The Freeman 1978

ttlC

FreemanVOL. 28, NO. 4 • APRIL 1978

Guilt, Responsibility and Western Prosperity Charles Dykes 195A rising standard of living hinges on the elevation of spiritual,moral and educational standards.

The Hidden Costs of Free Lunches Gary North 200Free lunches, if legislated, are devastatingly expensive to therecipients.

Living Together Roger Donway 204Concerning the bonds of sociability underlying the concept of lais-sezfaire.

The Farm Strike-Will It Do More Harm than Good? Leland P. Cade 211

Is a cost-price squeeze sufficient reason to repeal the law of sup-ply and demand?

Levels of Discussion Hans F. Sennholz 215All ideas must be submitted to the test of free discussion which is areliable friend of truth.

Is the Free Market Ethical? Fred E. Foldvary 220A market free of coercion is on firm moral ground.

World in the Grip of an Idea16. Sweden: The Paternal State Clarence B. Carson 223

The curious notion of the paternal state could hardly have comefrom a careful study of history.

What Price Control Really Means Lawrence W. Reed 235The history of price control is the history of shortages, queues,and dissatisfied customers.

Constitutional Restraints on Power Edmund A. Opitz 239Government is the power structure that free men are obliged torestrain.

Book Reviews: 244"Beyond Failure: How to Cure a Neurotic Society" by Frank Goble"A Critique of Interventionism" by Ludwig von Mises"Notes and Recollections" by Ludwig von Mises"On the Manipulation of Money and Credit" by Ludwig von Mises"It's No Sin To Be Rich: A Defense of

Capitalism" by William Davis"The People Shapers" by Vance Packard

Anyone wishing to communicate with authors may sendfirst-class mail in care of THE FREEMAN for forwarding. '

@FreemanW A MONTHLY JOURNAL OF IDEAS ON LIBERTY

FOUNDATION FOR ECONOMIC EDUCATIONIrvington-on-Hudson, N.Y. t0533 Tel: (914) 591-7230

Leonard E.Read, President

Managing Editor: Paul L. Poi rotProduction Editor: Beth A. Hoffman

Contributing Editors: Robert G. AndersonBettina Bien GreavesEdmund A. Opitz (Book Reviews)Brian Summers

THE FREEMAN is published monthly by theFoundation for Economic Education, Inc., a nonpolitical, nonprofit, educational champion of private property, the free market, the profit and losssystem, and limited government.

The costs of Foundation projects and servicesare met through donations. Total expenses average $18.00 a year per person on the mailing list.Donations are invited in any amount. THEFREEMAN is available to any interested personin the United States for the asking. For foreigndelivery, a donation is required sufficient to coverdirect mailing cost of $5.00 a year.

Copyright, 1978. The Foundation for Economic Education, Inc. Printed in U.S.A.Additional copies, postpaid: 3 for $1.00; 10 or more, 25 cents each.

THE FREEMAN is available on microfilm from University Microfilms International,300 North Zeeb Road, Ann Arbor, Mich. 48106.

Some articles available as reprints at cost; state quantity desired. Permissiongranted to reprint any article from this issue, with appropriate credit except "TheFarm Strike-Will It Do More Harm than Good?" and "World inthe Grip of an Idea."

Charles Dykes

Guilt,Responsibility

()1'\dWestern Prosperity

ONE of the great differences betweenancient paganism and early Christianity was in their varying concepts of responsibility. Responsibility has generally been defined as~~the human sense ofanswerablenessfor all acts of thought and conduct."lThe pagan, however, located responsibility primarily in his environment-e.g., fate, the stars, the gods,and the like, whereas Christianfaith insisted on individual moralresponsibility. Orthodox Christianity was not then nor is itnow ~~concerned with the pointlessquestions about heredity, environment, the stars, or any other likesearch for a cause." Rather theChristians perceived that Hthepagan search for causes is a denial ofthe person and also of responsibility."2

Ours is a time when the pagan

Mr. Dykes Is a businessman, free-lance writer andenthusiastic advocate of the free market.

and Christian concepts of responsibility are often curiously mixed inthe same minds, resulting in astrange new doctrine wherein somemen are considered to be the helpless victims of environmental determinism, while others are declared to have a free will, albeit anevilone.

In his analysis of egalitarianism,P. T. Bauer provides an example ofthis kind of thinking: ~~The poor areoften envisaged as a distinct class atthe mercy of the environment, withno will of their own, while at thesame time they are denied the primary human characteristic of responsibility. The rich are regarded ashaving a will of their own, but asbeing villainous. Poverty is seen asa condition caused by externalforces, while prosperity, is viewed asthe result of conduct, although reprehensible conduct. The poor areconsidered passive but virtuous, therich as active but wicked."3

195

196 THE FREEMAN April

Thus in contemporary egalitariandemonology, the ~~rich" and theirmachinations have become the~~stars," ~~fate," or other ~~causes"

which afflict the ~~poor."

Search for Scapegoats

This abiding human passion totransfer responsibility for one's ownsin and failure to someone or something else can be illustrated by innumerable examples. Some yearsago, G. K. Chesterton wrote of hisencounter with anti-Christian booksin days prior to his conversion. Henoted that Christianity ~~was attacked on all sides and for all contradictory reasons...." He continues, ~1 was much moved by theeloquent attack on Christianity as athing of inhuman gloom. . . . Theydid prove to me in Chapter I. (to mycomplete satisfaction) that Christianity was too pessimistic; andthen, in Chapter II., they began toprove to me that it was a great dealtoo optimistic."

He was impressed by the argument that Christianity was weak,timid and cowardly with regard tofighting, then turned the page and~~found that I was to hate Christianity not for fighting too little, butfor fighting too much. Christianity,it seemed, was the mother of wars"and ~~had deluged the world withblood. . . . The Quakers (we weretold) were the only characteristicChristians; and yet the massacres of

Cromwell and Alva were characteristic Christian crimes."4

A few years later Ludwig vonMises was moved to say that ~~Noth

ing is more unpopular today thanthe free market economy, i.e., capitalism. Everything that is considered unsatisfactory in present dayconditions is charged to capitalism.The atheists make capitalism responsible for the survival of Christianity. But the papal encyclicalsblame capitalism for the spread ofirreligion and the sins of our contemporaries, and the Protestantchurches and sects are no less vigorous in their indictment of capitalistgreed. Friends of peace consider ourwars as an offshoot of capitalist imperialism. But the adamant nationalist warmongers of Germany andItaly indicted capitalism for its~bourgeois'pacifism.... Sermonizersaccuse capitalism of disrupting thefamily and fostering licentiousness.But the ~progressives'blame capitalism for the preservation of allegedly outdated rules of sexualrestraint."5

Thus Christianity and capitalismhave often been the ~~scapegoats"onwhich the sins and shortcomings ofmany have been laid. More recently,the wealth of Western nations-aproduct of Christian capitalismhas been attributed to u neocolonialism," the indictment putforward by socialists of all stripesthat the nations of the Western

1978 GUILT, RESPONSIBILITY AND WESTERN PROSPERITY 197

world (the Hhaves") derive a largeand essential part of their affluencefrom exploitative investments inthe underdeveloped nations (the~~have-nots").

President Julius Nyerere of Tanzania put it this way: ~~I am saying itis not right that the vast majority ofthe world's people should be forcedinto the position of beggars.... Inone world, as in one state, when I amrich because you are poor, and I ampoor because you are rich, the transfer of wealth from the rich to thepoor is a matter of right; it is not anappropriate matter for charity...."6

Here we have not only the accusation that the rich nations are responsible for the poverty of the poornations, but also the claim that therich have a moral responsibility toredistribute their ill-gotten gain tothe masses of undifferentiated poor.

Accusations of the West

Like the critics of Christianityand capitalism, the Third-Worldapologists really get carried away.According to Dr. Lewis H. Gann,Hthe hated American plotters, likethe Elders of Zion in the Nazipolemics of old, can do no right. Ifthey invest overseas, they exploitforeigners. If they do not. investabroad, they are guilty of boycottingother countries. . . . If capitalistsearn profits, they impoverish themasses. If they· do not earn profits,they prove that capitalism must be

decadent. If American entrepreneurs try to preserve indigenouscustoms in the Third World, theypromote ~dysfunctional' forms oftribalism. If they disrupt indigenouscustoms, they are guilty of culturalgenocide. The list can be extendedindefinitely."7 Dr. Gann concludes:~(The real or assumed machinationsof foreign capitalists supply a universal excuse for the political andeconomic failures of the ThirdWorld."8

Accusations that the West in general, and capitalism in particular,has caused the poverty, hunger andbackwardness of the Third World,are totally without foundation.There are able studies which setforth the truth,9 but the urge tomasochism remains strong, especially among Western intellectualsand churchmen.

P. T. Bauer and B. S. Yamey cite aleaflet put out by a student organization in Cambridge, England: ~~AI

most all of us in this country belongto the small minority of those whomade it to prosperity. But weclimbed on the shoulders of therest-the ones we left behindabandoned to disease, poverty, andunemployment. We took the rubberfrom Malaya, the tea from India,raw materials from all over theworld, and gave almost nothing inreturn." The truth, according toBauer and Yamey, is that ~~Westerngovernments and enterprise


brought rubber to Malaya and tea toIndia which were not indigenous tothese countries."lO

Why the Difference?

Given the obvious economicsupremacy of the West vis-a-vis therest of the world, and given theequally valid, if not so obvious, factthat this supremacy has not beenachieved at the expense of the rest ofthe world, why is the West-andespecially America-prosperous,while the remaining two-thirds ofmankind are part of the world'shungry billions? We cannot give adetailed explanation here, but canindicate, several conditions thatwere essential in preparing the wayfor the affluence we now enjoy.

First, one need not be a believer tonotice that the poor nations arethose where Christianity has hadlittle influence or has not takenstrong root. On the other hand, therich nations, those where agricultural surpluses are a chronic problem, are those where the dominantformative values have beenChristian-and in particular,Protestant Christian. Cattle andmonkeys thrive in India becausethey are considered sacred; noHindu would kill a cow because he isafraid of offending his god, nor arecattle and monkeys usually drivenaway from crops, even when theyare consuming food desperatelyneeded by the starving. Here we see

false religion leading directly to badfarming.

Second, the Reformation gave toEurope a new understanding ofusing and enjoying the materialworld. The older asceticism was essentially rejected and a new workethic emerged which provided thedynamic for the economic explosionthat was to follow over the next fourcenturies. Third, the Puritans assisted mightily in the developmentof modern science and encouragedmen to master their material environment. ll (It is not well known, butof 68 men on the original list of theRoyal Society for whom informationon their religious orientation isavailable, 42 were Puritans.)12 Theywere instrumental in bringing theScientific Revolution, which provided the theoretical and technicalfoundation for the Industrial Revolution.t3 We should, moreover, notforget the influence of Puritanismon education. Universal education isan inheritance directly traceableback to the Reformers, and theirheirs, the Puritans.14

And finally, as Irving Kristol hasreminded us, ~~the Founding Fathersintended this nation to be capitalistand regarded it as the only set ofeconomic arrangements consistentwith the liberal democracy they hadestablished."15

The above represents, of course,only some of the more importanthistorical antecedents making for

1978 GUILT, RESPONSIBILITY AND. WESTERN PROSPERITY 199

Western prosperity. In relating thisback to present conditions in theThird World, are we not justified inbelieving that if they are ever toappreciably raise their materialstandard of living, they must firstraise their "spiritual, moral, and educational standards. Only byachieving a society com.m.itted toindividual responsibility and moralaccountability for both persons andinstitutions will they approach thematerial well-being of the West.

Is it any surprise that the developed nations not only have themost productive economies but thattheir citizens enjoy the greatest degree of freedom? As Friedrich vonHayek has stated: ((What strikes oneabove all is the general achievement. . . of practically all developingcountries which have embarked onthe road of consistent market economy to pull themselves out of themire of poverty. What also strikesone is the hopelessness of those whohave tried the road of socialistmethods."16 @

-FOOTNOTES-

IDavid Fyffe, "Responsibility," in JamesHastings, editor: Encyclopedia ofReligion andEthics, Vol. 10, p. 739. Scribners, 1908-1922.

2R. J. Rushdoony, Revolt Against Maturity,p. 89, Fairfax, Va.: Thoburn Press, 1977.

3IrvingKristol & Peter T. Bauer, Two Essays on Income Distribution and the OpenSociety, pp. 17, 18. Los Angeles: InternationalInstitute"for Economic Research, 1977.

4G. K. Chesterton, Orthodoxy, pp. 84, 85, 87.Garden City: Image Books, 1959.

5Ludwig von Mises, Planned Chaos, p. 17,Irvington, N.Y.: FEE, reprinted 1972.

6Julius Nyerere, African Affairs, pp. 242-50.April 1976, quoted in P. T. Bauer & B. S.Vamey, Commentary, ((Against the NewEconomic Order," p. 27. April 1976.

7Lewis H. Gann, Neo-Colonialism, Imperialism, and the 'New Class', p. 10. MenloPark, Ca.: Institute for Humane Studies, Inc.,1975.

8Ibid., pp. 4, 5.9See P. T. Bauer, Dissent on Development,

Cambridge: Harvard University Press, 1972.lOp. T. Bauer & B. S. Yamey, Commentary,

"Against the'New Economic Order," p. 27,April 1976.

uSee R. Hooykaas, Religion & the Rise ofModern Science, pp. 135-149, Grand Rapids:Eerdmans, 1961. Also Christopher Hill, TheCentury of Revolution, pp. 92-4, 179-81, NewYork: W. W. Norton, 1961.

12R. K. Merton, Social Theory and SocialStructure, p. 584ff., New York: The Free Press,1967.

13Kurt Mendelssohn, The Secret of WesternDomination, New York: Praeger, 1976.

14See Hans J. Hillerbrand, The World of theReformation, p. 212 f., New York: Scribners,1973. Also Harold J. Grimm, The ReformationEra: 1500-1650J p. 592 f., New York: Macmillan, 1954.

15Irving Kristol, The Public Interest, "OnCorporate Capitalism in America," number 41,Fall 1975, p. 124.

16Quoted on the editorial page of the WallStreet Journal, 6 January 1976.

Gary North

THEHIDDENCOSTS

OFFREE

LUNCHES

200

ffA distinguished economist . .. offersus the verity that there is no freelunch-to which I, a non-economist,reply: But of course there is! If youhave too much provision and I notenough, then when you yield a little,I may indeed have a free lunch."

-Irving Howe, New York Times,Nov. 27, 1976, p. 23.

* * *

This seems like such a clever response to the most universallyagreed-upon principle of economics,namely, the doctrine of scarce resources. After all, if the person with((too much provision" does yieldsome or all of his lunch to the otherindividual, the lunch is free ofcharge to the recipient, isn't it? Hehas had to give up nothing in return,right?

Wrong.Let us consider the case of a

charitable donation. The person whohas had access to a lunch earned byhis own labors or capital may bewilling to share part of it with someone else. The recipient may prefer tothink of his share of the lunch assomething that was worthless to thesharing benefactor. In short, that hereally had (~too much provision," sothe extra portion was really free.

Dr. North Is editor of Biblical Economics Today,available free on request: P.O. Box 8567, Durham,N.C. 27707.

THE HIDDEN COSTS OF FREE LUNCHES 201

But the decision concerning whetheror not the donor had too much foodhad to be made by the donor. Healone could determine his appetite,not the recipient. It is possible thatthe donor would have thrown thefood away anyway. Instead, he gaveit to someone in need. At the time ofthQ gift, thQ donor may have regarded the extra portion as a freegood-something of no earthly benefit to him, the donor.

The donor paid for the lunch. Itwas not free of charge to him. Nexttime he may decide to order a smaller portion and pay less for hislunch. He may decide even to skip ameal, if the first one has drained hisresources. As the economic actor, hemay have regarded the extra food asa free good in his value scale, so hewas willing to give it away. But menhave an incentive to reduce theirpurchases of goods and services thatthey think will prove excess to theirneeds. To avoid waste, they conserveresources. This means that the supply of free lunches will always belimited. Rare is the case of a trulyfree lunch, meaning a lunch thathas zero value to the owner. Suchlunches involve prior waste, and themarket pressures all participants toreduce waste by making better predictions about their need for a particular resource in the future, including the immediate future. Wetell children not to take more foodthan they can eat. ~~your eyes are

bigger than your stomach," we say.When children start paying for theirown meals, their eyes get smaller.

Even a zero-value (to the owner)lunch involves cost. Ownership always involves responsibility for theuse of any resource. If a man has anextra lunch in front ofhim, he has tomakQ a decision. Should he throw itaway? Should he offer it to the highest bidder? Only if there are no bidders at any price, is the lunch trulyof no value to the owner. Should hegive it away? To whom should hegive it away? Who is most deserving? There is no such thing as zeroresponsibility ownership, whateverthe costs of lunches may be.

The recipient of charity then facesa choice. Should he say thank you tothe donor? Should he thereby acknowledge his status as a beneficiary of another man's wealth, evenif the form of that wealth was useless to the donor? Should the recipient be grateful? Should he be resentful at the other man's wealth? Hehas placed himself in a position ofsubordination. There are many people who resent their position as beneficiaries. Jealousy (wantinganother man's goods) and envy(wanting no one to have such goods)spring up in the hearts of recipients.They find themselves eaten upspiritually by either or both of thesetwo forms of resentment. They find,in short, that the lunch was not free.They had to give up something in


order to get it: pride, self-confidence,a feeling of independence, or peaceofmind (in the case of the resentful).

Coercive Redistribution

The idea that the person who has~~too much provision" ought to beforced to ~~yield" the excess portiontransforms the whole idea of thehypothetical free lunch. A legal obligation, like the signs that say((yield to pedestrians," has beencreated. But we are all pedestriansfrom time to time, and we all pay thetaxes to operate the streets, so we donot pass class-conflict legislationwhen we propose street safety signs.In the case of free lunches, we act interms of a philosophy of economicclass and class antagonism.

The person who wants the freelunch arbitrarily asserts that thelunch is unnecessary to the owner.He then uses political force to confiscate the lunch, either for himself,or for those who can benefit him(e.g., voters), or for those who willesteem him highly for being sogenerous with somebody else's resources. He receives some sort ofbenefit from the act of confiscation.

Was the lunch really free? Certainly, it was not free for the original owner. Even if he really regarded it as a zero-value resource,he probably does not regard his rightto do what he wants to with hisresource as something of zero value.The act of confiscation infringes on

the right of ownership-if nothingelse, with his right to give away thelunch to that person whom he regards as most deserving. But theargument does not concern itselfwith the costs borne by the originalowner. It is aimed at the hypothetical zero-cost lunch in the life of therecipient.

What has he really given up?First, and most important, he hasgiven up his personal commitmentto an ideal, namely, the right ofeachperson to the fruits of his labor.Second, he has given up a portion ofhis own future. If he should somehow become a person with an earnedlunch of his own, he will not be socertain of the protection which .thelaw will provide him when he wantsto make decisions concerning the useof his lunch. He has compromisedhis own confidence in the law ofproperty protection. Third, he hasguaranteed the reduction of supplyin the lunch market of the future.

Those who have earned lunchesfor themselves will not be equallyhappy to continue to produce theresources necessary to buy lunchesand then see them confiscated. Themodern interventionist may havefaith that the lunch ·producers andlunch buyers of the world will go onforever, like the goose that laid thefamous golden· eggs. HIf we just refrain from cutting the goose's neck,we can get free golden eggs forever,"they argue. The trouble with such

1978 THE HIDDEN COSTS OF FREE LUNCHES 203

logic is that other, less rational,more greedy people will not listen towords of restraint once the egg confiscation philosophy has taken holdof a voting population, and even ifeveryone were to show restraint,golden egg-laying geese are not immortal. Those who rely on the confiscated productivity of others makethemselves dependent on the futuresupply of free lunches. They havegained free lunches at the cost ofself-reliance.

Self-esteem is not a zero-value resource. It is not talked about in thetextbooks advocating free lunches,or partially subsidized lunches, orattacking class-exploiting lunch production methods. Nevertheless, thetalk of Hwelfare rights," and theshouts of ~~legal obligation," and thesophisticated speculations concerning ~~entitlement" cannot successfullyevade the effects of the loss of selfesteem inherent in any system offree-lunch politics. The recipientsare like those little boys who havetheir big brothers beat up other little boys to take away their snackmoney. The older brother alwayswants payment in one way or theother, and the little brother has difficulty in working up a sense ofpride in what he has accomplished.Then, too, the other little boys mayhave big brothers-much biggerbrothers. Self-esteem is exchanged

for a free lunch and a lot of fearconcerning the future.

The Bottom Line

What has happened to ourhypothetical free lunch? It has costthe recipient self-confidence, as wellas his confidence in legal institutions. It has cost him his self-esteem.It has made him partially dependenton those who produce lunches, forthey have less incentive to producelunches in quantities sufficient forall those who want to be recipientsof free lunches. The politics of freelunches unleashes the forces ofjealousy and envy, showing peoplethat both evils can be put into lawwith impunity.

Free lunches, if legislated, are devastatingly expensive to the recipients. If you think otherwise, try tofind thankful beneficiaries of theUnited States' foreign aid programs.The lack of gratitude should be expected; we have promised men freelunches, and we have extracted aterrible price. Why should we expectapplause from those who have become dependent on us as never before? The price of self-esteem hasbeen discounted far too much by theadvocates and administrators of thepolitics of free lunches. The recipients have made more accurate estimates of the costs of legislated freelunches. @

Roger Donway

LIVINGTOGETHER

Is laissez-faire an unsociable system? Indifferent to cooperation?Hostile to fellow-feeling? From theabuse laissez-faire receives, onewould certainly suppose it was allthese things.

Indeed, one might supposelaissez-faire to be something of anultimate in unsociability. I haveseen it asserted, as an obvious truth,that under laissez-faire the major~ty

of people would be reduced to asub-human level-as though freedom were a type of anti-personnelweapon.

And that was from a Centrist'spoint of view. Further Left, theytake off the gloves. One popular radical economist speaks unhesitatingly of the ((ruthless amorality oflaissez-faire," and insinuates that

Mr. Donway deals as a free-lance student and writerwith the social implications of certain philosophicalissues.

204

even a moderate capitalist mustnumber Al Capone among hisheroes.

Really, it is an extraordinarystate of affairs. The system whosevery name proclaims a policy of((hands off' is attacked as a systemwhose hand is against every man.

Yet the idea of laissez-faire seemssimple enough to be understoodeven by those who disagree with it.Essentially, there is only one operative principle to be grasped: laissezfaire forbids aggressive coercion between people. That is almost allthere is to it.

It is just the consistency withwhich laissez-faire applies this prohibition that distinguishes it fromother systems of civil order. The useof force, other than defensively, isforbidden under laissez-faire to allcitizens, including public servants.

The result of practicing such con-

LIVING TOGETHER 205

sistency some call ~~liberty," andsome call ~~freedom." KennethBoulding has suggested we shouldcall it ~~peace," because the ban oncoercion is similar to internationalnonaggression.

Liberty Is Peaceful

That may be a bad idea, because ofthe differences between liberty andinternational nonaggression. Butthe suggestion does express this oneroot truth: that liberty is peaceful. Itfunctions by guaranteeing safetyfrom constraint.

Now why would anyone considerthat unsociable? What connection isthere between forswearing harmand forswearing humanity? Not toshanghai one's neighbor, not to ravage his land, not to expropriate hisproperty may be less than the lastword in fraternity, but it is a start.And in motive, it is more than astart.

If there is any hostility to community, surely, it lies with those whoreject the principle of laissez-faire.Their refusal to accept an armisticeis somehow unsettling.

When a moderate speaks in favorof this freedom or that, he is certainto say, ~~Of course, I'm not advocat-ing laissez-faire," and he means tobe reassuring. But where is thereassurance? If his auditors tookhim seriously, I should think, theywould leap from their seats and rushthe exits. For he has said, in effect,

that he accepts no standing ruleabout dealing peaceably with peaceable citizens. Not knowing his rulesfor dealing violently with peaceablecitizens, his listeners should hardlyfeel safe in his presence. Perhaps heis inclined to reject laissez-fairewhen he spots a pocket of poverty inhis trousers.

Obviously, things do not worklike that. Yet they do almost work inreverse. People really do shrinkfrom an advocacy of laissez-faire asthough it were an advocacy of barbarism. They actually hear, in a callfor freedom, a cry for havoc. Howhas so mad a reversal been accepted?

The charge against liberty cannotbe like the straightforward chargeagainst a coercive state-that itpushes people around. That much,at least, the explicit ban on coercionspares us. Yet somehow the impression is being given that liberty does,virtually, mean being pushedaround, and much worse besides.

Garry Wills, for instance, callslaissez-faire Hthe law of the jungle,"and it is a common enough description. But it is also a curiousdescription-of laissez-faire, to saynothing of jungles. For if laissezfaire is the jungle's law, it is a junglewhere the overriding rule is ~~Thou

shalt not use force," and where violence is the forbidden means of survival. It is a jungle where the lambcan lie down with the lion.


Surely, that is unpromIsIngground for the enemies of freedom.From such politics, not even themost resourceful could construct aferal image for liberty.

How Will Free People Behave?

In consequence, the attack on ccan_tisocial" freedom generally beginswith the nonpolitical side of a freesociety. It starts with a hypothesisabout how free people will use theirfreedom in their everyday lives.

The hypothesis is usually a wildone, as it happens, made withoutreference to the historical behavioror actual attitudes of free people.But nevertheless, the hypothesis, orguess, is made.

And how will free people behave?The guess is: Not well. The accusation of cJungle law" implies that freepeople will deal with one another aswarily and as meanly and as uncooperatively as they can. It suggests they will be as vicious as thelaw allows, and perhaps a littlemore.

A citizen living under freedom isexpected to suffer all the noncoercive evil his fellow citizens can inflict on him, and to enjoy as few ofthe benefits of cooperation as theycan arrange. The majority of peoplewill be reduced to a subhuman level,and so forth, and so on.

The obvious question is: Whyshould free people behave like this?And the typical answer is clear. Ac-

cording to those who make thecharge, there is an attitude thatgives rise to freedom, and this attitude is at bottom antisocial.

More specifically, the ethos behind liberty is said to take life as acompetition for survival, and winning that competition as the highestvalue. From this,. the internecinefray is inferred.

That is the slander, and apparently it is effective. How it can beeffective, though, is something of amystery. The odds against the slander's even surviving, I should think,are overwhelming.

After all, the ethos of liberty thatactually gave rise to liberty has notbeen lost in oblivion. The conceptionof a free community that actuallygave us free communities can stillbe learned. One would imagine thatdocuments recording these thingsmight, on any day, give the lie toaccusations about freedom's unsociability.

Shared Reason and Goodwill

To take a simple example: theDeclaration of Independence doesnot begin with a premise of battleroyal. It begins with a decent respectto the opinions of mankind as itsself-proclaimed motive; which is tosay, it begins with an assumption ofshared reason and goodwill.

The writings of John Locke, too,are not antisocial. They do not assume that people will be at each

1978 LIVING TOGETHER 207

other's throats. As a matter of fact,they assume that free people willgenerally associate in HPeace, GoodWill, Mutual Assistance, and Preservation."

That the charge of unsociable liberty has survived in the face.of thishistory is a wonder, but that it hassurvived the scrutiny of commonsense is a marvel. For the allegationof ~~f~ral freedom" is unbelievable onits face.

The first part of the charge, remember, says that free men considerthemselves to be engaged in a war ofall against all. And the second partsays that, consequently, they place atotal ban on coercion. Why wouldpeople fighting a life-or-deathstruggle do that? Why would theyenforce greater decorum than prevails at the average sporting event?Just psychologically, it is not aplausible sequence of action. Yet noone seems to notice.

I think we should ask why no onenotices. The allegation is a smear,undoubtedly. But if it were a smearonly, the smear would have beenexposed long ago. The charge is sooutlandish that it could not survivewithout help, and especially withoutinside help from its victims. Unfortunately, such help is easy to find.

To begin with, a notion of universal competition was once adduced inbehalf of freedom, by the SocialDarwinists of the late nineteenthcentury. It can be said that their

idea of competition was v~ry different from the savagery depicted bythe enemies of freedom. It can besaid that the Social Darwinists werenot the true heirs, philosophically,of those who authored our freedom.Nevertheless, they did tie freedomto universal competition, even ascharged.

And perhaps that tie is still made,here and there. A few apologists forsharp practice, I suppose, still usethe phrase ~~competition for survival" as a dodge and an excuse.

But if these are things that cannotbe changed, they are at worst minordifficulties. They are the kind of aidthat can be 'dragged up in support ofany straw man.

A second type of aid is much moredangerous, and it is also given to theenemies of freedom. Probably, it isthe most dangerous sort of aid thatcan be given to one's detractors, foraccording to an old rubric it actuallyimplies consent. This aid, of course,is silence.

A Weak Defense

Defenders of liberty have simplynot avowed some of the things thatgo with freedom, like sociability, cooperation, and goodwill. It is a common habit among defenders of freedom merely to recommend the prohibitions against .coercion withoutmentioning what sort of societythose prohibitions govern.

By way of example, that was


exactly the approach used abovehere to recommend laissez-faire.

What can a listener make of sucha presentation? How can he weigh apolitical ethic that says nothingabout the tenor of its proposed society? Will his fellow citizens, in thisproposed society, treat him as anally, or as an enemy, or will theytreat him with total indifference? Itis a matter of legitimate curiosity.

But commonly, a person who isasked to accept freedom cannot tellin the least what sort of existence heis being asked to accept. Is he beingasked to join with peaceful producers, or harmless nomads, or pacifiedflower children? If you are going tolive with people, the differences areimportant. The ~~look" of a free society, surely, must be part of the argument for a free society.

If it is not, if such details are notfilled in, the enemies of freedom willfill them in for us. In what manner,we have seen.

Before discussing the free society's ~~look," however, an objection toany such discussion must be noted.It is a simple and worthy objection.A free society, after all, is a tolerantsociety. It does not prescribe its citizens' peaceful behavior. How thencan we depict any general patternsof such behavior?

Evidently, the answer must lie inthe context of freedom. We shouldknow, for we have only too muchoccasion to see, that liberty does not

grow anywhere, anyhow, under anyconditions. It has emerged, when ithas emerged, from a fairly definiteattitude toward man and society. Ithas been rooted in an outlook, and ithas waned with the waning of thatoutlook.

Attitudes and Beliefs

The enemies of freedom are rightin this regard, and they havegrasped what few defenders oflaissez-faire have grasped. There isan ethos that gives rise to liberty,and it does tell us something aboutfree people. By noting the attitudesand beliefs that generate freedom,we can know something about theattitudes and actions of free peoplein their everyday lives.

The question is, therefore: whatoutlook gives rise to liberty, andwhat does it tell us? How does itsuggest free people will behave?Specifically, can we say with anyconfidence how free people will viewone another, and what use they willmake of their fellows?

Obviously, I think we can.A few general facts about man

and society, variously expressed atvarious times, have been thegroundwork of freedom. To put itsimply, we might say that freedomis based on three commonplace beliefs.

The first of these holds thathuman life is at bottom individual.To live-to discover what man needs

1978 LIVING TOGETHER 209

and produce it-is something doneby a person. It is a problem for themind, and the mind is individual.

The point must be stated carefully, for it is easily misrepresented.Few of us could live outside society,and fewer of us would want to try.But the reason why is important. Itis not, as some collectivists think,that man exists like an ant, only asa member of his group. In fact, it isnot a problem of what we are at all.It is only a problem of what the taskis, namely, Herculean. Strip awaythe aid, the arts, and the artifacts ofcivilization, and what remains is abrutal struggle, if indeed anythingremains.

The second belief, then, is equallycommonplace: human association isthe greatest of all the tools that canbe used to make Iiving easier.Thrnugh the division of labor,through the accumulation of knowledge, and through the accumulationof capital, human association canact as an enormous lever on theenergies a man devotes to his attempt to live. And the results areobvious, attested by the presence ofsome four billion people. In society,survival is merely a man-sized task.

Friendship and Love

Nor is productive cooperation theonly benefit of society. To the material aid that arises from association,we may add all that can be saidabout friendship, camaraderie, loy-

alty, and love. These, too, make living easier and are part of society'spromise.

In short, if we want to live, witheach other is the way to do it. Livingis the task, ((with each other" is thetool. And the tool is practically indispensable.

The third belief of liberty buildson this. It is: that association mustnot be turned against an individual's attempt to live. The tool mustnot be turned against its purpose. Toobserve this is not to disparage association, but to care for it. It is toinsist that association not be perverted from its ends.

Admittedly, the task of ensuringthat association does not turnagainst life can be a difficult job, andit becomes more difficult as societybecomes more complex. Yet oneprinciple remains perspicuousthroughout the complications. Wecannot allow anyone to constrainanother from acting on his ownjudgment. That, we can say, undercuts the attempt to live at its source;and above all, it undercuts the attempt to live together. If we aregoing to live together, in the fullsense of both terms, we must insiston living peaceably.

The consistent application of thisprinciple is laissez-faire.

When one understands freedom asemerging from such beliefs, one understands in addition how much canbe fairly said about the look of a free

210 THE FREEMAN

society. It is by no means the closedbook it is sometimes considered.

We can see, for example, what sortof mutual admiration is likely tobind people in a free society. Asliberty is rooted in the problem ofliving, esteem is likely to follow productiveness, and the great producers, who make our lives qualitativelyeasier, will obviously tend tobe major figures. The Jeffersonians,we know, gave great honor to thosewho discovered practical knowledge,and· that estimate will probably bepart of the Jeffersonian outlookwhenever it reappears.

Again, by understanding the rootsof liberty, we can see why a freesociety is a generous society. Alexisde Tocquevilleremarked on this aspect of liberty. He said of the freecitizen, vis-a-vis his fellows: HAs hesees no particular ground of animosity to them, since he is never eithertheir master or their slave, his heartreadily leans to the side of kindness."

And at that, Tocqueville wasthinking of freedom only as ((liveand let live," as being neither slavenor master. When we think of freedom as ((living together," with eachof our fellow citizens an actual orpotential ally, how much more ourhearts must lean toward kindness.

But most of all, by seeing theground of freedom, we can see howintensely sociable it is. The idea thatliberty is based on a competition for

survival becomes ludicrous. Libertyis based on a cooperation for survival.

Even the specific economicphenomenon of competition exhibitsthis cooperativeness. For economiccompetition is essentially the struggle to be chosen as a trading partner. And, as trade is mutually beneficial, economic competition is thusessentially·a competition to cooperate. It is a struggle to reach what ismutually beneficial.

So finally we see, by looking at theroots of liberty, what a shame it isthat· defenders of freedom are silentabout·this sociability. Proponents ofa system that is based on cooperation ought not wince at the word((society," whose origins are in thenotion of an alliance. People whounderstand how humans can trulylive together should not be shy ofconviviality.

Great evils, undoubtedly, havebeen committed in the name ofcommunity and fraternity. Thewords have been used to damn theindividual's attempt to live, andthey have been used to cover allmanner of coercion. But it is termsof association that have been usedprecisely because, in proper context,those terms stand for great values.These values of community shouldbe reclaimed for liberty, not onlybecause the coercive state pervertsthem, but because the free state doesnot. ,

Leland P. Cade

The Farm Strike-

Will It DoMore HarmThan Good?

THE current farm ttstrike" is an expression offrustration over low farmprices. No doubt about it, farmprices are low, farm expenses arehigh and the result is desperation..Economic security is flimsy, unpredictable, as changeable as theweather.

All of agriculture is now on frontand center stage as the strike makesheadlines in magazines and newspapers and on TV and radio. The 200million plus audience wonders whatis going on, what is causing all theconcern. If viewers are impressed,the strike could turn out to be a plus;if viewers get disgusted, the strikecould turn out to be a liability for allof agriculture.

This article is reprinted by permission from theJanuary 5, 1978 issue of the Montana FarmerStockman, of which Mr. Cade is Montana Editor.

Participants hope for results inthe form of better prices. But isthere a chance of this happening?And if the whole incident turns outto be a badly engineered dream, towhere does the credibility of theAmerican farmer go?

Meetings around Montana havebeen emotional. Very little has beenpresented in the form of basic questions or of basic answers. Since thestrike strategy is so new for agriculture, there are many questions thatshould be faced squarely.

Strike leaders want 100 per centof parity and their focal point isPresident Carter and SecretaryBergland. And the questions startcoming. Since when is Uncle Sam ina position to determine the full priceof a commodity-and pay it too?Since when is Uncle Sam to serve as

211


a substitute for the market place?How does the message from thestrikers to Congress and the President compare to the message of thefarm organizations which have beenconcerned for years and years aboutfarm prices?

One leader in Montana agriculture asked the writer recently,ttWhere were these people when weneeded them?"

Presumably everyone involved inagriculture believes in privateenterprise, which exists on the assumption that opportunity and riskgo together. Are strikers asking forgovernment to take the risk, butleave the opportunity to individualhands? Will the result be one stepcloser to government taking over allof agriculture?

Another agricultural leader commented to the writer, ttWhat everhappened to the right to go broke?"

Is there a possibility that the focusof the strike is on the wrong topic -atthe wrong time? Could it be thatexcesses of the federal governmentare the real culprit, and just now weare forcing a late payment out of thefarm sector?

Excesses of the federal government have been enormous and continuing right up to the farmsteadoffice where the books are maintained. The list of excesses is longand frightening. \Ve are now a halftrillion dollars indebt-$60 billion

more this year alone. Before election, candidates talk about balancing the budget-but they never getserious after election. The Social Security system is a rip-off of the firstmagnitude because it is basically awelfare program. There is absolutely no proof that the pastgovernment farm program, or thepresent farm program, will help agriculture one tiny bit, yet government continues to give this impression.

Government is out of control withall of its controls-the new federalestate tax law is considered by manyan outright fraud-it is far worsethan the old law, yet was enacted asttreform."

Could it be that the problem isreally the federal government withall its excesses, and that the realproblem is being"bypassed, ignored,not recognized?

More questions. If the strikemovement is successful in getting $5wheat, then who gets to sell? Andwho-doesn't? And what then will bethe price for the individual whodoesn't get to sell?

If $5 wheat reduces consumption-and a higher price alwaysdoes-then what price for additionalbushels that might be produced?American agriculture has an enormous capacity to respond to higherprices. The price of grain right nowis without a doubt a direct result of

1978 THE FARM STRIKE 213

the last time wheat went to $5. Evenat the present $3, the market doesn'twant all that grain. How much lesswill the market want at $5? Andthen what is the price of grain whensome is sold at $5 and some not atall?

If picketing actually stops the flowof agricultural commodities, couldthe situation be made worse insteadof better? For example, assume thatpicketing stops the flow of beef, avery perishable product. Producerswill keep the beef off the market atan increased cost. Sooner or laterthe beef will have to enter the market with a rush. Every farmerknows that a rush on the marketmeans lower prices.

Or take grain. Suppose the strikeprevents wheat from getting intoexport channels. Buyers don't haveto buy their grain from us; there areother sources. So they go elsewhere.Which leaves more, not less, grainin the U.S. without a market. Couldthe strike, if effective, make mattersworse instead of better?

Has the law of supply and demandbeen repealed? Some strike leaderssay the law isn't working now. If itisn't working, then how can it bethat as more bushels of grain areproduced the price goes down? Or, asdemand increases, as it did when theprice went to $5, the price went up?Or as the beef supply increased, theprice went down? Or as there was a

demand for animals a few years ago,that the price of beef went way up?

Some get the idea that the law ofsupply and demand is working as itshould for agriculture, but that itisn't working in other segments ofthe economy. Not so.

Headline -~~25,000 steel workersout of work because foreigners willproduce it for less."

Headline - HForeign cars take agreater share of the market."

Headline -nFewer Americansnow belong to unions."

In some situations, the law worksslowly, in some more rapidly. But asfar as anyone knows, the law has notbeen repealed, and is still working.

More questions: Is it to be assumed that the market must takeall of the production of an industryat a stated price whether it wants itor not? If striking farmers cansomehow cause the market place totake their products at 100 per cent ofparity, then do the same rules applyto producers of toothpicks and fencing pliers? If Rule A states that inprivate enterprise the market has totake all of a commodity at 100 percent of parity, then presumably, itwould apply to both farmers andproducers of toothpicks and fencingpliers.

Or is the market place the bestplace to determine how much of acommodity should be produced?

The farm strike has all the earmarks of (1) assuming that the law

214 THE FREEMAN

of supply and demand has been repealed, (2) asking government totake over agriculture even thoughthis is not the view of many producers, (3) ignoring the basic purpose ofthe market place which determines,through price, how much of a commodity will be produced, (4) makingthe situation worse instead of betterby ignoring so many of the basicforces at work.

The selling price of farm commodities is the problem that staresthe farm bookkeeper in the face. Butit isn't the basic problem. The basic

No Special Privileges

problem is the excesses of the federal government that has over-spentand promoted rapid inflation; deceived the farm population intothinking that government can dothings it can't do; legislated aneconomy with unfair advantagesand disadvantages. Legislators inWashington should be hearing thereason for low farm prices, not justthe story that prices are low. Sooneror later the bills have to be paid, andAmerican agriculture is now payingthe bills for the past excesses of thegovernment. @

IDEAS ON

LIBERTY

IN the limited government society, where government gives no specialprivileges or subsidies, but confines itself to defending personal freedomand the right of private property, men will naturally form voluntaryassociations where group effort is more efficacious than solitary action.Voluntary associations do, then, indeed make prodigious contributionsto the progress of mankind. They diversify, enrich, harmonize, andstabilize society. In a regime of unlimited government, however, strongprivate associations expend their effort in a quest for special privilege andadvantage. Disguised anarchy, large-scale power structures, and chaosare the necessary long-run consequences.

The fundamental duty of the state in a free society is to prevent anyperson or group from infringing on the rights of others. Failing toperform this task-and our government is today failing to performit-the modern state is guilty of the most profoundly damaging dereliction ofduty. Instead of being the servant of the community, it becomes aco-conspirator against the community. Instead of waging unceasing waragainst the enemies of society, it joins with them in a league of mutualassistance against society.

SYLVESTER PETRO, "The Perversion of Pluralism"

Hans F. Sennholz

LEVELSOFDISCUSSION

THE NOVICE· in economic and socialthought is bewildered by the greatvariety of competing philosophies,ideologies and doctrines that vie forhis support. In desperation aboutthe apparent confusion, he mayshun the social sciences altogetherand seek other knowledge. As ayoung student, Albert Einstein despaired about economics and turnedhis great intellectual powers towardphysics. Many others of lesser talentmay just imbibe the brand ofthought that is fashionable· at themoment. Or they may readily acceptthat which is available at their particular institution of learning.Others may temporarily suspendtheir judgment until they have

Dr. Sennholz heads the Department of Economics atGrove City College and is a noted writer and lectureron monetary and economic affairs.

thoroughly analyzed the variousschools of thought. As students, theymay be sitting at the feet of thegreat scholars anywhere in theworld until, after much deliberationand research, they are prepared totake a position of their own.

For the scholar who soberly anddeliberately pursues knowledge,there is a short-cut to the issue. Hemay simply judge the level of scientific discussion in which each of thecontending schools is engaged. Thelevel may range from the most exacting dispassionate analysis of a subject matter to the most primitiveemotional exchange of debate tricksthat negate any pretense of scholarship. The latter may be very popular with the masses of people whoprefer entertainment over enlightenment. The seeker of truth

215


has no choice but to listen to seriousscientific discussion.

Many years ago Eugen vonBohm-Bawerk, Austria's foremosteconomist and statesman at the turnof the century, described his searchfor knowledge. In his critique of thewritings of Marx and Rodbertus hewas looking at the exploitationtheory ~~with its best foot forward."He tried to adhere to what we todaywould call ((a policy of equal opportunity for all contending doctrines."In the language of the Continentalaristocrat: ((He who would be victorious on the field of scientific research, must allow his adversary toadvance in all the panoply of hisarmor and in the fullness of hisstrength."!

The great writings that havepassed the test of time reflect thiscalm confidence in the ultimate victory of truth over error. Surely theyrecognize that man is a creature ofimpulse and emotion and that he isperpetually swayed by his interests,passions and vices. But man wasalso given his power of reasoningwhich makes way for revelation andknowledge. Reason is the candle inman's hand which enables him toexplore and discover.

Popular writings may appeal topassions and emotions. But the tastefor emotion is a very fickle taste thatchanges continually and fatuously.

lCapital and Interest (South Holland, illinois:Libertarian Press, 1959), Vol. I, p. 250.

The writers who, for the applause orgratuity of the moment, appeal tosuch tastes are riding the waves ofhuman folly that will swallow themin the end.

Jokes and Insinuations

Most contemporary writers on social matters, even the most illustrious among them, are merely skillfulsurfboard riders whom the nextwave may engulf. They entertaintheir readers with wit, jest and jocularity, carefully avoiding any serious discussion with knowledgeableopponents. They may ignore theircritics entirely or, if this can nolonger be done, shoot at them withmalice and hatred. A poor joke maytake the place of a rational reply.

Paul A. Samuelson, the vocalspokesman for post-Keynesian political economy and Nobel laureate ineconomics, mostly ignores the writings in defense of individual freedom and the private property order.In his Economics, the textbook formillions of American students, hebrushes them aside Has conservativecounterattacks against mainstreameconomics." He neither defines nordescribes these counterattacks, buthaving announced them in a boldface title he demolishes them with afour-line gesture of disgust. Withselfishness, ignorance, and malice((there is not much intellectual arguing that can be done." (10th ed., p.847)

1978 LEVELS OF DISCUSSION 217

He devotes half a page to ((ChicagoSchool Libertarianism" of men likeFrank Knight, Henry C. Simons,Friedrich Hayek, and MiltonFriedman. He lumps them togetherunder a cryptic label and rejectsthem as ((provocative negations."His favorite target, Milton Friedman, is dispatched with an uglyjoke. ((If Milton Friedman had neverexisted, it would have been necessary to invent him." (p. 848)

But the champions of all-roundgovernment ownership or control inthe means of production are treatedwith utmost courtesy and respect.He devotes eight pages of textsupplemented by eight pages of appendix to ((eminent," ((competent,"and ((eloquent" advocates of radicaleconomics from Karl Marx to JohnG. Gurley. He quotes extensivelyfrom their writings without refutingany of their arguments. To Samuelson, Karl Marx ((was as much aphilosopher, historian, sociologist,as a revolutionist. And make nomistake. He was a learned man." (p.855) In fact, Samuelson echoes Engels: ((Marx was a genius ... the restof us were talented at best." (p. 853)

Samuelson is riding the highwaves of fashionable folly. It doesnot speak well for the AmericanAcademe to have made his writingsthe best sellers of our time. Anddepend on it, a society that builds itspolicies on such thought faces misfortune and calamity.

The writings of J. K. Galbraithare as popular with bureaucrats andpoliticians as Samuelson's workwith academicians. It is true, Galbraith abstains from crude personalattacks on authors who disagreewith him. He merely ignores them.He is utterly unaware of the subjective-value theory and its important ramifications. In his own bookon Money (Houghton Mifflin Co.,1975) he does not deal with a singlemonetary thought of the Austrianwriters. But he mentions Joseph A.Schumpeter, Friedrich von Hayek,Ludwig von Mises, GottfriedHaberler, Fritz Machlup and OskarMorgenstern, composing ((theworld's most distinguished coterie ofconservative economists." Havinglived through Austrian inflationthey all shared ((a profound mistrustof any action that seemed to riskinflation along with an even greaterdistaste for anything that seemed tosuggest socialism." (p. 186) This isGalbraith's only reference to aschool of thought that for more thana century has spearheaded the scientific discussion of money and thesystems of social organization.

Galbraith is a clever phrasemaker. Almost instinctively he usesfigurative or metaphorical termsthat are favorable to his contentionsand unfavorable to those of his critics. Pre-Galbraith economic knowledge is ((conventional wisdom"which is ((obsolete" and ((pessimis-


tIc'." After that rhetoric so brilliantlyflavored with the spices of intellectual omniscience, who would havethe courage to identify. with ~~conventional" and ~~obsolete" knowledge? Who would care to join ~~the

coterie"? For Galbraith any furtherdiscussion is redundant.

Talking To The Audience

Most academic writers do notpainstakingly analyze the theoriesand arguments with which they disagree. Ittakes great effort and laborto reach beyond a familiar body ofthought and wade through the armory of a different school. Indeed, itis much easier to talk to one's ownaudience and seek its applause. TheKeynesian writers are scribbling fortheir followers, the ~~radical econ-omists" for theirs.

Where a particular assertion is inneed of verification and support,they may appeal to authority ratherthan rely on their own reasoning.They may cite another writer ofsimilar persuasion, a member oftheir own school of thought.Samuelson may quote Solow andSolow, Samuelson. Neither of themknows, or cares to know, what Misesand Hayek have written about thesubject matter.

The great writers whose workssurvive the test of time reach beyond their particular audiences andseek truth regardless of its popularity. They analyze doctrines and

theories; they do not psychoanalyzetheir opponents. They refute errorsand fallacies, they do not malign theperson who errs. They do not engagein propaganda, they search for truthno matter where it should be found.In the interests of science they pursue the truth even if society shoulddislike and reject it. They do notprimarily teach that which theyknow, but endeavor to discover thatwhich they do not yet understand.To seek for the truth, for the sake ofknowing the truth, is their first objective.

Human understanding is alwaysliable to error; infallibility is deniedto man. Therefore, error needs to beexposed and corrected. This is theproper function of scientific critique.But it must not just destroy and pulldown, it must direct attention to theexcellent and positive.

Emphasize the Positive

Error must not be permitted torun its course and work its harm. Itmust be confronted and refuted inorder to make way for truth. But itis difficult to decide 'which fallacyshould command our attention andeffort, and which one should be ignored. Ludwig von Mises consideredit an important task for youngscholars to confront and explodepopular fallacies. To recognize errorand refute it was a minimumrequirement for doctoral candidatesand prospective economists.

1978 LEVELS OF DISCUSSION 219

Leonard Read built his creativeefforts on the observation that ~~ac

tion that is wholly against must leadto inaction as soon as it is successful." In all his writings and the activities ofhis Foundation, he and hisassociates are emphasizing the positive, bringing to light that which isright. They are convinced that onlypositive views of truth show the wayand can lead to action. For this reason they try to avoid the arena ofheated debate and criticism, and instead, proceed on the steady course

A Cage of Apes

of learning and explaining the freedom philosophy and its miraculousresults.

And yet, all findings must besubmitted to the test of free discussion which is a reliable friend oftruth. Trickery and emotion in argument betray a conscious weakness of the cause and often signaldespair. Indeed, we may be able tojudge our adversaries, as they mayjudge us, by the levels of discussion. @

IDEAS ON

LIBERTY

BLIND conformity, regimentation, and loss of the individual in the massare both national and individual suicide. When we have reduced theworld to a cage of apes, each imitating the other, we may be perfectlysure that we will be apes and nothing more. For leadership does notdevelop in an atmosphere that provides no opportunity for change,growth, and self-determination.

God gave you legs on which to stand, and may He forgive you if youuse them only as something with which to run away from reality. Yet hewho takes a stand on anything today is in danger of being torn to piecesby those who run with the pack. Do you dare to be different?

Despite all interpretations of the Constitution to the contrary, manstill has innate and inalienable rights. One of these is the right to be anindividual. But this right is also a responsibility. If you refuse theresponsibility, as so many people today are doing, you will be deprived ofthe right-as has happened in almost every other country in the world.The hour calls for people who dare to be individuals in a world where itis fast becoming improper to be anything but apes.

KENNETH W. SOLLITI, "Do You Dare to Be Different?"

Fred E. Foldvary

Is theFree Market

Ethical?

FREE-MARKET economists haveamply demonstrated and documented the fact that free enterprise is the most efficient and productive way to provide for people'seconomic needs and desires. Thesimple but powerful logic of supplyand demand is irrefutable, and eventhe critics of the free market acknowledge that the ~~invisiblehand"of self-interest can produce and distribute goods and services withoutany need for central planning andcontrol.

Yet, the pervasive critics and opponents have succeeded in convincing much of the world that there issomething sinister or immoral aboutthe free market and private enterprise. Even when they acknowledgeits efficiency, they claim that free

Mr. Foldvary does free-lance writing and is a systems analyst at the Educational Testing Service inBerkeley, California.

220

enterprise is somehow unfair or inherently exploitive. Even when theyagree that the free market is productive, they argue that it producesthe ~~wrong" goods, too much advertising, for instance, or too manyluxury goods, and not enough ~~pub

lic goods" such as education.The opposition to free markets,

then, is often not so much aneconomic claim as a moral one.Marxists, for example, claim thatprofit is the taking away from theworkers part of the value which theyput into their products, a value that,in their view, rightfully belongs tothe workers. Less radical advocatesof government planning claim thatthough the free market may be efficient, it does not produce the goodsthat people ~~really need," such ashealth care, or that the inequalitiesofwealth resulting from free marketforces are for some reason wrong.

IS THE FREE MARKET ETHICAL? 221

When one speaks of what peopleshould consume, or what a workershould earn, these cCshoulds" aremoral considerations. These aremoral attacks on the free market,which must be answered by moralarguments, since they are based ongoals and values rather than factsabout how an economy works. So letus examine the question, is the freemarket ethical? In order to answerthat question, we must first ask,what exactly is a free market?

Assuming we know what a ccmar_ket" is, the question hinges on theword C(free." In the context ofsociety,C(free" means free from the coercionof others. More specifically, it meansan absence of coercive harm, whichincludes coercive restrictions. A person is free when he can buy, produce, and sell whatever commodityor service he desires, with noarbitrary interl'erence from others. Thus,the market is free when all the individuals in it have this freedom.

In a free market the transactionsare voluntary. A market is unfree tothe degree that people are forced toproduce according to some decreedmethod, or trade at a dictated priceor quantity, or give up their earnings and profits to finance somepolitically chosen ((good works."

Opponents of free markets oftencriticize the inequalities of wealththat may result from it. One premisewhich they will generally agree

with is the moral equality of man,that all human beings are equal inhuman rights. Moral equality implies that no one may claim to bemorally superior to others, and thatno one may impose his beliefs, values, and desires on another, forthose. of one person have equalstanding with those of anyone else.

This means that if one person believes that certain goods cCshould" beproduced, he has no moral right toforce another to comply with thispersonal belief. Each person has hisown unique personality and his ownneeds and desires, and moral equality implies that each person has theequal right to decide how he shouldlive, including how he will work andwhat he shall buy and sell.

Thus, the basic moral principlecompatible with moral equality isthat no one may impose his personalwill on another. One may use forceonly in self-defense. Otherwise,coercion is morally wrong, and thatimplies that people have the right todo whatever does not coercivelyharm others. Actions which do notcoerce others are morally right, or atleast not wrong, from society's pointof view. For example, if someonesells cigarettes, he could be accusedof selling something harmful tohealth, but since their purchase isvoluntary, it is not coercive, andthus not wrong.

Since a free market is, by definition, one that is free from coercion, it

222 THE FREEMAN

follows that the free market is ethical; without coercion there is nomoral wrong, from society's viewpoint. If some people do not like theallocation of goods in a particularfree market, they are entitled totheir opinion and personal ethicalbeliefs, but not entitled to imposetheir values on others by force. Evenif they are in the majority, opponents of the free market who feelthat profits are nasty or that inequalities of wealth are wrong haveno right to inflict these personalopinions on others, just as they haveno right to force others to adhere totheir religious beliefs. So, not only isa free market ethical, but any othereconomic arrangement is inherentlyunethical, since it must involvecoercion!

In a free market, goods and services are worth what people believethey are worth and are willing to payfor. The free market, and only thefree market, allows people to act ontheir individual desires. Moralequality is not the equal right to thegood produced by the economy, butrather the equal right to be freefrom the coercion of others.

Government interference in thefree economy is not only wastefuland unnecessary; it is also wrongethically, just as wrong as theft,kidnaping, and trespassing arewhen committed by private individuals. Of course, markets can also becoercive without government in-

volvement. Slavery, for example, isnot a free-market institution, sincethe slaves are not voluntary workers. But slavery and other coercivepractices have generally been committed with government sanction.State monopolies, such as the post·office, and industries ((protected"from free competition, such astransportation, are coercive not onlyin taxing us to support the inefficient and superfluous bureaucraciesand pay higher prices, but in violating our rights to peacefully pursueour own business.

Those who oppose free marketsand use the power of government toenforce their personal doctrines areimposing their views on everyoneelse as though they were somehowmorally superior to the rest of us.

A free economy is part of a freesociety, one in which each personmay live by his own values. A freesociety has a free market for thesame reason it has free expressionand the freedom to choose one'slifestyle: because people have theright to be free from coercion in anyarea of life. Not only are the opponents of free markets wrong, in theirmoral arguments; their proposed alternatives are inherently immoralsince they are coercive.

The case for the free market existson firm moral ground: the free market, free from coercion, is the onlyethical market. @

·W)rld':t ".... th.'.'.\o,~ In 8

g«p9fanIae~

·ClarenceB.Carson

16. Sweden: The Paternal State

ONE of the most curious notions ofour era is that of the paternal state.Not that it lacks antecedents; iteven has a history, of sorts, goingback into the dim past of whichthere is little record. Nor is it curious because we ordinarily refer to itas the paternal state, for we do not.Ordinarily, it is called the welfarestate, or, by some of its proponents,the social service state. It is a notiononly. in the sense, then, that it is theidea which underlies the practices

In this series, Dr. Carson examines the connectionbetween ideology and the revolutions of our timeand traces the impact on several major countriesand the spread of the ideas and practices aroundthe world.

we have come to associate withsomething that is called the welfarestate.

The' welfare state notion does notstrike most people as odd or curious,so far as we can tell. Clearly, ifpoliticians can run for office and getelected on the basis that they willprovide a great variety of goodies,the idea is widely accepted. That itshould be so accepted, however, doesnot mean that it lacks curiosity; it israther testimony to the fact thatwhen an idea becomes sufficientlyfamiliar, no matter how peculiar itis, it can become a part of theperspective from which we seethings. Then it will seem strange

223


that at other times and placespeople did not see or do it that way.

The paternal state notion is curious, in the first place, because itmisconstrues the character of thestate. The state is not somethingthat can be likened to a father. Itdoes not beget, as a father has done.Nor is it a provider, as the father issupposed to be. The state, or government, is begat, but is itselfsterile, sexless, and forever barren.It has no means of its own and isincapable of producing any. It is, soto speak, an abstraction. Whateverthe state bestows, it must first takefrom those who have produced it.Unlike a real life father, it cannotlook after us; we must first lookafter it.

In the second place, the paternalstate is a curious notion when viewedin the light of most of history.Those who have governed have usually been the possessors of such ostentatious wealth as was abroad inthe land. They have usually been inpossession of the finest residences,the best clothes, the most servants,the finest conveyances, and whatever happen to be the going trappings of office. Far from being material benefactors of the people, theyhave usually been beneficiaries ofan unwilling largess from the people. They have entangled their peoples in dynastic wars, taken theirsubstance in order to realize thepersonal ambitions of rulers, and

all too often played havoc with thelives and goods of the people. Farfrom being father-like-seeking thegood of their children-, they haveall too often been robber-like andjailor-like. It is greatly to be doubtedthat the notion of the paternal statewould ever have arisen from an empirical study of history.

Family Ties

Even so, government, or the state,may have arisen on analogy withpaternity or as the paternal state.Historians have been generally ofthe view that government may havecome into being as rule over theextended family. The organization isusually referred to as the clan. Theclan was ruled over by the oldestmale, or the male from whom alltraced their lineage. If the orientation was maternal, or if allowancewas made for maternal rule, theruler might be the oldest female.The bounds of the state would be thelands claimed by the clan. Such anarrangement would, no doubt, be apaternal state. Nor would itscharacter change greatly if it wereenlarged to include several clansand these should be ruled by a council of elders. Family ties, at leastwithin clans, would make it stillfundamentally paternal. Undoubtedly, the task fell upon the elders ofproviding for and looking after thosein their care.

The rudiments of this idea can be

1978 SWEDEN: THE PATERNAL STATE 225

discerned in hereditary monarchyand similar arrangements. The kingwas not literally the father of hispeople, of course, but he could bethought of in that way. Somemonarchs have been described as~~father,"or ~(litt1e father." The coun-cil of elders might survive, too,under various names. (The Witanwas· some such council in England,for instance, as is the survivingHouse of Lords.) The RomanCatholic Church uses languagedrawn from paternity to describemany of its clergy. The hereditaryfeature of monarchy must derivefrom the paternal concept. While wemay doubt that the paternal statecould rightfully be applied tomonarchies, it does trace its roots tothe same idea.

Anathema to Socialists

What is curious here, however, isthat socialists should produce andchampion a paternal state. Virtually every idea in it has beenanathema to socialists. They haveever been ideologically opposed tomonarchy. They have been, in allinstances, convinced and committedrepublicans. The paternal state is aconservative idea. Modern socialismstems from the time of the FrenchRevolution, when the emphasis wasupon individual rights, when family, tradition, and the wholeparaphernalia from the past were inquestion. Custom and age were los-

ing veneration. Mechanical conceptswere replacing ancient ties of fleshand blood.

Moreover, conservatives haveplayed a role in advancing the paternal or welfare state. Disraeli inEngland, a leading conservative ofthe latter part of the nineteenthcentury, took a hand in introducingwelfare measures. Even more impressively, Otto von Bismarck, a reputed conservative and Germany'sleading political figure of the latterpart of the nineteenth century,brought welfarism to Germany. Asone history says, ((Between 1884 and1889 gigantic welfare schemes, thefirst of their kind in the modernworld, provided health, accident,and disability insurance, pensionsfor widows, orphans, and the aged,giving workers greater security andbetter living conditions."! It is notuncommon to read that conservatives enacted welfare measures inSweden.

However, writers often ascribethis penchant for welfare legislationin conservatives to untoward motives. Bismarck, it is sometimessaid, was end-playing the socialists.He may have been, of course, but wehave no way of being certain of hismotives. In any case, conservativesare as entitled to a presumption infavor of the purity of their motivesas anyone else. And for politicians toseek advantage through their actsonly appears strange to those who


can imagine large numbers of selfless people, something that is possible in the imagination but unlikelyin the real world. In short, if conservatives have, with some consistency,advanced welfarism the answershould be sought in conservatism,not in something they share witheveryone else.

And there is an explanationwithin conservatism. One of thefacets of conservatism is paternalism. The role of the father ashead of the household is an ancientand venerated practice. In an extended fashion, the role of the elderswithin the community as providersand carers for those in need is oflong establishment. That thosewho-have ought to reach out towardand lend assistance to those-whohave-not is one of the deepestsprings of conservatism. Thus arethe bonds of community knit together and the common humanity ofthose within it confirmed. Conservatives in power in a state have atendency to devise and support thepaternal state.

The Conservative Element

This may be somewhat confusingto many of those who think of themselves as conservatives in the UnitedStates. Many thoughtful Americanconservatives are not in the leastsympathetic with governmentalpaternalism (though there are thosewho are). Indeed, it can be argued

that to be conservative in America isto be opposed to governmentalpaternalism. There is an historicalexplanation for this. A strenuouseffort was made at the founding ofthe United States to delimit paternalism. The doctrine of limits pervades our constitutional arrangements. Whatever arrangements afather wished to make for hishousehold was left to him. Associations of men were in like mannerleft to their devices to form communities and do within them whatthey would, so long as in so doingthey avoided doing some civii orcriminal injury. Such arrangementsrequired, ofcourse, that the force ofgovernment be denied to any and allin effecting their ends.

Itis commonly said that there is aseparation of church and state in theUnited States. The matter runs evendeeper than this. Though it isnowhere formally stated, there is aseparation of parenthood and thestate. At the founding of the UnitedStates the individual was releasedfrom the tutelage of the state, so tospeak. A profound distinction wasmade between what is the affair ofindividuals and what are affairs ofstate. That is the essence of constitutionalism in America. To defend those arrangements becamepolitical conservatism in America.Paternalism may have been augmented in America, but it was apaternalism divorced from politics.


European conservatism has a different flavor to it. The separationbetween parentage and the statethat occurred in America did notoccur generally in Europe. AnAmerican and a European conservative may share similar values, butthe import of these values is alteredby differences of perspective. Thedangers of the state were not soobvious to European conservativesas to Americans. Indeed, those whohold and wield power are unlikely tobe impressed with the danger of it,for men do not ordinarily considerthemselves dangerous. The paternalstance is, after all, ego flattering,and European conservatives kept itwithin the makeup of their perspective.

Itis not my point, however, thatthe animus to the creation of thewelfare state came from conservatives. That is about as likely as thatsow's ears come from silk purses.Socialism provided the yeast for thewelfare state; the people providedthe dough; and conservatism provided its intricate patterns. To put itanother way, the paternal or welfarestate is the end product, thus far, ofsocialist equalitarian prescriptionswhen they have been winnowedthrough the overlay of conservatismin society. The distributive thrust issocialist; the shifting bubbles arepopulist; and the paternalism is conservative.

As if all this were not irony

enough, this strange blend is oftenreferred to as liberalism, not only byAmerican writers but by those inother parts of the world as well.Historic liberalism was not in theleast paternal. Its main thrust in thenineteenth century was to limitgovernment, to free the individual,to permit trade without let or hindrance, to expand the suffrage andpopular government. The equalitythat animated liberals was one thatheld that no man having reachedseniority ought to be under thetutelage of another. In the quest forthis condition, liberals relied ratherheavily on extending the vote andestablishing or maintaining populargovernment. Now, however, wehave the paternal state which iswidely proclaimed as liberal. Proponents of the welfare state have gonefar toward co-opting the availableintellectual positions.

The Paternal Role

The topic at hand, of course, isSweden and the paternal state.Since Sweden does not proclaim itself to be a paternal state, and sincethe phrase is by no means generallyemployed, some proof of the proposition is in order.

What is a paternal state? It is, inbrief, a state which takes over andperforms the functions of a father, orthose of the dominant parent. Sincesome may have forgotten the role ofthe father and the grounds for it, it


may be helpful to recall it. It is onthe father's physical initiative thatthe act is begun by which conceptiontakes place. Since the male's physical condition is unaltered by theensuing pregnancy and since, in anycase, he is larger and stronger, it ishis responsibility and function toprovide for the female and the unborn infant during the period ofpregnancy. It is his task, of course,to make provision for the delivery ofthe child.

A newborn infant is helpless, orvery nearly so, having only the ability to breathe and the capacity totake nourishment. In this situation,the main task of the father is toprotect infant and mother and provide food, clothing, and shelter.Since the human child does not become large or strong or sufficientlywell developed to look after himselffor several years after birth, bothparents perform assorted functionsfor him. They not only provide forhis basic material needs but alsosuch medical care as he requires, forinstruction (education) in their culture, for his moral indoctrination,and for such training as may fit himfor becoming an adult.

To the father particularly belongsthe instruction and training of a son,and to the mother that of a daughter, assisted as they may be by thesurrounding community. As thechild grows toward manhood, hetakes on more and more the role of

the adult and becomes less and lessdependent on his parents. As theparents grow old and lose their powers the time arrives for the child toattend them in their decliningyears.

Cultural Prescriptions

In practice, of course, it does notalways happen that way. The fathercan terminate the relationship atany stage that he will. Nor does itnecessarily occur that mother andoffspring will perform in the waydescribed. Hence, there have usually been cultural prescriptions, religious sanctions, and, mayhap,legal enactments to insure the performance of these roles. The rolesare themselves founded in nature,but the support of them is cultural.

~~Paternal" is descriptive of andderives from the normal role of thefather during the formative years ofthe child. A paternal state is onewhich assumes or imitates this role.Sweden was one of the first and maybe thought of as the model of thepaternal state. Until a morethoroughgoing one is devised, Sweden is the paternal state.

A qualification is in order. Humanfathers have not been entirely replaced in Sweden. But a major shiftof the functions of paternity fromthe father to the state has takenplace.

To wit. There may be a gleam inthe prospective mother's eye before


conception ever takes place, a gleamaroused by the hope of reward. Atthe birth of an infant, the state stepsforth and awards the mother overone thousand kronor (the Swedishmonetary unit). Sometimes, ahuman father who was especiallypleased has bestowed gifts on thenew mother. The paternal state inSweden has removed the element ofchance; it is established by law andas sure as taxes.

Enter, the State

As incubation begins, the statestands by to perform vital paternalfunctions. There are ~~free" maternity clinics for expectant mothersand their unborn children, and PapaState will pay three-fourths of thecost of dental care. Should custom orremote location lead to the use of amidwife, the state will pay the fee. Ifthe expectant mother needs transport at her appointed time, the paternal state will pay for the cost ofthe taxi, even if the infant should beborn therein. Should they be so fortunate as to make it to the hospital,the service there is ~~free." If the newmother has been remunerativelyemployed, she need have no anxietyabout her job. The state has established that she may have up to atotal of six lllonths leave which maybe taken in any combination of priorto, during, and after the birth of thechild.

There is one fly in all this oint-

ment, however; in multiple births,the mother receives only one-halfthe award (only some 500 kronor)for each child above one.2

Having taken such pains thus far,it is hardly to be expected that thepaternal state will abandon motherand child at the hospital. It will, ofcourse, supplement the cost of housing for mother and child and, shouldthe human father deign to live withthem, for him as well. Should themother be a ~~single parent," Le., in asituation in which no wedding haspreceded the birth, the. state offersspecial attention and care. The statehas caused to be built and set asidefor their special use apartments forunmarried mothers. (As yet, no~~swinging single" apartments havebeen built for unwed fathers.) Thereis also a category known as a ~~one

parent family," in which the parentmay be either male or female, andthe state offers aid to them in theirundertaking.

Naturally, the paternal state provides support for each child regardless of the parental status of thosewith whom he dwells. The allowanceto the mother for each child is 900kronor per year. This particularpayment ceases at the age of sixteen. In addition, if one of his parents dies, the child receives a ~~pen

sion" of 1300 kronor. If both parentsshould die, the amount is increasedto 1820 kronor. These paymentsstop at the age of sixteen also. Espe-


cially needy families can apply forand get additional supplements foreach child. Mothers who grow wearyof attending children can apply tothe paternal state for a holidaygrant. The grant pays not only fortravel to and fro but also for thecosts while at the rest home. Ofcourse, there is industrial insuranceto protect workers from injury ordisease when they are at theiremployment (paid for by the employer as required by the state), butcompensation takes into account thevalue ofhousework lost as a result ofbeing harmed on the outside job.

Child Care and Education

The paternal state has not neglected to provide day nurseries forsmall children, although suchfacilities are said to be in short supply. There are nurseries where children may be placed for the day.There are also afternoon homes forchildren in school who can come tothem after school and be lookedafter and fed while the mother is atwork.

It should come as no surprise thatthe paternal state in Sweden provides for the formal education of thechildren. Of course, the schools are~~free," as are schoolbooks, dentalcare, and such psychological attention as the child may require. College and university students are assisted by various loans and grants.Nor is there any need for parents to

concern themselves about thecharacter or quality of education, forthat has been determined by thestate. Of late, there have even beentwo sorts of school in the land, one ofwhich was initially somewhat experimental.

Children are sometimes sick andafflicted in Sweden as elsewhere, asare also adults. All treatment inSwedish hospitals and clinics is~~free." If, however, a physician iscalled to the home, he must be paidby the patient who can then turn inthe receipt and get a refund of aboutthree-fourths of the amount of thebill. Taxis to and from hospitalsmust also be paid on the spot, butthe cost can be reclaimed by thepresentation of the receipt.

Once the child has grown up andis ready to marry, or at least set uphousekeeping on his own, thefatherly state is on hand to make thetransition easier. The state does notquite provide a dowry; it is rathermore like a combination of loans andaids. There are housing loans available, and the state will come forthwith up to 15 per cent of the collateral value of the house. In somecircumstances, a rent subsidy maybe forthcoming if that path is followed rather than purchase. A homefurnishing loan can be obtainedfrom the state also, with a maximum of 5000 kronor to those in thegreatest need.

Just as natural parents are re-


lieved of much of the responsibilityfor their children, so does the paternal state relieve children of thenecessity for caring for their parentsin old age. An elaborate system ofold age pensions is established. HTheidea is to provide every wageearner, on retirement, with a substantial pension directly relatedto-in practice about two-thirdsof-his or her earnings in his or herprime. There are upper and lowerlimits to qualifying incomes, thatpart of the income lying outsidethese lines not counting for the calculation of supplementary pension.The eligible sum is termed thepension-bearing income, and it is apercentage of this amount ... whichis payable by the employer in premiums. Self-employed persons mustpay their own."3 If an old person isnot living in suitable accommodations, he can apply for housing inblocks set aside for old people. If,because of some debility, he shouldneed occasional· assistance this canbe provided in his home. If he is nolonger able to look after himself, hecan go into an old peopie's home orinto hospitals for the chronically ill.

Why No Baby Boom?

Now here is an anomaly. It mightbe supposed that with much of theburden of the child hearing andrearing removed from natural parents there would be a great babyboom. Moreover, an additional

thrust in this direction has beenprovided by removing every stigmafrom bearing children out ofwedlock(if one may employ so dated a term).But it has not turned out that way.As one writer says, ((Sweden is extraordinary in its low birth rate andlow rate of population increase."4 Asa matter of fact, the lump sum payment to the mother on the birth of achild was devised· many years agowith the specific purpose of spurringan increase in births. To no avail.For some time now, Sweden hasbeen encouraging immigrants tocome in to augment the declining.work force.

Cause and effect in human actionis more complex than we may think.It takes place within a context muchbroader than man's simple legislation. and piddling interventions.There is a law in physics that ((Forevery action there is an equal andopposite reaction." (Italics added.)The working of the law may be illustrated in this fashion. When someone fires a gun there will be a kickfrom it; The kick from the gun is theequal and opposite reaction to theaction of the bullet being fired fromthe gun. Reverberations (or repetitions) of action and reaction continue until the stock of the gun isstill and the bullet has come to rest.The implications of this law are farreaching, and we are justified insupposing that they extend to allhappenings on this planet.


Muted ReactionWhat will be the equal and oppo

site reaction to the action of a paternal state conferring benefits onsome portion of the population? Noanswer can be made to such a question in the abstract. One might aswell ask how strong a kick a hunterwill receive from firing a gun. Therecoil of a weapon is, of course, indirect proportion to the size of theexplosion which propels the bulletfrom the gun. The size of the explosion is determined by the amount ofthe charge in the shell. There is nomeaningful limit to the potentialvariations in the charge.

On the other hand, the expressionof the recoil depends upon the materials used and the design of the gun.In some guns, the recoil comes out inthe rise of the barrel. In others, it isfelt in the stock of the weapon. Insome, there is no perceptible kick,owing to weight distribution in thegun. There are even what are called~~recoil-Iess" weapons, by which weunderstand not that the law of compensation has been abridged butthat the equal and opposite reactionhas been so cushioned and dispersedthat it can no longer be detected. Allthis is by way of saying that thecharacter of the equal and oppositereaction is determined by the variables of the context within whichthe action occurs. It is, so to speak, aconditioned effect.

It is, then, the conditions in Swe-

den that determine the reaction tothe actions of the welfare state. Bymany outward appearances Swedenis still a traditional land. There isthe monarch, the royal family, theestablished church, and a government with roots deep into the past.Long observed festivals are reenacted, and folk songs and dancesare performed as of yore. Much ofthe legislation which has broughtforth the paternal state has a conservative cast to it. It is conservativeto encourage young people to go outon their own and have their ownhousing. It is even more conservative to encourage marriage and thefounding of families. The nurtureand caring for children and seeingthat they are housed, fed, clothed,and educated has about it a conservative aroma. That people should belooked after in their old age is ofsimilar vintage.

The sound is not· to be taken forthe substance, however. Sweden is aprofoundly different land from whatit was at the beginning of this century. A traditional overlay survives;but beneath it, surrounding it, andnow overwhelming it, is somethingquite different. Sweden is under thesway of the idea that has the worldin its grip. Those who think of Sweden in terms only of a modifiedsocialism with certain economicpolicies have not begun to grasp theextent of the change.

The great change has come in the


rooting out of the moral, spiritual,and cultural foundations of the society. The established church isstill there; old churches still standsometimes and many new ones havebeen built. But attendance is exceedingly slim. Individuals are inthe church registers, but such astatus requires nothing by way ofreligious observance, and littl~ isdone. Marriages often take place inchurches but the frequent divorcessaw the bonds of ties in civil surroundings. A new ((morality" hasarisen, a morality without foundation in transcendent sanctions.Gradualism has slowly devouredwhat formerly existed and replacedit with something else.

A major tenet of the idea that hasthe world in its grip is that government shall concert all efforts andbring about a collective unity. Thepower over affairs is shifted fromindividuals and families inwardlydirected by custom, tradition, andmorality to a state driven by goalsproclaimed for the future. The acquisition of this power comes by wayof the promises which add up to apaternal state.

Motives Involved

What human motives are engagedfrom the populace in this shift ofpower to the state? Freud said thatman wishes to return to the womb.Whether this is so or not, the present writer cannot profess to know.

But it is clearly the case that thereare aspects of childhood to which wewould like to return if we have leftor to retain if we are still there.Perhaps the most prominent one isfreedom from responsibility. Thechild, the small child anyhow, everhas his material needs provided bysomeone else: he is suckled, diapered, warmed, and watched over byothers. As he grows a little older hecan arise at will, play until he istired at whatever amuses him, andrest until he has recuperated. His isa life without the nuisance of responsibility and bounded only by theaggravations there may be in theexercise of external authority overhim.

The paternal state grows on thetacit premise of restoring and maintaining an irresponsibility whichhas its roots in the childhood experience, then. It shifts the burdens ofthe adult to the state and, in hope,provides a perpetual childhood forthe citizenry.

Within this framework it can beseen why the equal and oppositereactions to the actions of the paternal state are not what might besupposed. Why, when the paternalstate has relieved so many of theburdens of parents and even provided rewards, is there not a babyboom in Sweden? Because-to put itin its simplest terms-the state hasnot relieved all the burdens, andthat is the underlying promise and

234 THE FREEMAN

the expectation which its actionsarouse.

Because expectant mothers growlarge and unwieldy, have ttmorning"sickness, and their feet and legs areapt to swell on them. Because aninfant is still brought forth in painand suffering, even if the ttfree" taximakes it to the ttfree" hospital. .Because children still require a greatdeal of attention, however much assistance the state may provide. Because the bearing of children has itsultimate meaning within the'framework of extended family,community, and moral and spiritualovertones. Because beaming grandparents are the human reward for anewborn child. Because the gathering of friends and relatives to inspect and ttooh" and ttah" over theinfant is a normal incentive. Because Divine injunction supports replenishing the earth with children.Because the normal consequence ofaroused sexual passion is conception.

Because socialists in devising thepaternal state have tampered withand cut away the framework of bearing and nurturing of children andthe purpose of the family. Becausethe idea of a perpetual child-likecarefree existence would requirethat there be no children for whomto care. Because contraceptives andabortions are in accord with thisidea rather than the bearing of children. Because the paternal state

substitutes a cold and impersonalmechanism for the warmth thatarises from the freedom and responsibility of normal human action. Because for every action there is anequal and opposite. reaction, thoughthe opposite reaction is the appropriate reaction to the action.

Because, in the final analysis, thepaternal state is an anomaly. It is ofthe same character as the notionthat there can be a rifle withoutrecoil. The paternaLstate is a notionborn of and promoted by hiding theconsequences as the, ttrecoil-Iess"rifle is an appearance achieved bydesign and materials. The state isan abstraction. Unlike a humanfather it neither toils nor spins. Allthat the state hands out as benefitsmust first be taken from those wholabor. It is time now to look at thecarefully concealed. other side of reality hidden by socialist rhetoric. @

Next: 17. Sweden: Tightening theScrews.

-FOOTNOTES-

lEugen Weber, A Modern History of Europe(New York: W. W. Norton, 1971), p. 813.

2These figures were taken from Paul B.Austin, The Swedes (New York:Praeger,1970) and should be considered as illustrativerather than final, since the amounts do changefrom time to time.

3/bid., pp. 84-85.4Donald S. Connery, The Scandinavians

(New York: Simon and Schuster, 1966), p. 392.

Lawrence W. Reed

WhatPrice ControlReally MeansttIn the great chessboard of humansociety," observed the eighteenthcentury Scot philosopher andeconomist Adam Smith, ttevery piecehas a principle of motion of its own,altogether different from that whichthe legislature might choose to impress upon it."

The belief that individuals arepawns to be pushed about by centralplanners is not new, as this statement by Smith clearly indicates. Indeed, socialism-the controlledsociety-has its roots in the actionsof primitive man. When the firstcave man clubbed his neighbor toexpropriate the food his neighborhad gathered, he gave blunt, physical expression to the essence ofsocialist society.

Mr. Reed is an instructor in economics at NorthwoodInstitute, Midland, Michigan.

Two centuries after Adam Smithpenned his eloquent defense of theright to be free from coercion, coercion is again in the ascendancy. It isseen by many as the ttquick fix," theanswer to chronic problems, apanacea that will bring order out ofchaos. In 1795, James Madison described this phenomenon as ttthe oldtrick of turning every contingencyinto a resource for accumulatingforce in goverment."

The issue of price control providesan excellent illustration. Invariably,as prices rise due to an expandingmoney supply, talk is heard thatgovernment must impose controls.The fact that such talk is becomingmore and more prevalent these daysmay be a warning that price controlsloom on the horizon. Therefore, it isabsolutely essential to the debate

235


that all be made aware of the trueimplications of government pricefixing. Just what is it that control ofprice by central planners means?What are we abandoning when weembrace the idea?

Forcing People to Conform

The object of price control is reallynot the control of trillions of numbers and dollar signs in the economy. Price control is merely an excuse to coercively dictate the termsof trade between people. The penalties for violating price control edictsare levied on individuals. Jails andfines are made for people, not forprices. In Revolutionary France,those individuals who dared to tradeat prices not in conformity with the~~Law of the Maximum" paid a visitto the guillotine.

When government fixes price,coercion is substituted for voluntaryexchange. Price is no longer determined peacefully in the marketplace of free and willing trade.Economic consequences must followand they are easily discernible inlight of the two functions of price.

One function is to allocate scarceresources. When anything is scarce,as all economic goods are, it must berationed. Supply must somehow beequated with demand. If the marketplace be imagined as a huge auction,the problem becomes one of whoshall get what quantity of the goodsto be auctioned. Do we draw straws,

or beat each other up until the number of survivors equals the numberof goods? Would it make sense to lineeveryone up, fire a gun, and declarethat the fastest runners shall receive the goods?

The economic way to ration scarceresources is through the price system. By way of the ~~market price,"supply and demand meet, the market is cleared, and scarce resourcesare allocated. In so doing, chronicshortages and surpluses areavoided, the productive process is leftunharmed, and peaceful exchangebecomes the reigning principle. It isa perfectly natural process; all thatis required for it to take place is formen to be left alone to pursue theirown desires and abilities.

Price also directs production, itssecond function. Businessmen areprofessional price-watchers. If consumer demand for a product increases, consumers are willing topay more for that product. This putspressure on price to rise, whichraises profit margins. In order totake advantage of this profitablesituation, businessmen increasetheir production. The process worksin the other direction too: decliningconsumer demand will mean fallingprice and falling profit margins. Inthat case, price will ~~signal" producers to abandon that line of production and enter another where thedemand is more urgent. In the freeeconomy, it is not necessary for the

1978 WHAT PRICE CONTROL REALLY MEANS 237

government to issue an edict to thefarmer, ttGrow wheat; the peoplewant bread." It is not necessary forthe government to instruct a manufacturer, HMake televisions; thepeople want entertainment." Themarvelous mechanism of price doesthe job far better than the noblestand wisest politician.

Economic Disruption

The economic consequence of government price control is economicdisruption. A controlled price willstill allocate resources, but not inaccordance with supply and demand. Likewise, a controlled pricewill still direct production, but notin the same directions as consumers,by their voluntary purchases, wouldhave dictated. The signals are falsified and distorted by fixed prices.The history of price control inAmerica and everywhere else hasbeen the history of shortages,queues, and popular disaffection.

The economic effect is but oneaspect of price control. A moralquestion is also involved. By whatright does any party coercively dictate the terms of trade betweenothers? By what twisted principle ofjustice is one penalized for tradingwith another at a mutually-agreedupon price?

Price control is a form of publictheft. In the name of ttthe publicgood," the authorities are empowered to force their particular val-

ues on others. The victims are allthose deprived of the opportunity totrade or to trade on terms whichthey regard as satisfactory. Pricecontrol breeds a spirit of lawlessness, a network of spies and informers,. and is unmistakably ahallmark of an immoral society.

To those who are committed toprice control, these argumentsperhaps will not be sufficient to dissuade them. They may reply thatwhatever evils price control mightproduce can be corrected at the ballot box. The people can supposedlyuse their political liberty to counterbalance their loss of economicliberty. To make this assumption isto ignore the manifest threat topolitical liberty that price controlposes.

It is no exaggeration that theeconomic order determines the political order. If people are so controlledeconomically that their every moveis subject to scrutiny by the State,then they can be effectively silencedby the State. ttControl of a man'ssubsistence is control of his will,"wrote Alexander Hamilton. It is inconceivable that economic freedomcan be lost while political freedomremains intact. A brief glance athistory confirms what theoryteaches.

In the mercantilist period,roughly 1500 to 1800, the State controlled the economy. The subjectsdid not elect their kings and queens.

238 THE FREEMAN

In the thousand years offeudalism, the State controlled theeconomy. The serfs did not vote theirmasters to power.

In modern-day Russia, the Statecontrols the economy and twohundred fifty million Russians aregoverned by a single political party.

In similar fashion, it is no coincidence that Adam Smith's ideas ofeconomic liberty nurtured ideas ofpolitical liberty in the nineteenthcentury. Because price controls em-

Closing the Market

power the government to establish avital command post over the economy, they would sow the seeds forthe loss of political liberty as well.

Will Americans endorse a policyof price control? If they have lostfaith in the free society they morethan likely will. If the power of priceis delivered from the market place tothe politicians, surely ignorance ofthe grave implications will be theproximate cause. @

IDEAS ON

LIBERTY

To TRADE is to exchange one item for another, as butter for coal. Eachparty to any trade is both a buyer and a seller, and a person must besatisfied in that dual capacity before he will trade voluntarily.

When the government intervenes to force a change from the freemarket price, the theory is that one of the parties to the trade will gainat the new price. The idea usually is to help the underdog, whether it bethe poor consumer and his family, or the poor farmer, or the poor infantindustry, or the poor employee, or the poor Defense Department of thegovernment, or whatever. But the theory is false. It still takes two tomake a trade. To arbitrarily change a price for the benefit ofone party tothe bargain necessarily means a change to the other party's disadvantage. And it is always that forgotten other party who will not bear theattempted charge. If the government raises the price of butter above itsfree market level, the owner of coal will not voluntarily trade as much asbefore. He doesn't want less butter for more coal. So, instead of helpingthe presumed underdog, the government intervention only drives fromthe market some of the chances for the underdog to get what he wantsthrough trade.

PAUL L. POIROT, "More than the Traffic Will Bear"

Edmund A. Opitz

ConstitutionalRestraints on Power

AMERICAN political institutions presuppose certain convictions abouthuman nature, the worth and prerogatives of persons, the meaning oflife, the distinction between rightand wrong, and the destiny of theindividual. The Colonists came totheir understanding of these matters as heirs of the intellectual andreligious heritage of Christendom-the culture whose shapingforces sprang from ancient Israel,Greece, and Rome.

Given the consensus of two centuries ago-which regarded man asa sovereign person under God-itwas only logical to structuregovernment so as to· expand opportunities for the exercise of personal

The Reverend Mr. Opitz is a member of the staff ofthe Foundation for Economic Education, a seminarlecturer, and author of the book, Religion and Capitalism: Allies, Not Enemies.

freedom. The Constitution is clearlydesigned to maximize each individual's equal right to pursue his ownpeaceful goals and enjoy the benefitsand responsibilities of ownership.

The Declaration of Independenceput into words what nearly everyonewas thinking, that personal rightsand immunities are ours because weare created beings, that is, we manifest a major purpose and intent ofthis universe. This implies a firmrejection of the alternative, which isto assume that we are the mere endproducts of natural and social forces,adrift in a meaningless cosmos. Forif the universe is meaningless, thenno way of life is any more meaningful than any other; in which casePower has no limits.

Our forebears had firm convictions about the purpose of life, andknew that in order to achieve life's

239


transcendent end Power must belimited: ((Resistance to tyrants isobedience to God," they declared. Iflife is viewed in these terms, howshall we conceive the proper scopeand competence of government?What is its role in society? Whatfunctions should we assign to it?

Government is the power structure of a society. This is the first andmost important fact about the political agency, that it has the legalauthority to coerce. The secondthing is to inquire whether thepower wielded by government isself-sprung, or delegated by a morecomprehensive authority than themerely political. Does governmentrule autonomously or by divineright; or is the real power locatedelsewhere and merely loaned to government? The Constitution is clearon this point; the power is in thepeople to lay down the laws whichPower must obey. They set it up;they tell it what to do.

((We, the People of the UnitedStates," reads the Preamble, ((do ordain and establish this Constitutionfor the United States of America."

Specific Limitations

The people empower an agency todo certain things for them as a nation, but if we isolate the provisionsthey laid down to limit government the prevailing intent or consensus which made the Constitutionits political tool becomes clearer.

The powers not delegated to the UnitedStates by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or tothe people. Amendment X

The people, furthermore, possess abody of rights by native endowmentabove and beyond those mentionedin the Constitution.

The enumeration in the Constitutionof certain rights, shall not be construed to deny or disparage others retained by the people. Amendment IX

These sovereign people shall be freeto worship, speak, and publishfreely.

Congress shall make no law respectingan establishment of religion, or prohibiting the free exercise thereof.

Amendment I

Congress shall make no law . . .abridging the freedom of speech.

Amendment I

Congress shall make no law ...abridging the freedom ... of the press.

Amendment I

Voluntary association is the corollary of individual liberty, and this isemphasized, as well as the right ofpetition.

Congress shall make no law ...abridging . . . the right of the peoplepeaceably to assemble. Amendment I

Congress shall make no law abridging... the right of the people ... to petition the Government for a redress ofgrievances. A mendment I

The old world divisions of mankind

1978 CONSTITUTIONAL RESTRAINTS ON POWER 241

into castes and orders of rank are tobe no more.

No title of nobility shall be granted bythe United States. Article I, 9

Every citizen shall have a right toparticipate in the processes bywhich the nation is governed; and,should he desire to run for publicoffice he shall not be put to a creedaltest.

The right of the citizens of the UnitedStates to vote shall not be denied orabridged....

Amendments XV and XIX

No religious test shall ever be requiredas a qualification to any office or public trust under the United States.

Article VI

Freedom to Trade;No Special Privilege

Commerce makes for a free andprosperous people, so restraints ontrade shall be removed.

No tax or duty shall be laid on articlesexported from any State.... Article I, 9

No preference shall be given by anyregulation of commerce or revenue tothe ports of one State over those ofanother. Article I, 9

Progressive taxation violates theprinciple of equal treatment underthe law-penalizes ability, and lowers productivity, so it is forbidden.

No capitation, or other direct, tax shallbe laid, unless in proportion to thecensus. . . . Article I, 9

The public treasury shall be inviolate; government shall not confereconomic privilege on some at theexpense of others.

No money shall be drawn from theTreasury, but in consequence of appropriations made by law. Article I, 9

Personal privacy shall be respectedand jealously guarded.

The right of the people to be secure intheir persons, houses, papers, and effects . . . shall not be violated.

Amendment IV

Conflict is a built-in feature ofhuman action, and when collisionsof interest do occur in society, therights of the individual must bemaintained.

No person shall ... be deprived of life,liberty, or property, without due process of law. Amendment V

Nor shall private property be taken forpublic use without just compensation.

Amendment V

Strings on the Military

In some nations, the civilian life is amere appendage to the military.This will not happen here becausecivilians control the purse strings.

No appropriation of money (to raiseand support military and naval forces)shall be for a longer term than twoyears. Article I, 8

As a further safeguard against anyfuture militarization of this nation,the civilian sector must have themeans for defending itself.


The right of the people to keep andbear arms, shall not be infringed.

Amendment II

In some countries, criminal proceedings are used to entrap citizens,whose guilt is assumed; the burdenof proof is on them to show theirinnocence. Here, the innocence ofthe accused is .assumed, until hisguilt is proved. The law shall notreach backward to designate ascriminal an action which until thenwas innocent.

No ... ex post facto law shall be passed.Article I, 9

There shall be no Star Chamberproceedings.

No person shall be held to answer for acapital, or otherwise infamous crime,unless on a presentment or indictmentof a Grand Jury. Amendment V

Protecting the Accused

The accused is protected against illegal imprisonment, and must beinformed of the charges against him.

The privilege of the write of habeascorpus shall not be suspended.

Article I, 9

Punishment shall fit the crime; itshall not mean extinction of civilrights, forfeiture of property, orpenalties against kin.

Nobill of attainder ... shall be passed.Article I, 9

The accused is entitled to be tried byhis peers.

. . . the right of trial by jury shall bepreserved. Amendment VII

There is to be no -forced selfincrimination.

Nor shall [he] be compelled in anycriminal case to be a witness againsthimself. Amendment V

The rights of the accused are summarized:

1. ... a speedy and public trial, by animpartial jury;

2. Within the district wherein thecrime shall have been committed;

3.... to be informed of the nature andcause of the accusation;

4. . . . to be confronted with the witnesses against him;

5.... to have compulsory process forobtaining witnesses in his favor;

6.... and to have the assistance ofcounsel for his defense.

Amendment VI

Even when found guilty, the accusedis protected.

1. Excessive bail shall not be required;

2. Nor excessive fines imposed;3. Nor cruel and unusual punish

ments inflicted. Amendment VIII

Treason

Treason is a crime against the nation, so serious that it must be defined with special care.

Treason against the United States,shall consist only in levying waragainst them, or in adhering to theirenemies, giving them aid and comfort.

Article III, 3

1978 CONSTITUTIONAL RESTRAINTS ON POWER 243

The person judged guilty of treasonis personally responsible for hiscrime, and therefore his family andkin shall not be punished.

No attainder of treason shall workcorruption of blood. Article III, 3

Impeachment is a special case.

The Senate shall have the· sole powerto try all impeachments ... and noperson shall be convicted withouf theconcurrence of two-thirds of the members present.

Judgment . . . shall not extend further than to removal from office, anddisqualification to hold any office ofhonor, trust or profit under the UnitedStates. Article I, 3

A blind spot in the original Constitution is corrected.

Neither slavery, nor involuntaryservitude, except as punishment forcrime. . . Amendment XIII

No state shall ... deny to any personwithin its jurisdiction the equal protection of the laws. Amendment XIV

The separate states are not whollysovereign.

No state shall enter into any treaty ...coin money ... pass any law impairingthe obligation of contracts. Article I, 10

The Method of FreedomThere is a strong penchant in

human nature which impels peoplewho feel strongly about some-

thing-a good cause, say-to grouptheir forces and use the power ofgovernment to fasten their panaceaon those they've been unable to persuade. The Constitution is a primeexample of the limitations placedupon governmental power so thatpeople with a cause to advance mustresort to education, persuasion, andexample only. This is the method offreedom, and a people committed tothe method of freedom find the Constitution still an apt instrumentfor structuring a society whichmaximizes freedom and opportunityfor all persons. It was designed toestablish a national government internally controlled by checks andbalances between the separate powers. And government was to befurther limited by the federal structure itself, in which the centripetalpower of Washington was to beoffset by the centrifugal powers ofthe separate states. It was not aperfect document, but it carried themeans of its own correction, and itdid embody the consensus of thepeople for whom freedom was theprime political good. It was workable. And it will work again whenever a significant number of peoplehave the force of intellect to comprehend sound ideas, and the forceof character to make them prevail.@

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN

BEYONDFAILURE:How to Cure aNeurotic Society

FRANK GOBLE, author of BeyondFailure: How to Cure a Neurotic Society (Caroline House Books, GreenHill Publishers, Inc., Ottawa, Illinois 61350, $10, foreword byHenry Hazlitt), has a great vision.He wants to establish what he callsa People's Project, a Hnationalmobilization of resources to solvehuman problems using the same approach that placed astronauts on themoon." The ideas which he hopes todisseminate are based on the socalled Third Force psychology of Dr.Abraham Maslow, who revoltedagainst both Freudianism and Behaviorism on the ground that theyare ~~cripple philosophies" which ignore whole stretches of human history and endeavor. What Mr. Goblehas to say about the ~~cripple

philosophies" is perfectly true, but

244

his theory that one can apply themoon-shot approach to the solutionof social problems ignores a host ofdifficulties. History is always a ragged process, and great changesnever come about overnight.

Putting men on the moon was apurely physical process. Once themoney had been approved to carry itout, a ~(task force" approach becamefeasible. The problem was to provideastronauts with oxygen to breatheand food and water to sustain themselves while riding a ballistic arc toa celestial destination. The technology of rocket-launching was alreadyin place when the task force tackledits mission. The personnel wasready: World War II had produced aresourceful air force whose adventurous pilots were yearning forsomething challenging to do. The

HOW TO CURE A NEUROTIC SOCIETY 245

rest was simple, and its accomplishment involved little controversy once it had been acceptedas a national objective. Whetherpeople should have been taxed forthe job is, of course, another story. Itwas easy, however, compared to engineering a big change in society.

Some Vital Adjustmentsas Prelude to Reform

Before a task force could be assembled to rout the devils of Freudand Behaviorist John B. Watson,not to mention B. F. Skinner, and tore-establish the Natural Law ideasof our Founding Fathers in theschools, a political sea-change ofmassive proportions would have tobe brought about. The National Education Association would have tobe deprived of its grip on Americanteachers. The big labor bosses wouldhave to accept a formula for relatingwage-increase demands to a wellunderstood productivity standard.Congress would have to withdrawsubsidies from a thousand angrypressure groups. And our Washington bureaucrats would have toabandon the Nanny approach to theinstitutions they are supposed toregulate. As for regulation itself, itwould have to be dispensed with,save in the few clear instanceswhere the public health is involved.

Meanwhile, our educators wouldhave to rehabilitate the AmericanEthic. They would have to begin

teaching history again. Naturally,all of this would involve skirmisheson a thousand fronts, not a singlededication to a moon-shot-type~~people'sproject." Mr. Goble is facedwith the problem of setting in motion a Fabianism-in-reverse on awide front before he can hope to seea fin~d victory. for what he callsResponsibility Theory.

When he desists from his moonshot and Manhattan Projectanalogies, Mr. Goble talks eminentand inspiring common sense. Hisbook is first-rate analysis. As hesays, Freud erred by confusingneurotics with normal people: noteverybody is bedeviled by aggressive instincts or is helpless to controlhis libido. According to RichardLaPiere, a Stanford sociologist, theFreudian ethic resulted in the ideaHthat man cannot and should not beexpected to be provident, selfreliant, or venturesome, and that hemust and should be supported, protected, socially maintained." TheAmerican Ethic, as defined by theFounding Fathers, had entirely opposite presuppositions, and itworked for several generations before Freud was ever heard of in thiscountry.

"Responsibility Theory"

The Maslow-Goble Third Forceidea rejects Freud and the anti-freewill Behaviorists in favor of Responsibility Theory which assumes that


human babies are born with sociallyconstructive instincts that are conducive to the survival of theirspecies unless they are mistaught bypermissive theorists to expect tohave things handed to them on aplatter.

It is permissiveness, according toGoble, that has ruined our educational system. Where there is notruth, anything goes. The idea thatscience must be value-free orvalue-neutral has resulted in apreoccupation with averages. The((well-adjusted person" won't quarrelwith the average. The welldeveloped person, on the other hand,will reject the idea that he mustsettle for mediocrity. He will insiston having values of his own. Whatour educational system should do,according to Maslow-Goble Responsibility Theory, is to inculcate theidea not of Hadjustment," but ofHself-actualization," which is described as ((the full use and exploitation of talents, capabilities, potentialities." Instead of studying theworst of humanity, as the Freudiansdo, Responsibility Theory wouldconcentrate on ((the less than onepercent of society that had achievedself-actualization." Dr. Maslow preferred to have his students readabout Hpeak experiences" in thelives of heroes such as Lincoln, J efferson, William James, AlbertSchweitzer, Jane Addams and,oddly, Eleanor Roosevelt.

Character EducationThere are the elements for a good

Fabianism-in-reverse in the U.S.,and Mr. Goble mentions a few. Hetells about the Character Education Projects sponsored by theAmerican Institute for CharacterEducation in San Antonio, Texas.One of these projects, at PublicSchool 63 in Indianapolis, Indiana,has been active for six years and hasrestored both school and individualpride while reducing vandalism to aminimum.

Such projects would have a biggerchance in private schools, wherethere would be less apathy to overcome, but Mr. Goble presumablydoesn't want to get into the publicversus-private school fight. Hewants to work through ((existing institutions." He hopes to see a nonprofit People's Project Corporationformed to push his ideas. The Corporation, by ((mass-marketing" educational and motivational programsto existing institutions whether public or private, would, he thinks, act asa catalytic agent to reduce costs ofgovernment, inflation, unemployment, crime, drug abuse, illegitimacy, welfare rolls and ((other destructive problems."

It is a grand idea, but since therearen't enough Gobles to go around,wouldn't it be more realistic to takea one-community-at-a-time approach? After all, nothing succeedslike one good example.

1978 OTHER BOOKS

THREE NEW BOOKSby Ludwig von MisesReviewed by Henry Hazlitt

247

NOTES AN'D RECOLLECTIONSby LUdwig von Mises(Libertarian Press, SouthHolland, Illinois)181 pages. $9.95

WHEN Ludwig von Mises died onOctober 10, 1973, at the age of 92,even his· most devoted readers, andthose privileged to know him personally, assumed that everything hehad written, in German or English,had already been published. But hiswidow Margit now reveals that immediately after they emigrated tothis country in August 1940, Misesset to work on a manuscript that heturned over to her at the end of theyear, with the simple instructions to((take good care of it." It was notuntil some time after his death,thirty-three years later, that sheremembered it. It turned out to bethe present remarkable combinationof autobiography and critique of theintellectual milieu in Mises' nativeAustria in the years when he wasgrowing up.

He was ((devouring" articles onhistory when he was seven yearsold. When he graduated from highschool he decided to study .law. Buthe was also reading in economics.In the German-speaking worldSchmoller was then ((adored as thegreat maste'r on (political economy.' "But when Mises was still in highschool, he tells us, he ((noticed acontradiction in the position of theSchmoller circle."

When he entered the universityhe, too, he confesses, ((was athorough statist. But in contrast tomy fellow students I was consciouslyanti-Marxian. . . . When I finallyengaged in an intensive study of theimportant works of Marx, Engels,and Lassalle, I was provoked to contradict them on every page. Itseemed incomprehensible to me thatthis garbled Hegelianism couldexert such an enormous influence."

Yet he continued to bean ardentinterventionist and ((reformer" untilone of his professors induced him toresearch housing conditions andanother suggested he study the legal


changes regarding domestic servants. (1t then dawned on me thatall real improvements in the condition of the working classes were theresult of capitalism; and that sociallaws frequently brought about thevery opposite of what the legislationwas intended to achieve."

In 1913 Mises was admitted to thefaculty of law at the University ofVienna as an unsalaried lecturer,and in 1918 he received the title ofAssociate Professor. But that was asfar as he was destined to go there.((A university professorship wasclosed for me," he writes: HThe universities were searching for interventionists and socialists."

He did receive a position in theVienna Chamber of Commerce,however, and from there he began toexert his real influence. At his office, every two weeks, he conducteda small seminar consisting of 20 to25 students. It was from this smallgroup that such famous economistswere to emerge as F. A. Hayek, theNobel laureate, Gottfried Haberler,Fritz Machlup, Oskar Morgenstern,and Eric Voegelin.

The "Austrian School"

The great intellectual influencesin Mises' own development were, ofcourse, the founders of the HAustrian school," Carl Menger andEugen von Boehm-Bawerk. Misesarrived too late at the University ofVienna to have Menger as a teacher,

but he recalls that around Christmas, 1903, he read Menger's Principles ofEconomics for the first time:HIt was the reading of this book thatmade an (economist' of me." Fortunately, Mises was able to attend theseminars of the great BoehmBawerk.

Mises' own outstanding contributions included his work on money,which finally unified monetarytheory with economic theory in general, his demonstration thatsocialism must fail because it cannotsolve the problem of ((economic calculation," and his recognition thateconomics is merely a part, thoughby far the greater part, of a widerscience of Human Action. He wasbeyond question the foremosteconomist of his generation.

Yet this is in the main a sad book.As Mises matured intellectually, hecame to recognize that Austrianthought and culture were already indecline. Menger and Boehm-Bawerkwere still alive; but they were beingsucceeded by mediocrities who failedto grasp their revolutionary insights. Menger was Hdiscouraged"and ((silenced." ((The evening ofBoehm-Bawerk's life was darkenedby his fears for the future of Austriaand its culture." He died a fewmonths after the outbreak of WorldWar I. Mises got the news when hewas with his artillery battery at thefront.

There was more misfortune to

1978 OTHER BOOKS 249

come. Mises lived to see the rise ofHitler. Driven from Vienna by thethreat of a Nazi takeover, he spentsix comparatively happy years as aprofessor at the Graduate Instituteof International Studies in Geneva.But the outbreak of World War IImade it seem to him once more advisable to emigrate, this time to theUnited States, in August 1940... Inthe months when he was writing thepresent book, he had no knowledgeof the future he would have in hisnew country.

That future too, in its early years,was to prove full of anxiety anddifficulties. With the help of American friends, he was finally, in 1945,appointed Visiting Professor at theGraduate School of Business Administration of New York University.Even then his salary did not comefrom- the university's own generalfunds, but had to be provided byfriends and foundations.

Some of us may regret that Mises'great personal reticence kept himfrom telling ~ore about his earlychildhood and his emotional life, butwe can still count ourselves fortunate to have this important additionto his legacy.

The book is preceded by the shortForeword by Margit von Mises, andfollowed by an admirable Postscriptof thirty pages, describing Mises'later years and works, by his friendand student, and translator of thisvolume, Professor Hans F. Sennholz.

A CRITIQUE OFINTERVENTIONISMby Ludwig von Mises(Arlington House, New Rochelle, NewYork)164 pages. $8.95

Essays collected in A Critique ofInterventionism were written in theearly 1920's, and published in German in 1929. They are now issuedfor the first time in an Englishtranslation by Professor Sennholz.The English title almost exactly follows the German-Kritik des Interventionismus.

The American reader familiarwith Mises' other work will find noideological surprises. But what willprobably impress him most is precisely this-that as early as themid-1920's Mises' economic philosophy, and his main conclusions, werealready formed. He was astonishingly immune from the then almostuniversal fashion in respectableeconomic circles, which rejectedboth laissez-faire capitalism andoutright socialism, in favor of a socalled ~~middle road," which acceptedonly qualified property rights, subject to overriding government interventions and controls.

In the 1920's Mises was not onlykeeping abreast of all the major output on economics in Europe, butpaying tribute to the contributions


of such American writers as JohnBates Clark, Taussig, Fetter andDavenport. But he had little patience with the work of the selfstyled American Institutionalistsand he was unsparing, for example,in his dissection of the fallacies ofsuch advocates of ~~social control" asJohn Maurice Clark.

The main theme of this book, asits title makes clear, is not only theneedlessness, but the immenseharm done by government intervention in economic affairs. He definesintervention as «a limited order by asocial authority forcing the ownersof the means of production and entrepreneurs to employ their meansin a different manner than theyotherwise would." More briefly, hedefines interventionism as Uthehampered market order." And hegoes on to show why, in the long run,it can never achieve the objectiveswhich the authorities aim toachieve.

All interventions consist of a prohibition or compulsion or a combination of both. Among the outstandingexamples are price controls andwage controls. What are usuallyprescribed are price ceilings orminimum wages.

Price Controls, andWhere They Lead

In dealing with price ceilings,Mises begins by pointing out thatthe constellation of prices at .. any

time is not haphazard or accidental,but has been determined precisely-or at least within narrowlimits-by the interrelations of sup:ply, demand, costs, and similar,factors. But those who believe that theformation of prices is purely arbitrary easily arrive at the conclusionthat they should be fixed by externalregulation.

When prices are held down bygovernment edict, however, two. results inevitably follow. More of theprice-fixed goods are bought, andless are produced. To limit consumption, the government must resort torationing. To restore profit marginsand production, it must fix the pricealso of raw materials, and eventually wage rates, and force businessmen and workers to produceand labor at these prices.

In short, the government mustproceed step· by step to comprehensive control over labor and production. But this was not what itstarted out to do. It wanted thebuyers to enjoy the goods at lowerprices, not to deprive them of theopportunity to buy the goods at all.

When, on the other hand, government tries to fix minimumwages, it forces an increase in costsof production and also in prices.Either profit margins are wiped outor fewer goods are sold, and as a result workers are laid off. If the laidoff workers are then paidunemployment compensation, the government


creates a permanent body of unemployed.

In addition to interventionismproperly so called, one or two of theessays in this book discuss such topics as socialism, Marxism, antiMarxism, and the nationalization ofcredit. But the reasoning throughout leads to the conclusion that interventionism must disorganizeproduction, and that in the long runthere is only one alternative foreconomic organization: either capitalism or socialism. ((There is nothird road."

ON THE MANIPULATION OFMONEY AND CREDITby LUdwig von Mises(Free Market Books, Dobbs Ferry, NewYork)296 pages. $14.00

We come now to the volume Onthe Manipulation ofMoney and Credit. In 1912 Mises published inGerman the first edition of TheTheory of Money and Credit. Therehe first developed what has sincebecome known as the ((Austrian"theory of the trade cycle. In 1928, heelaborated and perfected this theoryin an essay of more than 100 pages.

This essay is the main single itemnow for the first time translated intoEnglish and presented together withthree other newly translated items.

These are an article on ttStabilization of the Monetary Unit" (1923),one on HCauses of the MonetaryCrisis" (1931), and one published in1933 on the then existing state ofbusiness cycle research. The translations are by Bettina Bien Greaves,and the book is edited with an Introduction and an Epilogue by Percy L.Greaves, Jr.

Readers sufficiently acquaintedwith the work of Mises that hashitherto been available in Englishwill already be familiar with thegeneral outline of his business cycletheory. Even under a (fractional reserve) gold standard, governmentsand central banks permit or encourage an artificial lowering of bankinterest rates. This stimulates thedemand for bank loans beyond theamount of real savings available forlending. The increasing demand forbank loans is then met by inflationary increases in the quantity ofmoney and credit. The first recipients of the newly-created funds usethem to launch or expand businessventures for which the required realfactors of production must be withdrawn from the particular pattern ofproduction that would otherwisehave been preferred by consumers.In other words, the pattern of production becomes distorted and misdirected, and increasingly so thelonger the credit expansion continues, until the boom ends in aninevitable bust and depression.


Mises elaborated his. trade cycletheory both in subsequent editionsof The Theory of Money and Credit(e.g., 1953) and in Human Action(1949). He also presented elsewheremuch of the substance of the otherpapers translated in this volume.Nevertheless, Mises never repeatedhimself mechanically or by rote.Whenever he came back to the sameproblem he addressed it afresh, almost as if he were solving it for thefirst time. As a result each exposition threw its own special illumination on the problem, or suppliedsome connecting link that his otherexpositions may have omitted tomake quite so explicit or clear. Thisthe present trade cycle essay notablydoes. Consequently we owe thepresent translator and editor ourgratitude for making these important contributions at last availablein English.

* * *In spite of his great gifts for ex

position, Mises' contributions weremuch misunderstood during hislifetime, and are still often misunderstood today. A recent exampleis an article on Wilhelm Roepke byPatrick M. Boarman in the Autumn1977 issue of The University Bookman. Roepke, writes Boarman atone point, ~~remembered von Misessaying that if only the principles offree trade had been followed fromthe beginning, World War II might

never have happened. I don't remember Roepke's exact reply to this,but he was, in effect, struck dumb.And he remarked to me that it wasincredible that anyone with a fairknowledge of German or of European history could reduce the German question-the darkest andmost sombre question of the age,with myriad roots reaching backhundreds of years-to a mere set ofeconomic arrangements."

Yet Mises was right. If free tradewere a sort of isolated accident,Roepke might have been warrantedin being ~~struck dumb." But freetrade is a result of a state of publicopinion within the country that hasadopted it. It means that the peoplegenerally recognize the advantagesof international trade (particularlyof imports) and recognize equallythe advantages of international cooperation. In such an atmospherethe fanatic and belligerent nationalism that leads to war is very unlikely to exist.

To resume the quotation fromBoarman: ~~For Roepke, this kind ofeconomic determinism, thoughemployed in defense of capitalism, isjust as fallacious as the Marxianversion of economic determinism,directed to the justification of thedialectic."

Equating Mises with Marx issomething new. Mises was merelyreasoning from cause to effect. Onlyin this sense were his remarks ~~de-


terministic." But all science is ((de_terministic" in this sense. Marx'seconomic determinism was of a different sort. It was mystical. It was aone-way determinism in which the((material productive forces" determined everything else-even theideology of the people-but it was itself not explained by any precedingcause. As Mises himself oncepointed out-for he was, amongother things, Marx's most devastating critic-nIt never seems to haveoccurred to Marx that the productive forces are themselves a productof human thought, so that onemerely moves in a circle when onetries to derive thought from them." @

Editor's Note:Each of the above three vol

umes is available, at priceslisted, from The Foundationfor Economic Education,Irvington-on-Hudson, NewYork 10533

IT'S NO SIN TO BE RICH:A DEFENSE OF CAPITALISMby William Davis(Thomas Nelson, Inc., 407 SeventhAve., S., Nashville, Tenn. 37202)264 pages • $8.95

Reviewed by David A. Pietrusza

WILLIAM DAVIS is well known in theUnited Kingdom as an influentialfinancial editor and columnist andas the sprightly editor-in-chiefof thefamed humor magazine, Punch. Hecombines economic expertise withan eye for the absurd to provide aself-confident, breezy, often anecdotal look at modern economicthought, focusing on the prejudiceswhich bias the public attitudeagainst achievement, success, andprivate profit in business.

Ironically enough, he opens hiscounterattack by quoting Marxhimselfon the value of the capitalistin history: ~~The bourgeoisie hasbeen the first to show what man'sactivity can bring about. It has accomplished wonders far surpassingEgyptian pyramids, Roman aqueducts and Gothic cathedrals . . .the bourgeoisie ... draws all nations... into ... civilization it hascreated enormous cities and thusrescued a considerable part of thepopulation from the idiocy of rural


life . . . the bourgeoisie, during itsrule of scarce one hundred years,has created more colossal productiveforces than have all the precedinggenerations together."

Davis rips apart the myth ofworsening conditions at the beginningsof the Industrial Revolution, dissects the glaringly inaccurate predictions of Marx and Engels in regard to the inevitable crumbling ofcapitalism, scores the results ofMarxist theorizing in both its Communist and Socialist offshoots, andeven ventures so far as to heartilydefend the nineteenth-century Captains of Industry that today arepopularly derided as ((Robber Barons."

In most countries of the worldtoday business is under attack; itmust propitiate the politically powerful in order to survive. Blackmailed by officials, it pays protection money and is accused of bribery. Davis does not excuse or condone bribery, but merely describesthe situation in which certainbusinessmen find themselves. Hequotes an oil company executive assaying, ~(I would like to ask some ofthe people who are becoming close tosanctimonious humbugs just whatthey would do if they had twohundred million dollars invested ina country, and a politician, with adeath warrant in his pocket, camealong and said, (give me ten millionor else'-and the (or else' can take

several forms. Would they pay it orwould they refuse to pay it? And ifthey did pay, would they say it was abribe or would they not call it by itsproper name-extortion?"

Then there is the menace ofunionism in Davis' Britain. England's labor movement fanaticallyattempts to wring the last remaining shilling out of that nation's industrial establishment, while disclaiming any responsibility for thecountry's economic health or evenits survival. Through compulsoryunionism, big labor's grip on eventhe highly-individualistic professionof journalism grows more vise-likeevery day. Strikes have shut downthe printing trades and thus endangered press freedoms: but also,incredibly, unions have gained control of access into the reportorial andeditorial fields themselves.

~(An eighteen-year-old beginner,"says Davis, ((however talented, nowhas little or no chance of joining anational newspaper. The closed-shopsystem, as applied in the seventies,deliberately prevents many potentially good journalists from gettinginto the profession-and keepsmany bad ones in it. It also presentsa quite genuine threat to the freedom of the press. It is intolerablethat editors should no longer bepermitted to employ the best available talent and equally intolerablethat the opinions ofjournalists-andcartoonists-should be subject to the


censorship of trade-union militants."

Like an efficient and personabletour guide, Davis touches all majorpoints of interest, provides new insights, and yet maintains a leisurelyand amiable pace. It's No Sin To BeRich provides a sturdy defense of thediversity, prosperity, and freedomthat a market economy makespossible.

THE PEOPLE SHAPERSby Vance Packard(Little, Brown & Company, 200 West St.,Waltham, Mass. 02154, 1977)398 pages. $12.50

Reviewed by Th9mas L. Johnson

IN order to win a battle one mustknow the enemy and understand histactics. This is just as true of thebattle for freedom as for any otherstruggle. This book describes ~~the

enemy's" various techniques ofpeople-control: Skinnerian behavioral conditioning, brainwashing and reprograming, moodmanaging, hypnosis, imprinting,personali ty altering via brainsurgery or electric shock, andothers. A well-known psychologist isquoted: ~~We can choose to use our

growing knowledge to enslave people in ways never dreamed of before,depersonalizing them, controllingthem by means so carefully selectedthat they will perhaps never beaware of their loss of personhood." Itis a startling and frightening account.

Some of·these techniques are already in use, to a far greater extentthan generally realized. Packardcites Science Digest as his authorityfor saying that an estimated 500,000to 2,000,000 school children havebeen put on amphetamines or Ritalin in· order to drug these childreninto a more passive state. And ~~in

some cases, there appears to havebeen a clear element of coercion:threats to hold back a child or puthim in some class with a disabledlabel" if parents refused to allowhinl to take the recommended drug.

Packard reminds his readers thatschools are institutions of government and then asks: ~~Are schools ingeneral exerting, however subtly,any kind of governmental pressureto get children on behavior-modifying drugs?" Good question, and onewhich would be answered in theaffirmative by certain parents whoare currently involved in a lawsuitin which they contend that, for somechildren, the taking of Ritalin wasmade a condition of attending publicschool.

The author goes on to describeforced drugging in other societal in-


stitutions such as prisons, mentalinstitutions, homes for the aged, andthe like.

Part II of The People Shapers discusses the many and variedtechniques, mainly biological, whichare being used now or will be used inthe near future in order to reshapeman. This section reads like sciencefiction except for the fact that itreveals many possibilities, such asthat of cloning man or resetting hisbiological clocks, that are on theverge of happening.

Packard ends his enlightening,thought provoking, and sometimesshocking book by discussing somenew trends that can enhance individual self-direction, and how it maybe possible to control the would-becontrollers. One may not agree withsome of his suggestions for improvement or for safeguarding individual rights, but the reader is certainly prodded into thinking aboutmany difficult and serious mattersthat every believer in liberty willwant to ponder. @

HANDSOME BLUE LEATHERLEX

FREEMAN BINDERS

$3.00Order from:

THE FOUNDATION FOR ECONOMIC EDUCATION, INC.

IRVINGTON-ON-HUDSON, NEW YORK 10533

The Freeman 1978

Documents

Transcript of The Freeman 1978