification thereof. your income to build an opera And more is required than to house for me? Or to buy opera transmute the wishes into rights. tickets for me? Or to construct a One other bit of abracadabra is a golf course for me? Or to provide must if the jinni’s image is to re- a “living wage” for me? Do I have main unassailable: the jinni must a valid claim to use your income cast itself and be popularly ac- to erect my school and staff it with cepted in the role of helper. To be teachers, or finance my church and thought of as a modern Robin supply clergymen? Hood or as a robber of Peter to Most people victimized by the pay Paul would destroy the whole magic transmutation of wishes illusion. ===== PAGE 9 ===== 1964 WHEN WISHES BECOME RIGHTS 7 In any community in the land Help is a social term.® At least may be found people pointing with two persons — the helper and the pride to some “necessity” the local helped —are implicit in its mean- citizens could not or would not ing. There cannot be one without finance, explaining that it was the other. The extent to which one made possible “with the help of is helped is measured precisely by the Federal government.” Or, read the nature and amount of the at random on any subject falling helper’s contribution. What is re- within the enlarging Federal em- ceived by the one is what comes brace and you will come upon from the other. Nothing is altered statements like this: by the tramsfer. If the helper’s The cost of such machines is so help 18 a loaf of bread, the re- prohibitive that no one institution or C1P1ent is helped to the extent of company can undertake to build one. & loaf of bread. If the contribution In our country, it was only with the iS a rotten egg, the other gets a help of the Federal government... - rotten egg — nothing more nor that the cosmotron and its successors less! Emerson summarized these were built. (Italics added) facts succinctly and dramatically: The modern American jinni, Cause and effect, means and ends, lacking supernatural powers, can- seed and fruit, cannot be severed; not bring down manna from for the effect already blooms in the heaven. Being earthly, its manna cause, the end pre-exists in the is earthly in origin. Having noth- means, the fruit in the seed. ing whatsoever of its own, its Property taken without consent “gifts” must, perforce, stem from is correctly branded as ill-gotten.” what is taken by coercion from If passed on to another, the other others. It cannot be otherwise. receives ill-gotten property. Noth- But Is It Helpful? ing is altered by the transfer. Ac- ut is elptul? . 8 Lo. . . The questions posed are: Do ron help is irrelevant in this con these “gifts” qualify as help? Is , . this jinni, in fact, a helper? Are The collection of a tax to cover the o AP legitimate and principled functions of the “beneficiaries” really helped? government, related to keeping the If we can answer these questions peace, is self legitimate and princi- . : pled an rastically differs from a use in the negative, we come out from of the taxing power to feather the nests under the jinni’s spell. of some at the expense of others. See _— my Government: An Ideal Concept. 5 See The Atom by George L. Bush (Irvington-on-Hudson, N. Y.: The Foun- and Anthony Silvidi (New York: Barnes dation for Economic Education, Inc., & Noble, Inec., p. 109). $1.50 paper; $2.00 cloth) pp. 11-57. ===== PAGE 10 ===== 8 THE FREEMAN November cording to moral law, as well as must confine ourselves to those the law of the land, one who takes aids that stimulate the renewed property without the owner’s con- exercise of the volitional faculties sent commits a crime. When such in others. This suggests a rejec- property is passed on to and ac- tion of all powers to impose, leav- cepted by another, the other is ad- ing instead a reliance upon in- judged an accomplice to the crime. gathering or drawing power — that Property taken without consent magnetic, attracting, emulating cannot be given, for to give is force, the power that derives from conditioned on and presupposes such self-perfection as one may ownership by the giver. I cannot achieve.8 give that which is not mine. Thus, the jinni’s largess cannot qualify Not the Objectives, but the as gifts but only as loot. Citizens Means, Are in Doubt who have been pointing with pride I must not, in picking to pieces at their rebuilt downtown section the notion that wishes are rights, or at the new hospital “financed” leave the impression that wishes, by Washington or at their subsi- of and by themselves, are proper dized this-or-that should modify objects of scorn. On the contrary, their exclamations: “See what we wishes, hopes, aspirations are have done with the loot of the Fed- among the most important forces eral government!” motivating human progress, evo- Loot is not help, one who loots lution, emergence. At issue here is not a helper, and one who ac- is only the means of their gratifi- cepts the loot is not really helped. cation. Power to tamper with the voli- We who reject illusory schemes tional faculties of others is, in are not denying the good life to fact, a dangerous possession. Nor others but merely pointing out does it much matter whether this that these political nostrums can power be used to restrain these lead only to desolatory dead ends. faculties, as in private or politi- No good end can be reached by cal dictatorship, or exerted to re- choosing a wrong way. lieve the need for the exercise of While it is not the purpose of these faculties, as in private or Te Thi fe mot to b truod us an political welfarism. . However argument against the practice of charity strong the compulsion in most of in its best sense: coming to the rescue us to modify or improve the lot of of those who are at the end of their . . rope — a subtle, sensitive, secret, highly other people, if we would avoid : spiritual experience rarely dwelt upon causing more harm than good, we today, in or out of church circles. ===== PAGE 11 ===== 1964 WHEN WISHES BECOME RIGHTS 9 this paper to explain the right ing exchange, of common consent, way, that way is far from a secret of self-responsibility, of open op- — even though it be but little prac- portunity. It respects the right of ticed and only slightly perceived. each to the product of his own The right way is the greatest labor. It limits the police force to gratifier of human wishes ever keeping the peace. It is the way of come upon — when allowed to oper- the free market, private property, ate. It is as morally sound as the limited government. On its banner Golden Rule. It is the way of will- is emblazoned Individual Liberty. @® Reprints available, 10 cents each. UTHORITY minus ) ESPONSIBILITY | E—— JESS RALEY THE RAVAGING ACTION of a mob is Municipal, state, and Federal by no means humorous, but the governments stand accused of fail- so-called big city race riots have ure to provide their wards with produced some funny arguments. acceptable houses, education, and Among the reasons advanced as employment. We are told over and an excuse for the riots are the over again that the taxpayers owe heat and humidity, boring reruns these people better housing, but on TV, unemployment, poor hous: scarcely anyone seems willing to ing, illiteracy, lack of understand- suggest that any rioter who is un- ing by society, lack of opportunity, happy with his present abode and lack of recreation. No one should make an effort to build seems to have written or spoken himself a better one. a word to the end that any indi- We are told that more tax col- vidual involved was responsible for lections absolutely must be allo- his or her action. cated to educate the underprivi- SU EE— leged mobs, but hardly a voice Mr. Raley is a free-lance author, speaker, . el 4s 2 philosopher from Gadsden, Alabama. cries out for more individual ap- ===== PAGE 12 ===== 10 THE FREEMAN November plication to study and less atten- they want and destroy personal tion to the ravishment of teachers property for kicks. Having never as a possible remedy for illiteracy. been obliged to earn the price of Even the most severe critics of food or starve, provide shelter or mob rule rarely suggest that there freeze, they have no concept of are opportunities in America other the labor of love that begets pri- than an increase in welfare. vate property and no sense or The riots have been, and will be, knowledge of individual responsi- termed racial, to protect the illu- bility. sion that America’s list toward so- Since the early 1930’s, when the cialism is beyond reproach; but United States government ignored the root of this matter is more the limits of its vested authority psychic than racial. True, most of and accepted responsibility for the the rioters, to date, have been non- health and personal welfare of any whites because the larger concen- citizen willing to become a ward trations of state wards are found of the state, this theory of irre- among those groups in the big sponsible citizenship has grown. cities. These are the people who The theory holds that industrious, have been most successfully indoc- ambitious, responsible individuals trinated with the theory that should be penalized and that lazy, everyone has an inherent right to irresponsible bums must be sub- the fruits of any individual's sidized. labor. From the cradle, in most The “something for nothing” — cases, they have seen their govern- authority without responsibility — ment take from the producers and theory has been with us from the savers and give to the more so- beginning, of course, but it made phisticated bums. They have been little progress until enforced by taught to use their authority as the Federal government. Since citizens to vote themselves a raise that time, the theory has been ac- — vote, at every election, for the cepted by vast numbers in all candidate who promises the larg- walks of life. est increase in “benefits.” “If the student fails to learn, » the teacher has failed to teach,” Not Surprising is a popular argument today. In With these facts before us, no reality, very few teachers are en- one should be surprised when this dowed with that certain “thing” breed — spawned by the ‘“some- that renders their teaching irre- thing for nothing” theory rather sistible. As in all professions, the than race — decides to take what vast majority are only earning a ===== PAGE 13 ===== 1964 AUTHORITY MINUS RESPONSIBILITY 11 living by doing a job. But notice plication. In recent years the the implication — the thinking be- unions have maintained, and ar- hind this phrase. Responsibility is biters often concur, that an em- laid on the teacher, without re- ployee must be advanced when he course. The child supposedly has acquires sufficient seniority, and the authority to demand an educa- given every opportunity to master tion, but no responsibility to com- the “job” later. In other words, plete an assignment given by a there is no employee responsibility teacher. to learn; the employer must teach! The courts have ruled that a These are only a few of many prospective employee may not be examples that could be advanced refused employment for failure to in defense of the proposition that pass an established aptitude test; our so-called race riots are, in one applicant may have had less reality, no more than the natural opportunity to learn than other ap- results of predominant thinking plicants and, since it might not be in America today. Reduced to the his fault that he was unable to do simplest form possible, my thesis the job, he must be hired anyway. is that (A-R)T=C. Authority Traditionally, in American in- minus Responsibility, in Time, dustry, men have advanced to must equal Chaos. The time factor better paying, more responsible may vary slightly from race to positions by learning the trade race, but the end result is as cer- through close observation and ap- tain as death. @® The Better Way THE MORE COMPETENT BUSINESSMEN we have the less need for charitable institutions. Without any desire to detract one bit from the generous and noble spirit that prompts rich men to give liberally of their time and money to the promotion of cultural pursuits, I still think they are more useful citizens when they are making money than when they are giving it away. WILLIAM FEATHER The William Feather Magazine, September, 1964 ===== PAGE 14 ===== . no NN 5 ; i Ta ite ny RS 0 “ o. i i os tigi ith; Fe BACK in February, 1871, a group cotton grower or user was long in of free enterprisers found a way doubt about the state of the cotton to help cotton growers adjust their market, present or future. For production to market demand. there is no better indicator of the They organized the New Orleans state of a commodity market than Cotton Exchange. There, for 93 the prices at which that com- years, cotton growers, wholesalers, modity is bought and sold for manufacturers, and profit-seeking various dates of delivery. speculators could buy and sell cot- The prices of the New Orleans ton at free market prices for pres- Cotton Exchange were long a valu- ent and future delivery. able guide for farmers and manu- The prices paid and offered facturers alike. For farmers, they were published in the press. No indicated how much land should Mr. Greaves is a free-lance economist and be planted in cotton and how much lecturer. in other crops. Through the grow- Wuationigns Tie Sow Qrloans Cotton Ex- ing geason, future prices indicated 12 ( ===== PAGE 15 ===== 1964 WHY SPECULATORS ? 13 how much time, care, and expense subsidized price to farmers and should be spent in tending crops. stores all unsold cotton. When de- When future prices were high, no mand for cotton rises, cotton pours expense was spared to bring every out of government subsidized possible ounce to market. When warehouses and sells at the gov- future prices were low, farmers ernment set price. Either way, the were warned not to waste too taxpayers lose. Until present laws much time and expense cultivat- change or break down, cotton ing and picking that last possible prices will be set by the govern- ounce. ment, cotton acreage will be For manufacturers and other guided by bureaucrats, and valu- cotton buyers, the Cotton Ex- able men, materials, and tax change quotations provided a base money will continue to be wasted for estimating or determining in nonproductive enterprise. their future raw material costs. This situation reflects a com- This in turn helped them calculate plete lack of understanding of the the prices on which they bid for rules of human behavior and the future business. On orders ac- role of speculators in a free mar- cepted for delivery over long peri- ket society. It substitutes the wis- ods of time, they could always dom of a few striving to stay in make sure of their raw material political power for the wisdom of costs by immediately buying con- those who spend their lives study- tracts for delivery of cotton on ing every facet of supply and de- the dates they would need it. mand before pledging their names and fortunes in support of their considered judgment. On July 9, 1964, the New Or- It is human nature for men to leans Cotton Exchange closed its try to improve their future condi- doors to trading in “cotton fu- tions. That is the aim of every tures,” as contracts for future conscious human action. Men make delivery are known. For years mistakes, but they always aim at such sales have been fading away. success in providing a better fu- With cotton prices more and more ture for themselves or their loved controlled by the government, ones. Free market transactions are neither farmers nor manufactur- merely the attempts of men to im- ers need the information or in- prove their own situations by so- surance of a futures market. cial actions which also improve When demand for cotton drops the situation of others. Barring off, the government advances the force, fraud, or human error, all Cotton Prices Controlled ===== PAGE 16 ===== 14 THE FREEMAN November voluntary market transactions more they can undertake with must improve the situations of all prior certainty as to the actual participants. results. Men act as speculators when they have only partial knowledge Actually, there are only three and understanding of the results basic principles of human action. their actions are likely to pro- Men can act as gamblers, duce. The more speculators know scientists, or speculators. Few acts and understand, the better they fall entirely within any one clas- can predict the future results of sification. For every human ac- their actions. But they never can tion is confronted by elements of be certain of the actual results. future uncertainty, such as those Most speculations involve peo- that exist in life itself. ple and how they will react to Men act as gamblers when they given situations. Since we can know nothing in advance about never know with certainty the fu- the results except that some will ture reactions of others, every ac- win and others lose. There is noth- tion which involves others is a ing a man can know, study, learn, speculative action. Thus, all vol- or experience that will help him untary actions, including market to become a winner. When men actions, are speculative. gamble, the desired results de- pend upon pure chance. No skill whatsoever is involved. The best way to increase the Men act as scientists when probability that speculative ac- they know in advance the results tions will produce the desired re- their actions will produce. Scien- sults is to increase our knowledge tists deal only with solvable prob- and understanding of all pertinent lems where conditions can be data, including the thoughts and controlled and where identical ac- ideas that motivate the actions tions in identical situations will and reactions of others. This takes always produce identical results. time, study, experience, and eco- Automation is a modern example nomic analysis. of scientifically directed action. In Men have found that the best all scientific action, the repetition way to gain more of the needed of prescribed procedure will al- knowledge, experience, and under- ways produce the same results. standing is for each one to select So, the more that scientists know some limited area of human ac- about the laws of nature, the tivity and then specialize in it. How Men Act Why Men Specialize ===== PAGE 17 ===== 1964 WHY SPECULATORS ? 15 Out of this division-of-labor prin- able. Greater specialization tends ciple the whole market system has to reduce errors and help men developed. In a market society, achieve better results. everyone specializes and then Many men prefer the relative trades the products of his special- security of a reasonably assured ty for the products of other spe- steady income to the insecurity cialists, his partners in total so- of a wholly speculative income—an cial production. income that may turn out to be This system permits scientists very high, very low, or even a net to specialize in the automatic mass loss. Such security-seeking people production of inanimate objects tend to become employees. of wealth with certainty as to the Others prefer the lure and ex- physical results. However, men citement of speculation. Such peo- cannot plan or plot the market ple are the investors, employers, value of their products with scien- business promoters, and profes- tific certainty. All such values are sional speculators. They assume relative and speculative. They de- responsibility for the uncertainty pend on the ever-changing ideas of a business venture’s future suc- of buying men as to which of the cess or failure. Their likelihood of many things offered for sale will success depends largely on their give them the most satisfaction ability to predict the future wants for the sums they have to spend. of buyers. Specialization can and does help men engaged in marketing and other speculative social actions. It In a mass production market permits them to learn more about economy, the function of predic- what they sell and also more about tion and speculation falls primar- the needs and wants of those to ily on investors, business promot- whom they seek to sell. Thus they ers, and specialists rather than on become wiser and more efficient consumers. When producers seek speculators, wasting less time try- to act as scientists only, creating ing to sell the wrong things to the wealth by relying on the known wrong people. laws of the physical sciences, they Perfect results depend on the must find others to undertake the perfect prediction of future condi- predictions and speculations as to tions. Because of human fallibil- the future conditions of the ity, this is rarely possible. How- market. ever, better predictions and thus Such specialists must estimate, better results are often achiev- at the time production starts, what Better Foresight Pays ===== PAGE 18 ===== 16 THE FREEMAN November consumer demand, competitive How Hedging Works supplies, and other market condi- A good example of “hedging” tions are likely to be at the time is the case of the cotton shirt of sale. Such speculators then as- manufacturer. He is a specialist sume the responsibility that the in making and selling shirts. He planned production will meet the knows that the selling price of whims and wishes of consumers. cotton shirts is largely dependent Their income will depend on how upon the price of raw cotton. He correct their early predictions of has little time to study the cotton- future conditions prove to be. growing conditions around the As the division of labor has world or the other prospective de- progressed, men and firms have mands on the raw cotton supply. tried to reduce their predictive He is fully occupied with his own and speculative functions to limit- problems in the shirt business. ed areas in which they become However, he would like to avoid specialists with a better under- the consequences of unforeseen standing than most other men. changes in the prices of raw cot- They concentrate on making or ton. marketing certain goods and, in Under free market conditions, doing so, pay little attention to he can hedge by contracting to sell the market conditions of other at current prices raw cotton which goods, including their raw mate- he need not buy or deliver until rials which may come from far- the date he expects to sell the away sources with which they are shirts he is making. Then, if the unfamiliar. price for shirts has fallen, due to Of course, the future prices they a drop in raw cotton prices, he can get for their finished goods would buy raw cotton at the lower are in part dependent upon the price to meet his hedging contract. ever-changing prices of the raw The profit on his raw cotton trans- materials with which they are action would offset his loss on the made. So, to protect themselves shirts. against future price fluctuations On the other hand, if the prices in their raw materials, business- of both raw cotton and cotton men sometimes engage in “hedg- shirts have risen, the extra profits ing.” By “hedging,” they trans- from his shirt sales will be offset fer the hazards resulting from the by his losses on the hedging trans- uncertainty of future prices to action in raw cotton. By hedging professional speculators in those he can protect himself against all products. possible fluctuations in raw cotton ===== PAGE 19 ===== 1964 WHY SPECULATORS ? 17 prices which might affect the and thus bring about a change in prices of the shirts he sells. He future raw cotton prices. rids his mind of this worry so that As a well-informed specialist, he can concentrate on the details the speculator is much better able of the shirt business at which he to predictfuture cotton pricesthan is a specialist. is the man who specializes in The man who takes his hedge growing cotton or manufacturing is usually a professional cotton cotton shirts. Competition among speculator. He is a specialist who speculators trading on a commod- studies and interprets all the ity exchange forces them to share available data and conditions that the benefits of their knowledge are likely to affect future raw cot- with their customers. ton prices. He trades in cotton a Businessmen can protect them- thousand times for every once or selves from some speculative losses twice by the average cotton manu- by taking out insurance. However, facturer. He knows how much has customary insurance can only be been planted in the many cotton- bought for risks which are large- growing countries. He studies the ly known or predictable. Losses rainfall and other weather condi- from fire, death, theft, or trans- tions which may affect the size of portation accidents are thus dis- the various crops. He keeps up-to- tributed over all those insured, in- date on laws and proposed laws stead of falling entirely on the that may affect raw cotton prices. ones who suffer a specific disaster. He follows the ups and downs in Future price changes do not fall in foreign exchange and transporta- this category. They are the same tion costs. for everyone. Only the well-in- He also keeps an eye open for formed specialist is equipped to changes in demand for each type speculate successfully and *“in- of cotton. He has informed ideas sure” others against losses from about increased demands arising price changes. from new uses for cotton, as well as any decreases due to the sub- stitution of synthetics. He watches developments in mass purchasing In popular thinking, the specu- power, production, and consump- lator is a bold, bad man who makes tion in faraway lands like India. money at the expense of others. In short, he learns all he can about Many people believe he gains his anything that might affect the livelihood by luck, gambling, or supply of, or demand for, cotton inside manipulation. There are, A False Popular Notion of the Speculator’s Role ===== PAGE 20 ===== 18 THE FREEMAN November of course, a few dishonest specu- the hardships when the shortage lators who lie and cheat, as do becomes evident to all. some in all occupations, but the Since a price rise tends to en- honest speculator is a serious spe- courage increased production, the cialist who serves mankind. He sooner prices rise, the sooner new constantly strives to obtain a bet- and additional production will be ter understanding of future mar- started and become available. So ket conditions. He then places this a successful speculator reduces better understanding at the serv- both the time and the intensity ice of all interested parties. When- of shortages as well as the hard- ever his predictions are wrong, it ships which always accompany is he who loses. When he is right, shortages. he and everyone who trades with Likewise, speculators are often him benefit. For if they did not the first to foresee an increase in expect to benefit, they would not future supplies. When they do, trade with him. they hasten to sell contracts for The service of a speculator is future delivery. This in turn to smooth out some of the gaps be- drives down future prices earlier tween supply and demand and than would otherwise be the case. some of the extreme ups and downs This tends to discourage new pro- in prices. He tries to buy when duction that could only be sold at and where a commodity is plenti- a loss. It also gives manufacturers ful and the price is low and to sell a better idea of what future prices when and where the commodity is will actually be. So, here again the in short supply and the price is speculator tends to smooth out pro- high. When he does this wisely duction and consumption to the and successfully, he tends to raise benefit of all concerned. extremely low prices and reduce extremely high prices. Frequently, the speculator is the A good example of how specula- first to foresee a future scarcity. tors serve society was provided in When he does, he buys while prices the coffee market a few years ago. are still low. His buying bids up A small newspaper item reported prices, and consumption is thus a sudden unexpected frost blight more quickly adjusted to future in Brazil. Speculators immediately conditions than if no one had realized that such a frost must foreseen the approaching scarcity. have killed large numbers of coffee A larger quantity is then stored bushes. This meant much smaller for future use and serves to reduce future supplies for the United Speculators Spread Supplies ===== PAGE 21 ===== 196} WHY SPECULATORS ? 19 States. So the speculators prompt- shortage was known to all, spec- ly bought all the coffee they could ulators helped to level out the below the price they thought available supply- and reduce the would prevail when consumers be- extreme height to which prices came fully aware of the approach- would otherwise have risen. Spec- ing shortage. This tended to raise ulators make money only when coffee prices immediately. they serve society by better dis- The effect of this was to reduce tributing a limited supply over consumption and stretch some of a period of time in such a man- the existing supply into the short- ner that it gives greater satis- age period. It likewise alerted cof- faction to consumers. They thus fee growers in other areas to be permit other businessmen and more careful in their picking and consumers to proceed with great- handling of coffee so that there er safety and less speculation in was less waste. Higher prices en- their own actions. couraged them to get to market every last bean, which at lower prices would not have been worth If a speculator buys a product the trouble. Higher prices also thinking its price will rise and speeded up the planting of new it later falls, he loses money for bushes. Since it takes five years the simple reason that he has for a new coffee bush to bear ber- acted against the general wel- ries, the sooner new planting was fare. He has sent out false in- undertaken the shorter the period dicators to producers and con- of shortage. sumers alike. That happened just The speculators who first acted recently in the case of a large on this development served every sugar importer. The firm bought coffee consumer. If these spec- large quantities of sugar when ulators had not driven up prices it was selling at 11¢ a pound. immediately, consumers would Its purchases were not hedged. have continued drinking coffee at In six months or so the price of cheap prices for a time. Then, sugar fell below 5¢ a pound and suddenly, they would have faced the importer was forced to file a still greater shortage and still a petition under the National higher prices than those that Bankruptcy Act. actually prevailed. Hedging with a professional By buying when coffee sup- speculator would have prevented plies were still relatively plenti- that loss. Of course, if the spec- ful and selling later when the ulator had made no better esti- Speculators Can Lose ===== PAGE 22 ===== 20 THE FREEMAN November mate about future sugar prices into balance at the point which than the importer did, it might provides the greatest consumer have been the speculator who satisfaction. With the passage of filed under the bankruptcy law. time, each such intervention can But as a rule, speculators are the only make matters worse. Then, if specialists who are best informed people still believe the remedy for on what future prices are likely every economic ill is more inter- to be. vention, political interventions i will increase further until the Fruits of Intervention police state is reached. When governments set prices, quotas, acreage limits, or other In any such trend toward a hampering restrictions on the police state, the speculators are honorable activities of men, they among the first to be eliminated. countermand the checks and bal- They are the specialists who study ances that the free market places world-wide markets in order to on supply and demand. The re- reduce the uncertainties that face sult is always surpluses and short- all farmers and businessmen. ages: the former, where pro- Without the services of specu- ducers’ rewards are set too high; lators, bottlenecks of production the latter, where they are set too —a symptom of socialism — soon low. Where there are surpluses develop. of some things, there will al- Men and materials are then ways be shortages of others. For wasted in the production of sur- the men and materials subsidized pluses. As a result there are ever- to produce surpluses have been increasing shortages in the things lured from producing those things people want most but can’t have which free market conditions because the means to produce would indicate that consumers them have been misdirected by prefer. government decree. The recent Political interference with free end to trading in cotton futures market processes can only burden on the New Orleans Cotton Ex- the taxpayer and weaken the hu- change is an omen that should man impulses of free men which make thoughtful men reflect on tend to bring demand and supply the road we are now traveling. & Reprints of this article available at 10 cents each. ===== PAGE 23 ===== ARE YOU a moonlighter? Most of us are, in one way or another. The term moonlighting refers to holding down more than one job, the purpose being to gain additional income. The practice is reported to be widespread. W. M. CURTISS In the “good old days” when 90 per cent of the workers were opportunities was limited and that farmers, that first job was about these jobs ought to be shared a- all anyone could handle — rising mong available workmen. MUONINGHIING with the sun and the chickens, The law recognized the 40-hour and ready when they were, to call week, requiring employers to pay it a day. one-and-one-half times regular Then, with savings and capital, wages for overtime hours. This, came technology and industrializa- of course, was an added cost of tion. A man could earn a better doing business and a hindrance living working 8 hours for five to the laborer seeking extra work days a week than six 10- or 12- and income. Though studies enu- hour days had previously afforded. merated the blessings of the short- This gave him more time at home er day and week, the main idea each day with his family, and a was to spread the work. day now and then for fishing or The point is that this com- golf or other forms of leisure. pulsory spread-the-work idea is There were some, of course, éspe- now built into our economy; in cially the young and vigorous and most cases, the person who prefers those with heavy family responsi- more income to leisure must now bilities, who preferred more in- seek a second job rather than come to more leisure. They were work more hours at his regular willing to work more than 40 hours job — hence, moonlighting. And a week if it meant more income, the shorter the work week, the and such jobs were open in a num- more moonlighting. ber of industries. During the depression, there The depression of the 1930's, was considerable unemployment with its heavy unemployment, among the rubber workers in helped to spread the erroneous (hijo. Labor unions and manage- theory that the number of job ment negotiated a 36-hour week oe. which has continued to this day; Dr. Curtiss is a member of the staff of the . . : Foundation for Economic Education, this helps explain the very high 21 ===== PAGE 24 ===== 22 THE FREEMAN November incidence of moonlighting among and-a-half for overtime work, these workers. In other words, a some firms prefer to pay it in 36-hour week doesn’t keep a man special cases rather than hire and as fully employed as he would like train new workers for the job. to be when the choice is more in- This added expense to the firm is come or more leisure.l not as great as first appears be- . i cause some of the fringe benefits Higher Pay the Object — now a sizable proportion of the What this suggests is that any entire payroll — do not increase further compulsory reduction in with overtime pay. The fact that the length of the work week many firms now pay the time-and- should be considered with caution. a-half penalty indicates that it is Electrical workers in New York the best alternative under the cir- City recently went on strike for cumstances. a 30-hour week, among other High government officials re- things. This was not a question of cently have suggested that over- spreading the work, because there time wages should be double the were few unemployed electricians. regular wage rate. The argument Nor was it an expression of de- seems to be: “If time-and-a-half mand for more leisure. It was a for overtime will not discourage thinly-disguised way of increas- this evil practice, let's try double ing wages. The workers knew that time.” The objective, of course, is many of them would be asked to to reduce unemployment — to work beyond the 80 hours in a spread work among more em- week at time-and-a-half for ad- ployees. ditional hours. This would yield There can be little doubt that a handsome wage indeed; and the new proposal would discourage with a strong union, with tight the hiring of overtime help. Few control over the entrance of new firms could afford it. Whether it members, such a monopoly ar- would appreciably reduce unem- rangement is not impossible. ployment is another question. It Even with a penalty of time- would certainly stimulate a search TI 1t is reported that many second IOT greater efficiency and acceler- jobs taken on by moonlighters are in ate the introduction of labor-sav- the category of contract work or self- ing equipment. It doubtless employment such as housepainting, and . thus are not subject to tax withholdings. would mean an over-all reduction The amount of this income which es- of take-home pay for workers and capes taxation, cannot, of course, be . accurately measured. But that is another probably would result in fresh de- story. mands for increased pay scales. ===== PAGE 25 ===== 196 MOONLIGHTING 23 One thing is certain: Double extending his income as though time for overtime would increase he held two jobs. moonlighting. Many would not think of these We should have realized by now activities as moonlighting — the that unemployment during periods extension of income. Many would of general prosperity is caused say they paint their own homes by overpriced- labor — overpriced because they have the leisure and by reason of compulsory minimum like to use it in this active man- wages or because wages have been ner. True enough, much of the negotiated under threats of coer- do-it-yourself activity of workers cion at a level higher than a free around their homes on weekends market would allow. A happier and on vacations is fun-work. But alternative is to let the worker consider this: Suppose it would and the employer agree on wages cost $600 to hire your house and hours suitable to both.2 painted. You would have to earn oo around $900 before taxes to get Moonlighting at Home the $600 for the painters. So, you Increased leisure has given rise may choose to moonlight or do- to another kind of moonlighting, it-yourself. Not bad! But, you'd sometimes referred to as “do-it- better like house painting! yourself,” and involving every- The answer to the question of thing from refinishing furniture leisure versus income is a very to actual home building. This is personal one and varies tremen- a reversal of the long-time trend dously between individuals. In- toward specialization and divi- volved, besides the length of work sion of labor in an advancing week, is the trend toward com- economy. pulsory and permanent leisure at An example of moonlighting is age 60 or 65. Rather than force that of the small, part-time farm- workers into a uniform pattern, er working at an industrial job it would seem desirable to leave within driving distance. While he arrangements as flexible as pos- can hardly be called a farmer, he sible. This should benefit both em- is able to get some of his living ployers and employees. While off the land and may have a bit there is nothing inherently wrong to sell. Thus, he is moonlighting — with moonlighting, it seems a _— rather clumsy way of solving the ) . . he ea io, See problem of the man who would Foundation for Economic Education, prefer additional income through Inc., 1957. additional work. ® ===== PAGE 26 ===== A | 2. eT Symptoms FRoM oF of the e RE AY Flight CLARENCE B. CARSON ANYONE who announced to an it strange that the question of academic audience that he was what constitutes reality should be going to do a work on “The Flight raised. In a contemporary work on from Reality” might expect that the history of Western philosophy the first questions he would be -a book which traces thought asked would go something like the from Thales in ancient Greece to following: “What is reality?’ Or, Bertrand Russell in modern Brit- “What do you mean by reality?” ain — the scholar concludes with That such questions would almost these observations, among others: certainly be asked may be itself the leading sign of the flight from So far we have tried io suggest reality. Th ti ) that, even though they are not eter- eality. € questions are 1mpor- nally true, the answers philosophy tant, of course, and will require gives are useful and significant in answers, but for the moment that terms of their cultural context. Now can be deferred to deal with their we must point out that, valuable as implications. philosophy’s answers are, they are Indications are that few people not as important as the questions in academic circles would consider philosophy asks. In fact, we may say —_— that the chief function of philosophy Dr. Carson is Professor of American History . ke . h h at Grove City College, Pennsylvania. Among 13 to ask questions, rather than to his earlier writings in THE FREEMAN were his answer them. Its function is to re- series on The Fateful Turn and The Ameri- buff all forms of dogmatism and ins can Tradition, both of which are now avail- . able as books. tolerance, to keep before the mind a 24 ===== PAGE 27 ===== 1964 SYMPTOMS OF THE FLIGHT 25 sense of possibilities unrealized.... the failure to attain truth and Thus the real utility of philosophy belabor those who would proclaim lies precisely in what seems to some tryth as “intolerant” and “pre- its futility. Its especial competence sumptuous.” lies in He seeming 1 ncompetence — in We might expect, at the least, the way in which it discourages too that the client d t f definitive conclusions and too neat a € chien 8 and pa rons ° solutions.1 such education would withdraw their support. On the contrary, as In short, it appears that philos- is well known, intellectuals, schol- ophy succeeds to just that extent ars, and teachers have never be- that it fails to answer the ques- fore enjoyed such influence and tions that it raises. But lest this affluence as they do today. Bil- state of affairs be supposed to be lions of dollars are poured into restricted to philosophy, the education; students come forth writer assures us that the matter in ever greater numbers to educa- is otherwise. tional institutions; research re- ceives bountiful support from gov- _ The “incompetence” of philosophy eynments and industries, philan- 1s... nota peculiarity of philosophy. thropists and politicians. The fail- None of the sciences has attained an . ure to attain truth does not appear eternal truth. Consider what rela- inhibit p “orofessing” tivity has done to Newtonian phys- to inhibit men irom “professing ics. . . . Or consider what the dis- it 2nd students from purchasing covery of the non-Euclidian geome- Whatever it is they have to teach. tries has done to mathematies.? If the value lies only, or even pre- dominantly, in the quest, one won- Professors and Patrons ders why so many should choose and the Quest for Truth the academic endeavor. Why not, One might suppose, then, that instead, “quest” for a lower golf intellectuals, scholars, and teach- score? At least there are stand- ers would be found in sackcloth ards by which improvements in a and ashes, repenting their impos- golf game can be measured. tures upon society or praying for There is much more to the story guidance that they might find of contemporary education, how- some truth. Obviously, such is not ever, as will become clear later. the case. They make a virtue of But on the face of it, such atti- — tudes as the above surely consti- 1 W. T. Jones, A History of Western tyte symptoms of a flight from Philosophy (New York: Harcourt, . Brace, 1952), p. 995. Italics mine. reality, both by professors and 2 Ibid., p. 997. patrons. ===== PAGE 28 ===== 26 THE FREEMAN November The Central Problem: value? The method can only be of What Is Real? use in arriving at truth if it is The matter cuts deeper, too. It related to reality in such a way is true that the study of philos- as to discover truth. The employ- ophy has been in somewhat of a ment of a method or an endless decline for a good many years. quest for the unattainable may This would appear to be a realistic have subjective personal value, of response to the bankruptcy of phi- course, just as mountain climbing losophy, understandable and even may have, but this can only con- commendable. Actually, no such cern the individual involved, not interpretation can be allowed. If the public at large. philosophy is indeed bankrupt, we That philosophers should cannot know whether the giving blithely announce the futility of up of the quest for truth by way their quest, that scholars should of philosophy is realistic or not. ignore the consequent absence of For we do not know what is real. underpinnings in their endeavors, The central problem of philosophy that the public should provide sup- is the determination of what is port for research that has not real. If philosophers have not ar- been carefully related to some rived at truth in this regard, it truth, that students should spend should be obvious that truth can- years learning methods which may not be attested in any other area have no applicability to the of thought. The possibility of illu- achievement of their ends, and sion in all matters would be ever that hardly anyone in a vast present, and no means for separat- establishment should bother to ing the illusory from the real mention the matter, should cer- would exist. Reason would be of tainly be construed as a symptom no use, for reason is only as valid of the flight from reality. Indeed, as the premises upon which it the lack of concern about first rests, and the premises must be things that is involved in the state referable to some reality. of philosophical thought comes Nor can the scholar take refuge very close to being the flight from in methods and quests. The man reality itself. who claims that he is concerned But let us stick with symptoms only with imparting a method may at this point in the study. There be making an honest statement, are a great many of these. Only a but he is evading the central ques- few can be given, and the ones tion about his labors. How does he chosen as examples should dem- know that his method is of any onstrate that the flight is wide- ===== PAGE 29 ===== 196} SYMPTOMS OF THE FLIGHT 27 spread, that the intellectuals have tures which will place money in succeeded in drawing much of the the hands of consumers. populace, or at least policymakers, Such practices, and the justifi- into the web of their illusion. The cations offered, are founded upon next two examples will be drawn misunderstandings about the na- from economics. ture of money, if we assume that } the apologies are seriously made. Monetary Manipulation Money is a medium of exchange. One of the most pronounced It is that through which an ex- symptoms of the flight in eco- change of goods and services is nomics is the handling of mone- effected. Transfers of commodities tary matters by governments. from one owner to another are Specifically, governments virtu- made by the use of money. The ally everywhere engage in mone- ‘purchasing power” resides in the tary manipulation. They engage commodities, however, not in the in deficit spending, public works money. (Money may, of course, be programs to revive sagging econ- a commodity itself, as when some omies, issuance of fiat money by precious metal is used. In this banks under their control, the case, it would have “purchasing establishment of minimum wages, power,” which would derive from and so on. In order to be able to its commodity value.) The fact do this, governments make one of that people will turn over goods the simplest flights from reality: and services to others in return they cease to make payments in for money creates an illusion that specie —that is, gold or silver. Fol- money has “purchasing power.” lowing this, their flights become Governments, presumably oper- much more imaginative and com- ating under the sway of this illu- plex. sion, increase the amount of cur- The justifications for monetary rency in circulation. By so doing, manipulation are numerous and they do not increase the “purchas- ingenious. Money is identified ing power” of the citizenry. In- with “purchasing power,” and stead, they reduce the amount of apologists propose to increase goods which will be turned over “purchasing power” by increasing for a given amount of money, re- the amount of money in circula- duce it in proportion to the tion. Monetary manipulation is amount of the monetary increase. used as a method of spurring in- Since what money will purchase vestment. Consumer spending is depends upon the amount of goods promoted by government expendi- and services available, the only ===== PAGE 30 ===== 28 THE FREEMAN November way to increase the ‘‘purchasing proposals for the redistribution power” of the citizenry is to in- of the wealth. crease the amount of those goods and services. If the amount of goods are increased and if the Another symptom can also be amount of currency remains the given from the economic sphere. same, a given amount of money This one has to do with economic will, in effect, command more assistance given by the United goods. States to other countries since While an increase in the supply World War II. As is well known, of money does not increase ‘“pur- the United States government has chasing power,” it does have con- spent huge sums of money on for- sequences. By increasing the eign aid. This aid has taken many amount of money in circulation, forms: outright grants, technical governments confiscate a portion assistance, “mutual” assistance, of the value of the money which loans, and so forth. The aid has anyone happens to hold or have been justified on many grounds: due him at the time of the in- the responsibility for aiding allies crease, Governments also can and in postwar reconstruction, the con- do redistribute this confiscated tainment of communism, national wealth by spending programs and self-interest, humanitarianism, by other devices. In short, pro- among others. grams which are advanced as stim- Let us restrict our discussion ulants to the economy are, in to the economic and humanitarian effect, programs for the redistri- justifications, however. The hu- bution of the wealth. manitarian argument usually goes It is difficult to determine something like this: There is whether inflationary programs are great suffering in the world, occa- symptoms of a flight from reality sioned by hunger, malnutrition, by those who advance them or by and disease. The United States is the general public which accepts a wealthy nation, and it should them. The United States govern- share its bounty with those in ment has had economic advisers in need. The two statements which influential positions for years. follow are based mainly on these These have consistently advanced premises. The first one was made inflationary policies. They are by a representative of the Na- either ignorant of the conse- tional Council of Churches of quences of such actions or they Christ in the U. S. A, and on its are guilty of making surreptitious behalf: Foreign Aid ===== PAGE 31 ===== 1964 SYMPTOMS OF THE FLIGHT 29 We believe human life is sacred, indeterminate degree. This re- being of primary value, so mutual sponsibility was not, however, hu- aid is indispensable as it literally manitarian; it was economic, makes the difference between life though there might well be hu- and death for some people, and im- pita ian grounds for objecting proves living for millions of others.3 to the economic policy which fos- The second is from a statement tered suffering. To understand made for the Society of Friends: American responsibility for for- eign deprivation, it is necessary United States policy should be de- to know something about how for- signed to help that part of the hu- ejgn trade is conducted. Presum- man race, about two-thirds of whom 4hy foreigners suffered to some are sick or illiterate or politically or extent because they could not pur- seonomically Sisadvanisge d, develop chase goods which Americans had eir God-given potentialities. It means primarily helping others help for sale. They could not purchase themselves to do the things they these goods because Americans want to do toward our joint com- could not (or would not) spend or munity aspirations and ideals. This invest comparable amounts kind of program must express both abroad. a deep, passionate concern for peo- We can back into an explanation ple and a determination that they of this state of affairs by stating need not suffer from conditions the reason for it in this way: For- which are not their fault. We should eign goods were more expensive settle into this task on a long-range than their equivalent in American basis.4 . goods. Therefore, Americans It is understandable and even bought mainly goods of domestic commendable that men should be Manufacture. In consequence, for- concerned with suffering and de- eigners could not buy the needed privation in distant lands. Let it &oods from America. be noted, too, that American policy . . The Obstacle to Exchange was (and is) responsible to some _ The solution to this problem 3 Waldo Chamberlin, “Statement on should have been rather simple, Behalf of the National Council of icall eaking. The people Churches of Christ in the U. 8. A.” economically sp g peop United States Foreign Aid, DeVere E. 1D a foreign land who needed Pentony, ed. (San Francisco: Howard American goods should have de- Chandler, 1960), p. 48. voted themselves to producing 4 Edward F. Snyder, “Statement on : : uld be sold Behalf of the Friends Committee on those items which co National Legislation,” in Ibid., pp. 50-51. cheaper in America than the ones ===== PAGE 32 ===== 30 THE FREEMAN November of domestic origin. This would subsidies. It should be kept in have provided the wherewithal to mind that foreign governments purchase American goods. So they aggravated the situation by their might, and probably would, have own subsidies, price supports, done if the matter had been left minimum wages, and import quo- in the economic sphere. It was not. tas. Many governments scared Instead, political interference had away investors by nationalization made economic solutions virtually and confiscation of property, thus impossible. Indeed, such responsi- creating “underdevelopment” and bility as Americans bore for the then clamoring for government-to- situation could be ascribed to po- government loans to take up the litical interference, though it slack. should be kept in mind that coun- tries in which there was suffering Solution Creates More Problems contributed to their own condition It should be axiomatic that quite often by domestic political when political interference has interference. caused a problem, the solution to To be more specific, the main the problem would be the removal obstacles to international trade in of the political interference. It the postwar period, so far as should be, but it is not today. In- American action affected it, were stead, the attempt was made to tariffs and subsidies. Protective solve problems created by political tariffs kept foreigners from being action by additional political in- able to undersell American prod- tervention. By and large, govern- ucts quite often. If some foreign ments continued their tariffs, sub- land were able to overcome even sidies, regulations, and nationali- this handicap, a clamor would zations. America granted and arise from the domestic interest loaned money so that other coun- involved for higher tariffs or tries could buy goods from quotas, or both. America, hire technical assistants, The other great difficulty was and make capital investments. that American food products were The problems that this course quite often too high to be sold of development has created are abroad or to effect a general legion. Foreign countries became lowering of food prices in the dependent upon the United States; world. This was directly related the aid was quite often used to to hunger and starvation. Ameri- bolster corrupt regimes; nations can prices were kept high by allot- spent huge sums upon prestigious ments, parity payments, and other items such as steel mills (though ===== PAGE 33 ===== 1964 SYMPTOMS OF THE FLIGHT 31 it cost them much more to produce Identity of Government with People steel than they could have bought Let us take an example now it for on the world market) and from the area of political theory. airlines; and Americans have be- The most fruitful field for discov- come busily engaged in interfer- ering some flight in the contem- ing in the internal affairs of coun- porary world would be theories tries around the world. The debil- concerning democracy. The myths itating effects of these develop- about democracy are so numerous ments upon the independence and that to select one is necessarily to strength of the countries involved neglect a great many others. Per- need not be dwelt upon here. The haps the central one, however, can economic distortions produced by be phrased this way: In a democ- progressive intervention are mani- racy the government is the people. fold. A complete identification exists Much more could be said about between the government and the these matters, but enough has people. According to this view, been said to make the point. Un- government in a democracy man- der the guise of humanitarianism ages to catch up, congeal, and and defense, Americans have been utilize the whole being of a peo- drawn into a web of intertwined ple. More than a hundred years interventionism. Foreign aid has ago, the American historian, often forestalled the economic con- George Bancroft, suggested some sequences of intervention for for- such notion in the following eign countries (such as bolstering words: the Labor Government in England in the late 1940's), but it could not is, indeed, not the opinion of one or solve the problems, for it was re- fa few, but the sagacity of the lated to the causes only in the ny It is hard for the pride of sense that it was like them. Inter- cultivated philosophy to put its ear vening to solve problems caused to the ground and listen reverently by intervention can be likened to to the voice of lowly humanity; yet breaking the other leg of a man the people collectively are wiser than who already has one broken leg the most gifted individual, for all in order to get him back on his his wisdom constitutes but a part of feet. The fact that Americans theirs. . . . It is when the multitude have been pursuing such policies give counsel that right purposes find } } safety; theirs is the fixedness that rather consistently 18 another cannot be shaken; theirs is the un- symptom of the flight from {derstanding which exceeds in wis- reality. dom; theirs is the heart of which Thus the opinion which we respect ===== PAGE 34 ===== 32 THE FREEMAN November the largeness is as the sand on the seashore.b Whatever this passage may mean, it is certainly intended as a justification of democracy. And, so far as it is, it suggests that a complete identity of people and government occurs. Of course, Bancroft actually assumes such an identity and is bent upon argu- ing the superiority of decisions reached by the people collectively. Our concern, however, is not with the contention but with the as- sumption. Public Debt No Problem All sorts of conclusions are regularly drawn from this sup- posed identity of the government with the people. For example, some say that there is no need to worry about the public debt. After all, they say, we owe it to our- selves. Others impute morality to government because of its iden- tity with the people. The foreign aid, discussed above, was sup- ported on moral grounds, and this was made to appear logical by assumptions about democracy. Some would hold the American people individually and collec- tively responsible for the actions of the government in a democ- "5 George Bancroft, “The Office of the People in Art, Government and Reli- gion,” Social Theories of Jacksonian Democracy, Joseph L. Blau, ed. (New York: Liberal Arts Press, 1954), p. 269. racy. It has been alleged, for ex- ample, that the American people bore such guilt as there may have been for the dropping of the atomic bomb on Hiroshima. Again, the identification theory tends to validate such an allega- tion. Let us set this assumption beside political realities in Amer- ica, since it is commonly held that the United States is a democracy. Is, or could, such an identification be effected by the political proces- ses now employed ? The most com- mon procedure followed by the citizenry to participate in govern- ment is by voting. By voting the citizen marks an “X” or pulls a lever beside the name of the can- didate for whom he votes. He has chosen one name from among two or more, if the office was con- tested. If a majority of those vot- ing chose the name, he has helped to select the man who will serve, if the vote was in the general election. If his candidate was not elected, he has participated in the election, but only to a most lim- ited extent in the governmental actions that stem from the man elected. But, to keep matters simple, let us suppose that his candidate won. Does this mean that there is a complete identity between the voter and the man elected? Hard- ly. The voter may have known ===== PAGE 35 ===== 1964 SYMPTOMS OF THE FLIGHT 33 nothing of any of the candidates programs based upon the premise and have marked his ballot for of identity are insecurely based. the one who headed the list. On In fact, they have no real base or the other hand, he may have care- foundation. In short, American fully considered the positions of acceptance, so far as it exists, of the men on a number of issues the belief, that the public debt and voted for the man who fa- poses no problem because we owe vored a preponderance of those it to ourselves, that governments he favored. The voter would not can act morally, that there is a have been unusual, however, if he collective responsibility for all had voted against the man he dis- government action in a democracy, liked by voting for the other can- should be taken as another symp- didate. Quite possibly, none of the tom of the flight from reality. candidates suited him, but he voted for the one he considered the lesser of the evils. One other symptom may be in In any case, so far as the elected order. There is much professed official represents the government, concern today about what is known so far as voting coincides with as the population explosion. Dire participation, no complete identifi- predictions are made about what cation has been made between the life will be like if the population people and the government. By increase continues as it has in re- participating in the election, the cent decades. They may be right, citizen may have given his tacit but what do they propose to do approval to the electoral system. about it? Most proposals have had By failing to revolt, he may even to do with birth control. An effort have given tacit approval to the has been made to get the United government. By voting for the States government to make avail- candidates of one political party able information and perhaps de- rather than those of another, he vices for birth control. How much "may have some effect on general and to what extent governments policies to be pursued. could or should effect birth control But there is no way to stretch is, of course, highly controversial. the cloth of the present political But, if government action is taken, process to make a suit that will fit it should be noted that govern- the notion of complete identifica- ments will be discouraging with tion between the people and the one hand what they have been en- government. Since no such identi- couraging with the other. fication has been vouchsafed, all Surely, one of the greatest ra- Government and Birth Control ===== PAGE 36 ===== 34 THE FREEMAN November tional deterrents to having chil- flight from reality. They could be dren is the considerable financial taken from developments in the responsibility involved. When par- arts, in religion, in international ents are responsible for feeding, relations, in the use of technology, clothing, educating, innoculating, and so on. But perhaps the point and entertaining their children, has been made. There are wide- they will be most likely to have spread indications that programs, second thoughts about large fami- policies, studies, and actions are lies. Modern governments have, not being checked against any however, taken over a considerable reality. Philosophers proclaim part of these activities. Presum- that they cannot determine what ably, the same people who favor is real. Economists sanction pro- government propagation of infor- grams which bear only a tangen- mation about birth control would tial relation to any discernible favor an extension of govern- economic reality. Political theo- mental activities in education, in rists concoct relationships that building parks, playgrounds, and can by no stretch of the imagina- zoos, and in providing medical tion be induced from the facts. care. They would thus favor re- School building goes on apace and lieving parents of responsibilities gtudents multiply; yet many pro- which they still have. Moreover, fessors are in the position of not tax exemptions for children would being able to decide whether edu- seem to promote the bearing of cation deals with reality or not. children, if government action af- These must be signs of a flight fects the matter at all. In short, from reality. proposals are made that govern- ment facilitate child bearing on Sky Hook Systems the one hand and promote birth Now it is not my contention control on the other. that no system of ideas would No one, to my knowledge, has support the programs and actions pointed out these inconsistencies. described. On the contrary, it is The fact that they are not gener- my belief that there is a vast ally recognized as inconsistencies ideological edifice being used as is yet another symptom of the a launching pad for the flight flight. from reality. My point will be, i however, that this launching pad Other Signs is suspended in mid-air, hanging Many other examples could be from a sky hook, as it were. To given of the symptoms of the be more literal, the systems of ===== PAGE 37 ===== 1964 SYMPTOMS OF THE FLIGHT 35 ideas which are supposed to sup- thing itself. Diagnostically, symp- port the programs are themselves toms tell us something is amiss, not founded in reality. in this case that departures have The proof of this assertion been made from reality. Such a must be made in connection with conclusion in the realm of ideas a conception of reality, however. is roughly equivalent to a medi- Until that is set forth, the above cal conclusion that the patient is are largely examples of incon- ill. What is wanted, in both cases, sistencies, evidence of a wide- is to know what the specific cause spread disparity between an- of the trouble is. To adjudge the nounced aims and the methods character and content of a flight used to arrive at the aims. Incon- from reality, it must be viewed sistencies are symptoms, not the from the vantage point of reality. The next article in this series will concern “The Nature of Reality.” Free Speech DEAN RUSSELL IN THE UNITED STATES, the police in our history. So far as I know, will protect everyone (including every good and bad economic and a communist) in his right to speak political and social idea known to freely. True enough, local passions man is being advocated by some- in certain sections of our nation one today in every state of our still restrict freedom of speech on union — publicly and under police certain topics, but the fact re- protection. mains that there is less of this in- Of course, there have always terference today than ever before been economic consequences at- Dr. Russell is a member of the staff of The tached to speaking one’s mind. But Foundation for Economic Education and Di- surely that is good rather than rector of the FEE School! of Political Econ- omy. bad; for presumably, no one would ===== PAGE 38 ===== 36 THE FREEMAN November exercise his freedom to speak on of the Department in an excellent controversial issues unless he liberal arts college. wanted something to happen. And That’s the way it should be — only a childish mind could dream each person speaking freely, and of a situation in which the conse- being grateful indeed that poten- quences would invariably be fa- tial employers have the freedom vorable to the speaker and never to hire, or not to hire, on the basis unfavorable. For example, I have of an applicant’s announced philos- always spoken freely and publicly ophy or, for that matter, for any against governmental intervention other reason. in our economy. That attitude is, I note with considerable alarm, of course, supported by only a however, that many of my teach- small minority today. Thus I was ing colleagues have a different idea hardly surprised at the reaction a of freedom of speech. Under the few years ago when I was search- vague heading of “academic free- ing for my first teaching job. The dom,” they insist on the right to top administrators of several of say anything they please, but com- our most famous universities plain that their freedom of speech stated quite clearly that they did is being interfered with when the not want me as an instructor of economic consequences of their economics in their classrooms; speaking are unfavorable rather they honestly believe that I am than favorable. Such a person too one-sided and narrow in my neither understands nor wants viewpoints. Several other schools, freedom of speech; he merely however, were quite willing to ex- wants a special privilege that will pose their students to my view- protect him against the economic points. I accepted the best offer for actions of persons who disagree my services, and eventually became with what he says. This is a fatal Professor of Economics and Head step away from freedom. @® | meas ®X 008007Y | The Supreme Test THE SUPREME TEST of an educated person is his willingness to sacrifice for an abstract ideal. FRANCIS P. GAINES ===== PAGE 39 ===== LEOPOLD SCHWARZSCHILD \What Price Freedom? SOCIALISM makes its principal ap- one for which testimony has been peal on economic grounds, but, given in prison and exile, on gal- paradoxical as this may sound, its lows and battlefields, in every pe- economic aspects are in the last riod of history. analysis secondary. It raises a Frankly, if this were not the problem of a quite different na- problem, it would hardly be worth ture, a problem which towers while to argue, it certainly would above the economic one as the Hi- not be worth while to fight about malayas tower above the cliffs of it. The prospect that socialism will Dover. This problem is to what slow up rather than hasten eco- extent socialism imperils human nomic progress would not suffice freedom. And what we are discuss- to excite men’s minds. They would ing here is not the freedom of mil- be disappointed in their expecta- lionaires. No, it is your, our, my tions; but, after all, they are used freedom that is in question. Nor to that. If their faith and will are is it the perverted thing repre- so strong, let them put their so- sented as “freedom” by modern cialism into practice. Mankind will sophists that concerns us, but manage to get along with less eco- freedom without sophisms, the nomic progress. In fact, since they Leopold Schwarzschild (1891-1950), distin. Will be compensated for this by guished journalist and editor and opponent of the abolition of unemployment, rising German nationalism, was forced to flee . his native Germany by the Hitler government they will manage all the better. A and lived in the United States after 1940. . . This article is reprinted by permission from lowered rate of economic upswing Primer of the Coming World published in 1944 by Alfred A. Knopf. alone would not be worth any 37 ===== PAGE 40 ===== 38 THE FREEMAN November counter-agitation, determined re- longer slam the door in the face of sistance, tragedy. this employer, who would no long- But even if the economic aspects er be one in a hundred thousand, of socialism were as wonderful as but the only one. You could not its proponents say and believe, look for another, for there would this alone would not justify any be no other. You could not escape ecstatic enthusiasm for it. It into an independent way of mak- would still have to be ascertained ing your living, for this would not what price must be paid for the exist, either. The prayer: “Give us economic gains in terms of free- this day our daily bread,” would, dom; it would still have to be de- in point of fact, become a prayer cided — and in full knowledge of addressed to the monopolistic em- the dilemma, not in ignorance or ployer, the state. frivolity — whether the will to pay It is not at all necessary to as- this price really exists. The eco- sume that this monopolistic em- nomic discussion skims only the ployer would be a hard boss, al- surface of the problem of “basic though this, too, is possible. We changes.” At bottom, it is imma- can readily suppose that in the terial who is right or wrong in factories and shops and offices and this discussion. The serious fun- laboratories everything would be damental — I would even say the irreproachable and that the con- tragic — core of this problem re- tent of the pay envelopes would be mains unaffected by it. That core generous. This has nothing to do is the question of freedom. with the great problem. The great } problem is that the state would be A Single Employer irresistible. Let us avoid all abstractions. Who would be able to risk its Socialism means that there will be displeasure? The laws might say only one employer in the country. a hundred times that you had the The advancement, success, indeed right to your own opinion, but the daily bread of every single they would no longer be a guaran- man would be in the hands of that tee. They would protect you — as single employer. He alone could far as they went! —from arbitrary give jobs. He alone would decide actions of the police, the courts, whether you go up or remain down and the prisons. But they would below. From him alone you would not protect you from not obtaining receive your bread, not to mention the better position to which you the butter on it. From him there aspired nor from losing the one would be no escape. You could no you had. And this single fact ===== PAGE 41 ===== 1964 WHAT PRICE FREEDOM ? 39 would be more powerful than all play-producer, publisher, moving- the rights and freedoms. Against picture producer, and radio-station a government that controlled ev- owner. When the government is eryone’s subsistence no one could everyone’s only bread-giver, any really take advantage of his rights opposition becomes a piece of fool- and freedoms. To arouse the dis- hardiness which no normal person pleasure of such a government would risk. And there are always would be suicidal. If it asked any- more people ready to suffer the thing of you, you could no longer death of a hero in battle than to refuse; you would risk being rot in civilian life. turned into the street a month later, under some pretext or other. Even more impossible than to This is the real danger of social- resist individually would be any ism. A dreadful power is inherent kind of general organized opposi- in the means of subsistence. Alex- tion. No one could risk being a ander Hamilton, in the classical candidate against a government language of the Federalist, warned candidate, if this were connected of this. “In the general course of with the danger of economic ex- human nature,” he wrote, “a communication. No one could lead power over a man’s subsistence opposition parties or belong to amounts to a power over his will.” them, start or support campaigns, But there are various degrees of call meetings and speak at them, if power over a man’s subsistence. these were contrary to the wishes The more easily a man can change of the government. Yes, even if the means of subsistence he has through some supreme inconsist- for another, the less power it has. ency the newspapers escaped be- General Motors Corporation has coming state property, they would great power over a sub-manager still be unable to express any kind who earns thirty thousand dollars of opposition. The government, as a year and could find an equally owner of the printing plants and lucrative job only with great diffi- paper factories, would be abletocre- culty. This sub-manager can be ate the most unbearable difficulties ordered around by General Motors for them. The editors and writers — if it wishes to order him around who as a rule have ambitions to be- — to a fairly considerable extent, come playwrights, novelists, screen even in regard to his private life. or radio writers and commentators, But in normal times General Mo- would not dare to expose them- tors has very little power over an selves to the vengeance of the sole ordinary worker, who can get ap- A Power Over Subsistence ===== PAGE 42 ===== 40 THE FREEMAN November proximately equal wages else- which are the usual means of get- where if he does not like his job. ting one’s daily bread, but to the And another important consid- printed notes called ration cards, eration must be added: there are which are a different way of get- also various degrees of interest ting one’s daily bread. If these two that an employer can show in his kinds of printed notes can be employees’ will. A normal employ- handed to you only by the state, er is rather indifferent to what his then both of them represent its employees think, do, or want in monopolistic power over your daily matters that are not connected bread; and this is what Lenin said with his business. The radius of about the meaning of full state his interests is not so large that power over the people’s daily he needs to exert power over the bread: “The ration books . .. are whole radius of their interests. in the hands of the Proletarian But for the employer who is the State, the most powerful means of state, not only matters concerning control. Those means will furnish one business are important; count- a power unprecedented in the an- less other matters are important, nals of history. Those means of too. Each man’s will interests him control and compulsion are strong- in innumerable respects. He has a er than the laws of the convent far greater incentive to take real and the guillotine.” advantage of his power over peo- “Unprecedented . . . stronger ple’s wills. than the guillotine”! Why mince words when one wants to speak Stronger than the Guillotine frankly? In the hands of the gov- Should we not therefore tremble ernment that wants to use it, the before the prospect of a social or- power over everybody’s subsistence der in which there is only one sin- amounts to a guillotine over every- gle master over all the means of body’s free will. Once in possession subsistence, and in which this sin- of this power, it can decapitate all gle master is the state? A witness the liberties of a country within a who knew something about this very short time. Let me repeat that has warned us. Lenin himself ex- in order to achieve this result it plained quite clearly the meaning hardly needs to violate any laws, for of state power over the bread of no law can ever prescribe when an every individual. This significant employer should find an employee statement is in Peasants and satisfactory and when he can find Workers. He was referring not to him unsatisfactory. For this rea- the printed notes called money, son tyranny will be able to develop ===== PAGE 43 ===== 1964 WHAT PRICE FREEDOM ? 41 in spite of the barriers of the ex- nisms for the control of the state isting laws as easily as rats pass are of no value if the people, who under a fence. are the life of these mechanisms, It is difficult for the human are compelled to behave in a ser- mind to imagine things which it vile fashion. From the moment this has not seen. For the inhabitants monopolistic power falls into the of a free country it seems almost hands of the state for the first impossible clearly to understand time, the people who will then be the process through which free- entirely dependent upon it will be- dom is lost. One must have per- come more and more cautious. The sonally witnessed it once in order moment the guillotine of the with- to realize its nature. As a rule, drawal of subsistence falls on the those who have never witnessed it, necks of a few overbold dissidents, always remain too innocent about the sclerosis of the political organ- it. They think of the conditions to ism will set in. The blood which is which they are accustomed. “It still flowing through its old veins can’t happen here.” Why should will be poisoned by fear. The body anything change much? The state will no longer move, but will be will become the sole owner of ev- moved. And once things have gone erything, but for the rest—so peo- thus far, there will be no obstacle ple imagine — everything will re- to transforming at will even the main as it is. The old institutions nominally subsisting institutions and mechanisms, the Constitution, and mechanisms, the constitutions, the Bill of Rights, opposition, par- bills of rights, and laws. Freedom ties, elections, parliaments, courts, will be lost. The blackout will de- all this will continue to function scend. the day after socialism just as it “But my government will not do did the day before. this,” replies the optimist. “It will be a government which I myself have chosen and put in power. It What a delusion! Everything will be composed of people whom can change. The single fact that I know, who all their lives have everybody’s bread is in the power fought for the cause of the people of the government sterilizes all and for freedom. I can entrust my these institutions and mecha- welfare to them without fear.” It nisms, even if they continue to can be said that behind all the en- exist in name. The right to speak thusiasm for “basic economic against the state is of no value if changes” there is a confidence that no one dares exercise it. Mecha- the governments which will wield A Right Unexercised ===== PAGE 44 ===== 42 THE FREEMAN November the increased power will be benev- go to this extreme limit. Good in- olent and noble and self-re- tentions are one of the most com- strained. This is an assumption mon bridges to tyranny; the road which the optimists, whether they to hell is paved with good inten- know it or not, simply cannot do tions. without. The leaders think: “I will be the government,” and that Is It Worth the Price? settles the matter as far as they Are any economic advantages are concerned. The followers worth this dreadful price? Even think: “This will be my govern- if the economic hopes of socialism ment, and I can be sure that it came true, would this compensate will not abuse the instrument of us for the loss of freedom? Would increased power — at least it will it compensate even for the loss of not abuse it against me.” part of our freedom? Would it But one has no right to be sure compensate even for the establish- of any government — least of all, ment of a regime which implied a of the unknown government of to- grave danger to freedom? morrow. We cannot put ourselves The genuine socialists of the blindly into anyone’s hands. “Se Marxian school were at least clear méfier c'est essence de la liberté.” in this respect. They declared (“Distrust is the essence of free- roundly that what we call freedom dom”), says Montesquieu. Even did not interest them. What they what is in the minds of those who proclaimed was explicitly dictator- have fought all their lives for the ship. They called it dictatorship of cause of freedom is, in reality, the proletariat—which is again an never quite clear. When such peo- illusion, because a dictatorship ple achieve power, they often can be exercised only by an indi- enough show surprisingly differ- vidual or by a few individuals. ent faces. And even aside from Their minds were quite made up this, hardly any government has that a dictatorship was to rule. ever refrained from using the full And Lenin explained: “The very measure of power it had. When meaning of the word ‘dictatorship’ difficult situations and crises arise, signifies the existence of an abso- when opposition threatens, every lute government which is not lim- government goes to the extreme ited by any laws, takes no notice limit of its actual power. Yes, per- of any rules whatsoever, and relies haps the more firmly they are con- directly on violence.” vinced that they are right and These socialists, too, believed beneficent, the more readily they that dictatorship would disappear ===== PAGE 45 ===== 1964 WHAT PRICE FREEDOM ? 43 some day. But it must be empha- day most socialists do not seem to sized that they promised a curi- know anything at all about this ous, not very reassuring kind of last goal of their journey. It is no disappearance. Dictatorship was longer mentioned — least of all in to pass away only after a very Moscow. The bulk of today’s so- long period of transition —‘“‘after cialists thus have no idea of how a whole historical epoch has distant and how extremely uncer- elapsed.” And the process of its tain the end of the dictatorship is, disappearance was to be accom- according to their own doctrine; plished by virtue of a mystic apoth- they do not realize that it would eosis that, with the best will in depend upon an absolutely unsub- the world, does not sound very stantiated miracle. But be that as convincing. The end of the dicta- it may, the genuine communists torship, we are told, will not come and Marxian socialists cannot be because it will be abolished; no, reproached with being obscure, something much more grandiose deluded, or irresolute in the mat- and mysterious will take place. ter of freedom. The socialist doc- After socialism has ruled for a trine is unequivocal on the point whole epoch, the state will disap- that freedom as we know it must pear. Such a perfect harmony will actually be sacrificed, and sacri- set in that no state or government ficed for an indefinite period. will any longer be necessary. “The But do you, reader, share this state withers away,” as Marx put resolute contempt for freedom? If it. “The state renders itself super- people were clearly confronted fluous . . . it dies,” as Engels com- with this dilemma, would any pro- mented. portion of them worth mentioning consent to abandon even a part of their freedom, were it only for the duration of a ‘historical epoch,” Unfortunately they never told until that fata-morgana world us in greater detail what the without states and governments world would look like in this para- was achieved? Despite all the con- disiac condition, without states fusions, the opposite is certain! and governments. Although this Confronted with this dilemma millennium is the proclaimed final clearly, understandably, without goal and ultimate justification of any hocus-pocus, the overwhelm- the whole socialist adventure, any ing majority in the democratic concrete description of it has so countries would refuse to sacrifice far not been vouchsafed to us. To- their traditional rights and free- Utopia Proclaimed but Never Described in Detail ===== PAGE 46 ===== 44 THE FREEMAN November doms for the sake of any other ad- served by means which in truth vantage. would strangle these ideals! What a tragedy to see them embrace the A Downward Path idea that the quintessence of lib- So let us make the dilemma eralism is something which is in clear instead of obscuring it by reality the negation of the whole sophisms. Let us establish clearly liberal heritage! that there is hardly a surer way to Yes, in the whole thousand- lose all freedom than to make the year-long history of liberalism state the monopolistic owner, em- there has never been any uncer- ployer, and feeder. Tragic is the tainty as to the source of the over- error of those who dream of being whelmingly greatest danger to the able to lead mankind upwards on rights, sovereignty, and inviola- this path. For it is the path down- bility of man. There was never wards. Tragic is the role of those any doubt that while there are who hope to attain a flourishing many small, diffuse, special dan- liberalism by following this road. gers to the dignity of every indi- They would lead all liberalism in- vidual, there is only one single to the desert. great concentrated danger to the Tragic, indeed, is the role of so dignity of all: the danger of many liberals in this matter. strangulation by the organized Nothing has changed in the ulti- power of the state. The fight for mate philosophy of the liberal freedom, human rights, and hu- camp, which is my camp. Now, as man dignity has always consisted before, the basic ideals of this in restricting the power of that camp are those of humanity: the crushing thing, the state, in bal- rights, sovereignty, dignity, and ancing it and dividing it. This was inviolability of the individual. It the whole proclaimed meaning of has never been more necessary to liberalism. All the struggles for fight for these ideals than it is to- freedom in history were struggles day. Without groups and centers against the power of the state. In which constantly and tenaciously the last analysis they all amounted wage the struggle for these ideals, to conquering and preserving that conditions would soon degenerate simple indefinable thing which Jus- everywhere. Today the liberal mis- tice Brandeis called the most fun- sion is more important than ever. damental of all rights: “The mak- But how pitiful it is to see so ers of the Constitution sought to many liberals fall victim to the il- protect Americans in their beliefs, lusion that their ideals are best their thoughts, their emotions, ===== PAGE 47 ===== 1964 WHAT PRICE FREEDOM ? 45 and their sensations. They con- to place in one hand the economic ferred, as against the government, power which, thank God, is now their right to be left alone — the divided among a hundred thou- most comprehensive of rights and sand; and, to place it in the very the right most valued by civilized hand that already holds the politi- men.” cal power. And all this for the sole purpose of achieving an extraor- dinary improvement in living What a spectacle to find so many standards — which again is imagi- liberals of our day following the pary! exactly opposite path! They no longer erect walls against the Important Questions state and defend them. They call Is there no road back from this upon us to tear down existing error? Can you no longer recog- walls. They no longer try strictly nize the truth that the hundreds to limit the zones to which the of thousands of employers, what- state has access; they invite it to ever the sins of any one of them, supervise ever widening zones. are still incomparably more bear- They are furious against small, able than would be one single total diffuse, special damages which employer? Is it still not clear that they find anywhere or of which a thing can be bad, but its op- they only suspect the existence. posite immeasurably worse? The Their sharpest attacks are di- faith in the saving virtues of the rected against the “monopolies” opposite has in our lifetime led to — that is, against the biggest an unprecedented catastrophe; it among the hundreds of thousands led mankind directly into a new of employers. But to banish the real war instead of into the hoped-for or imaginary sins of these mo- perpetual peace. Are we destined nopolies, they call for a titanic to discover that the faith in the supermonopoly which would com- opposite will through a new direct bine the power of all the hundreds development bring servitude to of thousands of employers and mankind instead of the hoped-for which represents all the great higher freedom? dangers in concentrated form. Abundance for all: what an al- Liberalism is the descendant of luring aim! It cannot be achieved the doctrine of “divided powers”: more successfully through social- let no power be totally in one istic methods than through “free hand! Today, completely reversing enterprise.” But even if it could be, this doctrine, the liberals desire do not lose sight of the price! Let The “New Liberalism’ ===== PAGE 48 ===== 46 THE FREEMAN November not this one passion, this one de- on the battlefield, will after the sire, this one appetite rob mankind war be admitted through the back of all sense to such a point that it door. takes the risk of giving the state all Let us, therefore, remember the power over every man’s subsistence truth that man’s well-being is —or even over most of it. Then once composed of many elements. Let again Edmund Burke’s dictum will us not forget that what seems to be confirmed: “Men are qualified favor one element can be fatal to for civil liberty in exact proportion another. Let us not sacrifice one to their disposition to put chains in order to improve another, let upon their own appetites. . . . It alone to improve it in a purely is ordained in the eternal consti- imaginary fashion. And least of tution of things that men of in- all let freedom be the sacrificed temperate habits cannot be free. element! If after this war destiny Their passions forge their fet- mercifully asks us the Shakes- ters.” Should the passion for gi- pearian question: “What is’t thou gantic economic progress lead to canst demand?” let our answer be, the plunge into economic omnipo- first and foremost, now and al- tence for the state or to anything ways: “Our liberty!” approximating it, fetters would be Let us agree that the govern- forged of which the innocent do ment’s power over the means of not suspect the true nature. A production means its power over cruel historical irony will ma- everyone's subsistence. Its power terialize: the “total state,” against ower this sounds the knell of indi- whose power victory has been won vidual freedom. - @® [ ooeas @ 100A | The Wrong Approach A FREE ECONOMY and society expands the opportunities for all its members but leaves it largely to them to decide what they will do about it. This is the antithesis of the present sociological approach, which regards the poor as a segregated class; either they must be dragged out of their poverty by mechanical Gov- ernment programs or else maintained in their poverty by the rest of society. Since there are always those only too willing to live at the expense of others, that approach may only swell the ranks of the shiftless and help perpetuate poverty. The Wall Street Journal ===== PAGE 49 ===== THE ROAD IS BETTER THAN THE INN We are now beginning to realize that these centuries, so self- satisfied, so perfectly rounded-off, are dead within. Genuine vital integrity does mot consist in satisfaction, in attainment, in ar- rival. Cervantes said long since: “The road is always better than the inn.” When a period has satisfied its desires, its ideal, this means that it desires nothing more; that the wells of desire have been dried up. That is to say, our famous plenitude is in reality coming to an end. There are centuries which die of self-satisfac- tion through not knowing how to renew their desires, just as the happy drone dies after nuptial flight. ORTEGA Y GASSET, Revolt of the Masses THE PASSAGE quoted by Ortega tions. Any implication that a man from Cervantes may be taken as may live a good life in the present a reply to the arguments of the is met by sneering rejection. utopians, whose energies are so The other side of the question, much given to dreaming of the however, must have its statement. future that many of them do not It is true enough that much of know how to live in the present. the present is contemptible. There To them, the present is contempt- is always a sense in which the ible, intolerable. You might say utopians are right. There is the that in their thought they have likelihood, if not the certainty, socialized human longings, but col- that people who show no interest ored them with a kind of collec- in the sort of changes the uto- tivist avarice, making their strug- pians talk about are themselves gle for power embody contradic- quite content with the status quo tory emotional components. They and indifferent to the welfare of are lustful for the common good, those whose lives are ill served angry at delays, and stridently py the present. self-righteous in their conten- pe chief difficulty in resolving From Manas, February 12, 1964 this contradiction lies in the fact 47 ===== PAGE 50 ===== 48 THE FREEMAN November that when men do find a balance be made to change, and to admit between thdse two aspects of their them to be a matrix of any sort lives — between work for the fu- of growth would be to compromise ture, for better social or other their utopian ardor. arrangements, on the one hand, What can be done about this? and a full expression of them- Nothing short of a complete re- selves as human beings, here and definition of utopian ends can now, on the other — they find it help, it would seem. Even the intuitively, and not by any plan methods of change must some- or program that can be incorpo- how lend themselves to a fullness rated in some progressive scheme. of human life. These, as we say, This sort of private resolution must be “organic” to the kind of tends to be ignored or held to be lives we want to live, and not a worthless by the utopians, since series of preparatory steps. The their methods of arousing inter- goal, in short, is not an inn, but est in what they believe ought to a proper road. The good life would be done are not calculated to en- then be recognized as a form of courage people to make the best endless movement along the way, use of their present circum- and never a static, final condi- stances. Those circumstances must tion. @® | 00 AS ®M LIBERTY Same Old Problem AT THIS MOMENT society is very generally philanthropic, ex- tremely desirous of improving the condition of the multitude; it is deeply affected by sufferings from disease and want, from close, small, and crowded dwellings, and seems resolved by legis- lation to get rid of dirt and discomfort. The object is excellent; the legislation, however, in the main is really directed against property; it is carried out, and can only be carried out, by some kind of restrictions and some kind of office-bearers to see them executed — an infallible means of dividing the existing amount of wealth in smaller portions, with no tendency to increase the whole, and certain, therefore, to sharpen and augment the pov- erty it really aspires to lessen. The Economist (London), June 7, 1856 ===== PAGE 51 ===== ! ON MINDING ONE'S BUSINESS WILLIAM GRAHAM SUMNER THE PASSION for dealing with so- structive and inferential individ- cial questions is one of the marks ual purpose. For A to sit down of our time. Every man gets some and think, What shall I do? is com- experience of, and makes some ob- monplace; but to think what B servations on social affairs. Except ought to do is interesting, roman- matters of health, probably none tic, moral, self-flattering, and pub- have such general interest as mat- lic-spirited all at once. It satisfies ters of society. Except matters of a great number of human weak- health, none are so much afflicted nesses at once. To go on and plan by dogmatism and crude specula- what a whole class of people ought tion as those which appertain to to do is to feel one’s self a power society. The amateurs in social on earth, to win a public position, science always ask: What shall we to clothe one’s self in dignity. do? What shall we do with Neigh- Hence we have an unlimited sup- bor A? What shall we do for ply of reformers, philanthropists, Neighbor B? What shall we make humanitarians, and would-be man- Neighbor A do for Neighbor B? agers-in-general of society. It is a fine thing to be planning and discussing broad and general theories of wide application. The Every man and woman in so- amateurs always plan to use the ciety has one big duty. That is, to individual for some constructive take care of his or her own self. and inferential social purpose, or This is a social duty. For, fortun- to use the society for some con- ately, the matter stands so that —_— the duty of making the best of Yale, 1872-1909. President of the American separate thing from the duty of Sociological Society. Author of many books and articles. This is Chapter VIII of his book, filling one’s place in society, but What Social Classes Owe to Each Other, pub- . lished in 1883. the two are one, and the latter is The First Duty 49 ===== PAGE 52 ===== 50 THE FREEMAN November accomplished when the former is man who proposes to take care of done. The common notion, how- other people must have himself ever, seems to be that one has a and his family taken care of, after duty to society, as a special and some sort of a fashion, and must separate thing, and that this duty have an as yet unexhausted store consists in considering and decid- of energy. ing what other people ought to do. Now, the man who can do any- thing for or about anybody else The danger of minding other than himself is fit to be head of people’s business is twofold. First, a family; and when he becomes there is the danger that a man head of a family he has duties to may leave his own business unat- his wife and his children, in addi- tended to; and, second, there is tion to the former big duty. Then, the danger of an impertinent in- again, any man who can take care terference with another’s affairs. of himself and his family is in a The “friends of humanity” almost very exceptional position if he always run into both dangers. I does not find in his immediate sur- am one of humanity, and I do not roundings people who need his want any volunteer friends. I re- care and have some sort of a per- gard friendship as mutual, and I sonal claim upon him. If, now, he want to have my say about it. I is able to fulfill all this, and to take suppose that other components of care of anybody outside his family humanity feel in the same way and his dependents, he must have about it. If so, they must regard a surplus of energy, wisdom, and any one who assumes the role of a moral virtue beyond what he needs friend of humanity as impertinent. for his own business. No man has The reference of the friend of hu- this; for a family is a charge manity back to his own business which is capable of infinite de- is obviously the next step. velopment, and no man could suf- Yet we are constantly annoyed, fice to the full measure of duty for and the legislatures are kept con- which a family may draw upon stantly busy, by the people who him. Neither can a man give to have made up their minds that it society so advantageous an em- is wise and conducive to happiness ployment of his services, whatever to live in a certain way, and who they are, in any other way as by want to compel everybody else to spending them on his family. Upon live in their way. Some people have this, however, I will not insist. I decided to spend Sunday in a cer- recur to the observation that a tain way, and they want laws A Twofold Danger ===== PAGE 53 ===== 1964 ON MINDING ONE'S OWN BUSINESS 51 passed to make other people spend edge of the anatomy or physi- Sunday in the same way. Some ology of society. They never have people have resolved to be tee- any doubt of the efficacy of their totalers, and they want a law remedies. They never take ac- passed to make everybody else a count of any ulterior effects which teetotaler. Some people have re- may be apprehended from the rem- solved to eschew luxury, and they edy itself. It generally troubles want taxes laid to make others them not a whit that their remedy eschew luxury. The taxing power implies a complete reconstruction is especially something after of society, or even a reconstitution which the reformer’s finger always of human nature. Against all such itches. Sometimes there is an ele- social quackery the obvious in- ment of self-interest in the pro- junction to the quacks is, to mind posed reformation, as when a pub- their own business. lisher wanted a duty imposed on The social doctors enjoy the books, to keep Americans from satisfaction of feeling themselves reading books which would un- to be more moral or more enlight- settle their Americanism; and ened than their fellow men. They when artists wanted a tax laid on are able to see what other men pictures, to save Americans from ought to do when the other men buying bad paintings. do not see it. An examination of I make no reference here to the the work of the social doctors, giving and taking of counsel and however, shows that they are only aid between man and man. The more ignorant and more presump- very sacredness of the relation in tuous than other people. which two men stand to one an- We have a great many social other when one of them rescues difficulties and hardships to con- the other from vice separates that tend with. Poverty, pain, disease, relation from any connection with and misfortune surround our ex- the professional philanthropist, istence. We fight against them all the work of the social busybody, the time. The individual is a center and the empirical legislator. of hopes, affections, desires, and sufferings. When he dies, life changes its form, but does not The amateur social doctors are cease. That means that the person like the amateur physicians — they — the center of all the hopes, affec- always begin with the question of tions, ete. — after struggling as remedies, and they go at this with- long as he can, is sure to succumb out any diagnosis or any knowl- at last. We would, therefore, as Social Quacks ===== PAGE 54 ===== 52 THE FREEMAN November far as the hardships of the human we have been warped and distorted lot are concerned, go on struggling until we have got used to it, as the to the best of our ability against foot adapts itself to an ill-made them but for the social doctors, boot. Next, we have come to think and we would endure what we that that is the right way for could not cure. things to be; and it is true that a But we have inherited a vast change to a sound and normal con- number of social ills which never dition would for a time hurt us, came from Nature. They are the as a man whose foot has been dis- complicated products of all the torted would suffer if he tried to tinkering, muddling, and blunder- wear a well-shaped boot. Finally, ing of social doctors in the past. we have produced a lot of econo- These products of social quackery mists and social philosophers who are now buttressed by habit, fash- have invented sophisms for fitting ion, prejudice, platitudinarian our thinking to the distorted facts. thinking, and new quackery in po- Society, therefore, does not need litical economy and social science.... any care or supervision. If we can acquire a science of society, based The Most Needed Reform on observation of phenomena and The greatest reforms which study of forces, we may hope to could now be accomplished would gain some ground slowly toward congist in undoing the work of the elimination of old errors and statesmen in the past, and the the re-establishment of a sound greatest difficulty in the way of and natural social order. Whatever reform is to find out how to undo we gain that way will be by their work without injury to what growth, never in the world by any is natural and sound. All this mis- reconstruction of society on the chief has been done by men who plan of some enthusiastic social sat down to consider the problem architect. The latter is only repeat- (as I heard an apprentice of theirs ing the old error over again, and once express it), What kind of a postponing all our chances of real society do we want to make? When improvement. Society needs first they had settled this question a of all to be freed from these med- priori to their satisfaction, they dlers — that is, to be let alone. set to work to make their ideal Here we are, then, once more society, and today we suffer the back at the old doctrine — Laissez consequences. Human society tries faire. Let us translate it into blunt hard to adapt itself to any condi- English, and it will read, Mind tions in which it finds itself, and your own business. It is nothing ===== PAGE 55 ===== 1964 ON MINDING ONE'S OWN BUSINESS 53 but the doctrine of liberty. Let taken. The half-way men — the every man be happy in his own professorial socialists — join him. way. If his sphere of action and They solemnly shake their heads, interest impinges on that of any and tell us that he is right — that other man, there will have to be letting us alone will never secure compromise and adjustment. Wait us perfect happiness. for the occasion. Do not attempt Under all this lies the familiar to generalize those interferences logical fallacy, never expressed, or to plan for them a priori. We but really the point of the whole, have a body of laws and institu- that we shall get perfect happiness tions which have grown up as oc- if we put ourselves in the hands of casion has occurred for adjusting the world-reformer. We never sup- rights. Let the same process go posed that laissez faire would give on. Practice the utmost reserve us perfect happiness. We have left possible in your interferences even perfect happiness entirely out of of this kind, and by no means seize our account. If the social doctors occasion for interfering with nat- will mind their own business, we ural adjustments. Try first long shall have no troubles but what and patiently whether the natural belong to Nature. Those we will adjustment will not come about endure or combat as we can. What through the play of interests and we desire is, that the friends of the voluntary concessions of the humanity should cease to add to parties. them. Our disposition toward the ills which our fellow man inflicts on us through malice or meddling I have said that we have an em- is quite different from our disposi- pirical political economy and social tion toward the ills which are in- science to fit the distortions of our herent in the conditions of human society. The test of empiricism in life. this matter is the attitude which To mind one’s own business is one takes up toward laissez faire. a purely negative and unproduc- It no doubt wounds the vanity of tive injunction, but, taking social a philosopher who is just ready matters as they are just now, it is with a new solution of the uni- a sociological principle of the first verse to be told to mind his own importance. There might be de- business. So he goes on to tell us veloped a grand philosophy on the that if we think that we shall, by basis of minding one’s own busi- being let alone, attain to perfect ness. @® happiness on earth, we are mis- Reprints available, 10 cents each. The Root of Dictatorship ===== PAGE 56 ===== The Invisible Hand WYATT B. DURRETTE, JR. OUR GIANT GOVERNMENT, giant more effectually than when he really corporations, and giant unions intends to promote it. make it difficult to see how the market economy functions and to understand the role profits play. Though we frequently refer to the “invisible hand,” it is seen with little more clarity today than when Adam Smith identified it in 1776: The following personal experi- ence may help to exemplify how the market functions and profits play their part. To help defray expenses while in law school, I worked part time as equipment manager for the . by directing that industry in varsity athletic teams. There, in such a manner as its produce may the locker rooms, I met a senior be of the greatest value, he intends of some ingenuity who had estab- only his own gain, and he is in this, |ighed and developed a popular and as in many other cases, led by an profitable orange juice concession. invisible hand to promote an end He offered to pay me a certain which was no part of his intention. amount each afternoon if I would Nor 18 it always the worse for the oo. society that it was no part of it. By help. The juice sold for 10 cents pursuing his own interest he fre- 2 Cub cash or credit, and we quently promotes that of the socicty dipped it out from behind the ———— equipment counter. This worked Mr. Durrette hos finished law school and is fairly well, except that now and doing graduate work in Political Science at . Johns Hopkins University. then, if there was a heavy call for 54 ===== PAGE 57 ===== 1964 THE INVISIBLE HAND 55 shoulder pads or other equipment, They were getting more juice for the lines would lengthen and im- each 50-cent outlay, and I was patience would cost us sales of gaining sales and profit. juice. Next, with equal satisfaction to Since the “owner” of the juice all concerned, I offered a free cup business had no other reason to for each ten purchased in a week. stay in the locker room, he soon Finally, I moved the concession offered me a better deal — 50 per from behind the counter to a cen- cent of the profits if I would oper- trally located table, invested in two ate the concession. He would see large plastic containers and six that ice and juice were always dippers, and instituted self-serv- available. ice. The increased volume of busi- So, I became a partner and con- ness was amazing. Again, the cus- tinued to operate the concession tomers were pleased with the as before, giving little thought to changes I had made in an attempt measures to increase sales. There to increase my profit. were no complaints, and it never Here, then, was a monopoly occurred to me to make changes. I operated by a profit-seeking en- think now that my complacency trepreneur. But, contrary to the then stemmed from the fact that popular myth, no one was being I was doing all the work for only exploited. The willing customers half the profit. were getting more product for The situation changed when my their money and faster service. partner graduated. The next fall, Yet, the myth persists, and the as sole owner of the concession, I assault on profits continues. The began to contrive ways to increase national government first takes sales, and profits. As Adam Smith half, then taxes again the divi- might have observed, I was moti- dends received by owners. These vated only by the desire for per- and other highly progressive in- sonal gain; but I realized that if I come taxes siphon off much of the failed to provide a good product venture capital so desperately and adequate service at a reason- needed for economic progress. able price, my sales would decline. Of course, different conclusions My first innovation was to offer can be drawn from my experience a free cup of juice to each cus- and arguments made that it has tomer who bought five in a day. no relevance to the affairs of big Immediately, many of my 3-and industries today. Still, it may 4-cup boys began to down an extra afford some slight challenge to the cup or two to get the free one. prevailing dogma. @® ===== PAGE 58 ===== A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN The Case for the FREE MARKET EVERY FOURTH YEAR we get in- The politico, when he is running volved in the frenzied madness of for office, is a mere resultant of a presidential election. A candidate forces. The way to move society on says a sensible thing — such as that its axis is not to play politics. It it would be in keeping with a gen- is to persuade teachable people to eral profession of a belief in free think as you do. And the best way enterprise if the TVA were to sell to do this is to be a good personal whatever facilities it possesses that living example of the philosophy have nothing to do with flood con- you hope to spread. trol — and all hell breaks loose. The Leonard Read is not running for head of a great Detroit union, with office, so he can freely say what a gesture of horror, says the can- some people would describe as the didate will soon be advocating the damnedest things. His book, Any- sale of the U.S. government to Gen- thing That's Peaceful: the Case eral Motors. At another point the for the Free Market (FEE, $3.50 candidate remarks that social se- cloth, $2.50 paper) wouldn't get curity would be better if it were him through the New Hampshire voluntary. Practically everybody primary. He believes that govern- jumps on him, and he tries to make ment should be limited to such a sidewise retreat by saying that things as keeping the peace, pre- he only wants social security to be venting fraud, dispensing justice, “strengthened.” and fending off attacks by foreign Watching the quadrennial show, powers. He says it is violent coer- Leonard E. Read correctly esti- cion to force social security on any- mates that politicians are power- body. He thinks that Robin Hood, less of themselves to change things. who advocated taking money from 56 ===== PAGE 59 ===== 1964 THE CASE FOR THE FREE MARKET 57 one set of people to give it to an- to make them think that the way to other, should properly be called release energy was to deliver ev- Robin Hoodlum. He argues that erybody to the dictates of a public any type of government economic planning authority. The colum- intervention forces human energy nists, radio commentators, and into shapes that are marketable magazine writers who believed in only at the end of the police club. economic freedom could be counted He doesn’t consider that people on a couple of hands. When the think well in committee. He refuses writer of this review teamed up to vote when the choice is between with Henry Hazlitt and Suzanne two trimmers. He challenges the La Follette to start THE FREEMAN, idea that the government is pecu- he was told by an old friend, his liarly fitted to run the post office, or first night city editor, that he had to maintain schools, or to plan the better consult a psychiatrist, for coming of either a good or great surely he was sick, sick, sick. society. In short, his opinions are i such that he couldn't be elected to Doubtful Uses of Coercion the office of dog catcher, let alone All of this was scarcely a genera- win a state primary. tion ago. Mr. Read still sounds ex- Nevertheless, Mr. Read, by in- treme to the conventional way of sisting that the state should not thinking when he says that edu- intervene to keep people from do- cation would be improved if there ing anything at all that’s peaceful, were no tax-supported public is beginning to shake up American schools. But private schools society as no political figure has throughout America have started ever managed to do. I know this to come back in recent years with a because I have witnessed the rush. Not so long ago an ex-Presi- come-back of the freedom philos- dent of Harvard University, James ophy over the past twenty years. Conant, was advocating the aboli- Mr. Read began in the nineteen tion of private secondary schools forties as a still, small voice. He as “undemocratic” institutions. had a few accomplices then. There Dr. Conant isn’t talking this way were a couple of emigrant econo- today. The “freedom philosophy” mists of the Vienna neo-liberal has been creeping up around him, school taking issue with the domi- changing the climate in which he nant Keynesian hosts. Three wom- speaks as an authority on second- en — Ayn Rand, Isabel Paterson, ary education. and Rose Wilder Lane — were won- Mr. Read doesn’t think you nec- dering what had gotten into men essarily have to forbid socialistic ===== PAGE 60 ===== 58 THE FREEMAN November enterprise by law to restore free- prominent publisher to Washing- dom. Take this matter of the Fed- ton to assure him he is all for self- eral monopoly of mail delivery, for made men. The TVA may still be instance. Mr. Read is satisfied that regarded as sacrosanct, even when if the law were changed to permit it burns coal to add to the electric- private corporations to undertake ity that is made by use of water the delivery of mail, and if an un- power, but it is getting tougher to subsidized Post Office were to be sell huge river development put on an accounting basis com- schemes to the public. The objec- parable to that forced on private tion to saddling the existing social industry, some ingenious free en- security system with new compul- terprisers would soon compete the sory payments for new services be- government out of the mail busi- comes respectable among the poor, ness. For what, so Mr. Read asks, for they are at last beginning to is difficult about delivering mail? see that the value of the social se- The telephone company, in trans- curity they already have depends porting the human voice three on keeping inflation from getting thousand miles from New York to out of bounds. San Francisco, does something that takes much more ingenuity. And, 80 Mr. Read adds, the American During the twenty years I've Telephone and Telegraph Company known him, Mr. Read has not, to showed a profit of $22 billion when the extent of my knowledge, ever the Post Office was losing $10 bil- argued for or against any specific lion. Congressional bill as such. He has That the climate has changed not attacked or supported specific since Mr. Read, with a handful of men for specific public office. This confederates, started to preach the is not because he values tax exemp- freedom philosophy is proved by tion for his foundation, for it is the lip service that is now being part of his fundamental creed. He paid to libertarian generalities. A can’t have voted very often in his candidate for vice president re- lifetime, for he believes that it is signs as co-chairman of the so- just as wrong to vote for a small- cialistic Americans for Democratic scale trimmer as it is to vote for a Action and makes a sudden appear- big one. As this country reckons ance before a number of important things, he is the completely non- businessmen to assure them that political man. He even argues that he isn’t anti-business. An occupant we might do better if we were to of the White House invites a choose our Congressmen for non- The Non-Politician ===== PAGE 61 ===== 1964 THE CASE FOR THE FREE MARKET 59 recurring terms by lot, for by such of the right instead of the intellec- a method we would get represent- tuals of the left, even the greatest atives who would have no stake in of “evils” will begin a new career buying voters with their own mon- of trimming in the right direction. ey. Such obliviousness to the emo- @® tions that are unleashed in most breasts in a campaign year is a marvel to behold. p THE AGE OF INFLATION by Jacques Rueff; translated by A. Yet I do not doubt that Mr. Read H. Meeus and F. G. Clarke (Chi- will one day be a chief architect of cago: Henry Regnery Company, a change in this country that will 1964). 175 pp., paper, $.95. have a profound effect on our philosophy of government. He is a Reviewed by Percy L. Greaves, Jr. positive force, and, being such, he shapes the adaptation of other peo- MONSIEUR RUEFF is an eminent ple without buttonholing them, or French statesman and economist. demanding that they vote for this He played a major role in re-es- or that bill or this or that man. tablishing the French franc after I say this with profound admira- the inflations of both World Wars. tion, even though I have often, in This book, a collection of six es- my lifetime, voted for the man gays and the author’s 1958 recom- whom I have regarded as the mendations — which were largely “lesser evil.” I have always been accepted by General de Gaulle — hopeful that a “lesser evil” might, appeared last year in the French. in office, be more likely than a Rueff writes from a European or “greater evil” to see the light on world viewpoint and makes an im- the Road to Damascus. Almost in- passioned plea for an immediate variably I have been disappointed, end to present-day monetary poli- yet I persist in coming back for cies while there is still a chance to more. But contact with Mr. Read do it without producing a world- has done much to make me serene wide catastrophe. in the face of continual disappoint- As he phrases it, “Mankind is ment in the electoral process. Even geeking — and waiting for — a lead- “greater evils” can be forced, by er who will display the courage changes in the intellectual climate, and intelligence required to rescue to slow the pace toward socialist us. If such a leader does not exist, goals. And when the natural lis- or if political circumstances pre- teners and followers in the middle vent him from emerging, man’s. begin to listen to the intellectuals destruction is as inevitable as that ===== PAGE 62 ===== 60 THE FREEMAN November of a man falling from the roof of has encouraged this policy since it a skyscraper.” cuts down on the current outflow Disclaimers by the dozen cannot of gold. alter the fact that we live dan- The facts which rightly disturb gerously in an age of inflation. him so much are: For half a century, governments 1. More and more American dol- the world over have been meeting lars are spent, lent, or presented their extra expenses by inflating to foreigners without ever leaving the number of their monetary the United States or reducing the units by the billions. The United number of dollars which can be States is no exception. In the last spent in the United States. year, our officials have sanctioned 2. American banks lend out an increase in the nation’s money these foreign-owned dollars do- supply of almost 20 billion dollars. mestically while paying interest to Each added dollar buys some- the foreign depositors. thing and thus reduces the pur- 8. Foreign central banks, which chasing power of previously owned can legally demand gold for these dollars. The few who spend these dollars, treat them as if they were new dollars first are the gainers, gold reserves and thus use them while the majority, whose dollars as a base for expanding their own buy less, are the losers. What is domestic money supply. worse, the whole economy is de- So, the continuing American in- ranged as producers try to satisfy flation becomes the basis for the the first spenders of the newly further inflation of many Euro- created money. When the inflation pean currencies. As M.Rueff states ends, as it must some day, let us it, this policy “has saddled a con- hope that the necessary readjust- siderable portion of the United ments will not be too painful. States gold stock with an exceed- Jacques Rueff’s collection of es- ingly high double mortgage. If a says lays stress on one little-under- substantial part of the foreign stood international aspect of our holdings of claims on dollars were government's policy of dispensing cashed in gold, the credit struc- “foreign aid” while increasing the ture of the United States would be money supply at home. For years, seriously threatened.” M. Rueff has been chiefly con- He would like to see the situa- cerned about the effects of an in- tion corrected, and promptly. If creasing number of FEuropean- this is not done, he fears this house owned dollars left on deposit in the of cards may come tumbling down. United States. Qur government Unfortunately, however, the au- ===== PAGE 63 ===== 1964 OTHER BOOKS 61 thor weakens his case by endors- fied in so many different fields, are ing expansion of the money sup- there any general principles or ply for the “needs of business” laws by which technology ad- and against domestic government vances, and with increasing ac- securities. But for anyone inter- celeration? Fuller believes there ested in the top economic problem are, that the principles are simple, of our age, this little book is a but infinitely extensible in appli- frightening reminder of what cation. The chief shock and invig- could be just around the corner oration of his autobiography is for our civilization. @® the tracing of his own reasoning and quest for the “inclusive equa- tion” of the industrial complex. p IDEAS AND INTEGRITIES: A Among Fuller's observations Spontaneous Autobiographical Dis- along the way are these: closure, by Buckminster Fuller 1. The major source of increas- (Englewood Cliffs, N. J.: Prentice ing wealth is the organization of Hall, Inc., 1963) 318 pp., $6.95. energy. The physical universe does not wear out or run down by use; Reviewed by Arthur P. Moor the intellectual factor of organi- zation and design improves with As engineer-designer-builder, ge and is self-augmenting. Since Buckminster Fuller has become jncreasing production and world- famous for his “geodesic domes” 4round service flows from the and other structures which span progressive integration of tech- large areas with light, strong ylogies, the primary initiative space-enclosures, built on a prin- ., pe taken by the individual de- ciple about 2,000 times as efficient, signer. If one sees a gap-closing per pound of material, as ordinary {,5k in the world equation for building methods. His domes, like hich his experience and compe- all technological advances, are (ence prepares him to make a con- based on discovered ways of doing tribution, and finds no patron or more with less — less weight, less sponsor for the task, he may as- bulk, less time, less cost. And tech- gyme he is being directly chal- nology, according to Fuller, is Jenged by the Universe and will be simply the art and science of “do- supported by it, often in indirect ing more with less.” Increasing and unpredictable ways. “One of service with diminishing cost is the rules of Nature is that she good economics in any field. But permits us each day the integrity since technology is now so diversi- of that day’s thinking.” ===== PAGE 64 ===== 62 THE FREEMAN November 2. The integrity of the Universe p» THE CONSERVATIVE PA- is extensible to man, but ‘only PERS, introduction by Representa- 3. Increasing wealth and free- ) WHAT IS CONSERVATISM? dom will be achieved through com- edited by Frank S. Meyer (New prehensive design and planning in York: Holt, Rinehart and Wilson). a world service context. This, how- $4.95 cloth, $2.75 paper. ever, is not to be confused with } SUICIDE OF THE WEST by state planning, or political plan- james Burnham. (New York: John ning, any kind of authoritarianism Day Company). $5.95. or compulsion. We cannot expect politicians to solve the problems CAN by Clarence Manion (New . e of technology, industry, and eco- York: The Devin-Adair Company) nomics any more than we can ex- $4.75. pect them to solve problems of chemistry. The problem and the » THE CHALLENGE OF CON- solution is in progressive design SERVATISM by Paul A. Sexson and production for a world soci- and Stephen B. Miles, Jr. (New ety, and can only be hampered or York: Exposition Press) $4.00. obstructed by attempts to subor- ) DIALOGUES IN AMERICAN- dinate it to the limited interests ISM (Henry Regnery Co. (Chi- of any political or ecoromic pres- cago, Illinois) $3.95. Sure groups. Reviewed by Edmund A. Opitz p THE CONSERVATIVE AMERI- The book is amply illustrated IN the Battle of the Books, the with pictures of his structures, conservatives have it by a mile. and is crowded with fresh obser- Compare the first volume listed vations on economic history, the above with its counterpart of development of technologies in two years ago, The Liberal Pa- shipbuilding and aircraft design, pers. That was a tired, party- the application of these in forward line plea to quit rocking the boat; planning to “livingry” instead of the book under review, on the to “weaponry,” and his experi- other hand, has vigor and variety. ences with labor unions. It is not Its scholarly authors are not a book for browsing or drowsing members of the club, but each — but if you like rugged climbing in his own way, in the sector as- with some breathtaking views, signed to him, registers his dis- don’t miss it! @® sent from the prevailing “liberal” ===== PAGE 65 ===== 1964 OTHER BOOKS 63 prescriptions. Topics run the stung by Burnham’s book. His gamut from inflation, union pow- point of departure is the thesis er, NATO, and federalism to the that civilizations are not mur- free market, civil liberty, and for- dered; they commit suicide. eign aid. Macaulay predicted more than a This work is in the nature of century ago that we would breed a handbook for policy makers, our own Huns and Vandals; whereas What Is Conservatism? Ortega, in 1930, foresaw a ‘“ver- smacks more of the study. But tical invasion of the barbarians.” again, there is no party line; More prosaically, the central val- the terms of the discussion are ues of Western civilization no broad enough to permit inclusion longer generate spontaneous loy- of an old-fashioned Whig’s not alty and affection in the hearts very convincing account of why and minds of many of our con- he is not a conservative! temporaries. Diagnosing this sit- There are major differences of uation Burnham necessarily emphasis within the conservative zeroes in on that body of doctrine camp, even as concerns the name currently labeled “liberalism.” He itself. Some stress the liberty of seeks to understand the program the individual, his right to a do- promoted by present-day “liber- main of his own exempt from als” by laying bare the premises the encroachments of the state; on which their thought and ac- others stress the importance of tions are based, and by systema- continuity and tradition in human tizing the implications of their affairs. Editor Meyer has, as a creed. In effect, the “liberal” is matter of fact, made ‘“consensus stretched out on the analyst's and divergence” a theme of his couch with his psyche exposed. book. Libertarians and tradition- This amounts to radical soul- alists share much common ground surgery and the “liberal” won’t and are linked naturally in a like it. He’s not supposed to like common cause; that, at least, is it! Nor will all conservatives be made clear by each of the dozen pleased. But all men of good will, contributors. This and the pre- whatever the device engraved on ceding volume supplement each their banners, will benefit from other beautifully; the academic the kind of jolts and jabs that a community, if it takes its pre- profound and unorthodox mind tensions seriously, cannot shrug like Burnham’s can administer. them off. And they will be stirred by Dean Liberaldom already feels itself Manion’s diagnosis of our recent ===== PAGE 66 ===== 64 THE FREEMAN November past and his prescriptions for a three debates between Steve Allen better future. We of the present and Bill Buckley, Robert Hut- are stuck with the untoward —and chins and Brent Bozell, and James unforeseen — consequences of the MacGregor Burns and Willmoore liberal program of a generation Kendall. Speaking for liberaldom, ago. That program promised to Professor Burns believes that the make America over; and its very party which can mobilize a ma- success has proved its undoing! jority behind it should be given Liberalism is less sure of itself a free hand to run the country. today, and conservatism is resur- He would not deprive conserva- gent. tives of this opportunity when A new consensus is being ham- their time comes, that is, when mered out in our time which, in a majority of the citizens are con- the normal course of events, will servatives. And it is for this replace the current orthodoxy. reason, he concludes, “that I That orthodoxy is challenged by want the liberals of the nation to Messrs. Sexson and Miles in an have a right to rule in what I excellent little book, as informal think is their day today.” When and enlightening as a conversa- a political philosophy has to re- tion over the back fence. It is sort to the numbers game, its challenged again, more formally, days, as a philosophy, are num- in the final book, comprising bered. @® MEMO: To Businessmen ENTER FEE'S 1965 BUSINESS FELLOWSHIP PROGRAM Invite a college professor (or several) to study your business. It should improve the understanding of young men and women coming out of our colleges. For details, write to W. M. Curtiss THE FOUNDATION FOR ECONOMIC EDUCATION, IRVINGTON-ON-HUDSON, NEW YORK ===== PAGE 67 ===== ESSAYS ON LIBERTY—— This new and latest volume of the series (448 pages, indexed) includes 43 es- says by 31 outstanding exponents of the freedom philosophy. These are se- lected from articles published in THE FREEMAN and other FEE releases dur- ing the past year. crotH $3.00 paper $2.00 Setter yet, the dull set — ALL ELEVEN VOLUMES—for self or friends Covering FEE publications from 1946 to date cLoTH, $26.40 PER SET PAPER, $17.60 PER SET THE FOUNDATION FOR ECONOMIC EDUCATION, INC. IRVINGTON-ON-HUDSON, NEW YORK 10533 lenclose $_________ for the following: ———— copies, cloth, @ $3.00 ESSAYS ON LIBERTY, Vol. XI: copies, paper, @ $2.00 sets, cloth, @ $26.40 ——_ sets, paper, @ $17.60 ESSAYS ON LIBERTY, Eleven-vol. set: MY NAME STREET CITY, STATE, ZIPCODE ===== PAGE 68 =====