Chapter 16 Present-day Trends and the Future
1.
The Reversal of the Trend Toward Freedom
From the seventeenth century on, philosophers, in dealing with the essential content of history,
began to stress the problems of liberty and bondage.
Their concepts of both were rather vague, borrowed from the political philosophy of
of Ancient Greece and influenced by the prevailing interpretation of the conditions of the Germanic
tribes whose invasions had destroyed Rome's Western Empire.
As these thinkers saw it, freedom was the original state of mankind and the rule of
kings emerged only in the course of later history.
In the scriptural relation of the inauguration of the kingship of Saul, they found confirmation
of their doctrine as well as a rather unsympathetic description of the characteristic marks of
of Royal Government.
Historical evolution, they concluded,
had deprived man of his inalienable right of freedom.
The philosophers of the Enlightenment
were almost unanimous in rejecting
the claims of hereditary royalty and in recommending
the republican form of government.
The royal police forced them to be cautious
in the expression of their ideas,
but the public could read between the lines.
On the eve of the American and French revolutions, monarchy had lost its age-old hold on men's
minds.
The enormous prestige enjoyed by England, then the world's richest and most powerful nation,
suggested the compromise between the two incompatible principles of government, which had worked
rather satisfactorily in the United Kingdom.
But the old indigenous dynasties of continental Europe were not prepared to acquiesce in their
and a reduction to a merely ceremonial position such as the alien dynasty of Great Britain
had finally accepted, though only after some resistance.
They lost their crowns because they disdained the role of what the Count of Chambord had
called the legitimate king of the revolution.
In the heyday of liberalism, the opinion prevailed that the trend toward government by the people
is irresistible.
From the conservatives who advocated a return to monarchical absolutism, status privileges
for the nobility and censorship were more or less convinced that they were fighting
for a lost cause.
Hegel, the champion of Prussian absolutism, found it convenient to pay lip service to
the universally accepted philosophical doctrine in defining history as progress in the consciousness
of freedom.
But then arose a new generation that rejected all the ideals of the liberal movement without,
like Hegel, concealing their true intentions behind a hypocritical reverence for the word
freedom.
In spite of his sympathies with the tenets of these self-styled social reformers, John
Stuart Mill could not help branding their projects, and especially those of Auguste
Kant, liberticide.
In the eyes of these new radicals, the most depraved enemies of mankind were not the despots,
but the bourgeois who had evicted them.
The bourgeoisie, they said, had deceived the people by proclaiming sham slogans of liberty,
equality under the law, and representative government.
What the bourgeois were really intent upon was reckless exploitation of the immense majority
of honest men.
was in fact Pluto democracy, a blind to disguise the unlimited dictatorship of the capitalists.
What the masses needed was not freedom and a share in the administration of government affairs,
but the omnipotence of the true friends of the people, of the vanguard, of the proletariat, or of the charismatic Fuhrer.
No reader of the books and pamphlets of revolutionary socialism could fail to realize that their authors
Authors sought not freedom but unlimited totalitarian despotism, but so long as the socialists had
not yet seized power, they badly needed for their propaganda the institutions and the
bills of rights of plutocratic liberalism.
As an opposition party, they could not do without the publicity the parliamentary forum
offered them, nor without freedom of speech, conscience, and the press.
Thus, willy-nilly, they had to include temporarily in their program the liberties and civil rights
which they were firmly resolved to abolish as soon as they seized power.
For, as Bukharin declared after the conquest of Russia by the Bolshevists,
it would have been ridiculous to demand from the capitalists liberty for the workers' movement
in any other way than by demanding liberty for all.
In the first years of their regime,
The Soviets did not bother to conceal their abhorrence of popular government and civil liberties,
and openly praised their dictatorial methods.
But in the later 30s, they realized that an undisguised anti-freedom program
was unpopular in Western Europe and North America.
As, frightened by German rearmament, they wanted to establish friendly relations with the West.
They suddenly changed their attitude toward the terms, not the ideas, of democracy,
Constitutional Government and Civil Liberties
They proclaimed the slogan of the Popular Front
and entered into alliance with the rival socialist factions
which up to that moment they had branded social traitors.
Russia got a constitution which all over the world was praised by servile scribblers
as the most perfect document in history
in spite of its being based on the one-party principle,
the negation of all civic liberties.
From that time on, the most barbaric and despotic of governments began to claim for itself the appellation People's Democracy.
The history of the 19th and 20th centuries has discredited the hopes and the prognostications of the philosophers of the Enlightenment.
The peoples did not proceed on the road toward freedom, constitutional government, civil rights, free trade, peace, and goodwill among nations.
Instead, the trend is toward totalitarianism, toward socialism, and once more, there are
people who assert that this trend is the ultimate phase of history and that it will never give
way to another trend.
2.
The Rise of the Ideology of Equality in Wealth and Income
From time immemorial, the living philosophy of the plain man has unquestioningly accepted
the Fact of Status Differences, as well as the Necessity of Subordination to Those in
Power.
Man's primary need is protection against malicious onslaughts on the part of other men and groups
of men.
Only when safe from hostile attacks can he gather food, build a home, rear a family,
in short, survive.
Life is the first of all goods, and no price to be paid for its preservation appeared too
to hide people harassed by predatory raids.
To remain alive as a slave, they thought, is still better than to be killed.
Lucky are those who enjoy the patronage of a benevolent master, but even a harsh overlord
is to be preferred to no protection at all.
Men are born unequal.
Some are stronger and smarter.
Some are weaker and clumsier.
The latter had no choice but to surrender to the former and link their own destiny with
that of a mighty suzerain.
God, declared the priests, ordained it this way.
This was the ideology that animated the social organization which Ferguson, Saint-Simon,
and Herbert Spencer called militaristic and which present-day American writers call feudal.
This prestige began to decline when the warriors who fought the warlords' battles became
aware that the preservation of their chieftain's power depended on their own gallantry and,
made self-reliant by this insight, asked a share in the conduct of the affairs of state.
The conflicts resulting from this claim of the aristocrats engendered ideas which were
bound to question and finally to demolish the doctrine of the social necessity of status
and Cast Distinctions Why, asked the commoners, should the nobleman
enjoy privileges and rights that are denied to us?
Does not the flowering of the commonwealth depend on our toil and trouble?
Do the affairs of state concern only the king and the barons and not the great majority
of us?
We pay the taxes and our sons bleed on the battlefields, but we have no voice in the
councils in which the king and the representatives of the nobility determine our fate.
No tenable argument could be opposed to these pretensions of the tiara ta.
It was anachronistic to preserve status privileges that had originated from a type of military
organization which had long since been abandoned.
The discrimination practiced against commoners by the princely courts and good society was
merely a nuisance.
But the disdainful treatment in the armies and in the diplomatic and civil service of
Of those who were not of noble extraction caused disasters.
Led by aristocratic nincompoops, the French Royal Armies were routed, yet there were many
commoners in France who later proved their brilliancy in the armies of the revolution
and the empire.
England's diplomatic, military and naval accomplishments were evidently due in part
to the fact that it had opened virtually all careers to every citizen.
The demolition of the Bastille and the abolition of the privileges of the French nobility were
hailed all over the world by the elite, in Germany by Kant, Goethe and Schiller, among
others.
In Imperial Vienna, Beethoven wrote a symphony to honor the commander of the armies of the
revolution who had defeated the Austrian forces and was deeply grieved when the news came
that his hero had overthrown the republican form of government.
The principles of freedom, equality of all men under the law, and constitutional government
were with little opposition approved by public opinion in all western countries.
Guided by these principles, it was held, mankind was marching forward into a new age of justice
and prosperity.
However, there was no unanimity in the interpretation of the concept of equality.
For all of its champions, it meant the abolition of status and caste privileges and the legal
disabilities of the lower strata, and especially of slavery and serfdom.
But there were some who advocated the leveling of differences in wealth and income.
To understand the origin and the power of this egalitarian ideology, one must realize
that it was stimulated by the resumption of an idea which for thousands of years all over
All the evils that plagued mankind were ascribed to the fact that some people had appropriated
more land than they needed for the support of their families.
The corollary of the abundance of the Lord of the Manor was the penury of the landless.
This iniquity was seen as the cause of crime, robbery, conflict, and bloodshed.
All these mischiefs would disappear in a society consisting exclusively of farmers who could
produce in their own household what they needed for the support of their families, and neither
more nor less.
In such a commonwealth, there would be no temptations.
Neither individuals nor nations would covet what by rights belongs to others.
There would be neither tyrants nor conquerors, for neither aggression nor conquest would pay.
There would be eternal peace.
Equal distribution of land was the program that prompted the Grokai in ancient Rome,
the peasant revolts which again and again disturbed all European countries, the agrarian
reforms aimed at by various Protestant sects and by the Jesuits in the organization of
their famous Indian community in what is now Paraguay.
The fascination of this utopia enticed many of the most noble minds, among them Thomas
Jefferson. It influenced the program of the social revolutionaries, the party which recruited
the immense majority of the people in imperial Russia. It is the program today of hundreds
of millions in Asia, Africa, and Latin America, whose endeavors meet, paradoxically enough,
with the support of the foreign policy of the United States.
Yet the idea of equal distribution of land is a pernicious illusion.
Its execution would plunge mankind into misery and starvation and would in fact wipe out
civilization itself.
There is no room in the context of this program for any kind of division of labor, but regional
specialization according to the particular geographical conditions of the various territories.
The Scheme, when consistently carried to its ultimate consequences, does not even provide
for doctors and blacksmiths.
It fails to take into account the fact that the present state of the productivity of land
in the economically advanced countries is a result of the division of labor which supplies
tools and machines, fertilizer, electric current, gasoline, and many other things that multiply
the quantity and improve the quality of the produce.
Under the system of the division of labor, the farmer does not grow what he can make
direct use of for himself and his family, but concentrates upon those crops for which
his piece of soil offers comparatively the most favorable opportunities.
He sells the produce on the market and buys on the market what he and his family need.
The optimum size of a farm no longer has any relation to the size of the farmer's family.
It is determined by technological considerations, the highest possible output per unit of input.
Like other entrepreneurs, the farmer produces for profit, that is, he grows what is most
urgently needed by every member of society for his use and not what he and his family
alone can directly use for their own consumption.
But those who desire equal distribution of land stubbornly refuse to take notice of all
They would undo the whole of economic history, regardless of consequences.
They disregard the fact that under the primitive methods of land tenure which they recommend,
our globe could not support more than a fraction of the population now inhabiting it, and even
this fraction only at a much lower standard of living.
It is understandable that ignorant paupers in backward countries cannot think of any
other way for the improvement of their conditions than the acquisition of a piece of land.
But it is unpardonable that they are confirmed in their allusions by representatives of advanced
nations who call themselves experts and should know very well what state of agriculture is
required to make a people prosperous.
The poverty of the backward countries can be eradicated only by industrialization and
its agricultural corollary.
The replacement of land utilization for the direct benefit of the farmer's household
by land utilization to supply the market.
The sympathetic support with which schemes for land distribution meet today and have
met in the past from people enjoying all the advantages of life under the division of labor
has never been based in any realistic regard for the inexorable nature-given state of affairs.
It is rather the outcome of romantic illusions.
The corrupt society of decaying Rome, deprived of any share in the conduct of public affairs,
bored and frustrated, fell into reveries about the imagined happiness of the simple life
of self-sufficient farmers and shepherds.
The still more idle, corrupt and bored aristocrats of the ancien régime in France found pleasure
in a pastime they chose to call dairy farming.
Today, American millionaires pursue farming as a hobby which has the added advantage that
its costs reduce the amount of income tax due. These people look upon farming less as
a branch of production than as a distraction. A seemingly plausible plea for expropriation
of the landholdings of the aristocracy could be made out at the time the civil privileges
of the nobility were revoked. Feudal estates were princely gifts to the ancestors of the
The aristocratic owners in compensation for military services rendered in the past and
to be rendered in the future, they provided the means to support the king's armed retinue
and the size of the holding allotted to the individual liegeman was determined by his
rank and position in the forces.
But as military conditions changed and the armies were no longer composed of vassals
called up, the prevailing system of land distribution became anachronistic.
There seemed to be no reason to let the squires keep revenues accorded as compensation for
services they no longer rendered.
It seemed justifiable to take back the fiefs.
Such arguments could not be refuted from the point of view of the doctrine to which the
aristocrats themselves resorted in defense of their status privileges.
They stood on their traditional rights, pointing to the value of the services their forebearers
had rendered to the nation.
But as it was obvious that they themselves no longer rendered such indispensable services,
it was correct to infer that all the benefits received as reward for these services should
be cancelled.
This included revocation of the land grants.
From the point of view of the liberal economists, however, such confiscation appeared an unnecessary
and dangerous disruption of the continuity of economic evolution.
What was needed was the abolition of all those legal institutions that sheltered the inefficient
proprietor against the competition of more efficient people who could utilize the soil
to produce better and more cheaply.
The laws that withdrew the estates of the nobleman from the market and the supremacy
of the consumers, such as entails and the legal inability of commoners to acquire ownership
by purchase, must be repealed.
Even the supremacy of the market would shift control of land into the hands of those who
know how to supply the consumers in the most efficient way with what they ask for most urgently.
Unimpressed by the dreams of the utopians, the economists looked upon the soil as a factor
of production.
The rightly understood interests of all the people demanded that the soil, like all other
and other material factors of production should be controlled by the most efficient entrepreneurs.
The economists had no arbitrary preference for any special size of the farms.
That size was best which secured the most efficient utilization.
They did not let themselves be fooled by the myth that it was in the interest of the nation
to have as many of its members as possible employed in agriculture.
On the contrary, they were fully aware that it was beneficial not only to the rest of
of the Nation, but also to those employed in agriculture if waste of manpower was avoided
in this as in all other branches of production. The increase in material well-being was due
to the fact that, thanks to technological progress, a continually shrinking percentage
of the whole population was sufficient to turn out all the farm products needed. Attempts
to meddle with this secular evolution which more and more reduced the ratio of the farm
Mankind is the more prosperous the smaller the percentage of its total numbers employed in producing all the quantities of food and raw materials required, if any sense can be attached to the term reactionary, then the endeavors to preserve by special measures those small size farms which cannot hold their own in the competition of the market are certainly to be called reactionary.
They tend to substitute a lower degree of the division of labor for a higher degree
and thus slow down or entirely stop economic improvement.
Let the consumers determine what size of farm best suits their interests.
The economists' critique of the agrarian utopia was highly unpopular.
Nevertheless, the weight of their arguments succeeded for a time in checking the zeal
of the reformers.
Only after the end of the First World War did the ideal of an agriculture, predominantly
or even exclusively operated by small farmers, again attain the role it plays today in world
politics.
The great historical and political importance of the idea of equal distribution of land
is to be seen in the fact that it paved the way for the acceptance of socialism and communism.
The Marxian socialists were academically opposed to it and advocated the nationalization
of Agriculture.
But they used the slogan, Equal Distribution of Land Ownership, as a lever to incite the
masses in the economically underdeveloped countries.
For the illiterate rural population of these nations, the nostrum socialization of business
was meaningless.
But all their instincts of envy and hatred were aroused when politicians promised them
the land of the kulaks and the owners of big estates.
And during F.D. Roosevelt's administration, pro-communists in the United States government
and the American press asserted that the Chinese leftists were not communists, but merely agrarian
reformers.
They were right insofar as the Chinese agents of the Soviets had adopted Lenin's clever
trick of inaugurating the socialist revolution by resorting to the most popular slogans and
concealing one's own real intentions.
Today we see how in all economically underdeveloped countries, the scheme of land confiscation
and redistribution makes the most effective propaganda for the Soviets.
The scheme is manifestly inapplicable to the countries of Western civilization.
The urban population of an industrialized nation cannot be lured by the prospect of
such an agrarian reform.
Its sinister effect upon the thinking of the masses in the capitalistic countries consists
in its rendering sympathetic the program of wealth and income equality.
It thus makes popular interventionist policies which must inevitably lead to full socialism.
To stress this fact does not mean that any socialist or communist regime would ever really
bring about equalization of income.
It is merely to point out that what makes socialism and communism popular is not only
the illusory belief that they will give enormous riches to everybody, but the no less illusory
The American progressives, who are stirring up their countrymen as well as all foreigners
to envy and hatred, and are vehemently asking for the equalization of wealth and incomes,
do not see how these ideas are interpreted by the rest of the world.
Foreign nations look upon all Americans, including the workers, with the same jealousy and hostility
with which the typical American union member looks upon those whose income exceeds his own.
In the eyes of foreigners, the American taxpayers have been motivated merely by bad conscience
and fear when they spent billions to improve conditions abroad.
Public opinion in Asia, Africa, Latin America, and many European countries views this system
of foreign aid as socialist agitators do money laid out by the rich for charity, a pittance
meant to bribe the poor and prevent them from taking what, by rights, belongs to them.
Statesmen and writers who recommend that their nations should side with the United States
against Russia are no less unpopular with their countrymen than those few Americans
who have the courage to speak for capitalism and to reject socialism or with their fellow
citizens.
In Gerhard Hauptmann's play Die Weber, one of the most effective pieces of German anti-capitalistic
Literature.
The wife of a businessman is startled when she realizes that people behave as if it were
a crime to be rich.
Except for an insignificant minority, everyone today is prepared to take this condemnation
of wealth for granted.
This mentality spells the doom of American foreign policy.
The United States is condemned and hated because it is prosperous.
The almost uncontested triumph of the egalitarian ideology has entirely obliterated all other
political ideals.
The envy-driven masses do not care a whit for what the demagogues call the bourgeois
concern for freedom of conscience, of thought, of the press, for habeas corpus, trial by
jury, and all the rest.
They long for the earthly paradise which the socialist leaders promise them.
Like these leaders, they are convinced that the liquidation of the bourgeois will bring
them back into the Garden of Eden.
The irony is that nowadays they are calling this program the liberal program.
3.
The Chimera of a Perfect State of Mankind
All doctrines that have sought to discover in the course of human history some definite
trend in the sequence of changes have disagreed, in reference to the past, with the historically
established facts, and where they tried to predict the future have been spectacularly
proved wrong by later events.
Most of these doctrines were characterized by reference to a state of perfection in human
affairs.
They placed this perfect state either at the beginning of history, or at its end, or at
both its beginning and its end.
Consequently, history appeared in their interpretation as a progressive deterioration or a progressive
improvement or as a period of progressive deterioration to be followed by one of progressive
improvement.
With some of these doctrines, the idea of a perfect state was rooted in religious beliefs
and dogmas.
However, it is not the task of secular science to enter into an analysis of these theological
aspects of the matter.
It is obvious that in a perfect state of human affairs, there cannot be any history.
History is the record of changes, but the very concept of perfection implies the absence
of any change, as a perfect state can only be transformed into a less perfect state,
that is, can only be impaired by any alteration.
If one places the state of perfection only at the supposed beginning of history, one
One asserts that the age of history was preceded by an age in which there was no history, and
that one day some events which disturbed the perfection of this original age inaugurated
the age of history.
If one assumes that history tends toward the realization of a perfect state, one asserts
that history will one day come to an end.
It is man's nature to strive ceaselessly after the substitution of more satisfactory
conditions for less satisfactory.
This motive stimulates his mental energies and prompts him to act.
Life in a perfect frame would reduce man to a purely vegetative existence.
History did not begin with the Golden Age.
The conditions under which primitive man lived appear in the eyes of later ages rather unsatisfactory.
He was surrounded by innumerable dangers that did not threaten civilized man at all, or
at least not to the same degree.
The idea that a state of aimlessness and indifference is desirable and the most happy condition
that mankind could ever attain permeates utopian literature.
The authors of these plans depict a society in which no further changes are required because
everything has reached the best possible form.
In utopia, there will no longer be any reason to strive for improvement because everything
is already perfect.
History has been brought to a close.
Henceforth all people will be thoroughly happy.
In this sense, Karl Marx, too, must be called a utopian.
He, too, aimed at a state of affairs in which history will come to a standstill.
For history is, in the scheme of Marx, the history of class struggles.
Once classes and the class struggle are abolished, there can no longer be any history.
It is true that the Communist Manifesto merely declares that the history of all hitherto
existing society, or, as Engels later added, more precisely, the history after the dissolution
of the Golden Age of Primeval Communism is the history of class struggles and thus does
not exclude the interpretation that after the establishment of the socialist millennium,
some new content of history could emerge.
But the other writings of Marx, Engels, and their disciples do not provide any indication
that such a new type of historical changes, radically different in nature from those of
the preceding ages of class struggles, could possibly come into being.
But further changes can be expected once the higher phase of communism is attained in which
everybody gets all he needs.
The distinction that Marx made between his own scientific socialism and the socialist
plans of older authors whom he branded as utopians refers not only to the nature and
organization of the socialist commonwealth, but also to the way in which this commonwealth
is supposed to come into existence.
Those whom Marx disparaged as utopians constructed the design of a socialist paradise and tried
to convince people that its realization is highly desirable.
Marx rejected this procedure.
He pretended to have discovered the law of historical evolution according to which the
coming of socialism is inevitable.
He saw the shortcomings of the utopian socialists, their utopian character, and the fact that
they expected the coming of socialism from the will of the people, that is, their conscious
A New, Sophisticated Version of the Image of the Perfect Society has arisen lately out
In order to deal with the effects of changes in the market situation, the endeavors to
adjust production to these changes and the phenomena of profit and loss, the economist
constructs the image of a hypothetical, although unattainable, state of affairs in which production
is always fully adjusted to the realizable wishes of the consumers and no further changes
whatever occur.
In this imaginary world, tomorrow does not differ from today.
No maladjustments can arise, and no need for any entrepreneurial action emerges.
The conduct of business does not require any initiative.
It is a self-acting process unconsciously performed by automatons impelled by mysterious
quasi-instincts.
There is, for economists, and for that matter also for laymen discussing economic issues,
No other way to conceive what is going on in the real, continually changing world than
to contrast it in this way with a fictitious world of stability and absence of change.
But the economists are fully aware that the elaboration of this image of an evenly rotating
economy is merely a mental tool that has no counterpart in the real world in which man
lives and is called to act.
They did not even suspect that anybody could fail to grasp the merely hypothetical and
Ancillary Character of Their Concept. Yet some people misunderstood the meaning and
significance of this mental tool. In a metaphor borrowed from the theory of mechanics, the
mathematical economists call the evenly rotating economy the static state, the conditions prevailing
in it equilibrium, and any deviation from equilibrium, disequilibrium. This language
suggests that there is something vicious in the very fact that there is always disequilibrium
in the Real Economy and that the state of equilibrium never becomes actual.
The merely imagined hypothetical state of undisturbed equilibrium appears as the most
desirable state of reality.
In this sense, some authors call competition, as it prevails in the changing economy, imperfect
competition.
The truth is that competition can exist only in a changing economy.
This function is precisely to wipe out disequilibrium and to generate a tendency toward the attainment
of equilibrium. There cannot be any competition in a state of static equilibrium because in
such a state, there is no point at which a competitor could interfere in order to perform
something that satisfies the consumer better than what is already performed anyway.
The very definition of equilibrium implies that there is no maladjustment anywhere in
in the Economic System and, consequently, no need for any action to wipe out maladjustments,
no entrepreneurial activity, no entrepreneurial profits and losses.
It is precisely the absence of the profits that prompts mathematical economists to consider
the state of undisturbed static equilibrium as the ideal state, for they are inspired by
the prepossession that entrepreneurs are useless parasites and profits are unfair lucre.
The equilibrium enthusiasts are also deluded by ambiguous thymological connotations of
the term equilibrium, which, of course, have no reference whatever to the way in which
economics employs the imaginary construction of a state of equilibrium.
The popular notion of a man's mental equilibrium is vague and cannot be particularized without
including arbitrary judgments of value.
All that can be said about such a state of mental or moral equilibrium is that it cannot
Don't prompt a man toward any action.
For action presupposes some uneasiness felt, as its only aim can be the removal of uneasiness.
The analogy with the state of perfection is obvious.
The fully satisfied individual is purposeless.
He does not act.
He has no incentive to think.
He spends his days in leisurely enjoyment of life.
It is certain that living men can never attain such a state of perfection and equilibrium.
It is no less certain that, sorely tried by the imperfections of real life, people will
dream of such a thorough fulfillment of all their wishes.
This explains the sources of the emotional praise of equilibrium and condemnation of
disequilibrium.
However, economists must not confuse this thymological notion of equilibrium with the
use of the imaginary construction of a static economy.
The only service that this imaginary construction renders is to set off in sharp relief the
ceaseless striving of living and acting men after the best possible improvement of their
conditions.
There is for the unaffected scientific observer nothing objectionable in his description of
disequilibrium.
It is only the passionate pro-socialist zeal of mathematical pseudo-economists that transforms
a purely analytical tool of logical economics into an utopian image of the good and most
desirable state of affairs.
4.
The Alleged Unbroken Trend Toward Progress A realistic philosophical interpretation
of History must abstain from any reference to the chimerical notion of a perfect state
of human affairs.
The only basis from which a realistic interpretation can start is the fact that man, like all other
living beings, is driven by the impulse to preserve his own existence and to remove,
as far as possible, any uneasiness he feels.
It is from this point of view that the immense majority of people appraise the conditions
It would be erroneous to scorn their attitude as materialism in the ethical connotation
of the term.
The pursuit of all those nobler aims which the moralists contrast with what they disparage
as merely materialistic satisfactions presupposes a certain degree of material well-being.
The controversy about the monogenetic or polygenetic origin of Homo sapiens is, as
As has been pointed out earlier, of little importance for history.
Even if we assume that all men are the descendants of one group of primates, which alone evolved
into the human species, we have to take account of the fact that at a very early date, dispersion
over the surface of the earth broke up this original unity into more or less isolated parts.
For thousands of years, each of these parts lived its own life with little or no intercourse
Health and Decay, Progress and Retrogression, Improvement and Deterioration, if the historian
or philosopher does not arbitrarily pretend to know what the end of human endeavor ought
to be.
There is no agreement among people on a standard by which the achievements of civilization
can be said to be good or bad, better or worse.
Mankind is almost unanimous in its appraisal of the material accomplishments of modern
Western Capitalistic Civilization
The immense majority considers the higher standard of living which this civilization
secures to the average man highly desirable.
It would be difficult to discover, outside of the small and continually shrinking group
of consistent ascetics, people who do not wish for themselves and their families and
friends the enjoyment of the material paraphernalia of Western Capitalism.
If, from this point of view, people assert that we have progressed beyond the conditions
of earlier ages, their judgment of value agrees with that of the majority.
But if they assume that what they call progress is a necessary phenomenon, and that there
prevails in the course of events a law that makes progress, in this sense, go on forever,
they are badly mistaken.
To disprove this doctrine of an inherent tendency toward progress that operates automatically,
As it were, there is no need to refer to those older civilizations in which periods of material
improvement were followed by periods of material decay or by periods of standstill.
There is no reason whatever to assume that a law of historical evolution operates necessarily
toward the improvement of material conditions or that trends which prevailed in the recent
past will go on in the future too.
What is called economic progress is the effect of an accumulation of capital goods exceeding
the increase in population.
If this trend gives way to a standstill in the further accumulation of capital, or to
capital decumulation, there will no longer be progress in this sense of the term.
Everyone but the most bigoted socialists agrees that the unprecedented improvement
in economic conditions which has occurred in the last two hundred years is an achievement
of Capitalism, it is, to say the least, premature to assume that the tendency toward progressive
economic improvement will continue under a different economic organization of society.
The champions of socialism reject as ill-considered all that economics has advanced to show that
a socialist system, being unable to establish any kind of economic calculation, would entirely
disintegrate the system of production.
Even if the socialists were right in their disregard for the economic analysis of socialism,
this would not yet prove that the trend toward economic improvement will or could go on under
a socialist regime.
5.
The Suppression of Economic Freedom
A civilization is the product of a definite worldview, and its philosophy manifests itself
in each of its accomplishments.
The artifacts produced by men may be called material, but the methods resorted to in the
arrangement of production activities are mental, the outcome of ideas that determine what should
be done and how.
All the branches of a civilization are animated by the spirit that permeates its ideology.
The philosophy that is the characteristic mark of the West and whose consistent elaboration
Man has in the last centuries transformed all social institutions as been called individualism.
It maintains that ideas, the good ones as well as the bad, originate in the mind of
an individual man.
Only a few men are endowed with the capacity to conceive new ideas, but as political ideas
can work only if they are accepted by society, it rests with the crowd of those who themselves
are unable to develop new ways of thinking to approve or disapprove the innovations of
the pioneers.
There is no guarantee that these masses of followers and routinists will make wise use
of the power vested in them.
They may reject the good ideas, those whose adoption would benefit them, and espouse bad
ideas that will seriously hurt them.
But if they choose what is worse, the fault is not theirs alone.
It is no less the fault of the pioneers of the good causes in not having succeeded in
bringing forward their thoughts in a more convincing form.
The favorable evolution of human affairs depends ultimately on the ability of the human race
to beget not only authors but also heralds and disseminators of beneficial ideas.
One may lament the fact that the fate of mankind is determined by the, certainly not infallible,
minds of men.
But such regret cannot change reality.
In fact, the eminence of man is to be seen in his power to choose between good and evil.
It is precisely this that the theologians had in view when they praised God for having
bestowed upon man the discretion to make his choice between virtue and vice.
The dangers inherent in the masses' incompetence are not eliminated by transferring the authority
to make ultimate decisions to the dictatorship of one or a few men, however excellent.
It is an illusion to expect that despotism will always side with the good causes.
It is characteristic of despotism that it tries to curb the endeavors of pioneers to
improve the lot of their fellow men.
The foremost aim of despotic government is to prevent any innovations that could endanger
its own supremacy.
Its very nature pushes it toward extreme conservatism, the tendency to retain what is, no matter
how desirable for the welfare of the people a change might be.
It is opposed to new ideas and to any spontaneity on the part of the subjects.
In the long run, even the most despotic governments with all their brutality and cruelty are no
match for ideas.
Eventually, the ideology that has won the support of the majority will prevail and cut
The Theory of Money and Credit
not entirely wipe out.
The main excellence and worth of what is called constitutional institutions, democracy and
government by the people, is to be seen in the fact that they make possible peaceful
change in the methods and personnel of government.
Where there is representative government, no revolutions and civil wars are required
to remove an unpopular ruler and his system.
If the men in office and their methods of conducting public affairs no longer please
In this way, the philosophy of individualism demolished the doctrine of absolutism, which
ascribed heavenly dispensation to princes and tyrants.
To the alleged divine right of the anointed kings, it opposed the inalienable rights bestowed
upon man by his Creator.
As against the claim of the state to enforce orthodoxy and to exterminate what it considered
and Heresy, it proclaimed freedom of conscience.
Against the unyielding preservation of old institutions become obnoxious with the passing
of time, it appealed to reason.
Thus, it inaugurated an age of freedom and progress toward prosperity.
It did not occur to the liberal philosophers of the eighteenth and early nineteenth centuries
that a new ideology would arise which would resolutely reject all the principles of liberty
and Individualism, and would proclaim the total subjection of the individual to the
tutelage of a paternal authority as the most desirable goal of political action, the most
noble end of history, and the consummation of all the plans God had in view in creating
man.
Not only Hume, Condorcet, and Bentham, but even Hegel and John Stuart Mill would have
refused to believe it if some of their contemporaries had prophesied that in the twentieth century
Generally most of the writers and scientists of France and the Anglo-Saxon nations would
wax enthusiastic about a system of government that eclipses all tyrannies of the past in
pitiless persecution of dissenters and in endeavors to deprive the individual of all
opportunity for spontaneous activity.
They would have considered that man a lunatic who told them that the abolition of freedom,
of all civil rights, and of government based on the consent of the governed would be called
liberation.
Yet, all this has happened.
The historian may understand and give theymological explanations for this radical and sudden change
in ideology, but such an interpretation in no way disproves the philosophers' and the
economist's analysis and critique of the counterfeit doctrines that engendered this movement.
The keystone of Western civilization is the sphere of spontaneous action it secures to
the individual.
There have always been attempts to curb the individual's initiative, but the power of
the persecutors and inquisitors has not been absolute.
It could not prevent the rise of Greek philosophy and its Roman offshoot or the development
of modern science and philosophy.
Driven by their inborn genius, pioneers have accomplished their work in spite of all hostility
and opposition.
The innovator did not have to wait for invitation or order from anybody.
He could step forward of his own accord and defy traditional teachings.
In the orbit of ideas, the West has by and large always enjoyed the blessings of freedom.
Then came the emancipation of the individual in the field of business and achievement of
that new branch of philosophy, economics.
A free hand was given to the enterprising man who knew how to enrich his fellows by
improving the methods of production.
A horn of plenty was poured upon the common men by the capitalistic business principle
of mass production for the satisfaction of the needs of the masses.
In order to appraise justly the effects of the Western idea of freedom, we must contrast
the West with conditions prevailing in those parts of the world that have never grasped
the meaning of freedom.
Some Oriental peoples developed philosophy and science long before the ancestors of the
The representatives of modern Western civilization emerged from primitive barbarism.
There are good reasons to assume that Greek astronomy and mathematics got their first impulse
from acquaintance with what had been accomplished in the East.
When later the Arabs acquired a knowledge of Greek literature from the nations they
had conquered, a remarkable Muslim culture began to flourish in Persia, Mesopotamia, and
Spain.
Up to the 13th century, Arabian learning was not inferior to the contemporary achievements
of the West, but then religious orthodoxy enforced unswerving conformity and put an
end to all intellectual activity and independent thinking in the Muslim countries, as had happened
before in China, in India, and in the orbit of Eastern Christianity.
The forces of orthodoxy and persecution of dissenters, on the other hand, could not silence
the voices of Western science and philosophy, for the spirit of freedom and individualism
was already strong enough in the West to survive all persecutions.
From the 13th century on, all intellectual, political, and economic innovations originated
in the West.
Until the East, a few decades ago, was fructified by contact with the West, history in recording
the great names in philosophy, science, literature, technology, government, and business could
hardly mention any orientals.
There was stagnation and rigid conservatism in the East until Western ideas began to filter
in.
To the Orientals themselves, slavery, serfdom, untouchability, customs like suddism or the
crippling of the feet of girls, barbaric punishments, mass misery, ignorance, superstition, and
disregard of hygiene did not give any offense.
Unable to grasp the meaning of freedom and individualism, today they are enraptured with
and the Program of Collectivism.
Although these facts are well known, millions today enthusiastically support policies that
aim at the substitution of planning by an authority for autonomous planning by each
individual.
They are longing for slavery.
Of course, the champions of totalitarianism protest that what they want to abolish is
only economic freedom and that all other freedoms will remain untouched, but freedom is indivisible.
The distinction between an economic sphere of human life and activity and a non-economic
sphere is the worst of their fallacies.
If an omnipotent authority has the power to assign to every individual the tasks he has
to perform, nothing that can be called freedom and autonomy is left to him.
He has only the choice between strict obedience and death by starvation.
Committees of experts may be called to advise the planning authority whether or not a young
A young man should be given the opportunity to prepare himself for and to work in an intellectual
or artistic field, but such an arrangement can merely rear disciples committed to the
parent-like repetition of the ideas of the preceding generation.
It would bar innovators who disagree with the accepted ways of thought.
No innovation would ever have been accomplished if its originator had been in need of an authorization
by those from whose doctrines and methods he wanted to deviate.
Hegel would not have ordained Schopenhauer or Feuerbach, nor would Professor Rao have
ordained Marx or Carl Menger.
If the supreme planning board is ultimately to determine which books are to be printed,
who is to experiment in the laboratories and who is to paint or to sculpture, and which
alterations in technological methods should be undertaken, there will be neither improvement
nor progress.
All man will become a pawn in the hands of the rulers, who in their social engineering
will handle him as engineers handle the stuff of which they construct buildings, bridges,
and machines.
In every sphere of human activity, an innovation is a challenge not only to all routinists
and to the experts and practitioners of traditional methods, but even more to those who have in
the past themselves been innovators.
It meets, at the beginning, chiefly stubborn opposition.
Such obstacles can be overcome in a society where there is economic freedom.
They are insurmountable in a socialist system.
The essence of an individual's freedom is the opportunity to deviate from traditional
ways of thinking and of doing things.
Planning by an established authority precludes planning on the part of individuals.
6.
The Uncertainty of the Future
The outstanding fact about history is that it is a succession of events that nobody anticipated
before they occurred.
What the most far-seeing statesmen and businessmen divine is, at most, conditions as they will
develop in the near future, in a period in which, by and large, no radical changes in
ideologies and in general conditions will take place.
The British and French philosophers whose writings actuated the French Revolution, and
the thinkers and poets of all Western nations who enthusiastically hailed the first steps
in this great transformation, foresaw neither the reign of terror nor the way Babiff and
his followers would very soon interpret the principle of equality.
None of the economists whose theories demolished the pre-capitalistic methods of restricting
and Economic Freedom, and none of the businessmen whose operations inaugurated the Industrial
Revolution anticipated either the unprecedented achievements of free enterprise or the hostility
with which those most benefited by capitalism would react to it.
Those idealists who greeted as a panacea President Wilson's policy of making the world safe
for democracy did not foresee what the effects would be.
The fallacy inherent in predicting the course of history is that the prophets assume no
ideas will ever possess the minds of men, but those they themselves already know of.
Hegel, Kant, and Marx, to name only the most popular of these soothsayers, never doubted
their own omniscience.
Each was fully convinced that he was the man whom the mysterious powers providently directing
All Human Affairs had elected to consummate the evolution of historical change.
Henceforth, nothing of importance could ever happen.
There was no longer any need for people to think.
Only one task was left to coming generations, to arrange all things according to the precepts
devised by the messenger of providence.
In this regard, there was no difference between Mohammed and Marx, between the Inquisitors
and Auguste Kant.
Up to now, in the West, none of the apostles of stabilization and petrification has succeeded
in wiping out the individual's innate disposition to think and to apply to all problems the
yardstick of reason.
This alone and no more, history and philosophy, can assert in dealing with doctrines that claim
Time to know exactly what the future has in store for mankind.
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