Chapter 6--Antimarket Ethics: A Praxeological Critique
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ANTIMARKET ETHICS:
A PRAXEOLOGICAL CRITIQUE
1.
Introduction: Praxeological Criticism of Ethics
Praxeology—economics—provides
no ultimate ethical judgments: it simply furnishes the indispensable
data necessary to make such judgments. It is a formal but universally
valid science based on the existence of human action and on logical
deductions from that existence. And yet praxeology may be extended
beyond its current sphere, to criticize ethical goals. This does not
mean that we abandon the value neutrality of praxeological science. It
means merely that even ethical goals must be framed meaningfully and,
therefore, that praxeology can criticize (1) existential errors made in
the formulation of ethical propositions and (2) the possible
existential meaninglessness and inner inconsistency of the goals
themselves. If an ethical goal can be shown to be self-contradictory
and conceptually impossible of fulfillment, then the goal is clearly an
absurd one and should be abandoned by all. It should be noted that we
are not disparaging ethical goals that may be practically unrealizable
in a given historical situation; we do not reject the goal of
abstention from robbery simply because it is not likely to be
completely fulfilled in the near future. What we do propose to discard
are those ethical goals that are conceptually impossible of fulfillment
because of the inherent nature of man and of the universe.
We therefore propose to place a restriction on the unlimited validity
of anyone’s ultimate ethical valuations. In doing so, we
still are not pushing beyond the bounds of praxeology to function as
ethicists, for we are not here attempting to establish a positive
ethical system of our own or even to prove that such a system is
attainable. We believe only that praxeology should have the right of
veto, to discard any ethical propositions that fail to meet the test of
conceptual possibility or internal consistency.
Furthermore, we maintain that whenever an ethical goal has been shown
to be conceptually impossible and therefore absurd, it is
equally absurd to take measures to approach that ideal. It is
illegitimate to concede that X is an absurd goal, and then to go on to
say that we should take all possible measures to approach it, at any
rate. If the end is absurd, so is the approach toward that end; this is
a praxeological truth derived from the law that a means can obtain its
value only by being imputed from the end.
A drive toward X only
obtains its value from the value of X itself; if the latter is absurd,
then so is the former.
There are two types of ethical criticisms that can be made of the
free-market system. One type is purely existential; that is, it rests
on existential premises only. The other type advances conflicting
ethical goals and protests that the free market does not attain these
goals. (Any mixture of the two will here be placed in the second
category.) The first type says: (1) The free market leads to
consequence A; (2) I don’t like consequence A (or consequence
A is objectively unlikable); (3) therefore, the free market should not
be established. To refute this type of criticism, it is necessary only
to refute the existential proposition in the first part of the
argument, and this is, admittedly, a purely praxeological task.
The following are brief summaries of very common criticisms of the free
market that can be refuted praxeologically and that, indeed, have been
refuted, implicitly or explicitly, in other writings:
(1) The free market causes business cycles and unemployment.
Business cycles are caused by the governmental intervention of
bank-credit expansion. Unemployment is caused by unions or government
keeping wage rates above the free-market level. Only coercive
intervention, not private spending, can bring about inflation.
(2) The free market is likely to bring about monopoly and
monopoly pricing. If we define “monopoly”
as the “single seller of a product,” we founder on
insoluble problems. We cannot identify homogeneous products, except in
the concrete day-to-day valuations of consumers. Furthermore, if we
consider such monopoly as wicked, we must regard both Crusoe and Friday
as vicious monopolists if they exchange fish and lumber on their desert
island. But if Crusoe and Friday are not wicked, how can a more complex
society, one necessarily less monopolistic in this
sense, be at all wicked? At what point in the reduced scope of such
monopoly can it be considered evil? And how can the market be held
responsible for the number of people inhabiting the society? Moreover,
every individual striving to be better than his fellows is thereby
trying to be a “monopolist.” Is this bad? Do not
both he and the rest of society benefit from his better mousetrap?
Finally, there is no conceptually identifiable monopoly or monopolistic
price on the free market.
Hence, a monopoly price and a monopoly by any usable definition arise
only through the coercive grant of exclusive privilege by the
government, and this includes all attempts to
“enforce competition.”
(3) The government must do what the people themselves cannot
do. We have shown that no such cases can exist.
There are other criticisms, however, which infuse various degrees of
ethical protest into the argument. This chapter will be devoted to a
praxeological critique of some of the most popular of these antimarket
ethical contentions.
2.
Knowledge of Self-Interest: An Alleged Critical Assumption
This criticism of the market is more existential than ethical. It is
the popular argument that laissez faire, or the free-market economy,
rests its case on the crucial assumption that every individual knows
his own self-interest best. Yet, it is charged, this is not true of
many individuals. Therefore, the State must intervene, and the case for
the free market is vitiated.
The free-market doctrine, however, does not rest on
any such assumption. Like the mythical “economic
man,” the Perfectly Wise Individual is a straw man created by
the critics of the theory, not implied by it.
First, it should be evident from our analysis of the free market and
government intervention throughout this work that any argument for the
free market rests on a far deeper and more complex doctrine. We cannot
enter here into the many ethical and philosophical arguments for
freedom. Secondly, the laissez-faire or free-market
doctrine does not assume that everyone always knows
his own interest best; it asserts rather that everyone should
have the right to be free to pursue his own interest as he deems best.
Critics may argue that the government should force men to lose some ex
ante or present utility in order to gain ex post
utility later, by being compelled to pursue their own best interests.
But libertarians may well reply in rebuttal: (1) that a
person’s resentment at coercive interference will lower his ex
post utility in any event; and (2) that the condition of
freedom is a vital, necessary prerequisite for a person’s
“best interests” to be attained. Indeed, the only
lasting way to correct a person’s errors is by persuasive
reasoning; force cannot do the job. As soon as the individual can evade
this force, he will return to his own preferred ways.
No one, certainly, has perfect foresight into the uncertain future. But
free entrepreneurs on the market are better equipped than anyone else,
by incentive and by economic calculation, to foresee and satisfy the
needs of the consumers.
But what if the consumers are mistaken with regard
to their own interests? Obviously, they sometimes are. But several more
points must be made. In the first place, every individual knows the
data of his own inner self best—by the very fact that each
has a separate mind and ego. Secondly, the individual, if in doubt
about what his own true interests are, is free to hire and
consult experts to give him advice based on their superior knowledge.
The individual hires these experts and, on the market, can continuously
test their helpfulness. Individuals on the market, in short, tend to
patronize those experts whose advice proves most successful. Good
doctors or lawyers reap rewards on the free market, while poor ones
fail. But when government intervenes, the government expert acquires
his revenue by compulsory levy. There is no market test of his success
in teaching people their true interests. The only test is his success
in acquiring the political support of the State’s machinery
of coercion.
Thus, the privately hired expert flourishes in proportion to his
ability, whereas the government expert flourishes in proportion to his
success in currying political favor. Moreover, what incentive does the
government expert have to care about the interests
of his subjects? Surely he is not especially endowed with superior
qualities by virtue of his government post. He is no more virtuous than
the private expert; indeed, he is inherently less capable and is more
inclined to wield coercive force. But while the private expert has
every pecuniary incentive to care about his clients or patients, the
government expert has no incentive whatever. He obtains his revenue in
any event. He is devoid of any incentive to worry about his
subject’s true interests.
It is curious that people tend to regard government as a quasi-divine,
selfless, Santa Claus organization. Government was constructed neither
for ability nor for the exercise of loving care; government was built
for the use of force and for necessarily demagogic appeals for votes.
If individuals do not know their own interests in many cases, they are
free to turn to private experts for guidance. It is absurd to say that
they will be served better by a coercive, demagogic apparatus.
Finally, the proponents of government intervention are trapped in a
fatal contradiction: they assume that individuals are not competent to
run their own affairs or to hire experts to advise them. And yet they
also assume that these same individuals are equipped to vote for these
same experts at the ballot box. We have seen that, on the contrary,
while most people have a direct idea and a direct test of their own
personal interests on the market, they cannot understand the complex
chains of praxeological and philosophical reasoning necessary for a
choice of rulers or political policies. Yet this political sphere of
open demagogy is precisely the only one where the mass of individuals
are deemed to be competent!
3.
The Problem of Immoral Choices
Some writers are astute enough to realize that the market economy is
simply a resultant of individual valuations, and thus they see that, if
they do not like the results, the fault lies with the valuations, not
the economic system. Yet they proceed to advocate government
intervention to correct the immorality of individual choices. If people
are immoral enough to choose whiskey rather than milk, cosmetics rather
than educational matter, then the State, they say, should step in and
correct these choices. Much of the rebuttal parallels the refutation of
the knowledge-of-interests argument; i.e., it is self-contradictory to
contend that people cannot be trusted to make moral decisions in their
daily lives but can be trusted to vote for or accept leaders who are
morally wiser than they.
Mises states, quite rightly, that anyone who advocates governmental
dictation over one area of individual consumption must logically come
to advocate complete totalitarian dictation over all choices. This
follows if the dictators have any set of valuational principles
whatever. Thus, if the members of the ruling group like Bach and hate
Mozart, and they believe strongly that Mozartian music is immoral, they
are just as right in prohibiting the playing of Mozart as they are in
prohibiting drug use or liquor consumption.
Many statists, however,
would not balk at this conclusion and would be willing to take over
this congenial task.
The utilitarian position—that government dictation is bad
because no rational ethics exists, and therefore no person has a right
to impose his arbitrary values on someone else—is, we
believe, an inadequate one. In the first place, it will not convince
those who believe in a rational ethics, who believe that there is
a scientific basis for moral judgments and that they are not pure whim.
And furthermore, the position involves a hidden moral assumption of its
own—that A has no right to impose any
arbitrary values on B. But if ends are arbitrary, is not the end
“that arbitrary whims not be imposed by coercion” just
as arbitrary? And suppose, further, that ranking high on A’s
value scale is the arbitrary whim of imposing his other
values on B. Then the utilitarians cannot object and must
abandon their attempt to defend individual liberty in a value-free
manner. In fact, the utilitarians are helpless against the man who wants
to impose his values by coercion and who persists in doing so even
after the various economic consequences are pointed out to him.
The would-be dictator can be logically refuted in a completely
different way, even while remaining within Wertfrei
praxeological bounds. For what is the complaint of the would-be
dictator against free individuals? That they act immorally in various
ways. The dictator’s aim, therefore, is to advance morality
and combat immorality. Let us grant, for the sake of argument, that an
objective morality can be arrived at. The question
that must be faced, then, is: Can force advance morality?
Suppose we arrive at the demonstrable conclusion that actions A, B, and
C are immoral, and actions X, Y, and Z are moral. And suppose we find
that Mr. Jones shows a distressing propensity to value A, B, and C
highly and adopts these courses of action time and again. We are
interested in transforming Mr. Jones from being an immoral person to
being a moral person. How can we go about it? The statists answer: by
force. We must prohibit at gunpoint Mr. Jones from doing A,
B, and C. Then, at last, he will be moral. But will
he? Is Jones moral because he chooses X when he is forcibly
deprived of the opportunity to choose A? When Smith is
confined to a prison, is he being moral because he
doesn’t spend his time in saloons getting drunk?
There is no sense to any concept of morality, regardless of the
particular moral action one favors, if a man is not free to do the immoral
as well as the moral thing. If a man is not free to choose, if he is
compelled by force to do the moral thing, then, on the contrary, he
is being deprived of the opportunity of being moral. He has
not been permitted to weigh the alternatives, to arrive at his own
conclusions, and to take his stand. If he is deprived of free choice,
he is acting under the dictator’s will rather than his own.
(Of course, he could choose to be shot, but this is
hardly an intelligible conception of free choice of alternatives. In
fact, he then has only one free choice: the hegemonic one—to
be shot or to obey the dictator in all things.)
Dictatorship over consumers’ choices, then, can only atrophy
morality rather than promote it. There is but one way that morality can
spread from the enlightened to the unenlightened—and that is
by rational persuasion. If A convinces B through the use of reason that
his moral values are correct and B’s are wrong, then B will
change and adopt the moral course of his own free will. To say that
this method is a slower procedure is beside the point. The point is
that morality can spread only through peaceful
persuasion and that the use of force can only erode and impair morality.
We have not even mentioned other facts that strengthen our argument,
such as the great difficulty in enforcing dictatorial rules against
people whose values clash with them. The man who prefers the immoral
course and is prevented by the bayonet from acting on his preference
will do his best to find ways to circumvent the
prohibition—perhaps by bribing the bayoneteer. And, because
this is not a treatise on ethics, we have not mentioned the libertarian
ethical theory which holds that the use of coercion is itself the
highest form of immorality.
Thus, we have shown that would-be dictators must necessarily fail to
achieve their professed goal of advancing morality because the
consequences will be precisely the opposite. It is possible, of course,
that the dictators are not really sincere in stating their goal;
perhaps their true purpose is to wield power over others and to prevent
others from being happy. In that case, of course, praxeology can say no
more about the matter, although ethics may find a good deal to say.
4.
The Morality of Human Nature
It is very common to assert that the advocates of the purely free
market make one fundamental and shaky assumption: that all human beings
are angels. In a society of angels, it is commonly agreed, such a
program could “work,” but not in our fallible
world. The chief difficulty with this criticism is that no
libertarian—except possibly those under Tolstoyan
influence—has ever made such an assumption. The advocates of
the free market have not assumed a reformation of human nature,
although they would certainly have no objection to such a reformation
if it took place. We have seen that libertarians envision defense
services against predators as provided by private bodies rather than by
the State. But they do not assume that crime would magically disappear
in the free society.
Statists concede to libertarians that no State would be required if all
men were “good.” State control is allegedly
required only to the extent that men are “evil.”
But what if all men were
“evil”? As F.A. Harper has pointed out:
Still
using the same principle that political rulership should be employed to
the extent of the evil in man, we would then have a society in which
complete political rulership of all the affairs of everybody would be
called for. . . . One man would rule all. But who would serve as the
dictator? However he were to be selected and affixed to the political
throne, he would surely be a totally evil person, since all men are
evil. And this society would then be ruled by a totally evil dictator
possessed of total political power. And how, in the name of logic,
could anything short of total evil be its consequence? How could it be
better than having no political rulership at all in that society?
Is this argument unrealistic because, as everyone agrees, human beings
are a compound, capable of both good and evil? But then, at what point
in this mixture does State dictation become necessary? In fact, the
libertarian would reason that the fact that human nature is a mixture
of both good and evil provides its own particular argument in his
favor. For if man is such a mixture, then the best societal framework
is surely one in which evil is discouraged and the good encouraged. The
libertarian maintains that the existence of the State apparatus
provides a ready, swift channel for the exercise of evil, since the
rulers of the State are thereby legitimated and can wield compulsion in
ways that no one else is permitted to do. What is considered
“crime” socially, is called “exercise of
democratic power” when performed by an individual as a State
official. The purely free market, on the other hand, eliminates all
legitimated channels for the exercise of power over man.
5.
The Impossibility of Equality
Probably the most common ethical criticism of the market economy is
that it fails to achieve the goal of equality. Equality has been
championed on various “economic” grounds, such as
minimum social sacrifice or the diminishing marginal utility of money
(see the chapter on taxation above). But in recent years economists
have recognized that they cannot justify egalitarianism by economics,
that they ultimately need an ethical basis for equality.
Economics or praxeology cannot establish the validity of ethical
ideals, but even ethical goals must be framed meaningfully. They must
therefore pass muster before praxeology as being internally consistent
and conceptually possible. The credentials of
“equality” have so far not been adequately tested.
It is true that many objections have been raised that give egalitarians
pause. Sometimes realization of the necessary consequences of their
policies causes an abandonment, though more often a slowing down, of
the egalitarian program. Thus: compulsory equality will demonstrably
stifle incentive, eliminate the adjustment processes of the market
economy, destroy all efficiency in satisfying consumer wants, greatly
lower capital formation, and cause capital consumption—all
effects signifying a drastic fall in general standards of living.
Furthermore, only a free society is casteless, and
therefore only freedom will permit mobility of income according to
productivity. Statism, on the other hand, is likely to freeze the
economy into a mold of (nonproductive) inequality.
Yet these arguments, though powerful, are by no means conclusive. Some
people will pursue equality anyway; many will take these considerations
into account by settling for some cuts in living
standards in order to gain more equality.
In all discussions of equality, it is considered self-evident that
equality is a very worthy goal. But this is by no means self-evident.
For the very goal of equality itself is open to serious challenge. The
doctrines of praxeology are deduced from three universally acceptable
axioms: the major axiom of the existence of purposive human action; and
the minor postulates, or axioms, of the diversity
of human skills and natural resources, and the disutility of labor.
Although it is possible to construct an economic theory of a society
without these two minor axioms (but not without the major one), they
are included in order to limit our theorizing to laws that can apply
directly to reality.Anyone who wants to set forth a
theory applicable to interchangeable human beings
is welcome to do so.
Thus, the diversity of mankind is a basic postulate of our knowledge of
human beings. But if mankind is diverse and individuated, then how can
anyone propose equality as an ideal? Every year,
scholars hold Conferences on Equality and call for greater equality,
and no one challenges the basic tenet. But what justification can
equality find in the nature of man? If each individual is unique, how
else can he be made “equal” to others than by
destroying most of what is human in him and reducing human society to
the mindless uniformity of the ant heap? It is the task of the
egalitarian, who confidently enters the scene to inform the economist
of his ultimate ethical goal, to prove his case. He must show how
equality can be compatible with the nature of mankind and must defend
the feasibility of a possible egalitarian world.
But the egalitarian is in even direr straits, for it can be shown that
equality of income is an impossible goal for
mankind. Income can never be equal. Income must be
considered, of course, in real and not in money terms; otherwise there
would be no true equality. Yet real income can never be equalized. For
how can a New Yorker’s enjoyment of the Manhattan skyline be
equalized with an Indian’s? How can the New Yorker swim in
the Ganges as well as an Indian? Since every individual is necessarily
situated in a different space, every individual’s real income
must differ from good to good and from person to person. There is no
way to combine goods of different types, to measure some income
“level,” so it is meaningless to try to arrive at
some sort of “equal” level. The fact must be faced
that equality cannot be achieved because it is a
conceptually impossible goal for man, by virtue of his necessary
dispersion in location and diversity among individuals. But if equality
is an absurd (and therefore irrational) goal, then
any effort to approach equality is correspondingly absurd. If a goal is
pointless, then any attempt to attain it is similarly pointless.
Many people believe that, though equality of income is an absurd ideal,
it can be replaced by the ideal of equality of opportunity.
Yet this, too, is as meaningless as the former concept. How can the New
Yorker’s opportunity and the Indian’s opportunity
to sail around Manhattan, or to swim in the Ganges, be
“equalized”? Man’s inevitable diversity
of location effectively eliminates any possibility of equalizing
“opportunity.”
Blum and Kalven lapse into a common error
when they state that
justice connotes equality of opportunity and that this equality
requires that “the contestants start from the same
mark,” so that the “game” be
“fair.” Human life is not some sort of race or game
in which each person should start from an identical mark. It is an
attempt by each man to be as happy as possible. And each person could
not begin from the same point, for the world has not just
come into being; it is diverse and infinitely varied in its parts. The
mere fact that one individual is necessarily born in a
different place from someone else immediately insures that
his inherited opportunity cannot be the same as his
neighbor’s. The drive for equality of opportunity would also
require the abolition of the family since different parents have
unequal abilities; it would require the communal rearing of children.
The State would have to nationalize all babies and raise them in State
nurseries under “equal” conditions. But even here
conditions cannot be the same, because different State officials will
themselves have different abilities and personalities. And equality can
never be achieved because of necessary differences of location.
Thus, the egalitarian must not be permitted any longer to end
discussion by simply proclaiming equality as an absolute ethical goal.
He must first face all the social and economic consequences of
egalitarianism and try to show that it does not clash with the basic
nature of man. He must counter the argument that man is not made for a
compulsory ant heap existence. And, finally, he must recognize that the
goals of equality of income and equality of opportunity are
conceptually unrealizable and are therefore absurd. Any drive to
achieve them is ipso facto absurd as well.
Egalitarianism is, therefore, a literally senseless social philosophy.
Its only meaningful formulation is the goal of “equality of
liberty”—formulated by Herbert Spencer in his
famous Law of Equal Freedom: “Every man has freedom to do all
he wills, provided he infringes not the equal freedom of any other
man.”
This goal does not attempt
to make every individual’s total condition
equal—an absolutely impossible task; instead, it advocates
liberty—a condition of absence of coercion over person and
property for every man.
Yet even this formulation of equality has many flaws and could
profitably be discarded. In the first place, it opens the door for
ambiguity and for egalitarianism. In the second place, the term
“equality” connotes measurable identity with a
fixed, extensive unit. “Equal length” means
identity of measurement with an objectively determinable unit. In the
study of human action, whether in praxeology or social philosophy,
there is no such quantitative unit, and hence there can be no such
“equality.” Far better to say that “each
man should have X” than to say that “all men should
be equal in X.” If someone wants to urge every man to buy a
car, he formulates his goal in that way—“Every man
should buy a car”—rather than in such terms as:
“All men should have equality in car buying.” The
use of the term “equality” is awkward as well as
misleading.
And finally, as Clara Dixon Davidson pointed out so cogently many years
ago, Spencer’s Law of Equal Freedom is redundant. For if every
man has freedom to do all that he wills, it follows from this very
premise that no man’s freedom has been
infringed or invaded. The whole second clause of the law after
“wills” is redundant and unnecessary.
Since the formulation of
Spencer’s Law, opponents of Spencer have used the qualifying
clause to drive holes into the libertarian philosophy. Yet all this
time they were hitting at an encumbrance, not at the essence of the
law. The concept of “equality” has no rightful
place in the “Law of Equal Freedom,” being
replaceable by the logical quantifier “every.” The
“Law of Equal Freedom” could well be renamed
“The Law of Total Freedom.”
6.
The Problem of Security
One of the most common ethical charges levelled at the free market is
that it fails to provide “security.” It is said
that the blessings of freedom must be weighed against the competing
blessings of security—to be provided, of course, by the State.
The first comment to make is that this world is a world of uncertainty.
We shall never be able to forecast the future course of the world with
precision. Every action, therefore, involves risk. This risk cannot be
eliminated. The man who keeps cash balances suffers the risk that its
purchasing power may dwindle; the man who invests suffers the risk of
loss; and so forth.
Yet the free market finds ways of voluntarily relieving risk as much as
can possibly be done. In a free society there are three prime ways that
men can alleviate uncertainty about the future:
(1) By savings. These savings, whether invested in
production or kept in cash balances, insure money for future needs.
Investing in production increases one’s future assets; cash
balances insure that funds will be immediately available.
(2) By entrepreneurship. The entrepreneurs, i.e.,
the capitalist-entrepreneurs, assume the bulk of the risks of the
market and concomitantly relieve laborers of a great deal of risk.
Imagine the universal risk if laborers could not be paid until the
final product reached the consumers! The pain of waiting for future
income, the risk in attempting to forecast consumer demands in the
future, would be almost intolerable, especially for
those laborers toiling in the most remote processes of production. It
is difficult to see how anyone would embark on longer processes of
production if he were forced to wait the entire length of the
production period to earn any income. But the capitalist-entrepreneur
pays him, instead, immediately and himself adopts the burden of waiting
and forecasting future wants. The entrepreneur then risks loss of his
capital. Another method of entrepreneurial assumption of risk takes
place in futures markets, where hedging allows
buyers and sellers of commodities to shift the risk of future price
changes onto a body of specialized traders.
(3) By insurance. Insurance is a basic method of
pooling and abating risks on the market. While entrepreneurs assume the
burdens of uncertainty, insurance takes care of actuarial
risks, where stable collective frequencies can be arrived at and
premiums can be charged accordingly.
The State cannot provide absolute security. The slaves may have
believed that their security was guaranteed by their master. But the master
assumed the risk; if his income fell, then he could not provide
security for his charges.
A fourth way to provide security in a free society is by voluntary charity.
This charity, of necessity, comes out of production.
It has been maintained that the State can provide security for the
people better than the market because it can guarantee a minimum income
for everyone. Yet the government can do no such thing. The State produces
nothing; it can only confiscate the production of others. The State,
therefore, can guarantee nothing; if the requisite minimum is not
produced, the State will have to default on its pledges. Of course, the
State can print all the money it wants, but it cannot produce the
needed goods. Furthermore, the State cannot, in this way, provide
security for every man alike. It can make some secure only at
the expense of others. If A can be made more secure only by
robbing B, B is made more insecure in the process.
Hence, the State, even if production is not drastically reduced, cannot
provide security for all, but only for some at the expense of others.
Is there no way, then, that government—organized
coercion—can provide security? Yes, but not in the absolute
sense. Rather, it can provide a certain aspect of
security, and only this aspect can be guaranteed to every
man in the society. This is security against aggression.
In fact, however, only a voluntary, free-market defense can provide
this, since only such a non-Statist type of defense agency does not itself
engage in aggression. With each man acquiring security of person and
property against attack, productivity and leisure are both immeasurably
increased. Any State attempt to provide such security is an
anachronism, since the State itself constantly invades individual
liberty and security.
That type of security, then, which is open to every man in society, is
not only compatible with, but is a corollary to, perfect freedom.
Freedom and security against aggression are two sides of the same coin.
It might still be objected that many people, even knowing that slavery
or submission to dictation cannot bring absolute security, will still
wish to rely on masters. But if they do so voluntarily, the libertarian
asks, why must they force others, who do not choose to submit to
masters, to join them?
7.
Alleged Joys of the Society of Status
One common related criticism of the free market and free society
(particularly among intellectuals who are conspicuously not craftsmen
or peasants) is that, in contrast to the Happy Craftsmen and Happy
Peasants of the Middle Ages, it has “alienated” man
from his work and from his fellows and has robbed him of his
“sense of belonging.” The status society of the
Middle Ages is looked back upon as a Golden Age, when everyone was sure
of his station in life, when craftsmen made the whole shoe instead of
just contributing to part of its production, and when these
“whole” laborers were enmeshed in a sense of
belonging with the rest of society.
In the first place, the society of the Middle Ages was not
a secure one, not a fixed, unchanging hierarchy of status.There was little progress,
but there was much change. Dwelling as they did in
clusters of local self-sufficiency, marked by a low standard of living,
the people were ever threatened by famine. And because of the relative
absence of trade, a famine in one area could not be countered by
purchasing food from another area. The absence of famine in capitalist
society is not a providential coincidence.
Secondly, because of the low living standards, very few members of the
population were lucky enough to be born into the status of the Happy
Craftsman, who could be really happy and secure in his work only if he
were a craftsman to the King or the nobility (who, of course, earned their
high status by the decidedly “unhappy” practice of
permanent violence in domination over the mass of the exploited
population). As for the common serf, one wonders whether, in his
poverty-stricken, enslaved, and barren existence, he had even
sufficient time and leisure to contemplate the supposed joys of his
fixed post and his “sense of belonging.” And if
there were a serf or two who did not wish to
“belong” to his lord or master, that
“belonging,” of course, was enforced by violence.
Aside from these considerations, there is another problem which the
society of status cannot surmount, and which indeed contributed a great
deal to breaking up the feudal and mercantilist structures of the
precapitalistic era. This was population growth. If everyone is
assigned his appointed and inherited role in life, how can an increased
population be fitted into the scheme? Where are they to be assigned,
and who is to do the assigning? And wherever they are allocated, how
can these new people be prevented from disrupting the whole assigned
network of custom and status? In short, it is precisely in the fixed,
noncapitalistic society of status that the Malthusian problem is ever
present, at its ugliest, and where Malthusian
“checks” to population must come into play.
Sometimes the check is the natural one of famine and plague; in other
societies, systematic infanticide is practiced. Perhaps if there were a
modern return to the society of status, compulsory birth control would
be the rule (a not impossible prognosis for the future). But in
precapitalist Europe, the population problem became a problem of an
ever increasing number of people with no work to do and no place to go,
who therefore had to turn to begging or highway robbery.
The proponents of the theory of modern “alienation”
do not offer any reasoning to back up their assertions, which are
therefore simply dogmatic myths. Certainly, it is not self-evident that
the craftsman, or better still, the primitive man who made everything
that he consumed, was in some sense happier or “more
whole” as a result of this experience. Although this is not a
treatise on psychology, it might be noted that perhaps what gives the
worker his sense of importance is his participation in what Isabel
Paterson has called the “circuit of production.” In
free-market capitalism he can, of course, participate in that circuit
in many more and varied ways than he could in the more primitive status
society.
Furthermore, the status society is a tragic waste of potential skill
for the individual worker. There is, after all, no reason why the son
of a carpenter should be particularly interested or skilled in
carpentry. In the status society he faces only a dreary life of
carpentry, regardless of his desires. In the free-market, capitalist
society, though he is of course not guaranteed that he will be able to
make a livelihood in any line of work that he wants to pursue, his
opportunities to do work that he really likes are immeasurably, almost
infinitely, expanded. As the division of labor expands, there are more
and more varieties of skilled occupations that he can engage in,
instead of having to be content with only the most primitive skills.
And in the free society he is free to try these tasks, free to move
into whatever area he likes best. He has no freedom and no opportunity
in the allegedly joyful society of status. Just as free capitalism
enormously expanded the amount and variety of consumers’
goods and services available to mankind, so it vastly expanded the
number and variety of jobs to be done and the skills that people can
develop.
The hullabaloo about “alienation” is, in fact, more
than a glorification of the medieval craftsman. He, after all, bought
his food from the nearby land. It is actually an attack on the whole
concept of the division of labor and an enshrining of primitive
self-sufficiency. A return to such conditions could mean only the
eradication of the bulk of today’s population and
complete impoverishment for those remaining. Why
“happiness” would nonetheless increase, we leave to
the mythologists of status.
But there is one final consideration which indicates that the vast
majority of the people do not believe that they need primitive
conditions and the slave’s sense of belonging to make them
happy. For there is nothing, in a free society, to prevent those who
wish from going off in separate communities and living primitively and
“belongingly.” No one is forced to join the
specialized division of labor. Not only has almost no one abandoned
modern society to return to a happy, integrated life of fixed poverty,
but those few intellectuals who did form communal Utopias of one sort
or another during the nineteenth century abandoned these attempts very
quickly. And perhaps the most conspicuous nonwithdrawers
from society are those very critics who use our modern
“alienated” mass communications to denounce modern
society. As we indicated at the end of the last section, a free society
permits any who wish to enslave themselves to others to do so. But if
they have a psychological need for a slave’s “sense
of belonging,” why must other individuals without such a need
be coerced into enslavement?
8.
Charity and Poverty
A common complaint is that the free market would not insure the
elimination of poverty, that it would “leave people free to
starve,” and that it is far better to be
“kindhearted” and give
“charity” free rein by taxing the rest of the
populace in order to subsidize the poor and the substandard.
In the first place, the “freedom-to-starve”
argument confuses the “war against nature,” which
we all conduct, with the problem of freedom from interference by other
persons. We are always “free to starve” unless we
pursue our conquest of nature, for that is our natural condition. But
“freedom” refers to absence of molestation by other
persons; it is purely an interpersonal problem.
Secondly, it should also be clear that it is precisely voluntary
exchange and free capitalism that have led to an enormous improvement
in living standards. Capitalist production is the only method by which
poverty can be wiped out. As we stressed above, production
must come first, and only freedom allows people to produce in
the best and most efficient way possible. Force and violence may
“distribute,” but it cannot produce. Intervention
hampers production, and socialism cannot calculate. Since production of
consumer satisfactions is maximized on the free market, the free market
is the only way to abolish poverty. Dictates and legislation cannot do
so; in fact, they can only make matters worse.
The appeal to “charity” is a truly ironic one.
First, it is hardly “charity” to take wealth by
force and hand it over to someone else. Indeed, this is the direct
opposite of charity, which can only be an unbought, voluntary act of
grace. Compulsory confiscation can only deaden
charitable desires completely, as the wealthier grumble that there is
no point in giving to charity when the State has already taken on the
task. This is another illustration of the truth that men can become
more moral only through rational persuasion, not through violence,
which will, in fact, have the opposite effect.
Furthermore, since the State is always inefficient, the amount
and direction of the giving will be much different
from what it would be if people were left free to act on their own. If
the State decides from whom to take and to whom to give, the power
residing in the State’s hands is enormous. It is obvious that
political unfortunates will be the ones whose
property is confiscated, and political favorites
the ones subsidized. And in the meantime the State erects a bureaucracy
whose living is acquired by feeding off the confiscation of one group
and the encouraged mendicancy of another.
Other consequences follow from a regime of compulsory
“charity.” For one thing, “the
poor”—or the “deserving”
poor—have been exalted as a privileged caste, with an
enforceable claim to the production of the more
able. This is a far cry from a request for charity. Instead, the able
are penalized and enslaved by the State, and the unable are placed on a
moral pedestal. Certainly, this is a peculiar sort of moral program.
The further consequence will be to discourage the able, to reduce
production and saving in all of society, and beyond this, to subsidize
the creation of a caste of poor. Not only will the poor be subsidized
by right, but their ranks will be encouraged to
multiply, both through reproduction and through their moral exaltation
and subsidization. The able will be correspondingly hampered and
repressed.
Whereas the opportunity for voluntary charity acts
as a spur to production by the able, coerced charity acts as a drain
and a burden upon production. In fact, in the long run, the greatest
“charity” is precisely not what we know by that
name, but rather simple, “selfish” capital
investment and the search for technological innovations. Poverty has
been tamed by the enterprise and the capital investment of our
ancestors, most of which was undoubtedly done for
“selfish” motives. This is a fundamental
illustration of the truth enunciated by Adam Smith that we generally
help others most in those very activities in which we help ourselves.
Statists, in fact, are really opposed to charity.
They often argue that charity is demeaning and degrading to the
recipient, and that he should therefore be taught that the money is
rightly his, to be given to him by the government as his due. But this
oft-felt degradation stems, as Isabel Paterson pointed out, from the
fact that the recipient of charity is not self-supporting on the market
and that he is out of the production circuit and no longer providing a
service in exchange for one received. However, granting him the moral
and legal right to mulct his fellows increases his
moral degradation instead of ending it, for the beneficiary is now
further removed from the production line than ever. An act of charity,
when given voluntarily, is generally considered temporary and offered
with the object of helping a man to help himself. But when the dole is
ladled out by the State, it becomes permanent and perpetually
degrading, keeping the recipients in a state of subservience. We are
not attempting to argue at this point that to be subservient in this
way is degrading; we simply say that anyone who
considers private charity degrading must logically conclude that State
charity is far more so.
Mises, furthermore, points
out that free-market exchange—always condemned by statists
for being impersonal and “unfeeling”—is precisely
the relation that avoids all degradation and
subservience.
9.
The Charge of “Selfish Materialism”
One of the most common charges levelled against the free market (even
by many of its friends) is that it reflects and encourages unbridled
“selfish materialism.” Even if the free
market—unhampered capitalism—best furthers
man’s “material” ends, critics argue, it
distracts man from higher ideals. It leads man away from spiritual or
intellectual values and atrophies any spirit of altruism.
In the first place, there is no such thing as an “economic
end.” Economy is simply a process of
applying means to whatever ends a person may adopt. An individual can
aim at any ends he pleases, “selfish” or
“altruistic.” Other psychic factors being equal, it
is to everyone’s self-interest to maximize his monetary
income on the market. But this maximum income can then be used for
“selfish” or for “altruistic”
ends. Which ends people pursue is of no concern to
the praxeologist. A successful businessman can use his money to buy a
yacht or to build a home for destitute orphans. The choice rests with
him. But the point is that whichever goal he pursues, he must first
earn the money before he can attain the goal.
Secondly, whichever moral philosophy we adopt—whether
altruism or egoism—we cannot criticize the
pursuit of monetary income on the market. If we hold an egoistic
social ethic, then obviously we can only applaud the maximization of
monetary income, or of a mixture of monetary and other psychic income,
on the market. There is no problem here. However, even if we adopt an altruistic
ethic, we must applaud maximization of monetary income just as
fervently. For market earnings are a social index of one’s
services to others, at least in the sense that any services are
exchangeable. The greater a man’s income, the greater has
been his service to others. Indeed, it should be far easier for the
altruist to applaud the maximization of a man’s monetary
income than that of his psychic income when this is
in conflict with the former goal. Thus, the consistent altruist must
condemn the refusal of a man to work at a job paying high wages and his
preference for a lower-paying job somewhere else. This man, whatever
his reason, is defying the signalled wishes of the consumers, his
fellows in society.
If, then, a coal miner shifts to a more pleasant, but lower-paying, job
as a grocery clerk, the consistent altruist must castigate him for
depriving his fellowman of needed benefits. For the consistent altruist
must face the fact that monetary income on the
market reflects services to others, whereas psychic income is a purely
personal, or “selfish,” gain.
This analysis applies directly to the pursuit of leisure.
Leisure, as we have seen, is a basic consumers’ good for
mankind. Yet the consistent altruist would have to deny each worker any
leisure at all—or, at least, deny every hour of leisure
beyond what is strictly necessary to maintain his output. For every
hour spent in leisure reduces the time a man can spend serving his
fellows.
The consistent advocates of “consumers’
sovereignty” would have to favor enslaving the idler or the
man who prefers following his own pursuits to serving the consumer.
Rather than scorn pursuit of monetary gain, the consistent altruist
should praise the pursuit of money on the market and condemn any
conflicting nonmonetary goals a producer may have—whether it
be dislike for certain work, enthusiasm for work that pays less, or a
desire for leisure.
Altruists who criticize
monetary aims on the market, therefore, are wrong on their
own terms.
The charge of “materialism” is also fallacious. The
market deals, not necessarily in “material” goods,
but in exchangeable goods. It is true that all
“material” goods are exchangeable (except for human
beings themselves), but there are also many nonmaterial goods exchanged
on the market. A man may spend his money on attending a concert or
hiring a lawyer, for example, as well as on food or automobiles. There
is absolutely no ground for saying that the market economy fosters
either material or immaterial goods; it simply leaves every man free to
choose his own pattern of spending.
Finally, an advancing market economy satisfies more and more of
people’s desires for exchangeable goods.
As a result, the marginal utility of exchangeable goods tends to
decline over time, while the marginal utility of nonexchangeable
goods increases. In short, the greater satisfaction of
“exchangeable” values confers a much greater
marginal significance on the “nonexchangeable”
values. Rather than foster “material” values, then,
advancing capitalism does just the opposite.
In short, we are saying that the
means must be justified by the end. What else but an end can
justify a means? The common conception that the doctrine,
“the end justifies the means,” is an immoral device
of Communists, is hopelessly confused. When, for example, people object
to murder as a means to achieve goals, they are objecting to murder,
not because they do not believe that means are justified by ends, but
because they have conflicting ends—for example, the end
that murder not be committed. They may hold this view as an
end-in-itself or because it is a means to other ends, such as upholding
each man’s right to life.
For further discussion, see
Man, Economy, and State, chapter 10.
Interventionists assume the political
(but no other) competence of the people even when they favor
dictatorship rather than democracy. For if the people do not vote under
a dictatorship, they still must accept the rule of the dictator and his
experts. So the interventionists cannot escape this contradiction even
if they give up democracy.
Ludwig von Mises has been active
in pointing out this contradiction. Thus, see his Planning
for Freedom (South Holland, Ill.: Libertarian Press, 1952),
pp. 42–43. However, the remainder of Mises’
criticism of this antimarket argument (ibid., pp.
40–44) rather differs from the one presented here.
Mises, Human Action,
pp. 728–29. The same total dictatorship over consumer choice
is also implied by the knowledge-of-interest argument discussed above.
As Thomas Barber astutely says:
It
is illegal for pleasure-boaters to fail to carry a life preserver for
every person on board. A great number of young men are publicly
employed to go about and look for violators of this law. Pleasant for
the young men, of course. But is it really any more the
government’s business that a man goes canoeing without a life
preserver than that he goes out in the rain without his rubbers? . . .
The law is irritating to the individual concerned, costly to the
taxpayers, and turns a lot of potential producers into economic
parasites. Perhaps the manufacturers of life preservers engineered its
passage. (Barber, Where We Are At, p. 89)
It is true that we do not advocate
ends in this volume, and in that sense praxeology
is “utilitarian.” But the difference is that
utilitarianism would extend this Wertfrei
injunction from its proper place in economics and praxeology to embrace
all of rational discourse.
Mises often states that
interventionary measures in the market, e.g., price controls, will have
consequences that even the government officials administering the plans
would consider bad. But the problem is that we do not know
what the government officials’ ends are—except
that they demonstrably do like the power they have
acquired and the wealth they have extracted from the public. Surely
these considerations may often prove paramount in their minds, and we
therefore cannot say that government officials would invariably
concede, after learning all the consequences, that their actions were
mistaken.
F.A. Harper, “Try This
on Your Friends,” Faith and Freedom,
January, 1955, p. 19.
For a further discussion of these
axioms, see Rothbard, “In Defense of
Extreme Apriorism,” Southern Economic Journal,
January, 1957, pp. 314–20.
Blum and Kalven, Uneasy
Case for Progressive Taxation, pp. 501ff.
Spencer, Social Statics,
p. 121.
This goal has sometimes been
phrased as “equality before the law,” or
“equality of rights.” Yet both formulations are
ambiguous and misleading. The former could be taken to mean equality of
slavery as well as liberty and has, in fact, been so narrowed down in
recent years as to be of minor significance. The latter could be
interpreted to mean any sort of “right,” including
the “right to an equal income.”
“. . . the opening
affirmation includes what follows, since, if any one did infringe upon
the freedom of another, all would not be equally free.” Clara
Dixon Davidson in Liberty, September 3, 1892, as
quoted in Benjamin R. Tucker, Instead of a Book
(New York: Benjamin R. Tucker, 1893), p. 137. Davidson’s
formulation has been completely neglected.
The present section is meant more
as a logical critique of the theory of status than as a detailed
account of society in the Middle Ages. For a critique of a recent
expression of the Happy Peasant myth, see Charles
E. Silberman, The Myths of Automation (New York:
Harper & Row, 1967), pp. 98–107.
See the readings referred to in
footnote 3 of the preceding chapter.
The devotion of government to
charity may be gauged by its universal
repression of mendicancy. A direct gift to a beggar helps the
recipient directly and leaves no opportunity for large bureaucratic
organizations to live full-time off the transaction. Harassment of
direct aid, then, functions as a grant of monopolistic privilege to the
“official” charity organizations. Isabel Paterson
points out that the American government imposed a requirement of
minimum cash assets for immigrants as an alleged way of helping
the poorer immigrants! The actual effect, of course, was to keep the
poorest immigrants, who could not meet the requirement, from American
shores and economic opportunity.
On various aspects of the problem
of charity and poverty, see Paterson,
“The Humanitarian with the Guillotine” in God
of the Machine, pp. 233–50; Spencer, Social
Statics, pp. 317–29; Mises, Human Action,
pp. 831–36; F.A. Harper, “The Greatest Economic
Charity” in Sennholz, ed., On Freedom and Free
Enterprise, pp. 94ff.; and Leonard E. Read,
“Unearned Riches,” ibid., pp.
188–95.
W.H. Hutt actually goes this far
in his article, “The Concept of Consumers’
Sovereignty,” Economic Journal, March,
1940, pp. 66–77.
It is also peculiar that critics
generally concentrate their fire on profits (“the profit
motive”), and not on other market incomes such as wages. It
is difficult to see any sense whatever in moral distinctions between
these incomes.
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