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2.

THE HUMANITIES IN A CENTURY OF THE COMMON MAN

THE CURRENT DEFENSE of humanities does not take into account the depth of the tide running against them, probably because it is politically unsettling to do so. But if we wish to acquaint ourselves with prospects we shall soon be grappling with as pressing realities, we shall have to look more candidly at what is undermining this historic body of study. If certain forces continue unabated, humanistic training as we have known it is not likely to survive another generation.

The first point to take into account is the paradoxical fact that the humanities are a discipline. I say paradoxical because there is a certain anomoly in asking the human being to undergo a regimen in order to become more human, or more humane, if we may give a focused meaning to the latter word. For the humanities are not the spontaneous, loose, and thoughtless expression of the human race, but on the contrary a highly difficult, concentrated, and directed expression which aims at a center—man at his best, not man transmuted into an angel, which is the proper study of divinity, but man incarnate, which is today, man in this world, making the best of his estate as he responds to its colors and configurations. That is why we can today admire the humanism of Greece and Rome, with indifference to the other tendencies of this civilization. Like every humanism, theirs was an achievement in sensibility and expression, and their brilliance was such that the modern world has up until now been glad to emulate. But it has always been accepted as a starting point that this emulation required education and effort, so that he who engaged in it sought to make himself over in accordance with an ideal superior to his untutored self. That would seem to be the premise of all humanistic study: the best which has been thought and said in the world was not uttered in a babble, but came slowly and often at the cost of self-torture, or at least of the mortification of passing desire. Education in the humanities has always meant a study of the classics, and a classic is a sort of cultural leader, to whom we submit ourselves out of our faith in edification.

Those who have been brought up on a humanistic education assume that there is something in the monuments of humanism which compels a respect. I fear that they are only taking a constant of their own lives to be a universal constant, which does not exist. Once before a long night descended upon these monuments. They were there to plead their case, but you cannot plead to those who will not hear. I should like to echo Whitman here, and say that if to have great poets, there must be great audiences, to have a victorious humanism, there must be a humanized audience. Enough has been said elsewhere of the dehumanizing pressures under which we labor; and acute observers have long detected in modern men, and not solely among those who are low-placed, an impulse to reach for the metaphorical pistol when the word culture is mentioned. There seems to be growing up an attitude of truculence, and nothing is more fatal to an appreciation of past accomplishment. There are plenty of signs that the traditional respect for artistic and intellectual distinction is being displaced by reverence for political power and institutions. The first of these requires a belief in personality, and the second tends to require a disbelief in it. That may prove the fundamental difference between them.

It is a commonplace of recent history that about 1930 our age turned sharply political. The impluse has been so strong in the 30’s and 40’s as to carry along with it, like some engrossing wave, a large part of all artistic expression. Artistic work came to be judged by whether or not it contributed to a conception of progress, and the term progress implies, of course, a direction. If we had to give a name to that direction, we would not have to seek beyond “social democracy.” This is a quite elastic term which covers, on the one extreme, the palest social amelioration, and on the other the strictest type of state-managed economy, requiring total regimentation. But whatever the form, social democracy exhibits two tendencies which are serious for the future of the humanities. One of these is a change in the structure of society, and the other a disposition of society’s income.

The first tendency works to break down the categories which have hitherto existed in favor of an undifferentiated mass. Without raising the question of whether these classes which have been privileged in the past have deserved their fortune, it can be asked whether society is not thereby sacrificing its strength. It seems to be incontrovertible that all progress in the higher meaning of that term—the progress which is the carrying out of an enlightened moral ambition—has not come from society fused as a mass, but from society held in a kind of counterpoise. Aristotle has illustrated this truth through an analogy with music. A state ceases to be a state when what is harmony is allowed to pass into unison. Now the mass seems to be this state of unison, which is with out the principle of counterpoise. In the other type of society, which has proved creative, we have numberless arrangements in which men are functionally placed against men, since this is in very fact its integrating principle. There is a substratum of unity, of course, for without that even our definition would collapse. The principle of counterpoise works in such a way that one element plays its part and gets its living by being poised against another element. The one is commissioned to get as much as it can out of the other, more than would ever be granted without the pressure of its demand. The requirement is always made in the name of some higher order, or liberty, or degree of enlightenment. For example, in this functional counterpoise we have teachers against students, policemen against citizens, buyers against sellers, managers against employees. It is the pluralistic kind of arrangement, in which one group stands for and enforces an ideal of performance like a competitor in a contest, viz., especially teachers and policemen, and the rest of us profit by their necessary though at times irksome office. The effect of this arrangement is to make society vertebrate, if we may vary the figure. I do not see what social democracy is going to substitute for this structure. What has been suggested or exhibited thus far is a more simple and more rigid pattern, which is without the flexibility of the healthy organic body. Now the humanities have in the past exerted their authority from a kind of limited autonomy; they have been one of the weights holding us in a counterpoise. In the new state, what is going to “enforce” the humanities? It is becoming clear that if the state does not do it, it will not be done; and yet if the state does it, it will likely be done in a way that will prove fatal.

This brings us to the second tendency, which is the economic transformation accompanying the process we have just sketched.

Everyday observation brings home to us that as the modern state expands its power, it becomes more jealous of the rights of individuals. It grows more rigorous in the exercise of the authority it owns; and secretly, one fears, it determines to extend its reach. It is inevitable that in this development it should become more curious about what individuals do with their incomes. Its level of understanding here is pretty low; expenditures for food, clothing, and shelter it can grasp, but as it seeks to placate the greatest number, things beyond these will be sold to it with increasing difficulty.

Let us consider for a moment the way in which it has brought the individual’s economic life under surveillance. First, the state somewhat timidly lays an income tax, applied at the outset to the wealthy, who are few and conspicuous. Next, on a plea of emergency, or extended social welfare, it increases the rates sharply, making them virtually confiscatory on the upper levels. This fact is not presented in defense of an unregenerate capitalism; its relevance to the argument appears when one recalls what has happened in this country to private donations to universities. As someone has remarked, you cannot eat up your millionaires with taxes and have them too.

The state finally adopts the withholding tax, which has the practical effect of putting everyone on the government payroll, since the government first looks at the salary, decides what fraction of it the individual shall have, and then passes on the remainder. Thus the private company becomes in effect a kind of disbursing agent for the government. This circumstance, which seems to have gone largely unnoticed, is symbolic in the highest degree of the trend even in “free” countries toward state collectivism. The bearing upon the case of culture is just this: what is going to happen to the supernumerary, non-utilitarian part of our activity when every individual is virtually on a government expense account? The inescapable conclusion is that the sum which goes for “brave, translunary things” is going to be politically determined—and inspired.

The modern world is creating an ideology whose hero is the satisfied consumer. He is the common denominator, and the offices of the state are to serve him, and not some imponderable ideal. This state serves, moreover, with an ever-increased efficiency. Today, everything is under control; nothing slips through; there is less chance than ever before that the state will fail of its announced aim. Populations have been numbered, incomes have been listed; techniques have become machine-like. We must therefore consider the chance of the humanities in a social democracy whose policies will be efficient, as far as its light goes, but whose ideals encounter an insistent pull downward.

At this certain point objections arise. “Culture,” which in common parlance stands for the humanities, is still a word with a great deal of prestige; it yet has associations of value which would induce politicians to sponsor it even if they felt no attachment to it. It is frequently seen that social democratic parties are more liberal than others in recognizing the claims of culture. They pledge large outlays for education and a better deal for the artists and intellectuals under their regime. The promise is fair, but it has to be distinguished from the performance for the plain reason that it is uttered as part of the ideal, and does not reflect the forces which will mold the actual. It is one thing to promise in the name of the people reverence for great art and intellectual distinction, but this is a situation in which the will, or it might be more accurately described, the impulse, of the people is going to determine. After all, one of the chief aims of social democracy is the removal of those barriers which in traditional or formalized societies stand between the people and an immediate fulfillment of their wishes.

What is likely to happen is this: in the primitive or heroic days of social democracy we would very likely get commissars or administrators who believe genuinely in the humanities and who would put up a battle for them. One is compelled to suppose that they would be battling as individuals, against indifference from above and poorly educated taste from below. For a time they might do much, but it would be foolish to mistake in this case accident for essence. For these men would be individualists, and sooner or later they would be supplanted by others closer to popular sympathy. It is likely that their very success would be held against them, so refined are the arts of political detraction. They would be described as aloof from the people, or as thwarters of the popular will; for, in fact, they would be representing an “undemocratic” force. Their successors would be the political type, who know all too well how to commit a murder while concealed under the cloak of popular sentiment. They will give the public what it wants and provide the rationalization. This is the fate in store for all state-controlled culture.

Anyone who thinks this is a fanciful alarm should reflect upon what has been done to public education in the United States. The boast of the innovating “progressive” schools is that they prepare the youth for a changing world. Would it not be incomparably more sensible to prepare the youth to understand why the world is changing? This is what the humanities do. There is little appeal here to the exponents of progressive education because they have no desire to rise above the confusion. If they did, they would soon be at odds with the weight and mass of general opinion. Consequently, in our present educational system, popular pressure and specious doctrines have almost extinguished the idea of discipline. Yet I am inclined to think that this system has been better protected than one could expect the humanities to be in a pure social democracy.1

There are further reasons for saying that we have reached a point at which these dangers are not purely speculative. We are able to examine three years of socialist rule in Britain, which indicates that we have not been expressing undue alarm. I shall cite two passages from a “Letter from England,” by D. S. Savage, appearing in the Spring, 1946, issue of the Hudson Review. “A Labour government is in power and, so far from fostering the arts and subsidizing artists as some of its more gullible adherents among the intelligentsia had hoped, it is proving on the whole inimical to cultural values; an implicit doctrine of ‘bread alone’—that is, bread and guns—prevails.” Mr. Savage ventures a prediction of his own. “It seems possible that as the social order hardens into shape we shall witness the emergence of two cultures—an official and an unofficial, the one well-paid, flashy, and sterile, drawing upon the talent of debauched artists and intellectuals, and the other surviving only through extreme enthusiasm and devotion.”

It is an historic truth which holds good for the past several centuries of our life that culture has developed from the liberty of the superior individual to love superior things. Whether these individuals established foundations, or whether they merely sustained a market for works of distinction out of their earned or unearned surpluses, the result was as we have seen. The essential condition was that the individual had a power of decree. We have observed that the new social regime does not permit the individual much power of decree, and it is very jealous of these surpluses. Its present humor is to describe them as theft and to appropriate them on one pretext and another. We arrive then at a state in which the single, sensitive, imaginative person cannot project his will in this fashion. As Paul Valery has suggested, liberty in the modern “free” state is simply a liberty to be like the masses because political control is vested in them. They feel “free” because what they will is made law. The more one resembles the mass man, the freer he is because his impulses run the same channel as theirs. And if he is antipathetic to the idols of the mass, he may be very unfree, because mass law and mass ethos are enforced with peculiar rigor, and there is no court of appeal. Traditional forms of government now in disfavor provided a better haven for the individualist because they felt some distrust of their own power and often relaxed it in administration. It is the special mark of the mass that it has not such feeling about its power, and is exhilirated to see it brutally exercised. For its attitude toward the non-conventional, see our daily tabloids.

In summary, we face a future in which the mass is going to determine with increasing power what is done with the total productivity of the nation. There is little chance that it will devote a substantial part of that productivity to the development of pure science (unless science can be hitched to some wagon like preparation for defense in war), or to the creation of works of art which baffle or offend it.

It is now time to look at one or two aesthetic difficulties which will prove handicaps in an age dominated by this new mentality. I shall consider the first of these as the aesthetic plebeianism. There is an aesthetic of common life and an aesthetic of noble life, and the two are far from meeting. To find a principle that distinguishes them it is only necessary to point out that they correlate closely with optimism and pessimism. The noble view of life, which is the view that has conditioned art in the past, tends always to be pessimistic for the plain reason that life “does not measure up.” It is not satisfactory when compared with that clear pattern which the believer in excellence has in his soul. This is clearly proved by the fact that the arts of tragedy and satire have flourished in ages which were predominantly aristocratic, that is to say, ages which accepted as a reality the distinction between good and bad men, or actions. It could not be otherwise, for satire is the reproof of man, and the very plot of tragedy depends upon the “good” man struggling in a net of evil. Whoever thinks he knows how the world ought to be feels a certain melancholy that it is not so. In all great art therefore there is a certain pessimistic overcast. Art is a kind of protest, a transfiguration. It has been remarked that if one looks below the surface of two of the most dazzling periods of creativeness in history, the Greek and the Elizabethan, he finds a well of melancholy. Shakespeare’s plays deepened in gravity as the man matured.

But what occurs when life is made not the subject of a critique, but an occasion for relaxed joyousness and animal abandon? There have been signs for years that we are passing out of one climate of belief into another. A significant witness is that tragedy has all but disappeared. And if this is but a beginning, it may be no exaggeration to say that the new climate is to be anti-artistic and anti-cultural. We may be faced with a time when the root-idea of standards, which is the anchor of all humanistic discipline, is to be eradicated. Indeed, our expression here may be too cautious, for the extent to which knowledge has been displaced by opinion makes this almost now an actuality.

The aristocratic view of life is waning because the mass everlastingly insists that the world be represented as pleasant. One quality which the crowd is never able to acquire is a hardheadedness sufficient to accept the realism of the world. For this reason it falsifies whatever it touches, and there is no hope for true art where the principle at work is falsification. To foretell the kind of art expression which the mass is going to demand, and demand effectively by reason of its economic power, one has only to look at today’s media of mass circulation. The preferred themes are romantic love (this seems to be a modern version of the Aphrodite Pandemos, which is distinct from the Aphrodite Ouranios of the ancients, and from the courtly love of the mediaevals), success stories, fantasies, comedy with elements of violence and sadism. I suspect that the truest index to this mentality is the comic strip, whose offenses against taste and aestheic theory it would be impossible to number. But present in all of them is the unrelenting demand that the world be subjectivized to accord with our humor. The herd man never grows reconciled to the fact that life is a defeat, and that this defeat is its real story. He wants instead a pleasing fiction by which his hopes are ingeniously flattered. It is not pressing the matter too far to say that what he wants is deception.

What we are actually contending with in these aesthetic plebeianisms is the mass’ deep-seated and enduring hostility to the idea of discipline. It does finally require some discipline of mind to accept the fact that life is not a triumphal progress, but a sadly mixed affair with many a disenchantment. When Arnold talked of seeing things steadily and seeing them whole, he must have had reference to just this evasiveness and flabbiness of mind which it is the function of culture to remove—where it can. It will never do that where the ideal is the thing made easy.

The psychological springs of this hostility are not far to seek. The mass can never grant that there is something superior to its habitus and its way of conduct. For as soon as it grants the existence of such, it is under a theoretic discipline. The mass is a jealous sovereign. Those who challenge it from a superior level it seeks to destroy with the ad hominem attack. It is daily verifiable that in a culture so maintained, the best rewarded of those who work in the arts are soothers and entertainers.

A secondary problem posed by the aesthetic plebeianism is the impossibility of maintaining a meaningful criticism. Obviously this aesthetic can never circumvent the criterion of popularity. It finds itself always in the tautologous position of saying that because a thing is popular, it is good; and because it is good, it is popular.

Art criticism is here in the same dilemma as political democracy when the latter sets up the voice of the people as the voice of God. Either it must accept its own proposition and say that the people is infallible, and can never for one minute, or in one action, go wrong; or else it must yield its whole position. If one admits that the people can even for a minute be deluded; that is to say, that one man or one minority can be right for a minute and the people wrong, then he admits the existence of a right that is not determined by the people. I feel this to be so important that I shall try to put it in another way. The moment one grants that the people can sometimes err, even temporarily, even when bamboozled by demagogues or the press, he has scuttled the thesis of the popular determination of truth. For he has already admitted that the people may be one thing and the truth another, and this could never be if popular opinion were the sole determinant of what is true.

Now when we apply this finding to the humanities in a mass society, the same interesting thing is revealed. Either popular impression is infallible, and the people are the only judge of what they should have, or else one must admit the existence of an independently grounded aesthetic. As soon as the latter is admitted, however, the beautiful and the non-beautiful become constants, and there is something superior to the popular taste, which may be applied to it. But I fear the mass is too intractable an animal to grant these existences after it has sensed the way they are tending.

Put into language, its denial seems to take this form: it does not matter if we disdain the moral earnestness of Christianity; it does not matter if we refuse to think with the clarity of the Greeks; it does not matter that we cannot dramatize with the success of the Elizabethans; it does not matter if we fall below the eighteenth century in elegance of manner. It does not matter? I suppose one can argue here only by begging the question and saying that it is blasphemy not to prefer the good and obey its commandments. And possibly it is as much as we can do about the condition of modern man to say that he is blasphemous. In the past he has blasphemed idols that were set up for him; and now he blasphemes those which he set up for himself when he repudiates the humanities.

The second difficulty may be, at some deeper level, the source of the first. As a teacher of humanities, I have grown disturbed over an attitude which is appearing in students, including those with some endowment of sensibility. I could describe it briefly by calling it a distrust of all rhetoric. The great passages of the past, the flights of Milton, of Burke, of Arnold, are lost upon them; and they show an active distrust of contemporary matter which is rhetorically presented. The power of language to stir, or to direct the feelings of man, seems only to provoke them to an antagonism. This has gone so far that the once-familiar rhetoric of pulpit and platform is beginning to seem an anachronism. Two different interpretations can be put upon this development.

The first is that the new generation has become scientific-minded and is insisting upon pure notation in all discourse. That is to say, it has accepted the advice of the semanticists and has resolved to have no traffic with words whose objective reference is dubious. They are impatient of anything which lacks the objective correlative, and so when language passes from a sort of literal correspondence with what is signified, to metaphor, as all rhetoric must, they simply cease to accept. Since they cultivate the scientist’s detached outlook upon the world, emotion is for them mere disturbance in what ought to be clear communication. Pure notation will give them knowledge in the same way that mathematics does, or nearly so. And as for making up their minds about how to feel about a thing, well, that can wait—perhaps upon the development of yet another science.

The second interpretation, which I believe to be the true one, is that our generation is losing faith in the value of value. It will appear on a moment’s reflection that this is the same as losing faith itself. Ours is not so much a generation of vipers as a faithless generation. Since the whole of humanistic study is based upon the acceptance of value, here is where the decay has its source. People have suffered much in the past decades, and they have not often been told the truth by their political leaders. It may be that there has set in as a defense a kind of psychic numbness. Since all feeling brings imposition in its train, there is a will not to feel. (I have noted among more than one student a kind of shrinking from propaganda as though it were a dreaded plague loose in the world—which in a way it may be.) Now we approach the ultimate in disenchantment.

Here would be cause for rejoicing if it were possible for man to live in a devalued world, but man is simply not that kind of animal. He has got to show his inclinations. And with the death of value there is every possibility that he will do it in grotesque, unintelligible ways, in fetishism and explosions of hard feeling, in demonism and vandalism. There is not the slightest possibility that he is less a creature of feeling than before. But the old gods have gone and the new gods have not arrived. It may be that in the interim he will turn into an idol smasher. The humanities seem high on the list of the things he will rudely reject, or allow to drift into obscurity. I fear that this is the meaning of the hatred of the old spacious rhetoric, with its tendency to elevate all that is described.

Most surveys of the plight of the humanities I have seen fall into wishful conclusions.

One supposition is that the colleges will be able to save them by a reform of curriculum. In response to this we see the inauguration of courses in general education. But this seems to be in essence only a streamlining. The courses are recast, made more compact and better integrated. The new conception, however, is hardly a discipline in the humanities such as used to season the graduates of our universities. It may easily degenerate into another requirement like the ubiquitous English composition. The intention is good, of course, but the hope is not great. There was a time when a cultural education was income-producing for the legions that take it, and that means inevitably a different kind of education. Statistics on what the returned veterans have studied in our universities will prove the point.

Or it is supposed that larger grants to this and that will restore the balance. These will be gratefully received, and they will help, but it is sanguine to suppose that they will restore the balance in a displacement so huge as the one taking place before our eyes. I have already shown that public sources of such grants have a very limited independence and could not long survive political attack. A grant to the humanities today is like a contribution to a church whose doctrines we have no thought of honoring with practice. I doubt that anything large and vigorous can be sustained on this.

Teachers of the humanities are going the way of teachers of Latin and Greek and elocution unless we have something like a Second Coming of faith in the values.

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Reflections on the Loss of Liberty

GEORGE J. STIGLER*

THE CONSERVATIVES have been in high alarm at the encroachments on liberty by the state for at least 30 years. It would be possible to amass a volume of ominous predictions on the disappearance of individual freedom and responsibility, and not by silly people.

Yet if we canvass the population we shall find few people who feel that their range of actions is seriously curtailed by the state. This is no proof that the liberties of the individual are unimpaired. The most exploited of individuals probably does not feel the least bit exploited. The Negro lawyer who is refused admission to a select club feels outraged, whereas his grandfather was probably a complaisant slave. But neither is complacency a proof of growing tyranny.

So let us look at what liberties, if any, the typical American has lost in the recent decades of growing political control over our lives. Let us face this American as he completes his education and enters the labor force. Of what has he been deprived?

Some additional barriers have been put in the way of entrance into various occupations. Some barriers consist of the direct prescription of types of training; for example, to teach in a public school one must take certain pedagogical courses. More often, the state imposes tests—as for doctors and lawyers and barbers and taxi drivers—which in turn require certain types of training in order to be passed.

But few people consider such restrictions on occupations to be invasions of personal liberty. The restrictions may be unwise—those for school teachers are generally so viewed by the university world—but since the motive is the protection of users of the service, and since the requirements are directed to competence even when they are inefficient or inappropriate, no question of liberty seems involved. No one, we will be told, has a right to practice barbering or medicine without obtaining the proper training. The freedom of men to choose among occupations is a freedom contingent on the willingness and ability to acquire the necessary competence. The mentally and physically untalented man has no inherent right to pilot a commercial plane, or any other type.

For consider: we surely do not say that a man born with weak or clumsy legs has been denied the portion of his liberty consisting of athletic occupations. At most a man is entitled to try to enter those callings which he can discharge at a level of skill which the community establishes.

“Which the community establishes.” The obverse of the choice of occupations is the choice of consumers. It can be said that the denial of my right to patronize lawyers or doctors with less preparation than the majority of my fellow citizens deem appropriate is the complementary invasion of my liberty. Why should the community establish the lowest levels of skill and training with which I satisfy my needs?

The answer is, of course, that on average, or at least in an appreciable fraction of cases, I am deemed incompetent to perform this task of setting standards of competence. I am, it is said, incapable of distinguishing a good surgeon from a butcher, a good lawyer from a fraud, a competent plumber from a bumbler, and so on.

Now one could quarrel with both sides of this position: neither has my own incompetence been well demonstrated (especially when account is taken of my ability to buy gurantees of competence) nor has anyone established the ability of other judges to avoid mistakes or at least crudity of judgment. But these are questions of efficiency much more than of justice, so I put them aside not as unimportant but as temporarily irrelevant.

The real point is that the community at large does not think a man should have the right to make large mistakes as a consumer. The man who cannot buy drugs without a prescription does not really rebel at this undubitably expensive requirement. The man who is denied the services of a cheaper and less well trained doctor or teacher does not feel that he has been seriously imposed upon.

THE CALL TO the ramparts of freedom is an unmeaning slogan in this area. If we were to press our typical American of age 22, he would tell us that some infringements on his liberties would be intolerable, but they would be political and social rather than economic: free speech should not be threatened—at least by McCarthy—and Negroes should not be discriminated against. No economic regulation of consumers would elicit serious objection, and this younger person would often be prepared to go even farther in regulating consumers in areas such as health and education. We would have to propose policies remote from current discussion, such as compulsory location of families to hasten racial integration, before we should encounter serious resistance to public controls in principle.

Governmental expenditures have replaced private expenditures to a substantial degree, and this shift poses a related problem to liberty. The problem seems less pressing because private expenditures have increased in absolute amount even though public spending has risen in this century from perhaps 5 to 25 per cent of income. Yet the shift has been real: we can no longer determine, as individuals, the research activities or dormitory construction of universities, the housing of cities, the operation of employment exchanges, the amount of wheat or tobacco grown, or a hundred other economic activities. But again the typical American finds each of these activities worth while—meaning that he thinks that the activity will not be supported on an adequate scale by private persons.

ON A CLOSER VIEW OF THINGS, some restrictions on individuals as workers will strike most Americans as unfair, especially if they are presented as indictments. Complaints will be aroused by a demonstration that political favorites have been enriched by governmental decisions which excluded honest competitors—and of course this can be demonstrated from time to time, or perhaps more often. The complaint, however, will involve equity much more than liberty.

This conclusion, that Americans do not think that the state presently or in the near future will impair the liberties that a man has a right to posses is, of course, inevitable. It is merely another way of saying that our franchise is broad, our representatives will not pass laws to which most of us are opposed, or refuse to pass laws which most of us want. We have the political system we want.

The conservative, or traditional liberal, or libertarian, or whatever we may call him, will surely concede this proposition in the large. He will say that this is precisely the problem of our times: to educate the typical American to the dangers of gradual loss of liberty. One would think that if liberty is so important that a statue is erected to her, the demonstration that a moderate decline of personal freedom leads with high probability to tyranny would be available in paperback at every drugstore. It is not so easy to find. In fact, it may not exist.

That there have been many tyrannies no one will dispute, and indeed it is at least as easy to find them in the twentieth century as in any other. Moreover, the loss of vital liberties does not take place in a single step, so one can truly say that a tyranny is entered by degrees. But one can easily reverse this truism and assert that some decrease in liberties will always lead to more, until basic liberties are lost. Alcoholics presumably increase their drinking gradually, but it is not true that everyone who drinks becomes an alcoholic.

THE NEAREST APPROACH to a demonstration that the tendency of state controls to increase beyond the limits consistent with liberty is found in Hayek’s Road to Serfdom. But Hayek makes no attempt to prove that such a tendency exists, although there are allegations to this effect.1 This profound study has two very different purposes:

(1) A demonstration that comprehensive political control of economic life will reduce personal liberty (political and intellectual as well as economic) to a pathetic minimum.

I may observe, in passing, that this argument seems to me irresistible and I know of no serious attempt to refute it. It will be accepted by almost everyone who realizes the import of comprehensive controls.2

(2) If the expansion of control of economic life which has been underway in Britain, the United States, and other democratic western countries should continue long enough and far enough, the totalitarian system of Nazi Germany and Fascist Italy will eventually be reached.

This second theme is not an historical proposition—and no historical evidence was given: it is the analytical proposition that totalitarian systems are an extreme form of, not a different type from, the democratic “welfare” states to whom the book was addressed. Hayek was telling gentlemen drinkers, and especially some Englishmen—who were becoming heavy drinkers, not to become alcoholics.

The twenty-five years that have passed since the outbreak of World War II have seen further expansions of political control over economic life in the United States, and in most western European nations except Germany. Yet no serious diminution of liberties deemed important by the mass of educated (or uneducated) opinion has taken place. Another hundred years of governmental expansion at the pace of these recent decades would surely destroy our basic liberties, but what evidence is there that such an expansion will continue? Quite clearly, no such evidence has been assembled.

IT IS ONE THING to deny that evidence exists for the persistence of present trends to where they will endanger our liberties, and quite another to deny that such a momentum exists. Or, differently put, where is the evidence that we won’t carry these political controls over economic life to a liberty-destroying stage?

This may be an impeccable debating point, but it will carry much less conviction than an empirical demonstration of the difficulty of stopping a trend. When men have projected the tendency of a society to a distant terminus, they have invariably committed two errors. The tendency develops in a larger number of directions than the prophet has discerned: no tendency is as single-minded as its observer believes. And the tendency encounters other and contradictory forces in the society, which eventually give the course of events a wholly different turn. We have no reason to believe that the current prophets are any wiser.

SO I CONCLUDE: we should either fish or cut bait. On the subject of liberty the conservative should either become silent, or find something useful to say. I think there is something useful to say, and here is what it is.

The proof that there are dangers to the liberty and dignity of the individual in the present institutions must be that such liberties have already been impaired. If it can be shown that in important areas of economic life substantial and unnecessary invasions of personal freedom are already operative, the case for caution and restraint in invoking new political controls will acquire content and conviction. We cannot scare modern man with incantations, but we can frighten him with evidence.

The evidence, I think, will take a variety of forms:

1. A full study of the barriers of men to entry in occupations, and of the extent to which the barriers can be defended on social grounds, will demonstrate, I believe, that the area of occupational freedom has been seriously restricted simply for reasons of ignorance, or special interest. If this is correct—if the present practices will not bear close review—the danger of further extensions of such barriers will be substantially reduced.
2. The widespread belief in the incompetence of the individual and the efficacy of economic censorship of tastes is the second large area of potential invasion of personal freedom. This development has surely not benefited from close study: it has happened that errors of judgment or deficiencies of knowledge of a tiny fraction of consumers have led to restraints being imposed on all consumers, without even checking what gains are achieved by the censorship. My own study of the S.E.C., indeed, reveals a clear instance of where the gains are not worth the cost. If consumers are wiser than the public believes, and if political intervention is not infallible and economical, we shall be better able to stop future invasions of the consumer’s freedom.

I do not know whether justice is more or less important than liberty, or whether they are even fully separable. The standards of justice under political direction of economic life, I conjecture, are deplorably low:

3. The state is now the giver of many valuable rights. The favorites get TV channels, or oil import quotas, or F.D.I.C. charters, or leases on federal grazing lands, or N. Y. state liquor store licenses, or waivers from the local zoining board. Who has studied the bases on which these favors are allotted? I suspect that a careful study would display vast caprice, much venality, and a considerable number of calluses on applicants’ knees and navels. The harshness of competition may mellow somewhat in public repute when alternative systems of distributive justice are studied.

Studies of the types here proposed will, I am reasonably confident, give vitality and content and direction to fears for liberty in our society. But whether the studies confirm the need for reform and vigilance in preserving freedom, or suggest that such fears are premature, they are essential to remove this subject from the category of cliché. It is no service to liberty, or to conservatism, to continue to preach the imminent or eventual disappearance of freedom; let’s learn what we’re talking about.

The Fusionists on Liberalism and Tradition

RALPH RAICO*

THE PUBLICATION OF a symposium on the question, “What is conservatism?”1 provides us with an opportunity to explore once again a complex of issues frequently raised in these pages—that having to do with the differences between libertarianism and conservatism. In this article, I shall not attempt to deal with all of the areas covered by these differences, nor with the essays of all twelve contributors to Meyer’s symposium. Instead, I shall deal merely with certain aspects of the attempted reconciliation of the two philosophies that goes by the name of “fusionism.”

Frank S. Meyer and M. Stanton Evans are the two most notable exponents of the fusionist position, and they present their case in two essays in the present volume.2 The problem they are trying to solve may be stated in this way: the term “conservative” when applied to various writers in America today (especially when applied by social democratic writers, who usually have little familiarity with the literature) appears, on closer examination, to be equivocal. The authors of the following two statements, for example, although they are both sometimes considered “conservatives,” clearly have widely divergent approaches to so basic a question as the nature of government:

In mankind’s experience, government has always figured as an institution publicly representing shared insights into the meaning of life, God, man, nature, time.3

Society cannot exist if the majority is not ready to hinder, by the application or threat of violent action, minorities from destroying the social order. This power is vested in the state or government. . . . Government is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisonment.4

There are, in fact, as Meyer and Evans point out, two distinct groups of writers which the term “conservative” in its current sense encompasses: those whose intellectual forebears are to be found chiefly in the ranks of the classical liberals of the 18th and 19th centuries (this group would include Hayek, Friedman, von Mises, etc.), and those who trace their ideas back primarily to Burke and the 19th century conservatives (Kirk is the best-known representative of this group, which also includes others associated with National Review and Modern Age). The first group is called by Meyer the “libertarians,” and the second the “traditionalists.” Often libertarians and traditionalists attack one another vigorously, and some in each camp have even maintained that the two view-points are fundamentally at absolute odds. It is true that members of the two factions very often have had similar opinions on questions of immediate political importance (which is one of the chief reasons why they are looked on as factions of one movement), but anyone who has read the works of the two groups is aware that there exist significant differences on a more basic level. These have to do with such matters as the weight given to tradition, the arguments used for freedom, the priority allowed freedom as against other values (order, virtue, and so on), as well as with (as the quotations from Niemeyer and von Mises show) what I am afraid we may have to call the “philosophical presuppositions” of the two view-points. The imposing task the fusionists have undertaken, then, is to resolve the differences between libertarians and traditionalists—and this by showing that both have something of fundamental value to contribute to a common “conservatism” (for that is to be the name of the amalgamated movement), and that both are likewise at fault in certain respects.

WHAT THE LIBERTARIAN (or classical liberal) has to offer, the fusionists maintain, is a good understanding of the meaning of freedom, of the dangers facing it, and especially of the connection between economic and other forms of freedom. He is mistaken, however, in disregarding “value” and the moral law, and in having no understanding of the goal and raison d’être of freedom, which is “virtue.” The traditionalist, on the other hand, is the complimentary figure to the libertarian, and brings to the synthesis a—as the phrase goes—deep commitment to moral value, to virtue and so on. Moreover, he understands the part that tradition must play in the life of society, while the libertarian typically “rejects tradition.” Thus, the stage is set for the synthesis, which will consist in a political philosophy developed on the basis of “reason operating within tradition,” and upholding freedom as the highest secular end of man and virtue as the highest end of man tout court.

It will be seen that anything approaching an exhaustive critique of this thesis would be impossible here.5 What I shall attempt to do, therefore, is simply to clear some ground by examining certain points in the fusionist thesis, with the aim of helping to provide the basis for a more analytical and less rhetorical discussion of these issues than has sometimes been the case in the past.

Before one can determine to what extent, if any, classical liberalism6 must be modified, it is absolutely crucial, of course, for one to have a correct conception of what classical liberalism means. It appears to me, however, that in this regard, conservative and fusionist writers, while quite dogmatic, are also quite mistaken. As a rule, they are in the habit of treating liberalism in a casual, off-handed way, scarcely ever bringing forward any actual evidence to substantiate their rather free-swinging claims. At the risk of seeming unfair to M. Stanton Evans—which is certainly not my intention—I shall submit his conception of classical liberalism, which appears to me fairly typical of this view, to an extended analysis.

Evans states:

The libertarian, or classical liberal, characteristically denies the existence of a God-centered moral order,7 to which man should subordinate his will and reason. Alleging human freedom as the single moral imperative, he otherwise is a thoroughgoing relativist, pragmatist, and materialist. [p. 69]

In this amazing statement, Evans asserts the following concerning the “typical” classical liberal or libertarian:

(1) he denies the existence of a God-centered moral order;8
(2) he alleges human freedom to be the single moral imperative;
(3) aside from (2), he is a complete relativist, pragmatist, and materialist.

Let us deal with these allegations in detail.

(1) This is false, of course, in regard to the many liberals who were Christians (e.g., Ricardo, Cobden, Bright, Bastiat, Madame de Stael, Acton, Macaulay, etc.).9 Indeed, many classical liberals (including present-day ones) have felt that the connection between their political and their religious and ethical views has been a very intimate one. Frédéric Bastiat, for instance, who, because of his “superficiality” and “glib optimism” is sometimes taken to be the very paradigm example of a classical liberal, expressed himself as follows towards the end of one of his more important works:

There is a leading idea which runs through the whole of this work, which pervades and animates every page and every line of it; and that idea is embodied in the opening words of the Christian Creed—I BELIEVE IN GOD.10

John Bright was the man who, with Cobden, and for twenty years after Cobden’s death, was the leader of the Manchester School in British politics and political and economic thought—surely a typical liberal, if there is such a thing. Yet the following characterization of Bright, by his most authoritative biographer, hardly seems compatible with Evan’s description:

Religious feeling, in its simplest form, was the very basis of his life. He was always a Friend [i.e., Quaker] before everything else; and a servant of God; a man of deep, though ever more silent devotion.11

Although Christians were probably, and theists certainly, in the majority, it is true that a certain number of liberals were atheists or (much more frequently) agnostics: J. S. Mill, Herbert Spencer, John Morley, etc. Nevertheless, the following points ought to be made: (a) the denial of a “God-centered moral order” has been no more characteristic of classical liberalism than its affirmation; (b) even if a majority of liberals had been atheists and agnostics, the connection is so far accidental and historically-conditioned, and not logical; (c) supposing the majority of liberals to have been tainted with unbelief in one form or another, Evans still presents no reasons for dismissing the liberalism of Christian writers like Bastiat.

(2) The second charge—that the classical liberal or libertarian alleges “human freedom as the single moral imperative”—can hardly be seriously meant. Does Evans mean to say that liberals characteristically do not believe benevolence, or even lack of malice, to be morally enjoined on men? This cannot have been true of the many Christian liberals, and neither was it the case with the non-Christians, least of all the Benthamite utilitarians among them. Evans mentions only two names in connection with his general description: J. S. Mill and Herbert Spencer. Spencer explicitly states that, in addition to justice (respect for the rights of others), the moral code enjoins both “negative” and “positive” beneficence, the latter being the capacity to receive happiness from the happiness of others.12 This may not be an especially elevated view of our moral obligations, but it is nonetheless sufficient to contradict Evans’ statement, at least in regard to one of the only two writers he mentions by name. But the statement is even more erroneous in regard to the utilitarian liberals. J. S. Mill makes their position clear in his well-known essay, “Utilitarianism”:

I must again repeat what the assailants of utilitarianism seldom have the justice to acknowledge, that the happiness which forms the utilitarian standard of what is right in conduct, is not the agent’s own happiness, but that of all concerned. As between his own happiness and that of others, utilitarianism requires him to be as strictly impartial as a disinterested and benevolent spectator. In the golden rule of Jesus of Nazareth, we read the complete spirit of the ethics of utility. To do as you would be done by, and to love your neighbor as yourself, constitute the ideal perfection of utilitarian morality.13

Far from being “characteristic” of classical liberalism, (2) is an attribute for which I doubt that a single example could be found in the whole history of liberalism.

(3) EVANS GIVES US virtually no idea of what he might mean by these three highly-charged terms, “materialist,” “relativist,” and “pragmatist,” so we will have to deal with them as best we may.

“Materialist” may have a precise philosophical, or a loose vulgar, meaning. Taken in the first sense, the assertion would be absurd: if any metaphysic were characteristic of liberalism, it would probably be idealism in one form or another, not materialism. Taken in the vulgar sense of addiction to, or espousal of, “material” (usually sensual) pleasures, the assertion is also invalid. It is, indeed, hardly worth rebutting, since to support this allegation, Evans only adduces a statement by—Ernest Renan. We might as well point out, however, that, even ignoring the fact that “materialist” is scarcely a fair description of Bentham’s form of hedonism, and certainly not of J. S. Mill’s, the German liberals of the Classical period—e.g., von Humboldt and Kant—and the French liberals of the Restoration—e.g., Constant and Madame de Stael—assuredly had ideas on ethics and the destiny of man independent of any form of the pleasure philosophy.

In Evans’ view, the liberals were also typically “pragmatists.” Whether this is supposed to mean that they were followers of Peirce and William James, or, in some looser sense, that they believed that the truth was “what works,” is unclear. It would be tedious to attempt to salvage this claim by lending it some semi-reasonable meaning, and then showing that even then it had no foundation in fact. The rebuttal of the assertion, therefore, will wait upon its being given some sense.

Evans also claims under (3) that the liberals, aside from their adherence to freedom, have been complete “moral relativists.”14 This brings up an issue which is frequently raised by conservatives: often, the essence of the “moral crisis of our age” is seen in the decline of faith in “absolute values.” It should be clear that the question of moral relativism vs. moral absolutism cannot even be intelligently approached until we know what is to be understood by these terms, but conservatives, in discussing the subject, generally fail to indicate their meaning. In general philosophical discussion, the most important senses of the term “moral relativism” appear to be: (a) the idea that moral rules are defeasible, i.e., are not unconditionally valid; and, more frequently, (b) the idea that “it is logically possible for two persons to accept verbally conflicting ethical statements without at least one of them being mistaken.15

(a) The idea that moral rules must be absolute in the sense that they are binding under all empirically possible conditions appears to be a sense in which conservatives often use the term. And yet it seems to me hardly a defensible position. Is it, after all, possible to cite a single moral injunction with content (not, e.g., “It is good to do the Will of God”) and with application to social questions (not, e.g., “It is good to love God”) which is unconditionally valid? Would it, for instance, be impermissable under all possible conditions to take the life of a man whom one knows to be innocent? It seems to me that circumstances could well be imagined in which this would be the reasonable—possibly even the moral—thing to do. Whether or not supported by classical liberals, moral absolutism in this sense appears to me to be an untenable position, the rejection of which cannot rightfully be made the grounds for censuring anyone.

(b) The more common sense of “moral relativism” is the position that it is possible for what appear to be contradictory ethical statements to be true at the same time. A relativist in this sense might hold, for instance, that ethical statements are simply reports of the speaker’s subjective feelings, and, therefore, the statement, “Murder is evil,” may be true or false, depending on the actual feelings of the person who uttered it. Another form of this second sense would be that of a relativist who might hold that it is impossible to make ethical judgments transcending the bounds of different societies, and that an ethical statement may be “true” in one society and “false” in another. In this sense of relativism, however, the utilitarians (to take the group Evans probably has chiefly in mind) were almost paradigm absolutists. The reason for this is obvious. For any given situation in which an ethical judgment is to be made, the facts are what they are: one decision will maximize happiness, while a different one will not maximize it.16 Thus, although we may be mistaken in our decision, still, in principle, there is only one true judgment in each ethical situation.

Thus, of the two most important senses of “moral absolutism,” one is a sense in which, whatever the liberals may have thought, it cannot reasonably be defended; the other is a sense for which many adherents of moral absolutism can be found among the classical liberals.

I HAVE SPENT a good deal of time—and probably the reader’s patience as well—in discussing these two sentences. But my justification lies primarily in the circumstance that these statements well summarize the inaccurate conception—“impression” would perhaps be a better word—of classical liberalism which many conservatives hold and propagate. It may well be that classical liberalism is superficial, unrealistic and obsolete; apparently modern-day conservatives are eager to join most of the rest of the 20th century in announcing so. But before we can accept this evaluation—and with it the idea that liberalism must at least be substantially modified—we must be satisfied, as so far we cannot be, that it is really classical liberalism which has been demolished, and not a strawman.

NOW I WANT TO turn my attention to one of the chief problems which Meyer’s and Evans’ fusionism must attempt to solve: that of tradition. The role of tradition is often seen as the crux of the division between the two wings of what is allegedly basically one movement; the traditionalists, not unnaturally, emphasize tradition, while the libertarians are said to reject it. But just what is at issue here would be much clearer if, instead of scornful references to the French Revolution and the “apotheosis of reason,” conservative and fusionist writers had outlined, in a more or less systematic way, what they have in mind when they speak of “tradition,” and what they claim for it and why. Nowhere is lack of precision in this whole area more regrettable than in the repeated assertion that the classical liberals “reject tradition.” The rejection of tradition can mean many different sorts of things, and depending on what is meant, it may be a good or a bad thing.

If it means, for example, that the traditionality of an idea is not to be taken by the political philosopher as an argument for its truth, then the rejection of tradition, as far as I can see, is totally unobjectionable. For to defend the truth of an assertion on the basis that it has been the traditional belief of our society, presupposes that any belief that has been traditionally accepted by our society is very likely to be a true one. But contrary examples are available in too great an abundance to permit of any confidence in such a premise. Thus, recourse to tradition in abstract, speculative argument is invalid.

On the other hand, when we say that a person accepts tradition, we might mean that he believes that tradition ought to play a large part, not in the evaluation of putative truths, but in the functioning of society, which is obviously a different thing. Here a person might argue along these lines: science is one thing, and life another. A systematic Cartesian doubt may be useful in the scientific enterprise, but, applied to social life, it would make mankind like “the flies of summer.” It is necessary for the continuance of society, it could be argued, that a good deal of our moral code, for instance, be taken simply on faith, at least by the great majority of people, and probably by everyone. It would be intolerable to have the existence of organized society depend on each individual arriving at the indispensible moral rules through his own reasoning. Thus, there must be some means of attaching people to these rules. One of the most powerful of these means, the argument might continue, is tradition. People who could not follow the abstract arguments for the moral code nevertheless obey it, because of the affection and regard surrounding mores which have been adhered to for a very long time. Now, this is a plausible argument, and may well be substantially correct. The important thing to realize, however, is that it involves something completely different from maintaining the truth of a given assertion on the basis of its traditionality.

Now, the second category may be further subdivided: there are traditions that are maintained in the social sector (typically the sector of free interaction among individuals) and there are traditions pertaining to the government sector (typically the sector of force or the threat of force). An example of traditionality in the social sector would be the continuance of Christianity in its received forms as the result of the private decisions, habits, etc., of people; an example in the realm of governmental activity is (or was, 200 years ago) the continuance of the persecution of Protestant “heretics” in France, Spain, etc.—that is, a tradition involving violent interference with the peaceful actions of individuals. Now a classical liberal may be an atheist, or he may be a Christian, or he may hold some other position on this question. If he is an atheist, it is likely that he will personally disapprove of the continuance of Christianity as the freely-accepted religion of individuals; his private opinion is likely to be that people would be more happier, more rational, or whatever, if they abandoned Christianity. If the classical liberal is a Christian, then presumably he will be pleased to see the continuance of the tradition of Christian belief. Thus, on this question concerning a tradition in the social sector, liberals may have various personal views of their own, but liberalism itself has no policy recommendations to make whatsoever; does not, in fact, concern itself with the matter. How does it stand with the second sort of traditional arrangement, that pertaining to the government sector?

Here, before we can answer this question, we are compelled to make yet another distinction (and, as regards the libertarian-conservative controversy, possibly the most important one to be made), there are some traditional governmental arrangements which involve interference with the basic rights of the individual—the persecution of Protestants in France under the Old Régime, for example. Others, however, pertain to the structure of the government itself, and may not, in the first instance, have anything to do with individual rights at all, as, for example, a traditional adherence to bicameralism. In the case of the first sort of traditional governmental arrangement, the classical liberal characteristically and by the logic of his principles recommends the abolition of the tradition, i.e., recommends that the government cease doing certain things. With regard to this category, then, the liberal may be said to “reject tradition”—that is, he holds that the traditionality of the arrangement can be no argument in its favor. It must be tested against certain standards, and, if it is found wanting, steps must be taken towards its elimination.

The case is different with the second sort of traditional governmental arrangement: that pertaining to the structure of government itself, as, for example, the extent and conditions of the franchise, and the form of the government (constitutional monarchy, republic, etc.). Such issues do not involve basic individual rights, in the sense that religious freedom and freedom from involuntary servitude are basic. Their function, from the liberal point of view, is to aid the preservation of the basic rights, and they may therefore vary to a great extent, depending on time and place. As Edouard Laboulaye, probably the outstanding French liberal of the later 19th century, put it:

Whatever may be the epoch or the country, whatever the form of government or the degree of civilization, every man has the need to exercise his physical and spiritual faculties, to think and to act. Russian or Englishman, Frenchman or Turk, every man is born to dispose of his person, his actions and his goods. . . . With political liberties it is not the same; they change according to the time and country. One does not always have need of the same guarantees [of liberty]; as the form of attack varies, so does that of the defense.17

TO SUMMARIZE OUR rather rough classification of the senses of tradition (which is offered, with some trepidation, as a tentative basis for discussion):

I. tradition in scientific and philosophical discourse: the traditional acceptance of a truth claim may be adduced as evidence in support of the claim;
II. tradition in the functioning of society: the traditionality of a societal arrangement may be adduced as good reason for continuing the arrangement. This may apply either to:
- A. the social (non-governmental) sector, i.e., to traditions not involving government action, or to
- B. the governmental sector. Under B we have
  - I. political traditions violating basic individual rights, and,
  - II. political traditions (primarily those having to do with the structure of government itself) which do not violate basic individual rights.

In considering the differences between libertarianism and fusionism (as well as conservation), I would locate the significant and challenging disagreement regarding tradition primarily under II A. That is, while classical liberalism as a rule restricts itself to attempting to secure individual rights by operating on the government sector (and in this endeavor may well make use of traditional political elements), fusionist and conservative writers claim that certain traditions within the social sector must often be regarded as necessary conditions for the preservation of liberty and ought to be actively cultivated and promoted by all supporters of a free society. This is especially true, in their view, of religion. The idea is suggested at times by Meyer and Evans, and is put succinctly by Stephen Tonsor, in his interesting essay, “The Conservative Search for Identity,” in the present volume:

Religion is important to the democratic state not only because it preserves the fabric of society but also because it acts as the most important power to check the aggressive, centralizing, and totalitarian tendencies of the modern state, without a strong religion, which remains outside and independent of the power of the state, civil liberty is unthinkable. The power of the state is, in part, balanced and neutralized by the power of the church. The freedom of the individual is most certain in that realm which neither church nor state can successfully occupy and dominate. [p. 150]

This represents, of course, a historical and sociological hypothesis concerning an alleged casual connection between religion and freedom. If true, it could indicate that certain policy recommendations might be in order which libertarianism would tend to frown on (Tonsor himself maintains that tax money ought to be used to support church schools). In any case, it is a thesis which ought, I think, to be elaborated and critically and dispassionately examined, for it appears to me to be the most interesting and the most plasible of the fusionist claims.

This is only one of a number of important issues raised by fusionism which it is impossible to go into here. The claim that libertarians believe in the “innate goodness of man,” and err in ignoring the reality of “original sin” (whatever might be meant by these two notions) is also one that should sometime be submitted to critical examination, if only because it is so often advanced. More important would probably be a discussion of the principle aim of fusionism: in place of our support of a free society for all our various ends (or simply for itself), to substitute support of it because it is a means to one particular end, namely “virtue,” in whatever sense Meyer and Evans attach to the term.

Finally, it should be evident that none of what has been said here is to be taken as indicating hostility or rancor towards the authors whose writings have been discussed. In contrast to a number of conservatives, Meyer’s and Evans’ real concern for freedom is obvious. And that their intentions are good ones is evidenced by the statement of Meyer:

. . . the development of a common conservative doctrine, comprehending both emphases [traditionalist and libertarian]—cannot be achieved in a surface manner by blinking differences or blurring intellectual distinctions with grandiose phraseology. [p. 18, ital. added]

Certainly, a true and important judgment. It is unfortunate that, in the heat of battle it is too often forgotten.

H. L. Mencken and The American Hydra

WILLIAM H. NOLTE*

H. L. MENCKEN’S major complaint with the nation at large may be reduced to one often repeated lament: America is without an intellectual aristocracy that would give it direction and order. This absence of an intellectual class free to inquire and interpret, to act on its own prerogatives, to function autonomously without regard for the opinions of the mass also explains, in large part anyway, Mencken’s disapproval of democracy. Like many another artist—Melville comes at once to mind—Mencken was unable to reconcile democracy with order. And it was order that prevented man from running amuck in chaos. Moreover, it was order, or form, that gave universality to art. The modern democratic state resembles nothing more than the drunken beggar on horseback, riding off in all directions. Though it is impossible, and not even wholly desirable, to prevent that beggar from doing as he jolly well wishes, Mencken did attempt rather successfully to slow him down and make him sit up in the saddle as if he were sober. This service was performed by attacking one of the most virulent outgrowths of democracy: Puritanism. (I should explain that I use the word democracy—which by now is perhaps without any specific meaning—as the antonym of aristocracy.)

Mencken performed, broadly speaking, two major services for the national letters: he led the attack on Puritanism, which had crippled the artist in America for generations; and he gave great aid to a large number of the best writers America has produced.

Down to the 1920’s in America, the “master” of the arts had things pretty much his way. He was powerful, he was confident, he was popular. He was the proud descendant of Puritanism in its narrowest sense. He still violently objected to anything that smacked of heresy; especially did he object to the modern-day Maypole dancers. He represented the “moral viewpoint,” the “closed vision,” the “narrow outlook”—call it what you will. This ogre haunting the dreams of honest writers had over the years taken many shapes in the daylight world of actuality. In the first two decades of this century, the Puritanical restrictions were upheld in art by a class of men—the academicians; and by a philosophy—the so-called New Humanism. Moreover, the stronghold of Puritanism in the social realm had moved from New England to the South. Mencken’s criticism of the professor, of the New Humanist, and of the South is of one cloth.

THE FOUNDING FATHERS of New England came to America to establish one particular type of freedom—the freedom to enforce their own narrow beliefs without any deviations.1 Indeed, one of the first things the college student learns in a course on early American literature or history is that the concept of the Pilgrims which he acquired from high school must be radically revised. It is really an example of unlearning, which is the most powerful of all antidotes to the conditioned mental reflex, to superstition, and to prejudice. In Europe the Puritans had been persecuted largely because they were public nuisances, malcontents unable or unwilling to live and let live, similar in many ways to the God-crazy Anabaptists who were wont to run through the streets naked and howling to the invisible powers and principalities of the air. Only in a land uninhabited by civilized man could the Puritan hope to set up his peculiar kingdom of God. In America he had to contend only with the Indian, who was an easy prey for the sharp-trading, vindictive Puritan. In his book article for December, 1921, of the Smart Set, Mencken took to task those historians who credited the Puritans with the invention of most of the liberal institutions and ideas, such as they were, in America. (Mencken, incidentally, was in the forefront of those who, in the 1920’s, called for new and realistic appraisals of the American past.) “There is not a single right,” Mencken wrote, “of the citizen of today, from free speech to equal suffrage and from religious freedom to trial by jury, that [the Puritans] did not oppose with all their ferocious might.” Actually, as Mencken pointed out then, and as we now know for certain, it was the non-Puritan immigrants to New England who were responsible for overthrowing the Puritan and setting up free institutions in the country.

To [the anti-Puritans] we owe everything of worth that has ever come out of New England. They converted the sour gathering of hell-crazy deacons into the town-meeting; they converted the old pens for torturing little children into public-schools; they set up free speech, free assemblage, a free press, trial by jury, equality before the law, religious freedom, and manhood suffrage; they separated church and state; they broke down the old theology and substituted the rationalism that was to come to flower in New England’s Golden Age. The Puritans were absolutely against all of these things. They no more gave them to the Republic than they gave it Franklin or Emerson. What they gave it was something quite different: the shivering dread of the free individual that is still the curse of American civilization. They gave it canned patriotism, comstockery, intolerance of political heresy, Prohibition. They gave it Wilsonism, Burlesonism, and the Ku Klux Klan.2

THE MAIN IDEAS of Mencken on Puritanism may be found in “Puritanism as a Literary Force,” one of the major documents of American criticism. Aside from its value as a penetrating analysis of the debilitating effects of Puritanism on art, “Puritanism as a Literary Force” served as a spark to ignite the most bitterly waged critical war of the century. At the time of its publication (in A Book of Prefaces, 1917; the other three essays in the volume are on Conrad, Dreiser and Huneker) Mencken was at the height of his powers as a literary critic. He was 37 years old and not yet disenchanted with the profession of book criticism (it should always be remembered that Mencken’s best literary criticism was done before the twenties, the decade over which he reigned as America’s leading man-of-letters). Moreover, A Book of Prefaces was his first important volume of criticism (not counting the book on Nietzsche, which was primarily exposition). And it stands today, along with various essays in the Prejudices volumes as the best writing he was ever to do in that particular area. Indeed, within ten years after it appeared, Mencken had given up criticism of belles lettres except for occasional pieces and comments that continued to see print until his death in 1956.

Inevitably, the reigning America-First critics fell on A Book of Prefaces like angels on the Antichrist. Never before in America had a writer directed such a blast against an American sacred cow. And to publish such an un-American essay just when the nation was making the world safe for democracy was more than any right-thinking man could stand. The reception of Prefaces—which had a small sale in 1917, but enjoyed a wide audience when reissued in 1924—is a good gauge of Mencken’s popularity. Only a few rebels could stomach him during the war (Sgt. Edmund Wilson, for example, read and re-read the book, which convinced him more than any other single work that literary criticism was a worth-while profession); after the return of the conquering armies, a whole generation accepted the Menckenian theses as gospel.

In the opening pages of “Puritanism as a Literary Force,” Mencken made it clear that Puritanism as a theological doctrine was pretty much exploded: “That primitive demonology still survives in the barbaric doctrines of the Methodists and Baptists, particularly in the South; but it has been ameliorated, even there, by a growing sense of the divine grace, and so the old God of Plymouth Rock, as practically conceived, is now scarcely worse than the average jail warden or Italian padrone.”3 But as an ethical concept, Puritanism lived on in all its fury. To Mencken, the American still described all value judgments, even those of aesthetics, in terms of right and wrong. It was only natural that such “moral obsession” should strongly color our literature. In the histories of all other nations there have been periods of what Mencken called “moral innocence—periods in which a naif joie de vivre has broken through all concepts of duty and responsibility, and the wonder and glory of the universe have been hymned with unashamed zest.” But in America no such breathing spells have lightened the almost intolerable burdens of man. For proof of this continued moralism, one need only to glance at the critical articles in the newspapers and literary weeklies—that is, at those of the period before and during World War I. “A novel or a play is judged among us, not by its dignity or conception, its artistic honesty, its perfection of workmanship, but almost entirely by its orthodoxy of doctrine, its platitudinousness, its usefulness as a moral tract. A digest of the reviews of a book of Ibsen’s Hedda Gabler would make astounding reading for a Continental European.”4 Had not most of the critics of Dreiser’s The Titan indignantly denounced the morals of Frank Cowperwood, the novel’s central character?

That [Cowperwood] was superbly imagined and magnificently depicted, that he stood out from the book in all the flashing vigour of life, that his creation was an artistic achievement of a very high and difficult order—these facts seem to have made no impression upon the reviewers whatever. They were Puritans writing for Puritans, and all they could see in Cowperwood was an anti-Puritan, and in his creator another. It will remain for Europeans, I daresay, to discover the true stature of The Titan, as it remained for Europeans to discover the true stature of Sister Carrie.5

When one encounters an American humorist of high rank, Mencken said, he finds further evidence of the Puritan mind. Aside from Ambrose Bierce, actually a “wit” and not at all well known, there had been few scurvy fellows of the Fielding-Sterne-Smollett variety. Mencken believed that our great humorists “have had to take protective colouration, whether willingly or unwillingly, from the prevailing ethical foliage, and so one finds them levelling their darts, not at the stupidities of the Puritan majority, but at the evidences of lessening stupidity in the anti-Puritan minority.” Rather than do battle against, they have done battle for, Philistinism—and Philistinism is just another name for Puritanism. Mencken might easily have found an exception to his generalization here in the person of George Ade, whose “fables” could hardly be said to support Philistinism. But then Ade was a singular case; besides, he did not offer much as a witness for the prosecution—and Mencken was intent on prosecuting. Mencken saw his favorite American artist, Mark Twain, as a perfect example of the American whose nationality hung about his neck like a millstone.

One ploughs through The Innocents Abroad and through parts of A Tramp Abroad with incredulous amazement. Is such coarse and ignorant clowning to be accepted as humour, as great humour, as the best humour that the most humourous of peoples has pro-produced? Is it really the mark of a smart fellow to lift a peasant’s cackle over Lohengrin? Is Titian’s chromo of Moses in the bullrushes seriously to be regarded as the noblest picture in Europe? Is there nothing in Latin Christianity, after all, save petty grafting, monastic scandals and the worship of the knuckles and shin-bones of dubious saints? May not a civilized man, disbelieving in it, still find himself profoundly moved by its dazzling history, the lingering remnants of its old magnificence, the charm of its gorgeous and melancholy loveliness? In the presence of all beauty of man’s creation—in brief, of what we roughly call art, whatever its form—the voice of Mark Twain was the voice of the Philistine.6

In tracing the development of Puritanism in America, Mencken found two main streams of influence. First, there was the force from without, that is, the influence of the original Puritans, who brought to the New World a philosophy of the utmost clarity, positiveness and inclusiveness. Actually, Mencken had no great objections to the original Puritans’ philosophy, or at least so he says in a letter to Gamaliel Bradford, dated October 24, 1924; what he objected to was that philosophy’s “perversion, by Methodists, Rotarians and other such vermin.”7 Although the original Puritan often possessed a good education (he was not infrequently a Cambridge or Oxford graduate) and even “a certain austere culture,” he was almost sure to be hostile to beauty in all its forms. Nature, it must be remembered, fell with Adam, and like Adam is at the mercy of wanton demons. To copy nature is to copy corruption. There is little, if any, of the dionysian spirit, the Ja-sager philosophy, in the preachments of Puritan divines.

The eighteenth century saw the passing of the Puritans as a powerful body of law makers. Deism undermined the old theology; epistemological studies replaced metaphysics. The proper study of mankind was thought to be man. Skepticism was all but universal among the learned of Europe, and Americans still imported their ideas wholesale from the mother countries. Both political and theological ideas were imported from France, where Voltaire, Diderot, D’Alembert and the other Encyclopedists were giving an entirely new direction to world philosophy. Mencken noted that even in New England, the last stronghold of the old Puritanism, this European influence was felt: “there was a gradual letting down of Calvinism to the softness of Unitarianism, and that change was presently to flower in the vague temporizing of Transcendentalism.” This decline of Puritanism proper was not, however, an unalloyed blessing. For as Puritanism “declined in virulence and took deceptive new forms, there was a compensating growth of its brother, Philistinism, and by the first quarter of the nineteenth century, the distrust of beauty, and of the joy that is its object, was as firmly established throughout the land as it had ever been in New England.” With the passing of the Adamses and the Jeffersons, Mencken remarked, the nation was quickly turned over to the tradesmen and the peasants. There was, he maintained, but one major difference between American peasants and those of other nations: the American peasant was listened to; he possessed power. (There is, of course no such thing as a peasant in America today—only social unfortunates.) With the election of Andrew Jackson, a man with whom Mencken violently disagreed and yet admired as a strong individual, Philistinism became the national philosophy. Jackson did what had not been done before: “he carried the mob’s distrust of good taste even into the field of conduct; he was the first to put the rewards of conformity above the dictates of common decency; he founded a whole hierarchy of Philistine messiahs, the roaring of which still belabours the ear.” The chief concern of Americans ever since the official triumph of mobocracy has been politics; what’s more, politics tended to absorb the rancorous certainty of the fading religious ideas; the game of politics had turned itself into a holy war.

The custom of connecting purely political doctrines with pietistic concepts of an inflammable nature, then firmly set up by skillful persuaders of the mob, has never quite died out in the United States. There has not been a presidential contest since Jackson’s day without its Armageddons, its marching of Christian soldiers, its crosses of gold, its crowns of thorns. The most successful American politicians, beginning with anti-slavery agitators, have been those most adept at twisting the ancient gauds and shibboleths of Puritanism to partisan uses. Every campaign that we have seen for eighty years has been, on each side, a pursuit of bugaboos, a denunciation of heresies, a snouting up of immoralities.8

THE PERVASIVENESS of Puritan ethics (not, remember, theology) in America placed all purely aesthetic concerns in limbo. Mencken stated that with the exception of Whitman there was hardly a major writer who used the materials of his own age for subject matter. He used Algernon Tassin’s The Magazine in America (1916) to support his thesis that the literature of the ante-bellum period was almost completely divorced from life as men were then living it. Only in such “crude politico-puritan tracts” as Uncle Tom’s Cabin was there any attempt made to interpret, or even to represent, the culture of the time. (The fact that Mrs. Stowe was chastised in her own day for her “realistic” novels only supports Mencken’s contention.) Later, the culture found historians, and in at least one work—Huckleberry Finn—it was depicted with the highest art, but Twain’s magnum opus was a rare exception. The nineteenth-century novelists did not even sentimentalize the here and now in the manner of Mencken’s contemporaries. The best minds of that period were engaged either in business or politics. The few competent men of the period who were artists almost without exception forsook the present for the non-political, non-social realms of Arcadia or El Dorado. It is evident that much of the material in “Puritanism as a Literary Force” was condensed in the later essay on “The National Letters” (in Prejudices: Second Series, 1920). For example:

Fenimore Cooper filled his romances, not with the people about him, but with the Indians beyond the sky-line, and made them half-fabulous to boot. Irving told fairy tales about the forgotten Knickerbockers; Hawthorne turned backward to the Puritans of Plymouth Rock; Longfellow to the Acadians and the prehistoric Indians; Emerson took flight from earth altogether; even Poe sought refuge in a land of fantasy. It was only the frank second-raters—e.g., Whittier and Lowell—who ventured to turn to the life around them, and the banality of the result is a sufficient indication of the crudeness of the current taste, and the mean position assigned to the art of letters. This was pre-eminently the era of the moral tale, the Sunday-school book.9

IN THE SEVENTIES and eighties, with the appearance of such men as Henry James, Howells, and Twain (Mencken also listed Bret Harte even though he never considered him a good second-rate artist), a better day seemed to be dawning. These writers gave promise of turning away from the past to the teeming and colorful life that lay about them. The promise, however, was not fulfilled.

Mark Twain, after The Gilded Age, slipped back into romanticism tempered by Philistinism, and was presently in the era before the Civil War, and finally in the Middle Ages, and even beyond. Harte, a brilliant technician, had displayed his whole stock when he had displayed his technique: his stories were not even superficially true to the life they presumed to depict; one searched them in vain for an interpretation of it; they were simply idle tales. As for Howells and James, both quickly showed timorousness and reticence which are the distinguishing marks of the Puritan even in his most intellectual incarnations. The American scene that they depicted with such meticulous care was chiefly peopled with marionettes.10

To return to “Puritanism as a Literary Force.” The force from within was, in essence, a force of “conditioning.” The American tended to view all the workings of God, fate, man and nature as exemplifications of a moral order or structure or pattern, just as his forebears had done. The rebel, that is, the writer who made an earnest attempt to depict his surroundings realistically rather than romantically or sentimentally, had had little influence on the main stream of American literature. Such writers as Hamlin Garland began as realists but soon saw a rosy light and devoted themselves to safer enterprises; Garland ended his days by composing books on spiritualism, or, as Mencken put it, by “chasing spooks.” (Garland, as well as Howells, refused to sign the Dreiser Protest, a petition objecting to the ban placed on The “Genius.” In the early days of the twentieth century, there had been a few realists—for example, Ambrose Bierce, Frank Norris, Stephen Crane, David Graham Phillips, Henry Fuller, Upton Sinclair—but their rebellion was apparently ineffectual.

The normal, the typical American book of today is as fully a remouthing of old husks as the normal book of Griswold’s day. The whole atmosphere of our literature, in William James’ phrase, is “mawkish and dishwatery.” Books are still judged among us, not by their form and organization as works of art, their accuracy and vividness as representations of life, their validity and perspicacity as interpretations of it, but by their conformity to the national prejudices, their accordance with set standards of niceness and propriety. The thing irrevocably demanded is a “sane” book; the ideal is a “clean,” an “inspiring,” a “glad” book.11

In addition to the impulse from within, or the internal resistance, there was a pervasive Puritan influence from without. No examination of the history and present condition of American letters, Mencken believed, could have any value at all unless it took into account the influence and operation of this external Puritan force. Supported by the almost incredibly large body of American laws, this power resided in the inherited traits of Puritanism, which were evident in the “conviction of the pervasiveness of sin, of the supreme importance of moral correctness, of the need of savage and inquisitorial laws.” The history of the nation, Mencken wrote, might be outlined by the awakenings and re-awakenings of moral earnestness. The spiritual eagerness that was the basis for the original Puritan’s moral obsession had not always retained its white heat, but the fires of moral endeavor had never gone out in America. Mencken remarked that the theocracy of the New England colonies had scarcely been replaced by the libertarianism of a godless Crown when there came the Great Awakening of 1734, “with its orgies of homiletics and its restoration of talmudism to the first place among polite sciences.” The book-bumping of Jonathan Edwards’ “Sinners in the Hands of an Angry God” stands as a testament to that holy resurrection of Almighty Sin.

During the Revolution, politics superceded theology as the national pastime, and there was a brief period of relative quiet. But no sooner had the Republic emerged from the throes of adolescence than “a missionary army took to the field again, and before long the Asbury revival was paling that of Whitefield, Wesley and Jonathan Edwards, not only in its hortatory violence but also in the length of its lists of slain.” From Bishop Asbury down to the present day, that is, to World War I, the country was rocked periodically by furious attacks on the devil. On the one hand, the holy Putsch

took a purely theological form with a hundred new and fantastic creeds as its fruits; on the other hand, it crystallized into the hysterical temperance movement of the 30’s and 40’s, which penetrated to the very floor of Congress and put “dry” laws upon the statute-books of ten States; and on the third hand, as it were, it established a prudery in speech and thought from which we are yet but half delivered. Such ancient and innocent words as “bitch” and “bastard” disappeared from the American language; Bartlett tells us, indeed, in his “Dictionary of Americanisms,” that even “bull” was softened to “male cow.” This was the Golden Age of euphemism, as it was of euphuism; the worst inventions of the English mid-Victorians were adopted and improved. The word “woman” became a term of opprobrium, verging close upon downright libel; legs became the inimitable “limbs”; the stomach began to run from the “bosom” to the pelvic arch; pantaloons faded into “unmentionables”; the newspapers spun their parts of speech into such gossamer webs as “a statutory offense,” “a house of questionable repute” and “an interesting condition.” And meanwhile the Good Templars and Sons of Temperance swarmed in the land like a plague of celestial locusts. There was not a hamlet without its uniformed phalanx, its affecting exhibit of reformed drunkards.12

Mencken argued that the Civil War itself was primarily a result of the agitations of anti-slavery preachers. He admitted that to many historians the anti-slavery feeling had economic origins, but he insisted, probably correctly, that the war was largely the result of ecstatically moral pleas. In “The Calamity at Appomattox” (in the American Mercury for September, 1930), Mencken attributed the Negro’s bondage in the South today to the fact that the war was won by the North. Before the surrender at Appomattox, there was little hatred of the Negro in the South. More importantly, the Negro would most certainly have been made a freedman before the end of the nineteenth century anyway, and without the resulting hostility between the races. The Union victory, as Mencken stated, simply deprived the best southerners of any say in national and regional affairs, and placed the lower orders—the scalawags, carpet-baggers, freed slaves, and poor white trash—in the saddle. The Negro, of course, was soon disfranchised again, but the power remained in the hands of incompetent whites.

The Puritan of the days between the Revolution and the Civil War was, according to Mencken, different from the Un-Puritan and neo-Puritan of the post-bellum period. The distinguishing mark of the Puritanism of this middle period, at least after it had attained to the stature of a national philosophy, was its appeal to the individual conscience, its exclusive concern with the elect, its strong flavor of self-accusing. Certainly the Abolitionists were less concerned with punishing slave-owners than they were with ridding themselves of “their sneaking sense of responsibility, the fear that they themselves were flouting the fire by letting slavery go on.” The Abolitionist was willing, in most cases, to compensate the slave-owner for his property. The difference between the new Puritanism with its astoundingly ferocious and uncompromising vice crusading and the Puritanism of the 1840’s was of great degree, if not of kind: “In brief, a difference between renunciation and denunciation, asceticism and Mohammedanism, the hair shirt and the flaming sword.” After going through a number of stages and fads, neo-Puritanism found its apex in comstockery. And in comstockery there was a frank harking back to the primitive spirit.

The original Puritan of the bleak New England coast was not content to flay his own wayward carcass: full satisfaction did not sit upon him until he had jailed a Quaker. That is to say, the sinner who excited his highest zeal and passion was not so much himself as his neighbor; to borrow a term from psychopathology, he was less the masochist than the sadist. And it is that very peculiarity which sets off his descendant of today from the ameliorated Puritan of the era between the Revolution and the Civil War. The new Puritanism is not ascetic, but militant. Its aim is not to lift up saints but to knock down sinners. Its supreme manifestation is the vice crusade, an armed pursuit of helpless outcasts by the whole military and naval forces of the Republic. Its supreme hero is Comstock Himself, with his pious boast that the sinners he jailed during his astounding career, if gathered into one penitential party, would have filled a train of sixty-one coaches, allowing sixty to the coach.13

In accounting for the wholesale ethical transvaluation that came after the Civil War, Mencken pointed to the Golden Calf; in short, Puritanism became bellicose and tyrannical when it became rich. History shows that a wealthy people are never prone to soul-searching. The solvent citizen is less likely to find fault with himself than with those about him; what’s more, he has more time and energy to devote to the enterprise of examining the happy rascal across the street. The Puritan of America was, generally speaking, spiritually humble down to the Civil War because he was poor; he subscribed to a Sklavenmoral. But after the Civil War prosperity replaced poverty; and from prosperity came a new morality, to wit, the Herrenmoral. Great fortunes were made during the conflict, and even greater wealth followed during the years of the robber barons. Nor was this new prosperity limited to a few capitalists only; the common laborer and the farmer were better off than ever before.

The first effect of prosperity was, as always, a universal cockiness, a delight in all things American, the giddy feeling that success has no limits. “The American became a sort of braggart playboy of the western world, enormously sure of himself and ludicrously contemptuous of all other men.” Mencken observed that religion, which is always dependent upon its popularity for survival, naturally began to lose its inward direction and take on the qualities of a business enterprise. The revivals of the 1870’s were similar to those of a half century before except that the converts at the later date were more interested in serving than in repenting. The American Puritan was less interested in saving his own soul than in passing salvation on to others, especially to those reluctant individuals who hung back and resisted the power of divine grace. It became apparent to the more forward-looking ecclesiastics that the rescue of the unsaved could be converted into a big business. All that was needed was organization. Out of this unabashed industrialization of religion came a new force, one that still exerts great influence on American society. “Piety was cunningly disguised as basketball, billiards and squash; the sinner was lured to grace with Turkish baths, lectures on foreign travel, and free instructions in stenography, rhetoric and double-entry bookkeeping.” Religion lost its old contemplative nature and became an enterprise for the public relations man, the bookkeeper and the extrovert. In short, religion was “modernized.” What was true at the time Mencken wrote this essay is, as a pragmatist would say, even more true in the 1960’s.

After giving the necessary background material, Mencken then devoted a lengthy section of his essay to the workings and accomplishments of Anthony Comstock and his associates. The various laws, state and national, which Comstock got passed offer the contemporary reader a sorry spectacle of the vice crusader’s power. As a public figure, Old Anthony was as well known as P. T. Barnum or John L. Sullivan. He had disciples in every large city who were just as eager for blood as he was. Since there were few American writers brash enough to challenge the inquisitors, Comstock and company were forced to turn to foreign works. Rabelais and the Decameron were naturally banned (they are still being banned in various American cities today); Zola, Balzac and Daudet were driven under the counters; Hardy’s Jude the Obscure and Harold Frederic’s The Damnation of Theron Ware were also among the victims. These are but leading examples of the purge. In fact, Comstock got 2,682 convictions out of 3,646 prosecutions and is credited by his official biographer with having destroyed 50 tons of books, 28,682 pounds of stereotype plates, 16,900 photographic negatives, and 3,984,063 photographs. That such a Herod’s record could have been compiled was largely a result of the postal laws, which, of course, Comstock was responsible for in the first place. The very vagueness of the law was of great convenience to the prosecutors. That a novel like George du Maurier’s Trilby, which I read in search of damning evidence, could have been widely condemned as “lewd,” “obscene,” and “lascivious” is next to incredible. It merely provides further proof that Swift’s Gulliver’s Travels is a good deal closer to reality than it is to fantasy.

It is held in the leading cases that anything is obscene which may excite “impure thoughts” in “the minds . . . of persons that are susceptible to impure thoughts,”14 or which “tends to deprave the minds” of any who, because they are “young and inexperienced,” are “open to such influences”15 —in brief, that anything is obscene that is not fit to be handed to a child just learning to read, or that may imaginably stimulate to lubricity of the most foul-minded. It is held further that words that are perfectly innocent in themselves—“words, abstractly considered, [that] may be free from vulgarism”—may yet be assumed, by a friendly jury, to be likely to “arouse a libidinous passion . . . in the mind of a modest woman.” (I quote exactly! The court failed to define “modest woman.”)16 Yet further, it is held that any book is obscene “which is unbecoming, immodest. . . .”17 Obviously, this last decision throws open the door to endless imbecilities, for its definition merely begs the question, and so makes a reasonable solution ten times harder. It is in such mazes that the Comstocks safely lurk. Almost any printed allusion to sex may be argued against as unbecoming in a moral republic, and once it is unbecoming it is also obscene.18

Mencken then cited numerous cases to show that the defendant was helpless in proving his innocence against any of a whole host of charges of immorality. Besides, Dr. Johnson was obviously right when he stated that no man would want to go on trial, even if possessed of absolute proof of his innocence. Obviously, neither author nor publisher ever knew what might pass the watchful eyes of the self-appointed smut-hounds and defenders of decency. Competent work invariably was banned while the frankly prurient and vulgar went unmolested. Mencken was never in favor of denying anything or anyone the freedom of speech, but he was indignantly amazed that the serious work of an Auguste Forel or a Havelock Ellis should be barred from the mails while the countless volumes of “sex hygiene” by filthy-minded clergymen and “smutty old maids” were circulated by the million and without challenge.

Frank Harris is deprived of a publisher for his Oscar Wilde: His Life and Confession” by threats of immediate prosecution; the newspapers meanwhile dedicate thousands of columns to the filthy amusements of Harry Thaw. George Moore’s Memoirs of My Dead Life are bowdlerized, James Lane Allen’s A Summer in Arcady is barred from the libraries, and a book by D. H. Lawrence is forbidden publication altogether; at the same time half a dozen cheap magazines devoted to sensational sex stories attain to hundreds of thousands of circulation. A serious book by David Graham Phillips, published serially in a popular monthly, is raided the moment it appears between covers; a trashy piece of nastiness by Elinor Glyn goes unmolested. Worse, books are sold for months and even years without protest, and then suddenly attacked: Dreiser’s The “Genius,” Kreymborg’s Edna and Forel’s The Sexual Questtion are examples. Still worse, what is held to be unobjectionable in one state is forbidden in another as contra bonos mores.19 Altogether, there is madness, and no method in it. The livelihoods and good names of hard-striving and decent men are at the mercy of the whims of a horde of fanatics and mountebanks, and they have no way of securing themselves against attack, and no redress for their loss when it comes.20

It was no wonder, Mencken wrote, that American literature down to World War I was primarily remarkable for its artificiality. He compared our fiction to eighteenth-century poetry; it was just as conventional and artificial, just as far removed from reality. In America, and probably only here, could an obvious piece of reporting like Upton Sinclair’s The Jungle create a sensation, or Dreiser’s Jennie Gerhardt evoke such astonishment and rage. As an editor of the Smart Set Mencken was fully aware of the dangers lying in the path of any publisher who attempted to give his readers quality writing. Since his magazine was frankly addressed to a sophisticated minority, sold for a relatively high price, and contained no pictures or other baits for the childish, Mencken assumed that “its readers are not sex-curious and itching adolescents, just as my colleague of the Atlantic Monthly may assume reasonably that his readers are not Italian immigrants.” Nevertheless, he was constantly forced to keep the comstocks in mind while reading a manuscript sent him by an author. He warned his contributors, though he never admitted this publicly, to be sure to keep clothes on their female characters at all times. Mencken was a man marked by the Puritan elements in the country, and he knew it. But he certainly possessed nothing resembling a martyr complex. As he wrote Dreiser in 1921, the joy of living in America “does not lie in playing chopping-block for the sanctified, but in outraging them and getting away with it. To this enterprise I address myself. Some day they may fetch me, but it will be a hard sweat.”

ALTHOUGH OUR LITERATURE was policed and picketed by a small band of comstocks, the fact remains that the American people offered little resistance; they were perfectly willing to be led by their noses like so many cattle. The American was “school-mastered out of gusto, out of joy, out of innocence.” He could in no way understand William Blake’s belief that “the lust of the goat is also to the glory of God.” When the comstocks examined The “Genius” to determine its harmful effect on immature female readers, they tacitly admitted, Mencken wrote, that “to be curious is to be lewd; to know is to yield to fornication.” The medieval doctrine that woman is depraved was, and, for that matter, still is widely accepted in our own century. The right-thinking man must do all he can to save her from her innate depravity. “The ‘locks of chastity’ rust in the Cluny Museum: in place of them we have comstockery. . . .” Though censorship is nothing like so powerful today as it was forty years ago, and we must credit Mencken with having done much to deprive the censors of their power, there are still numerous evidences of the puritanical perversion. The most cursory look at television, for example, will provide the spectator with enough sadism to last a lifetime, but it is still impossible to portray a normal sex relationship in any way even resembling a realistic manner. It is also ironic that Roman Catholic censors, particularly the Legion of Decency, have taken up where the more nearly pure descendants of New England Puritanism left off. Once the object of Puritan prejudice, the Catholic Church now wields the whip in many areas of the country. Boston, now a Catholic stronghold, remains the laughing-stock of the nation. What hungry young novelist doesn’t nightly pray that his latest book will receive the free advertising that goes with being banned in Boston?

NEW BOOKS AND ARTICLES

THE FOLLOWING IS A SELECT LIST OF BOOKS AND ARTICLES WHICH, IN THE OPINION OF THE EDITORS, MAY BE OF INTEREST TO OUR READERS.

Milton Friedman and Anna J. Schwartz, A Monetary History of the United States, 1867-1960. Princeton, Princeton University Press, 1963. $15.00. A mammoth study of the history of United States monetary policies and the money supply since the Civil War.
H. L. A. Hart, Law, Liberty, and Morality. Stanford, Stanford University Press, 1963. $3.00. A largely successful attack on the Conservative position espoused by Sir Patrick Devlin (and in the nineteenth century by James Fitzjames Stephen) that “society” has the right to enforce “its” moral code against dissenters, even in the absence of direct injury to innocent parties.
Two books of note have appeared recently by W. H. Hutt, distinguished economist of the University of Capetown, South Africa, and a consistent opponent of the policies of apartheid: The Economics of the Colour Bar. London, Andre Deutsch, 1964. 5 shillings, paper. His theme is that “the restrictionist policies arising from the racialist doctrines of the Nationalist Government and the efforts of the higher-paid workers to protect privileged positions in the labour market would not have been possible had the economy been run on competitive lines. But this has not happened because investors and managements have been intimidated by politicians wielding the planning powers of the state.” Available from the publisher at 105 Great Russell St., London, W.C.1, England. And: Keynesianism—Retrospect and Prospect. Chicago, Regnery, 1963. $7.50. A major contribution to the body of anti-Keynesian literature. Professor Hutt supplies an impressive amount of factual and theoretical economic evidence for his arguments.
George J. Stigler, The Intellectual and the Market Place and Other Essays. New York, The Free Press of Glencoe, 1963. $2.50. A collection of highly readable essays on economic and political topics. The title essay should be familiar to NIR readers.
Ernest van den Haag, Passion and Social Constraint. New York, Stein and Day, 1963. $6.95. A new work by one of the foremost contemporary conservative sociologists, discussing the problems raised by the fact of limitation from the viewpoint of the fields of anthropology, sociology, and psychoanalysis.
Alfred Avins, “Freedom of Choice in Personal Service Occupations: 13th Amendment Limitations on Antidiscrimination Legislation,” Cornell Law Quarterly, Winter 1964, pp. 228-256. An historical survey of antidiscrimination legislation and its human limitations, tending slightly to the polemical; but well reasoned and well documented.
William Letwin, “What’s Wrong with Planning: The Case of India,” Fortune, June 1963, pp. 118 ff. An illustrative discussion of the problems India now faces because of central planning and public ownership.
Jesse W. Markham, “Anti-Trust Trends and New Constraints,” Harvard Business Review, May-June 1963, pp. 84-92. A detached survey of recent antitrust developments which look less like attempts to foster competition and more and more like protectionism.

AS A MAGAZINE . . .

reaches maturity in the publication field it is often blessed with the growth of a loyal and dedicated following. This hard core of zealots will stick with a magazine through thick and thin, hard times and good. NIR is fortunate in having a larger percentage of these “hard core” readers than the average periodical. We would like to present here a sampling of the encouraging praise and constructive criticism we have received over the past few months:

“Your recent issue on the Federal Regulatory Bureaus was well written and very informative. I just wanted to let you know that we have passed a resolution abolishing the ICC in our neighborhood.”

“The publishing policies of your periodical have brought a new meaning to the word ‘quarterly’ in American magazine circles.”

“As one of the more responsible extremist publications, NIR is, I feel, a valuable contributor to the Great Conversation and to the world’s store of Great Ideas. Mankind needs NIR; mankind needs the vigor which NIR lends to dialogues between peoples. The fact that sometimes you do go just a bit far out sometimes—like selling the lighthouses, really!—does not in any way diminish your service or, as Sir Servapali Chutney was fond of putting it, your ‘contribution,’ to humanity.”

“Leafing through back issues of NIR, I came across Mr. Hurt’s ‘Sin and the Criminal Law.’ It is good to see a member of the responsible right who believes that moderation in pursuit of vice is no virtue.”

Society lives and acts only in individuals . . . Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way for himself if society is sweeping toward destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle (between freedom and slavery) into which our epoch has plunged us.

—Ludwig Von Mises

The Intercollegiate Society of Individualists, a non-partisan, non-profit educational organization, deals with ideas. ISI places primary emphasis on the distribution of literature encompassing such academic disciplines as economics, sociology, history, moral philosophy, and political science. If you are a student or teacher, you are invited to add your name to the ISI mailing list. There is no charge, and you may remove your name at any time. For additional information, or to add your name to the list, write the nearest ISI office.

VOLUME 3, NUMBER 4, SPRING 1965

THE REVIVAL OF TRADITIONAL LIBERALISM

YALE BROZEN

CONSTITUTIONAL MYTHOLOGY

GORDON TULLOCK

ECONOMIC LIBERALISM IN POST-WAR GERMANY

WILLIAM S. STOKES

PROPERTY LAW AND RACIAL DISCRIMINATION

ROBERT M. SCHUCHMAN

A JOURNAL OF CLASSICAL LIBERAL THOUGHT

Spring 1965

50 cents

Vol. 3, No. 4

EDITORIAL STAFF

Editor-in-Chief • Ralph Raico

Associate Editors • J. Michael Cobb • Robert M. Hurt

John P. McCarthy • James M. S. Powell

Robert Schuettinger

Editorial Assistants • Douglas Adie • Burton Gray

Edwin Harwood • Edward Kimak • James A. Rock

William Lamb • Julian Svedosh

EDITORIAL ADVISORS

Yale Brozen • Milton Friedman • George J. Stigler

University of Chicago

F. A. Hayek	•	Benjamin Rogge
University of Freiburg		Wabash College

COLLEGE AND UNIVERSITY REPRESENTATIVES

UNIVERSITY OF ARIZONA
Stephen Sala

BALL STATE COLLEGE
Geoffrey Scott

BELOIT COLLEGE
Alfred Regnery

BROWN UNIVERSITY
Grant F. Shipley

BRYN MAWR COLLEGE
Sheila Bunker

COLUMBIA UNIVERSITY
A. Thadeus Perry

UNIVERSITY OF DELAWARE
John M. Tobin

DE PAUW UNIVERSITY
David Prosser

UNIVERSITY OF DETROIT
George McDonnell

DUKE UNIVERSITY
Robert B. Fisher

EARLHAM COLLEGE
David Lindsey

GROVE CITY COLLEGE
A. Bruce Gillander

HARVARD UNIVERSITY
David Friedman

UNIVERSITY OF IDAHO
Robert D. Brown

INDIANA UNIVERSITY (Bloomington)
Karl K. Pringle

INDIANA UNIVERSITY (Indianapolis)
Janis Starcs

UNIVERSITY OF KANSAS
Larry F. Glaser

UNIVERSITY OF KENTUCKY
James G. Otto

KNOX COLLEGE
Kip Pencheff

LOUISIANA STATE UNIVERSITY
William Thomas Tete

LOYOLA UNIVERSITY (Chicago)
William Ford

MANHATTAN COLLEGE
Stephen J. Kerins

MIAMI UNIVERSITY (Ohio)
Thomas R. Ireland

NEW YORK UNIVERSITY
Jeffrey Jay Weiser

OCCIDENTAL COLLEGE
Goetz Wolff

OREGON STATE UNIVERSITY
John Charles Neeley

PACIFIC COAST UNIVERSITY
Ernest Talaganis

PROVIDENCE COLLEGE
Raymond LaJeunesse

PURDUE UNIVERSITY
Ted Sigward

QUINCY COLLEGE
Michael J. Hill

REGIS COLLEGE
Herbert C. Liebman, III

SOUTHERN ILL. UNIVERSITY
Thomas Cannon

STANFORD UNIVERSITY
Rossman Wm. Smith, Jr.

SYRACUSE UNIVERSITY
Irwin H. Rosenthal

TEXAS A & M UNIVERSITY
Steve Thurman

TUFTS UNIVERSITY
William G. Nowlin, Jr.

VANDERBILT UNIVERSITY
Peter Chamberlain

WABASH COLLEGE
Ronald Rettig

UNIVERSITY OF WASHINGTON
R. P. Johnson

UNIVERSITY OF WISCONSIN
Theodore Cormaney

WILLIAMS COLLEGE
Thomas Ehrich

UNIVERSITY OF WISCONSIN (Milwaukee)
Wells H. Perkins

YALE UNIVERSITY
Bill Dennis

•

UNIVERSITY OF FRANKFURT
Werner Krebs

OXFORD UNIVERSITY
Robert Schuettinger

The Revival of Traditional Liberalism
	3	YALE BROZEN
Constitutional Mythology
	13	GORDON TULLOCK
Prospects for South Africa
	18	DENIS V. COWEN
Note on the Election
	28	BENJAMIN A. ROGGE
Economic Liberalism in Post-War Germany
	30	WILLIAM S. STOKES
Property Law and Racial Discrimination
	39	ROBERT M. SCHUCHMAN
New Books and Articles
	49

NEW INDIVIDUALIST REVIEW is published quarterly by New Individualist Review, Inc., at Ida Noyes Hall, University of Chicago, Chicago, Illinois 60637.

Opinions expressed in signed articles do not necessarily represent the views of the editors. Editorial, advertising, and subscription correspondence and manuscripts should be sent to NEW INDIVIDUALIST REVIEW, Ida Noyes Hall, University of Chicago, Chicago, Illinois 60637. All manuscripts become the property of NEW INDIVIDUALIST REVIEW.

Subscription rates: $2.00 per year (students $1.00). Two years at $3.75 (students $1.75).

Copyright 1965 by New Individualist Review, Inc., Chicago, Illinois. All rights reserved. Republication of less than 200 words may be made without specific permission of the publisher, provided NEW INDIVIDUALIST REVIEW is duly credited and two copies of the publication in which such material appears are forwarded to NEW INDIVIDUALIST REVIEW.

IN MEMORIAM Robert M. Hurt

The editors and staff of New Individualist Review join with his family and his friends in mourning the tragic death of Robert M. Hurt. His contributions to this magazine covered the entire scope of its operations and reflected the wide range of his own abilities. The signed articles which he wrote demonstrated both his capacity for research and analysis, and his deep concern with the extension of freedom; his sense of humor was manifested in some of our advertisements; and more than any other person he is responsible for placing New Individualist Review on a firm financial base.

When he left the University of Chicago to join the faculty of Princeton University, we believed that he was launched on a career that promised high achievements; he had so much ability.

He was a friend to each of us, and a stimulating companion whose zest for his own special fields of the law and economics did not dampen his interest in matters as diverse as the philosophy of logical positivism and the domestic political situation in the new nations of Africa, and whose good temper and good humor kept animosity out of even the most heated discussion. He was a keen thinker, a thorough scholar and a dear friend; we will remember him with esteem, affection, and sorrow as we grieve for his untimely death.

*The Revival of Traditional Liberalism**

YALE BROZEN*

A druggist’s assistant who, after listening to the description of pains which he mistakes for those of colic, but which are really caused by inflammation of the caecum, prescribes a sharp purgative and kills the patient, is found guilty of manslaughter. He is not allowed to excuse himself on the ground that he did not intend harm but hoped for good . . . .

We measure the responsibilities of legislators for mischiefs they may do, in a much more lenient fashion. In most cases, so far from thinking of them as deserving punishment for causing disasters by laws ignorantly enacted, we scarcely think of them as deserving reprobation. It is held that common experience should have taught the druggist’s assistant, untrained as he is, not to interfere; but it is not held that common experience should have taught the legislator not to interfere till he has trained himself. Though multitudinous facts are before him in the recorded legislation of our own country and of other countries, which should impress on him the immense evils caused by wrong treatment, he is not condemned for disregarding these warnings against rash meddling . . . .

—Herbert Spencer1

A DISCUSSION OF the revival of liberalism should begin with a description of what it is—particularly since our latter-day reactionaries have stolen the name. They have stolen the label for a good reason: it stands for the opposite of what they propose. These reactionaries are attempting to disguise their desire to apply the interventionist policies of seventeenth-century mercantilism to twentieth-century society.

Literally, liberalism meant to liberalize or liberate—to make free—to permit men to do or say whatever they wished. Of course, there was a constraint implied in this. No man could do anything which affected the liberty of others. To permit some men to intervene in the lives of others would be the opposite of making men free. This would make some men unfree—subject some men to tyranny by others. The classical liberal was and is opposed to all forms of tyranny.

This constraint on the individual, to preclude what has been called license, implies equality in the right to be free. Opposition to all tyranny is equalitarian. Unfortunately, some economists imbued with the equalitarianism in liberty implied by opposition to tyranny came to confuse liberalism with another position—equalitarianism in the distribution of income. They began to scrutinize every public policy for its effects on the distribution of income.

“A growing number of economists, indeed, implicitly argue that no other injustice equals in enormity that of large differences in income.”2 From this position began the rationalization of intervention to make those lower on the income scale better off by methods other than removing the barriers to self-improvement or to charitable actions by private persons. At first it was argued that the state should be used to transfer income from those higher on the income scale. From this it was an easy step to forcing people low on the income scale (and others) to do what the interventionist felt would be good for them, even though these people did not wish to do these things. The new tyranny was born—or rather the old tyranny was re-born.

Historically, the rise of liberalism was in opposition to tyranny from two sources. One source was the tyranny of private persons or associations such as monopolies and guilds (usually through a grant of power from the sovereign). Monopolies and guilds could and did prevent men from consuming things which otherwise would have been available. They could and did prevent men from seeking and obtaining jobs otherwise available to them. While tyranny in this form may seem to be a small thing, it was odious not only because some men had the power to dictate economic conditions to others, but also because such dictation could be used to bend men to accept the political dictates of those possessing the power.

The second source of tyranny was the state—those who manned the political apparatus. The possessors of political power could grant or withhold favors and could thus bend men to their will. Not only could they withold favors, but they also could take punitive action, even going so far as to take the lives of those who would not obey them. As one writer has said, “Government is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing and imprisonment.”3 The spectacle of some men forcing others to crawl, or possessing such power, was shocking to those bred in traditions of liberty.

NEVERTHELESS, DESPITE a long tradition in the United States of constant battle to reduce the amount of power by some private agents—such as businesses—we have permitted much coercion by other private agents, notably trade unions; at the same time we have allowed enlarged powers to be assumed by the state, opening up new possibilities for unwanted coercion. Trade unions in the city of Chicago, for example, prevent anyone from becoming a plumber or a plastering contractor unless his father or his uncle was a member of the plumbers’ union or the Plasterers’ Institute. Political dissenters find building inspectors invading their homes and hauling them into court for presumed violations of the building code. Those in the restaurant and grocery business who disagree with the men in power find their establishments do not measure up to the standards of health inspectors. Property assessments have a suspiciously uniform tendency to rise for those property owners who do not go along, while they tend to decrease for those who “play ball.” The Federal administration’s Bureau of Internal Revenue has harassed newspapermen and steel executives who do not agree with the Administration’s views.

The power of the government has grown as it has, in part, because native Americans have had little experience with tyrannical governments. There has been a naive trust in the good will, the beneficence, and even the omnipotence of government. Many Americans have felt that whenever the government does something, it must be in their interest and that their government will not take advantage of them.4 The modern “liberal,” the reactionary in disguise, suspects every businessman of an intent to bilk him. On the other hand, he trusts every bureaucrat and trade union officer to look out for his interest. I, on the contrary, suspect everybody of looking out for his own interests, be he businessman, bureaucrat, union officer, consumer, Congressman, workman, or the ordinary citizen. I am somewhat willing to trust a businessman to serve me well since any attempt to bilk his customers will mean that he will lose business to competitors. This, at least, means that it is to his self-interest to serve me well.

The average politician I trust a great deal less since he is quite willing to serve my interest badly if the support he gains at my expense is crucial to his election. Besides, he can confuse the issue by offering a few items in his platform which have some appeal to offset the other things which are distasteful. In every election, I have had to choose either the grab bag of proposals offered by one party, 95 per cent of which are distasteful, or the grab bag offered by the other party, 97 per cent of which are distasteful. That is hardly a choice. At least, when I buy a General Motors automobile, I do not have to buy GM gasoline, GM schools for my children, GM garbage collection service, GM old age annuities, or GM anything else. In a free market, I can separate my decisions on what automobile I buy from my choice of what gasoline I consume, which service station I patronize, which mechanic I go to for repairs, or which company insures my car or administers the funds I save for my retirement income.

In a political market, choosing the party which offers the best school program means I may also have to take a poor street repair program, inferior garbage collection services, and indifferent operation of the water works. For that reason, I prefer that the government do less rather than more. I can make more of each of my decisions separately from other decisions. Thomas Jefferson expressed this very pointedly when he said, “That government is best which governs least.”

I think another reason that Americans have allowed their government to take on an uncontrollably large number of functions is because we have improved so many things and solved so many problems (by private action, in most instances) that we think all problems can be solved—and we are an impatient people who believe it is better to take care of our problems today instead of next year.

As one of my colleagues has put the matter:

Our faith in the power of the state is a matter of desire rather than demonstration. When the state undertakes to achieve a goal, and fails, we cannot bring ourselves to abandon the goal, nor do we seek alternative means of achieving it, for who is more powerful than a sovereign state? We demand, then, increased efforts of the state, tacitly assuming that where there is a will, there is a governmental way.

Yet we know very well that the sovereign state is not omnipotent. The inability of the state to perform certain economic tasks could be documented from some notorious failures. Our cotton program, for example, was intended to enrich poor cotton farmers, increase the efficiency of production, foster foreign markets, and stabilize domestic consumption. It is an open question whether twenty-eight years of our farm program have done as much for poor cotton farmers as the trucking industry and mail-order houses.5

Now that we have lived so long with government intervention in our economy, a few professional economists have begun to examine the results of that intervention. Some findings from these examinations are beginning to appear and affect, at least, the attitudes of an increasing number of scholars. If any resurgence of liberalism is occurring, this is the primary place where it is apparent to me. However, I am extremely poorly informed on the attitudes of undertakers, bricklayers, Republicans and Democrats.

Four years ago, an opinion study showed that 73 per cent of the college economists of this country were definitely in favor of additional government intervention in the economy. Sixteen per cent were opposed. The rest expressed no leaning either way.6 An opinion study done last year showed that the group opposed to additional government intervention had grown to 35 per cent and the group still in favor of more intervention had shrunk to about 50 per cent.7

WHAT ARE THE studies leading to this change in attitude? First, I should mention a group of studies examining the effects of regulation of the transportation industries by the Interstate Commerce Commission, Civil Aeronautics Board, and the Federal Maritime Commission. One study done a few years ago points to several features of transportation regulation which produce undesirable results.8 Let me cite one instance of the way in which railroad-trucking regulation has worked. The railroads petitioned the ICC for permission to reduce freight rates on cigarettes in the early 1950’s. They had lost most of the cigarette transportation business to trucks since the rail rate on cigarettes was higher than the truck rate. The railroads examined their cost of transporting cigarettes and found they could make money at much lower rates than they had been charging. After extended hearings, during which the reduction was not allowed to go into effect, the ICC finally decided that the railroads had an inherent advantage over trucks in moving cigarettes and, therefore, should have the business. In their wisdom, the ICC commissioners decided to divert business to the railroads, not by acceding to the railroad request for permission to reduce rates, but by raising truck rates.9

If this were an isolated and exceptional act of the Commission, it would produce little reaction. However, a recent study of the behavior of the Commission in its founding days, 1888-1890, indicates that raising rates is an old Commission tradition.10 Before the ICC was formed by the Interstate Commerce Act of 1887, railroads between Chicago and New York entered into agreements with each other to maintain prices at specified levels on Chicago-New York shipments of corn and grain. These agreements were seldom successful. Railroads secretly sold transportation services at less than the agreed-upon price, and frequently at much less. In practice, the cartel of railroads rarely found it possible to maintain the agreed-upon price.

After 1887, the ICC was empowered to prevent the setting of long distance rates below the level of short haul rates. Since cutting the long haul rate between Chicago and New York made it necessary to also cut short haul rates, the net result was that railroads stopped competing for long haul business by cutting rates. After 1888, Chicago-New York rates were not kept low by competition between railroads. Rates tended to stay at the levels railroads had attempted to set by agreement before they had the ICC to run their cartel for them.

We also suffered the usual consequences of cartel operation. High prices induced over-investment in the railroad industry, draining capital from other uses where we needed tools and equipment, creating over-capacity (from which the railroads are still suffering) and causing under-utilization of the available plant because the business available was restricted by high prices. Incidentally, the ICC is now asking for additional legislation from Congress to strengthen its power to operate as a cartel authority.

Still another study in the transportation industry, this time the effect of regulation of the price of transportation of processed foods, has produced shocking findings. This category of transportation was formerly exempt from regulation under the general exemption of agricultural commodities. The exemption was narrowed by the 1958 Transportation Act to exclude processed agricultural commodities. After this phase of transportation came under regulation by the ICC, transportation charges promptly jumped by 20 per cent.11

IT IS NOT ONLY the ICC which behaves this way in the transportation industry. The CAB withdrew certification from North American Airlines and drove them out of business after they pioneered air coach transportation. North American carried passengers for 30 per cent lower fares than other airlines, despite the subsidies received by these other airlines, with never an accident during the time they carried 6,000,000 passengers.12 An intra-state airline (which is exempt from CAB regulation because it flies intra-state) flying today in California from Los Angeles to San Francisco, carries passengers at lower fares than those which prevail on any regulated airline segment of comparable length and traffic density (and makes just as much money on its investment).13

The Federal Maritime Board forces all subsidized ship lines to join the ocean conferences which cartelize ocean transportation. Conference-set rates are higher than those charged by ship owners and operators who are not members of the conference. Not only does the Board force higher rates on American shippers, but also follows policies in its construction and operating subsidy program which result in the inefficient design and operation of American ships. American ships carry bigger crews and are more expensive to operate than foreign ships. Since American seamen’s wage rates are higher than those of foreign seamen, you would expect labor-saving features to be built into American ships that would not be found on foreign ships. Instead, the reverse is true. Because the operating subsidy provided by the federal government is based on the excess of the American crew costs over foreign crew costs, no subsidized ship operator finds it to any advantage to pay the extra cost of labor-saving equipment.14

So much for some of the material developed in a few of the recent studies of the transportation industry. These data are not the sort to make economists feel that the heavy hand of government is beneficent or produces results preferable to those that will occur in a free market.

RECENT STUDIES of public utility regulation do not make this bit of intervention any more appealing, although this is the one area that more economists have agreed upon as being a proper sphere for government intervention than any other. A study of the Federal Power Commission regulation of the natural gas industry has shown that regulated field prices of natural gas sold to interstate pipe line companies are about seven per cent higher than they would be in the absence of regulation of field prices.15

A study of the regulation of prices for electric energy reaches the conclusion “that it is very doubtful whether consumers have been saved as much by public regulation of the electrical utilities as they have had to pay, directly and indirectly, for regulation.”16 Another study shows the prices for electricity and gas are higher in those states where commissions severely restrict the rate of return on investment (to less than 6½ per cent) than in those which do not. In those jurisdictions where electric companies are allowed to earn more than 6½ per cent return, the average price for 500 KWH to a residential consumer was $9.82. In those jurisdictions where the rate of return was restricted to less than 6½ per cent, the average cost to a residential consumer for 500 KWH per month was $10.14.

A study of gas utilities reached a similar finding. The companies allowed to earn more than 6½ per cent charged $8.62 for 100 therms of residential gas service. Those restricted to less than 6½ per cent charged $10.58 (about 20 per cent more).

Here is a paradox that non-economists find hard to believe, much less understand. How can a company make more by charging less? The answer lies in the fact that those companies allowed to earn more than 6½ per cent can attract the capital which can be used to install cost-saving equipment; allowing them to earn more thus benefits the consumer. Profits in the American economy are, by and large, not made at the expense of the consumer. They are made by doing a better job in production or design of product—by benefitting consumers.

Some sacred cows of those economists who believed most profits are made by monopolizing were slaughtered by this study. Even more, it casts grave doubts on the usefulness of government intervention in the one area which most economists have agreed required regulation to prevent monopolistic exploitation of consumers.

CONCERNING AGRICULTURE, farmers themselves seem to be reaching the conclusion that they are worse off with government intervention than without it—or at least wheat farmers seem to have reached this conclusion, judging by the latest wheat referendum. Farmers have found they received higher prices for wheat with government intervention, but they also endure higher costs as a consequence of acreage restrictions on their operations. The Agricultural Program conveys little benefit to most farmers at great expense to every taxpayer. Since farmers have begun to discover this, economists, too, are gradually becoming aware of it.

Some recent studies by agricultural economists have demonstrated that many of the programs supposedly designed to benefit the farmers have been hurting them. It seems obvious that subsidizing the use of fertilizer and machinery would help farmers by reducing their costs of production. What has seemed to be so obviously true turns out to be completely false. The increased output with subsidies has driven prices down with the result that farmers are not any better off. Those who are tenants and obtain their return from their labor are worse off because labor values are decreased by the substitution of fertilizer and equipment.17 Those who are owner-operators are worse off not only because the return earned by their labor is reduced, but also because that earned by their land is decreased. Fertilizer and equipment are substitutes for land and subsidizing their use reduces the return to land compared to what it otherwise would be.18

The farm programs of the federal government have not only failed to benefit the farmer, but they have also been mutually off-setting with their only net result being a higher tax burden and a waste of resources. The spectacle of multi-billion dollar reclamation programs putting more land under cultivation occurring side-by-side with a soil bank program taking land out of cultivation does not appear to be a more rational management of the economy than that resulting from the operation of free markets. Yet, the main argument of interventionists has been that the government can plan rationally. They have argued that the free market is at best non-rational but usually irrational. In the face of this evidence, it appears that government planning is far more irrational than even the severest critics of free markets could ever impute to the operation of the market.

ANOTHER GREAT disillusionment being suffered by the interventionists is the result of the examination of the programs presumably designed to benefit the poor and the disadvantaged. Urban renewal programs were launched with a great fanfare of propaganda concerning what they would do to improve the housing of the poor. The net result of our urban renewal programs has been increased cost of housing for the poor and the destruction of the livelihoods of hundreds of small businessmen. A typical urban renewal project is one in Chicago which had these results: 4,632 dwellings used by the lowest income groups in Chicago were destroyed. These were replaced by 2,040 apartments now used by middle income families.

In effect, 4,600 low income families were forced out of their homes and told to go find other housing. With the reduced supply of low-rent units, they typically had to pay higher rents in bidding for the remaining supply. A Chicago Housing Authority study of relocation in 1952-1954 showed that the average rent paid by the dispossessed before destruction of their homes was $37 per month. The average rent this group paid after being dispossessed went to $67 per month.19 It hardly helps the poor to take their homes away and force them to rent more costly residences.

ANOTHER MEASURE which interventionists thought would help the poor was the passage of minimum wage legislation. They believed Sidney and Beatrice Webb, who argued that “higgling in the market” would reduce all wages to bare subsistence (or below). They believed that employers have the power to exploit their employees. All that had to be done to improve the lot of the poor was to pass a law which would stop the exploitation of labor by employers.

As it turned out, it has become evident that employers were paying people what they were worth. As the minimum wage rate has been raised, more and more people have been laid off who were not worth the higher wage rate20 or have failed to find jobs which would otherwise have been available.21 They were not being exploited. They were receiving low wage rates because they were not worth any more. The people laid off have been forced to take jobs not covered by the minimum wage law where they received even lower wage rates than in the jobs they lost22 or they have remained unemployed. Unemployment among teenagers, for example, has gone from 595,000 in 1949, when the minimum wage rate was $0.40 per hour (and large unemployment might have been expected because this was a depression year), to 979,000 in 1963, a prosperous year, a year in which the minimum wage rate was raised to $1.25 per hour. To the extent that teenagers are inexperienced, unskilled workers, they are the ones who have been priced out of the market by the rise in the minimum wage. Even my interventionist friends are beginning to believe that all teenagers should be exempted from the application of minimum wage laws. Perhaps they will soon learn that we should simply repeal all minimum wage laws.

One more point should, I think, be made in connection with teen-age unemployment. A leading interventionist, Willard Wirtz, Secretary of Labor, believes that the solution to this problem lies in extending compulsory education by another two years. It is typical of the interventionists that they suggest simple answers based on the treatment of all people as if they were identical, homogeneous units. It is typical that they will force people to do what they regard as being good for these people, whether or not those whose freedom is being infringed regard this as desirable. As a matter of fact, the proportion of fourteen to seventeen-year olds in school has increased from 83.3 per cent fifteen years ago to 90.3 per cent today.23 This is in response to the fact that wage incomes of those with more years of schooling have gone up more than the wage incomes of those less educated.

Of those who are not in school, I would venture the guess that most of them were not finding the schooling available to them useful or rewarding. Forcing them to remain in school would be more likely to reduce the efficiency of the educational process than to improve the skills and make employable these unwilling drinkers at the fountain of knowledge.

FINALLY, LET ME turn to the most telling charge which has been made against free markets. The primary weapon of the socialists in their attack on free enterprise is the business cycle and the suffering caused by cyclical unemployment. If classical liberalism and the laissez faire for which it stands is vulnerable to attack, cyclical unemployment is the Achilles heel.

On this score, recent studies of the causes of the business cycle have disclosed that the primary cause is a change in the rate of growth of the stock of money.24 A turn in the rate of increase in the stock of money is followed by a turn in business and employment. A downturn in the rate of increase in the stock of money is followed by a downturn in employment about six months later, on the average.

Let me describe a few instances: Sharp rises in Federal Reserve rediscount rates and imposition of penalty rates on borrowers occurred in late 1919 and in the first half of 1920. This caused a decline in the stock of money. The reduction in the stock of money was followed by an increase in unemployment from 1.5 million in 1920 to over 5 million persons in 1921.25

The contraction of Federal Reserve credit in late 1928 and early 1929 caused a decrease in the stock of money which started unemployment rising.26 It jumped from 1.6 million in 1929 to over 5 million in 1930. The decline in money stock was intensified after September 1931 by deflationary actions on the part of the Federal Reserve when it panicked over the loss of gold. The result was a horrifying rise in unemployment to over 12 million persons in 1932.

The increases in required reserve ratio by the Federal Reserve Board in August 1936, and again in March 1937, and once again in May 1937, turned the stock of money down and sent unemployment soaring.27 From approximately 6 million in mid-1937, unemployment rose to over 11 million in 1938.

Turning to the post-war period, fluctuations in unemployment were considerably milder. Nevertheless, we find the same relationship holding between governmental manipulation of the stock of money and unemployment. The rise in the required reserve ratio in February, June and September of 1948, along with other Federal Reserve actions in the government bond market, began a decrease in the stock of money which sent unemployment in 1949 to almost 4 million from the 2 million level of 1948.28

Again, in 1952, the Federal Reserve Board reduced the rate of increase in the stock of money.29 At mid-1953, unemployment started to climb, doubling to about 3.5 million in 1954.

Still again, the Federal Reserve Board reduced the rate of increase in the money supply in 1956.30 Recession began in mid-1957 and the unemployment level rose to over 5 million in 1958.

In 1959, the Board began limiting the reserves available to banks and started a downturn in the stock of money.31 Recession began in early 1960 with unemployment again rising to over 5 million in 1961.

I have gone into some detail to show that the primary cause of cyclical unemployment does not lie in the unregulated behavior of free men in free markets. Those who have argued for greater governmental intervention on the grounds that a free enterprise system is unstable have chosen the wrong target for their criticism and the wrong means to cure the problem which worries them. The source of instability has been the government. The cure for instability is less government—not more. We would have less instability if the Federal Reserve Board stopped toying with the supply of money.

The study of the causes of cyclical unemployment has had a great unsettling effect on those economists who have thought we needed more government activity in the economy.32 Most have not yet accepted the conclusions of the study. They are resisting the recognition that they have been wrong and they have attempted to refute the study. The attempts to date have failed; the data are too overwhelming. Opinion in the profession is starting to swing, even though old ideas do not die easily, especially since repetition seems to be regarded as a more cogent proof of a proposition than any evidence a scholar can offer.33

I WOULD LIKE to close by quoting an observation of a nineteenth-century German immigrant to America:

Here in America you can see how slightly a people needs to be governed. . . . Here are governments, but no rulers—governors, but they are clerks. All the great educational establishments, the churches, the great means of transportation, etc., that are being organized here—almost all of these things owe their existence not to official authority, but to the spontaneous cooperation of private individuals. It is only here that you realize how superfluous governments are in many affairs in which, in Europe, they are considered entirely indispensable, and how the opportunity of doing something inspires a desire to do it.34

The most telling and effective recent evidence casting doubt on the beneficence of government and the presumed inability of free markets to serve the common good, and such social goals as improving the lot of the average man, is provided by the “miracle” of West Germany35 and Japan, and the failure of the socialized governments in the Iron Curtain countries. We might put this in the words of a recent cartoon showing two Russian officials chatting with each other. One is saying, “When all the world is Communist, where will we get wheat?”

Reprints of this article are available from New Individualist Review. Single copy, 15 cents. Ten or more copies, 10 cents each.

Constitutional Mythology

GORDON TULLOCK*

MYTHS, AS A PART of literature, can be entertaining and even illuminating, but if they are believed and acted upon they can be dangerous. There is such a dangerous myth which is widely believed at the present time by Americans. This myth, that “the Constitution is what the Supreme Court says it is,” has the logical corollary that no action taken by the Supreme Court can be unconstitutional, and hence that decisions by the court are binding upon the executive and legislative branches. If the myth were true, then it would mean that the system of checks and balances set up in our constitution is incomplete. The powers of the legislative and executive branches are subject to checks, but those of the judicial branch are uncontrolled. Given the care which the drafters of that historic document obviously took to give no person or organization absolute power, this would be most surprising. The founders of our nation did not feel that the form of government they established could safely be trusted to the good will or self-restraint of any individual or body of men. Instead they built into the structure of government a system in which possible abuse of power by any branch could be checked by the others. If the popular myth of supreme court supremacy were true, then we would have to conclude that the founding fathers distrusted the elected legislature and the elected president, but somehow felt no suspicion of the appointed supreme court. Surely this is absurd.

The power of the Supreme Court to declare acts of Congress unconstitutional was first established in the famous case of Marbury v. Madison by Chief Justice John Marshall. It is interesting that this case concerned a “plain violation” of the rights of five individuals. The Court refused to take action to redress the wrong to these individuals because it held that the act which gave them the right to sue before its bar was unconstitutional. In other words, it put enforcement of the Constitution above human rights. The reasoning upon which it did so is still the foundation of the doctrine of unconstitutionality.

Marshall’s argument, adhered to by all commentators from his day to the present, may be summed up by one paragraph from his decision:

Certainly all those who have framed written constitutions contemplate them as forming the fundamental and paramount law of the nation, and consequently, the theory of every such government must be, that an act of the legislature, repugnant to the constitution, is void.1

Clearly this paragraph would make as much sense if the words “executive” or “judiciary” were substituted for “legislature.” The view that the executive or the judiciary is not bound by the Constitution would as much subvert the document as the view that the legislature is not so bound. It is true, of course, that we must not expect to find the court announcing that its own acts are unconstitutional, any more than we should expect to find the legislature passing laws which it explicitly states are unconstitutional. In each case the constitutional check is imposed from the outside, not by a given branch of the government judging its own acts.

The same principle will be found to fit the remainder of Marbury v. Madison. Marshall was a judicial officer engaged in deciding whether he would obey a law duly passed by the legislature and signed by the President. As such he confined his language to this particular problem and did not discuss the complementary problems which would arise if the court made an unconstitutional determination. Nevertheless, his language is still convincing if it is applied to the converse problem. As an illustration let us make the necessary changes for two and a half paragraphs:

If, then, the [executive] is to regard the constitution, and the constitution is superior to any [judicial decision], the constitution and not such [decision], must govern the case to which they both apply.

Those, then, who controvert the principle that the constitution is to be considered, [by the executive], as a paramount law, are reduced to the necessity of maintaining that the [President] must close [his] eyes on the constitution and see only the [decision].

This doctrine would subvert the very foundation of all written constitutions. It would declare that . . . [a decision] which, according to the principles and theory of our government, is entirely void, is yet, in practice, completely obligatory. . . .2

THE CONTRARY VIEW, that decisions of the Supreme Court are superior to the Constitution because “the Constitution is what the Supreme Court says it is” has never been claimed by the Court, although a Chief Justice once said this in a speech. The Court in its decisions always claims that it is bound by the Constitution. It does not purport to have the power to change the Constitution, only to interpret and to apply it. It is, of course, true that the Constitution is a rather short document and almost 175 years old for the most part. Interpretation under these circumstances may frequently involve interstitial law making; in fact this is the main function of the Supreme Court. There is, however, a great difference between deciding what the Constitution should mean in an area where it is unclear, and deliberately going against the plain words of the document. A decision, for example, that the Senate must be elected according to population would clearly and obviously be unconstitutional.

Marshall, however, had one more problem after he had demonstrated that the Constitution was superior to the acts of a branch of the government; he had to show that the Court was charged with a duty of enforcing the Constitution. His method was simple: he pointed out that the Constitution “direct[s] the judges to take an oath to support it.”

This oath certainly applies in an especial manner, to their conduct in their official character. How immoral to impose it on them, if they were to be used as the instruments, and the knowing instruments, for violating what they swear to support!3

Continuing this line of reasoning, the final full paragraph of his decision reads:

Thus, the particular phraseology of the constitution of the United States confirms and strengthens the principle, supposed to be essential to all written constitutions, that a law repugnant to the constitution is void; and that courts, as well as other departments, are bound by that instrument.4

The argument, again, makes as much sense if the name of another department is substituted for that of the judiciary, as Marshall explicitly recognizes in the last full line of the above quotation. The same sentence of the Constitution which requires judges to support the Constitution also requires legislators, and other officials of the government, to swear to support it. Surely the oath is not more binding on one class of officials than on another. Let us repeat our experiment and substitute the executive for the judiciary in two more paragraphs of this fundamental decision:

Why does . . . [the President] swear to discharge his duties agreeably to the constitution of the United States, if that constitution forms no rule for his government? if it is closed upon him, and cannot be inspected by him?

If such be the real state of things, this is worse than solemn mockery. To prescribe, or to take this oath, becomes equally a crime.5

It is hard to see why this is less reasonable as a matter of constitutional law than the original version. If Chief Justice Marshall’s reasoning was correct for the judiciary, clearly it is also correct for the executive and the legislature.

My argument that the Congress and the Executive also have responsibilities for preserving and protecting the Constitution, although it would have been acceptable to such liberals as Justices Black and Douglas in the late thirties, will be vigorously contested today. The argument which may be offered against it is that there must be a single ultimate authority to decide constitutional problems, and that the Supreme Court is that authority. This can be divided into two parts, an argument that a single authority is logically necessary, and that the Constitution established such an authority in the Supreme Court. The first, or logical, argument, although superficially plausible, is fairly easily answered. It would, of course, be impossible to have two or three bodies each issuing authoritative interpretations of the Constitution if these interpretations were equally binding upon the citizen and likely to conflict. We are not, however, faced with a dilemma of choosing between two equally unattractive alternatives, the one involving multiple and possibly conflicting authorities with power to interpret the Constitution and the other involving a single arbitrary authority. If the founding fathers had seen the problem in this light they would surely not have set up an appointed body as the ultimate sovereign. They had just fought a war to free themselves from the control of appointive royal governors, and there is no reason to believe that they would have wished to place themselves and their descendants under the complete control of a body of men who were not removable no matter how bad their decisions.

THAT THE DRAFTERS of the Constitution did not even think in terms of giving ultimate power to the Court can be readily seen from the provision of the Constitution that “the Supreme Court shall have appellate Jurisdiction, both as to Law and Fact, with such Exceptions, and under such Regulations as the Congress shall make.” (Article III, Section 2.) The right of Congress to make exceptions in the jurisdiction of the Supreme Court, upheld by that Court in Ex Parte McCardle,6 a case involving civil rights, is clearly inconsistent with the view that the Court is the ultimate authority on constitutional questions.

If we return to Marbury v. Madison we see that Marshall did not claim any sort of ultimate authority for the Court. He simply said that where he thought the Constitution and a law conflicted he would carry out his oath of office and refuse to enforce the law. Until very recently this purely negative concept of the duty of the courts in constitutional questions was the dominant theory. The whole subject was traditionally described under the rubric of “judicial review,” and that review amounted to “little more than the negative power to disregard an unconstitutional enactment.”7 This negative view of the problem of protecting the Constitution raises none of the logical problems of conflicting determinations of constitutionality while at the same time avoiding the grant of ultimate power to one body. Normally any act of the government will require the co-operation of two or three of the main branches of government. If the act initiated by one branch is constitutional, the other branches are required to co-operate. If the initial act, on the other hand, is unconstitutional then the other branches are required by the oaths that their officers have taken to uphold the Constitution, to refuse to play any part in destroying the constitutional guarantees. This is the famous system of “checks and balances” which the drafters of the Constitution thought more desirable than dependence upon the good will and self-restraint of a small body of men.

In practice, of course, the bodies initiating action in our system have normally been the legislature and the executive. The courts, until very recently, seldom took the initiative. This meant that most cases in point have been resolved through refusal by the courts to carry out unconstitutional acts of the legislature rather than through refusal by the legislature or executive to enforce unconstitutional decisions of the courts. The only major effort at judicial legislation prior to the last two decades was the Dred Scott case, which was, quite rightly, not enforced by many state governments and reversed “on the slight, bare slopes of Gettysburg.” However, the recent outburst of judicial activism, which contrasts so strongly with the restraint characterizing previous courts even in the exercise of their negative power of judicial review, has raised an essentially new problem. Although the court still talks the language of simply applying the Constitution, it now acts as though it were a sort of superior legislature, not only imposing new laws, but also actually changing the Constitution by its decisions. No longer are constitutional decisions largely limited to refusals to enforce laws; they now frequently take the form of positive orders to other branches of the government and general rules for the control of citizens. Most of the civil rights cases and the reapportionment decisions are of this nature. Under these circumstances the right of the other branches to “check” the Supreme Court by refusing to apply its decisions when they violate the Constitution, a right long held in abeyance, becomes a matter of first importance.

Even if a supreme authority is not logically necessary in a system where each branch checks the others, it might still be true that the Constitution did establish such an ultimate arbiter in the form of the Supreme Court. This is, however, not the case, for there is nothing in the language of Article III of the Constitution which directly assigns to the Supreme Court any special duties with respect to the Constitution. If the Constitution conferred such special powers on the Court it did so implicitly, not explicitly; and it is hard to see where supreme power is implied for the Supreme Court. The judiciary is given “the judicial power of the United States.” If they had been written in 1964, these words might be construed as implying arbitrary power of the Court to interpret the Constitution in any way it sees fit. But this mythological view of judicial power was not held in 1789. Nor did Marshall claim such power. He made only the following claim:

So if a law be in opposition to the constitution; if both the law and the constitution apply to a particular case, so that the court must either decide that case conformably to the law, disregarding the constitution; or conformably to the constitution, disregarding the law; the court must determine which of these conflicting rules governs the case. This is of the very essence of judicial duty.8

The statement of the role of the Court is acceptable; but it is also a duty of the executive to decide which of two conflicting laws is to be enforced, especially if one of these laws is the Constitution itself.

THE PRESIDENT HOLDS a unique status in that the Constitution itself specifies the content of the oath he must take on assuming office. This oath concludes with the words “[I] will, to the best of my Ability, preserve, protect, and defend the Constitution of the United States.” The obligation devolving on the President is clearly more weighty than the mere duty “to support” the Constitution, the requirement specified for oaths to be subscribed to by all other officials including judges. In carrying out his duty to execute the laws, the President must, of course, make constitutional decisions. If he feels that a given law enacted by Congress is unconstitutional, he may veto it; and this is one of the reasons given by presidents for their vetoes. If an unconstitutional law is passed, he must follow his oath and refuse to enforce it. This, although it may appear novel, is simply a description of what the President has always done. The Attorney General frequently considers the constitutionality of various laws, and his rulings on such points are normally accepted by the executive arm.

A particularly interesting case has arisen in recent years with respect to defense appropriations. Congress quite frequently feels that some certain arm or weapon is more important than the executive believes. Congress has, therefore, tried to get the executive to spend more money than the Department of Defense requests for such arms, and it may put a specific provision in the appropriation act requiring that the money be spent. The intent of such provisions is to give the President the choice of vetoing the entire defense appropriation or spending the money. Since Truman, however, the executive branch has uniformly held that such provisions are unconstitutional and hence has refused to carry them out. No court was involved in this highly important decision on a constitutional issue, and clearly it does not involve any usurpation of judicial power by the executive.

The members of Congress are not only sworn to support the Constitution; they also tend to run heavily to lawyers, and hence are apt to be interested in constitutional questions. The question of whether a given measure is constitutional is frequently discussed on the floor of the two houses, and a consensus seems to prevail to the effect that unconstitutional acts should not be passed. If the President requests legislation which appears to the members of Congress to be unconstitutional, they should refuse to pass it. It is always a little hard to determine exactly why Congress has taken any given action since there will normally be many different arguments offered by different members; but it is reasonably clear that there have been occasions when legislation has been rejected or modified for constitutional reasons. Again this involves no usurpation of judicial prerogatives. Congress is unique in that the Constitution specifically limits its power to making “Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States. . . .” Surely Congressmen asked to appropriate money for a purpose they believe unconstitutional may refuse. The view that Congress shall refrain from considering constitutional questions is not only absurd but also directly contrary to the established practice of our government.

Thus it is not only the Constitution, but long established practice, which gives to each of the three branches of the government the right to check the others if their acts are unconstitutional. The Supreme Court has seldom experienced such checks, but this simply reflects the fact that it has seldom taken positive action which required checking. Surely the restraint of previous judges does not give the present Court positive powers to do anything it wishes.

The well thought out plan of checks and balances is completely negated by the myth of judicial supremacy. Only if we feel assured that the Justices are not like other men, that they neither make mistakes nor try to extend their authority, will we favor a system giving them ultimate power. Our officials are sworn to uphold the Constitution, not the Supreme Court. Where judicial decisions conflict with the Constitution they should keep their oath and uphold the Constitution. The statesmen who drew up our Constitution did not leave the protection of our liberties solely to nine fallible men.

Prospects for South Africa

DENIS V. COWEN*

THIS PAPER IS concerned with the political future of South Africa; that is to say, the future of some 16 million people occupying a territory approximately one-third the size of the United States, in one of the most richly endowed, beautiful and temperate zones of the earth’s surface. These 16 million people, my fellow South African citizens, are quite normal, friendly human beings, with ordinary human virtues and vices; but they are troubled and perplexed—and in varying degrees, humbled—by the tremendous challenge in human relations which faces them.

Most readers are aware of the broad outlines of the South African government’s racial policy—a policy which has excited so much attention and criticism in the international community that I need do little more than mention its essential features.

The South African government of the day—which has been in power for some sixteen years—does not believe that there is any future for any political system whereunder the various racial and cultural groups in South Africa would live together on terms of equality in one undivided country. Some 10.5 million blacks of the full blood, belonging to several tribes, speaking several Bantu languages, and at varying stages of development, cannot, they say, form a stable political structure on terms of equality with 3.5 million whites who wish to preserve their own cultural heritage. In addition, there are a half-million Asians and 1.5 million people of mixed blood, who live mainly in Cape Province. Whites, for their part, belong to two groups having much in common, but yet they each have their distinctive character; 60 per cent (nearly 2 million) are Afrikaans-speaking (i.e., their home language is Afrikaans, though most of them speak English as well), and Calvinist in religion. The remaining 40 per cent are primarily English-speaking and either more tolerantly Protestant (Episcopalian, Presbyterian, Congregationalist), or Roman Catholic in religion. About 5 per cent of the whites are Jewish. In short, not only is South Africa multi-racial; it is multi-cultural.

Given such a population structure, any attempt to share political power between whites and non-whites in a single political system is seen by most whites as involving self-immolation. “One man, one vote” in an undivided society, or anything which may lead to it, it is said, would involve cultural suicide and the eventual abandonment of a way of life. The blacks, it is argued, would “swamp” the whites; and what is more, as they are on the whole the “have-nots,” the character of the economy would soon be changed out of all recognition.

PLACING NO FAITH in constitutional guarantees and devices for minority protection—which have tended in many parts of Africa, and indeed in South Africa itself, to be mere scraps of paper—the overwhelming majority of South African whites accordingly feel that there is no health in any deliberate attempt to bring about a common political society between blacks and whites. In this predicament, the better hope, they argue, lies in the opposite direction—it should be, in short, in the direction of “separate development” of the main racial groups in their own homelands, leading to eventual independence or partition. At the same time, it is recognized that the various population groups—black and white—are now, and are likely to remain, very largely economically interdependent, whatever their political future may be. European nations, it is argued, are a similar case; and the Common Market is taking care of the resulting organizational problem. Accordingly, Dr. Verwoerd would like to see political separation, coupled at the same time with increasing economic integration, not only between the population groups of South Africa, but also between the various South African groups, on the one hand, and the African states north of the Limpopo, on the other.

That, in basic outline, is Dr. Verwoerd’s plan for separate development; stated, I hope, as fairly—though not as eloquently—as he would state it in equally short compass. Nothing would be easier than to show the defects in this policy. Indeed, even its ardent supporters recognize that, given the most favorable circumstances, the achievement of Dr. Verwoerd’s goals would take many years; would involve great sacrifices on the part of the whites, if the eventual partition is to be fair; and that in the intervening years there would be many injustices and anomalies.

Meanwhile, under the guidance of a very efficient administration (as efficient as any in South Africa’s history) the country continues to prosper—even to boom—economically. Industrially and economically speaking, South Africa is the continent’s giant, so far in advance of all the rest that economists do not even group South Africa along with other African territories. Much the same is true of education and the organization of the learned professions.

But beneath the fair surface there is tension; and the cost of implementing the government’s racial policy is very high in terms of human suffering. Having written several detailed indictments of the policy myself,1 it is not my intention to repeat the performance now. I have not changed my convictions about the basic immorality of racialism. Nor have I changed my opinion about the economic and political arrangements in South Africa. I still hope and believe that one day racial tension will no longer exist in a fully integrated South Africa. At this stage, however, I think that it is more profitable to call attention to certain facts which tend to be overlooked in discussions about South Africa; to say why I believe that my country has a very good chance of pulling through to the achievement of a satisfactory future; and to give some idea of what may, I think, be done to help.

One will appreciate that I speak without any brief from either the exponents or the critics of the South African government’s policies. The only brief I hold is for my country, and all its people.

Perhaps the best way to present my subject is to deal with it under three headings.

First, I would like to review briefly why it is that South Africa matters; why her political future deserves the very serious attention and encouragement of people beyond her borders.

Second, I would invite the reader to look at the South African scene from the point of view of what, in the past, has actually happened, and what, in the future, is likely to happen—as distinct from what some of us would have liked to have seen, or may yet wish to see take place. In other words, I suggest that it may be useful to focus attention on the actual facts, and try to predict probable events as distinct from speculating as to what ought to have happened and what ought yet to be. Under this heading, it is my intention to place before you—somewhat bluntly and flat-footedly—a series of axioms about South Africa.

Third, while concentrating on the “is,” and the “likely to be,” rather than the “ought to be,” it may be useful for me to suggest a few maxims concerning what may be done to help the situation in South Africa; and, in particular, what sort of action should be avoided, as being calculated to aggravate the present distemper rather than cure it, for I would not like it to be thought that we should have no interest in the sphere of the “ought-to-be.”

I have been induced to adopt this method of treatment (that is to say, the formulation of axioms and maxims), because a similar procedure was recently used in an article by Mr. Philip Mason, in the October 1964 issue of Foreign Affairs.2 With some of Mr. Mason’s conclusions I am in complete agreement. From others, however, I would differ sharply. Nevertheless, I would commend his article to you, suggesting my own remarks as required supplementary—dare I say, corrective—reading!

AT THE LEVEL of international power politics, South Africa’s significance is considerable, although she is not yet a member of the nuclear club. At summit conferences, and notably in the lobbies of the United Nations, a determined effort is being made by the Afro-Asian bloc to bring the South African government to its knees, as the saying goes. More particularly, Britain and the United States, South Africa’s two largest trading partners, are being told that continued trade with South Africa bolsters up and encourages a regime which the Afro-Asian nations regard as an affront to their dignity and self respect. Accordingly, they are asking for a full scale trade boycott, backed by a blockade. They say, quite bluntly, that Britain and the United States must choose between them and South Africa.

The threat must be taken seriously. Not only would it be difficult to overestimate the determination of the Afro-Asian bloc to bring about a change in the political structure of South Africa, but a suitable occasion for involving the older and greater powers may actually present itself in the near future. Thus, it is quite possible (some say it is very probable) that next year the International Court at the Hague may feel itself compelled to give judgment against South Africa in regard to her administration of the South West African Mandate, and to call upon Dr. Verwoerd’s government to abandon their racial policies in that territory. It is by no means clear that the judgment will, in fact, go against South Africa; but if it does, and if South Africa refuses to comply with the court’s order (which, again, is not a foregone conclusion), the United States and Britain—being pledged to uphold the rule of law—might find it difficult to resist a call for immediate sanctions; and this could be the flash point for a major international confrontation.

In any event, whichever way the South West African judgment goes, the Afro-Asian bloc—aided and abetted by Russia and China, who seek, I believe quite cynically, merely to make political capital out of their “support” in terms of the overall “cold war”—will continue to press for international intervention in South Africa. In a world bemused with argument and agitation about skin color, South Africa has become a convenient pawn in a power struggle towards ends which have nothing to do with color.

Already there have been several resolutions in the General Assembly which make it abundantly clear that the South West African issue is only one string in the bow of the Afro-Asian block. To change the metaphor, it is no more than a convenient casus belli. Whatever happens in the World Court on that issue, they insist that there are bigger issues at stake. South Africa, they assert, presents a unique case in the modern world of a denial of human rights on the score of color. It is said that the denial of rights is so flagrant and unique that the issue cannot possibly be regarded as a domestic one; that it is, accordingly, the legitimate business of the world community; and, more particularly, the duty of the world community to put an end to the outrage.

It may be observed that quite apart from this very high-tensioned legal and moral question, South Africa also matters at the international level because it is the world’s greatest producer of gold, uranium, and diamonds; one of the world’s greatest producers of wool, and possesses vast deposits of coal and iron ore and other minerals. In addition, its industrial growth in recent decades has been phenomenal. None of the larger powers can be indifferent to the question of who controls this wealth and for what purpose. Indeed, only a few months ago, Dr. Nkrumah of Ghana let one of his cats out of one of his bags when he declared that South Africa’s mineral wealth rightly belongs to black Africans, to be shared north of the Limpopo.3

At a very much deeper level, South Africa matters, too, because it presents the world’s race and color problems in microcosm. If these problems can be satisfactorily resolved in South Africa—and when I say “satisfactorily,” I mean at depth, with roots in sincere conviction, and not merely on the surface, or in unwilling token compliance with law—if these problems can be solved in South Africa, something enduring will have been wrought for the benefit of the world as a whole. In this regard, one will recall that the ratio between whites and non-whites in South Africa is approximately the same as the overall world ratio. Moreover, pressures and tensions are felt at the same points—that is to say, in regard to opportunities for education, jobs, housing, social and marriage relations, and in the churches.

THUS FAR I HAVE emphasized South Africa’s significance from the point of view of shared international concern. At the same time, it should be borne in mind that South African affairs may also—all too easily and all too unfortunately—become part of the domestic political power struggle in the U.S. and Great Britain. One may recall how Israel’s affairs long bedeviled local American politics. It should not be overlooked that today American Negroes not only hold something very like a balance of domestic political power, but they are tending increasingly to identify their own “freedom fight” with the “freedom fight” of their “black brothers in Africa.” (I am quoting Dr. Martin Luther King.) Indeed, on this whole aspect, Dr. King’s recent acceptance speech, when receiving the Nobel Peace Prize, is full of significance.4

And now having tried to put my subject into broad perspective, it is time for me to get down to the facts. I turn, therefore, to the enumeration of a few suggested axioms—or brief statements—concerning the essential and often overlooked facts of South African life.

First Axiom: My first axiom relates to the importance of cleaving to facts, as distinct from myths, illusions, and falsehoods about South Africa. Moreover, it is essential not only to cleave to facts, but to have regard to all the relevant facts, and not merely a selected group of facts; and, further, it is no less essential to weigh the facts dispassionately, and in full perspective. All this is emphatically not easy, because—and here is my first axiom—the South African situation, or racial predicament, is highly complex, shot through with deep emotion, conditioned by historical events, and, in the result, one may be sure that the surface appearance is almost invariably misleading.

Too many of the alleged friends of liberalism in the modern world approach the facts of the South African racial situation (and indeed other racial situations) with fixed inflexible ideas—sometimes based on sheer expediency; often with no rationally based or other deep-seated convictions; yet they cling to and brandish their ideas with a bigotry, self-righteousness, rancor, and prejudice, which is the very negation of true liberalism.

Beware of the professional “do gooders”; also beware of both the professional apologists for, and the professional critics of, South Africa. Both are likely to be wide of the mark.

To hear some of the white-washers of South Africa talk, one would imagine that the country has no problems at all. They fool nobody but themselves. On the other hand, to hear some of its traducers hold forth, one would imagine that the whites spend all their time killing and torturing the blacks.

Second Axiom: South Africa presents a situation to live with and improve, not a “problem” capable of instant solution.

Most of South Africa’s critics, well meaning though they may be, tend to overlook the magnitude and frightful difficulty of the human situation with which we are concerned. We speak of a “color problem” as if one could “solve” (that is to say, “remove”) it by an effort of the will and the intelligence. This is almost pathetically naive! There is no room here for easy generalizations in terms of “good guys and bad guys.” Nor is there any one magic formula which will dissolve the dark clouds. Certainly “one man—one vote” is not the answer—potent as that slogan may have been in some parts of Africa as a weapon in the early stages of the struggle for political power or emancipation, as distinct from the achievement of prosperity or true freedom. Dr. Nkrumah’s “Seek ye first the political Kingdom and all else will be added unto you” is not only sacriligious, but also over-simplistic.

We should be constantly on guard against over-simplifying the South African scene in terms of one issue. The black man’s effort to better himself in the modern world is often regarded as being simply and solely a color struggle—an effort to erase color-prejudice. This is an over-simplification. It is probably nearer the mark to suggest that what is taking place the world over is a vast revolution in which social, economic, and educational opportunities are being redistributed. The non-whites are, on the whole, the “have-nots” and color tends to be the external and visible sign of a pressure point in a social and economic process. The process itself, however, is not exclusively, and maybe not even basically, concerned with color.

Let me hasten to add that when I say that South Africa’s predicament may have to be “lived with” rather than “solved,” I am not being an apologist for much that is deplorable in present government policies. I say this because in the semi-lunacy which pervades some so-called “liberal” circles, if one does not support violent and bloody revolution in South Africa, one tends to be sworn at as being a “white supremacist.”

Nor am I a complacent believer in a policy of drift, against which Mr. Mason rightly inveighs. I do not believe that the mere passage of time necessarily brings about an improvement in human affairs. On the contrary, it is obvious that human situations may be lived with more or less successfully. And South Africa is not being all that successful!

Again, I do not advocate inaction. But on the other hand, I most emphatically repudiate the proposition that any action is better than no action. What we need is wise action—effective action—about which I shall have a little to say under the heading of Maxims. Wisdom is often the product of old fashioned and (among the shallow) discredited virtues, such as honesty and humility.

Third Axiom: Bad as apartheid, or separate development, are—and, let me repeat, I would not even try to defend any of the acts of stupidity and cruelty which have been perpetrated in its name—no one has yet come up with an alternative, which would be acceptable to both whites and non-whites. In fact, apartheid, like democracy, may be the worst form of government; but at the moment, as a matter of practical politics, there is nothing better in sight. Indeed, those who are serious-minded and sincere enough to get beyond vague generalities (such as, something must be done!), differ hopelessly as to what specific form of government should replace the present dispensation.5 The Afro-Asian bloc gets no further than the proposition: Leave the basic political structure to the decision of all the people of South Africa on a one man—one vote basis at a national convention. And this the whites will not soon or willingly accept. Any proposed change in South Africa must be acceptable to the whites as well as to the blacks if peace and inter-racial harmony are to result.

Fourth Axiom: No alternative blueprint for South Africa’s future has any chance of sticking unless the whites, as well as the non-whites, want it and willingly accept it.

In elaboration of this axiom, I would remind you that in no sense of the term are the 3.5 million whites in South Africa colonists. Many of them have been in the country as long as the white man has been in America. They have no other home. What is more, they have as good a title to some of the country as the Bantu-speaking settlers, who arrived at about the same time from the north. The whites are grimly determinded to stay on in South Africa, and I have no doubt that they will do so. For one thing, the dominant Afrikaans-speaking group have their own language, their own church, and their own mores, for the preservation of which they fought grimly over a period of many generations. They will fight to the death for them now. In this they would, I believe, be joined by the English-speaking whites.

Indeed, the population as a whole—white as well as non-white—are bent on working out their own destiny. What is more, despite talk to the contrary, I believe that many South African non-whites would resent outside interference as bitterly as the whites.

Fifth Axiom: There is no likelihood of a local black revolution ever developing or succeeding in South Africa, unless it is aided and abetted by the great powers abroad. Certainly there will be no Congo, no Algeria, no Zanzibar in South Africa unless the great powers, and in particular the United States and Great Britain, deliberately cripple South Africa’s economy and her government.

My reasons for this conclusion are:

(a) The South African whites are strong and determined. Rightly or wrongly, they believe that for them all is at stake. Above all, they believe in themselves. However perplexed they may be by their problems, they are tough and effective.

(b) The vital immediate decisions concerning South Africa are being taken and will, during the foreseeable future, continue to be taken in South Africa. In other words, the kind of withdrawal action which an external metropolitan power took in respect of, say, the Congo, Algeria, or Zanzibar, is simply “not on” in South Africa. Mr. Wilson, the present Prime Minister of England, may, perhaps, call the vital shots in Southern Rhodesia. I cannot see his doing so in South Africa.

(c) The more aggressive local opposition to apartheid has either been silenced or induced to acquiesce in the emerging patterns now being devised very largely by the whites. At the same time, I am bound to confess that I regard this silencing of black leadership as a seriously unhealthy factor. I am worried by the fact that so many of the articulate black political leaders are in jail, both because (quite apart from the humanities) I believe it necessary to encourage the fullest dialogue at all levels, and because a suppressed political view-point tends to become a political cancer. But at present I am concerned to state facts, not evaluate them.

(d) The spread of wealth in South Africa (uneven as it is between black and white) and, especially, the geography of South Africa are unfavorable to revolution. To begin with, economically, the whites and the non-whites are too heavily interdependent. Secondly, the overall economic conditions are not nearly bad enough for revolution. Compared with black states in the North, and with many other states in the world, South Africa’s non-whites are indeed, on the whole, economically fairly well off. Thirdly, the South African terrain is open and free from jungle; and, finally, the bland, sunny weather is just too good to encourage and sustain a violent revolution.

The point I am making is that South African affairs need not necessarily come to a crisis point, unless this is deliberately engineered by the great powers.

Sixth Axiom: If the great powers were to heed the Afro-Asian call to bring the South African government to its knees, the consequence would be extremely grave. Assuming that economic sanctions (and they would have to be universal and total), coupled with a naval blockade, could bring South Africa to her knees (and that is a very big assumption), how thereafter, I ask, in the ensuing chaos, would the country be governed? An immediate consequence, I believe, would be the need for indefinite international police action. White resistance would be stiffened and great and lasting bitterness would ensue. Not only would it be difficult for foreign powers to maintain peace in the presence of an embittered white minority, with the black majority clamoring for change, but the problem of restoring South Africa as a peaceful, productive, and independent country would, to say the least, be most formidable.

Seventh Axiom: One of the greatest threats to a sane outcome in South Africa—as, indeed, to sanity and health anywhere in Africa—is the ugly growth of anti-whiteism in the modern world. The whites, no doubt, have done much to bring this upon themselves, but it is often despicably nourished by white “freedom fighters” (for a variety of their own reasons). White racism is infernally evil; black racism, let me add, is no less evil—a point which I was delighted to hear Mr. Adlai Stevenson make (at long last) in the United Nations recently.6

Eighth Axiom: My eighth and last axiom is perhaps the most important. Most people in South Africa—including, let me emphasize, a great many Afrikaners—recognize that changes in South Africa’s political structure must come about. The white man knows and concedes that he cannot survive as a dominating and privileged minority. But, while the outside world clamors for change, it is all too often overlooked that changes are, in fact, taking place.

Barely three years ago, in my book The Foundations of Freedom, I criticized the Bantustan experiment in the Transkei on the score that it was retrograde and undemocratic, more particularly because the idea of popular voting was entirely excluded as being alien to the Bantu mentality.

The government’s policy has since changed radically; under the revised Transkeian constitution voting is now allowed to take place on a substantial scale—a definite step, in my view, in the right direction; and so this particular piece of criticism largely falls away.

EVIDENCE OF CHANGE for the better is manifest to anyone who is honest enough to keep his eyes open, and humble enough not to expect the immediate advent of the millenium.

This is especially true in South Africa’s industrial life; African minimum wages are rising steadily; last February the Minister of Labour stated in the Senate that there would be no ceiling to the skills Africans would be allowed to acquire in the border areas (a change in policy which has enormous possibilities); and, in the big cities, the wastefulness and inequity of “job reservation” is beginning to break down in the face of economic realities.

Again, a few years ago, it would have been unthinkable for Nationalist newspapers to refer to Africans as “Mr.” and “Mrs.” This is now being done. This may be a trivial point to those who have no experience of, or sympathy with, South Africa; but for anyone familiar with the history of this country, it is by no means an insignificant change, and—to many—most encouraging.

In short, the situation still holds within it elements of fluidity. While some doors are shutting, others are opening.

I have said that in my view the South African situation has within it elements of fluidity. It is of cardinal importance to keep the situation fluid, and to avoid inducing an overall rigidity through malicious action, or short-sighted action. What, then, can be done to help; and what in the first place, should be avoided? These questions bring me to the enumeration of a few maxims.

First Maxim: There is no health in attempting to fight evil with evil. More particularly, attempts to engineer internal violence, sabotage, and bloodshed can have no beneficial effect. Those who have engineered or condoned murder and violence—often from the safety of sniping points abroad—have achieved little more than trouble and imprisonment for young men and women, deceived by their charm and rhetoric, but left behind to face the music. What is more, they have provided an excuse for increasingly drastic laws. Indeed, there is much truth in the old French proverb that “without the gift of grace, men tend to become like the evil they oppose.”

Second Maxim: Attempts to pull South Africa and her government to their knees by isolation, boycotting, etc., are, in my view, mischevious and irresponsible—unless accompanied by a practical and acceptable alternative form of government. As to such an alternative, the boycotters are notoriously silent.

Third Maxim: Just as black racism is not the antidote for white racism, so too “appeasement” is not the antidote for black racism. You may be sure that no black racist would admire or like the United States or Britain any more for succumbing to the blackmail implicit in the now current Afro-Asian threat: “Choose between our friendship (no matter what the merits of the particular issue may be) or South Africa’s friendship.” The United States and Britain must be prepared to tell black men that they are often as wrong as white men—precisely because they are men; that each specific issue should be decided on its specific merits, and not by reference to an allegedly universal but crude yardstick: “If you are not against South Africa’s government you are against us.”

I am aware that there are some black racists who argue that there is no room for the whites anywhere in Africa. And it is possible that this may yet prove to be the real and horrible issue. “Africa for black Africans!” Happily, this is not the view of most non-whites in South Africa. What South African non-whites understandably desire in their country is a more equitable sharing of power and opportunities, which is not the same thing as a rejection of the whites.

Fourth Maxim: Mere negative shibboleths like “abandon apartheid” are not going to get anyone anywhere. Even the more positive call for a national convention to work out a new deal for South Africa is not really helpful, unless one has workable ideas about what is to happen if the government of the day, of what is after all still a sovereign state, refuses to summon it; and even more to the point, what is to happen if the delegates to such a convention do not agree on a new dispensation. On these specific but crucial points, one will again find the busybodies conspicuously silent or unhelpful.

Fifth Maxim: If international intervention can be justified at all in South Africa, it ought to be justified by reference to an issue of real principle—as distinct from mere expediency—and, what is more, in the application of any genuine principle, there can be no room for “double standards.”

In this regard, I was disappointed by Mr. Mason’s article. Mr. Mason argues that South Africa’s race relations, unlike race relations anywhere else in the world, should not be regarded as a matter of domestic jurisdiction, but are the world’s legitimate business because, he says, South Africa is uniquely guilty of a denial of human rights. South Africa alone uses the legal process to accord different treatment to men by reason only of their color—over which they have no control.

There are several things very wrong with Mr. Mason’s argument.

In the first place, color discrimination, bad as it is, is not the only kind of denial of human rights which should excite Mr. Mason’s indignation. Hungary and Ghana have, it would seem, been guilty of some fairly massive denials of human rights in recent years. Why single South Africa out as a scapegoat?

Secondly, it is by no means the case that South Africa alone is guilty of racial discrimination, backed by law. The Indian Tamils, not so long ago, were ruthlessly disenfranchised by law in Ceylon; and even Denmark draws certain important distinctions between Danes and Greenlanders. Moreover, and this is even more to the point, the absence of racially discriminatory laws from the statute book does not afford an exoneration from vicious racialism in men’s hearts and in actual practice. Indeed, when one looks at the facts—as distinct from mere theory and black-letter law—the body of sinners swells mightily, as you will discover if you talk to Asians in Zanzibar and throughout East Africa; Tamils in Ceylon; Malays and Chinese in Malaya; and many dark-skinned people even in the United States and Britain.

I do not mention these facts because I believe that by saying “you too,” one thereby finds an excuse for South Africa’s sins. Why single South Africa out as a scapegoat, I ask again?

Thirdly, it must be remembered that the South African government quite seriously rejects the contention that it is guilty of a denial of human rights, when it regards racial origin as a legitimate criterion for distinguishing between human beings. Arguing that racial origins are relevant to legitimate governmental objectives in the particular circumstances of South Africa, it places reliance on something like the “separate but equal” doctrine which once obtained in the United States. If today South Africa is admittedly a unique exception in putting forward such an argument, her government would reply that unique problems call for unique remedies. Nowhere else, they contend, within the confines of one country, does one find a comparable racial pattern to that obtaining in South Africa—where the whites are outnumbered by three to one.

I DO NOT PERSONALLY subscribe to the South African argument. On the contrary, I oppose it for reasons which I have set out at length in another place. My point here is simply that it calls for a serious answer, in the course of which the issue of bona fides—that of South Africa as well as that of her critics—may have to be faced.

Fourthly, the attempt to find something unique about South Africa’s case is to miss a golden opportunity to internationalize the problem of race-relations and human rights—whenever and wherever that problem is to be found; and to internationalize it in a mature and effective way.

For some years it has been recognized among international lawyers that the whole argument about the right of a sovereign state to do what it will with its own subjects within its own boundaries is becoming more and more out of date. What is needed is the encouragement and growth of this point of view; and the rededication and strengthening of the United Nations as a more clearsighted, impartial, and rational enforcement-agency against the infringement of human rights, wherever and whenever such infringements occur. These goals, I believe, are not helped forward by the over-simplified and often hypocritical performance of singling out South Africa as the world’s scapegoat. International law and organization are as yet a very tender plant. There is danger that its growth may be blighted by anger where coolness is needed, and by hate where there is need for compassion, charity, and above all honesty.

At the same time, there is much solid and worthwhile work that can be accomplished quietly day by day. As an example of such work, I value none more highly than keeping the channels of communication open between South Africa and what is good and more humane in the world beyond her borders. In such an enterprise, international trade and commerce have, I believe, a vital role to play.

There is an honored place for “industrial statesmanship” in South Africa. The standard of living of the African can and should be raised; African wages can and should be substantially increased on the basis of merit alone (bringing them nearer to white wages) without making enterprises uneconomic; tactful pressures can be brought to bear to relax still further the immoral and economically wasteful “job reservation” laws; new skills and know-how can be imparted to Africans; in short, the vast productive talent and purchasing power of non-white South Africans are ready for full and fair development; and here I would place the emphasis on the role of fairness.

Only a person with a rigid a priori view would regard such suggestions as these as an indefensible bolstering up of Dr. Verwoerd’s government. I prefer to regard it as what it more properly is—an opening up of new and wider horizons; an opportunity to demonstrate that efficiency and economic laws are color blind; an opportunity, in the constructive climate of commerce and industry, and in day to day contact, to treat men and women of all races as they should be treated, for let us never forget that there are no laws against charity—no laws capable of determining the look in a man’s eye and the tone of his voice; and finally, such an enterprise may be an instrument helping to consolidate and cement the interdependence of all men everywhere.

The blacks and the whites not only need each other but are too strong to destroy each other. Indeed, South Africa may demonstrate that economic realities are more potent than political dogmas. Earlier I indicated that I was an integrationist. I am; and I would suggest that, paradoxical as it may seem, the quickest and best route to stable and lasting integration may be the seemingly longest and the least dramatic way. Economic integration, which Dr. Verwoerd favors, may, despite his apparent views to the contrary, not only make eventual political and social integration inevitable, but it may also produce the only safe foundation for its enduring stability.

New Individualist Review welcomes contributions for publication from its readers. Essays should not exceed 5,000 words, and should be type-written. All manuscripts will receive careful consideration.

COMMUNICATION:

Note on the Election

BENJAMIN A. ROGGE*

This communication was written in October before the close of the campaign.

THE ELECTION WILL probably be over by the time this reaches print, and conservatism as a potent political force will be dead. A fine man will have suffered a humiliating defeat and the modern-liberals in his party will be planning a ruthless purge of all those who were closely associated with his candidacy. The stage will have been set for the spectre of the “Goldwater debacle” to haunt the candidacy of every conservative for years to come.

In the meantime, his most passionate supporters will be using their special journals of opinion to vent their disappointment and bitterness in angry explanations of why it happened. Some will say that the campaign was badly conducted (which it was); some, that Goldwater was sabotaged by the modern-liberals of the press, radio and television (which he was); some, that he was defeated by one of the most effective, ruthless and corrupt politicians of the modern era (which may or may not true). The Minutemen will be laying in more rifles and the head of the John Birch Society will be proving to his own satisfaction that Goldwater’s defeat was engineered by members of his own party, acting as conscious agents of the Communist conspiracy.

The truth, I suspect, lies quite elsewhere, and it is this possibility that I wish to explore. My own interpretation of the election can be simply stated: In a democratic society, under normal circumstances, no radical reorientation of social policy can be achieved by simple political organization and political action. Or to put it another way: As a general rule, for groups concerned with ultimate principles, elections just don’t matter!

Let me put it still another way: Given the absence of any feeling of crisis in the American society and given the general acceptance of modern-liberalism by most Americans who count, Goldwater was foredoomed to crushing defeat. All of this was perfectly evident long before Goldwater was nominated. The great mistake was made, not during the campaign, but precisely when those conservatives who pride themselves on being activists and on “knowing how to get things done,” decided that conservatism could be brought to America by what would amount to a political coup. Goldwater’s own clear, good sense in thinking that the time was not ripe and that he could serve the cause better by continuing as Senator from Arizona was overpowered by the passion of the leaders of the Draft-Goldwater group and by their assurance that they had the know-how to get the job done.1

This assurance was bolstered by the ease with which the organization swept through the San Francisco Convention. But of course, it is no great task for a well-organized minority to take over a committee (and that is what a political convention most resembles); in fact, it is done every day.

Goldwater might have won, had the country been plunged in a deep crisis of some kind at the time of the campaign. The victories of the Erhard “social market economy” in Germany in the late forties and more recently of the conservatives in Brazil were both made possible by the wide-spread sense of impending disaster in the societies involved. As John Maynard Keynes wrote with such excellent foresight in 1936: “At the present moment people are unusually expectant of a more fundamental diagnosis; more particularly ready to receive it; eager to try it out, if it should be even plausible.”2 Certainly the philosophical and political success of the ideas he presented in the book in which these words appear would attest to the significance of timing in attempts at radical change.

IN ANY CASE, it was precisely those who pride themselves on their practical wisdom who launched this most impractical and tragic of all modern political actions. The country was simply not yet prepared to accept the conservative position. Goldwater’s campaign could not build on any solid foundation of widely accepted ideas on society, economics, and the state.

This became apparent the moment Goldwater made the slightest threatening gesture in the direction of any specific element of the welfare state, e.g., social security. The response was so immediate and frightening that his campaign strategy made an obvious switch, to concentrate on corruption in the Johnson administration and to promise a rather mystical rebirth of honesty and integrity in government and of “morality” in society.

As Hayek pointed out to us long ago, honesty and integrity in government are not functions of which party is in power, but of the power over economic decisions possessed by those in government.3 But the people were not ready to reduce the power of government, and Goldwater and his advisors had no place else to go.

Nor could much be made out of foreign policy issues. Goldwater’s interventionist posture in foreign affairs was just like Johnson’s, only more so. The Goldwater principles of non-intervention and limited government on the domestic scene seemed to mix poorly with his promise of aggressive, interventionist action on the foreign scene. Whether he was more or less right than Johnson on foreign policy is not at issue. The question is whether there was any fundamental difference between the two in principle, and no such difference could be made to stick (not even the charge that Johnson was “soft on Communism”).

Let me repeat: Goldwater lost because those who count in America weren’t prepared to accept his ideas. The lesson would seem to be that the real function of conservatism in America is not to try to win elections but to try to win converts. The real battle is, as always, a battle of ideas. It matters less what name I drop into the ballot box on election day than what ideas I drop into the common pool during my lifetime.

Not a single one of the principles of limited government and individual freedom has been proved wrong by the Goldwater defeat (just as not a single one would have been proved right by a Goldwater victory). Nor has a single principle of the interventionist, welfare state been proved right by the Johnson victory.

Ideas are still evaluated by a different and more fundamental process, and perhaps it is time that we got back to work on that process. Let us forget for a while all attempts to be clever at political organization. Let us return to our problems of understanding, analysis, and clarity of exposition of the ideas of freedom. If we do our work well, we may some day be rewarded by the only lasting kind of political victory—a situation in which the ideas of freedom are so generally accepted in both parties that it will make little or no difference which one wins.

Economic Liberalism in Post-War Germany

WILLIAM S. STOKES*

. . . I do not believe that the idea of a “German mircle” should be allowed to establish itself. What has taken place in Germany during the past nine years is anything but a miracle. It is the result of the honest efforts of a whole people who, in keeping with the principles of liberty, were given the opportunity of using personal initiative and human energy. If this German example has any value beyond the frontiers of the country it can only be that of proving to the world at large the blessings of both personal and economic freedom.

—Ludwig Erhard1

DR. THEODOR HEUSS, the distinguished first president of the West German Federal Republic, once addressed himself to the question as to why the German has worked hard in recent times. He concluded: “he has had to; there has been no other way for him to earn his living in a country so restricted in area.”2 On the other hand, Professor Louis L. Snyder advances the thesis that German history and social, economic, and political institutions have conditioned the German to an acceptance of authoritarianism. When the elite members of society order the German to work hard, he responds instantly by working hard.3

The German people are indeed hardworking in the West German Federal Republic. They are also imaginative, inventive, efficient, affluent, and humane. In a major policy address delivered by Dr. Gerhard Schröder, Federal Minister of Foreign Affairs, on April 3, 1964, certain facts were revealed which demonstrate clearly that economic progress is continuing in West Germany. Dr. Schröder said, among other things:

With a gross national produce of some 380,000 million Deutschmarks we are at the head of all Common Market countries. Our share in the overall GNP of the EEC comes to almost 40 per cent. Our industrial production has increased by more than 180 per cent between 1950 and 1963, which means that, together with Japan and Italy, we top the list of all industrialized countries of the free world. As regards automobile production we are second only to the United States. The volume of our external trade amounts to 111,000 million Deutschmarks, which makes us today the world’s second trading nation. In recent years, Germany alone has provided roughly twice as much development aid as all the Communist countries taken together.4

Although the explanations for German effectiveness in producing and distributing goods and services provided by Dr. Heuss and Professor Snyder are interesting and perhaps useful, they do not quite cover the situation. One can stand on the border between East and West Germany and, bereft of all of the quantification devices of behavioralists, observe the obvious differences in productivity in the two systems.5 East Germany has the better agricultural land, yet weeds compete with the corn for nutrients in the soil. Even the very young and the very old willingly contribute to agricultural production in West Germany. Workers in the urban centers of East Germany are apathetic and careless, whereas standards of individual performance are high in West Germany. Although repeated so frequently that the whole world must know, it is nevertheless worth saying once more that the contrast between East and West Berlin proves strikingly the superiority of capitalism over socialism. The people in East Germany, of course, are just as German as those in the Federal Republic. If Dr. Heuss’ thesis were valid, they should buzz with economic activity. On the other hand, if Professor Snyder’s thesis were valid, they should respond with great zeal to the admonitions of their Communist leaders: They certainly live under one of the most authoritarian systems the world has ever known. But the fact is that the People’s Democracy in East Germany lags far behind the West German Federal Republic in economic development.

This paper will attempt to show that economic reforms in the direction of a private enterprise, market-oriented economy were primarily responsible for the rapid economic development which has taken place in West Germany in recent years. Special attention must be given to Ludwig Erhard and to Wilhelm Röpke, since Erhard provided the leadership and the policies and Röpke many of the principles of classical liberalism which were embraced by the government of West Germany. Other men in public life in Western Europe have shared the views of Erhard and Röpke. Where they have been able to persuade their governments to move from the planned state (dirigisme) to economic liberalism, the results in terms of economic development have been similar. Such men include Reinhard Kamitz in Austria, Luigi Einaudi in Italy, Jacques Rueff of France, Walter Eucken, and Per Jacobsson.6 It is not merely that economic liberalism has produced a dynamic and creative economic system, important as this fact is, but that the value implications of classical liberalism have extended to social and political life as well.

THE SPIRIT OF the White-Morgenthau Plan permeated the military occupation of Germany in its early years. It was planned that by 1949 Germany’s overall industrial capacity would be reduced to about 50 to 55 per cent of the prewar 1938 level (excluding the construction and building materials industries). The “planned reduction in Germany’s resources” would result in “a 30 per cent cut in the standard of living” as compared with the average standard of living before the war (1930-38).7 About 6.6 million Germans were killed during the war, 3.5 million were disabled, and more than 15 million lost their homes.8 Many parts of Germany were literally flattened. Although the initial policy was to disable rather than rebuild, the United States never intended to starve Germans to death. Between July 1, 1945, and March 31, 1950, total United States aid to West Germany was $3,801 million. As of July 31, 1952, the figure was somewhat greater. The United States claimed officially that the economic aid was used for purposes of achieving recovery in Germany. “In one form or another some 4 billions of dollars of United States aid have been applied to the economic recovery of West Germany in accordance with a policy of assistance to a defeated foe unduplicated in history and in violent contrast to the treatment accorded the areas of Germany under Soviet domination.”9 In a very broad sense, this statement may be accurate. However, the economic aid was not used to construct new industries or activate agriculture. “Nearly all of this aid represents the cost of procuring and shipping food, industrial raw materials and like commodities to Germany.”10 An official report of the Military Government describes United States policy as of 1946: “No attempt has been made to do extensive rebuilding while new construction has been absolutely prohibited.”11

Although the United States government spent billions of dollars in Germany, policies of rationing, price control, centralized direction, restriction, and restraint—coupled with a failure to stabilize the monetary situation and manage the inflation—resulted in a virtually stagnated economy: “by the end of 1945 industrial output was no more than 25 per cent of 1936 and perhaps as little as 15 per cent of the highest wartime level.”12 The plants operating by the end of 1945 represented about 15 per cent of the total industrial establishments in the United States zone. However, such plants were operating at no more than 5 per cent of capacity.13 About 20 per cent of the German population in the United States zone was receiving public assistance in some form or other.14 Little improvement could be claimed in 1946. The official report for the period stated: “Industrial production is estimated at only 10-12 per cent of current capacity in the United States Zone.”15 As of late 1949, the economic situation in Berlin could only be described as deplorable. About 25 per cent of the residents were unemployed. The Soviets looted to a point of reducing industrial capacity about 80 per cent. By the end of 1949, 800,000 of the 2.1 million total population or 38 per cent were being subsidized by some form of public aid.16

Despite the heavy expenditures of United States dollars, few Germans ate well. In the first 21 months of the occupation, rations were as low as 1,180 calories per person per day; and in only 8 out of the 21 months did the rations reach 1,550 calories per day in the American zone.17 Average weight continued to decline from sub-standard figures in June 1946, resulting in a nutritional status so low “as to entail excessive morbidity and mortality from infectious diseases in general and respiratory diseases in particular.” The increased incidence of tuberculosis is explained by weight deficiency and overcrowding.18

In a speech delivered at Antwerp, Ludwig Erhard described the character of the German economy just prior to the currency reform:

It was a time when most people did not want to believe that this experiment in currency and economic reform could succeed. It was a time when it was calculated that for every German there would be one plate every five years; a pair of shoes every twelve years; a suit every fifty years; that only every fifth infant would lie in its own napkins; and that only every third German would have a chance of being buried in his own coffin. That seemed to be the only life before us. This demonstrated the boundless delusion of planners that, on the basis of raw material stocks and other statistical data, the fate of a people could be determined for a long period in advance. These mechanists and dirigstes had absolutely no conception that, if a people were allowed once more to become aware of the value and worth of freedom, dynamic forces would be released.19

LUDWIG ERHARD, who was elected director of economic administration of the bi-zonal economic area on March 2, 1948, before becoming Minister of Economic Affairs in the new government and Chancellor in 1964, made clear in party circles and in the Military Government that he sought the destruction of planning and the institution of a market oriented economy. He found some opposition within his own party (the Christian Democratic Union or CDU-CSU). The Social Democratic Party (SPD), Marxist influenced and socialist in a formal, official fashion, naturally despised everything Erhard stood for in the field of economics. In addition, there was apparently a preponderance of economic planners, mostly United States university professors, acting as advisers in the Military Government. Although Erhard is a friend and supporter of the United States, various statements in one of his books suggest that he had a difficult time with the economists in the Military Government. For example, he says: “It was strictly laid down by the British and American control authorities that permission had to be obtained before any definite price changes could be made. The Allies never seemed to have thought it possible that someone could have the idea, not to alter price controls, but simply to remove them.”20

Again, when Erhard put currency stability in the forefront of his objectives, the Allies “in a heated ‘war of memoranda,’ preferred full employment . . . [to] the stability of our currency . . . . nearly all forces joined for a general attack on the market economy, forgetting that only through greater productivity and free competition, on the basis of the stability of our money, could we secure our position in the world markets.”21 When Erhard wanted to lower certain taxes and to remit others in order to step up consumption and lighten the burden on the economy, the Allies “at first refused permission for this tax reform.”22 Other words and phrases in his book further indicate the reluctance of the American authorities to accept economic reform: “interventions from the Americans”; the Income Tax Law of April 23, 1950 “was finally sanctioned by the Allies”; etc.23 The head of the E.C.A. mission in Germany expressed his distaste for what Erhard was doing by describing the German tax system as the most “anti-social in the world.” Erhard says that “there was constant pressure from the U.S.A. to introduce controls . . . .”24

The first great reform which Erhard achieved was the Tripartite Currency Reform, officially promulgated June 18, 1948 (Military Government Law No. 61), effective June 20. The reform retired the Reichsmark and established the Deutsche Mark. There would be DM 10 billion in the western zones (DM 11 billion on agreement of at least three-fourths of the Boards of Directors of the Bank Deutscher Länder of at least six of the Länder).25

From 1935 to 1945, the currency in circulation had increased from about RM 5 billion to over RM 50 billion. Bank deposits grew from about RM 30 billion to over RM 150 billion. Reich debt increased from RM 15 billion to RM 400 billion, “excluding war damage and other war-connected claims of RM 300 to 400 billion . . . . By 1946 the national income had been reduced from RM 60 billion to about RM 25 billion to 30 billion in 1936 prices.” It was estimated that the black market controlled 50 to 60 per cent of production, with prices often fifty to several hundred times the official prices.26

Erhard quotes Jacques Rueff and Andre Piettre as to the immediate effect of the currency reform in West Germany, and the paragraph is worth quoting here:

The black market suddenly disappeared. Shop windows were full of goods; factory chimneys were smoking; and the streets swarmed with lorries. Everywhere the noise of new buildings going up replaced the deathly silence of the ruins. If the state recovery was a surprise, its swiftness was even more so. In all sectors of economic life it began as the clocks struck on the day of currency reform. Only an eye-witness can give an account of the sudden effect currency reform had on the size of stocks and the wealth of goods on display. Shops filled up with goods from one day to the next; the factories began to work. On the eve of currency reform the Germans were aimlessly wandering about their towns in search of a few additional items of food. A day later they thought of nothing but producing them. One day apathy was mirrored on their faces while on the next a whole nation looked hopefully into the future.27

The bi-zonal index of industrial production increased from about 47 per cent of 1936 in May 1948 to 75 per cent in November28 and to 140 per cent by mid-1952.29 Lutz, Sohmen, Wright, and Röpke agree that currency reform was the beginning of the general policy of freedom of economic opportunity (Gewerbefreiheit) which, year after year, has continued to produce highly satisfactory results.30

Wilhelm Röpke has provided the best description of the nature of the economic reforms:

The essence of the German economic reform corresponds to the sickness which it was intended to cure. If the sickness was that combination of collectivism and inflation which we have designated as repressed inflation, the therapy for it had to consist, on the one hand, in the elimination of inflationary pressure and, on the other hand, in the elimination of the apparatus of repression (maximum prices, rationing, controls, and other interferences with free prices) and the restoration of market freedom, free prices, competition, and entrepreneurial incentives. Freedom in the realm of goods, discipline in the realm of money—those were the two principles upon which rested the German economic revival from 1948 onwards, and they have remained the foundation of German prosperity in spite of all the many concessions made to interventionism and the welfare state.

The reform of 1948 was constituted, then, of two parts: the overcoming of inflation and the dismantling of the apparatus of repression. The first was accomplished by the monetary reform, the second by the economic reform represented in the restoration of the market economy. Thus were the twin pillars of genuine economic order reconstructed from the chaos and the paralysis of the inflationary planned economy: the steering and motive power of free prices and the stability of the value of money.31

It is hard not to agree with Röpke when he says that “here is to be found the most convincing case in all history against collectivism and inflationism and for market economy and monetary discipline.”32

In my opinion, the most important result of currency reform was that human beings became important again. Individual dignity and self-respect were restored. It was the economic success of the early reforms, however, which provided the government with the means to behave in a humane manner. In order to assist some 13,090,000 expellees and refugees to find new homes and jobs and become a part of the West German community, more than $14.3 billion had been spent by January 1961. About 12.5 per cent of the total national product is devoted to social welfare functions (although Erhard makes crystal-clear his opposition to the concept of the paternalistic state). Restitution payments to the victims of the Nazi tyranny have been recognized to the extent of $7.8 billion, half of which has already been paid. The Federal Government has met its defense obligations through expenditures of $19,223 million ($21,823 million if aid to Berlin is included) in the period 1950-1960.33

No one knows or can measure the creative potentialities of human beings. The best way to discover who is capable of achievement is to permit all to try, each in accordance with his own inclinations and ideals. In Germany since 1949, talent has burst to the surface where none was ever suspected of existing. The tremendous increase in vertical mobility has already changed attitudes and perhaps values as well in the direction of representational government. With freedom, individuals have experimented with many kinds of social and economic activities. Inevitably, the like-minded have formed voluntary organizations to discuss and, more recently, scrutinize government to see that no one in authority jeopardizes the new-found liberty.

The achievements of the “social market economy” and republican government under federalism should not be exaggerated, however. West Germany is not rich in natural resources, except for coal. No matter how inventive, ingenious, and hard-working Germans may be, relatively full employment and a high level of prosperity depend to an important degree upon an international climate that permits free, fair access to raw materials and markets. The CDU-CSU Government has succeeded in bringing about agreements liberalizing trade in the European area, but a reversal of this trend would have a negative effect. Although about 5.5 million homes were built in the period 1950-1960, construction techniques are less advanced than in the United States. Retail merchandising, especially in food, must be improved if people are to obtain high quality products at low cost.

One reform which Erhard hoped to accomplish early in his administration was the modernization of agriculture and the elimination of subsidies. When the Bonn government assumed power in 1949, the many small farms were divided into about 25 million tiny scattered strips, resulting in “an enormous waste of time, labor and land resources and seriously handicapping mechanization.”34 The “Green Plan,” which is the term used to designate the program of government subsidies, distorts the market and delays the fundamental solution to the problem of producing inexpensive fruits, vegetables, meat, and dairy products. The elimination of subsidies, tariff reform, and consolidation (by voluntary means, not by government coercion) of the small plots represent goals which Erhard has not yet been able to realize.

ERHARD AND THE FOUNDING Fathers of the Bonn system believed that a private enterprise, market-organized economic order was essential for political liberty and freedom. When the White-Morgenthau policy was abandoned and West Germany was permitted to attempt national regeneration in the political realm, the Germans advanced their views to the military authorities.35 After much deliberation, the three Military Governors submitted an Aide-Memoire to the Parliamentary Council meeting at Bonn on November 22, 1948, outlining the constitutional principles which the occupation authorities believed should be incorporated into the new “basic law” (Grundgesetz rather than Verfassung because the Founding Fathers at Bonn wanted to reserve the term “constitution” for the organic statute of a reunited Germany). The Aide-Memoire is a remarkable document, because its recommendations are the result of searching analysis of why the representational system failed in the Weimar Republic, culminating in the Nazi tyranny. As the Aide-Memoire does not seem to be well-known, or, at least, is not often mentioned in scholarly studies of Germany, it is perhaps worthwhile to insert the provisions here:

“They [the Military Governors] believe that the Basic Law should, to the maximum extent possible, provide:

“a. For a bicameral legislative system in which one of the houses must represent the individual states and must have sufficient power to safeguard the interests of the states;

“b. that the executive must only have those powers which are definitely prescribed by the constitution and that emergency powers, if any, of the executive must be so limited as to require prompt legislative or judicial review;

“c. that the powers of the federal government shall be limited to those expressly enumerated in the constitution, and, in any case, shall not include education, culture, health (except, in this last case, to secure such coordination as essential to safeguard the health of the people in the several states); and that its powers in the field of public welfare be limited to those necessary for the coordination of social security measures; and that its powers in the police field be limited to those especially approved by the Military Governors during the occupation period;

“d. that the powers of the federal government in the field of public finance shall be limited to the disposal of monies, including the raising of revenue for purposes for which it is responsible; that the federal government may set rates and legislate on the general principles of assessment with regard to other taxes for which uniformity is essential, the collection and utilization of such taxes being left to the individual states; and that it may appropriate funds only for the purpose for which it is responsible under the constitution;

“e. that the constitution should provide for an independent judiciary to review federal legislation, to review the exercise of federal executive power, and to adjudicate conflicts between federal and Land authorities as well as between Land authorities, and to protect the civil rights and freedom of the individual;

“f. that the powers of the federal government to establish federal agencies for the execution and administration of its responsibilities should be clearly defined and should be limited to those fields in which it is clear that state implementation is impracticable;

“g. that each citizen have access to public office, with appointment and promotion being based solely on his fitness to discharge the responsibility of the position, and that Civil Service should be non-political in character; and

“h. that a public servant, if elected to the federal legislature, shall resign his office with the agency where he is employed before he accepts election.”36

How unnerving and even galling the provisions of the Aide-Memoire and, indeed, the Bonn Basic Law must be to the modern-day “liberal.” Both sources prove that one can “turn the clock back” to the principles of classical liberalism, such as individualism, voluntarism, genuine division of powers, states’ rights, and most important of all, limited government.

BUT WHAT ABOUT the Social Democrats? What has been the impact of the return to classical liberalism insofar as their ideological and policy posture is concerned? Are they sincere in rejecting socialism in favor of the “social market economy” now in force?

Although the SPD until very recently opposed every major foreign and domestic policy of the Bonn Government, it is possible to argue that the party has now shifted fundamentally in the direction of strong, if not militant anti-Communism, and that it now supports the private enterprise economic system. It is difficult to conceive how a party could so radically change its position in so short a period of time, but there is evidence that this is what has happened.

The left-right conflict in the SPD over socialism and capitalism was resolved in a draft program published in the SPD paper Vorwärts on September 10, 1959. The program eliminated the term “class struggle” and included only one reference to the “privileges of the ruling class.” It moved away from socialism and endorsed private enterprise in such phrases as “prosperity for all”; “freedom of choice for consumer goods”; and “free initiative for entrepreneurs.” However, other phrases in the program indicated that the Party intended to remain at least partly leftist: “democratic socialism”; “just socialist order”; and “competition as far as possible and planning as far as necessary.”

The program called for nationalization of coal and power, control of the management of large industries, cartel regulation, investment supervision, and competition by public enterprises. It preferred respect for religious institutions and endorsed their protection by law and accepted the principle of national defense. The convention of the SPD held at Bad Godesberg approved the major provisions of the draft program on November 16, 1959. Thus, the Bad Godesberg program replaced the Heidelberg program of 1925 and committed the SPD to new policies of private property, a free economy, and national defense. The Bad Godesberg program clearly rejects Marxism and denies that socialism can be made a substitute for religion. The orthodox Marxists at the convention remained almost completely silent, and only 16 out of 340 delegates voted against the program. The public press made clear that the wing of the party which supported the anti-Communist and moderate economic views of Willy Brandt had triumphed over the leftists who had dominated the party in recent years.37

IT IS THE ATTITUDES and values which individuals hold and cherish which determine the character of a state, regardless of the forms, structures, laws, or constitutions which may be in force at any given time. It is true that political and governmental institutions contribute to the value pattern of a society, but the family, Church, education, social classes, and the economic system also play important roles. If one seeks a society of free men organized in an independent state, it is logical to assume that the possibilities for success are maximized by creating as complete a climate of freedom as possible. If I interpret the evidence correctly, this has been the position of the leaders of the new German state since the inception of the Federal Republic in 1949 and even before, since the currency reform was in 1948. By honoring the concept of the worth and dignity of the individual Erhard and his supporters have unleashed talent and ability which almost overnight produce a dynamic economic system which in turn made values of voluntarism, fluidity and mobility in the class system meaningful. Since freedom is indivisible, it is only logical to insist on the establishment of a government limited to a range of functions compatible with personal liberty.

Since man is fallible and his institutions necessarily imperfect, one should not overestimate the achievement of the renewed application of principles of classical liberalism in a single country. In West Germany over three-fourths of the adult population had only eight years or less of schooling in 1949. Educational opportunities have increased since that time, of course. However, children are still separated at about age ten into the small group preparing for university or professional education and the large majority who face early terminal education and employment. Good as the system is in many respects, it may deny the country the skills and leadership which a longer and more flexible education might produce. The present system probably reduces mobility, makes the class structure more rigid, and aggravates individual and group conflict. The retention of the old division (almost a caste system) of the Beamten, civil service officials with a formal certificate of appointment, and the Angestellte, or employees, has a similar effect in the public service.

In the political and governmental field, the partial use of proportional representation permits fragmented, “functionary” parties, although West Germany is practically a two-party country in national elections. Single member constituencies and majority voting may replace proportional representation completely in time, thus compelling party leadership to behave more considerately and responsibly toward party members. Although the right-wing movements have declined in influence since about 1951-1952 and the major parties are committed to the principle of representation, there does not seem to exist any large degree of popular enthusiasm for the mechanical aspects of the Bonn system. Many Germans do not regard it wholly as their own creation. I was told many times: “It’s all right, but when we achieve reunification, we will put our heads to the task and come up with something better.” Perhaps so, but in the meantime it is possible to conclude that the German experience proves once more that some ideas are better than others, and that sometimes those which have prevailed in the past serve the needs and idealistic aspirations of man better than those which happen to be popular at present.

It has seemed to me that the achievements of Bonn have contributed to the defeat of socialism in the Western European countries. In a trip to the major countries of the Far East in 1963, a research experience which permitted me to talk to heads of state, men in public life, scholars, and businessmen, I found that there was widespread awareness of the German case study. I seemed to detect an awareness of the fact that those countries in the Far East which have taken steps to free their economy (Japan, Taiwan, and the Philippines for example) were regarded as having achieved a more impressive economic and political experience than those which have moved in the direction of state interventionism and planning (such as Indonesia, Ceylon, Burma, or India). As a Latin Americanist, I have many times called attention to the strong penchant for left or right-wing collectivism among both large and small countries in the Western Hemisphere. In the last ten years, however, and especially in the past several years, much evidence has appeared to suggest that people with power and influence in the community are re-examining the principles of classical liberalism, particularly in the economic realm. The case study of Germany in particular, Western Europe in general, and most recently, Spain, which is in the process of dismantling state controls, appears in the literature and in the discourse of knowledgeable people. Even in the United States itself it might be said that some change of direction can be discerned.

Property Law and Racial Discrimination

ROBERT M. SCHUCHMAN*

RECENT CIVIL RIGHTS legislation, both state and federal, has incorporated the premise that the right to use and dispose of private property is limited by the concept that all persons are deserving of an equality of treatment, regardless of race, creed, or nationality. It is not our purpose to review “public accommodations” legislation. Instead, we shall examine the judicially-inspired thesis that the doctrine of racial equality serves as a constitutional limitation on the use and disposition of property, regardless of the presence or absence of statute.

The first pertinent problem considered by the federal courts in this century was the obverse of the principal question here. The issue presented in Buchanan v. Warley, 245 U.S. 60 (1917), was whether the government could, through legislation, impose a racial preference on the use and disposition of property. An ordinance of the city of Louisville prevented the residential occupancy of a lot by “a person of color” in a block where the greater number of residences were occupied by white persons. A sale of private property to a Negro in such a block was declared to be void.

The law was defended on the ground that it was a proper exercise of the police power of the state. It was claimed that the ordinance “tends to promote the public peace by preventing racial conflicts; that it tends to maintain racial purity; that it prevents the deterioration of property owned and occupied by white people . . . .” 245 U.S. at 73-74.

A white person sold a residential lot to a Negro in a “white block.” When the buyer refused to fulfill the contract, relying upon the racial occupancy ordinance, the seller sued for specific performance, claiming that the Louisville act violated the Fourteenth Amendment to the Constitution.

In its decision, the United States Supreme Court upheld the right to freely dispose of one’s property regardless of the local law. The Court said that:

The effect of the ordinance under consideration was not merely to regulate a business or the like, but was to destroy the right of the individual to acquire, enjoy, and dispose of his property. Being of this character, it was void as being opposed to the due-process clause of the Constitution.

245 U.S. at 79-80.

It further said that:

The Fourteenth Amendment protects life, liberty, and property from invasion by the States without due process of law. Property is more than the mere thing which a person owns. It is elementary that it includes the right to acquire, use, and dispose of it. The Constitution protects these essential attributes of property.

245 U.S. at 74.

It must be stressed that Buchanan v. Warley does not speak in terms of the equal protection clause of the Fourteenth Amendment. The decision emphasizes the “essential attributes” of the rights of property, attributes which, it is said, are protected by the ancient concept of due process of the law.

RACIAL RESTRICTIONS on the alienation of property, when imposed by the government, were struck down in subsequent decisions even when couched in the guise of a zoning regulation. Thus, in City of Richmond v. Deans, 37 F.2d 712 (4th Cir.), aff’d, 281 U.S. 704 (1930), the court held as violative of the Fourteenth Amendment a zoning ordinance which prohibited the sale of a residence on a block “where the majority of residences on such street are occupied by those with whom said person is forbidden to intermarry . . . .” Because that question was not before the court, it did not rule on the constitutionality of the law prohibiting intermarriage.

The rule that the alienation of property was entirely free from restrictions based on the racial preferences of the state was again upheld in a 1932 case in Missouri. However, the decision in this case left the door open for future regulation if such regulation was found to be for the public welfare.

Private property cannot, under the guise of police power, be subjected to unreasonable annoyance and arbitrary restriction of its use where public welfare can in no way receive benefit by such restriction.

Women’s Kansas City St. Andrews Soc. v. Kansas City, 58 F.2d 593, 598 (8th Cir. 1932).

Now it was no longer a question of the “essential attributes of property.” The basic issue was said to be whether “public welfare” could in any way “receive benefit.” Since the racial ordinance did not benefit the public welfare, it was stricken.

The constitutional power of the states to attach a racial preference to the exercise of the rights of property seemed a settled issue after Buchanan v. Warley and the subsequent line of cases. A governmental body could not, constitutionally, command a property owner to restrict the sale and use of his property to members of a specified race or color.

These early cases dealt with statutes; they were concerned with the limits of the law as exercised through the police power, not with the purely private arrangements of men. If the state could not impose racial preference by law, then the next and obvious question was: Could the state impose racial non-preference on private property and private arrangements by the use of law?

As we have noted, Buchanan v. Warley held that a racially restrictive ordinance was void not because it interfered with the federal government’s notions of equality, but because it infringed upon the essential rights of property held by the individual. However, when state laws imposing non-discrimination on private arrangements were challenged in the courts, a completely new rationale was used to uphold the laws.

The New York Civil Rights Act provided, inter alia, that no labor organization could deny a person membership or equal treatment because of race, color, or creed. In Railway Mail Ass’n v. Corsi, 326 U.S. 88 (1945), the union challenged the Act on the ground that, in line with Buchanan v. Warley, it was an unconstitutional “interference with its right to selection of membership and abridgment of its property rights and liberty of contract.” It was argued that the right of property to be free from one brand of government racial preference implied freedom from any other preference.

The Supreme Court disagreed and held that property was only free from legislation imposing racial discrimination, not from that imposing racial equality:

A judicial determination that such legislation violated the Fourteenth Amendment would be a distortion of the policy manifested in that amendment, which was adopted to prevent state legislation designed to perpetuate discrimination on the basis of race or color.

326 U.S. at 93-94.

THUS THE PROTECTION of the right of property by the Fourteenth Amendment, in the racial context, became a simple expression of the racial policy preferences of the state. No longer was the right to use property free from the racial preference of law a part of the “essential attributes of property,” as far as freedom from positive law restriction was concerned.

The development of the law from a general protection of property rights to a judicially approved mirror of public policy is echoed in the area of purely private arrangements. Contemporaneous with the line of cases concerning laws which express racial preference in property relations is a trend of decisions affecting private agreements and decisions on the use and disposition of property.

The first of these cases concerned the so-called “restrictive covenant” in real property. A racial restrictive covenant is typically an agreement among property owners, binding on the land for a specified number of years, which declares that no property in the area covered by the contract may be sold, leased, or used by members of the Negro race.

Historically, racially restrictive covenants on land were considered to be valid and enforceable contracts. They were agreed upon voluntarily by the contracting landowners, were secured by a valuable consideration, and any new buyer took possession subject to and with notice of the restriction. Except for an isolated case in 1892, such covenants were consistently upheld, except where they violated the common law policy against unreasonable restraints on alienation, or where enforcement was deemed inequitable because of the changed character of the neighborhood. But, after Buchanan v. Warley, challenge after challenge was made to these covenants on the ground that they denied the excluded race due process of the laws.

The courts generally rejected this argument without much comment. The Buchanan rule was held to apply solely to state action. When purely private parties agreed to a restriction, there was no constitutional violation and no rights were denied by enforcement of the covenant. A clear statement of the early judicial reaction to the racial covenant challenge may be found in the lower court opinion in Corrigan v. Buckley, 299 Fed. 899 (D.C. Cir. 1924), which upheld the covenant, stating:

The constitutional right of a Negro to acquire, own, and occupy property does not carry with it the constitutional power to compel sale and conveyance to him of any particular private property. The individual citizen, whether he be black or white, may refuse to sell or lease his property to any particular individual or class of individuals . . . . Such a covenant is enforceable, not only against a member of the excluded race, but between the parties to the agreement.

299 Fed. at 901.

This was a restatement of the “essential attributes of property” argument embodied in Buchanan v. Warley. Just as a property owner was free to sell to a Negro despite laws attempting to negate this right, he could agree to refuse to sell to a Negro without state interference. The denial of due process occurred when the state dictated a racial preference in property, not when individual property owners expressed this preference.

On appeal, the Supreme Court affirmed the lower court holding in Corrigan v. Buckley, 271 U.S. 323 (1926). The Court emphasized that the due process clause of the Fifth and Fourteenth Amendments was a “limitation only upon the powers of the General Government, and is not directed against the action of individuals.” 271 U.S. at 330. Hence, there was no substantial federal question involved in the enforcement of private restrictive covenants. The Court dismissed, without much comment, the novel contention that the Court decree enforcing the covenant was itself state action, and such enforcement therefore denied due process of law to the petitioner.

Such was the state of the law when, in 1948, the landmark case of Shelley v. Kraemer, 334 U.S. 1, reached the Supreme Court. On February 16, 1911, thirty out of a total of thirty-nine owners of property in a certain lot in St. Louis, Missouri, signed an agreement, subsequently recorded, which provided in part:

. . . the said property is hereby restricted to the use and occupancy for the term of Fifty (50) years from this date, so that it shall be a condition all the time and whether recited and referred to as [sic] not in subsequent conveyances and shall attach to the land as a condition precedent to the sale of the same, that hereafter no part of said property or any portion thereof shall be, for said term of Fifty-years, occupied by any person not of the Caucasian race, it being intended hereby to restrict the use of said property for said period of time against the occupancy as owners or tenants of any portion of said property for resident or other purposes by people of the Negro or Mongolian Race.

On August 11, 1945, Shelley, a Negro, purchased a parcel of land in the lot concerned. On October 9, 1945, the white landowners in the lot brought suit to enforce the terms of the restrictive covenant. The Supreme Court of Missouri granted the relief, holding the agreement effective and concluding that enforcement of its provisions violated no rights guaranteed by the Federal Constitution. Kraemer v. Shelley, 355 Mo. 814, 198 S.W. 2d 679 (1946).

Shelley took his appeal to the United States Supreme Court. Chief Justice Vinson, in his decision, noted initially that the racial restrictions of this private agreement “could not be squared with the requirements of the Fourteenth Amendment if imposed by state statute or local ordinance,” 334 U.S. at 11. But this was a voluntary, private restriction, and a different rule of law applied:

. . . the action inhibited by the first section of the Fourteenth Amendment is only such action as may fairly be said to be that of the States. That Amendment erects no shield against merely private conduct, however discriminatory or wrongful.

We conclude, therefore, that the restrictive agreements standing alone cannot be regarded as violative of any rights guaranteed to petitioners by the Fourteenth Amendment. So long as the purposes of those agreements are effectuated by voluntary adherence to their terms, it would appear clear that there has been no action by the State and the provisions of the Amendment have not been violated.

334 U.S. at 13.

SO FAR, this is just a restatement of the old law. But Shelley argued, and the Court agreed, that the mere enforcement of these admittedly lawful covenants constituted state action in violation of the Fourteenth Amendment. The reasoning of the Court in this regard is so vital for an understanding of later applications of the “state action” doctrine that I take the liberty of quoting from the decision at some length:

It is clear that but for the active intervention of the state courts, supported by the full panoply of state power, petitioners would have been free to occupy the properties in question without restraint.

These are not cases . . . in which the States have merely abstained from action, leaving private individuals free to impose such discriminations as they see fit. Rather, these are cases in which the States have made available to such individuals the full coercive power of government to deny to petitioners, on the grounds of race or color, the enjoyment of property rights in premises which petitioners are willing and financially able to acquire and which the grantors are willing to sell. . . . Nor is the Amendment ineffective simply because the particular pattern of discrimination, which the State has enforced, was defined initially by the terms of a private agreement. State action, as that phrase is understood for the purposes of the Fourteenth Amendment, refers to exertions of state power in all forms. And when the effect of that action is to deny rights subject to the protection of the Fourteenth Amendment, it is the obligation of this Court to enforce the constitutional commands.

334 U.S. at 19-20.

The decision in Shelley v. Kraemer was shattering in its impact. It held, in effect, that although private racial preference contracts were perfectly valid and legal, their enforcement was unlawful. The Court treated the equitable enforcement of a restrictive covenant as a positive discriminatory act of the state, bringing it within the limitations of the Fourteenth Amendment.

This analysis, it would seem, entirely misconstrues the historical role of courts of equity. Moreover, it ignores the distinction between the judicial function of enforcing positive law and that of settling private disputes and construing private agreements. In the Buchanan v. Warley situation, the courts were called upon to enforce a legislative enactment expressing racial preference. It was because the underlying act, an expression of the positive law, was contrary to the Fourteenth Amendment, that the enforcement of the law was also barred.

The private agreement in Shelley v. Kraemer presents an entirely different situation. There, the underlying act was a voluntary private covenant, admittedly in violation of no law. The role of the court was not one of enforcing a coercively based government measure. Rather, the court was to act as a neutral arbiter of private disputes by carrying out the solemn agreements of a contractual society. In its enforcement of private contracts, the courts should not judge the substance of such contracts. Private agreements, to this observer, need not reflect the prevailing government policies. Otherwise, liberty of contract is a sham.

IT HAD BEEN accepted doctrine in the Anglo-American community that courts were not to write the contracts of men: they were to construe and then enforce them, regardless of which party had the better bargain, so long as the bargain was not illegal. Those who dislike a contract need not agree to it. When a person received notice of a restrictive covenant on a property he wished to buy, he was free to accept it with the covenant or not make the purchase. The novel doctrine of Shelley v. Kraemer places the courts in the position of rewriting the bargain to conform to current majority sentiment. To say the least, this is not an expression of freedom of contract.

Numerous cases since Shelley v. Kraemer have extended the “state action” thesis even further. In the companion case to Shelley, Hurd v. Hodge, 334 U.S. 24 (1948), the Supreme Court considered the enforcement of a restrictive covenant in the District of Columbia. Inasmuch as the Fourteenth Amendment applies only to the states, and not to the District, a different rationale than that relied upon in Shelley was required.

One contention of the petitioners in Hurd v. Hodge was that “judicial enforcement of the covenants is contrary to . . . treaty obligations of the United States contained in the United Nations charter.” 334 U.S. at 28, n.4. To this and other arguments the Court stated that enforcement was

. . . judicial action contrary to the public policy of the United States, and as such should be corrected by this Court in the exercise of its supervisory powers over the Courts of the District of Columbia. The power of the federal courts to enforce the terms of private agreements is at all times exercised subject to the restrictions and limitations of the public policy of the United States as manifested in the Constitution, treaties, federal statutes, and applicable legal precedents. Where the enforcement of private agreements would be violative of that policy, it is the obligation of courts to refrain from such exertions of judicial power.

334 U.S. at 35.

Here, as in Shelley, we see the notion that property must be used in accordance with the majority sentiment of the day dignified into a governing juridical principle. The final statement of this doctrine, as applied to restrictive covenants in real estate, appeared in the case of Barrows v. Jackson, 346 U.S. 249 (1953). A sale of restricted real estate was made to a Negro purchaser and, under the authority of Shelley v. Kraemer, he was permitted to occupy the lot without challenge. However, the owners of the adjoining properties, who were parties to the restrictive covenant, sued the white vendor of the lot in question for money damages for breach of contract.

Here it could hardly be argued that “state action” was being used to exclude Negroes and deny rights guaranteed by the Fourteenth Amendment. Unlike Shelley, the court was not asked to enforce the contract and expel the Negro purchaser. Rather, the covenanting parties sought to hold the violating party liable for his breach. The Supreme Court disagreed however, and, in a terse decision, disallowed the recovery of damages under the authority of Shelley v. Kraemer.

The new departure of the Court in Barrows v. Jackson was emphasized by Chief Justice Vinson in a vigorously worded dissenting opinion. It will be recalled that Vinson actually wrote the opinion in Shelley v. Kraemer. Yet, in Barrows, he said:

The majority seems to recognize, albeit ignores, a proposition which I thought was made plain in the Shelley case. That proposition is this: these racial restrictive covenants, whatever we may think of them, are not legal nullities so far as any doctrine of federal law is concerned; it is not unlawful to make them; it is not unlawful to enforce them unless the method by which they are enforced in some way contravenes the Federal Constitution or a federal statute.

* * * * * * *

The majority identifies no non-Caucasian who has been injured or could be injured if damages are assessed against respondent for breaching the promise which she willingly and voluntarily made to petitioners, a promise which neither the federal law nor the Constitution proscribes. Indeed, the non-Caucasian occupants of the property involved in this case will continue their occupancy undisturbed regardless of the outcome of the suit.

346 U.S. at 261, 262.

As Chief Justice Vinson pointed out, the Shelley doctrine goes much further, as applied, than a mere ban on enforcement of private agreements expressing racial preference. Despite all the verbiage about the lawfulness of these agreements in themselves, the Court actually struck down the underlying voluntary agreements. Since Shelley v. Kraemer, the Supreme Court has extended the “state action” rule to prohibit more and more private uses of property. In a society where broken agreements can only be enforced through the judicial system, it has declared that, in effect, all contracts partake of state action. As the Supreme Court put it: “Once courts enforce the agreement the Sanction of government is, of course, put behind them [sic].” Railway Employe’s Dep’t. v. Hanson, 351 U.S. 225, 232 n.4 (1956). No longer is the Court the neutral enforcer of private contracts; instead, it becomes a participant in the contract.

The Shelley rule was extended to labor union contracts in Brotherhood of R.R. Trainmen v. Howard, 343 U.S. 768 (1952), where it was held that, under the Railway Labor Act, a union could not make a contract where race was a determinent of employment. One of the reasons therefore was that since Congress authorized the system of collective bargaining through union representatives such representatives would act in violation of the Constitution if they deprived a worker of benefits because of his race. 343 U.S. at 773.

ANOTHER FACET of the Shelley doctrine is whether a member of the excluded race has a right to use another person’s private property when the exclusion is based solely upon race. The recent trend of decisions concern not judicial enforcement of racial restrictive contracts, but judicial compulsion directed against those voluntarily agreeing to abide by such contracts.

An early case dealing with the question was Rice v. Sioux City Memorial Park Cemetery, 349 U.S. 70 (1955). The contract of sale of a burial lot in the cemetery provided that “burial privileges accrue only to members of the Caucasian race.” The Cemetery, acceding to its own contract, refused to bury a certain Winnebago Indian. The decedent’s widow sued the Cemetery to compensate her for its action. She argued that judicial recognition of the validity of the racial clause in the burial contract would violate the Fourteenth Amendment and, in addition, the provisions of the United Nations Charter.

The Supreme Court of Iowa denied relief to the widow. It held that, under Shelley v. Kraemer, it could not compel the Cemetery to obey its contract by excluding non-Caucasians. However, where the Cemetery was only relying upon the racial clause as a defense to an action, the court could not reform the contract by enforcing it without regard to the racial clause. Moreover, the court said, the provisions of the United Nations Charter “have no bearing on the case.”

The widow appealed the decision to the United States Supreme Court, which granted certiorari. The Court split down the middle, four Justices for affirmance, four for reversal. Under the traditional rules of the Court, an evenly-divided court is treated as an affirmance of the lower court, but no opinion is filed. Hence, the reasoning of the Justices in this case is unknown, although four jurists apparently believed that the racial restriction in the burial contract could not be privately enforced by the Cemetery. The Iowa Legislature then passed a statute prohibiting denial of burial solely on account of race. This law, governing future burial contracts, made the Rice situation a moot question.

But more recent cases have probed more deeply into the issue of a private right to express racial preference on one’s own property. In Wilmington, Delaware, a Negro was refused service in a privately owned and operated restaurant which was, however, in quarters leased from the municipal parking agency which owned the building. The Negro sued to compel the restaurant to serve him, on the ground that the restaurant had sufficient proximity to state action for denial of service to constitute a violation of the Fourteenth Amendment. From an adverse decision in the Supreme Court of Delaware, he appealed to the United States Supreme Court.

In, Burton v. Wilmington Parking Authority, 365 U.S. 715 (1961), the Court reversed the decision, holding that state action was involved in the restaurant, and the Negro could not be denied service because of his race. It was found that the Parking Authority and the city of Wilmington owned the land and the building in which the restaurant was located; the building, a municipal garage, was dedicated to a “public use”; the costs of acquisition, construction, and maintenance of the building were publicly defrayed; and the restaurant gained the benefits of proximity to the parking facility. 365 U.S. at 723, 724. The Court concluded that:

Addition of all these activities, obligations and responsibilities of the Authority, the benefits mutually conferred, together with the obvious fact that the restaurant is operated as an integral part of a public building devoted to a public parking service, indicates that degree of state participation and involvement in discriminatory action which it was the design of the Fourteenth Amendment to condemn.

365 U.S. at 724.

The Burton case, as can be seen, goes further than Shelley v. Kraemer. The issue is no longer limited to judicial enforcement of private contracts. In Burton the question is whether private uses of property, in terms of racial preference, can be restricted by the courts on the ground that there is “state participation and involvement” in the private property. The overwhelming involvement of the state in all aspects of private property today leads to the conclusion that the Burton doctrine can be used to eliminate virtually all expressions of racial preference by private owners on private property, as a matter of constitutional law. Moreover, the doctrine can be used to restrict other voluntary uses of property which do not conform to prevailing majority sentiment.

A FEW EXAMPLES of the broadness of the concept of “state involvement” demonstrates how easily private property can be limited merely by redefining it as government-involved property. Smith v. Holiday Inns of America, Inc., 220 F. Supp. 1 (M.D. Tenn. 1963) was a class action to enjoin the defendant motel from continuing its policy of refusing to accept Negroes as guests. The land for the motel had been acquired by the city of Nashville as part of an urban redevelopment project. The Holiday Inns purchased the land from the city, paying full market value, without tax rebates; the Inns erected the motel with its own funds and at no cost to the public; the operating motel paid all relevant taxes; and, it was found, the state had no interest in the property and no voice in the management, operation and control of the motel.

This did not satisfy the court, however. Since the deed to the property contained several reservations and covenants placed there by the state and federal governments, to insure future uses of the land in harmony with the redevelopment project, the court held that the state was “involved in private conduct to a significant extent,” and the private motel was compelled to drop its policy regarding Negro guests.1 220 F. Supp. at 8.

Another recent case, Simkins v. Moses H. Cone Memorial Hospital, 323 F.2d 959 (4th Cir. 1963), demonstrates how participation of any sort by a government entity in private property takes that property out of the voluntary sector and places it in the coercive sector of the economy. Simkins was an action by Negro physicians, dentists, and patients to compel private hospitals to end racial discrimination. The hospitals, which were entirely private, had accepted federal aid under the Hill-Burton Act (Hospital Survey and Construction Act), 42 U.S.C.A. §291. The court held that acceptance of federal monies placed the hospitals under the rule of the Burton case, and Negroes could not be excluded as either doctors or patients:

Weighing the circumstances we are of the opinion that this case is controlled by Burton . . . . Here the most significant contacts compel the conclusion that the necessary “degree of state [in the broad sense, including federal] participation and involvement” is present as a result of the participation by the defendants in the Hill-Burton program. The massive use of public funds and extensive state-federal sharing in the common plan are all relevant factors, . . . . But we emphasize that this is not merely a controversy of a sum of money . . . . As the case affects the defendants it raises the question of whether they may escape constitutional responsibilities for the equal treatment of citizens, arising from participation in a joint federal and state program allocating aid to hospital facilities throughout the state.

323 F. 2d at 967.

TO SUMMARIZE these cases, it has been held that “state action” or “state involvement” exists in private property when that property is: (a) leased from the government, and is physically part of a government project; (b) purchased from the government, with the government attaching some covenants restricting use to the deed of sale; and (c) the beneficiary of federal financial assistance. In each situation, the private property owner has been held subject to the same restrictions as a government body.

The most recent Supreme Court extensions of the “state involvement” doctrine have been in the celebrated “sit-in” cases in the South. In each of these cases, civil rights demonstrators entered the “white only” section of segregated lunch counters or restaurants; they demanded service and refused to leave until served. The store manager, following the restaurant’s policy, refused to serve them and asked them to leave; when they refused, he called the police, who arrested the demonstrators for criminal trespass. The defendants were convicted, the lower courts finding a clear case of trespass on property wherein the owner did not want their continued presence.

In reversing these cases, the Supreme Court found “state involvement” present in every instance. Peterson v. Greenville, 373 U.S. 244 (1963), for example, involved a city where the local ordinance required separation of the races in restaurants (clearly an unconstitutional ordinance). Said the Court:

It cannot be denied that here the City of Greenville, an agency of the State, has provided by its ordinance that the decision as to whether a restaurant facility is to be operated on a desegregated basis is to be reserved to it. When the State has commanded a particular result, it has saved to itself the power to determine that result and thereby “to a significant extent” has “become involved” in it, and, in fact, has removed that decision from the sphere of private choice.

373 U.S. at 247-48.

But, it was argued, the store manager removed the demonstrators because he wanted to run a segregated restaurant, independent of any ordinance. Thus, it was a private decision, without state involvement. Chief Justice Warren disagreed:

These convictions cannot stand, even assuming, as respondent contends, that the manager would have acted as he did independently of the existence of the ordinance. . . . When a state agency passes a law compelling persons to discriminate against other persons because of race, and the State’s criminal processes are employed in a way which enforces the discrimination mandated by that law, such a palpable violation of the Fourteenth Amendment cannot be saved by attempting to separate the mental urges of the discriminators.

373 U.S. at 248.

After reading Peterson v. Greenville, one would think that the touchstone of state involvement was the local segregation ordinance. In other words, absent the ordinance, the store manager could segregate Negroes to his heart’s content; it was only because the city government decreed segregation that the private decision to segregate was unlawful. But in the companion case of Lombard v. Louisiana, 373 U.S. 267 (1963), also written by the Chief Justice, there was no ordinance or statute compelling racial segregation in restaurants. The store manager called upon the demonstrators to leave his premises without any local command of law to guide his decision.

The Supreme Court found state involvement present anyway. In lieu of an ordinance, the Court found that during the civil rights crisis in the city of New Orleans, the Mayor and the Superintendent of Police had issued statements condemning violence, opposing the “sit-in” movement, and calling for an end to the demonstrations. Although these statements were not made with the force of a law behind them, the Court held that they constituted sufficient “state involvement” to nullify the private decision of the store manager:

A State, or a city, may act as authoritatively through its executive as through its legislative body. As we interpret the New Orleans city officials’ statements, they were determined that the city would not permit Negroes to seek desegregated service in restaurants. Consequently, the city must be treated exactly as if it had an ordinance prohibiting such conduct . . . . These convictions, commanded as they were by the voice of the State directing segregated service at the restaurant, cannot stand.

373 U.S. at 273-74.

The development of the law on private racial preference from Buchanan v. Warley to the “sit-in” cases has been most extraordinary. From the position that individuals were free to express a racial preference in the use of their property, regardless of ordinance or statute, we have come to the point where private racial preference is invalid if the Mayor expresses the same preference.

The notion that private property is to be treated as if it were an agency of the government whenever the state is “involved” in that property is a most comprehensive doctrine. In a country where every business must be licensed by the state; every profession must be authorized by the state; every piece of real estate must conform to zoning laws, building codes, fire regulations, housing ordinances, etc.; every labor union must be certified by the state; and almost everybody receives money from the state; in such a regimen one is hard pressed to find any substantial voluntary action which does not have “state involvement” to some degree.

If this be true, then the sphere of private contract and use of property is severely restricted. None can deny that discrimination solely on the basis of race is morally indefensible. But the right to discriminate, the right to express a preference in the use of one’s property which is at variance with the prevailing majority sentiment is of the very essence of liberty. It is possible that if the state involvement doctrine were alive a century ago, in the days of Dred Scott, the Court would have ruled that a property owner was obligated to treat Negroes as chattels, that manumission was illegal. Today the pendulum is on the other side, in favor of racial equality. But the principle remains: If state involvement means state determination of the uses of property, then private property is a nullity.

For those who may think this analysis far-fetched, and who may disbelieve that this is the trend of judicial decision, I close with the analysis of one of our most advanced jurists, Mr. Justice Douglas. Believing that the majority view in Lombard v. Louisiana did not go far enough, Justice Douglas wrote a concurring opinion in which he expressed the view that there was “state action . . . wholly apart from the activity of the Mayor and police.” 373 U.S. at 278. This is the basic substance of his commentary:

Places of public accommodation such as retail stores, restaurants, and the like render a “service which has become of public interest” in the manner of the innkeepers and common carriers of old. . . . In our time the interdependence of people has greatly increased; the days of laissez faire have largely disappeared; men are more and more dependent on their neighbors for services as well as for housing and the other necessities of life. By enforcing this criminal mischief statute, invoked in the manner now before us, the Louisiana courts are denying some people access to the mainstream of our highly interdependent life solely because of their race.

When the doors of a business are open to the public, they must be open to all regardless of race if apartheid is not to be engrained in our public places. It cannot by reason of the Equal Protection Clause become so engrained with the aid of state courts, state legislatures, or state police.

There is even greater reason to bar a State through its judiciary from throwing its weight on the side of racial discrimination in the present case, because we deal here with a place of public accommodation under license from the State.

State licensing and surveillance of a business serving the public also brings its service into the public domain. This restaurant needs a permit from Louisiana to operate; and during the existence of the license the State has broad powers of visitation and control. This restaurant is thus an instrumentality of the State since the State charges it with duties to the public and supervises its performance. The State’s interest in and activity with regard to its restaurants extends far beyond any mere income-producing licensing requirement.

There is no constitutional way, as I see it, in which a State can license and supervise a business serving the public and endow it with the authority to manage that business on the basis of apartheid, which is foreign to our Constitution.

373 U.S. at 279, 281, 282-83.

See also the concurring opinion of Mr. Justice Douglas in Bell v. Maryland. 378 U.S. 226, 242 (1964).

THE CONCLUSIONS expressed by Mr. Justice Douglas have been incorporated into the Public Accommodations section of the Civil Rights Act of 1964 However, the statute finds the authority of Congress to interfere with the racial policies of private owners in the plenary power granted the federal government by the Commerce clause of the Constitution.

The view of Justice Douglas goes much further. He enunciates a trend of juridical thinking which holds that all private properly used for business purposes is, as he phrased it, “an instrumentality of the State.” If this be true, then private business establishments must indeed conform to the current judicial interpretation of the Constitution, even absent all civil rights laws. The pattern of decision reviewed by this paper demonstrates that in the conflicts between the imposition of normative values by the state and the liberty of private property, it is property which is being sacrificed.

NEW BOOKS AND ARTICLES

THE FOLLOWING IS A SELECT LIST OF BOOKS AND ARTICLES WHICH, IN THE OPINION OF THE EDITORS, MAY BE OF INTEREST TO OUR READERS.

Armen A. Alchian and William R. Allen, University Economics. Belmont, Calif., Wadsworth Publishing Co., 1964. $11.35 (text edition $8.50). An excellent new introductory economics text by two well-known UCLA Professors—both of the “Chicago School”—designed to relegate Samuelson’s text to the role of an inferior good.
Martin Anderson, The Federal Bulldozer: A Critical Analysis of Urban Renewal, 1949-1962. Cambridge, Mass., The MIT Press, 1964. $5.95. The first major analysis of the federal urban renewal program since its inception. In the opinion of Edward C. Banfield of Harvard University, “There may be some fine points to quibble about, but The Federal Bulldozer makes rubble of the urban renewal program.”
George J. Stigler, “Public Regulation of the Securities Markets,” The Journal of Business, April 1964. Prof. Stigler presents fundamental criticisms of the recently published Special Study of the Securities Markets on grounds of both methodology and validity of its conclusions, saying “Once we ask for the evidence for its policy proposals, the immense enterprise becomes a promiscuous collection of conventional beliefs and personal prejudices.” The article is mainly devoted to setting forth a few statistical models by which the efficiency of the securities market might be judged both before and after the establishment of SEC regulation. In the October 1964 issue of The Journal of Business two articles appear in reply, and sharply criticize several points which Stigler makes in the earlier article; but they fail on the whole to refute the thrust of his argument. In his rebuttal, also appearing in the October 1964 issue, Prof. Stigler comments: “The issue is precisely that of the use of ‘scientific method’ versus ‘common sense.’ Either we present explicit hypotheses and test them by the developing techniques of the social sciences, or we rely upon the a priori case for protecting investors plus the scandals revealed by a Pecora, or the a priori case for letting men conduct their own affairs plus the counter-scandals revealed by some new counter-Pecora.”
Ronald Hamowy, “Liberalism and Neo-Conservatism: Is a Synthesis Possible,” Modern Age, Fall 1964. A noteworthy attack upon the position that classical liberalism and modern conservatism can be synthesized into a single right-wing philosophy. Hamowy argues that both classical liberalism and modern conservatism arise from distinct and separate traditions of thought, and that their basic premises are fundamentally in conflict.
The fifth volume of the Journal of Law and Economics (dated October 1962) has been issued, and includes articles by George J. Stigler, Ronald Coase, Yale Brozen, and others. Of all American scholarly journals, this annual publication is undoubtedly the one most solidly in the classical liberal tradition. A complete set (five issues) may be obtained for $12.50 (students $5.00) by writing: Prof. Aaron Director, The Journal of Law and Economics, University of Chicago Law School, Chicago, Illinois 60637.
Philip B. Kurland, “The Supreme Court 1963 Term, Foreword,” Harvard Law Review, November 1964. A lengthy evaluation of the decisions handed down by the Supreme Court during 1963 which is generally critical of the path the court is taking. Prof. Kurland notes four movements which have gained strength during the last decade: “the emerging primacy of equality as a guide to constitutional decision . . . the effective subordination, if not destruction, of the federal system . . . the enhancement of judicial dominion at the expense of the power of other branches of government, national as well as state . . . [and] the absence of workmanlike product, the absence of right quality [in the decisions of the court].” In regard to the first of these movements, he notes the more and more frequent tendency of the court to appeal to the equal protection clause rather than to the due process clause of the Fourteenth Amendment. “There are two primary problems that arise under the equal protection clause. The first is the ambiguity inherent in the relevant term, whether it be ‘equality’ or ‘equal protection of the laws.’ The second major difficulty results from the possible conflict of the notion of equality with that of liberty or some other fundamental constitutional value.”
Regenery has published two new books on or by Albert Jay Nock: his autobiography, Memoirs of a Superfluous Man (Chicago, 1964. $5.95), is reprinted from the 1943 edition which is no longer available; and Robert J. Crunden, The Mind and Art of Albert Jay Nock. Chicago, 1964. $4.95. The latter is an excellent intellectual biography, and contains an appendix listing his uncollected articles.
Richard M. Weaver, Visions of Order: The Cultural Crisis of Our Time. Baton Rouge, La., Louisiana State University Press, 1964. $4.50. A posthumous collection of Prof. Weaver’s essays concerned with an elaboration of the uses of order and tradition in society, and a critique of modern-liberalism and sentimental democracy.
Hanson W. Baldwin, “Should We End the Draft?,” New York Times Magazine, Sept. 27, 1964. The military expert of the New York Times summarizes the major arguments for and against ending conscription, while lending the weight of his authority to the opinion that “there is not much doubt that long-term professional services—active and reserve—are better suited to the military requirements of the atomic age than large, semi-trained, rapid-turnover forces drafted or induced to serve by the prospect of the draft.”
Prof. Ernest van den Haag of the New School discusses the question of Negro intelligence in an interesting interview published in National Review (“Intelligence or Prejudice?,” December 1, 1964). His conclusions are essentially: (1) There is no scientific evidence supporting the currently popular theory that no innate intelligence differences exist between ethnic groups; (2) There is some, although not conclusive, evidence that the contrary is true; and (3) that even if (2) were proven to be the case, genetically determined intellectual inferiority of the members of a particular race in no way implies their moral inferiority. See also the criticisms and reply in the Feb. 9, 1965, issue of National Review. On the same theme there is an excellent review of Weyl and Possony’s Geography of Intellect in the University of Chicago Law Review, Spring 1964, by Warren Lehman. Rather than dealing with the shoddy and unscientific approach of the authors, Lehman concentrates on the possible legal implications of their conclusion that interracial intelligence comparisons indicate sharp distinctions exist. Lehman attacks the thesis—interestingly enough shared by many violent anti-racists—that scientific evidence on the intellectual inferiority, superiority, or equality of one race over another is relevant to their legal (and particularly constitutional) status.
The latest (we think) issue of Focus Midwest (Vol. III, Number 6) is devoted to a “roster of the right wing” which runs the gamut from the American Farm Bureau to the Soldiers of the Cross and the American Nazi Party. If one is inured to the incredibly unsophisticated approach manifested by the leftist counterparts of The Christian Crusade, he will find much information of interest and value in this publication.

DeGaulle and Erhard Who are the men behind them?

Europe’s economy is on the move—as witness the stabilization of the franc, the West German “economic miracle,” and General DeGaulle’s recent challenge to the primacy of the dollar in international exchange.

To understand such developments as these, it is necessary to be acquainted with the thought of two leading European economists:

Jacques Rueff and Wilhelm Röpke.

These are the men behind the leaders and the economic resurgence of Western Europe. Their basic ideas are now available to American readers in two new books.

JACQUES RUEFF, financial advisor to the French government and originator of France’s recent currency reform, outlines his theories in THE AGE OF INFLATION, a series of essays on monetary instability and the origins of financial crises. The book includes the full text of Dr. Rueff’s 1958 “Report on the Financial Condition of France.” (Paperbound, $1.45)

WILHELM ROPKE, whose ideas sparked West Germany’s economic recovery, wrote his ECONOMICS OF THE FREE SOCIETY before World War II. This gracefully-written textbook of the “new economics” (a continuing best seller in four European Languages) is now published in a revised and updated American edition. Prime Minister Erhard has characterized Dr. Röpke in these words: “Wilhelm Röpke stands as a great witness to the truth. My own services toward the attainment of a free society are scarcely enough to express my gratitude to him who, to such a high degree, influenced my position and conduct.” (Hardbound, $4.95)

THE AGE OF INFLATION and ECONOMICS OF THE FREE SOCIETY are available at booksellers’, or directly from:

Lyndon Johnson Got 130% of The Votes Needed to Lose!

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THE UNIVERSITY OF CHICAGO PRESS

Chicago and London

VOLUME 4, NUMBER 1, SUMMER 1965

FINANCING HIGHER EDUCATION

BENJAMIN A. ROGGE

TRENDS IN THE U. S. SUPREME COURT

PHILIP B. KURLAND

HOW SOVIET PLANNING WORKS

G. WARREN NUTTER

• • •

LEWY’S “THE CATHOLIC CHURCH AND NAZI GERMANY”

STEPHEN J. TONSOR

A JOURNAL OF CLASSICAL LIBERAL THOUGHT

Summer 1965

50 cents

Vol. 4, No. 1

Financing Higher Education
	3	BENJAMIN A. ROGGE
Trends in the U. S. Supreme Court
	15	PHILIP B. KURLAND
How Soviet Planning Works
	20	G. WARREN NUTTER
Collectivism in Social Theory
	26	EDWIN HARWOOD
Justice, “Needs,” and Charity
	32	ROBERT L. CUNNINGHAM
COMMUNICATION:
The 1964 Election
	39	WILLIAM A. RUSHER
		BENJAMIN A. ROGGE
REVIEWS:
The View from London Bridge
	42	STEPHEN J. TONSOR
Van den Haag’s “Passion and Social Constraint”
	47	RICHARD McCONCHIE
New Books and Articles
	49

NEW INDIVIDUALIST REVIEW is published quarterly by New Individualist Review, Inc., at Ida Noyes Hall, University of Chicago, Chicago, Illinois 60637.

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Financing Higher Education in the United States

BENJAMIN A. ROGGE*

THE PURPOSE OF THIS study is to explore certain current and expected problems in the financing of higher education in the United States. In particular, it will be directed to an evaluation of one method of solving these problems: the method of full-cost pricing of the services of higher education.1

The central thesis of the study is that full-cost pricing has much to recommend it, both as a solution to the pressing financial problems of higher education and as a solution to other serious problems flowing from below-cost pricing. It is argued that the traditional reasons advanced to support the need for subsidy to higher education, even if accepted, do not demand below-cost pricing as the method of subsidy. A secondary thesis is that the case for subsidy has itself been both exaggerated and distorted and requires careful reexamination.

No time need be spent here establishing the fact that the colleges and universities of this country, both public and private, do indeed face a serious financial problem. This is one of the best publicized facts in the United States today. In sum, the story is that of an industry which confronts a financial crisis because of a fast-rising demand for its services.

This statement of the problem is used deliberately to throw in sharp relief the unique character of the industry. It is one in which the service is sold for much less than its cost of production.2 It is this and this only which makes an increase in demand a matter of deep concern rather than a reason for optimism. An increase in the size of a student body usually means a larger deficit—a deficit that must be financed through public and/or private subsidy.

To most students of the problem, including most college and university presidents, the problem is simply one of raising more money to meet the larger deficits. To only a few does it seem to be reason for a careful and thorough reexamination of the nature and purposes of higher education and of the financial arrangements most likely to promote those purposes. It is the thesis of this study that such a reexamination is badly needed. In particular, to view the problem as simply a desperate need for expanded subsidy to higher education is to ignore the many problems that are associated with below-cost pricing—problems that will not be solved even if the expanded subsidy is secured.

This study is designed to concentrate attention on how educational services are priced, not on how the buyers of those services secure the funds to pay the prices asked. That is, full-cost pricing does not rule out private and/or public subsidies to individual students. There are really two questions here: One is how the service should be priced, and the other is who should ultimately bear the cost of the service. Both will be examined, but the first will receive the more careful study.

TO SUBJECT HIGHER education to economic analysis may seem to be laying profane hands on a sacred symbol Such is the mystique of this “industry” that it must not be appraised with the vulgar calculus of the market place.

Yet, “the vulgar calculus of the market place” still remains as the most humane method man has yet devised to solve those problems of allocation and division which are ubiquitous and permanent in human society. This we have accepted as a people by our continued commitment to the free market form of economic organization. We profess our faith in this form of economic organization for the economy at large, but deny that it is suited to the purposes of higher education. Free market pricing is deemed appropriate for most goods and services, but is rejected in pricing the services of higher education. The reasons advanced to support this position will be examined, but attention will be directed first to certain effects of this policy on the educational system itself. The question to be examined can be phrased in this way: How does below-cost pricing affect the college and university system of this country?

The impact of below-cost pricing on higher education will be examined in four parts: problems of finance, problems of rationing, problems of motivation, and problems of educational efficiency.

To most observers the only problem presented by below-cost pricing is the financial problem—the deficits that must be underwritten by the taxpayer or the private donor. Admittedly the financial problem is a serious one. This fact is clearly evidenced in the increasing tendency for college and university presidents (even of tax-supported institutions) to be fund-raisers first and educational leaders and scholars second.

The college or university president must of necessity be a professional begger and the pressure of performing in this role is undoubtedly one of the factors leading to the rapid turnover of presidents in American colleges and universities.

The financial problem presented by below-cost pricing is a serious one and is rapidly becoming a problem of fantastic proportions. Given the fact of below-cost pricing, there seems to be no solution to this problem that does not involve a significant increase in the burden of the taxpayer. Nor does it seem likely that it will be solved without increasing reliance on funds supplied by the Federal government.

THE FINANCIAL PROBLEM, however, is not the only problem presented by below-cost pricing, nor is it even necessarily the most serious. At least as serious is the rationing problem which comes from selling educational services at well below the price which would clear the market.

The price of a good or service in a free market is not only a source of funds to cover the costs of the good or service. It is also the instrument which answers the question of to whom the available supply is to go. That is, the price rations the total number of units available among those who wish to buy the product. It does this on the principle that the product is to go to those who are willing to give up the most i.e., pay the highest price) to obtain it.

The acceptability of this principle need not be debated here. It is important only to note that it is a device for rationing Moreover, it is a device that clears the market and that operates without any need for the seller to choose among buyers on some personal basis.

To set a price below the market price is to create an excess of quantity demanded over quantity supplied, whether the product be sirloin steak, rental housing, or education. This, in turn, requires of the seller that he find some way to determine whose requests for the product are to be granted and whose denied.

The problem of rationing the available educational services is fast becoming one of the major problems of higher education. This has brought into sharp relief the issue of the rationing principle to be used. The generally accepted principle is that educational opportunities are to go to those possessed of the greatest potential for intellectual activity; but closer examination reveals that this principle can be questioned on both practical and theoretical grounds.

If the principle is accepted, the first task is to measure potential for success in college. No one who has served on the admissions committee of a college or university would argue that this is a simple task. On the contrary, it is one of the most difficult tasks of college administration. Techniques for measuring potential are being improved each year, but mistakes are still made and will continue to be made under the best of measurement programs.

Somewhat less difficult, but no less trying, is the task of determining which students are to be permitted to continue in school, once admitted, and which are to be denied further access to the services of higher education.

The rationing technique under discussion here—whether applied in the selection of students for admission or in the selection of those to continue—operates in such a way that it often appears to the rejected student as a personally discriminatory technique. The rationing system of the free market at least has the advantage of operating as does the system of justice represented by the blindfolded goddess holding the scales. It does not ask “Who are you?” or “What kind of a person are you?” or “Did your mother or father attend this college?” but only “Are you willing to pay the price?” Cruel as this may sometimes seem in practice, it would appear on balance to be less cruel and less humillating than the personalized techniques of non-market rationing.

YET EVEN IF POTENTIAL for intellectual growth and general success in college could be measured with complete accuracy and in such a way as to leave no room for personally discriminatory decisions, there would still exist serious questions of the appropriateness of this principle. It seems to rest on the assumption that large jars should be filled with the purest wine, while smaller jars should receive nothing but such rainwater as they can catch from the skies. If education is opportunity for personal growth, are we to deny it in some arbitrary way to those unfortunate enough to start from a lower level or to possess less absolute capacity for growth? Is 30 per cent growth for the bright student more to be preferred than 30 per cent growth for the less able student?

Is it not possible that the brighter student is more capable of educating himself than the weaker student; that in fact it might not be nonsense to say to the quick-minded student, “Go educate yourself,” and to the less-gifted student, “Come, we will try to help you”? As a matter of fact, current practice on United States campuses is moving toward independent study programs for the gifted students—a back-handed recognition of the fact that to such students the traditional apparatus of the college may not be important. This is not to argue that admission should be limited to the bad student, but only to indicate that the principle that admission should be limited to the good student can be questioned.

Suppose this same principle of making educational opportunities available only to those with high potential to benefit from these opportunities were applied to other goods and services. The sale of opera tickets would then be restricted to those who could establish ability to enjoy opera, wine would be sold only to the recognized connoisseur, and most wives would be denied the privilege of attending baseball games with their husbands.

For almost all other goods and services we assume that the individual is the best judge of whether or not he is receiving his money’s worth. Only in education do we give to the seller the power to make this decision for the buyer.

It might be answered that this is made necessary by the fact that college students are too immature to make this decision for themselves. This answer ignores the fact that the family of the college student participates in this decision and that we permit this same family to make most other decisions for the children in the family. Why is the family less able to make decisions about education than about medical care or clothing or housing for the members of the family?

In sum, the rationing principle in current use in higher education in the United States today is questionable in both philosophy and in practice.3 Yet below-cost pricing makes some such arbitrary and capricious method of rationing a necessity.

UNDER THE PRICE SYSTEM, a unit of any given product goes to the one who is willing to give up the most to get it. This is a rationing principle which tends in part to be a measure of strength of motivation. It tends to weed out those who have no great interest in the product. The effect of far-below-cost pricing in higher education is to admit many who have no strong desire to be educated—thus the curious situation in which professors and deans must be constantly belaboring students to take that which they are supposed to desire. We are in the position of a grocer who must keep close watch on his customers to see that they do not pay for the merchandise and then try to get out of the store without it.

Moreover, the effect on the motivation of teachers is equally significant. To the extent that their incomes derive from sources other than student fees, they are freed from some part of the necessity of really attending to the interests and wishes of their students. It is curious how irritated teachers become at any suggestion that their product be evaluated by their customers. They seem to really desire that each teacher be judge in his own cause or, at worst, that he be judged by his colleagues (who, of course, should not be so vulgar as to consult student opinion on his work as a teacher).

A number of the points under discussion here are well made in Adam Smith’s The Wealth of Nations. Smith comments at length on the effect of divorcing teachers’ income from student fees as follows:

In other universities, the teacher is prohibited from receiving any honorary or fee from his pupils, and his salary constitutes the whole of the revenue which he derives from his office. His interest is, in this case, set as directly in opposition to his duty as it is possible to set it. It is the interest of every man to live as much at his ease as he can; and if his emoluments are to be precisely the same, whether he does or does not perform some very laborious duty, it is certainly his interest, at least as interest is vulgarly understood, either to neglect it altogether, or, if he is subject to some authority which will not suffer him to do this, to perform it in as careless and slovenly a manner as that authority will permit. If he is naturally active and a lover of labour, it is his interest to employ that activity in any way from which he can derive some advantage, rather than in the performance of his duty, from which he can derive none.

If the authority to which he is subject resides in the body corporate, the college, or university, of which he himself is a member, and in which the greater part of the other members are, like himself, persons who either are, or ought to be teachers, they are likely to make a common cause, to be all very indulgent to one another, and every man to consent that his neighbour may neglect his duty, provided he himself is allowed to neglect his own. In the university of Oxford, the greater part of the public professors have, for these many years, given up altogether even the pretence of teaching.4

He then comments on the effect of loss of student control in the choice of teachers:

If in each college, the tutor or teacher, who was to instruct each student in all arts and sciences, should not be voluntarily chosen by the student, but appointed by the head of the college; and if, in case of neglect, inability, or bad usage, the student should not be allowed to change him for another, without leave first asked and obtained; such a regulation would not only tend very much to extinguish all emulation among the different tutors of the same college, but to diminish very much, in all of them, the necessity of diligence and of attention to their respective pupils. Such teachers, though very well paid by their students, might be as much disposed to neglect them, as those who are not paid by them at all or who have no other recompense but their salary.

If the teacher happens to be a man of sense, it must be an unpleasant thing to him to be conscious, while he is lecturing to his students, that he is either speaking or reading nonsense, or what is very little better than nonsense. It must, too, be unpleasant to him to observe, that the greater part of his students desert his lectures; or perhaps, attend upon them with plain enough marks of neglect, contempt, and derision. If he is obliged, therefore, to give a certain number of lectures, those motives alone, without any other interest, might dispose him to take some pains to give tolerably good ones. Several different expedients, however, may be fallen upon, which will effectually blunt the edge of all those incitements to diligence. The teacher, instead of explaining to his pupils himself the science in which he proposes to instruct them, may read some book upon it; and if this book is written in a foreign and dead language, by interpreting it to them into their own, or, what would give him still less trouble, by making them interpret it to him, and by now and then making an occasional remark upon it, he may flatter himself that he is giving a lecture. The slightest degree of knowledge and application will enable him to do this, without exposing himself to contempt or derision, by saying any thing that is really foolish, absurd, or ridiculous. The discipline of the college, at the same time, may enable him to force all his pupils to the most regular attendance upon his sham lecture, and to maintain the most decent and respectful behavior during the whole time of the performance.

The discipline of colleges and universities is in general contrived, not for the benefit of the students, but for the interest, or, more properly speaking, for the ease of the masters. Its object is, in all cases, to maintain the authority of the master, and whether he neglects or performs his duty, to oblige the students in all cases to behave to him as if he performed it with the greatest diligence and ability. It seems to presume perfect wisdom and virtue in the one order, and the greatest weakness and folly in the other. Where the masters, however, really perform their duty, there are no examples, I believe, that the greater part of the students ever neglect theirs. No discipline is ever requisite to force attendance upon lectures which are really worth the attending, as is well known whereever any such lectures are given.5

In sum, then, while the student may find it pleasant to have his education subsidized, the price he pays for this is loss of control over his education. He who pays the piper will call the tune, and if the student is not the one who pays the piper, he cannot call the tune. Moreover, the divorce of teacher income from student fees has a tendency to encourage inefficient and ineffective teaching and to encourage teachers to treat their teaching duties as a necessary evil to be disposed of as quickly as possible to permit them time for more important activities. An exaggeration? Perhaps, but who can say that he has never seen such tendencies at work?

The small, private colleges have the reputation of providing the best quality of teaching in higher education. Why is this? It is difficult to believe that it has no connection at all with the fact that such institutions derive 50 per cent or more of their revenues from student fees. Thus, the quality of the teaching has an important effect on the revenues of the college and the administration is forced to encourage and demand of its faculty a high quality of teaching service.

The effect, then, of below-cost pricing is to make of our colleges a collection of students, many of whom have no real desire to make use of the opportunity, and a collection of teachers who are under no real necessity to provide a high quality of teaching services.

THE PROBLEMS OF educational efficiency are usually discussed under the heading Problems of Academic Freedom; but “academic freedom” is really a misnomer. It should not be confused with freedom in the sense of those rights which are guaranteed to Americans in the Bill of Rights. It is altogether fitting and proper that a person should be free to worship as he pleases (or not to worship at all), to think as he pleases, to speak and write as he pleases without fear of reprisal by government. In fact, these rights are the very cornerstone of any free society and they are literally worth dying for; but to say that Paul Robeson should be free to sing the Internationale is a far different thing from saying that we must pay him for singing it. We may believe that Gus Hall should be free to publish books advocating communism, but we are not violating his freedom when we refuse to buy them. Now perhaps we are missing a chance to become better educated by refusing to buy them and that brings us to the point here. So-called academic freedom is really a question of educational efficiency, of the improved understanding which comes from being exposed to a variety of points of view.

No teacher has an inherent right to present a point of view and to be paid for presenting it. If his customers wish not to pay to hear his point of view, this may be unwise on their part; but it is not a violation of any inherent freedom. In fact, to force them, say, through the taxing power of the government to pay a teacher to present a point of view which they do not wish presented is a violation of an important freedom—the freedom of each man to spend his money as he pleases. Consider, for example, the injustice that would be done if the trustees of a college which demands acceptance of the Apostle’s Creed as a condition of employment were to be forced to hire or to continue to employ an acknowledged atheist in the interest of academic freedom, or if a Quaker college were forced to hire General Mark Clark as its president.

Insisting that what is called academic freedom does not really involve freedom, however, it not to minimize its importance. On the contrary, even though it is really a question of educational efficiency, it is a very important question. It is important that students be given an opportunity to hear and read a variety of points of view, particularly on questions of social policy. In the words of John Stuart Mill, “There is always hope when people are forced to listen to both sides; it is when they attend only to one side that errors harden into prejudices.”

THIS BRINGS US BACK finally to the matter of below-cost pricing. The necessity for finding funds to fill the gap between students fees and total costs is always potentially dangerous to the integrity of an institution, to its continued ability to offer a program which embraces a wide range of social philosophies and which is otherwise educationally efficient.

The reasoning runs as follows: While the piper must inevitably be subject to pressure from those who pay him, his opportunity to play a varied and personally satisfying concert is the greater the more numerous the sources of his support and the less dependent he is upon the support of one payer or one group of payers. In other words, his best protection lies in a wide diffusion of the economic power which he confronts. For example, if an institution becomes dependent on a government for support, the government will be strongly tempted to call the tunes. This control can and has been used to dictate not only the “proper” social philosophies for teachers but the “proper” content of the curriculum as well. Even the assumption that the government is controlled by majority vote of the citizenry is cold consolation to a professor or an institution that prefers the point of view of the minority.

In the same way, for a private college to become dependent on a few men of wealth, or on a relatively homogeneous alumni body or on corporation giving, is to create a potential for control and dictation. Of course, a mixing of all of these with student fees does provide considerable diffusion of power, and this is the real strength of the private college as compared to the public; but even this mixing may leave a few men or a few corporations in a position to wield extraordinary influence on the policies of the college. It must be insisted that there is no violation of inherent right if these men or corporations insist on exerting the influence they possess. They have helped to pay the piper and they have a right to call some of the tunes, but this is a situation in which the educational efficiency of the institution may not be maximized. Now sometimes these money-givers from among the philistines have a better idea of what the college should be doing than does the faculty and administration, but there is no reason to believe that their influence will always be benign.

Below-cost pricing combined with public and/or private subsidy creates a situation in which the integrity of the educational institution is not protected by that diffusion of economic power ranged against it which is the real protection of all units—households and firms alike—in a competitive market economy. The private colleges and universities—both because they depend more heavily on student fees and because they draw subsidies from a greater variety of sources—do seem more capable of maintaining an educationally efficient program than do the large, state-supported institutions. The argument is not that the public donor is more given to intervening or is less tolerant than the private donor. The argument is that the public donor agency may have control of as much as 80 per cent of the revenue sources of the institutions with which it is involved, whereas the private donor rarely has control over more than a small fraction of the revenue sources of the institutions with which he is involved.

BUT WOULD NOT FREEING the colleges from subsidy-oriented control and placing them under customer control be a move from the frying-pan into the fire? Is the college student really equipped to evaluate the service he is buying?6

This is a difficult question to answer. If I may be permitted to draw from my own experiences as a college teacher and college dean, I would say that the student is a much better judge of the quality of the educational services he is receiving than he is commonly held to be. In the main, students are able to distinguish between those faculty members who provide excellent learning opportunities and those who provide mediocre or worse. The testimony on which the student has been convicted as a poor judge is the testimony of those who are themselves the object of the judging and who have traditionally resented the very practice of student appraisal.

And here again it must be remembered that the student’s family often participates in the decision-making, adding the maturity of adult critical faculties to the immediate impressions of the student.

However, the greatest benefit to be derived from customer control is that the judgment of no one customer is critical to the operation of the institution. No small group of legislators, no small groups of corporations or individuals, must be placated for the institution to survive and prosper. Nor need all institutions serve the same type of customer. The critical customer can be told to go elsewhere, because no one customer is of great significance. To repeat, it is not the “quality” of the power wielders but the diffusion of power under customer control that protects the integrity of the institution.

In sum, below-cost pricing inevitably creates a threat to what has been called “academic freedom,” or “educational efficiency.” To expect those who provide the subsidies to refrain from interfering with the operation of the school is to make a demonstrably weak assumption. On the other hand, to do as many seem to feel appropriate, to somehow “force” the donors (perhaps through the operation of an organization like the American Association of University Professors) to keep their hands off the institutions they have subsidized is to deny another important freedom—the freedom of each man to choose the purposes to which his money resources are to be put. This is particularly true when the donor is the taxpayer who does not have the immediate option of stopping his contributions. He is ordered to pay and then is told that he must not question the purposes to which his money resources are to be put. Under the system of below-cost pricing there is no way of guaranteeing so-called “academic freedom” that does not involve a denial of other freedoms—or that does not demand of the donor a superhuman restraint from directing the uses to which his funds are to be allocated.

TWO PRIMARY ARGUMENTS are advanced in support of below-cost pricing. One is based upon the assumption that the benefits of higher education flow not only to the students who are the direct customers of the schools, but also to society at large—that every member of society profits from being surrounded by and led by an educated citizenry. The other is the pure egalitarian argument that the principle of equality of opportunity demands that each young man and each young woman be given the opportunity of attending college, regardless of ability to pay for the services rendered. These arguments will be examined in turn.

The traditional thesis is that the student “captures” only a part of the gain that flows from his college education. Some part of the gain flows to society at large. Thus, in the Northwest Ordinance of 1787 we find the following statement: “Religion, morality and knowledge being necessary to good government and the happiness of mankind, schools and the means of education shall forever be encouraged.”

The student tends to push his purchases of education only to the point where the private gain from another unit would be equal to the cost of another unit. However, it is in society’s interest that he push his purchases beyond this to the point where the social gain from another unit would be equal to the cost of that unit. This requires that the student receive a subsidy sufficient to induce him to purchase the additional units of education.

But even if this principle be accepted, below-cost pricing does not inevitably follow. The subsidy could be provided directly to the student to permit him to pay the market price to whatever institution he chooses to attend. We have implemented our desire to provide bread to those who do not have the means to buy it, not by asking bakeries to sell all bread at below-market prices and then subsidizing the bakeries, but rather by providing a direct subsidy to the families involved. In particular, we have not insisted on the government actually operating bakeries to take care of this problem. The thesis under study does not establish a need for government-operated educational institutions, and in fact, on other grounds, there is good reason to prefer privately operated to publicly operated colleges and universities.

Nor does this thesis establish any case for below-cost pricing of (or even for subsidy to) all the services now provided by higher education. It seems to establish a case only for those programs of education which contribute to the citizenship qualities of the individual. Surely those courses which are primarily vocational in nature make only an insignificant contribution to the development of the citizen.

Professor George Stigler of the University of Chicago has commented on this issue as follows:

The basic defense for public and private subsidy of higher education is of course that it confers large social benefits, quite aside from any benefits accruing to the individual. This defense is largely wrong, simply as a matter of fact. The majority of college students concentrate their efforts on vocational studies whose general social value is measured, comprehensibly and with tolerable accuracy, by the earnings of the graduates. In 1954, of 187,500 bachelor’s and first professional degrees received by men in the United States, 63.1 per cent were vocational degrees. For women the corresponding percentage was 54.8. The largest fields were:

Business Administration	35,255
Engineering	22,264
Education	16,885
Medicine	16,458
Law	8,687
Agriculture	7,687

The general scientific and cultural values of these disciplines scarcely call for something like a 50 per cent subsidy of the costs of institutions of higher learning.7

The principle of social benefit at best calls for subsidy only to the traditional liberal arts programs of colleges and universities and even there does not require below-cost pricing as the technique of implementation. Direct subsidy to the individual student would serve equally as well.

Finally, it might be argued that the social benefits deriving from formal higher education have been much exaggerated. These benefits probably come primarily at the lower levels of education, particularly in the instruction each child receives in the basic skills of communication. Once a young person has acquired these skills, a whole world of knowledge is opened to him, a world in which formal classroom education is only one of many alternatives. It would be difficult to prove that the college graduates in this country have been “better” citizens (if even a yardstick could be found) than the high school graduates. Far from under-emphasizing the importance of formal higher education, we may have grossly exaggerated its importance to the maintenance of our free society.

THE SECOND ARGUMENT advanced in support of below-cost pricing is that equality of opportunity must be assured and that this demands equal educational opportunity for all.

In the first place, it should be pointed out that this too would justify only subsidy in some form, and provides no specific support for below-cost pricing of the services of higher education. On the contrary, below-cost pricing is a technique that subsidizes the sons and daughters of the wealthy as well as the sons and daughters of the poor. If the goal is to make education available to those who cannot afford it, below-cost pricing is a very blunt and wasteful instrument. Thus, even if the egalitarian view is accepted, far from justifying below-cost pricing, it condemns it as an inefficient means of achieving the desired end.

But the thesis that equal access to higher education, regardless of financial ability to pay for it, is a sine qua non of equality of opportunity is not of unquestionable validity either. Support for this thesis usually involves pointing to the demonstrably higher lifetime earnings of college graduates vis-à-vis non-college graduates. The inference is drawn that the college education is itself the cause of the higher earnings.

One of the most important principles of statistics is that correlation is not the equivalent of causation. In this case, the high correlation between years of education and lifetime earnings may derive in part from the fact that those who attend college possess a generally higher potential to achieve than those who do not. These same people would probably attain to higher income positions even if they were not to go to college. In the same way, those who attend college tend to come from higher-income families than those who do not, and they have such advantages as may come from a firmer financial base as a platform for the launching of a career. Finally, there is good evidence in the current and recent economic history of this country that a young man or woman without a college education is capable of making rapid economic progress.8

Moreover, those who wish to be educated do not face just the one alternative of formal, classroom education. Each person in our modern society is surrounded by opportunities for acquiring the knowledge, skills, and understandings that are the end-product of higher education. One increasingly important set of such opportunities is to be found in the education programs sponsored by business firms for their employees. In addition, there is evidence that the young adult, with some work experience behind him, makes much better use of educational opportunities than does the young person of 18 to 22.

In other words, there is no clear evidence that income earning possibilities are a direct function of education; and even if this could be established, it would still be difficult to prove that formal college education is the only kind of educational opportunity which promotes this end.

Admittedly, there are certain professions (e.g., law, medicine, and engineering) which are open only to those with a certain minimum of formal education; but in most of those cases, the lifetime earnings of those who received the training would easily permit them to pay for their education on a deferred-payment basis. All that is needed here is a capital market that will permit the treating of professional education as an investment in personal capital.

Confirmation of this thesis is found in one unexpected place: in a book whose central thesis is that higher education must be even more subsidized than at present, including a substantial increase in Federal aid to higher education. The book is A New Basis of Support for Higher Education, by Thad L. Hungate, Controller and Professor of Education, Teachers College, Columbia University.

In one paragraph he says, “While students and parents may continue to finance student living costs, neither fees nor living expenses should bar a student who has met defined state standards and has been admitted to and accredited for attendance. State aid should supplement family means as needed for this purpose.”9 Yet in the very next paragraph he adds, “It is considered likely that each beneficiary of a college education so lifts his lifetime earnings that the increased taxes he pays will more than repay to society the initial capital it has invested in him.”10 If his increased earnings will permit him to repay the taxpayer, they will also permit him to repay a lending agency on the private capital market! Far from establishing a case for public subsidy, this statement weakens the case for public subsidy and strengthens the case for letting each student finance his own education from some combination of current and anticipated resources.

In sum, the argument that higher education must receive public subsidy to assure equality of income-earning possibilities is questionable in both theory and practice. There is no clear evidence that a formal, college education is itself a cause of higher lifetime earnings; but if it could be established, it would establish not a need for public subsidy, but rather a need for an improved capital market to permit students to pay for their schooling out of the higher earnings produced by that schooling.

IT MIGHT BE ARGUED that the primary inequality associated with less than universal higher education is a social inequality, that the non-college person is denied entry to the social circles of the college graduates. This may or may not be true. Certainly there is some evidence that many Americans look upon the college degree as little more than a card of admission to “polite” society. This case is usually stated less boldly by the philosophers of American higher education. Their stress is upon the “democratizing” influence of our educational system. Thus, Howard Mumford Jones writes,

. . . the American university operates, and operates successfully, because it is staffed by Americans reared on that simplest of all formulas for getting men to work together, the democratic formula . . . . The great virtue of this remarkable invention is that it rests upon a particular theory of education, including higher education, as a form of public service. The great reproach brought against the ivy colleges in the old days was, indeed, that they did not recognize this doctrine, but were on the contrary expressive of snobbery. The eventual response of the ivy colleges to this reproach is, I think, illuminating. They did not defend the necessity, perhaps even the duty, of creating an intellectual elite; . . . on the contrary, they demonstrated that they are just as public and popular as anybody else. With us, in truth, the popular theory has triumphed over the concept that the nation needs an intellectual elite, and the notion of the university as a service institution prevails in the United States to a degree that astonishes the foreign scholar.11

It may well be that making the college degree available to all has a levelling effect on the social system. The colleges and universities may be primarily institutions dedicated to the task of giving young people membership cards in an eventually universal club of college graduates. If so, it is serving a futile purpose. Nothing is surer than that man will develop forms of social differentiation and if one form is eliminated, another will take its place. To pander to envy is hardly a useful and noble role for higher education.

Nor is it likely that the quality and nature of its services will remain unaffected by this goal. Already there is good evidence of the impact of the demand of education for all on the qualitative characteristics of higher education. It would be interesting to speculate on what would happen to the quality of a “prestige” car like the Cadillac if we were to endeavor to make one available to each family so that no family would have to feel inferior to another. It is quite legitimate to argue that education must be made available to all because otherwise education becomes an element in an unwanted social differentiation, but to so argue is to attempt to satiate man’s unlimited capacity to envy his fellow man. Also, it must carry with it certain modifications in the character of higher education which not all would find desirable.

IN SUMMARY, THE following conclusions can be drawn: The present system of below-cost pricing of higher education creates a number of serious problems. These include the problem of deciding which young people are to be admitted to college and then which are to be permitted to continue; the problem of low motivation of many students; the problem of motivation of faculty members created by the fact that they are not paid by their students; and the problem of educational efficiency created by the need to find resources to cover the annual deficits of colleges and universities. The arguments presented to establish the desirability of public and/or private subsidy to higher education, even if accepted, do not demand below-cost pricing. They call only for subsidy in some form, and the problems associated with below-cost pricing suggest that the subsidy should be provided in other ways, perhaps through grants to individual students.

The arguments for subsidy to higher education are not of unquestionable validity. The “social benefit” argument seems to have been exaggerated and at best would apply only to the non-vocational types of higher education. The “equality of opportunity” in the opportunity-to-income sense, cannot be verified by a study of the recent and current economic history of this country. If it could be verified, it would establish not a case for subsidizing higher education, but rather a case for an improved capital market to permit students to borrow against future earnings to meet current educational expenses. The “equality of opportunity” in the sense of opportunity to acquire the social status of a college-trained person may be valid, but this would make of higher education a technique for satisfying a futile and none-too-noble purpose.

IF THE ARGUMENTS developed in this article were to be accepted as valid, what policy changes would seem to be required? Would these changes not call for an unrealistic assumption of the willingness on the part of the American people to modify the traditional arrangements in higher education? Certainly it is true that traditional arrangements cannot be changed quickly or with ease—and this is not an unmixed evil. A certain caution in making changes is usually wise.

It is particularly difficult to secure any reduction of subsidies to special groups, and in particular to secure reduction of subsidies coming from public funds. Those who lose the subsidy lose a considerable sum per capita; those who are relieved of paying for the subsidy gain only a small sum per capita. Thus, the subsidized tend to be much more vocal and aggressive than the subsidizers. However, there is a growing awareness of the frightening financial load of higher education to be expected in the next 10 or 15 years. Some state legislators are already demanding that the state-supported schools increase tuition charges to students.

Clearly any changes would have to begin with the charges at state-supported schools. The private colleges and universities cannot hope to move much closer to full-cost tuition charges until the tuition charges at state-supported schools are increased substantially. The differential in tuition costs already operates to place the private schools at a serious competitive disadvantage.

The first step would seem to be for state-supported institutions to set up a pattern of tuition increases designed to increase the percentage of costs covered by tuition payments. This pattern could call for a final position in which the revenues from tuition fees would be approximately equal to total costs. This could probably be done, of course, only if the state were to also provide an increasing supply of straight grants or loans to students. It would seem to be desirable to move as quickly as possible to the use of only loans to students pursuing strictly vocational courses, and to increase the ratio of loan money to grant money for all students. These state loans and grants could also go to students attending privately operated colleges and universities. This would certainly be consistent with the general principle, but the private colleges would probably be able to bring students in touch with private sources of loan or scholarship money and might probably prefer to do so. In fact, there would be good reason for the state governments to vacate the lending position as rapidly as the private money market could service the needs of students.

This article is basically neutral on the question of whether government aid should come from local and state units or from the Federal government. However, the principle of diffusion of power would seem to establish a preference for local and state units. Also, the general reduction in the financial responsibilities of government for higher education under this plan would largely dissipate the case now being made for Federal aid to higher education.

IT IS PROBABLY unrealistic to expect that higher education in this country could be recast in the ultimate pattern implied in this study; but it is not unrealistic to suppose that progress could be made in bringing all tuition charges closer to the level of full-cost, in greater use of loan techniques in the financing of all education and in the financing of vocational education in particular, and in making greater use of the private capital market in the financing of investments in education. These changes would also tend to place an increasing emphasis on private as compared to public sponsorship of institutions of higher education. If the arguments advanced in this article are valid, all of these changes would work to the benefit of higher education and of the American society.

Trends in the U. S. Supreme Court

PHILIP B. KURLAND*

I INTEND TO CONFINE my observations to the constitutional aspects of the Supreme Court’s work. It is here that the Court performs its unique role as ultimate arbiter of the meaning of our fundamental law; law beyond the power of the other branches of the government to revise and, for the most part, beyond the control of the people themselves.

Looking over the past decade of the Court’s work—roughly the period between the school desegregation cases1 in 1954 and the reapportionment cases2 of 1964, one quickly discovers that the Justices have wrought more fundamental changes in the political and legal structure of the United States than during any period in our history since Mr. Chief Justice Marshall first wrote meaning into the abstractions of the Constitution’s language. To make my essential point at the outset, the problem is not primarily whether in one’s personal opinion these changes are good or bad; but whether the Supreme Court, constituted as it is by nine lawyers with life tenure and politically irresponsible, is the proper organ of government to accomplish the goals it may decide to set for this country.

THREE DOMINANT MOVEMENTS are evident in the Court’s recent work. First and foremost has been the emerging primacy of equality as a guide to constitutional decision. Perhaps an off-shoot of the Negro Revolution that the Court helped to sponsor in Brown v. Board of Education,3 the egalitarian revolution in judicial doctrine has made dominant the principles to be read into the Equal Protection clause of the Fourteenth Amendment rather than the Due Process clause, heretofore the polestar of Supreme Court action. Just as the Court read its own notions of appropriate governmental policy into its creation of substantive due process in the period that culminated in the 1930’s, so we now have a similar construction by the Court of what the Swiss have most appropriately called “substantive equal protection.” The decisions in the school segregation cases, the sit-in cases, and the reapportionment cases are merely the most prominent of a very large number of decisions pushing this egalitarian theme. Quite clearly the movement is at its inception; certainly it is nowhere near its conclusion.

Two fundamental difficulties face the Court in this effort, or would face the Court were it more conscious of its obligation to justify and explain its judgments. The first is the question whether the Equal Protection clause empowers the Court to eliminate not only the inequalities imposed by law, but the inequalities that derive from non-governmental action or inaction, the social and economic inequalities as well as the political inequalities. Until now the Court has successfully avoided confrontation of the problem either by finding governmental action where few others can discover it, as in the sit-in cases that preceded the Civil Rights Act,4 or by sweeping the problem under the rug, as in the sit-in cases decided by the Court since the Civil Rights Act.5

The second major problem presented by the new egalitarian movement is the task of adequately reconciling the competing claims of equality on the one hand with liberty and other fundamental guaranties on the other.6 Again the confrontation has not been publicly made, although the conflict was revealed in the 1963 Term in the Court’s split over its own power to command that private business concerns make their premises, goods, and services equally available to all.7 The split in the Court was all the more interesting because it separated Mr. Justice Black, heretofore the acknowledged intellectual leader of the “liberal” wing of the Court, from Justices Goldberg and Douglas, who have now assumed the role of leading the levellers. Mr. Justice Goldberg, for example, expressed himself—extracurricularly—as believing that equality and liberty were one and the same.8

This short article is not the place to document further my proposition of the Court’s new egalitarian pose. Those who are hardy may find some of the details set out in a recent article of mine in the Harvard Law Review.9 Those of you who are foolhardy can look forward to seeing them expressed at greater length in a book I hope to publish soon.

LET ME TURN THEN to the second prominent theme of current Supreme Court adjudication. This one, however important, is hardly novel. I am referring to the effective subordination, if not destruction, of the federal system. This movement is not entirely disparate from the egalitarian push, for each is a drive toward uniformity and away from diversity. Equality demands uniformity of rules. Uniformity cannot exist if there are multiple rulemakers. It follows that the objective of equality cannot be achieved except by the elimination of authorities not subordinate to the central power. It, too, is an important part of our political and social and economic movement away from diversity towards conformity.

Because of its lack of novelty there is no need to dwell on the Court’s behavior on this front. Perhaps the most amazing fact about the Court’s recent infringements on state authority is that, having taken so much power away from the states, it continues to find more to take away. But one point should perhaps be made clear. Governor Rockefeller in his 1962 Godkin lectures at Harvard said “The reports of the death of federalism, so authoritatively asserted in the nineteen-thirties, were, as we have seen, highly exaggerated.”10 But the Governor obviously had a different concept of federalism in mind than I do here. Certainly, as the Governor pointed out, state governments are bigger than ever, both in the amount of money they secure and disperse and in the number of tasks they perform; but this reflects not the continuance of federalsm but merely the growth of the role of government in modern society.

As Rector K. C. Wheare of Exeter College, Oxford, in his book on federalism, has pointed out: “What is necessary for the federal principle is not merely that the general government, like the regional governments, should operate directly upon the people, but, further, that each government should be limited to its own sphere and, within that sphere, should be independent of the other.”11 As you all know, there are today few, if any, governmental functions performed by the states that are not subject either to the direct control of the national government or to the possibility of preemption by the national government. The concept of separate sovereignties within this country is now largely a matter of history. Vestigial remains are perhaps still to be found in the fields of education and health and the administration of criminal justice, but even here state power is clearly on the wane. It is especially in the area of control of police and prosecution that the Court has, in recent years, drawn the reins tighter and tighter.

It would not be correct to leave the impression that this fundamental revision of governmental structure was brought about solely by the Court. Advances in transportation, communication, and science, which reduced the size of the world, were the primary causes. The rise of the United States as a world power was certainly a most important factor. And the essential default of the states in failing to assume the responsibilities that were theirs cannot be ignored. But the Court, too, has made and is making its contribution. It may be that federalism is no longer desirable or feasible. The question remains, who should make that judgment. Ought it, or must it, be the Court?

THIS BRINGS ME TO the third of the major trends discernible from a study of the Court’s efforts over the past ten years. I have in mind the enhancement of the judicial dominion at the expense of the power of other branches of government, national as well as state. Again it is not a novel theme. In the past, the Court’s powers have risen and declined like the business cycle; but like the recent economic prosperity, the Court’s recent dominance has been unusually long-lived and shows no signs of recession. (Automation creates no problems here.) There was, at one time, a fairly substantial area of governmental action that the Court had wisely declared off-limits for itself. The reapportionment cases seem to have dealt a fatal blow to the idea that there are certain functions of government beyond the competence of the Court to perform. There was, at one time, a notion that the Supreme Court was a court like other courts, called upon to resolve specific controversies between specified parties and not to lay down general blueprints for the reorganization of society. For Mr. Justice Brandeis, for example, if not for his successor: “If the Court were to exercise its grave function of reviewing the validity of co-ordinate branches of government, the Court must be careful to keep within its appointed bounds as a condition of judging whether others had kept within theirs.”

This calls to mind the fact that the Court in recent years has struck down so much Federal legislation as unconstitutional that it is reminiscent only of the activities of the nine old men in their frustrated attempt to dam the tide of the New Deal. Certainly it is true that the Court has engaged in this pastime of judicial review since it was invented by Mr. Chief Justice Mashall in Marbury v.Madison. Even so, striking down two statutes in a single Term is a little better than par for the course; and that is what the Court accomplished at the 1963-64 Term. In an opinion by Mr. Justice Douglas, it held that it was so unreasonable as to be unconstitutional for Congress to say that the benefits of citizenship conferred on a foreign-born person are dissipated when the citizen returns to his homeland for an indefinite period of time, perhaps never to return to this country.12 In an opinion by Mr. Justice Goldberg, Aptheker v. Secretary of State, it held that no legitimate governmental purpose could be served by denying passports to all members of the Communist Party and therefore no legitimate governmental purpose could be served by denying passports to the chairman of the Communist Party and its chief theoretician.13

IT IS ONLY FAIR TO note, however, that the Court treats its own precedents with no less disdain than it accords Congressional legislation. Indeed, a Court that considers its pronouncements to be “the law of the land” might be expected to pay more respect to its own opinions. The fact of the matter is that the number of its own cases overruled by the Court in the past decade, either openly or covertly, have accelerated at such a rate as almost to remove the hyperbole from Mr. Justice Roberts’ charge that the Court’s judgments were coming to be like railroad excursion tickets, good for this day only.

I shall not burden the reader with the details of my complaint about the technical deficiencies of the Court’s performance except to quote from an article written over seven years ago by two members of the Yale Law School faculty, in which they said:

The Court’s product has shown an increasing incidence of the sweeping dogmatic statement, of the formulation of results accompanied by little or no effort to support them in reason, in sum, of opinions that do not opine and of per curiam orders that quite frankly fail to build the bridge between the authorities they cite and the results they decree.14

I would report here only that the difficulties suggested have become exacerbated rather than resolved in the more immediate past.

The Court has not, however, acted entirely without excuse for its behavior, although there are some who think the excuse is not adequate. The essential justification is that the Court has acted, perhaps overacted, as the conscience of a nation when no other branch of our government was capable of demonstrating adequately decent behavior. Certainly there is merit in the argument when one considers the conduct of our other governmental departments in the face of the abuses that the community has rained on the Negro; the evils of McCarthyism, and the continued restrictions on freedom of thought committed by the executive and legislative branches of our national and state governments; the refusal of the states and the nation to make it possible for the voices of the disenfranchised to be heard; the continued use of police tactics that violate the most treasured rights of the human personality. The list may be substantially extended, but to no good purpose here. There can be little doubt that the other branches of government have failed in meeting some of their most fundamental obligations to provide constitutional government.

This justification may be inadequate, however, because the Court’s conduct has gone far beyond the necessity suggested by the action or inaction of the elected officials of our government. Or it may be inadequate because, as Learned Hand once told us, “a society which evades its responsibility by thrusting [it] upon the courts . . . in the end will perish.”15

THE SOLUTION OF THE problem of excessive judicial power, of what Leonard Boudin called, in the 1930’s, “Government by the Judiciary,” of what Morris Ernst damned at the same time as “The Ultimate Power,” is not to be found in the various gimmicks that have been suggested for limiting the Court’s jurisdiction or subordinating it to so silly an institution as “The Court of the Union,” any more than it was to be found in 1937 in Roosevelt’s “court-packing plan.” The answer must be found in making the judicial branch of the government politically more responsible without impinging on its independence. It should be remembered, as Sir Winston Churchill was fond of pointing out, that the success of Anglo-American democracies has depended in no small part on the independence of the judiciary.

Such an answer, if it is to be found anywhere, may possibly be found in the responsible utilization of the amending power. I would emphasize the qualification that the utilization of the amending power must be responsible. Recent efforts to push amendments through state legislatures without the knowledge of the people of the states is not what I have in mind, for there are, of course, serious dangers in an expanded use of power of constitutional amendment. The people of California have only recently provided us with some examples of silly, if not tragic, behavior in this regard. Professor Paul Freund has told us that the essential difficulties are threefold.16

The first, and I think the most important, is that “proliferating amendments would impair the sense of attachment to the old and familiar, the spirit of loyal devotion to a deeply rooted institution.” The second is that amendment may precede second thoughts that would demonstrate the undesirability of the amendment. The third is that an amendment may create more difficulties than it would solve.

In no small measure, the Founding Fathers anticipated two of these difficulties in providing for the means of constitutional amendment. The method is sufficiently cumbersome to assure that no large number of amendments could be successfully promulgated. The same lack of ease of amendment would provide more than adequate time for second thoughts to prevent unduly hasty action. The problem of the “risk of substituting new dissatisfactions for old, new uncertainties for old perplexities,” can be avoided only by dealing with proposed amendments with the care received, for example, by the proposed School Prayer Amendments in the House Judiciary Committee.

There is, however, a prerequisite to the utilization of the amending process, a prerequisite that will both justify the process and, in many instances, make it superfluous. That prerequisite is a real comprehension on the part of the electorate of the role and performance of the Supreme Court. The obligation of this understanding falls particularly on the leaders of the community, for, I think. I can say without fear of being proved wrong, that the press has failed in its obligation to educate the public about the decisions of the Court. It is also unfortunately true that the bar has failed in this regard; too few lawyers are themselves concerned with the efforts of the highest judicial tribunal in the land. Only an educated public can understand whether judicial decisions appropriately call for constitutional amendment. At the same time, an educated and aroused public may make the Court politically more responsible than it has been. It may, at times, even convince the Court itself to reconsider constitutional judgments that it has promulgated. History shows that the Court understands that, to use Professor Thomas Reed Powell’s phrase, “a switch in time saves nine.”

In conclusion, like another unsuccessful campaigner, I would remind you that the people get the kind of government they deserve. He was speaking of the elected branches of government, but I think it is also true of the Supreme Court. If the country thinks it deserves better, it should do something about it.

How Soviet Planning Works

G. WARREN NUTTER*

IN AN AGE OF romantic pragmatism, such as we now endure, keeping faith with logic, principles, or the facts is likely to be considered a curious eccentricity, perhaps deserving tolerance on occasion but seldom worthy of emulation. Nothing succeeds, in such an age, quite like success. Surely, nothing fails like failure. Never mind if you are wrong as long as you succeed. Right or wrong, beware only of failure.

Rationalization waxes as reason wanes, and here enters the role of the intellectual; for he is set off from other mortals as much by his impressive powers of rationalization as by anything else. To him, failure is no more difficult to “explain” after the fact than is success, even when the one historically follows the other and the two “explanations” are mutually inconsistent. Hence we grow accustomed to the spectacle of intellectuals scurrying to get off one bandwagon that has stalled and onto another that is gathering speed.

As a case in point, when it was popular only a short time ago to believe that the Soviet economy was sweeping all before it, the main body of Western intellectuals spoke almost of one voice in praising the Soviet brand of central planning as the reason for success. In urging their own countries to heed this unmistakable lesson of history. Learned acticles were even being written on “why Stalin was necessary.” Now the mob has swung around in the opposite direction; now they accuse this same system of bringing about inevitable economic failure and applaud Soviet officials for talking about reform. Why this change in attitude, one might ask? Can it be simply because it is no longer popular to view Soviet economic performance as an unprecedented and unmarred string of successes? The failures that were always there to be seen by the discerning eye have become too apparent to be hidden from anybody by propaganda. In many ways there is little difference in the realm of intellectual discussion between what goes on inside and outside the Soviet world. The basic difference, perhaps, is the intensity of argument. Formerly Soviet literature contained the most uncritical adulation of centralized planning. Now it contains the most severe criticism.

BUT THIS IS ALL BY way of introduction, because I want to discuss another, though related, kind of romanticizing that has helped make scholars blind to what was really happening in the Soviet economy. I have in mind the propensity to idealize, to elevate form above substance, to impute purpose to chance—in brief, to see order in disorder or even in chaos. The point is that Western scholars have not, as a rule, seen the Soviet system for what it really is: a set of institutions that has arisen out of an historical process of trial and error, and survived the various tests along the way. Their vision of the system has instead been almost idyllic, imposing a logic of design, a purity of function, and a simplicity of structure that have little or nothing to do with reality. Thus, the typical textbook on the Soviet economy has an early chapter on central planning that usually begins with a discussion of what one would want to do if one ran an economy; continues with an analysis of how one could efficiently do this by somehow solving an impressive array of simultaneous equations; and concludes with a description of how Soviet planning performs these functions. In other words, the actual system is made to conform with a preconceived ideal whether it does or not.

Perhaps a better way to understand central planning would be to start with the definition given by Mark Spade in his charming little book Business for Pleasure, the sequel to How to Run a Bassoon Factory.1 Spade says: “The difference between an unplanned business and a planned one is this: (1) In an unplanned business things just happen, i.e. they crop up . . . . On the other hand: (2) In a planned business things still happen and crop up and so on, but you know exactly what would have been the state of affairs if they hadn’t.” There is, of course, more to the matter than this, but not as far as planning itself is concerned. We all know about the “best laid plans of mice and men,” and yet we persist in applying the term “planning” to quite different social processes. We forget that this word was put into currency for its propaganda value, not its descriptive accuracy.

Instead of talking about planning, central or otherwise, we should be talking about ways of organizing social activity. At base, social organization must be achieved through custom, contract, or authority. No society has ever existed—or could exist—that relied on one principle to the full exclusion of the others, and hence the only sensible way to distinguish societies is in terms of the different roles played by each.

There is, however, a point to visualizing pure forms of social organization, if only to get our thinking straight. Let us start with an imaginary society ruled solely by authority. This would be best described as a corporate or hierarchical order. Everything that is done is done in response to an order passed down from a superior to a subordinate. Everybody has a boss—everybody, that is, except the supreme boss. The prototype is a military force, and a society exclusively run by a corporate order would simply be an army.

BY CONTRAST, ORGANIZATION by contract means a social order based on mutual interaction or voluntary association, whichever way one wishes to think of it The purest form is the ideal market place, where individuals freely exchange their wares for mutual benefit.

No one but a diehard and deluded anarchist can conceive of a society based solely on contract No one but a demented and doomed dictator can conceive of one based solely on authority. In any event, there are no historical examples of either, and there will never be any. All this is painfully obvious, not to mention trite. The family itself is an authoritarian body, though it may not always be clear who is the boss A private enterprise—the organizing entity in a market economy—is also a corporate form; and no authoritarian system of any size can survive without some markets and other realms of mutual interaction within it.

But to get down to cases The Soviet system may be described as basically a corporate order with a large area of contractual and customary behavior—some authorized, some merely tolerated, and some strictly illicit. The functioning of the economy is necessarily conditioned by this mixture of elements, and it is misleading to neglect any of them. As in the case of all economic systems, organization of the Soviet economy has three aspects. First of all, there must be planning or thinking ahead. Second, there must be basic decisions on what the economy is to try to do. Third, there must be administrative direction of activity.

Planning, in the narrow sense used here, is essentially a staff function. Somebody sits down and reviews the record of past performance, imagines how things have or could be changed to alter that performance, and maps out a program or programs designed to achieve goals supplied by somebody else. No society can keep going unless somebody, somewhere is looking ahead in some degree, but this is just another way of saying that man differs from other animals in at least this respect. It is equally clear that no society can run on planning alone.

Obviously somebody has to have the power to decide which program is to be followed. In the Soviet Union, this power is focused in a small self-perpetuating elite, and ultimately in the hands of one man or, at most, a small committee of men. Yet this group cannot decide everything. Like the great generals of history, it must leave small decisions to lieutenants if it is to make the big ones. The cardinal decisions, as far as the economic sphere is concerned, is how the fruits of social activity are to be divided, first, between the state and the populace, and, second, between the present and future in each case. The overriding objective is reasonably clear and simple enhancement of Soviet power, and thereby the power of the elite; but there remains the more important question of how this goal can be realized. In particular, there is the annoying problem of how to get the right mixture of power now and power in the future.

Let us put the problem in its crudest form. Military force is surely a key element in Soviet power, yet a smaller force now makes possible a larger one in the future. Similarly, the volume of goods available both now and in the future is not independent of what is given to the populace. The basic question boils down to this: When, in point of time, should the power of the state be maximized? The subsidiary problem is then how to arrange affairs to get the desired result. These are the kinds of decisions the Soviet planners must make, and they make them on the basis of the configuration they perceive in the giant chess game they are playing with the world. Just as to plan is not to decide, so to decide is not to do. Somebody has to get things done—to organize and manage activities with at least the intent of fulfilling basic decisions. This, in fact, is what most people seem to have in mind when they speak of “central planning”; and so I want to center the remainder of my remarks on how the Soviet economy runs.

FIRST, LET ME REPEAT my opinion that one gains little in understanding from abstract theorizing about central planning. Perhaps there will be a time when it will be relevant to talk about how Kosygin, or somebody else, optimized this or that through material balances or electronic computers or input-output techniques or linear programming or some as yet undiscovered but revolutionary device of social engineering; but that time is not now, and it was less so every year one goes back in Soviet history. Let me further state—as a simple act of faith, if you will—my conviction that it is beyond the ingenuity of man, no matter how far the science of social engineering may progress, to devise ways of running a society as large as the Soviet Union without significant recourse to contract or custom. Unless, that is, one is willing to abandon altogether the notions of efficiency and rationality, and to quit raising the question of how end results are related to original intentions.

Whatever may be the ultimate limits of a corporate order, the fact is that the Soviet economy is run only in part by command and obedience. It is also run by adjustment and even by inertia. There is no more sense in attributing all good or ill in the Soviet economy to centralized direction, without regard to the role played by markets and related institutions, than there is in saying that a man stays alive by breathing in, regardless of what he does about breathing out.

Markets pervade the Soviet economy, and their role has steadily grown since the early thirties. Some, like the socalled collective farm market, are open and legitimate. Others pass through the various shades of gray. Who has not heard of the “fixers” and “pushers”—the tolkachi? Of institutionalized influence peddling—the system of blat? Of the elaborate markets for exchanging apartments? Of “speculators” and other entrepreneurs, who sometimes achieve momentary fame on their day of execution? And so on and on. It is literally inconceivable that centralized direction could have functioned as well as it has without these pervasive, built-in shock absorbers and flexible linkages. I recall the words of a disillusioned young Russian engineer who, while vacationing in Yalta some eight years ago, struck up a brief acquaintance with me. “You know what communism means?” he asked me. “Communism means.” he said without waiting for an answer, “that if you have enough money, you can buy whatever you want.” And there was the collective farm manager whom I asked about planning in agriculture. “Of course, there are agricultural plans,” he replied. “But,” he added, “they depend on the weather.”

LET US TURN TO another widespread misconception about Soviet planning. Textbooks often describe Soviet economic programs, as if they were a series of boxes within boxes. According to this view the first box to be built is the grandest one of all: the long-range plan, formerly for five years and now for seven. Even this box is said to have its general contours determined by a fifteen or twenty-year plan. Once the long-range plan is constructed, the only problem remaining, we are told, is to fit the smaller boxes inside it, one for each successively smaller time period. The actual schedules of day-to-day activity—the quarterly and monthly plans—are viewed as miniatures of the grander scheme.

This all sounds fine, and it would make sense except for one troublesome detail: the system just does not happen to work this way. Western scholars in general have merely repeated in their writings what they have read in Soviet textbooks. Until very recently, they have not studied in depth, using the most primary sources available, how the system actually works.2

THE LONG-RANGE PLAN is a hazy vision of things it would be nice to have. It sets forth, for a limited number of key items, targets to keep one’s eye on. In other words, it gives something to shoot at and shout about—something concrete that the populace and economic agencies can be exhorted to attain. In no other important sense can it be considered a blueprint of the economic program for the intervening years. It does not attempt, for instance, to set a time schedule of achievements.

Now, consider two additional things: first, goals for the future grow out of experience of the past; and, second, it takes time to prepare reports on accomplishments and prospects. The result is that a goodly portion of the period being planned for is eaten away by preparation of plans. It is not unusual for a longrange plan to be published as late as a year after the period has started.

What, then, keeps things going in the meantime? The technical answer is current plans, on an annual, quarterly, and monthly basis. But these plans obviously have to be drawn up before there is a long-range plan of which they are supposed to be a carefully fitted part. And this is not the end: current plans also take time to draw up. The first quarter may be over before the annual plan is ready, the first month before the quarterly plan is ready, and so on. By that time, what has actually taken place is likely to be rather different from what has emerged as the plan. So the plan has to be revised to correspond with actual performance, and the process repeats itself. Through this constant readjustment of current plans to achievements, plans and performance converge in the course of the year. No wonder Pravda can publish such high percentages of plan fulfillment at the end of each year. The plan referred to is, of course, the final revised version.

Similiarly, in the course of either a short or a long period, plans can be attained—if this should remain an overriding objective—by the rather simple expedient of letting things slide in those large areas where no precise goals are set, or where the goals have a relatively low priority. There are plenty of built-in shock absorbers—or residual claimants, if you will—to dampen the blows of miscalculation. If this does not work, there always remains the expedient of throwing the whole plan away and starting over, as was done, for example, in 1957 and 1958. The question to ask, of course, is: Which is chicken and which is egg? Does performance derive from plan or plan from performance? The answer is that the relation goes both ways, though it is much stronger, in my opinion, from performance to plan than from plan to performance.

THE CRITICAL ELEMENT of muddling through can be shown in another way. Let us ask the question: What are the agencies that draw up plans, make basic economic decisions, and run things? As far as planning is concerned, the name Gosplan—State Planning Agency—immediately pops to mind: but one grows dizzy tracing out the shifting assignments and personnel of this agency in the postwar period alone. The terms of reference for this agency were changed no fewer than eight times between 1945 and 1964, almost once every two years.

Let me illustrate. In 1945 Gosplan had four major tasks: (1) planning of supplies, (2) planning on a current basis, (3) planning on a longe-range basis, and (4) compiling and processing statistics. The planning of supplies was withdrawn in 1946, processing of statistics in 1947. In 1953, planning of supplies was reassigned to Gosplan, only to be withdrawn two years later along with current planning. At this low point in 1955 and 1956, Gosplan was responsible for long-range planning alone, but in 1957, both planning of supplies and current planning were returned to its province. Three years later, it was relieved of its duties in long-range planning and restricted to planning of supplies and current planning. After another two years, its role was precisely reversed: It was made responsible solely for long-range planning. Finally, in 1964 its duties were expanded to encompass part but not all of current planning. There has, of course, been rather more stability in the decision-making nexus, essentially the Presidium of the Communist Party and of the Council of Ministries. Here important shake-ups have occurred only four times. At the level of actual administration, however, there has been vacillation back and forth between territorial and functional principles of organization since 1957, and no equilibrium arrangement is in sight. This is to say nothing of the frequent reorganizations of ministries, state committees, and the like, and the constant reshuffling of personnel.

Let me try to disarm my critics in advance by admitting that I have exaggerated elements of disorder in the Soviet system to make a point. Make due allowance, if you will, for this exaggeration. Is it even so possible to visualize Soviet planning as a process with dominant order, purposes, and continuity? I think not. Let us describe it for what it is: a set of institutions that has arisen out of an historical process of trial and error and survived the various tests along the way. These institutions make the economy go, sometimes reasonably well and sometimes quite poorly. Beneath everything there is the elemental force of momentum, which carries the economy forward from one day to the next whether plans have been properly attended to or not. Then, also, there are the many loose and flexible links that allow bending without breaking.

THIS IS FAR FROM THE picture conjured up by loose talk about theories of central planning. There is no command headquarters in the Soviet economy where brilliant scholar-leaders are solving a horde of simultaneous equations, pausing intermittently to issue the orders that mathematical solutions say will optimize something or other. Nor is there a simple mechanism whereby these orders are transmitted or carried out. If I may now conclude where I began, I would stress again the mischief of romanticizing. If they had faced the facts in the first place, would the intellectuals of our society have fallen down so badly in their job of guiding public understanding of the Soviet economy? Perhaps so. But at least they would have an honorable excuse.

WHAT YOU CAN DO TO HELP NIR . . .

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Collectivism in Social Theory

EDWIN HARWOOD*

There is no scientific sense whatever in creating for oneself some metaphysical entity to be called “The Common Good” and a not less metaphysical “State” that, sailing high on the clouds and exempt from and above human struggles and group interests, worships at the shrine of that Common Good.

—Joseph A. Schumpeter1

THE BELIEF THAT THE natural law framework of society is essentially corporative, that society requires a hierarchy of enlightened leadership with its most important social institutions receiving their legitimacy from a common ideological core and their operating directives from a central political directorate, has tended to unite social democrats, fascists, and even, it would seem, some religiously inspired neo-traditionalist thinkers. In the view of these, a government equipped with sufficient powers over human and material resources should be able to achieve a maximum of rationality and morality in society; and market-capitalism, which produces a division of political and economic powers, leads to the deterioration of a moral society.

It is too often forgotten that many liberal bourgeois social thinkers who were not socialists themselves have contributed to this critique of capitalism, partly as a result of their acceptance of that genre of social metaphysics alluded to above. In the case of the French sociological school, an essentially moral critique of capitalist industrial society was abetted by social scientific research and reinterpretation. Aiming to correct basic theoretical flaws in the atomisticutilitarian conception of human action and motivation, these outwardly liberal thinkers emphasized the coercive and regulatory functions of all social organization. They argued that it was necessary to recognize the importance of moral and cultural constraints in human action. As a member of society, man regulates his action in accordance with social values and tempers his hedonism with moral and religious considerations; in any case, his felicific calculus is as much the product of cultural tradition as it is of a basic schedule of biologically fixed needs.

This attack on atomistic utilitarianism (the psychological-methodological basis of English political economy and of its radical off-shoot, Marxism), received its major impetus from the French school of sociology, from men like Saint-Simon and Comte at an earlier period, and later from Durkheim and Mauss.2

It should be noted that while the French sociologists were hostile to capitalism and suspected that it was the chief cause of industrial civilization’s presumed moral anarchy, the French critique of utilitarian theory did not derive from their ideological principles, but rather it rested on the accepted canons of scientific investigation alone. On the other hand, it is clear that if a good case could be made for theories which stressed the social determinants of human action and which asserted that man’s nature is nothing if not social, then societies which appear consistent with the utilitarian analysis would be more likely to appear unnatural; that is, historical aberrations to be corrected by a generous corporative impulse. Hence, there is indeed an ideological bias in the early French sociological theorizing.3 In the writings of Comte, Mauss, and Durkheim one finds many concrete recommendations for a corporative social order, and they attempted to support these recommendations with their scientific studies.4

AMERICAN SOCIOLOGY of the 1930’s manifests a strong imprint of French concepts and the anti-capitalist bias discussed above. This may have been understandable in view of the solid empirical contributions of Durkheim and his students; but the task of carrying forward their program of research on the industrial order and its disabilities extended to more than just scientific considerations. It included, in addition, adapting the French assault against “chaotic capitalism” to the American social terrain of the 1930’s—admittedly a time which was not exactly propitious to theories favorable to capitalism, especially among social scientists not trained in economics. The separation of the moral and political order of society on the one hand from the operations of the market on the other, a separation which is never complete even in advanced capitalist societies, was one of the “natural aberrations” which the French fulminated against. This theme was soon taken up by a group of American sociologists and social-anthropologists, some of them men of indisputably great stature, like Elton Mayo and W. Lloyd Warner. In their work one finds the same admixture of political critiques with scientific explanation. Both of these writers write eloquently about the need for society to re-integrate itself in the interest of all contending factions. Their recommendations for a more rigid and unified hierarchy, and for a greater coordination of economic interest groups by political institutions is consonant with the corporative conception outlined above;5 but if social peace and quiet are such vital needs, why not recommend the proscription of those political freedoms and that type of parliamentary squabbling and naughtiness which—at least in the view of right- and left-wing authoritarians—only serve to magnify and exacerbate rather than resolve existing tensions and social antagonisms! Why not leave off with the terminological trepidation. Call it what it properly is: a fascist solution.

What had been with the French and certain of these American social scientists a critique of existing capitalist society and an argument for a corporative social order, one in which the economic sector of society would again be put to a moral harness, became transformed into a highly general theory of social organization.

INSTRUMENTAL IN THIS development was the work of Talcott Parsons. In a brilliant early work, The Structure of Social Action, Parsons continued the dialogue with utilitarian individualist thought which the French had spearheaded. Ten year later, in The Social System, he developed a distinctive theory of his own. Emphasis in this theory, which was not meant to be a theory of any one type of social system but of all social systems, was given to the postulate of shared values, of norms held in common by the inhabitants of a political community. Basic social antagonisms based on class and political divisions were secondary phenomena which had to be explained but were not of central relevance. What is the difference here between Parsons’ extrapolation of French sociological thought and what the French themselves believed? Parsons’ theory does not allow for distinctions between types of social systems, distinctions which are essential to a proper understanding of different societies at different stages of historical development. There was, for example, no attempt to distinguish between actual ongoing corporate states on the one hand—socialist and feudalist societies are similar in terms of the heavy-handed political centralization and statist natural law premises they advance—and capitalist society with its institutionalized independence of economy from polity. The French recognition of the fact that capitalist society differed from what they conceived of as a more natural social order was lost sight of in the emerging general theory developed by Parsons.

Parsons wanted to talk about society in general. This led him to the kind of pitfalls which I intend to discuss now. We shall consider one application of his general theory, his explanation of social stratification: the way in which men come to differ in terms of income and prestige. This theory of stratification is erroneous because it derives from a wholistic conception of social life and such a conception, I argue, is not at all adequate to the task of describing capitalist societies.

Parsons assumes that the reward and prestige which a given occupation garners depend upon “society’s” evaluation of the contribution of that occupation to the survival needs of the society. Occupations felt to be vital to the continuation of society will receive much more prestige and income than occupations which are not so vital. Sufficient consensus exists, in Parsons’ view, to insure that the income of a position will not be discrepant with its social value. A moral order being common to all men within the social system, such consensus about the relative ranking of services and occupations would never be problematic; but if a discrepancy should occur, if occupations of great importance were to receive less income than would be warranted by their importance, serious strains would be engendered. Some agency would have to intervene to insure that the important occupations received their due share of the economic distribution.6

That is the theory in a nutshell. It assumes that social systems have stable ideological cores from which unambiguous rankings of different occupations can be derived. It assumes that men come to a uniform evaluation of the survival needs of their societies—indeed, that societal survival is foremost in their minds when it comes to ranking jobs and allocating material rewards. It assumes, further, that situations in which a discrepancy exists, as for example in the case of jobs or trades which have high income but are morally reprehensible, can be considered abnormal and productive of social strain. Then, of course, they must be “corrected.” Is it not possible, however, in contrast to Professor Parsons’ view, to think of a market which does not follow the moral guidelines of some social elite, but allocates income to those who best provide for the wants of the mass of consumers?

These individuals may not measure up to the standards of the cultural elitists. They may actually provide services and goods felt to be petty and trivial; but the financial power of the consuming public is a basically democratic power, and it lies at the very roots of those discrepancies between the presumed moral attributes of an occupation and that occupation’s income which are more the rule than the exception in healthy capitalist states. It is often only the elitist intellectuals who must perceive a harmony of social functions where harmony does not in fact exist; and it is usually the intellectuals and the unsuccessful who feel that things moral and material must be brought back “into line.”

IN COLLECTIVIST societies a general consensus regarding the relative worth of different social functions, if it does not actually exist among the populace at large, can indeed be enforced by the intellectual, military, or feudal elites. Only this type of society, approximated by contemporary socialist states and feudalist regimes, can attempt to coerce the flow of income into channels which maintain consistency between the income and the presumed moral worth of a given occupation or social position. It is well known that a market freely organized can be frustrated in its effective allocation on the basis of demand, and thus the central administrative apparatus of the state can assign wages and salaries on the basis of criteria irrelevant to economic efficiency. In feudal and socialist regimes, merchants, entrepreneurs, tradesmen, and kindred social types of the third estate usually do not receive the material rewards that they would otherwise receive for their services in a democratic capitalist society.

Since a free market would have provided these social types with income felt to be inappropriate to the economic worth of their social functions, kings and comrades must have recourse to measures which will bring income into line with social prestige or what they feel to be society’s needs. Heavy taxation continually enforced, as in Bourbon France, or capriciously, as in the England of Charles I, sumptuary legislation—now, with changing fashions, referred to as “rationing”—and downright expropriation are among the measures which a social elite can employ to make certain that income will be allocated on the basis of political or “moral” criteria. I must confess that the socialist elites have carried out their task in this matter with much greater efficiency than the former Western monarchs and feudal princes; but I think that in terms of the ideal-typical distinctions I am trying to draw in this paper, it is safe to contrast feudal and socialist social systems on the one hand with capitalist societies on the other.

Professor Parsons and those sociologists who have followed him in this theory of social stratification never made these crucial distinctions between capitalist societies on the one hand, and socialist and feudal regimes on the other. They are not advocating a return of control over economic operations to a social and political elite—in short, a transformation of capitalist society into a socialist order—because they believe that there are no crucial distinctions. I am not saying that they are not personally aware of important differences. I am arguing that their explanation of social stratification does not take these differences into account.

I CANNOT DEAL WITH all of the underlying assumptions in this theory, in particular, with the assumption that society has a set of survival needs which are clear to most men in society, and which, when clearly understood, give rise to a uniform set of occupational evaluations. I leave this assumption for more versatile metaphysicians than myself to grapple with. The belief, however, that widespread social consensus exists with respect to the value of different economic services and social roles, that men not only agree upon the relative ranking of different social functions but in addition, experience strain and distress when they perceive how occupations and other social functions of high prestige receive modest incomes, strikes me as being contrary not only to common sense but also to historical experience. Consider the social and political upheaval in seventeenth century England. The enclosure movement which developed in the wake of the Tudor Reformation, as a response to the sale of monastery lands to enterprising nobles and burghers, created concern among the highest ruling elements of the society, Church and Crown.

The greater efficiency of the monastery lands, after having been sold to enterprising private individuals, increased the pressure on other landholders to raise rents and rationalize agricultural practices. There were other factors at work here, among them the decline in the purchasing power of the coinage, while rents in many cases had remained unchanged since feudal times. Nobles and gentry responded by jacking up rents, and by turning a large part of their lands into pasture for the production of wool. The lower ranks of the peasantry, the copyholders in particular, had a difficult time defending their rights to their private plots as well as to the commons in manor courts run by the very nobles and gentry they were up against. The Crown was disturbed by the growing social dislocations in the countryside. The rationalization of social relations between peasant and manor brought about by the commercialization of land was felt to undermine the power of the Crown—although Henry’s sale of Church lands and the campaign against the private feudal armies of the nobility were themselves factors in the decline of manorial paternalism.7

In the end, of course, the anti-capitalist measures of Laud, the High Commission, and Charles’ Privy Council were put to the block as squarely as was the Archbishop’s head. The combined triumph of agricultural capitalism in alliance with urban mercantile capitalism meant far more than just the end of a corporate feudal society. It meant, in addition, the end of a coerced consensus on the relative moral worth and prestige of different social functions. It meant that low-born bourgeois would obtain the full value of their economic contributions. They would also have more wealth than many of the high-born, and in time, more power too. Parliament, in denying the Crown’s right to impose arbitrary taxes, in particular, to sell and grant exclusive franchises which interferred with the efficiency of the market system, abolished in the process the use of political power for the control of economic life, for the diverting of the flow of goods and income away from the strata to which they would normally be destined under free market conditions. The sundering of the polity from the market meant—and this is most important for understanding the inadequacy of sociological theories of stratification like Parsons’—that the prestige which some elite judges to be merited by a social function will not necessarily correspond to the income received by that function in a capitalist society. There is also an absence of consensus about the relative importance of different social functions in capitalist society. Leftist intellectuals do not think as highly of businessmen as the latter do of themselves; ward-heelers are thought very highly of by lower-class, ghettoized immigrants, but that doesn’t assure them entry into clubs and upper-class salons.

In seventeenth century England, on the other hand, the nobility and court had sufficient social and political resilience to continue to determine what style of life and family background constituted high social worth, but they lost the ability to insure that the stream of goods and material comforts would correspond to this other dimension of social class. Capitalism’s triumph was not postponed because it had a falling out with some presumed “common-value” system which had assured consensus on the relative worth of different social functions. It triumphed because certain strata, fortunately aided by an aristocratic element with strong commercial interests, the Tory Radicals of their age, took the political initiative in seeing that the market system worked without Stuart political and religious fetters. England attained this goal much earlier because its bourgeoisie was much more advanced. It was favored over France and the other continental countries for a number of other reasons which John U. Nef has dealt with at length in his Industry and Government in France and England: 1540-1640. That work is among the best I know for gaining an understanding of why parliamentary democracy and capitalism triumphed so early in England.

WE HAVE DEALT AT some length with the myth of a “common-value” system, at least as applied to capitalist social systems, and I think that in the process we have learned why collectivist sociological theories apply to collectivist societies and not to the more pluralistic democratic capitalist system. If one considers, for example, R. H. Tawney’s political tracts, Equality and The Acquisitive Society, or Karl Polanyi’s The Great Transformation, one finds a quite stubborn awareness of the fact that capitalist civilization is neither a moral unity with a common ideological core nor a system that assures that income and prestige will follow what these anti-capitalist intellectuals consider to be their proper channels. These men are advocating a unified, morally integrated society, one in which a centralized political directorate would have the power to determine the moral value and “functional contribution” of various occupations and services. Although I heartily disagree with the ideas of these two thinkers, I must confess that they have a more acute understanding of the nature of social class and stratification in capitalist society than non-socialist social scientists such as Parsons and his followers. That the general theory of social stratification advances conceptions unsuited to the contours of capitalism is most clearly revealed in the statement made by two of Parsons’ followers regarding the dilemma of private property and inherited wealth:

. . . as social differentiation becomes highly advanced and yet the institution of inheritance persists, the phenomenon of pure ownership emerges. [By this I assume they mean ownership without unsubtly obvious functions.] In such a case it is difficult to prove that the position is functionally important or that the scarcity involved is anything other than extrinsic or accidental. It is for this reason, doubtless, that the institution of private property in productive goods becomes more subject to criticism as social development proceeds towards industrialization.8

This seems to be a striking admission. Having noted the obdurate legal fact of inherited wealth, Davis and Moore are arguing that with time people will come to reject the right of private ownership of productive firms and will insist that such material reserves be re-allocated on the basis of some more valid criterion of social contribution. This may or may not be an accurate description of current historical tendencies. It is clearly an admission of the inadequacy of their theory to account for the dynamics of class and stratification in capitalist states. What they are saying really is that with time, social reality will “catch up” with the propositions of their theory, the day when some Ministry of the Moral Order will insure that large blocs of wealth do not go into the hands of rentiers—Captains of Non-industry, if I may pervert somewhat a phrase coined by David Riesman; but will go to those who make the most important contributions to that somewhat mysterious and elusive end, societal survival.

These men pretend not to advocate but only to describe what is. The advocates of a collectivist society, however, are not only honest advocates but clearly cognizant of the important differences between the dynamics of class and stratification under capitalism on the one hand, and the mechanisms which operate in collectivist states on the other. I do not care for the collectivist goals of the French sociologists or the Marxian mecca of orthodox socialism; but I am concerned to see that the distinction between corporative and capitalist societies be fully understood for what it is, rather than being submerged by a general theory which admits of no important differences.

For this reason, I tend to feel that the older political polemics which recognize these differences have more scientific relevance and analytic clarity than altogether inapplicable abstractions about society in general. The latter have attained the orthodox scientific goal of universality with the result that we understand not more but less about the functioning of modern western societies.

Justice, “Needs,” and Charity

ROBERT L. CUNNINGHAM*

And for bonnie Annie Laurie
I’d lay me down and dee
(William Douglas, Annie Laurie)
Each heart recalled a different name
But all sang “Annie Laurie”
(Bayard Taylor)

DEFINITIONS ARE generally regarded as the best and most effective means of ensuring that our use of words is exact and clear. The advantages of following the recommendation: Define your terms! are seldom questioned; but to define a term like “justice,” a word that combines a strong eulogistic flavor with a wide ambiguity of meaning, is to engage in a dangerous occupation, for one is implicitly engaged in recommending an ideal, and thus any definition given is inevitably persuasive. There may be no agreement on the application of “justice,” no agreement on the criteria which ought to determine its use, there may be an inconsistency of application which reflects confusion of thought, but there will be unquestioning adherence to the proposition that justice is a good thing. When it proves possible to shift the application of a term like “justice” (or “democracy” or “liberty” or “socialism”) one may very well have won an important battle, for, implicitly, interests are thus redirected, values legislated in or out of existence, and the range of relevant “explanatory” information changed.

That such a shift in the application of “justice” has occurred is not really in doubt. “Justice” now usually refers not so much to a moral habit some individuals have and others, more or less, lack, but to a sort of institutional arrangement which it is the goal of political programs to achieve. Part of the load of favorable connotations formerly carried by “charity” (now redefined and carrying somewhat dyslogistic overtones), “love,” and “mercy” have been shifted to “justice.” Commutative justice is “out”; distributive or social justice is “in.” “Social justice” and “universal prosperity” or “happiness” are often used coextensively.

I shall attempt to show that if this shift has occurred, it has considerable importance for men of intelligence and good will: for it is an analytical proposition that men of good will and intelligence will strive for justice. A few centuries ago, a somewhat analogous shift occurred—a shift in the meaning of “selfish” which led men to accept as true the proposition: “All action is really selfish”—with the result that many were seduced from attending to their duties; fortunately a Bishop Butler was then available to make the appropriate distinctions and to show that the proposition was true only when “selfish” is used in a trivial and uninteresting sense.

JUSTICE HAS traditionally been considered to be a necessary modality of government action. If one says, “that’s unjust,” one has implicity said, “government has no business doing that”; and if one can justifiably say, “doing that will promote or foster justice,” one has given a good (though not necessarily a sufficient) reason for saying, “government ought to do that.” Now, one way of broadening the legitimate range of government activity is to broaden the scope of “justice,” and it does appear true that certain sorts of activity hitherto attached to “charity” (love, sympathy, affability, kindliness, spontaneous likings, friendliness, friendship) are now attributed to “justice”—usually social justice (the very best things these days are characterized as “social”). There are certain advantages to this broadening of “justice.” “Justice” connotes rationality, austerity, rigor, and admits of being pressed into fixed formulae and codes. The virtue of justice counteracts the crude egoism of the individual, but only in a minimal way, for it demands that all men be treated equally—and there are only a limited number of ways in which men are equal. “Charity,” and “mercy” even more so, connotes sentiment, softness, the glorification of instincts and whims, non-rationality. There is this difference too between charity and justice: Justice calls for treating A and B equally, whether A is a friend and B an enemy, or A one’s mother and B one’s mother-in-law. “A judge who respects the person is unjust.” Justice calls for the methodological exclusion of charity; but charity does not call for treating A and B equally. We love what is like ourselves and since some are more like us than others are, we love them more than we love the others. There are gradations of love or charity, but not of justice: We can love one more than we love another, but cannot treat one more justly than we treat another. As Joseph Pieper has written, “If love says: ‘Whatever belongs to me should belong to the one I love, too,’ justice proclaims: ‘To each his own.’ ”1

When strict (commutative) justice is called for by the situation, it must never be overruled or replaced by charity. If I borrow fifty cents from a friend, promising to repay fifty cents the next day, it would be unjust of me not to repay what I owe when it is due: to refuse to do so (when able) is a paradigm of injustice. It would also be morally unreasonable to strike an attitude of generosity and, when the money is due, say: “Here, take the fifty cents: you need it more than I do”; or out of “charity” to say: “I won’t keep the fifty cents, nor will I give it to you; I’ll give it to some poor person who needs it more than either of us.” Nor is it true that the claim to justice and to mercy are of equal weight. “There is,” James Martineau says, “a vast interval between the obligation which I have openly incurred in the face of my neighbor’s conscience and that which is only privately revealed to my own.”2 But if charity be brought under the aegis of social justice, then it may well be that some will argue that social justice ought to overrule commutative justice. The exquisite charity of the saint scarcely permits his justice—hardly different from that of the honest tradesman—to appear; and similarly, scarcely will social justice allow commutative justice to appear.

Notice also another limitation on the rectification of “justice” to designate what was traditionally designated by “charity.” Ordinary language is a few paces behind the verbal redistricting that has gone on. “He needs it more than I” justifies giving another charity, but hardly justice; and it makes sense to say, “I owe you $50 for the suit I got from you,” but hardly any sense to say, “I (we) owe you $50 because you are unemployed.”

WHY NOT, HOWEVER, broaden the designation of “just” to include much of what was hitherto included under “charitable”? If government will now promote charity, mercy, love—why not? For a very simple reason, indeed: because government has no goods of its own to distribute in charity and mercy. What goods it has it obtained from others who were (implicitly) threatened with violence if they did not pay what they “owe.” There is all the difference in the world between helping the poor by a free gift, and being ready to take away from the rich what he would otherwise unjustly—by the criteria of social justice—retain and then giving this to the poor. “Christ’s bidding to the rich is most imperative. It is necessary to stress that while He urged the rich young man to ‘distribute unto the poor,’ He did not tell the poor to take upon themselves to redistribute by taxation the rich young man’s wealth. While the moral value of the first process is evident, that of the second is not.”3 Though the (individual) moral duty of charity logically presupposes that of strict justice—since even when exercising charity to the highest degree, one can give only what is one’s own—if government is acting as a charitable agent, its charity can now be seen as demanded by social justice.

One tends to be struck, over and over again, with the unreal, not-in-this-world atmosphere in which many philosophers tend to discuss justice. The problems that seem important to solve have to do with distribution—there is no discussion of costs. The underlying model seems to be one in which there exists a mountain of goods to which individuals come with claims of various sorts, and government’s job, with the advice and consent of the philosopher, is to judge which and how many of these goods are to be distributed to A, to B, to C. In such a world the only problem is that of a just distribution—how this mountain of goods got there is irrelevant, or at least uninteresting; for this model does not even permit the raising of the issue of whether or not these goods already belong to someone, whether it is private property that is being (re-) distributed. W. K. Frankena, for example, asks us to consider the notion of comparative allotment as central to distributive justice. Suppose, he says, “society” is “alloting” goods to people. Then society may be justified in “giving C a banjo, D a guitar, and E a skin-diving outfit.”4 Note well the paternalistic model: Surely these are the gifts a father would give his children, say at Christmas; and note that the question of how it is that the father raises the money to pay for these goods does not arise. Nor does the question of how it is that one knows just what is good for each child arise; but is it appropriate to use the actions of a wealthy and wise father as a model for government action?

MERCY IS AN EVEN more unseemly sort of virtue than charity in our modern world. The man who practices it places himself above his neighbor, who is put in the position of receiving alms, in the position of dependence on an overlord. Can anything less democratic be imagined? Nor is mercy a radical virtue. the merciful man tends to deal with symptoms rather than root-causes, and is guilty, as Aurel Kolnai puts it, of “wishing to relieve the pain of the incurably sick instead of eliminating sickness from the world.” One can see that if the “mercy of the rich and powerful” can be eliminated from the world—by being made unnecessary as a result of the substitution of systematic social justice—the world will have gained in objectivity, rationality, and human dignity.

Notice also another advantage of broadening the extension of “justice”: those who receive what they “need” are no longer put in the position of one who receives charity or mercy, but of one who receives his just due. “Means tests” are out, for they were appropriate only when a man could not have been said to “deserve” help. It was argued traditionally that the fact that each person is not due the fulfillment of his “needs” follows directly from the proposition that “neither can it be affirmed a priori that there exists in the external world a sufficiency of goods for the needs of all, nor can it be affirmed a priori that one’s needs constitute a sufficient title to claim from others what belongs to them.”5 Now the “logic” of the word “need” is interesting. If I say “I need X,” there is, by contrast with my saying “I want Y,” a connotation of constancy, absoluteness, definiteness, a suggestion that what I say I need is almost physiologically demanded, and a suggestion that costs are irrelevant; the things I “need” are things that surely benefit me, but what I “want” may not do so. I can compare, for instance, my wife’s telling me, “I want a new rug” with her saying, “We need a new rug.” The connection between “X needs Y” and “X (morally) ought to have Y,” though not an entailment, is not purely contingent; but it makes sense to say “X wants Y, but maybe he (morally) ought not to have it.” In English we speak not of urgent, critical, crying, vital, or essential wants—but of urgent, critical, crying, vital, or essential needs (and this is so even though the noun “want” connotes the stability of “need”—a connotation not at all present in the use of the verb “want”). To speak then of an economy as potentially capable of satisfying all our “needs” is to imply that there is a constant and unchanging set of goods and services called “our needs” and also that a finite amount of wealth will enable us to satisfy these needs. But as economists point out over and over again, the notion of “need” is not an analytically useful one.

We are inclined to say that we need too many sorts of things, from more protein in our diet or a longer vacation, to a new car, more highways, more and better teachers, more missiles, more water in California. This is to say that “need,” like “want,” is a vague word, connoting constancy and definiteness but denoting, in many of its uses, nothing more definite than “want.” “I need” is used persuasively to say “I want.” When someone says: “I (or more usual, we) need X,” one should, I think, follow the suggestion made by Alchian and Allen and respond: “You say you need X, but in order to achieve what? At what cost of other goods or ‘needs’? And at whose cost?”6 These questions are obviously relevant when someone says “I want X”; they are no less relevant when someone says “We need X.” The only practical way, of course, of distinguishing “wants” and “needs” is to give some authority the power to define what are to be counted as “needs” and what are to be counted only as “wants”—but this course of action would have some rather obviously undesirable consequences which need not be discussed here.

D. D. RAPHAEL ARGUES that unequal treatment can be justicized on the basis of different needs: “We think it right to make special provision for those affected by special needs, through disability, such as mental or physical weakness, or through the slings and arrows of outrageous fortune. . . . Here, it would seem, we go against nature, and think ourselves justified in doing so.”7 Nonetheless, would we not find it strange to say: “He’s a just man because he gave more attention to the poorer students than to the average students”; or to say: “He’s a just man because he helped the child the bigger boys knocked down.” It may be right to give greater attention to poorer students, or to help the injured child—but is it just (that is do we now say that it is “just”)? It may be right “to meet these special needs . . . [by] an attempt to bring such people up to the normal level of satisfactions, or as near to it as we can”—but is it just to spend more on some than on others? Mortimer Adler once argued that if it takes two or even three times as much money to educate the less intelligent to an acceptable norm, the money should be spent. Perhaps; for maybe there are good (possibly utilitarian) reasons for doing so—but are they justicizing reasons? It may be right for a father to spend a great deal of money to send a crippled child to special schools, but if the other children question the justice (or “fairness”) of this procedure, can the father give good justicizing reasons? Though charity never overrules justice, one may—and perhaps the crippled boy’s siblings morally ought to—give up that to which one is justly entitled; but ought government to use the threat of coercion to achieve the same goal?

If a man asks for a dollar for a bed for the night, few would say I ought to give it in justice; but if that man votes himself a dollar from me, do I now owe it to him in justice? It is hard to see that the fact that he now has the government at his back to enforce his “claim” makes all the difference between a request for mercy and a demand for justice.

There may be a sense in which college professors “deserve” higher pay (everyone might be better off if abler men were attracted to teaching, etc.); it might be right to “work for” higher pay; but is it unjust that people have not chosen to spend a greater amount of their wealth on education?

One may well be able to defend the proposition that “private property has a social function”; but is this appropriately interpreted to mean that if you have more property than I, you ought in justice to give me some? This is egalitarianism with a vengeance and, as Kolnai says, “the trouble with the true egalitarian is precisely that he is unable to see a fat person beside a lean one without being tempted to assume that the former must have fattened on the flesh and blood of the latter.”8

It is conceivable that robbing Peter to pay Paul (the model of the welfare state?) may sometimes, in marginal situations, be justified; but never justicized. It is a considerable step from “the pursuit of happiness” to a claim to happiness rationed out by a government which guarantees social justice—aside from the fact that here as in all other cases where scarce goods are rationed, the goods tend to disappear.

Is it not odd that people will “fight” to raise social security benefits with all the solemnity proper to the performance of a religious duty? One is reminded of the Marxist prophecy which “required from its disciples no other belief than that in the force of bodily appetites and yet at the same time satisfied their most extravagant hopes.”9 What used to be called “selfishness” is made out to be not only permissible but a moral duty, the motive power behind the achieving of world social justice. “The ‘divine discontent’ that makes me crave for three rooms instead of two and two radios instead of one is a revolutionary force which deserves not only to be acknowledged but venerated.”10 If striving after limited equality is justice, then striving after total equality is striving for the consummation of justice.

IT IS NOT, I THINK, irrelevant to note parenthetically that there is good reason to believe that when legislators respond to popular demand for “public services” solely on the basis of “needs” criteria, overinvestment tends to result. This is also the case when government provides “private” goods to individuals without the use of pricing. It is doubtless true, as Kolnai writes, that we may be ready to dispense with “the fine connoisseurship of delicious dukes if in compensation we are relieved from the presence in our midst of illiterates, uncared-for consumptives, and persons ignorant of the use of soap.”11 But the means we choose, whether “just” or not, often fail to achieve their goal. Milton Friedman has argued, successfully I think (pace Galbraith: “Public services have . . . a strong redistributional effect. And this effect is strongly in favor of those with lower incomes.”12 ), that with the exception of direct transfer payments to the poor, all types of social welfare measures have the effect of taxing the poor to help the rich.13 This is to say that there is a net transfer from the poor to the rich when measures such as those making education “free” to the poor are passed (mainly at the higher, but even at lower, educational levels); freeways (not tollways) are built; “public housing” is provided (more housing than is built is first destroyed, and so the average cost of the housing available is raised); areas are “redeveloped”; “medicare” legislation is passed (the very poor are already well taken care of); “social security” is passed (benefits are, partly, paid for by a regressive tax); and legislation is passed to help farmers, only some of whom are poor (but raising the price of food for everyone else); or to help “senior citizens,” only some of whom are poor; etc.

The way the poor are dealt with is reminiscent of the way wolf packs are dealt with by the Eskimos. They plant razor-sharp knives clasp down in the ice and rub the blades with a little seal blood. The wolves, attracted by the blood, lick the knives, cutting their tongues. They are greedily delighted by the seemingly unending supply of nourishing blood they can lick off the knives. They stand there licking until they drop in their tracks from the loss of their own blood, then freeze to death in the snow.

Gregory Vlastos argues that “since humanity has lived most of its life under conditions of general indigence, we can understand why it has been so slow to connect provision for special need with the notion of justice, and has so often made it a matter of charity; and why ‘to each according to his need’ did not become popularized as a precept of justice until the first giant increase in the productive resources. . . .”14 But is this not a rather odd position? In the past, when we could not satisfy needs adequately, it was the function of charity (sympathy, pity, generosity) to provide help to the needy; today, when most people are not needy, charity is no longer called for, but we must in justice bring the few needy who remain up to par. When there are a great many needy people, pity them; when there are only a few who are not really so needy—in advanced countries, for in most of the world many people are still (biologically) needy—give them justice. Few would want to deny that with the passage of time sensitivity to the demands of justice can increase (or decrease), or that sensitive, pitying awareness of human misery can increase (or decrease). Yet is it not simply obfuscation (though persuasive) to confuse the two verbally, to say what was called for by “charity” on one day is called for by “justice” on another; and that the extent of remediable misery is sufficient to call for the verbal transmutation of “charity” into “justice.” We must give justice to our poor fellow-Americans, but need give only charity to the rest of the world’s poor.

Ceteris paribus, all of us would prefer a state of affairs where social rewards, privileges, wealth, power, and prestige were proportional to the individual’s use of his talents. We would like to see reward proportioned to “merit,” not only in heaven, but here and now on earth. What holds people back is the recognition that they lack divine knowledge and power (recalling the old saw of what would heaven be like if God sometimes put people in the wrong mansions?) Most political theorists also feared that some man or group of men might acquire the power to decide what another’s status ought to be, and that therefore freedom would be diminished.

ALTHOUGH IN UTOPIA reward should correspond to merit, and not necessarily to performance (which may dedepend on luck), we cannot very well judge merit. We may, however, feel that there are ways to get an idea of motivation; and for anyone influenced by Kant, motivation may be thought to be the near-equivalent of merit. From this viewpoint, it appears that businessmen are inspired mainly by the profit-motive, when we should prefer them to be motivated by a desire to promote the “common good”; but since there is no logically necessary connection between performance and income, we can, by interfering with the market system, attempt to establish some sort of correlation between preferred motivation and high income.

This sort of thinking is, however, moralistic, and leads only to confusion between the end of the activity and the end of the actor. Yet certainly what is done should count for more than why something is done: a Torquemada does no less harm for being nobly motivated. Should we no longer interest ourselves in the finality of an activity but only in the finality of the agent, we shall find highly motivated activity driving out highly beneficial activity. “Let us stop talking about people’s motives. I don’t care what people’s motives are. I want to know what they are doing and what the effects are, and which ones are good and which ones are bad. I don’t care why you hold this office or why you run this business. It will always be true, I should think, that people will go into business to make money. What is wrong with that?”15

Is it not better to strive for less than “(re-) distributive justice”—namely, for visible and evident commutative justice which does not directly count the personal effort of a man’s work but only the result—realizing that moral value, while the highest, is not the sole value, and is the least measurable by empirical methods. It is better to give up a dream for the perfectly just society—which, as a matter of fact, the unsuccessful would find more unbearable than now, when chance and fortune so clearly have enormous roles to play and they can blame luck rather than lack of merit for their condition. Given the climate of opinion about the very wealthy—whether based on envy or not—a man is unlikely to choose commerce and industry unless the material rewards are relatively great. The only way a “philistine” has of knowing whether his efforts have any merit is by his profit-and-loss account. If this standard of successful service is scorned, the function of the market in allocating resources to successful producers is destroyed. Running a department store well is not the noblest of all humanly befitting activities, a bonum honestum, and the best people know it. (The Greeks called such activity banausic—“the man at the stove.”

The lower the possible “profits,” the less the interest in putting one’s economic life on the line. The losses are as great as ever, and speculative economic investment of the sort that, when successful, means great service to the consumer and so great wealth to the entrepreneur, is stillborn. How far we have departed from the attitudes reflected in Samuel Johnson’s remark that “there are few ways in which a man can be more innocently employed than in getting money”! As long as it appears desirable to raise the general standard of living, if not for oneself then at least for one’s fellows in one’s own country and the rest of the world, one had better make sure that those who engage in productive pursuits are not deprived of sufficient material rewards to encourage them to continue their useful other-serving activity, even though whole-hearted moral approval cannot be given them. The envious man who for “moral” reasons refuses to pay the price asked for the services he demands (“How can any man be worth a million dollars a year?”) will shortly find these services are unavailable. One must not forget, as Hayek reminds us, that in a sense all of us are striving to achieve the status of the “idle rich,” those whose activities are not governed by desires for material gain.

What is true of the wealthy with respect to the poor is true also to wealthy nations vis-à-vis poorer nations: One may, by redistribution, kill the proverbial goose. Further, if it is “just” to re-distribute the “profits” of the wealthy to the poor in one’s own country, is it not quite as “just” for people of poorer countries to claim that the goods of the wealthy nations ought to be redistributed among them? Is not “social justice” being violated in a world in which an American auto worker belongs to that two per cent of the earth’s population whose income is highest?

COMMUNICATION:

The 1964 Election

Rusher on Goldwater:

IT MAY BE USEFUL if I describe some of the considerations that motivated those who sought to draft Senator Goldwater, and who in the process seem to have annoyed Professor Rogge so vastly. (“Note on the Election” by Benjamin A. Rogge, New Individualist Review, vol. III, no. 4, Spring 1965)

First let me say that I agree with a large part of Professor Rogge’s underlying thesis. It is perfectly true that America, in 1964, “was simply not yet prepared to accept the conservative position.” Furthermore, I will cheerfully go the extra mile and concede that the probable outcome of the struggle was plainly foreseeable from the outset. One mild caveat here: No election is ever totally predictable, and it was always possible, even if only slightly so, that our expectations were unduly pessimistic, or that external events—the “deep crisis” mentioned by Professor Rogge—might arise to confound them. My own not terribly libertarian view was quoted in the November 1962 issue of Foundation: “there will inevitably come a time when the American people determine that world Communism must be destroyed. If that time comes before November of 1964, Goldwater will be elected. If it comes after 1964, he will be defeated.”

Yet Professor Rogge seems to think he has the argument won if he can only manage to establish that Senator Goldwater was doomed to lose. He throws in a few unkind remarks about the excessive zeal of the Draft-Goldwater forces, and concludes with a ringing appeal to conservatives “not to try to win elections but to try to win converts.”

This is sound enough as far as it goes, but I think it omits some important considerations. There is, first of all, the question of what obligation (if any) we owe to the democratic process. Granted that conservatives are a minority in this country, does it inexorably follow that they should not “fight the good fight, run the good race,” in Bryan’s hackneyed phrase? How, if conservatism is too delicate a bloom to be buffeted by the rough winds of the electoral process, are the American people even going to learn what it is, let alone be converted to it?

Beyond such considerations, and at a lower but by no means unimportant level, I urge Professor Rogge to consider the striking increase in the size, and the even more striking increase in the general articulation, of the conservative movement as a result of the Goldwater campaign. It will not, I think, be seriously denied that ten years ago there were far fewer conscious, committed conservatives in this country than there are today. Even two years ago, when the National Draft-Goldwater Committee was publicly proclaimed, conservatives were comparatively unaware of each other’s existence, and hence of their united strength. Today, despite the disappointment naturally engendered by Senator Goldwater’s defeat, conservatives are vastly better organized and infinitely more experienced in the ways of practical politics than they have ever been before.

A final observation. After the defeat of Richard Nixon in 1960, it was universally assumed that the inevitable course of the Republican Party was leftward—to Rockefeller, and perhaps even beyond him; but what is the comparable expectation today, nine or ten months after the “debacle” of the Goldwater drive? It is, of course, widely asserted in Republican Party circles that a “conservative can’t win”; but is one not struck by the paucity of voices arguing that its destiny lies with Rockefeller (or Kuchel, or Lindsay, or some other authentic modern-liberal) in 1968? The general assumption seems to be that we are in for Mr. Nixon or somebody more or less like him—perhaps Romney; and I have no hesitation in saying that this passion for the middle of the road is generated, and indeed dictated, by the show of force put on by the conservative Republicans under Senator Goldwater last year. No Republican convention in the near future will be able to ignore their wishes altogether—thanks to Senator Goldwater’s effort in 1964.

For all of the above reservations, I repeat that I agree with much of Professor Rogge’s central thesis. The real battle is, and will always be, the battle of ideas. Conservatives must labor to build that better mousetrap; only then will the world beat a path to our door.

—WILLIAM A. RUSHER1

Reply to Mr. Rusher:

IT MAY BE symptomatic of the general concern of conservatives with consistent principles that Mr. Rusher and I continue to dispute various points on the periphery of a central core of agreement. Were we modern-liberals, we could bed down together in the spacious accommodations of complete pragmatism, perhaps even co-authoring a book on the danger to society of “true believers.”

I agree with Mr. Rusher that the key to my thesis is the almost-fact that Senator Goldwater was doomed to lose, right from the start. He was running as a candidate of one of the two major political parties in the country, and the function of a political party at election time is to win the election—not to educate the electorate. A party can win only by offering a candidate and by taking a position near the center of the normal distribution curve of public philosophy; only by offering what, if not an echo, is at least only a semi-choice. If this be true, then the only way a real change can be made in the policies of the country is by moving this “locus of possible choice” to the left or to the right. What the modern-liberals have succeeded in doing is to move this locus significantly to the left. What we must do is move it back to the right.

Is there no role for political action then? Yes, but it is not the central role, which belongs to education in its broadest sense. Political action in local areas (including whole states) where the locus of possible choice is already to the right can be successful—witness the number of conservative voices in the houses of Congress in recent decades. In fact, one of the tragedies of the Goldwater candidacy was that his crushing defeat carried many of these men into at least temporary oblivion as well. As Congressmen or Senators they were in a position to educate the electorate; now the task is more difficult.

If a political party happens by chance to select a candidate not from the center, it will be forced to remake his image so that he appears to be so—and with this remaking goes most of the chance for the candidacy of a Goldwater to be educational. While the last campaign may have trained some conservatives in political action, it did not educate the public to conservatism, nor even sharpen the issues between conservatism and modern, social democratic liberalism. In fact, these issues were hardly debated. For Goldwater to have really taken his stand on these issues would have been immediate political suicide. Thus he was forced to make concessions that will not help conservatives in their long-run battle for men’s minds. For example, when I now criticize social security, I am told that “even Barry Goldwater wasn’t that reactionary.”

I come out right where I did before: The candidacy of Barry Goldwater was not helpful to the chances in the long-run of moving America in the direction of individualism and limited government.

—BENJAMIN A. ROGGE2

The View from London Bridge

STEPHEN J. TONSOR*

The Catholic Church and Nazi Germany by Guenter Lewy. New York, McGraw-Hill, 1964. 464 p. $7.50.

IN OCTOBER 1840, Thomas Babington Macaulay, Whig-Protestant and the most widely-read and influential English historian of the nineteenth century, reviewed Leopold von Ranke’s The Ecclesiastical and Political History of the Popes of Rome, during the Sixteenth and Seventeenth Centuries. In Macaulay’s time Roman Catholicism, after two centuries of decline which culminated in exile and imprisonment for Pius VII by Napoleon, was demonstrating a vitality and dynamism which enabled it to threaten both Protestantism and liberalism. Macaulay and Ranke explored and expanded upon the sins of Rome, but both recognized and were puzzled by her permanence. In a famous passage from Macaulay’s review of 1840 he observed:

Nor do we see any sign that the term of her long dominion is approaching. She saw the commencement of all the governments and all the ecclesiastical establishments that now exist in the world; and we feel no assurance that she is not destined to see the end of them all. She was great and respected before the Saxon had set foot on Britain, before the Frank had passed the Rhine, when Grecian eloquence still flourished at Antioch, when idols were still worshipped in the temple of Mecca. And she may still exist in undiminished vigour when some traveller from New Zealand shall, in the midst of a vast solitude, take his stand on a broken arch of London Bridge to sketch the ruins of St. Paul’s.1

Now, a century later, Guenter Lewy in his recent book has rediscovered the Scarlet Lady and, while most of the secular and religious press of the United States is filled with the spirit of ecumenism and the excitement of Vatican II, has indicted her once more on the grounds of immorality and institutional opportunism. His study is fascinating and complex both because of the problems which it raises and the motives which lie behind its charges. Its tone of ill-concealed hostility and its unnerving assumption of moral superiority are matched only by the thoroughness of its documentation and the clarity of its analysis. Mr. Lewy clearly possesses what Justice Holmes described as an “instinct for the jugular.”

There is a certain naive charm in those historians who discover, with an intensity of moral indignation which nearly lifts them above the moral insensitivity and the common fallibility of mankind, that Popes sin, that prelates mistake institutional advantage for the will of God, that even good men, indeed saints, are not much better than the average run of their fellow men. They somehow forget that moral grandeur is not the hallmark of fallen man; that Moses doubted, that David murdered and fornicated, that Solomon as all his people before and after him, turned away from Jehovah to whore after false Gods and to live in injustice and iniquity; that Peter, reckoned by Catholics as the first pope, denied Jesus three times when Jesus’ hour of passion had come; that Judas among the chosen twelve betrayed; that mistaken Paul assisted at the martyrdom of Stephen. Those who stand at some distance from Holy Scripture and the common experience of mankind are always surprised at the history of Christianity; forgetting somehow that we are formed of the dust of the earth. Perhaps the error lies in a generous overestimation of the moral resources of human nature rather than a deeper commitment to morality. This emphasis upon perfectability and innate goodness is a common characteristic of recent Protestantism, of Whig politics, and of liberal humanism. The view, however, from London Bridge leaves few illusions and holds few surprises. The Old and New Testaments should be required reading for graduate students in history, not because they are good history, nor because they expound the basic religious attitudes and values out of which our society has developed, but because they give us such a long, uninterrupted, and candid view of the nature and possibilities of this creature, man.

AT THE WAR’S END IN 1945 a myth seemed in the process of crystalizing. As with other myths the myth of the opposition of the Catholic Church to National Socialism had its roots in reality. From the outset there had been tension and open hostility between Catholicism and National Socialism; but the myth and the world ignored those wide areas of agreement and open cooperation between National Socialism and German Catholicism, and chose to overlook the curious ambivalence and friendly neutrality so often exhibited between the Holy See and the Nazi State. Only history was capable of pointing the finger of guilt and disestablishing a myth which comforted both the Roman Church and the new Germany.

The truth, when it is finally established, will be far more interesting than the myth and far more consistent with past history and with our experience of human behavior. Yet the truth is not easily come by and there is reason to suspect that the truth in all its ramifications is still and will long be incompletely known. There is a great deal more evidence in the Vatican archives which the Church owes the world. Its effects upon world opinion cannot be more damaging than the silence which has cloaked this important aspect of contemporary history; but when the evidence is all in, there is reason to suspect that an important aspect of the truth will be a sympathetic analysis and understanding of motive. It is precisely this understanding of motive which is absent in both Rolf Hochhuth’s play, The Deputy, and Guenter Lewy’s The Catholic Church and Nazi Germany. Lewy gives us, in his study, with great care, detail, and accuracy, the facts. But in history, aside from the know-nothing histories of the positivists, the facts are always less than the truth.

As we also might suspect, the facts are far more damning than the truth. There is the fact that German Catholicism was hostile to the Weimar Republic; that it marshalled its great power against the ideological and social pluralism, the liberalism, the democracy, the secular tone of Weimar Germany. The Church’s vision was dominated by the ideal of an authoritarian state whose object was the promotion of virtue and true religion. The libertarian secularism of the Weimar Republic could only be considered by the Church as social disease, the work of Jews, liberals, Freemasons, and Bolsheviks.

There was, moreover, the fact to reckon with that German Catholics were enthusiastic nationalists who, since the days of the Kulturkampf, had been stung by the charge that Catholicism was incompatible with German patriotism. In an effort to prove themselves both good Catholics and good Germans they displayed an understandable but excessive devotion to “national rebirth,” militarization, and the revision of the Versailles treaty. Since this “national rebirth” was obviously being achieved under the leadership of the National Socialists, Catholics in large numbers joined the party and enthusiastically supported the Nazi program. As Guenter Lewy points out, such actions were not limited to the secularized laity. Numerous priests and bishops supported National Socialism out of patriotic motivation.

THE CONCLUSION IS plain. Traditional German and Catholic anti-semitism played an important role in strengthening the accommodation between National Socialism and Catholicism. It is too easy to see anti-semitism as George Mosse does in his recent study, The Crisis of German Ideology,2 as the product of volkish ideas and a social response to the crisis of the emergence of German society into modernity. Anti-semitism is much more complicated than the partial explanation which Mosse proposes. It is clear that its roots were to a substantial degree cultural and religious and reach back into German and Christian history to a point well before the beginning of the nineteenth century. It was easy for German Catholics, consequently, to be at best insensitive to the fate of the Jews under National Socialism, though most of them did not support the morally monstrous “final solution.”

There was, too, the very human effort on the part of the Church to derive some advantage from an accommodation with the dynamic National Socialist movement. When Rome was captured by the Allies in World War II, a cynic remarked of the behavior of the Roman citizenry in welcoming the Allied armies, “Everybody loves a winner, but the Romans love them just a little more.” There is a strong (if we are to judge from the historical record) parallel between Rome’s citizens and the clergy of the Roman Church. It is all too easy to see the hand of Providence supporting the successful conqueror and the triumphant tyrant. A belief in Providential history leads almost inevitably to the assumption that “whatever is, is right.”

Additionally there is a confidence in the Church, born of the divine promise and two thousand years of experience, that the Church can outlive its enemies, profit from their concessions, and eventually assist in their undoing. But in accommodating to National Socialism through the Concordat of July 1933, the Church put its stamp of approval upon a criminal regime and opened the way for a recognition of that regime within Germany and abroad. The cooperation of the Church went well beyond the Concordat. The Church played an important role in the Saar referendum, in the remilitarization of the Rhineland, in the Austrian Anschluss, in the German war effort, 1939-1945, and in the “crusade against Soviet Bolshevism.” The Catholic press in Germany was frequently little more than an extension of Goebbels’ propaganda ministry and German bishops and priests often spoke the party Chinese of the Nazis.

Ultimately the worst sins of the German Catholic Church and of the Papacy were those of omission; the failure to speak out against racism, persecution, the violation of the peace, murder on a scale hitherto unknown in human history, in morally unambigious terms. To be sure, there were infrequent statements from the German bishops and the Papacy, but they were couched in the muted and esoteric language of encyclical-Latin. If Jesus Christ had spoken this language he might have been appointed to the Sanhedrin.

THESE ARE THE “FACTS.” There are explanations possible which are more sympathetic than those adduced by Guenter Lewy. George O. Kent’s article, “Pope Pius XII and Germany: Some Aspects of German-Vatican Relations, 1933-1943,”3 is, at certain points, both more exact and more charitable than Lewy’s account. Klaus Epstein’s discussion of the problem, entitled “The Pope, the Church and the Nazis,”4 is the sanest, deftest, and most knowledgable review of the whole matter. Still, if the worst possible construction is put on the “facts,” Pius XII and his fellow bishops emerge as figures of singular moral grandeur when compared with their fellow bishops of earlier date. Given the moral condition of the world in the thirties and forties, that any objective moral standards were maintained (as indeed they were) was a signal victory. That these standards were not forcefully voiced or adequately implemented is only another in the long series of moral failures which serve to remind Catholics of the human dimension of their Church. Nor is this simply an easy way of shunting moral responsibility. “Woe to the world because of scandals! For it must needs be that scandals come, but woe to the man through whom scandal does come.” (Matt. 18:7)

If a more charitable construction is placed on the events of 1933-1945, it is frequently understandable that the protests were necessarily weak and ineffectual Pius XII was frequently forced to weigh saving Catholic souls as against saving Catholic and Jewish lives. His choice was wholly in accord with that which he thought the more important obligation. One is tempted to reply to Lewy’s condemnation of the German Church for having failed to foster an active resistance to Hitlerism by asking where, during the period of 1933-1945, the Jewish resistance was? Is it not possible that those who suffer indignity and persecution without resisting also do God’s work? One may question the reasonableness of such inaction, it is difficult to question the motive.

WHATEVER MAY BE the “ultimate truth,” Catholicism need not fear a temporarily “bad press.” Religion is rooted in responses which are not, fortunately, contingent upon the moral probity of its communicants or its leaders. The more interesting and fundamental questions, however, concern the attitude of the Catholic Church which made the initial enthusiasm of German Catholics for National Socialism possible and, secondly, the danger which this set of ideas still poses for the Catholic Church. In terms of these ultimate questions Guenter Lewy’s final chapter “Catholic Political Ideology: The Unity of Theory and Practice” is perhaps the most interesting and important part of his book.

Since St. Paul, the political theory of Catholicism has been unsatisfactory. It has been unsatisfactory largely because the Church at first saw itself and mankind as pilgrims and strangers on earth. The time between Christ’s ascension and his second coming was thought to be short, and life in the interim was provisional. Political institutions were not important to the Christian who had his treasure elsewhere. As eschatological expectation waned and the institutional Church solidified its forms and achieved victory in the struggle with paganism, some accommodation between the supernatural order which the Church represented and the secular state was necessary. Eusebius viewed the Empire of Constantine the Great as the embodiment of God’s kingdom on earth, and Constantine was elevated, at his death, to sainthood (Catholic churchmen have been making the same error as Eusebius from that day to this.) As the centuries passed Church and State were ever more completely identified. In the Christian East the identification was complete and the State emerged as the dominant partner in this strange and uncertain relationship. In the Christian West the Church with difficulty maintained its independence from the State, and the struggle of the medieval papacy to establish a theocracy left a permanent impress upon Catholic political theory.

In its growing recognition of permanence and its accommodation to temporal society, the Church identified itself ever more closely with the authoritarian culture of the medieval era. It grew progressively more difficult to distinguish the boundaries of the realms of nature and of grace as the so-called “medieval synthesis” developed. So close, indeed, was this identification between the Church and its cultural context that when, as was inevitably the case, medieval society began its long process of transition and dissolution, the Church failed to adjust its institutional structure or its political theory to the new culture which was emerging. It continued down to the last decade to maintain the necessity for a close and intimate association between Church and State and an authoritarian social order. Its views were, and in many instances remain, anti-democratic, anti-pluralistic, anti-liberal, anti-capitalistic. It is for this reason that the Church opposed liberal democratic political and social forces in the reactionary first half of the nineteenth century, when the restoration Church dreamed of a medieval revival and an alliance between throne and altar.

It is for this reason that neo-romantic Papal social theory at the turn of the century created the grotesque intellectual charade of “corporatism,” grounded, as it was, upon an imperfect understanding of medieval society. It is true, as Lewy points out, that Pope Leo XIII revolutionized Catholic political theory by divorcing it from emphatically teaching the necessity of monarchy as a state form for the welfare of the Church. Yet while other state forms were recognized as licit, the presumption of correctness was clearly in favor of authoritarianism. This is the basic reason that the Church welcomed the dissolution of liberal democratic governments in Italy, Germany, and Spain in the 1920’s and 1930’s. Nor need we point to Europe in quest of evidence. One need only recall the rasping voice of Father Charles Coughlin, leaf through an old file of Social Justice, or study the inconography of the Shrine of the Little Flower in Royal Oak to understand the full implications of the so-called “social teachings” of the Church in the 1930’s. In this atmosphere the fact that Father Coughlin circulated the antisemitic Protocols of the Elders of Zion was no accident. It should be remembered that the Church resisted the anti-Christian aspects of National Socialism. Its guilt lay in the fact that it espoused a political phantasm which bore no relationship to the economic, cultural, or religious reality of modernity. Finally, there is no assurance at the present time that Catholic political theory has broken with the traditions of a thousand years.

Implicit in the difficulty is the fact that Catholic theologians have confused the temporal with the divine order, have confused man’s culture, which is man’s creation, with God’s revelation. When man’s culture, which always is imperfect, erring, and inextricably bound up with man’s creaturely imperfection and sinfulness, is elevated to a position of absolute validity (as it is in so much of contemporary Catholic social thought), the Church invites disaster. The institutions of man are neither eternally valid nor unambigiously moral. Even the most perfect of institutions, the Church, bears eloquent testimony to the imperfections inherent in man’s condition. It is for this reason that the Church dare not attach itself to a particular social or political order. The attachment to the older authoritarian order of Western society was the source of the failure of the Church to meet squarely the challenge of totalitarianism.

REVIEW:

Passion and Social Constraint by Ernest van den Haag. New York, Stein and Day, 1963. 368 p. $6.95.

AMONG CONTEMPORARY American sociologists, Ernest van den Haag is perhaps the most creative and the most independent; the unique character of his work is doubtless owing, at least in part, to a most catholic upbringing. Born in Holland of Dutch parents, van den Haag was reared in Germany and later studied in France, Italy, and America. He remained for ten years in Italy, spending part of this time at the University of Bologna. After later receiving a doctorate in economics from New York University, he embarked on a career in psychoanalysis, and although he is a practicing analyst, van den Haag is best known today for his contributions to sociology.

This broad and varied background is reflected in a distinctive contribution to American social science. Whereas the overwhelming majority of his colleagues are modern-liberal in viewpoint, van den Haag is an avowed conservative. Whereas modern psychoanalytic theory has gradually blended orthodox Freudianism into the ego-oriented psychology of the neo-Freudians and their related cohorts, van den Haag holds firmly to Freud. In an age when form and order are held by many to be no longer applicable to art, literature, or even to society, when a slovenly relativism is the favored approach to life and art, van den Haag advocates an old-fashioned reliance on moral and aesthetic “truths.” He calls a spade a spade, and vulgarity, vulgarity. Popular Western culture is vulgar, he says, and for him that vulgarity is not redeemed by the material it offers for his acerb humor.

Both van den Haag’s background and his philosophical position are reflected in Passion and Social Constraint. Opinion and fact are carefully delineated and distinguished, however; a precision not often shown by van den Haag’s modern-liberal colleagues.

The opening section of the book deals with personality, which is handled from an orthodox Freudian point of view. Van den Haag presents the Freudian developmental position clearly, carefully limiting the number of “technical” terms he uses, concisely defining those he does employ, and thus managing to be easy to read without diluting what he has to talk about. In presenting evidence for and against his interpretations, he does not engage in the currently all-too-common serpentine manipulations of logic whereby a particularly embarrassing set of facts is somehow made to lead to a conclusion directly opposed to that obviously called for. In those very few instances when the facts do not seem to justify van den Haag’s interpretation, he quite candidly resorts to a salvation-is-by-faith-and-faith-alone appeal, and invokes Freud to settle the dispute—this touch of dogmatism at least provides a consistent framework for the analysis and interpretation of the existing evidence.

The most controversial aspects of the book derive from van den Haag’s insistence on the inherent “limitations of man’s nature and on the tragic nature of human destiny.” The essence of this strictly Freudian position is that biology sets limits on man’s development; culture determines only to what extent his biological potential may be fulfilled. Social change cannot eradicate basic differences between men. Hence social change will never accomplish all that its egalitarian advocates hope for.

THE SECOND SECTION of the book, that dealing with society, blends the predominantly psychoanalytic approach of the personality section with van den Haag’s conservative approach to sociology. He treats such standard sociological topics as group membership, tensions and rivalry, power and authority, cultural constraints, class and caste, but in a refreshingly original manner. Of particular interest here is the material dealing with prejudice and the Supreme Court’s desegregation decisions. Van den Haag argues that it is impossible to prove “that prejudice is clinically injurious.” If prejudice cannot be shown to be clinically injurious, then no damage has been wrought of which a court may properly take judicial notice. Van den Haag discusses the famous study of Dr. Kenneth Clark, which was cited as evidence before the Court and which declared that Negro children in a segregated school suffered psychological injury. Van den Haag points out that the same tests administered to Northern Negro children in integrated schools showed even greater manifestation of the behavior interpreted by Clark as the outcome of injurious, that is, prejudiced treatment. On the basis of Clark’s logic these findings should lead to the conclusion that desegregation is psychologically more injurious; and therefore that segregation should prevail as a means of protecting Negro children from psychological harm.

Van den Haag’s distaste for what he considers a distorted egalitarianism becomes most apparent in Part III of this book. Interestingly, he, like his modern-liberal counterparts, is vitriolic in denouncing the popular culture of today, but where they blame this deterioration on the corrupting influence of advertising and other mass media, he feels that advertising does not create taste, but merely reflects the abysmally low level of public taste. Advertising has pandered to the populace, but advertising has not created its vulgarity. The responsibility for that lies with the same leveling influences which have lowered the purchasing power of those cultivated persons who have “individual taste” while raising the purchasing power of the masses so fast that they have not been able to acquire, via education and acculturation, a respectable level of personal taste. The free market has operated to translate tastes into economic demand under these circumstances, and that demand has evoked the corresponding supply.

Whatever one’s opinions on the individual and social issues discussed in this highly readable book, one cannot fail to be impressed by the clarity of van den Haag’s exposition. Contemporary sociological jargon is little in evidence here Van den Haag also manages to make seemingly dull topics fascinating by introducing historical examples (Frederick II’s experiment to determine the natural speech of children—their nurses were instructed not to talk to them, but instead of speaking any language, all the children died). This interesting synthesis of psychoanalysis and sociology presents a truly novel discussion of contemporary mass society in a book which the educated layman can enjoy, and which the social scientist should respect.

—RICHARD McCONCHIE1

NEW BOOKS AND ARTICLES

THE FOLLOWING IS A SELECT LIST OF BOOKS AND ARTICLES WHICH, IN THE OPINION OF THE EDITORS, MAY BE OF INTEREST TO OUR READERS.

Milton Friedman and Anna J. Schwartz, The Great Contraction. Princeton. N. J., Princeton University Press, 1965. $1.95. A paperback reprint of those chapters in their monumental Monetary History of the United States, 1867-1960 (Princeton: Princeton Univ. Press, 1963) pertaining directly to the years of the Great Depression. Prof. Friedman remarks in the preface that the idea of a smaller reprint was given him by a student, with the idea in mind of bringing the work within reach of undergraduates and others unable to avail themselves of the complete work.
Vera Lutz, French Planning. Washington, D. C., American Enterprise Institute, 1965. An analysis and criticism of the “soft” economic planning pursued by France in recent years. This, and other worthwhile and scholarly publications, are available from the American Enterprise Institute at little cost. Address: 1200 Seventeenth Street N.W., Washington, D.C. 20036.
James J. Martin, American Liberalism and World Politics, 1931-1941. New York, Devin-Adair, 1963. 2 vols. $22.50. An extremely detailed exposition, largely from the pages of the Nation and The New Republic, of the shift in American left-wing circles from a position generally pacifistic and critical of the Versailles settlement, to one demanding a crusade against the Axis Powers. The New Republic and Nation’s profuse apologiae for Stalin’s forceful measures of internal policing in Russia during this period provide some amusement.
Richard Perlman, Wage Determination: Market or Power Forces. Boston, D.C. Heath and Co., 1965. $1.50. A timely paperback collection directed to the controversy of “countervailing power” or supply and demand in the labor market. Contributor Fritz Machlup proposes that the entrepreneur does equate marginal productivity with marginal costs in hiring simply through his feel of the situation.
Prof. P. T. Bauer of the London School of Economics, a specialist in the field of underdeveloped countries, criticizes in the June 29, 1965, issue of National Review (“Capitalism and African Economic Development”) the ideas on this subject of the in-vogue Swedish economist, Gunner Myrdal. Myrdal, Bauer finds, like so many other writers in this field, “takes the case for comprehensive [government] planning for granted without argument.” Yet, “it is by no means obvious why an economy should progress more rapidly, if what is produced is determined largely by the government, rather than by individual consumers and producers.” Prof. Bauer is, along with B. S. Yamey, author of The Economics of Underdeveloped Countries, an excellent introduction to the field.
Robert L. Cunningham, Professor of Philosophy at the University of San Francisco and well known to NIR readers, dissects the basic claims of the Triple Revolution group on automation in the current (Summer 1965) issue of Modern Age. Far from ranking with the works of Copernicus and Galileo, the ideas of this highly-publicized organization, Cunningham demonstrates, consist largely of a few shopworn economic fallacies, with an admixture of odd linguistic usage.
Edwin L. Dale, Jr., “The Big Gun on Poverty,” The New Republic, August 7, 1965. A writer on economic affairs for The New York Times points out the far greater efficacy in combatting poverty of greater economic growth over particular governmental programs. “Jobs have increased rapidly in the very places where the great bogey, automation, was supposed to cause trouble. . . . By the test of income, 450,000 families moved out of the poverty class last year, almost none of them touched by the poverty program. . . . The main conclusion is that an increase of one percentage point in the national rate of economic growth solves far more problems of human misery, insofar as they stem from unemployment or low income, than all the retraining programs, union resistance to automation, poverty programs, distressed-areas programs and the rest put together.”
Theodore Draper, “The Roots of the Dominican Crisis,” The New Leader, May 24, 1965. An interesting, objective analysis of the situation in the Dominican Republic following the ouster of Trujillo. Draper criticizes especially the incredibly incompetent handling of Latin American relations by the United States in general, and the Johnson Administration in particular. “In effect, the decision against Bosch was a decision against democracy and decency as the bulwarks against Communism.”
Harry Kalvin, Jr., “The New York Times Case,” 1964 Supreme Court Review. Chicago, University of Chicago Press, 1964. Prof. Kalvin of the University of Chicago Law School discusses the content and the larger significance of the Supreme Court’s actions in striking down the libel ruling of a lower court: “In brief compass, my thesis is that the Court, compelled by the political realities of the case to decide it in favor of the Times, yet equally compelled to seek high ground in justifying its result, wrote an opinion which may prove to be the best and most important it has ever produced in the realm of freedom of speech. . . . analysis of free speech issues should hereafter begin with the significant issue of seditious libel and defamation of government by its critics rather than with the sterile example of a man falsely yelling fire in a crowded theater.” The implications of the Times case extend far beyond the usual notions of “democratic open discussion”: “If [a society] makes seditious libel an offense, it is not a free society no matter what its other characteristics.”
Spencer MacCallum, “Social Nature of Ownership,” Modern Age, Winter 1964-65. Mr. MacCallum discusses the sociological role of property in human society and traces its functions logically prior to the State from the point of view of anthropology, and presents it as a workable alternative to state action. His discussion represents a serious and valuable contribution to classical liberal thinking in areas where the point is usually granted to the authoritarian position a priori.
An interesting article appeared in the July 24, 1965, issue of The New Republic: “Concern About LBJ,” by John Osborne. Among the sources of concern cited is the curious tone struck by Presidential Aide Jack Valenti, who recently stated, in a speech in Boston: “The Presidency is a mystical body, constructed by the Constitution, but whose architecture was conceived in the inner crannies of a people’s soul.” Valenti also referred, according to Osborne, to President Johnson as “a father to lead us,” and claimed that the President was fortified by a “Godly osmosis” [sic].
An excellent new journal is called to the attention of the libertarian reader: Left and Right, among whose editors appear Dr. Murray N. Rothbard and Leonard Liggio, both NIR contributors. Left and Right emphasizes an anti-Cold War position, from a libertarian point of view. Subscriptions to this journal, published three times yearly, are available from: Left and Right, Box 395, Cathedral Station, New York, N.Y. 10025, for $2.50 per year. Another interesting publication recently brought to our attention is Innovator, a monthly in the newsletter format, featuring “applications, experiments and advanced developments of liberty.” Subscriptions are $2.00 per year. Write: Innovator, P.O. Box 34718, Los Angeles, Calif.

Coming This Fall From Regnery

LIFE WITHOUT PREJUDICE and other Essays
by Richard Weaver

Selections of his most important and mature essays.

$3.50

NEW GATEWAY EDITIONS

THE INVISIBLE HAND
by Adrian Klaasen, editor

Essays in classical economics by such leading economists as George Stigler, Ludwig von Mises, Friedrich Hayek, Allen Wallis and Milton Friedman.

$2.45

SELF CONDEMNED
by Wyndham Lewis

This is a novel of great style and force about an Englishman who exiled himself to Canada during World War II Considered by T. S. Eliot to be Lewis’ most significant work.

$1.95

FADS AND FOIBLES IN MODERN SOCIOLOGY
by Pitirim A. Sorokin

One of the leading contemporary sociologists exposes the non-scientific and half-scientific elements in modern sociology and the related disciplines. Dr. Sorokin searingly debunks the use of obtuse jargon and sham-scientific slang, testomania—the overuse of intelligence, projection, ink-blot and thematic apperception tests—the “Grand Cult of ‘social physics’ and ‘mental mechanics’ ” and the obsolescent philosophy too widely adhered to by social science.

$2.45

CREATION AND DISCOVERY
by Eliseo Vivas

Essays in criticism and aesthetics. This book includes analyses and critiques of Dostoyevsky, Kafka, Dreiser, Henry and William James, discussions of the major aesthetic theories and problems of aesthetics.

$2.45

In August 1963 We Promised:

“NEW INDIVIDUALIST REVIEW will NOT publish articles by James Baldwin, Ralph McGill, Walter Lippmann, J. William Fulbright, Arthur Schlesinger, Jr., Gore Vidal, Jean-Paul Sartre, or Howard N’Bongo-Bongo, Prime Minister of Anthropophagia;

“NIR will not tell you how affluent you are, or urge you to write your Congressman to triple your income-tax, so that the country can eliminate squalor in the public sector;

“NIR will not attempt to distinguish between in-itself and for-itself in the Theater of the Absurd, or compare Bertholt Brecht favorably with Shakespeare;

“NIR will not claim that Portuguese rule in Angola is the single greatest threat to world peace today;

“NIR will not assert that American businessmen are morally inferior to the Mau Mau.”

WE KEPT THIS PROMISE. This alone would be worth the price of a subscription, even if we sent you 60 pages of blank paper every three months. But we do more—we send you a magazine full of thoughtful and thought-provoking discussions of individualist ideas and proposals, by some of the leading classical liberal writers of today and tomorrow—articles like those in the issue you’ve just read.

HOW CAN YOU POSSIBLY LIVE WITHOUT NIR? SUBSCRIBE TODAY!

ESSAYS IN THE HISTORY OF ECONOMICS
By GEORGE J. STIGLER

One of the most distinguished proponents of the “Chicago School” of economics, Professor Stigler has selected from his published writings the essays to be included in this volume. He ranges over such diverse topics as originality in scientific progress, the politics of political economists, the development of utility theory, Ricardian value and distribution, Fabian socialism, perfect competition, marginal productivity theory, and the Giffen paradox. “Professor Stigler writes with a wit that is even more to be cherished than his erudition. Economics would never have been called the dismal science if there had been a nineteenth-century Stigler.”—The Economist.

400 pages $6.95

THE CREATIVE ORGANIZATION
Edited by GARY A. STEINER

“The creative organization in fact prizes and rewards creativity. A management philosophy that stresses creativity as an organizational goal, that encourages and expects it at all levels, will increase the chances of its occurrence. But it is one thing to call for creativity, another to mean it, and still another to reward it adequately and consistently when it occurs.”

The coexistence of the creative organization and the creative temperament was the topic of a recent seminar sponsored by the Graduate School of Business of the University of Chicago. Here are papers presented by social scientists Bernard Berelson, Jerome S. Bruner, and Paul Meehl; educators Ralph W. Tyler and W. Allen Wallis; and executives B. E. Besinger, Peter Peterson, and David Ogilvy, together with lively exchanges of opinion and an “Overview” by Mr. Steiner.

288 pages $5.00

UNIVERSITY OF CHICAGO PRESS

Chicago/London

VOLUME 4, NUMBER 2, WINTER 1966

HERBERT CLARK HOOVER: A RECONSIDERATION

MURRAY N. ROTHBARD

TWELVE THOUGHTS ON INFLATION

W. H. HUTT

CLASSICAL LIBERALISM AND RELIGION

M. STANTON EVANS RALPH RAICO

THE UNEASY CASE FOR STATE EDUCATION

E. G. WEST

A JOURNAL OF CLASSICAL LIBERAL THOUGHT

Winter 1966

75 cents

Vol. 4, No. 2

Herbert Clark Hoover: A Reconsideration
	3	MURRAY N. ROTHBARD
Twelve Thoughts on Inflation
	13	W.H. HUTT
Classical Liberalism and Religion
	19	M. STANTON EVANS RALPH RAICO
Anglican and Gallican Liberty
	32	FRANCIS LIEBER
The Uneasy Case for State Education
	38	E. G. WEST
COMMUNICATION:
South Africa Reconsidered
	50	THOMAS MOLNAR
REVIEW:
Alchian and Allen’s “University Economics”
	53	STANLEY G. LONG
New Books and Articles
	56

Due to unavoidable technical difficulties, we have been forced to omit the Autumn 1965 issue of New Individualist Review. The present Winter 1966 issue follows the Summer 1965 issue as Volume IV, Number 2. Subscriptions will not be affected by this omission; each subscriber will receive four issues for a one-year subscription.

NEW INDIVIDUALIST REVIEW is published quarterly by New Individualist Review, Inc., at Ida Noyes Hall, University of Chicago, Chicago, Illinois 60637. Telephone 312/363-8778.

Subscription rates: $3.00 per year (students $1.50). Two years at $5.75 (students $2.75).

Copyright 1966 by New Individualist Review, Inc., Chicago, Illinois. All rights reserved. Republication of less than 200 words may be made without specific permisaion of the publisher, provided NEW INDIVIDUALIST REVIEW is duly credited and two copies of the publication in which such material appears are forwarded to NEW INDIVIDUALIST REVIEW.

EDITORIAL STAFF

Editor-in-Chief • Ralph Raico

Associate Editors • J. Michael Cobb • James M. S. Powell

Robert Schuettinger

Editorial Assistants • Douglas Adie • David D. Friedman

Burton Gray • Edwin Harwood • Thomas C. Heagy

James A. Rock • Ernest L. Marraccini • John C. Moorhouse

EDITORIAL ADVISORS

Yale Brozen • Milton Friedman • George J. Stigler

University of Chicago

F. A. Hayek	Benjamin Rogge
University of Freiburq	Wabash College

Complaints of the loss of individuality and the lessening of respect for the person and his rights have become a commonplace of our time; they nonetheless point to a cause for genuine concern. NEW INDIVIDUALIST REVIEW, an independent journal associated with no organization or political party, believes that in the realm of politics and economics the system most effectively guaranteeing proper respect for individuality is that which, historically, has gone by the name of classical liberalism; the elements of this system are private property, civil liberties, the rule of law, and, in general, the strictest limits placed on the power of government. It is the purpose of the Review to stimulate and encourage explorations of important problems from a viewpoint characterized by thoughtful concern with individual liberty.

Herbert Clark Hoover: A Reconsideration

MURRAY N. ROTHBARD*

THE AMERICAN PEOPLE have been subjected to a battery of political and historical myths; of these one of the most virulent has been the Hoover Myth. During the Great Depression, the Democrats held Herbert Hoover aloft as the wretched symbol of poverty and iniquity; but with the passing of the Depression, new times and new issues evaporated the old Democratic antagonism. The field was thereby cleared for the Hoover hagiographers, who have rushed in, unopposed (to paraphrase Mencken’s immortal comment on the Woodrow Wilson idolators), to nominate Herbert Clark Hoover for the first vacancy in the Trinity. We have been regaled ad infinitum with the wisdom, the individualism, the sagacity, the lovability, and the glory of Herbert Hoover; and we have countless times been instructed on the horrors of the smear campaign waged against him by Charlie Michelson and the Democratic National Committee during his Administration. Throughout the Right-wing, numberless pilgrimages were made to Hoover’s suite in the Waldorf Towers, and countless Right-wingers have been honored to refer to him as “The Chief.” It is high time to redress the balance.

The hand-wringing over the Michelson smear campaign may be disposed of at the start. Any public official, any politician, must expect to be subject to vigorous attacks, some justified, some not. Every president since Washington has been subjected to such attacks, and thus the public has been kept alert and vigilant to possible error and wrongdoing. Why should Hoover enjoy a special exemption from criticism? It is curious to see the same people who distributed with zeal and relish A Texan Looks at Lyndon bewail the tragedy of Hoover’s ordeal. Despite the repeated harangues of his idolators that Hoover was not a “politician” and should therefore not have been treated as such, Hoover was a politician and cannot be allowed to escape the responsibility for his chosen profession.

THE MYSTERY OF Herbert Hoover begins, not in 1928 or 1932, but in 1919, when he was boomed for the Democratic nomination for the Presidency by such left-wing Democrats as Louis Brandeis, Herbert Croly, Ray Stannard Baker, Colonel Edward Mandell House, and Franklin D. Roosevelt. Yet, less than two years later, the Left-wing of the Republican Party was able to force Hoover on a reluctant Harding as a Secretary of Commerce whose powers had been vastly enlarged. What manner of man was this to be so beloved by both parties? It might be said that Hoover’s greatness or goodness was so evident as to lead to his being courted by both parties; but to the wiser and more skeptical this story is suspiciously familiar. If a hard-core member of the Establishment may be defined as someone who somehow manages to land in a high government post whichever party is in power, Herbert Hoover may be considered to be the first ur-Establishment man of modern American politics.

It must be noted at the outset that any definitive study of Hoover at this point in time is almost impossible, but the blame for this situation must lie largely with Hoover himself. Hoover never released his papers for study by the scholarly public; hence the only information about his career has come from Hoover’s own Memoirs—almost unbearably self-righteous and free from acknowledgment of error, even for political memoirs—and from Hoover’s friends and supporters. As a result, critics have been discouraged from writing about Hoover, and we are left with a flood of worshippers, none of whom acknowledges a single error or flaw in their hero. Franklin D. Roosevelt, at least, had his John T. Flynn; where is Hoover’s?

One significant example will give much of the flavor of the Hoover reminiscences. Hoover’s recent book on Woodrow Wilson in the war and post-war years of World War I is almost as worshipful of Wilson as recent biographies have been of Hoover; or, rather, the book is a series of paeans to Wilson by Hoover, interspersed with paeans to Hoover by Wilson. Virtually the only act of Wilson’s disapproved by Hoover was his famous call for a Democratic Congress in 1918, a call that angered the American public in its repudiation of the Wilsonian Republicans (such as Hoover) who had joined ardently in the war policy. Naturally, Hoover was shocked at this brusque slap at Republicans who had subordinated themselves to Mr. Wilson’s war. How did Hoover react? In his book, he registers his sharp disapproval of the Wilson appeal; and yet, at the time, Hoover not only did not attack the Wilson plea; instead, he publicly rallied to the President’s support, understandably angering Republicans in the process. Hoover states:

Deeply as I believed that this appeal was a mistake and a wholly unwarranted reflection on many good men, . . . I addressed a letter to . . . a Republican friend, in which I supported the President’s appeal for a Congress favorable to him. I did so because I believed that the President’s hand in the Treaty negotiations would be greatly weakened if the election went against him. The publication of this letter created a storm around my head. The Chairman of the Republican National Committee denounced me violently.1

There is no hint of apology, no hint of remorse for Hoover’s act; instead, there is, characteristicaly, only the proud reference to Woodrow Wilson’s praise of Hoover’s deed:

My dear Hoover:

Your letter . . . has touched me very deeply, and I want you to know not only how proud I am to have your endorsement and your backing given in such generous fashion, but also what serious importance I attach to it, for I have learned to value your judgment and have the greatest trust in all your moral reactions. . . .2

And that is all of Hoover’s reference to the matter; for Herbert Clark Hoover, at least, wrapped securely in the mantle of morality and the enthusiasm of Woodrow Wilson, the case is closed.

THE HERBERT HOOVER story begins in 1899, when Hoover, a very young mining engineer and manager, was sent to China by his employers, the London mine consulting firm of Bewick, Moreing and Co. It is fitting that Herbert Hoover launched his career in enterprise, not on the free market, but in the midst of a mercantilistic struggle among claimants for mixed governmental and private property. Moreing had joined forces with a wily operator and recipient of special privilege in China, one Chang Yen Mao, who conveniently held the simultaneous posts of head of the Chinese Bureau of Mines in two provinces, and head of the “private” Chinese Engineering and Mining Company. Hoover became Yang’s deputy in managing the mines in both of Yang’s capacities, public and private. Herbert Hoover emerged from years of competition among numerous foreign powers for the Chinese prize with the first leg up on his mining fortune.

The next years of Hoover’s life, during which he built a multi-million dollar mining fortune, have not been generally detailed, and they are badly in need of scholarly work. Suffice it to say that Hoover’s high qualities as a mining manager were undoubtedly primarily responsible for the amassing of the fortune, and enabled him to strike out on his own as an international mining consultant in 1908.

HOOVER SOON BEGAN TO display the ignorance of economics and predilection for statism that was to mark his public career. In 1904, at the age of thirty, he informed the Transvaal Chamber of Commerce that he had achieved lower mining costs in Australia because labor had been paid higher wages; thus, Hoover had already adopted the egregious fallacy that wage rates are determined by the good or ill will of the employer rather than by the competitive market, and that high wage rates lead to greater efficiency and lower costs rather than the other way round. Four years later, Hoover reiterated these views, and, in his Principles of Mining, went further to embrace the institution of labor unions. Unions, he declaimed, “are normal and proper antidotes for unlimited capitalistic organization. . . . The time when the employer could ride roughshod over his labor is disappearing with the doctrine of ‘laissez faire’ on which it is founded. The sooner the fact is recognized, the better for the employer.”3 He went on to challenge, in a neo-Marxist manner, the orthodox laissez faire view that labor is a “commodity” and that wages are to be governed by laws of supply and demand. It is not surprising that, in 1912, Herbert Hoover enthusiastically supported and voted for Theodore Roosevelt’s Progressive Party, for Hoover had become the very model of an “enlightened” left-wing Republican, a man of the Establishment Superficially, his views might be called “socialistic”; but it would be more precise to term them “mercantilist” or “state capitalist” or “monopoly capitalist,” for Hoover, like his fellow Establishment liberals then and since, was not about to abandon state power to a dictatorship of the proletariat or even to Fabian social workers.4 In the house of statism there are many mansions.

By 1914, Herbert Hoover, having made a substantial fortune in mining, was eager to try his hand at “public service.” The First World War brought him his chance, and it was Hoover’s luck that the opportunities that came his way were such as to lend him that mantle of saintliness and advanced morality which he was always able to wrap around his political activities more snugly than most of his fellows.

When Belgium was occupied in the fall of 1914, a group of American businessmen resident in London and Brussels formed a Commission for the Relief of Belgium, and Hoover agreed to serve as its head. The massive relief effort to Belgium, continuing throughout the war, gained Hoover immense publicity, and “The Chief” and “The Great Engineer” had now become “The Great Humanitarian.” Actually, while it was no doubt admirable that Hoover and the group of wealthy American businessmen serving as his top aides accepted no compensation for their efforts, the operation was in no sense true charity. Neither was it really humanitarian and apolitical, as Hoover and its eulogists maintained.

In the first place, to be truly charity, aid must be voluntary and not compulsory; and yet the overwhelming bulk of contributions to Belgian relief came not from private citizens but from Western governments. Secondly, from the beginning the C.R.B. was tied in with governmental policy, particularly of the supposedly neutral American, and the definitely warring Belgian, governments. On the American side, Hugh Gibson, secretary of the American Legation at Brussels, was one of the main originators of this unusual Commission. Belgian officials were vital leaders of the whole operation, and the notoriously Anglophiliac Walter Hines Page, the American Ambassador to London, was strongly committed to the whole idea.

The curious point about the C.R.B., and one that highlights the spuriousness of its neutrality and divorce from politics, is the question, why Belgium? Why a massive relief program to Belgium (and Northern France), and none anywhere else in war-torn Europe? The evident answer is that the C.R.B. was conceived as an extremely clever device to focus the continuous attention of the American people on the supposedly unique sufferings of Belgium, and thereby to lead people to keep focussing on the allegedly heinous crime of Germany in warring against “poor little Belgium.” The “poor little Belgium” line was the main focal point of the mendacious propaganda of Great Britain, especially in sentimental and poorly-informed America, and it was undoubtedly instrumental in sucking America into perhaps the most senseless and ill-conceived war in which it has ever engaged. Certainly, it was a war with unprecedently bad consequences, for America and for Europe. As Walter Millis has put it:

When the appeals for aid for the starving Belgians began to come in, offering a sudden practical outlet for the overwrought American emotions, the response was immediate—and the Allies found themselves in possession of still another incomparable propaganda weapon. That the relief of suffering could in any way compromise our neutrality hardly occurred to the Americans who poured out their contributions; but the Allied leaders understood very well that every request for funds in that cause was a conceded demonstration of German brutality and every answering . . . penny doing its part to cement the emotional alliance with the Entente Powers.5

Of course, few Americans stopped to realize that the major cause of starvation in Belgium—and in the rest of Europe—was the brutal British blockade, which cut off even such non-contraband items as food from the people of the Continent.

THE IMAGE OF Herbert Hoover as an “isolationist” is as distorted as that of Hoover as an individualist. While apparently originally opposed to American entry into the war, by the Spring of 1917 Hoover had gone over to the pro-war camp, and sent Wilson a warm telegram of congratulations for his war message. Hoover promptly returned to the United States to take a leading part in the “war socialism” which marked America and the leading European participants in World War I.

It is almost impossible to exaggerate the fateful consequences, for America and the world, of the collectivism and central planning engaged in by the leading countries in the First World War. Here was the watershed of our time; and here was the model of collectivism, in a great many of its features: for fascism and naziism; for the central planning of the early New Deal years and during World War II; and for the “military-industrial complex” of the present day. The totalitarian changes of our age began in the impact of World War I, and Herbert Hoover played a large part in their inception.

Being “The Great Humanitarian,” Hoover was appointed Food Administrator (also known as “Food Czar” or “Food Dictator”) by President Wilson. In accepting, Hoover insisted that he alone have full authority, unhampered by boards or commissions. So eager indeed was Hoover to get started that he set up the Food Administration illegally, several months before it was authorized by Congress. Hoover urged Wilson to set up single Czars in every field, and was also responsible for Wilson’s creation of the War Council, which served as the overall organ for the central planning of the economy.

Hoover’s food-control act imposed the strictest control of any area of war planning. As the historian of government price control in World War I put it, the act “was the most important measure for controlling prices which the United States took during the war or had ever taken.”6 The measure set the pattern for twentieth century American collectivism: Behind a facade of demagogy about the necessity for keeping prices down and regulating business, the Federal government organized a gigantic cartellizing program to keep prices up and “stabilize” business under the guidance of government. Thus, the masses would come to think of the Federal government as their proconsul in control of business, while in reality it was the servant of those business interests who wanted monopoly privilege and a quieter life against the rigors of a competitive market.

TWO OUTSTANDING examples were the Hoover wheat and sugar control programs during World War I. Wheat price control was organized as a result of propaganda that the government must step in to see that wicked “speculators” did not push the price too high; but somehow, the government never got around to fixing maximum prices; instead the prices it fixed were minima, and these minima were systematically pushed higher in order to maintain the bloated wartime wheat prices after the end of the war. The method of such control was through a gigantic licensing system, under which every food manufacturer and dealer had to be licensed—and to keep its license—from the Federal government. Profits were guaranteed at “reasonable” amounts by fixing cost-plus margins, and any overly greedy competitor who dared to raise his profits above pre-war levels by cutting his prices were severely cracked down on. Hoover organized a Grain Corporation, “headed by practical grain men,” which purchased most of the wheat in the country and sold it to the flour mills, all the while undertaking to guarantee millers against loss, and to maintain the relative position of all the mills in the industry. Wilson and Hoover also kept the industry happy by requiring all bakers to mix inferior products with wheat flour at a fixed ratio, something which the bakers were of course happy to do since they were assured that all their competitors were being forced to do likewise. All this was initiated in the name of “conserving” wheat for the war effort.

The fiercely-conducted drive to keep down sugar prices, in contrast, was far more sincere—sincere because the raw sugar came largely from Cuba, and the sugar refiners were in the United States and other allied countries. The fact that increased sugar demand should have raised sugar prices by the workings of the free market made no impression on the sugar refining interests or on the Allied governments. Hoover and the governments of the Allies therefore organized an International Sugar Committee, which undertook to buy all of the sugar demanded in those nations at an artificially low price, and then to allocate the sugar, in the manner of a giant cartel, to the various refiners. On the other hand, of course, the price of sugar could not be forced too low, since then the marginal American cane and beet sugar producers would not be getting their divinely-appointed “fair return.” Therefore, the Federal government set up the Sugar Equalization Board to keep the price of sugar low to the Cuban producers while keeping it high enough to the American sugar refiners; the Board would buy the Cuban sugar at the low price and then resell at the agreed-upon higher price. Since an excessively low price of sugar would have caused high public consumption, production was directly ordered to be cut, and consumption by the public was severely rationed.

The food industry, as well as other industries in the Wilson-Baruch program of war collectivism, were delighted with the cartellizing and “stabilizing” (part of which was accomplished by enforcing compulsory standardization of parts and tools, a standardization which eliminated many small specialty businesses in machine tool and other industries, and forced production into a smaller number or bigger firms). Thus, Hoover

. . . maintained, as a cardinal policy from the beginning, a very close and intimate contact with the trade. The men, whom he chose to head his various commodity sections and responsible positions, were in a large measure tradesmen. . . . The determination of policies of control within each branch of the food industry was made in conference with the tradesmen of that branch, meeting at intervals in Washington. It might be said . . . that the framework of food control, as of raw material control, was built upon agreements with the trade. The enforcement of the agreements once made, moreover, was intrusted in part to the cooperation of constituted trade organizations. The industry itself was made to feel responsible for the enforcement of all rules and regulations.7

DURING HIS LONG REIGN as Secretary of Commerce in the 1920’s, Herbert Hoover carried forth the principles of advancing governmental cartellization of business, production was restricted and cartellized as much as possible by appeals to “elimination of waste,” trade associations of business were promoted, export industries were encouraged and promoted abroad, “standardization” was furthered. It was this encouragement of industrial self-regulation, with the governmental mailed fist kept in the background to crack down on the maverick competitor, that launched the characteristic Hoover emphasis on “voluntary” action, and that enabled him to establish specious distinctions later between his own “voluntary” program and the compulsory measures of FDR. Also typical of Hoover’s “voluntarism” was heavy emphasis on propagandizing the public. Thus, in his program as Food Czar in the First World War:

The basis of all efforts toward control exercised by the Food Administration was the educational work which preceded and accompanied its measures of conservation and regulation. Mr. Hoover was committed thoroughly to the idea that the most effective method to control foods was to set every man, woman, and child in the country at the business of saving food. . . . The country was literally strewn with millions of pamphlets and leaflets designed to educate the people to the food situation. No war board at Washington was advertised as widely as the United States Food Administration. There were Food Administration insignia for the coat lapel, store window, the restaurant, the train, and the home. A real stigma was placed upon the person who was not loyal to Food Administration edicts through pressure by schools, churches, women’s clubs, public libraries, merchants’ associations, fraternal organizations, and other social groups.8

Perhaps Herbert Hoover’s outstanding “accomplishment” as Secretary of Commerce was to impose socialism on the radio industry. Even though the courts were working out a satisfactory system, based on private property rights in radio frequencies—under which one frequency owner could not interfere in the radio signals of another9 —Hoover by sheer administrative fiat and the drumming up of “voluntary cooperation” was able to control and dictate to the radio industry and keep the airwaves nationalized until he could secure pasage of the Radio Act of 1927. The act established the government as inalienable owner of the airwaves, the uses of which were then granted to designated licensed favorites, the favorites being kept in line by the Federal Radio Commission’s unchallenged control of the licensing power. If private “squatters’ rights” had been permitted in radio (and subsequently in television) frequencies, we would have had a genuinely free press in the airwaves. As it is, we have had an air medium totally regulated and integrated into the Federal Establishment. More than anyone else we have Herbert Hoover to thank for government ownership and regulation of radio and television.

Hoover was also the first great proponent of Federal dams, and was the initiator of the Grand Coulee, Hoover Dam, and Muscle Shoals projects. Improvement of navigation or reclamation was to be at the expense of the taxpayer and of the flooded private property owners, for the benefit of the recipients of cheap water and cheap power. Hoover was insistent, however, that the Federal government should not itself go into the power business; instead, it should thoughtfully build the plants and then lease them to private enterprise. Here is another example of state monopoly capitalism: the active use of the Federal government to promote monopoly and subsidize privilege.

UNDOUBTEDLY THE SINGLE most collectivist and despotic governmental action during the ascendancy of Herbert Hoover was Prohibition. It is characteristic of Herbert Hoover that he was one of Prohibition’s most ardent supporters. Prohibition, of course, should be quite congenial to modern conservatism. All the arguments for prohibition of narcotics and gambling apply here too: Statistics show that people under the influence of liquor commit more crimes; let a workingman spend his money on liquor and he will become attached to it and waste his money there rather than spend it on nourishing and wholesome food for his children, etc.

Hoover acted in all this like a typical conservative, i. e., glorifying the State and its sacrosanct Laws over the liberty of the individual. His definitive statement on Prohibition as a whole: “Our country has deliberately undertaken a great social and economic experiment, noble in motive and far-reaching in purpose. It must be worked out constructively.”10 Whereas the only way to break down Prohibition was to destroy its enforcement, Hoover maintained that violation of one law destroys respect for all laws, and greatly expanded the nefarious institution of the Federal Prohibition Agent, attempting to make him incorruptible. To the very last, Hoover stood fast for the “noble experiment.”

As befitting one of the major leaders in the twentieth century drive for replacing quasi-laissez faire by a tightly controlled and cartellized system, Herbert Hoover favored trade unionism, and the dragooning of the worker into large, “responsible” unions that could be integrated into the New Order. Thus, during 1919/20, Hoover directed for President Wilson a Federal conference on labor-management relations. Under Hoover’s aegis, the conference, which included “forward looking” industrialists such as Julius Rosenwald, Oscar Straus, and Owen D. Young, as well as labor leaders and economists, adopted Hoover’s recommendations, wider collective bargaining, attacks on company unions, abolition of child labor, national old-age insurance, and government arbitration boards for labor disputes. In 1920, Hoover arranged a meeting of leading industrialists of “advanced views” to try to persuade them to tie in more closely with the American Federation of Labor; Hoover, incidentally, was always close to the A.F.L. leadership.

Hoover committed two striking acts of pro-union interventionism during the 1920’s. One was his movements against the steel industry: Steel was operating on a twelve hour day, and groups of Social Gospel ministers suddenly found Biblical sanction for the alleged immorality of any working day over eight hours. Hoover assumed the mantle of evangelical cum secular power to force steel to grant an eight hour day. Conducting a skilful propaganda campaign, Hoover induced President Harding to launch several bitter attacks on the steel industry. Finally, in June 1923, Hoover wrote a letter for President Harding to send to Judge Gary of U.S. Steel, sternly chastising the steel companies. This Presidential pressure turned the tide and forced the steel companies to capitulate.

Hoover also played a large role in helping to bring about the compulsory unionization of the railroad industry, and did so long before the Wagner Act. The railroad unions had waxed fat as a result of Federal government favoritism during World War I, when the government had temporarily nationalized the railroads (the government operated the roads, and the old owners reaped the profits which the government turned over to them). During the severe (though short-lived) depression of 1921, the railroads asked for wage cuts, and the unions angrily hit back by calling a nation-wide strike. When Attorney General Daugherty acted to preserve person and property by obtaining an injunction against union violence, Herbert Hoover, winning Secretary of State Hughes to his side, persuaded the weak-willed Harding to withdraw the injunction.

Despite Hoover’s actions, the unions lost the strike, and so they decided to use the power of Federal coercion to establish themselves in the industry. They finally achieved this goal in the Railway Labor Act of 1926, which guaranteed compulsory unionism (collective bargaining for all) to the railway unions, and imposed compulsory arbitration. Most of the railroads went along with the plan because railroad strikes were now outlawed; but the bill was drafted by union lawyers Donald Richberg and David E. Lilienthal, and by Herbert Hoover.

HOOVER WAS ALSO THE victim of a terribly inadequate grasp of economics, leading him to accept the popular “new economics” of the 1920’s.11 The “new economics” stood economics on its head, whereas economics saw that high wage rates in prosperous countries came about as a result of capital investment and high productivity, the “new” thinkers concluded that American prosperity had come about because employers paid high wage rates. In reality, the market determines wages, and not the goodheartedness or the wisdom of the employer. The employer in modern India who decided, out of the goodness of his heart and/or from reading economic nonsense peddled by Hoover or old Henry Ford, to triple his wage payments would quickly find himself bankrupt. Hoover deduced from this the union slogan that during depressions the worst thing that could happen was lower wage rates. It was this lowering that helped wipe out unemployment and end previous depressions relatively quickly; and it was Hoover’s personal use of the mailed fist in the velvet glove to prevent such lowering that kept wage rates increasingly and disastrously above market wages during the years 1929-33. This intervention insured that the Depression could not be relieved by natural market forces, or unemployment be lowered from disastrous Depression-born levels.

It was indeed as a depression-fighter that the nation came to know Herbert Hoover best. In all previous depressions, the Federal government had pursued a laissez faire attitude, keeping hands off and letting market forces bring about recovery quickly; and the recovery always came, no matter how steep the depression at the start.12 But Hoover had long determined that he was not going to pursue such a “reactionary, Neanderthal” course. He would rush in, to plan, to inflate, to push up wages and prices and insure purchasing power. He had determinde that he would plan, that he would use the full resources of government, all the modern tools of the new economics, to push the economy out of the Depression. And he did just that, except that the results were not quite what the Great Engineer had anticipated.

In pushing through his program, Herbert Hoover created virtually all the lineaments of the New Deal; the New Deal was in fact Herbert Hoover’s creation, and historians, now removed from the partisan squabbles of the New Deal period, are increasingly coming to recognize this fact. Massive public works programs, government relief, inflation and cheap money on a grand scale, government deficits, higher taxes, government loans to shaky businesses, farm price supports, propping up of wage rates, monopolizing the oil industry and restricting production, war against the stock market and stock speculation—all these crucial facets of the New Deal program were launched con brio by President Hoover.13

Hoover’s method of forcing wage rates to remain high was typical of his pseudo-“voluntarism.” He lost no time; as soon as the stock market crash broke, Hoover, in November 1929, called all the major industrialists to the White House and told them that they must pledge to keep wage rates up; that, whatever happened, the brunt of the Depression must fall on profits, not wages. This is precisely what did happen; wages were bravely kept up, especially in the larger firms, profits collapsed, and losses, bankruptcies, and mass unemployment ensued and remained unresolved. Since prices continued to fall, fixed wage rates meant that real wages (in terms of purchasing power) rose, aggravating the unemployment problem still further. Only in the small firms, hidden from public view, could quiet and secret wage cuts be agreed upon, and the workers continue to be employed. This was indeed the first severe depression in history in which real wage rates rose rather than fell: with the result that the Depression was intensified and rendered quasi-permanent. Even when wage cuts finally came, hesitantly, after several years of steep depression, they were so designed as to have little effect. For “humanitarian” reasons, they were largely put through in the higher income brackets and among executives: this, of course, could have little effect in stimulating employment where it was needed: among the lower-income, rank-and-file workers.

Addressing the White House conference, Hoover described his wage-floor agreements as an

. . . advance in the whole conception of the relationship of businesses to public welfare. You represent the business of the United States, undertaking through your own voluntary action to contribute something very definite to the advancement of stability and progress in our economic life. This is a far cry from the arbitrary and dog-eat-dog atttiude of the business world of some thirty or forty years ago.14

The American Federation of Labor was ecstatic over this new era in combatting depressions: “The President’s conference has given industrial leaders a new sense of their responsibilities. . . . Never before have they been called upon to act together. . . .” The United States, it proclaimed, would “go down in history as the creator of [an] . . . epoch in the march of civilization—high wages.”15

One of the most irritating facets of Herbert Hoover was his unshakable conviction that he had never committed a serious mistake. He had entered the White House at the peak of economic prosperity; he had left it, after a new departure in economic planning, in the midst of the most intense and long-lasting depression the United States had ever known. Yet not once, either then or later, did Herbert Hoover falter in his absolute conviction that his every act was precisely what should have been done. In his acceptance speech for renomination, Hoover proclaimed:

We might have done nothing. That would have been utter ruin. Instead, we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action.16

Indeed he did, and “utter ruin” was precisely the result. Yet never once did Hoover falter in his attacks against all criticism, from left or right. Neither was this simply campaign oratory, for never once in his later years, when he was considered by friend and foe alike as a living symbol of laissez faire, did Herbert Hoover fail to look back upon every one of his disastrous deeds, from fighting the Depression to bolstering Prohibition, without finding them right and good. Every four years, Hoover could be depended upon to issue a campaign manifesto proving proudly and conclusively that the Republican Administrations, far from being exemplars of laissez faire, pioneered in the burgeoning statism of the twentieth century.

THERE SEEM TO BE several important lessons embedded in the story of the Hoover myth. One, of course, is the great dimensions of the myth, of the total misinterpretation, on all sides, of the Hoover record. Far from being a libertarian, Hoover was a statist par excellence, in economics and in morals; and his only difference from FDR was one of degree, not of kind: FDR only built upon the foundations laid by Hoover. Secondly, the very pervasiveness of the myth poses some sharp questions about the Right-wing that has so earnestly fostered it. There can be only two explanations of this phenomenon: Either the Right-wing shows itself monumental in stupidity, by mistaking statism for laissez faire; and/or, more significantly, the Right-wing’s professed devotion to free enterprise and the free market is only rhetorical, and it will cheerfully welcome a statism slanted in typically conservative directions. A third lesson is that anyone genuinely devoted to freedom and the free market must, once and for all, discard the whole putrescent world-view of the unique diabolism of Franklin Roosevelt and his New Deal. The plain fact is that the New Deal was rooted far back in the past, in the Hoover Administration, and further back into the Progressive period and beyond. Genuine believers in freedom and a free market must cease to regard the American system as having been a grand and splendid one until an unaccountable break came in the 1930’s. They have to realize that they must be far more “radical” than they have ever remotely conceived.

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Twelve Thoughts on Inflation

W. H. HUTT*

THE PRESENT WRITER’S interest in the phenomenon of inflation goes back at least forty-five years. He was then an undergraduate at the London School of Economics. The famous Edwin Cannan, at whose feet he was studying, had taken the delightful gesture of suing the British Government under the Profiteering Act for selling pound notes at above their gold value. Cannan wanted to bring home to the public the extent to which inflation had debased the pound sterling.

As a teacher of business administration during the last thirty-eight years, the writer’s attention has been repeatedly forced back to this question of the spasmodic, yet persistent, depreciation of money. How can businessmen co-ordinate the private sector of the economy effectively when the most important measuring-rod of all—the monetary unit—has been left with no reliable, defined value? Units of length, volume, and weight have been universally defined with meticulous care; but dollars, lire, francs, and pounds have been allowed to change in every significant attribute over time. Hence, the aim in this article is to record briefly the twelve most important practical conclusions to which the thought of an academic lifetime on this issue has led the author.

(1) Nearly all inflations have been intentional, calculated actions of governments, however reluctant they may have been. No monetary depreciation in history has ever occurred in which governments have not purposely taken the steps needed to bring it about or, alternatively, have not deliberately refrained from action which could rectify any inadvertently caused inflationary tendencies. If monetary systems had rested solely on private contracts to redeem credit instruments (according to some stipulated standard) inflation could never have occurred.

(2) From time immemorial princes debased currencies. To such an extent did this happen that almost invariably the emergence of representative government in different parts of the world was followed by legislation to remove the right of monarchs to reduce the metallic content of moneys. But curiously, with the transfer of the kingly power to parliaments, no similar constitutional limitations were imposed upon elected governments. There have been suggestions in the United States, since the Second World War, that the continued decline in the purchasing power of the dollar should be brought to an end by incorporating the objective of a stable price index, by amendment, into the Employment Act of 1946; but the leadership which could have forced governments to take so difficult a step has thus far been lacking.

(3) When governments plan the programs which force up the cost of living they are usually reluctant. If they (or their advisers) could conceive of some means other than inflation for keeping their supporters happy they would make use of them; but provided the public generally does not predict the speed with which it is to occur, or its duration, inflation accords governments an easy access to income—unauthorized by democratic process—with which to purchase popularity, as well as an easy means—although a clumsy and unjust means—of temporarily alleviating the most common causes of disco-ordination in an economic system.

(4) Inflation can serve as a sort of palliative or anaesthetic which deadens the pain of a serious economic disease, namely, disco-ordination due to different categories of prices coming to be wrongly related to one another. Various types of restraint on competition permit wage rates and prices to be fixed too high to permit the full flow of output to be purchased from uninflated income, or too high in relation to price expectations. When one kind of labor or its product is priced too high, the sources of demand for non-competing labor and products are reduced; and if prices generally are rigid downwards, a cumulative decline in activity is set in motion. In the absence of inflation, therefore, the symptoms of the disco-ordination so caused are unemployment and depression.

AN ORGANIZED depreciation of the monetary unit, however, may bring about some sort of reco-ordination of the price system, in spite of its injustice. Under favorable conditions, it can cause the prices realized for products to rise more rapidly than the costs of making them. This may render profitable the employment of some presently unutilized or under-utilized productive capacity. For instance, if costs such as wage rates have been fixed higher than the public can afford to pay for the full supply of labor, a slowing down of output, with unemployment, is threatened. Inflation can then raise prices in relation to costs and so keep the economy going. Similarly, if producer-dominated marketing commissions have forced up the prices of primary products (raw materials or food) so that the public begins to be unable to afford to buy all that is being produced, again inflation can, in a crude sort of way, rectify the position by validating the higher prices. But all this depends, of course, upon the public as a whole not expecting it.

Eventually the recipients of wages as a whole and the farmers as a whole receive no more for their services. Their persistent striving to squeeze more for themselves out of the common pool is self-frustrating because the prices of the things which they have to buy are equally forced up by the process; but elected labor union officials can often retain their jobs only if they can show that they have raised wage rates year by year; and organized farmers habitually think it right that they should be paid a little more each year for their products. Hence in this inflationary age, wage rates and primary product prices tend to be raised, again and again, above what the public could afford in the absence of concurrent inflation; and so it seems as if the whole fatuous process has to be kept going.

(5) When the prosperity achieved by inflationary means happens to be accompanied by thrift, economic growth will occur, although in a less productive form than non-inflationary growth; and the easily won and largely illusory development tempo then gives rise to a confusion of growth with rising prices, a confusion which politicians (not surprisingly) encourage. But growth is purely a matter of thrift. Rising prices are not a condition for growth. On the contrary, there are good reasons for regarding inflation as, on balance, a discouragement of growth. In countless ways, rising prices tend to induce consumption. In particular, the “money illusion” all too easily causes insufficient provision to be made for depreciation and the maintenance of “real capital” intact.

(6) The result of trying continuously to co-ordinate by inflation is that the basic causes of the disorder so crudely rectified are never tackled. For this reason, inflation is a more insidious and virulent manifestation of the disease of disco-ordination than unemployment and recession; for the latter, being more painful, create incentives for fundamental reform.

(7) The origin of the most serious disco-ordinations of the modern economic system lies ultimately in the corrupting influence of a tradition whereby governments have come to be regarded as beneficent distributors of favors to the people, the people in turn rewarding governments by keeping them in power. This tradition creates a situation in which governments can intimidate minorities (unless the minorities happen to be able to disturb the balance of political power). Business managements become disheartened and obsequious; and because inflation seems to offer the only way out, they acquire the habit of acquiescence in it. At the same time politically powerful groups or institutions are given virtual carte blanche to pursue purely sectionalist objectives. That is why the private use of coercive power—the most obvious cause of disco-ordination in the pricing mechanism—has come to be tolerated.

(8) The crucial task, yet the most difficult task, of a truly planned regime is to secure co-ordination without inflation; and that means, in the first place, protection of the community from such sectionalist actions—particularly on the part of trade unions—as are calculated to reduce the flow of wages and other forms of income and render its distribution less equitable. A reduced flow of uninflated wages is always the consequence of any forcing up of wage rates (and hence product prices) in certain sectors otherwise than through free market pressures. If governments were aiming at (i) the maximization of the wage-flow, and (ii) equality of opportunity as a determinant of the distribution of wages, they would be ipso facto achieving effective co-ordination, for both rising prices and unemployment would then be simultaneously eliminated. But to achieve this result they would be forced to take the initially unpopular step of enshrining the right of all, and particularly of the poorer classes or races, to keep the price of their labor at a minimum. For instance, if equality of opportunity, distributive justice, and economic efficiency had been primary objectives in the United States, the minimum wage laws, which have slowed down the industrial progress of Negroes in the underdeveloped South, would never have been passed.

For identical reasons, governments would have to prevent other forms of contrived scarcity. A good example is the price supports which have become common where governments have been directly active in agricultural marketing. When the prices of primary products and food are raised, people have less uninflated income to spend on other things; and if the prices of these other things are rigid, that must mean the unemployment of some of the productive factors which manufacture them also. Dynamic forces cause cumulative contraction.

(9) THE TECHNIQUE OF inflation demands that governments and their agencies shall continuously deceive the public about the fact, the speed, and the duration of inflation intended. Ministers of Finance have here no option but to employ what has been called the “necessary untruth.” Unless they do employ this technique, inflation will lead to costs rising as rapidly as prices, or in advance of prices, thereby destroying the whole purpose of inflation. Moreover, yields on fixed interest bonds will be forced up and yields on equities forced down. As Professor Ludwig von Mises has insisted:

These enthusiasts [for inflation] do not see that the working of inflation is conditioned by the ignorance of the public and that inflation ceases to work as soon as the many become aware of its effects upon the monetary unit’s purchasing power....This ignorance of the public is the indispensable basis of inflationary policy. . . . The main problem of an inflationary policy is how to stop it before the masses have seen through their rulers’ artifices.1

The phrase “necessary untruth” was used in 1949 by the Manchester Guardian2 in justifying the conduct of the British Chancellor of the Exchequer, Sir Stafford Cripps, who, just before the British devaluation of that year, and after it had been finally planned, had categorically denied on no fewer than nine occasions that it was intended. The British Government had secretly discussed the proposed step for some time, almost inevitably setting into circulation rumors of what was contemplated. They had finally decided to devalue, it seems, at least three weeks before they were ready to put their decision into effect. They had to discuss it first with the United States, Canada, and the International Monetary Fund. In the meantime it became imperative to mislead the trustful for the benefit of the mistrustful.

It had for some time been governmental technique to pretend, in order to dissuade rational reactions, that “suspensions” of convertibility were merely temporary breaches of obligation. Thus, in 1931 there occured one of the most disturbing examples of the necessity to mislead in order successfully to reduce the value of a nation’s currency: Dr. Vissering, head of the Netherlands Bank, telephoned Mr. Montagu Norman, Governor of the Bank of England. He inquired whether his bank would be justified in retaining the sterling it was holding. Dr. Vissering received from Norman an unqualified assurance that Britain would remain on the gold standard. He believed what he was told. In consequence, his bank lost the whole of its capital; for the very next day Britain abandoned gold. Through the same act., the Bank of France lost seven times its capital.3

Two years later, using the argument that he wanted “to control inflation.” President Roosevelt persuaded Congress to give him extraordinary discretionary powers in the monetary field. Then, in April of that year, he decided to call in all privately owned gold “as a temporary measure.” There was no suggestion that the real purpose was a forced depreciation of the dollar in terms of gold, the issue of an enormous number of notes, with open market operations by the Treasury and Federal Reserve System to acquire government securities and hence perpetuate the depreciation.

The fact that the Bank of France had been called upon to falsify its balancesheet in 1925, in order to maintain confidence, had been regarded as a shocking incident by those who understood what had happened.4 But exactly the same kind of deception is inevitable if inflation is ever to be continuously successful. A delightful euphemism is “creating a favorable climate of opinion”!

Because a policy of creeping inflation must rely upon persistent deception, its survival in the modern world is obvious evidence of the corruption of government and of the disintegration of trustworthy relations between governments.

In 1922, in negotiating a settlement with the American Debt Funding Commission, Britain had confined herself, on the whole, merely to asking that the rate of interest should be 3½% in accordance with her credit standing. Professor B. M. Anderson, at that time economist to the Chase Bank, commented: “The British were superb in this. They were proud, magnificently proud. They asked little consideration.”5 Perhaps Britain was then the loser, in material terms; but can we be indifferent to the moral deterioration which has subsequently become evident, recorded in an era which demands “necessary untruth”?

(10) The disintegration of faith in money (ultimately, of faith in government) has involved the peoples of the world in formidable material costs. In the pre-1914 era, simply because no one ever doubted that “banks of issue” would honor convertibility obligations, there were no balance of payments difficulties, no hot money flights, no devaluation scares, no complaints of world liquidity shortages, no restraints on international settlements, no blocking of foreign balances, and no quantitative trade restrictions for balance of payments purposes. In that co-ordinated era, even such concepts (which the present disco-ordinated age treats as everyday notions) would have been incomprehensible.

The enormous administrative costs of today’s “controls” are obvious enough; but the losses due to the economic distortions they cause—domestically and internationally—are incomparably heavier. World disco-ordination is a product of the continuous misdirection of expectations which the inflationary technique necessitates.

(11) THE ONLY WAY IN which the general public can discourage inflation is to make it unprofitable. They can do this when they are in a position to insist upon fixed income contracts being revised ahead of instead of following the price increases at which official policy is aiming (perhaps via “escalator clauses”), and refusing to accept the dishonest assurance that their insistence can be a cause of inflation. A similar discouragement is effected when investors learn to avoid fixed interest bonds, except at very high yields to compensate for monetary depreciation.

(12) When more and more people begin to understand what is happening, a government which wishes to persevere with inflation is forced to take authoritarian action. It has to discourage or prevent those who understand from using market institutions to escape the destruction of the real value of their savings. In other words, when enlightenment spreads, for a government to engineer rising prices successfully demands eventual resort to price controls, rent controls, import controls, exchange controls, controls of capital issues, “income policies,” and so forth. In the absence of inflation, all controls of this kind (or extra-legal “persuasions” with the same object, backed by arbitrary state power) have no purpose.

TO WHAT GENERAL conclusion are we led after consideration of these twelve points? Is it not that the gradual drift of the so-called “free world” towards a totalitarian concentration of power has had its origin in the creeping inflation which, dating from the 1930’s, seems to have been mainly inspired by Keynesian teachings? Through public acquiescence in perpetually rising prices, we are threatened with an emergence of the sort of social order which, less than three decades ago, the blood of countless patriots was spilled to prevent.

In recording these thoughts, is the writer the victim of a futile nostalgia—a naive longing for the nineteenth century era? Has not inflation perhaps been an inevitable step towards a slow, inexorable transfer of consumer freedom (and the entrepreneurial freedom which is its consequence) to the state? Certainly there are those who, with a dogmatism of Marxian stubborness, will argue that, once the institutions of representative government had been conceded, politicians were bound, sooner or later, to discover the potentialities of twentieth century techniques of persuasion and propaganda; whilst that discovery could not fail to mean the ultimate passing of authority to those most skilled, or most uninhibited, in controlling the minds and purchasing the support of political majorities. If they are right, the stereotype of the state as the donor of benefits was predestined to emerge; recourse to inflation had necessarily to follow; and as the community began to be more difficult to deceive, and started to use the remnants of the free market economy to evade the burden of inflation, the urge to totalitarian government became irresistible.

To those who are inclined, for such reasons, to acquiesce in, or make terms with, the totalitarian trend, the “classical” type of analysis, like that presented above, seems to have become irrelevant. What the rulers of modern society now need, they feel, are formulae which assist officialdom in maintaining a nice balance between plausibility or electoral acceptability on the one hand and mitigation of the more obvious causes of unrest on the other. It comes to be regarded as more important, therefore, for economists to be experts in semantics than experts in explaining dispassionately to students and the public the nature of the economic process. Indeed, governments have no alternative but to choose economic advisors from those who understand their basic problems, all of which center on the need for the retention or winning of office. Accordingly it becomes the duty of the universities to provide the required training. Useful economics, they will insist, is “operational.” That is, it is a kind of economics which takes politically decided objectives for granted, concentrates on the problems which arise in seeking those objectives, and isolates the kinds of data (and types of statistical analysis) which are of service in satisfying the politically powerful and placating the politically weak.

Would inflationary policy (with its eventual totalitarian outcome) have been inevitable, however, if the public had been taught the above twelve truths (if they are truths) about inflation? Suppose economists in the leading universities had maintained their political independence and reiterated with unanimity the simple points we have stressed. Would not the authority attaching to their teachings, together with the almost self evident irrefutability of the propositions themselves (to men of affairs), have forced the abandonment of inflation? And in renouncing the inflationary remedy for disco-ordination, would not the state have been forced to re-assume its traditional task of protecting the co-ordinative mechanism of the price system from sabotage by sectionalist action? Would not suppression of the private use of coercive power have permitted the social discipline of the free market to bring different categories of prices into harmonious relationship with one another, without inflationary validation?

But this was not to be. From the middle thirties—for reasons which cannot be discussed here—Keynesian economists slowly got the upper hand, not only in the counsels of governments but in most of the universities. “Classical economics,” the product of more than a century of disinterested, scientific thinking, was pushed aside as fundamentally wrong. It was replaced by the more plausible doctrines of Keynes’ General Theory—doctrines built on a number of obscurely enunciated propositions which, because obscurity all too easily suggests profundity, greatly impressed the layman—an influence which was magnified through the subsequent elaboration of the propositions by mathematicians.

The fact that, since the war, every unique Keynesian theory which clashes with classical economics seems to have been tacitly abandoned, in the sense that it can no longer be rigorously defended,6 has hardly discouraged the continued indoctrination of students of economics in the new orthodoxy. Indeed, so strongly is a powerful Keynesian establishment now entrenched within the universities, and so influential are the vested interests it has built up, that even non-Keynesian economists have mostly felt themselves forced to attempt to persevere with its concepts. The most widely used textbooks remain Keynesian, and the young student of economics is seldom made aware that ideas like those explained in this article can be seriously entertained except by cranks. Yet the present writer is convinced that, if free and fair competition between the Keynesian and “classical” notions had been permitted, only the latter could have survived.

AS THINGS ARE, THE Keynesian thesis which—as one apologist put it—“removed inhibitions against inflation,” still dominates policy in Britain, in the United States, and, indeed, in most parts of the world. Governments, relying on the fruits of a technological progress which current policy has hampered but not prevented, will not easily renounce the myth that they can foster the spending of a country into prosperity and growth whilst they simultaneously “fight inflation.”

Raico on Liberalism and Religion

M. STANTON EVANS*

IN A RECENT issue,1New Individualist Review carried an article by Ralph Raico which was among other things an extended attack upon a contribution of mine to What Is Conservatism?2 I had intended a reply before this, but the pressure of journalistic duties, followed by a rather hectic session of the Indiana legislature, has intervened. I trust, however, that the nature of the subject will make this belated continuation of it of some interest to New Individualist Review’s readers.

The article which ignited Raico’s displeasure argues that the imperatives of freedom and religious authority were not, as sometimes asserted, incompatible, but complementary. In so alleging, I briefly sketched the outlines of what I call “classical liberal” philosophy and traditional conservatism, trying to show that the alleged contradictions were more a matter of mortal confusion than of philosophical necessity. In rebuttal, Raico contended my discussion of classical liberalism was mistaken, both in the round and in its several particulars; that I had along with other conservatives and divers spokesmen for modernity, erred in calling this school of thought “superficial, unrealistic, and obsolete.”

My first observation on this charge is that my views on “classical liberalism,” however broadly or narrowly the term may be defined, do not coincide with the usual modernist critique of it. I am in general agreement with the economic views of the classical liberals. I happen to think that, in discussing the secular modulations of freedom and the secular conditions most agreeable to its continuance, Herbert Spencer is hard to surpass. It is precisely in this respect, of course, that the views of the classical liberals are nowadays most disparaged.

Where I depart from classical liberalism’s most famous spokesmen is the point at which modern collectivists tend to agree with them—in their mechanical, materialist, and relativist view of human nature and ethical principles. As I tried to argue in my previous article, the classical liberals all too clearly foreshadowed modern-liberalism in this respect, and helped lay the ethical foundation for the rise of the total state they wanted to avoid.

In lumping together the critics of classical liberalism, therefore, Raico is liable to give the reader a wrong impression of my differences with nineteenth century spokesmen for laissez faire. My position is not one of blanket condemnation, but rather one of arguing that, while the secular views of the classical liberals are by and large correct, their ethical views in the long run undermine the freedoms they thought they were protecting.

My argument is so insistent on this point that Raico, despite his tendencies toward amalgam, perforce devotes most of his comment to battling against it. Once more, however, he neglects to keep the categories of the discourse in order. My purpose in What Is Conservatism? was, in part, to examine the philosophical strain in Western society which, as most characteristically put forward in England and America during the past century, I identify with the terms “libertarian” and “classical liberal.” I explicity note that some people who put themselves in this category do not fit my definition, since they do profess religious sentiments. “To the extent they do,” I say in an explanatory note which appears with the article and which in fact appeared with it in its original incarnation as far back as 1960, “I trust my terminology will not obscure the fact that the argument of this essay is not an attack on such ‘libertarians,’ but a vindication of them.”

Raico chooses to ignore the meaning of this statement, feigning to believe my critique includes everyone in the nineteenth century, religious or otherwise, who embraced the principles of freedom. He then cites certain examples of religious devotees of liberty as disproof of my argument. The deficiencies of this tactic are so grave as to be, in themselves, fatal to his position. He in effect ignores the definition I explicitly set forward, as the central condition and point of my article; bootlegs another definition of his own without making it explicit; glosses over the transposition in terms by suggesting I have employed his categories despite my direct statement to the contrary; and then taxes me for violation of his unstated taste in noun substantives. If I had used the categories he appears to favor, there would have been no point to the article in the first place. The purpose of my essay was to examine that class of people who do believe irreligion and liberty to go hand in hand, and to argue that they are mistaken. Of course there have been libertarian spokesmen who also believed in a profoundly religious view of the universe; I acknowledge the existence of such people in my article. More, I cite them as examples of the correct view of things, in opposition to those who believe irreligion the handmaiden of freedom. Burke, Smith, Acton, and Tocqueville are some I mention explicitly. To bring these people up as a rebuttal to my assertions about irreligious classical liberals is comparable to citing Barry Goldwater as proof that Lyndon Johnson is not a Democrat.

Thus launched into obscurity, Raico proceeds to divide his argument unevenly among a number of points. In some places, he seems to object to the argument that there are people who believe liberty can be protected by tearing down religious authority. Secondly, and in this modulation he consumes most of the space in his criticism, he argues that, whatever the general case with people of this description, classical liberalism is not the correct label for them. Like Pascal, I am not much inclined to argue about names so long as I know what is meant by them. If Raico wants to call such people by another name, well and good; let us have the name; we can then go on, using Raico’s terminology, to explore the real issues involved. While he quarrels with my use of the term, Raico ignores the specific content I give it and neglects to say what terminology he would himself apply to the irreligious-libertarian point of view so that it might in some way be discussed. His approach suggests he either does not grasp the import of my article, or else does not want to talk about it. In either event, he has not answered it.

Finally, and this may be the reason Raico neither acknowledges the real nature of my argument nor reformulates it in his own terms, he goes on to suggest that, although there are irreligious classical liberals, their views are a matter of indifference, since the maintenance of freedom is a purely secular business. On this score, he begs the question to which my article is addressed. My view is exactly that the maintenance of freedom is not, and cannot be, purely secular, and that the profession of irreligious, relativist ethics is in the long run harmful to liberty. At no point does Raico close with my views on this score, as he would have to do if he paraphrased them correctly rather than presenting them in caricature.

To sustain his criticism while omitting substantive argument, Raico undertakes a laborious analysis of my statement that the classical liberal “characteristically denies the existence of a God-centered moral order, to which man should subordinate his will and reason,” alleges human freedom, “as the single moral imperative,” and otherwise is a “thoroughgoing relativist, pragmatist, and materialist.” His comment is that the classical liberal is not in fact like this, and that the characterizations are in several instances meaningless anyway.

As to the irreligious nature of “classical liberals,” I have already noted Raico’s principal tactic. At different points in his article, he directly or indirectly accuses me of ignoring or “dismissing” certain religious classical liberals. In point of fact, I “dismiss” no religious classical liberals; they are the very type of correct reasoning suggested by my article, men who combine both ethical affirmation and concern for human freedom. They are the heroes of the piece. This is the most frivolous of his arguments, and I have no doubt belabored it sufficiently already.

MORE TO THE POINT is a second version of Raico’s position—that although irreligious classical liberals do exist, they are no more numerous than the religious sort, and that their irreligion has no necessary connection with their libertarian views. This argument from statistical insignificance is patently incorrect. Whatever the numerical incidence of such people, the issues raised by them are still there, and still distressing. It is their position, not that of an Acton or Tocqueville, which has given rise to philosophical contention within the ranks of conservatives; it is their position which clashes directly with what is understood to be conservative ethical theory; it is their position which is emphasized nowadays in public discourse, in part by critics of conservatism, but also by sectarians within the conservative camp. The whole purpose of the article was to discuss these deep-going differences—to take the “libertarian” and “authoritarian” positions in their most antinomian terms, in order to explore the philosophical tensions between them. To reconcile Acton with Burke, while no doubt a problem to test the mettle of political philosophers, would be nothing to the purpose, since both occupy, comparatively speaking, middle ground. But to explore the possibility of uniting Spencer’s economics with de Maistre’s ethical theory, although clearly too ambitious a project for my talents, is very much to the purpose indeed. The latter effort speaks to the philosophical stress within the conservative camp today, and which was recognized by de Tocqueville more than a century ago. Raico faults me with not taking the solution to the problem as the statement of it.

As to whether the agnostic strain in libertarian philosophy is important enough to merit this kind of treatment, and to justify using “classical liberalism” as an eponym for such belief, the names of Mill and Spencer should be sufficient answer. Raico passes over these giants of classical liberal thought as though they were but random faces in the crowd, preferring the example of John Bright. But to adduce the atypical Quakerism of Bright as proof of the religious character of classical liberalism is no more convincing than to cite the formal devoirs of the National Council of Churches as proof of the religious character of modern-liberalism. The Bright example fails on at least three counts. First, while Bright was sincerely theistic, the emphasis of his public advocacy (and private contention within the Society of Friends) was on the secular aspects of reform, and it was in this secular business that the entire impact of his public career was made. Ficino and Erasmus were, in their way, equally pious; yet it was the pagan secularism they mixed with Christianity which left its mark on Renaissance scholarship, and it was in its thrust toward secularism that the Renaissance helped shape the modern consciousness. Second, Bright occupies little or no place in the theoretical development of classical liberalism, any more than a LaFollette or Borah occupies a place in the theoretical development of modern-liberalism. Bright was all free trade and extend-the-franchise, and while a consistent libertarian and a man of probity, he was a politician and not a philosopher. Third, precisely because Bright was not a philosopher, he was not called upon to square his private theism with the implications of classical liberal chiliasm and environmentalist notions about man. When such a confrontation of thought was made by nineteenth century liberals, it is noteworthy that they either repudiated liberal assumptions (as did Acton), or else repudiated Christian ethics (as did Spencer).

If we would understand the philosophical tendencies of classical liberalism, we must turn to its explicit theorists, as represented in the clear line of development from Hume to Sumner. In this history, Mill and Spencer have a pre-eminent claim upon our attention. It is from them that classical liberal philosophy received its most powerful impulses and most characteristic form. It is from them that the notion of irreligion united with secular liberalism continues to draw sustenance. Mill is still considered the great aboriginal spokesman for civil liberties. Spencer, above all other men, put the impress of his thought on the rationalization of the free enterprise system, ably assisted in America by the complementary efforts of Sumner. To suggest classical liberal thought was religious, with the exception of Mill and Spencer, is very much like suggesting late Victorian culture, with the exception of Darwin and Huxley, affirmed special creation. To argue that we should hold the immense force of the ideas generated and formalized by these two powerful intellects—ideas which long dominated English and American thought and which in their ethical tendencies are all too unhappily attuned to modern disintegration—at parity with the opinions of Madame de Stael is equivalent to saying we cannot identify Communism with Marx and Engels because Proudhon also has his claims in the matter. Mill and Spencer alone would, I think, justify appropriating “classical liberalism” to describe anti-clerical libertarianism, and for making it the object of considerable examination. But they do not, of course, stand alone. To their names might be joined those of Diderot, Condorcet, Faguet, Hume, Godwin, Paine, Bentham, Sumner, Nock, Mencken, and Miss Ayn Rand, to mention only a few.

If any of these deserves to be mentioned along with Mill and Spencer, it is Sumner, whose formulation of classical liberalism looms enormously in any conspectus of American thought. It was Sumner who preached to Americans the evolutionary ethics of which Spencer was the acknowledged master, and taught that all values are relative to the needs of time and place; whose views became embodied in American thought and practice and translated into law through the labors of Mr. Justice Field and others on the Supreme Court; who preached the radical disjunction of liberal sentiment from religious profession, and whose inconsistencies foretold the unhappy results of that separation. Himself a Puritan by temperament and upbringing, Sumner believed the Protestant Ethic could stand on its own secular merits even after society, like himself, had put its religious beliefs in the drawer never to retrieve them. He believed it possible to construct a purely materialist and relativist system while maintaining the strict moral outlook indicated by his Puritan ancestry. The experiment has not worked Once the religious underpinning was removed, the subtle comprehension of material forces desired by Sumner could not be counted on to sustain human motives toward liberty and self-reliance, as our own era has all too conclusively demonstrated. Sumner helped demolish the moral foundations which alone can support a regime of freedom.

So much for classical liberals’ not believing in a “God-centered moral order.” On the secondary point that classical liberals do not believe man should subordinate his will and reason to this order, Raico generously refrains from annihilating me because he considers it of small importance. He then goes on, in a footnote, to say even Christians do not necessarily believe man should subordinate his will and reason to the divine order, citing a commentary in paraphrase of St. Thomas. His construction of this point is in error. St. Thomas believed a portion of the divine order, revealed in the Natural Law, apprehensible by reason; he did not, however, believe it was validated by reason. The ultimate sanction for all truth, natural and divine, is in the Christian view of the will of God. Raico has got Christian orthodoxy hopelessly turned around, as he will readily discover if he opens the Summa to Question XCI, Articles 2, 3, and 4.

On the issue of a causal connection between irreligion and libertarian attachment, enough has been said, I think, to show that Raico has twisted my position inside-out. “Even if a majority of liberals had been atheists and agnostics,” he says in supposed rebuttal to my position, “the connection is so far accidental and historically-conditioned, and not logical.” The burden of my argument, of course, is precisely that there is no logical relationship between the anti-religious views of Mill, Spencer, et al., and the establishment of the free society they desired. On the contrary, I argue that lack of religious grounding leads to slippage from freedom. Mill’s intellectual career is a perfect example of this.

The connection between libertarian views and anti-religious tendencies is, therefore, not causal, but adventitious. That the dominant spokesmen for classical liberalism gravitated to anti-religious thought is a matter not of integral connection but of historical fact. The relation, to use Hume’s terminology, was not causal, but conditional—apparently founded in the assumption which has vitiated modern thought from the Renaissance forward, that supernatural authority is the enemy of freedom. This assumption, far from being my own, is the chief target of my article.

RAICO NEXT objects to my statement that classical liberals elevated human freedom as “the single moral imperative.” Other values, he says, were also cherished by them. The reader of Spencer’s Principles of Ethics and Social Statics will be constrained to disagree with Raico’s interpretation of this author. The necessity of a regime of freedom is Spencer’s “first principle”; all other principles he deduces from the irrefragable rightness of liberty. Raico incorrectly alludes to Spencer in his effort to prove otherwise. Spencer’s summum bonum is the existence of mutually sacrosanct zones of freedom for all men—the ability of each to do as he pleases so long as he respects the equal ability of everybody else. He states and restates this as the first law of moral philosophy, recommended by science, logic, and the intuition of fitness which is the final authority for every value system. “Positive” and “negative” beneficence are not moral values, but utilitarian functions of the human mind which enable it to comprehend and enjoy the balance of freedoms that is the end and justification of all other principles. Negative beneficence consists in refraining from encroachment upon other men’s satisfaction; positive beneficence is the ability to derive part of one’s own satisfaction from the fact that the general system of freedom has displaced the reign of license in which one man’s desires are satisfied at the expense of another’s. In the second category, Spencer’s disquisition greatly resembles Hume’s treatment of “sympathy” in the Treatise, in which benevolent tendencies are ultimately derived from the self-regarding faculties. Spencer’s view is even more mechanical than Hume’s (subsequently modified in the Inquiry Concerning The Principles of Morals), because it clearly views this tendency as a means toward achievement of universal freedom. “Positive” and “negative” beneficence, in Spencer’s system, are props to his first principle of mutual liberty, and derive their sanction from it. Freedom is, for Spencer, quite obviously the “single moral imperative.” Spencer’s inconsistency in bringing “intuition” into play at this juncture is characteristic of the classical liberal position as a whole, even when the matter is not made as explicit as Spencer makes it. My point is that, given the relativist-utilitarian ethics of the Mill-Spencer school, there is no logical reason to exempt human freedom from the potencies of the system. If morality is the function of secular arithmetic or the adjustment of secular means to secular ends, or a coefficient of the evolutionary struggle, then it is altogether possible that, somewhere along the line, freedom must give way to the calculus, the adjustment, or the evolution. This was a conclusion Mill and Spencer were loath to draw, in effect excepting liberty from their mechanical systems. This is, to be sure, an inconsistency; but again, it is not my position, but the position of the classical liberal spokesmen whom I am criticizing.

Finally, Raico questions my use of the terms “materialist,” “pragmatist,” and “relativist,” alternately claiming them to be untrue or professing himself baffled by my meaning. Each of them refers to the classical liberal tendency of deriving value from the conjunction of secular phenomena and subjective apprehension. Spencer is an aboriginal “materialist” in the philosophical sense; value for him arises from the evolutionary progress of history toward its “higher” forms; good and bad are the terms we give to the adjustment of means to ends in the battle for biological and cultural survival. As for “pragmatism,” both Mill and Spencer were pragmatists a half-century before James and Dewey; both test values by their practical consequences. Spencer’s language in Social Statics is pragmatic at every turn. If the reader will peruse Mill and James consecutively on the subject of religion, he will find the first values it because it provides rules for moral life, suggesting a secular substitute would do as well or better, and the second favors it because it evokes a release of vital energies. It should be obvious to the rudest intelligence that both men take a “pragmatic” view of religion—judging it solely by its “practical” effects in the secular world.

Both Mill and Spencer, finally, are clearly relativists in the sense that they deduce value criteria from secular and largely subjective phenomena. Both begin with the pleasure-pain calculus, making right and wrong a function of human comfort; Spencer superadds the asserted “laws” of evolutionary development. To assert this utilitarian view is a form of “absolutism,” as does Raico, taxes credibility even in an Orwellian generation. Presumably, all criteria of value are “absolute” in a sense if one is prepared to act upon them; to a dope addict, securing the next fix is the most compelling of absolutes; but we would be justified in launching further inquiry before anointing him as a moral absolutist. According to received notions of intelligible discourse, “absolutism” holds values to exist independent of subjective apprehension. Mill-Spencer utilitarianism makes values consist exclusively in such apprehension. “The facts are what they are,” Raico says of the pleasure-pain calculus; but “happiness,” as Spencer himself noted, is not a fact, it is a state of mind; the greatest good for the greatest number” is not a fact, it is a matter of opinion. To make these things the measure of value is to throw all fixed and objective values out the window, to make right and wrong a function of secular stress and contention; it is relativism par excellence.

ALMOST ALL of the foregoing, however, is oblique from the main point, and I have gone into it only because failure to respond to Raico’s charges might give some readers the impression that I conceded their correctness. The fact of the matter, however, is that even if I could settle all of these differences to Raico’s satisfaction, or he to mine, the outstanding issues of freedom and authority would be no closer to resolution than before. While clarity in the use of terms is desirable, it is chiefly important as it helps us to advance in substantive understanding. I am therefore reluctant to leave the present discussion with a pro forma defense of my previous article, which I fear would create an unhappy emphasis on lesser issues at the expense of greater ones. Let me, then, repeat what I consider to be the chief topic before us, namely: Can a regime of political freedom long exist without the underpinning of religion and moral sentiment derived from Judaeo-Christion revelation? There is a considerable history of modern Western thought, ranging from Diderot to Mencken, which says it can, and which has worked great influence in contemporary America and elsewhere. The important point about this school is not whether we call it or some subdivision of it “classical liberalism,” but whether its major premises are true or false. A certain number of “libertarians” today appear to think they are true. I for one think they are dangerously false. That is the issue, and the terminology of the thing—while I happen to believe my own usage is justified—is of little or no importance compared to the substance of it.

*Reply to Mr. Evans:**

BEFORE I DEFEND my critique against Mr. Evans’ rebuttal, I should like to explain briefly why I took time to attack Evans’ article in the first place.

In their attempt to carve for themselves a position of relevance in discussions of contemporary social problems, conservative writers sometimes present a sketchy philosophical outline of the historical development of classical liberalism, attempting to show deeper reasons for its decline than those readily admitted by classical liberals themselves. The attempt has been supported by writers such as Russell Kirk, Frank S. Meyer, and Eric Voegelin. Dr. Kirk, for instance, sees the original flaw in the liberals’ excessive commitment to individualism, especially in the form of economic liberty:

. . . central direction endeavors to compensate for the follies of reckless moral and economic atomism. . . . [The liberals’] sentimental liberalism soon became shocked at its own practical consequences; the economic competition and spiritual isolation which resulted from the triumph of their ideas provoked among them a reaction in favor of powerful benevolent governments exercising compulsions.1

Mr. Meyer, an advocate of economic liberty, identifies the seed of corruption in liberalism rather as its supposed utilitarian ethic:

This transformation [from individualistic to collectivistic liberalism] was the result of a fatal flaw in the philosophical underpinnings of 19th-century liberalism. It stood for individual freedom, but its utilitarian philosophical attitude denied the validity of moral ends firmly based on the constitution of being.2

Eric Voegelin imagines he can see a close connection between classical liberalism and Bolshevism: both, he thinks, imply the “permanent revolution,” in that they attempt the impossible—changing the nature of man.3 And so on, with other conservative authors.

It appeared to me that for once someone ought to call a conservative to account for his flamboyant and unsubstantiated claims regarding classical liberalism; for once, the canons of precise definition and relevant evidence, which serious scholars in all disciplines apply, ought to be applied here, too. It seemed to me, furthermore, that Evans had presented us in his article with a startling example of these conservative defects, and that the article could profitably be examined from this point of view.

NOW TO DEAL WITH Evans’ rebuttal. Is it true that I have confusedly interpreted his claims, besides being wrong on a number of factual points?

First comes the terminological question, less interesting than the others, but unavoidable, since here is where I am supposed to have decisively confused the issues.

What does Evans mean by “classical liberalism”? Does he mean what everyone else does—that is, in one description, the social philosophy whose best representatives were Tocqueville and Acton?4 Does he mean that great intellectual and political movement of the eighteenth and nineteenth centuries, so vast and various that no particular philosophical pre-suppositions bind all of its adherents, but only their commitment to individual liberty—to private property, civil liberties, and parliamentary and constitutional government? If the reader considers classical treatments of the subject, say Ruggiero’s History of European Liberalism or (on a more analytical level) Von Mises’ The Free and Prosperous Commonwealth, he will see what is meant by classical liberalism when the world at large discusses the history of ideas.

Evans claims, on the contrary, however, that he was clearly and consistently using “classical liberalism” in an odd sense: he was using it to designate only the atheistic and agnostic classical liberals (what he wants to call the theistic classical liberals is not made clear—possibly he wants to refer to Bastiat and Adam Smith as “conservatives”). It seemed to me otherwise. In my article, I point out that Evans has a footnote to the effect that in his usage “libertarianism . . . signifies the chemically pure form of classical liberalism, with all of its metaphysical implications.” Now, in the first place, it ought to be clear that this passage implies that libertarianism is one subspecies of classical liberalism (its “chemically pure form”), other subspecies of which, less chemically pure, do not share libertarianism’s anti-religious position. This indicated to me that Evans, at least at this point, was using “classical liberal” in more or less its received meaning, and simply wanted to define “libertarian” in an unconventional way.

Then, in the text, Evans equates libertarian and classical liberal, stating: “The libertarian, or classical liberal, characteristically denies the existence of a God-centered moral order. . . .” Now this certainly sounds like a description; that is, it sounds as if Evans is accepting the usual definition of classical liberal, and saying that, while there may have been a few liberals who were religious, characteristically and as a rule they were not religious. If he were keeping to the definition in the footnote, the passage wouldn’t make sense: it would then have to read, “libertarians necessarily and by definition deny the existence . . . ,” etc.

If the reader still thinks it was unreasonable of me to suppose that Evans was using classical liberalism in its usual sense (or, at least, that its usual sense was one of those in which Evans was using the term), let him consider the following, from Evans’ original article:

While labelling someone a classical liberal is not necessarily an insult, it must be pointed out that today’s conservatives, although opponents of statism, are generally not Manchesterians.

Doesn’t this imply that Evans was taking the Manchesterians to be one school (the only school?) of classical liberalism? But how could this be, if he was exclusively using classical liberal to mean agnostic or atheistic classical liberals? Both leaders of the Manchester School, Cobden and Bright, were Christians.

Evans tries to trivialize this terminological point by speaking of varying “tastes” in noun substantives. But there is very good reason for preserving a modicum of consensus on the way terms are to be used. Imagine what trouble would be caused if each time anyone wrote on the history of ideas, he used terms like “liberal,” “conservative,” “socialist,” “utopian,” etc., in odd and unconventional ways. For one thing, intellectual history as an on-going enterprise would become impossible. It is at least equally important to keep to the same definitions of key terms in one and the same article.

LET US ASSUME, though, that Evans had made it clear in his article that in levelling his series of charges he had in mind only the non-religious classical liberals of the past and present: men like John Stuart Mill and Herbert Spencer, and, in our own day, most of the free enterprise economists whose names would come most readily to mind. Is it true that these men “allege human freedom as the single moral imperative”? Evans really does hold that they do, evidentally: An irritating premise of his, which comes out also in his rebuttal, is that a person who is not religious can have no ethical beliefs or concerns. Thus he refers to the religious classical liberals, “men who combine both ethical affirmation and concern for human freedom,” as if an agnostic liberal never affirmed any ethical principles. Evans’ position is that non-religious liberals did not and do not believe that anyone has a moral obligation to tell the truth, or to avoid malice, or to save another person’s life even at no risk to oneself. Can this really be the case?

Well, I quoted in my critique a well-known passage from J. S. Mill’s essay, Utilitarianism, part of which tells us that:

In the golden rule of Jesus of Nazareth we read the complete spirit of the ethics of utility. To do as you would be done by, and to love your neighbor as yourself, constitute the ideal perfection of utilitarian morality.5

Evans prefers in his rebuttal not to take cognizance of this point. Instead, declining to withdraw his claim, he attempts to show that it is true of Herbert Spencer. Even if this were true, it would prove nothing, since innumerable agnostic and atheistic liberals could be cited who do, indeed, believe that there are ethical imperatives beyond simple respect for the liberty of others. Yet far from being “quite obvious” that freedom for Spencer is the single moral imperative, it is quite obviously false. This is not the place to go into a detailed examination of Spencer’s ethical system (I find Evans’ exposition confusing); but this is what Spencer says:

[There are] many actions which from hour to hour are gone through, now with an accompaniment of some pain to the actor and now bringing results that are partially painful to others, but which nevertheless are imperative. . . . Though the pains which the care of many children entail on a mother form a considerable set-off from the pleasures secured by them to her children and herself, yet the miseries immediate and remote which neglect would entail, so far exceed them that submission to such pains up to the limit of ability to bear them becomes morally imperative as being the least wrong.6

The point about natural law and Roman Catholicism is trivial and quickly disposed of. One of the things wrong with classical liberals, in Evans’ view, is that they deny that there is any divine “moral order to which man should subordinate his will and reason.” Of course, the existence of any moral law means that one should subordinate one’s will to it: this isn’t in question. What is at issue is just what Evans meant by the liberals’ denial that reason ought to be subordinated to the moral law. If, as seemed likely, this meant that they denied that the moral law was unknowable by reason and had to be accepted purely on faith, then I don’t see why this should be considered especially atheistic; for the denial of the arbitrariness and irrationality of the moral law is precisely the position of the Catholic Church. Again, I don’t understand Evans’ exposition in his rebuttal on this point: neither his distinction between (in St. Thomas’ view) the moral law being apprehensible by reason, but not validated by it, nor how Evans is using “sanction.” The important point is that if one believes with St. Thomas and the Catholic Church7 that the moral law can be discovered by reason, then there is nothing sinister or atheistic about the liberals’ position. Furthermore, it is then possible for an agnostic to come to an appreciation of morality, without any personal religious faith. On this problem of the connection between morality and reason, Evans blinks the distinction among Christian churches, and seems to want to have Calvin legislating for Christendom.

I do not find that Evans’ rebuttal illuminates to any great extent what he might have had in mind when he charged classical liberals with being “materialists,” “pragmatists,” and “relativists.” We are given no definition of materialism, no evidence that classical liberals were and are “characteristically” materialists. Spencer doesn’t appear to have been a materialist, pace Evans,8 but what if he had been? Mill was a phenomenalist; that is, he thought that matter was nothing but the possibility of certain mental states9 —rather the opposite of a materialist. What do these two examples prove about the characteristic position of classical liberalism?

Evans doesn’t really meet my objection to his use of “pragmatism,” either. He states that Bentham, the Mills, etc., were pragmatists long before Charles Peirce and William James (the founders of the school), because they believed in an instrumentalist theory of value. But the essence of pragmatism lies in its theories of meaning and truth, and the one sentence definition Evans is seeking is not that pragmatism holds value to be determined by “what works,” but that it holds truth to be so determined,10 i.e., the difference between: “this action is good,” and “this statement about the properties of copper is true.”

FINALLY, WE COME TO the modern-day conservative bugaboo, “relativism.” Here, too, Evans, like other conservatives who write on the subject, still owes us a definition. I don’t think the one he gives in his rebuttal—deducing “value criteria from secular and largely subjective phenomena”—is really adequate. For one thing, it is uncertain, on the basis of this, whether someone who holds a fiat justicia, pereat mundus natural law position, but with no supernatural elements, would fall into the category of “relativist”; if he would, it would be a fairly unserviceable definition. For another thing, the definition doesn’t make “relativism” the opposite of Evans’ “absolutism,” which “holds values to exist independent of subjective apprehension.” J. S. Mill’s utilitarianism, for instance, would be both relativist and absolutist in Evans’ definitions: relativist, because its criterion of good is whatever promotes human happiness, and thus it may be said to deduce its criterion from a secular phenomenon—human happiness; it would be absolutist, though, because it insists, for example, that although all the people of a country might think it good to undertake aggressive war, this would not make it a good thing: its goodness is “independent of the subjective apprehension” of the actors, and is to be tested by whether the action actually does promote human happiness and welfare.

There is nothing “Orwellian” in my suggestion that utilitarianism can be considered an “absolutist” ethic; by one definition commonly accepted among philosophers, it is so considered.11 If Evans wants to deny that utilitarianism may be judged to be absolutist, if he wants to continue to maintain that liberals and libertarians were and are characteristically “relativists,” let him provide acceptable definitions and then cite some evidence.

Incidentally, it seems interesting that conservatives typically don’t spend just a bit more time explaining in a clear manner what they have in mind by terms such as “relativism” and “absolute values,” considering that these make up such a large part of their stock-in-trade.

I think I have given good reason to believe that I was justified in my original critique of Evans’ article. The question remains, however, why didn’t I deal with the substantive issues, with Evans’ thesis—why did I limit myself to discussing just his attack on classical liberalism?

FIRST OF ALL, WE MUST ask: Exactly what is Evans’ thesis? Exactly what is the thing in the absence of which a free society cannot be maintained? Is it belief in the “Judeo-Christion” revelation, or a belief in a particular variety of Protestantism? In his rebuttal, Evans traces many of our troubles to the decline of the Protestant Ethic—this decline is supposed to make self-reliance less popular and the welfare state more tempting, and the liberals were, he alleges, foolish to suppose they could undermine the Protestant Ethic and not expect people to gravitate towards dependence on the state. But Max Weber’s point was precisely that the Protestant Ethic was not characteristic of Roman Catholicism, or even of Lutheranism, but primarily of Calvinism and related sects.12 Here the role of the doctrine of predestination was crucial, in Weber’s statement. If it is the Protestant Ethic which is a necessary condition for the preservation of a free society, are we then committed to saying that a free society cannot be preserved without a general belief in predestination?

Let us assume that Evans’ thesis is the one he explicitly states: “A regime of political freedom cannot long exist without the underpinning of religious and moral sentiment derived from Judaeo-Christian revelation.” Why didn’t I go on to discuss this? The answer is that, although I consider this an interesting and important question, Evans purely and simply presents not the slightest evidence for “his thesis.”13 We cannot consider vague references to the moral crisis of our time, plus the example of John Stuart Mill—overworked as these both are—to be evidence in any scientific sense. If someone wanted seriously to maintain that a free society cannot be preserved in the absence of a commitment on the part of the great majority of the people to Christian revelation, a number of questions would immediately arise. Here are a few:

(1) What were the real causes of the decline of liberalism, beginning around 1870? To what extent did Christianity itself contribute to this, in the form of the numerous Christian Socialist and Christian Social movements in Europe and America? To what extent was the decline of liberalism due to the decline of the authority of the science of economics, and to what degree was this, in turn, caused by the view, often supported by Christian moral sentiment, that economics was “inhuman” and “selfish” in its view of human nature?

(2) Assuming that a free society is only possible if people believe that it is called for by the Christian holy scriptures, how can such a belief be long sustained if, in fact, these writings do not call for a free society? Assume that at any given time everyone believes in capitalism because he thinks that it is entailed by revealed Christian doctrine; unless it really is so entailed, then this supposed iron-clad support for capitalism must be expected to crumble as people realize that the entailment does not exist. Now, why does Evans, and why do so many conservatives, suppose that free enterprise and limited government are called for by Christian doctrine? Most of the Christians who have lived, and most Christians today, would disagree with this interpretation. Examples are really superfluous: The whole history of intolerance and persecution, the opposition of most Christian churches to capitalism down to, in our own day, John XXIII’s Mater et Magistra—all this indicates that most Christians have found their faith perfectly compatible with all kinds of infringements on liberty. If Evans could demonstrate that Christian doctrine calls for capitalism, it would represent a real landmark in the history of thought.

(3) Another difficulty that arises for anyone who wants to maintain that Christian revelation provides a much firmer basis for ethics (and thus for a free society) than any secular philosophy is able to propose, is the fact that very few people would be prepared to accept certain clear Biblical statements in this field. Who now agrees with Exodus 18:22—“Thou shalt not suffer a witch to live.” How many friends of freedom are completely comfortable with Romans 13:1-2—“The powers that be are ordained of God. Whosoever therefore resisteth the power, resisteth the ordinance of God: and they that resist shall receive to themselves damnation.” How many people find that, on reflection, there is a great deal of practical good sense in: “Take no thought for your life, what ye shall eat, or what ye shall drink. . . . Take therefore no thought for the morrow: for the morrow shall take thought for the things of itself.” (Matthew 6:25, 34) On what basis do we choose among the various ethical imperatives contained in the Bible, which we will take seriously and which not; which we shall interpret literally and which we shall reinterpret in some more convenient manner?

(4) Evans states, in his rebuttal: “If morality is the function of secular arithmetic or the adjustment of secular means to secular ends . . . then it is altogether possible that, somewhere along the line, freedom must give way to the calculus. . . .” Here we have another hidden assumption—that unlike non-supernatural ethical systems, Christianity presents us with an air-tight body of moral rules: it consists of the orders given by God to man, which are clearly expounded in various revelations and backed up by the very powerful sanctions available to the Divinity. This is, however, a very naive view, I think, and anyone holding it is obliged to acknowledge the existence of the following argument and attempt to answer it: Exactly what is it that God tells us in an unambiguous way concerning our ethical obligations? Are there any rules which we are commanded to follow, telling us what to do under given conditions in a manner much more precise than some ethic such as utilitarianism? If we turn to the Bible, we find a number of such rules given, such as: Thou shalt not kill, thou shalt not steal (sometimes taken as a divine rule governing the proper social attitude towards private property), etc. Now, if the religionist conservative claimed that “Thou shalt not kill” is an unconditional rule (at least in reference to human beings), I think I could understand in what sense Christian ethics is more absolutist than, say, utilitarianism; in what sense Christianity presents what Evans calls “fixed and objective values” which utilitarianism does not present. Utilitarianism, as far as I can see, proposes no such unconditional, absolute rules. Yet surely there are no conservative religionists who favor an absolute, unconditional acceptance of this rule, for that would make impermissable both American military action in Viet Nam and capital punishment. So in just what sense is the Biblical injunction against killing more absolutist than the utilitarian one?

I am not aware that any religionist conservative has really dealt with any of these questions, and certainly Evans has not. It is much easier to flog non-supernatural ethical systems for being vague and indeterminate, and consequently responsible for all kinds of catastrophes, always with the implication that one has himself a really solid ethic in reserve.

FINALLY, I SHOULD like to make the chief point implied in my attack on Evans’ original article somewhat more explicit: the fact is that much too much passes muster in conservative writings that is nothing more than uninformed rhetoric. That almost all conservative publicists are guilty of this, at least sometimes, is scarcely the best kept secret on the Right. I for one am finally getting bored with the sophomoric misuse of technical philosophical terms; with sketchy outlines of the “course” of modern history; with constant attacks on the French Enlightenment, on human reason, and on the hubris of modern man; and with worldly-wise references to Original Sin and the absurdity of progress. Let conservative writers follow the example of present-day classical liberal economists, who adhere to the accepted rules of scholarly discussion in their confrontation with their leftist counterparts. The typical approach of the conservative cultural critics, on the other hand, since it is rhetorical and unanalytical, does not allow for progress being made towards the solution of the issues under discussion. If conservative publicists find the scholarly approach too tedious, they ought to recall that no one is compelled to write on intellectual history or philosophy.

—RALPH RAICO

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Anglican and Gallican Liberty

FRANCIS LIEBER

Francis Lieber, scholar and political writer, was born in Prussia in 1800, emigrated to America in 1827, and soon thereafter became an American citizen. His career was divided between teaching at the University of South Carolina and Columbia College, and such public services as the composition of legal rules to protect non-combatants and their property in time of war (his suggestions were adopted by Lincoln for the Union Army and subsequently embodied in the Hague Conventions of 1899 and 1907). His main energies, however, were devoted to a comprehensive statement of liberalism, the social philosophy which was his lifelong concern. The following selection, from his Miscellaneous Writings,1is a characteristic example both of Lieber’s liberal political thinking and his admiration for his adopted country.

IN THE SPHERE of political freedom there arise, as in all spheres of unfettered action, different schools, to borrow a term from the province of philosophy and that of the arts. It is thus that we have in the province of political freedom an Anglican and Gallican school. The term Anglican has been adopted here for want of a better one. We stand in need of a term which designates characteristics peculiar to the Anglican race in Europe, here, and in other parts of the world. If they are not all peculiar to this race, they are at least characteristics which form very prominent marks of its politics.

It is by no means the object here to show the gradual development of modern liberty and of the Anglican characteristics, their causes, and the circumstances under which they developed themselves, but rather to point out in what at this moment consist the striking features of these two political schools. With this view, it may be stated at once, that Anglican liberty distinguishes itself above all by a decided tendency to fortify individual independence, and by a feeling of self-reliance. The higher the being stands in the scale of nature, the more distinct is its individuality until it reaches in man its highest degree, and among men again we find the same principle prevailing. The higher, the more intellectual, and the more ethical the being is, the more prominent is also his own peculiar individuality. The same progress is observed in the scale of civil liberty. Individuality is almost annihilated in absolutism—whether this be of a monarchical or a democratic cast—while the highest degree of freedom (in the Anglican view of the subject) brings out the individuality of every one and the individual activity of each, as best it seems to him, in its freest play. Independence in the highest degree, compatible with safety and broad national guarantees of liberty, is the great aim of Anglican liberty, and self-reliance is the chief source from which it draws its strength. At no period has the deplorable absorbing concentration of power which characterizes the political systems of the continent of Europe during the seventeenth and eighteenth centuries obtained a footing among the Anglican peoples, although it was several times strenuously attempted. All the maxims of the common law most dear to the people, and most frequently quoted with pride as distinguishing it favorably from the civil law, embody this manly feeling of individual independence.

Everywhere is liberty considered by the Anglican nation to consist, in a very high degree, in a proper limitation of public power. Anglican liberty may be said to consist, essentially, in a proper restriction of government, on the one hand, and a proper amount of power on the other, sufficient to prevent mutual interference with the personal independence among the people themselves, so that order and a law-abiding spirit becomes another of its distinctive features. No people of the past or present have ever made use of the right of association, even where it fully existed, equal to the vast and at times gigantic application of this right to great practical purposes of a social, as well as political, character among the English and Americans. Public interference is odious to them. Government, to them, is not considered the educator, leader, or organizer of society. On the contrary, in reading the many constitutions which this race has produced, and the object of which is to define the spheres of the various public powers and to fix the rights of the individual, we almost fancy to read over all of them the motto, “Hands off.”

This tendency of seeking liberty, above all, in untrammelled action has produced among others the following great effects.

The untrammelled action or absence of public interference (which of course must in its nature be almost always of an executive character) has not been restricted to individuals, but as a matter of course the spirit has extended to institutions and whole branches of power, so that time was allowed to them to grow, to develop themselves, and to acquire their own independent being; consequently, we find the word law possesses a meaning very different from that which the corresponding words have even in their most comprehensive sense with other nations; we find a common law rooted deeper in the people than any enacted law or constitution; we find a parliamentary law (no “reglement”); we find the indispensable principle of the precedent of greater power than minister or crown, even though it be worn by a Stuart, or a Henry the Eighth.

Secondly, a consequence of the principle of self-reliance is that liberty is conceived far more essentially to consist in a great amount of important rights than in a direct share in the government. The latter is sought after as a security and guarantee for the former.

Thirdly, Anglican liberty consists in or produces the utmost variety, as all untrammelled life and unfettered individual actions necessarily do. Equality (if sought in aught else than in equality of freedom from interference, and if believed to consist in uniformity alone) is monotony, and becomes the opposite to life and action.

Fourthly, the Anglican race has mixed up subjects purely social with politics far less than any other race, and, it may be safely averred, has allowed itself to be less misled by phantoms, and adhered more to positive realities in the sphere of public life, than any other division of mankind.

EVERY GREAT PRINCIPLE or movement of mankind has its own characteristic fanaticism, caricature, or mischievous extravagance. This applies to all movements, religious, social, or political, and Anglican individualism leads, if carried beyond its proper line, to selfish isolation and heartless egotism. The fanaticism of Anglican individualism is Utilitarianism as it has been taught by some. But it must not be forgotten that we speak here of civil liberty alone. No American or Englishman has ever maintained that we can do without patriotism, without devotion to the public, and it is a striking fact, admitted by all, that nowhere is shown so much public spirit, during successive periods, as by the Anglican people, although it might have been supposed that their individualism would have led to the opposite. The reason is that Anglican liberty makes the people rely upon themselves, and not upon public power; they feel, therefore, that they ought to help each other and to depend upon their own united action, and not call for the aid of government at every step.

From a point of view, therefore, which belongs to Anglican liberty, the French device—Liberty, Equality, Fraternity, will appear in this light: Liberty is aspired to by all; it is the breath of conscious man. If equality means absence of privilege, unfounded upon political equivalents, it is comprehended within the term of liberty; if it mean, however, social uniformity, it is rather the characteristic of absolutism, and not of liberty. For if liberty means unrestrainedness, it implies variety. Bating the monarch, there exists nowhere in Europe or America a degree of equality equal to that in all Eastern despotisms, or that which existed in the worst period of Athens, where democratic absolutism was consistently carried out; where ultimately the principle of equality required the razing even of talent, fitness, and virtue, and the lot decided upon appointments. After the principle of equality had been established in such a manner, Aristotle described democratic liberty (or what we, according to modern terminology, would call democratic absolutism) as consisting in this: that every citizen is, in regular turn, ruling and ruled. Diversity is the law of all organic life, and despotism and freedom find their parallels in nature, in inorganic matter, and organic bodies. As to fraternity, it is the broad principle proclaimed by Christ; it is the divine principle of all social existence; it is one of the wells from which we shall draw, to irrigate our otherwise sterile life; it is like charity, like honesty, like forbearance, and to be true, ought to be infused into all our actions and measures, but it is no right, it is not liberty; nor does it necessarily indicate freedom. There is in some respects more political fraternity among Mohammedans than, unfortunately, among Christian people. Not that we put any slight value upon fraternity; Christians ought to have far more; but we merely mean to show that it is not necessarily connected with liberty. Fraternity exists often in the highest degree among the rudest tribes. That this device was adopted during the first French revolution was natural. It had a meaning in contradistinction to the utterly selfish and immoral state of things which had existed and which it was a settled purpose to destroy: but its resumption in the present third French revolution leads to misconceptions or rests on a confusion of ideas, which seems as great as if in America a political banner were raised with the motto, Liberty, Love of our Enemy, and Salvation; or Liberty, Production, and Daring. All these are excellent or sacred things, but used as distinctive political characteristics would either have no meaning or might easily be made to mean mischievous things.

QUITE DIFFERENT from Anglican is Gallican liberty. The history of England distinguishes itself from that of all the other nations of Europe by nothing more than by the fact that, in that country alone, the nobility assimilated itself at a very remote period with the people. As early as in the year 1215 the noblemen did not wholly forget the people. The plodding husbandman was included in the Magna Charta; and repeatedly afterwards we find the knights siding with the citizens. The nobility of all other countries, however, were and remained selfish, oppressive and rebellious barons. Louis XI and Richelieu greatly broke their power in France, and Louis XIV completed the work. No citizen-liberty having existed in that country, Louis found himself perfectly unlimited so soon as he had changed the baron into the servile courtier; and now a system of such absorbing centralization began that, when he died, he left France without institutions (if we take the term in the Anglican sense, meaning institutions with an independent and individual existence), as he left her without money and without morality in the leading classes. The absorbing centralization of power went on in all successive periods, and whatever changes of government have taken place, the process of centralization was only speeded on by it. The ball was ever rolling in that direction. The first French revolution, whatever benefit it otherwise produced, accelerated and perfected it much; Napoleon carried it still further, and a minister of the present provisional government, M. Ledru Rollin, lately declared, in one of his proclamations, that France should imitate the example of Paris, which he called the center and representative of French virtue, intelligence, action, and patriotism. How strange a similar declaration of an English minister, with reference to London, would sound in the ear of an Englishman, or of our President with reference to New York, or any state of ours!2

Concentration of the most stringent kind existing, and it being neither disrelished nor suspected by the people, it is obvious that, coupled with the idea of liberty, in contradistinction to despotism, it can produce no other idea than equality—an equal change of “ruled and being ruler”; and since equality, with this political meaning, is a practical impossibility with a nation so vast as the French, we have the further consequence that, practically speaking, equality means in France always the exclusive sway of a certain class. He that seeks now to sway is the Ouvrier, and Bourgeoisie has actually become a name of shame or hatred, as the term noblesse had become in the first revolution.

Gallican liberty, then, is sought in the government, and, according to an Anglican point of view, it is looked for in a wrong place, where it cannot be found. Necessary consequences of the Gallican view are that the French look for the highest degree of political civilization in organization, that is, in the highest degree of interference by public power. The question whether this interference be despotism or liberty is decided solely by the fact who interferes, and for the benefit of which class the interference takes place, while according to Anglican views this interference would always be either absolutism or aristocracy, and the present dictatorship of the ouvriers would appear to us an uncompromising aristocracy of the ouvriers.

The universal acknowledgment of organization makes the Frenchmen look for every improvement at once to government. Self-reliance does not exist in detail. While the British race seeks for one of the great applications of liberty in free trade, the French call for organization of labor, and M. Louis Blanc has proposed a plan, accordingly, which would appear to us as insufferable tyranny, and annihilation of individuality. While we have seen, in the Anti-Corn-Law League, a mighty private association coping with the most powerful interest that ever existed in a legislature, the British land-owner, and ultimately forcing government to fall into its own ranks, we do not find a solitary club in Paris pursuing one detailed practical measure, but all discuss the best organization, and to the Minister of Justice, and of Worship, and to others whom previous “organization” had already created, a Minister of Labor, and even one of Progress has been added, if the papers have informed us correctly. In Anglican liberty the movement not only begins with the people, but also the practical carrying out. In France, liberty is expected to begin practically with government organization and to descend to the people.

This is so true, that a large number of the French (we believe it to be a minority, but it is the active and loud minority) seem to have wholly discarded the idea that liberty is the main object to be striven for, and call for a social reorganization. A very busy and widespread club at Paris has actually hoisted a banner on which the word Liberty is omitted, bearing the following device: Equality, Solidarity, Fraternity. Here, then, we have the caricature of French liberty, as we have in ultra-utilitarianism that of Anglican freedom. Equality and solidarity are necessary elements of all politics. Without solidarity no nation could be a nation, no state a state. Every one is obliged to bear with laws which he considers bad, or the consequences of a war which he condemns. It is the price we pay for living in a civil society; but if solidarity be elevated into a distinctive mark of a specific political or social system it is the death-blow to individualism, and a Spartan republic, destroying even the family, must be the consequence. Here, too, is to be found the reason of the striking phenomenon that at all periods the fanatics who have attempted the abolition of private property always made war against exclusive or individual marriage at the same time. Many communists have preached it, and many religious fanatics in the Middle Ages have attempted it.

The fact that Gallican liberty expects everything from organization, while Anglican liberty inclines to development, explains why we see in France so little improvement and expansion of institutions; but when improvement is attempted, a total abolition of the preceding state of things—a beginning ab ovo—a re-discussion of the first elementary principles.

ANGLICAN LIBERTY produces variety, as was stated before, and demands absence of unnecessary restraint; Gallican liberty demands uniformity and even uniforms, so odious to Americans. A proclamation of the provisional government, dated April 30, 1849, actually begins with the words: “Considering that the principal of equality implies uniformity of costume for the citizens called to the same functions,” etc., prescribing a costume—coat, waistcoat, and pantaloons, to the members of the national assembly—that assembly which, according to the expression of the provisional government itself, is the highest representative of national sovereignty that has ever assembled, and into whose hands that same provisional government will lay down its power. Nothing can show more distinctly the difference between Anglican and Gallican liberty than that this order was possible.

In England and America, the principle of liberty dictates that all that can be done by private enterprise ought to be left to it, and that the people ought to enjoy the fruits of competition in the highest possible degree. In France, on the other hand, the provisional government made arrangements to buy up all the railways so soon as the king had been expelled.

All political changes, according to Anglican liberty, are intended more efficiently to protect the changes which society has worked for itself; according to Gallican liberty, the great changes are intended to be, not political, but social, organized by government: that is, according to Anglican liberty, forced upon society by the successful party, which, nevertheless, may be a very small minority owing to the peculiar power which, in the great system of concentration, Paris exercises over France, and which all movable masses exercise over populous cities—an influence considered salutary according to Gallican views of liberty, and disastrous according to Anglican.

THE OBJECT OF this paper has been to show the difference of the two schools, and it would be foreign to the subject to dwell upon the generous enthusiasm which pervades at this moment large parts of the French people, and, coupled as it is with the fearful reminiscences of former days, has produced some very remarkable effects; but enthusiasm cannot last, and, if it could, it cannot become a substitute for individualism, an indispensable element of our ethical nature. Enthusiasm is a necessary element of all great actions of individuals as well as masses, but he who founds upon it plans of a permanent state of things, whether in worship or politics, deprives his system of durability. Nothing can insure principles against an early withering but institutions. No ruler, however popular or brilliant, no period, however glorious, and no enthusiasm, however generous, can produce lasting good if they do not lead first of all to the foundation of expansive institutions. Nations must neither depend upon popular rulers, nor trust their own enthusiasm. If they do, everything is frail and evanescent, and the continuity of the state, without which there is no law, order, strength, or greatness, is rendered impossible.

This remark leads us to the last observation we mean to make upon the difference of Anglican and Gallican liberty. The Anglican race is a decidedly institution-loving and institution-building race, as the Romans were, who built up the civil law. They are conservative as well as progressive, and believe that conservatism is as necessary an element as progression. The fanaticism of conservatism is a Chinese idolatry of the past and the old. The French, on the other hand, as they appear, at least in modern times, are philosophizing, often brilliant, organizers, and resemble in this more the Greeks, who built up no law but whose philosophers proposed invented governments. The fanaticism of this disposition is a restless re-beginning at every step and denial of the necessity of continuous progress.

It must have appeared to the reader that the writer of this paper is an advocate and lover of the principles of Anglican liberty; that he believes the French are mistaking democratic absolutism for democratic liberty; that the whole Continent will have to pass through long periods of ardent struggle before it can rid itself of the consequences of the unhallowed centralization which absolute princes in their blindness mistook for power and fastened upon the people; that he is a devoted friend to independence and the liberty of the individual, which, in his opinion, need be as little connected with selfishness as Christianity is, although this religion, above all others, throws man upon his individual responsibility, thus raising him immeasurably; that, however dazzling the effects of democratic absolutism occasionally may be, it is still not freedom, which, like dew, nourishes every blade in its own individuality, and thus produces the great combined phenomenon of living nature; and that he would infinitely prefer a life in one of our loneliest log-houses to a barrack-residence of absolute equality, stifling his own individuality and that of every one of his fellow-citizens, however brilliant that barrack might be furnished.3 But whether these are the views of the writer or not, is of little importance. The truth remains the same, that the difference pointed out by him exists between the two modes of liberty, that they differ widely, and that it behooves every sincere friend of liberty to reflect maturely on the subject and to come to clear results; especially on the European continent, where liberty is in a nascent state, and is of course exposed to be seriously injured in the tender age of her infancy; while a closer geographical connection with France often leads to the adoption of measures and views peculiar to that country, when no intrinsic reason for doing so exists. The European continental countries have had their periods of absorbing and life-destroying centralization. The principles of our liberty, therefore, are peculiarly necessary to the people of the European continent. Many of them seem to fall into the same unfortunate delusion of expecting everything from organization by public power.

The Uneasy Case for State Education

E. G. WEST*

This article has been adapted by the author from his recent book Education and the State, published in London by the Institute of Economic Affairs.

THE CASE FOR substantial government intervention in primary education is normally examined by political economists in the context of two principles: “state protection” and “neighborhood effects.” According to the first, if it is generally agreed that the state exists basically to give protection to its members, it must have special obligations to children since they are least able to protect themselves on their own. According to the second principle, the way I choose to act often has serious spillover effects upon my neighbors; and similarly the actions of my neighbors, taken individually, can substantially affect me. The choice of any one individual to educate, or not to educate, his children is shown to be a particular case in point. Even if all individuals choose voluntarily to purchase education they may still “underinvest” from the point of view of society as a whole. This being so there is again said to be a strong presumption in favor of government intervention.

The first part of this article attempts to examine the “protection principle” in more than usual detail. The second part will raise questions which are not normally raised about the empirical foundation for common assumptions about the “neighborhood effects” of education.

WHATEVER THE MEANING of laissez faire, the most ardent of its nineteenth century English supporters rarely argued that it should operate outside the boundaries of a proper legal framework. Within this framework they were prepared to make many exceptions to their general principle of freedom of contract and their special reservation for children was a prominent example of this attitude. However much they disliked overinterfering governments, they believed that some element of governing was necessary. But what was the true duty of government? The answer of one of the classical economists, Nassau Senior, disciple of Bentham and friend of John Stuart Mill, was quite clear:

I detest paternal despotisms which try to supply their subjects with the self-regarding virtues, to make men by law sober, or frugal, or orthodox. I hold that the main, almost sole, duty of Government is to give protection. Protection to all, to children as well as to adults, to those who cannot protect themselves as well as those who can.1

Senior went on to remind his readers that children were more defenseless than others. In view of this the state had extra protective obligations towards them and in particular there was a strong presumption in favor of state intervention in education. This view, which seems to have been readily accepted by liberal economists ever since,2 will now be examined in more detail in order to gather its precise implications.

A MOMENT’S REFLECTION will show that it is much easier to state the “protection of minors” principle than to draw practical policy conclusions from it. If it is agreed that the state should be responsible for seeing that children are protected, the question arises: whom should it appoint to carry out this duty in practice? The first obvious point to clear up before deciding this issue is for the state to ascertain from its members how important a role they want the family to play. If they aim at giving the family a central place, then the question of protecting infants cannot be settled in isolation of this policy, for it establishes a presumption in favor of delegating the duty of child protection first and foremost to the parents and only withdrawing this arrangement when special circumstances require it. For these reasons the following remarks of John Stuart Mill, which seem to have had widespread influence on this subject, were too evasive and too legalistic:

In this case [education] the foundation of the laissez-faire principle breaks down entirely. The person most interested is not the best judge of the matter, nor a competent judge at all. Insane persons are everywhere regarded as proper objects of the care of the state. In the case of children and young persons, it is common to say, that though they cannot judge for themselves, they have their parents or other relatives to judge for them. But this removes the question into a different category; making it no longer a question whether the government should interfere with individuals in the direction of their own conduct and interests, but whether it should leave absolutely in their power the conduct and interests of somebody else.3

Few would disagree with Mill’s general sentiments. If we do not tolerate cruelty to animals still less should we allow the possibility of continued cruelty to children by granting absolute power over them to any single person. But Mill was mistaken in assuming that the common argument, that parents and relatives could judge for their children, was a claim for absolute power. What most people envisage is something in the nature of a fiduciary power, to be removed in cases where abuse can be shown.

Whatever the true interpretation of his statement, Mill’s anxiety to put this question into a different category did not make it any less important or less urgently in need of an answer: for the state is not a disembodied entity; it has to work through individuals to whom it prescribes certain powers. Now the function of supervising a child is such a personal and delicate matter that it is most important to visualize it in the form of a competition for influence between one individual, the parent, who by nature is closer to the child and therefore has better opportunity for gaining knowledge of its best interests, and another individual, appointed by the state, who has the advantage of some presumed expertise in protecting children. When the problem is expressed in this way the question of absolute power is beside the point. Certainly the difficulty is not one which can be solved easily by any universal or dogmatic ruling. Accordingly, the following analysis is not intended to stake an unconditional claim for any of the parties concerned, but is merely an attempt to examine the issues objectively. Insofar as I am critical of the ability of the “protection” argument to justify universal state schooling, it must be emphasized that my criticism is not to the prejudice of the “neighborhood effects” argument for this system.

BEFORE WE CAN CHOOSE those individuals deemed to be best able to protect a child, we have to solve the even more difficult task of defining the danger against which we are trying to protect it. Even state action against physical cruelty is not always simple to administer since the criterion is rarely a matter of unanimous agreement. But at least where physical injury has resulted in permanent damage to an individual, then the evidence is usually so obvious that the case for state protection against further assault is clear enough. In education, on the other hand, the argument is for protection not against physical injury but against ignorance. Here it is often more difficult to see in what respect any faculties can be said to be permanently injured, either in effect or in intention. When, for instance, the head of a temporarily distressed family sees his five- and six-year-old children remaining ignorant of reading and writing, we cannot say that their faculties are injured in the same sense as in the case of physical brutality. In this instance, the faculties of learning need not in any way be permanently damaged; it is quite possible for them to remain intact to be used later. If the state does decide to intervene in such cases, therefore, it cannot be on the grounds of the same sort of protection as that directed against physical aggression of any kind; rather is it likely to be based on the widely accepted principle of government relief of poverty. This initial clarification seems necessary if we wish to avoid using the term “protection” with its more usual connotation.

But there is a much more stubborn difficulty. When we now speak of protection against ignorance, we have to ask: ignorance of what? A person may be most ignorant of one thing but quite expert at another. Too hasty attempts to prescribe learning priorities can lead to results which not only endanger spontaneity and individuality but which can involve fundamental contradictions in any society which professes to encourage and support the ideal of liberty. Confusion on this subject often arises from a dogmatic insistence that the relevant ignorance is necessarily ignorance of what is taught in schools between statutorily prescribed ages. Schooling is only one instrument in the removal of ignorance; if other means are being used, the need for protection may well be superfluous. There are additional sources of learning in real life: the parent, the family, its friends, the church, books, television, radio, newspapers, correspondence courses, etc., “on the job training,” and personal experience. J. S. Mill himself can be quoted in this respect:

Even if the government could comprehend within itself, in each department, all the most eminent intellectual capacity and active talent of the nation, it would not be the less desirable that the conduct of a large portion of the affairs of the society should be left in the hands of the persons immediately interested in them. The business of life is an essential part of the practical education of a people; without which, book and school instruction, thought most necessary and salutary, does not suffice to qualify them for conduct, and for the adaptation of means to ends. Instruction is only one of the desiderata of mental improvement; another, almost as indispensable, is a vigorous exercise of the active energies; labor, contrivance, judgment, self-control: and the natural stimulus to these is the difficulties of life.4

The best means by which individuals are likely to “protect” themselves or their children from “ignorance” should therefore be open to constant comparative appraisal. That a parent, for instance, wishes to take his child away from school at an early age does not necessarily signify that he is negligent. Insofar as the school has become less efficient than other means of education, the parent himself may be acting from motives of protection and be making the same kind of shrewd comparative assessment that he makes before transferring his buying from one source of his child’s food or clothing supply to another. Again, to assume that the education given in a school is always and under all circumstances to be preferred to alternative types of education is probably to assume also that all schools and home environments are homogeneous. This is by no means self-evident—especially in a changing society. It is interesting a recall that J. S. Mill himself was deliberately kept at home throughout his childhood by a father who was strenuously motivated by protective impulses. His father, James Mill, indeed kept his son away from school, “lest the habit of work should be broken and a taste for idleness acquired.”5 It is quite true that James Mill has been the subject of severe criticism from subsequent state educationists on the ground that he was too forceful a task-master. The question is, however, whether a state school could have produced a “better” John Stuart Mill. Such questions, of course, give rise to all sorts of speculations, but no apology is offered for asking them, since, as I hope to show, they lie at the root of the problem I am discussing.

THE “PROTECTION OF minors” argument has in the past been used to support pressure not merely to educate a minority of neglected children but also to establish universal schooling whereby every child is provided for by state schools. There are two major difficulties in the way of our accepting such reasoning, the first political and the second economic. On the political difficulty, it must first be observed that in order to justify a vast and comprehensive system comprising thousands of new state schools one must establish that such provision is needed to fill an obviously widespread deficiency and that the majority of parents and relatives are either negligent or ignorant. Now if this is the contention, it must imply either widespread schizophrenia or self-abnegation, for it envisages an electorate which virtually condemns most parents and relatives for being ignorant or negligent about their children when that same electorate consists to a large extent of the parents and relatives themselves. Otherwise, the question immediately arises of why, if such ignorance and negligence is so serious, should we presume that it will not equally express itself at the ballot box and with equally “unfortunate” results when the parents and relatives choose their representatives?

The extent of this presumed schizophrenia could best be checked by a survey among parents to ask their intentions if given hypothetical refunds of indirect and direct taxes in the form either of money vouchers spendable only on education in lieu of “free” state education or of income tax allowances. The only statistical survey that has attempted to elicit answers to this question suggests that negligence would be far from typical.6 Alternatively we can make an historical investigation to discover parental behavior before the inception of state education, bearing in mind that such state intervention had to be supported by increased tax revenues which might otherwise have been spent voluntarily on education. I think it can be shown from historical evidence that nineteenth century parental behavior was much more responsible than is commonly supposed.7

The second major difficulty in the way of accepting the “protection” argument to justify a universal state school system is an economic one. Nowhere does it seem to have been shown why other forms of state intervention could not achieve the intended result of state protection more effectively and with less cost than the present system of state schools (which amounts virtually to a system of nationalized schools). Much as John Stuart Mill wanted the protection of children, even he did not in the end prescribe compulsory state schools, nor even compulsory private schooling, but only compulsory education. Accordingly he held that the state should be interested not merely in the number of years of schooling but in checking the results of education whatever its sources, and he contended that an examination system was all that was necessary. If a young person failed to achieve a certain standard, then extra education would be prescribed at the parents’ expense. Another sanction which Mill also entertained was to make the right to vote conditional on some minimum degree of education.

Under Mill’s scheme, if it were operating today, it is conceivable that some children would attempt to attain the necessary standards by much more dependence on parental instruction,8 correspondence courses, evening classes, local libraries, etc. These in turn would be measured against particular services offered by the private schools whose relative efficiency would be measured by parents and their children in terms of the size of their classes, for instance, or the qualifications of their staff and the personal attention they gave the children.9 There are examples of this kind of minimum state intervention in other spheres. Thus although the state insists on the acquisition of a minimum competence in driving before allowing persons to take their vehicles on the roads, it has so far found it unnecessary to prescribe the particular way in which persons should acquire the knowledge and the skill, or to nationalize the driving schools and supply training “free” by raising taxes on all. Again, protection against the supply of adulterated food to children (or to anybody else) is effected simply by a system of inspection, reinforced by regulations, breaches of which are punishable by the law.

THE CASE OF FOOD IS interesting. Protection of a child against starvation or malnutrition is in the same category of importance as protection against ignorance. It is difficult to envisage, however, that any government, in its anxiety to see that children have minimum standards of food and clothing, would pass laws for compulsory and universal eating, or that it should entertain measures which lead to increased taxes in order to provide children’s food “free” at local government kitchens or stores. It is still more difficult to imagine that most people would unquestioningly accept this system, especially where it had developed to the stage that for “administrative reasons” parents were allocated those stores which happened to be nearest their homes; or that any complaint or special desire to change their pre-selected stores should be dealt with by special and quasi-judicial inquiry after a formal appointment with the local “Child Food Officer” or, failing this, by pressure upon their respective representatives on the local “Child Food Board” or upon their Congressman. Yet strange as such hypothetical measures may appear when applied to the provision of food and clothing, they are nevertheless typical of English and American state education as it has evolved by historical accident or administrative expediency.

Presumably it is recognized that the ability in a free market to change one’s food market when it threatens to become, or has become, inefficient is an effective instrument whereby parents can protect their children from inferior service in a prompt and effective manner. If this is so, then one should expect that the same arguments of protection would in this respect point in the direction not of a state school system where it is normally difficult to change one’s “supplier” but in the direction of a free market where it is not. In this sense one must question John Stuart Mill’s assertion that in the case of education the principal of laissez faire breaks down entirely; for if by laissez faire he meant (as he seems to have meant) a free market system, then our reasoning suggests on the contrary that this is a technique which with some qualifications is admirably suited to protection of all kinds and not least the “protection of minors.”

So much for the analysis of the basic issues in the “protection” thesis. The conclusion is that if there is a logical case for a universal state school system, as distinct from marginal intervention to meet special cases, we must look elsewhere than the protection principle.

THE ABSENCE OF A justification for state intervention on the grounds of the “protection principle,” brings us to the second line of reasoning, which is widely believed to give still stronger support for such intervention. As previously indicated, this belongs to what is known as the “neighborhood effects” argument; a brief general account of its present place in economics may be helpful prior to the particular application of it to education.10

Roughly speaking, the “neighborhood effects” argument stems from the common observation that “no man is an island.” Many of his actions intentionally or unintentionally affect other people. Where these spillover effects are very pronounced, and do not show any signs of ever being organized or brought under control by the market, one’s normal reaction is to explore the possibility of government intervention. The most obvious instance of the resort to government is seen in the establishment of a state system of law and order to curb and to make socially accountable individual acts of aggression. Here, indeed, we have the basic raison d’être of the state in the first place. Beyond personally aggressive private actions, however, there are other particular “neighborhood effects” which are also identified and often listed in a descending order of seriousness or scope. Several of these are also commonly claimed to warrant state intervention. The most frequently quoted example in economics is the firm whose factory chimneys offend the neighborhood with smoke and thereby cause people outside the factory to spend extra amounts on laundries, bronchitis cures, etc. Another alleged instance is the injury to “local amenities” caused by the “unfortunate” construction of a new house by a private speculative builder. Again there is the individual motorist who parks his car to the detriment of other road users. Campaigns to make socially accountable those responsible for road traffic and aircraft noises or exhaust fumes also belong in the same category of “neighborhood effects.” All of them are cited as cases where the costs taken into account by the individual in the market are unlikely to include any element of what are called social costs.

One must observe already that although most people react to such situations by readily calling upon government to put these things right, they do not immediately see how complicated is their request. For one thing, if they examine more carefully the above examples of social costs they will see that they are not exclusively a consequence of private action. The noise from publicly-operated airways, buses, and trains, for instance, has its ultimate sanction not in private action but in public legislation, that is, in government itself. Nationalized chimneys give off smoke no less than private ones. Public gasworks can spoil amenities while offensive smells can come from publicly operated sewage works.

A further complication is that social costs can be negative as well as positive; that is, some spillover effects may be unintentionally beneficial to the neighborhood. Thus a farmer who drains his own land may improve that of the neighboring farm, even though he cannot charge for benefits rendered Still more complex are the many instances where both positive and negative social costs are produced by the same agent. An example of this is where a new industrial plant gives off smoke (detrimentally) but also reduces unemployment in the same neighborhood (beneficially). Again the owner of the plant could be the central or local government as well as a private company.

It seems to have been widely believed at one time that the moment that one had pointed out a privately originating “neighborhood effect,” such as that of the smoke-laden atmosphere, actual intervention by the state was adequately justified. This, however, is not so. The identification of a “neighborhood effect” is only a necessary but not a sufficient condition for intervention. There are many serious offsetting considerations, the most important being that the task of measuring the chain reaction of costs and benefits is often insuperable. The administrative costs of intervention alone may be so high as to exceed the net benefits which such action sought to secure, even if they could be measured.11 Furthermore, it is likely that a particular mode of state intervention to meet a privately originating “neighborhood effect” may itself incur a second (publicly originating) “neighborhood effect” which has still more serious consequences than the first. For instance, suppose that the government responds to the smoke pollution of a factory by placing a special local tax upon the offending firm. The resulting increase in relative costs of production may so discourage the expansion of the same firm as to encourage it to invest its surplus funds elsewhere. The result may be that the firm’s decision is now the cause of another “neighborhood effect,” not smoke pollution this time but the more serious problem of unemployment.12

How then does the “neighborhood effects” analysis apply to education? Political economists usually have two particular instances in mind. The first is expressed in their contention that the social benefits of education are not confined to the “educatee” but spread to society as a whole, most noticeably in the form of reduced crime and more “social cohesion.” This can be expressed negatively: The private actions of an uneducated person may have unfortunate consequences for others in society. The idea seems to be, for instance, that just as the government can do something about “anti-social” smoke (e.g., by taxation) it can do something about “anti-social” conduct (e.g., by education). The second general example is the idea that education is an investment whose benefits also spill over to the economic advantage of society as a whole. There is nothing in this argument so far to justify government provision of schools. If the government were satisfied that neighborhood effects were substantial, it could increase the quantity of education by a mixture of subsidies, vouchers, and compulsory legislation. But what is the evidence for neighborhood effects? Are economists’ assumptions always well grounded?

CONSIDER FIRST THE familiar proposition that state provision of education will successfully meet the “neighborhood effect” of crime. It will be helpful first to give a few quotations to illustrate the widespread influence of the idea both in the nineteenth century and today.

In 1847 T. B. Macaulay proclaimed in Parliament:

I say that all are agreed that it is the sacred duty of every government to take effectual measures for securing the persons and property of the community; and that the government which neglects that duty is unfit for its situation. This being once admitted, I ask, can it be denied that the education of the common people is the most effectual means of protecting persons and property?13

In the previous year W. T. Thornton had typically expressed the prescription of the Utilitarians:

No one now denies that proper schools for the lower orders of people ought to be founded and maintained at the cost of the state. The expense no doubt would be considerable, but it would scarcely be so great as that already incurred for prisons, hulks, and convict ships; and it is certainly better economy to spend money in training up people to conduct themselves properly, than in punishing them for their misdeeds.14

Such Utilitarian calculation of the crime-reducing potentialities of formal education is still in evidence among responsible authorities today. Thus, referring to the “neighborhood effects” of education, the Robbins Report on Higher Education (1963) said:

There are, of course, also important social and political benefits of education which accrue to the populace as a whole—a better informed electorate, more culturally alive neighborhoods, a healthier and less crime-prone population, and so on. What is not always recognized is that these social and political consequences may in turn have significant economic effects—the efficiency with which goods are exchanged is obviously enhanced by general literacy, to the extent that education reduces crime (even if only by keeping children off the streets during the day) the country can shift resources that would have had to be used for the police function to other ends, and so on.15

The Robbins Report makes this statement before freely admitting that the evidence is still not sufficient to make it anything more than an inspired hunch. The Crowther Report of 1959 and the Newsom Report of 1963, referring to the education of persons between fifteen and eighteen years (which include the most crime-prone ages), although much more hesitant on the matter, nevertheless, as I shall show in more detail below, favored still more education in the current twentieth century campaign against delinquency and crime.

IN THE LIGHT OF THE “neighborhood effects” argument examined in the preceding paragraphs, what can be made of its application to education? It is important to remember the complications; not only must the “neighborhood effect” be first identified in a meaningful way, but also the possible side-effects of the proposed government intervention itself should all be examined before such intervention is fully justified. How far then, first of all, has the particular “neighborhood effect” relationship between education and crime been reasonably established in practice? In other words, what evidence have we to show that the belief in state education as a general insurance against crime is anything more than dogma?

In answering such questions the early economists were inclined to rely upon crude statistics. Because the latter were presented as showing an inverse relationship between crime and education (usually measured by the degrees of schooling) the general inference was that ignorance (or the deprival of schooling) was a major cause of crime. To the extent that poverty was connected with ignorance and undesirable habits, it too was thought to be an important contributory factor. In view of this kind of reasoning it would be intriguing to know the reaction of these early commentators to present-day statistical evidence, for this shows that crime has increased at the same time as state education has been growing. Certainly this does not deny that crime could have grown equally or even more in the absence of state education; but scientific objectivity demands that all things should be suspect, especially where there is a positive correlation. One can at least speculate, judging by their weakness for such crude statistical inferences on this subject, that the early economists would be tempted to point to the possibility that our state education, as distinct from their nineteenth century parochial education, was a predisposing cause of crime!

Today indeed there is at least a growing scepticism about the potentialities of state education as a crime reducer. Thus The Times Educational Supplement in 1963 declared:

It is strange that as education spreads and poverty decreases, juvenile crime should steadily rise.16

Similarly, the idea that poverty is a major cause of crime is not so confidently held. Indeed some social scientists conclude from the evidence that the idea has no firm basis. Lady Wootton writes:

. . . it is a conclusion which would, I think, have surprised our grandfathers. The converse was implicit—and sometimes explicit—in the thought of not so many generations ago; as it is implicit also in the thought of those who express disappointment that the coming of a “welfare state,” which they believe (though mistakenly) to have banished poverty, has not also greatly reduced the criminal statistics.17

The most energetic nineteenth century advocates of state education would no doubt have been also perplexed by the fact that the same welfare state which has failed to reduce crime is one which also includes an extensive education system financed by public funds of unprecedented magnitude.

Today, of course, we would claim to be much more aware of the complexity of crime and its causes. Certainly much more sophisticated reasoning surrounds the subject and it has been established in particular that a proportion of convicted persons is suffering from mental disorders which, it is claimed, need psychiatric treatment. Many other possibly conducive factors are still being investigated and these include divorce, broken homes, the persistence of crime in some families, poor church attendance, mothers’ employment outside the home, health, and type of employment. Meanwhile an ordinary person may be forgiven the thought that highly organized crimes today call for such a degree of skill and intelligence that education can only serve to be a complementary rather than a competitive factor. The cleverer the criminal the more effective the crime. But it is interesting to observe that so far English social scientists have not even yet reported any very clear correlation between education and crime. Thus in 1958 Lord Pakenham published the results of research into the causes of crime (financed by the Nuffield Foundation), which included the following observation:

I do not think, however, that the distinguished experts, including the representatives of the National Union of Teachers who gave evidence before us, would claim that, up to the present, much progress has been made in connecting education and crime.18

Insofar as people today still press for more education to reduce crime they usually mean a lengthening of the school life, i.e., a rise in the school-leaving age. In this connection we touch upon a piece of evidence which English educationists have found particularly perplexing. The Crowther Committee (1959) discovered the fact that the last year of compulsory education was also the heaviest year for juvenile delinquency and that the tendency to crime during school years was reversed when a boy went to work. Not only was this a long-standing phenomenon but also when in 1947 the school-leaving age was raised from fourteen to fifteen the most troublesome age group moved up from the thirteen-year-olds to the fourteen-year-olds.19

HOW SHOULD AN economist treat such information within the general framework of the “neighborhood effect” analysis? It seems reasonable at least for him to conclude that the popular belief, as quoted for instance from the Robbins Report that state education makes the public less crime prone, is unsupported by the available evidence. Beyond this he could argue, but with less certainty, that the evidence showed a prima facie relationship in the opposite direction, i.e., that state education involved adverse external effects and aggravated or even helped to cause the prevailing trend towards increased criminal behavior. Certainly one could not object to the tentative conclusion that if any further official action were to take place it should first concentrate on a proper investigation of this question and that in the meantime there was to be a presumption against any further increases in the duration of compulsory schooling on this account.

It therefore comes as a surprise to find the Crowther Report concluding that there was nothing in the current state of affairs

. . . to make any thoughtful person doubt the value of being at school; indeed, the delinquency may arise, not because boys are at school, but because they are not at school enough.20

As is well known in Great Britain, the Report argued for the raising of the compulsory school-leaving age. In doing so it referred to the beneficial external effects on society of presumed increased economic growth,21 but at the same time it apparently refused to consider the possibility of any adverse external effects. Yet the Crowther policy of first raising the school-leaving age despite the evidence about delinquency and then trying to justify the measure after the event by offering hopes of future improvements in schooling seems to start at the wrong end. Indeed, such proposals seem to substitute dogma for reason and to betray the attitude that come what may the schools should not yield. In this attitude they probably reflect the limitations of state-sponsored committees which inevitably comprise many members and witnesses such as local education officers, state school headmasters, and the heads of teacher-training establishments who have a direct interest and belief in the expansion of state education itself. Such committees seem to welcome the rationality implicit in the “neighborhood effect” argument when it suits them, but are too ready to discard it the moment it becomes inconvenient.

The Crowther Committee contended that delinquency among older pupils probably arose because a boy had more time on his hands to get into mischief when at school compared with when he was at work. The Newsom Report22 (on the education between the ages of thirteen and sixteen of pupils of average or below average ability) pointed out the difficulty of getting enough staff and resources to keep the boys occupied sufficiently. Accordingly this Report recommended that: “The school programme in the final year ought to be deliberately outgoing—an initiation into the adult world of work and leisure.”23 Again, undaunted by the evidence, the Report also recommended the raising of the school-leaving age. Once more the innocent observer must be allowed to question why, if the rate of delinquency declines when boys go out to work, should the commencement of this work be delayed still further in favor of schemes for simulating work in school? Why do we accept indiscriminately arguments about the need to protect young people from the “uncertain pressures of adult life” as long as possible and neglect the possibility that the pressures of school life may be in some cases the crucial ones? Such thoughts are not so revolutionary when it is remembered that, in these days, going out to work does not necessarily mean the end of formal education, since technical colleges and day-release schemes are now typically provided for the young worker’s continued instruction. Those who show an overweening concern about the welfare of school-leavers do not seem to have shown why their proposals for extra protection could not be implemented, for instance, by schemes for appointing special supervisors, which would have the additional merit of being far less expensive than schooling. This is not of course to argue that all expenditure on further schooling is wrong. Where it is appropriate, and this may apply to most people, it is to be welcomed; but to apply a measure to all on the grounds that it is suitable to some is to sacrifice prudence to mere legislative expediency.

The reduction of crime is only one of many kinds of social benefit which society is supposed to expect from education; but it has been selected here for first attention because of its prominence in traditional reasoning and because it is a good illustration of the facility with which unchallenged and unverified theories can become assimilated in the folklore of educational debate. In addition to the errors of fact which are involved in it, such thinking also suffers through a lack of conceptual clarity. What do we mean when we say that education reduces crime? Are we thinking of education in the wide sense or do we mean only formal schooling? If the former, what kind of education have we in mind? If the latter, do we mean only state schooling or do we include non-state schooling?

The “reduction of crime” is only one of the propositions which economists normally associate with “neighborhood effects.” Space does not allow a review of all of them, so the remainder of this article will confine itself to one more example of unsupported assumptions in this field: the assumption that widespread literacy could not have been achieved or maintained today without the predominant role of government.24

MANY ECONOMISTS ARE anxious to remind us that without widespread literacy it would be difficult to maintain a market economy as well as a political democracy. What, then, is to be feared? Was the populace not making itself literate before the government stepped in?

To what extent does nineteenth century history indicate that the English people, for instance, were in need of governmental help on this account? The evidence shows indeed that the majority of people in the first half of the nineteenth century did become literate (in the technical sense) largely by their own efforts.25 Moreover, if the government played any role at all in this sphere it was one of saboteur!

As long ago as the first few years of the nineteenth century it was a subject for government complaint that the ordinary people had become literate; for the government feared that too many people were developing the “wrong” uses of literacy by belonging to secret “corresponding societies” and by reading seditious pamphlets. In 1803, for example, Thomas Malthus echoed the government’s fears by asserting the probability that: “The circulation of Paine’s Rights of Man . . . has done great mischief among the lower and middle classes of this country.”26 Far from subsidizing literacy, the early nineteenth century English government placed severe taxes on paper in order to discourage the exercise of the public’s reading and writing abilities. Yet despite this obstacle, by the time government came around to subsidizing on a tiny scale in the 1830’s, between two-thirds and three-quarters of the people (according to one modern specialist27 ) were already literate. Even then the subsidies were financed from a taxation system which burdened the poor more than the rich.28

Those who argue that the system, not of government subsidy, but of government provision in the form of nationalized schools, was the key to the expansion of literacy have an even more difficult task. Using one of the generally accepted indexes of nineteenth century literacy, the figures showing the number of persons signing the marriage register with marks, it is argued that in 1870 when nationalized schools (called board schools) were introduced, 20 per cent of the men and 27 per cent of the women were signing their names with a mark. Much of the subsequent improvement in literacy, so the argument continues, must therefore be attributed to the 1870 legislation. One must observe, however, first that even if such figures are accepted they indicate that most people were already literate without the help of the nationalized schools. In other words, this evidence does not demonstrate the need for universal provision of these schools. Second, that judging by the growth rate in literacy prior to 1870 it is not clear that at least as good an improvement would not have occurred without the 1870 Act. Third, the men signing the marriage register in 1870, having an average age of 28 years, had on the average left school seventeen years before. If most people learn to read and write at school, an assumption which seems to be implied in this sort of reasoning, the 1870 marriage registers in England reflect the schooling of the early 1850’s. A more appropriate figure to test the literacy rate of school leavers around 1870 is that of the 1891 Census. This shows that only 6.4 per cent of the men and 7.3 per cent of the women were signing the registers with a mark. These men must have left school on an average around 1874. They could therefore have barely benefitted from the new state schools since the building program had scarcely got underway at this time. Finally, there is no evidence that the state school system, which had become universal by the time of the Second World War, has been a complete success. Even by 1948 there were still in England and Wales 5 per cent of fourteen-year-old school-leavers officially classified as nearly or completely illiterate.

Here then we have the paradox of a public managing to educate itself into literary competence from personal motives and private resources, despite the obstacle of an institution called government which eventually begins to claim most of the credit for the educational success. The notion held by many people that had it not been for the state they or at least most of their neighbors would never have become educated is a striking monument to the belief of the Victorian legal theorist Dicey, that people’s opinions and convictions eventually become conditioned by the legislated institutions they make themselves.

COMMUNICATION:

South Africa Reconsidered

THOMAS MOLNAR*

In our Vol. III, No. 4 issue, New Individualist Review carried an article by Professor Denis Cowen, of the Law School of the University of Capetown, “Prospects for South Africa.” Professor Cowen is a confirmed and outspoken opponent of the Nationalist Administration’s policy of apartheid. A reply to Professor Molnar’s communication will appear in a forthcoming issue of New Individualist Review.

THE TONE OF WRITERS against South African apartheid policies is generally so vituperative that one must welcome Prof. Cowen’s article in the Spring 1965 issue of New Individualist Review (Vol. III, No. 4) for its relative moderation. As one example of the usual “approach” to South African affairs in our press, I wish to mention only the document, published in March 1965 by the Carnegie Endowment for International Peace.

Under the title, Apartheid and the UN: Collective Measures, the Carnegie Endowment, supposedly devoted to peace on earth, recommends the most drastic aggression against South Africa, including naval blockade, combat operations by small naval, air, and land forces, and military occupation. The authors of the document go so far in their warlike enthusiasm as to set down in advance the probable casualty figures, dead, wounded, and prisoners: close to forty thousand, although they thoughtfully add that “a percentage of these personnel would be returned to duty.” That they expect a war of no small scale and violence is indicated in their closing sentence: “The statistics are based on experience gained from World War II and Korea. These estimates will vary based upon intensity of combat, enemy capabilities, training of troops, etc. Consequently they should be used with caution.”

I mention this monstrous instance of warmongering by an organization nominally devoted to peace in order to suggest the difficulty Prof. Cowen, mindful of world opinion, must have faced in writing his article—in a climate of clamoring demagoguery in which common sense is practically suppressed, or at least suspected. Yet Prof. Cowen himself seems to me to yield to ideological pressure and consequent unrealistic thinking in too many passages of his text. In what follows I wish to point out these passages.

Cowen shares his premises with the ideological liberals when he assumes that all South Africa must do is to comply with the demands of “world opinion” and the United Nations for peace to descend on that beautiful country and its population. His arguments are surprisingly naive, although he himself warns the reader against the views of liberals and do-gooders. Everything would turn out all right, he says, and the world would turn its attention elsewhere if a non-racial democracy were established in South Africa in the framework of a federal form of government in which the courts would enforce a bill of rights protecting the minority races.

This is, of course, not a new formula; indeed Mr. Cowen, under the disguise of impartiality, has taken out a leaf from the Progressive Party’s program, backed in South Africa exclusively by starry-eyed liberals and misguided intellectuals. I would point out to Mr. Cowen, as I did to Mrs. Helen Suzman, sole parliamentary spokesman of the Progressive Party, that almost the totality of the South African electorate is violently opposed to this program, hence that it is simply not enforceable except by military action such as that outlined in the above-quoted document.

Furthermore, it should also be stated (and Mrs. Suzman, in private conversation, found no counter-argument) that in recent history very few bills of rights, or other legal guaranties, proved more than fragile paper barriers when the (racial, national, religious, etc.) majority wanted to have its own way. After all, what good did the Bill of Rights do for the American Negro in the last one hundred years, since Abraham Lincoln emancipated him and restored him to full citizenship? There is every reason to believe that if full parliamentary democracy is introduced in South Africa, with universal suffrage for all races, the majority which is black, will in no time submerge the entire country. To everybody who tries to view the South African situation with some clarity of judgment it is evident that the white, Indian, Chinese, Griqua, and Coloured minorities would be swept away by a triumphant black majority and by the one-party State.

BEHIND PROF. COWEN’S faith in the “federal” or “democratic” solution (incidentally: democracy has not survived even the first years of independence anywhere in Africa), there is his equally unrealistic belief that the UN is, now or potentially, an impartial enforcement agency of human rights wherever they are threatened. It would be tedious to list the examples of UN failure to act (Budapest and Tibet come easily to mind), except when the two great powers which dominate it, the United States and the Soviet Union, decide to push it in the direction they occasionally favor together. But it is nothing less than scandalous to suggest that Africa, which has witnessed horrible UN atrocities in Katanga, amply documented by the International Red Cross, should again be the scene of “peace enforcement” by that organization I know that among liberals in South Africa there is the same ideology-spawned faith in the moral superiority of the UN as among members of the Western intelligentsia; but the dream of a few utopian minds ought not to become the platform of a country’s policies.

The fact is that the UN, and a number of other agencies and countries whom Mr. Cowen implicity trusts and quotes, are irrevocably hostile to South Africa because it is a bulwark of anti-Communism, hence of Western defenses in the South Atlantic and the Indian Ocean. (Taiwan cannot be accused of “racial discrimination,” yet the same circles are hostile to it.) Displaying a strange naiveté, Mr. Cowen admits the fact of this hostility, even though he and I would disagree on its motives. He admits, namely, that even if South Africa were to comply with the UN claim, now debated before the World Court at The Hague, on South West Africa (which Pretoria has administered since 1920 under a League of Nations mandate), other issues would be found to attack it. He also quotes Kwame Nkrumah who lays claim, in the name of “Africa,” to the South African mineral wealth. He also argues that since the American Negroes hold now “the balance of political power” in the United States (!), Pretoria had better change its racial policies before Washington, pressured by Negro groups at home, intervenes with pressures of its own.

Like an irresponsible Santa Claus, Mr. Cowen chooses to hold out some rewards for the South Africans in case they become good children and obey the UN’s solicitous advice. If South Africa solves its race problem, Mr. Cowen writes, it will provide the world with a beautiful example of racial peace. More than that: Since the ratio of races (white to non-white) in the world is roughly the same as in South Africa, the example would become truly convincing! This is not exactly a scholarly argument, nor does it mention that racial strife exists between all races (in Africa: between blacks and Arabs, Indians and blacks), that it is not an invention of those devilish whites.

In this rather long, yet incomplete, comment on Mr. Cowen’s text I did not wish to introduce a counter-analysis of apartheid and other related matters, domestic and foreign, in the light of which they must be viewed for the sake of intelligibility. I merely wanted to point out that behind Prof. Cowen’s apparently objective and sweetly benevolent arguments one finds the same assumptions, based on the quicksand of illusions, which have so far created tragedy and bloodshed for African whites and blacks alike.

AVAILABLE FOR A LIMITED TIME . . .

Certain back issues of NEW INDIVIDUALIST REVIEW are available to readers at the special rate of 75 cents per copy, or ten for $7.00. Among the issues presently available are those containing:

“Sin and the Criminal Law,” by Robert M. Hurt (II/1)

“National Review: Criticism and Reply,” by Ronald Hamowy and William F. Buckley, Jr. (I/3)

“The Revival of Traditional Liberalism,” by Yale Brozen (III/4)

“The Regulatory Bureaus,” by Christopher D. Stone, Sam Peltzman, and Robert M. Hurt (II/4)

“Is a Free Society Stable,” by Milton Friedman (II/2)

“Civil Liberties in the Welfare State,” by Robert M. Schuchman (II/3)

“Reflections on the Loss of Liberty,” by George J. Stigler (III/3)

“H.L. Mencken: The Joyous Libertarian,” by Murray N. Rothbard (II/2)

“Financing Higher Education,” by Benjamin A. Rogge (IV/1)

“Antitrust and Competition,” by Robert M. Hurt (I/4)

Please order issues by designations in parentheses above. A complete set of back copies (ten issues) may be ordered for $7.00. Please specify. Out of print issues can be provided by xerographic reproduction at a cost of $4.00 each. Address inquiries to NEW INDIVIDUALIST REVIEW, Ida Noyes Hall, University of Chicago, Chicago, III. 60637.

REVIEW:

Alchian and Allen’s “University Economics”

STANLEY G. LONG*

University Economics by Armen A. Alchian and William R. Allen. Belmont, California: Wadsworth Publishing Co., 1964. 924 p. $8.95.

ABOUT A YEAR AGO while riding in a railroad club car I got into a conversation with several publisher’s representatives, who were with one of the well known textbook firms. While talking about texts for the economics principles course, one of them was quite knowledgeable about frequently cited strengths and weaknesses of his company’s products and also those of his competitors. (It is one of the duties of publishers’ representatives, when calling at universities and colleges, to make lists of “strong points” and “weak points.”)

Commenting one one of his firm’s books, I said that it seemed sound, that I was contemplating adopting it, and that I supposed that that particular book was my second choice in the field (although I couldn’t then decide what my first choice was).

“That’s why it’s the number two seller in the field; it’s everyone’s second choice,” returned my friend triumphantly.

Our exchange suggests something about the textbook industry, or at least the section of that industry devoted to producing new principles-of-economics books. Location theory suggests that it is often in the interest of a second mobile hot dog seller just invading a beach to locate near an already existing one. Studies of product differentiation in, say, consumer-durable-producing oligopolies lead us to expect many quite similar brands each trying to capitalize on the success of competitors and being just different enough to give the advertising department some extra push buttons, or what-have-you, to write about. Similarly with our number-two textbook: Everything is there, and its (justifiable) claim for serious consideration rests on being able to persuade some potential customers that it covers each (or most) of the “essential areas” just a little better than any of its slightly differentiated substitutes. See for example any or all of the good texts by Samuelson, Bach, McConnell, Reynolds, Fels, Harris, Ferguson, and Kreps, to name most of the leading contenders in the field. Each has certain distinctions, such as being the first to incorporate the “Keynesian Cross” into an elementary text, being unusually encyclopedic with respect to topics covered, being unusually well written, etc. Yet the nature of the textbook market is such that each book tries to appeal to the largest possible audience, and in so doing often seems to imitate the others. The fact that the book selection process is often one of committee decision accentuates the tendency to include all possible topics.

UNIVERSITY ECONOMICS cannot be considered as simply another entrant into a crowded field trying simultaneously to be discreetly and marginally new and yet enough like “the others” so that potential customers (who are of course, from the standpoint of decision making, the professors, not the students) may continue to use last year’s lecture notes and not be threatened by any really new approach or organization. University Economics, rather, offers a real alternative choice, and in the opinion of this reviewer, a good one indeed. The student who sustains his interest through this book in an introductory economics course will understand a great deal more about resource allocation than he could have obtained from the price theory sections of perhaps any other introductory text with which I am familiar. The probability of continuing interest is increased both by Alchian and Allen’s prose style and by the use of some “gimmicks,” especially a series of provocative questions at the end of each chapter. Unfortunately, our student who has sustained his interest through the book, while having acquired a firm grasp of pricing and allocation theory and of the process of economic reasoning, will not have learned much about macro-economic analysis, that is, the national-income-determination process from what seems to be an overly short and mechanical section on the simple income determination model. The presentation of a simple model to show equilibrium national income and a discussion of monetary and fiscal policy using such a model is more satisfactory elsewhere.1 So, the strength of the text and its emphasis lie in its superior treatment of exchange, production, and distribution. To many of us the strength here will outweigh the cost of having to supplement the macro-economic sections, and I have no quarrel with the authors’ decision to forego a separate section (presumably of equal “weight”) on every possible policy “area.” Let me make it clear that I do not consider the national income sections unusable; it is only the relative strength to which I refer. The implications for a second edition are evident, however.

A STRONG CASE CAN BE made for placing a rather greater emphasis on resource allocation than has been the vogue for at least the last decade. It has been convenient to separate national income determination from price analysis as if these two parts of economic reasoning had nothing to do with one another, and as if the principles of resource allocation were inapplicable in periods of less than full employment. However convenient, this is simply wrong. The reason for this simplifying assumption in the organization of our texts was, of course, that the macro-economic or national income analysis was something rather new, developing from the discussion started by Keynes’ General Theory and finding its way into textbooks only after World War II. The experience of this intellectual revolution and the overwhelming impact of the Great Depression caused a generation of economists to direct most of their energies to this one single problem. Perhaps it was necessary to attack the then “conventional wisdom” in order to pave the way for a more orderly analysis of the goal of economic stability; but it needn’t have been done at the cost of converting the analysis of prices (in many of the texts) to a bag of tricks. (Some of the writers on my list are more guilty of this than others.) Today, moreover, the idea that particular policy proposals are automatically contained in a particular theory, Keynes’ or anyone else’s, seems silly. Theories must be accepted or rejected on their own merits, according to established rules of evidence; and the policy proposals one advocates depend also on what normative goals one has chosen to support.

Once the ideological brush has been cleared, then, income analysis becomes an important tool for analyzing monetary and fiscal policies (or the lack of them); and the saving-equals-investment equilibrium is a simpler notion to understand than the supply-and-demand equilibrium (although it has fewer important uses than the latter). Thus, once we no longer have to knock down Classical straw men or be forced to defend any particular policy along with a body of analyses, I would claim that the essentials of macro-economics are needed to understand public discussion of policies about price stability, growth, full employment, etc.; but that having understood the essentials, most important economic issues involve discussions of resource allocation, or broadly, price theory. George Stigler has claimed that for every time a citizen is called upon to hold a responsible opinion about economic policy when macro-economic theory can be used, he can use price theory ninety-nine times.

Questions devoted primarily to maintaining employment are posed so infrequently, and are even then (as in the appropriation acts) so completely dominated by allocative questions that for practical purposes they are an infrequent and minor problem for the citizen. . . . Would intense concentration on the basic logic of price theory, applied to . . . real problems, give a vastly better and more lasting training than the current encyclopedic texts? Surely the answer is yes.2

I might be inclined to make the ratio 49 to 1, but I qualitatively agree. To put my position rather differently, I would claim that the problem of aggregate demand is a very important one (too much leads to inflation, not enough to depression, etc.), and that it is vital that the supply of money, tax schedules, and government expenditures be in a proper relationship to business and consumer expenditures so that we avoid disaster; but we have the knowledge to take care of this. (Here is not the place to demonstrate that Keynes was a conservative.) Given that we have this knowledge, beginning economics students should learn about it; but not to the exclusion of learning about the analysis of problems of resource allocation which have so much wider applicability.3 It is in this presentation of the problems of exchange, production, and distribution that University Economics excels.

ALCHIAN AND ALLEN take greater care than usual to emphasize that economic analysis and value judgments should be identified and separated. That there should be occasional lapses from this ideal is perhaps inevitable. Even as one who considers himself a classical liberal, I was occasionally disturbed by implicit value judgments in the text, often in the form of omitted qualifications. Although they are mentioned later in the book in short sections, I would like to see more frequent and explicit reference to (i) the existence of externalities; (ii) the fact that the distribution of income depends on acceptance of a set of institutional arrangements about which a value consensus, or even one person’s value judgment, is of a different order than a value consensus about, say, “economic efficiency.” Aside from what I would call purely technical problems, e.g., economic stabilization and the provision of “pure public goods,” those areas about which a classical liberal might question the ability of “open markets” to provide a “satisfactory” answer usually concern situations involving externalities or situations of “unsatisfactory” distribution of income.

An understanding of the working of markets, however, is perhaps our best safeguard against misguided idealists and special interest pleaders being able to alter the economic solution by trying (or claiming to try) to obtain one result (with respect to externalities or income distribution) but achieving another.

At this point, however, I am grinding one of my own axes about which I happen to feel rather strongly. I am often upset by the neglect of these two issues, externalities and income distribution, when policy proposals are being advanced which are designed to further classical liberal goals. However, Alchian and Allen’s analysis must be judged as just that, analysis, regardless of their implicit policy position, which it would seem is classical liberal. As analysis it comes very well indeed. Here is a new introductory economics text that rescues price theory from the status of a mechanical puzzle which some treatments have given it, and while I have dealt with it primarily as an undergraduate text, the first thirty chapters could well be recommended as introductory or review reading for the interested layman.

NEW BOOKS AND ARTICLES

THE FOLLOWING IS A SELECT LIST OF BOOKS AND ARTICLES WHICH, IN THE OPINION OF THE EDITORS, MAY BE OF INTEREST TO OUR READERS.

Two books have appeared recently compiling some of the essays and letters of Randolph Bourne: The World of Randolph Bourne, edited with an introduction by Lillian Schlissel. New York: Dutton, 1965. $2.25, paper. And: War and the Intellectuals, edited with an introduction by Carl Resek. New York: Harper Torchbooks, 1964. $1.95, paper. Bourne is of interest as one of the very few radical American intellectuals of the early 1900’s who was not swept along in the euphoria of “Mr. Wilson’s War.” In many often brilliant passages Bourne is able to capture and express the same anarchistic sentiments felt by many of today’s “conservatives.”
Frank S. Meyer, ed., The African Nettle. New York: John Day, 1965. $5.00 A symposium on the current situation and the prospects for Africa, including articles by P. T. Bauer on African economic policy; W. H. Hutt on the collectivistic policies used to keep living standards for the blacks depressed in South Africa; Sir Roy Welensky; Elspeth Huxley; and others.
The essays of Mihajlo Mihajlov, the young Yugoslavian intellectual, which recently led to his being sentenced to a nine-month prison term (later commuted to five months on probation and suspended sentence) have been issued by Farrar, Strauss and Giroux. Moscow Summer (New York: 1965, $3.50) were held to violate the Yugoslavian law against “damaging the reputation of a foreign state” (the Soviet Union). Specifically in question was Mihajlov’s discussion of the Russian concentration camps, e.g.: “The first ‘death camps’ were not really established by the Germans, since they were founded by the Soviets. In 1921 [under Lenin and Trotsky], in the vicinity of Archangel, the first death camp, known as Homogor, was formed with the sole purpose of physically exterminating the prisoners. . . .” Another indication of Mihajlov’s transgression of the acceptable limits of debate in Yugoslavia as set by the Tito regime is a letter from Mihajlov, quoted in an interesting article in the June 1965 issue of Encounter (“Letter from Belgrade,” by Anatole Shub), in which he maintains that in the U.S.S.R. “serfdom still obtains, because the agricultural workers are administratively bound to the kolkhoz.”
E. G. West, Education and the State. London: Institute of Economic Affairs, 1965. 40 shillings. From the review in The Times Educational Supplement (London), November 12, 1965: “Dr. E. G. West, an economics lecturer in Newcastle University, has produced a remarkably able and lively critique of the system and principles under which education is provided by the state. He denies that the majority of working-class parents are not to be trusted. By going back to the days before the 1870 Act, when education was neither free nor compulsory, he attempts to show that the great majority of working-class parents were prepared to spend money on it. . . . If working-class parents were prepared to back the choice they then possessed with money, why should they be presumed unfit to choose today when they are so much richer?” In another review, Giles St. Aubyn writes: “If myths were as self-evident as truths are supposed to be, they would collapse of their own accord; but endowed opinions tenaciously resist destruction regardless of the errors they contain. Dr. West’s book none the less is calculated to reduce even the strongest fortifications to rubble. Educationand the State is perhaps the most important work written on the subject this century.” [The Sunday Times (London), November 21, 1965.] Copies may be ordered directly from the IEA, Eaton House, 66A Eaton Square, London S.W.1, England.
Martin Anderson, “Urban Renewal: The Claims and the Facts,” Harvard Business Review, XLIII (Jan.-Feb. 1965), 6-20ff. Prof. Anderson of Columbia University is the author of The Federal Bulldozer (Cambridge, Mass.: MIT Press, 1964), a large-scale study of the urban renewal program. Anderson’s scientific investigations have led him to the conclusion that the arguments in favor of governmental urban renewal programs are largely mythical, and that the interest of the public at large—as distinguished from that of certain special interest groups—would be better promoted by abolishing the programs. His findings are summarized in this article, which is available from the American Conservative Union in pamphlet form without charge. Write: ACU, Suite 1101, 1010 Vermont Ave., N.W., Washington, D.C. 20005.
Prof. Colin D. Campbell of Dartmouth College and his wife have written an article entitled “You’ll Never Get Back All Those Old-Age ‘Contributions’ ” in the Washington Post, November 7, 1965, Section E. Campbell points out on the basis of calculations made in the article from typical Social Security payments, benefits, and life expectancy, that the average worker would be much better off if the system did not exist: “Even from a private insurance company, the cost of a $3024 annuity at age 65 is about $45,000, $9000 less than the accumulated amount of a worker’s tax payments.” He further points out that at 4 per cent interest, the typical worker could provide out of savings as much as the Social Security program provides, and still have an accumulated $38,000 to pass on to his heirs. Campbell discusses in brief the inequities in the present system as regards women, bachelors, the poor, and those workers over sixty-five who choose to continue to work. “The Social Security system started out as a program to help wage earners provide themselves with a minimum income in their old age. It has evolved into a combined insurance, welfare, and giveaway program with inequities that are difficult to justify.”
John Gregory Dunne, who writes an occasional column on TV and radio for The New Republic, had a provocative article in the November 6, 1965, issue of that magazine (“Whose Dissent Do You Hear?”). His main thesis: “I think it can be argued that the three major networks are indirectly responsible for the proliferation of paranoid [Right-wing] broadcasters. The reason is that there is nothing on the air today remotely passing for responsible dissent. The news departments of all three networks are in the hands of an Establishment consensus, bounded on one side by Eric Sevareid, on the other by Howard K. Smith.” The frequency with which William Buckley graces the airwaves does not invalidate this description because, “As Proust was the pet Jew of the anti-Semites, so Buckley is the pet Conservative of the Establishment.” Dunne argues for more conservatives on radio and television, which would have the effect of inducing Americans to consider “whether opposition to Medicare can be dismissed simply as hostility to old people, or support of the bracero program only as an excuse to exploit Mexican wetback labor.”
Michael E. Levine, “Is Regulation Necessary? California Air Transportation and National Regulatory Policy,” The Yale Law Journal, LXXIV (July 1965), 1416-47. In this detailed study of the operation of free market forces in Los Angeles-San Francisco air transportation, Mr. Levine concludes: The CAB should draw a lesson for national regulation from the Los Angeles-San Francisco market and amend the present regulatory scheme so that all markets are freed from restrictive economic regulation. . . . [The] air space is public property, restrictions on the use of which were initially imposed in response to fears of economic evils. Since examination of the Los Angeles-San Francisco market shows that these fears are unjustified, there is no reason why we need continue to deny the opportunity to serve the public to those prepared to risk capital to do so. It is neither wise political nor economic policy to mark out an area of activity as the preserve of a few corporations who have the good fortune to have been operating on May 14, 1938.”
Wesley McCune, director of Group Research, Inc., was for some reason or other asked to address the meeting of the Intellectual Freedom Committee of the American Library Association in Washington early this past year (his speech is reprinted in the June 1965 issue of the American Library Association Bulletin). His talk naturally concerned the threat from the Radical Right, and served to “alert” librarians to the “flood” of Radical Right propaganda they may expect to receive soon (what librarians do with such materials is primly left to their own civilized consciences). Typical of McCune’s technique, and indicative of why he so annoys conservatives and classical liberals, is the following: After discussing the activities of the old stand-bys—like Gerald L. K. Smith and Billy James Hargis—McCune warns librarians of one of the newer threats: “. . . a group . . . headquartered at Wabash College and called the Principles of Freedom. . . . The key man in this planned operation is Dean Benjamin Rogge, . . .” whom McCune further identifies through Rogge’s curious and suggestive connections with the Foundation for Economic Education and the Intercollegiate Society of Individualists. New Individualist Review recommends the speech especially to (a) modern-liberals who wish to avoid having to rebut the arguments for consistent capitalism; and (b) conservatives who would like to see a McCarthy-redivivus in action.
Herbert Spencer, “The New Liberalism,” The Freeman, November 1965. This reprinting of excerpts from Spencer’s “The New Toryism” and “From Freedom to Bondage” represents a welcome effort to bring to the general public today some of the classic arguments for liberty as set down by one of the best minds of the last century. These essays were directed to those of Spencer’s contemporaries who, he thought, were forgetting the basic principle of liberalism: “to diminish the range of governmental authority and to increase the area within which each citizen may act unchecked.” This article is a good introduction to Spencer’s political thought, and is available on request from: The Foundation for Economic Education, Irvington-on-Hudson, New York 10533.
Kenneth Vinson, “Prohibition’s Last Stand,” The New Republic, October 16, 1965. A professor of law at the University of Mississippi reports on that state’s curious official attitude on hard liquor: while it is prohibited by law throughout the state, there also exists a state excise tax on it. The situation lends itself easily to the arbitrary use of the police power, which has been employed, according to Prof. Vinson, particularly against civil rights workers and others out of step with the officially sanctioned mores regulating race relations in that state.

Sampling of Distinguished Paperbacks

Literature and Criticism
PORTRAITS FROM LIFE, Ford Madox Ford	288 pages/$1.95
ABEL SANCHEZ AND OTHER STORIES, Miguel de Unamuno Translated and introduced by Anthony Kerrigan	216 pages/$1.45
CREATION AND DISCOVERY, Eliseo Vivas Essays in criticism and aesthetics	478 pages/$2.45
THE ETHICS OF RHETORIC, Richard M. Weaver	235 pages/$1.45
Philosophy
THE EXISTENTIALISTS, James Collins	230 pages/$1.45
THE MIND OF KIERKEGAARD, James Collins	308 pages/$1.45
MAN AGAINST MASS SOCIETY, Gabriel Marcel	273 pages/$1.65
PHILISOPHY IN THE TRAGIC AGE OF THE GREEKS, Friedrich Nietzsche	128 pages/95c
SCHOPENHAUER AS EDUCATOR, Friedrich Nietzsche	135 pages/95c
THE MORAL LIFE AND THE ETHICAL LIFE, Eliseo Vivas Introduction by Joseph Krutch	320 pages/$1.95
Political Science, Economics, History
REFLECTIONS ON THE REVOLUTION IN FRANCE, Edmund Burke Introduction by Russell Kirk	360 pages/$1.45
THE MACHIAVELLIANS: Defenders of Freedom, James Burnham	320 pages/$1.95
THE FAILURE OF TECHNOLOGY, F. G. Juenger	204 pages/$1.25
THE CONSERVATIVE MIND, Russell Kirk	566 pages/$1.95
Psychology, Sociology, History of Science
FADS AND FOIBLES IN MODERN SOCIOLOGY, Pitirim A. Sorokin	355 pages/$2.45
THE CONQUEST OF THE UNITED STATES BY SPAIN AND OTHER ESSAYS, William Graham Sumner	250 pages/$1.45

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. . . the impact a controversial young magazine such as NEW INDIVIDUALIST REVIEW can have upon the mass movements of our age. But who can ignore the lesson of recent events in Andorra? Taking to the barricades with submachineguns in one hand and (thanks to our energetic representative at the University of Andorra Business School) copies of NIR in the other, the Andorran Freedom Fighters held off government troops for three days while, behind closed doors, high level theoreticians in the Andorran Liberal Party debated the questions raised in the last, provocative issue of NEW INDIVIDUALIST REVIEW.

The moderate majority deftly sidestepped the issue of contracting the army and police force out to a private company (amidst shouts of “shame!” and “Yalta!” from one faction) and finally succeeded in getting the Party to broadcast the following statement on the rebel station, Radio Free Andorra:

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APOSTLES OF THE SELF-MADE MAN
Changing Concepts of Success in America
By JOHN G. CAWELTI

Thirty per-cent of the businessmen in the United States will either “make it” or be broken this year. Those who “make it” are termed “successful”—those who don’t are failures. But how does one define success? What does our society say about success and failure? The definitions change with the times, from “Protestant Virtue” to the “Rat Race” and back again. Mr. Cawelti draws from many sources, both literary and otherwise, to trace the evolution of that enigmatic goal everyone strives for—success! “. . . lightened by a pawky humor . . . an extremely entertaining volume to read.”—GERALD W. JOHNSON, The New Republic.

279 pages, $6.95

THE POLITICS OF MODERNIZATION
By DAVID E. APTER

In modernizing societies the mood fluctuates between an exciting sense of new freedom and hope and fear, cynicism and opportunism. In this, the first major study of the processes of modernization, the struggle that has given meaning to our generation, Dr. Apter brilliantly analyzes the basis for both extremes. His main theme is the consolidation of authority during periods of modernization and the exceptional opportunities for creative choice which arise in times of upheaval. His far-reaching, profound analysis is based on the contention that in political life, the significant can only be understood in moral terms.

481 pages, $7.50

A PERIL AND A HOPE
The Scientists’ Movement in America, 1945-1947
By ALICE KIMBALL SMITH

How did the scientists who developed the atomic bomb react to its first explosion during World War II? Mrs. Smith and her scientist-husband, Cyril Stanley Smith, lived at Los Alamos, while he worked on the Manhattan Project. Her intimate association with these men and her reporter’s eye for detail combine to present a living document of the scientists’ efforts to wrest control of the bomb from the military and turn it over to the civilians. “. . . fully and critically documented, compassionately written, painstakingly detailed. It is both lively and exact.”—PHILLIP MORRISON, The Scientific American.

591 pages, $10.00

UNIVERSITY OF CHICAGO PRESS

Chicago/London

VOLUME 4, NUMBER 3, SPRING 1966

THE TRIPLE REVOLUTION: A NEW METAPHYSICS

KARL BRUNNER

AGNOSTICISM AND MORALITY

HENRY HAZLITT

WAGE RATES, MINIMUM WAGE LAWS, AND UNEMPLOYMENT

YALE BROZEN

ECONOMIC DEVELOPMENT AND FREE MARKETS

REED J. IRVINE

A JOURNAL OF CLASSICAL LIBERAL THOUGHT

Spring 1966

75 cents

Vol. 4, No. 3

NIR BACK ISSUES . . .

Certain back issues of NEW INDIVIDUALIST REVIEW can be purchased for a limited time at the special rate of 75 cents per copy Among the issues presently available are those containing

“Sin and the Criminal Law,” by Robert M. Hurt (II/1)

“National Review. Criticism and Reply,” by Ronald Hamowy and William F Buckley, Jr (I/3)

“The Fusionists on Liberalism and Tradition,” by Ralph Raico (III/3)

“Civil Liberties in the Welfare State,” by Robert M Schuchman (II/3)

“The Uneasy Case for State Education,” by E.G. West (IV/2)

“Is A Free Society Stable,” by Milton Friedman (II/2)

A complete set of available back copies (eleven issues) may be ordered for $8 00. The three out of print issues can be provided by xerographic reproduction at a cost of $4 00 each. Address inquiries to—NEW INDIVIDUALIST REVIEW, Ida Noyes Hall, University of Chicago, Chicago, Illinois 60637.

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“PIRATE QUEEN OR CAPITALIST HEROINE?” - “LIBERATE EDUCATION NOW!” “TAX REVOLT!(?)” - “ECONOMIC POTENTIAL OF PREFORM’S ‘FREE ISLES’ ” “SELL THE ROADS” - “FIRE FIGHTING FOR PROFIT IN ARIZONA” and many other articles appeared in recent issues of INNOVATOR.

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The Triple Revolution: A New Metaphysics
	3	KARL BRUNNER
Agnosticism and Morality
	19	HENRY HAZLITT
Wage Rates, Minimum Wage Laws, and Unemployment
	24	YALE BROZEN
Economic Development and Free Markets
	34	REED J. IRVINE
The Sources of Monopoly
	41	SUDHA R. SHENOY
What’s Wrong with Right-to-Work Laws
	45	HIRSCHEL KASPER
COMMUNICATION:
“Fragile” Constitutions
	48	W. H. HUTT
BOOKS:
Kefauver and Populist Economics
	53	SAM PELTZMAN
Freedom Under Lincoln
	56	ARTHUR A. EKIRCH, JR.
New Books and Articles
	59

NEW INDIVIDUALIST REVIEW is published quarterly by New Individualist Review, Inc., at Ida Noyes Hall, University of Chicago, Chicago, Illinois 60637. Telephone 312/363-8778.

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Copyright 1966 by New Individualist Review, Inc., Chicago, Illinois. All rights reserved. Republication of less than 200 words may be made without specific permission of the publisher, provided NEW INDIVIDUALIST REVIEW is duly credited and two copies of the publication in which such material appears are forwarded to NEW INDIVIDUALIST REVIEW.

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Yale Brozen • Milton Friedman • George J. Stigler

University of Chicago

F. A. Hayek	Benjamin Rogge
University of Frieburg	Wabash College

The Triple Revolution: A New Metaphysics

KARL BRUNNER*

MAN’S CONCERN WITH salvation is ancient indeed. For millenia he has relentlessly poured out his intellectual resources in this pursuit. The pressures and frustrations of reality have demanded consoling orientations toward the universe and the social environment, and man has proved almost more than equal to this challenge of “existential anxiety.” A profusion of products has been created to satisfy this demand; and over the centuries a rich pattern has evolved, from the biomorphic interpretations of the cosmos as in primitive societies, up to the metaphysical systems of modern philosophy and theology.1

A concern for salvation in this world and this life through the manipulation of institutional arrangements is not entirely new. This secular eschatology shares with other types of Erlösungslehren an essentially noncognitive, emotive-pictorial use of language and the commitment to a global strategy. It holds that redemption from evil cannot be assured by a piecemeal procedure of trial and error. The social order must be totally reshaped in order to achieve salvation. Deliverance comes through a force or a process which invariably destroys the inherited social organization, and thus opens the path to the New Jerusalem.

The theme is old and has been played in many variations; but the clash of ideologies permitted by an open society inevitably generates new conceptions. Among the products recently cast up we note in particular the Manifesto of the Triple Revolution, prepared by an Ad Hoc Committee for the Triple Revolution, and issued in March 1964 with an admirable sense for publicity. A variety of programs on radio and television have since been devoted to the diffusion of the Word. Article in magazines and newspapers have similarly elaborated the message. In this article I intend to analyze the claims and proposals of the “Triple Revolution” group from the standpoint of economic theory, and then indicate some of the wider philosophical implications of this phenomenon.

The Manifesto opens with a declaration that “mankind is at a historic conjuncture which demands a fundamental re-examination of existing values and institutions.” The historic conjuncture results from “three separate and mutually reinforcing revolutions”: cybernation, weaponry, and human rights. The Manifesto, however, barely mentions the last two, and concentrates on the cybernation revolution. It is claimed that the advent of complex computers, data-processing and self-regulating machines, creates an historical break in the evolution of social life. “A new era of production has begun. Its principles of organization are as different from those of the industrial era as those of the industrial era were different from the agricultural.” The new machines, it is claimed, introduce a regime of unlimited productive capacity.2 With cybernation, abundance has become a “fact”; scarcity is the result of obsolete institutions and inappropriate values. With abundance abounding, rationing and allocation mechanisms become redundant.

In the Marxist eschatology, the state was expected to wither away. Not so according to some prophets of the Triple Revolution. The economic organization is expected to vanish, but the state will absorb society.3 While paradise could (almost?) immediately be achieved, inherited institutions and values prevent its realization. An economic organization based on private property and guided by market price signals converts the impact of cybernation into rising poverty, expanding unemployment, and corrosive “alienation of man.” The new machines displace people in droves, first from manufacturing industries and agriculture, and subsequently from the service industries. Man cannot compete with these machines. Poverty, therefore, expands and men become totally alienated from a hostile society. In the new era dominated by cybernation and automation, it has become impossible to achieve full employment in the context of a market economy. Fiscal policy may, admittedly, provide some transitory remedies; but they are of dubious value in alleviating the unavoidably growing unemployment.4

THE NATURE OF THE ultimate society remains strangely obscure, however. We seem assured that it will be a Good Society which will have exorcised the curse of alienation brought on by a market system of economic organization. There is, however, no discussion of the institutional arrangements of the new society of abundance which will have vanquished the Satan of Scarcity. One point only emerges with clarity: The vanishing amount of labor required to assure abundance suggests that any connection of income with productive effort is totally obsolete, and in a “deeper sense” immoral. Incomes must be disbursed independent of productive contribution.

Instead of a description of institutional arrangements and of their manner of operation in the new society, we are offered tortuous debates on the New Morality required for a society which radically dissociates income from productive effort. The agonizing discussions about the inappropriateness of inherited moralities yield no enlightenment concerning the mode of operation of the new society. It is not clear whether any income whatsoever may be claimed by the individual eager to share abundantly in the abundance, or whether a limited income is assigned to every member of society “according to his needs.” The vague references which may be culled from pamphlets suggest the second interpretation. Should this be correct, one wonders about the justification for such limited allocations in the midst of “unlimited” plenty.

We are, however, provided with somewhat more information concerning the transition from the old to the new order. Massive government programs and a massive expansion of the government sector and government activities are necessary to alleviate “the physical and psychological miseries” created by cybernation in a market system. The key word is definitely “massive,” whether it pertains to public education, public works, low cost housing, rapid transit systems, or public power systems. Among the etcetera may be noted income redistribution through taxation (on a massive scale, of course); and extensive use of licensing, and minimum wage laws are also proposed. In summary, the Manifesto, supplemented by individual elaborations and comments offered by its propounders, casts a “cacotopian” gloom over contemporary society and its economic organization, and reveals the promise of a Happy and Good Society achievable through radical social engineering and an appropriate reshaping of moral values. It also traces suggestive outlines of a program to alleviate the pains of transition.

Many people no doubt find the arguments used to support the Manifesto’s approach appealingly plausible. The impact of new machines on the workers directly affected appears quite simple and obvious. Such impressions, however, possess a most ambiguous significance. For many centuries they confirmed that nobody could live on the other side of the earth, and it seemed just as obvious to most men that the sun revolves around the earth. The history of many sciences clearly shows that impressions must be carefully distinguished from observation reports. Impressions transcend a mere recording of observations in that they contain interpretative conjectures bearing on the observations noted. Consequently, they provide no evidence for the underlying and hidden theoretical notions. Moreover, the psychological sense of conviction accompanying such implicit interpretations cannot possibly establish their truth. The history of man’s knowledge supplies many examples demonstrating the inadequacy of the most convincing, most obvious, and most plausible impressions of our environment. A critical examination of the ideas which the Manifesto advances with an overpowering sense of urgency for immediate radical action thus acquires considerable importance. That such an examination can only be conducted by means of technical economic theory is due to the nature of the subject matter. I shall proceed in this manner with some reluctance, since I feel certain that my treatment is destined to receive much less attention in the popular press than did the Manifesto of the Triple Revolution. Yet in the last analysis, after all, it is through economics and not prophecy that we can come to the truth in this matter.

THE EXISTENCE OF “idle” resources has often been observed in both market and non-market economies. On this point, the two types of economic organizations do not differ. They do differ, however, in the manner of occurance and the appropriate interpretation of the phenomenon.

The market process releases signals in the form of price movements which reallocate resources and output. If information about evolving market structures and the reallocation of resources were available without cost, resources would move instantly in the directions determined by the changes in demand and supply. In the context of a “full-information world” with no adjustment costs, economic resources would never be “idle,” and markets would always be cleared. But this is not our world. Information must be produced, or gathered, at a positive social and private opportunity cost. Resources with alternative uses must be invested to collect, evaluate, and comprehend information about market positions. The more information one requires, and the more rapidly one wishes to collect a given amount of it, the greater will be its cost. Similarly, the readjustment of inherited resource-utilization patterns also necessitates a specific allocation of resources with alternative uses. Readjustment involves costs, which rise with both its magnitude and its speed.

Once we recognize the crucial role of the costs of information and adjustment, we can arrive at a more intelligent understanding of the nature of the market process. Idle resources will then appear as a rational attempt to minimize the costs of information and adjustment in the face of shifting demand and supply patterns. Consider, for instance, the position of a landlord having lost some tenants and being left with a number of vacant apartments. There is always a sufficiently large reduction in the rent which would lure new tenants immediately. Nevertheless, landlords rarely choose this option. The likelihood of his taking this action would be substantially greater if the landlord could immediately terminate the tenure of provisional low-rent tenants. But this action is precluded by the tenants’ behavior. They insist, as a rule, on some minimal period of assured tenancy. This behavior is a consequence of the readjustment costs noted above. If readjustments imposed by others proceeded without inconvenience, i.e. without cost, tenants would be indifferent between two apartments differentiated only by the existance or absence of an advance notice before having their lease cancelled. The existence of readjustment costs thus induces tenants to prefer contracts requiring advance notice and preferably longer advance notice. This latter condition is due to the greater costs of readjustment when it must be done at greater speed. Under these circumstances the landlord will reject the option of immediately luring a tenant by lowering the rent. The market has informed him so far that he can rent the apartments at the accustomed prices. He has at the moment no information which would rationally justify a lowering of his rents.

Keeping an apartment vacant, coupled with a continuous sampling of the market and calling information to the attention of potential buyers, thus forms an alternative to immediate and large rent reductions. Both alternatives involve costs: the direct purchase of other resources (advertising, real estate agents, etc.) or the allocation of one’s own resources (showing customers around, etc.). The latter includes most particularly the cost of the immediately available lower revenue foregone by holding the apartment vacant. The resampling of the market yields, on the other hand, information on the maximum price obtainable. The more a supplier samples the market, the greater is the probability that he will find somone willing to pay a higher price; and the higher this price, the greater the return for the landlord. The returns diminish, though, as the period of resampling and information distribution lengthens. On the other side, the marginal cost of information persists or may even increase; and so the landlord will reach a point where he will maximize his profits. A bargain is struck at the best price sampled at the moment. Under this wealth-maximizing action, however, emerges an unused, an “idle” resource, viz. vacant apartments. Yet simply to call these apartments “idle resources” is dangerously misleading. It conveys an impression of functionless, useless, and inefficient waste; and this is not necessarily the case. Vacancy emerges from a rational use of resources in the face of incomplete information and substantial adjustment costs. Holding apartments vacant implies, under the circumstances indicated, a more economical usage of resources, in response to the relevant operation of informational and adjustment costs.

THE SAME FORMAL analysis applies to any asset, as, for example, labor. The workers’ search for jobs and the employers’ search for employees, the collection of information about jobs and employee characteristics, do not proceed without substantial costs. Moreover, the adjustment of the supply of labor services to the range of new job opportunities is not costless; neither is the hiring and firing of employees. A discharged worker could always find a job, quite immediately, at a sufficiently low wage. Yet if the market indicated up to the time he was discharged that he could reasonably expect to find jobs at accustomed conditions and the inherited wage, he would reject the option of an immediate job at lower wages and prefer to sample the market through appropriate search activities. The search would involve costs of various types, foremost of course the potential wage forfeited by remaining unemployed and searching for a job of the same type and wage as the old. The nature of the prevailing relief and unemployment benefit systems modifies this cost, and thus affects the outcome substantially. This sampling of the population of potential buyers of labor services supplies the unemployed worker with an expanding volume of information. If the market situation for his general skills is fundamentally unchanged, the repeated resampling yields a rising maximal wage offer. The rate of increase diminishes, however, with repeated sampling; and the worker will accept employment when marginal adjustment and information costs (modified by benefits) threaten to exceed the expected increment in the maximal wage offered.

The market situation may, however, change fundamentally during a worker’s search for one of two reasons: either because a change in the general supply conditions has permanently lowered the relative demand for his special skills, or because the aggregate demand for output is falling. In the first case, the information collected through persistent resampling of the market will always disappoint the worker. The low wage offers experienced will induce him eventually to readjust his anticipations and, consequently, his labor supply decision. This readjustment presents him with a choice between two courses of action: either to accept employment at substantially lower wages on the basis of unspecialized skills, or to invest some resources (and thus incur additional costs) in order to acquire new skills. In either case, he will eventually find employment—after possibly a substantial revision of anticipations and matching reservation prices.

In the second case, a different situation emerges. The initial anticipation level and reservation price of the discharged worker correspond to the information previously available through his employment. The unemployed worker thus samples the market with the anticipation of finding a similar job at the accustomed wage. But while he slowly acquires information, aggregate demand declines and thereby changes the phenomena sampled.

The maximal wage offers fail to rise in the manner expected and may even fall. Anticipation-level and reservation price will gradually be adjusted downwards, in the absence of legal or institutional constraints. Nevertheless, they will lag behind the decline in aggregate demand. An indefinite period of unemployment will eventually be absorbed as soon as the aggregate demand stablizes, even without a subsequent increase, though such an increase would be a necessary condition for absorption of unemployment in the case where institutional constraints prevent a downward adjustment of wages. Otherwise, this increase in business activity accelerates absorption.

THIS OUTLINE OF AN economic analysis of unemployment may be summarized in the following manner: Unemployment is broadly determined by: (a) the nature of the costs govering information gathering and adjustments in the types and directions of the labor supply (relief and benefit systems and opportunities for choice between employment and non-employment activities may play a crucial role at this point); (b) the magnitude and frequency of relative shifts in demand for products; (c) the magnitude and frequency of shifts in the supply conditions of product markets, particularly in the underlying technology shaping production; and (d) the comparative variability of aggregate demand for output. It is the variability relative to the prevailing speed of information diffusion and the associated adjustment speed of anticipations and reservation prices which actually matter in this context.

It follows from these considerations that larger marginal adjustment costs, smaller marginal information costs, and large and frequent demand shifts compounded by an accelerating technological impact on production tend to raise the average level of unemployment generated by the market process. Furthermore, the larger the relative variability of aggregate demand for output, the larger are the fluctuations of unemployment around its average as determined by the above set of factors.5

The analysis outlined above, based on general economic theory, provides an interpretation of unemployment. It also determines a balance of social costs, the social cost of unemployment juxtaposed with the social cost of lowering average unemployment or holding its level below some ceiling. One may also use this analysis to investigate the nature of institutional arrangements which contribute to reduce both types of costs and, most particularly, assure a continuous close balance of the types of costs.6 Moreover, we can extract some general information from this analysis about the impact of cybernation on the level of unemployment. The effect of cybernation essentially coincides with the broad pattern of consequences emanating from new technologies observed over a long period in the past. It will effect the level of unemployment only in the cases where cybernation involves an accelerated rate of technological innovation. In addition, it would require a continuous acceleration in order to raise the average level of unemployment persistently. So far the balance of evidence assembled by investigators of technological innovation yields little support for the assertion that innovation has been accelerated and definitely no support for the expectation of a continuous acceleration. This finding does not deny the existence of substantial social readjustment costs associated with the impact of cybernation; and one might legitimately raise the issue of the proper distribution of these costs. One could reasonably expect that cybernation would sharpen the wage differential between skilled and unskilled, and within the skilled group itself shift the balance of wages and employment conditions in favor of the professionally better educated. The readjustment costs and the differential impact on labor types will occur, however, independently of the level of unemployment due to the rate of acceleration of the cybernation process. Our analysis cannot be understood therefore to imply a smug indifference. It emphasizes, on the contrary, the importance of appropriate institutional arrangements designed to minimize the social adjustment costs associated with the continuous introduction of new technologies. Economic analysis can even be usefully applied to clarify the consequences of various arrangements for distributing these costs among different groups of our society. No rational choice among these arrangements can be made without careful application of this underlying analysis.7

THIS ANALYSIS, BASED on validated economic theory, yields no “paradox of poverty amidst abundance” nor any general erosion of employment opportunities. The Manifesto of the Triple Revolution is quite correct in its assertion that economic analysis denies such “paradoxes” and gloomy predictions. One might have reasonably expected, therefore, that the Manifesto would present (or refer to) an alternative analysis of economic processes, combined with a careful assessment of the relevant evidence which would enable us to appraise the comparative validity of the conflicting theories. At this point, however, an astonishing fact emerges. The prophets of the Triple Revolution have simply failed to provide any such alternative theory. Analysis appears to be replaced by the assertion that the structure of the world has fundamentally changed. As a result of this unspecified historical break, expanding poverty and rising unemployment are the necessary consequences of the patterns of innovation presently at work. Nevertheless, “observations” are adduced apparently as evidence in support of the non-existent analysis. The following are statements culled from the Manifesto:8

(1) It is noted that productivity per man-hour rose at an average pace above 3.5 per cent since 1961. This acceleration of productivity is attributed to the impact of new machinery.

(2) Prices of machines replacing labor are low compared to the annual wage of the replaced worker.

(3) It is increasingly more difficult to create the increment in aggregate demand necessary to absorb the growing labor force into employment.

(4) Unemployment rates averaged 5.7 per cent in the earlier 1960’s. Teenage unemployment has risen steadily, and minorities exhibit a comparatively high unemployment rate.

(5) Nearly 4 per cent of the labor force sought full-time work in 1962 but could find only part-time jobs.

(6) Many men and women stopped looking for employment and withdrew from the labor force. It is reasonable to estimate that over 8 million people are not working who would like to have jobs today as compared with the 4 million shown in the official statistics.

(7) The number voluntarily withdrawn from the labor force is continuously increasing.

(8) Labor force participation rates are declining.

(9) The stablization of the unemployment rate at 5.5 per cent does not reflect the market’s absorption of labor into employment but rather withdrawal of discouraged would-be workers from the labor force.

(10) During the period 1957 to 1962 more than half of the new jobs were created in the public sector. The private sector almost ceased to create new jobs, with the exception of the service industries.

THE STATEMENTS listed above contain a weird mixture of interpretative assertions, vague conjectures, and observations. Some of the statements have simply no bearing as evidence for the Manifesto’s thesis, but instead contribute to an appropriate psychological receptivity on the part of unwary readers (including the signers of the Manifesto?). This applies particularly to points (1), (2), (4), (8), and (10). All these points are quite consistent with an explanation based on the previously developed analysis of no discriminating evidence and thus no support for the Manifesto’s central thesis. It should be noted, in particular, that the unemployment patterns alluded to under point (4) are quite closely associated with the repeated extensions of minimum wage laws and the rise in minimum wages. Economic analysis implies that both the extension and increase in minimum wages will raise the unemployment rate of teenagers and of the least skilled workers. It is especially Negroes, therefore, who are unfavorably affected by the legislators’ desire “to help the poor.”9 Similarly, the observed variations in the growth rate of labor productivity can be explained within the framework of economic analysis. Neither recent growth rates nor observed accelerations assume levels significantly different from past cyclical experiences. Moreover, the growth rate declined somewhat in the past year and the current year compared to the levels reached in the earlier expansion phases. These observations yield little support, indeed, for the Manifesto’s thesis of a revolutionary breakthrough.

Point (2) deserves some further attention. The statement, while emotively suggestive, is almost meaningless. Information about the machine price relative to the annual wage is not sufficient to yield implications bearing on our issue. And point (3), of course, is not an observation: It remains a sheer unsupported conjecture suggested by the retardation of the economic process over the period 1957 to 1961 compared to the movements before 1957. The sluggish retardation of the 1950’s has been replaced meanwhile by a surging and maintained expansion. Both retardation and subsequent acceleration, nevertheless, require an explanation.

The upswing, beginning in 1949 and ending in the summer of 1953, was supported by a substantial monetary expansion. As a matter of fact, the growth rate of the monetary base (i.e., the volume of high-powered money issued by the Federal Reserve authorities) accelerated until 1952 and moved to levels not reached since 1945. The resulting surge in aggregate demand continued to lower unemployment rates even beneath the typical sharp decline accompanying the first phase of an upswing. A different pattern emerged with the upswing beginning in the late summer of 1954. The initial acceleration in the monetary base was suddenly broken in 1955 and its subsequent growth rate was held to a comparatively low level and even declined gradually during 1957. Some indications suggest that money demand contracted over the middle 1950’s. This fall contributed to maintain the initially acquired momentum for some time in spite of the retardation in the base.10 Still, the pronounced deceleration of the monetary base probably weakened somewhat the movement of aggregate demand. Unemployment declined sharply for some months but resisted further erosion after that. The next cyclic period, beginning in early 1958 and terminating around the middle of 1960, was characterized by a pronounced acceleration of the monetary base followed by a remarkable deceleration. The early acceleration contributed to prolong the rapid decline of unemployment rates from their peak until the turn of the year 1958/59. But the sudden deceleration obstructed absorption of unemployment beyond this level. Unemployment thus rose at the beginning of the downswing from a higher low point than before. Furthermore, the sharply restrictive monetary policies were not attenuated by changing demand factors which contributed to raise the velocity of spending. The period from 1957 to 1961 may very well be characterized as a time of comparative monetary restriction. This monetary restriction differentiates this period from both the early postwar adjustment phase (1945 to 1949) and the first post-adjustment phase (1949 to 1957). The monetary restriction resulted in higher unemployment, a serious retardation of employment in the private sector, and sluggish movement of production and Gross National Product. Monetary policy was however decisively reversed in 1961. There emerged the longest acceleration in the monetary base ever observed and attributable to Federal Reserve action since the Federal Reserve started operations in 1914. Moreover, this acceleration pushed the growth rate of the monetary base to levels not observed since the war. This remarkable monetary expansion gradually and persistently lowering unemployment rates, contrary to the “cacotopian gloom” of the Triple Revolution, was also accompanied by a rapid expansion of production. Gross National Product, and even employment in the private sector.

The comparative stagnation of employment in the private sector from 1957 to 1961/62 was thus a consequence of a severe monetary restriction. If this stagnation had been the first symptom of the cybernation revolution, as suggested by the Manifesto and its supplementary elaborations, then the subsequent movements of private employment and unemployment could not have occured. Yet they did occur and they were the natural outcome of a historic monetary expansion most admirably engineered by the Federal Reserve authorities.11

UNDER THE STIMULUS of an appropriate monetary and fiscal policy, the market process created ample opportunities for employment. The relevant development may be usefully sketched with the aid of the comparative movements of employment and employment potential. The latter describes the “portion of the total population which is of approximate working age.”12 Such a comparison is particularly pertinent for the appraisal of points (6) and (7) mentioned above. These assertions made by the Manifesto would merit attention if the population’s employment potential grew substantially more than actual employment. Morover, the Manifesto’s case rests chiefly on an accelerated divergence of employment and employment potential since the turn of the decade. From 1948 to 1964 total population at working age (twenty to sixty-four) rose at an average rate of 0.9 per cent, whereas employment rose at an average rate of 1.07 per cent. “Since April 1961, while total employment has increased at a 1.7 per cent annual rate, population aged twenty to sixty-four is estimated to have increased at a rate of about 1.1 per cent per annum, and population aged eighteen to sixty-four increased at a 1.3 per cent rate.13 Thus, it follows that, contrary to the assertions trumpeted in the Manifesto, jobs and employment have been growing more rapidly than the population of working age. The assertions made by the Triple Revolution group simply have no basis.

Observations on the relative participation of various population groups in the labor force yield additional information bearing on the relevance of the Manifesto’s ideas. The participation rate of males in the labor force declined from 84.5 per cent in 1947 to 78.6 per cent in 1964. The participation rate of females rose on the other hand from 31 per cent to 37.4 per cent over the same period. The observation makes little sense if one believes that machines remove workers from the labor force and that service industries are increasingly exposed to the calamity of cybernation.

Still there remains the decline in the participation rate of males. How is this to be explained? It is important to recognize that this decline results from the falling participation rates of two specific age groups. Males between fourteen and nineteen years lowered their participation rate from 54.3 per cent in 1947 to 43.6 per cent in 1964, and males sixty-five and over lowered their rates from 47.8 per cent to 28 per cent over the same period. A slight decline can also be found for the age group fifty-five to sixty-four. The other age groups show either no significant change or even a slight increase. Moreover, there is no indication of any break in the participation of the middle group in the labor force. The assertions listed under points (5) and (7) simply do not hold for the central core of our working age population.

But what about teenagers and the oldest group? Do they not confirm the claims of the Manifesto? The answer is, No. Cybernation cannot be used to explain the peculiar pattern of evolving participation rates. The wholesale destruction of jobs under the Cybernation Revolution would create a random pattern of discouragement and defeat involving also the broad range from twenty years to fifty-five years. It would also affect the females over twenty years, whose participation rates have all been rising. What actually occurred is that considerable extension of the Social Security system, of pension plans and associated devices, expanded income outside of employment for older age groups. This gradual change in opportunities modified the comparative advantages and disadvantages of retirement and induced a growing number of older people to prefer a retirement status. It should be noted however that this process operated only on the male worker and is only reflected in the male participation rates. Our argument does not apply to the females, and we do observe that their participation rate in the age group fifty-five to sixty-four rose by 66 per cent from 1947 to 1964 and even increased slightly for those sixty-five and older. Once more, this movement yields no support for the thesis of wholesale and widely ramified job destruction through cybernation.14 The decline of teenage participation also can be understood as a response to peculiar institutional changes and expanding wealth. Expanded schooling has created opportunities for additional education, and increasing income has enabled families to exploit these opportunities. Repeated extentions of the minimum wage laws may also have contributed to the withdrawal of teenagers from the labor force and induced them to stay longer in school.15 Moreover, the decline in the teenagers’ participation rate is a long-run phenomenon and exhibits no acceleration in the last five to ten years. This observation again is difficult to reconcile with the claims advanced by the Manifesto.

THE PECULIAR assertions listed under points (5) and (7) possibly refer to the existence of “disguised unemployment.” This phenomenon is associated with the cyclical sensitivity of the labor force, i.e., the partial dependence of the labor force on aggregate demand. It follows therefore that reported unemployment understates the actual loss in employment occurring during a downswing. The disguised loss of employment has been estimated in several ways. Moreover, it has been suggested on occasion that reported and “disguised” unemployment are both components of some complete measure of employment loss. A more careful examination, based on economic analysis, renders this conception very dubious. The additivity of the two groups appears in the context of an argument which postulates that absorption of labor into employment from either group occurs at approximately equal net levels of marginal productivity; and most particularly, the marginal productivity of the unemployed in either group is supposed to be zero. This assumption is very doubtful, indeed. A growing number of people possess a meaningful choice between employment and non-employment activities, and in the marginal productivity (or marginal utility) of these non-employment activities may be quite substantially above zero. The relevant attraction of such non-employment activities is mirrored in the large turnover of participants in the labor force. An average participation ratio of 50 per cent does not mean that 50 per cent of the population is always in the labor force and 50 per cent is never in the labor force. There prevails a frequency distribution of participation time. Some people participate more continuously, others much less, and the resulting average over a given period yields 50 per cent. But this very behavior reveals the existence of attractive alternatives to employment activities. The positive marginal productivity of non-employment activities existing for a number of groups implies that the opportunity costs of job-searching and job-assessment (i.e. the costs of information) are quite sizeable. It follows therefore that “the net gain from moving into the labor force and the net loss from leaving it. . . can be quite small” for this group of people. The existence of non-employment activities with positive marginal productivity determines a pronounced supply elasticity with respect to market conditions—changing market conditions induce substitutions between employment and non-employment activities. Under these conditions, merely adding together reported and “disguised” unemployment misconceives the nature of productive labor. Additivity also misconstrues and badly exaggerates the loss in welfare terms. The opportunities for non-employment activities are particularly relevant for the so-called secondary labor groups, which include a good portion of the females, and the older and single males. The behavior of this secondary group confirms our supposition: The labor force participation of this group is remarkably responsive to employment conditions. The substitution elasticity between employment and non-employment conditions of this group induces a sensitive shift in time allocation between employment and non-employment activities. This analysis of “disguised unemployment” eliminates the Manifesto’s assertions listed under points (5) and (7) from further consideration until some analysis worthy of attention is supplied.

Unemployment data mean very little by themselves; they require careful interpretation, and only analysis supported by relevant evidence yields a reliable interpretation. The movements of unemployment figures must be considered within the context of shifting patterns created by a changing and expanding economic system. This applies especially to the interpretation of the apparent growth of unemployment since the early fifties. No doubt, unemployment rates during the 1958 recession exceeded the unemployment rates during the 1954 recession. Similarly, unemployment rates during the upswing initiated in 1958 exceeded the unemployment rates during the expansion of 1954 to 1957. During the recession of 1961, however, unemployment rates were lower than at the previous low point and were also lower than during the recession of 1949. In addition, unemployment rates in the autumn of 1965 were close to unemployment rates in late 1948. This evolution in employment rates yields little support for the apocalyptic assertion of a total discontinuity in the nature of the economic process occurring around the turn of the decade. On the other hand, there exists some evidence suggesting that average unemployment rates will gradually rise with increasing affluence given our values and institutional arrangements. Increasing wealth raises the demand for schooling and also the demand for leisure. More extensive enrollment in schools induces a lower labor force participation of younger people, while Social Security arrangements and pensions exert a similar effect on the older age groups. The decreasing labor force participation of these groups reveals itself predominantly through an increasing proportion of intermittent work, increased labor turnover, and an increased proportion of inexperienced workers among both employed and unemployed. These trends are reinforced by the growing participation of women. The range of relevant tradeoffs between employment and non-employment activities will continue to grow. This change in the structure of employment is a natural response to expanding opportunities and not a symptom of impending catastrophe. Slowly rising unemployment rates are therefore not a harbinger of growing and entrenced poverty but the epiphenomenon of deepening affluence and a broader range of relevant choices. Should this argument be supported by subsequent analysis and evidence we would conclude that unemployment rates of the primary group consisting of males between twenty-five and fifty-four years of age provide a much better index of the unemployment situation. This central core group probably reflects the movements of “involuntary unemployment” much more reliably. Interestingly enough, these data substantially refute the dismal projections of the Manifesto of the Triple Revolution.

16 ECONOMIC ANALYSIS yields no case for the Triple Revolution. Of course, the Masters of the Manifesto were aware that “conventional analysis” denies their assertions, so they have dismissed economic analysis.17 It is quite clear, however, that they fail completely to understand the nature of this analysis, why it rejects their assertions, and on precisely what grounds. They provide no critical examination of any empirical theories supported by economics nor any reference to such examinations; nor do we find a comparison of the merits of received economic theories, which have successfully explained observable phenomena, with a carefully and explicitly constructed alternative theory justifying their contentions. Similarly, any careful analysis of the institutional arrangements which are suggestively proposed in order to ease the pain of transition is completely absent. The behavior patterns and the consequences which may be expected to arise from these proposed arrangements pose a serious problem both for the general welfare and for the survival of an open society. Even less is heard about the ultimate society of happy, just, and de-alienated abundance. They tell us nothing of the nature of such a society, of its institutional arrangements and its general mode of behavior. Are we supposed to infer the emergence of a millenium, a paradise maintained for “humanized man” with “creatively adjusted highest values”?

The fundamentally metaphysical character of the whole Triple Revolution venture comes into focus in many details. Analysis and evidence are dismissed in favor of emotive phillipics—a play on words replaces analysis, moral agonizing and impressionistic references substitute for evidence. The play on the words “scarcity” and “abundance,” for instance, provides an excellent example of the irresponsible misuse of language, of the surreptitiously emotive use of a pretended cognitive category. The economist applies the term “scarcity” to describe the relative limitation of an inherited resource situation in the context of a given technology. This limitation exists relative to the values pursued by individual members of a society. Scarcity is reflected in the curcumstances that every allocation of resources to particular tasks involves a sacrifice of some other valuable tasks; and this fact continues to exist even with cybernation. No society of our empirical world will ever be able to extract from its resources a total satiation of the wants of every member of that society. The principle of scarcity continues to prevail even in very affluent societies. The prophets of the Triple Revolutionary paradise carelessly shift the meaning of their words from “abundance” as denial of the economist’s “scarcity” to “abundance” as an emotive-effective description of a large and rising real income per capita. From such a confusion of concepts, only confusion can result.

A similarly effective usage dominates the term “facts.” Direct observations, interpretive guesses, and wild conjectures are equally referred to as “facts.” No doubt, facts may be hard to recognize; but not that hard, provided the difference between metaphysical speculation and empirical-rational procedures is maintained. The impressionistic misuse of language, in particular, is such as to constitute a scandal. Innumerable examples of this could be adduced. Here is a brief sampler:

. . .people are increasingly outside

. . .our social structure. . . . 18

Vague allusions to scientists working for the joy of achievement appear sufficient to justify a totally new society which does not have to rely on wealth incentives.19 And look at this hoary fallacy:

In the society of scarcity, one man’s well-being could be increased only at the expense of other men’s well-being. . . .20

Michael Harrington pronounces that “the question of collectivism has been settled.”21 A survey of his writings shows, however, no analysis nor even a remote hint of relevant evidence supporting this claim. Or, catch this one:

. . .Technology is in charge and men are not in charge.22

And an absolutely delicious example:

. . .at precisely the moment all economic problems disappear . . . we would have a finished society in which men would die not from floods or plagues or famines, not from their own idiocies about the economy. They would die from death, and at that point the historical shell around the fact of death would be broken. For the first time society would face up to death itself.23

A favorite procedure of the group involves references to single examples to support far-reaching generalizations. This applies particularly to the relation between cybernation-automation and unemployment.

The dislocation and disemployment that occur simply add the people to the twenty million families some of whom by now have had several generations living in this state.24

Or, we may read:

But these sectors, which have been soaking up the disemployed from productive and extractive functions, are beginning to fail to soak them up. New jobs are not being created in these fields.25

Both statements are, of course, palpably false. The first implies that unemployment should increase at a rate equal to gross dismissals from work. This assertion is immediately rejected by observation. Piel’s contention cannot survive exposure to observations on the movement of employment in non-manufacturing activities outside the government sector.

THE IMPRESSIONISTIC misuse of language is particularly reflected in a persistent confusion of value statements and cognitive statements. The proper separation of the two types of statements has been painfully slow in man’s history, and the distinction is often felt to endanger most of man’s elaborate constructions for orienting himself in a manner satisfying to his psychological needs. The logical clarification of these statements has therefore encountered deep-seated hostility. The careful separation of value assertions and theoretical statements forms, however, an absolutely crucial precondition for any progress of knowledge. This does not preclude their interaction in the analysis of rational action; but the explicit recognition of the mutual spheres of value assertions and cognitive statements exhibits the logical impossibility of deriving factual statements or even policy statements from value assertions only.

A major consequence of the tangled confusion involving valuations and theoretical statements deserves particular attention. As human beings, we do not respond at random to the various types of statements. Reactions to value judgements are much more pronounced than those to cognitive statements. This response pattern creates a surreptitious domination of value judgements over intellectual processes. A pervasive effect of the very language we use strengthens this pattern. The apparently autonomous existence of language induces a belief that since value judgements are articulated in sentences which exhibit the same grammatical form as cognitive statements, the two types of statements are of the same logical form. Cognition thus becomes irrelevant and even appears obstructive to the reformation of the world in the light of one’s valuation. At the very base of the Triple Revolution is rejection of critical analysis; we can thus recognize a radical rejection of man’s noblest achievement: his struggle, always endangered by entrenched ideologies, to respond intelligently to the challenge of his environment through a systematization of an ancient trial and error procedure.

An act of faith thus replaces the empirical assessment of human institutions; and the patiently piecemeal but reliable improvement of our lot is sacrificed to a dream.

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Agnosticism and Morality

HENRY HAZLITT*

I THINK I SHOULD begin with a confession of faith—or lack of faith. I am an agnostic. Having made this confession, I think I should go on to say just what an agnostic is, and is not, and just what kind of agnostic I consider myself to be.

An agnostic is, first of all, a man who confesses his own ignorance—specifically, his own ignorance of the ultimate nature of the universe, of the ultimate destiny of man, of whether the universe has or has not a “purpose,” and finally, of whether there is or is not a God or Supreme Being governing the universe.

It is possible to define an agnostic by two negatives: Although, on the one hand, he is not convinced of the existence of God, he is not certain of His non-existence either. A man who declares himself to be an atheist declares that there is no God. The agnostic replies that such a statement is mere dogmatism, and assumes knowledge and evidence that do not exist. Yet, there is a wide range of possible differences, intellectual and emotional, among agnostics; and I think I should explain just where I stand in that spectrum. An agnostic may merely be one who confesses his personal ignorance of whether or not there is a God. He may be willing to admit that perhaps others know, or can know, or at least that mankind may someday know. I should not blankly deny this last possibility, but I regard it as enormously improbable.

The human intellect is wonderful, judged by animal standards; it has recently shown itself capable of accomplishments that a highly intelligent man before the birth of Aristotle would have thought impossible, and, in fact, of accomplishments that would have amazed even Leibnitz or Newton or Darwin. Yet the human intellect is primarily an instrument for dealing with practical problems. While it is capable of amazingly abstract concepts, it can carry back the chain of cause and effect only for a finite and limited distance. This little animal brain, weighing three or four pounds, and these limited animal senses, were not evolved to comprehend infinite time or space, or the complexity of an infinite number of facts; or a First Cause.

The human brain has, of course, achieved wonderful results by inventing and manipulating symbols, as in mathematics; but these results, I think, lead us to deceive ourselves as to the true extent of our knowledge. Any man can say “a million,” or “a billion,” or a “hundred billion,” and write down the symbols or perform various operations with them in a matter of seconds or minutes; but how many men can have a true conception of even a million—a million dollars or a million miles or a million anything else: As an economic journalist I have been stuck, in recent years, with how little impression it makes on people to tell them that we have a five billion dollar budget deficit, or that we have given away more than one hundred billion dollars in foreign aid.

The more a man knows, the more he realizes the extent of his ignorance, and the greater that ignorance seems to him. One of the most striking examples of this is Sir Isaac Newton, the greatest intellect of his age, and possibly the greatest that has ever lived: “I do not know what I may appear to the world,” he wrote, “but to myself I seem to have been only a boy playing on the seashore, and diverting myself in now and then finding a smoother pebble or a prettier shell than ordinary, whilst the great ocean of truth lay all undiscovered before me.”

I became an agnostic, as I remember, at the age of seventeen or eighteen; and I gave up my belief in God and human immortality painfully and reluctantly. Today my agnosticism is more thoroughgoing than it was then. I remember being for some time attracted by Herbert Spencer’s concept of the Unknowable; but I later decided that Spencer knew too much about the Unknowable. He knew that it was unknowable; he seemed also to know just where the Unknowable began, and the exact dividing line between it and the Knowable. I decided that none of these things were known and probably could not be known.

Today I am not sure that I know even the meaning of the ultimate religious or philosophical questions, let alone the positive or negative answers. What is the meaning of the question: “Is there a God?” or “Is there a Supreme Being?” What is the meaning of the answer: “There is a God” or “There is no God”? How would we establish whether either answer is true? What sort of evidence would we look for to establish the truth or the probable truth of our answer? What necessary consequences would follow from the truth or falsity of either answer? What necessary difference, for example, would the truth or falsity of either answer make in our own earthly goals or our own conduct?

What sort of concept lies behind the words either of the theist or the atheist, “Do you believe in a personal God?” What is meant by “personal” in this connection? That God looks like a human being—like the God painted by Michelangelo on the ceiling of the Sistine Chapel, for example? That he is the size of a human being? Or twice the size? Or how many times the size? That he has a definite location in space—“in heaven,” for example? That he is “within us”? Like a microbe? Exactly what does this spacial metaphor mean, and is it consistent with belief in a “personal” God? Or does a “personal” God simply think or feel like a human being? Think with our limitations, or without them? Feel the way a person feels? But in what respect? Surely not in physical appetites, or in sexual drive, or in energy or fatigue, or in ambition or frustration, or in seeing the same things as beautiful, indifferent, or ugly—or in showing the same tastes and responses that make up at least nine-tenths of all human feelings and actions.

LET US ABANDON THESE insoluble problems and come to a problem that seems at first glance more soluble. Let us ask: How do, or how should, our intellectual answers—whether theism, atheism, or agnosticism—affect our attitude toward the universe—our trusts and hopes and fears, for ourselves or for mankind, our goals, our morality, our attitude towards each other? A large number of modern philosophers have concluded, in despair of knowing what to believe, that the essence or religion is simply such an attitude. I have myself been attracted by the statement of Gerald Heard, for example, that the essence of religion is a belief that the universe is friendly; but this attitude of trust in the universe, as regards its intentions towards mankind, rests on a belief. What is the ground or justification for this belief? To be sure, the universe has been friendly enough toward man in the past to make it possible for him to evolve, to multiply, to live longer, and to increase his material satisfactions enormously. What reason, though, do we have for assuming that this will go on indefinitely, that the earth will not grow cold—or collide with a comet or some other body? Hurricanes, tornadoes, floods, droughts, and earthquakes are, after all, a matter of annual occurrence, and seem to be entirely indifferent to our human hopes or prayers.

I have given time to confessing and explaining my reasons for doubt. I am not triumphant about my doubts. I am not eager to infect anybody else with them. I am not eager to undermine anyone else’s religious faith. In brief, I am not eager to argue for my doubts; I am merely trying to explain them.

What I do wish to state, however, is my conviction that one’s belief or lack of belief on religious matters neither logically should, nor in fact does, affect one’s actions, goals, and moral conduct to anything like the extent that is commonly imagined. This conviction rests on both empirical and on deductive grounds. Those who are acquainted with the history of moral philosophy know that there is no sharp and consistent difference between the moral injunctions preached by the pagan philosophers and by the early Christian philosophers. There is no sharp and consistent difference between the “justice” of Socrates and Plato, between the “golden mean,” the “temperance” and the “high-mindedness” of Aristotle, between the virtues preached by the Stoic philosophers, by Epictetus with his counsels to “endure” and “refrain,” by Marcus Aurelius and his precept to “reverence the gods and help men”—and the virtues recommended by, say, Thomas Acquinas. In fact, as Henry Sidgwick reminds us: “The moral philosophy of Thomas Aquinas is, in the main, Aristotelianism with a Neo-Platonic tinge.” And when Aquinas lists the moral virtues by which others receive their due, his list of such virtues, to the number of ten, “is taken en bloc from the Nicomachean Ethics.”1

It is not merely in moral philosophy, however, but in prevailing commonsense ethics, that we find, in spite of peripheral differences, a great central core of agreement in the moral codes of different nations and peoples and even of historical eras, notwithstanding fundamental differences in religion. Practically all widely-shared moral codes have been against domestic murder and violence, law-breaking, looting, banditry, theft, ingratitude, treachery, lying, promise-breaking, etc. Practically all such codes have been for law and order, domestic peaceableness, promise-keeping, truth-telling, loyalty, mutual aid, good manners, etc.; and all this for the simple reason that justice and morality are absolutely indispensable for the very preservation of society.

For the same reason, whatever different names they may have given to it, or whatever aspect they may have emphasized, all moral codes have implicitly recognized that the very function and goal of a moral code is, on the negative side, to prevent or minimize violence, conflict and strife; and on the positive side, to promote human well-being and happiness. The minimum goal of our moral rules is to avoid conflict and collision, to learn how to keep out of each other’s way. In a wider setting moral rules are necessary so that we can all reasonably count on each other’s statements, promises, and actions, so that we not only may avoid acting at cross-purposes but can co-operate with each other to promote our mutual welfare.

TOO MUCH TIME HAS been wasted in moral philosophy in comparing or contrasting the relative necessity and merits of “egoism” and “altruism.” There is no basic conflict, but coincidence and harmony, between the rules of action that would do most to promote the welfare of the individual and those that would do most to promote the welfare of society. One could hardly promote one without promoting the other, or harm one without harming the other. It is in the interest of every individual to live in an orderly, peaceful, secure, co-operative—i.e., a moral—society. Social co-operation is the heart of morality, and the means by which each of us can most effectively supply his own wants and maximize his own satisfactions.

Whether or not a man believes in God, he has exactly the same reasons for following the rules of prudential ethics. If he is an idler, a spendthrift, or a gambler, a glutton, a drunkard, or a drug addict, he will pay the same penalties for his sins in the one case as in the other. Whether or not a man believes in God, he has exactly the same reasons for obeying the traffic laws: they exist for his own protection as well as the protection of others, and if he violates them he takes the same risks with his own life as well as the same risks with the law. Finally, whether or not a man believes in God, he is likely to have the same sympathy with his fellow men, the same respect for their opinion, the same desire for their good will, and the same impulse to act decently towards them. “It is a curious assumption of religious moralists,” once wrote Santayana, “that their precepts would never be adopted unless people were persuaded by external evidence that God had positively established them. Were it not for divine injunction and threats, everyone would like nothing better than to kill and to steal and to bear false witness.”2 The religious moralists who hold this view assume that those who do not believe in God are moral only because they are afraid of being caught. Yet their own argument also assumes that religious people are moral chiefly because they believe that God will reward them if they are, and punish them if they are not.

Those who are truly moral, in fact, whether theists, agnostics, or atheists, are so because they believe that virtue is its own reward, and sin its own punishment. They believe that good actions promote human well-being, including their own, and that evil actions injure others as well as themselves. In brief, whether we are Catholics, Protestants, Jews, agnostics, or atheists, we can agree on essentially the same moral code. If most of us, even if we are professed Christians, cannot always bring ourselves to love each other, most of us, religious or non-religious, can be brought to see the advantages of being decent and polite and even kind to each other.

Morality, in other words, is autonomous; it is not dependent on one’s religion. As Stephen Toulmin has put it, writing from the standpoint of a religious man:

Where there is a good moral reason for choosing one course of action rather than another, morality is not to be contradicted by religion. Ethics provides the reason for choosing the “right” course: religion helps us to put our hearts into it.3

Finally, as William James wrote: “Whether a God exist, or whether no God exist, in yon blue heaven above us bent, we form at any rate an ethical republic here below.”4 This, I think, is the best if not the only basis on which it is possible for the religious and the non-religious to co-operate intellectually in moral, legal, and political philosophy.

This does not mean that any of us need abandon religious or ontological speculations. On the contrary, we should all strive to keep alive the sense of wonder and awe before the inscrutable mystery of the universe, before the tremendous mystery of existence—not merely of the existence of mankind, but of the existence of anything, the existence of a grain of sand, or of the planets, the sun, the solar system, the stars, the Milky Way, the constellations and galaxies without end. The difference between a philosopher and a philistine, between a thinking man and a Babbitt, is that the thinking man has not lost his sense of wonder. In his Voyage of the Beagle, Darwin tells us how, at one place where the ship anchored, the native savages were enormously curious about the rowboats in which the British came ashore; but they showed no interest in the ship itself. It was so far beyond their understanding that they simply took it for granted. It is a very limited and shallow mind that takes the existence and nature of the universe for granted.

LET US BY ALL MEANS keep alive our interest in ultimate questions; but let us recognize that they are ultimate questions, final questions. Our own conclusions on these matters, if we arrive at any, should not be made the necessary premises for agreement on practical actions or policy.

All of my readers are, I take it, devoted to a greater or lesser degree to liberty; and among the liberties that all of us hold most precious is liberty of opinion—for ourselves and for others. If we respect this, we will not insist that others must accept our own particular religious, epistemological, or ontological premises before we will even condescend to argue with them on moral, legal, or political questions.

Wage Rates, Minimum Wage Laws, and Unemployment

YALE BROZEN*

ALONG WITH THE weather, sex, health, and taxes, one of the most widely discussed topics in America is wage rates. We have had an abundance of guide posts offered for determining the changes which should be made in wage rates. Union strategists have insisted in times past that wage rates should rise when the cost of living goes up, whatever “cost of living” may mean. They do not accept the converse proposition that wage rates should go down when the cost of living goes down, however. In the latter case, they argue that a decline in cost of living means a depression is coming or has arrived and, therefore, wage rates should be raised to increase purchasing power and prevent the depression.

Another guide post offered in times past (and last year by Mr. Reuther) concerns the relationship between wage rates and profits. Still another relates wage rates to an acceptable level of living. Most recently, wage rates and changes in them have been linked to changes in average output per man-hour. The General Motors contract of a decade ago provided for changes in wage rates linked to the change in the consumer price index of middle income urban families, plus an annual improvement factor which happened to be approximately the same as the increase in output per man-hour in the American economy in the preceding several decades.

Four years ago last January, the Council of Economic Advisors entered the discussion of guide posts for wage rate increases. They were moved to do this because, as they said at the time, “. . .wage decisions affect the progress of the whole economy” and, therefore, “. . .there is legitimate reason for public interest in their content and consequences.”1 They repeated their suggested guide posts in 1964 because, as they said, “If cost. . .pressures should arise through the exercise of market power. . .we would be forced once more into the dreary calculus of the appropirate trade off between ‘acceptable’ additional unemployment and ‘acceptable’ inflation.”

The Economic Advisers have advised that, “The general guide for wages is that the percentage increase in total employee compensation per man-hour be equal to the national trend rate of increase in output per man-hour.”2 The Council has provided a measure of recent trends (1952-64) in the annual rates of growth of output per man-hour in the private economy. They suggest that the latest five-year trend in productivity, amounting to 3.2 per cent, should be the guide for wage rate increases. They seem to believe that if wage rates plus fringe benefits in each industry rise by 3.2 per cent, then the average cost of labor will rise by 3.2 per cent.

If hourly labor costs increase by 3.2 per cent on the average in each industry, however, average compensation per man-hour would rise by 4 per cent. Many wage earners obtain wage increases by leaving low paying jobs (such as those in agriculture) for higher paying jobs—without any change in the rates paid for specific positions. The average wage does rise, then, without any change in wage rates, about 0.6 to 0.8 per cent per year. Subtracting this out of the 3.2 per cent rise in output per man-hour for the total private economy would imply that the Council’s suggested guide rate would be achieved with an average annual rate of change of 2.5 per cent per year in money wage rates (including fringe benefits as part of the wage, or employee compensation) in each industry.

The Council does not believe that every wage rate should be increased exactly by the rate of overall productivity increase. Their report says that “specific modifications must be made to adapt (the guide posts) to the circumstances of the particular industry.”3 For instance, they say “Wage rate increases would fall short of the general guide rate in an industry which could not provide jobs for its entire labor force.”4 Also, they would fall short where “wage rates are exceptionally high because the bargaining position of workers has been especially strong.”5

THE COUNCIL OF Economic Advisors should be complimented for its recognition of the fact that wage rates in some industries are too high to permit all those who would like jobs in those industries to obtain them. They should also be complimented for recognizing that money wage rate increases must be smaller in the future if we are to have more rapid economic growth and decreased unemployment without inflation. The Council recognizes that the upward movement of some wage rates and prices is the result of agreements between strong unions and employers, and that “the post-Korean war years were marked by the coincidence of relatively large wage increases with declines in industry employment.”6

The fact that unduly high wage rates decrease the number of jobs available and the number of people working in an industry is obviously understood by the Council and is clearly implied in its report.

Several things are left unsaid, however, which should receive explicit recognition. The Council dwells on the inflation which may be caused by large wage rate increases. They fail to recognize that large wage rate increases for some workers come not only at the expense of causing some to become unemployed, absent inflation, but also at the expense of workers in other sectors of the economy.

I would estimate that 10 per cent of the labor force of the United States receives wage rates about 15 per cent higher than they would in the absence of wage laws and governmental support of trade unions.7 The result is that 90 per cent of the U.S. labor force receives wage rates about 5 per cent lower than they would otherwise obtain. The net result is greater inequality in the division of income and about 3 per cent less total wage income for U.S. wage earners, or about 10 billion dollars less than they would otherwise earn as a group (including those whose wage rate is excessive).

To illustrate this in terms of the experience of one state, let us consider some occurrences in Michigan. Wage rates in transportation equipment manufacturing in Michigan not only rose more than in other manufacturing industries in the state, but also rose, between 1950 and 1957, by 10 per cent more than in the same industry in the other four East North Central states (Wisconsin, Ohio, Indiana, and Illinois).8 Overall employment in the auto industry declined in part as a result of overly large employment cost increases. In Michigan, where the greatest increase in wage rates occurred, the decline in employment was greater than for the industry as a whole. Between 1954 and 1958, there were 85,000 more jobs lost in Michigan than in the other four East North Central states. In 1954, Michigan employed 41,000 more workers in transportation equipment manufacturing than the other four states. In 1958 it employed 44,000 fewer workers in the industry than the other states. Michigan became a depressed area, in employment terms, largely because employment costs increased so drastically in its major industry.

Not only did employment in Michigan suffer; in addition, workers in other industries in Michigan suffered. Those becoming unemployed in the transportation equipment industry sought jobs in other fields. Many found jobs in other manufacturing industries. The consequence was, however, lower compensation for those in the other industries. More jobs were made available only by restricting the rise in wages which otherwise would have occurred. Hourly earnings in these “other” industries rose 6 per cent less than the rise in these same industries in the other four East North Central states. Although employment in these industries in Michigan increased more than in other states, this represents a less productive use of the labor than its employment in transportation equipment. If wage rates and other employment costs in transportation equipment had not been raised so much in Michigan, hourly earnings would have gone up more in the other manufacturing industries. High hourly earnings for auto workers came at the expense of workers in other industries.

THIS BRINGS US TO the second point which the Council failed to make explicit in its concern over the inflationary impact of unduly large wage rate increases. The power of unions is focused on certain sectors of the economy, such as transportation, auto manufacturing, and coal mining. Their use of power and the consent of employers to agreements which incorporate unduly high costs of employment decreases the number of jobs available in these sectors of the economy. Since these are industries in which output per man-hour is high, declining employment in these industries forces men to take jobs in low productivity sectors of the economy. The net result is a lower average output per man-hour for the economy than otherwise would be attained. Excessive wage hikes in some parts of the economy cause our productivity to rise less rapidly (and average wage income to rise more slowly) than it otherwise would.

The experience of coal miners illustrates this point. Coal mining hourly earnings rose by $1.95 or 163 per cent from 1945 to 1960; bituminous coal mining employment dropped from 385,000 to 168,000. By way of comparison, in the same period, manufacturing production worker hourly earnings rose $1.24 or 122 per cent, and manufacturing employment rose from 15,524,000 to 16,762,000. The differential in hourly earnings in favor of coal miners increased from 18 to 39 per cent. Many of the coal miners who lost their jobs (and men who would have found employment in coal mines) took manufacturing jobs. In these jobs, their productivity and their wage income is lower than in coal mining. If we had more coal miners mining coal and fewer coal miners in other industries today, average output per man-hour in the private sector of the economy would be higher (and the record of the annual rate of increase in output per man-hour would be better), average wage income would be higher, and inequality would be less.

Excessive wage hikes in some industries slow the increase in output per man-hour in the economy as a whole for another reason besides forcing people out of high productivity into low productivity occupations. To make men worth employing in coal mining or auto manufacturing at high wage rates, the amounts of capital per man employed must be increased enough to raise the productivity of the men remaining in the industry to the point where employment costs can be covered. This is the process known as automation. Concentration of large amounts of the available capital on a few men in these industries reduces the capital available per man in the rest of the economy. With less capital per man, output per man-hour in other industries is lower than it otherwise would be. The distortion in the allocation of capital caused by distortions in the wage structure prevents average output per man-hour from reaching otherwise attainable levels. The result is a poorer record of increase in output per man-hour, a poorer record of growth, and lower incomes on the average for all.

The most important point that the Council has overlooked is that their proposed guides will have no influence on the determination of wage rates anyway. They worry about some wage rates being too high, about the unemployment caused in some areas of the economy by the overpricing of labor, about the slowing in the growth rate caused by increasing unemployment; but they suggest no effective means for preventing these unhappy events from occurring. They suggest that “an informed public. . .can help create an atmosphere in which the parties to (wage decisions) will exercise their powers responsibly.”9 This is much like expecting the flood waters rolling toward a threatened town to stop because an informed public recognizes the tremendous damage that will be done.

If an “intormed public” does recognize that it and the country are being damaged by excessive wage increases, and that these excessive wage increases are the result of union power and legislative enactments, what should it do? The Council proposed no action! It seemes to be sufficient for the Council that the public recognize that the wage increases are excessive and damaging. The President has added that it is his intention to “draw public attention to major actions by either business or labor that flout the public interest in non-inflationary price and wage standards.”

IT IS UP TO THE public, evidently, to figure out what it should do. The Council is not about to tackle this thorny problem. One thing the public might do is to tell the Council to tell the Secretary of Labor to stop raising the minimum wage rates he sets under the powers vested in him by the Walsh-Healy and Davis-Bacon Acts. In 1964, he raised a great many rates. Most of these he raised by much more than 2.5 per cent—usually by 5 per cent or more. Most of these rates were excessive before he raised them. According to the Council’s guide posts, they should not have been raised at all. He raised rates in one case to $6.10 an hour, surely a clear instance in which the advice of the Economic Advisors would have been not to raise such a high minimum wage rate.

Since the Secretary of Labor has surely read the Council’s report, however, I would advise the public to forget about asking the Council to speak to the Secretary of Labor. Instead, the public should speak to its Congressmen about repealing the Walsh-Healy and the Davis-Bacon Acts. These are pernicious Acts which, on the one hand, increase costs to the government and increase our taxes, and, on the other hand, prevent people from getting jobs who would like to have them.

Additional steps I would suggest to make the Council’s advice effective is to reduce the power of labor unions. The public should insist on enforcment of laws during strikes. Assaulting and threatening people on their way to work is against the law in any jurisdiction about which I know.

Still another step I would suggest is the repeal of the increases which have occurred in the minimum wage rate set by the Fair Labor Standards Act. On September 3, 1965, there was an increase in the minimum wage from $1.15 to $1.25 an hour for a large group of employees, in addition to the group whose minimum wage was raised to $1.25 in September 1963. This will be and was an increase of 8.7 per cent in the wage rate of the very groups now suffering the greatest incidence of unemployment. It comes on top of a 15 per cent increase made two years ago. Not only is this a much greater increase than the 3.2 per cent rate of rise suggested by the Council—it is an increase for a group of people who cannot now find jobs. The Council has said “wage rate increases [should] fall short of the general guide rate (in occupations) which cannot provide jobs for their [entire] labor force.”10 The greatest unemployment we have is among the less educated, less skilled, low productivity, low wage groups. Teen-age unemployment amounts to 13 per cent, and Negro unemployment is 9 per cent. The Council’s advice points strongly to the inadvisability of any wage rise in this group, much less an 8.7 per cent increase.

Certainly, this is not a time to enact still higher minimum wage rates. Yet, a bill is now before Congress which would increase rates from $1.25 to $1.60 and extend coverage to seven million additional jobs. When this passes we will doubtless find the number of applicants for the Job Corps skyrocketing.

We have seen the damage done by previous increases in the minimum wage rates. Newspapers a few months ago reported 1,800 women discharged in crab meat packing plants in North Carolina because of the increase in the minimum from $1.15 to $1.25 which went into effect last September. When the rate was increased from 75 cents to $1.00 in 1956, unemployment among workers under nineteen and females over forty-five rose, despite an increase in total employment by 1.8 million in 1956 over the levels prevailing in 1955, and a decline in unemployment in all other groups. Normally, increasing employment decreases unemployment in all groups.11 It failed to do so in 1956 because of the overpricing of less skilled workers.

I remember vividly a dramatic example of the effect of the increase in the 1956 minimum wage. I visited friends in Nashville late in 1956 and remarked on the fact that they had acquired a maid since my previous visit in 1955. They told me that they had hired a Negro girl because the wage rate of maids had dropped, and they had to pay only 50 cents an hour. I expressed my astonishment and asked what had happened. They told me that local textile mills had been hiring girls at 80 cents an hour in 1955. When the minimum wage rate went up to $1.00 an hour in 1956, many of the mills reduced their work force and were no longer hiring Negro girls.12

Similar results occurred in 1950 when the minimum wage rate was raised from 40 cents to 75 cents an hour. Professor John Peterson of the University of Arkansas found, from surveys of large southern pine saw mills before and after the imposition of the 75 cent minimum wage in January 1950, that 17 per cent of the workers in mills whose average wage had been below the minimum lost their jobs.13 Again, when the Fair Labor Standards Act came into operation in October 1938, workers in the seamless hosiery industry in Western Pennsylvania suffered unemployment. The imposition of a minimum wage rate of 25 cents an hour at that time caused layoffs and a drop in employment in Western Pennsylvania at the very time when employment in the United States was rising.

IN ADDITION TO THE actual unemployment caused by increased minimum wage rates, there is also a decrease in the opportunities for youngsters to obtain training which prepares them for productive employment. To put this in terms of a specific example, an automobile parts jobber testified: “We had always had a training program for new employees which in itself is expensive, and when the minimum wage was increased, we had to discontinue this training program and hire only people as we needed them on a productivity basis. In other words, the average number of employees that we now have is about 5 per cent lower than before the minimum wage was increased.”

I could go on giving illustrations of the unemployment caused by minimum wage laws and their effects on freedom of choice among occupations, but this should be sufficient to convey the point. Instead, let me turn to another kind of minimum wage imposition and its effect.

We are very concerned in Chicago about the large number of adolescents who drop out of high school and are unable to find jobs. The problem manifests itself in part in high juvenile delinquency rates. These boys would like to engage in some kind of activity, preferably filling a job. Many of them used to be employed as elevator operators at $1.00 to $1.25 an hour. The elevator operators, union has succeeded in imposing a minimum wage of $2.50 an hour for operators in downtown Chicago buildings. The result is that owners of buildings have found it economical to spend $30,000 per elevator to automate their lifts and make them self-operating. Since the tax, insurance, depreciation, and interest costs of automating an elevator amount to $8,000 per year, it did not pay to automate when two shifts of operators cost only $5,000 per year. The union has succeeded in driving the two-shift cost of operation to over $10,000 per year. The result is elevator automation, no jobs for elevator operators, and a policing problem of unskilled teen-agers which is getting out of hand. I think this example speaks for itself. Thirteen per cent of the teen-agers who would like to have jobs cannot find them because of the minimum wage rates set by the unions, by the Secretary of Labor, and by law.

Perhaps I should quote the words of a U.S. Senate report at this point, “The conditions of insecurity and hopelessness that characterize the lives of many unemployed young people threaten their acceptance of traditional American ideals. What they need and cannot find is jobs. Given jobs, many of them will make a successful transition into the adult world and a useful contribution to the nation’s strength. Without jobs, continuing moral degeneration is inevitable.”

The power of unions to prevent people from taking jobs they would like to have is a major factor in causing some people to suffer the circumstances described in this Senate report. Perhaps it is an anticlimax to add that the power concentration in union hands is also a major factor in causing some wage rates to rise much more rapidly than the Council of Economic Advisors’ guide lines would allow. Yet the Council has made no suggestion for limiting concentrations of power. It simply offers some meaningless rhetoric about the necessity for having an informed public opinion as a way of enforcing its suggestions.

There is quite a list of actions the Council could have suggested which would make its words meaningful. The fact that its words are not is demonstrated by a series of wage rate increases which have occurred since their guide posts were suggested—wage rate increases exceeding 3.2 or even 4 per cent. The New York electricians’ increase is a notorious instance. Typo. graphers on New York newspapers struck for a 26 per cent increase in compensation, surely an amount far in excess of 3.2 per cent. Longshoremen were granted an 8 per cent increase as a result of the pressures exerted by the Federal government during a strike. The Teamsters negotiated a contract providing a 5 per cent annual increase just a year ago. In the first six months of this year, the average wage increase in new settlements amounted to 4 per cent, exclusive of increases in fringe benefits. One-third of the workers covered by new settlements received increases of 5 per cent or more. The agreement negotiated last fall between the Communication Workers and the Michigan Bell Telephone Company provided a 5 per cent increase in wage rates and fringe benefits. The U.A.W. won a 4.9 per cent annual increase for each of three years in 1964. This is 50 per cent higher than the guide line.

THE COUNCIL’S GUIDE lines for wage setting are meaningless in terms of informing the public, providing a guide for employer-union bargaining, or for guiding employers who have no union with which to contend. Certainly, no one has paid much attention to the Council’s guide posts, except where unions have used them as an argument for getting a bigger wage increase than they might otherwise be able to justify. However, they are meaningless for very good reasons other than the fact that no one uses them.

First, the increase in average output per man-hour is highly variable year to year. The overall trend of several past years has no necessary relationship to the change in any one year. If one examines productivity changes from year to year, it is clear that average output per man-hour decreased between 1920 and 1921, increased between 1923 and 1924, decreased between 1926 and 1928, decreased again between 1929 and 1933, etc. This is highly variable behavior. Any constant rate of increase even in real wage rates, much less money wage rates, would result in unemployment in some years, shortages of labor in other years, and allocation of much labor to the wrong places every year.

Aside from the fact that past output-per-hour trends do not provide a guide for real-wage rate changes in a specific year, they are of no help at all in judging proper changes in money wage rates. Money rates fell from 56 cents an hour in 1920 to 52 cents an hour in 1921—a 7 per cent decrease—yet real wage rates went up 4 per cent because of an even greater decline in consumer prices. If money wage rates had been increased 3 per cent between 1920 and 1921, we would have had a 14 per cent rise in real wage rates and 10 million unemployed instead of 5 million in 1921.

The Council pays little attention to the possibility that real wage rates may increase through a declining level of product prices as well as by a rising level of money wage rates. In view of our balance of payments problems at this time, this should be the preferred method of raising real wage rates.

If we are going to engage in the sport of setting guide posts for wage increases, I would like to enter a candidate. I would like to suggest my guide post in the form of an answer to the question, “How can employers recognize the circumstances which dictate a change in the wage level or wage structure?” Of course, any time a company’s profits fall or it incurs a loss, it would like to decrease its wage costs. In some cases, this may be the proper action to take; but, in other cases, a decrease in wage rates may increase costs or may cause the company to lose even more.

On the other hand, when profits increase, as they did for General Motors last year, for example, should wage rates be raised? Again this may or may not be the proper action. It depends upon the circumstances. How can we tell what to do, then, if the proper action is not directly related to profitability?

THE BEST SINGLE guide to the proper action is the relationship of the quit rate of currently employed persons to the rate of receipt of qualified applications for jobs. If the quit rate in a given company exceeds the qualified-applicant rate, the wage rate may be too low. People do not ordinarily quit jobs in appreciable numbers unless alternative jobs are available which are more attractive than those they are leaving. If the quit rate is high, we would probably find that better paying jobs, or jobs more attractive for some other reason, are available. A low qualified-applicant rate also indicates this sort of situation. Retaining a work force, then, may require an increase in the level of wage rates.

Now, one may notice that my suggested guide line is in the form of advice to employers. I am not interested in getting the public into the act, nor in getting government into the act. The only people in the act should be those who are employing men, and the men who would like to have the jobs. This is true for the determination of overtime rates as well as straight time wage rates. We should not impose penalty rates by law on employers for employing men over forty hours a week. If men desire additional income, wish to work more than forty hours per week, and are willing to do so for rates less than those required by the Fair Labor Standards Act, that should be their privilege as free men.

Further, one may notice that my advice to management is hardly necessary. It simply says, pay as much as you must to obtain the labor force you require; but do not pay any more than you must. Any company not trying to do this is not a business—it is a philanthropic operation. How long it can survive depends only on how long it can go on giving money away, or rather, how long the stockholders are willing to hold stock in a company giving away their money. Also, any company paying higher wage rates than it must to attract the work force it wants, and keep turnover rates as low as is profitable, is not serving the public well. It is providing fewer jobs than men would like to have and less product than its customers would like to have. If employers will follow their own interests by raising wage rates only when their quit rates go up (or threaten to do so), they will be serving the economy in general as well as their own interests.

In advising that quit rates should be the primary indicator in determining the appropriateness of a wage change, all I have really said is that wage rates should be set at the levels at which free marekts would set wage rates. Perhaps this might be better said by using a quotation from Henry Simons. He pointed out that

The proper wage in any area or occupational category is....the wage that will permit the maximum transfer of workers from less attractive, less remunerative, less productive employments....We imply that any wage is excessive if more qualified workers are obtainable at that wage than are employed—provided only that the industry is reasonably competitive as among firms. Reduction of rates (in these circumstances) would permit workers to enter who otherwise would be compelled to accept employment less attractive to them and less productive for the community or to accept involuntary unemployment....

The basic principle here is the freedom of entry—freedom of migration, between localities, between industries, between occupational categories. If such freedom is to exist....wages must fall to accommodate new workers in any area to which many qualified persons wish to move. Freedom of migration implies freedom of qualified workers, not merely to seek jobs but to get them; free entry implies full employment for all qualified persons who wish to enter. Whether the wage permits an adequate family scale of living, according to social service workers, is simply irrelevant ....what really matters is the judgment of workers who would be excluded by an excessive wage as to the relative merits of the employment in question and of employment in less attractive alternatives actually open to them. Other things equal, the wage is too high if higher than the wage in actually alternative employments. Ethically, one cannot go beyond the opinion of qualified workers seeking to transfer. If in large numbers they prefer employment here to the alternatives and cannot get it, the wage is excessive.14

I should add that the Council of Economic Advisors itself believes this, although it tries to avoid saying so. The Council does not think much of its own guide posts and prefers the one suggested here, as I will demonstrate shortly.

WHAT IS FRIGHTENING about the Council’s discussion of guide lines for the economy is the implication that they know how to make wage decisions and price decisions which are in the public interest. Some idiot is likely to take this seriously and set up a regulatory agency to set wage rates and prices. It is not a long step from setting guide lines for the economy to guiding the economy. Down that road lies tyranny.

That the possibility is real is evidenced by the appointment two years ago of a member of the Council who believes the government should set up an Industry Economics Agency which would set specific prices and wage rates—not just generalized national guide lines—and which would hold corporations over a certain size and unions to “new standards of public accountability.” The Council has not yet gone this far, but there is talk about a so-called early warning group to watch for price and wage changes which do not conform to the guide lines.

The Council of four years ago did not even take its own rule for wage setting in terms of change in output per man-hour seriously. After offering its general rule it said, “wage rate increases would exceed the general guide rate in an industry which would otherwise be unable to attract sufficient labor.”15 This, of course, is what any employer does when he finds he cannot obtain as many employees as he wishes. He bids a higher wage to attract more people, frequently bidding substantial premiums above even union-set wage rates when he cannot find enough men. Also, the Council said, “wage rate increases would fall short of the general guide rate in an industry which could not provide jobs for its entire labor force.”16 This, of course, usually occurs in markets where there are large numbers of unemployed men—and no legal minima, or union power to prevent this. What the Council has said in these statements is that supply and demand in free markets should determine wage rates.

I am heartily in favor of those measures and those laws which maximize wage income and minimize inequality. If the labor legislation which I have discussed, and the guide lines proposed for determining changes in wage rates were good for labor as a whole, that would be the end of the matter for me. I question the virtue of these measures because they decrease labor income, limit the opportunity to obtain jobs and to engage in meaningful activity, and increase inequality.

Reprints of this article are available for 15 cents each. Ten or more copies may be ordered for 10 cents each. Rates for larger quantities will be furnished upon request.

Economic Development and Free Markets1

REED J. IRVINE*

THE IDEA THAT THE wealth of nations can be expanded most rapidly by governmental direction of their economies is not a traditional socialist concept. In the broad sweep of economic thinking Adam Smith pioneered the view that governmental intervention was a hindrance, not an aid to economic development. He examined what was going on around him in England and some parts of Europe, and he came to the conclusion that if men were given a high degree of freedom to produce, trade, and consume, productivity would rise and consumers would be better satisfied.

The socialists, including Karl Marx, did not dispute the contention that economic freedom led to great productivity. They could not, for they had all about them the overwhelming evidence of the Industrial Revolution which showed that this was true. Note this description of the process of economic development under capitalism by Friedrich Engels:

. . .the bourgeoisie shattered the feudal system, and on its ruins established the bourgeois social order, the realm of free competition, freedom of movement, equal rights for commodity owners, and all the other bourgeois glories. The capitalist mode of production could now develop freely. From the time when steam and the new tool-making machinery had begun to transform the former manufacture into large-scale industry, the productive forces evolved under bourgeois direction developed at a pace that was previously unknown and to an unprecedented degree.

What bothered the nineteenth century socialists was not the inability of the capitalistic free market to bring about rapid economic development. On the contrary, many of them were appalled by the extent and pace of the economic change caused by the Industrial Revolution in England. They were all highly critical of what seemed to them to be an unjust distribution of the fruits of production. Marx and Engels shared these views, but they also advanced the idea that this tremendously dynamic productive system would eventually break down because of defects that were inherent in it. They perceived what they thought was a fatal flaw in the constant drive for greater productivity and what they thought was a tendency to minimize the use of labor and the payment of labor. They maintained that this would eventually bring the whole system crashing down and open the way to socialism.

The fact that economic history has failed to bear out the dire predictions of their prophets ought to be a source of profound embarrassment to Marxist theorists. The capitalist states have had their crises, but none of them ever proved fatal, and these economies have not only recovered but have gone on to create and distribute to the workers, as well as to the capitalists and rentiers, wealth on a scale undreamed of in the nineteenth century.

The dogma has had to be adjusted to this stubborn refusal of the facts of history to bear out the Marxian hypothesis. We hear less and less about the increasing misery of the exploited workers in the capitalist economies. Even rarer are the predictions of the eventual collapse of the developed economies of the West.

In lieu of this we have a new dogma—one which Marx would never recognize. One might say that just as Marx turned Hegel upside down, so have the modern Marxists turned Marx upside down. Socialism is no longer the synthesis that is supposed to emerge from the inevitable collapse of the most developed capitalist states. Rather, socialism is now presented as the engine of economic development itself. Capitalism, with its bourgeois emphasis upon free trade and free competition, is now portrayed as a system that is useless if not harmful for any underdeveloped country that hopes to see its wealth increase. While Marx and Engels saw in capitalism an irrepressible drive to expand production and productivity which would inevitably bring about its collapse, the modern socialist sees capitalism as completely lacking in dynamism with a fatal tendency toward total stagnation. Socialism is said to be the energizing medicine which the states stagnating under free market systems need to propel themsleves into the industrial age. This view has been accepted even by some modern-liberals, one of whom has put this new dogma in these words:

Only in Russia and China do they, the submerged masses, find a model of how in backward countries great masses of people can raise themselves quickly by their own bootstraps.

The Communists are expanding in Asia because they are demonstrating a way, at present the only obviously effective way, of raising quickly the power and the standard of living of a backward people.2

THE EMPIRICAL EVIDENCE no more supports this new hypothesis than it does the original theory of Marx. While the world has been awed by Soviet space feats, the people of Eastern Europe have grown increasingly critical of the failure of the communist economic system to provide housing, food, clothing, and other consumer goods in the desired quantities and qualities. While these countries boast of impressive rates of economic growth, their statistics have concealed serious economic failures. This is true not only in agriculture, where the disastrous effects of the communist policies are notorious, but also in industry.

This is why the revolutionary proposal that profit incentives be introduced into the Soviet economic system have made such headway throughout Eastern Europe. The proposal was first made by Professor Y.G. Liberman of the Economic-Engineering Institute of Kharkov in September 1962. Although the Liberman proposals were opposed by communist “conservatives” as being capitalistic, they were introduced in the Soviet Union on an experimental basis in July 1964. More recently, following Khrushchev’s overthrow, the Soviet government announced that it was pleased with the results of the experiment and indicated that it would be extended to other plants. This triggered an announcement by Czechoslovakia that it was completely revamping its economic system to reduce centralized planning and control, and placing greater reliance on profit incentives and the law of supply and demand. A report from Prague summed up the trouble with the old system in these words:

Through centralized planning and control, resources were squandered on almost every imaginable industrial product—from airplanes to xylophones. This over-extension produced intolerably high costs of production, manpower shortages and, above all, a loss of quality in comparison with the products of more-specialized competitors. Prague was forced to sell cheaply abroad and the cost of living here soared. There was no way to reverse the trend because central planning of production could control only quantity, not quality. It could not enforce technological improvement, innovation and refinement, which depend upon the producer’s interest in his goods.3

Hungary has introduced “capitalistic” reforms, and Poland is clearly moving in the same direction.

An economic system which has been exposed as suffering from such serious inherent defects in the countries which have tried the hardest to make it work can hardly be recommended as a model to other countries. Where it has been tried in countries even more dependent upon agriculture than those of Eastern Europe, the results have been even more disastrous. Cuba, once one of the most prosperous countries of Latin America, was impoverished by communism in less than five years. China, within a decade of the communist takeover, was shaken to her foundations by the disastrous consequences of the economic follies of the communists. Economic debacles have struck or are threatened in such countries as Indonesia, Burma, Ceylon, Guinea, Mali, and Algeria as a result of their adoption of the “socialist” approach to economic growth. Retrogression, not progress, has been the hallmark of communist experimentation in the less developed countries.

What of the charge that capitalism is too lacking in dynamism to be useful to developing countries in the modern age? This too is refuted by the evidence.

The striking contrast between the economic restoration of West Germany under free-market capitalism and the painfully halting recovery of East Germany under socialism tells a great deal about the relative dynamism of the two systems. Of course, the socialists did not anticipate this result. Paul Hagen, a German socialist, in his book Germany After Hitler, which was published during the war, said that unless Germany adopted a system of “democratic planning, as against a restoration of profit capitalism” the economic outlook for Germany and Eruope would be a dark one. He thought that restoring the old system would amount to sentencing millions of Germans to death and would endanger European reconstruction.4 Fortunately for Germany, Ludwig Erhard did not share these dogmatic doubts.

Japan, like West Germany, has displayed tremendous economic dynamism in the postwar period, while remaining wedded to free enterprise. In 1945, Japan’s physical destruction was so complete and the demoralization of her people so thorough, that some observers thought it might take a century for her to recover economically from the war. It actually took less than a decade. Manufacturing output exceeded the prewar level in 1953. Six years later it had doubled, and by mid-1964 it had doubled again. Japan is now the third largest producer of steel in the world, ranking behind the U.S. and the U.S.S.R. Japanese consumer goods are not only abundant at home, but they are being sold in great quantities all over the world. Japanese exports, despite discrimination in some markets, more than quadrupled between 1953 and 1963.

It should be noted that this achievement represents a great deal more than merely the recovery from the destruction wreaked by the war. The development of synthetic fibers during the war meant that Japan could not place such heavy reliance on earnings from raw silk exports as she had prewar. Cotton textiles, another prewar pillar of Japan’s foreign trade, also offered diminished prospects as other countries developed their own mills and restricted imports.

The Japanese knew that they would have to trade to survive, but ten years ago no planner could possibly have predicted the course their trade would take. The Honda motorcycle which has since taken a good part of the world by storm was still little more than a gleam in the eye of a struggling young mechanic. Transistor radios were still unheard of, the world was just beginning to hear that the Japanese could make optical goods that rivalled German goods in quality, and the idea that the Japanese might give the Swiss competition in watches would have been considered a joke.

Fortunately, under the free-market system, it was not necessary for any planner to predict or even understand the possibility of these developments. They came about because of the dynamism of the free-market system—that same drive for greater efficiency, greater production and greater sales which had so forcefully impressed Karl Marx. The export of these and thousands of other items in tremendous quantities has earned for Japan the means to pay for the huge amounts of food, fuel, raw materials, machinery, equipment, and consumer goods that she needs to keep her great industrial machine operating and keep her people well-fed and contented. Although Japan has 96 million people crowded into four mountainous islands whose total land area is less than that of Paraguay, they have been able to achieve a reasonably high standard of living. This has been steadily improving in recent years as productivity has gone up. Unemployment is negligible and wage rates are now said to be comparable to those in Southern European countries. The rise in real wages has averaged about 4.5 per cent a year since 1951.

It may be argued that Japan and Germany are exceptional cases, since both had already attained a high degree of industrial development before the Second World War. Recovery and further rapid growth may be easier than starting from scratch—even if it did not so appear to observers at the end of the War.

What about other countries? Are there any which were not already industrialized which have shown signs of development in recent years?

THERE HAS BEEN a striking rise in industrial activity throughout the world in the postwar period, and many of the countries of Asia, Africa, and Latin America have participated in this. One of the most interesting examples is that of Hong Kong—both because its growth has been so rapid and because its economic policies have been in such striking contrast to those prescribed by the communists. Hong Kong is perhaps the closest approximation to nineteenth century laissez faire capitalism that exists in the world today. In the words of a recent publication of the U.S. Department of Commerce:

Hong Kong is unique among the world’s markets in that it presents virtually no artificial barriers to trade. As a free port, the colony has no protective duties or quantitative restrictions on imports; no difficulties are encountered in obtaining import licenses or foreign exchange; no cumbersome procedures or delays hinder the clearing of merchandise through customs; the Hong Kong dollar is stable and freely convertible. . . .Indeed, the concept of free trade and private enterprise is heartily supported and practiced by all segments of the business and official community and has probably been the single most important factor accounting for the phenomenal development of the colony’s commerce and industry over the past decade.5

Before the War Hong Kong had been little more than a bustling entrepot for China. She resumed this role after the war for a few years, but the communist takeover on the mainland forced a dramatic change in her status. Hong Kong could no longer depend on the entrepot trade for survival. Moreover, her population was being heavily swollen by refugees from the mainland. No planner decreed that Hong Kong should emphasize industry, but it soon became apparent to a large number of people that it might be profitable to start manufacturing enterprises there. Labor was abundant and cheap, taxes were low, red tape was virtually nonexistent, raw materials and machinery could be imported freely, and Hong Kong had the whole world for her market.

A start was made in cotton textiles, and by 1957, little Hong Kong was becoming a competitor to be reckoned with in the world’s textile markets. The entrepot trade continued, but as early as 1957, about a third of her exports consisted of goods produced in Hong Kong. This ratio grew to three-fourths by 1961.

Hong Kong does not publish an index of industrial production, but some idea of the rate of increase of manufacturing output can be obtained from the statistics on registered factories and employment. In 1950, there were 1,752 such factories employing 92 thousand workers. By the end of 1963, there were 8,348 thousand factories employing 354 thousand workers. Thus the number of factories had nearly quintupled while factory employment had nearly quadrupled. However, these figures considerably understate industrial employment. According to the 1961 census, 39 per cent of the population was employed, and just over half, or 610 thousand was employed in industry.

Hong Kong’s industrial development has had to overcome the handicaps of a shortage of land and fresh water. Virtually all raw materials have to be imported, including fuels. This means that industry has not had the advantage of cheap electric power.

Nevertheless a most impressive array of manufactured products is now being produced. Cotton textiles are still the most important single product. At the end of 1963, 632 thousand spindles and 19.3 thousand looms were in operation. Over 540 million square yards of cotton cloth were produced, and most of this was exported. Other important industries include plastic products, shipbuilding and shipbreaking, machinery manufacture, cement, aluminum products, clocks and watches, enamelware, electrical equipment and appliances, foodstuffs and beverages, footwear, leather goods, electronic goods, hardware, optical goods, and clothing.

A decade ago Hong Kong was hardly anything more than an insignificant spot on the map as far as most people were concerned. Today, she is one of the major trading countries in Asia—and indeed, in the world. In 1963, only four Latin American countries, Argentina, Brazil, Venezuela, and Mexico, surpassed Hong Kong in the value of exports. This is a remarkable achievement for 3.6 million people crowded into an area of only 391 square miles which is almost completely devoid of natural resources.

As in the case of Japan, this dynamic economic expansion resulted in higher incomes and improved living standards for the working people of Hong Kong. In spite of the influx of refugees from the “workers’ state” on mainland China, which in 1960 and 1961 helped boost the population of Hong Kong by an incredible 7 per cent a year, labor shortages have developed. Wages, while still low by Western standards, have risen sharply in recent years. Since the increase in the cost of living has been one of the lowest in the world, there has been a substantial increase in real wages.6

One indication of the improvement in living standards is the sharp drop in the death rate and the infant mortality rate in the last decade. The crude death rate has fallen to 5.5 per thousand, one of the lowest in the world. The infant mortality rate has been cut by 64 per cent since 1948 to the level of 32.9 per 1000 live births in 1963.7 This is considerably lower than the rate for non-whites in the United States, and it compares with rates in Central America and Mexico which range from 80.2 for Mexico to 91.3 for Guatemala (1962 data).8

HONG KONG’S POSTWAR growth is a striking demonstration of just how dynamic a developing free economy can be. It does not prove that every free economy will necessarily be equally dynamic. The colony has had some advantages and some disadvantages not found in other developing countries. Not every country can duplicate Hong Kong’s accomplishments even if it pursues identical economic policies. Some countries suffer from even more serious economic handicaps than Hong Kong. Some are so isolated geographically that they are at a serious disadvantage in international trade. Many have a large number of inhabitants who do not easily adapt to new and more efficient modes of production. Others are beset by political instability and strife which discourage saving and investment.

When a country which suffers from serious disadvantages such as these does not make rapid economic progress, the communists invariably place the blame on whatever degree of economic freedom the government may permit.

It would be wrong to pretend that there are always easy, quick solutions to many problems such as these. Economic freedom cannot overcome all such handicaps. Some curtailment of freedom is indispensable to the attainment of a reasonable degree of order and security in society, as Thomas Hobbes long ago convincingly argued in the Leviathan.

It would be equally wrong to argue that all of these problems can be solved by abolishing all individual economic freedom, as the communists propose. This is not merely because freedom is itself something which men prize highly, frequently more highly than material progress. It is because freedom, when properly used, can accelerate material progress enormously. To use an analogy, an excess of lubricating oil may cause a motor to malfunction. This does not mean that you try to operate the equipment without any oil at all. The amount of freedom in an economy, like the lubricating oil in a motor, has to be adjusted to the varying conditions that exist.

The communists, by dogmatically propagandizing against this valuable economic “lubricant,” have succeeded in influencing policy in many countries toward minimizing the degree of economic freedom that is permitted. They have systematically labored to magnify the obstacles to economic development in free economies. They have worked to intensify political instability and insecurity, they have done their best to discourage the induction of needed savings from abroad, they have tried to frustrate efforts to increase labor productivity and needed rationalization in the allocation of economic resources. All this has been done to prove that freedom has to be eliminated. The result has been that many economies are functioning at far less than the highest possible level of efficiency either because they have permitted too much liberty to those whose main objective has been to keep the economy from performing satisfactorily, or because they have given in to unreasonable pressure to restrict freedom which might improve the functioning of the economic machine.

The experience of Japan and Hong Kong, where these machinations have had no success, deserves careful study and emulation by the countries of the world which wish to develop economically.

The Sources of Monopoly

SUDHA R. SHENOY*

IN THIS ARTICLE I wish to examine, very briefly, the tacit assumption universally made, even by free-market writers, that monopoly is a natural market phenomenon, arising out of normal market processes. I hope to show that, on the contrary, the conditions of monopoly cannot arise except in connection with government intervention.

The characteristics of monopoly are usually given as follows: (a) exclusive control over the whole—or a very high proportion—of the output of a commodity lacking close substitutes (or control over a group of commodities that are close substitutes to each other); arising out of, and maintained by, (b) barriers to entry that are tacitly assumed to be spontaneously thrown up by normal market forces; or (c) the two together (exclusive control over supply and barriers to entry), enabling the monopolist to restrict output below, and thus raise prices above, the competitive level.

For our purposes the most important assumption to consider is the second, barriers to entry.1 Before going on to examine some of these, I should first like to suggest that exclusive control over the supply of a (physically distinct) commodity does not mean that the “monopolist” is isolated from, or insulated against, the effects of competition—using the term to indicate a dynamic market process. The range of substitution open to the consumer is not something which is fixed once and for all, and which can be ascertained by simple “observation.” We seem to have here a confusion between the economic and the technological notions of substitution. Whether commodities are to be regarded as complementary or as substitutes depends not on their technological characteristics, nor on the opinion of the economist, who is only an observer, but on the real actions of individuals taken in their aspect as consumers. Products may be treated differently by different consumers at different times: a housewife may today treat cornflakes and shredded wheat as perfect (economic) substitutes, while tomorrow she may differentiate sharply between them if in the meantime her family has acquired a taste or a dislike for either. Again, wash-and-wear shirts may be seen as providing substitutes for laundry services; and home canning may similarly provide competition for the large firms producing canned goods. In short, there may be all sorts of unexpected sources of competition on the market.

To return to the notion of bars to entry: It has been argued that costs may form a barrier, in the sense that the optimal size of the plant in a particular field may be “large” compared to the size elsewhere. The necessity of having to raise large amounts of capital, however, cannot be said to prevent entry, since if sufficient profits were anticipated the capital would be forthcoming, either from savings or by withdrawing it from other uses; and if sufficient returns were not anticipated, this would indicate that the existing firm was efficient enough in meeting the demand so that the setting up of another firm would be unprofitable, or at least less profitable than using the resources elsewhere.

Nor can it be said that cut-throat competition can establish a monopoly by driving all firms except one out of business: since whenever the “monopolizing” firm attempted to raise its prices again, it would be inviting other firms to enter the field.2

WHAT ABOUT MONOPOLY arising out of exclusive control over some essential factor of production—e.g., a natural resource or a trade secret? Now here again, a rise in relative prices would render profitable the search for substitutes,3 or the use of techniques or factors that would not otherwise be profitable. Moreover, the possession of a “trade secret” by a firm must be counted as part of the skills forming its owner’s property.

Goodwill, advertising, and product differentiation are said to create monopolistic positions and barriers to entry by, so to speak, “attaching” consumers to a particular supplier, so they do not readily turn to alternative sources of supply. Here, too, the economist cannot decide for the consumer his range of substitution, since this would depend on the latter’s own preferences (including his laziness or other costs involved in acquiring information about possible substitutes). It would always be open to competing firms to try and persuade consumers of the superiority of their own products and services, since presumably the “attachment” of the consumer to a particular firm bears some relation to its performance, or to his beliefs about its performance. Moreover, to speak of such things as advertising and good will as creating monoplistic positions would seem to imply that consumers react like puppets. The function of these two is probably better described as conveying information to consumers. The concept of product differentiation is subject to the same ambiguities as that of the range of substitution: is the product “different” from the viewpoint of the technologist, the engineer, the economist-observer, or the consumer; and whose viewpoint is most relevant?

For these considerations, I will suggest that the sources of monopoly cannot be found in market processes, as their working has usually been interpreted; and I will propose that the chief sources are governmental acts of intervention, for here we have a clearly identifiable and unambiguous class of barriers to entry. We can clearly and unambiguously identify a restriction of market supply below the competitive level, and the corollary of raising prices above the level they might otherwise have attained.

In the case of such interventions as exclusive patents, grants, charters, concessions, permits, licenses, tariffs, and quotas, this restrictive effect is quite plain. All of these reduce the number of sources of market supply—the number of firms that would otherwise be present in the market. Yet we may also perceive this restrictive effect arising out of such interventions as progressive taxation, labor legislation, and the special privileges granted to labor unions. Progressive taxation prevents the accumulation of additional capital, to the comparatively greater detriment of those firms and individuals seeking to establish themselves, and to the advantage of established firms and the already-wealthy. Firms cannot expand except as they save out of their rising incomes or borrow out of the rising incomes of others. Insofar as these incomes are taxed away at progressive rates, new firms and individuals seeking to rise are placed at a comparative disadvantage to those who may fall back on previously accumulated capital. If “large” firms and “wealthy” individuals are prevented from growing larger or wealthier, the comparatively smaller firm and poorer individual are prevented from rising at all.4

The effect of labor legislation is to raise total costs above the level they would have otherwise attained. This in turn implies that fewer firms will be able to continue in, or newly enter, the fields where such legislation is applied. In other words, we have here a formidable cost barrier to entry.5 Labor unions have been granted the special privilege of using private coercion; they may use this power to cartelize an industry, or give de facto monopoly to a single firm, by preventing the entry of firms who would seek to cut costs, or by driving certain firms out of the field. That unions in the United States have used their special privileges to cartelize numerous areas of economic activity seems to be one of the major conclusions emerging from such investigations as those of Senator McClellan and his Committee.6

SO-CALLED “FAIR TRADE” laws, which set minimum prices or purport to set minimum standards, also operate to reduce competition and thereby create semi-monopolistic positions.7 And then there are, of course, the cartels and monopolies, especially in the agricultural sectors of developed economies, that have been deliberately organized by governments.8 For these reasons, we find that, historically, government intervention has almost invariably been connected with the emergence of monopolies. We may examine some specific examples of this:

In the United States, the presence of tariffs on manufactured goods almost certainly facilitated the emergence of monopoly-like situations in the manufacturing sector of the economy in the latter half of the last century by limiting the effectiveness of international competition. The remedy, however, was sought in further intervention, in the form of antitrust legislation. This at least prevented further monopolization, by making cartelizing contracts unenforceable at law, thus permitting domestic competitive forces to operate;9 but legal opinion in the country does not seem certain whether uniform pricing by independent firms should be taken as evidence of competition or collusion, while every attempt at price cutting seems to be taken as evidence of a desire to monopolize.10

In Germany, contracts in restraint of trade were declared enforceable at law by the Supreme Court, thus eliminating the emergence of competition via the activities of “chiselers”; later, the government actively engaged in the formation of cartels, even making cartelization compulsory.11

In South Africa, diamond mining was gradually becoming a more competitive industry when the government, alarmed at the prospective loss of revenue from its share of the profits of one of the companies, decreed that thenceforward mining was to be by license only.12

In Great Britain, monopoly was never a serious problem during the free trade period of the nineteenth century; it became a problem only with the abandonment of free trade in the early twentieth century, and with the acceptance by the courts at about the same time of the enforceability of restrictive contracts, if the restrictions were “reasonable.”13 In Britain, also, the government has engaged actively in the cartelization of the trucking and coal mining industries, as well as of agriculture.14

In India, comprehensive exchange and import controls, together with comprehensive and detailed regulation of every aspect of business life, insure that competition is never allowed to emerge.15

The conclusion to which all these considerations would seem to lead is that monopoly is not, as so many have supposed, a natural, market phenomenon at all; but that, on the contrary, it does not arise except in conjunction with government intervention.

What’s Wrong With Right-to-Work Laws

HIRSCHEL KASPER*

ALTHOUGH THERE IS NO necessary reason why public policy proposals should be consistent with one’s political philosophy, it can be embarrasing for classical liberals to say one thing and lobby for another. The recent debate on the issue of whether to maintain Federal legislation to enable states to pass Right-to-work laws presents just such a striking anomaly. A correct reading of classical liberal philosophy requires disapproval of legislation, Federal or state, which forbids private parties to engage in a mutually beneficial exchange, unless that private contract eliminates liberty or is an element of increased coercion. Given our existing economy. Right-to-work laws should be seen as antithetical to those who prefer more liberty and less governmental coercion.

Since this line of reasoning may not be clear, a brief discussion of the background of Right-to-work legislation may be useful. When there is a federal system of government, legislation on the same matter may arise from both the central Congress and the state legislatures. The Supreme Court has decided that national legislation preempts state legislation in labor-management relations, as well as in many other areas. In this light, Congress wrote into the 1947 Taft-Hartley Act a provision, Section 14(b), which said specifically that the Act should not

. . .be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial law.

The effect of such Congressional legislation is to allow states to prohibit union-management contracts which require union membership as a condition of employment. About two-fifths of the states, mostly in the South and West, have taken advantage of Section 14(b) of the Taft-Hartly Act and passed restrictive legislation to outlaw “union shop” agreements. The state laws, referred to as Right-to-work laws, thus derive from the Congressional legislation; and if Congress had repealed Section 14(b), there is no doubt that the state legislation would have been invalidated.

It is not immediately apparent why a classical liberal should favor legislation which forbids unions and firms from signing a contract which requires union membership as a condition of employment. Certainly, there would be opposition to legislation which prohibited contracts from including provisions on hours, grievance procedures, and working conditions. Union security provisions requiring workers to join unions and to pay union dues are as much a legitimate condition of employment as requirements that workers arrive at work on time and perform their jobs satisfactorily. All of these conditions of employment are coercive of the employees who would prefer to work under other arrangements; but there is no especial diminution of liberty, certainly not in modern-day America. The right to work for a particular firm under an employee’s own conditions has not been recognized, and is likely to remain secondary to the right of a firm and a union to establish mutually satisfactory rules for employment.

TO A CLASSICAL LIBERAL, the denial of a union shop, where it is desired both by labor and by management, is a needless and arbitrary reduction in liberty. All workers in each of the nineteen states with Right-to-work laws are denied by statute the opportunity of working in a union shop. Just as an open, competitive society will give birth to firms which can take advantage of the propensity of women to prefer to work from 10:00 A.M. to 3:00 P.M., so it will give birth to firms which hire workers who prefer not to join unions, for whatever reason. This is more than an academic point, since total union membership in the United States is less than one-fourth of the total labor force, and less than one-half of the number of “potential” or “eligible” union members. The open society is far more protective of the liberty of workers to work under conditions which they prefer than a society which prohibits certain working conditions.

In addition, it is not obvious that union shop provisions should be prohibited in order to improve labor-management relations. On the contrary, there is a strong presumption for allowing the parties to the bargain the widest latitude in working out for themselves those conditions of employment which improve the labor-management relations climate. Bargaining practice suggests that union security provisions are obtained by the union only at the cost of foregoing some other demand. Reportedly, management often “sells” a union shop provision for a five-cent per hour wage increase. Since there is so little known about the impact of union security provisions on labor-management relations, there is every reason to suppose that the regulation of union security ought to be left to the parties involved.

Although all unions might prefer stronger union security provisions, companies are of mixed opinion. Some firms believe that the climate of labor-management relations is improved when unions are assured of members without continuing incidents of bickering; others believe just the opposite. In one case, the labor agreement of a large farm implement manufacturer includes the text of a union security provision which it would want but cannot have because such is not “legally possible under Iowa and Federal laws” (according to the agreement). Thus, the existence of a Right-to-work law interferes with the right of private parties to sign agreements and to commit private property in accordance with their preferences. The effect is to coerce the parties to the bargain and, in our society, to increase the liberty of none.

Let me emphasize that the argument here is not one of whether union security provisions are good or bad; the argument is whether there should be legislation which prohibits them.

IT IS DIFFICULT TO shake the suspicion that many people favor Right-to-work laws because of the presumption that such legislation will weaken the political and economic power of unions. Regardless of whether this presumption is correct, and most of the evidence is in the other direction, this kind of legislation is a most obtuse way of accomplishing the goal. If the opposition to unions is to be based on liberal tenets, it should be focused on the nature of unions and collective bargaining per se, and not on those kinds of government interference which on any other grounds would be inherently indefensible.

Although Right-to-work laws interfere with the right of private contract and must be coercive, if they are effective, it does not follow that repeal of such legislation is neutral with respect to private property. The concern here is that some workers, currently employed in Right-to-work states, who would prefer jobs where union membership is not a condition of employment, would suffer a loss of property if their unions obtained union shop contracts. These workers have accumulated rights in the form of pensions, insurance, and, most important, seniority, which they would lose should they have to take another job to avoid union membership. One compromise which would increase freedom, preserve property rights, and minimize coercion might be the repeal of all Right-to-work laws—i.e., repeal of Section 14(b)—but with the provision that all currently employed workers who are not now members of a labor union would not be compelled to join a union as a condition of employment. All new employees in firms which have union shops would be required to join the union as a condition of employment. Such a compromise would ease the transition for workers and unions in states with Right-to-work laws, since job opportunities in those states are increasing at a faster rate than in the economy as a whole.

COMMUNICATION:

“Fragile” Constitutions

W. H. HUTT*

PROF. THOMAS MOLNAR’S courteous criticism of Dr. Denis Cowen’s interesting article on “Prospects for South Africa”1 reminds me of an occasion some years ago when I was addressing a meeting of the South African Institute of Race Relations (from the floor). The question of constitutional protection of minorities had arisen. I put forward the proposition that “the essence of an effective constitution is that it is built on mistrust, not on faith.” I can remember the murmer of disapproval—even seething indignation—which swept over the gathering. Most of the kindly, well-meaning people present—many of them clergy—could simply not contemplate so cynical a view.

Several years before that, at another meeting of the same Institute, I had argued that the prospect of an African majority, through the ultimate extension of the franchise on the basis of “one man, one vote,” created wholly justifiable fears on the part of the Whites. I suggested that, if the sharing of political power with the Africans was ever to be peacefully achieved, it would have to be based on constitutional entrenchment of the rights of the three minorities—the Whites, the Coloureds (i.e., the half-castes), and the Indians. I suggested further that, for the presently-enfranchised Whites to be persuaded to share their virtual monopoly of political power, it would be absolutely essential to renounce the principle of universal suffrage on a common roll and accept some form of weighted franchise.

I was told that the Africans would never agree to any such arrangement; that the very suggestion implied a slight on the majority race and a wish to maintain them in a permanent condition of inferiority and subordinacy; and, much to my regret, my proposal evoked an angry attack in the press from Alan Paton, for whom I have a profound admiration as a genuine humanitarian and one of the greatest novelists of this generation.

Professor Molnar’s position appears to be exactly the opposite to that of the sentimentalists whose opposition I have recorded. He seems to argue categorically that no effective constitutional protection for minorities, such as the Whites in South Africa, is possible, unless the constitution denies all political representation to the majority group. Those who believe, as the Progressive Party in South Africa does, that the solution lies in the direction of limitations on voting rights, he describes as “starry-eyed liberals and misguided intellectuals.” Actually, that Party happens to be the only political party of which I myself have ever been a member, and I hardly deserve to be called “liberal” in the current American sense of the word.

The sole reason why I felt compelled to join the Progressives a few years ago was that they are the only party in my country which has any glimmering of insight into the imperative need to restrain majority power. However wrong they may be on some issues, they do perceive that, if we are to find any democratic solution to the incipient racial conflict which history has bequeathed us, it is the state which we must somehow control.

Yet we are reminded by Prof. Molnar that very few bills of rights and constitutions have “proved more than very fragile paper barriers.” This is undoubtedly true; but his point is, we should notice, not that constitutional entrenchments cannot be effective when they are enforced, but that constitutions will be torn up when they are unpalatable to majorities.

The tearing up of the 1910 constitution of South Africa through the subterfuge of packing the Senate, and the absence of Constitutional restraint to prevent political appointments to the Supreme Court of the United States (which appointments have led to the Court’s functioning on vital issues—as I once heard it put—“like a constitutional convention in permanent session”), ought properly to shake the faith of those who, like myself, believe that minorities can be effectively protected by entrenched constitutional provisions with a rigid separation of powers.

But if a constitution is framed by those who have studied dispassionately the manner in which time-serving politicians have in the past trampled on bills of rights, and who recognize therefore that their task must be carried out in an atmosphere of the utmost distrust of politicians and parliaments, and even of judges, must they necessarily fail? Obviously, a more effective means of ensuring judicial independence and preventing judicial tyranny than has yet been achieved in the United States is needed. Moreover, the question of control of the police and the armed forces is also a vital issue.

I DO NOT THINK THE leaders of the Progressive Party in South Africa have gone nearly far enough in their studies of these and other aspects of the working of constitutions. The complex racial difficulties with which they are faced demand more imagination and inventiveness than they have yet given to their task; but they are pioneers among realistic political thinkers about race relations in South Africa. They deserve every encouragement and the frankest criticism from their friends.

May not the attitude of Prof. Molnar on this issue have been influenced by a belief that a more humane form of apartheid is possible? Does he believe that the “separate development” of Africans in Bantustans like the Transkei, in which they will be permitted local government rights and ultimately perhaps (although this is very unlikely) some measure of political independence, can provide a statesmanlike solution?

The truth is that, in spite of all the efforts to bring about segregation of one of the races in South Africa—the Africans—they seem to be in the process of integration into the White economy at an accelerating pace. As a very wise resolution submitted to a meeting of the Institute of Race Relations recently put it, “Segregation is an ideal. . . . It does not exist in any general or fundamental form in South Africa. The fact of integration and the ideal of segregation are on different planes and do not admit of a middle course between them. . . .” And the resolution suggests that one proper field of activity is, therefore, “demonstration of the fact of integration and exploration of ways to live with it. . . .”

In spite of strenuous, indeed ruthless, governmental attempts to turn back the tide, economic integration is growing. Is it really conceivable, then, that a minority race will be able permanently to deny equality of opportunity to the other races, who constitute an overwhelming majority of the population, and to withhold from Africans the effective right to vote in the areas in which most of them must work? If Prof. Molnar thinks that this is possible, does he not invite the application to himself of his own epithet, “starryeyed”?

When the minorities in my country fear eventual domination by the Africans—possibly imbued with the spirit of African nationalism and thirsting for revenge—these minorities are, of course, fearing what nationalists can achieve through the machinery of the state. The Progressive Party and Dr. Cowen are thinking in terms of preventing the abuse of state power. If Prof. Molnar maintains that they have not yet satisfactorially solved the problem of how to do so, I agree with him. But surely he cannot contend that they are groping for a solution in the wrong direction.

Origins of Apartheid:

In the following excerpts from his book, Economics of the Colour Bar, Prof. Hutt discusses the origins of apartheid. In the opinion of the Editors, an awareness of the history of apartheid is important in light of the preceding discussion.

WE DO NOT . . . find in colour prejudice as such the main origin-nor, perhaps, even the most important cause—of most economic colour bars. The chief source of colour discrimination is, I suggest, to be found in the natural determination to defend economic privilege (the preservation of “customary economic relationships between the races”), non-Whites simply happening to be the essentially underprivileged groups in South Africa. Certainly colour custom and colour prejudice have been persistently exploited in efforts to win electoral support for measures which seek to curb the tendency of the profit system to admit the poorer races to better opportunities; but such casuistic exploitation of custom and prejudice does not make it the prime motive for the exclusion of competition from the despised or feared Coloureds, Asiatics or Africans. . . .1

Because of the shortage of skilled personnel in South Africa at the beginning of the century, artisan immigrants, reared in the traditions of the emergent restrictionist ideologies and British trade unionism, were brought to fill artisan and foreman posts. It is hardly surprising that, after the Boer war (and together with their Afrikaner comrades after 1907), they should have endeavored to enforce a sort of closed shop which denied all opportunities for advancement to their non-White comrades. The political background of the period had produced stereotypes which actively encouraged the formation of labour unions, and the strike power so created seems to have enabled the Whites to perpetuate the ratio of White to non-White wage-rates which had been established by the 1880’s. In this way, the unions managed not only to preserve the remuneration of their members against the competition of their fellow Whites, but later to forbid the training of Africans for employment in responsible, supervisory and skilled occupations.

What was probably at that time the most blatant colour bar of history (although by no means the most burdensome) received the force of law in 1911. The motive was industrial peace; but it was sought via an appeasement of the militant White labour organization, which appeared then to be growing in strike power and political support.

The beginnings of militant unionism date from the 1880’s and 1890’s when branches of British labour unions were opened in South Africa. The leadership was in the hands of typical union officials of the British type-hard, ruthless but scarcely Marxist. Quite early in South African labour history, however, the influence of the extreme Left seems to have been discernable, and resort to violence in support of strike action was not uncommon. This tendency was probably due to infiltration of the class-war idea from foreign countries rather than from the relatively respectable British trade unionism of the day....2

During the First World War, the White miners’ union had succeeded in enforcing wage-rate increases many times larger than those obtained by the unorganized Africans. But the position of the latter had in some respects improved because, through the emergency, they had been permitted to undertake semi-skilled work especially as drill-sharpeners. This opportunity for a small proportion of Africans mitigated the increased costs of mining gold, the price of which rose to a premium after the war for a short period only. When it was obvious that the sterling price of gold would return to its standard level, the mine-owners naturally attempted to retain Africans in semi-skilled tasks and tried further to obtain some relaxation of other wasteful provisions enforced through regulations under the 1911 Colour Bar Act. They asked for a ratio of 10.5 Africans to 1 White; but the labour union demanded 3.5 to 1. A disastrous strike followed in 1922. The miners were supported by a general strike on the Rand, which developed into virtually an armed uprising. Those who revolted were mainly Afrikaners, but as always the extremists of the Left were experts in the art of fishing in troubled waters. W. H. Andrews, who was shortly to become Secretary of the Communist Party in South Africa, played a leading role in this fight for White privilege. The revolt was crushed but powerful publicity had been given to the notion that the Whites were fighting against capitalist exploiters for the preservation of their traditional and rightful economic supremacy. In that sense, the strike, which has been called the “colour bar strike,” was a victory for Andrews and those who called themselves socialists.

At the time of the strike, the overwhelming majority of the white miners (foremen or artisans, as distinct from executives) were Afrikaners from the Transvaal and the Orange Free State, and their anti-colour indoctrination had been fruitfully exploited from the first by the Marxist-indoctrinated inspirers and leaders of the insurrection, such as Andrews. The result was a great boost to the South African Labour Party, which was modelled more or less on its British counterpart and was on the best terms with the British trade-union movement. In 1924, largely through the impact upon White opinion of the 1922 strike, it obtained the chance of sharing in government through a coalition formed with the Nationalist Party, a socialistically-oriented party representing Afrikaners who accepted the principle of White supremacy and non-White subjection. Without this active co-operation of a typically British sort of Socialist party to form a Labour-Nationalist “Pact,” the era which introduced the most serious forms of colour injustice might never have emerged....3

THE “RATE FOR THE JOB” was the vital principle in the most powerful yet most subtle colour bar that has ever operated. Equal pay for equal work (i.e., for identical outputs of a given quality) is a result of the neutrality of the free non-discriminatory market. It is no method of achieving such a market. When the standard wage-rate is forced above the free market level (whether through legal enactment or the strike threat), thereby reducing the output which can be produced profitably, it must have the effect of preventing the entry of subordinate races or classes into the protected field or of actually excluding them from it. This has been by far the most effective method of preserving White privileges, largely because it can be represented as non-discriminatory. Whereas some of the policies of the Labour-Nationalist Pact amounted to blatant discrimination (such as the deliberate dismissal of non-Whites in order to employ Whites in government service), the effects of the “civilized labour” restraints have been far more important. They have rendered much more formidable the restraints imposed by custom and prejudice that have debarred non-Whites from avenues of economic advancement. They have, indeed, had a more unjust impact than “influx control” and “job reservation” under apartheid. . . .4

The initial disadvantages of the non-Whites due to home background and lack of resources for investment in their own education have in themselves been a minor hindrance to their progress. It will generally pay private enterprise to see that education, both general and technical, is made available where openings for the employment of the attributes and skills acquired are not likely to be suppressed. But powerful custom or prejudice, collusive action and legal enactment, by closing potential avenues of employment may destroy the motive for investment in human capital. Indeed, it will be wasteful for the state, for business concerns or for individuals to devote their energies and limited incomes to such purposes. But there would have been an irresistibly strong demand for developing the industrial usefulness of the Coloureds if it had not been for fears that any such move would have encountered other legislative steps to render unusable the skills so developed. The profit motive is powerful; but when it is likely to be overruled by legislation or regulation its power to serve the community is hamstrung. . . .5

I have tried to show that in South Africa it has been to the advantage of investors as a whole that all colour bars should be broken down; and that the managements of commercial and industrial firms (when they have not been intimidated by politicians wielding the planning powers of the state) have striven to find methods of providing more productive and better remunerated opportunities for the non-Whites. . . .6

The virtues of the free market do not depend upon the virtues of the men at the political top but on the dispersed powers of substitution exercised by men in their role as consumers. In that role, a truely competitive market enables them to exert the energy which enforces the neutrality of business decision-making in respect of race, colour, creed, sex, class, accent, school, or income group. The reader will have noticed that at no time have I claimed that the free market which released the “liberating force” has been motivated by altruistic sentiment. . . .7

BOOKS:

Kefauver and Populist Economics

SAM PELTZMAN*

In a Few Hands: Monopoly Power in America by Estes Kefauver, Baltimore: Penguin Books, 1965. 246p. $1.25, paper.

THE LATE SENATOR Estes Kefauver first came into prominence in the early 1950’s as chairman of the Senate crime investigating committee. After he had made two unsuccessful bids for the Democratic Presidential nomination, his name reappeared in the headlines in 1958 when the Senate Subcommittee on Antitrust and Monopoly conducted hearings under his chairmanship on industrial pricing practices. In a Few Hands summarizes some of the more lurid findings which made those hearings newsworthy and serves as a vehicle for the Senator’s random thoughts on the problem of monopoly in American industry.

Since the book is about monopoly, it was to be expected that Senator Kefauver would define the beast. The etymologically correct definition—a market served by one seller—applies to none of the industries discussed in the book (drugs, steel, baking, automobiles). Most of the time Senator Kefauver seems to apply the term to an industry dominated by a few firms, but he never does precisely define it. Sometimes it appears that the word “monopoly” is just longhand for “bad”—since a monopoly, whatever it is, is bad, many, if not all bad things derive from monopolies. This utter failure to make necessary intellectual distinctions is well illustrated by the Senator’s discussion of the drug industry.

Here we have an industry in which Kefauver is able to cite numerous examples (pp. 11-23) of small competitors substantially undercutting their larger rivals in order to win orders, and he suggests that the availability of cut-price drugs is fairly widespread (p. 24). To be sure, price competition doesn’t characterize all drugs; but the Senator makes it quite clear that the most notable exceptions are to be found among patented drugs.1 Now, of course, price competition is absent here because of a legally enforced monopoly and has nothing to do with the particular market structure of the drug industry. Whatever else it may be, it is not the purpose of the patent laws to promote price competition in drugs or any other patented product but to prevent precisely that. If price competition in drugs now protected by patent is deemed desirable, then it is the patent law and not the structure of the drug industry which has to be changed.

If the drug industry, where it is unprotected by law, doesn’t exhibit the evil pricing policies of monopolistic industries, what other evil doings can it be saddled with? In answering this question Senator Kefauver makes much of some of the defective drugs that have been introduced onto the market in recent years, e.g., thalidomide, chloromycetin, MER/29. The tragic consequences of the introduction of these drugs is well-known, and the Senator recounts them for his reader. Yet, again, the connection of all this with the market structure of the drug industry is never made clear. Do such mistakes occur more frequently because the drug industry is dominated by a few large firms, or would such events occur about as frequently if there were ten thousand equal sized drug producers? Surely it would seem that the losses incurred by way of law suits, damaged trade reputation, etc., would weigh as heavily against relatively large as against relatively small firms. Implicitly Senator Kefauver must have believed that these losses were somehow not as great for the relatively large firms, or that such firms derived some special gains from selling bad drugs; if he didn’t believe this, why the association of the practice with “monopoly” and not, say, with stupidity? The reason for this belief is never spelled out, however, and it will remain a mystery to those who do not share the Senator’s animus against the drug industry.

Since Senator Kefauver’s discussion of other industries is no more precise and no less confused than that of the drug industry, it is easy to wonder if he was trying to make any point at all. He was; but it surfaces amidst contradiction, and it turns out to have nothing to do with monopoly at all.

SENATOR KEFAUVER’S central point becomes obvious when one compares his discussions of the steel and baking industries. The steel industry is chided for various monopolistic pricing practices—rigid prices, implicit collusion whereby all firms adopt the prices set by one of them, etc. If this or any industry is to serve the public interest, according to Senator Kefauver, the firms in it really ought to compete against each other in the most vigorous manner:

It is this free spirit of individualistic behavior which gives to the public the benefits of competitive enterprise, namely lower prices and better quality. It is this same spirit which earns the enmity of the monopoly for its unsettling and disturbing impact upon established ways of doing things, not to speak of the disruptive consequences on [sic] monopolistic pricing and profits.2

Now, sometime after World War II some baking companies prospered by acting as the Senator believed steel companies should. They penetrated many markets by offering lower prices than existing bakers. Predictably, this forced some established bakers out of business. Yet this particular disturbance of established ways of doing business is not welcomed by Senator Kefauver. It is, instead, cause for complaint that “small producers, unable to stand up under the pressure directed against them by the giants of the industry, are disappearing from the American scene.”3 All of a sudden the laudable “competitive enterprise” recommended to the steel industry becomes, when practiced by baking companies, evil “competitive warfare.”4 The desideratum is no longer the “free spirit of individualistic behavior” but rather “free and reasonable competition.”5 Why this palpable contradiction, this switch from the ethics of competition to the ethics of the cartel? The answer has already been suggested: The aggressive bakers, because of their success, have become large; they are replacing small bakers. This really is the crux of the matter. Both the aggressive baker and the somnolent steelmaker are bad mainly because they are big. It would do little good to point out that large absolute size has nothing per se to do with monopoly; that, in fact, many of the small bakers replaced by large, nationwide bakers were local monopolies; and that a few large companies competing in several local markets make for a more competitive industry than several local monopolies. Senator Kefauver simply seems to have had a tropistic reaction against big corporations (the TVA excepted) which he embellished with the nostalgia for rural and small town America that comes from his Populist political heritage.6 He tends to identify this advocacy of an economic system composed of many, physically small firms with advocacy of the competitive system and opposition to monopoly. The normal functioning of a competitive system will, of course, comprehend cases where large firms win out over small firms. At no point in his book, however, does the Senator point to any such event as an example of the healthy functioning of a competitive economy. Where such events are alluded to, as with the baking industry, the context is the triumph of evil bigness over the victimized innocence of the small.

Once Senator Kefauver’s basic premise becomes clear, many of the other points he makes become explainable, if not particularly understandable. Take, for example, his discussion of the relationship between monopoly and the development of a community—“monopoly” for these purposes being identified with the dominant importance of large absentee-owned industries in a community’s economic life. To monopoly, or rather to this grotesque A is bad, B is bad, therefore A is B definition of monopoly, Senator Kefauver attempts to attribute, in whole or part, each of the following community ills or presumed ills: shoddily built houses, slums, high bankruptcy rates among small retail stores, high infant mortality rates, lack of popular interest in literature and education, low church membership, a diminution of the spirit of neighborliness and good fellowship, and excessive time spent by youths in pool halls.7 This incredible list could be expanded. Some may be tempted to find in all this a reflection of the type of mentality that moved men to burn witches in former times. To Senator Kefauver, however, it must have appeared the simple truth that where the desirable attributes of the small Tennessee town have vanished, big companies captained from the far-off metropolis are the cause of it all. Anyhow, talking against monopoly is these days more socially respectable than witch burning.

IT IS PERHAPS fortunate that all Senator Kefauver, the co-author of an important antitrust statute, did in his book was to talk against monopoly. He made no important policy recommendation for remedying what he conceived to be the monopoly problem. In fact, he is at his most perceptive where he discusses and rejects certain remedies advanced by others. He rejects general government price regulation, for example, because of a clear recognition that where it already exists—e.g., airlines, railroads, natural gas—such regulation has become little more than a shield for cartelization.8

BOOKS:

Freedom Under Lincoln by Dean Sprague, Boston: Houghton Mifflin Co., 1965. 345 p. $5.95.

THE COMPLETION, a year ago, of the centennial celebration affords an opportunity for a more sober re-evaluation of the Civil War’s continuing influence upon American life and thought. Freedom Under Lincoln is a useful contribution to Civil War history which also offers timely instruction for our own day. In a dramatic and interesting way, it tells the story of the suppression of civil liberties in the United States as the Lincoln Administration struggled to preserve the Union. In the unprecedented experience of trying to cope with the problems of secession and civil war, the North lived in a state of public hysteria. Fearful for the safety of the capital at Washington and of the border slave states of Maryland, Kentucky, and Missouri, the President, without consulting Congress, suspended the writ of habeas corpus and permitted Secretary of State Seward to order the arbitrary martial arrest and imprisonment of hundreds of American citizens.

More than in any other crisis in the nation’s history, the Civil War raised the question of the extent of the individual’s loyalties and responsibilities in relation to his government. Though there was justifiable concern in the North over the presence there of thousands of Southern sympathizers, it was nevertheless tragic that the Lincoln Administration felt forced to abandon traditional American rights and freedoms. In addition to the sudden arrest of citizens whose loyalty was suspect—often on the flimsiest sort of hearsay evidence—newspapers were coerced or suspended, state legislatures dissolved, and free elections corrupted. Soldiers home on leave heightened the intolerant militarist atmosphere in the North while, again and again, as Sprague’s book demonstrates, the doctrine of military necessity was used improperly to justify harsh measures. More often than not, the appeal to national security, in areas far removed from the battlefield, was simply an excuse to cloak the expansion of Federal power over the states and individual citizens. In the author’s words, “the policy of repression did have a tremendous impact on the nation. It fundamentally altered the balance of power between the Federal and state governments, laying the groundwork for such actions as the national draft and the Federal income tax.”

Fortunately, most of those imprisoned were held only for short periods of time—as the protests against the arbitrary arrests grew in volume and intensity. Some of those taken away, such as James Wall of New Jersey who later became a United States Senator, actually derived a certain political benefit from their imprisonment and never stopped talking against the War. After 1861, when the immediate military safety of the North was largely assured, the suppression of dissent was directed mainly against those who advocated the prompt negotiation of a peace settlement with the South; and later, in 1863, when Clement L. Vallandigham was arrested for stating his peace views, the famous midnight knock on the door by agents of Secretary Seward or Stanton had become a rare event. As the brave but scattered voices of dissent were silenced, the growth of national power over the individual become more and more a component part of the preservation of the Union.

ALTHOUGH THE BROAD outlines of the American democratic process were preserved, and although Lincoln himself exercised a mild and humane influence within his Administration, it is clear nevertheless that the Civil War did great violence to the Constitution it sought to safeguard. In the very process of extending freedom to the Negro slaves, countless Americans were temporarily deprived of their civil liberties and personal freedom. That the ultimate legacy of the Civil War was, however, one of hope rather than despair is indicated in the author’s concluding quotation from the Supreme Court’s classic postwar defense of individual rights in the celebrated Milligan case of 1866. In language which has echoed to our own time, the Court held that “the Constitution of the United States is a law for rulers and people, equally in war and in peace, and covers with the shield of its protection all classes of men, at all times, and under all circumstances.”

—ARTHUR A. EKIRCH. JR.1

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NEW BOOKS AND ARTICLES

THE FOLLOWING IS A SELECT LIST OF BOOKS AND ARTICLES WHICH, IN THE OPINION OF THE EDITORS, MAY BE OF INTEREST TO OUR READERS.

Robert M. Hurt and Robert M. Schuchman, “The Economic Rationale of Copyright,” American Economic Review, LVI (May 1966), 421-32. The authors, who were both closely associated with New Individualist Review, argue that copyright is not the most suitable way either to protect property rights in publication or to promote publication. “If we believe in the theory that an author is entitled to certain moral rights as an extension of his personality, then traditional tort law protection could satisfy our objectives short of a copyright monopoly grant. If we are attracted by the analysis of the Register of Copyrights, that society has an obligation to support the creators of literary products, our goal could be achieved by other methods of reward than copyright, such as tax exemptions for royalties or payment of cash bounties for literary creation. . . .We can say that the traditional assumption that copyrights enhance the general welfare is at least subject to attack on theoretical grounds; the subject certainly deserves more investigation and less self-rightious defense.”
One of the most interesting and lively publications on the market today is Innovator, devoted to “applications, experiments, and advanced developments of liberty.” In its June issue, several authors provide the reader with information about the origins of the government postal monopoly, and the non-governmental origins of most of the technological advances which the industry has made. An earlier issue (January 1966) carried articles concerned with the question of privately owned roads and highways, as opposed to the present system of government-maintained roads. Published in newsletter format, a year’s subscription is $2.00. Write: Innovator, Box 34718, Los Angeles, Calif. 90034.
Grant McConnell, “P.R. in the Forests,” Sierra Club Bulletin, April 1966. Prof. McConnell, of the Department of Political Science at the University of Chicago, cites evidence in this article to add the United States Forest Service to the list of regulatory agencies taken over and made to serve the interests of those supposedly regulated: “As with other reforming and formally independent agencies, time and exposure took their toll. In order to survive and also maintain its bureaucratic autonomy, the Forest Service had to accomodate itself to the interest groups whose activities it was supposed to regulate. Over time, the service, like such other independent regulatory agencies as the ICC, the CAB and the SEC, acquired as its own constituency a particular industry, in this case lumber. Thus, in symbiotic relationship, there lies behind the Forest Service a strongly organized and determined lumbering industry.” Write: Sierra Club, 220 Bush Street, San Francisco, Calif. 94104. This article is an adaptation of one by the same title which appeared in the Nation, December 27, 1965, and additional material is in Prof. McConnell’s recent book, Private Power and American Democracy (New York: Alfred A. Knopf, 1966), $4.95.
Jora R. Minasian, “Television Pricing and the Theory of Public Goods,” Journal of Law and Economics, VII (October 1964), 71-80. This article, in the form of an analysis of the theory of public goods advanced by Prof. Paul A. Samuelson, is a fine addition to the literature on pay television. Prof. Minasian is chiefly concerned with the additional choices in programming which would be yielded by subscription TV, since, of the two, subscription pricing would be more responsive to minority consumer wants. This article should be read in conjunction with R.H. Coase’s article, “The Federal Communications Commission,” in the second volume of the Journal (1959). For subscriptions or single copies, write: The Journal of Law and Economics, University of Chicago Law School, Chicago, Illinois 60637. Single copies, $2.50; students, $1.00. The Journal is issued annually; subscription prices are multiples of single copy prices.
Two articles in major publications have recently noted a striking comparison between the United States today and the first years of the Roman Empire: Thomas Molnar, “Imperial America: A Look into the Future,” National Review, May 3, 1966, and Hans J. Morgenthau, “The Colossus of Johnson City,” New York Review of Books, March 31, 1966. Although the two authors differ markedly in their political views, both writers recognize that Empire may work unintended effects upon American federal institutions. These articles, and many others offering a more thorough treatment of the subject, ought to be of interest (i) to conservatives who advocate a vigorous foreign policy but limited government at home, and (ii) to social democrats who oppose such a foreign policy but favor a vigorous government at home. Specifically to be recommended is a pamphlet by Garet Garrett, first published in 1952 and reprinted in his book The People’s Pottage (Caldwell, Idaho: Caxton Printers, 1953), entitled “The Rise of Empire.” This short piece is an excellent, perceptive analysis of the degeneration of a republic into an empire through the actions of a strong central executive and an aggressive foreign policy. A condensed reprint of this article appeared in the Winter 1966 issue of Left and Right (Box 395, Cathedral Station, New York NY 10025; 85 cents).
An informative discussion of the recent Supreme Court ruling in the Ginzberg and other pornography cases is provided in the April 11, 1966, issue of The New Leader, by Richard Morgan of Columbia University (“The Court and Obscenity”). Morgan emphasizes the lack of logic and arbitrariness of the Brennan decision against Ginzberg, underwritten by Warren, Fortas, and two other Justices. The issue is dealt with also in an editorial in the April 19, 1966, issue of National Review (“Ginzberg and Pornography”), a contribution to the discussion notable not so much for the light it casts on the problem as for the insight it provides into the thinking of contemporary American conservatives. National Review’s editorial comment exhausts itself in irrelevent sallies against “the hypocrite Ginzberg. . .a pornographer-for-profit

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2.

THE HUMANITIES IN A CENTURY OF THE COMMON MAN

Reflections on the Loss of Liberty

The Fusionists on Liberalism and Tradition

H. L. Mencken and The American Hydra

NEW BOOKS AND ARTICLES

AS A MAGAZINE . . .

VOLUME 3, NUMBER 4, SPRING 1965

EDITORIAL STAFF

EDITORIAL ADVISORS

COLLEGE AND UNIVERSITY REPRESENTATIVES

IN MEMORIAM Robert M. Hurt

The Revival of Traditional Liberalism*

Constitutional Mythology

Prospects for South Africa

COMMUNICATION: Note on the Election

Economic Liberalism in Post-War Germany

Property Law and Racial Discrimination

NEW BOOKS AND ARTICLES

DeGaulle and Erhard Who are the men behind them?

Lyndon Johnson Got 130% of The Votes Needed to Lose!

VOLUME 4, NUMBER 1, SUMMER 1965

EDITORIAL STAFF

EDITORIAL ADVISORS

Financing Higher Education in the United States

Trends in the U. S. Supreme Court

How Soviet Planning Works

WHAT YOU CAN DO TO HELP NIR . . .

Collectivism in Social Theory

Justice, “Needs,” and Charity

COMMUNICATION: The 1964 Election

Rusher on Goldwater:

Reply to Mr. Rusher:

The View from London Bridge

REVIEW:

NEW BOOKS AND ARTICLES

Coming This Fall From Regnery

In August 1963 We Promised:

VOLUME 4, NUMBER 2, WINTER 1966

EDITORIAL STAFF

EDITORIAL ADVISORS

Herbert Clark Hoover: A Reconsideration

Twelve Thoughts on Inflation

Raico on Liberalism and Religion

Reply to Mr. Evans:*

Anglican and Gallican Liberty

The Uneasy Case for State Education

COMMUNICATION: South Africa Reconsidered

AVAILABLE FOR A LIMITED TIME . . .

REVIEW: Alchian and Allen’s “University Economics”

NEW BOOKS AND ARTICLES

Sampling of Distinguished Paperbacks

Few Readers Realize . . .

VOLUME 4, NUMBER 3, SPRING 1966

NIR BACK ISSUES . . .

EDITORIAL STAFF

EDITORIAL ADVISORS

The Triple Revolution: A New Metaphysics

NIR NEEDS YOUR HELP . . .

Agnosticism and Morality

Wage Rates, Minimum Wage Laws, and Unemployment

Economic Development and Free Markets1

The Sources of Monopoly

What’s Wrong With Right-to-Work Laws

*The Revival of Traditional Liberalism**

COMMUNICATION:

Note on the Election

COMMUNICATION:

The 1964 Election

*Reply to Mr. Evans:**

COMMUNICATION:

South Africa Reconsidered

REVIEW:

Alchian and Allen’s “University Economics”

COMMUNICATION:

“Fragile” Constitutions

BOOKS:

Kefauver and Populist Economics