The Market Economy and Its Life-Support SystemBy
The World we live in is divided. The major division, the division drilled into us by journalistic usage, separates the planet into the iron curtain countries versus the free world. Soviet Russia and its satellites plus communist China and its satellites are geographically separate from the nations comprising the free world, but the differences are not merely geographical.
The iron curtain countries are fiercely devoted to an ideology which is at war with the philosophy of liberty which the free world professes, but to which the free world gives little more than lip service. Communism is a fanatical, crusading faith which activates millions behind the iron curtain; nothing of like intensity inspires the citizens of the so-called free nations. I say “so-called,” having in mind that Britain is socialist, France has a socialist president, and America continues welfarist despite the good intentions of Mr. Reagan and many of his henchmen.
Why does government continue to expand? Why does it cost us more with each passing year? It’s no mystery; more and more people are dependent on government give-away programs which the taxpayers have to pay for. Social Security is a costly program and it’s here to stay, at ]east for the foreseeable future; it has now become compulsory for those formerly outside its grasp—like FEE. Then there is our permanent bureaucracy, with its multiple alphabet agencies empowered to regulate virtually every facet of our lives. There are various and growing numbers of people and groups encompassed by the entitlement programs; many businessmen enjoy special privileges conferred by government; millions of former government employees and politicians dig deep into the tax fund for their pensions. Everyone who feeds at the political trough has a stake in bigger government and higher taxes.
Freedom at the Fringes
Freedom is marginal in modern societies; it survives on the fringes of life. We can widen the margin of freedom only insofar as we deepen our understanding of the free society and its imperatives, and then act wisely in terms of what it demands of us. Recovery of freedom will not be easy, for the people of this nation are not of one mind as to the merits of a society of free people. There are Marxists in America and they show renewed vitality. One of them, a professor at New York University, has recently (1982) written a book entitled The Left Academy, describing Marxist scholarship on American campuses, in the departments of economics, political science, sociology, history and psychology. He tells us that:
In political science, for example, four Marxist-inspired textbooks in American government have been published since 1970, whereas before that there were none. In the same period, Cambridge, Oxford, and Princeton University Presses, the three most prestigious university publishers, have among them brought out over fifteen books on Marx and Marxism, almost all of them quite sympathetic. There are over 400 courses given today in Marxist philosophy, whereas hardly any were given in the 1960s.
Socialists and liberals in our nation are more numerous than Marxists: they are also more respectable. They regard themselves as intellectuals, and they write and they talk. Using the written and the spoken word from a variety of podia and pulpits they virtually dominate the various avenues of communication—radio, television, movies, the press, schools and churches. They report the news they want us to hear and tell us how to think about it; they write most of the scripts for Broadway, radio, television and the movies; they write speeches for people in public life; they compose the songs and the slogans that stir popular emotions. They manufacture the public opinion which determines political action.
In short, millions of Americans today—for reasons of their own—do not want a market economy; they are financially dependent on an over-extended government, massive Federal spending, and high taxes.
That’s the bad news. Now for the good news. The good news is that the philosophy of the market economy and the free society is in better shape than ever before. It is more intellectually rigorous, more solidly based, spelled out more clearly than ever. And it is available in an increasing number of books, pamphlets, and periodicals. Hundreds of organizations are now hotbeds of free market activity, promoting a set of beliefs on the highest mental and moral plane, and reaching down into the deepest wellsprings of human nature—the firmly rooted aspiration of every man and woman for the elbow room necessary for them if they are to achieve their personal goals.
The Socialist System versus The Free Market Economy
Socialism or communism is easy to understand; a socialized society is one where the government owns the means of production; government operates the factories, the banks, the farms, the mines; it generates the power and controls transport and communication. In a socialist or communist system government runs the country. The system doesn’t work.
The free society, by contrast, is not run by anyone. Yet, it runs more efficiently than any politically planned economy. The free society operates within certain rules which safeguard life, liberty and property; individual decisions within these rules marvelously coordinate—as if guided by Adam Smith’s “invisible hand.” Individual ownership is a key concept of the free society; manufacturing, business and trade operate under private auspices; productive property is owned by scores of millions of individual persons. The market economy is not a “system,” but it works. It is the market economy which created and continuously renews the prosperity we enjoy, and which the world envies.
Our forebears in the 18th century talked a lot about property. The political war cry of the period was “Life, Liberty, and Property,” with major stress on property. There was a reason for this. These people knew that the chief distinction between a slave and a free man was the fact that the slave had no right to own things. The slave worked and he produced things, but he had no right to possess them; the product of the slave’s labor belonged to his owner. On the other hand, any person with the right to own whatever he produced was a free man; his survival did not depend on another’s whim: he was his own man. And being free, he had every incentive to become more productive, and thus more prosperous.
Personal liberty cannot exist except on a private property foundation, and that foundation is badly eroded in 1984. The fact that in our nation today the productive people of this society work approximately five months out of each year for government, before they are allowed to keep the fruits of their toil for themselves, would have seemed to our forebears a monstrous injustice. Private property is a pillar of the free society idea, but it’s a shaky pillar in today’s world.
Everyone desires a place in society which gives him the widest range of opportunities over the greatest possible latitude to live the life he has chosen. Everyone knows that he must be free if he is to fully realize his personal goals. I suppose that the average citizen of Moscow or Peking has his dreams, just as we do, and presumably he does achieve some of his ambitions. But the state exercises almost complete authority over his life, determining his training, the kind of work he does, how he shall live, with whom he associates, and what he reads.
Although we in this country are not as free as we say we’d like to be, the opportunities here to live a full and well-rounded life are infinitely greater than they are in collectivist nations. We are free to read what we please, to speak our minds, to attend the church and school of our choice. These intellectual and cultural freedoms of ours are directly related to the degree of freedom we enjoy in the economic sphere. Economic freedom is important in itself, because every freedom is important. But economic freedom is doubly important because the higher freedoms depend on it.
Take freedom of the press, for example—and I use the term “the press” broadly, to include not only newspapers and periodicals, but also TV and radio. The press is the communications industry, and it is big business; it’s one of our largest industries. People in the communications industry often display an inflated notion of what freedom of the press means; their understanding of responsible journalism is very vague. Those of you who read the newsletter, Accuracy in Media, are aware of the extent of irresponsible journalism in contemporary society. Despite which, believers in the free society uphold the doctrine of freedom of the press.
A free press is what you have when there is no government censor telling reporters what to write and editors what to print. No American publisher, to my knowledge, advocates that the Washington bureaucracy be empowered to control and operate the publishing business. But a lot of people in the newspaper trade editorialize in favor of the government regulation of business—their own excepted; and we find the same kind of advocacy journalism on radio and television. People in the press are left of center, by and large.
Suppose the country accepts the advice of these people and nationalizes coal, steel, the automobile industry, the airlines—one industry after another till all business is run by the government. Should this happen can anyone believe that a now all-powerful government will exempt the gigantic communications industry from its controls and allow the press to remain free to criticize it? Not a chance. The press too will be nationalized, becoming the government’s agency of information and propaganda, specializing in Orwell’s newspeak to program the minds of people.
An analogous situation exists with reference to academic freedom. I’ve never heard of a professor opposing the concept of academic freedom; he might not understand what academic freedom means, but he’s all for it. Academic freedom means that a professor is allowed to teach, research and publish as he pleases without having to go to the government for permission—so long as some academic institution is willing to pay him a salary and provide him with such classroom and laboratory facilities as he needs. Academic freedom does not mean that the professor is entitled to a teaching job in an institution that doesn’t want him; it means only that the government shall keep hands off the campus.
Professors, like their counterparts in the press, tend to be left of center; they believe that business and industry should be regulated by the government. Suppose their wishes come true; suppose government does control the nation’s business and industry. From whence will come the funds to support our colleges? From one source only: government. Government controls have dried up the private sources which once bankrolled education, so government will have to finance the schools. Whoever pays the piper will call the tune, so when government pays the bills it will eventually dictate the curriculum. Teachers then become political flunkies and our colleges and universities become an arm of government, something like the Post Office.
The situation in the churches is similar, but somewhat more complex. I have many friends in the parish ministry, and I know them to be devout, honest, hardworking and devoted to the traditional values. There are some left-wing clergy in the parish ministry, turned in that direction by their professors in college and seminary, and by the materials foisted on them by certain departments in their respective denominations. But if you are looking for hard core left-wing churchmen go to the denominational hierarchies, to the religious press, to theological faculties, to the various local councils of churches, and especially to the National and World Councils of Churches. Collectivist churchmen have a monopoly of the positions of influence in these sectors of ecclesiastical life.
These people profess their devotion to the ideal of religious liberty; they believe in the independence of the churches from government interference; they don’t want a state church—they say. But if we get what they are striving for—government control of business and industry—private funding of churches will give way to taxpayer funding. When this happens the churches will no longer be free institutions; they will become branches of the government bureaucracy.
The Most to Lose
Who has the greatest stake in the free economy? Businessmen? No. Industrialists? No. It is the scholarly class that has the greatest stake in the free society and market economy. I’m talking about teachers, preachers, researchers, writers, of independent mind and character—the genuine intellectuals. When a nation succumbs to communism or any other form of totalitarian tyranny, it is no longer business as usual, but business of some sort must continue.
Every industrialized society needs managerial and technical expertise to keep it going. Someone has to operate the factories, someone must keep the wheels of industry turning, and someone must maintain a certain level of productive efficiency. Who will do this: professors of sociology, preachers, Dan Rather, Jane Fonda? Successful industrialists and businessmen, technicians who know how to get things produced—such people have a pretty fair chance to get good jobs after the Revolution. But what happens to independent intellectuals when the communists take over? A totalitarian society has no place for people of searching mind and high character; they vanish into the Gulag.
What a paradox; those who would have most to lose in a collectivist society are working hardest to bring it about. It’s a kind of social suicide for these folk.
The market economy happens to be the most productive, most prosperous economy. But even if it were not, even if the market economy left us poor but honest, there’s not a one of us here who would not choose to live under it, because only the free economy is compatible with freedom of worship, only the free economy permits a variety of independent educational systems, only the free economy allows the free mind to function in the areas of speech and publishing.
Economics is only a part of life, but it is the part which sustains and makes possible all the rest—the intellectual, the spiritual, the cultural. If we want to be free in these areas we must maintain economic freedom. John Maynard Keynes, in his backhanded fashion, lends support to this contention by declaring that his theory of economic planning adapts nicely to a totalitarian political order. He wrote a special foreword for the 1936 German translation of his General Theory, and had this to say: “The theory of aggregate production, which is the point of the following book . . . can be much easier adapted to the conditions of a totalitarian state than . . . under conditions of free production and a large degree of laissez-faire.” If the planned economy adapts nicely to Nazism, it is obviously incompatible with the institutions of a free society.
If you look behind the iron curtain you will see several species of communism. Russian communism has a Slavic flavor. The communism of the late Mao Tse-tung contains elements unique to the culture of China. There’s a Latin beat to Castro’s communism. Yugoslavian communism is, to a limited extent, in business for itself; and the same is true of the communisms of various Third World nations. Those who happen to have an interest may make comparisons between the communism of one nation and that of another.
The situation as regards the free society and market economy way of life is quite different; there’s only one capitalism in history, and only one today. Japan, I regard as a branch grafted onto our stem. I yield to popular usage and for convenience use the term “capitalism” for the social order I have briefly sketched—the free society and market economy way of life. The word “capitalism” is today a little less confusing than the word “liberalism” which was intelligible to our forebears, but which now means the opposite of what it meant in the 19th century. Capitalism became explicit about two centuries ago when the political ideas of The Declaration of Independence and The Constitution joined forces with the economic ideas expounded in The Wealth of Nations.
The American Idea
Capitalism is a shorthand term for the kind of society based on this combination of the market economy with a limited government of equal justice, and it appeared in just one place on the globe. It would be more accurate to say “one culture, the Anglo-American, separated by the Atlantic Ocean.” The colonists thought of themselves as Englishmen until just before the Revolution. Many had come here from England; they shared their institutions and their history with England. But liberty attained a purer form here than in the mother country, for England was bogged down in the remnants of feudalism. So, let’s focus on the free society as it took shape in America, and nowhere else on the planet.
The American idea of government was unique. Trace the history of political institutions as far back as you wish; every one is based on the philosopher-king idea. It was Plato who pinned this label on the universally accepted belief that “cities would never have rest from their evils” until they found some man who possessed the wisdom of a philosopher and at the same time wielded absolute power. The philosopher, as Plato uses the term, might be defined as a very smart fellow who really does know what is good for us. Trouble is, we ignore the philosopher; we don’t want to know what is good for us; or, if we do know we are too lazy or too wicked to live the life that is good for us. What’s the answer?
Simple! Find the man who embodies the ultimate in wisdom and goodness. Then vest this man with all the power he needs to extend his benevolence, as dictated by his wisdom. He will then use his power to force us to be free; he will make us good—at which point we’ll have our heaven on earth.
The people we refer to as our Founding Fathers took just the opposite tack. They threw out the philosopher-king idea, lock, stock and barrel. They rejected altogether those who advised: “Increase the powers of government in order to magnify its capacity to do good.” Believing that authoritarian politics is intrinsically evil, they said: “Limit the powers of government drastically, by the rule of law, so that those who rule will have no opportunity to do evil.” This was the unique political formula which took root on our shores. My own thumbnail formulation of this point is: “Never advocate any more power for your best friends than you would be willing to see wielded by your worst enemies.”
The Containment of Power
The critical issue here is the containment of power. Each person should be regarded as an end in himself, and in a truly free society individual autonomy is respected. But in a power situation people are reduced to a mere means to serve the ends of others. The philosopher-king idea of unlimited power to run the lives of others is based upon a profound distrust of the ability of people to run their own lives. People must be made to feel little before governments can grow big. As the power of government increases the power in the people diminishes.
Now, it may be true that a lot of people exercise but little wisdom in running their own lives, but it is a non sequitur to deduce from this that A’s situation will be improved if B runs A’s life for him against A’s will! We know that this cannot work because it violates the basic law of life, a law as fundamental in human affairs as the law of gravity in Newtonian physics: Each person is in control of his own life, and if he doesn’t take charge of himself no one can assume this responsibility for him.
The original American idea was based upon the profound conviction that people really do have the latent talents and abilities which, properly schooled and utilized, enable each person to take charge of his own life and accept responsibility for his actions; each person has within him the necessary ingredients for living a truly human life of growth, fulfillment and joy. The potential for life of this quality is built into human nature itself as an original endowment. What we do or fail to do with that original endowment is up to the individual man or woman, and only a free society provides the maximum opportunity for the fullest attainment of what we have it in us to become.
Before people accept a caretaker government they must be convinced that they can’t take care of themselves; independence, resourcefulness, self-reliance, fortitude, endurance, hardihood, and similar personal qualities must be programmed out of them. Our 18th-century forebears possessed these and other traits of character which enabled them to stand on their own two feet; so they conceived a government that would keep the peace and otherwise let people alone to run their own affairs.
What was the source of their beliefs about themselves; where did their ideas about life come from? We know from the books they read that the Greek literature of the classical age was familiar to them. In Latin literature and in the history of Rome they saw their own situation as in a mirror. And even those who were comparatively unlettered were steeped in the Old and New Testaments. It has often been observed that the Western intellectual and spiritual heritage is a triple cord woven of ideas and a vision of the good life derived from Athens, Rome, and The Bible.
On Becoming Human
The human nature we are born with is raw material; it’s the elemental stuff each of us works with toward the achievement of adulthood and maturity. Very few people realize their potential fully, but the degree of our attainment depends on the ideas we have as to what it means to be a human being. If we believe ourselves to be helpless pawns in the grip of fate we will be less effective personalities than if we believe ourselves masters of our own destiny. If we blame childhood poverty, or parents who didn’t understand us, or the wrong crowd, or an uncaring society, or our glands, or whatever, for our personal shortcomings we will never strive to convert our minuses into pluses.
No person reaches his full stature of humanity unless he maintains a lively contact with a set of ideas as to what it means to be a person, ideas we have absorbed from our cultural heritage. And it is a fact that great numbers of people in this favored land of ours no longer believe in the ideas that made Western civilization unique. What are some of these ideas?
Our forebears learned from their educational sources that we live in a purposeful universe in which human beings are the most meaningful representation of a mighty cosmic design. They believed that we are created beings, not mere chance collocations of atoms. As embodiments of the Divine Creativity we are gifted with reason and free will. By the exercise of right reason we can think God’s thoughts after Him and thus gain precious nuggets of truth. And by the exercise of free will, we can overcome environmental handicaps and become responsible beings. They believed that it is within the power of every person to fashion his own character, and that he has a moral obligation to do just that.
Our forebears believed in the moral law. They knew that the very existence of a free society presupposes that most people most of the time will not murder or assault or steal; they will keep their word, fulfill their contracts, tell the truth, lend a hand to a neighbor. These moral imperatives were believed to be expressions of the will of God.
Every human being has a unique role to play in the Divine Plan, and because of this, each private life is lived within a sacred precinct. Acknowledging the inviolability of this personal domain, the Declaration speaks of rights endowed by The Creator which governments are morally bound to respect. Given the premise of individual rights it follows that the primary responsibility of the law is to secure the rights of every man, woman and child.
It was upon a foundation of these basic ideas about the unique sacredness of human life, the efficacy of reason, the reality of free will, the moral law, and the inviolable rights of persons that the solid citizenry of the 18th century structured the free society—with the free market as its economic corollary. We have carelessly allowed this precious heritage to dribble away, but the hunger for freedom has not been lost; it will never be lost, for it is born anew with every child who comes into the world. The recovery of our heritage of liberty may exact a cost in blood, sweat and tears; but of one thing I am certain—when we want freedom desperately enough, nothing will stop us from getting it.
Tags: economics, ethics, free market, free society