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NOTE 6. Antimarket Ethics: A Praxeological Critique

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Chapter 6. Anti-Market Ethics. A Praxeological Critique.

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1. Introduction. Praxeological Criticism of Ethics.

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Praxeology, economics, provides no ultimate ethical judgments.

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It simply furnishes the indispensable data necessary to make such judgments.

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It is a formal but universally valid science based on the existence of human action and on logical deductions from that existence.

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And yet, praxeology may be extended beyond its current sphere to criticize ethical goals.

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This does not mean that we abandon the value neutrality of praxeological science.

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Hence, it means merely that even ethical goals must be framed meaningfully, and therefore

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that praxeology can criticize 1.

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Existential errors made in the formulation of ethical propositions, and 2.

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The possible existential meaninglessness and inner inconsistency of the goals themselves.

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If an ethical goal can be shown to be self-contradictory and conceptually impossible of fulfillment,

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then the goal is clearly an absurd one, and should be abandoned by all.

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It should be noted that we are not disparaging ethical goals that may be practically unrealizable

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in a given historical situation.

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We do not reject the goal of abstention from robbery simply because it is not likely to

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be completely fulfilled in the near future.

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What we do propose to discard are those ethical goals that are conceptually impossible of

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fulfillment because of the inherent nature of man and of the universe.

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We therefore propose to place a restriction on the unlimited validity of anyone's ultimate

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ethical valuations.

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In doing so, we still are not pushing beyond the bounds of praxeology to function as ethicists,

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for we are not here attempting to establish a positive ethical system of our own, or even

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to prove that such a system is attainable.

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We believe only that praxeology should have the right of veto to discard any ethical propositions

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that fail to meet the test of conceptual possibility or internal consistency.

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Furthermore, we maintain that whenever an ethical goal has been shown to be conceptually

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impossible and therefore absurd, it is equally absurd to take measures to approach that I

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Ideal. It is illegitimate to concede that X is an absurd goal, and then to go on to say that we

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should take all possible measures to approach it, at any rate. If the end is absurd, so is the

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approach toward that end. This is a praxeological truth derived from the law that a means can obtain

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in its value only by being imputed from the end.

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In short, we are saying that the means must be justified by the end.

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What else but an end can justify a means?

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The common conception that the doctrine the end justifies the means is an immoral device

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of communists is hopelessly confused.

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When, for example, people object to murder as a means to achieve goals, they are objecting

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to murder not because they do not believe that means are justified by ends, but because

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they have conflicting ends, for example, the end that murder not be committed.

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They may hold this view as an end in itself, or because it is a means to other ends, such

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Such as upholding each man's right to life. A drive toward X only obtains its value from

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the value of X itself. If the latter is absurd, then so is the former.

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There are two types of ethical criticisms that can be made of the free market system.

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One type is purely existential. That is, it rests on existential premises only. The other

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Another type advances conflicting ethical goals and protests that the free market does not

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attain these goals.

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Any mixture of the two will here be placed in the second category.

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The first type says 1.

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The free market leads to consequence A. 2.

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I don't like consequence A, or consequence A is objectively unlikable.

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3. Therefore, the free market should not be established.

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To refute this type of criticism, it is necessary only to refute the existential proposition

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in the first part of the argument, and this is, admittedly, a purely praxeological task.

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The following are brief summaries of very common criticisms of the free market that

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that can be refuted praxeologically, and that, indeed, have been refuted, implicitly or explicitly

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in other writings.

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1.

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The free market causes business cycles and unemployment.

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Business cycles are caused by the governmental intervention of bank credit expansion.

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Unemployment is caused by unions or government keeping wage rates above the free market

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level, only coercive intervention, not private spending, can bring about inflation.

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2.

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The free market is likely to bring about monopoly and monopoly pricing.

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If we define monopoly as the single seller of a product, we founder on insoluble problems.

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We cannot identify homogeneous products except in the concrete day-to-day valuations of consumers.

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Furthermore, if we consider such monopoly as wicked, we must regard both Crusoe and

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Friday as vicious monopolists if they exchange fish and lumber on their desert island.

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But if Crusoe and Friday are not wicked, how can a more complex society, one necessarily

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less monopolistic in this sense, be at all wicked?

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At what point in the reduced scope of such monopoly can it be considered evil?

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And how can the market be held responsible for the number of people inhabiting the society?

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Moreover, every individual striving to be better than his fellows is thereby trying to be a monopolist.

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Is this bad? Do not both he and the rest of society benefit from his better mousetrap?

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Finally, there is no conceptually identifiable monopoly or monopolistic price on the free market.

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Hence, a monopoly price, and a monopoly by any usable definition, arise only through

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the coercive grant of exclusive privilege by the government, and this includes all attempts

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to enforce competition.

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3.

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The government must do what the people themselves cannot do.

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We have shown that no such cases can exist.

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There are other criticisms, however, which infuse various degrees of ethical protest

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into the argument.

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This chapter will be devoted to a praxeological critique of some of the most popular of these

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anti-market ethical contentions.

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2. Knowledge of Self-interest, an alleged critical assumption

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This criticism of the market is more existential than ethical.

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It is the popular argument that laissez-faire, or the free market economy,

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rests its case on the crucial assumption that every individual knows his own self-interest best.

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Yet, it is charged, this is not true of many individuals. Therefore, the State must intervene, and the case for the free market is vitiated.

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The free market doctrine, however, does not rest on any such assumption.

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Like the mythical economic man, the perfectly wise individual is a straw man, created by the critics of the theory, not implied by it.

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First, it should be evident from our analysis of the free market and government intervention throughout this work,

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that any argument for the free market rests on a far deeper and more complex doctrine.

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We cannot enter here into the many ethical and philosophical arguments for freedom.

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Secondly, the laissez-faire or free market doctrine does not assume that everyone always knows his own interest best.

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It asserts rather that everyone should have the right to be free to pursue his own interest as he deems best.

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Critics may argue that the government should force men to lose some ex ante or present utility in order to gain ex post utility later by being compelled to pursue their own best interests.

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But libertarians may well reply and rebuttal, 1. that a person's resentment at coercive interference will lower his ex-post utility in any event,

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and 2. that the condition of freedom is a vital, necessary prerequisite for a person's best interests to be attained.

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Indeed, the only lasting way to correct a person's errors is by persuasive reasoning.

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Force cannot do the job.

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As soon as the individual can evade this force, he will return to his own preferred ways.

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No one certainly has perfect foresight into the uncertain future, but free entrepreneurs

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Consumers on the market are better equipped than anyone else by incentive and by economic

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calculation to foresee and satisfy the needs of the consumers.

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But what if the consumers are mistaken with regard to their own interests?

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Obviously, they sometimes are.

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But several more points must be made.

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In the first place, every individual knows the data of his own inner self best by the

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very fact that each has a separate mind and ego.

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Secondly, the individual, if in doubt about what his own true interests are, is free to

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hire and consult experts to give him advice based on their superior knowledge.

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The individual hires these experts and, on the market, can continuously test their helpfulness.

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Individuals on the market, in short, tend to patronize those experts whose advice proves

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most successful.

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Good doctors or lawyers reap rewards on the free market, while poor ones fail.

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But when government intervenes, the government expert acquires his revenue by compulsory

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levy.

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There is no market test of his success in teaching people their true interests.

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The only test is his success in acquiring the political support of the state's machinery

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of coercion.

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Thus the privately hired expert flourishes in proportion to his ability, whereas the

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government expert flourishes in proportion to his success incurring political favor.

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Moreover, what incentive does the government expert have to care about the interests of

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his subjects?

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Surely he is not especially endowed with superior qualities by virtue of his government post.

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He is no more virtuous than the private expert.

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Indeed, he is inherently less capable and is more inclined to wield coercive force.

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But while the private expert has every pecuniary incentive to care about his clients or patients,

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the government expert has no incentive whatever.

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He obtains his revenue in any event.

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He is devoid of any incentive to worry about his subjects' true interests.

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It is curious that people tend to regard government as a quasi-divine, selfless, Santa Claus organization.

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Government was constructed neither for ability nor the exercise of loving care.

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was built for the use of force and for necessarily demagogic appeals for votes.

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If individuals do not know their own interests in many cases, they are free to turn to private

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experts for guidance.

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It is absurd to say that they will be served better by a coercive, demagogic apparatus.

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Finally, the proponents of government intervention are trapped in a fatal contradiction.

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They assume that individuals are not competent to run their own affairs or to hire experts

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to advise them.

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And yet, they also assume that these same individuals are equipped to vote for these

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same experts at the ballot box.

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We have seen that, on the contrary, while most people have a direct idea and a direct

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test of their own personal interests on the market, they cannot understand the complex

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chains of praxeological and philosophical reasoning necessary for a choice of rulers

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or political policies.

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Yet this political sphere of open demagogy is precisely the only one where the mass of

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individuals are deemed to be competent. Interventionists assume the political, but no other, competence

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of the people even when they favor dictatorship rather than democracy. For if the people do

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3. The Problem of Immoral Choices

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Some writers are astute enough to realize that the market economy is simply a resultant

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of Individual Valuations, and thus they see that if they do not like the results, the

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fault lies with the valuations, not the economic system.

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Yet they proceed to advocate government intervention to correct the immorality of individual choices.

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If people are immoral enough to choose whiskey rather than milk, cosmetics rather than educational

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matter, then the state, they say, should step in and correct these choices.

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Much of the rebuttal parallels the refutation of the knowledge of interests argument.

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That is, it is self-contradictory to contend that people cannot be trusted to make moral

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decisions in their daily lives, but can be trusted to vote for or accept leaders who

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who are morally wiser than they.

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Mises states, quite rightly, that anyone who advocates governmental dictation over one

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area of individual consumption must logically come to advocate complete totalitarian dictation

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over all choices.

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This follows if the dictators have any set of valuational principles whatever, thus if

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If the members of the ruling group like Bach and hate Mozart, and they believe strongly

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that Mozartian music is immoral, they are just as right in prohibiting the playing of

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Mozart as they are in prohibiting drug use or liquor consumption.

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Many statists, however, would not balk at this conclusion and would be willing to take

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over this congenial task.

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The same total dictatorship over consumer choice is also implied by the knowledge of interest

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argument discussed earlier.

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As Thomas Barber astutely says, it is illegal for pleasure boaters to fail to carry a life

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preserver for every person on board.

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A great number of young men are publicly employed to go about and look for violators of this

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law.

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Pleasant for the young men, of course, but is it really any more the government's business

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that a man goes canoeing without a life preserver than that he goes out in the rain without

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his rubbers?

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The law is irritating to the individual concerned, costly to the taxpayers, and turns a lot of

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potential producers into economic parasites.

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and perhaps the manufacturers of life preservers engineered its passage.

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The utilitarian position that government dictation is bad because no rational ethics exists and

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therefore no person has a right to impose his arbitrary values on someone else is, we

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believe, an inadequate one.

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In the first place, it will not convince those who believe in irrational ethics, who believe

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that there is a scientific basis for moral judgments and that they are not pure whim.

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And furthermore, the position involves a hidden moral assumption of its own, that A has no

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right to impose any arbitrary values on B.

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And if ends are arbitrary, is not the end that arbitrary whims not be imposed by coercion,

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just as arbitrary?

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And suppose further that ranking high on A's value scale is the arbitrary whim of imposing

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his other values on B. Then the utilitarians cannot object, and must abandon their attempt

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to defend individual liberty in a value-free manner.

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In fact, the utilitarians are helpless against the man who wants to impose his values by

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coercion and who persists in doing so even after the various economic consequences are

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pointed out to him.

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It is true that we do not advocate ends in this volume, and in that sense, praxeology

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Praxeology is utilitarian, but the difference is that utilitarianism would extend the Wertfrei

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injunction from its proper place in economics and praxeology to embrace all of rational

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discourse.

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The would-be dictator can be logically refuted in a completely different way, even while

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remaining within Wertfrei praxeological bounds.

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For what is the complaint of the would-be dictator against free individuals, that they

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act immorally in various ways?

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The dictator's aim, therefore, is to advance morality and combat immorality.

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Let us grant for the sake of argument that an objective morality can be arrived at.

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The question that must be faced then is, can force advance morality?

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Suppose we arrive at the demonstrable conclusion that actions A, B and C are immoral and actions

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X, Y and Z are moral.

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And suppose we find that Mr. Jones shows a distressing propensity to value A, B and

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C highly and adopts these courses of action time and again.

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We are interested in transforming Mr. Jones from being an immoral person to being a moral

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person.

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How can we go about it?

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The statists answer, by force.

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We must prohibit at gunpoint Mr. Jones from doing A, B, and C. Then, at last, he will

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be moral.

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But will he?

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Is Jones moral because he chooses X when he is forcibly deprived of the opportunity to

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choose A?

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When Smith is confined to a prison, is he being moral because he doesn't spend his

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time in saloons getting drunk?

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There is no sense to any concept of morality, regardless of the particular moral action

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One favors if a man is not free to do the immoral as well as the moral thing.

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If a man is not free to choose if he is compelled by force to do the moral thing, then on the

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contrary he is being deprived of the opportunity of being moral.

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He has not been permitted to weigh the alternatives, to arrive at his own conclusions, and to take

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If he is deprived of free choice, he is acting under the dictator's will, rather than his own.

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Of course, he could choose to be shot, but this is hardly an intelligible conception of free choice of alternatives.

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In fact, he then has only one free choice, the hegemonic one, to be shot or to obey the dictator in all things.

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Dictatorship over consumers' choices, then, can only atrophy morality rather than promote it.

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There is but one way that morality can spread from the enlightened to the unenlightened, and that is by rational persuasion.

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If A convinces B through the use of reason that his moral values are correct and B's are wrong,

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We have not even mentioned other facts that strengthen our argument, such as the great

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The man who prefers the immoral course, and is prevented by the bayonet from acting on his preference, will do his best to find ways to circumvent the prohibition, perhaps by bribing the bayonetier.

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And because this is not a treatise on ethics, we have not mentioned the libertarian ethical theory, which holds that the use of coercion is itself the highest form of immorality.

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Thus we have shown that would-be dictators must necessarily fail to achieve their professed goal of advancing morality, because the consequences will be precisely the opposite.

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It is possible, of course, that the dictators are not really sincere in stating their goal.

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Perhaps their true purpose is to wield power over others and to prevent others from being happy.

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In that case, of course, praxeology can say no more about the matter, although ethics may find a good deal to say.

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Mises often states that interventionary measures in the market, for example, price controls,

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will have consequences that even the government officials administering the plans would consider

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bad.

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But the problem is that we do not know what the government officials' ends are, except

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that they demonstrably do like the power they have acquired and the wealth they have extracted

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from the Public, surely these considerations may often prove paramount in their minds,

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and we therefore cannot say that government officials would invariably concede, after

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learning all the consequences, that their actions were mistaken.

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4.

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The Morality of Human Nature

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It is very common to assert that the advocates of the purely free market make one fundamental

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and shaky assumption that all human beings are angels.

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In a society of angels it is commonly agreed such a program could work, but not in our

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fallible world.

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The chief difficulty with this criticism is that no libertarian, except possibly those

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has ever made such an assumption.

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The advocates of the free market have not assumed a reformation of human nature, although

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they would certainly have no objection to such a reformation if it took place.

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We have seen that libertarians envision defense services against predators as provided by

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by private bodies rather than by the state, but they do not assume that crime would magically

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disappear in the free society.

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Statists concede to libertarians that no state would be required if all men were good.

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State control is allegedly required only to the extent that men are evil.

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But what if all men were evil?

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As F. A. Harper has pointed out, still using the same principle that political rulership

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should be employed to the extent of the evil in man, we would then have a society in which

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complete political rulership of all the affairs of everybody would be called for.

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One man would rule all, but who would serve as the dictator?

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Remember he were to be selected and affixed to the political throne, he would surely be

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a totally evil person, since all men are evil, and this society would then be ruled by a

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totally evil dictator possessed of total political power.

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And how, in the name of logic, could anything short of total evil be its consequence?

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How could it be better than having no political rulership at all in that society?

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Is this argument unrealistic because, as everyone agrees, human beings are a compound, capable

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of both good and evil?

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But then, at what point in this mixture does state dictation become necessary?

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In fact, the libertarian would reason that the fact that human nature is a mixture of

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both good and evil provides its own particular argument in his favor.

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For if man is such a mixture, then the best societal framework is surely one in which

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evil is discouraged and the good encouraged.

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The libertarian maintains that the existence of the state apparatus provides a ready, swift

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channel for the exercise of evil, since the rulers of the state are thereby legitimated

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and can wield compulsion in ways that no one else is permitted to do.

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What is considered crime, socially, is called exercise of democratic power when performed

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5.

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The Impossibility of Equality Probably the most common ethical criticism

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of the market economy is that it fails to achieve the goal of equality.

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has been championed on various economic grounds, such as minimum social sacrifice, or the diminishing

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marginal utility of money, but in recent years economists have recognized that they cannot

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justify egalitarianism by economics, that they ultimately need an ethical basis for

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equality.

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Catallactics or praxeology cannot establish the validity of ethical ideals, but even ethical

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goals must be framed meaningfully.

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They must therefore pass muster before praxeology as being internally consistent and conceptually

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possible.

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The credentials of equality have so far not been adequately tested.

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It is true that many objections have been raised that give egalitarians pause.

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Sometimes realization of the necessary consequences of their policies causes an abandonment, though

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more often a slowing down of the egalitarian program.

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Thus, compulsory equality will demonstrably stifle incentive, eliminate the adjustment

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Processes of the Market Economy, destroy all efficiency in satisfying consumer wants, greatly

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lower capital formation, and cause capital consumption, all effects signifying a drastic

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fall in general standards of living.

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Furthermore, only a free society is castless, and therefore only freedom will permit mobility

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of Income According to Productivity, Statism, on the other hand, is likely to freeze the

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economy into a mold of non-productive inequality.

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Yet these arguments, though powerful, are by no means conclusive.

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Some people will pursue equality anyway.

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Many will take these considerations into account by settling for some cuts in living standards

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in order to gain more equality.

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In all discussions of equality it is considered self-evident that equality is a very worthy

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goal, but this is by no means self-evident, for the very goal of equality itself is open

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to serious challenge.

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The doctrines of praxeology are deduced from three universally acceptable axioms.

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The major axiom of the existence of purposive human action and the minor postulates, or

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axioms of the diversity of human skills and natural resources, and the disutility of labor.

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Although it is possible to construct an economic theory of a society without these two minor

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are included in order to limit our theorizing to laws that can apply directly to reality.

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Anyone who wants to set forth a theory applicable to interchangeable human beings is welcome

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to do so.

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Thus, the diversity of mankind is a basic postulate of our knowledge of human beings.

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But if mankind is diverse and individuated, then how can anyone propose equality as an

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ideal?

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Every year, scholars hold conferences on equality and call for greater equality, and no one

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challenges the basic tenet.

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But what justification can equality find in the nature of man?

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If each individual is unique, how else can he be made equal to others than by destroying

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most of what is human in him and reducing human society to the mindless uniformity of

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the ant-heap?

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It is the task of the egalitarian who confidently enters the scene to inform the economist of

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his ultimate ethical goal to prove his case.

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We must show how equality can be compatible with the nature of mankind, and must defend

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the feasibility of a possible egalitarian world.

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But the egalitarian is in even direer straits, for it can be shown that equality of income

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is an impossible goal for mankind.

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Income can never be equal.

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must be considered, of course, in real and not in money terms, otherwise there would be no true equality.

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Yet real income can never be equalized. For how can a New Yorker's enjoyment of the Manhattan skyline

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be equalized with an Indian's? How can the New Yorker swim in the Ganges as well as an Indian?

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Since every individual is necessarily situated in a different space, every individual's real income must differ from good to good and from person to person.

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There is no way to combine goods of different types to measure some income level, so it is meaningless to try to arrive at some sort of equal level.

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Level.

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The fact must be faced that equality cannot be achieved because it is a conceptually impossible

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goal for man by virtue of his necessary dispersion in location and diversity among individuals.

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But if equality is an absurd and therefore irrational goal, then any effort to approach

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Equality is correspondingly absurd.

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If a goal is pointless, then any attempt to attain it is similarly pointless.

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Many people believe that though equality of income is an absurd ideal, it can be replaced

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by the ideal of equality of opportunity, yet this too is as meaningless as the former concept.

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How can the New Yorker's opportunity and the Indian's opportunity to sail around Manhattan

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or to swim in the Ganges be equalized?

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Man's inevitable diversity of location effectively eliminates any possibility of equalizing opportunity.

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00:37:55.000 --> 00:38:01.760
Bloom and Calvin lapse into a common error when they state that justice connotes equality

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of Opportunity, and that this equality requires that the contestants start from the same mark,

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so that the game be fair.

357
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Human life is not some sort of race or game in which each person should start from an

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identical mark.

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It is an attempt by each man to be as happy as possible.

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00:38:26.240 --> 00:38:33.600
And each person could not begin from the same point, for the world has not just come into

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being.

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It is diverse and infinitely varied in its parts.

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The mere fact that one individual is necessarily born in a different place from someone else

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immediately ensures that his inherited opportunity cannot be the same as his neighbors'.

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The drive for equality of opportunity would also require the abolition of the family,

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since different parents have unequal abilities.

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It would require the communal rearing of children.

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The state would have to nationalize all babies and raise them in state nurseries under equal

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conditions.

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But even here, conditions cannot be the same, because different state officials will themselves

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have different abilities and personalities, and equality can never be achieved because

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of necessary differences of location.

373
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Thus, the egalitarian must not be permitted any longer to end discussion by simply proclaiming

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equality as an absolute ethical goal.

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He must first face all the social and economic consequences of egalitarianism, and try to

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show that it does not clash with the basic nature of man.

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He must counter the argument that man is not made for a compulsory ant-heap existence.

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And finally, he must recognize that the goals of equality of income and equality of opportunity

379
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are conceptually unrealizable and are therefore absurd.

380
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Any drive to achieve them is ipso facto absurd as well.

381
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Egalitarianism is therefore a literally senseless social philosophy.

382
00:40:32.620 --> 00:40:39.260
Its only meaningful formulation is the goal of equality of liberty, formulated by Herbert

383
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Spencer in his famous Law of Equal Freedom.

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Every man has freedom to do all he wills, provided he infringes not the equal freedom

385
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of any other man.

386
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This goal does not attempt to make every individual's total condition equal, an absolutely impossible

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task.

388
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Instead, it advocates liberty, a condition of absence of coercion over person and property

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00:41:10.840 --> 00:41:13.200
for every man.

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This goal has sometimes been phrased as equality before the law, or equality of rights.

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Yet both formulations are ambiguous and misleading.

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The former could be taken to mean equality of slavery as well as liberty, and has in

393
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fact been so narrowed down in recent years as to be of minor significance.

394
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The latter could be interpreted to mean any sort of right, including the right to an equal income.

395
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Yet even this formulation of equality has many flaws and could profitably be discarded.

396
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In the first place, it opens the door for ambiguity and for egalitarianism.

397
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In the second place, the term equality connotes measurable identity with a fixed extensive

398
00:42:06.240 --> 00:42:10.800
Quantitative Unit Equal length means identity of measurement

399
00:42:10.800 --> 00:42:14.400
with an objectively determinable unit.

400
00:42:14.400 --> 00:42:22.240
In the study of human action, whether in praxeology or social philosophy, there is no such quantitative

401
00:42:22.240 --> 00:42:27.320
unit, and hence there can be no such equality.

402
00:42:27.320 --> 00:42:34.440
Far better to say that each man should have X than to say that all men should be equal

403
00:42:34.440 --> 00:42:35.600
in X.

404
00:42:35.600 --> 00:42:43.080
If someone wants to urge every man to buy a car, he formulates his goal in that way.

405
00:42:43.080 --> 00:42:49.680
Every man should buy a car, rather than in such terms as, all men should have equality

406
00:42:49.680 --> 00:42:51.660
in car buying.

407
00:42:51.660 --> 00:42:58.080
The use of the term equality is awkward, as well as misleading.

408
00:42:58.080 --> 00:43:04.760
And finally, as Clara Dixon Davidson pointed out so cogently many years ago, Spencer's

409
00:43:04.760 --> 00:43:08.540
Spencer's Law of Equal Freedom is redundant.

410
00:43:08.540 --> 00:43:15.520
For if every man has freedom to do all that he wills, it follows from this very premise

411
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that no man's freedom has been infringed or invaded.

412
00:43:20.540 --> 00:43:27.320
The whole second clause of the law after wills is redundant and unnecessary.

413
00:43:27.320 --> 00:43:33.460
Since the formulation of Spencer's Law, opponents of Spencer have used the qualifying clause

414
00:43:33.460 --> 00:43:40.220
to drive holes into the libertarian philosophy. Yet all this time they were hitting at an

415
00:43:40.220 --> 00:43:48.180
encumbrance, not at the essence of the law. The concept of equality has no rightful place

416
00:43:48.180 --> 00:43:55.620
in the law of equal freedom, being replaceable by the logical quantifier, every. The law

417
00:43:55.620 --> 00:44:02.220
of equal freedom could well be renamed the law of total freedom.

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6. The Problem of Security

419
00:44:07.520 --> 00:44:13.300
One of the most common ethical charges levelled at the free market is that it fails to provide

420
00:44:13.300 --> 00:44:19.860
security. It is said that the blessings of freedom must be weighed against the competing

421
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blessings of security, to be provided, of course, by the state.

422
00:44:25.780 --> 00:44:31.500
The first comment to make is that this world is a world of uncertainty. We shall never

423
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Never be able to forecast the future course of the world with precision.

424
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Every action, therefore, involves risk.

425
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This risk cannot be eliminated.

426
00:44:43.440 --> 00:44:49.640
The man who keeps cash balances suffers the risk that its purchasing power may dwindle.

427
00:44:49.640 --> 00:44:54.980
The man who invests suffers the risk of loss, and so forth.

428
00:44:54.980 --> 00:45:02.140
But the free market finds ways of voluntarily relieving risk as much as can possibly be

429
00:45:02.140 --> 00:45:03.260
done.

430
00:45:03.260 --> 00:45:10.220
In a free society, there are three prime ways that men can alleviate uncertainty about the

431
00:45:10.220 --> 00:45:11.500
future.

432
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1.

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By Savings These savings, whether invested in production

434
00:45:17.340 --> 00:45:23.600
or kept in cash balances, ensure money for future needs.

435
00:45:23.600 --> 00:45:27.800
Banking and production increases one's future assets.

436
00:45:27.800 --> 00:45:33.240
Cash balances ensure that funds will be immediately available.

437
00:45:33.240 --> 00:45:34.480
2.

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By Entrepreneurship

439
00:45:36.840 --> 00:45:43.760
The entrepreneurs, that is, the capitalist entrepreneurs, assume the bulk of the risks

440
00:45:43.760 --> 00:45:50.860
of the market, and concomitantly relieve laborers of a great deal of risk.

441
00:45:50.860 --> 00:45:57.180
Imagine the universal risk if laborers could not be paid until the final product reached

442
00:45:57.180 --> 00:45:58.820
the consumers.

443
00:45:58.820 --> 00:46:05.900
The pain of waiting for future income, the risk in attempting to forecast consumer demands

444
00:46:05.900 --> 00:46:12.220
in the future would be almost intolerable, especially for those laborers toiling in the

445
00:46:12.220 --> 00:46:15.780
most remote processes of production.

446
00:46:15.780 --> 00:46:22.140
It is difficult to see how anyone would embark on longer processes of production if he were

447
00:46:22.140 --> 00:46:28.360
forced to wait the entire length of the production period to earn any income.

448
00:46:28.360 --> 00:46:35.360
But the capitalist entrepreneur pays him, instead, immediately, and himself adopts the

449
00:46:35.360 --> 00:46:39.620
burden of waiting and forecasting future wants.

450
00:46:39.620 --> 00:46:44.320
The entrepreneur then risks loss of his capital.

451
00:46:44.320 --> 00:46:50.680
Another method of entrepreneurial assumption of risk takes place in futures markets, where

452
00:46:50.680 --> 00:46:58.480
hedging allows buyers and sellers of commodities to shift the risk of future price changes

453
00:46:58.480 --> 00:47:02.560
onto a body of specialized traders.

454
00:47:02.560 --> 00:47:03.920
3.

455
00:47:03.920 --> 00:47:09.020
Buy Insurance Insurance is a basic method of pooling and

456
00:47:09.020 --> 00:47:11.980
and Baiting Risks on the Market.

457
00:47:11.980 --> 00:47:18.940
While entrepreneurs assume the burdens of uncertainty, insurance takes care of actuarial

458
00:47:18.940 --> 00:47:26.780
risks, where stable collective frequencies can be arrived at and premiums can be charged

459
00:47:26.780 --> 00:47:28.740
accordingly.

460
00:47:28.740 --> 00:47:33.300
The state cannot provide absolute security.

461
00:47:33.300 --> 00:47:39.940
The slaves may have believed that their security was guaranteed by their master, but the master

462
00:47:39.940 --> 00:47:41.940
assumed the risk.

463
00:47:41.940 --> 00:47:48.660
If his income fell, then he could not provide security for his charges.

464
00:47:48.660 --> 00:47:55.520
A fourth way to provide security in a free society is by voluntary charity.

465
00:47:55.520 --> 00:48:00.100
This charity of necessity comes out of production.

466
00:48:00.100 --> 00:48:06.780
It has been maintained that the state can provide security for the people better than the market

467
00:48:06.780 --> 00:48:11.660
because it can guarantee a minimum income for everyone.

468
00:48:11.660 --> 00:48:15.020
Yet the government can do no such thing.

469
00:48:15.020 --> 00:48:17.780
The state produces nothing.

470
00:48:17.780 --> 00:48:21.820
It can only confiscate the production of others.

471
00:48:21.820 --> 00:48:25.780
The state, therefore, can guarantee nothing.

472
00:48:25.780 --> 00:48:32.180
If the requisite minimum is not produced, the state will have to default on its pledges.

473
00:48:32.180 --> 00:48:38.980
Of course, the state can print all the money it wants, but it cannot produce the needed

474
00:48:38.980 --> 00:48:39.980
goods.

475
00:48:39.980 --> 00:48:46.800
Furthermore, the state cannot in this way provide security for every man alike.

476
00:48:46.800 --> 00:48:52.100
It can make some secure only at the expense of others.

477
00:48:52.100 --> 00:49:01.540
If A can be made more secure only by robbing B, B is made more insecure in the process.

478
00:49:01.540 --> 00:49:09.080
Hence the state, even if production is not drastically reduced, cannot provide security

479
00:49:09.080 --> 00:49:15.180
for all, but only for some at the expense of others.

480
00:49:15.180 --> 00:49:21.900
Is there no way, then, that government, organized coercion, can provide security?

481
00:49:21.900 --> 00:49:25.260
Yes, but not in the absolute sense.

482
00:49:25.260 --> 00:49:33.420
Rather, it can provide a certain aspect of security, and only this aspect can be guaranteed

483
00:49:33.420 --> 00:49:36.540
to every man in the society.

484
00:49:36.540 --> 00:49:40.120
This is security against aggression.

485
00:49:40.120 --> 00:49:47.560
In fact, however, only a voluntary free market defense can provide this, since only such

486
00:49:47.560 --> 00:49:55.000
a non-status type of defense agency does not itself engage in aggression.

487
00:49:55.000 --> 00:50:01.700
With each man acquiring security of person and property against attack, productivity

488
00:50:01.700 --> 00:50:05.880
and leisure are both immeasurably increased.

489
00:50:05.880 --> 00:50:12.520
Any state attempt to provide such security is an anachronism, since the state itself

490
00:50:12.520 --> 00:50:18.160
constantly invades individual liberty and security.

491
00:50:18.160 --> 00:50:25.800
That type of security, then, which is open to every man in society, is not only compatible

492
00:50:25.800 --> 00:50:31.220
with but is a corollary to perfect freedom.

493
00:50:31.220 --> 00:50:37.540
Freedom and security against aggression are two sides of the same coin.

494
00:50:37.540 --> 00:50:43.500
It might still be objected that many people, even knowing that slavery or submission to

495
00:50:43.500 --> 00:50:51.100
dictation cannot bring absolute security, will still wish to rely on masters.

496
00:50:51.100 --> 00:50:58.460
But if they do so voluntarily, the libertarian asks, why must they force others, who do not

497
00:50:58.460 --> 00:51:09.500
7. Alleged Joys of the Society of Status

498
00:51:09.500 --> 00:51:16.660
One common related criticism of the free market and free society, particularly among intellectuals

499
00:51:16.660 --> 00:51:25.160
who are conspicuously not craftsmen or peasants, is that, in contrast to the happy craftsmen

500
00:51:25.160 --> 00:51:31.560
Human and Happy Peasants of the Middle Ages, it has alienated man from his work and from

501
00:51:31.560 --> 00:51:36.760
his fellows, and has robbed him of his sense of belonging.

502
00:51:36.760 --> 00:51:43.480
The status society of the Middle Ages is looked back upon as a golden age, when everyone was

503
00:51:43.480 --> 00:51:50.520
sure of his station in life, when craftsmen made the whole shoe instead of just contributing

504
00:51:50.520 --> 00:52:08.540
In the first place, the society of the Middle Ages was not a secure one, not a fixed, unchanging

505
00:52:08.540 --> 00:52:11.060
hierarchy of status.

506
00:52:11.060 --> 00:52:17.340
There was little progress, but there was much change, dwelling as they did in clusters of

507
00:52:17.340 --> 00:52:19.440
of Local Self-Sufficiency,

508
00:52:19.440 --> 00:52:21.940
marked by a low standard of living,

509
00:52:21.940 --> 00:52:24.940
the people were ever threatened by famine.

510
00:52:24.940 --> 00:52:28.140
And because of the relative absence of trade,

511
00:52:28.140 --> 00:52:31.420
a famine in one area could not be countered

512
00:52:31.420 --> 00:52:34.460
by purchasing food from another area.

513
00:52:34.460 --> 00:52:38.140
The absence of famine in capitalist society

514
00:52:38.140 --> 00:52:41.380
is not a providential coincidence.

515
00:52:41.380 --> 00:52:44.680
Secondly, because of the low living standards,

516
00:52:44.680 --> 00:52:50.760
Very few members of the population were lucky enough to be born into the status of the happy

517
00:52:50.760 --> 00:52:57.700
craftsman who could be really happy and secure in his work only if he were a craftsman to

518
00:52:57.700 --> 00:53:04.960
the king or the nobility, who of course earned their high status by the decidedly unhappy

519
00:53:04.960 --> 00:53:12.200
practice of permanent violence in domination over the mass of the exploited population.

520
00:53:12.200 --> 00:53:18.640
As for the common serf, one wonders whether, in his poverty-stricken, enslaved and barren

521
00:53:18.640 --> 00:53:25.360
existence, he had even sufficient time and leisure to contemplate the supposed joys of

522
00:53:25.360 --> 00:53:32.680
his fixed post and his sense of belonging, and if there were a serf or two who did not

523
00:53:32.680 --> 00:53:41.680
wish to belong to his lord or master, that belonging, of course, was enforced by violence.

524
00:53:41.680 --> 00:53:47.760
Aside from these considerations, there is another problem which the society of status

525
00:53:47.760 --> 00:53:54.480
cannot surmount, and which indeed contributed a great deal to breaking up the feudal and

526
00:53:54.480 --> 00:53:58.760
mercantilist structures of the pre-capitalistic era.

527
00:53:58.760 --> 00:54:01.480
This was population growth.

528
00:54:01.480 --> 00:54:08.160
If everyone is assigned his appointed and inherited role in life, how can an increased

529
00:54:08.160 --> 00:54:11.600
population be fitted into the scheme?

530
00:54:11.600 --> 00:54:16.280
Where are they to be assigned, and who is to do the assigning?

531
00:54:16.280 --> 00:54:22.400
And wherever they are allocated, how can these new people be prevented from disrupting the

532
00:54:22.400 --> 00:54:26.800
whole assigned network of custom and status?

533
00:54:26.800 --> 00:54:35.520
In short, it is precisely in the fixed, non-capitalistic society of status that the Malthusian problem

534
00:54:35.520 --> 00:54:42.320
is ever present, at its ugliest, and where Malthusian checks to population must come

535
00:54:42.320 --> 00:54:44.120
into play.

536
00:54:44.120 --> 00:54:48.700
Sometimes the check is the natural one of famine and plague.

537
00:54:48.700 --> 00:54:53.320
In other societies, systematic infanticide is practiced.

538
00:54:53.320 --> 00:55:00.040
Perhaps if there were a modern return to the society of status, compulsory birth control

539
00:55:00.040 --> 00:55:05.040
would be the rule, a not impossible prognosis for the future.

540
00:55:05.040 --> 00:55:11.180
But in pre-capitalist Europe, the population problem became a problem of an ever-increasing

541
00:55:11.180 --> 00:55:18.300
number of people with no work to do and no place to go, who therefore had to turn to

542
00:55:18.300 --> 00:55:21.700
begging or highway robbery.

543
00:55:21.700 --> 00:55:28.380
The proponents of the theory of modern alienation do not offer any reasoning to back up their

544
00:55:28.380 --> 00:55:33.320
assertions, which are therefore simply dogmatic myths.

545
00:55:33.320 --> 00:55:38.840
Certainly it is not self-evident that the craftsman, or better still, the primitive

546
00:55:38.840 --> 00:55:45.860
man who made everything that he consumed, was in some sense happier or more whole as

547
00:55:45.860 --> 00:55:48.540
a result of this experience.

548
00:55:48.540 --> 00:55:54.140
Although this is not a treatise on psychology, it might be noted that perhaps what gives

549
00:55:54.140 --> 00:56:00.180
the worker his sense of importance is his participation in what Isabel Patterson has

550
00:56:00.180 --> 00:56:15.180
In free market capitalism, he can, of course, participate in that circuit in many more and varied ways than he could in the more primitive status society.

551
00:56:15.180 --> 00:56:23.100
Furthermore, the status society is a tragic waste of potential skill for the individual

552
00:56:23.100 --> 00:56:24.100
worker.

553
00:56:24.100 --> 00:56:29.940
There is, after all, no reason why the son of a carpenter should be particularly interested

554
00:56:29.940 --> 00:56:32.300
or skilled in carpentry.

555
00:56:32.300 --> 00:56:40.240
In the status society, he faces only a dreary life of carpentry, regardless of his desires.

556
00:56:40.240 --> 00:56:46.600
In the free market, capitalist society, though he is of course not guaranteed that he will

557
00:56:46.600 --> 00:56:53.340
be able to make a livelihood in any line of work that he wants to pursue, his opportunities

558
00:56:53.340 --> 00:57:00.760
to do work that he really likes are immeasurably, almost infinitely expanded.

559
00:57:00.760 --> 00:57:07.640
As the division of labor expands, there are more and more varieties of skilled occupations

560
00:57:07.640 --> 00:57:13.800
is that he can engage in, instead of having to be content with only the most primitive

561
00:57:13.800 --> 00:57:15.000
skills.

562
00:57:15.000 --> 00:57:22.120
And in the free society, he is free to try these tasks, free to move into whatever area

563
00:57:22.120 --> 00:57:24.000
he likes best.

564
00:57:24.000 --> 00:57:31.560
He has no freedom and no opportunity in the allegedly joyful society of status.

565
00:57:31.560 --> 00:57:38.220
Just as free capitalism enormously expanded the amount and variety of consumers' goods

566
00:57:38.220 --> 00:57:45.960
and services available to mankind, so it vastly expanded the number and variety of jobs to

567
00:57:45.960 --> 00:57:50.920
be done, and the skills that people can develop.

568
00:57:50.920 --> 00:57:57.480
The hullabaloo about alienation is in fact more than a glorification of the medieval

569
00:57:57.480 --> 00:57:58.480
craftsman.

570
00:57:58.480 --> 00:58:03.080
He, after all, bought his food from the nearby land.

571
00:58:03.080 --> 00:58:09.600
It is actually an attack on the whole concept of the division of labor and an enshrining

572
00:58:09.600 --> 00:58:12.340
of primitive self-sufficiency.

573
00:58:12.340 --> 00:58:19.380
A return to such conditions could mean only the eradication of the bulk of today's population

574
00:58:19.380 --> 00:58:23.260
and complete impoverishment for those remaining.

575
00:58:23.260 --> 00:58:31.020
Why happiness would nonetheless increase, we leave to the mythologists of status.

576
00:58:31.020 --> 00:58:37.140
But there is one final consideration which indicates that the vast majority of the people

577
00:58:37.140 --> 00:58:44.180
do not believe that they need primitive conditions and the slave's sense of belonging to make

578
00:58:44.180 --> 00:58:51.180
them happy, for there is nothing in a free society to prevent those who wish from going

579
00:58:51.180 --> 00:58:56.820
Starting off in separate communities and living primitively and belongingly.

580
00:58:56.820 --> 00:59:01.420
No one is forced to join the specialized division of labor.

581
00:59:01.420 --> 00:59:08.200
Not only has almost no one abandoned modern society to return to a happy, integrated life

582
00:59:08.200 --> 00:59:15.400
of fixed poverty, but those few intellectuals who did form communal utopias of one sort

583
00:59:15.400 --> 00:59:22.080
or another during the 19th century, abandoned these attempts very quickly, and perhaps the

584
00:59:22.080 --> 00:59:30.440
most conspicuous non-withdrawers from society are those very critics who use our modern

585
00:59:30.440 --> 00:59:36.040
alienated mass communications to denounce modern society.

586
00:59:36.040 --> 00:59:42.960
As we indicated at the end of the last section, a free society permits any who wish to enslave

587
00:59:42.960 --> 01:00:01.940
8.

588
01:00:01.940 --> 01:00:07.480
Charity and Poverty A common complaint is that the free market

589
01:00:07.480 --> 01:00:15.360
would not ensure the elimination of poverty, that it would leave people free to starve,

590
01:00:15.360 --> 01:00:22.840
and that it is far better to be kind-hearted and give charity free rein by taxing the rest

591
01:00:22.840 --> 01:00:28.920
of the populace in order to subsidize the poor and the substandard.

592
01:00:28.920 --> 01:00:35.600
In the first place, the freedom to starve argument confuses the war against nature which

593
01:00:35.600 --> 01:00:42.480
which we all conduct, with the problem of freedom from interference by other persons.

594
01:00:42.480 --> 01:00:50.320
We are always free to starve, unless we pursue our conquest of nature, for that is our natural

595
01:00:50.320 --> 01:00:51.740
condition.

596
01:00:51.740 --> 01:00:57.400
But freedom refers to absence of molestation by other persons.

597
01:00:57.400 --> 01:01:01.280
It is purely an interpersonal problem.

598
01:01:01.280 --> 01:01:09.460
Secondly, it should also be clear that it is precisely voluntary exchange and free capitalism

599
01:01:09.460 --> 01:01:14.840
that have led to an enormous improvement in living standards.

600
01:01:14.840 --> 01:01:20.940
Capitalist production is the only method by which poverty can be wiped out.

601
01:01:20.940 --> 01:01:28.580
As we stressed, production must come first, and only freedom allows people to produce

602
01:01:28.580 --> 01:01:36.100
in the best and most efficient way possible. Force and violence may distribute, but it

603
01:01:36.100 --> 01:01:44.980
cannot produce. Intervention hampers production, and socialism cannot calculate. Since production

604
01:01:44.980 --> 01:01:51.920
of consumer satisfactions is maximized on the free market, the free market is the only

605
01:01:51.920 --> 01:02:05.960
The Appeal to Charity is a truly ironic one.

606
01:02:05.960 --> 01:02:13.280
First, it is hardly charity to take wealth by force and hand it over to someone else.

607
01:02:13.280 --> 01:02:21.520
Indeed, this is the direct opposite of charity, which can only be an unbought, voluntary act

608
01:02:21.520 --> 01:02:27.080
of Grace Compulsory confiscation can only deaden charitable

609
01:02:27.080 --> 01:02:33.760
desires completely, as the wealthier grumble that there is no point in giving to charity

610
01:02:33.760 --> 01:02:37.380
when the state has already taken on the task.

611
01:02:37.380 --> 01:02:44.260
This is another illustration of the truth that men can become more moral only through

612
01:02:44.260 --> 01:02:52.260
through rational persuasion, not through violence, which will, in fact, have the opposite effect.

613
01:02:52.260 --> 01:02:59.940
Furthermore, since the state is always inefficient, the amount and direction of the giving will

614
01:02:59.940 --> 01:03:06.660
be much different from what it would be if people were left free to act on their own.

615
01:03:06.660 --> 01:03:13.940
If the state decides from whom to take and to whom to give, the power residing in the

616
01:03:13.940 --> 01:03:40.940
The State's hands is enormous. It is obvious that political unfortunates will be the ones whose property is confiscated, and political favorites the ones subsidized, and in the meantime, the State erects a bureaucracy whose living is acquired by feeding off the confiscation of one group and the encouraged mendicancy of another.

617
01:03:40.940 --> 01:03:46.440
Other consequences follow from a regime of compulsory charity.

618
01:03:46.440 --> 01:03:54.440
For one thing, the poor, or the deserving poor, have been exalted as a privileged caste,

619
01:03:54.440 --> 01:03:58.940
with an enforceable claim to the production of the more able.

620
01:03:58.940 --> 01:04:02.940
This is a far cry from a request for charity.

621
01:04:02.940 --> 01:04:07.940
Instead, the able are penalized and enslaved by the state,

622
01:04:07.940 --> 01:04:11.940
and the Unable are placed on a moral pedestal.

623
01:04:11.940 --> 01:04:15.940
Certainly, this is a peculiar sort of moral program.

624
01:04:15.940 --> 01:04:19.940
The further consequence will be to discourage the able,

625
01:04:19.940 --> 01:04:24.940
to reduce production and saving in all of society,

626
01:04:24.940 --> 01:04:30.940
and beyond this, to subsidize the creation of a caste of poor.

627
01:04:30.940 --> 01:04:34.940
Not only will the poor be subsidized by right,

628
01:04:34.940 --> 01:04:44.940
But their ranks will be encouraged to multiply, both through reproduction and through their moral exaltation and subsidization.

629
01:04:44.940 --> 01:04:49.940
The able will be correspondingly hampered and repressed.

630
01:04:49.940 --> 01:05:03.940
Whereas the opportunity for voluntary charity acts as a spur to production by the able, coerced charity acts as a drain and a burden upon production.

631
01:05:03.940 --> 01:05:04.940
Action.

632
01:05:04.940 --> 01:05:12.860
In fact, in the long run, the greatest charity is precisely not what we know by that name,

633
01:05:12.860 --> 01:05:21.180
but rather simple, selfish capital investment and the search for technological innovations.

634
01:05:21.180 --> 01:05:28.220
Poverty has been tamed by the enterprise and the capital investment of our ancestors, most

635
01:05:28.220 --> 01:05:33.100
of which was undoubtedly done for selfish motives.

636
01:05:33.100 --> 01:05:39.300
This is a fundamental illustration of the truth enunciated by Adam Smith, that we generally

637
01:05:39.300 --> 01:05:46.680
help others most in those very activities in which we help ourselves.

638
01:05:46.680 --> 01:05:50.940
Statists in fact are really opposed to charity.

639
01:05:50.940 --> 01:05:57.220
They often argue that charity is demeaning and degrading to the recipient, and that he

640
01:05:57.220 --> 01:06:03.320
He should therefore be taught that the money is rightly his, to be given to him by the

641
01:06:03.320 --> 01:06:05.660
government as his due.

642
01:06:05.660 --> 01:06:12.340
But this oft-felt degradation stems, as Isabel Patterson pointed out, from the fact that

643
01:06:12.340 --> 01:06:19.780
the recipient of charity is not self-supporting on the market, and that he is out of the production

644
01:06:19.780 --> 01:06:25.780
circuit, and no longer providing a service in exchange for one received.

645
01:06:25.780 --> 01:06:41.780
However, granting him the moral and legal right to mulkt his fellows increases his moral degradation instead of ending it, for the beneficiary is now further removed from the production line than ever.

646
01:06:41.780 --> 01:06:53.780
An act of charity, when given voluntarily, is generally considered temporary and offered with the object of helping a man to help himself.

647
01:06:53.780 --> 01:07:01.380
But when the dole is ladled out by the state, it becomes permanent and perpetually degrading,

648
01:07:01.380 --> 01:07:08.260
keeping the recipients in a state of subservience. We are not attempting to argue at this point that

649
01:07:08.260 --> 01:07:16.420
to be subservient in this way is degrading. We simply say that anyone who considers private

650
01:07:16.420 --> 01:07:23.140
charity degrading must logically conclude that state charity is far more so.

651
01:07:23.780 --> 01:07:31.900
The devotion of government to charity may be gauged by its universal repression of mendicancy.

652
01:07:31.900 --> 01:07:39.540
A direct gift to a beggar helps the recipient directly and leaves no opportunity for large

653
01:07:39.540 --> 01:07:45.380
bureaucratic organizations to live full-time off the transaction.

654
01:07:45.380 --> 01:07:52.220
Harassment of direct aid, then, functions as a grant of monopolistic privilege to the

655
01:07:52.220 --> 01:07:55.320
The Official Charity Organizations

656
01:07:55.320 --> 01:08:01.580
Isabel Patterson points out that the American government imposed a requirement of minimum

657
01:08:01.580 --> 01:08:09.240
cash assets for immigrants as an alleged way of helping the poorer immigrants.

658
01:08:09.240 --> 01:08:15.100
The actual effect, of course, was to keep the poorest immigrants who could not meet

659
01:08:15.100 --> 01:08:20.900
the requirement from American shores and economic opportunity.

660
01:08:20.900 --> 01:08:28.220
Mises furthermore points out that free market exchange, always condemned by statists for

661
01:08:28.220 --> 01:08:36.760
being impersonal and unfeeling, is precisely the relation that avoids all degradation and

662
01:08:36.760 --> 01:08:38.760
subservience.

663
01:08:38.760 --> 01:08:40.620
9.

664
01:08:40.620 --> 01:08:47.620
The Charge of Selfish Materialism One of the most common charges levelled against

665
01:08:47.620 --> 01:08:54.640
The free market, even by many of its friends, is that it reflects and encourages unbridled

666
01:08:54.640 --> 01:08:57.260
selfish materialism.

667
01:08:57.260 --> 01:09:04.700
Even if the free market, unhampered capitalism, best furthers man's material ends, critics

668
01:09:04.700 --> 01:09:09.020
argue, it distracts man from higher ideals.

669
01:09:09.020 --> 01:09:17.940
It leads man away from spiritual or intellectual values and atrophies any spirit of altruism.

670
01:09:17.940 --> 01:09:23.940
In the first place, there is no such thing as an economic end.

671
01:09:23.940 --> 01:09:31.860
Economy is simply a process of applying means to whatever ends a person may adopt.

672
01:09:31.860 --> 01:09:37.960
An individual can aim at any ends he pleases, selfish or altruistic.

673
01:09:37.960 --> 01:09:44.360
After psychic factors being equal, it is to everyone's self-interest to maximize his

674
01:09:44.360 --> 01:09:47.520
monetary income on the market.

675
01:09:47.520 --> 01:09:54.880
But this maximum income can then be used for selfish or for altruistic ends.

676
01:09:54.880 --> 01:10:00.200
Which ends people pursue is of no concern to the praxeologist.

677
01:10:00.200 --> 01:10:06.840
A successful businessman can use his money to buy a yacht or to build a home for destitute

678
01:10:06.840 --> 01:10:07.840
orphans.

679
01:10:07.840 --> 01:10:15.400
The choice rests with him, but the point is that whichever goal he pursues, he must first

680
01:10:15.400 --> 01:10:20.000
earn the money before he can attain the goal.

681
01:10:20.000 --> 01:10:29.220
Secondly, whichever moral philosophy we adopt, whether altruism or egoism, we cannot criticize

682
01:10:29.220 --> 01:10:33.500
the pursuit of monetary income on the market.

683
01:10:33.500 --> 01:10:40.500
If we hold an egoistic social ethic, then obviously we can only applaud the maximization

684
01:10:40.500 --> 01:10:48.740
of monetary income, or of a mixture of monetary and other psychic income on the market.

685
01:10:48.740 --> 01:10:50.780
There is no problem here.

686
01:10:50.780 --> 01:10:59.600
However, even if we adopt an altruistic ethic, we must applaud maximization of monetary income

687
01:10:59.600 --> 01:11:08.760
The Great Income is a social index of one's services to others, at least in the sense

688
01:11:08.760 --> 01:11:12.000
that any services are exchangeable.

689
01:11:12.000 --> 01:11:17.600
The greater a man's income, the greater has been his service to others.

690
01:11:17.600 --> 01:11:25.440
Indeed, it should be far easier for the altruist to applaud the maximization of a man's monetary

691
01:11:25.440 --> 01:11:27.440
The Theory of Money and Credit

692
01:11:55.440 --> 01:11:57.440
Society.

693
01:11:57.440 --> 01:12:04.760
If then a coal miner shifts to a more pleasant but lower paying job as a grocery clerk, the

694
01:12:04.760 --> 01:12:12.600
consistent altruist must castigate him for depriving his fellow man of needed benefits.

695
01:12:12.600 --> 01:12:20.280
For the consistent altruist must face the fact that monetary income on the market reflects

696
01:12:20.280 --> 01:12:28.980
Services to Others, whereas Psychic Income is a purely personal or selfish gain.

697
01:12:28.980 --> 01:12:33.480
This analysis applies directly to the pursuit of leisure.

698
01:12:33.480 --> 01:12:41.400
Leisure, as we have seen, is a basic consumer's good for mankind, yet the consistent altruist

699
01:12:41.400 --> 01:12:49.760
would have to deny each worker any leisure at all, or at least deny every hour of leisure

700
01:12:49.760 --> 01:12:56.600
Leisure beyond what is strictly necessary to maintain his output, for every hour spent

701
01:12:56.600 --> 01:13:03.180
in leisure reduces the time a man can spend serving his fellows.

702
01:13:03.180 --> 01:13:10.800
The consistent advocates of consumer sovereignty would have to favor enslaving the idler or

703
01:13:10.800 --> 01:13:18.120
the man who prefers following his own pursuits to serving the consumer, rather than scorn

704
01:13:18.120 --> 01:13:24.580
In pursuit of monetary gain, the consistent altruist should praise the pursuit of money

705
01:13:24.580 --> 01:13:32.360
on the market and condemn any conflicting non-monetary goals a producer may have, whether

706
01:13:32.360 --> 01:13:41.340
it be dislike for certain work, enthusiasm for work that pays less, or a desire for leisure.

707
01:13:41.340 --> 01:13:48.380
It is also peculiar that critics generally concentrate their fire on profits, the profit

708
01:13:48.380 --> 01:13:54.040
motive, and not on other market incomes, such as wages.

709
01:13:54.040 --> 01:14:02.060
It is difficult to see any sense whatever in moral distinctions between these incomes.

710
01:14:02.060 --> 01:14:10.980
Altruists who criticize monetary aims on the market therefore are wrong on their own terms.

711
01:14:10.980 --> 01:14:14.980
The charge of materialism is also fallacious.

712
01:14:14.980 --> 01:14:23.020
The market deals not necessarily in material goods, but in exchangeable goods.

713
01:14:23.020 --> 01:14:30.580
It is true that all material goods are exchangeable, except for human beings themselves, but there

714
01:14:30.580 --> 01:14:35.700
are also many non-material goods exchanged on the market.

715
01:14:35.700 --> 01:14:42.660
A man may spend his money on attending a concert, or hiring a lawyer, for example, as well as

716
01:14:42.660 --> 01:14:45.500
on food or automobiles.

717
01:14:45.500 --> 01:14:52.660
There is absolutely no ground for saying that the market economy fosters either material

718
01:14:52.660 --> 01:14:55.000
or immaterial goods.

719
01:14:55.000 --> 01:15:01.140
It simply leaves every man free to choose his own pattern of spending.

720
01:15:01.140 --> 01:15:08.780
Finally, an advancing market economy satisfies more and more of people's desires for

721
01:15:08.780 --> 01:15:11.100
exchangeable goods.

722
01:15:11.100 --> 01:15:18.940
As a result, the marginal utility of exchangeable goods tends to decline over time, while the

723
01:15:18.940 --> 01:15:24.420
marginal utility of non-exchangeable goods increases.

724
01:15:24.420 --> 01:15:32.980
In short, the greater satisfaction of exchangeable values confers a much greater marginal significance

725
01:15:32.980 --> 01:15:36.460
on the non-exchangeable values.

726
01:15:36.460 --> 01:15:44.660
Rather than foster material values, then, advancing capitalism does just the opposite.

727
01:15:44.660 --> 01:15:46.460
10.

728
01:15:46.460 --> 01:15:49.020
Back to the Jungle?

729
01:15:49.020 --> 01:15:55.660
Many critics complain that the free market, in casting aside inefficient entrepreneurs

730
01:15:55.660 --> 01:16:01.380
or in other decisions, proves itself an impersonal monster.

731
01:16:01.380 --> 01:16:07.500
The free market economy they charge is the rule of the jungle, where survival of the

732
01:16:07.500 --> 01:16:09.660
fittest is the law.

733
01:16:09.660 --> 01:16:15.980
Libertarians who advocate a free market are therefore called social Darwinists who wish

734
01:16:15.980 --> 01:16:29.980
In the first place, these critics overlook the fact that the operation of the free market is vastly different from governmental action.

735
01:16:29.980 --> 01:16:35.980
When a government acts, individual critics are powerless to change the result.

736
01:16:35.980 --> 01:16:42.980
They can do so only if they can finally convince the rulers that their decision should be changed.

737
01:16:42.980 --> 01:17:10.980
In short, whoever feels that the market has been too cruel to certain entrepreneurs or

738
01:17:10.980 --> 01:17:19.980
is perfectly free to set up an aid fund for suitable gifts and grants.

739
01:17:19.980 --> 01:17:26.480
Those who criticize existing private charity as being insufficient are perfectly free to

740
01:17:26.480 --> 01:17:28.980
fill the gap themselves.

741
01:17:28.980 --> 01:17:38.100
We must beware of hypostatizing the market as a real entity, a maker of inexorable decisions.

742
01:17:38.100 --> 01:17:44.940
The market is the resultant of the decisions of all individuals in the society.

743
01:17:44.940 --> 01:17:51.400
People can spend their money in any way they please and can make any decisions whatever

744
01:17:51.400 --> 01:17:54.760
concerning their persons and their property.

745
01:17:54.760 --> 01:18:02.180
They do not have to battle against or convince some entity known as the market before they

746
01:18:02.180 --> 01:18:05.740
can put their decisions into effect.

747
01:18:05.740 --> 01:18:13.240
The free market, in fact, is precisely the diametric opposite of the jungle society.

748
01:18:13.240 --> 01:18:18.300
The jungle is characterized by the war of all against all.

749
01:18:18.300 --> 01:18:25.120
One man gains only at the expense of another, by seizure of the latter's property.

750
01:18:25.120 --> 01:18:31.680
With all on a subsistence level, there is a true struggle for survival, with the stronger

751
01:18:31.680 --> 01:18:34.440
force crushing the weaker.

752
01:18:34.440 --> 01:18:41.340
In the free market, on the other hand, one man gains only through serving another, though

753
01:18:41.340 --> 01:18:49.280
he may also retire into self-sufficient production at a primitive level if he so desires.

754
01:18:49.280 --> 01:18:56.240
It is precisely through the peaceful cooperation of the market that all men gain through the

755
01:18:56.240 --> 01:19:00.880
development of the division of labor and capital investment.

756
01:19:00.880 --> 01:19:07.380
To apply the principle of the survival of the fittest to both the jungle and the market

757
01:19:07.380 --> 01:19:12.340
is to ignore the basic question, fitness for what?

758
01:19:12.340 --> 01:19:18.980
The fit in the jungle are those most adept at the exercise of brute force.

759
01:19:18.980 --> 01:19:25.000
The fit on the market are those most adept in the service of society.

760
01:19:25.000 --> 01:19:31.960
The jungle is a brutish place, where some seize from others and all live at the starvation

761
01:19:31.960 --> 01:19:33.000
level.

762
01:19:33.000 --> 01:19:40.280
The market is a peaceful and productive place, where all serve themselves and others at the

763
01:19:40.280 --> 01:19:46.200
same time, and live at infinitely higher levels of consumption.

764
01:19:46.200 --> 01:19:54.540
On the market, the charitable can provide aid, a luxury that cannot exist in the jungle.

765
01:19:54.540 --> 01:20:00.700
The free market, therefore, transmutes the jungle's destructive competition for meager

766
01:20:00.700 --> 01:20:10.260
subsistence into a peaceful, cooperative competition in the service of oneself and others.

767
01:20:10.260 --> 01:20:15.140
In the jungle, some gain only at the expense of others.

768
01:20:15.140 --> 01:20:18.180
On the market, everyone gains.

769
01:20:18.180 --> 01:20:26.180
It is the market, the contractual society, that rests order out of chaos, that subdues

770
01:20:26.180 --> 01:20:34.240
nature and eradicates the jungle, that permits the weak to live productively, or out of gifts

771
01:20:34.240 --> 01:20:40.940
from production in a regal style compared to the life of the strong in the jungle.

772
01:20:40.940 --> 01:20:47.180
Furthermore, the market, by raising living standards, permits man the leisure to cultivate

773
01:20:47.180 --> 01:20:53.140
the very qualities of civilization that distinguish him from the brutes.

774
01:20:53.140 --> 01:21:01.460
It is precisely statism that is bringing back the rule of the jungle, bringing back conflict,

775
01:21:01.460 --> 01:21:10.480
disharmony, caste struggle, conquest and the war of all against all, and general poverty.

776
01:21:10.480 --> 01:21:18.560
In place of the peaceful struggle of competition in mutual service, statism substitutes calculational

777
01:21:18.560 --> 01:21:26.440
chaos and the death struggle of social Darwinist competition for political privilege and for

778
01:21:26.440 --> 01:21:29.120
limited subsistence.

779
01:21:29.120 --> 01:21:31.100
11.

780
01:21:31.100 --> 01:21:32.580
Power and Coercion

781
01:21:32.580 --> 01:21:34.940
a.

782
01:21:34.940 --> 01:21:37.680
Other Forms of Coercion

783
01:21:37.680 --> 01:21:38.800
Economic Power

784
01:21:38.800 --> 01:21:46.000
A very common criticism of the libertarian position runs as follows.

785
01:21:46.000 --> 01:21:52.960
Of course, we do not like violence, and libertarians perform a useful service in stressing its

786
01:21:52.960 --> 01:21:54.060
dangers.

787
01:21:54.060 --> 01:22:01.120
But you are very simplistic because you ignore the other significant forms of coercion exercised

788
01:22:01.120 --> 01:22:08.460
in society, private coercive power, apart from the violence wielded by the state or the

789
01:22:08.460 --> 01:22:30.460
In the first place, this seeming difficulty for libertarian doctrine may quickly be removed by limiting the concept of coercion to the use of violence.

790
01:22:30.460 --> 01:22:44.220
This narrowing would have the further merit of strictly confining the legalized violence of the police and the judiciary to the sphere of its competence, combating violence.

791
01:22:44.220 --> 01:22:53.260
But we can go even further, for we can show the inherent contradictions in the broader concept of coercion.

792
01:22:53.260 --> 01:23:01.580
A well-known type of private coercion is the vague but ominous sounding economic power.

793
01:23:01.580 --> 01:23:08.860
A favorite illustration of the wielding of such power is the case of a worker fired from his job,

794
01:23:08.860 --> 01:23:17.180
especially by a large corporation. Is this not as bad as violent coercion against the property of the

795
01:23:17.180 --> 01:23:23.460
of the Worker? Is this not another subtler form of robbery of the worker, since he is

796
01:23:23.460 --> 01:23:29.840
being deprived of money that he would have received if the employer had not wielded his

797
01:23:29.840 --> 01:23:38.460
economic power? Let us look at this situation closely. What exactly has the employer done?

798
01:23:38.460 --> 01:23:46.260
He has refused to continue to make a certain exchange, which the worker preferred to continue

799
01:23:46.260 --> 01:23:47.260
Banking.

800
01:23:47.260 --> 01:23:55.620
Specifically, A, the employer refuses to sell a certain sum of money in exchange for the

801
01:23:55.620 --> 01:23:59.020
purchase of B's labor services.

802
01:23:59.020 --> 01:24:02.480
B would like to make a certain exchange.

803
01:24:02.480 --> 01:24:04.640
A would not.

804
01:24:04.640 --> 01:24:11.400
The same principle may apply to all the exchanges throughout the length and breadth of the economy.

805
01:24:11.400 --> 01:24:16.100
A worker exchanges labor for money with an employer.

806
01:24:16.100 --> 01:24:20.740
A retailer exchanges eggs for money with a customer.

807
01:24:20.740 --> 01:24:26.740
A patient exchanges money with a doctor for his services, and so forth.

808
01:24:26.740 --> 01:24:33.680
Under a regime of freedom, where no violence is permitted, every man has the power either

809
01:24:33.680 --> 01:24:40.100
to make or not to make exchanges as and with whom he sees fit.

810
01:24:40.100 --> 01:24:45.600
Then, when exchanges are made, both parties benefit.

811
01:24:45.600 --> 01:24:52.600
We have seen that if an exchange is coerced, at least one party loses.

812
01:24:52.600 --> 01:24:59.420
It is doubtful whether even a robber gains in the long run for a society in which violence

813
01:24:59.420 --> 01:25:06.820
and tyranny are practiced on a large scale will so lower productivity and become so much

814
01:25:06.820 --> 01:25:13.660
infected with fear and hate that even the robbers may be unhappy when they compare their

815
01:25:13.660 --> 01:25:29.380
Economic power, then, is simply the right under freedom to refuse to make an exchange.

816
01:25:29.380 --> 01:25:31.920
Every man has this power.

817
01:25:31.920 --> 01:25:38.700
Every man has the same right to refuse to make a proffered exchange.

818
01:25:38.700 --> 01:25:46.220
Now it should become evident that the middle-of-the-road statist who concedes the evil of violence

819
01:25:46.220 --> 01:25:52.900
but adds that the violence of government is sometimes necessary to counteract the private

820
01:25:52.900 --> 01:25:58.740
coercion of economic power is caught in an impossible contradiction.

821
01:25:58.740 --> 01:26:06.000
A refuses to make an exchange with B. What are we to say or what is the government to

822
01:26:06.000 --> 01:26:12.520
to do if B brandishes a gun and orders A to make the exchange.

823
01:26:12.520 --> 01:26:14.820
This is the crucial question.

824
01:26:14.820 --> 01:26:21.720
There are only two positions we may take on the matter, either that B is committing violence

825
01:26:21.720 --> 01:26:29.300
and should be stopped at once, or that B is perfectly justified in taking this step because

826
01:26:29.300 --> 01:26:59.300
The Theory of Money and Credit

827
01:26:59.300 --> 01:27:07.000
Of both doctrines, this violence is either invasive and therefore unjust, or defensive

828
01:27:07.000 --> 01:27:09.140
and therefore just.

829
01:27:09.140 --> 01:27:15.340
If we adopt the economic power argument, we must choose the latter position.

830
01:27:15.340 --> 01:27:19.020
If we reject it, we must adopt the former.

831
01:27:19.020 --> 01:27:26.940
If we choose the economic power concept, we must employ violence to combat any refusal

832
01:27:26.940 --> 01:27:28.620
of exchange.

833
01:27:28.620 --> 01:27:36.340
If we reject it, we employ violence to prevent any violent imposition of exchange.

834
01:27:36.340 --> 01:27:40.980
There is no way to escape this either-or choice.

835
01:27:40.980 --> 01:27:48.820
The middle-of-the-road statist cannot logically say that there are many forms of unjustified

836
01:27:48.820 --> 01:27:49.940
coercion.

837
01:27:49.940 --> 01:27:55.640
He must choose one or the other and take his stand accordingly.

838
01:27:55.640 --> 01:28:03.740
Either he must say that there is only one form of illegal coercion, overt physical violence,

839
01:28:03.740 --> 01:28:11.960
or he must say that there is only one form of illegal coercion, refusal to exchange.

840
01:28:11.960 --> 01:28:18.560
We have already fully described the sort of society built on libertarian foundations,

841
01:28:18.560 --> 01:28:27.520
a society marked by peace, harmony, liberty, maximum utility for all, and progressive improvement

842
01:28:27.520 --> 01:28:29.680
in living standards.

843
01:28:29.680 --> 01:28:34.880
What would be the consequence of adopting the economic power premise?

844
01:28:34.880 --> 01:28:37.680
It would be a society of slavery.

845
01:28:37.680 --> 01:28:41.720
For what else is prohibiting the refusal to work?

846
01:28:41.720 --> 01:28:47.800
It would also be a society where the overt initiators of violence would be treated with

847
01:28:47.800 --> 01:28:54.320
of Kindness, while their victims would be upbraided as being really responsible for

848
01:28:54.320 --> 01:28:56.200
their own plight.

849
01:28:56.200 --> 01:29:03.520
Such a society would be truly a war of all against all, a world in which conquest and

850
01:29:03.520 --> 01:29:07.600
exploitation would rage unchecked.

851
01:29:07.600 --> 01:29:15.120
Let us analyze further the contrast between the power of violence and economic power,

852
01:29:15.120 --> 01:29:21.160
Between, in short, the victim of a bandit and the man who loses his job with the Ford

853
01:29:21.160 --> 01:29:22.680
Motor Company.

854
01:29:22.680 --> 01:29:29.940
Let us symbolize in each case the alleged power-wielder as P and the supposed victim

855
01:29:29.940 --> 01:29:31.240
as X.

856
01:29:31.240 --> 01:29:36.560
In the case of the bandit or robber, P plunders X.

857
01:29:36.560 --> 01:29:43.000
P lives, in short, by battening off X and all the other Xs.

858
01:29:43.000 --> 01:29:48.320
This is the meaning of power in its original political sense.

859
01:29:48.320 --> 01:29:50.760
But what of economic power?

860
01:29:50.760 --> 01:30:00.560
Here, by contrast, X, the would-be employee, is asserting a strident claim to P's property.

861
01:30:00.560 --> 01:30:06.760
In this case, X is plundering P instead of the other way around.

862
01:30:06.760 --> 01:30:13.440
Those who lament the plight of the automobile worker who cannot obtain a job with Ford do

863
01:30:13.440 --> 01:30:22.080
not seem to realize that before Ford and without Ford there would be no such job to be obtained

864
01:30:22.080 --> 01:30:23.620
at all.

865
01:30:23.620 --> 01:30:31.760
No one, therefore, can have any sort of natural right to a Ford job, whereas it is meaningful

866
01:30:31.760 --> 01:30:39.540
to assert a natural right to liberty, a right which each person may have without depending

867
01:30:39.540 --> 01:30:43.520
on the existence of others, such as Ford.

868
01:30:43.520 --> 01:30:50.360
In short, the libertarian doctrine, which proclaims a natural right of defense against

869
01:30:50.360 --> 01:30:57.680
political power, is coherent and meaningful, but any proclaimed right of defense against

870
01:30:57.680 --> 01:31:01.400
economic power makes no sense at all.

871
01:31:01.400 --> 01:31:08.840
Here indeed are enormous differences between the two concepts of power.

872
01:31:08.840 --> 01:31:14.840
B. Power over nature and power over man.

873
01:31:14.840 --> 01:31:22.120
It is quite common and even fashionable to discuss market phenomena in terms of power,

874
01:31:22.120 --> 01:31:26.680
that is, in terms appropriate only to the battlefield.

875
01:31:26.680 --> 01:31:32.820
We have seen the fallacy of the back-to-the-jungle criticism of the market, and we have seen

876
01:31:32.820 --> 01:31:40.580
how the fallacious economic power concept has been applied to the exchange economy.

877
01:31:40.580 --> 01:31:47.020
Political power terminology, in fact, often dominates discussions of the market.

878
01:31:47.020 --> 01:31:54.720
Peaceful businessmen are economic royalists, economic feudalists, or robber barons.

879
01:31:54.720 --> 01:32:01.060
Business is called a system of power, and firms are private governments, and if they

880
01:32:01.060 --> 01:32:05.020
are very large, even empires.

881
01:32:05.020 --> 01:32:13.620
Less luridly, men have bargaining power, and business firms engage in strategies and rivalry

882
01:32:13.620 --> 01:32:15.980
as in military battles.

883
01:32:15.980 --> 01:32:23.740
Recently, theories of games and strategy have been erroneously applied to market activity,

884
01:32:23.740 --> 01:32:31.580
Even to the absurd extent of comparing market exchange with a zero-sum game, an interrelation

885
01:32:31.580 --> 01:32:37.900
in which A's loss is precisely equal to B's gain.

886
01:32:37.900 --> 01:32:44.940
This of course is the action of coercive power, of conquest and robbery.

887
01:32:44.940 --> 01:32:53.360
There, one man's gain is another man's loss, one man's victory another's defeat.

888
01:32:53.360 --> 01:32:57.820
Only conflict can describe these social relations.

889
01:32:57.820 --> 01:33:04.680
But the opposite is true on the free market, where everyone is a victor, and everyone gains

890
01:33:04.680 --> 01:33:06.800
from social relations.

891
01:33:06.800 --> 01:33:14.000
The language and concepts of political power are singularly inappropriate in the free market

892
01:33:14.000 --> 01:33:16.100
society.

893
01:33:16.100 --> 01:33:22.020
The fundamental confusion here is the failure to distinguish between two very different

894
01:33:22.020 --> 01:33:27.880
Concepts, Power over Nature and Power over Man.

895
01:33:27.880 --> 01:33:34.740
It is easy to see that an individual's power is his ability to control his environment

896
01:33:34.740 --> 01:33:37.620
in order to satisfy his wants.

897
01:33:37.620 --> 01:33:42.420
A man with an axe has the power to chop down a tree.

898
01:33:42.420 --> 01:33:48.900
A man with a factory has the power, along with other complementary factors, to produce

899
01:33:48.900 --> 01:33:50.560
capital goods.

900
01:33:50.560 --> 01:33:57.720
A man with a gun has the power to force an unarmed man to do his bidding, provided that

901
01:33:57.720 --> 01:34:04.760
the unarmed man chooses not to resist or not to accept death at gunpoint.

902
01:34:04.760 --> 01:34:11.380
It should be clear that there is a basic distinction between the two types of power.

903
01:34:11.380 --> 01:34:17.240
Power over nature is the sort of power on which civilization must be built.

904
01:34:17.240 --> 01:34:23.640
The record of man's history is the record of the advance or attempted advance of that

905
01:34:23.640 --> 01:34:25.280
power.

906
01:34:25.280 --> 01:34:32.520
Power over men, on the other hand, does not raise the general standard of living or promote

907
01:34:32.520 --> 01:34:37.520
the satisfactions of all, as does power over nature.

908
01:34:37.520 --> 01:34:44.880
By its very essence, only some men in society can wield power over men.

909
01:34:44.880 --> 01:34:52.680
Where power over man exists, some must be the powerful, and others must be objects of

910
01:34:52.680 --> 01:34:54.100
power.

911
01:34:54.100 --> 01:35:00.740
But every man can and does achieve power over nature.

912
01:35:00.740 --> 01:35:07.240
In fact, if we look at the basic condition of man as he enters the world, it is obvious

913
01:35:07.240 --> 01:35:37.240
The Theory of Money and Credit

914
01:35:37.240 --> 01:35:45.400
bring about a society in which plunder has replaced production, hegemony has supplanted contract,

915
01:35:45.400 --> 01:35:51.880
violence and conflict have taken the place of the peaceful order and harmony of the market.

916
01:35:52.440 --> 01:35:59.880
Power of one man over another is parasitic rather than creative, for it means that the

917
01:35:59.880 --> 01:36:07.080
nature conquerors are subjected to the dictation of those who conquer their fellow man instead.

918
01:36:07.240 --> 01:36:15.820
Any society of force, whether ruled by criminal bans or by an organized state, fundamentally

919
01:36:15.820 --> 01:36:20.840
means the rule of the jungle, or economic chaos.

920
01:36:20.840 --> 01:36:27.440
Furthermore, it would be a jungle, a struggle in the sense of the social Darwinists, in

921
01:36:27.440 --> 01:36:34.220
which the survivors would not really be the fittest, for the fitness of the victors would

922
01:36:34.220 --> 01:36:56.780
The libertarian doctrine, then, advocates the maximization of man's power over nature,

923
01:36:56.780 --> 01:37:05.180
and the eradication of the power of man over man. Statists, in elevating the latter power,

924
01:37:05.180 --> 01:37:12.260
often fail to realize that in their system man's power over nature would wither and become

925
01:37:12.260 --> 01:37:20.380
negligible. Albert J. Nock was aiming at this dichotomy when, in Our Enemy the State, he

926
01:37:20.380 --> 01:37:25.860
He distinguished between social power and state power.

927
01:37:25.860 --> 01:37:32.860
Those who properly balk at any terms that seem to anthropomorphize society were wary

928
01:37:32.860 --> 01:37:35.600
of accepting this terminology.

929
01:37:35.600 --> 01:37:39.340
But actually this distinction is a very important one.

930
01:37:39.340 --> 01:37:47.860
Nock's social power is society's, mankind's, conquest of nature, the power that has helped

931
01:37:47.860 --> 01:37:53.580
to produce the abundance that man has been able to wrest from the earth.

932
01:37:53.580 --> 01:38:01.540
His state power is political power, the use of the political means as against the economic

933
01:38:01.540 --> 01:38:03.940
means to wealth.

934
01:38:03.940 --> 01:38:11.540
State power is the power of man over man, the wielding of coercive violence by one group

935
01:38:11.540 --> 01:38:13.780
over another.

936
01:38:13.780 --> 01:38:19.600
Rock used these categories to analyze historical events in brilliant fashion.

937
01:38:19.600 --> 01:38:27.200
He saw the history of mankind as a race between social power and state power.

938
01:38:27.200 --> 01:38:35.000
Always man, led by the producers, has tried to advance the conquest of his natural environment.

939
01:38:35.000 --> 01:38:42.940
And always men, other men, have tried to extend political power in order to seize the fruits

940
01:38:42.940 --> 01:38:52.740
History can then be interpreted as a race between social power and state power.

941
01:38:52.740 --> 01:38:58.860
In the more abundant periods, for example, after the Industrial Revolution, social power

942
01:38:58.860 --> 01:39:06.560
takes a large spurt ahead of political power, which has not yet had a chance to catch up.

943
01:39:06.560 --> 01:39:13.720
The stagnant periods are those in which state power has at last come to extend its control

944
01:39:13.720 --> 01:39:17.560
over the newer areas of social power.

945
01:39:17.560 --> 01:39:25.440
State power and social power are antithetical, and the former subsists by draining the latter.

946
01:39:25.440 --> 01:39:33.540
Clearly, the concepts advanced here, power over nature and power over man, are generalizations

947
01:39:33.540 --> 01:39:41.180
One problem may appear puzzling.

948
01:39:41.180 --> 01:39:45.620
What is the nature of purchasing power on the market?

949
01:39:45.620 --> 01:39:51.620
Is this not power over man and yet social and on the free market?

950
01:39:51.620 --> 01:39:55.620
However, this contradiction is only apparent.

951
01:39:55.620 --> 01:40:03.380
Money has purchasing power only because other men are willing to accept it in exchange for

952
01:40:03.380 --> 01:40:21.380
The Power to Exchange rests on both sides of the exchange on production, and this is precisely the conquest of nature that we have been discussing.

953
01:40:21.380 --> 01:40:32.380
In fact, it is the exchange process, the division of labor, that permits man's power over nature to extend beyond the primitive level.

954
01:40:32.380 --> 01:40:33.380
level.

955
01:40:33.380 --> 01:40:39.740
It was power over nature that the Ford Motor Company had developed in such abundance, and

956
01:40:39.740 --> 01:40:47.580
it was this power that the angry job seeker was threatening to seize by political power,

957
01:40:47.580 --> 01:40:52.580
while complaining about Ford's economic power.

958
01:40:52.580 --> 01:41:00.500
In sum, political power terminology should be applied only to those employing violence.

959
01:41:00.500 --> 01:41:07.300
The only private governments are those people and organizations aggressing against persons

960
01:41:07.300 --> 01:41:14.460
and property that are not part of the official state, dominating certain territory.

961
01:41:14.460 --> 01:41:21.540
These private states, or private governments, may either cooperate with the official state,

962
01:41:21.540 --> 01:41:28.040
as did the governments of the guilds in the Middle Ages, and as labor unions and cartelists

963
01:41:28.040 --> 01:41:51.000
A common criticism of free market decisions is that luck plays too great a role in determining

964
01:41:51.000 --> 01:41:52.000
incomes.

965
01:41:52.000 --> 01:42:01.000
and those who concede that income to a factor tends to equal its discounted marginal value product to consumers,

966
01:42:01.000 --> 01:42:08.000
and that entrepreneurs on the free market will reduce mistakes to an absolute minimum,

967
01:42:08.000 --> 01:42:13.000
and that luck still plays a role in income determination.

968
01:42:13.000 --> 01:42:18.000
After charging that the market confers undue laurels on the lucky,

969
01:42:18.000 --> 01:42:29.000
The critic goes on to call for expropriation of the rich, or lucky, and subsidization of the poor, or unlucky.

970
01:42:29.000 --> 01:42:34.000
Yet how can luck be isolated and identified?

971
01:42:34.000 --> 01:42:38.000
It should be evident that it is impossible to do so.

972
01:42:38.000 --> 01:42:45.000
In every market action, luck is interwoven inextricably and is impossible to isolate.

973
01:42:45.000 --> 01:42:52.000
Consequently, there is no justification for saying that the rich are luckier than the poor.

974
01:42:52.000 --> 01:43:02.000
It might very well be that many or most of the rich have been unlucky and are getting less than their true DMVP,

975
01:43:02.000 --> 01:43:06.000
while most of the poor have been lucky and are getting more.

976
01:43:06.000 --> 01:43:11.000
No one can say what the distribution of luck is.

977
01:43:11.000 --> 01:43:17.520
Hence, there is no justification here for a redistribution policy.

978
01:43:17.520 --> 01:43:24.960
In only one place on the market does luck purely and identifiably determine the result

979
01:43:24.960 --> 01:43:28.840
– gambling gains and losses.

980
01:43:28.840 --> 01:43:37.040
Here we refer to pure gambling, or games of chance, such as roulette, with no intermingled

981
01:44:07.040 --> 01:44:15.040
and compensated, for they freely and voluntarily accepted the rules of chance before beginning to gamble.

982
01:44:15.040 --> 01:44:25.040
The governmental policy of neutralizing luck destroys the satisfaction that all the participants derive from the game.

983
01:44:25.040 --> 01:44:34.040
It is curious that so many economists, including Alfred Marshall, have proved the irrationality of gambling,

984
01:44:34.040 --> 01:44:47.040
For example, from the diminishing marginal utility of money, by first assuming, clearly, erroneously, that the participants do not like to gamble.

985
01:44:47.040 --> 01:44:52.040
13. The Traffic Manager Analogy

986
01:44:52.040 --> 01:44:58.040
Because of its popularity, we may briefly consider the Traffic Manager Analogy,

987
01:44:58.040 --> 01:45:07.040
The Doctrine that the government must obviously regulate the economy just as traffic must be regulated.

988
01:45:07.040 --> 01:45:13.040
It is high time that this flagrant non sequitur be consigned to oblivion.

989
01:45:13.040 --> 01:45:17.040
Every owner necessarily regulates his own property.

990
01:45:17.040 --> 01:45:24.040
In the same way, every owner of a road will lay down the rules for the use of his road.

991
01:45:24.040 --> 01:45:32.040
Far from being an argument for statism, management is simply the attribute of all ownership.

992
01:45:32.040 --> 01:45:36.040
Those who own the roads will regulate their use.

993
01:45:36.040 --> 01:45:42.040
In the present day, the government owns most roads and so regulates them.

994
01:45:42.040 --> 01:45:50.040
In a purely free market society, private owners would operate and control their own roads.

995
01:45:50.040 --> 01:46:07.600
14. Over and Under Development Critics often level conflicting charges against

996
01:46:07.600 --> 01:46:14.080
the free market. The historicist-minded may concede that the free market is ideal for

997
01:46:14.080 --> 01:46:21.200
for a Certain Stage of Economic Development, but insists that it is unsuited to other stages.

998
01:46:21.200 --> 01:46:27.600
Thus, advanced nations have been exhorted to embrace government planning because the

999
01:46:27.600 --> 01:46:36.800
modern economy is too complex to remain planless, the frontier is gone, and the economy is now

1000
01:46:36.800 --> 01:46:37.800
mature.

1001
01:46:37.800 --> 01:46:49.600
But, on the other hand, the backward countries have been told that they must adopt statist planning methods because of their relatively primitive state.

1002
01:46:49.600 --> 01:47:04.800
So, any given economy is either too advanced or too backward for laissez-faire, and we may rest assured that the appointed moment for laissez-faire somehow never arrives.

1003
01:47:04.800 --> 01:47:11.200
The currently fashionable economics of growth is an historicist regression.

1004
01:47:11.200 --> 01:47:17.120
The laws of economics apply whatever the particular level of the economy.

1005
01:47:17.120 --> 01:47:25.360
At any level, progressive change consists in a growing volume of capital per head of population,

1006
01:47:25.360 --> 01:47:32.400
and is furthered by the free market, low time preferences, far-seeing entrepreneurs,

1007
01:47:32.400 --> 01:47:36.560
and Sufficient Labor and Natural Resources.

1008
01:47:36.560 --> 01:47:41.440
Regressive change is brought about by the opposite conditions.

1009
01:47:41.440 --> 01:47:49.360
The terms progressive and regressive change are far better than growth, a term expressing

1010
01:47:49.360 --> 01:47:57.420
a misleading biological analogy that implies some actual law dictating that an economy

1011
01:47:57.420 --> 01:48:15.880
The term underdeveloped is also unfortunate, as it implies that there is some level or

1012
01:48:15.880 --> 01:48:22.580
norm that the economy should have reached, but failed to reach, because some external

1013
01:48:22.580 --> 01:48:25.820
force did not develop it.

1014
01:48:25.820 --> 01:48:32.640
The old-fashioned term, backward, though still normative, at least pins the blame for the

1015
01:48:32.640 --> 01:48:38.160
relative poverty of an economy on the nation's own policies.

1016
01:48:38.160 --> 01:48:46.160
The poor country can best progress by permitting private enterprise and investment to function,

1017
01:48:46.160 --> 01:48:53.400
and by allowing natives and foreigners to invest there unhampered and unmolested.

1018
01:48:53.400 --> 01:48:59.900
As for the rich country and its complexities, the delicate processes of the free market

1019
01:48:59.900 --> 01:49:08.320
are precisely equipped to handle complex adjustments and interrelations far more efficiently than

1020
01:49:08.320 --> 01:49:11.640
any form of statist planning.

1021
01:49:11.640 --> 01:49:13.540
15.

1022
01:49:13.540 --> 01:49:17.400
The State and the Nature of Man

1023
01:49:17.400 --> 01:49:23.240
Since the problem of the nature of man has been raised, we may now turn briefly to an

1024
01:49:23.240 --> 01:49:29.880
argument that has pervaded Roman Catholic social philosophy, namely that the state is

1025
01:49:29.880 --> 01:49:33.400
part of the essential nature of man.

1026
01:49:33.400 --> 01:49:40.760
This Thomistic view stems from Aristotle and Plato, who in their quest for a rational ethic

1027
01:49:40.760 --> 01:49:48.360
leaped to the assumption that the state was the embodiment of the moral agency for mankind.

1028
01:49:48.360 --> 01:49:56.000
That man should do such-and-such quickly became translated into the prescription, the state

1029
01:49:56.000 --> 01:49:58.260
should do such-and-such.

1030
01:49:58.260 --> 01:50:04.840
But nowhere is the nature of the state itself fundamentally examined.

1031
01:50:04.840 --> 01:50:11.240
Aristotle is a work very influential in Catholic circles, Heinrich Roman's The State in Catholic

1032
01:50:11.240 --> 01:50:12.840
Thought.

1033
01:50:12.840 --> 01:50:18.960
Following Aristotle, Roman attempts to ground the state in the nature of man by pointing

1034
01:50:18.960 --> 01:50:22.080
out that man is a social being.

1035
01:50:22.080 --> 01:50:28.200
In proving that man's nature is best fitted for a society, he believes that he has gone

1036
01:50:28.200 --> 01:50:35.400
Roman far to provide a rationale for the state, but he has not done so in the slightest degree,

1037
01:50:35.400 --> 01:50:42.580
once we fully realize that the state and society are by no means coextensive.

1038
01:50:42.580 --> 01:50:49.120
The contention of libertarians that the state is an anti-social instrument must first be

1039
01:50:49.120 --> 01:50:54.560
refuted before such a non sequitur can be allowed.

1040
01:50:54.560 --> 01:51:05.560
The State and Society are distinct, but he still justifies the state by arguments that apply only to society.

1041
01:51:05.560 --> 01:51:16.560
He also asserts the importance of law, although the particular legal norms considered necessary are unfortunately not specified.

1042
01:51:16.560 --> 01:51:25.260
Yet law and the state are not coextensive either, although this is a fallacy that very few writers avoid.

1043
01:51:25.260 --> 01:51:32.460
Much Anglo-Saxon law grew out of the voluntarily adopted norms of the people themselves,

1044
01:51:32.460 --> 01:51:38.260
common law, law merchant, etc., not as state legislation.

1045
01:51:38.260 --> 01:51:44.860
Roman also stresses the importance for society of the predictability of action,

1046
01:51:44.860 --> 01:51:48.300
which can be assured only by the state.

1047
01:51:48.300 --> 01:51:55.020
Yet the essence of human nature is that it cannot be considered as truly predictable.

1048
01:51:55.020 --> 01:52:00.380
Otherwise, we should be dealing not with free men, but with an ant-heap.

1049
01:52:00.380 --> 01:52:08.060
And if we could force men to march in unison according to a complete set of predictable norms,

1050
01:52:08.060 --> 01:52:14.460
it is certainly not a foregone conclusion that we should all hail such an ideal.

1051
01:52:14.460 --> 01:52:17.660
Some people would combat it bitterly.

1052
01:52:17.660 --> 01:52:24.780
Finally, if the enforceable norm were limited to abstinence from aggression against others,

1053
01:52:24.780 --> 01:52:30.620
1. A state is not necessary for such enforcement, as we have noted,

1054
01:52:30.620 --> 01:52:38.540
and 2. The state's own inherent aggression itself violates that norm.

1055
01:52:38.540 --> 01:52:44.060
16. Human Rights and Property Rights

1056
01:52:44.060 --> 01:52:51.580
It is often asserted by critics of the free market economy that they are interested in preserving

1057
01:52:51.580 --> 01:52:59.820
human rights rather than property rights. This artificial dichotomy between human and property

1058
01:52:59.820 --> 01:53:07.820
rights has often been refuted by libertarians who have pointed out a that property rights of course

1059
01:53:07.820 --> 01:53:30.060
In short, they have shown that property rights are indissolubly also human rights.

1060
01:53:30.060 --> 01:53:37.320
They have, besides, pointed out that the human right of a free press would be only a mockery

1061
01:53:37.320 --> 01:53:44.400
in a Socialist Country, where the state owns and decides upon the allocation of newsprint

1062
01:53:44.400 --> 01:53:47.400
and other newspaper capital.

1063
01:53:47.400 --> 01:53:50.920
There are other points that should be made, however.

1064
01:53:50.920 --> 01:53:58.180
For not only are property rights also human rights, but, in the most profound sense, there

1065
01:53:58.180 --> 01:54:01.720
are no rights but property rights.

1066
01:54:01.720 --> 01:54:06.940
The only human rights, in short, are property rights.

1067
01:54:06.940 --> 01:54:10.380
There are several senses in which this is true.

1068
01:54:10.380 --> 01:54:18.220
In the first place, each individual as a natural fact is the owner of himself, the ruler of

1069
01:54:18.220 --> 01:54:20.100
his own person.

1070
01:54:20.100 --> 01:54:26.780
The human rights of the person that are defended in the purely free market society are, in

1071
01:54:26.780 --> 01:54:34.820
effect, each man's property right in his own being, and from this property right stems

1072
01:54:34.820 --> 01:54:46.660
In the second place, alleged human rights can be boiled down to property rights, although

1073
01:54:46.660 --> 01:54:50.400
in many cases this fact is obscured.

1074
01:54:50.400 --> 01:54:54.500
Take for example the human right of free speech.

1075
01:54:54.500 --> 01:55:00.600
Freedom of speech is supposed to mean the right of everyone to say whatever he likes.

1076
01:55:00.600 --> 01:55:04.220
But the neglected question is, where?

1077
01:55:04.220 --> 01:55:06.780
Where does a man have this right?

1078
01:55:06.780 --> 01:55:11.760
He certainly does not have it on property on which he is trespassing.

1079
01:55:11.760 --> 01:55:19.260
In short, he has this right only either on his own property or on the property of someone

1080
01:55:19.260 --> 01:55:26.820
who has agreed as a gift or in a rental contract to allow him on the premises.

1081
01:55:26.820 --> 01:55:33.320
In fact, then, there is no such thing as a separate right to free speech.

1082
01:55:33.320 --> 01:55:41.160
There is only a man's property right, the right to do as he wills with his own, or to

1083
01:55:41.160 --> 01:55:46.320
make voluntary agreements with other property owners.

1084
01:55:46.320 --> 01:55:54.160
The concentration on vague and wholly human rights has not only obscured this fact, but

1085
01:55:54.160 --> 01:56:02.200
has led to the belief that there are of necessity all sorts of conflicts between individual rights

1086
01:56:02.200 --> 01:56:07.480
and Alleged Public Policy or The Public Good.

1087
01:56:07.480 --> 01:56:14.880
These conflicts have, in turn, led people to contend that no rights can be absolute,

1088
01:56:14.880 --> 01:56:18.760
that they must all be relative and tentative.

1089
01:56:18.760 --> 01:56:23.120
Take for example the human right of freedom of assembly.

1090
01:56:23.120 --> 01:56:28.240
Suppose that a citizen's group wishes to demonstrate for a certain measure.

1091
01:56:28.240 --> 01:56:31.360
It uses a street for this purpose.

1092
01:56:31.360 --> 01:56:37.280
The police, on the other hand, break up the meeting on the ground that it obstructs traffic.

1093
01:56:37.280 --> 01:56:45.440
Now, the point is that there is no way of resolving this conflict except arbitrarily,

1094
01:56:45.440 --> 01:56:49.040
because the government owns the streets.

1095
01:56:49.040 --> 01:56:56.000
Government ownership, as we have seen, inevitably breeds insoluble conflicts, for on the one

1096
01:56:56.000 --> 01:57:01.560
On the one hand, the citizens group can argue that they are taxpayers and are therefore

1097
01:57:01.560 --> 01:57:08.280
entitled to use the streets for assembly, while on the other hand, the police are right

1098
01:57:08.280 --> 01:57:10.860
that traffic is obstructed.

1099
01:57:10.860 --> 01:57:19.120
There is no rational way to resolve the conflict because there is, as yet, no true ownership

1100
01:57:19.120 --> 01:57:22.160
of the valuable street resource.

1101
01:57:22.160 --> 01:57:28.200
In a purely free society, where the streets are privately owned, the question would be

1102
01:57:28.200 --> 01:57:29.200
simple.

1103
01:57:29.200 --> 01:57:32.560
It would be for the street owner to decide.

1104
01:57:32.560 --> 01:57:39.320
And it would be the concern of the citizens' group to try to rent the street space voluntarily

1105
01:57:39.320 --> 01:57:41.120
from the owner.

1106
01:57:41.120 --> 01:57:46.920
If all ownership were private, it would be quite clear that the citizens did not have

1107
01:57:46.920 --> 01:57:50.280
any nebulous right of assembly.

1108
01:57:50.280 --> 01:57:57.200
Their right would be the property right of using their money in an effort to buy or rent

1109
01:57:57.200 --> 01:58:03.880
space on which to make their demonstration, and they could do so only if the owner of

1110
01:58:03.880 --> 01:58:07.480
the street agreed to the deal.

1111
01:58:07.480 --> 01:58:13.600
Let us consider finally the classic case that is supposed to demonstrate that individual

1112
01:58:13.600 --> 01:58:20.640
All rights can never be absolute, but must be limited by public policy.

1113
01:58:20.640 --> 01:58:27.320
Justice Holmes' famous dictum that no man can have the right to cry fire in a crowded

1114
01:58:27.320 --> 01:58:28.640
theater.

1115
01:58:28.640 --> 01:58:34.140
This is supposed to show that freedom of speech cannot be absolute.

1116
01:58:34.140 --> 01:58:40.880
But if we cease dealing with this alleged human right, and seek for the property rights

1117
01:58:40.880 --> 01:58:47.280
involved, the solution becomes clear, and we see that there is no need at all to weaken

1118
01:58:47.280 --> 01:58:50.360
the absolute nature of rights.

1119
01:58:50.360 --> 01:58:57.880
For the person who falsely cries fire must be either the owner or the owner's agent

1120
01:58:57.880 --> 01:59:01.340
or a guest or paying patron.

1121
01:59:01.340 --> 01:59:06.080
If he is the owner, then he has committed fraud upon his customers.

1122
01:59:06.080 --> 01:59:12.640
He has taken their money in exchange for a promise to put on a motion picture, and now,

1123
01:59:12.640 --> 01:59:19.600
instead, he disrupts the performance by falsely shouting, fire, and creating a disturbance

1124
01:59:19.600 --> 01:59:21.440
among the patrons.

1125
01:59:21.440 --> 01:59:29.180
He has thus willfully defaulted on his contractual obligation, and has therefore violated the

1126
01:59:29.180 --> 01:59:33.280
property rights of his patrons.

1127
01:59:33.280 --> 01:59:38.760
It is on the other hand that the shouter is not the owner, but a patron.

1128
01:59:38.760 --> 01:59:44.720
In that case, he is obviously violating the property right of the theater owner as well

1129
01:59:44.720 --> 01:59:46.860
as the other patrons.

1130
01:59:46.860 --> 01:59:54.080
As a guest, he is on the property on certain terms, and he has the obligation of not violating

1131
01:59:54.080 --> 01:59:59.680
the owner's property rights by disrupting the performance that the owner is putting

1132
01:59:59.680 --> 02:00:01.760
on for the patrons.

1133
02:00:01.760 --> 02:00:08.400
The person who maliciously cries fire in a crowded theater, therefore, is a criminal

1134
02:00:08.400 --> 02:00:16.400
not because his so-called right of free speech must be pragmatically restricted on behalf

1135
02:00:16.400 --> 02:00:23.180
of the so-called public good, but because he has clearly and obviously violated the

1136
02:00:23.180 --> 02:00:26.600
property rights of another human being.

1137
02:00:26.600 --> 02:00:32.880
There is no need, therefore, of placing limits upon these rights.

1138
02:00:32.880 --> 02:00:39.880
Since this is a praxeological and not an ethical treatise, the aim of this discussion has not

1139
02:00:39.880 --> 02:00:45.160
been to convince the reader that property rights should be upheld.

1140
02:00:45.160 --> 02:00:52.400
Rather, we have attempted to show that the person who does wish to construct his political

1141
02:00:52.400 --> 02:01:19.320
Appendix, Professor Oliver on Socio-Economic Goals Some years ago, Professor Henry M. Oliver

1142
02:01:19.320 --> 02:01:24.680
Professor Kenneth J. Arrow published an important study, a logical analysis of ethical goals

1143
02:01:24.680 --> 02:01:27.520
in economic affairs.

1144
02:01:27.520 --> 02:01:33.160
Professor Kenneth J. Arrow has hailed the work as a pioneer achievement on the road

1145
02:01:33.160 --> 02:01:37.440
to the axiomatization of a social ethics.

1146
02:01:37.440 --> 02:01:44.560
Unfortunately, this attempted axiomatization is a tissue of logical fallacies.

1147
02:01:44.560 --> 02:01:47.660
Arrow is correct, however, when he says,

1148
02:01:47.660 --> 02:01:52.760
It is only when the socio-economic goals have been made clear

1149
02:01:52.760 --> 02:01:58.560
that we can speak intelligently about the best policies for their achievement.

1150
02:01:58.560 --> 02:02:03.960
Such clarification has been attempted in the present chapter.

1151
02:02:03.960 --> 02:02:10.060
It is remarkable what difficulty economists and political philosophers have had

1152
02:02:10.060 --> 02:02:12.860
in trying to bury laissez-faire.

1153
02:02:12.860 --> 02:02:19.400
For well over a half century, laissez-faire thought, both in its natural rights and its

1154
02:02:19.400 --> 02:02:24.860
utilitarian versions, has been extremely rare in the Western world.

1155
02:02:24.860 --> 02:02:32.520
And yet, despite the continued proclamation that laissez-faire has been completely discredited,

1156
02:02:32.520 --> 02:02:36.320
uneasiness has marked the one-sided debate.

1157
02:02:36.320 --> 02:02:43.440
And so, from time to time, writers have felt obliged to lay the ghost of laissez-faire.

1158
02:02:43.440 --> 02:02:50.000
The absence of opposition has created a series of faintly worried monologues, rather than

1159
02:02:50.000 --> 02:02:52.680
a lively two-sided argument.

1160
02:02:52.680 --> 02:02:58.960
Nevertheless, the attacks continue, and now Professor Oliver has gone to the extent of

1161
02:02:58.960 --> 02:03:05.960
of Writing a Book, Almost Wholly Devoted to an Attempted Refutation of Laissez-faire Thought

1162
02:03:05.960 --> 02:03:08.440
a.

1163
02:03:08.440 --> 02:03:15.400
The Attack on Natural Liberty Oliver begins by turning his guns on the natural

1164
02:03:15.400 --> 02:03:21.040
rights defense of laissez-faire, on the system of natural liberty.

1165
02:03:21.040 --> 02:03:28.020
He is worried because Americans still seem to cling to this doctrine in underlying theory,

1166
02:03:28.020 --> 02:03:36.020
If not in actual practice, first he sets forth various versions of the libertarian position,

1167
02:03:36.020 --> 02:03:38.620
including the extreme version.

1168
02:03:38.620 --> 02:03:45.260
A man has a right to do what he will with his own, as well as Spencer's law of equal

1169
02:03:45.260 --> 02:03:52.560
freedom and the semi-utilitarian position that a man is free to do as he pleases so

1170
02:03:52.560 --> 02:03:55.880
long as he does not harm someone.

1171
02:03:55.880 --> 02:04:02.980
The semi-utilitarian position is easiest to attack, and Oliver has no difficulty in showing

1172
02:04:02.980 --> 02:04:04.980
its vagueness.

1173
02:04:04.980 --> 02:04:09.640
Harm can be interpreted to cover practically all actions.

1174
02:04:09.640 --> 02:04:16.180
For example, a hater of the color red can argue that someone else inflicts aesthetic

1175
02:04:16.180 --> 02:04:20.760
harm upon him by wearing a red coat.

1176
02:04:20.760 --> 02:04:28.020
Characteristically, Oliver has least patience with the extreme version, which, he contends,

1177
02:04:28.020 --> 02:04:35.420
is not meant to be interpreted literally, not a seriously reasoned statement, etc.

1178
02:04:35.420 --> 02:04:42.920
This enables him to shift quickly to attacks on the modified and weaker versions of libertarianism.

1179
02:04:42.920 --> 02:04:51.240
Yet it is a serious statement and must be coped with seriously, especially if A is replaced

1180
02:04:51.240 --> 02:04:54.000
by every in the sentence.

1181
02:04:54.000 --> 02:05:00.840
Too often political debate has been short-circuited by someone's blithe comment that you can't

1182
02:05:00.840 --> 02:05:02.820
really be serious.

1183
02:05:02.820 --> 02:05:09.040
We have seen that Spencer's law of equal freedom is really a redundant version of the

1184
02:05:09.040 --> 02:05:15.320
The Extreme Statement, and that the first part implies the Proviso Clause.

1185
02:05:15.320 --> 02:05:22.680
The Extreme Statement permits a more clear-cut presentation, avoiding many of the interpretative

1186
02:05:22.680 --> 02:05:26.720
pitfalls of the watered-down version.

1187
02:05:26.720 --> 02:05:32.720
Let us now turn to Oliver's general criticisms of the libertarian position.

1188
02:05:32.720 --> 02:05:39.500
Conceding that it has great superficial attractiveness, Oliver levels a series of criticisms that

1189
02:05:39.500 --> 02:05:43.040
are supposed to demonstrate its illogic.

1190
02:05:43.040 --> 02:05:44.400
1.

1191
02:05:44.400 --> 02:05:52.040
Any demarcation of property restricts liberty, that is, the liberty of others to use these

1192
02:05:52.040 --> 02:05:53.660
resources.

1193
02:05:53.660 --> 02:05:57.120
This criticism misuses the term liberty.

1194
02:05:57.120 --> 02:06:03.680
Obviously any property right infringes on others' freedom to steal, but we do not

1195
02:06:03.680 --> 02:06:08.400
even need property rights to establish this limitation.

1196
02:06:08.400 --> 02:06:15.840
The existence of another person under a regime of liberty restricts the liberty of others

1197
02:06:15.840 --> 02:06:17.280
to assault him.

1198
02:06:17.280 --> 02:06:25.840
Yet by definition, liberty cannot be restricted thereby, because liberty is defined as freedom

1199
02:06:25.840 --> 02:06:32.620
Freedom to control what one owns without molestation by others.

1200
02:06:32.620 --> 02:06:40.360
Freedom to steal or assault would permit someone, the victim of stealth or assault, to be forcibly

1201
02:06:40.360 --> 02:06:46.960
or fraudulently deprived of his person or property, and would therefore violate the

1202
02:06:46.960 --> 02:06:55.040
clause of total liberty, that every man be free to do what he wills with his own.

1203
02:06:55.040 --> 02:07:01.840
Understanding what one wills with someone else's own impairs the other person's liberty.

1204
02:07:01.840 --> 02:07:03.020
2.

1205
02:07:03.020 --> 02:07:10.000
A more important criticism in Oliver's eyes is that natural rights connote a concept of

1206
02:07:10.000 --> 02:07:17.800
property as consisting in things, and that such a concept eliminates property in intangible

1207
02:07:17.800 --> 02:07:19.560
rights.

1208
02:07:19.560 --> 02:07:26.920
Overholds that if property is defined as a bundle of things, then all property in rights,

1209
02:07:26.920 --> 02:07:33.520
such as stocks and bonds, would have to be eliminated, whereas if property is defined

1210
02:07:33.520 --> 02:07:42.240
as rights, insoluble problems arise of defining rights apart from current legal custom.

1211
02:07:42.240 --> 02:07:50.000
Furthermore, property in rights divorced from things allows non laissez-faire rights to

1212
02:07:50.000 --> 02:07:54.880
crop up, such as rights in jobs, etc.

1213
02:07:54.880 --> 02:07:58.480
This is Oliver's primary criticism.

1214
02:07:58.480 --> 02:08:01.960
This point is a completely fallacious one.

1215
02:08:01.960 --> 02:08:09.040
Although property is certainly a bundle of physical things, there is no dichotomy between

1216
02:08:09.040 --> 02:08:11.120
things and rights.

1217
02:08:11.120 --> 02:08:16.160
In fact, rights are simply rights to things.

1218
02:08:16.160 --> 02:08:21.640
A share in an oil company is not an intangible floating right.

1219
02:08:21.640 --> 02:08:27.880
It is a certificate of aliquot ownership in the physical property of the oil company.

1220
02:08:27.880 --> 02:08:35.400
Similarly, a bond is directly a claim to ownership of a certain amount of money, and, in the

1221
02:08:35.400 --> 02:08:41.560
The final analysis is an aliquot ownership in the company's physical property.

1222
02:08:41.560 --> 02:08:48.040
Rights, except for grants of monopolistic privilege, which would be eliminated in the

1223
02:08:48.040 --> 02:08:54.800
free society, are simply divisible reflections of physical property.

1224
02:08:54.800 --> 02:08:56.480
3.

1225
02:08:56.480 --> 02:09:03.440
Oliver tries to demonstrate that the libertarian position, however phrased, does not necessarily

1226
02:09:03.440 --> 02:09:26.400
The Harm Clause of the Semi-Utilitarians is justly criticized.

1227
02:09:26.400 --> 02:09:33.000
Spencer's Law of Equal Freedom is attacked for its Proviso Clause and for the alleged

1228
02:09:33.000 --> 02:09:38.560
vagueness of the phrase infringes on the equal freedom of others.

1229
02:09:38.560 --> 02:09:45.800
Actually, as we have seen, this proviso is unnecessary and could well be eliminated.

1230
02:09:45.800 --> 02:09:52.360
Even so, Oliver does considerably less than justice to the Spencerian position.

1231
02:09:52.360 --> 02:09:58.880
He sets up alternative straw-man definitions of infringement and shows that none of these

1232
02:09:58.880 --> 02:10:02.880
alternatives leads to strict laissez-faire.

1233
02:10:02.880 --> 02:10:08.680
A more thorough search would easily have yielded Oliver the proper definition.

1234
02:10:08.680 --> 02:10:16.400
Of the five alternative definitions he offers, the first simply defines infringement as violation

1235
02:10:16.400 --> 02:10:23.400
of the customary legal code, a question-begging definition that no rational libertarian would

1236
02:10:23.400 --> 02:10:24.600
employ.

1237
02:10:24.600 --> 02:10:31.180
Basing his argument necessarily on principle, the libertarian must fashion his standard

1238
02:10:31.180 --> 02:10:45.820
Oliver's fourth and fifth definitions, exercise of control in any form over another person's

1239
02:10:45.820 --> 02:10:53.640
satisfaction or deeds, are so vague and so question-begging in the use of the word control

1240
02:10:53.640 --> 02:10:56.980
that no libertarian would ever use them.

1241
02:10:56.980 --> 02:11:03.420
This leaves the second and third definitions of infringement, in which Oliver manages to

1242
02:11:03.420 --> 02:11:07.600
skirt any reasonable solution to the problem.

1243
02:11:07.600 --> 02:11:13.700
The former defines infringement as direct physical interference with another man's

1244
02:11:13.700 --> 02:11:21.620
control of his person and owned things, and the latter as direct physical interference

1245
02:11:21.620 --> 02:11:26.060
plus interference in the form of threat of injury.

1246
02:11:26.060 --> 02:11:33.380
But the former apparently excludes fraud, while the latter not only excludes fraud,

1247
02:11:33.380 --> 02:11:39.520
but also includes threats to compete with someone else, etc.

1248
02:11:39.520 --> 02:11:46.220
Since neither definition implies a laissez-faire system, Oliver quickly gives up the task,

1249
02:11:46.220 --> 02:11:53.220
and concludes that the term infringement is hopelessly vague, and cannot be used to deduce

1250
02:11:53.220 --> 02:11:59.700
use the laissez-faire concept of freedom and therefore that laissez-faire needs a special

1251
02:11:59.700 --> 02:12:06.780
additional ethical assumption aside from the basic libertarian postulate.

1252
02:12:06.780 --> 02:12:14.140
Yet a proper definition of infringement can be found in order to arrive at a laissez-faire

1253
02:12:14.140 --> 02:12:15.360
conclusion.

1254
02:12:15.360 --> 02:12:20.540
The vague question begging term injury must not be used.

1255
02:12:20.540 --> 02:12:27.140
Instead, infringement can be defined as direct physical interference with another man's

1256
02:12:27.140 --> 02:12:33.260
person or property, or the threat of such physical interference.

1257
02:12:33.260 --> 02:12:40.300
Contrary to Oliver's assumption, fraud is included in the category of direct physical

1258
02:12:40.300 --> 02:12:47.380
interference, for such interference means not only the direct use of armed violence,

1259
02:12:47.380 --> 02:12:53.560
But also such acts as trespass and burglary without use of a weapon.

1260
02:12:53.560 --> 02:13:01.840
In both cases, violence has been done to someone else's property by physically molesting it.

1261
02:13:01.840 --> 02:13:09.220
Fraud is implicit theft, because fraud entails the physical appropriation of someone else's

1262
02:13:09.220 --> 02:13:16.840
property under false pretenses, that is, in exchange for something that is never delivered.

1263
02:13:16.840 --> 02:13:23.800
In both cases, someone's property is taken from him without his consent.

1264
02:13:23.800 --> 02:13:29.800
Where there's a will, there's a way, and thus we see that it is quite easy to define

1265
02:13:29.800 --> 02:13:37.760
the Spencerian formula clearly enough so that laissez-faire and only laissez-faire follows

1266
02:13:37.760 --> 02:13:38.920
from it.

1267
02:13:38.920 --> 02:13:46.880
The important point to remember is never to use such vague expressions as injury, harm,

1268
02:13:46.880 --> 02:13:56.760
or control, but specific terms, such as physical interference or threats of physical violence.

1269
02:13:56.760 --> 02:13:58.800
b.

1270
02:13:58.800 --> 02:14:05.720
The Attack on Freedom of Contract After disposing to his own satisfaction of

1271
02:14:05.720 --> 02:14:15.320
of the Basic Natural Rights Postulates, Oliver goes on to attack a specific class of these rights, Freedom of Contract.

1272
02:14:15.320 --> 02:14:20.520
Oliver delineates three possible Freedom of Contract clauses.

1273
02:14:20.520 --> 02:14:24.720
1. A man has a right to freedom of contract.

1274
02:14:24.720 --> 02:14:32.320
2. A man has a right to freedom of contract unless the terms of the contract harm someone.

1275
02:14:32.320 --> 02:14:41.820
3. A man has a right to freedom of contract unless the terms of the contract infringe upon someone's rights.

1276
02:14:41.820 --> 02:14:45.820
The second clause can be disposed of immediately.

1277
02:14:45.820 --> 02:14:55.320
Once again, the vague notion of harm can provide an excuse for unlimited state intervention, as Oliver quickly notes.

1278
02:14:55.320 --> 02:14:58.820
No libertarian would adopt such a phrasing.

1279
02:14:58.820 --> 02:15:06.820
The first formulation is of course the most uncompromising and leaves no room whatever for state intervention.

1280
02:15:06.820 --> 02:15:15.820
Here Oliver again scoffs and says that very few persons would push the freedom of contract doctrine so far.

1281
02:15:15.820 --> 02:15:20.820
Perhaps, but since when is truth established by majority vote?

1282
02:15:20.820 --> 02:15:27.820
In fact, the third clause with its Spencerian proviso is again unnecessary.

1283
02:15:27.820 --> 02:15:40.820
Suppose, for example, that A and B freely contract to shoot C. The third version may say that this is an illegal contract, but actually it should not be.

1284
02:15:40.820 --> 02:15:53.820
For the contract itself does not and cannot violate C's rights. It is only a possible subsequent action against C that will violate his rights.

1285
02:15:53.820 --> 02:16:02.820
But in that case, it is that action which must be declared illegal and punished, not the preceding contract.

1286
02:16:02.820 --> 02:16:12.820
The first clause, which provides for absolute freedom of contract, is the clearest and evidently the preferable formulation.

1287
02:16:12.820 --> 02:16:21.820
In objection to this clause, Oliver states that Anglo-American law traditionally has voided certain types of contract

1288
02:16:21.820 --> 02:16:51.820
The Theory of Money and Credit The Theory of Money and Credit

1289
02:16:51.820 --> 02:17:18.820
For how, asks Oliver, can we distinguish between a free and voluntary contract on the one hand, and fraud and coercion, which void contracts on the other?

1290
02:17:18.820 --> 02:17:22.820
First, how can fraud be clearly defined?

1291
02:17:22.820 --> 02:17:26.220
Oliver's critique here is in two parts.

1292
02:17:26.220 --> 02:17:33.700
One, he says that common law holds that certain types of omissions, as well as certain types

1293
02:17:33.700 --> 02:17:39.420
of false statements and misleading sections, void contracts.

1294
02:17:39.420 --> 02:17:43.300
Where is this rule of omission to stop?

1295
02:17:43.300 --> 02:17:50.340
Oliver sees quite correctly that if no omission at all were allowed, the degree of statism

1296
02:17:50.340 --> 02:17:52.340
would be enormous.

1297
02:17:52.340 --> 02:17:55.740
Yet this problem is solved very simply.

1298
02:17:55.740 --> 02:18:01.900
Change the common law so as to eliminate all rules of omission whatever.

1299
02:18:01.900 --> 02:18:08.940
It is curious that Oliver is so reluctant even to consider changes in ancient legal customs

1300
02:18:08.940 --> 02:18:15.820
where these changes seem called for by principle or to realize that libertarians would advocate

1301
02:18:15.820 --> 02:18:17.660
such changes.

1302
02:18:17.660 --> 02:18:23.540
Since libertarians advocate sweeping changes elsewhere in the political structure, there

1303
02:18:23.540 --> 02:18:29.620
is no reason why they should balk at changing a few clauses of the common law.

1304
02:18:29.620 --> 02:18:30.980
2.

1305
02:18:30.980 --> 02:18:38.020
He states that even rules against false statements seem statist to some people and could be

1306
02:18:38.020 --> 02:18:45.340
be pushed beyond their present limits, and he cites SEC regulations as an example.

1307
02:18:45.340 --> 02:18:51.800
Yet the whole problem is that a libertarian system could countenance no administrative

1308
02:18:51.800 --> 02:18:55.320
boards or regulations whatever.

1309
02:18:55.320 --> 02:18:59.460
No advance regulations could be handed down.

1310
02:18:59.460 --> 02:19:05.620
On the purely free market, anyone damaged by false statements would take his opponent

1311
02:19:05.620 --> 02:19:13.380
to Court and Win Redress There, but any false statements, any fraud, would then be punished

1312
02:19:13.380 --> 02:19:18.300
by the court severely in the same manner as theft.

1313
02:19:18.300 --> 02:19:24.580
Secondly, Oliver wants to know how coercion can be defined.

1314
02:19:24.580 --> 02:19:31.780
Oliver is confused in contradictorily jumbling the definitions of coercion as physical violence

1315
02:19:31.780 --> 02:19:35.060
and as refusal to exchange.

1316
02:19:35.060 --> 02:19:43.640
As we have seen, coercion can rationally be defined only as one or the other, not as both,

1317
02:19:43.640 --> 02:19:46.180
for then the definition is self-contradictory.

1318
02:19:46.180 --> 02:19:53.800
Further, he confuses physical interpersonal violence with the scarcity imposed by the

1319
02:19:53.800 --> 02:19:59.080
facts of nature, lumping them both together as coercion.

1320
02:19:59.080 --> 02:20:05.800
He concludes in the hopelessly muddled assertion that the freedom of contract theory assumes

1321
02:20:05.800 --> 02:20:11.720
a meaningless equality of coercion among contracting parties.

1322
02:20:11.720 --> 02:20:18.680
In fact, libertarians assert that there is no coercion at all in the free market.

1323
02:20:18.680 --> 02:20:26.560
The equality of coercion absurdity permits Oliver to state that true freedom of contract

1324
02:20:26.560 --> 02:20:32.120
at least requires state-enforced pure competition.

1325
02:20:32.120 --> 02:20:39.000
The freedom of contract argument, therefore, implies laissez-faire and is also strictly

1326
02:20:39.000 --> 02:20:43.040
derivable from the postulate of freedom.

1327
02:20:43.040 --> 02:20:49.200
Contrary to Oliver, no other ethical postulates are necessary to imply laissez-faire from

1328
02:20:49.200 --> 02:20:50.680
this argument.

1329
02:20:50.680 --> 02:20:58.120
The coercion problem is completely solved when violence is substituted for the rather misleading

1330
02:20:58.120 --> 02:20:59.960
term coercion.

1331
02:20:59.960 --> 02:21:07.960
Then, any contract is free and therefore valid when there has been an absence of violence

1332
02:21:07.960 --> 02:21:12.240
or threat of violence by either party.

1333
02:21:12.240 --> 02:21:16.400
Oliver makes a few other attacks on legal liberty.

1334
02:21:16.400 --> 02:21:23.320
For example, he raises the old slogan that legal liberty does not correspond to actual

1335
02:21:23.320 --> 02:21:31.240
liberty or effective opportunity, once again falling into the age-old confusion of freedom

1336
02:21:31.240 --> 02:21:33.940
with power or abundance.

1337
02:21:33.940 --> 02:21:40.160
In one of his most provocative statements, he asserts that all men could enjoy complete

1338
02:21:40.160 --> 02:21:44.780
legal liberty only under a system of anarchy.

1339
02:21:44.780 --> 02:21:51.380
It is rare for someone to identify a system under law as being anarchy.

1340
02:21:51.380 --> 02:21:56.980
If this be anarchism, then many libertarians will embrace the term.

1341
02:21:56.980 --> 02:22:03.300
C. The attack on income according to earnings.

1342
02:22:03.300 --> 02:22:10.320
On the free market, every man obtains money income insofar as he can sell his goods or

1343
02:22:10.320 --> 02:22:12.660
services for money.

1344
02:22:12.660 --> 02:22:18.800
Everyone's income will vary in accordance with freely chosen market valuations of his

1345
02:22:18.800 --> 02:22:23.260
productivity in fulfilling consumer desires.

1346
02:22:23.260 --> 02:22:29.540
In his comprehensive attack on laissez-faire, Professor Oliver, in addition to criticizing

1347
02:22:29.540 --> 02:22:36.060
the doctrines of natural liberty and freedom of contract, also condemns this principle,

1348
02:22:36.060 --> 02:22:41.340
or what he calls the earned income doctrine.

1349
02:22:41.340 --> 02:22:48.500
Labor contends that since workers must use capital and land, the right to property cannot

1350
02:22:48.500 --> 02:22:52.340
rest on what human labor creates.

1351
02:22:52.340 --> 02:22:59.860
But both capital goods and land are ultimately reducible to labor and time.

1352
02:22:59.860 --> 02:23:06.900
Capital goods were all built by the original factors, land and labor, and land had to be

1353
02:23:06.900 --> 02:23:12.460
be found by human labor and brought into production by labor.

1354
02:23:12.460 --> 02:23:20.900
Therefore, not only current labor, but also stored-up labor, or rather stored-up labor

1355
02:23:20.900 --> 02:23:28.260
and time, earn money in current production, and so there is as much reason why the owners

1356
02:23:28.260 --> 02:23:35.180
of these resources should obtain money now as there is that current laborers earn money

1357
02:23:35.180 --> 02:23:36.260
now.

1358
02:23:36.260 --> 02:23:44.140
The right of past labor to earn is established by the right of bequest, which stems immediately

1359
02:23:44.140 --> 02:23:46.540
from the right of property.

1360
02:23:46.540 --> 02:23:53.500
The right of inheritance rests not so much on the right of later generations to receive

1361
02:23:53.500 --> 02:23:59.100
as on the right of earlier generations to bestow.

1362
02:23:59.100 --> 02:24:04.620
With these general considerations in mind, we may turn to some of Oliver's detailed

1363
02:24:04.620 --> 02:24:12.620
Criticisms. First, he states the basic earned income principle incorrectly, and this is a standing

1364
02:24:12.620 --> 02:24:21.580
source of confusion. He phrases it thus, a man acquires a right to income which he himself creates.

1365
02:24:22.300 --> 02:24:31.020
Incorrect. He acquires the right not to income, but to the property that he himself creates.

1366
02:24:31.020 --> 02:24:36.180
The importance of this distinction will become clear presently.

1367
02:24:36.180 --> 02:24:43.020
A man has the right to his own product, to the product of his energy, which immediately

1368
02:24:43.020 --> 02:24:45.380
becomes his property.

1369
02:24:45.380 --> 02:24:52.980
He derives his money income by exchanging this property, this product of his or his

1370
02:24:52.980 --> 02:24:56.440
ancestor's energy, for money.

1371
02:24:56.440 --> 02:25:02.560
His goods or services are freely exchanged on the market for money.

1372
02:25:02.560 --> 02:25:09.400
His income is therefore completely determined by the monetary valuation that the market

1373
02:25:09.400 --> 02:25:14.020
places on his goods or services.

1374
02:25:14.020 --> 02:25:20.280
Much of Oliver's subsequent criticism stems from ignoring the fact that all complementary

1375
02:25:20.280 --> 02:25:24.720
resources are founded on the labor of individuals.

1376
02:25:24.720 --> 02:25:32.960
He also decries the idea that if a man makes something, it is his as very simple.

1377
02:25:32.960 --> 02:25:38.360
Simple it may be, but that should not be a pejorative term in science.

1378
02:25:38.360 --> 02:25:44.580
On the contrary, the principle of Occam's razor tells us that the simpler a truth is,

1379
02:25:44.580 --> 02:25:45.760
the better.

1380
02:25:45.760 --> 02:25:53.560
The criterion of a statement, therefore, is its truth, and simplicity is, Ceteris Paribus,

1381
02:25:53.560 --> 02:25:54.960
A Virtue

1382
02:25:54.960 --> 02:26:02.180
The point is that when a man makes something, it belongs either to him or to someone else.

1383
02:26:02.180 --> 02:26:04.780
To whom, then, shall it belong?

1384
02:26:04.780 --> 02:26:09.520
To the producer, or to someone who has stolen it from the producer?

1385
02:26:09.520 --> 02:26:15.360
Perhaps this is a simple choice, but a necessary one nevertheless.

1386
02:26:15.360 --> 02:26:21.240
Yet how can we tell when a person has made something or not?

1387
02:26:21.240 --> 02:26:27.680
Oliver worries considerably about this question and criticizes the marginal productivity theory

1388
02:26:27.680 --> 02:26:29.180
at length.

1389
02:26:29.180 --> 02:26:35.140
Aside from the fallacies of his objections, the marginal productivity theory is not at

1390
02:26:35.140 --> 02:26:40.940
all necessary, although it is helpful to this ethical discussion.

1391
02:26:40.940 --> 02:26:47.460
For the criterion to be used in determining who has made the product on the market and

1392
02:26:47.460 --> 02:26:52.140
and Who Should Therefore Earn the Money is really very simple.

1393
02:26:52.140 --> 02:26:57.020
The criterion is who owns the product.

1394
02:26:57.020 --> 02:27:01.640
A spends his labor energy working in a factory.

1395
02:27:01.640 --> 02:27:08.540
This contribution of labor energy to further production is bought and paid for by factory

1396
02:27:08.540 --> 02:27:14.940
owner B. A owns labor energy, which is hired by B.

1397
02:27:14.940 --> 02:27:24.780
In this case, the product made by A is his energy, and its use is paid for or hired by B.

1398
02:27:24.780 --> 02:27:31.980
B hires various factors to work on his capital, and the capital is finally transformed into

1399
02:27:31.980 --> 02:27:41.580
another product and sold to C. The product belongs to B, and B exchanges it for money.

1400
02:27:41.580 --> 02:27:48.000
The money that B obtains, over and above the amount that he had to pay for other factors

1401
02:27:48.000 --> 02:27:53.500
of production, represents B's contribution to the product.

1402
02:27:53.500 --> 02:28:00.260
The amount that his capital received goes to B, its owner, etc.

1403
02:28:00.260 --> 02:28:07.420
Oliver also believes it a criticism when he states that men do not really make goods,

1404
02:28:07.420 --> 02:28:11.200
but add value to them by applying labor.

1405
02:28:11.200 --> 02:28:13.320
But no one denies this.

1406
02:28:13.320 --> 02:28:18.320
Man does not create matter just as he does not create land.

1407
02:28:18.320 --> 02:28:26.480
Rather, he takes this natural matter and transforms it in a series of processes to arrive at more

1408
02:28:26.480 --> 02:28:28.440
useful goods.

1409
02:28:28.440 --> 02:28:32.960
He hopes to add value by transforming matter.

1410
02:28:32.960 --> 02:28:39.920
To say this is to strengthen rather than weaken the earnings theory, since it should be clear

1411
02:28:39.920 --> 02:28:47.060
It is clear that how much value is added in producing goods for exchange can be determined

1412
02:28:47.060 --> 02:28:52.720
only by the purchases of customers, ultimately the consumers.

1413
02:28:52.720 --> 02:28:59.400
Oliver betrays his confusion by asserting that the earning theory assumes that the values

1414
02:28:59.400 --> 02:29:06.760
which we receive in exchange are equal in worth to those which we create in the production

1415
02:29:06.760 --> 02:29:08.640
process.

1416
02:29:08.640 --> 02:29:09.880
Certainly not.

1417
02:29:09.880 --> 02:29:15.940
There are no actual values created in the production process.

1418
02:29:15.940 --> 02:29:22.660
These values take on meaning only from the values we receive in exchange.

1419
02:29:22.660 --> 02:29:31.600
We cannot compare received and created values because created property becomes valuable

1420
02:29:31.600 --> 02:29:36.360
only to the extent that it is purchased in exchange.

1421
02:29:36.360 --> 02:29:43.120
Here we see some of the fruits of Oliver's fundamental confusion between creating income

1422
02:29:43.120 --> 02:29:45.760
and creating a product.

1423
02:29:45.760 --> 02:29:53.200
People do not create income, they create a product, which they hope can be exchanged

1424
02:29:53.200 --> 02:29:58.040
for income by being useful to consumers.

1425
02:29:58.040 --> 02:30:04.240
Oliver compounds his confusion by next taking up the laissez-faire theorem that everyone

1426
02:30:04.240 --> 02:30:11.360
One has the right to his own value scale and to act on that value scale.

1427
02:30:11.360 --> 02:30:17.820
Instead of stating this principle in these terms, Oliver introduces confusion by calling

1428
02:30:17.820 --> 02:30:23.200
it placing values on an equal footing for each man.

1429
02:30:23.200 --> 02:30:30.660
Consequently, he can then criticize this approach by asking how people's values can have an

1430
02:30:30.660 --> 02:30:53.140
Another of Oliver's critical objections to the earned income theory is that it assumes

1431
02:30:53.140 --> 02:30:59.780
that all values are gained through purchase and sale, that all goods are those of the

1432
02:30:59.780 --> 02:31:01.780
and the Marketplace.

1433
02:31:01.780 --> 02:31:06.780
This is nonsense, and no responsible economist ever assumed it.

1434
02:31:06.780 --> 02:31:15.780
In fact, no one denies that there are non-marketable, non-exchangeable goods, such as friendship, love and religion,

1435
02:31:15.780 --> 02:31:19.780
and that many men value these goods very highly.

1436
02:31:19.780 --> 02:31:28.780
They must constantly choose how to allocate their resources between exchangeable and non-exchangeable goods.

1437
02:31:28.780 --> 02:31:35.740
This causes not the slightest difficulty for the free market or for the earned income doctrine.

1438
02:31:35.740 --> 02:31:42.620
In fact, a man earns money in exchange for his exchangeable goods.

1439
02:31:42.620 --> 02:31:44.600
What could be more reasonable?

1440
02:31:44.600 --> 02:31:50.760
A man acquires his income by selling exchangeable goods at market.

1441
02:31:50.760 --> 02:31:57.340
So naturally, the money he acquires will be determined by the buyer's evaluations of

1442
02:31:57.340 --> 02:32:05.700
of These Goods, How Indeed Can He Ever Acquire Exchangeable Goods in Return for His Pursuit

1443
02:32:05.700 --> 02:32:13.680
or Offer of Non-Exchangeables, and Why Should He, Why and How Will Others Be Forced to Pay

1444
02:32:13.680 --> 02:32:20.220
Money for Nothing in Return, and How Will the Government Determine Who Has Produced

1445
02:32:20.220 --> 02:32:26.780
What Non-Exchangeable Goods, and What the Reward or Penalty Shall Be?

1446
02:32:26.780 --> 02:32:33.700
When Oliver states that market earnings are unsatisfactory because they do not cover non-market

1447
02:32:33.700 --> 02:32:40.580
production as well, he fails to indicate why non-marketable goods should enter the picture

1448
02:32:40.580 --> 02:32:42.020
at all.

1449
02:32:42.020 --> 02:32:47.620
Why should not marketable goods pay for marketable goods?

1450
02:32:47.620 --> 02:32:53.780
Oliver's statement that non-market receipts are hardly distributed so as to solve the

1451
02:32:53.780 --> 02:32:58.140
The non-market part of the problem makes little sense.

1452
02:32:58.140 --> 02:33:02.100
What in the world are non-market receipts?

1453
02:33:02.100 --> 02:33:08.340
And if they are not inner satisfaction from inner pursuits by the individual, what in

1454
02:33:08.340 --> 02:33:10.340
the world are they?

1455
02:33:10.340 --> 02:33:17.460
If Oliver suggests taking money from A to pay B, then he is suggesting the seizure of

1456
02:33:17.460 --> 02:33:22.560
a marketable good, and the receipts are then quite marketable.

1457
02:33:22.560 --> 02:33:28.200
But if he is not suggesting this, then his remarks are quite irrelevant, and he can say

1458
02:33:28.200 --> 02:33:31.840
nothing against the earned-income principle.

1459
02:33:31.840 --> 02:33:39.480
Also, it should not be overlooked that all those on the market who wish to reward non-marketable

1460
02:33:39.480 --> 02:33:43.560
contributions with money are free to do so.

1461
02:33:43.560 --> 02:33:50.480
In fact, in the free society, such rewards will be affected to the maximum degree freely

1462
02:33:50.480 --> 02:33:59.780
We have seen that the marginal productivity theory is not necessary to an ethical solution.

1463
02:33:59.780 --> 02:34:07.180
A man's property is his product, and this will be sold at its estimated worth to consumers

1464
02:34:07.180 --> 02:34:08.820
on the market.

1465
02:34:08.820 --> 02:34:15.260
The market solves the problem of estimating worth, and better than any coercive agency

1466
02:34:15.260 --> 02:34:17.720
or economist could.

1467
02:34:17.720 --> 02:34:24.800
If Oliver disagrees with market verdicts on the marginal value productivity of any factor,

1468
02:34:24.800 --> 02:34:31.460
he is hereby invited to become an entrepreneur and to earn the profits that come from exposing

1469
02:34:31.460 --> 02:34:33.960
such maladjustments.

1470
02:34:33.960 --> 02:34:37.280
Oliver's problems are pseudo-problems.

1471
02:34:37.280 --> 02:34:44.040
Thus he asks, when white's cotton is exchanged for brown's wheat, what is the ethically

1472
02:34:44.040 --> 02:34:51.320
and Correct Ratio of Exchange, Simple Answers of the Free Market Doctrine, Whatever the

1473
02:34:51.320 --> 02:34:59.280
Two Freely Decide, When Jones and Smith Together Produce a Good, What Part of that Good is

1474
02:34:59.280 --> 02:35:04.440
Attributable to Jones' Actions and What Part to Smith's?

1475
02:35:04.440 --> 02:35:12.380
The Answer, Whatever They Have Mutually Contracted, Oliver gives several fallacious reasons for

1476
02:35:12.380 --> 02:35:20.180
For Rejecting the Marginal Productivity Theory, one is that income imputation does not imply

1477
02:35:20.180 --> 02:35:27.820
income creation because a laborer's marginal product can be altered merely by a change

1478
02:35:27.820 --> 02:35:34.580
in the quantity or quality of a complementary factor, or by a variation in the number of

1479
02:35:34.580 --> 02:35:36.940
competing laborers.

1480
02:35:36.940 --> 02:35:44.860
Once again, Oliver's confusion stems from talking about income creation instead of product

1481
02:35:44.860 --> 02:35:46.540
creation.

1482
02:35:46.540 --> 02:35:50.300
The laborer creates his labor service.

1483
02:35:50.300 --> 02:35:57.740
This is his property, his to sell at whatever market he wishes, or not to sell, if he so

1484
02:35:57.740 --> 02:35:58.920
desires.

1485
02:35:58.920 --> 02:36:06.660
The appraised worth of this service depends on his marginal value product, which, of course,

1486
02:36:06.660 --> 02:36:13.980
depends partly on competition and the number or quality of complementary factors.

1487
02:36:13.980 --> 02:36:21.200
This in fact does not confound, but rather is an integral part of, marginal productivity

1488
02:36:21.200 --> 02:36:22.540
theory.

1489
02:36:22.540 --> 02:36:30.100
If the supply of cooperating capital increases, a laborer's energy service becomes scarcer

1490
02:36:30.100 --> 02:36:37.780
in Relation to the Complementary Factors, Land, Capital, and His Marginal Value Product

1491
02:36:37.780 --> 02:36:40.260
and Income Increase.

1492
02:36:40.260 --> 02:36:48.300
Similarly, if there are more competing laborers, there may be a tendency for a laborer's DMVP

1493
02:36:48.300 --> 02:36:55.300
to decline, although it may increase because of the wider extent of the market.

1494
02:36:55.300 --> 02:37:02.320
It is beside the point to say that all this is not fair because his service output remains

1495
02:37:02.320 --> 02:37:03.580
the same.

1496
02:37:03.580 --> 02:37:10.740
The point is that, to the consumers, his worth in production varies in accordance with these

1497
02:37:10.740 --> 02:37:15.560
other factors, and he is paid accordingly.

1498
02:37:15.560 --> 02:37:22.180
Oliver also employs the popular but completely fallacious doctrine that any ethical sense

1499
02:37:22.180 --> 02:37:29.940
to the Marginal Productivity Theory must rely on the existence of pure competition.

1500
02:37:29.940 --> 02:37:36.820
But why should the marginal value product of a freely competitive economy be any less

1501
02:37:36.820 --> 02:37:44.420
ethical than the value of the marginal product of the never-never land of pure competition?

1502
02:37:44.420 --> 02:37:51.220
Oliver adopts Joan Robinson's doctrine that entrepreneurs exploit the factors and reap

1503
02:37:51.220 --> 02:37:54.380
a Special Exploitation Gain.

1504
02:37:54.380 --> 02:38:02.020
But on the contrary, as Professor Chamberlain has conceded, no one reaps any exploitation

1505
02:38:02.020 --> 02:38:05.940
in the world of free competition.

1506
02:38:05.940 --> 02:38:09.220
Oliver makes several other interesting criticisms.

1507
02:38:09.220 --> 02:38:17.500
One, he maintains that marginal productivity cannot apply within corporations because no

1508
02:38:17.500 --> 02:38:24.220
No market for a firm's capital exists after the initial establishment of the company.

1509
02:38:24.220 --> 02:38:28.700
Hence, the directors can rule the stockholders.

1510
02:38:28.700 --> 02:38:35.820
In rebuttal, we may ask how the directors can remain directors without representing

1511
02:38:35.820 --> 02:38:39.420
the wishes of the majority of stockholders.

1512
02:38:39.420 --> 02:38:46.300
The capital market is continuing because capital values are constantly shifting on

1513
02:38:46.300 --> 02:38:53.100
from the Stock Market, a sharp decline in stock values means grave losses for the owners

1514
02:38:53.100 --> 02:38:59.260
of the company. Furthermore, it means that there will be no further capital expansion

1515
02:38:59.260 --> 02:39:05.420
in that firm and that its capital may not even be maintained intact.

1516
02:39:05.420 --> 02:39:14.240
2. He maintains that the marginal productivity theory cannot account for the lumpy, fixed

1517
02:39:14.240 --> 02:39:20.080
Contribution to All Incomes of the Services Supplied by the State

1518
02:39:20.080 --> 02:39:26.800
In the first place, marginal productivity theory does not at all, in its proper form,

1519
02:39:26.800 --> 02:39:34.720
assume, as Oliver believes, that factors are infinitely divisible. Any lumps can be taken

1520
02:39:34.720 --> 02:39:41.440
care of. The problem of the state, therefore, has really nothing to do with lumpy factors.

1521
02:39:41.440 --> 02:39:41.960
and the

1522
02:39:41.960 --> 02:39:42.440
world.

1523
02:39:42.440 --> 02:39:46.360
Indeed all factors are more or less lumpy.

1524
02:39:46.360 --> 02:39:52.880
Furthermore, Oliver concedes that the services of the state are divisible.

1525
02:39:52.880 --> 02:40:00.840
In one of his rare flashes of insight, Oliver admits that there can be and are varying degrees

1526
02:40:00.840 --> 02:40:07.840
of police, military and monetary, for example, mint services.

1527
02:40:07.840 --> 02:40:13.520
But if that is the case, how do state services differ from any other?

1528
02:40:14.480 --> 02:40:21.600
The difference is indeed great, but it stems from a fact we have reiterated many times,

1529
02:40:21.600 --> 02:40:28.880
that the state is a compulsory monopoly in which payment is separated from receipt of service.

1530
02:40:29.520 --> 02:40:36.880
As long as this condition exists, there can indeed be no market measure of its marginal

1531
02:40:36.880 --> 02:40:55.640
Oliver's criticism here is not of the free market, but of the statist sphere of a mixed

1532
02:40:55.640 --> 02:40:58.440
statist market economy.

1533
02:40:58.440 --> 02:41:06.080
Oliver's attribution of income creation to organized society is very vague.

1534
02:41:06.080 --> 02:41:11.720
If by this he means society, he is using a meaningless phrase.

1535
02:41:11.720 --> 02:41:19.240
It is precisely the process of the market by which the array of free individuals constituting

1536
02:41:19.240 --> 02:41:25.200
society portions out income in accordance with productivity.

1537
02:41:25.200 --> 02:41:33.960
It is double counting to postulate a real entity, society, outside the array of individuals,

1538
02:41:33.960 --> 02:41:39.360
and possessing or not possessing its own deserved share.

1539
02:41:39.360 --> 02:41:47.920
If by organized society he means the state, then the state's contributions were compulsory,

1540
02:41:47.920 --> 02:41:51.200
and hence hardly deserved any pay.

1541
02:41:51.200 --> 02:41:59.120
Furthermore, since, as we have shown, total taxation is far greater than any alleged productive

1542
02:41:59.120 --> 02:42:06.560
contribution of the state, the rulers owe the rest of society money, rather than vice versa.

1543
02:42:08.080 --> 02:42:14.640
3. Oliver makes the curious assertion, also made repeatedly by Frank Knight,

1544
02:42:14.640 --> 02:42:21.680
that a man does not really deserve ethically to reap the earnings from his own unique ability.

1545
02:42:22.320 --> 02:42:30.240
I must confess that I cannot make any sense of this position. What is more inherent in an individual,

1546
02:42:30.240 --> 02:42:38.720
more uniquely his own, than his inherited ability? If he is not to reap the reward from this,

1547
02:42:38.720 --> 02:42:47.280
Conjoined with his own willed effort, what should he reap a reward from, and why then should someone

1548
02:42:47.280 --> 02:42:57.200
else reap a reward from his unique ability? Why, in short, should the able be consistently penalized

1549
02:42:57.200 --> 02:43:05.120
and the unable consistently subsidized? Oliver's attribution of such ability to some mystical

1550
02:43:05.120 --> 02:43:12.840
first cause will make sense only when someone is able to find the first cause and pay it

1551
02:43:12.840 --> 02:43:15.800
its deserved share.

1552
02:43:15.800 --> 02:43:24.600
Until then, any attempt to redistribute income from A to B would have to imply that B is

1553
02:43:24.600 --> 02:43:26.680
the first cause.

1554
02:43:26.680 --> 02:43:28.000
4.

1555
02:43:28.000 --> 02:43:36.360
Oliver confuses private voluntary charity and grants in aid with compulsory charity

1556
02:43:36.360 --> 02:43:37.520
or grants.

1557
02:43:37.520 --> 02:43:45.240
Thus, he misdefines the earned income free market doctrine as saying that a person should

1558
02:43:45.240 --> 02:43:52.560
support himself and his legitimate dependence without asking for special favors or calling

1559
02:43:52.560 --> 02:43:56.040
upon outside parties for aid.

1560
02:43:56.040 --> 02:44:02.320
While many individualists would accept this formulation, the true free market doctrine

1561
02:44:02.320 --> 02:44:07.780
is that no person may coerce others into giving him aid.

1562
02:44:07.780 --> 02:44:13.400
It makes all the difference in the world whether the aid is given voluntarily or is stolen

1563
02:44:13.400 --> 02:44:15.380
by force.

1564
02:44:15.380 --> 02:44:22.900
As a corollary, Oliver confuses the meaning of power and asserts that employers have power

1565
02:44:22.900 --> 02:44:31.860
Oliver is quite right when he says that the

1566
02:44:31.860 --> 02:44:38.580
slave master was responsible for his slave's subsistence, but he doesn't seem to realize

1567
02:44:38.580 --> 02:44:46.380
that only the re-establishment of slavery would fit his program for labor relations.

1568
02:44:46.380 --> 02:44:53.840
To say that the feeble-minded or orphans are wards, as Oliver does, leads to his confusion

1569
02:44:53.840 --> 02:44:59.240
between wards of society and wards of the state.

1570
02:44:59.240 --> 02:45:05.440
The two are completely different, because the two institutions are not the same.

1571
02:45:05.440 --> 02:45:12.980
The concept of ward of society reflects the libertarian principle that private individuals

1572
02:45:12.980 --> 02:45:42.940
Oliver's conclusion that every normal adult should have a fair chance to support himself

1573
02:45:42.940 --> 02:45:49.020
Self, and in the absence of this opportunity he should be supported by the state, is a

1574
02:45:49.020 --> 02:45:52.340
mélange of logical fallacies.

1575
02:45:52.340 --> 02:45:56.500
What is a fair chance, and how can it be defined?

1576
02:45:56.500 --> 02:46:03.860
Further, in contrast to Spencer's law of equal freedom, or to our suggested law of

1577
02:46:03.860 --> 02:46:12.700
total freedom, every cannot here be fulfilled, since there is no such real entity as the

1578
02:46:12.700 --> 02:46:21.700
Anyone supported by the state must, ipso facto, be supported by someone else in the society.

1579
02:46:21.700 --> 02:46:25.700
Therefore, not everyone can be supported.

1580
02:46:25.700 --> 02:46:36.700
Especially, of course, if we define fair chance as the absence of interference or coercive penalizing of a person's ability.

1581
02:46:36.700 --> 02:46:39.220
5.

1582
02:46:39.220 --> 02:46:46.500
Oliver realizes that some earned-income theorists combine their doctrines with a finder's-keeper's

1583
02:46:46.500 --> 02:46:47.760
theory.

1584
02:46:47.760 --> 02:46:54.460
But he can find no underlying principle here, and calls it merely an accepted rule of the

1585
02:46:54.460 --> 02:46:56.260
business game.

1586
02:46:56.260 --> 02:47:02.600
Yet finder's-keeper's is not only based on principle, it is just as much a corollary

1587
02:47:02.600 --> 02:47:08.360
The theory of the underlying postulates of a regime of liberty, as is the earned income

1588
02:47:08.360 --> 02:47:09.800
theory.

1589
02:47:09.800 --> 02:47:16.560
For an unowned resource should, according to basic property rights doctrine, become

1590
02:47:16.560 --> 02:47:24.260
owned by whoever, through his efforts, brings this resource into productive use.

1591
02:47:24.260 --> 02:47:30.500
This is the finder's keepers, or first user, first owner, principle.

1592
02:47:30.500 --> 02:47:37.520
It is the only theory consistent with the abolition of theft, including government ownership,

1593
02:47:37.520 --> 02:47:44.700
so that every useful resource is always owned by some non-thief.

1594
02:47:44.700 --> 02:47:53.500
Oliver often cites in his support the essay of Frank H. Knight, Freedom as Fact and Criterion.

1595
02:47:53.500 --> 02:47:59.960
There is no need to elaborate further on Knight's essay except to note his attack on Spencer

1596
02:47:59.960 --> 02:48:07.000
for Adopting Both Psychological Hedonism and Ethical Hedonism.

1597
02:48:07.000 --> 02:48:13.520
Without analyzing Spencer in detail, we can, by a proper interpretation, make very good

1598
02:48:13.520 --> 02:48:16.680
sense of combining both positions.

1599
02:48:16.680 --> 02:48:24.280
First, it is necessary to change hedonism, the pursuit of pleasure, to eudaemonism, the

1600
02:48:24.280 --> 02:48:26.560
pursuit of happiness.

1601
02:48:26.560 --> 02:48:34.320
Second, psychological eudaemonism, the view that every individual universally and necessarily

1602
02:48:34.320 --> 02:48:42.780
seeks his own maximum happiness, follows from the praxeological axiom of human action.

1603
02:48:42.780 --> 02:48:50.200
From the fact of purpose, this truth follows, but only when happiness is interpreted in

1604
02:48:50.200 --> 02:48:57.780
in a formal, categorical and ex ante sense, that is, happiness here means whatever the

1605
02:48:57.780 --> 02:49:03.900
individual chooses to rank highest on his value scale.

1606
02:49:03.900 --> 02:49:11.060
Ethical eudaemonism, that an individual should seek his maximum happiness, can also be held

1607
02:49:11.060 --> 02:49:19.200
by the same theorist, when happiness is here interpreted in a substantive and ex post sense,

1608
02:49:19.200 --> 02:49:26.160
That is, that each individual should pursue that course which will, as a consequence,

1609
02:49:26.160 --> 02:49:27.860
make him happier.

1610
02:49:27.860 --> 02:49:31.760
To illustrate, a man may be an alcoholic.

1611
02:49:31.760 --> 02:49:35.360
The eudaemonist may make these two pronouncements.

1612
02:49:35.360 --> 02:49:36.360
1.

1613
02:49:36.360 --> 02:49:41.960
A is pursuing that course which he most prefers.

1614
02:49:41.960 --> 02:49:43.760
Psychological eudaemonism.

1615
02:49:43.760 --> 02:49:44.760
And 2.

1616
02:49:44.760 --> 02:49:48.080
A is injuring his happiness.

1617
02:49:48.080 --> 02:49:55.560
This judgment being based on happiness rules derived from the study of the nature of man,

1618
02:49:55.560 --> 02:50:02.520
and therefore should reduce his alcohol intake to the point that his happiness is no longer

1619
02:50:02.520 --> 02:50:03.520
impaired.

1620
02:50:03.520 --> 02:50:05.960
Ethical eudaemonism.

1621
02:50:05.960 --> 02:50:09.360
The two are perfectly compatible positions.