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The Unit of Social Life

Mises Daily: Thursday, December 29, 2011 by

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Beginning with the obvious — there must be men before there is a Society, and there must be a Society before there is a Government. Social institutions must seminate in the soil of which the individual is made. Therefore, we are compelled to ask the individual, the unit of social life, to tell us why he socializes, why he becomes political. The metaphysicians were on the right track when they inquired into the nature of the individual for an explanation of the State, even though they were sidetracked by their theological turn of mind. That way lies no positive answer, nor one that does not begin with making assumptions. Perhaps a surer light on the question will be thrown if we look at the human being externally, without reference to his spiritual composition.

What do we observe as a constant in his career? To that question there is but one answer: that he is always, and wherever we find him, concerned with making a living. We cannot even think of a human being who is rid of that preoccupation. He is, basically, an "economic man" — to use a term that is sometimes used derogatorily, but which is most appropriate when we reflect that man's primordial business is existence. His economic pursuit is ingrained in him as a matter of necessity. It seems logical to assume, then, that the Society in which we always find him is either a phase of, or is related to, the business from which he never retires. Is it not likely that if we apply ourselves to the means and methods he employs in the gaining of a living we shall learn that Society and Government are outgrowths of that process? Perhaps, after all, these institutions have their roots in economics. It is a plausible hypothesis at any rate.

The objection has been raised that the human being is far too complex to be treated only as a living creature. Other species that inhabit the earth are also on the constant prowl for the means of existence and they do not have anything like what we call Society and Government; the best they do in the way of socializing is a herd or a school or a flock, which are entirely different organizations from those that are formalized. This objection, however, stems from that limited and unreal definition of "economic man" that describes his life purpose as the mere acquisition of food, raiment, and shelter. Such a man does not exist, or exists only under the compulsion of necessity.

To man, unlike other living creatures, the "making of a living" only begins with providing the necessaries, for he is so constituted that once that problem is solved, or even before it is fully solved, his imagination gives rise to other desires that, when gratified, give rise to still other desires and so on ad infinitum. His job of "living" has no fixed perimeter. Yet, the satisfaction of every desire that springs from his fancy involves the same means and methods that he employs in securing the necessaries. The book and the violin come into being by processes that are in essence the same as those applied to the making of bread and clothes; everything man wants involves the machinery of production.

Hence, the "economic man" is not a special kind of man, and though for purposes of study we may in our mental laboratory segregate him from the "cultural man," the "religious man," or the "military man," he is in fact only man utilizing economic means in pursuit of whatever "living" his inclination or chance leads him to. The catalytic agent of all human aspirations is production.

What, then, is production? It is the application of labor to the raw materials that nature provides for the making of things that satisfy human desires. Nothing can be produced in any other way. True, there are things men want that apparently do not involve the use of raw materials, things that are usually described as services. But even the singer needs sustenance, and the naked preacher might find the cold a hindrance to thought. There is no desirable service so far removed from basic production — like insurance or education — but that upon examination it does not turn out to be a subdivision or offshoot of the application of labor to raw materials. When you think of it, you realize that all the tangibles that men desire, like food and raiment, are congealed services, like cooking and designing, and therefore any distinction between goods and services, in an economic sense, is academic.

The fact that man is invariably dependent on raw materials for his living, even in the widest sense of living, stamps him as a "land animal." But, in that respect, every other animal is similarly circumscribed. So, the question arises, in what respect does the human being, whose social institutions concern us, differ from his food-grubbing neighbors? It is in the fact that he is not, like them, dependent on what he finds, but has the capacity of making use of nature to further his ends. This capacity we call reason, which is the faculty of extracting from a number of related phenomena a causative principle and of applying this principle in his business.

For instance, he observes that nature does not grow edible things just anywhere and at any time, but only when and where soil of a given texture enjoys a given amount of sunshine and a given amount of moisture. Learning these secrets of nature, he sets them down in formulae, which he calls natural laws. Then, guiding himself by these laws, he goes about growing the food he wants; he becomes a maker of abundance. That his animal friends cannot do.

We say man "conquers" nature, but the fact is his conquest consists of accommodating himself to the means employed by nature in achieving its ends; he cannot get the results he is after unless he learns and makes himself subservient to its laws. Primitive people are primitive simply because they have not gotten around to fathoming these laws and making use of them. And the failures of what we call the "civilized" man, in whatever field he chooses to operate, are likewise due to his ignorance of nature's laws or his arrogance in trying to make his way in disregard of them; they are, however, immutable and self-enforcing, and his failures indicate that they carry their own sanctions.

He builds an atomic bomb because he has mastered the physical laws pertaining thereto; he destroys Society with it because he neither knows nor is willing to submit to the social laws that nature has writ in its book of knowledge. He is particularly at a disadvantage when he declares (as he sometimes does, especially in the fields of economics and social science) that there are no natural laws, that man is uninhibited by any such fictions; that's when he gets himself into real trouble.

Given the natural resources and a knowledge of nature's laws, the making of a living calls for an expenditure of labor. That is the inexorable price of production. But the expenditure of labor induces the unpleasant experience of weariness, something man does not want. (We are concerned only with labor expended for economic purposes. Sometimes man will find pleasure in exertion itself, as in taking a walk. And sometimes he "likes his job," finds enjoyment in the doing, regardless of any other returns. The exhilaration resulting from the doing is the profit he seeks. But he does not labor for the sake of laboring.)

To avoid exertion, man might, like other animals, curtail his appetites to the barest necessities, to the things that make existence possible and that can be had with the minimum of effort. (Nothing can be had with no effort.) He is, however, not so constituted, being driven by an ever-expanding curiosity to seek new gratifications, and he is ever looking to nature to tell him how he can acquire them with less labor. He invents labor-saving devices; he expends labor to save labor. He puts in "overtime" — or labor in excess of what is necessary to keep him alive — in the production of things that will save him labor in his future enterprises or will enable him to better his circumstances. We call those things capital.

As far as we know, man has always been a capitalist, a storer up of labor, and we cannot conceive of a time when he was not making such tools. Thus, the stone axe that he made to subdue an edible beast became, after centuries of reflection and trial-and-error, a cleaving knife and the Chicago stockyards. Capital accumulation has always been man's career. We do not know of a noncapitalistic man or a noncapitalistic Society. In any distinction between primitive man and civilized man we use as a yardstick their relative accumulations and use of capital.

A natural law is derived from observation of the ways of nature. Its first characteristic is invariability — it always happens that way; there are no exceptions. And since, in everything he does, as far back as we have any knowledge of him, so that we cannot even conceive of a deviation, man seeks to satisfy his desires with the least expenditure of labor, we can put that down as a natural law of human behavior. A second requirement of a natural law is that it enables us to predict what will happen in the future, and the rule above qualifies on that score. We invent and make household appliances because we know that every housewife is interested in saving labor; we offer bribes to officials because we are ever on the lookout for "something for nothing," and if the officials accept the bribes it is because they prefer to get their satisfactions without an expenditure of labor. Our entire price structure is based on that "law of parsimony."

In fact, every economic theory must take it into account — and social doctrines that leave it out of consideration prove impracticable — when, for instance, it is proposed that men sell their products for less than the cost of production, or for less than other men are willing to pay for them, we have what is called a "black market." Our immediate reaction to the socialistic notion that men will put out labor with abandon and with little regard for returns is that it is nonsensical; humans don't act that way.

Now, Society, Government, and the State are institutions that men make, and it must be taken for granted that these too are expressions of this law of human behavior. If in all his other undertakings he is invariably motivated by this aversion to labor, why should we assume that it plays no part in his social and political organization? He does not undergo a mutation when he socializes and politicalizes; he is still the same man. Perhaps, after all, his institutions are, in one way or another, analogous to labor-saving devices. It makes better sense to approach an inquiry into his institutions with such a hypothesis than to begin by positing the idea that his institutions arise from forces outside of him, forces that use him as an instrument, not as the creator, as the metaphysicians and the socialists do.

Correlating with this "law of parsimony" is another constant characteristic of the human that throws light on his institutions. It is the fact that he is the only animal whose desires are never satisfied. He does not shun labor merely for the sake of shunning it; he is not lazy. In fact, we find him investing every saving of labor in a new desire, one that he was hardly aware of before he had a surplus of energy to put into it. When he masters the art of grubbing for a livelihood and finds it easy, he begins to think of tablecloths and music with his meals. His living consists of a constant climb to greater heights, to what are sometimes called luxuries or marginal satisfactions, such as books, rare stamps, baseball, and Beethoven. Man's desires are unlimited.

But each new step in the search for a fuller life must be preceded by some shortcut in the securing of those things he has become accustomed to enjoy, and luxuries become necessities in proportion to the ease with which they can be had. Since the beginning of time, as far as we know, man has been a labor saver, a capitalist, not that he might hoard energy but that he might expend it in further accomplishment. It is for this reason, as we shall see, that Society becomes his natural habitat.

The "law of parsimony" does not maintain that men always satisfy their desires with the least exertion; it says that they seek to do so. Ignorance of the shortest cut, the easiest means, is the reason for his taking the longest way around. Before he knew about the automobile, the oxcart had to take care of his transportation, but as his aversion to labor caused him to invent that primitive improvement over walking, so did it spur him to the invention of the automobile; speed is an economy of effort for the accomplishment of results. The psychopath turns to stealing because he thinks that is the easiest way to satisfy his desires, and the shrewd monopolist is one who contrives to improve his circumstances without putting out the effort that competition would impose upon him. Every crime in the calendar, every social evil, every piece of political skulduggery is traceable to the "law of parsimony." So is every advance in the sciences and the arts.

It is beyond the mark to moralize about this aversion to labor qua labor. It is as amoral as the hair on a man's head. But if one looks into human psychology one can find there the germ of an ethical principle in this law of behavior. There it will be found that the value the individual puts on himself is measured in terms of the labor he must put out to satisfy his desires. His ego expands or contracts in proportion to the labor cost of his living.

Thus, a slave, who reaps a bare existence from his exertions, makes mental adjustment to that rate of pay and acquires what we call a slave psychology; that is, he thinks of himself as not worth more than what he gets. On the other hand, the "big shot" gangster looms large in his estimation of himself because with no apparent expenditure of labor he is able to live in luxury. The self-opinion of both the slave and the "big shot" is shared by their contemporaries simply because their self-evaluation is similarly measured. The adulation we accord the opulent man and our vicarious enjoyment of cinema luxuries evidence the workings of the "law of parsimony"; it is not so much that our envy is pricked, for this only stirs us to emulation or to theft; it is that what we desire has been acquired with no visible expenditure of effort; it is the summum bonum.

That being so, an economy so managed as to provide a general abundance, an economy of plenty, must improve the self-esteem or morale of those who enjoy it, while an economy of scarcity has the opposite effect; to put it otherwise, low prices (or easy accessibility) induce higher human values, while high prices (in terms of labor expenditure) tend to depreciate them. But that is another matter. The point is that there are moral consequences of the "law of parsimony."

Whatever other attributes the human being brings to bear on the social order of which he is the integral, his will to live comes first in the hierarchy; the will to live is not mere clinging to existence but is also an urge to improve one's circumstances and to widen one's horizon. This is innate; Nirvana, or the negation of desire, is an acquired characteristic, requiring much exercise of the will. The urge to live is accompanied by means and methods that are also built in — the inclination to avoid labor.

Society may be accounted for by other human characteristics, such as man's metaphysical makeup, his cultural aspirations, and his craving for companionship. But these are debatable variables. There is no question about the persistence and universality of the attributes mentioned, and therefore they must be considered prime imperatives. However else we try to explain Society, Government, and the State, we cannot ignore the "economic man."