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• F. A. Harper, Introduction
• Gustavo R. Velasco, On the 90th Anniversary of Ludwig Von Mises
• F. A. Harper, Ludwig Von Mises
• Property and Freedom, Alberto Benegas Lynch
• Technological Progress and Social Resistance, Guillermo Walter Klein
• Principles Or Expediency? F. A. Von Hayek
• Protection For Farmers, Antony Fisher
• For a Philosophy of Choice, Lord Grantchester
• The Surest Protection, Ralph Harris
• Towards the Just Society, Ralph Horwitz
• Size and Well-being, J. Enoch Powell
• Pour Eviter “une Collectivisation Par Annuities”, René Berger-perrin
• En Défense De L'economie Libérale: Réponse à Quelques Objections, Gaston Leduc
• L'occident Pour Son Malheur a Choisi Keynes Contre Mises, Pierre Lhoste-lachaume
• Das Ordnungsdenken In Der Martwirtschaft, Ludwig Erhard
• Unsere Gesellschaftsordnung Und Die Radikale Linke, Edith Eucken-erdsiek
• Privateigentum— Die Für Mitmenschen Günstigste Lösung Bei Den Produktionsmitteln, Wolfgang Frickhöffer
• Macht Oder ökonomisches Gesetz, Ernst Heuss
• The Reliability of Financial Statements, Ulrich Leffson and Jörg Baetge
• Ist Die Inflation Unser Schicksal? Alfred Müller-armack
• Der Reiche Goethe Und Der Arme Schiller, Volkmar Muthesius
• Krise Der Politischen Formen In Europa, Otto Von Habsburg
• The Need to Make Cognizance Available, Ulysses R. Dent
• Ways to Communism, Giuseppe Ugo Papi
• Convergence Theories and Ownership of Property, Kenzo Kiga
• Soaring Urban Land Prices and Market Economy, Toshio Murata
• Jesus and the Question of Wealth, Alberto G. Salceda
• A Program For a Liberal Party, Gustavo R. Velasco
• On the Entrepreneur Andries De Graaff
• La Integracion Economica De America Latina, Romulo A. Ferrero
• Problems of Economic Responsibility and Initiative Re-emerging In Eastern Europe, Ljubo Sirc
• Rent Control In Sweden: Lessons From a Thirty Year Old Socio-economic Experiment, Sven Rydenfelt

The Need to Make Cognizance Available
Ulysses R. Dent

When I was honored in being invited to write an essay for the “Mises 90th Birthday Collection”. I fully understood I could not possibly intend to expand on economic theory, on which I am only a student. It was my original idea to investigate further on the decisive influence of Professor Mises' writings and lectures in the organization and development of similar institutes to our “Centro de Estudios Economico-Sociales - CEES” in Guatemala; convinced as I am, from publications and contacts, that Mises has guided the thoughts of professors and businessmen.

Writing in a personal way has great disadvantages, principally because the best expressions may only be reflections of what has already been written, the result of reading such great masters. Therefore, I claim no merit for myself. Since attending a Seminar at FEE, in November, 1963, I have been guided by the writings, lectures and conversations with eminent men who have privileged me with their friendship and counsel.

After consultation and research, it became apparent that my original thoughts on this paper demanded more time. Originators like Mises influence more through the writings of their followers than they seem to do directly. Being influenced both directly and indirectly, and concentrating on the effects of his theories on our work at CEES, it is easier to understand how influential the great works are, worldwide; yet how long a time goes without making discoveries available or understood by people who could help the world in eliminating the real causes of poverty and despair.

Ignorance is probably the worst evil. Leonard Read has expressed it well. “The more one knows, the greater is the awareness of not knowing.” We have all seen how in the last decades socialism has advanced. While knowledge is always limited, ignorance of what knowledge is available is vast.

There are probably thousands of people in each region who understand the counter-effect of Government measures that increase the intervention and create the obstacles for economic development. They comprehend and object to the artificial limitations of individual freedom that go beyond the natural limitation by the freedom of others. These people could stop the bad influx and reverse the tide of greater government. Freedom has been curtailed, new controls have been invented. While constructed on sand, they stand as useless but as real as the Pyramids.

This is my own experience. I could help, if I only knew how. I have learnt a little to understand I can never learn enough. But a modest beginning is the way to start. I began to understand the reasons behind my feelings for a market economy when I started to receive a little pamphlet published by CEES - Manuel F. Ayau, editor, a great friend. I was most impressed with all the articles reproduced, principally by those written by Mises. Early in 1963 we started to study together - Ayau had already read a great deal. By the end of the same year, we attended the FEE Seminar. Lecturers were Read, Rogge, Rogers (r.i.p.), Russell, Bien, Poirot, Opitz, Petro, Curtiss, Fertig, Hazlitt, and von Mises. All have been most helpful to us, great personal friends and tutors individually and at CEES. We organized seminars in Guatemala, and have been greatly honored with the visits of Mises, Hazlitt, Rogge, Read and Russell of this group.∗

Mises has influenced CEES to a great extent. In case of doubt, his writings guide us. In studying his works, ideas take form, expanding into lectures, reproductions, speeches, newspaper articles. CEES has been publishing a weekly column in the most important daily paper in Guatemala. Many columns have been inspired on short paragraphs of Human Action, which could be more adequately called thoughts. Many more articles have been produced based on some of his phrases of his lectures.

When definitions are clear many applications are found that relate to conditions existing at every opportunity. So, in trying to reach more people, from “The Ricardian Law of Association”, Ch. VIII of Human Action, a simple comprobation of mutual gain from trade was mathematically proven and illustrated for a newspaper article by Ayau, which he could expand in the form of his pleasant book “From Robinson Crusoe to Friday.”

There is no doubt that there is today considerable economic information available that is not reaching the spheres of Government and education, the bookshelves of businessmen and leaders. And many motivated men ignore that there are discoveries that can make any dedicated person understand how the market economy would benefit all the people, and do away with the obstacles that stop progress.

With the fantastic development of communications, it should not take the tremendous lapses of time to make knowledge available to more people. And yet we see decades passing by, without any advantage from these discoveries. We see the development of more Government, more controls, more socialistic measures. We witness how private enterprise organizations fiercely battle against some measures that they later on approve and even collaborate to put into effect. “Brain washing” is sometimes a slow process, requires no pressure - simply time and patience.

It is evident there is a conspiracy of silence. Lord Keynes, a most influential man, used this weapon with great sagacity. His mention of Mises and Hayek disregarded their great works as “confusing” or incomplete. Keynesians do not even bother to read, even now when disaster is manifested as a product of the utilization of Keynes' theories.

We see that all universities around the free world emphasize Keynes' ideas and refuse to incorporate, learn of and study the new discoveries that make economics a science. Central Banks use the power of money to strengthen Keynesian theories, to support their very existence and invigorate interventionism.

On many occasions there are new constitutions promulgated that enhance the free enterprise system, guarantee the property rights and limit government power, but then confuse the issue by tergiversating definitions of freedom, rights and power.

No doubt the powerful governments would disqualify theories that would in effect demonstrate the need to limit power. To Governments, free enterprise is something to be done out of the scope of the will of government to intervene. Anything the state wants to do is not free. And of course, the natural tendency of the state is to take over completely.

We are therefore facing great obstacles. Contemporary history shows us that the greatest advances are produced after total disasters: war and defeat. Ludwig Erhard was not only capable but able to take a giant step to start with, doing away in one sweeping strike with more government controls than we can imagine existed. He was not permitted to accomplish all he wanted to do, yet Western Germany achieved a remarkable degree of market economy. The astounding recovery served as an example which some misinterpreted as being the natural result of post-war world organization.

Due to this misrepresentation of facts, the majority of nations took the opposite way, “The Road to Serfdom” as Hayek put it. Consequently, they failed, for having disregarded cognizance and good examples.

Japan has advanced very much in the same pattern after a very slow start, and according to the degree of gradualism adopted. They admit more foreign investment and technical assistance, and progress in accordance to the percentages selected. They are cutting tariffs to combat protectionism in the United States of America, becoming still more competitive. Their exports for cars and trucks are increasing constantly, even more now because of a cut of more than 50% on Japan's import duties for cars.

If follows that possibly countries need the experience of total failure to dramatically turn around, dismantle socialism and start an accelerated ascent, making use of the knowledge that is available.

THE LATIN AMERICAN EXAMPLE

Most of the Latin-American countries enjoy the right conditions to develop without having to deal with the problem of devastation. They have this great advantage: no displaced persons, no ruined installations, no dismobilization of great armies, no starvation.

These nations sit on the launching platform ready for sustained and fast advancement. But they all take the sinister road of nationalism, expropriation, “social” justice, progressive taxation, minimum wages, subsidies, international cartels, price, production and exchange controls. Before they can get the capitalization needed, they start regulating foreign investment. Before efficiency of production for export, they restrict imports and thus waste the opportunity to become competitive in the international market.

Latin American countries get stuck in fallacies. They claim that international prices for raw materials, minerals, grains and food exported are lower all the time, while imports get higher prices. In fact, prices for most Latin American exports have risen while many industrial raw materials imported are subject to intense competition that forces industrial countries to become more efficient. Giant sea transportation and handling facilities have been developed, along with bigger and more economical plants, resulting in lower prices. For instance, plastic raw materials were cut in price by 75% in just one decade. An amazing result, considering that most industrial countries depend on imports of the basic raw material: oil. This achievement has been possible despite increases in wages paid, rising costs of inland transportation and port charges - and higher prices on oil produced in “underdeveloped” nations.

Of course the consumers of the developing countries fall easily into this trap. They only see rising prices for all consumer goods, whether imported or manufactured locally. This is only the consequence of acute protectionism. Not only import duties are made prohibitive, but air, land and sea transportation is monopolized by the state, so that rates increase without the benefit of competition.

In restricting imports, subsidies under many different “development” assignations operate in a growing pattern, while subsidized production gets overwhelming controls, with a constant increase in government agencies that require myriads of paper forms to fill. The simple registration of commercial firms require legal copies of all deeds and duplicate former registration at tax, social security, labor and all other government agencies previously established. Quite an impossible control, overflowing with papers that even the whole bureaucracy can't cope with.

The tendency of paternalism is rampant as well. Wages are artificially kept low because of heavy taxation for “social benefits” and severance payments that no capitalization covers in fact. We witness now the demands of laborers in Chile, calling for more money than many times the worth of nationalized enterprises. Pressure is exerted to increase wages, and minimum wage laws produce unemployment, heavier taxation, welfare and government intervention. And of course, louder cries of unjust manipulation of international prices by the industrial nations.

Investment of the limited savings of their own citizens is restricted by fear of political reprisals, now aggravated by organized bandits, self-styled guerrillas enjoying political sanctuaries that are guaranteed no matter the nature of their crimes. Foreign investment is discouraged under the disguise of “national interests.” And so, the misnamed wealth of their natural resources is only symbolic, remaining more underdeveloped than the countries themselves.

The authority of central banks move in the same restrictive direction. A new god has been created, in the form of foreign exchange reserves. Few weapons can equal the power of a god. In his name, all kinds of intervention are justified. People should not travel abroad and waste the resources of the nation. Imports weaken this god, people must be protected against the evil of imports.

Familiar arguments are: Credit must be classified. The best destination is infrastructure, followed by industrialization. Agriculture is good, but must be regulated. We cannot remain backward by exporting bananas and coffee. These are planted by the rich who use credit they do not need in detrimental fashion to the development of the country, subtracting from those involved in pioneering new production- under the enlightment of the high priests. We must produce what we consume. We must diversify agricultural production even at the expense of efficient production existing. Development of utilities is government field. Only government can run public services. Subterranean resources belong to the State. State monopolies must be protected against dumping by sinister international interests.

Consequently the “developing” counties suffer from classification of credit that grows in detail. “Commercial"credit is bad, it can only be used to import goods we should produce or export badly needed capital. Exchange controls must be established with heavy penalties, so that unpatriotic persons cannot keep their liquidity abroad.

Private bankers really don't know how to dispose of their resources. Definite amounts must be determined by the authorities according to destination. A cattleman should really plant cotton; when the cotton line of credit is exhausted, beans must be planted.

Industrialization is the fashion. Long term credit should be extended. Low rates from International Development banks must be taken advantage of- and then made high to users by the processing through a long chain of state banking controls and state bank intervention.

To develop industrial production, common markets must be negotiated. Without import barriers, industrial complexes can be “integrated.” Integration means state controls and free trade disappears. Production planned for five countries gets restricted to four, or three or two. Industrialists are getting too much: they must pay 30% duties and 10% of normal duties must be invested to create industrial banks.

Suddenly the wise men regulating common market trade observe that one of the countries is not producing enough cotton and textiles. No more plants should be established in the other four countries. The resources of the common market bank must be used to induce the establishment of this important industry in the most “underdeveloped” country, regardless of whether entrepreneurs consider climate, labor, facilities, power and communications more adequate somewhere else. Planners should know, they are the professionals.

An application for a high tariff gets immediate response, whether production really is started or not, whether economical or not. Thus agricultural production gets taxed out of proportion and the cost of tools is artificially increased. The pattern repeats itself, just the same as in Rome or U.S.A. The farmer must get a high price for his product, the consumer must pay the lowest possible price. All get taxed some more.

Foreign investment is good, except that one under discussion at any particular time. Plants owned by local citizens should not be sold to foreign interests. Naturally those who do sell their plants invest in other enterprises that they consider more productive, but they nevertheless will be accused of the unpatriotic move to export their capital, despite exchange controls considered adequate to stop such actions.

Socialists continue in their arguments: As the best destination of credit is infrastructure and only government can do a good job about it, long term development credit must be obtained. Any amounts offered are acceptable. Foreign debt increases in an endless spiral, assuming that future budgets will also increase indefinitely.

The American taxpayer turns out paying taxes so that these long term loans or outright gifts - foreign aid - can be used to expropriate and nationalize American taxpayer investments in Latin America.

There is no need to expand too much on this paper on the effects of state investments. The state will not consider whether operations will be profitable at market prices: higher prices they will fix, and additional taxation can cover the losses. The state will invest in unprofitable projects like hydroelectric plants, spending for production three times higher than there is water available. In occasions such new plants only replace the ones that are efficiently producing the same output, with the difference that new plants run by the state suffer from unplanned stoppages. In the process, they move rivers through mountain tunnels, leaving producing farms without water. Not being government farms, no harm is done, according to this line of thinking.

The utilization of water resources is also the state right. Government can not only move rivers out of their normal course, lakes are half-emptied, property rights are re-defined, so that the shores of lakes, rivers and oceans are reserved for the state.

The contradiction of more industrialization and hampering with the economical production of electric power, is simply not understood. Industrial plants will either depend on expensive power, or will pay hidden taxes to the same effect, or both.

Of course, all hidden expenses and taxation multiply by so many factors such as loans to pay for bigger than necessary plants, to pay increased rates and taxes that make production anti-economical.

Therefore, claiming the need to make industry competitive in the world markets, or simply within the frames of common markets, they must be subsidized, compounding problems towards the formation of one big inefficient apparatus.

Most Latin American politicians like the consideration of “underdeveloped,” though they abhor the name. Some have collapsed, recovered when controls are liberated, and follow again the same route to failure. We witness the collapse in Uruguay and yet some of the measures that produced such collapse are copied by others. Regimes elected for their free enterprise ideas adopt plans previously made by socialistic planners. They must have a plan to show they know what to do.

Five year plans follow the same pattern probably originated by the Societs, except these new plans get new names. According to introductions, economic plans are to fortify the free enterprise system. But this is the end to free enterprise.

AGRICULTURE

All plans contemplate Land Reform Laws that result in making efficient farms inefficient, while planning for wide distribution of land. Again all the experience gained is disregarded. By distributing thousands of small patches of land legally stolen from other private owners, they condemn millions to permanent misery - for production under such circumstances can never sustain more than miserable living conditions.

The experience shows that only a small percentage really work on the small patches. Most of the “benefited” small farmers do not feel secured in land they have not bought. Easy given, easy taken away. The state can afford to make experiments with all the money given away by the industrial nations. So there would be mechanical equipment working for free so that the experiments are successful and planners can continue in the same destructive process.

All the failures are blamed on the market. The poor little producers, helped by state equipment, fertilizers and plague controls given to them for free, finally get some production going. But they get starvation prices paid by independent truckers who drive their trucks to the production zone, and bargain to purchase production at the lowest possible prices. Truckers are just as poor, but they will be called “hoarders” who exploit the farmers. Consequently, the state plans for vast expenditures in silos, and this way the farmers will get a programmed system of sales at sustained prices throughout the year. Silos built during the previous five year plan were probably never used and are covered by the jungle. This must be due to lack of up-to-date studies; “now” they know better.

Roads are built to relieve the farmers from the exploitation of hoarders, but a new philosophy is adopted, which is in itself surprising, coming from planners: What comes entirely free is not appreciated. As a result, good roads are built, but it is demanded that farmers give a cooperative effort: they must pay to pave them. In the discussion, roads get no maintainance and will not be finished until the state does it.

Planners find large extensions of land to move people to, and make it productive. It may be jungle full of mahogany that should be cultivated. Instead, planning determines it is good land for corn or cattle or whatever. It may be large sabanas good for oil companies to drill experimental wells, but without an inch of humus, just hard clay. The people moved in find themselves isolated, far away from water and supplies, hard to get out from, remembered during electoral campaigns. Nobody is surprised to find they moved out somehow.

In the process, the efficient farmers suffer from constant vigilance to find land that can be legally taken away from them. Forest inspectors pester them with fines for cutting trees down, while the economic plan considers forest reserves as “idle” land, tagged for expropriation at planners' assessed prices.

Economic plans stipulate generally the extension of land that each owner should hold before considering it as feudal estate. Thus large economical and productive farms are threatened and thus economic plans destroy economical production.

In spite of all the threats, entrepreneurs maintain a high level of enterprise and develop as well as diversify production, in the normal market way. If development is not as fast as it could be, it is due to the bias exerted against them. Considered “rich,” they should not get credit that should be available only for projects contemplated in the plan. If it takes seven years to develop production, like planting rubber or raising cattle, they will get five year loans. Expansion of coffee production is not an acceptable proposition.

Producers are constantly suffering from new taxation, from highways and high tension cables crossing through their installations and processing plants, from government interference in water resources, labor department, social security, forest, health, union inspectors, apart from other authorities and organized political banditry.

People in U.S.A. may figure that farmers get a lot of benefits. Public works in hydroelectric plants and irrigating lakes favor them. The state builds communications. Farmers have access to electric power, telephones, good highways and roads, police protection. They own the land and the subterranean resources. They get subsidized prices, subsidized production and get subsidies for not producing at all.

All this does not apply to Latin America properties. The zones under production get no phones, roads, electricity, unless they pay for these services themselves. In most countries they cannot get together in a common project to produce electricity for all. They all can produce all the electricity for their own use, but they cannot cross the limits of their individual properties. Thousands upon thousands of small gas, diesel, steam plants are then operating. Fuel gets exorbitant taxation, well over the cost itself. They build their own roads and then the law says that all roads are for public use. Organized political bandits sell “protection” from themselves, while law and order forces can hardly cope with this new type of criminals.

Of course, there are compensations, for there would be no production otherwise. Whether it is climate, relatively low wages, family living, friends and love for country, people are struggling as all human beings do, to improve their own. There is hope and hard work. In a generation, most hard working people can look back and feel satisfied of their own achievements.

To close on the agricultural aspects of Latin American economy, I can only remark that if the free market was permitted to operate, the agricultural development would be fantastic. As it is, it is impressive. Free market is not understood even by most entrepreneurs. Sugar cane growers want high minimum prices, sugar mills want high sugar prices. Cattle ranchers want high prices on the hoof, meat processing plants want them low enough for production within the market prices. On and on, with cotton, shortening plants, textile plants, apparel manufacturers, ad infinitum. The market economy strikes them all like lighting.

INDUSTRIALIZATION

Economic planning of course affects in all directions. Industrialization being one of the magic words, it would be expected it would attract the attention of the planners. Of course it does, and in the same detrimental manner.

It is assumed that little industry exists, if any at all. We hear the remarks made to this effect. Naturally the industry that does exist, previous to all the economic planning, is totally disregarded by planners. The new industry is for them the only industry and it is the new industry that planners pretend to know better than entrepreneurs how to develop.

It all starts with a fancy new development law that guarantees investors freedom from taxation for periods of time estimated as needed to pay for all installations. This alone does little harm because taxes would not be paid either if there were no installations to start with. But this is about the end of all the benefits. It is only the starting point of the maze.

Intelligent planning must help the investors understand what is good to produce and what is not considered good judgment. At the beginning, confusion, or rather chaos is the pattern. There are many shoe makers who may happen to have been protected already against the invasion of mass produced shoes made in foreign countries. Entrepreneurs look at a market full of barefooted people. Hand made shoes, though priced low considering the hard and long labor - to use a marxist term - are out of reach by the mass of potential consumers. Consequently, the first mass production is started. Shoemakers demonstrate and the press blast these new - usually foreigners - exploiters who are going to drive all shoemakers out of making a decent living. After a long turmoil, the factory is permitted to operate; their laborers have also demonstrated. But they must not undersell the shoemakers, as this is called “disloyal competition.”

The still high prices of the manufactured shoes attract many other entrepreneurs and more efficient plants open up, under some restrictions. They must not make leather shoes, for this would drive shoemakers out of a job. Canvass shoes are acceptable. The process continues until the turmoil weakens, and finally there are as many hand shoemakers as there were before or more, there are many new factories and the newer ones are most efficient and competitive. The consumers no longer go barefooted, they might even buy one extra pair or two, mass-made leather shoes as well.

A market that did not exist thrives to such an extent, that even some imported fine shoes find a place. Now not only the shoemakers but the factories and all the thousands of dependents will starve with the foreign competition. We must consume what we produce. The fires of protectionism raise. Patriotism is exalted. No one wants protection for himself, it is all the people that have to be protected.

A new factor enters the field of economic planning. Not only fiscal sacrifice, long term credit and restricted production to competitors is needed. Protective tariffs must be established. At this point, no one thinks of the shoe wearing consumer that used to go barefooted. So many thousands of workers, now unionized, cast their heavy weight in the scale and weigh more than millions of consumers.

Economic planners can well see the advantage. It is through controls that power is obtained. They will not recommend higher tariffs unless they can check manufacturers will not abuse the consumers. It is time to design something new. Industries must classify, according to investment, number of employees, whether raw material is local or imported, substitution of imported goods, and a long list of requirements. Investors save so much in taxes, they should not complain for expenses. On top of all that, entrepreneurs really don't know; they must present “economic studies” signed by a doctor in economics. Local universities must expand their economic faculties to cope with the demand, as this instrument is highly productive: it is producing jobs wholesale for economic planners.

Producers should not complain. Any request to raise import duties is processed as fast as the bureaucrats can do it. Except for old fashioned methods, that all taxation has to be approved by Congress. Intents are made to be free to manipulate the tariff without so much trouble. Thunder is heard from all sources: Chambers of Commerce and Producers Associations. Tempest explodes at Congress. Presidents see the threat to executive power. Time for a pause.

Industry could be so much more efficient if only the market could be expanded. The common market idea gets all the backing from all forces. Duty free imports and exports is of course a tremendous factor of development. The setback is that all countries have a different tariff for imports from “outside the area.”

Economic planners must get together to study a system for a unified tariff. The easiest solution is level all fractions up to the highest, and with few exceptions, this is done. The tariff is no longer a fiscal tool, it is an “instrument for development.” Of course, tariffs must be approved by Congresses of each nation, and considering there are many fractions where accord has not been reached, the common market nations agree to leave this to the integration authorities.

This is how, without a fight, Congresses and executive authorities of every nation lose control on taxation through an import-export tariff. In similar maneuvers, integration authorities make arrangements for common market communications systems that force private companies out of this field. American telephone and telegraph companies are invited to leave, and from their taxes in U.S.A., the common market governments get Aid to pay for nationalization.

This common market idea is a fountain of new methods to impose controls. To protect the country from exports of capital, strict exchange controls have to be established. But people can take money out to another common market country, then exchange for hard currencies. All countries must establish exchange controls. The exchange controls really open up the books for all operations. Records of all exports and imports are fed. Movement of people is controlled; in order to get exchange, complete information must be submitted, where traveling, how long. They all must be careful with expenditures: a maximum quota per day must be established.

In the process the original idea of free trade in the common market is totally lost. Balance of trade is followed with great care, forms to no end have to be filled in, border inspections make all transportation inefficient, insecure, damaging. It is enough that someone would denounce that a certain product moving across the border is not produced in the other country, or is simply assembled, or is damaging the interests of local producers, to have all transport stopped and delayed and many times returned.

The balance of trade is another interesting idea that produces more control for planners. Countries start getting classifications of “advantage” and “disadvantage.” The country at disadvantage must get more industrialization. So the planners determine that such country must make items that the other four are making and flood this market with such products. All the benefits are suspended in the four countries, and benefits are extended in a larger scale to attract a particular industry in the country at disadvantage. Statistics flood around and modernization of plants or new plants are stopped in four countries. In order not to take advantage of the poor member, plants should cultivate inefficiency.

Planners know everything about everything. Concentration of production in capital cities is really bad. Special benefits must be designed to move them out. If they are slow in doing so, restrictions can operate. Consequently, whether economical or not, it is cheaper to move than to stay.

With such manipulation, resources are wasted to a great extent. Entrepreneurs do not invest considering normal conditions but artificially abnormal ones. Based on protectionism and fiscal benefits, on elimination of competition, many investments are anti-economical. This is how getting out of the maze becomes a giant's job. Investors are the ones requesting what planners want. Protectionism is here to stay. That is, until total disaster appears.

FOREIGN AID

It is because of foreign aid that Latin American countries embark upon fantastic projects of industrialization, of Land Reform Laws that disrupt production, on State-owned and State-controlled communications, utilities, transportation, education, health and welfare projects. Socialism is exported through foreign aid, so that the pressure on U.S.A. comes back from abroad, as Hans Sennholz put it.

Due to the limitations of this essay, it is not possible to expand on the effects of foreign aid, except to observe that all projects outlined and many others in all different fields are financed with gifts or very long term loans marked for “development,” which really means for advancing government intervention.

Foreign aid has produced gross misallocation of resources. Production turns into waste of vast proportions. Foreign aid has stopped private investments and has reversed the process. Instead of collecting taxes from investor-owned companies, governments take over production at an impossible cost to taxpayers.

When communications are taken over by government, in one decade expenses grow tenfold and services decay. Electric power run by government increases taxation and rates, so that all industrial production is damaged by stoppages and becomes antieconomical, non-competitive.

Governments get financed to take over railroads, airlines, ports, truck companies and steamship lines, so that the compounded effect of total inefficiency drives governments to total inability. By the time they try to wake up, railroad track and equipment is obsolete, steamers, truck, planes, port equipment, all needs to be renewed. But the expensive original cost is not paid yet. More loans for more waste are required. In short, nationalism is financed by foreign aid, in detriment of foreign companies that had cost not one cent to nations.

Economists should pay special attention to the detrimental effects of foreign aid. This is the fountain-head of all socialistic measures, conducive to State controlled economy. It is the foundation of confusion that discredits the real development tool of foreign investments. It inspires nationalistic polcies that disrupt production and creates enmity when the lavish expenditures slovenly given were intended to make friends. Foreign aid attacks property rights by financing government enterprises that suppress or impede private investment. All Latin American failures can be traced to this factor, yet little attention has been given to it, when most other problems would not exist in the absence of foreign aid.

MAKING COGNIZANCE AVAILABLE

We have seen socialism advance even with the naive cooperation of free enterprisers who compromise. Centro de Estudios Economico-Sociales - “CEES” - influenced by von Mises, like all other institutes working for free market economy, realizes that the trend would be reversed and effective progress be achieved, if only the discoveries are made available.

Cees does not compromise. We use all peaceful methods to make cognizance available. We publish our fortnightly pamphlet distributed to a selected list of over 4,000 persons. We personally review our listings to reach those who can help spread the market economy theory. We publish newspaper articles and a weekly column in the most respected daily. We have organized seminars and many distinguished lecturers have honored us with their cooperation.

Cees is now organizing a new university, starting hopefully in 1972 with the faculties of law, economics and humanities. No doubt our efforts are not enough, but we can only expect Latin American countries will eventually comprehend the benefits of the free market. When this occurs, we all know recovery will also be misnamed: “miracle.”

Growth Delusions
George Alexander Duncan

• 1 The essential proposition of this essay is that contemporary “Growth Economics” is a nonsense exercise, a supreme example of that kind of philosophy which, as Descartes says “affords the means of discoursing with the appearance of truth on all matters, and commands the admiration of the more simple”. It might even qualify for admission as a subject in the schools of Swift's Laputa. Intellectually, the “growth” obsession has damaged the quality of economic research and understanding by its pretended statistical realism and by its mechanical assumptions. This very circumstance gives the contemporary form of dogma an attraction for the more simple (i.e. practising and aspiring politicians and civil servants and experts), who would be repelled by more austere analysis, and who naturally neglect the qualifications and conditions attached by the more sophisticated artists. The pragmatic danger lies precisely here, in that growth has become an object of policy and programmes, politicians and their servants being encouraged by an apparent exactitude and simplicity to assume tasks of government and advice far beyond their powers, even when aided by a high degree of self-deception. Dangerously, also, the prevalent mythology has distracted attention from more significant issues, has diverted an immense amount of skilled and less-skilled brain-power from the services of knowledge to the futile service of governments, has created millions of seemingly-important jobs for the verbose, has confused the debate between the liberal or humanitarian and the socialist or authoritarian views of society, and has encouraged the adoption of attitudes and actions on the part of “the authorities” consonant only with socialist-authoritarian doctrine.
• 2 Disillusion with the delusions of contemporary theory and practice in the matter of economic growth does not convey or imply denial of the substantive historic fact that something we can call economic growth or progress has existed in the past, does exist at present and will continue to exist in the future - so far as it has been, is and will be permitted by its enemies the politicians, whose wars - civil and international, military and economic-have been and remain the predominant obstructor and destroyer of economic and social progress. In parenthesis, it is ironical that the chief agents of destruction are now so devoutly worshipped as, hopefully, the progenitors of progress. There is a world of difference between the more sober contemplation of growth and its causes characteristic before, say, 1930 and the more mechanical and aggressive approach of our present-day pundits. In fact, “the nature and causes of the wealth of nations” has been the central theme of systematic economic theory since it started,long before Adam Smith's time, investigations into the mechanisms and psychology of economic behaviour providing the essential groundwork for assessing economic results and criticising the behaviour in the light of results. Since Keynes' “General Theory” a profound change has undercut the old teaching, elevating the uncertainly definable and imperfectly measurable resultant of complex processes into an end-in-itself, capable of exact measurement as to both quality and magnitude, and capable also of being promoted by prescribed actions, normally of “government policy” and formulated as plans and programmes. The change in emphasis, translating a resultant into an objective, is clearly shown in university teaching schedules and in the arrangement of text-books: both now habitually begin with “National Income” and “policies” for increasing it, all in a nationalistic framework, and bring in the many aspects and determinants of economic behaviour as a kind of afterthought. Many serious economists still survive to whom this procedure seems, both pedagogically and practically, putting the cart before the horse. It is true that Keynes and his more credulous disciples, in the peculiar circumstances of the 1930's (the by - product, as Keynes himself wrote in the “Economic Consequences”, of government folly and malevolence), devoted their attention chiefly to the cure of unemployment, but, for those simple enough to imagine a direct relationship between the employment proportion as shown by official statistics and the size of the national income as shown by doubtful estimates, the substitution of “growth in the national income” as the object of “policy” was an easy step. Nothing said above denies that governments and their experts have a role in economic life, or that there is a certain (or, rather, uncertain) connection between employment and aggregate production, or that calculations of national income or gross national product possess a certain interestwhat is questioned is the extravagant and absurd use made of these and similar concepts in our contemporary politico-economic scene. We can examine only some of our grounds of distrust.
• 3 The criterion or yard-stick of economic growth in common, pseudo-scientific usage is gross national product. It has become vulgarised to the extent that it is ceaselessly bandied about with an air of wisdom by countless thousands of people who have no idea of its meaning or calculation. GNP is a debased coin, like rheumatism or nervous exhaustion. The primitive estimates of “national income” have in the past forty years been refined and expanded into our present massive calculations of G.N.P. and its appropriation, still often under the title of “National Income and Expenditure”, constructed in the forms of “social accounts” and “input-output tables” - they are certainly not “accounts” recognisable by an accountant, and the relevance of “input-output” is not easy to find. It is an open question how large a part of the immense ingenuity and effort put into this research has been wasted in Laputa. As already said, such inquiries are a legitimate object of curiosity, but here the question is the validity of such computations as a basis for recommendation by an expert or action by a government. Our only answer can be that the foundation is very sandy, and for reasons well-known to the cognoscenti. Even with the best-regulated statistical police, as in the United Kingdom or the Irish Republic, the best of the vast masses of statistics now collected are inaccurate or incomplete within wide and inconstant margins of error, and many are no more than guesswork. The adaptation of this raw material, compiled for irrelevant purposes, for G.N.P. estimates, involves another range of errors. Further, the treble process of collection, publication and adaptation requires a time-lag running into many months in the best-policed societies and eternity elsewhere. The expert and his political boss fill in the gap with estimates and forecasts which rarely consist with the doubtful “actual” figures when finally published. Even when dealing with the events of, say, five years ago, the “facts” are murky. How much less dependable are they when related to last year, or even, in our present feverish taking of economic temperatures, to the current quarter? Add to this mess the circumstances that over most of the world the economic-statistical police is sadly deficient, and that in the Socialist-Communist part of the world the basic G.N.P. computations are simply not feasible, and the partly relevant data are habitually falsified for political purposes. It is hard enough, even in a relatively free world to get reasonably accurate data, but socialism denies this on principle.
• 4 The preceding paragraph Juvenal would have called chewing over old cabbage. Even in our company such a rehearsal is necessary from time to time, because one succumbs so easily to economeretrician “realism”, and accepts too easily the critical ability of the policy-makers and their Grey Eminences. Crudely, these comments constitute a reminder to ourselves not to be fascinated by glib comparisons between a “growth-rate” of a % in economy A and Z % in economy Z, and between a rate of a - n % this year in economy A as compared with a % last year. These neat percentages mean nothing, whether as statements or targets. No word could illustrate better our contemporary substitution of metaphor for thought than this one “target”. We progress still further into the realm of fantasy when we project or imply or plan or suppose a growth-rate of n % for the current or succeeding year. Most of these efforts are, naturally, of the crude 1928 Stalin-de Valera type - the boss says: “Here is the pattern I have seen when looking into my heart; go and get it”. The more sophisticated ones, however, build up a vast apparatus which the rest of us take too easily on faith, dazzled by econometric expertise into overlooking the fundamentally baseless assumptions, namely:
  • a) that we have anywhere a reliable record of recent economic events;
  • b) that this record can be convincingly translated into the terms required by G.N.P. theory;
  • c) that the statistics can be tortured into revealing a “growth-rate”;
  • d) that one can arbitrarily set an optimum or potential “growth-rate” of n % p.a.;
  • e) that measures or policy or action can be taken by government incantation or flagellation to pull down this “growth-rate” out of the sky.
• 5 There is, as we know, one valid programme for economic expansion, and that is that everyone use his wits to expand his saleable production, so far as he is interested in expanding his command over other goods and services. If X is not interested, or if he can expand his command by preying on his neighbour by banditry or the social services, he is economically negative. Then, supposing that A to Z, omitting X, are productive and ambitious, how do we sum up their efforts? The conventional answer is G.N.P., superficially criticized above. The radical question, however, was put a long time ago by Ludwig von Mises: “How can one add relatives?” The question is much more relevant today, when the unit of valuation has been made much more “airy-fairy” than it was when von Mises wrote. The quantities written into economic diagnoses and prescriptions are not quantities at all, as a natural scientist understands the term, but value-aggregates corrected by a price-index. In English the usual but ambiguous name for this monster is “volume”, but many languages, both more sophisticated and more primitive than English, have no closely parallel term of art with the same delicate ambiguity. Though a “sum of values” is unintelligible, we do not need to deny ourselves the pleasures of the parlour-game, but we must preserve always in the back of our minds the realisation that the aggregates, about whose magnitudes and rates the princes rave, are simply meaningless. Queries whether, in the politicians' formula, the “nation's growth-rate” has been only n % in 1970, when it “should” have been n+y %, and “must” be brought up to n + y + z % in 1971 if the “nation is to survive”, and to n + y + z + a % if “adequate provision for investment is to be made”, are strictly irrelevant. Anyone can promise anything, and string up a lot of plausible data and conjectures in support; many people make an honest living under canvas by doing just that. Slowly and deviously we are coming up to the doubleaxe:
  • a) In the quest for the Golden Fleece the laborious speculations of the econometers assist us not at all, for they are incapable of judging reasons and purposes - a mock-accounting filled out with slack variables leads only into a sans-issu (anglice cul-de-sac) bordered by aggregates.
  • b) Mensuration, however technically valid, and in economic spheres it is normally invalid, cannot distinguish between cost and satisfaction - consider armaments and space-rocketry.
  Here again one must refer to von Mises, though he was not the first to make the point. All economic aggregates are of the nature P × Q, and the derivation of the component P is of the utmost importance, because the sacred cow PQ (a lapse into metaphor) now enjoys vital statistics dictated less by nature than by art. The validity of the product PQ depends on the validity of both of its components, P and Q. Neither of these is real, in any physical or tangible sense: they are both imaginary constructs. Under certain circumstances one could persuade oneself that PQ does represent a kind of reality, but these circumstances no longer exist. The circumstances required are that P should stand for market prices, i.e. the valuations set by consumers, and Q should stand for identifiable goods. Manifestly, with most prices fixed arbitrarily by governments, and the widening ranges of complexity and quality of goods, these conditions cannot be fulfilled. However reluctantly, one must plug the crambe repetita, because fascination with statistical acromentics dulls perception.
• 6 The preceding paragraphs have been concerned only with “old hat” about conceptions and mensuration. Their significance lies in this, that in a parlour game an error of 15% is tolerable, if not indifferent, but it is not good enough when Big Brother is gambling with industries and livelihoods. The conventional answer of the statisticians and experts, that it is better to work from wrong figures than from none at all, has been clearly shown, both a priori and a posteriore, to be a nonsense. The self-confidence of half-knowledge is more destructive than ignorance, and our pundits are no better than mediaeval astrologers, in respect both of their “facts” and their “laws”. In fact, one of the nightmares of the modern scene is the arrogance and smugness of the saints and prophets of the easy way out. It is time now to look at certain associated ideas, and then come back to the central question.
• 7 Economic growth, having been for centuries a happy event surviving the attacks of the politicians, has become the obsessive toy of the same politicians. That is a pity. So long as the politicians concerned themselves only with abstractions like kingdoms, powers, glory, nationalism etc., the damage they inflicted on the economic society was indirect. Now, having clothed their obsessions in pseudoeconomic terms like “growth”, they inflict their damage directly, through the attempt to impose patterns. The people who pose as experts, the advisers of princes, are not free from blame, because they also gain by pattern-making and advising the easy way out. G.K. Chesterton once observed that the world's history could have been much happier if only the actors had been kept gently tight all the time: current economic politics or political economics seems to have taken this maxim to heart, omitting the adverb. The following paragraphs will look into some of the currently fashionable patterns. Four delusions only will be picked out, associated with the cult-names Investment, Public Ownership, Nation, Aid - each of which needs to be sharply debunked.
• 8 The mythology of “investment” reflects clearly the neglect of the simplest rules of Aristotelian logic. It is agreed that you cannot get “growth” without people saving out of their present plenty and putting the effort into constructions that will increase their future production. This seems a simple statement, but, of the 28 words in the written sentence 10 are controversial, or, in the current avoidance of straight talk, need clarification. It is no credit to us as economists that, after three centuries of systematic thinking and teaching, an important word like “investment” still means twenty things to ten people. The Aristotelian logic comes in this way: you cannot have growth without investment (defined and procured in some way); it does not follow that investment (defined and procured in some different ways) ensures “growth” - yet this mechanical fallacy is the foundation of our glib public utterances about “development” at home and abroad, and of our clever taxation schemes. It does not seem to have occurred to our pundits that a sum of £1000 left in the pocket of a firm which has earned it, and which may plough it back, is not the same thing as £1000 taxed or inflated out of A and handed over to Z in the hope that Z will use it “productively”. The height or should one say the depth? of absurdity is reached in the “capital output ratio”, suggesting that some formula, perhaps crudely derived from experience, can tell us the volume of production to be expected from a given investment. Here again is something which is worth pursuing in principle, but which has been reduced to a nonsense by the use of pseudo-mathematics. Inevitably, industries differ in the proportion that can be found between the capital sunk in a plant, as originally valued, and the output from that plant, as currently valued. This kind of inquiry is merely historical, except in so far as business managers may find it useful for comparing plant-performance. Observe also that, from the point of view of the community as well as of the manager, it is the net output that matters, i.e. what the investment has earned after all charges. The very definition of investment depends on net output. Unfortunately, too many users of the capital-output ratio are thinking in terms of gross output. Now, whatever may be the ratio in volume terms (i.e. capital and output being both scored up at cost) of gross output, the alleged investment is zero or less (i.e. expenditure on consumption) unless it earns its keep. The valuation of the investment is the capitalisation of its earnings, so that strictly speaking the capital-output ratio is always identical with the current rate of interest. On any other basis we are doing no more than comparing two arbitrary PQ constructs, capital-input and consumer output, which cannot be stated in commensurable terms. No amount of presumptive investment can guarantee production or growth.
• 9 The second great delusion is that somehow governments can foster “growth” better than the people who actually work at the desk or on the floor. It seems to spring from the idea that politicians and civil servants and experts can, by divine inspiration, pick out the “growth-points” of an economy and, by regulation or indication, procure investment and employment and product and profit at those points, to the general advantage of the economy, in a way and to a degree that people hazarding their own property and prospects would not do. There is not much foundation in experience for this idea; indeed, experience leans all the other way - there is no record of any of the governmental plans and programmes, which have proliferated by the thousand from China to Peru in the last 30 years, having been successful. Most of them have quietly dropped into the dust-bin. There are two curious ironies about this whole business. One is that professed economists have taken so large a part in what is only a form of astrology, since one of the earliest logical lessons an economist learns is that the measurement of effects by comparing what has happened with what would have happened in the absence of the particular intervention being justified is an intellectual impossibility. It is, for example, impossible to assert that the economic welfare of the United Kingdom or the Irish Republic has been increased by the restrictions on the importation of motor-cars and wheat. The other irony is that the chief agent, pragmatically, in the spread of this false doctrine has been the Administration of the United States of America, which claims to represent a powerful free-enterprise system. “Marshall Aid” was a noble and generous gesture, which was perhaps, by no means certainly, necessary at the time - but, by handing out American money to European governments, it powerfully reinforced the trend towards national socialism. The Russians were, within their blinkers, quite right in preventing their subject states from participating, since a good whack of the American cake would have strengthened and encouraged the national-socialist independence of the subjects against the Kremlin's “international” communism. Associated with this delusion is Keynes' “pyramid-obsession” - the idea that works of such a magnitude and such a speculative character that no private firm would contemplate them ought, on some chancy “cost-benefit” principle, to be imposed upon their labour-slaves by the Pharaohs or upon their tax-slaves by modern democratic governments (examples are T.V.A., the Aswan High Dam, the Volta Dam, etc.), the cost always turning out to be a multiple of that originally projected, and the benefit, in both quality and quantity, a fraction of that originally promised. It is probable that we have to live with this double “growth-government obsession” for some years still, until the historical necessity of communism takes over the relics, and calculations no longer matter. It is a curious reflection how few people have realised the true beauty of government, which is in excelsis socialism and the police, namely that you do not need to count or compare - each thing desired by the prince is absolute. The prince's name, whether Harold or Ulbricht, does not matter. We have no reason to suppose that their ideas of what is good for the people are any better than the people's own ideas, if they were allowed to have them unchallenged by the little whiff of grapeshot (nowadays tax and rate demands).
• 10 The third great delusion is our old 17th century friend Mercantilism - the division of the world into artificial non-entities called “nations” and the assertion or implication that each of these can “be developed” or can “grow” independently of its neighbours. This queer idea is most likely to be found in two very different sorts of community - the one relatively rich in national resources, like the United States of America, and the other recently taken over by terrorists, like the Irish Republic. In each of these the notion is apt to be prevalent that by some sleight-of-hand, usually tacked on to the sacred cow “credit”, or to some phenomenal “there's gold in them thar hills”, wealth can be created out of the local bootstraps, without the necessities of importing and exporting goods and knowledge. The simplest example is the Near East - the oil under the desert, so important a part of the world economy and politics today, would quite simply never have been discovered, let alone developed, by the local inhabitants who are now busy stealing the fruits of other men's labours. There is a whole enormous question here of who is entitled to what, which our self-styled liberals will not face, because it involves the admission that the man who has made two blades of grass grow where none grew before is entitled to at least one of them. The “nationalistic” theory, per contra, asserts that all the fruits of development are the perquisite of some mongrel tribe who conquered the country n years ago (and you fix n to suit your own preconceptions) - or did not even conquer it. The Algerine pirates never ruled the Sahara, but they robbed the French of oil and wine, and got away with it, particularly among sentimental Americans, on the queer notion that the oil and wine were somehow more the property of Boumédienne than of the corporations and pieds-noirs who got the wine and oil flowing. In one way, it does not matter. One always hopes that some day one will be able to do without the oil that our barbarian blackmailers are now squatting on - one cannot, of course, hope for any sense or resolution in resistance to blackmail on the part of our Western governments and corporations, partly because they have stewed themselves in their schizo-phrenic guilt-complex, and partly because they always have the Soviet gun-in-the-ribs, and do not know how to neutralise it. This paragraph has become unnecessarily long and complicated - but there is no escape: as soon as you begin to think about a matter of economics, you are landed into a question of power-politics in the crude, or in the apparently more sophisticated form of the rights of nations.
• 11 To use an old Dublin expression, the great gas nowadays is foreign aid for under-developed areas (or whatever other name you wish to use). There is a considerable element of delusion and illusion about current publicity on this head (of “thinking” there is too little). Those of us who are sympathetic observers of the natural scene would agree that there are many parts of the earth's surface where the inhabitants cannot escape from a poor and hard life, except by departing from Connemara or Titicaca. The pundits have called in self-deception to their aid, and in two ways. The first is really a misunderstanding of the nature of manufacturing industry. Undoubtedly, processing manufactures, especially those based on new artificial fibres and the like, are far more mobile, far less tied to particular locations, than industries using special materials like minerals or special facilities like ship-building. This release from local constraints is, however, still strictly limited, and it is just not possible, at whatever expense, to plant a new industry in an unreceptive place and atmosphere. There is more involved than simply building a factory at some one else's expense, and these other things required (enterprise, skill, labour, market, etc.) do not come down out of the sky. When the time comes for the history of Foreign Aid to be written, it will be found that three-quarters of the compulsory charity collected and transferred by governments was wasted. Waste is, of course, inherent in inter-governmental transfers, but the radical question goes deeper than that. Whether the charitable government gives or lends the principal sums to the recipient government, or even if it finances directly some “development” without the other government coming into the picture, the probabilities are that the project will be motivated more by considerations of megalomania than of consistence with the beneficiary's total economy. We have never really thought out the schizophrenia involved in exercises such as the governments of the United States and the United Kingdom and the French Republic destroying the economic basis of their Caribbean dependencies by extravagant subsidization of beet-sugar production - and then spilling out millions in “aid”. It all sounds very good that the wealthy or developed populations are under a moral obligation to contribute, say, 1% of their GNP towards the relief of their less fortunate brethren. Like all over-simplified, over-sentimentalised statements, this one overlooks a few difficult matters. First, it is not the wealthier community which is contributing “aid”, but only the taxpayers within it: there is nothing of a voluntary gift about the transaction. Secondly, given our present Western ruling (not observed by the Eastern empires) that no strings be attached (except the American perversion of “buy American”), there is no way of ensuring that the money is spent as intended. No doubt, golden beds are rare, but how much Atlantic charity has been diverted into luxury and arms, and even used for the achievement of robbing us of what we created? Thirdly, it has been easy money for a lot of not-too-good and not-too-experienced administrations, with the consequences that our grandparents called “pauperisation”. There is here a whole range of problems which cannot just be swept under the mat with a global approval of “aid” - we need to find out whether “aid to underdeveloped countries” as at present operating is actually helping their populations to raise their standards of living, and, if so, at what cost. It is not enough to be able to say only that charity has given some people more than they had before, even saved them from starvation. The “aid” is ineffective unless it has enabled the recipients to produce for themselves more of what they want - television sets are no use to people who want rice. Actually, we know next to nothing of the resultant in this sense of the countless millions of dollars taken and given in “aid”.
• 12 In the last analysis we come back to one of the oldest queries in economics. When we ask ourselves the question: “what is economic growth?”, we are only posing in another form the question: “Which is relevant, cost or value?” Strictly speaking, nothing has value except as an object of sale between a willing buyer and a willing seller. One can contort this proposition ad nauseam in respect of the buyer's and seller's degrees of freedom of choice, until you come to the ultimate socialist conclusion that only Big Brother can count, and that the rest of us are wasting our time deciding what we want at what price. The point is very important now. In even the least authoritarian of our western democracies, more than one-half of the PQ which represents our productive actuality and potential is dictated by governments. Two interesting consequences follow. One, already suggested above, is that all definitions and measurements of national income or gross national product are meaningless because they are arbitrary and do not reflect the society's valuations. The other is that more and more of such evaluations as are permitted have to be based on cost, because there is no sale. What is the value, the addition to welfare, of a moon-vehicle which gets there, or of a Mars-vehicle which does not? One can argue that such objects possess no value at all, because nobody wants them, and all the skill and knowledge and effort embodied in them have simply gone down the drain. Per contra one can argue that the cost incurred in mounting such vehicles, whether successful or not, reflects a productive capacity which exists and might be put to other uses. As always, when we try to get behind the scruffy statistics, we meet two questions which can be answered only by judgment informed by liberal attitudes of mind -: What is the content of economic growth - an incommensurable sum of satisfactions in the hearts of millions of people, or a set of doubtful figures? and How is the balance to be weighed between one's normal desire for less taxation and more food and the “collective” desire for more rocketry? Does more guns and less butter add up to “growth"?

[∗]Other lecturers at CEES: Hayek, Erhard, Alsogaray, Diaz, Kirzner, Velasco, Shenfield & Shenfield, Haberler, Thurn, Sennholz, Bailey, Manion, Lyons.