The Online Library of Liberty

A project of Liberty Fund, Inc.

• Foreword
• Author’s Preface
• Interventionism
• Introduction
• 1.: The Problem
• 2.: Capitalism Or Market Economy
• 3.: The Socialist Economy
• 4.: The Capitalist State and the Socialist State
• 5.: The Interventionist State
• 6.: The Plea For Moral Reform
• I.: Interference By Restriction
• 1.: The Nature of Restrictive Measures
• 2.: Costs and Benefits of Restrictive Measures
• 3.: The Restrictive Measure As a Privilege
• 4.: Restrictive Measures As Expenditures
• II.: Interference By Price Control
• 1.: The Alternative: Statutory Law Versus Economic Law
• 2.: The Reaction of the Market
• 3.: Minimum Wages and Unemployment
• 4.: The Political Consequences of Unemployment
• III.: Inflation and Credit Expansion
• 1.: Inflation
• 2.: Credit Expansion
• 3.: Foreign Exchange Control
• 4.: The Flight of Capital and the Problem of “hot Money”
• IV.: Confiscation and Subsidies
• 1.: Confiscation
• 2.: The Procurement of Funds For Public Expenditure
• 3.: Unprofitable Public Works and Subsidies
• 4.: “altruistic” Entrepreneurship
• V.: Corporativism and Syndicalism
• 1.: Corporativism
• 2.: Syndicalism
• VI.: War Economy
• 1.: War and the Market Economy
• 2.: Total War and War Socialism
• 3.: Market Economy and National Defense
• VII.: The Economic, Social, and Political Consequences of Interventionism
• 1.: The Economic Consequences
• 2.: Parliamentary Government and Interventionism
• 3.: Freedom and the Economic System
• 4.: The Great Delusion
• 5.: The Source of Hitler’s Success
• VIII.: Conclusions
• Reading References

3.

The Restrictive Measure as a Privilege

The policy of restrictive measures was believed to be a policy favoring producers, while the policy which does not want to impair the working of the market process was considered to be a policy favoring consumers. The advocates of the former policy justify it by pointing out that it was not the task of the authority to pursue a policy for the benefit of those who merely consume the products of other people’s efforts; rather the authority should serve the man actively engaged in production. But in a system which is based on the division of labor, all are both producers and consumers. There are no consumers whose income would not flow from production. The consumer is either an entrepreneur, an owner of means of production, or a worker. Or he is, as a member of a family, being supported by an entrepreneur, an owner of means of production, or by a worker. Each producer, on the other hand, is necessarily also a consumer. It is naive to claim that a single measure or a single policy would protect the interests of producers against the interests of consumers. The only statement which can properly be made is that almost every restrictive measure1 brings advantages to a limited group of people while it affects adversely all others, or at least a majority of others. The interventions, therefore, may be regarded as privileges, which are granted to some at the expense of others.

Privileges benefit the recipient and impair the position of the other members of the system. If the privileges benefit a limited number of persons only, they fulfill their purpose; they benefit them at the expense of others not so favored. If, however, all are equally benefited, then the system of privileges becomes nonsensical. As long as protective tariffs benefit only some of the producers or various groups of producers to a different extent, then some producers are still privileged. But if all producers are equally protected, then the policy becomes truly self-defeating. Then nobody gains but everybody loses.

[1. ]The limitation implied here by the word “almost” should not mean that there are restrictive measures which do not disadvantage anyone; it should indicate only that some such measures not only do not benefit anyone, but put everybody at a disadvantage.