We celebrate in 1976 the bicentennial of two significant events, the signing of the American Declaration of Independence, and the publication of The Wealth of Nations by Adam Smith.

Smith had made a name for himself with an earlier volume entitled Theory of the Moral Sentiments, published in 1759, but he is now remembered mainly for his Wealth of Nations, on which he labored for ten years. The Wealth of Nations sold briskly in the American colonies, some 2,500 copies within five years of publication, even though our people were at war. This is a remarkable fact, for there were only three million people living on these shores two centuries ago, and about one-third of these were Loyalists. In England, as in the colonies, there were two opposed political factions—Whigs and Tories. The Tories favored the King and the old regime; the Whigs worked to increase freedom in society. Adam Smith was a Whig; the men we call Founding Fathers were Whigs. There was a Whig faction in the British Parliament and many Englishmen were bound to the American cause by strong intellectual and emotional ties.

Adam Smith’s book was warmly received here, not only because it was a great work of literature, but also because it provided a philosophical justification for individual freedom in the areas of manufacture and trade. The colonies, of course, were largely agricultural; but of necessity there were also artisans of all sorts. There had to be carpenters and cabinet makers, bricklayers and blacksmiths, weavers and tailors, gunsmiths and bootmakers. These colonial manufacturers and farmers had been practicing economic freedom all along; simply because the Crown was too busy with other matters to interfere seriously. There were numerous laws designed to regulate trade, but the laws were difficult to enforce, and so they were ignored.

Mercantilism

The nations of Europe at this time embraced a theory of economic organization called "Mercantilism." Mercantilism was based upon the idea of national rivalry, and each nation sought to get the better of other nations by exporting merchandise in exchange for gold and silver. The goal of Mercantilism was the enhancement of national prestige by accumulating the precious metals, but the goal was not nearly so significant as the means employed to reach it. Mercantilism was the planned economy par excellence; the nation was trussed up in a strait jacket ofregulations just about as severe as the controls imposed today upon the people of Russia or China. The modern authoritarian state, of course, has more efficient methods of surveillance and control than did the governments of the seventeenth and eighteenth centuries, but the basic idea is similar.

Take the theory of Mercantilism and boil it down. What do you get? You get political control over what you eat. Now, if someone holds the power of decision over you as to whether you eat or starve, he’s acquired considerable leverage over every aspect of your life; you do not bite the hand that feeds you! If someone controls your livelihood, you do his bidding, or people start talking about you in the past tense!

Mercantilism, in short, is the prototype of today’s totalitarian state, where government — by controlling the economy — exerts a commanding influence over people in every sector of their lives.

The major theme of The Wealth of Nations has to do with the interaction between government and the economic order. The theory of Mercantilism held that government must control and manage the economy, else production would be chaotic and the right people would not be properly rewarded. Present-day collectivists concur; they want a national plan which taxes away about 40 per cent of the peoples’ earnings in order to redistribute these billions of tax dollars to politically selected individuals and groups.

Questions of Political Power

The actions of the redistributive state — call it the welfare state if you prefer — are political actions. From ancient times to the present, every political theorist — except the Classical Liberals — tried to frame answers for three questions.

The first question was: Who shall wield power? Whether the structure took the form of a monarchy backed by divine right or a democracy based on the so-called will of the majority, it was essential that power be wielded by the small group thought most fit to exercise rule. The ruler’s job is to program our lives toward the achievement of national goals. But it was never power simply for power’s sake; it was political power for the sake of the economic advantage power bestows.

So the second question is: For whose benefit shall this power be wielded? The court at Versailles is a good example of what I mean. The French nobles favored by royalty lived rather well, although they’d rather be caught dead than working. In virtue of their privileged position in the political structure, they got something for nothing. I daresay that each of you can think of parallel instances operating today, even in our own country. Now, when someone in a society gets something for nothing through political channels, there are others in that society who are forced to accept nothing for something! And the third question, of course, is: At whose expense shall this power be wielded? Somebody must be sacrificed.

Let me repeat these three questions, for they provide an apt key to many political puzzles: Who shall wield power? For whose benefit? At whose expense? One might put this in a formula: Votes and taxes for all; subsidies and privileges for us, our friends, and whoever else happens at the moment to pack a lot of political clout. The American system was to be based upon a different idea. It took seriously the ideas of God, the moral order, and the rights of persons. It discarded the notion of using government to arbitrarily disadvantage a selected segment of society, and instead embraced the ideal of equality before the law. Government, in this scheme, functioned somewhat like an umpire on the baseball field. The umpire does not write the rules for baseball; these have emerged and been inscribed in rule books over the years and they lay down the norms as to how the game shall be played.

If any person is on the field it is to be presumed that he has freely chosen to be there, and in his thoughtful moments he knows that the game cannot go on unless there is an impartial arbiter on the field to interpret and enforce last-resort decisions — such as ball or strike, safe or out at first. Government, similarily, enforces the previously agreed upon rules.

This is the political theory of Classical Liberalism, and it marks a radical departure from all other political theories. It declared that the end of government is justice between persons, and maximum liberty for everyone in society. "Justice is the end of government," wrote Madison in the 51st Federalist Paper; "it is the end of civil society."

Government Is Force

The point to be stressed is that the essential nature of government — its license to resort to force at some point — is not changed by merely altering the warrant under which government acts. Divine right or popular sovereignty — it makes no difference to this point: Government is as government does.

Governmental action is what it is, no matter what sanction might be offered to justify what it does. The nature of goverment remains the same even though its sponsorship be changed from monarchial power to majority rule. Government always acts with power; in the last resort government uses force to back up its decrees. The government of a society is its police power, and the nature of government remains the same, even when office holders are elected by a vote of the people. And when the police power — government — is limited to keeping the peace of the community by curbing those who disturb the peace — criminals —then there is maximum liberty for peaceful citizens.

"The history of liberty," wrote Woodrow Wilson in 1912, "is the history of the limitations placed upon governmental power." The 18th century Whigs achieved a limited monarchy in England, and a constitutional republic for the thirteen colonies. This was a victory for freedom over tyranny. Such battles, however, do not stay won, and in our time many people have lost their freedom.

Twentieth century political despotism is much more extensive and severe than the monarchial rule of Smith’s day, which is why The Wealth of Nations is still a relevant book. Smith demonstrated that a country does not need an overall national plan enforced upon people in order to achieve social harmony. This is not to say that a peaceful, orderly society comes about by accident, or as the result of doing nothing. Certain requirements must be met if people are to live at peace with their neighbors. It is required, first of all, that there be widespread obedience to the moral commandments which forbid murder, theft, misrepresentation, and covetousness. The second requirement is for a legal system which secures equal justice before the law for every person. When these moral and legal requirements are met, then the people will be led into a system of social cooperation under the division of labor "as if by an invisible hand."

Adam Smith liked this metaphor of "an invisible hand" and used it in Theory of the Moral Sentiments as well as in The Wealth of Nations. Every person, Smith writes, employs his time, his talents, his capital, so as to direct "industry that its produce may be of the greatest value…. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it…. He intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intentions." Smith concludes this passage by adding, sardonically, "I have never known much good done by those who affected to trade for the public good."

What is Adam Smith telling us? He is saying that if we operate within the proper moral and legal framework, employing our God-given talents to the limit of our powers, then we will find individual fulfillment directly and get the good society as an unexpected bonus.

Equality, Liberty, Justice

The Wealth of Nations is generally regarded as a work on economics, but Smith did not think of himself as an economist. Smith was a professor of Moral Philosophy at the University of Glasgow, where he lectured on ethics, rhetoric, jurisprudence, and political economy. Ask Adam Smith for a thumbnail description of the system of political economy he believed in, and he’d reply that he advocated "the liberal plan of equality, liberty and justice."

These three virtues together characterize the free society, and in fact they are but three facets of a single truth. Equality, as the term is used in the Declaration of Independence, and here by Adam Smith, means the abolition of privilege — one law for all men alike because all men are one in their essential humanity. Because all people are created equal, it is wrong for government to play favorites and bestow advantages on some at the expense of others. The goal is "equal and exact justice for all men, of whatever state or persuasion" — to quote from Jefferson’s First Inaugural. Justice is equality before the law, and this describes a society where each person may freely pursue his own goals, provided he does not infringe the equal right of all the others to pursue theirs.

You’re all familiar with the division of society into a public sector and a private sector; call the former the governmental, coercive sector, if you prefer, and the latter the voluntary sector. When the governmental sector expands, the voluntary sector contracts, and vice versa. The efforts of the old-fashioned Whigs and the Classical Liberals were directed toward the goal of a government limited to maintaining the peace of the community and assuring justice and fair play among people — the umpire role in society. This expanded the voluntary sector and gave us the ideals of freedom of speech, freedom of the press, and religious liberty. And in 1776, Adam Smith provided a rationale for freedom of economic action.

One of the large questions which every society has to face and resolve is: How shall the economic rewards be allocated? Food, clothing, shelter — as well as things like automobiles, television sets, refrigerators, concerts, and trips to Europe — are in limited supply. How shall we "divvy up" the available quantity of these goods? Who gets what?

We know how it was under the old regime: those who wielded political power used it for the economic advantage of themselves and their friends, at the expense of those who lacked political power. There were Haves and Have-nots, and the Haves obtained their wealth by seizing it.

But when men are free, economic rewards are parceled out in a different manner. The free society allocates rewards in the market place; the Haves get that way by pleasing the customers, at which game some are more successful than others.

Consumer Choice

Every one of us in a free society is rewarded in the marketplace by his peers, according to the value willing buyers attach to the goods and services he offers for exchange. This marketplace assessment is made by consumers who are ignorant, venal, biased, stupid; in short, by people very much like us! This does seem to be a clumsy way of deciding how much or how little of this world’s goods shall be put at this or that man’s disposal, and so people of every age look for an alternative.

There is an alternative, and it runs something like this: People are too dumb to know what is good for them, and they fall easy victims of Madison Avenue. Therefore, let’s invite the wise and good to come down from Olympus to sit as a council among men, and we’ll appear before them one by one, to be judged on personal merit and rewarded accordingly. Then we’ll be assured that those who make a million really deserve it, and those who are paupers belong at that level; and we’ll all be contented and happy. What lunacy! The genuinely wise and good would not accept such a role, and I quote the words of the highest authority declining it: "Who made me a judge over you?"

The Alternative Is Worse

The market-place decision that this man shall earn twenty-five thousand, this one ten, and so on, is not, of course, marked by supernal wisdom; no one claims this. But it is infinitely better than the alternative, which is to recast consumers into voters, who will elect a body of politicians, who will appoint bureaucrats, who will "divvy up" the wealth by governmental legerdemain. This mad scheme backs away from the imperfect and crashes into the impossible!

There are no perfect arrangements in human affairs, but the fairest distribution of material rewards attainable by imperfect men is to let a man’s customers decide how much he should earn; this method will distribute economic goods unequally, but nevertheless equitably. Parenthetically, it should be understood that the market does not measure the true worth of a man or a woman. If it did, we would have to rate all who make a lot of money as superior beings — rock music stars, producers of porno films, publishers of dirty books, television commentators, authors of best sellers — and they’re not superior. To the contrary! But such people constitute only a tiny sector of the free economy, and they are a very small price to pay for the blessings of liberty we enjoy.

In a free society, those who earn more than the national average are entitled to enjoy their possessions, for they’ve gained them in a system of voluntary exchange; the well-being the Haves enjoy is matched by the well-being they have bestowed upon other people —as these other people measure it. There is genuine reciprocity in the free society. But opponents of the market are blind to its built-in mutuality. The Left, therefore, will make a determined effort to instill a guilty conscience in everyone who lives above the poverty level. They use Karl Marx’s exploitation theory which alleges that the man who works for wages produces, over and above his wage, a "surplus value" which is garnisheed by his employer. To be employed — they tell us — is to be exploited, and the whole capitalist class should feel guilty for denying the working class its due!

"Surplus Value" Exposed

This naive and vicious notion was demolished even while Marx still lived, by the economist, Böhm-Bawerk — founder of the Austrian School. Bohm-Bawerk did it again in a second book, in 1896, with the result that the exploitation theory is not now promoted even by Communist theoreticians. But the "surplus value" idea does intensify feelings of envy and guilt, so it is still useful as propaganda.

The free economy sounds pretty good in theory, you might say, but what does it do for the poor? Well, it takes most of them out of that category! A free people becomes a properous people. To the extent that the free economy has been allowed to operate in a nation, in like measure has the free economy elevated more people further out of poverty, faster, than any other system.

It is easy to see why this is so. Poverty is a lack of certain things.

A man is poor whose supply of food, clothing, and shelter are meager; he has only one shabby suit, his diet is macaroni and cheese, and he lives in a sparsely furnished room. A man moves out of poverty only as he acquires better clothes, a more varied diet, and then expands into an apartment or a house. People are well off or less well off according as they command more or less of the things which are manufactured or grown. This is axiomatic, and it follows that poverty is overcome by increased productivity and in no other way. America is the world’s most properous nation because America has been the most productive nation; we have more wealth because we produce more wealth.

Who has the biggest stake in the free economy? Who has most to lose if the free economy lapses into the planned state? Not the rich; the poor! The corporate executive type; the shrewd, energetic, hard-driving, far-seeing, imaginative, nimble, smart, tough executive will make a bundle under any system. In Russia he’d be a commissar. It’s the not so smart, not so energetic, not so imaginative, plodder type who has the biggest stake in the free society. This description fits most of us, and there is a place for us in the free society, where we are rewarded quite handsomely. We’d be serfs, or worse, in most other societies — if we survived liquidation!

When people are free, there is no guarantee that they’ll use their freedom wisely. Freedom of speech does not assure witty conversation, eloquent preaching, or lofty utterance. Most talk, as a matter of fact, is banal and shallow and gossipy; but no one on this account suggests we put a political ban on free speech. We have freedom of the press, with the result that we are knee deep in triviality and garbage. But we support freedom of the press anyway, knowing that a governmentally controlled press would be far worse. Freedom of religion opens the door to all kinds of weird cults, as well as to exotic brands of superstition and magic; but no one advocates that we repeal the First Amendment and set up an American National Church!

That is what freedom is all about — putting up with things we don’t like, and living with a lot of people we can barely stand! We must support the processes of freedom even when we cannot endorse every one of the products of freedom. And that goes for freedom of economic enterprise as well —as Adam Smith advised 200 years ago.

Now, neither the free economy nor its business sector can guarantee to every person full realization of his potential talents; this is a matter for individual decision. All the free society can promise is maximum and equal opportunity —and this is all the guarantee we need.

Post from: LibertarianChristians.com

Adam Smith and the Invisible Hand

Man is not simply a spiritual being; he is a spiritual being who feels hunger, needs protection from the cold, and seeks shelter from the elements. In order to feed, house and clothe himself, a person must work. Augmenting his labor with tools and machinery, he converts the raw materials of his natural environment into consumable goods. He learns to cooperate with nature and use her forces to serve his ends. He also learns to cooperate with his fellows, his natural sociability reinforced by the discovery that the division of labor benefits all. "Trade is the great civilizer." There’s an unbroken thread that runs from these primitive beginnings to the complex economic order of our own time: it is the human need to cope with scarcity, to satisfy creaturely needs, to provide for material well-being.

The visible signs of this endeavor are all about us; factories, stores, offices, farms, mines, power plants. These are the locations where work is performed, services rendered, goods exchanged, wages paid, money spent, and so on. This is the economy, and in the free society the economy is not under government control and regulation.

In the free society the law protects life, liberty and property of all men alike, ensuring peaceful conditions within the community. This lays down a framework and a set of rules, enabling people to compete and cooperate as they go about the job of providing for their material well being. When government performs as an impartial umpire who interprets and enforces the agreed upon rules, then the uncoerced economic activities of people display regularity and harmony—as if guided by Adam Smith’s invisible hand!

The Capitalistic Economy

In a society where people are free, the economy is referred to as capitalistic. Some prefer the term free enterprise; others like the private enterprise system, or the private property system, or the market economy. Now, of course, no society has ever been one hundred per cent free, which means that we’ve never had a completely free market economy. Some people have always seized and misused political power to rig the market in their favor. Obviously, it is not the market’s fault if some people choose to break the rules.

The appalling thing is that many intellectuals mistake these deviations from free enterprise for free enterprise itself! And so they condemn "capitalism." But the "capitalism" they condemn is actually the failure of certain people to live up to the rules of capitalism–the system of voluntary exchange among uncoerced people. We’re aware of human frailties and shortcomings; we know that it’s easier to preach than to practice, easier to announce a set of ideals than to live up to them. Economic theory provides us with a description of the way an economy would work among a people who exercise individual liberty and practice voluntary association. It is this theory we seek to understand and explain, and it is the deviations from this ideal that we seek to correct.

Every person of good will wants to see other people better off; better fed, better housed, better clothed, and well provided with the amenities. So everyone wants the economic order to function efficiently. But how important is it that the economic order be free from bureaucratic direction and political controls? Does it do any harm if we allow the economic order to be quarterbacked by government? Let’s examine a concrete example to indicate the serious secondary consequences of government control.

In the economic sector of our society there is a multi-billion dollar industry engaged in the production of newspapers, magazines, and journals of opinion. There is also the book trade. Those who publish and distribute the printed word constitute The Press, and one of the important freedoms cherished in our intellectual heritage is Freedom of the Press. The concept is now extended to cover the media—radio and television—where the same principle applies.

Freedom of the Press means simply that the government does not tell editors what to print and what not to print–nor does it dictate to purveyors of television commentary. Some editors print stuff they think will sell. Some editors are men of strong conviction trying to promote a cause they believe in; others are party hacks thumping the tub for some ideological idiocy like communism, or anarchism, or the New Left, or whatever. But not a single editor in the country is out crusading for government censorship of the press; except indirectly!

Editorial Inconsistency

A large number of editors, writers and commentators who demand freedom for themselves in one breath, demand government regulation of business and industry with the next! If, at the urging of The Press, government continues to extend its controls over one business after another, how can anyone believe that government will respect the editorial room as a privileged sanctuary, and keep its hands off that section of business known as The Press? Socialize the economy and The Press becomes a branch of the government bureaucracy, free no longer.

The fact that The Press actively cooperates in its own entrapment makes the end result even more bitter. It is one thing to go down fighting; it is something else to cooperate in your own demise. Political control and regulation of the written and spoken word means excessive influence over the minds and thoughts of people. It means eventually a ministry of Propaganda and Information, and an Office of Censorship.

If you get the impression that I don’t think highly of some of the people involved with The Press, you’d be correct; they are—with notable exceptions—a sorry lot. They, along with their counterparts in the University and in the Church—with notable exceptions—are guilty of that "treason of the intellectuals" denounced by the French writer, Julien Benda, in his 1927 book of that title. The intellectuals’ treason in the modern world, wrote Benda, is to abandon the pursuit of truth and to seek political preferment instead.

Lest you think I am being unduly harsh on some of those who refer to themselves as Intellectuals, I shall quote a few words of C. S. Lewis:

It is an outrage that they should be commonly spoken of as Intellectuals. This gives them the chance to say that he who attacks them attacks Intelligence. It is not so. They are not distinguished from other men by an unusual skill in finding truth nor any virginal ardour to pursue her… It is not excess of thought but defect of fertile and generous emotion that marks them out. Their heads are no bigger than the ordinary; it is the atrophy of the chest beneath that makes them seem so.(1)

A Vital Connection

I use The Press to point up the vital relationship between intellectual freedom and economic freedom. Freedom of thought, bound only by the rules of thought itself; freedom of belief, in terms of the mind’s own energy; freedom of utterance, guided by logic and within reason–these spiritual freedoms are of the very essence of our being. When they are threatened directly all of us rush to their defense. My point is that they are threatened indirectly whenever—and to whatever degree—their material and economic support is straitjacketed by government regulations and controls.

The same analysis would apply to the Academy and to the Church. If the government owns the campus and pays the professor’s salary, the teacher becomes a political flunky, no longer free to research, write, and teach according to his best insights and conscience. And when private property is no longer regarded as the sine qua non of a free people, when private property suffers increasing encroachments by government, then church properties, too, become politicized. And, as taxes increase and disposable individual income diminishes, private voluntary funding of churches correspondingly declines and religious programs suffer. Accept economic controls, and what then becomes of Academic Freedom and Freedom of Worship?

In short, freedom is all of a piece; philosophy is not the same as digging a ditch, but socialize the ditch-digger and the philosopher begins to lose some of his freedom. Freedom of the marketplace and liberties of the mind hang together as one depends on the other.

The great philosopher, George Santayana, reflected sadly that, in this life of ours, the things that matter most are at the mercy of the things which matter least. A bullet, a tiny fragment of common lead, can snuff out the life of a great man; a few grains of thyroxin one way or the other can upset the endocrine balance and alter the personality, and so on. But the more we think about this situation and the more instances of this sort we cite, the more obvious it becomes that the things Santayana declared matter least, actually matter a great deal. They are so tied in with the things which matter most that the things which matter most depend on them!

Economic Liberty Paramount

In precisely the same way, economic liberty matters a great deal because every liberty of the mind is joined to freedom of the market, economic freedom. There’s an old proverb to the effect that whoever controls a man’s subsistence has acquired a leverage over the man himself, which impairs his freedom of thought, speech, and worship. The man who cannot claim ownership over the things he produces has no control over the things on which his life depends; he is a slave, by definition. A man who is not allowed to own becomes the property of whoever controls his means of survival, for "a power over a man’s support is a power over his will," wrote Hamilton in The Federalist. Economic planning implies the power to regulate the noneconomic sectors of life.

F. A. Hayek puts it this way in his influential book, The Road to Serfdom: "Economic control is not merely control of a sector of human life which can be separated from the rest; it is the control of the means for all our ends."(2)

In a totalitarian country like Russia or China the government acts as a planning board to assign people to jobs and direct the production and distribution of goods. The whole country is, in effect, a gigantic factory. In practice, there is bound to be a lot of leakage—as witness the inevitable black market. But to whatever extent the State does control the economic life of the Russian and Chinese people it directs every other aspect of their lives as well.

The Masses Content to Drift

The masses of people everywhere and at all times are content to drift along with the trend; they pose no problem for the planner. But what happens to the rebels in a planned economy? Suppose you wanted to publish an opposition newspaper in a place like Russia or China. You could not go out and simply buy presses, paper, and a building; you’d have to acquire these from the State. For what purpose? Why, to attack the State! You would have to find workmen willing to risk their necks to work for you; ditto, people to distribute; ditto people willing to be caught buying or reading your paper. A Daily Worker may be published in a capitalist country, but a Daily Capitalist in a communist country is inconceivable!

Or take the orator who wants to protest. Where could he find a platform in a country in which the State owns every stump, street corner, and soap box—not to mention every building?

Suppose you didn’t like your job, where could you go and what could you do? Your job is pretty bad, but it is one notch better than Siberia or starvation, and these are the alternatives. Strike? This is treason against the State, and you’ll be shot. Listen to George Bernard Shaw, defending Socialism, writing in Labor Monthly, October 1921: "Compulsory labor, with death as the final penalty, is the keystone of Socialism." Shaw was a vegetarian because he loved animals; perhaps he was a Socialist because he hated people!

Point One: Economic freedom is important in itself, and it is doubly important because every other freedom is related to it.

To have economic freedom does not, of course, mean that you will be assured the income you think you deserve, nor the job to which you think you may be entitled. Economic freedom does not dispense with the necessity for work. Its only promise is that you may have your pick from among many employment opportunities, or go into business for yourself, and as a bonus the free economy puts a multiplier onto your efforts to enrich you far beyond what the same effort returns you under any alternative system.

Under primitive conditions a family grows its own potatoes, builds its own shelter, shoots its own game, and so on. But we live in a division of labor society where individuals specialize in production and then exchange their surpluses for the surpluses of other people until each person gets what he wants. Most of us work for wages; we produce our specialty, and in return we acquire a pocketful of dollar bills. The dollars are neutral, and thus we can use them to achieve a variety of purposes. We use some of them to satisfy our needs for food, clothing and shelter; we give some to charity; we take a trip; we pay taxes; we go to the theater, and so on. The money we earn is a means we use to satisfy our various ends.

These interlocking events—production, exchange, and consumption—are market phenomena, and the science of economics emerged, as Mises put it, with "the discovery of regularity and sequence in the concatenation of market events."

Economics Concerns the Means to Achieve Human Goals

Economics has often been called a science of means. The economist, speaking as an economist, does not try to instruct people as to the nature and destiny of man, nor does he try to guide them toward the proper human goals. The ends or goals people strive for are, for the economist, part of his given data, and his business is merely to set forth the means by which people may attain their preferences most efficiently and economically. Economics, as Mises says, "is a science of the means to be applied for the attainment of ends chosen." And a "science never tells a man how he should act; it merely shows how a man must act if he wants to attain definite ends."(3)

When people are free to spend their money as they please, they will often spend it foolishly—I mean other people, of course! As consumers they will demand—and producers will obediently supply—goods that glitter but are shoddy; styles that are tasteless; entertainment that bores; and music that drives us nuts. Nobody ever went broke, H. L. Mencken used to say, by underestimating the taste of the American public. But this, of course, is only half the story. The quality product is available in every line for those who seek it out, and many do. The choices men make in the economic sector will be based upon their scales of values; the market is simply a faithful mirror of ourselves and our choices.

Now, man does not live by bread alone, and no matter how much we might increase the quantity of available material goods, nearly everyone will acknowledge that there is more to life than this. Individual human life has a meaning and purpose which transcends the social order; man is a creature of destiny.

As soon as we begin talking in these terms, of human nature and destiny, we move into the field of religion—the realm of ends. A science of means, like economics, needs to be hitched up with a science of ends, for a means all by itself is meaningless; a means cannot be defined except in terms of the ends or goals to which it is related. The more abundant life is not to be had in terms of more automobiles, more bathtubs, more telephones, and the like. The truly human life operates in a dimension other than the realm of things and means; this other dimension is the domain of religion—using the term in its generic sense. Or, call it your philosophy of life, if you prefer.

If we as a people are squared away in this sector of life—if our value system is in good shape so that we can properly order our priorities—then we’ll be able to take economic and political problems in our stride. On the other hand, if there is widespread confusion about what it means to be a human being, so that people are confused as to the proper end and goal of human life—some seeking power, others wealth, fame, publicity, pleasure or chemically induced euphoria—then our economic and political problems overwhelm us.

If economics is a science of means, that is, a tool, we need some discipline to help us decide how to use that tool. The ancient promise of "seek ye first the Kingdom" means that if we put first things first, then second and third things will drop naturally into their proper places. Our actions will then conform to the laws of our being and we’ll get the other things we want as a sort of bonus.

Point Two: Once we understand that economics is a science of means, we realize that economics cannot stand alone—it needs to be hooked up with a discipline which is concerned with ends, which means religion or philosophy.

There is no easy answer to questions about the ends for which life should be lived, or the goals proper for creatures of our species, but neither is the human race altogether lacking in accumulated wisdom in the matter. Let me offer you a suggestion from Albert Jay Nock. Nock used to speak of "man’s five fundamental social instincts," and he listed them as an instinct of expansion and accumulation, of intellect and knowledge, of religion and morals, of beauty and poetry, of social life and manners. He then makes the charge that our civilization, especially during the past two centuries, has given free reign only to the instinct of expansion and accumulation, that is, the urge to make money and exert influence; while the other four instincts have been disallowed and perverted. Our culture is lopsided as a result, and some basic drives of human nature are being thwarted.

Let’s move to the next stage of our inquiry and ask: What is the distinguishing feature of a science, and in what sense is economics a science? Adam Smith entitled his great work The Wealth of Nations (1776); one of Mises’ books is entitled The Free and Prosperous Commonwealth (1927). It is clearly evident that these works deal with national prosperity, with the overall well-being of a society, with upgrading the general welfare. These are works of economic science, insofar as they lay down the general rules which a society must follow if it would be prosperous.

General Principles

The distinguishing feature of a science, any science, is that it deals with the general laws governing the behavior of particular things. Science is not concerned with particular things, except insofar as some particular thing exemplifies a general principle. When we concentrate on a particular flower, like Tennyson’s "flower in the crannied wall," we move into the realm of art and poetry. Should we want the laws of growth for this species of flower, we consult the science of botany. These books by Smith and Mises lay down the rules a society must conform to if it wants to prosper, they do not tell you as an individual how to make a million in real estate, or a killing in the stock market. This is another subject.

The question before the house in economic inquiry is: "How shall we organize the productive activities of man so that society shall attain maximum prosperity?" And the answer given by economic science is: "Remove every impediment that hampers the market and all the obstructions which prevent it from functioning freely. Turn the market loose and the nation’s wealth will be maximized." The economist, in short, establishes the rules which must be followed if we want a society to be prosperous; but no conceivable elaboration of these rules tells John Doe that he ought to follow them.

Economic science can prescribe for the general prosperity, but it cannot tell John Doe that he ought to obey that prescription. That job can be performed, if at all, by the moralist. The problem here is to bridge the gap between the economist’s prescription for national prosperity and John Doe’s adoption of that prescription as a guide for his personal conduct.

A Science of Means

Economics is a science of means. It abstains from judgments of value and does not tell John Doe what goals he should choose. If you want to persuade John Doe to follow the rules of economics for maximizing the general prosperity you must argue that he has a moral obligation to conform his actions to certain norms already established in his society by the traditional ethical code.

This code extols justice, forbids murder, theft, and covetousness, and culminates in love for God and neighbor. This is old stuff, you say; true, but it’s good stuff! It’s the very stuff we need when constructing a proper framework for economic activity.

The market economy is not something which comes out of nothing. But the market economy emerges naturally whenever certain noneconomic conditions are right. There is a realm of life outside the realm of economic calculation, on which the market economy depends. Let me cite Ludwig Mises again, quoting this time from his great work, Socialism. Mises speaks of beauty, health, and honor, calling them moral goods. Then he writes: "For all such moral goods are goods of the first order. We can value them directly; and therefore have no difficulty in taking them into account, even though they lie outside the sphere of monetary computation." In other words, the market economy is generated and sustained within a larger framework consisting of, among other things, the proper ethical ingredients.

Point Three: The free market will not function in a society where the sense of moral obligation is weak or absent.

Nearly everything on this planet is scarce. There are built-in shortages of almost everything people want. For this reason we need a science of scarcity, and this is economics—a science of scarcity. Goods which are needed but not scarce, such as air, are not economic goods. Air is a free good. Economics deals with things which are in short supply, relative to human demand for them, and this includes most everything we need and use. Our basic situation on this planet is an unbalanced equation with man and his expanding wants on one side, and the world of scanty resources on the other.

Human Wants Insatiable

The human being is a creature of insatiable wants, needs, and desires; but he is placed in an environment where there are but limited means for satisfying those wants, needs, and desires. Unlimited wants on one side of this unbalanced equation; limited means for satisfying them on the other. Now, of course, it is true that no man, nor the human race itself, has an unlimited capacity for food, clothing, shelter, or any other item singly or in combination. But human nature is such that if one want is satisfied the ground is prepared for two others to come forward with their demands. A condition of wantlessness is virtually inconceivable, short of death itself.

What does all this mean? The upshot of all this is that the economic equation will never come out right. It’s insoluble. There’s no way of taking a creature with unlimited wants and satisfying him by any organization or reorganization of limited resources. Something’s got to give, and economic calculation is the human effort to achieve the maximum fulfillment of our needs while avoiding waste.

Let me, at this point, offer you a little parable. This story has to do with a bright boy of five whose mother took him to a toy store and asked the proprietor for a challenging toy for the young man. The owner of the shop brought out an elaborate gadget, loaded with levers, buttons, coils of wire, and many movable parts. The mother examined the complicated piece of apparatus and shook her head. "Jack is a bright boy," she said, "but I fear that he is not old enough for a toy like this."

"Madam," said the proprietor, "this toy has been designed by a panel of psychologists to help the growing child of today adjust to the frustrations of the contemporary world. No matter how he puts it together, it won’t come out right."

Relative Scarcity

Economics is indeed the science of scarcity, but it’s important to realize that the scarcity we are talking about in this context is relative. In the economic sense, there is scarcity at every level of prosperity. Whenever we drive in city traffic, or look vainly for a place to park, we are hardly in a mood to accept the economic truism that automobiles are scarce. But of course they are, relative to our wishes. Who would not want to replace his present car with a Rolls Royce if it were available merely for the asking?

These simple facts make hash of the oft repeated remark that "we have solved the problem of production, and now we must organize politically to redistribute our abundance." Economic production involves engineering and technology, in that men, money, and machines are linked to turn out airplanes, or automobiles, or tractors, or typewriters, or what not. But resources are limited, and the men, money, and machines we employ to turn out airplanes are not available for the production of automobiles, or tractors, or anything else. The dollar you spend for a package of cigars is no longer available to you for a hamburger.

The economic equation can never be solved; to the end of time there will be scarce goods and unfulfilled wants. There will never be a moment when everyone will have all he wants. "Economics," in the words of Wilhelm Roepke, "should be an anti-ideological, anti-utopian, disillusioning science,"⁽⁵⁾ and indeed it is. The candid economist is a man who comes before his fellows with the bad news that the human race will never have enough. Organize and reorganize society from now till doomsday and we’ll still be trying to cope with scarcity. This truth does not set well with those who have the perfect solution in hand—and the woods are full of such. No wonder economists are unpopular!

Point Four: Things are scarce, and therefore we need a science of scarcity in order to make the best of an awkward situation.

The modern mind takes the dogma of inevitable progress for granted. Most of our contemporaries assume that day by day, in every way, we are getting better and better, until some day the human race will achieve perfection. The modern mind is passionately utopian, confident that some piece of social machinery, some ideological gadgetry, is about to solve the human equation. Minds fixed in such a cast of thought, minds with this outlook on life, are immune to the truths of economics. The conclusions of economics, in their full significance, are incompatible with the facile notions of automatic human progress which are part of the mental baggage of modern man—including many economists!

I’m not denying that there is genuine progress in certain limited areas of our experience. This year’s color television set certainly gives a better picture than the first set you bought in, say, 1950. The jet planes of today deliver you more rapidly and in better shape than did the old prop jobs—although there’s some truth in the remark of some comedian: "Breakfast in Paris, luncheon in New York, dinner in San Francisco—baggage in Rio de Janeiro!" Automobiles are more luxurious, we have more conveniences around the house, we are better equipped against illness. There is real progress in certain branches of science, technology, and mechanics.

But are the television programs improving year by year? Are the novels of this year so much better than the novels of last year, or last century? Are the playwrights whose offerings we have seen on Broadway this season that much better than Shakespeare? Has the contemporary outpouring of poetry rendered Homer, Dante, Keats and Browning obsolete? Is the latest book on the "new morality" superior to Aristotle’s Ethics?

Are the prevailing economic doctrines of 1979, reflecting the Samuelson text, sounder than those of a generation ago, nourished on Fairchild, Furness and Buck? Are today’s prevailing political doctrines more enlightened than those which elected a Grover Cleveland? Henry Adams in his Education observed that the succession of presidents from Washington, Adams and Jefferson down to Ulysses Grant was enough to disprove the theory of progressive evolution! What would he say if he were able to observe the recent past?

The dogma of inevitable progress does not hold water. Perfect anthills may be within the realm of possibility; but a perfect human society, never! Utopia is a delusion. Man is the kind of a creature for whom complete fulfillment is not possible within history; unlike other organisms, he has a destiny in eternity which takes him beyond biological and social life. This is the world outlook of all serious religion and philosophy. The conclusion of economics—that life holds no perfect solutions—is just what a person who embraces this world view would expect. Economic truths are as acceptable to the religious world view as they are unacceptable to the world view premised on automatic progress into an earthly paradise.

Another Dimension Transcends the Natural Order

If there is another dimension of being which transcends the natural order—the natural order being comprised of the things we can see and touch, weigh and measure—and if man is really a creature of both orders and at home in both, then he has an excellent chance of establishing his earthly priorities in the right sequence. He will not put impossible demands on the economic order, nor will he strive for perfection in the political order. Earth is enough, so he’ll leave heaven where it belongs, beyond the grave! The effort to build a newfangled heaven on earth in countries like Russia and China has resulted in conditions that resemble an old-fashioned hell. Let us strive for a more moderate goal, let us work for a tolerable society —not a perfect one—and we may make it!

Point Five: Economics tells us that the Kingdom of God is beyond history.

Economics is a discipline in its own right, but it has some larger meanings and implications. Its very nature demands a framework in which there are religious and ethical ingredients. Establish these necessary conditions—together with their legal and political corollaries —and within this framework the economic activities of men are self-starting, self-operating, and self-regulating. Given the proper framework, the economy does not have to be made to work; it works by itself, and it pays rich dividends in the form of a free and prosperous commonwealth.

⁽¹⁾ The Abolition of Man, pp. 34-35.

⁽²⁾ The Road to Serfdom, p. 92.

⁽³⁾ Human Action, p. 10.

⁽⁴⁾ Socialism, p. 116.

⁽⁵⁾ A Humane Economy, p. 150.

Read more from the Edmund Opitz Archive.

Post from: LibertarianChristians.com

Thinking About Economics: It’s more than just money.

One area I don’t fully understand is the medical-industrial complex. I don’t get to visit hospitals very often, but when I do, I get the same sense of awe and wonder and I just can’t help but marvel at the wonders of the marketplace. Yes, I realize that the medical industry isn’t exactly as “free market” as, say, the technology industry. But that doesn’t preclude a strong market component in the production of devices and substances in the industry. Somebody long before our visit to the hospital saw a problem that needed to be solved. They took huge risks of capital in order to help save lives or to make our lives generally less problematic.

This is no small matter. I have a pitiful amount of knowledge about the production of the equipment that fills the rooms and corridors of our hospitals and operating rooms. What I do know, however, is that incredible risk was taken for something for which there was no guarantee: success. With only profit and loss as the barometer in the marketplace, some forged ahead. There were undoubtedly many failures along the way, yet some of the best equipment and substances emerged for our well-being. Their purveyors weren’t necessarily even interested in medical devices in the first place. All it took was the skills to make really awesome  microchips or perhaps the talent to manage a company of high-functioning people to create software that made procedures more efficient.

Leonard Read’s classic story, I, Pencil comes to mind. Millions of people, in small but important ways, contributed willingly to a process that saves lives (or produces pencils). Of course, some of them were intelligent people who were able to connect the dots and work purposefully toward solving a medical problem or need. But they represent the small percentage of those producers. By and large those who cooperated in the process weren’t boasting to their families at dinner about how they contributed to society’s health needs.

Despite the marvels of the marketplace advancement in health industry, there are two morally attractive but wholly dubious arguments regarding health care that we ought to guard against. The first is that health care is too important to be left up to the free market. Seriously? Take a stroll down the hallways of a local hospital and try to convince yourself that all this stuff can be produced through central planning, even if only for a single industry. If universal health care were indeed possible, its advocates take for granted that the marketplace itself provided the myriad luxuries provided in the medical industry. Universal health care is a direct result of the wealth created by the entrepreneurial spirit in the medical industry. Nobody was crying for “universal health care” 500 years ago.

A second but related complaint is that some people shouldn’t get rich off of other people’s ailments. Never mind the obviousness that whatever wealth is acquired it is in the solving of those ailments! What troubles the anti-market health care enthusiast can be sufficiently blamed on the word “care” in “health care.” The additional word introduces concepts such as intentionality or purposefulness or planning. The patient (who is a type of consumer, by definition, regardless of our sentimental objections to the term) must be cared for by her doctors and nurses. Yet if we consider the economics of the doctor-patient relationship, we realize that the success of the doctor depends on the quality of care they provide, both medically and emotionally. It’s an enormous asset to have a genuinely caring physician. What’s more important is competence and honesty, something a market is equipped to facilitate.

But should we even care whether the producers in the medical industry (or any other industry for that matter) are driven by rampant greed or Christian-like charity and good intentions for humanity? While it’s nice to think that laborers in factories, the CEOs of companies, and all who cooperated to bring those final goods into service are caring individuals, I’m personally more interested in the outcome: quality equipment and substances that do not fail. If the CEO of a company who can save lives is a greedy corporatist is inconsequential to whether my life is saved. The equipment must work.

To be sure, if somebody is getting wealthy because other people are being duped, defrauded, or misled, of course we take great issue with that (in any industry). But if you ask any woman about to deliver a baby if she cares that the inventors or producers of an epidural are wealthy, I doubt you’ll hear her disdain for such people.

It can’t be mistaken that there are truly caring entrepreneurs who want to discover and create solutions that save people’s lives. For that we must be grateful, and they can never receive enough praise. They saw a need and—regardless of motive—are working toward a solution. But we should neither forget nor discount the progress that occurs in the marketplace because any incentive whatsoever has helped produce a quality and desirable outcome.

Post from: LibertarianChristians.com

The Progress of Greed

Capitalism, by conquering poverty, creates the “problem” of poverty.

If we look back over the history of the past two or three thousand years we realize that most people who have ever lived on this planet were desperately poor, not merely poor by our standards – poor by any standards; miserably housed, shabbily clothed, and continually on the verge of starvation, only to go over the edge by the hundreds of thousands during the regularly recurring famines.

Medieval Europe is regarded by many scholars as one of the high points in world civilization. It gave us the great cathedrals, scholastic philosophy, magnificent works of art, literature like Dante’s Divine Comedy, specimens of craftsmanship that grace our museums, and chivalry. But the Middle Ages in Europe suffered from a number of famines. Between 1201 and 1600 there were seven famines, averaging ten years of famine per century. Coming down to 1709, there was a famine in France that wiped out one million people, five percent of the population. The last great natural famine in Europe was the Potato Famine in Ireland in the late 1840s, which claimed about one and a half million lives.

But Europe has always been a favored region, more prosperous than the rest of the world, less subject to natural disasters than Asia. There have been starving times in Western civilization, but never were they of the same order of magnitude as the disasters in the Orient. India and China have been especially vulnerable to famines. A famine in China between the years 1876 and 1879 resulted in an estimated 15 million deaths. And within living memory, a famine in China’s Hunan Province in 1929 resulted in two million dead. Ten major famines in India between 1860 and 1900 caused the death of close to 15 million people. During the Bengal famine of 1943-44—in and around Calcutta-one and a half million people died of starvation and the epidemics that followed.

I have recited these rather unpleasant facts, not for their own sake, but to emphasize a neglected or overlooked truism: Poverty is the natural state of mankind. Poverty is the rule; prosperity is the exception. In most parts of the globe, in most periods of history—including the present—most people most of the time have been or are desperately poor. Prosperity is what the ruling class enjoys. The rich are the superior warriors, the superior hunters, the favorites of the gods, and these wealthy few—it was believed—deserve what they have.

Water runs downhill, fire burns, grass is green, the masses of people are poor. This was the perceived natural order of things, accepted and rarely questioned. Such was the mentality that prevailed throughout most of the world most of the time—until a few centuries ago. Poverty for the multitudes was simply a fact of life. It was a hardship, but being poor was not perceived as deprivation.

The rich were envied, but the envy rarely translated into thoughts of redistributing their wealth. Occasionally something triggered a peasants’ revolt or a slave rebellion, but when each of these fizzled out, all ranks went back to “The good old rule/ The simple plan/ That they should take who have the power/ And they should keep who can.” Universal poverty was a fact. But poverty was not a problem! The distinction is simple: a fact or situation just is; a fact or situation for which there is perceived to be a solution becomes thereby a problem, and a new mentality is generated.

The Capitalist Alternative

Masses of people, the world over, have now been persuaded that someone or something keeps them poor, and their resentment follows. This fact helps to explain the modern world’s hostility toward capitalism. Capitalism is not at all the cause of the poverty of the noncapitalistic nations, but it is the source of their dissatisfaction with their poverty. Capitalism in fact overcomes poverty; but in overcoming poverty capitalism creates the problem of poverty.

There was a breakthrough a few centuries ago, one of those great tidal movements in human affairs resulting in a new mentality and a different way of viewing the human condition. It was the discovery by the people of a few western nations of the complex set of institutions which later came be to be called capitalism. The breakthrough might be symbolized by two documents, one penned by Thomas Jefferson setting forth the vision of a nation founded upon a new philosophy, that “all men are created equal,” that they are “endowed by their Creator with certain unalienable rights,” and that everyone is entitled to equal justice under the law. These axioms form the cornerstone of the free society.

At the same time, on another continent, a man named Smith wrote a great book which explained why the economy need not be centrally planned, directed, and controlled by the government—as it was under the mercantilism of his day. Let the law be vigilant to protect the life, liberty, and property of all — as the Whigs advocated — and the buying habits of freely choosing men and women in the marketplace will provide all the directives needed for the producers to grow and manufacture the things consumers want most. This is the market economy, the backbone of a free society. Under these conditions a free people will multiply their productivity and thus generate their own prosperity.

Capitalism is the name given to the set of institutions which enable free people to produce wealth up to the limit of their time, talents, capacity, and desire; and then to voluntarily exchange the fruits of their labors with others. Capitalism becomes fully operative only when there are institutional guarantees of individual liberty, with laws designed to secure the G0d-given rights of every person to life, liberty, and property.

The intelligent and ethical way of arranging human action in society, the free society-market economy way of life which we are labeling capitalism, was like a bootstrap by which whole nations of people could and did elevate themselves out of misery, grinding poverty, and periodic starvation. Capitalism tackled poverty using the only means by which poverty can be alleviated, namely, by increased productivity.

Remove every obstacle that hinders the productive and creative energies of men and women and you create an abundance of goods and services, shared by everyone involved according to his contribution to the productive process, as that contribution is judged by the man’s peers. This ever-increasing supply of goods and services will move the entire society up the rungs of the ladder of wealth. Some will climb to the top rungs, but even the least well-off on the bottom rungs will experience a level of well-being that would be regarded as affluence in noncapitalistic societies past or present.

Liberty and the Economic Miracle

The results of this new social order were almost miraculous, but there was nothing magical about the way the results were achieved. The results were achieved by people who had the intelligence to understand the requirements of a free and prosperous commonwealth, and who possessed the integrity and character to live by those requirements. We had a significant number of people a couple of centuries ago, who “pledged their lives, their fortunes, and their sacred honor” to establish not simply a new nation, but a nation founded upon new principles.

Capitalism generated a new mentality, a new perception of the human condition. After the experience of capitalism anywhere, people everywhere came to regard prosperity as the rule; poverty as the exception. The fact that we launched a “war on poverty” demonstrates this. No one would contemplate a war on poverty in India or Africa, where need is much more desperate than here. Only in a prosperous nation like our own, where the great war against poverty had already been won — by means of the market economy — would the elimination of the last, lingering remnants of poverty emerge as a political issue. The trouble is that if we employ the wrong remedy to eradicate the remaining pockets of poverty — as we are doing — we may find that we have destroyed prosperity instead, as in the familiar story about killing the goose that laid the golden eggs. Charles Murray’s recent book, Losing Ground, demonstrates that we have been losing the political war against poverty despite spending hundreds of billions of dollars yearly.

The 18th-century breakthrough I’ve referred to brought with it a new understanding of how economic goods come into being, the nature of material wealth, and how this new wealth is allocated in differing amounts among all the participants in the productive process. The economic breakthrough was not miraculous; it was preceded by a new vision of how the ancient ideas of liberty, justice, and law should be applied. No longer Were these venerable ideas to be the prerogative of the few; equal justice under the law was for everyone; liberty was to be enjoyed by all, and every person had a natural right to the property created by his labor.

For thousands of years the planet was regarded as a static warehouse, containing a fixed amount of wealth, impossible to increase, never enough for everyone. The serf tilling his field grumbled that he had to pay various feudal dues to the lord of the manor, but he was realistic enough to know that even if he kept everything he produced, he’d still go hungry much of the time. He was cursed by low productivity, caused by a faulty understanding of the nature of wealth.

When it is believed that the earth contains only a fixed amount of wealth, the preoccupation is with the allocation of what’s already here, which means, invariably, that one man’s gain is another’s loss.

The new perception that dawned during the 18th century was that new wealth is in a process of continuous creation, in ever-increasing amounts, with more for everyone resulting from each new cycle of production. This new abundance would be distributed—not equally, but equitably—by voluntary exchanges in the marketplace, with each person receiving from his fellows what they think his contribution is worth to them. Each of us benefits in such a voluntary exchange.

This is a paradigm of capitalistic society; peaceful exchanges within the rules, with the rules designed to protect person and property. Each participant in a voluntary exchange is a net gainer, having given up what he wants less to get what he wants more. And as these exchanges multiply every person has a strong inducement to work harder, producing more of the things other people will want from him in exchange. And as each person betters his own circumstances he improves the lives of other people. Production, in a free society, begets production, with more for everyone.

In the pre-capitalistic ages the kings and nobles used their political power to enrich themselves at the expense of the peasants. The serfs who did most of the work were entitled to enjoy only a portion of the goods they produced. Post-capitalistic societies operate in similar fashion. Those who possess political power in welfarist America or socialist Britain or Soviet Russia, exercise the taxing power to deprive productive people of a huge chunk of their earnings. These tax dollars — minus the political costs of effecting these transfers — are then doled out to various “deserving” pressure groups in the private sector.

We witness what Frederic Bastiat might have called a Plunder-bund — the law designed to protect life, liberty, and property perverted into an instrument to enrich some by impoverishing others. Albert Jay Nock referred to the law thus perverted as The State — holders of public office in cahoots with factions in the private sector to operate a scare against productive people.

Our basic political structures were largely built around the conviction that, “to the producer belongs the fruits of his toil.” We were to have a private property order. The Declaration does not mention a right to property, substituting a right to “the pursuit of happiness.” We cannot read Jefferson’s mind as he wrote the document, but we do know what was in almost everyone else’s mind at the time; it was Life, Liberty, and Property.

The colonists had migrated out of situations in Europe where they lived on the estate of a master, working mostly for his benefit and only partly for their own. Here in the colonies the idea of freehold property was established. You owned your farm in fee simple, which means that your estate was your very own. You could will it to your descendants, sell it, dispose of it as you wished.

What you produced on your property was yours to keep, or sell, or give away. Now, you owned what your labor created, and you had an enormous incentive to devise labor-saving devices and work harder, longer, and more skillfully because everything you produced was yours. You got the added benefit; not some absentee landlord. Wealth creation increased by geometrical progression under these circumstances, with free men and women living under a just system of laws, holding a strict property right in the fruits of their labor.

The American colonists of the 17th and 18th centuries lived in a society whose primary institution was not government, or the press, or business, or the academy; it was the Church. As Alexis de Tocqueville observed of us in the 1830s: “Religion… is the first of their political institutions.” And it was the colonial churches which labored for the creation of the kind of personal character in men and women which a free society, with its market economy, demands as its basic ingredient.

We are reminded of this need for exemplary character by the late, great economist Wilhelm Roepke who said that the market economy cannot “… go on in a moral vacuum… Self-discipline, a sense of justice, honesty, fairness, chivalry, moderation, public spirit, respect for human dignity, firm ethical norms—all of these are things which people must possess before they go to market and compete with each other.” And as these early Americans entered the marketplace they practiced the Puritan ethic of work and thrift, believing that thus they served God as co-creators of a new nation, and proved that poverty is not mankind’s fate.

The Wealth of the West

The Western World is relatively wealthy because it is relatively capitalistic. The Third World is poor because it shuns capitalism. This is the truth of the matter, obvious to any person who examines the issues impartially. But this truth is overcome by a worldwide ideology which declares that the wealth of the West is the cause of Third World poverty!

President Julius Nyerere of Tanzania voiced this Third World ideology when he wrote: “In one world, as in one state, when I am rich because you are poor, or I am poor because you are rich, the transfer of wealth from the rich to the poor is a matter of right; it is not an appropriate matter for charity.” Along the same line, Third World voices tell us that the United States is to blame for the famine in Ethiopia — a country which exported its surplus grain and other foodstuffs until the Communists took over.

Third World politicians have a method in their madness: they want things from the West — American dollars, foodstuffs, machinery, and other goods — so they try to convince us that we owe it to them because we are to blame for their plight. This is the Marxist notion that the rich, under capitalism, get richer by making the poor poorer. This ploy would not work except that millions of Americans have also swallowed the Marxist exploitation theory; that those who are better off got that way by making others worse off; that the wealth created by capitalism is the cause of poverty.

Here, for example, are the words from a keynote address given at the World Council of Churches Assembly held in Vancouver two years ago: “We inhabitants of the industrial nations… exploit the majority of the world’s population… The demon of profit for the few at the expense of the many, i.e., their impoverishment, has the whole world economic system firmly in its grip.” These false and defamatory sentiments are echoed by many academic and ecclesiastical voices, here and abroad.

Americans do consume more than most people elsewhere and it might be interesting to find out why. The answer is simple, to the point of being self-evident: Americans consume more because Americans produce more. Americans produce more, not because we are superior beings, but because our relatively free institutions impose fewer restraints on our productive energies than is the case in other nations, and our private property system guarantees to the producer that he will own the fruits of his toil. Any nation that adopts the free market will be more productive, and thus more prosperous, and in the long run this is the only way to feed the world’s hungry.

A False Axiom

The redistributionist policies of our own welfare state, as well as similar international policies which tax Americans in order to subsidize other nations, is based on the false axiom that the wealth of some is the cause of the poverty of others. Something like this was true during the pre-capitalistic ages, but capitalism introduced an entirely new ball game in which each one of us prospers to the degree that he contributes to the well-being of other people, as they see it. Walter Lippmann puts it this way: “For the first time in human history men had come upon a way of producing wealth in which the good fortune of others multiplied their own.” Freedom in production and exchange does not promise perfection. When people are free, many of their choices may offend us, which means that the free society demands infinite tolerance for each other’s foibles. But that’s a small price to pay for all the benefits received.

To believe that wealth is the cause of poverty makes as much sense as to assume that health is the cause of disease. And to contend that the remedy for poverty is to soak the rich and give to the poor is as idiotic as believing that the only way to heal the sick is to make the healthy ill. The sick can be made well only as they adopt the sensible regimen of the healthy, and the poor can move out of poverty only as they become more productive. The world’s economic problems and other ills will only worsen unless there is a revival of that sound philosophy, which, two centuries ago, gave us the free society and the market economy which I’ve been labeling capitalism. Education along these lines — replacing bad ideas with better ones — is slow, frustrating, uphill work. But there is no other way.

Meanwhile, we try to live with — while working to correct — the false assumption of people everywhere, that wealth is the cause of poverty. The truth of the matter is that poverty in a nation is caused by the low productivity in that nation. And it is our good fortune that there is a simple recipe for overcoming low productivity while moving in the direction of prosperity. The recipe is: follow the prescriptions of people like Jefferson and Madison; Adam Smith, and Bastiat; Mises, Hayek, Roepke, Friedman, and others. The remedy is simple, but simple is not necessarily easy!

Read more from the Edmund Opitz Archive.

Post from: LibertarianChristians.com

The War on Poverty Revisited

At its core, Jacob’s book addresses in brief the history of classical liberalism and the libertarian movement, explains the basics of the philosophy of liberty, and tells the stories of a number of modern libertarian organizations at work right now. It’s wonderfully entertaining, easy to read, and splendidly pithy.

Among Huebert’s most salient points is his excoriation of “conservatism” and its relationship to libertarianism. He completely demolishes the myth that Ronald Reagan was even close to a libertarian, and hopefully such words will shock conservatives into realizing that most, if not all, of “traditional conservatism” as enshrined in Reagan is nothing short of a lie.

I’m a particular fan of the chapter on war (read an excerpt here); it’s so great that I have to quote the first paragraph in full:

Libertarianism and war are not compatible. One reason why should be obvious: In war, governments commit legalized mass-murder. In modern warfare especially, war is not just waged among voluntary combatants, but kills, maims, and otherwise harms innocent people. Then, of course, wars must be funded through taxes, which are extracted from U.S. citizens by force — a form of legalized theft, as far as libertarians are concerned. And, historically, the U.S. has used conscription — legalized slavery — to force people to fight and die. In addition, an interventionist foreign policy makes civilians targets for retaliation, so governments indirectly cause more violence against their own people when they become involved in other countries’ affairs. Plus, war is always accompanied by many other new restrictions on liberty, many of which are sold as supposedly temporary wartime measures but then never go away.

And now I… have nothing else to say. This is it. This is what we need to communicate to everybody. War kills. War is immoral. To the Christian, aggressive war is among the greatest of all evils humans can commit. Peace is our code. Period.

Another great part of Jacob’s book is his chapter on education. Public, compulsory schooling is not libertarian. And guess what, vouchers are not a viable alternative. This principle is somewhat difficult to explain to many people, but I have contended for years that vouchers are just another back door for government control of education. Huebert does a much better job of explaining it than I ever have.

I could go on and on just describing the chapters themselves, but I want to give you a concise flavor for the book so I will stop with the praise here. However, there are a few weaknesses to the book that I would be remiss not to point out. First, I think that Jacob was a bit too critical of the Libertarian Party, and a bit too kind to the Campaign for Liberty. It’s true that the LP has not lived up to the radical vision of its founders at times, and there are questions that I still have about its future. Nevertheless, it continues to be the home of a huge number of amazing activists and thinkers, and we dismiss the effect that it can have. The LP will only fail to live up to its original purpose if we let it – Murray Rothbard said as much many years ago and prominent LP members such as Mary Ruwart and Lee Wrights say the same today.

In contrast, despite the influence of Ron Paul and the large amount of money initially invested, I am a bit underwhelmed by what the Campaign for Liberty has been able to do at the national level. In truth, the awareness that America now has of the Federal Reserve and its criminal nature is incredible, but is this the result of C4L or is it just the momentum from 2008? I personally wish C4L would be more a hub of local activism rather than another organization trying to take on the House of Representatives. Don’t get me wrong, I want to see C4L succeed, but I also want to make sure that local efforts are well-funded and well-staffed.

This leads me to another minor oversight in the book: the lack of discussion of local activism. Don’t get me wrong, I despise politics and the electoral process is completely inane. Moreover, I readily admit national politics stinks and is frequently a waste of money except in very specific situations (the Ron Paul Presidential Campaign being the most spectacular example). But on a local level (i.e. states, counties, cities) individuals can have very real impacts that truly promote liberty and help people live more freely. I wish Jacob had explored this more thoroughly, because I imagine that concrete examples of success would inspire people to get out there and make a difference.

Finally, the price tag is a bit stiff, but I still contend that you need this book on your bookshelf to have, read, and lend out. While Amazon.com generally sells the book for $35, you can get a paperback copy for $25 at the Mises Institute Store. No matter what you choose, the knowledge you will gain from reading this is totally worth it.

Please consider buying Libertarianism Today at Amazon.com and LCC will then get a small kick-back from the sale. Remember, LCC receives a small percentage of any shopping you do at Amazon when you go through an LCC link. Help keep LCC growing and growing; your support is much appreciated!

Post from: LibertarianChristians.com

What is the best book on the essentials of libertarianism?

The First Amendment to the Constitution forbids Congress to set up an official church; there was to be no “Church of the United States” as a branch of this country’s government. Such an alliance between Church and State is what “establishment” means. An established church is a politico-ecclesiastical structure that receives support from tax monies, advances its program by political means, and penalizes dissent. Our Constitution renounces such arrangements in toro; the Founders wrote the First Amendment into the Constitution to prevent them.

The famed American jurist Joseph Story, who served on the Supreme Court from 1811 till 1845, and is noted for his great Commentaries on the Constitution of the United States, had this to say about the First Amendment: “The real object of the Amendment was, not to countenance, much less advance Mahometanism, or Judaism, or infidelity, by prostrating Christianity; but to exclude all rivalry among Christian sects, and to prevent any national ecclesiastical establishment, which should give to an hierarchy the exclusive patronage of the national government.”

The various theologies, doctrines, and creeds found in this country can thus be advanced by religious means only—by reason, persuasion, and example. Separation of Church and State means that government maintains a neutral stance toward our three biblically based religions—Catholicism, Judaism, and Protestantism, as well as toward the various denominations and splinter groups. These several religious bodies, then, have no alternative but to compete for converts in the marketplace of ideas. This is a good arrangement, good for both Church and State; it avoids the twin evils of a politicized religion and a divinized politics.

A Christian Nation

It has often been observed that America is a Christian nation — around which observation several misunderstandings cluster. We are a Christian nation in the sense that our understanding of human nature and destiny, the purpose of individual life, our convictions about right and wrong, our norms, emerged out of the religion of Christendom — not out of Buddhism, Confucianism, or primitive animism. And it is a fact of history that our forebears whose religious convictions brought them to these shores in the 17th and 18th centuries sought to create in this new world a biblically based Christian commonwealth. But it was not to be a theocracy — of which the world had seen too many! It was to be a religious society, but one which incorporated a secular political order!

The reasoning ran something like this. The human person is forever; each man and woman lives in the here and now, and also in the hereafter. Here, we are pilgrims for three score years and ten, more or less. Life here is vitally important for it’s a test run for life hereafter. Earth is the training ground for life eternal. Such training is the essence of religion, and it’s much too important to be entrusted to any secular agency. But there is a role for government; government should maintain the peace of society and protect equal rights to life, liberty, and property. This maximizes liberty, and in a free social order men and women have maximum opportunity to order their souls aright.

Separating the sacred and the secular in this fashion is a new idea in world history. Secularize government and you deprive it of the perennial temptation of governments to offer salvation by political contrivances. By the same token, things sacred are privatized as free churches, where the spiritual concerns of men and women are advanced by spiritual means only.

So, when it is said that America is a Christian nation, the implication intended is poles apart from what is meant when it is observed, for example, that Iran is a Shiite nation. The Shiite sect of Islam is a branch of the government of Iran. Other religions are not tolerated. Deviations from doctrinal orthodoxy are forbidden. The government punishes infidels because Shiism is Iran’s official, authorized church. From time to time government uses the sword to gain converts. The government of Iran is not neutral with respect to religion.

In the United States, it is mandated that the government maintain a level playing field, so to speak, “a free field and no favor,” where freely choosing individuals find their different pathways to God while government merely keeps the peace. This is what is really meant by the phrase, “Separation of Church and State.” This oft-quoted phrase is frequently misunderstood as suggesting that religion and politics are incompatible, and that we should keep religion out of politics.

If we think of “politics” as several candidates wheeling, dealing, and slugging it out in an election campaign, it’s clear that religion doesn’t have a significant role in such a situation. And if we think of “religion” in terms of a contemplative meditating and praying in his cell, it’s obvious that politics is absent. But there is no coherent political philosophy apart from a foundation of religious axioms and premises.

Religion and the Social Order

Religion, at its fundamental level, offers a set of postulates about the universe and man’s place therein, including a theory of human nature, its origin, its potentials, and its destination. Religion deals with the meaning and purpose of life, with man’s chief good, and the meaning of right and wrong. Thus, religious axioms and premises provide the basic materials political philosophy works with. The political theorist must assume that men and women are thus and so, before he can figure out what sort of social and legal arrangements provide the fittest habitat for such creatures as we humans are. So, some religion lies at the base of every social order.

It is the religion of dialectical materialism that is the take-off point for the Marxian theory and practice of the total state. Hinduism is basic to the structures of Indian society. Western society, Christendom, was shaped and molded by Christianity. Incorporated into Western civilization were elements from the Bible, as well as ingredients from Greece and Rome. This composite was lived, worked over, and thought out for nearly 1800 years by the peoples of Europe. And then something new emerged and began to take root in the New World; it was the recovery of that part of the Christian story needed to ransom society from despotism and erect the structures of a free society wherein men and women might enjoy their birthright of economic and political liberty.

A vision emerged of a society where men and women would be free to pursue their personal goals, unimpeded by the fetters of rank, privilege, caste, or estate that had hitherto consigned people to roles determined by custom and command, not by their own choice.

The people who settled these shores during the 17th and 18th centuries were children of the Reformation driven by their need to worship God as it pleased them, according to their own wisdom and conscience. Believing that God had entered into a covenant with His people, they freely covenanted together to form churches. This was later called “the gathered church idea,” seemingly endorsed by Jesus himself in Matthew 18:20: “Where two or three are gathered together in my name, there am I in the midst of them.”

The local New England church in the Puritan period had full ecclesiastical authority to ordain its minister and appoint deacons and elders. Its minister could celebrate communion, perform christenings, baptisms, and marriages, and conduct funerals — all on the authority of the local church. Each church was in voluntary fellowship with other churches, but in authority over none. The covenant pattern of the early New England churches was the paradigm for the federalist political structure erected two centuries ago. The West was moving from status to contract, as Sir Henry Maine would observe in 1861.

This concern for individual liberty in society was not limited to theologians. Tom Paine generally took a critical stance when dealing with religion and the church, but in 1775 in an essay entitled “Thoughts on Defensive War” he wrote as follows: “In the barbarous ages of the world, men in general had no liberty. The strong governed the weak at will; ‘till the coming of Christ there was no such thing as political freedom in any part of the world… The Romans held the world in slavery and were themselves slaves of their emperors… Wherefore political as well as spiritual freedom is the gift of God through Christ.” And Edward Gibbon, so critical of the Church in his history of Rome, nevertheless pays tribute to “… those benevolent principles of Christianity, which inculcate the natural freedom of mankind.”

Our forebears of a couple of centuries ago regarded human freedom as a religious imperative. They loved to quote such biblical texts as: “Where the Spirit of the Lord is, there is liberty,” (2 Cor. 3:17) and “Proclaim liberty throughout all the land to all the inhabitants thereof.” (Lev. 25:10) They struggled for freedom of worship; they fought for the right to speak their minds, and for a free press to put their convictions into written form. They also had firm convictions about private property. The popular slogan of the time was “Life, Liberty, and Property!” Property meant the right of private ownership. Adam Smith and his Wealth of Nations came along at just the right time—with what Smith called his “liberal plan of liberty, equality and justice”—to become the economic counterpart of the political ideas of the Declaration of Independence.

The Importance of the Individual

The central doctrine of the American political system is our belief in the inviolability of the individual man or woman. This is one of the self-evident truths enunciated in the Declaration of Independence: “We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness.” The “equality” which is the key idea of the Declaration means “equal justice,” the Rule of Law, the same rules for everybody because we are one in our essential humanity.

The reflections of H.L. Mencken on this point are intriguing as coming from a man usually critical of religion. In 1926 Mencken wrote an essay entitled “Equality Before the Law.” “Of all the ideas associated with the general concept of democratic government,” he wrote, “the oldest and perhaps the soundest is that of equality before the law. Its relation to the scheme of Christian ethics is too obvious to need statement. It goes back, through the political and theological theorizing of the middle ages, to the early Christian notion of equality before God… The debt of democracy to Christianity has always been underestimated… Long before Rousseau was ever heard of, or Locke or Hobbes, the fundamental principles of democracy were plainly stated in the New Testament, and elaborately expounder by the early fathers, including St. Augustine.

“Today, in all Christian countries, equality before the law is almost as axiomatic as equality before God. A statute providing one punishment for A and another for B, both being guilty of the same act, would be held unconstitutional everywhere, and not only unconstitutional, but also in plain contempt of common decency and the inalienable rights of man. The chief aim of most of our elaborate legal machinery is to give effect to that idea. It seeks to diminish and conceal the inequities that divide men in the general struggle for existence, and to bring them before the bar of justice as exact equals.”

The freedom quest of Western man, as it has exhibited itself periodically over the past 20 centuries, is not a characteristic of man as such. It is a cultural trait, philosophically and religiously inspired. The basic religious vision of the West regards the planet earth as the creation of a good God who gives a man a soul and makes him responsible for its proper ordering; puts him on earth as a sort of junior partner with dominion over the earth; admonishes him to be fruitful and multiply; commands him to work; makes him a steward of the earth’s scarce resources; holds him accountable for their economic use; and makes theft wrong because property is right. When this outlook comes to prevail, the groundwork is laid for a free and prosperous commonwealth such as we aspired to on this continent.

A Created Being in a Created World

We gaze out upon the world around us and are struck by the preponderance of order, harmony, beauty, balance, intelligence, and economy in the way it works. The thought strikes us that the explanation of the world is not contained within the world itself, but is to be sought in a Source outside the world. The Bible simply declares that God created the world, and when He had finished He looked out upon the world He had created and called it good. The biblical world is not Maya — as Hinduism calls its world; it is not a mirage or an illusion. Nor is the world of nature holy; only God is holy. The created world, including the realm of nature, is “the school of hard knocks.” The earth challenges us to understand its workings so that we might learn to use it responsibly to serve our purposes. Economics and the free enterprise system teach us how to use the planet’s scarce resources providently, efficiently, and non-wastefully—in order to produce more of the things we need.

Man comes onto the world scene as a created being. As a created being, man is a work of divine art and not a mere happening; he possesses free will and the ability to order his own actions. As such, he is a responsible being. He’s no mere chance excrescence tossed up haphazardly by physical and chemical forces, shaped by accidental variations in his environment. To the contrary, man is endowed with a portion of the divine creativity, giving him the power to dynamically transform himself, and his environment as well, according to his needs and his vision of what ought to be.

The other orders of creation — animals, birds, bees, fish, and so on — live by the dictates of their instincts. But our species has no such infallible inner guidelines as our fellow creatures possess; our guidelines are formulated in the moral code, as summed up in the Ten Commandments.

Ethical relativism is a popular attitude today; it is a wrong answer to questions such as: Is there a moral code? Are there moral laws? Let me summarize briefly the argument that our universe has a built-in moral order by showing that there is a striking parallel between the laws of physical nature and moral laws.

The laws of science transcribe into words the observed causal regularities in the world of physical nature, i.e. the realm of things which can be measured, weighed, and counted. This is one sector of reality. Reality also exhibits a moral dimension, where things are valued or disdained on a scale of ethics ranging from good to evil. Biological survival depends on conforming our actions to the laws of nature; ignorance is no excuse. Social survival, the enhancement of individual life in society, depends on willing obedience to the moral code that condemns murder, theft, false witness, and the rest. Transgressors lead us toward social decay and cultural disorder.

Your individual physical survival depends on several factors. If you want to go on living you need so many cubic feet of air per hour, or you suffocate. You need a minimum number of calories per day, or you starve. If you lack certain vitamins and minerals specific diseases will appear. There is a temperature range within which human life is possible: too low and you freeze, too high and you roast. These are some of the requirements you must meet for individual bodily survival. They are not statutory requirements, nor are they mere custom. They are laws of this physical universe, which one can deny only at his peril.

Establishing a Moral Order

It is just as obvious that our survival as a community of men, women, and children depends on meeting certain moral requirements: a set of rules built into the nature of things which must be obeyed if we are to survive as a society — especially as a social order characterized by personal freedom, private property, and social cooperation under the division of labor.

Moses did not invent the Ten Commandments. Moses intuited certain features of this created world that tell us what we must do to survive as a human community, and he wrote out the code: Don’t murder, don’t steal, don’t assault, don’t bear false witness, don’t covet. Similar codes may be found in every high culture.

It would be impossible to have any kind of a society where most people are constantly on the prowl for opportunities to murder, assault, lie, and steal. A good society is possible only if most people most of the time do not engage in criminal actions. A good society is one where most people most of the time tell the truth, keep their word, fulfill their contracts, don’t covet their neighbor’s goods, and occasionally lend a helping hand. No society will ever eliminate crime, but any society where more than a tiny fraction of the people exercises criminal tendencies is on the skids. To affirm a moral order is to say, in effect, that this universe has a deep prejudice against murder, a strong bias in favor of private property, and hates a lie.

The history of humankind in Western civilization was shaped and tempered by biblical ideas and values, and the attitudes inspired by these teachings. There was much backsliding, of course; but in the fullness of time scriptural ideas about freedom, private property, and the work ethic found expression in Western custom, law, government, and the economy — especially in our own nation. We prospered to the degree that we practiced the freedom we professed; we became ever more productive of goods and services. The general level of economic well-being rose to the point where many became rich enough so that biblical statements about the wealthy began to haunt the collective conscience.

The Bible does warn against the false gods of wealth and power, but it legitimizes the normal human desire for a modicum of economic well-being — which is not at all the same as idolizing wealth and/or power. As a matter of fact, the Bible gives anyone who seeks it out a general recipe for a free and prosperous commonwealth. It tells us that we are created with the capacity to choose; we are put on an earth which is the Lord’s and given stewardship responsibilities over its resources. We are ordered to work, charged with rendering equal justice to all, and to love mercy. A people which puts these ideas into practice is bound to become better off than a people which ignores them. These commands laid the foundation for the economic well-being of Western society.

Western civilization, which used to be called “Christendom,” did not prosper at the expense of the relatively poor Third World. This unhappy sector of the globe is poor because it is unproductive; and it is unproductive because its nations lack the institutions of freedom that enabled us to achieve prosperity.

During recent years a small library of books and study guides has poured off the presses of American church organizations (and from secular publishers as well) with titles something like “Rich Christians (or Americans) in a Hungry World.” The allegation is that our prosperity is the cause of their poverty; in other words, the Third World has been made poor by the very same economic procedures — “capitalism” — that have made Western nations prosperous! Therefore — the argument runs — our earnings should be taxed away from us and our goods should be handed over to Third World countries—as a matter of social justice! The false premise is that the wealth we have labored to produce has been gained at their expense. Sending them our goods, then, is but to restore to the Third World what rightfully belongs to it! What perverse ignorance of the way the world works!

Nations of the West were founded on biblical principles of justice, freedom, and a work ethic, which led naturally to a rise in the general level of prosperity. Our wealth could not have come from the impoverished Third World where there was a scarcity of goods. We prospered because of our productivity; we became productive because we were freer than any other nation, Freedom in a society enables people to produce more, consume more, enjoy more; and also to give away more—as we have done—to the needy in this land and in lands all over the world. The world has never before witnessed international philanthropy on such a scale.

No one has denied Third World nations access to the philosophical and religious credo which has inspired the American practices that make for economic and Social wen-being. Few nations have done more to make the literature of liberty available to all who wish it than American missionaries, educators, philanthropists, and technicians. But there is something in the creeds of Third World countries that hinders acceptance. However, when non-Christian parts of the world decide to emulate Western ideas of economic freedom they prosper. Look what happened to the economies of Taiwan, South Korea, Hong Kong, and Singapore when they turned the market economy loose!

Regarding the Poor

Ecclesiastical pronouncements on the economy are fond of the phrase “a preferential option for the poor.” It is invoked as the rationale for governmental redistribution of wealth, that is, for a program of taxing earnings away from those who produce in order to subsidize selected groups and individuals. But it is a fact that reshuffling wealth by programs of tax and subsidy merely enriches some at the expense of others; the nation as a whole becomes poorer. Private enterprise capitalism is, in fact, the answer for anyone who really does have a preferential option for the poor. The free market economy, wherever it has been allowed to function, has elevated more poor people further out of poverty faster than any other system.

Another phrase, repeated like a mantra, is “the poor and oppressed.” There is, of course, a connection between these two words; a person who is oppressed is poorer than he would be otherwise. Oppression is always political; oppression is the result of unjust laws. Correct the injustice by repealing unjust laws; establish political liberty and economic freedom. But even in the resulting free society, where people are not oppressed, there will still be some people who are relatively poor because of the limited demand for their services. Teachers and preachers are poor compared to rock musicians because the masses spend millions to have their ears assaulted by amplified sound, in preference to the good advice often available for free!

Ecclesiastical documents announce their concern for “the poor and oppressed,” but the authors of these documents are completely blind to the forms oppression may take in our day. If there are unjust political interventions that deny people employment, this would seem to be a flagrant case of oppression. There are many such interventions. Minimum wage laws, for instance, deny certain people access to employment, and these people are poorer than they would be otherwise; the entire nation is less well off because some people are not permitted to take a job. The same might be said of the laws that grant monopoly status to certain groups of people gathered as “unions” – U.A.W., Teamsters, and the like. The above-market wage rate they gain for union members results in unemployment for others both union and nonunion. It is not difficult to figure out why this is so. The general principle is that when things begin to cost more we tend to use less of them. So, when labor begins to cost more, fewer workers will be hired.

It would take several pages to list all of the alphabet agencies that regulate, control, and hinder productivity, making the entire nation less prosperous than it need be. Our country suffers under these oppressions, economically and otherwise, but not so severely as the oppressed people of other nations, especially Communist and Third World nations. Churchmen recommend, as a cure for Third World poverty, that we deprive the already over-taxed and hampered productive segment of our people of an even larger portion of their earnings, so as to turn more of our money over to Third World governments. This will further empower the very Third World politicians who are even now oppressing their people, enabling those autocrats to oppress them more efficiently!

The New Testament and the Rich

It is not difficult to rebut the manifestoes issued by various religious organizations. But then we turn to certain New Testament writings and are confronted by what seem to be condemnations of the rich. How, for example, shall we understand Jesus’ remark, found in Luke 18:25 and Matthew 19:24: “It is easier for a camel to go through a needle’s eye, than for a rich man to enter into the kingdom of God”?

Jesus’ listeners were astonished when they heard these words. Worldly prosperity, many of them assumed, was a mark of God’s favor. It seemed to follow that the man whom God favored with riches in this life was thereby guaranteed a spot in heaven in the next.

There is a grain of truth in this distorted popular mentality. Biblical religion holds that man is a created being, with the signature of his Creator written on each person’s soul. This inner sacredness implies the ideal of liberty and justice in the relations between person and person. These free people are given dominion over the earth in order to subdue it, working “for the glory of the Creator and the relief of man’s estate,” as Francis Bacon put it. This is but another way of saying that those who follow the natural order of things—God’s order—in ethics and economics will do better for themselves than those who violate this order. The faithful, we read in Job 36:11, “… if they obey and serve Him… shall spend their days in prosperity and their years in pleasures.”

Perhaps Jesus had something else in mind as well. Palestine had been conquered by Rome. Roman overlords, wielding power and enriching themselves at the expense of the local population, would certainly supply many examples of “a rich man.” Furthermore, there were those among the subject people who hired themselves out as publicans to serve the Romans by extorting taxes from their fellow Jews. “Publicans and sinners” is virtually one word in the Gospels!

In nearly every nation known to history, rulers have used their political power to seize the wealth produced by others for the gratification of themselves and their friends. Kings and courtiers in the days of slavery and serfdom consumed much of the wealth produced by farmers, artisans, and craftsmen. Today, politicians in Communist, socialist, and welfarist nations, democratically elected by “the people,” share their power with a congeries of special interests, factions, and pressure groups who systematically prey on the economy, depriving people who do the world’s work of over 40 percent of everything they earn.

Many a “rich man” lives on legal plunder, today as well as in times past. Frederic Bastiat’s little book, The Law, familiarizes us with the procedure. The law is an instrument of justice, intended to secure each individual in his right to his life, his liberty, and his rightful property. Ownership is rightfully claimed as the fruit of honest toil and/or as the result of voluntary exchanges of goods and services. But the law, as Bastiat points out, is perverted from an instrument of justice into a device of plunder when it takes goods from lawful owners by legislative fiat and transfers them to groups of the politically powerful. “Robbery is the first labor saving device,” wrote Lewis Mumford, and political plunder is a species of theft. The fact that it is legally sanctioned does not make it morally right; it is a violation of the commandment against theft.

The Israelites had fond memories of King Solomon. “All through his reign,” we read in 1 Kings 4:25, “Judah and Israel continued at peace, every man under his own vine and fig tree, from Dan to Beersheba.” A nice tribute to individual ownership and economic well-being! The Bible has high praise for honestly earned wealth, and it is exceedingly unlikely that Jesus, in the passage we have been considering, intended anything like a general condemnation of wealth, as such.

At this point someone might raise a legitimate question: “Did not Jesus say, in the Sermon on the Mount, ‘Blessed are the poor’?” Well, yes and no. The Sermon on the Mount appears in two of the four Gospels, in Matthew and in Luke. In Luke 6:20 the Beatitude reads: “Blessed are the poor”; but in Matthew 5:3 it is: “Blessed are the poor in spirit.” There’s a discrepancy here; how shall we interpret it?

The Beatitudes were spoken somewhere between 25 and 30 A.D. The Gospels of Matthew and Luke appeared some 50 or 60 years later. Both authors had access to the Gospel of Mark, to fragments of other writings now lost, and to an oral tradition extending over the generations. We do not have the original manuscripts of the Gospels; what we have are copies of copies, and eventually translations of copies into various languages.

Scholars tell us that the Aramaic original of those two words, “the poor,” is am ha-aretz — “people of the land.” The am ha-aretz — at this stage in Israel’s history — were outside the tribal system of Jewish society; they did not have the time or inclination to observe the niceties of priestly law, let alone its scribal elaborations. The work of the am ha-aretz brought them into contact with Gentiles and Gentile ways of life, which in the eyes of the orthodox was defiling. Their status is like that of the people on the bottom rung of the Hindu caste system — the Sudras. Jesus is reminding His hearers that these outcasts are equal in God’s sight to anyone else in Israel, and because of their lowly station in the eyes of society, they may be more open to man’s need of God than the proud people in the ranks above them. The New English Bible provides an interesting slant on this text; it translates “poor in spirit” as “those who know their need of God.”

In short, Jesus is saying that all are equally precious in God’s sight, including the lowly am ha-aretz; He is not praising indigence, as such.

Biblical Interpretation

The Bible is full of metaphor and symbolism and allegory. Literal interpretation usually falls short; proper interpretation demands a bit of finesse… as in the case of St. Paul’s remark about money.

St. Paul declared that “The love of money is the root of all [kinds of] evil.” (1 Tim. 6:10) The word “money” in this context—scholars tell us—does not mean coins, or bonds, or a bank account. Paul uses the word “money” to symbolize the secular world’s pursuit of wealth and power. We tend to become infatuated with “the world.” It’s the infatuation which is evil, for God’s kingdom is not wholly of this world. We are the kind of creatures whose ultimate destiny is achieved only in another order of reality: “Here we have no continuing city.” (Heb. 13:14) Accept this world with all its joys and delights; live it to the full; but remember—we are pilgrims, not settlers. In today’s vernacular, Paul might be telling us: “Have a love affair with this world, but don’t marry it!”

We know that there are numerous unlawful ways to get rich, and these deserve condemnation. But prosperity also comes to a man or woman as the fairly earned reward of honest effort and service. The Bible has nothing but praise for wealth thus gained. “Seest thou a man diligent in his business?” said the author of Proverbs (Pr. 22:29). “He shall stand before kings.” Economic well-being is everyone’s birthright, provided it is the result of honest effort. But we are warned against a false philosophy of material possessions.

This, I think, is the point of Jesus’ parable of the rich man whose crops were so good that he had to build bigger barns. (Luke 12:17) This good fortune was the man’s excuse for saying, “Soul, thou hast much goods laid up for many years; take thine ease, eat, drink, be merry.”

There is a twofold point to this parable. The first is that nothing in life justifies us in resigning from life; we must never stop growing. It has been well said that we don’t grow old, we become old by not growing. The second point is that a material windfall—like falling heir to a million dollars—may tempt a man into the error of quitting the struggle for the real goals in life. Jesus condemned the man who put his trust in riches, who “layeth up treasure for himself and is not rich toward God.” He did not condemn material possessions as such; He taught stewardship, which is the responsible ownership and use of rightfully acquired material goods.

Life here is probative; our three score years and ten are a sort of test run. As St. Augustine put it, “We are here schooled for life eternal.” And one of the important examination questions concerns our economic use of the planet’s scarce resources and the proper management of our material possessions. These are the twin facets of Christian stewardship, and poor performance here will result in dire consequences. Jesus put it very strongly: “If, therefore, you have not been faithful in the use of worldly wealth, who will entrust to you the true riches?” (Luke 16:12)

What does it mean to be “faithful in the use of worldly wealth?” What else can it mean except the intelligent and responsible use of the planet’s scarce resources to transform them by human effort and ingenuity into the consumable goods we humans require not only for survival, but also as a means for the finer things in life? In practice, this means free market capitalism — the free enterprise system — in the production, exchange, and utilization of our material wealth in the service of our chosen goals.

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Biblical Roots of American Liberty

Capitalism is the only moral social system. Only a capitalist system allows you to act in your own interest, to keep what you have worked for and trade it with other willing individuals. For much of human history, wealth has been produced primarily by looting or enslaving others. Under capitalism wealth is created by serving others, by creating values for them. Individuals who produce the best goods and services are rewarded by making the most profit. Those who produce shoddy goods, mediocre services or try to defraud others are weeded out when exposed.

Capitalism is win-win. Producers only make profits on goods and services that consumers choose to buy. Competition among producers ensures that consumers have a variety of goods and services at different price ranges to choose from. Workers and employers come together based on mutual consent. Employers can choose to fire incompetent workers, and workers can choose to leave an employer for a better job. Competition among employers for qualified workers drives wages and benefits up. Whereas politics is a zero-sum game in which power and tax dollars are redistributed from one group to another, capitalism continuously creates more wealth, thereby growing the pie and increasing prosperity for all.

Capitalism is fair. Capitalism is predicated upon and respects individuals’ free choices. No one has to pay for what he does not want and derives no benefit from. Under capitalism, individuals and businesses cannot seek politically enforced advantages or handouts. For instance, in a capitalist system steel producers would not be able to obtain tariffs and subsidies in order to avoid being undersold or driven out of business by foreign competitors, and a workers’ union could not get government to force employers to provide higher wages, more benefits and greater job security. Unable to run to the government for help, these groups must prove themselves entirely based on the worth of the goods and services they produce. That is fair to consumers and competitors.

Capitalism empowers the consumer. The consumer votes for or against goods and services with his money. If companies do not offer the kinds of goods and services consumers want to buy, they fail — but their demise inspires the emergence of new markets, new products, new services, and new methods of production. In this way, capitalism promotes innovation and efficiency through a process of creative destruction. Capitalism also fosters the creation of mass communication tools such as the internet. Thus, consumers can make informed decisions about what to purchase and can let others know about the quality of that purchase. Many consumers united together can persuade a producer to lower prices or change his product or service for the better.

Capitalism reflects human nature. People have limited knowledge. State-planned economies fail because no bureaucrat or committee, no matter how well educated in economics, has the knowledge to coordinate the actions of millions of individuals. People are also motivated by different values. Under capitalism people can pursue their chosen values, provided of course that they do not violate the rights of others. Pursuing values and being allowed to keep, dispose of and profit from the results of that pursuit motivates people to take care of things, to produce, and to innovate. Further, by tapping into human beings’ competitive nature, capitalism makes everything better. Just compare the best car created under a capitalist system to the best car created under a socialist system, where competition is suppressed.

Capitalism fosters benevolence. When individuals are well-off, as would be the case for the bulk of individuals under capitalism (perhaps only those currently receiving special treatment from some government body would be the exception), they have time and money to take care of others. Further, if they have the right to keep what they have worked for and dispose of it in the way they choose, they are more likely to embrace helping people in need and give more than if their money is forcibly taken from them by the government via taxation. For instance, you might already donate money to your local homeless shelter, food pantry or to an organization working for a cause that is very important to you. But if you were not taxed as heavily as you are, you might be willing and able to donate more.

Capitalism makes everyone richer. Even the least well-off person in a developed country today lives a life of luxury beyond the wildest dreams of the richest kings centuries ago: consider televisions, computers, iPods, cell phones, microwaves, cars, washing machines, or air conditioning. Compare how poor people live in the United States today to how they lived in the US a hundred years ago, or to how they live in Third World countries today. In fact, capitalism is our best hope for alleviating and eventually eradicating poverty worldwide because it creates more wealth — for everyone — than any other social system.

Capitalism promotes peace. Capitalist countries are less likely than non-capitalist countries to initiate violence against their citizens or against other countries. Where people come together for mutually beneficial interaction such as trade, issues of race, religion, ethnicity, gender, or sexual orientation are less important. What matters is whether you can offer me the kinds of goods and services I want for the price I am willing to pay.

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Enjoy Capitalism!

Communism is the vision of an egalitarian society with common ownership of property. Karl Marx, the father of communism, stated that the prevailing capitalist environment is responsible for class struggle and inequality among people. He believed that people’s lives are determined by their economic environment and in order to achieve the communist utopia, that environment has to be changed. For this change to occur, the working class (proletariat) must overthrow the existing regime, dismantle all capitalist institutions, and eliminate the possibility of a counterrevolution by the merchant class (bourgeoisie). Then, as a necessary pre-stage to communism, a socialist authoritarian government must be established to take complete control over the means of production—natural resources, infrastructure, tools, financial capital, and labor. Once people are thoroughly conditioned by this new structure they will morph into a “higher” man. Soon, government will wither away and in its place will emerge the stateless, egalitarian society that communists envisage. This may sound good in theory to some, but the communist experiments of the 20th century resulted in economic deprivation and murder on a massive scale.

Communism kills. Marx knew that winning the revolution would not be enough. He penned that “so long as other classes continue to exist, the capitalist class in particular, the proletariat fights it…it must still use a measure of force, hence governmental measures.” Lenin purged his ideological rivals, the Mensheviks and the Social Revolutionaries. Stalin, Pol Pot, Che Guevara, Castro, and Mao all eliminated whoever they suspected of opposing their regimes, whether by deporting dissidents to slave labor camps, subjecting them to sham trials in which the forgone conclusion was a “guilty” verdict and execution, or simply murdering them outright. In all, even according to conservative estimates, communist regimes have killed at least 150 million people. Not too peaceful…

Communism prohibits private property. As Marx saw it, private property is the primary cause of man’s alienation from his social nature and a limitation on his freedom: “The right of property is therefore, the right to enjoy one’s fortunes and dispose of it as he will; without regard for other men and independently of society…It leads every man to see in other men, not the realization, but rather the limitation of his own liberty.” Marx agreed that private property is the basis of the capitalist system, creating enormous wealth and economic progress; but he claimed that such wealth and progress is limited to a small class of rich merchants at the expense of a large class of poor workers. But, as classical liberals such as Adam Smith and John Locke argued, private property is essential to securing man’s natural rights to life and liberty. Think about it: the right to life is the right to live, and to live in the way you choose; the right to liberty is the right to pursue what you need to survive and live a good life, so long as it does not entail violating the rights of someone else to do the same.

However, if the needs of others are the determinant of how much food, shelter, or clothing you are allowed to have or of the profession you may pursue—then, ultimately, your life depends on whoever can claim to have a greater need than you. That’s not freedom; that’s slavery.

Communism is full of contradictions:

• Communists claimed that their philosophy would outdo capitalism economically because it promotes the good of all rather than the narrow self-interest of a few greedy capitalists. Yet, if being self-interested means that one acts according to a set of values that one holds and wants to realize, then communism itself could not be implemented without self-interest. Capitalist economies far surpassed communist ones in wealth, evident by the fact that the least-well-off in the former have a greater standard of living than all but the top echelon of government officials in the latter. To achieve the economic growth necessary to alleviate poverty, productivity and innovation are key, both of which depend on the proper incentives. Under capitalism people get to keep and dispose of what they have produced, which gives them an incentive to produce and innovate more. This is absent under communism.
• Communist leaders hailed their societies as beacons for a more just, abundant society. Yet, one only needs to look at how people voted with their feet to know that was not true; many willingly risked death to escape the devastatingly brutal conditions of communist countries to obtain a better life in capitalist countries. Moreover, in areas once seen as “breadbaskets” of the world, communism (and the disallowance of private property) brought mass famine, as was seen in Russia in the early 1920s and in China in the late 1950s.
• Communists stated that their philosophy is ethically superior to classical liberalism and capitalism because it seeks to abolish inequality. Under communism, they claim, everybody is equally provided for but in reality only those in power (bureaucrats and party honchos) win while everybody else loses. The only level of equality reached by the common man is in the shared level of misery.

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Communism Kills

Adam Smith’s monumental achievement was to enlarge the individual person’s freedom of action in economic affairs, and thus in other sectors of his life as well. Smith’s argument had several minor loopholes, but these were plugged by the Austrian School—Carl Menger, Eugen von Böhm-Bawerk about a century after The Wealth of Nations. Today, it is fair to say that Ludwig von Mises and his students have created a genuine science of economics—a systematic exposition of the free market economy-which, as an intellectual structure, is virtually impregnable. Misesian economic science is, so to speak, The Answer. It’s the recipe for anyone who wants to know how a society must organize its workplace activities so as to maximize economic well-being for all.

The Question is: How may we achieve the free and prosperous commonwealth? To which The Answer is: Install the free market economy, as taught by Austrian—and some other—economists.

Trouble is, almost no one is asking The Question!

Economic science does not tell John Doe how to make a million dollars on Wall Street, or a killing in real estate, or how to protect his assets. Entrepreneurship is an art, not a science; profitable investing likewise. Economic science, like every other science, deals with abstract principles and general rules. Economic science sets forth the general rules which members of a particular society must apply in practice if the society is to enjoy maximum productivity and raise the general level of economic well-being. Economic science is a scholarly endeavor which shows what must be done to maximize the wealth of nations.

Economic science has The Answer for anyone who asks how a society may advance from poverty toward affluence. But economic science has no answer for those who ask: How can I make a fast and easy buck?

This is the wrong question, so far as economic science is concerned. How can people be persuaded to ask the right question? The question people should ask might be phrased as follows: How can we create the social institutions which provide maximum opportunity for all of us to be more prosperous? Only a sense of moral obligation will generate such a question.

The ordinary, decent, law-abiding citizen in his private dealings with his fellows would not use force or fraud to gain advantage over another. But when force and/or fraud are legalized millions do seek some advantage for themselves at the expense of their fellows. When the State allocates resources and redistributes the wealth, it is using its power to deprive producers of what belongs to them, in order to dispense it to those who have not earned it. Everyone is forced to pay tribute for the benefit of the wield-crs of power and their friends. Concerned with their own immediate well-being and looking to the State for handouts, tens of millions of Americans have no interest in working toward an economic order which would assure a rising level of prosperity for everyone—the free market economy.

Austrian economics is The Answer, all right, but it is the answer to a question which only a few are asking. The reason: only a few have an ethical incentive to ask it. Millions are searching for ways to increase their salaries, double their incomes, and enjoy the good life. Only a handful, by comparison, are working with any intensity to advance the free society-market economy way of life.

Economic Fallacies

We have it on the authority of Henry Hazlitt that “Economics is haunted by more fallacies than any other study known to man.” Who can deny it? Any reasonably bright high school student can read Economics in One Lesson. Haw ing read the book, he can spot the fallacies in many textbooks of economics, in the speeches of public figures, in the commentaries of television and radio pundits, in sermons and academic lectures, in almost any place he cares to look.

The discipline of economics is not mired in simple ignorance; it is stalled by willful ignorance. Economic fallacies abound because every economic fallacy in practice gives someone an economic or other advantage over someone else. Pocketbook motivations keep economic fallacies alive; slay them in one generation and they return from the dead in the next.

Virtually every economic fallacy that plagues us today has been demolished time and again over the past couple of centuries; but has this work of demolition diminished the number and power of economic fallacies? Hardly; they appear about as numerous and virulent as ever. There are few new economic truths, but new errors proliferate wildly. Demolishing fallacies and exposing errors may be exhilarating for a time, but it is negative work; it is to toil on a treadmill. The positive maths of a market economy—together with its supporting institutions and ideas—are reached only by taking a different route.

The celebrated classicist, Gilbert Murray, offers some wise words on truth and error: “The great thing to remember is that the mind of man cannot be enlightened permanently by merely teaching him to reject some particular set of superstitions. There is an infinite supply of other superstitions always at hand; and the mind that desires such things—that is, the mind that has not trained itself to the hard discipline of reasonableness and honesty, will, as soon as its devils are cast out, proceed to fill itself with their relations.”

There will always be a need to expose economic error and demolish fallacies, but something more is needed if we wish to advance in the direction of a truly free society; and that something more is the sense of moral obligation which motivates persons to pursue the goals they perceive to be ethically right and good. Economics needs ethics.

Mises points out that economics “is a science of means, not of ends,” and that science, furthermore, is value- free. A science describes; but does not prescribe. “Science,” Mises goes on to say, “never tells a man how he should act; it merely shows how a man must act if he wants to attain definite ends . . . . Praxeology and economics do not say that men should peacefully cooperate within the frame of societal bonds; they merely say that men must act this way if they want to make their actions more successful than otherwise.” Moral obligation, a sense of “oughtness,” is not within the purview of science; the sciences, basically, operate in a sector of the universe that is ethically neutral. By the same token, there are no grounds in economic science per se for telling anyone that he ought to do this when he prefers to do that.

Although every science is value-free, the universe is not value-free! We live in a rationally and ethically structured universe where some things are morally right and other things are morally wrong; there is genuine good, as well as real evil. Moral obligation, besides being a reality that presses on the sensitive conscience, is a potent incentive to strive to translate the reasoned maths of economic science into a go_ ing concern economy.

Economics is the science of human action, and the actions of human beings are intimately implicated with ethical standards and moral obligation. In other words, economic science does not stand alone; it is a “means,” and as a means economics needs to be hooked up with disciplines that deal with ends.

What we have here is an IF—THEN situation. The economist cannot tell us that we ought to prefer a free and prosperous commonwealth; but IF that is what we want, THEN economic science can demonstrate that the market economy is the only means to achieve that end. Economic science can only explain; the economic argument must therefore be joined to an ethical imperative which commands.

Strengthening the Case

Economic reasoning can demonstrate that the free market system is the most efficient way to produce goods and services, rewarding every participant according to his contribution to the productive process—as that contribution is judged by his peers. But the economic case for freedom is strengthened immeasurably when it is bolstered by moral reasoning which demonstrates that the market economy is the only economic order which embodies the ideas of liberty and justice for all. Capitalism is the only economic system that does not reward some at the expense of others.

The interventionist state provides cushy jobs for many a predator and parasite, people whose services would not be needed in a truly free economy. Many of these people, once they become dependent on consumer choice, might, to begin with, be worse off economically than before. The pocketbook argument will not persuade them, but the moral argument might.

Originally published in The Freeman, April 1989.

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Economics Has the Answer: What’s the Question?

The church plays an important role in human life.

It was once the unwritten rule in polite society that two topics have no place in civilized conversation; religion and politics. It was ill-bred to discuss religion; it was gauche to talk politics. But times have changed. We live in a different and more open age. Now we discuss religion for political reasons, and we talk politics for religious reasons! The Bishops issue a Letter; the highest dignitaries of the various denominations pronounce on matters of government and business. The people behind these proclamations represent only a tiny minority of the total church membership, but they presume to speak for everyone. What they say is, in effect, the Socialist Party platform in ecclesiastical drag.

These ecclesiastical documents focus on an economic malaise, poverty; the poverty of the masses, especially the masses of the Third World. Churchmen profess to know the cause of this poverty. Third World poverty is caused by the wealth of the capitalistic nations; they are poor because we, in becoming wealthy, have pauperized them. Likewise, within our own nation the wealth of those who are better off is gained at the expense of those who are made worse off in the process. These are the typical allegations: the rich get richer by making the poor poorer.

Ecclesiastical myopia views the market economy—or capitalism—as an evil system which, by its very nature impoverishes the many as the means by which the few are enriched. The suggested cure for these differentials in wealth is to use government’s power to tax to exact tribute from the rich, and then distribute the proceeds to the poor—minus the cost to the nation of these wealth transfers. Robin Hood robs the rich to pay the poor, but Robin takes his cut!

It is as if these churchmen had swallowed the current secular agenda to which they have merely added oil and unction; as if social reform were the end, religion the mere means; as if religion has little more to offer modern men and women beyond what they can get from contemporary liberalism or socialism. The church has a more important role to play in human life, as I shall suggest in the course of this article.

One of my favorite modern theologians is the late William Ralph Inge. Inge was the Dean of St. Paul’s Cathedral in London, the scholar’s pulpit of the Church of England. Dean Inge wrote some notable books in theology, philosophy, and social theory, but he was also a newspaper columnist during the 1920s where his hard-nosed comments on the passing scene earned him the nickname, “the gloomy Dean.”

Christian Socialism was strong within the church of England, with some churchmen going so far as to declare that for a Christian not to be a socialist was to be guilty of heresy. A popular slogan was “Christianity is the religion of which Socialism is the practice.” Dean Inge would have none of this, so he waged a perpetual war of words against the socialists, especially against socialists of the Christian variety. “I do not like to see the clergy,” he wrote, “who were monarchists under a strong monarchy, and oligarchs under the oligarchy, tumbling over each other in their eagerness to become court chaplains to King Demos. The black coated advocates of spoliation are not a nice lot!”

It was not that Dean Inge was a defender of the status quo; far from it. Inge was a severe critic of many features of the modern western world. He argued that socialism is little more than a logical extension of many of the worst features of the modern temper, derived from the French Revolution, with its inveterate faith that man is a good animal by nature, but corrupted by his institutions; “Man is born free, but is everywhere in chains,” as Rousseau put it. This being the case, said the socialists, all we have to do is change our institutions in order to produce an improved society out of unimproved men and women.

Dean Inge foresaw a tendency within this mind-set toward “a reversion to a political and external religion, the very thing against which the Gospel waged relentless war.” It is not that Christianity regards social progress as unimportant, Inge goes on to say; it is a question of how genuine improvement may occur. “The true answer,” he wrote, “though it is not a very popular one, is that the advance of civilization is in truth a sort of by-product of Christianity, not its chief aim; but we can appeal to history to support us that [the advance of civilization] is most stable and genuine when it is the by-product of a lofty and unworldly idealism.”

The Pull of Public Opinion

Churchmen in every age are tempted to adopt the protective coloration of their time; like all intellectuals, churchmen are verbalists and wordsmiths; they are powerfully swayed by the printed page, by catch words, slick phrases, slogans, and bumper stickers. In consequence, they are pulled first this way then that by whatever currents of public opinion happen at the moment to exert the greatest power over their emotions and imagination. Today, it is the powerful gravitational pull of “environmentalism.”

I’m using the word environmentalism as a label for the belief that the human species is nothing but what external conditions have made us, that we are the victims of circumstances, that our lives are determined by forces we can barely understand, let alone control. Random chemical and physical interactions produced mankind in the first place. Then this raw material—mankind as it comes from nature—is shaped into various forms by the particular society in which we find ourselves. The social class to which we belong determines, finally, what we are and how we view the world and ourselves. Environmentalism exerts a powerful attraction today over intellectuals of all creeds. It is the ideology of Marxists and non-Marxists alike that men and women are the mere end products of nature and society—responsible men and women no longer—and that social engineering can construct a perfect society out of defective human units. Environmentalism has the cart before the horse; it is dehumanizing.

If there is disorder in our society it follows that there is disorder within our very selves, in our faulty thinking and erroneous beliefs, in our misplaced loyalties and misguided affections. Disharmony in our personal lives will result in conflict and frictions in society. This is why serious religion has traditionally focused on the inward and the spiritual, on the mind and conscience of individual persons, to make them responsible individuals. The premise is that only right beliefs rightly held can produce right action. The good society emerges only if there is a significant number of people of intellect and character; and the elevation of character is the perennial concern of genuine religion, in league with education and art.

But the modern world views the matter differently. The modern world assumes that the human species is the mere end product of external forces; a product, first of all, of physics and chemistry—our natural environment; and a product, secondly, of the particular society in which an individual happens to live. The basic assumption is that man’s character is made for him, by others; no individual is really responsible for himself. It is only necessary, then, for “the others” to acquire political power and use it to create social structures designed to produce a new humanity. Transform external arrangements and—according to this ideology—it matters little if men and women remain unregenerate; they will behave correctly because their institutions have programmed them to act according to the blueprint. This is the modern heresy.

Christianity, rightly understood, stands for a society with such basic features as personal responsibility, equal justice under the law, and maximum freedom for every person—the kind of society envisioned by the 18th- century Whigs like Burke, Madison, and Jefferson. Such a social and political order as the Whigs had in mind lays down the conditions in a nation which permit the operation of one kind of an economic order only, the free market economy—later nicknamed capitalism—the thing described by Adam Smith.

The economic order which Adam Smith challenged was called Mercantilism. Mercantilism was the communism or socialism or planned economy of the 17th and 18th centuries. The nation was covered with a network of minute regulations controlling every stage of manufacture and exchange, and the controls were brutally enforced, as they must be in every planned economy; in a 73-year period in France, 1686 to 1759, approximately 16,000 people were put to death for some infraction of the government regulations over the economy.

Adam Smith set out to free the economy with what he referred to as his “liberal plan of liberty, equality, and justice.” (p. 628)It is more than a coincidence that The Wealth of Nations and the Declaration of Independence appeared within a few months of each other, in the year 1776. The Declaration endorses the Whig political vision whose main features were voiced by Jefferson in his First Inaugural: “Equal and exact justice to all men, of whatever state or persuasion, religious or political; peace, commerce, and honest friendship with all nations—entangling alliances with none . . . freedom of religion, freedom of the press, freedom of the person under the protection of the habeas corpus,” and so on. This was the political and legal framework laid down by the Whig theorists, within which Adam Smith’s free market economy, or capitalism, had the freedom necessary if it was to function-his “liberal plan of liberty, equality and justice.”

Millions of people during the 20th century have turned away from the traditional religious faiths of the West—Christianity and Judaism-to embrace some form of secular religion, such as communism or socialism. The prevailing world view in our time is not Theism—the belief that mind and spirit are rock-bottom realities in the universe; it is Materialism—the belief that basic reality is composed of nothing else but particles of matter.

Materialism is explicit wherever Marxism is the official creed, but it is implicit almost everywhere else. Begin with the Marxist premise of Dialectical Materialism—or any other variety of Materialism—and some form of totalitarianism logically follows. Such a society reduces human persons to minions of the state, to be used and used up in the utopian endeavor to bring about the classless society of the communist pipe dream. Christian doctrine, by contrast, makes the individual person central. His role in life is to serve the highest value he can conceive—God; the modest role of the political order is to provide maximum freedom for all persons in order that we, as created beings, may achieve our proper destiny.

The Theocratic Temptation

In the free society, church and state are independent of one another, as set forth in the First Amendment. But there is, historically, a perennial temptation for church and state to join forces and form a theocracy—an alliance which tends to divinize politics and depreciate genuine religion. We are moving in that direction.

The church has been allied with the state ever since the fourth century, and this church-state combination has often been less than Christian in its treatment of Christians, and others. Edward Gibbon, the 18th-century historian, is only one of the many scholars who have chastised the official church for its misdeeds. But listen to Gibbon when he refers to original Gospel Christianity; he speaks of “. . . those benevolent principles of Christianity, which inculcate the natural freedom of mankind.” (Vol. I, p. 661)

The idea of Christian freedom came into sharp focus in the preaching of 18th-century clergymen in New England. F. P. Cole, an historian of the period, writes: “There is probably no group of men in history, living in a particular area at a given time, who can speak as forcibly on the subject of liberty as the Congregational ministers of New England between 1750 and 1785.”

It was the custom of the New England clergy to preach twice a year on some theme having to do with the secular order, the Artillery Day Sermon and the Election Day Sermon. These scholarly sermons were published by the Massachusetts General Court, as the legislature was then called, and they have provided the raw material for many a doctoral dissertation. Let me offer a typical statement by one of the ablest of these preachers, Jonathan Mayhew of Boston, in 1752. “Having been initiated in youth in the doctrines of civil liberty, as they were taught by such men as Plato, Demosthenes, Cicero, and other renowned persons among the ancients; and such as Sydney and Milton, Locke and Hoadley among the moderns, i liked them; they seemed rational. And having learnt from the Holy Scriptures that wise, brave, and virtuous men were always friends of liberty,—that God gave the Israelites a king in His anger, because they had not the sense and virtue enough to be a free commonwealth,—and that ‘where the spirit of the Lord is, there is liberty’—this made me conclude that freedom was a great blessing.”

Religion and the Founders

Most of the men we refer to as our Founding Fathers were not active churchmen, for one reason or another, but they were men of strong religious convictions. Norman Cousins has compiled a 450-page anthology of the religious beliefs and ideas of eight of these men in their own words. (In God We Trust, 1958) Those quoted are Franklin, Washington, Jefferson, Madison, the two Adamses, Hamilton, and Jay. There’s also a section devoted to Tom Paine. A familiar statement of Jefferson pretty well summarizes the outlook of this remarkable group of men. “The God who gave us life, gave us liberty at the same time.”

Tom Paine authored some influential political pamphlets, and he also wrote a great deal on the subject of religion, much of it critical—which is all right, because there is much about the ecclesiastical life of any period which deserves criticism. But when it was a matter of Christian liberty, Paine was on target. Cousins, for some reason, does not quote a surprising statement by Paine: “Wherefore, political as well as spiritual liberty, is the gift of God, through Christ.” (From his essay “Thoughts on Defensive War”)

What was the situation in the 19th century? Let me offer a few remarks by one of the keenest foreign observers ever to visit this nation, Alexis de Tocqueville. Tocqueville landed in New York in May, 1831. Nine months and seven thousand miles later he returned to France and wrote his great book, Democracy in America, with special attention being given to religion and the churches. “The Americans combine the notions of Christianity and of liberty so intimately in their minds,” he wrote, “that it is impossible to make them conceive the one without the other . . . Religion in America takes no direct part in the government of society, but it must be regarded as the first of their political institutions . . . They hold it to be indispensable to the maintenance of republican institutions.”

“Despotism may govern without faith,” he continues, “but liberty cannot . . . [for] how is it possible that society should escape destruction if the moral tie is not strengthened in proportion as the political tie is relaxed?”

Tocqueville observed that the clergy stayed away from politics. The clergy, he observed, “keep aloof from parties and public affairs . . . In the United States religion exercises but little direct influence upon the laws and upon the details of public opinion; but [religion] directs the customs of the community, and, by regulating everyday life it regulates the state.”

A Spotty Record

The history of the church during the past two thousand years is a spotty record, with many ups and some downs. There have been glorious epochs, and there have been periods which make for melancholy reading. Occasionally, the church has sanctioned tyrannous political rule; from time to time it has lent its support to persecutions, inquisitions, and crusades. As an arm of the state, or as a tool of the state, it has betrayed its sacred task while it pursued secular goals like wealth and power.

In the 20th century segments of ecclesiastical officialdom and councils of churches demand legislation to transfer wealth from one group of citizens to another. They work for a collectivist economic order planned, controlled, and regulated by government. The intended aim is to overcome poverty and feed the hungry; the means is the planned economy, otherwise labeled socialism, collectivism, the new deal, or whatever. Whatever the label, the planned economy puts the nation in a strait jacket; the planned economy, however noble the intentions of the planners, is the road to serfdom, as F. A. Hayek demonstrated in a landmark book written some forty years ago.

A planned economy forcibly directs the lives of individual men and women, and to do so the state must deprive people of their earnings which they would otherwise use to direct their own lives. Nation after nation during the 20th century has gone in for political planning of the economy and the results have been disastrous; where the planning has been strictly enforced, as in communist nations, the result has been a nation ill housed, iii fed, and ill clothed, it is a sad paradox indeed that the secular program, promoted by church hierarchies to alleviate poverty, has caused poverty in every society which has tried it. The only way to alleviate poverty in a nation is to increase productivity; and increased productivity is generated only by an economy of free men and women. Freedom is an essential part of the church’s business. Freedom is a blessing in itself, and it’s a double blessing, for prosperity follows freedom.

The socialists, until recently, have claimed the high moral ground. Their boast is that only socialists—or liberals—really care about people. What nonsense! Every person of good will wants to see other people better off; better housed, better fed, better clothed, healthier, better educated, with finer medical care, and all the rest. The dispute between socialists and believers in the free economy is not so much over the goals as over the means by which these goals may be met. The socialist’s means—his command economy—will not achieve the goals he says he wants to reach; socialism makes the nation worse off; poorer in material wealth, and poorer in every other respect as well.

There is another route for churchmen to take, a way that leads to more freedom for people in society, rather than less freedom. Freedom is at the heart of the gospel message, and the true genius of our religion was proudly proclaimed by our forebears, some of whose words I have quoted.

Man’s will is uniquely free; that’s the way God made us. We are free beings precisely in order that each person shall be responsible for his own life and therefore accountable for his actions. It is by acts of will, acts of choice, exercised daily over the course of a lifetime that each of us becomes the person we have the potential to be. Each person is by nature self-controlling; each person is in charge of his own life.

The free society, then, is our natural habitat; freedom in the relations of persons to each other accords with human nature. The tactic of freedom in the business and industrial sectors is the free market economy; the free choice economic system corresponds to the freely choosing creature that each of us is.

Animals, unlike us humans, have a finely tuned set of instincts which infallibly guides each creature according to its species. We humans do not have such elaborate instinctual equipment; instead of instincts we are given a moral code, which we are free to obey or not. Anyone can figure out for himself that no kind of society is possible unless most people most of the time do not murder, steal, assault, or lie. Thus we have commandments that say Thou shalt not murder, Thou shalt not steal, Thou shalt not bear false witness, and so on. These and other commands compose the basic moral code which is the foundation of our law.

Because we are flawed creatures as well as free, we occasionally break the law, and so we need an umpire to interpret and, if necessary, enforce the rules. We refer to this umpire function as the political order—government, the police power, the law. And we have the courts, where honest differences of opinion may be examined and resolved.

The Productivity of Capitalism

The free market economy, or private property order, or capitalism—if you like—is, by common agreement, the most productive economic order. In fact, it’s the only productive economic order. Socialism in a given country lives by exploiting the previous productive economy of that country, and when that gives out, socialist nations live on largess from capitalist nations.

The incredible productivity of capitalism is generally admitted, even by its critics; it’s the way the wealth gets distributed that they complain about. What’s wrong about capitalism, the critics charge, is that some people in our society have enormous incomes while other people have to get by on a mere pittance. Disparities in income show up most vividly in the sports and entertainment industries. Take basketball players, for instance. Basketball is a fun game which thousands play for pleasure and recreation. But many professional players make more money in a year than any six of us will make in a lifetime of hard work. Baseball is almost as grotesque, and then the players threaten to strike for more pay! A rock singer gives what is laughably called a concert and more money changes hands in one evening than the Seattle Symphony sees in a year. Supply your own examples. The question is: How can any person with even a modicum of intelligence and refinement condone such grotesqueries? How do we respond to such a critic?

Part of the answer is that in a free society—a social order characterized by equal freedom under the law—the market place becomes a showcase for popular folly, ignorance, superstition, bad taste, and stupidity. The market, in other words, is individual free choice in action, and no one is pleased with everyone else’s choices. But our displeasure is a price we must learn to pay if we are to enjoy the blessings of liberty. We must stand firmly behind the processes of freedom, even though we can barely stand some of the products of freedom. So let’s stop wringing our hands; let’s try to be tolerant, and let’s get on with our lifelong task of setting a better example of what freedom means.

Remember that no one is forced to pay over good money to watch a sporting event; no one has to listen to some hyperkinetic young man howl and gyrate in public places to the accompaniment of amplified sound. You and I might not pay money for such a performance, and if everyone were just like us, those who now make millions playing games would have to go back to sport for its own sake, just like the rest of us. And if a miraculous change in musical taste should occur, there’d be crowds attending Bach recitals every Sunday afternoon on your local church organ.

Turn from the sports and entertainment field to the business and industry sector. Here, too, there are wide variations in wages, income and wealth. How does this come about?

Here’s a person with a knack for manufacturing a better mousetrap, which turns out to be just what millions of consumers have been waiting for. They are willing to pay handsomely for this better mousetrap, and so the manufacturer becomes wealthy. His employees also benefit. Our entrepreneur’s wealth is voluntarily conferred upon him by consumers who aren’t forced to buy the product, but who find that these new mousetraps make their lives safer, better, and more enjoyable. Every step in this procedure—manufacturing, marketing, exchanging—is free and fair, and when this is the case the resulting distribution of rewards is also fair. It is only when someone profits and becomes rich because government gives him a subsidy or provides him with some advantage over his rivals and his customers that there is mal-distribution and unfairness in the final result.

Setting a Good Example

Let me emphasize the fact that the free market economy rewards each participant according to the value willing consumers attach to his offering of goods and services. Why does a rock singer make millions while your fine church organist makes hundreds? The answer is obvious; crowds of people would rather pay a lot of money to hear rock than to listen to Bach for free. We may find this intellectual and esthetic wasteland repugnant to our refined sensibilities. But what an opportunity this situation presents to every teacher. I refer not only to full time professors, preachers, and writers. Most anyone can be a teacher. Nearly everyone, in other words, has the capacity to convey a new idea to some other person, to instill a nobler sentiment, a superior value, a higher moral tone. More persuasive than any of these, we can set a good example.

It is a solid truth, I believe, that you cannot build a free society out of just any old kind of people. A free society is built around a nucleus of people of superior intellect and integrity who are, at the same time, cognizant of economic and political reality. You need people who love God and their neighbor; people of understanding and compassion; people with enduring family ties. Our schools and our churches should be producing people of this caliber, for it is the function of education and religion—in the broad sense of both terms—to make us better and wiser men and women. When we have a significant number of wise and good people living lives of a quality high enough to deserve a free society we’ll have a free society. All the rest of us, riding on their coattails, will reap the rich blessings of liberty.

Originally published in The Freeman, August 1986.

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Churches and the Social Order