By LEONARD E. READ
Published by the Foundaiton for Economic Education, 1964
Contents
1. A Break with Prevailing Faith
Let anyone do anything, so long as his actions are peaceful; limit government to keeping the peace. The author’s premise. Incorruptibility defined and its importance emphasized.
2. The American Setting: Past and Present
A review of our evolutionary past should help us to better cope with the devolutionary theories and practices of the present.
3. Strife As A Way of Life
Socialism rests on raw violence. Peaceful people rarely carry noncompliance far enough to discover this shocking fact about our “social gains.”
4. Socialism Is Noncreative
Socialism only gives the appearance of being productive. What we mistake for socialism’s achievement is free human energy pushing its way through the stifling bureaucratic regimentation.
5. How Socialism Harms the Individual
When the individual forsakes or has taken from him a sense of self-responsibility, he loses the very essence of his being.
6. How Socialism Harms the Economy
Socialism gives rise to unnatural and unmarketable human efforts and specialties, exchangeable only under duress. If this persists, our once dynamic economy will spin apart!
7. How Pressure Groups Promote Inflation
Labor unions cause inflation precisely as do chambers of commerce and all other groups which seek handouts from the federal treasury; not, as is commonly supposed, by way of price and wage “spirals.”
8. Appoint a Committee!
Committees tend to absolve individuals from personal responsibility for positions taken, thus permitting careless and irresponsible actions which seriously threaten the peace.
9. Regardless of choice, Vote!
Voting presupposes a choice. Citizens have no moral obligation to cast a ballot for the “lesser of two evils,” or for one of two trimmers; trimming is not comparative, since every trimmer is without integrity.
10. On Keeping the Peace
The real and revealing distinction between the socialist, on the one hand, and the student of liberty, on the other, is a difference of opinion as to what peaceful actions others should be prohibited from taking.
11. Only God Can Make a Tree—Or a Pencil
Creative human energies combine miraculously to form a jet plane, a symphony, a pencil, just as molecules combine to form a living tree.
12. The Most Important Discovery in Economics
The most important discovery in economic science may be stated in a simple sentence. If fully mastered, it is all the economics the layman needs to know.
13. The Greatest Computer on Earth
The free market computer, if permitted to operate, requires no attendants and its services are free. It can automatically receive billions of flowing data daily, giving off simple signals in the form of prices.
14. Mail By Miracle
Let anyone deliver catalogues and letters as freely as we are permitted to deliver freight or sound or human beings. An explanation of why so many people mistakenly believe that mail delivery could not possibly be left to private enterprise.
15. Whose Academic Freedom?
An introduction to the myths surrounding government education, and how these myths create a distressing confusion over academic freedom.
16. Education for the Sake of Others
Government education is predicated on one’s education being in conformity with the way others think he should be educated. An explanation of how coercion in education creates an imbalance between know-how and wisdom.
17. Education for One’s Own Sake
Education to fit the individual; in short, the case for the free market in education.
18. In Pursuit of Excellence
The good society will never emerge from man’s drafting boards. Instead, it is a dividend flowing from the presence, in the pink of condition, of a natural aristocracy of virtue and talents among men.
Index
Many favor peace but not many favor
the things that make for peace.
—THOMAS A KEMPIS
• CHAPTER 1 •
A BREAK WITH PREVAILING FAITH
GALILEO WAS CALLED on the carpet, tried by the Inquisition, and put in prison because he affirmed the theory of Copernicus that the solar system does not revolve around our earth. The truth as he perceived it was a break with the prevailing faith; he committed the unpardonable sin of affronting the mores. This was his guilt.
Americans—enlightened as we suppose ourselves to be—are inclined to view with scorn that illiberal attitude of some three centuries ago which sought to keep the light of new evidence away from the fallacies of that time. Fie on such childish intolerance; we are not afraid of truth; let the light shine in!
Perhaps we should pause for a moment and carefully scrutinize what our own mirror reveals. A letter in the morning mail highlights my point: this woman had visited the librarian of the high school to which she had made a gift of The Freeman, a monthly journal that presents, dispassionately but consistently, the rationale of the free market, private property, limited government philosophy, along with its moral and spiritual antecedents. She discovered that the journal was not among the periodicals displayed for student perusal, that it had been discreetly relegated to the teachers’ reading room. What was the reason for this under-the-rug procedure? The librarian explained, “The Freeman is too conservative.” My correspondent, distraught by this illiberal attitude—by this attempt to keep students from knowing about the freedom philosophy—asked of me, “What can we do about this?"
The answer to this question is to be found in an old English proverb, “Truth will out!” As it did with Galileo’s theory, so it will do with the ideology of freedom! However, if we would conserve our energies and act in the best interests of the freedom philosophy, we will do well to reflect on the most effective way to lend a hand to the philosophy. Suppose, for instance, Galileo had exerted pressure on the Inquisitors to purvey that fragment of truth he had come upon. The folly of such a tactic is clear: His truth in the hands of his enemies; heaven forbid! Likewise, it is folly for us to exert influence on those of the collectivistic faith—be they librarians, teachers, book reviewers or bookstore owners, politicians, or whoever—to carry the message of individuality and its essential concomitant, freedom in exchange. If one wishes to win, never choose teammates who are intent on losing the contest. Indeed, such folks should be scrupulously avoided as partners.
The way to give truth a hand is to pursue a do-it-yourself policy. Each must do his own seeking and revealing. Such success as one experiences will uncover and attract all the useful, helpful, sympathetic teammates one’s pursuit deserves. This appears to be truth’s obstacle course—no short cuts allowed.
A Dark Age is followed by an Enlightenment; devolution and evolution follow on each other’s heels; myth and truth have each their day, now as ever. These opposites—action and reaction—occur with the near regularity of a pendulum, here as elsewhere, the vaunted “common sense of the American people” notwithstanding.
The Faith in Collectivism
Our time, as did Galileo’s, witnesses an enormous intolerance toward ideas which challenge the prevailing faith, that faith today being collectivism—world-wide. Americans during the past three or four decades have swung overwhelmingly toward the myths implicit in statism; but, more than this, they have become actually antagonistic to, and afraid of identification with, free market, private property, limited government principles. Indeed, such is the impact of the collectivistic myth, they shy away from any idea or person or institution which the political welfarists and planners choose to label as “rightists.” I have labored full time in this controversy for more than thirty years and, having a good memory, these shifts are as clear to me as if they had occurred in the last few moments, or I’d just viewed a time-lapse movie of these events. Were I unaware that such actions and reactions are inevitable in the scheme of things—particularly when observing such behavior by businessmen as well as by teachers, clergymen, and labor officials—I would be unable to believe my eyes.
Yet, truth will out! While myth and truth contend in their never-ending fray, truth inches ahead over the millennia as might be expected from the evolutionary process. My faith says that this is ordained, if we be worthy, for what meaning can truth have except our individual perception of it? This is to say that among the numerous imperatives of truth is that many individuals do their utmost in searching for it and reporting whatever their search reveals.
Worthiness also requires of those who would don her mantle a quality of character which I shall call incorruptibility. The more individuals in whom this quality finds refinement the better, and the sooner more truth will out. This quality is too important to suffer neglect for brevity’s sake; so let me spell it out.
If my claim for incorruptibility is to hold water, the notion of corruption will have to be refined beyond its generally accepted identification with bribery, stealing, boldfaced lying, and the like. Deplorable as are these specimens, they wreak but minor havoc compared to the more subtle corruptions of the intellect and the soul which, unfortunately, are rarely thought of—or even felt—as corruption.
The level of corruption I wish to examine was suggested to me by a friend’s honest confession, “I am as much corrupted by my loves as by my hates.” Few of us have succeeded in rising above this weakness; indeed, it is difficult to find one who has. Where is the individual who has so freed himself from his affections for or prejudices against persons, parties, creeds that he can utterly disregard these passions and weigh each and every act or proposal or idea strictly on its own merits—as if he were unaware of its source? Where is the man who can say “yes” or “no” to friend or foe with equal detachment? So rare are such individuals that we run the risk of concluding that no such person exists.
However, we must not despair. Recently, I was presented with an idea by an unknown author—in these words: “There is no such thing as a broken commitment.” Observing on many occasions that people do actually go back on their bond, I thought this to be at odds with the facts of life. Later, its meaning was explained to me: An unbroken commitment in this context means something more than paying debts, keeping promises, observing contracts. A man has a commitment to his own conscience, that is, to truth as his highest conscience discerns truth, and every word and deed must be an accurate reflection thereof. No pressure of fame or fortune or love or hate can even tempt such a person to compromise his integrity. At this level of life there can be no broken commitment.
Incorruptibility in its intellectual and spiritual sense refers to a higher order of men than is generally known to exist. It relates to men whose moral nature is such that infidelity to conscience is as unthinkable to them as stealing pennies from a child’s bank is to us. Folks who would deviate from their own highest concept of righteousness simply are not of this order nor are they likely to be aware that there is such an order of men.
An interesting sidelight on the individual whose prime engagement is with his own conscience and who is not swerved by popular acclaim or the lack of it, is that he seldom knows who his incorruptible brothers are. They are, by their nature—all of them—a quiet lot; indeed, most of us are lucky if we ever spot one.
Signs of Corruption
At this moment in history, this order of men must be distressingly small. The reason for this opinion is the “respectability” which presently attends all but the basest forms of corruption. Almost no shame descends upon seekers after office who peddle pure hokum in exchange for votes; they sell their souls for political power and become the darlings of the very people on whom their wiles are practiced. Business and professional men and women, farmers and workers, through their associations and lobbies, clergymen from their pulpits, and teachers before their students shamelessly advocate special privileges: the feathering of the nests of some at the expense of others—and by coercion! For so doing they receive far more pious acclaim than censure. Such are the signs of widespread corruption.
As further evidence of intellectual corruption, reflect on the growing extent to which excuses are advanced as if they were reasons. In the politico-economic realm, for example, we put an embargo on goods from China because they are, in fact, competitive. But professing to favor free, competitive enterprise, and hesitating to confess that we are against competition, we corrupt ourselves and offer the excuse that these goods are “red.”
Caviar from Russia—noncompetitive—is imported by the ton but is just as “red” as a linen tablecloth from China. This type of corruption occurs on an enormous scale, but is shrugged off as “good business.” Things would be otherwise if incorruptibility were more common.
If I am not mistaken, several rare, incorruptible oversouls have passed my way during these last three decades. For one thing, they were different. But it cannot be said that they stood out from the rest of us for, to borrow a phrase from a Chinese sage, they all operated in “creative quietness.” While not standing out, they were outstanding—that is, their positions were always dictated by what they believed to be right. This was their integrity. They consistently, everlastingly sought for the right. This was their intelligence. Furthermore, their integrity and intelligence imparted to them a wisdom few ever attain: a sense of being men, not gods, and, as a consequence, an awareness of their inability to run the lives of others. This was their humility. Lastly, they never did to others that which they would not have others do to them. This was their justice.
Truth will out, with enough of these incorruptible souls!
The Truth About Freedom
Now, having staked out the ideal, it behooves me to approximate it as best I can, which is to say, to present the truth as I see it, in this instance, as it bears on the free market and related institutions.
By my title, “Anything That’s Peaceful,” I mean let anyone do anything he pleases that’s peaceful or creative; let there be no organized restraint against anything but fraud, violence, misrepresentation, predation; let anyone deliver mail or educate or preach his religion or whatever, so long as it’s peaceful; limit society’s agency of organized force—government—to juridical and policing functions, tabulating the do-nots and prescribing the penalties against unpeaceful actions; let the government do this and leave all else to the free, unfettered market!
All of this, I concede, is an affront to the mores. So be it!
One more point: Discussion of ideological questions is more or less idle unless there be an awareness of what the major premise is. At what is the writer aiming? Is he doing his reasoning with some purpose in mind? If so, what is it?
I do not wish to leave anyone in the dark concerning my basic point of reference. Realizing years ago that I couldn’t possibly be consistent in my positions unless I reasoned from a basic premise—fundamental point of reference—I set about it by asking one of the most difficult of questions: What is man’s earthly purpose?
I could find no answer to that question without bumping, head on, into three of my basic assumptions. The first derives from the observation that man did not create himself, for there is evidence aplenty that man knows very little about himself, thus:
1. The primacy and supremacy of an Infinite Consciousness;
2. The expansibility of individual consciousness, this being demonstrably possible; and
3. The immortality of the individual spirit or consciousness, our earthly moments being not all there is to it—this being something I know but know not how to demonstrate.
With these assumptions, the answer to the question, “What is man’s earthly purpose?” comes clear: It is to expand one’s own consciousness into as near a harmony with Infinite Consciousness as is within the power of each, or, in more lay terms, to see how nearly one can come to a realization of those creative potentialities peculiar to one’s own person, each of us being different in this respect.
This is my major premise with which the reader may or may not agree but he can, at least, decide for himself whether or not the following chapters are reasoned logically from this basic point of reference.
The ideas offered here have been brewing for several years. Many of them, though slightly rephrased, have appeared elsewhere as separate essays. My aim now is to gather those fragments into an integrated, free market theme.
• CHAPTER 2 •
THE AMERICAN SETTING: PAST AND PRESENT
SOMEONE ONCE SAID: It isn’t that Christianity has been tried and found wanting; it has been tried and found difficult—and abandoned. Perhaps the same running away from righteousness is responsible for freedom’s plight for, plainly, the American people are becoming more and more afraid of and are running away from—abandoning—their very own freedom revolution.
Freedom, it seems to me, is of two broad types, psychological and sociological. The psychological—perhaps the more important of the two, but not the major concern of this book—has to do with man freeing himself from his own superstitions, myths, fears, imperfections, ignorance. This, of course, is a never-ending task to which we should give a high priority.
The sociological aspect of freedom, on the other hand, has to do with man imposing his will by force on other men. It is unfortunate that we need to spend any time on this part of the problem, for it calls for combating a situation that should not be. For instance, it is absurd for me forcibly to impose my will upon you: dictate what you are to discover, invent, create, where you shall work, the hours of your labor, the wage you shall receive, what and with whom you shall exchange. And it is just as absurd for any two or even millions or any agency that the millions may contrive—government or otherwise—to try to forcibly direct and control your creative or productive or peaceful actions.
Light can be shed on this thought by reflecting on the manner in which human energy manifests itself. Broadly speaking, it shows forth as either peaceful or unpeaceful, which is to say, as creative or destructive. If my hand is used to paint a picture, write this book, build a home, strew seed, my energy is manifestly peaceful, creative, productive. But if I make a clenched fist of the same hand and strike you with it, my energy is manifestly unpeaceful, destructive.
My theme is that any one of us has a moral right to inhibit the destructive actions of another or others, and, by the same token, we have a right to organize (government) to accomplish this universal right to life, livelihood, liberty. But no living person or any combination of persons, regardless of how organized, has a moral right forcibly to direct and control the peaceful, creative, productive actions of another or others. To repeat, we should not find it necessary to devote time and thought to this sociological aspect of the freedom problem, but a brief sketch of the American setting, past and present, will demonstrate that an awakening is now “a must” of the first order.
Let us pick up the thread of the historical setting beginning with the year 1620 when our Pilgrim Fathers landed at Plymouth Rock. That little colony began by practicing communism; all that was produced by each member, regardless of how much or how little, was forced (unpeaceful) into a common warehouse and the proceeds of the warehouse were doled out in accord with the governing body’s idea of the need. In short, our Pilgrim Fathers began the practice of a principle that was advanced by Karl Marx—more than two centuries later—as the ideal of the Communist Party: “from each according to his ability, to each according to his need.”
There was a persuasive reason why the Pilgrims threw overboard this communalistic or communistic practice: the members were starving and dying because, when people are organized in this manner, the warehouse always runs out of provender. The stark reality of the situation suggested to them that their theory was wrong and, bless them, they paused for reflection. In the third winter when they met with Governor Bradford, he said to them, in effect: Come spring, we’ll try a new idea. We’ll cast aside this communistic notion of to each according to need and try the idea of to each according to merit. Come spring, and each of you shall have what each produces.
As the record has it, springtime witnessed not only father in the field but mother and the children as well. Governor Bradford reported much later, “Any generall wante or famine hath not been amongst them since to this day.”1
It was by reason of the practice of this private property principle that there began in this land of ours an era of growth and development which sooner or later had to lead to revolutionary political ideas. And it did lead to what I refer to as the real American revolution, the revolution from which more and more Americans are now running away, as if in fear.
A Revolutionary Concept
The real American revolution, however, was not the armed conflict we had with King George III. That was a reasonably minor fracas as such fracases go! The real revolution was a novel concept or idea which was a break with all political history. It was something politically new on earth!
Until 1776 men had been contesting with each other—killing each other by the millions—over the age-old question of which of the numerous forms of authoritarianism —that is, man-made authorities—should preside as sovereign over man. The argument was not which was better, freedom or authoritarianism, but which of the several forms of authoritarianism was the least bad. And then, in 1776, in the fraction of one sentence written into the Declaration of Independence, was stated the real American revolution, the new idea, and it was this: “that all men … are endowed by their Creator with certain unalienable Rights; that among these are Life, Liberty and the pursuit of Happiness.” There you have it! This is the essence of the original American setting and the rock on which the “American miracle” was founded.
The revolutionary idea was at once a spiritual, a political, and an economic concept. It was spiritual in that the writers of the Declaration recognized and publicly proclaimed that the Creator was the endower of man’s rights; and, thus, it follows, that the Creator is sovereign.
It was political in that it implicitly denied that the state is the endower of man’s rights, thus holding to the tenet that the state is not sovereign.
Our revolutionary concept was economic in this sense: that if an individual has a right to his life, it follows that he has a right to sustain his life—the sustenance of life being nothing more nor less than the fruits of one’s labor.
It is one thing intellectually to embrace such a revolutionary concept as this; it is quite another matter to implement it—to put it into practice. The implementation came in the form of two political instruments—the Constitution and the Bill of Rights. These were essentially a series of prohibitions—prohibitions not against the people but against the political arrangement the people, from their Old World experience, had learned to fear, namely, over-extended government.2
The Constitution and the Bill of Rights more severely limited government than government had ever before been limited. There were benefits that flowed from this limitation of the state.
The first benefit, once this new concept became effective, was that individuals did not turn to government for security, welfare, or prosperity because government was so. limited that it had little on hand to dispense; nor did its limited power permit taking from some citizens and giving to others. To what or to whom do people turn for security, welfare, and prosperity when government is not available to them? They turn to where they should turn—to themselves.
As a result of this discipline founded on the revolutionary concept that the Creator, not the state, is the endower of man’s rights, along with these instruments of limitation, there was developed, on an unprecedented scale, a quality of character that Emerson referred to as “self-reliance.” The American people gained a world-wide reputation for being self-reliant.
A second benefit that flowed from this severe limitation of government: When government is limited to inhibiting the destructive actions of men, when it sticks to its sole competency of keeping the peace and invoking a common justice, which is to say, when it minimizes such unpeaceful actions as fraud, violence, predation, misrepresentation —when it is thus limited—then there is no organized force standing against the peaceful, productive, creative actions of citizens. As a consequence of this limitation, there was a freeing, a releasing of creative energy, on a scale unheard of before.
I repeat, it was this combination which was chiefly responsible for the veritable outburst of creative human energy and that accounted for the “American miracle.” We must everlastingly keep in mind that its roots were in the revolutionary concept that the Creator, not the state, is the endower of man’s rights.
This keeping-the-peace design manifested itself in individual freedom of choice as related to all peaceful, productive, creative efforts. Citizens had freedom of choice as to how they employed themselves; they had freedom of choice as to how they priced their own labor or steel or whatever; they had freedom of choice as to what they did with their own income.
This is the American setting—as it was.
The Situation in America Today
But let us examine the American setting as it is, a reversal in form, one might say. It seems that the persons we placed in government as our agents of peace discovered a weakness in our unique structure. Having acquisitive instincts for power over others—as indeed so many of us do—they found that the police power they had been given to keep the peace could be used to invade the peaceful, productive, creative areas the citizens had reserved for themselves—one of which was the business sector. And they also discovered that if they incurred any deficits by their interventions, the same police force could be used to collect the wherewithal to pay the bills. The very same force that can be used to protect against predation can also be used predatorily!
It is this misuse of police force, so little understood, which explains why we Americans who inveigh vociferously against socialism are unwittingly adopting socialism ourselves. For it is clear that the extent to which government has departed from the original design of inhibiting the unpeaceful and destructive actions; the extent to which government has invaded the peaceful, productive, creative areas; the extent to which our government has assumed the responsibility for the security, welfare, and prosperity of the citizenry is a measure of the extent to which socialism—communism, if you choose—has developed in this land of ours.
Can we measure this political devolution? Yes, with near precision. Reflect on one of the manifestations of the original structure: each individual having freedom of choice as to how he disposes of his own income. Measure the loss in this freedom of choice and you measure the gain of socialism. Merely bear in mind that freedom of choice exists except as restraint is interposed. Thus, the loss in freedom of choice shows the gain in authoritarian socialism.
The Growth of Government
Let us, then, proceed with the measurement. About 125 years ago the average citizen had somewhere between 95 and 98 per cent freedom of choice with each income dollar; which is to say, the tax take of government—federal, state, and local—was between 2 and 5 per cent of the people’s earned income. But, as the emphasis shifted from the original design, as government invaded the peaceful, productive, and creative areas, and as government assumed more and more the responsibility for the security, welfare, and prosperity of the people, the percentage of the take of total earned income increased. The 2 to 5 per cent take of a relatively small income has steadily grown to a take of approximately 36 per cent of a very large earned income—and grows apace!
Many complacent persons, undaunted by this ominous trend, remark: “Why fret about this; we still have remaining to us, on the average, 64 per cent freedom of choice with respect to each income dollar.
Parenthetically, may I suggest that we use with care the term “on the average.” Assume a 40-hour week, 8 hours a day, Monday through Friday. The average person, today, must work all of Monday and until mid-afternoon on Tuesday for government before he can begin to work for himself. But, if the individual has been extraordinarily successful, he has to work all of Monday, Tuesday, Wednesday, Thursday, and until noon on Friday for the government before he can start working for himself. He has only Friday afternoon to labor for his freedom-of-choice dollars. This, it seems, is a part of the “new” incentive system!
While we still enjoy 64 per cent freedom of choice over our earned income, this should afford little consolation. For we’ve long passed in this country the historical 20 to 25 per cent tax level beyond which governments seldom have gone without resorting to inflation. We are well into the inflationary stage, which means that constitutional or institutional limits on the taxing power have been abandoned; the government has found a way to take all our earned income if and when it chooses to do so.
Are we inflating? Indeed, yes! Let me explain that by “inflation” I do not mean rising prices, a consequence of inflation; rather, I mean government’s expansion of the volume of money. To the economist or mathematician, inflation is the same as counterfeiting; to the lawyer, inflation is distinguished from counterfeiting by being legal. But, definitions aside, governments always have popular support for their inflationary policies; politicians act in response to popular support; they cannot remain in office without it. Why the popular support? It is because a majority of voters are naive enough to believe that they can eat their cake and still have their cake left to them, which is to say, they can continue to receive handouts and “benefits” from government without having to pay for them. Because they see no direct tax levy and because they do not understand that inflation is a cruel, unjust form of taxation, they applaud the something which they feel is coming to them for nothing.
Inflationary Devices
It is interesting to observe the tricks of inflation—political sleight-of-hand, coin clipping, for instance. The sovereign of old—by police force, that is, unpeacefully—“called in” the coin of the realm, clipped the edges, retained the clippings, and returned the balance to the owners. This skulduggery continued until the coins became too small to return.
The French Revolution put that government in dire financial straits, so it issued, in ever-larger amounts, an irredeemable paper money, known as assignats, secured not by gold but by confiscated church properties. Every American should read and know by heart the catastrophic aftermath.3
In Argentina—following Perón and until recently—the expense of the national government was, shall we say, 100 billion pesos annually. But only half that amount could be collected by direct tax levies. How handled? Simple! They merely printed 50 billion pesos annually. One need not be much of an economist to realize that when the money volume is expanded, everything else being equal, the value of the monetary unit declines; prices rise. Imagine yourself “secure” at the time of Perón’s ascendancy to power: bank accounts, insurance, social security, a pension for your old age. These, along with all forms of fixed income, were politically rendered more or less worthless.
Our inflationary scheme in the U.S.A. is brilliant legerdemain: it is so complex that hardly anyone can understand itl We monetize debt; that is, the more the government spends, the more is the money supply expanded. Since the start of deficit financing and monetized debt, our quantity of dollars has enormously increased. Anyone with an eye to trends can observe that the dollar has declined in value and that prices are on the upswing.
The Russians, in my judgment, have the most honest system of dishonesty: the Kremlin—with guns, if necessary—“calls upon” the people to purchase government bonds. After the people have bought the bonds, the government cancels the bonds. Certainly, one does not have to be an economist to observe the chicanery in this method of inflation.
Frankly, I wish we were employing the Russian system of dishonesty rather than our present complex system. Were we inflating in this crude Russian manner, many Americans would be aware of what is being done to them. People who can’t see through shell games are likely to be taken in.
This is what we must realize: Inflation is the fiscal concomitant of socialism or the welfare state or state interventionism—call these unpeaceful, political structures what you will. Politically, it isn’t possible to finance government expenditures by direct tax levies beyond the point at which direct tax levies are politically expedient—20-25 per cent, as a rule. The overextended state is always beyond this point. Thus, anyone who does not like inflation can do nothing about it except as he assists in divesting our economy of socialism.
A good economy, in one respect, is analogous to a sponge; it can sop up a lot of mess. But once the sponge is saturated, the sponge itself is a mess. The only way to make it useful again is to wring the mess out of it.
Inflation in Modern France
Inflation may be better understood if we analyze it in some country other than our own; it is difficult to see our own faults, easy to note the mistakes of others. France serves our purpose, for that country, economically, has many likenesses to the U.S.A.
In 1914—only 50 years ago—modern France began what is now underway here; that is, her government invaded the peaceful, productive, creative areas and more and more assumed the responsibility for the security, welfare, and prosperity of the French people: socialism.
If my previous contentions be correct, the franc should have lost some of its purchasing value during these 50 years. To repeat, I have contended that socialism can be financed only by inflation which is an expansion of money volume—with a consequent price rise as money value declines. If my reasoning is valid, the franc should have declined in purchasing value. Has it? Yes, more than 99½ per cent!
In Paris, during World War I, I bought a good dinner for 5 francs, the equivalent of a 1918 dollar. On my next visit to Paris—1947—I took a friend to luncheon, admittedly a better restaurant than I visited as a soldier boy. How much for the two luncheons? 3,400 francs! Two years later I took my wife to the same restaurant and had the same luncheons, because it is instructive to check prices. How much? 4,100 francs! On a recent visit, same restaurant, same luncheons—6,000 francs!
Visualize a French lad in his early teens, forethoughtful, looking to 1964 when he would reach retirement. He bought a paid-up annuity, one that would return him 1,000 francs per month beginning in 1964. In 1914, the year of purchase, he could have lived quite handsomely on this amount. Yet, in 1964, the thousand francs will buy no more than a skimpy, low-grade meal, pretty poor fare for a whole month! This fictional catastrophe, in no way exaggerated, was brought about by an inevitable inflation in the name of social security.
The validity of this line of reasoning is confirmed historically: Only 35 years ago the take of earned income by government in Russia was 29 per cent; in Germany, 22 per cent; in England, 21 per cent. Keep in mind that we are now at 36 per cent and that our government has the policy of increasing expenditures as it reduces taxes, assuring more inflation which, of course, increases the take.
The “Galloping” Stage
Inflation, in popular terms, is of two types: “creeping” and “galloping.” Ours is often described as “creeping,” a term that appears rather weak to describe a dollar that has lost between 52 and 63 per cent of its purchasing value since 1939—according to which index one uses.
“Galloping” inflation is the type that Germany experienced following World War I and France during her issuance of the assignats. China’s money went “galloping” not too long ago, and the same can be said for the Latin American currencies right now.
I own one piece of Bolivia’s currency—10,000 Bolivianos. In 1935 it had the purchasing power of 4,600 of our 1964 dollars. What now? Eighty cents! There is galloping inflation for you and brought about—they had no wars—by socialism. In every instance “galloping” inflation has been preceded by “creeping” inflation. Not too strangely, inflation creeps before it gallops; and anyone having a dread of inflation should be on the alert whenever it begins to creep.
Any rational person should dread inflation, more so in the U.S.A. than elsewhere, and for self-evident reasons: Americans have a more advanced division-of-labor society than has heretofore existed; we are more specialized and further removed from self-subsistence than peoples of other times and places. I, for instance, do not know how to build my home, raise my food, make my clothes; with respect to most of what I consume, I know next to nothing. Like all other Americans—even farmers, for they are mechanized—I have become dependent on the free, uninhibited exchange of our countless specializations. Try to visualize existing on that which you alone produce!
A necessity is anything on which we have become dependent. Free, peaceful, unfettered exchange is as necessary to present-day Americans as is air or water.
There is, however, a key fact to keep in mind: In a highly specialized economy it is not possible to effect these necessary exchanges by barter. The woman who inspects transistors makes no attempt to barter the service she renders for a pair of shoes; nor do you observe a car owner trying to barter a goose for a gallon of gas.
No, an advanced division-of-labor economy cannot be made to function by direct swaps of this for that. Such an economy has only one means to effect the necessary exchanges of its numerous specializations: an economic circulatory system, that is, a medium of exchange—money.
Thinning the Blood
This economic circulatory system can be likened, in one respect, to the circulatory system of the body, the blood stream. Among other functions, the blood stream effects numerous exchanges: it picks up oxygen and ingested food, carrying these life givers to some 30 trillion cells of the body, and, at these trillions of points, it picks up carbon dioxide and waste matters, returning these items for disposal. But let someone insert a hypodermic needle into a vein, thin the blood stream—destroy its integrity—and the victim can be referred to in the past tense.
Likewise, one can thin the economic circulatory system by inflating—assured by socialism—and bring on the same catastrophic results; exchange will be impossible with each of us wedded to our specialization but unable to exchange our own for the specializations of others. The integrity of the medium of exchange has to be presupposed to assume that a division-of-labor economy can function for any sustained period of time.
To illustrate: Following the 1918 Armistice, my squadron was sent to Coblenz in the Army of Occupation. The German inflation was under way. I knew no more about inflation then than do most of our citizens now. And like many people, I enjoyed what I experienced: more marks each pay day, but not because of any increase in salary. The government was taking care of my food, shelter, clothing—I had “security.” My marks were used mostly to play games of chance—the more marks the more fun. Why shouldn’t I enjoy inflation?
The German inflation continued with mounting intensity; by 1923 it reached a point where 30 million marks would not buy a loaf of bread.
About the time I arrived in Coblenz (this is fiction, but sound) an elderly German passed on, leaving his fortune to his two sons—500,000 marks each. One was a frugal lad; he never spent a pfennig of it. The other was a playboy; he spent the whole inheritance on champagne parties. When the day came in 1923 that 30 million marks wouldn’t buy a loaf of bread, the lad who had saved everything, had nothing. But the other was able to exchange his empty champagne bottles for a dinner! The economy had been reduced to barter. To fully grasp the present American setting, we must be able to see that this very process is gaining momentum in our own economy. And primarily because we are substituting socialism for the peaceful ways of the free market.
At this point it is appropriate to be hardheaded and ask a practical question: Has there ever been an instance, historically, when a country has been on our kind of a socialistic toboggan and succeeded in reversing herself? There was a 10-year turnabout in the city-state of Lagash circa 2500 B.C., a 2-year reversal in the France of Turgot in the eighteenth century and, perhaps, there have been other minor cases of such political heroism. But, for the most part, the record reads like “the decline and fall of the Roman Empire.”
The only significant turnabout known to me took place in England following the Napoleonic Wars. The nation’s debt, in relation to her resources, must have been greater than ours now is; the taxation was confiscatory; and the restrictions on the peaceful production and exchange of goods and services—along with price controls—were so numerous and inhibitory that had it not been for the smugglers, black marketeers, and breakers of the law, many would have starved.4 Altogether, a bleak economic picture, indeed! Here, assuredly, was a setting worse than ours yet is.
Something happened, unique in history; and it is well that we take cognizance of it. One thing for certain, the change was wrought by a handful of men. We have a good account of the work of Richard Cobden and John Bright in England and of their two French collaborators, a politician named Chevalier, and the political economist and essayist, Frederic Bastiat. Cobden and Bright, having a far better understanding of freedom-in-exchange principles than their contemporaries, went about England speaking and writing on the freedom philosophy. The economy was out of kilter; Members of Parliament listened and, as a consequence, there began the greatest reform movement in English history.
The reform consisted of the repeal of restrictive law; the peaceful ways of the market were made possible by the removal of unpeaceful governmental interventionism. The Corn Laws (tariffs) were repealed outright; the Poor Laws (relief) were greatly curtailed; there were numerous other repeals. And, fortunately for the people, their newly limited government, nominally headed by Queen Victoria, relaxed the authority which the people themselves believed to be implicit in their Sovereign; the government gave the people freedom in the sense that a prisoner on parole is free: he can be yanked back! But the government exercised no such control; Englishmen by the hundreds of thousands roamed over the face of the earth achieving unparalleled prosperity and building a relatively enlightened empire.
This development continued until just before World War I when the same old political disease set in again. What precisely is this disease that must result in inflation and other unpeaceful manifestations? It has many popular names, some already mentioned, such as socialism, communism, the welfare state, government interventionism, authoritarianism. It has other names such as fascism, nazism, Fabianism, the planned economy. It has local names like New Deal, Fair Deal, New Republicanism, New Frontier; and new ones will be contrived to suggest that the identical political arrangement has something novel about it.
Faith in Government Intervention
However, popular names are but generalizations and oversimplifications. What, then, is really the essence of the above-mentioned “progressive ideologies”? Careful scrutiny of their avowed aims will reveal that each has a characteristic common to the others, this characteristic being the cell in the body politic that has the capacity for inordinate growth and from which stems our countless unpeaceful troubles. It is in the form of a belief—a rapidly growing belief—in the use of organized police force (government) not with the emphasis on keeping the peace but on a political manipulation of the peaceful, productive, creative activities of the citizenry. An increased intervention in all markets—commodities, exchange, finance, education, housing, or whatever—is what the proponents of this multi-named system set forth as their promise. I am only repeating the claim they present with pride; check it out for yourself.
To illustrate: I can remember the time when, if a house were wanted, the customer would look to the free market to supply it. The first step involved someone wanting a house in preference to other alternatives; the initiative rested with the desiring consumer. Next, the reliance was on those who wished to compete in the building. Last, we relied on people who thought they saw some advantage to themselves in loaning the money for the tools, labor, and material. With our reliance on the peaceful procedures of the market, we built more square feet of housing per person than was ever built in any other country at any other time.
Yet, despite this remarkable accomplishment, more and more people are coming to believe that the free market should be shelved and that, in its stead, government should use its police force to take the income of some and give it, in the form of housing, to the government’s idea of the needy. In other words, we are now practicing the principle used by the Pilgrim Fathers in 1620-23, and proclaimed as an ideal by Karl Marx in 1848: “from each according to his abilities, to each according to his needs,” and by the use of organized police force! (Keep in mind that I have used housing only as an example; the same policy is being extended to all segments of the economy.)
Here is a crucial, important, and self-evident fact: With increasing belief in police force as a means to productive ends, the belief in men acting freely, competitively, cooperatively, privately, voluntarily must correspondingly diminish. As a reliance on political authoritarianism advances, a faith in free men suffers erosion and, finally, obliteration.
It would seem to follow that there is no remedy for our current devolution except as a faith in free men be restored. The evolution of such a faith, I suspect, will rest as much on an unbelief in authoritarianism as on a belief of what can be wrought by voluntarism. I propose to share and explain my unqualified skepticism of political rigging as well as my faith in the creativity and miraculous performances of free men in an unfettered, peaceful market.
So much for the American setting—past and present!
________________
1 Taken from Bradford’s History “of Plimoth Plantation" from the original manuscript. Printed under the direction of the Secretary of the Commonwealth by order of the General Court (Boston: Wright & Potter Printing Company, State Printers, 1898), p. 162.
2 The Constitution and the Bill of Rights specify 46 negations of governmental actions.
3 See Fiat Money Inflation in France by Andrew Dickson White (Irvington-on-Hudson, N. Y.: Foundation for Economic Education, Inc., 1959), $2.00 cloth; $1.25 paper.
4 When the law runs amuck, lawlessness often ensues.
• CHAPTER 3 •
STRIFE AS A WAY OF LIFE
BROADLY SPEAKING, there are two opposing philosophies of human relationships. One commends that these relationships be in terms of peace and harmony. The other, while never overtly commended, operates by way of strife and violence. One is peaceful; the other unpeaceful.
When peace and harmony are adhered to, only willing exchange exists in the market place—the economics of reciprocity and practice of the Golden Rule. No special privilege is countenanced. All men are equal before the law, as before God. The life and the livelihood of a minority of one enjoys the same respect as the lives and livelihoods of majorities, for such rights are, as set forth in the Declaration of Independence, conceived to be an endowment of the Creator. Everyone is completely free to act creatively as his abilities and ambitions permit; no restraint in this respect—none whatsoever.
Abandon the ideal of peace and harmony and the only alternative is to embrace strife and violence, expressed ultimately as robbery and murder. Plunder, spoliation, special privilege, feathering one’s own nest at the expense of others, doing one’s own brand of good with the fruits of the labor of others—coercive, destructive, and unpeaceful schemes of all sorts—fall within the order of strife and violence.
Are we abandoning the ideal of peace and harmony and drifting into the practice of strife and violence as a way of life? That’s the question to be examined in this chapter—and answered in the affirmative.
At the outset, it is well to ask why so few people are seriously concerned about this trend. William James may have suggested the reason: “Now, there is a striking law over which few people seem to have pondered. It is this: That among all the differences which exist, the only ones that interest us strongly are those we do not take for granted.”1
Socialistic practices are now so ingrained in our thinking, so customary, so much a part of our mores, that we take them for granted. No longer do we ponder them; no longer do we even suspect that they are founded on strife and violence. Once a socialistic practice has been Americanized it becomes a member of the family so to speak and, as a consequence, is rarely suspected of any violent or evil taint. With so much socialism now taken for granted, we are inclined to think that only other countries condone and practice strife and violence—not us.
Who, for instance, ever thinks of TVA as founded on strife and violence? Or social security, federal urban renewal, public housing, foreign aid, farm and all other subsidies, the Post Office, rent control, other wage and price controls, all space projects other than for strictly defensive purposes, compulsory unionism, production controls, tariffs, and all other governmental protections against competition? Who ponders the fact that every one of these aspects of state socialism is an exemplification of strife and violence and that such practices are multiplying rapidly?
The word “violence,” as here used, refers to a particular kind of force. Customarily, the word is applied indiscriminately to two distinct kinds of force, each as different from the other as an olive branch differs from a gun. One is defensive or repellent force. The other is initiated or aggressive force. If someone were to initiate such an action as flying at you with a dagger, that would be an example of aggressive force. It is this kind of force I call strife or violence. The force you would employ to repel the violence I would call defensive force.
Try to think of a single instance where aggressive force—strife or violence—is morally warranted. There is none. Violence is morally insupportable!
Defensive force is never an initial action. It comes into play only secondarily, that is, as the antidote to aggressive force or violence. Any individual has a moral right to defend his life, the fruits of his labor (that which sustains his life), and his liberty—by demeanor, by persuasion, or with a club if necessary. Defensive force is morally warranted.
Moral rights are exclusively the attributes of individuals. They inhere in no collective, governmental or otherwise. Thus, political officialdom, in sound theory, can have no rights of action which do not pre-exist as rights in the individuals who organize government. To argue contrarily is to construct a theory no more tenable than the Divine Right of Kings. For, if the right to government action does not originate with the organizers of said government, from whence does it come?
As the individual has the moral right to defend his life and property—a right common to all individuals, a universal right—he is within his rights to delegate this right of defense to a societal organization. We have here the logical prescription for government’s limitation. It performs morally when it carries out the individual moral right of defense.
As the individual has no moral right to use aggressive force against another or others—a moral limitation common to all individuals—it follows that he cannot delegate that which he does not possess. Thus, his societal organization—government—has no moral right to aggress against another or others. To do so would be to employ strife or violence.
To repeat a point in the previous chapter, it is necessary to recognize that man’s energies manifest themselves either destructively or creatively, peacefully or violently. It is the function of government to inhibit and to penalize the destructive or violent manifestations of human energy. It is a malfunction to inhibit, to penalize, to interfere in any way whatsoever with the peaceful or creative or productive manifestations of human energy. To do so is clearly to aggress, that is, to take violent action.
TVA Analyzed
In the light of these definitions, let us then consider the nature and impact of TVA or any of the other socialistic projects earlier mentioned. We may assume that you are living peaceably off the fruits of your own labor, including anything which you have acquired from others in willing exchange. You are aggressing against no one; therefore, there is no occasion for anyone’s use of defensive force against you, defense being a secondary action against an initiated aggressive action. And, certainly, there is no moral sanction for anyone or any organization to take aggressive action against you.
Now, let us suppose that some people decide they want their power and light at a price lower than the market rate. To accomplish their purpose, they forcibly (with weapons, if necessary) collect the fruits of your peaceable labor in the form of capital to construct the power plant. Then they annually use force to take your income to defray the deficits of their operation—deficits incurred by reason of the sub-market rates they charge themselves for the power and light they use. The questions I wish to pose are these: Is any set of persons, regardless of how economically strapped they may be, morally warranted in any such action? Would not their project be founded on strife or violence? The answers to these questions are inescapably clear: such persons are thieves and criminals.
Very well. Move on to TVA. What distinguishes TVA from the above? Not a thing, except that in the case of TVA the immoral, aggressive, violent action has been legalized. This merely means that the law has been perverted so as to exonerate the “beneficiaries” from the customary penalties for criminal action. But the fact remains that TVA, and all other instances of state socialism, are founded on strife and violencel
Most people are inclined to scoff at this idea simply because they have never witnessed any instance of actual violence associated with TVA. They are blinded to what really takes place by the common acquiescence to socialistic measures, once these forms of Robin Hoodism are legalized. Everybody goes along. But wait!
Should not any conscionable citizen pause for reflection when he awakens to the fact that the people of his country are abandoning the ideal of peace and harmony and drifting into the practice of strife and violence as a way of life? The fact