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Foundations of a Free Economy

Mises Daily: Tuesday, August 27, 2002 by

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Review of Capitalism and Commerce: Conceptual Foundations of Free Enterprise, by Edward Younkins, Lexington Books, August 2002, 360 pp., $26.95 paperback.

Remember the mid-'90s, when the media buzz was about downsizing and about jobs being replaced everywhere by computers and machines? In the memorable words of Jeremy Rifkin, we had entered a new "post-market" phase in economic development and were witnessing the "end of work."

Or how about the fad for Japanese management techniques and the various corporatist models of Europe in the 1980s, when the too-aggressively individualist American type of capitalism was said to be in permanent decline? Or even earlier, the catastrophic pronouncements of the Club of Rome on the depletion of the earth’s resources and widespread famine that were to happen before the end of the 20th century?

Every era has its economic bugaboos, and we are now in the midst of another so-called "crisis of capitalism." This one, though, is not just another intellectual fad launched by the ravings of some academic guru and reinforced by the daily tittle-tattle of media ignoramuses.

A major economic downturn, engineered by the Fed’s reckless inflationist policy and made worse by the U.S. government’s current drive to clamp down on business, could have serious consequences. It’s certainly starting to look like the 1930s again. Will the historians of the future tell us that civilization was saved when governments adopted a spate of new laws, regulations, and spending programs during the severe depression of the early 21st century?

One ray of hope--if not for the way events themselves will unfold, at least for their future interpretation--lies in the fact that we are a lot better equipped intellectually today to fight collectivist mythology than our forebears were.

True, the basic tenets of a free, capitalist society were probably more widely accepted in 1930 than they are today among the population at large. But for decades before then, the intellectual tide in Europe and North America had overwhelmingly favored a forced "modernization of society," a "more rational management of economic forces" and generally more government control over the actions of individuals.

When depression struck, there were few who understood what was happening, and few principled defenders of a laissez-faire free-market economy--Ludwig von Mises was the foremost among them--who could offer a coherent explanation and who resisted the new Keynesian/interventionist consensus that took shape in the following years.

There is today a much stronger presence of free-market ideas in public debates. Although collectivist ideologies still dominate the academic world, they have been on the defensive for quite some time, following the systematic disintegration of all their utopian promises. More people are finding alternative interpretations on the Internet. And if things are to be different this time, it will be in part because of books like Capitalism and Commerce: Conceptual Foundations of Free Enterprise, by Edward Younkins.

As Younkins writes in his Preface,

"In a world of change, the viability of the market economy is at stake unless those who live and participate within it possess a rational understanding and appreciation of its underlying concepts and values. Present and future participants in the business system need to have access to a "bank" of fundamental ideas that provide the groundwork for the free enterprise system--this book provides such a bank. Its purpose is to be a clear, consistent, and accessible introduction and guide for anyone wishing to pursue the study of the theoretical and moral foundations of capitalism."

The book magisterially fulfills its promise. It is well-written and concise, and it presents all the fundamental arguments that anybody who supports the capitalist system should know about. Its 29 chapters cover all the main aspects of a free society: individual rights, civil society, private property, the corporation, entrepreneurship, etc. Younkins also devotes 10 chapters to refuting various ideologies and criticizing arrangements like protectionism and antitrust laws that are "Obstacles to a Free Society."

Anybody who wants to get acquainted with the classical liberal tradition of individualism, free markets, and limited government faces one big hurdle: where to start? Should one begin with the classical authors, like Adam Smith and David Ricardo, and risk wasting time and being misled trying to understand theories and issues of interest to economic historians only?

What's more, the disputes between various brands of Austrians, neoclassicals, objectivists, supply-siders, anarchists, and minarchists reflect genuine theoretical differences, but they are often of little relevance for the newcomer to the discipline. When trying to spread libertarian ideas among the uninitiated, it is no use fighting others who share major parts of our philosophy. What is important is to fight the real opponents--the statists and collectivists--and let people find their own path as they pursue their study.

That is the purpose of this book. Arguments are never narrowly focused on one perspective. Younkins uses all those that he finds compelling to make his point, and he leaves the others out. The chapter on inflation and money, for example, is squarely in the Austrian tradition--the only one of all the free-market schools that is consistently antistatist in this field.

But the book covers all the major issues with an "ecumenical" approach, which can appeal to people from various schools of thought who share common philosophical assumptions. Its goal is not to advance the cause of one school in particular, but rather to offer a general overview of the best arguments in defense of capitalism and individual freedom. Since it is aimed at students and educated readers who are trying to familiarize themselves with the free-market perspective, this is probably the best approach.

At the end of each chapter, the reader will also find a comprehensive and useful list of authors who have written on the subject and will be able to follow his own path if he wants to study the matter further. The book's Appendix offers a 24-page Reader’s Guide to Free-Market Organizations and Periodicals. Although such lists are easy to find on the Internet, this may be useful for beginners trying to find their way in this new philosophical world.

I may be somewhat partial in my evaluation of this book. For the past three years in my webzine, Ed Younkins has had a column called, like the book, "Capitalism and Commerce." Some parts of the book were first published there. But since I must find something to criticize to keep my reputation as a neutral reviewer, I should say that, against my advice, Ed has kept five pages on "Kant’s Epistemological Dualism and Self-Sacrificial Ethics" in his chapter on collectivist thinkers. Nobody who hasn’t read (or tried and gave up, as I did) the East Prussian philosopher will come out any wiser after reading these pages. They clash with the rest of the volume, which is accessible and free of jargon. In my judgment, this kind of high-flying philosophical discussion should not have been included in a book aiming at a broad readership.

Capitalism and Commerce is not a polemical essay. Ed Younkins writes in a dispassionate, systematic, and highly effective way--something one might expect from a professor of accountancy and business administration. And his message is anything but wishy-washy. His perspective is, as he writes, "uncompromising laissez-faire capitalism." His conclusion is a clear-cut exhortation to "work to create a culture of liberty that would serve as the foundation for a free society."

At a time like now, when the foundation that remains is again threatened by collectivist hysteria, we need more books like this that do away with the fallacies and reaffirm the tenets of a "just and proper political and economic order that is a true reflection of the nature of man and the world properly understood."


Martin Masse (martin@quebecoislibre.org) is publisher of the Montreal-based webzine Le Québécois Libre (www.quebecoislibre.org). See his Mises.org Archive.