-
the
FreemanVOL. 22, NO.3- MARCH 1972
Utopia: Dream into Nightmare Alexander Winston 131A historical
review o'f utopian ventures, culminating In the
twentieth-centurywelfare statism; prospects for a revival of
freedom. .
Digging DitchesA job worth doin'g is worth doing well.
Robert W. Demers 140
On Appeasing Envy Henry Hazlitt 142The very measures taken to
appease envy often tend to aggravate it.
The Founding of the American Republic:8. British Acts Become
Intolerable Clarence B. Carson 147
Parliamentary pressures after 1766 lead eventually to open
warfare.
Who Is the Marginal Producer? W. A.Paton 160The first to
withdraw unless conditions improve is not necessarily foretold
bythe. firm's balance sheet.
American Competitivism: Cause or Result? Ron Heiner 164How can.
we revive a competitive spirit if we reject· the condition of
freedomthat spawned it?
Fixed Exchange Rates and Monetary Crises Gary North 168Price
control, whether of goods and services or of money, interferes with
thepeaceful processes of trade.
BookReviews:186IICruising Speed: A Documentary" by William F.
Buckley, Jr."Libertarianism: a Political Philosophy for Tomorrow"
by John HospersliThe Regulated Consumer" by Mary Bennett
Peterson
Anyone wishing to communicate with authors may send
first-class mail in care of THE FREEMAN for forwarding.
-
tile
FreemanA MONTHLY JOURNAL OF IDEAS ON LIBERTY
IRVINGTON·ON·HUDSON, N. Y. 10533 TEL.: (914) 591·7230
LEONARD E. READ
PAUL L. POIROT
President, Foundation forEconomic Education
Managing Editor
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-
UTOPIAdrBaminton
ALEXANDER WINSTON
PLATO FATHERED the first blue-print of a planned society, and
hisdescendants still clasp us in asticky embrace while they
rifleour freedoms. His Republicmapped out a spartan state runby
benevolent philosophers, de-fended by a secondary caste ofwarriors,
and supplied with thenecessities of life by a mass
offarmer-artisans whose only polit-ical role was to obey. He did
awaywith two obstacles to the orderedstate : private property and
thefamily. In the Republic each citi-zen performs that task for
whichhe is fitted; the lowly toiler'signorance is his bliss; and
allparts of the body politic functiontogether in well-oiled
harmony.
Thomas More's Utopia (Greekfor "no-place") in 1516 gave the
A former lecturer in philosophy at Tufts Col-lege, Dr. Winston
has written extensively in thefield of history. His most recent
book is No ManKnows My Grave: Privateers and Pirates,1665-1715.
name to this whole type of litera-ture. A spate of others
followed:Andreae's Christianopolis (1619),Campanella's City of the
Sun(1623); Bacon's New Atlantis(1627), to cite a few; then agrowing
flood rising from theFrench Revolution and spreadingamidst the
industrial turmoil ofthe nineteenth century (EdwardBellamy's
Looking Backward,1888, being the most popular);and on to our own
day in suchprojections of the future as H.G.Wells' Modern Utopia
(1905) andB.F. Skinner's Walden Two (1948).
They number by the score, andtheir variety in detail is as
great.The majority rely on rule by anaristocracy of merit, a few
try topreserve a modicum of democracy;most are communistic, but one
atleast (Hertzka's Freelands, 1890)recognizes self-interest as
basicand aims to save capitalism byrestraint on overproduction.
They
131
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132 THE FREEMAN March
may be secular or religious, agri-cultural or industrial,
favorableto education or distrustful of it,resolutely egalitarian
or franklyhierarchical.
Common Assumptions
However, certain elements ofthese multiform visions emergewith
such frequency that they de-serve our attention. The
utopianpictures a static society in whichcareful planning solves
every ma-jor problem of human life.. Faithis placed in a
collectivity that ownsor controls all property. Competi-tion for
markets or jobs vanishes.Family ties diminish, and therearing of
children by the stateis taken for granted. Everythingis· rationally
ordered by thosemost capable of doing so: Plato'sguardians, More's
king and hisadvisers, Bacon's Solomon'sHouse scientists, Bellamy's
indus-trial council, Wells' austere samu-rai, Saint-Simon's Council
ofNewton, Campanella's quartet ofsuperior men, Skinner's panel
ofpsychologists.
In utopia everyone works, thewomen on equal terms with themen.
Hours are short - four tosix daily-and retirement as earlyas age
fifty, but the wants of thepeople have a stoic simplicity, andall
enjoy a decent living. There islittle to quarrel over, the
atmos-phere is uniformly brotherly,
crime is almost unknown anddisease rare - a perfect whole
ofperfect parts, all supremely con-tent. "U-topia," the no-place,
isplainly "eu-topia" the happy place.
But how to get there? Utopianshad no answer to that, and
avoid-ed the question. They sprang theirflawless states full-armed
fromthe ink-pot, always somewhereelse - a distant island, an
obscurewilderness, another planet - or· ata dim future time. The
transitionfrom a callous, exploitive society,its people already
deformed byprevalent evil, to one of affectionand universal
sharing, struck theutopians dumb. Their residue' ofhope rested in a
double view ofhuman nature. They mixed thesetwo elements at will,
for each onefavored a regeneration of man'ssorry existence. In one
they sawman fundamentally good (but per-verted by a debasing
environ-ment) ; in the other they saw manquite plastic, molded. to
the' lastdetail by his surroundings. Eitherway, the right society
would veryquickly set men right.
A combination of circumstancesafter 1800 convinced social
ideal-ists that the time was ripe forbringing heaven to earth.
TheFrench Revolution had produceda new crop of theorists, the
longhours and short pay of .the earlyfactory system .promised to
grinddown the poor, and overseas the
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1972 UTOPIA: DREAM INTO NIGHTMARE 133
American republic offered a havenfor all who wanted to try
some-thing better than mankind hadever known. "Our fathers havenot
seen it," said Saint-Simon;u our children will arrive thereone day,
and it is for us to clearthe way for them."
American Experiments
The result was more than 130attempts to establish utopian
so-cieties in the United States duringthe nineteenth· century. A
fermentof change filled the air, even instaid New England. "Weare
ana little wild here with numerousprojects, of social reform,"
Emer-son wrote to Carlyle. "Not a read-ing man but has a draft of a
newcommunity in his waistcoatpocket." Many of the settlementswere
European in origin as wellas theory; some seeking . escapefrom
-religious persecution, othersimbued with recent secular plansfor
utopia; but all drawn by thecheap land of the American fron-tier
and the easy tolerance of theyoung republic that had thrownoff the
shackles of old Europe andconsidered itself the vehicle of thenew
age. At last the utopians hadbefore them something very likethe
fabulous island of the olddreamers. In America they couldfound
minuscule states, as self-sufficient as possible, based oncommon
ownership of property,
filled with the brotherly spirit,and isolated from
contaminationby the outside world. "Our ulte-rior aim," said young
CharlesDana of Brook Farm, "is nothingless than heaven on
earth."
As might be expected, some ofthese starry-eyed experimentswere
simply preposterous. AtFruitlands that "tedius archan-gel" Bronson
Alcott would notharness work-horses to the plow(unnatural), nor
allow sugar(reaped by slaves), nor wearwoolen cloth (robbed from
sheep),nor spread manure on the fields(filthy stuff) ,nor burn
whale-oillamps (from slaughtered whales).Shakers led by an
illiterate fac-tory girI hailed as "Ann theWord" were strictly
celibate, andregulated the lives of the faithfuldown to such
details as what shoeto put on first in dressing, andwhich
trouser-leg to step into. Anirresistible little fellow in Michi-gan
got himself proclaimed JamesI of Zion by 2,000 adherents andfive
wives; "King Benjamin" ofthe House of David announcedthat he was
the younger brotherof Jesus Christ; the· final verdictin the early
days of the Amanasettlement rested with an oracularWerkzeug whose
utterances camestraight from God ; the ruler of aFlorida colony
taught that we alllive inside the earth, our feet onits inner
surface. The Lake Erie
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134 THE FREEMAN March
Brotherhood of the New Life gavemajor attention to the
sisterhood,in the belief that:
"Soul-life and sex-life are at one,In the Divine their pulses
run."
Robert Owen and Charles Fourier
Founders of other perfectionistsettlements were more sincere
anda bit less silly. Robert Owen, asuccessful English textile
manu-facturer, believed community ofproperty essential to the
goodlife, and was sure that the indi-vidual is totally shaped by
hisenvironment. In 1825 he boughtup the extensive holdings of
areligious community that wasmoving from Harmony, Indiana.The 900
who flocked in at hisopen invitation seemed to Owen'sson a
"heterogeneous collection ofradicals, enthusiastic devotees
toprinciple, honest latitudinariansand lazy theorists, with a
sprin-kling of unprincipled sharpersthrown in." Owen's
communalsystem gave full vent to theirshabby ways. They couldn't
runanything properly-flour mill, sawmill, tannery or smithy-and
theironly solution to problems of pro-duction was to write another
con-stitution or make another speech.The industrious soon tired· of
sup-porting the idle. From the Na-shoba, Tennessee Owenite
settle-ment, leader Frances Wright in-formed Owen that
"cooperation
has nigh killed us all," and de-parted. Within two years
everyOwenite venture, fourteen in all,disintegrated.
Disciples of the unsmilingFrenchman Charles Fourier setup no
less than twenty-sevenAmerican experiments. Fourierbased his
utopian ideal less onman's malleability than on hisfundamental
goodness. The twelvepassions, which he carefully listedand
classified, would act in perfectharmony with each other and
withsociety as a whole if given achance. Let people gather
into"phalanxes" of some 2,000 mem-bers, housed communally in
onehuge "phalanstery" lying in aspread of 1,600 acres owned
incommon. Let each choose the workhe wished to do. Pay the
highestwage for disagreeable butneces-sary labor, less for the'
more: at-tractive, and least for work thatwas downright
pleasurable. Bringall goods produced to a singlewarehouse, where
they could bepurchased with work-tickets. InFourier's ample vision
all man-kind would finally be gathered intothree million phalanxes,
coordi-nated by an Omniarch in Con-stantinople.
Fourier-inspired communesquickly died of dissension,
inepti-tude, and sheer tomfoolery. Anattempt to use some Fourier
prin-ciples dealt the final blow to the
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1972 UTOPIA: DREAM INTO NIGHTMARE 135
most charming and humane of allthe utopi~n experiments,
BrookFarm. The Farm was owned inshares; it intended to support
it-self by voluntary labor at an equalwage for all (ten cents an
hour),and have plenty of time leftoverfor culture. Some choice
soulssought refuge there: The Rev.George Ripley, founder;
NathanielHawthorne, who soon discoveredthat forking manure ten
hours aday was not conducive to litera-ture; George Curtis, later
to editHarper's; and Isaac Hecker, ahumble German who became
apriest and instituted the PaulistFathers. Good families sent
their·boys down to be prepared for Har-vard at the Farm school.
Into this idyllic but financiallyprecarious community of
likeminds swept a voluble enthusiastfor Fourier, Albert Brisbane.
Heconvinced them that their happyanarchy wouldn't work. Theymust
organize. Tasks were spe-cialized on Fourier principles; aSacred
Legion took on the dirtierjobs; unequal wages replacedequal pay;
work became compul-sory; uneducated artisans camein with their
ignorant and sharp-tongued wives; and before longthe genial spirit
that had heldBrook Farm together evaporated.Six years after its
beginning in1841 the Farm was sold to WestRoxbury (Mass.) for an
alms-
house, thus passing, in the wordsof one observer, from "the
highestideal" to "the lowest actual."
Two That Remain
Two utopian communes havethe distinction of remaining,though
much altered, to the pres-ent day. In 1848 John HumphreyNoyes
settled fifty-one Perfection-ists along Oneida Creek nearUtica, New
York, an area sofilled with fiery religious fanaticsthat wits
called it "the burned-over district." A slab-chinned fel-low with a
scraggly beard andbleating voice, Noyes was never-theless
personally impressive, anda canny manager of people.· Hequipped
that too many agricul-tural communes had "runaground," and set out
to makeOneida industrial. The growingmembership (an average of
250)canned farm produce for the mar-ket, made traveling bags and
aspecial type of steel trap, spunsilk, silver-plated dinnerware,
andprospered.
Noyes' word was law. He restedit on divine inspiration, and
ex-erted pressure so gently that noone thought him despotic. The
in-dividual at Oneida had no lifeapart from the community -
prop-erty in common, personal acts un-der common· scrutiny, sexual
shar-ing on the theory that monogamywas un-Christian "claiming."
The
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136 THE FREEMAN March
women said that they belonged toGod first and Noyes next, an
orderof precedence that they in factreversed. A system of
selectivebreeding called "stirpiculture"admitted only the most fit
toparenthood. Children lived apart,rarely seen by their
parents.
For thirty years Oneida ad-hered to the original plan. By1880
Noyes had aged; the reli-giousspirit that he had evokedflickered;
the young revolted atthe idea of sharing spouses andsurrendering
their children. Thecommune converted to a joint-stock company in an
effort toavoid collapse, but its old habitswere too ingrained. In
1890 P.B.Noyes, one of the founder's "stir-piculture" sons (he
sired ten)saved the community by trans-forming it into a typical
well-runAmerican business. He concen-trated on silverware, cut
costs,emphasized teamwork, hustled,advertised, and competed.
TodayOneida differs in no essentialfrom any other enlightened
man-ufacturing firm.
Where Oneida, chose industry,the Amana community of Iowa
re-mained rural, and even more per-vasively religious. Eight
hundredGermans of the "True Inspira-tion" sect established it in
1854on 26,000 choice acres, seven vil-lages spread in a circle
aroundthe central one. Every member
surrendered all his capital to thecommon fund (if he left, he
gotit back with interest) and in re-turn was guaranteed his
necessi-ties for life. Under the rule ofchurch elders the maxim,
"obey,without reasoning, God, andthrough God your superiors,"
keptmembers in line. Amana suppliedits own needs - weavers,
cobblers,tailors, watchmakers, pharmacies,printshop - and exported
onlyhigh-grade woolen cloth. As muchas possible the members
ignoredthe world around them, even hir-ing outsiders to serve in
the hotellest their own girls be corrupted.
By 1900 Amana's piety hadwaned. Without the invigoratingspur of
competition the economylagged badly. In 1932 it became'
ajoint-stock company intent onprofit. A business managerbrought in
from the outsidetrimmed the labor force of itshired hands, closed
shops that hadrun at a loss for years, eliminatedfifty-two
inefficient dining halls,sold businesses into private handsand
houses to their occupants. Stillquaint and quiet today, Amana isa
producing and marketing co-operative, without a vestige of
itsformer communism.
American experiments thatwent under in two years, as manydid,
had too large a proportion ofmisfits whose record outside wasone of
.steady failure. Intimacy
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1972 UTOPIA: DREAM INTO NIGHTMARE 137
bred discord, as people living ·tooclose together bumped each
otherat every turn. The absence ofcompetition resulted in
lethargy.None of these eccentrics had anybusiness sense; the
purchase of a300-acre tract in Pennsylvania,for example, was made
in mid-winter snows by an artist, a doc-tor and· a cooper, and
turned outto be rock-and-sand that had to beabandoned in a year.
The Ruskincolony in Tennessee (1894) wasruined by an agent who took
suchpleasure in making a sale that hesold regularly at a loss.
Occasion-ally plain chicanery was too muchfor the innocent: the
Rev. AdinBallou lost his "miniature Chris-tian republic" at
Hopedale- whenone of his Christians bought upenough shares to force
everyoneelse out. Worse, the· utopians mis-read human nature. "If
men wereangels," remark the FederalistPapers, "no government would
benecessary." The utopians discov-ered to their sorrow that men
arenot angels now, nor can be soshaped.
Displaced by the Welfare State
While these sad little failuresgathered dust, Americans awoketo
the fact that in the welfarestate of the western democracies,and
more explicitly in communistRussia, utopia had already arrivedon a
massive scale. The re-sults in
this country stirred up a generalunease. Every. step that added
tothe individual's security detractedfrom his liberty; every
movetoward the better life exacted itstoll. The United States
govern-ment assumed vast new powers totax, spend - and regulate the
af-fairs of its citizens. Mass produc-tion and the
communicationsmedia created a bland uniformity,with the
flesh-and-blood bread-winner converted into a SocialSecurity
number. Welfare pro-grams that averted gross povertyalso robbed the
-individual of hisinitiative. Women's equality didmuch to skyrocket
divorce. Thesame technological advance thatincreased abundance
polluted thelandscape. Nuclear energy wasmore bomb than blessing.
Parentsdid all they could to make a heavenon earth, and their
children kickedthem in the stomach for the effort.
The West edged piecemealtoward the planned· society; Rus-sia
made it in a leap. Marx hadrevived the utopian dream andpromised
its fulfillment: abun-dance of consumer goods, uni-versal
happiness, absolute equal-ity, peace at home and abroad,government
that would .hardlyneed to .govern - a perfect wholeof perfect
parts. Liberals who hadbeen beguiled by this splendidvision
shuddered at the actuality.In Russia the·government clamped
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138 THE FREEMAN March
an iron grip on the people andshowed no inclination to let
go.Everything was in short supplyexcept armaments. The
mildestcritic of the regime was brandeda traitor, and shipped off
to Si-beria. Art and science became toolsof the Party; news media
spewednothing but the official line; andthe calculated lie became
a. habit.The planned society, dreamed ofthrough the a.ges, turned
out tobe the police state.
Americans who had believed ina steady march to the promisedland
now quailed at the prospect.Once they had yearned for utopia.;now
they asked themselves, "Whatcan we do to prevent it?"
Anti-utopian novels clanged likewarning bells in the night.
EugeneZamiatin's We (1920) was amongthe first, and dozens followed
(ifwe include science fiction) , no-tably Aldous Huxley's Brave
NewWorld (1932), Vladimir Na-bokov's Bend Sinister (1947) andGeorge
Orwell's 198J" in 1949.They draw a frightening pictureof the
planned society: its ruth-less manipulation by the rulers ofthe
ruled, its grey-faced homoge-neity, its stifling of creativechange,
its reduction of man to aproducing and consuming animal,its hideous
distortion of truth.Once the masters of this. night-mare society
are in the saddle,few can escape or even want to.
Human nature, in these anti-utopias, is infinitely malleable;men
can be taught to kiss theirchains.
Are we all doomed to this?There is reason to doubt it.
Theanti-utopian sounds a neededalarm, but he badly overplays
hishand. He regards the individualas an empty sack into which
anyrubbish can be poured. Even thelonely rebels of anti-utopian
nov-els are spineless, stupid, or both.D-503 of We can build a
cosmicmachine, but is otherwise a bum-bling idiot; Bernard in Brave
NewWorld is a sniveling coward;Smith in 198J" is a perverter
oftruth by vocation and a. love':sickninny on the side; the
renownedphilosopher Kruger inBend Sin-ister has a backbone of rope.
Inanti-utopia western man hasthrown away every vestige of
hishard-won rights, to gain a bovineplacidity. All the world is
contentto chew its cud.
Common Sense .May Prevail
Such a view undoes history.Western man has shown himselffar too
stubborn, restless andplain cussed for any such fate.Once the
common man has hada full taste of speaking his mind,no one can shut
him up for long.Once he is used to the ballot, andthe exhilarating
experience ofthrowing the rascals out, he can
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1972 UTOPIA: DREAM INTO NIGHTMARE 139
be deprived of it only under themost extraordinary
conditions.Once real power is firmly estab-lished at the base of
the politicalpyramid (as it never was in Rus-sia or China), tyranny
from thetop becomes an outside chance.
This may be faith, but it is afaith worth having. A man's
es-sence is his hazardous freedom.It is built-in, inexpungeable.
For
it he has fought wars, rioted, hid-den in catacombs, gone to
thestake, killed kings, languished inprison, and he does not
forget.Freedom disrupts old orders, andsometimes gives the
impressionthat everything nailed down iscoming loose, but as long
asAmericans demand it as theirright, the horrors of the policestate
will stay beyond our borders.
~
IDEAS ON
LIBERTY
Umpire
IN GENERAL, nothing happens except a change in the
weather,unless somebody makes it happen. Under a free economic
system,the man who makes things happen is called an enterpriser.
Withhis own savings ·or savings. borrowed from others, he goes
intofarming, manufacturing, mining, or banking, and begins
pro-ducing goods or moving them around. That much is basic.
Thomas Nixon Carver, the economist, said the reason
manycountries are backward is that there was nobody who cared
toinvest in them. Either the government itself was predatory,
orthieves and robbers roamed unmolested. In such countries therich
keep their wealth in the form of unproductive goods - goldand
jewels - which they can hide and easily transport whenthings get
too tough.
If a nation wants production and prosperity,the persons
toencourage are the enterprisers. Not only· should they be
encour-aged to build and produce, but they should be assured that
theirproperty and a decent part of their gains are protected
againstconfiscation. If they lose part or all of their savings in
the com-petitive game, they must take the loss and shut up.
Government'smain job is to see that the rules are fair and are
enforced.
FROM The William Feather Magazine, November, 1971
-
DIGGINGROBERT W. DEMERS
I FIRST MET Joe when I was aboutten. My dad was foreman on
asewer job in our town and theywere digging a long ditch for
thepipe ·on the street where we lived.I was watching the men dig -
nomachines in those days. Aboutmid-morning a horse-drawn vege-table
wagon pulled up where sev-eral of the men were on the banktaking a
"break." I noticed Joebecause he bought a large cab-
. bage, cut it in half with his jackknife, and proceeded to
munch onit, raw. I was watching him, wide-eyed, when he smiled, cut
off aslice of the cabbage, and offered itto me. I bit into
it,hesitantly, andsoon found that I liked it' verymuch. That was
the first goodthing I learned from Joe, the firstof many things I
would learn fromhim over a period of several years.
Joe was a short, squat man,barrel chested, short legs, and
along, powerful torso. He was al-ready past 40 when I first methim,
with a thick thatch of grey-ing hair and a catching little ac-cent
in his voice. His father came
Mr, Demers is a vocational . counselor inVeneta, Oregon,
140
DITCHESto this country from Italy, but Joewas born in New York
City andhad migrated to the mountainswith his wife and family.
That'swhen he began working for mygranddad, digging ditches.
Whenever I could, through theyears, I would "visit" with
Joewherever he was working. He hadmany interesting stories to tell
ayoung boy, and a great pride inhis work.
He taught me the proper way touse a round-nosed shovel, a
square-nosed shovel, a long-handled anda short-handled shovel. It
was im;.portant tq keep the sides of theditch perpendicular, to
keep thebanks clean, to throw the dirt ina certain place and a
certain dis-tance from the edge of the ditch.The ditches varied in
width, andthe angles of the sides varied de-pending upon the
condition of thesoil. No facet of Joe's digging wastoo
insignificant to command hisfull interest and attention. Heloved to
talk about his job and toshow others how to do the
job"properly."
I recall my sadness on hearingthat Joe no longer dug ditches
for
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1972 DIGGING DITCHES 141
the city. One of his daughters, inmy class at school, told me
herfather had gone into .business forhimself, digging ditches.
Beforelong, he was the most sought afterditch digger in town.
Mechanicalcontrivances were now available,but there were still a
hundred andone places where a ditch could onlybe dug by hand; there
you'd findJ oe.Most of the plumbers in townwere "waiting in line"
for Joe'sskills, even holding off on certainjobs until he could dig
their ditch,or their hole, or whatever diggingthey needed.
Through the lean Depressionyears, Joe was one of the very,very
few who found full employ-ment. Somewhere Joe kept "dig-ging." His
pay sometimes· was asack of beans, a chicken, or adozen eggs, but
his children, allseven of them, remained well,strong, and in
school.
Few, indeed were the· people intown who didn't know Joe,
whodidn't know and who didn't telleverybody that he was "the
bestditch digger ever," and that healso built the "best stone
wallsand fences," and grew the "mostbeautiful roses."
Years later, on a fall day whenthe cabbages were ripe, I
soughtout Joe, where he was digging aditch. along a side hill. I
was onleave for a few weeks and hadlearned that Joe's son, one of
my
classmates, had died on the beachesat Normandy. As I walked up
thehill, Joe greeted me with the samebig smile. His hair was
snowywhite now, his back a little morehunched, his stance a bit
moresquat, but his arms were stillsinewy, muscular and powerful,
ashe cupped one·hand over the endof the hickory handle of his
be-loved shovel and extended theother warmly and affectionately
inmy direction.
We talked long in the warmthof the autumn sun. I learned thata
job worth doing is a job thatought to be extremely well done.
Ilearned something of the distanceI must travel toward such a.
worthygoal. Joe was sure that most ofthe trouble in the world
stemmedfrom the refusal of people to exer-cise to their fullest
potential thetalents with which they wereblessed. I wish that
everyonemight hear the tone, the richness,the wisdom in Joe's voice
as hesaid: "A man ought to find out,as soon as possible, what it is
thathe can do, then learn and study,and do it as best he can all of
hislife. If a man really did this he'dhave no time to drift to the
rightor the left, or to stumble up ordown because he'd' be too busy
do-ing well what he knew best, bestfor himself and for all th.ose
abouthim; and he'd be happy and rich,both here and beyond."
-
ONAPPEASING
ANY ATTEMPT to equalize wealthor income by forced
redistributionmust only tend to destroy wealthand income.
Historically the bestthe would-be equalizers have eversucceeded in
doing is to equalizedownward. This has even beencaustically
described as their in-tention. "Your levellers," saidSamuel Johnson
in the mid-eighteenth century,. "wish to leveldown as far as
themselves; butthey cannot bear levelling up tothemselves." And in
our own daywe find even an eminent liberallike the late Mr. Justice
Holmeswriting: "I have no respect forthe passion for equality,
whichseems to me merely idealizingenvy."!
Henry Hazlitt is well known to FREEMANreaders as author,
columnist, editor, lecturer,and practitioner of freedom. This
article willappear as a chapter in a forthcoming book,The Conquest
of Poverty, to be published byArlington House.
142
HENRY HAZLITT
At least a handful of writershave begun to recognize
explicitlythe all-pervasive role played byenvy or the fear of envy
in lifeand in contemporary politicalthought. In 1966, Helmut
Schoeck,professor of sociology at the Uni-versity of Mainz,
devoted. a pene-trating book to the subject.2
There can be little doubt thatmany egalitarians are motivated
atleast partly by envy, while stillothers are motivated, not so
muchby any envy of their own, as bythe fear of it in others, and
thewish to appease or satisfy it.
But the latter effort is bound to
1 The Correspondence of Mr. JusticeHolmes and Harold J. Laski
Cede M. DeWolfe Howe, 2 vol. Cambridge, Mass.,1953). From Holmes to
Laski, May 12,1927, p. 942.
2 Helmut Schoeck, Envy (Englishtranslation, Harcourt, Brace
& World,1969) .
-
1972 ON APPEASING ENVY 143
be futile. Almost no one is com-pletely satisfied with his
status inrelation to his fellows. In the envi-ous the thirst for
social advance-ment is insatiable. As soon asthey have risen one
rung in thesocial or economic ladder, theireyes are fixed upon the
next. Theyenvy those who are higher up, nomatter by how little. In
fact, theyare more likely to envy their im-mediate friends or
neighbors, whoare just a little bit better off, thancelebrities or
millionaires who areincomparably better off. The posi-tion of the
latter seems unattain-able, but of the neighbor who has.i ust a
minimal advantage they aretempted to think: "I might almostbe in
his place."
The Urge to Deprive Others
Moreover, the envious are· morelikely· to be mollified by
seeingothers dep~ived of some advantagethan by gaining it for
themselves.It is not what they lack that chief-ly troubles them,
but what othershave. The envious are not satis-fied with equality;
they secretlyyearn for superiority and revenge.In the French
revolution of 1848,a woman coal-heaver is reportedto have remarked
to a richlydressed lady: "Yes, madam, every-thing's going to be
equal now; Ishall go in silks and you'll carrycoal."
Envy is implacable. Concessions
merely whet its appetite for moreconcessions. As Schoeck
writes:"Man's envy is at its most intensewhere all are almost
equal; hiscalls for redistribution are loud-est when there is
virtually nothingto redistribute."3
(We should, of course, alwaysdistinguish· that merely
negativeenvy which begrudges others theiradvantage from the
positive ambi-tion that leads men to active emu-lation,
competition, and creativeeffort of their own.)
But the accusation of envy, oreven of the fear of others'
envy,as the dominant motive for anyredistribution proposal, is a
seri-ous one to make and a difficult ifnot impossible one to prove.
More-over, the motives for making aproposal, even if
ascertainable,are irrelevant to its inherentmerits.
We can, nonetheless, apply cer-tain objective tests.
Sometimesthe motive of appeasing other peo-ple's envy is openly
avowed. Social-ists will often talk as if some formof superbly
equalized destitutionwere preferable to "maldistrib-uted" plenty. A
national incomethat is rapidly growing in abso-lute terms for
practically every-one will be deplored because it ismaking the rich
richer. An impliedand sometimes avowed principleof the British
Labor Party leaders
3 Ibid., p. 303.
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144 THE FREEMAN March
after World War II was that "No-body should have what
everybodycan't have."
Equality, Yes; Abundance, No!
But the main objective test of asocial proposal is not
merelywhether .it emphasizes equalitymore than abundance, but
whetherit goes further and attempts topromote equality at the
expense ofabundance. Is the proposed meas-ure intended primarily to
help thepoor, or to penalize the rich? Andwould it in fact punish
the rich atthe cost of also hurting everyoneelse?
This is the actual effect, as wesaw earlier,4 of steeply
progressiveincome taxes and confiscatory in-heritance taxes. These
a.re notonly counter-productive fiscally(bringing in less revenue
from thehigher brackets than lower rateswould have brought), but·
theydiscourage or confiscate the capi-tal accumulation and
investmentthat would have increased nationalproductivity and real
wages. Mostof the confiscated funds are thendissipated by the
government incurrent consumption expenditures.The long-run effect
of such tax-rates, of course, is to leave theworking poor worse off
than theywould otherwise have been.
There are economists who will
4 "Should We Divide the Wealth 1" inTHE FREEMAN, February, 1972,
p. 100.
admit all this, but will answer thatit is nonetheless
politically neces-sary to impose such near-confisca-tory taxes, or
to enact similarredistributive measures, in orderto placate the
dissatisfied and theenvious - in order, even, to pre-vent actual
revolution.
Appeasement Provokes Envy
This argument is the reverse ofthe truth. The effect of trying
toappease envy is to provoke moreof it.
The most popular theory of theFrench Revolution is that it
cameabout because the economic con-dition of the masses was
becomingworse and worse, while the kingand the aristocracy remained
com-pletely blind to it. But Tocqueville,one of the most
penetrating socialobservers and historians of his orany time, put
forward an exactlyopposite explanation. Let me stateit first as
summarized by an emin-ent French commentator in 1899:
Here is the theory invented byTocqueville.... The lighter a
yoke,the more it seems insupportable;what exasperates is not the
crushingburden but the impediment; whatinspires. to revolt is not
oppressionbut humiliation. The French of 1789were incensed against
the nobles be-cause they were almost the equals ofthe nobles; it is
the slight differencethat can be appreciated, and whatcan be
appreciated that counts. The
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1972 ON APPEASING ENVY 145
eighteenth-century middle class wasrich, in. a position to fill
almost anyemployment, almost as powerful asthe nobility. It was
exasperated bythis "almost" and stimulated by theproximity of its
goal; impatience isalways provoked by the final strides.5
I have quoted this passage be-cause I do not find the
theorystated in quite this condensedform by Tocqueville himself.
Yetthis. is essentially the theme of hisL'Ancien Regime et la
Revolution,and he presented impressive fac-tual documentation to
support it.
As the prosperity which I havejust described began to extend
inFrance, the community neverthelessbecame more unsettled and
uneasy;public discontent grew fierce; hatredagainst all established
institutionsincreased. The nation was visibly ad-vancing toward a
revolution. . . .
It might be said that the Frenchfound their position the more
in-tolerable precisely where it had be-come better. Surprising as
this factis, history is full of such contradic-tions.
It is not always by going from badto worse that a country falls
intorevolution. It happens most frequent-ly that a people, which
had sup-ported the most crushing laws with-out complaint, and
apparently as ifthey were unfelt, throws them offwith violence as·
soon as the burden
5 Emile Faguet, Politicians and M oral-ists of the Nineteenth
Century (Boston:Little, Brown; 1928), p. 93.
begins to be diminished. The state ofthings destroyed by a
revolution isalmost always somewhat better thanthat which
immediately preceded it;and experience has shown that themost
dangerous moment for a badgovernment is usually that when itenters
upon the work of reform.Nothing short of great political gen-ius
can save a sovereign who under-takes to relieve his subjects after
along period of oppression. The evilswhich were endured with
patienceso long as they were inevitable seemintolerable as soon as
a hope can beentertained of escaping from them.The abuses which are
removed seemto lay bare those which remain, andto render the sense
of them moreacute; the evil has decreased, it istrue, but the
perception of the evilis more keen. . . .
No one any longer contended in1780 that France was in a state
ofdecline; there seemed, on the con-trary, to be just then no
bounds toher progress. Then it was that thetheory of the continual
and indefiniteperfectibility. of man took its origin.Twenty years
before nothing was tobe hoped of the future: then nothingwas to be
feared. The imagination,grasping at this near, and unheardof
felicity, caused men to overlookthe advantages they already
pos-sessed, and hurried them forward tosomething new.6
6 Alexis de Tocqueville, On the Stateof Society in France before
the Revolu-tion of 1789. (London : John Murray,1856) pp. 321-324.
Also' available as TheOld Regime and. the French Revolutionin a
Doubleday paperback.
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146 THE FREEMAN March
Aggravated by Sympathy
The expressions of sympathythat came from the privilegedclass
itself only aggravated thesituation:
The very men who had most tofear from the fury of the people
de-claimed loudly in their presence onthe cruel injustice under
which thepeople had always suffered. Theypointed out to each other
the mon-strous vices of those institutionswhich had weighed most
heavilyupon the lower orders: they em-ployed all their powers of
rhetoricin depicting the miseries of the com-mon people and their
ill-paid labor;and thus they infuriated while theyendeavored to
relieve them.7
Tocqueville went on to quote atlength from the mutual
recrimi-
7 Ibid., pp. 329-330.
nations of the king, the nobles,and the parliament in
blamingeach other for the wrongs of thepeople. To read them now is
to get
.the uncanny feeling that they areplagiarizing the rhetoric of
thelimousine liberals of our own day.
All this does not mean that weshould refrain from taking
anymeasure truly calculated to relievehardship and reduce
poverty.What it does mean is that weshould never take
governmentalmeasures merely for the purposeof trying to assuage the
enviousor appease the agitators, or to buyoff a revolution. Such
measures,betraying weakness and a guiltyconscience, only lead to
more far-reaching and even ruinous de-mands. A government that
payssocial blackmail will precipitate thevery consequences that it
fears. ~
IDEAS ON
LIBERTY
The "Law of Sympathy"BUT AID and sympathy must operate in the
field of private andpersonal relationships under the regulation of
reason and con-science. If men trust to the State to supply "reason
and con-science," they so deaden themselves that the "law of
sympathy"ceases to operate anywhere. Men who shrug off their
personalobligations become hard and unfeeling, and it is small
wonderthen that they are entirely willing to go along with hard
andunfeeling politics. It is when he decides to "let the State do
it" thatthe humanitarian ends up by condoning the use of the
guillotinefor the "betterment" of man.
FROM JOHN CHAMBERLAIN'S REVIEW OF SUMNER'SWhat Social Classes
Owe to Each Other,
September 1955 issue of Ideas on Liberty.
-
CLARENCE B. CARSON
THE
FOUNDING
OF
THE
AMERICAN
REPUBLIC
8
British ActsBecome Intolerable
THE REPEAL of the Stamp Act inearly 1766 did not put an end
toresistance in America. It didlower the level of the contest
be-tween Britain and America fromits crisis proportions by
removingthe most conspicuous irritant. Butrepeal of the Stamp Act
only whet-ted the appetite of some Ameri-cans for much more
thoroughgo-ing removal -of British imposi-tions. As early as April
the NewYork Sons of Liberty were de-manding that "Americans
shouldalso insist on the removal of allrestrictions on trade, the
abolitionof post offices and admiraltycourts, and they should do so
'whilethe colonies are unanimous.' "1
After all, most of the parliamen-tary acts against which the
colo-nists objected were still on thebooks, and executive action
re-mained unaltered. Troops werestill stationed in America, and
na-val ships of war were stationedalong the coast. The Sugar Actwas
still in effect. New York mer-chants sent a petition to Parlia-ment
in 1766 complaining bitterlyabout the effects of trade
restric-tions upon their commerce. Re-
1 Merrill Jensen, The Founding of aNation (New York: Oxford
UniversityPress, 1968), p. 186.
Dr. Carson lives. in Florida. He is a notedlecturer and author,
his latest book entitledThrottlinA the Railroads.
147
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148 THE FREEMAN March
straints upon imports and exportsof sugar were particularly
galling,and their· trade was hurt badly bylimitations on how wood
productscould be sold.2 The Quartering Actstill placed requirements
on thecolonies involved which some ofthem refused to comply with.
TheCurrency Act restricted the issu-ance of paper money both
uponcolonies which had responsibly re..;tired theirs in the past as
well asthose which had not. And therewas the Declaratory Act with
itsstrident claims about the unlimitedpowers of Parliament.
The'Strategy of Resistance
The colonists employed a va-riety of tactics in their
resistanceto British impositions during thedecade or so after 1763:
some le-gal, some extra-legal, and othersillegal. These tactics
ranged fromresolutions of legislatures, to peti-tions to the
government in Eng-land, to unauthorized conventionsand congresses,
to boycotts, todemonstrations, all the way torioting and the
intimidation of of-ficials by mobs. The use of some ofthese latter
tactics in recent yearshas been justified on the groundsthat they
were employed by ourvenerated forebears - an excusewhose merits
would be dependentupon analogous conditions. It maybe of some use
to examine the con-
2 Ibid., pp. 207-08.
ditions of the resort to violenceby some Americans of that
earliertime, both for the light it will shedon their situation as
well as whatit may tell us about the appropri-ateness of this
justification forcontemporary violence. By such anexamination, too,
the issues be-tween the colonists and the Britishcan be sorted
out.
What tactics are appropriate issurely dependent on the
options
.available. To understand what op-tions were available to the
colo-nists, one needs to review the po-litical situation.
The colonists did not fully con-trol their governments. Far
fromit, in most cases. Usually, the gov-ernor was appointed from
England(the charter colonies of Connecti-cut and Rhode Island were
excep-tions) , and he quite often receivedinstructions from
officials there.No more did the colonists ordi-narily choose the
members of thegovernor's council. The assemblywas popularly
elected, but its ac-tions could be severely circum-scribed. It met
on call from the gov-ernor, could have its acts vetoedby him, and
was subject to beingdismissed or dissolved by the ex-ecutive. There
were even efforts tocontrol assemblies from England.For· example,
the New York legis-lature was suspended for its fail-ure to provide
supplies for thetroops under the Quartering Act.
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1972 BRITISH ACTS BECOME INTOLERABLE 149
Therefore, legislatures were great-ly hampered when it came to
pre-venting impositions on the colon-ies. No direct action was open
tothem ordinarily because. of thepower of governor and council
tonegate such action.
Nor was there any establishedm.eans for intercolonial
action;none had ever been set up, and theBritish were not about to
allowany to be legally established dur-ing the decade under
considera-tion. At best, only extra-legalmeans were available for
concertedaction across the lines of colonies.The means for legal
action by thecolonists were limited then, not, asis the case
usually, the means forsome minority to express itself,but for the
colonies as a people.This distinction is quite germaneboth for the
justifications of revo-lution which would be offered inthe 1770's
and for such justifica-tion as there could be for illegalaction
prior to the revolt.
A Balance of Powers
Now the elected legislatures hadgained considerable power
duringthe colonial period, as was shownin an earlier chapter. That
powerderived mainly from their author-ity to originate taxes and
appro-priations. Governors even depend-ed upon the elected
legislaturefor their salaries in most colonies,and all actions
requiring moneys
awaited legislative action. Gov-ernors and other crown
officialswere dependent upon or subject tothe local populace in
other ways aswell. The force that had ordinarilybeen at their
disposal before theperiod· under discussion had to beexercised by
militia and other lo-cal persons. Crown officials had toact through
courts whose judgesmight be appointed by governorsbut whose most
basic decisionswere made by juries; and theycould, themselves, be
brought be-fore the courts for mistreatingcolonists.
In short, a precarious balance ofpowers had grown up over
theyears in most colonies. Coloniallegislatures were
counter-balancedby governors and councils, and thegovernor's power
was limited bythe necessity of his relying uponelected
legislatures. Action depend-ed upon a considerable measureof
co-operation among the branch-es of government. If they wouldnot
act together, many kinds ofaction could not be taken.
Massive resentment was arousedin the 1760's, then, when
Parlia-ment moved to alter these arrange-ments: by taxing
colonists, bymaking appropriations, by· sendingstanding armies, by
setting up ad-miralty courts without juries, andso on. The thrust
of parliamentaryaction was to eviscerate the inde-pendence of
elected legislatures.
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150 THE FREEMAN March
The Quartering Act points this up,for the act required that
coloniesappropriate supplies for troopswithin the colony. If a
legislaturehad to act in this fashion, it washardly independent of
Parliament.If Parliament could tax the colo-nists, it could
appropriate moneysto free officials within the coloniesfrom
dependence on the legisla-tures. The fear of this was nophantom,
for Parliament wasmov-ing in this direction on governor'ssalaries.
Of course, taxation byParliament raised another basicissue. The
Connecticut legislatureput the matter in this fashion in1765:
That, in the opinion of this House,an act for raising money by
dutiesor taxes differs from other acts oflegislation, in that it is
always con-sidered as a free gift of the peoplemade by their legal
and electedrep,resentatives; and that we cannotconceive that the
people of GreatBritain, or their representatives,have right to
dispose of our prop-erty.3
In fact, Parliament was movingto unbalance the powers
withincolonies and make the colonies sub-ject to itself. The
colonists raisedthe question from the outsetwhether Parliament had
the au-
3 Quoted in Edmund S. Morgan, "Co-lonial Ideas of Parliamentary
Power,:The Reinterpretation of the AmericanRevolution, Jack P.
Greene, ed. (NewYork: Harper and Row, 1968), p.166.
thority to do this. This question,in turn, led to an even more
basicone: What was the extent of par-liamentary authority over
Amer-ica? This was a question for whichno definitive answers had
everbeen given. As Richard Bland ofVirginia said in 1766: "It is
invain to search into the civil con-stitution of England for
directionsin fixing the proper connection be-tween the colonies and
the mother-kingdom.... The planting coloniesfrom Britain is but of
recent date,and nothing relative to such plan-tation can be
collected from theancient laws of the kingdom...."He argued that
"As then we canreceive no light from the laws ofthe kingdom, or
from ancient his-tory to direct us in our enquiry,we must have
recourse to the lawof nature, and those rights of man-kind which
flow from it."4 Otherssought to base the argument, how-ever, on
charter rights.
Colonial spokesmen generallymaintained that Parliament
couldproperly regulate relations amongthe parts of the empire and
withother nations. They accepted thesovereignty of the British
govern-ment over them and did not ques-tion - during the early
years-that Parliament played a role inchanges in the actions of the
sov-
4 Jack P. Greene, ed., Colonies to Na-tion (New York:
McGraw-Hill, 1967),pp. 88-89.
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1972 BRITISH ACTS BECOME INTOLERABLE 151
ereign. Beyond these general func-tions, Parliament should not
go.The position of Parliament re-garding its powers over the
colo-nies was set forth in the Declara-tory Act: it could legislate
for thecolonies in all matters whatsoever.
Who was right? The answer tothat question depends on what
isright. The majority in both housesof Parliament never proposed
toconsider the question. They did notdoubt that they had the
authorityto take what actions they would(Where were the limits
uponthem?), and they did not appearto .doubt that when called
uponthey would have the necessarypower to enforce their acts. It
wasnot a matter of what was right (aminority in Parliament
disagreedabout this), it was only a matterof what was
expedient.
The colonial opposition, fromthe beginning, did tackle the
ques-tion from the angle of what wasright. They believed that
Parlia-ment, by right, was limited inwhat it could do. They
believedthat the original charters, theBritish constitution, and,
in thefinal analysis, the laws of nature,set bounds to the
authority ofParliament. The colonists shouldbe adjudged to have
been right,then. Since Parliament chose toact on the grounds of
expediency,it is only fair that they should bejudged, in part, on
those grounds.
It turned out not to have been anexpedient course, for by it
theAmerican empire, except forCanada, was lost. Since Parlia-ment
did not choose to stand onright, the colonist's position as toright
can be accepted without dif-ficulty, because it was not
con-tested.5
In any case, Parliament and thecolonies were on a collision
courseeach time they acted fro~ theiropposite premises.
Parliamentmight, and did, find it expedient toback down on
particular issues,though not on the general princi-ple. The
colonists, on the otherhand, since they did not supposethemselves
to be acting from ex-pediency, did not back down. OnceParliament no
longer found it ex-pedient to back down, the die wascast.
The Townshend Acts
Parliament plunged ahead withnew legislation aimed at the
colo-nies in 1767. The leader in formu-lating this legislation was
CharlesTownshend, and it became known
5 This does not mean that colonistswere right in everything they
did in op-position to British action, nor thatothers at some later
time would be justi-fied in imitating their every action, evenif
they found themselves in analogousconditions. The rightness of a
cause doesdoes not absolve people from moral andjust behavior. That
a cause is just isreason for working for its triumph, notfor the
engaging in wrongful acts.
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152 THE FREEMAN March
as the Townshend Acts. For awhile after the repeal of theStamp
Act, things began to lookbetter for the colonies. WilliamPitt
formed a cabinet, and he hadbeen quite outspoken on the sideof the
colonies during the debatesover the Stamp Act. In fact, Pittwas far
and away the most popu-lar Englishman in America at thistime,
though truth to tell he hadlittle competition. But Pitt wasmade the
Earl of Chatham, movedinto the House of Lords, and wasdebilitated
by illness. The legisla-tive leadership passed to CharlesTownshend,
chancellor of the ex-chequer, in 1767.
Taxes and Intervention
The act which has drawn themost attention was the one levy-ing
import duties on glass, lead,painter's colors, paper, and
tea.During the debates over the stamptax the distinction between
inter-nal and external was talked aboutconsiderably. Some got the
impres-sion that Americans accepted ex-ternal taxes, but not
internal ones.Operating from this premise,Townshend argued that
Ameri-cans should accept these new du-ties, since they were levied
on im-ports and would be consideredexternal taxes. The act
indicatedthat it was for the purpose ofraising a revenue, that such
mon-eys as were raised would go first
to defray costs of governing inAmerica, that what was left
wouldgo to the British treasury, andthat the. duties must be paid
insilver. It also authorized the useof writs of assistance to be
usedin searching for goods on whichduties had not been. paid
andspecifically empowered "his Maj-esty's customs to enter and go
intoany house, warehouse, shop, cellar,or other place, in the
Briti-sh colo-nies or plantations in America, tosearch for and
seize prohibited oruncustomed goods" with writswhich courts in
America were di-rected to issue.
Another act, passed at the sametime, was the American Board
ofCustoms Act. This established aboard of customs for America, tobe
composed of five commissioners,and to be located at Boston. Alittle
later in the year, an act waspassed suspending the New
Yorklegislature for not providing troopsupplies. In a similar vein,
an actin September of 1767 curtailedthe power of colonial elected
legis-latures. Finally, an act passed inJuly of 1768 extended and
spelledout the jurisdictions of vice-ad-miralty courts in the
colonies andincreased the number of courts inAmerica from one to
four.
Resistance to the Townshendduties, as to the other British
ac-tions, was preceded or accom-panied by theoretical
formulations,
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1972 BRITISH ACTS BECOME INTOLERABLE 153
formulations which held that Brit-ish action was in violation of
im-memorial rights. These theoreticalformulations frequently
appearedfirst as' a series of anonymous let-ters in newspapers and
then aspamphlets, though the order mightbe reversed. America had
quite anumber of men ready to enter thelists with such writings at
criti-cal junctures. James Otis, SamuelAdams, Daniel Dulany, and
Rich-ard Bland provided some of theearly grist for the mills of
opposi-tion.
John'Dickinson's "Letters"
The man who came forward todo duty against the TownshendActs was
John Dickinson, a Mary-lander born, who was sometimesfrom
Pennsylvania but most regu-larly from Delaware. He belongsin that
select circle of men en-titled to. be called Founding Fath-ers.
From 1767 to 1775 he was thetheoretician of colonia.l
resistance.Though he opposed declaring in-dependence, he headed the
commit-tee which produced the Articles ofConfederation. He served
in thearmy for a time during the Warfor Independence and was a
dele-gate to the constitutional. conven-tion from Delaware, though
leader-ship in such matters was now inother hands.
Dickinson's position on theTownshend duties was published
as a series of letters published'weekly in the
PennsylvaniaChronicle and Universal Adver-tiser beginning November
30,1767. These collected letters werecalled Letters from a Farmer
inPennsylvania. New England news-papers began publishing them
inDecember, and before it was overall colonial neswpapers except
fourpublished them. They were pub-lished as a pamphlet in 1768,
wentthrough seven American editions,one in Dublin, two in London,
and3. French translation.6 A historiansums up their impact in this
way:"Immediately, everyone took Dick-inson's argument into
account:Americans in assemblies, townmeetings, and mass
meetingsadopted resolutions of thanks;British ministers wrung
theirhands; all the British press com-mented, and a portion of it
ap-plauded; Irish malcontents readavidly; even the dilettantes
ofParis salons discussed the Penn-sylvania farmer."7
For one thing, the tone of theLetters was right.. Dickinson
notonly claimed a formal loyalty to theking and the empire but
actuallycast. his argument in terms of thewell being of the empire.
Thoughthe natural law philosophy. under-
6 See Jensen, op. cit., pp.241-42.1 Forrest McDonald, intro.,
Empire
and Nation (Englewood Cliffs: Prentice-Hall, 1962), p. xiii.
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154 THE FREEMAN March
lay much of what he wrote, he didnot· emphasize natural laws
andnatural rights so as to distinguishthem in a divisive manner
fromthe rights of Britons under theConstitution, as some writers
hadrushed to do prematurely. His ap-peal was to tradition,
precedent,prudence, self-interest, the desireof liberty, and
continuity with thepast. And though he bade Ameri-cans to resist
the Townshend du-ties, he proposed that they do soin an orderly
fashion. First, theyshould send petitions; if these didnot get
results, turn to somethinglike a boycott of goods; only whenall
peaceful means had failed,should other approaches be con-sidered.
But he pled with Ameri-cans not to give in to a spirit.
ofriotousness. "The cause of libertyis a cause of too much dignity
tobe sullied by turbulence and tu-mult. It ought to be maintained
ina manner suitable to her nature.Those who engage in it,
shouldbreathe a sedate, yet ferventspirit, animating them to
actionsof prudence, justice, modesty,bravery, humanity and
magna-nimity."8
The Argument Against Taxes
The great appeal of his workstemmed, of course, from the
factthat he shredded the argument forthe Townshend duties, showed
it
8 Ibid., p. 17.
to be grounded in sophistry - nobetter than the case for the
StampAct, only more subtle - and foundthe duties violative of the
rightsof British subjects and potentiallyconfiscatory. As for these
dutiesbeing acceptable because theywere external taxes, he
thoughtthe case hardly worth considering.The objection to taxation
by Par-liament did not hinge upon thedistinction between internal
andexternal; it was to taxation assuch. Americans accepted,
hepointed out, as they had accepted,duties that were for the
purposeof regulating trade, but not thoselevied for the raising of
revenue.·The latter were clearly taxes, andthey involved the taking
of prop-erty without the consent of theowners. True, incidental
revenuesmight arise from the regulationof trade, but they were a
conse-quence, not the cause of it. Nosuch case could be made for
theTownshend duties; they were laidon items which must be
obtainedfrom England. Certainly, it wasnot the aim of the British
to in-hibit trade in them nor to re-strain it. In fact, it was
simplya tax, for the colonists were notpermitted to obtain the
goods else-where, and might, if the Britishchose, be prohibited
from manu-facturing them. There was ampleprecedent for this.
Property was no longer· secure,
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1972 BRITISH ACTS BECOME INTOLERABLE 155
Dickinson said, if the principle ofparlia.mentary taxation of
the col-onies be· once accepted. "If theparliament have a right to
lay aduty of Four Shillings and Eight-pence on a hundred weight
ofglass, or a. ream of paper, theyhave a right to lay a duty of
anyother sum on either.... If theyhave any right to tax us -
then,whether our own money shall con-tinue in our own pockets or
not,depends no longer on us, but onthem. 'There is nothing which'
we'can call our own; or, to use thewords of Mr. Locke - WHAT
PROP-ERTY HAVE' WE 'IN THAT, WHICH
ANOTHER MAY, BY RIGHT, TAKE,
WHEN HE PLEASES, TO HIMSELF?'''9
Massachusetts' Circular Letter
Colonial elected legislatures be-gan to act in 1768.
Massachusettstook the lead in February bydrawing up a Circular
Letterwhich it sent around to the othercolonies. This letter was
subse-quently endorsed by New Hamp-shire, Virginia, Maryland,
Connec-ticut, Rhode Island, Georgia, andSouth Carolina, sometimes
by as-semblies~ and, if they were notsitting, by the Speaker.10
TheBritish reply came from the Earlof Hillsborough in April; it
was
9 Ibid., pp. 43-44.10 See Lawrence H. Gipson, The Com-
ing of the American Revolution (NewYork: Harper Torchbooks,
1962), pp.185-87.
sent as a. circular letter to thegovernors of all the colonies.
Hehad already written to GovernorBernard of Massachusetts that
atthe next session of the House ofRepresentatives he "must
're-quire' " them "to rescind theCircular Letter and declare"
their"'disapprobation of and dissent tothat rash and hasty
proceed-ing.'''l1 To the other governors,he declared that his
expectationwas that their assemblies wouldnot participate in this
new effortto arouse resentment to Britishrule. "But if
notwithstandingthese expectations and your mostearnest endeavors,
there shouldappear in the Assembly of yourProvince a disposition to
receiveor give any Countenance 'to thisSeditious Paper [the
Massachu-setts Circular Letter], it will beyour duty to prevent any
proceed-ing upon it, by an immediateProrogation or
Dissolution...."12In June, Hillsborough orderedtroops to
Boston.
Non-Importation Agreement
It was obvious from these andother instances - the harassmentof
shippers by customs agents,the increasing of military forcesin the
colonies, the rejection ofpetitions - that petitions and
res-olutions alone would not produce
11 Jensen, Ope cit., p~ 253.12 Greene, Colonies to Nation, p.
143. ,
-
156 THE FREEMAN March
a change in British policy. Thecolonists, then, moved toward
at-tempting to hit Britain where itwould hurt - in trade. Boston
tookthe lead in adopting a non-im-portation agreement in August
of1768. What they proposed to do,among other things, was to
ceasealmost all imports from Britain.The movement to do this
spreadthrough the colonies, though itwas rough going.
Understandably,importers and shippers were notoverly enthusiastic
about this,especially those for whom this wasa major source of
income. More-over, it needed to be a concertedeffort throughout the
colonies. Ifit were not, ports which· remainedopen could put the
efforts of theothers to nought. Colonists didsucceed in closing
down the majorport cities in America to mostBritish imports in the
course of1769. The best weapon againstports which did not
co-operate wasto cut off commercial relationswith them. ~ This
usually broughtthem into line.
Though non-importation wasfar from absolute, it did
succeed.Imports from Great Britain intothe colonies fell from
£2,157,218in 1768 to £ 1,336,122 in 1769.13
Some ports did much better thanthis average. For example,
Phil-
13 Richard B. Morris, ed., Encyclopediaof American History (New
York: Har-per, 1953), p. 78.
adelphia's imports from Britaindropped from £432,000 in 1768to £
200,000 in 1769 to £ 135,000in 1770.14 More importantly, sincethe
object of non-importation wasnot simply to reduce imports
fromBritain, the British began to backdown once again in the face
ofdetermined colonial opposition. In1769, Parliament moderated
itsposition on the Quartering Act toallow colonies to supply troops
ontheir own initiative.
Reduced Tensions under Lord North
More success for the colonieswas to follow with the coming ofa
new ministry. Lord North be-came, in effect, Prime Minister inearly
1770, a position which hewas to hold until 1782. Duringthese years
he served George IIIas best he could, doing his willduring a time
when a man oflesser loyalty and fortitude wouldhave sought a less
demanding job.Re served his king first by actingto reduce tensions
in America. InApril, the Townshend duties wererepealed, except for
the tax ontea. Some concessions were alsomade in the application of
theCurrency Act.
I t was not long before the non-importation agreements began
tobe abandoned. There was consider-able sentiment for
continuingthem - after all, the tax on tea
14 Jensen, op. cit., p. 357.
-
1972 BRITISH ACTS .BECOME INTOLERABLE 157
had not been repealed, nor hadother sources of tension been
re-moved - but many of the mer-chants had had ~nough of
suchself-denial. By various maneuvers,they opened up the ports to
Brit-ish goods once again. This coursewas the more attractive
generallybecause the hasty efforts at in-creasing domestie
manufacturesto replace British imports hadproduced few tangibl~
results.
Calm Before Storm
The colonies were comparativelycalm during 1771. Although
therehad been clashes between Britishtroops and colonists at New
Yorkand Boston (the latter leading tothe "Boston Massacre") in
1770,these did not expand into anygeneral conflict. Such as
remainedof the British threat to the colo-nies was difficult to
dramatize;there can hardly be said to be atrend toward oppression
if the op-pressive measures are being re-duced. At any rate, no
major fig-ure ventured forth to attempt anydramatization. Even
though teacontinued to be taxed, the amountof tea imported into the
coloniesfrom England increased from thelow point for the past
severalyears of 110,000 pounds in 1770to 362,000 pounds in
1771.15
15 See Donald B. Cole, Handbook ofAmerican History (New York:
Harcourt,Brace and World, 1968), p. 51.
It was, however, the calm beforethe storm, the clouds for
whichbegan to gather in 1772. The firstof these was the burning of
therevenue ship, the Gaspee, byRhode Islanders in June. TheGaspee
had been harassing ship-ping coming into Rhode Islandfor some time;
the captain wasparticularly obnoxious in histreatment of those on
shipsstopped for searches. The Gaspeeran aground, and while she was
inthat disabled condition, a partyboarded her, drove the crew
offand burned the ship. An investi-gating committee turned up
nouseful information but its appoint-ment from England stirred
resent-ment. A little later in the year,the British Exchequer took
overthe payment of the salaries of thegovernor and judges in
Massachu-setts. Here the move that had beenlong feared: to remove
crown of-ficials from reliance on the electedlegislature. In
November, Bostonformed a committee of correspon-dence which sent
statements toother towns in Massachusetts andto all colonial
assemblies. Earlythe next year, the House of Bur-gesses in Virginia
established acommittee of correspondence, andmost· other colonies
followed suit.
Tea Act 01 May, 1773
What stirred the colonists toopen resistance once again,
how-
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158 THE FREEMAN March
ever, was the Tea Act in May of1773. The purported intent of
thisact was to rescue the East IndiaCompany. That company was
indire straits, on the verge of bank-ruptcy, and sorely in need of
amarket for its tea. Though im-ports had picked up in the Amer-ican
market, it is generally be-lieved that most of the tea con-sumed in
America came from theDutch; by buying such tea thethe colonists
unlawfully evadedthe tax on it. The Tea Act wasdevised to make tea
from the EastIndia Company almost irresisti-ble. It enabled that
company tosell tea directly in America, re-lieving it of the
necessity of sell-ing it first at auction to merchantsin England.
"By eliminating themiddleman . . . the company wasable to sell tea
in the coloniescheaper than in England," eventhough it was still
taxed in the col-onies. "More significantly, its teanow undersold
that of the Dutchsmugglers."16
A Monopoly, plus Taxes
The British were about to suc-ceed in doing what John Dickin-son
indicated to be the danger.They were going to establish amonopoly
for a taxed item, some-thing which could not be compet-
16 John C. Miller, Origins of the Amer-ican Revolution (Boston:
Little, Brownand Co., 1943), p. 339.
itively produced in America, butwas very popular. It is likely
thathad Parliament contented itselfwith establishing a monopoly
itmight have got away with it. Butthe fact that tea was taxed
entan-gled the monopoly question
withtaxation-without-representation.The objections which had
beenraised before had now a freshexemplar; but now Americanswere to
be seduced into compli-ance by a lower price.
It did not happen. True, theEast India. Company caused chestsof
tea to be loaded on many shipsfor America, and these put intoport
at Boston, Philadelphia, NewYork, and Charleston. The colon-ists
were ready for them; theywould not buy or consume thetea, nor would
they allow it to belanded if they could help it. Themost dramatic
opposition occurredat Boston, where Bostoniansdressed as Indians
boarded theships and heaved the chests intothe water. Patriots
prevented teafrom being landed in Philadelphia.It was landed and
transferred tothe customs house at Charleston;there it stayed until
war came.
The Intolerable Ads
This time Parliament did notback down when confronted bycolonial
resistance. The majoritydetermined, instead, on a policy
ofcoercion, a policy backed by four
-
1972 BRITISH ACTS BECOME INTOLERABLE 159
acts passed between March 31stand June 2nd of 1774. They
areknown formally as the CoerciveActs. The force was to be
con-centrated on Boston and Massa-chusetts. The Boston Port
Actclosed the port of Boston to com-mercial shipping until such
timeas the East India Company hadbeen compensated for the tea.
TheMassachusetts Government Actprovided that the governor's
coun-cil would be appointed by the king,not elected as had been the
case,that the governor and king wouldappoint judges, that juries
would
be chosen by the sheriff, and thattown meetings could not be
heldwithout the consent of the gover-nor, except for annual
electionmeetings. The Administration ofJustice Act was of general
effectand provided for the trying ofcertain officials from the
coloniesin England, if the governorthought it necessary. The
Quar-tering Act applied generally to thecolonies, also; it
authorized thequartering of troops in occupied·dwellings.
The colonists dubbed them theIntolerable Acts. (I
Next: The Prelude to Independence.
A Policeman's Lot
IDEAS ON
LIBERTY
A GOVERNMENT'S proper function in a free society· is to act asa
policeman, not as a regulator over people's actions Ot"
choices.
The more regulations or restrictions, the more corruption.Why?
Because we have reached a time when honest business-men must get
the right to produce or engage in a business frommen who do not
produce. A dozen permits are needed by busi-nessmen before they can
engage in activity which is their right.More often than not, they
must grease the palm of every para-site issuing these permits or
suffer deliberate and disastrousdelays. In addition the city has
the "right" to take away thesepermits, in the event some asinine
regulation is not complied with.
JACK MORANO, A MEMBER OF THE TACTICAL PATROL FORCE OF NEW YORK
CITY,FROM A LETTER TO The Wall Street Journal, December 28,
1960.
-
Who is theMARC! LR ODUCER?
w. A. PATON
CONCEPTIONS of the marginal en-tity ranging from the fuzzy tothe
downright indefensible arefrequently encountered in
currentdiscussions of business manage-ment and finance and
pe:t;haps thisjustifies some comments aimed atclarification and
sharper defini-tion.
Marginal firm Defined
In making use of the term"marginal" in this connectionthere is a
need, to begin with, tohave clearly in view the qualityor
characteristics we are lookingfor when .attempting to define
themarginal enterprise. In thissearch our concern, presumably,is
with the price-making process,and we are focusing attention on
Dr. W. A. Paton is Professor Emeritus of Ac-counting and of
Economics at the Universityof Michigan. This article is adapted
from onesection of a paper prepared for the "Mises 90thBirthday
Collection," copyright by The Insti-tute for Human~ Studies.
160
the business firm that occupiesthe crucial position in this
proc-ess, for a special field or marketarea, at a particular point
orperiod in time.
The· definition I consider ap-propriate may be stated as
fol-lows: The marg·inal producer is theone who is just barely
induced toremain in operation by the exist-ing state of affairs and
who is sosituated with respect to volume ofoutput that his dropping
out willexert sufficient pressure on thearray of price-itnftuencing
forces,through the supply side of themarket, as to bring about a
rec-ognizable change in product price.
This was the description of themarginal man or firm, as I
recallit, stressed by my revered mentor,Fred Manville Taylor, when
I wasin his graduate courses sixtyyears ago. A slightly
differentversion that is acceptable is: The
-
1972 WHO IS THE MARGINAL PRODUCER? 161
marginal producer is the·. one whowill be the first to withdraw
un-less conditions improve.
The Break-Even Approach
The most common conception ofthe marginal producer nowadays,so
it seems, is that of the entitythat is precisely at the break-even,
zero-earnings stage. Thetextbooks in the courses in man-agement and
other subjects in theschools of business administrationare full of
charts which identifythe break-even position as of crit-ical
importance. I am one of thosewho are getting very tired of
thispreoccupation with break-even"analysis." In my judgment
noconvincing case has ever beenmade for the view that the
zero-earning level is a decisively sig-nificant spot in connection
withbusiness decision-making. Andwhen the "analysis" includes
thedesignation, of the firm at thebreak-even point as
"marginal"those who know anything abouteither economic theory or
actualbusiness operation can feel theirhackles rising.
The notion that the marginalposition is occupied by the
break-even producer finds no solid sup-port in business
experience.· Evenfirms operating at .a loss oftenhang on for years.
This is par-ticularly true in the case of thesmall or medium-sized
firms with
ownership and control residing ina family or small local group,
butthe condition is not unknownamong relatively large enter-prises.
As long as revenues covercurrent expenditures, includingattractive
salaries for executives,immediate management has astrong urge to
continue opera-tions, even if the outlook is un-promising to the
point of beingdownright gloomy. This accountsfor the phenomenon of
corpora-tions that are worth more deadthan alive. Examples. are not
rareof substantial concerns whoseshares have been quoted formonths
or even years at less thannet liquidation value (that is, atless
than could be realized if theentity disposed of all assets forwhat
they would bring, paid allliabilities, and distributed the bal-ance
to shareholders).
In some. of these cases the an-nouncement, finally, that the
di-rectors had decided on a, programof liquidation has caused a
sharpadvance in the price of the stock.I recall one example, a
miningcompany, with shares listed on amajor exchange, where the
marketprice of .the stock - which hadbeen hovering under $2 per
sharefor some time - promptly movedup to $16 when the plan to go
outof business was formally decidedupon at a board meeting. The
lowprice preceding the announcement
-
162 THE FREEMAN March
was of course based on the as-sumption - by those trading inthe
company's shares - that themanagement would continue tofritter away
the liquid resourcesin unprofitable operation and ex-ploration. (By
these observationsI am not intending to deny thatthere have been
many cases wheretenacity in the face of a poorshowirig over a
considerable timehas finally paid off.)
It may be safely concluded thatin a given situation neither
thefirm at the zero-earning point northe concern suffering
persistentlosses is necessarily the vulner-able, marginal entity,
the enter-prise just barely hanging on, andthat will be the first
to drop outif conditions become less favor-able. And it may also be
concludedthat even the most badly situatedfirm, the one at the very
bottomof the stairway of earning power(or that shows the greatest
levelof loss) need not be in the mar-ginal position in the sense
definedabove. (Of course, the term mightbe used to designate the
worst-offenterprise - and some seem toemploy it for this
purpose.)
Profit Maker May Be Marginal
Indeed the marginal producer,soundly defined, may be an
enter-prise that has an established ea.rn-ing power. Assume, for
example,a producer operating in a high-
risk field for some time has beenachieving an earning rate· of 4
percent on the stockholder capitalemployed (computed in terms ofthe
current value of resourcesless liabilities). Assume, further,that a
10 per cent annual returnis regarded as the necessary lurefor risk
capital in this field, asevidenced by the data of the in-vestment
market. With these con-ditions the management may welldecide to
curtail production - orstop operations altogether as soonas
practicable - and thus step intothe marginal-entity role.
Remem-ber, it's the producer just on theverge of dropping out, and
whosedecision will have an effect onproduct price, who may be
re-garded as marginal.
In practice, it must be con-ceded, the identification of
themarginal producer in a given in-dustry and time period may
bedifficult if not impossible. Thisis especially true when we
thinkof such producers as poised onthe brink of withdrawal, but
notyet having taken decisive action.The difficulty in the way of
spe-cific identification, however, is nowarrant for adoption of
sloppy orunsound concepts and definitions.A good guess would be
that sel-dom does reaching the preciseposition of a zero level of
earn-ings signal or trigger a cease-production decision.
-
1972 WHO IS THE MARGINAL PRODUCER? 163
The Cost of Capital-FurnishingIn conclusion I wish to return
to the fashionable break-evencharts and discussions for a
mo-ment to register an objectionsomewhat outside the question ofthe
definition of the marginalfirm. From the standpoint of
goodmarket-economy theory the basicdifficulty with an this rubbish
liesin an improper conception of whatit means to "break even." If
cap'i-tal-furnishing is a primary, essen-tial factor in the
productive proc-ess - and that this is the case hasbeen brilliantly
demonstrated byeconomists over and over again-it shouldn't be
ignored in the com:-
putation of total cost in the broadsense of price-influencing
cost.And if, in a given situation, thiscost is omitted from the
reckon-ing, and revenues just match therecognized costs, the
producer isnot truly breaking even. Instead,he is operating at a
loss (even ifthis is not the way the account-ants look at it). Here
is a crucialpoint in the case for the free-market economy as
opposed to so-cialism, and certainly those whostrongly prefer
control by themarket to authoritarian directives(including
"freezes") shouldn'tuse concepts and terms that playinto the
enemy's hands. t)
IDEAS ON
LIBERTY
How to Attract Capital
THERE IS NO REAL SHORTAGE of capital in the world, and I do
notknow of any major project which has been held up solely
becauseof the lack of money. Capital is plentiful wherever it is
"wantedand well treated." The real bottleneck in the development of
theworld is the shortage of human capital: people with the
skill,training, and education intelligently to employ the
world'sresources.
The facts are that when political freedom and free
enterprisespread, markets increase, and that the expansion of
markets isonly prevented through political motivation. The interest
ofAmerican business in the expansion of a free enterprise
systemaround the world as part of a free political system is based
notonly upon moral considerations, but on the hard fact that
thereis no market for consumer goods among slaves.
WALTER B. WRISTON
-
RON HEINER
FROM TIME IMMEMORIAL, thinkersand philosophers have attributedto
that which has been called the"character" or "spirit" of the
peo-ple all of those noteworthy accom.;,;plishments achieved by
variouscivilizations. Rome was the prod-uct of a great spirit of
disciplineand a genius of organizationalability; the European
Renaissancewas the product of a rebirth ofenergy and creativity;
and theAmerican rise to world eminencewas due to the unheralded
ruggedcompetitive spirit of its people.The preeminence of this view
isseen by its implicit reflection inmost ethnic jokes (Le., the
impli-cation· being in certain jokes thatthe Polish are stupid, the
Italiansare lazy, the Germans are mili-taristic' and so on) .
Mr. Heiner is a third-year undergraduate ineconomics at the
University of Washington.
164
Concomitant with this view isthe belief that if order and
civili-zation are on the decline, if "timesare bad," what is needed
is a re-commitment, a rededication, a re-newed spirit of sacrifice
on thepart of the citizens and then allwill be well again.
In the last two centuries, how-ever, a select group of
thinkershas fundamentally challenged thecorrectness of these views
con-cerning civilization and social life.Beginning most
recognizably withthe writings of Adam Smith, TheWealth of Nations,
there emergedan essentially new discipline laterto be called
economics, and with itsprang a different view of humancivilization
which was to revolu-tionize subsequent thought. Twoparagraphs from
the openingpages of Ludwig von Mises' Hu-man Action serve as a
striking
-
1972 AMERICAN COMPETITIVISM: CAUSE OR RESULT? 165
introduction to this view and itssignificance:
"Other philosophers . . . lookedat human things from the
view-point of government. They wereintent on establishing rules
ofpolitical action, a technique, as itwere, of· government and
state-manship. Speculative minds drewambitious plans for a
thoroughreform and reconstruction of so-ciety. The more modest were
satis-fied with a collection and systema-tization of the data of
historicalexperience. But all were fully con-vinced that there was
in the courseof social events no such regularityand invariance of
phenomena ashad already been found in the op-eration of human
reasoning andin the sequence of natural phe-nomena. They did not
search forthe· laws of social cooperation be-cause they thought
that man couldorganize society as he pleased. Ifsocial conditions
did not fulfill thewishes of the reformers, if theirutopias proved
unrealizable, thefault was seen in the moral failureof man. Social
problems were con-sidered ethical problems. Whatwas needed in order
to constructthe ideal society, they thought,were good princes and
virtuouscitizens. With righteous ·men anyutopia might be
realized.
"The discovery of the inescapa-ble interdependence of
marketphenomena overthrew this opinion.
Bewildered, .people had to face anew view of society. They
learnedwith· stupefaction that there is an-other aspect from which
humanaction might .be viewed than thatof good and bad, of fair and
un-fair, of just and unjust. In thecourse of social events there
pre-vails a regularity of phenomenato which man must adjust his
ac-tions if he wishes to succeed. It isfutile to approach social
factswith the attitude of a censor whoapproves or disapproves from
thepoint of view of quite arbitrarystandards and subjective
judg-ments of value. One must studythe laws of human action and
so-cial cooperation as the physiciststudies the laws of nature.
Humanaction and social cooperation seenas the object of a science
of givenrelations, no longer as a norma-tive discipline of things
that oughtto be - this was a revolution oftremendous consequences
forknowledge and philosophy as wellas for social action."l
In other words,· the belief in thesole primacy of ethics in
socialmatters was fundamentally chal-lenged: society. could not be
or-ganized according to any set ofethical norms; and further,
thereprevailed certain inescapable ef-fects of. various social
structureswhich could not be nullified re-
1 Ludwig von Mises, Human Action(3rd ed., Chicago. Regnery,
1966), p. 2.
-
166 THE FREEMAN March
gardless of the sincerity and dili-gence of those individuals
attempt-ing to reform the social system interms of various desired
ethicalqualities (such as equality in allaspects of social life).
Indeed, theview now developed that many ofthese qualities (viz.,
character,spirit, dedication, and so forth ofthe people) could more
correctlybe regarded as effects or resultsof certain patterns of
social col-laboration, rather than the causeof the specific social
structure andthe achievements of the peopletherein.
Ethics Plus Organization
Thus, one of the significantrevelations derived through
thedevelopment of economics is thatthe necessary conditions for
theprogression and "flowering" of acivilization include not only a
sys-tem of workable ethical values butalso the appropriate system
of BO-cial organization, and that neitheris sufficient without the
other.Moreover, if there prevails a setof ethical norms, the
practice ofwhich precludes the developmentof an appropriate system
of socialorganization (for example, beliefswhich consider merchants
andlenders of money who demand in-terest as people engaged in
activi-ties of low moral character), therecan be no general
advancement forthat civilization; or, if the appIi-
cation of a set of political andeconomic doctrines also
precludesthe establishment and continuanceof an appropriate system
of socialorganization, then appeals and ef-forts to revitalize the
dedicationand moral spirits of the populacecannot succeed in
bringing aboutadvancement (or preventing down-fall) for that
civilization.
It could be argued, therefore,that the oft-cited American
"com-petitive spirit" and "rugged in-dividualism" are consequences
ofthat system of social collaborationcharacterized by the
unhamperedmarket economy, and that thiscompetitive drive could not
havedeveloped without this system ofsocial collaboration.
Very much related to the abovediscussion is a remarkable
andsignificant series of events in re-cent months most
dramaticallyrepresented by the current "wage-price freeze." In one
of the state-ments made by President Nixonshortly after the
initiation of the"freeze," it was emphasized that,in the long run,
what is needed torevitalize America (in addition towage-price
controls) is a rededica-tion by Americans to that spirit
ofcompetitivism which made Amer-ica great.
In light of the preceding devel-opment, however, this plea for
arecommitment of the American"rugged individualist spirit" is
-
1972 AMERICAN COMPETITIVISM : CAUSE OR RESULT? 167
seen to be completely illusory.In fact, what has been done
is
to implement the most drasticform of restriction (general
scaleprice controls) on that· system ofsocial organization (viz.,
the un-hampered market economy) whichis the cause or necessary
co-con-dition which permitted the emer-gence of the very spirit of
com-petitive individualism which thePresident deems as necessary
forAmerica's continued greatness.
This means that the Presidenthas embarked on a policy which,if
continued and enlarged, willeliminate what is left of this
com-petitive spirit and render its re-emergence impossible.
Compounding Error
All of this testifies to the wordsof Ludwig von Mises in the
clos-ing pages of Human Action2 :"the study of economics is
almostoutlawed today. The public discus-sion of economic problems
ignoresalmost entirely all. that has beensaid by economists in the
last two-hundred years. Prices, wage rates,interest rates, and
profits are dealtwith as if their determinationwere not subject to
any law. Gov-ernments try to decree and to en-force maximum
commodity prices
2 Ibid., pp. 879-880.
and minimum wage rates. States-men exhort businessmen to cutdown
profits, to lower prices, andto raise wage rates as if thesematters
were dependent on thelaudable intentions of individuals."
In order to attain any end, ap-propriate means must be used
inorder to effect the true causes ofthat which is sought. The
ironic.aspect of the solely ethical inter-pretation of economic
affairs isthat it fundamentally miscon-ceives the operation of the
socialsystem in such a manner as to sup-press and obscure the real
work-ings and true causes of the prob-lems it seeks to remedy. In
so do-ing, the measures which are thusimplemented themselves
becomecauses of systematic distortionsin the economic system;
whichare then interpreted as proof ofthe necessity for even more
drasticextensions of those original poli-cies - thus compounding
and mul-tiplying the distortions in a self-justifying cycle.
All of these. consideratio