the

FreemanVOL. 29, NO. 8 • AUGUST 1979

The Ethics of Profit Making Brian Summers 451Why punish those who profitably serve willing consumers?

A Symbol of Chaos: The Gas Pump Hans F. Sennholz 458Regulation and control of production and pricing create intoler-able shortages and disaster.

"Sorry, No Further Bidsl" Gary North 466Government changes the outcome when it regulates the auction.

Profits and Payrolls Henry Hazlitt 470How the employees of corporations compare with stockholders inthe distribution of income.

Agriculture and the Survival ofPrivate Enterprise Ed Grady 480

The most positive program for agriculture or any business, for hu-man freedom in general, is to avoid political management.

World in the Grip of an Idea32. The Restoration of the Individual Clarence B. Carson 485

The Good News that individual man is valuable beyond compare.

Hock: An Appreciation Ronald F. Cooney 499Albert Jay Nock did the most one can to improve society: presentthe example of one improved unit

The Writings of F. A. Harper Paul L. Polrot 505In testament to the collected works of a brilliant exemplar of free-dom in all its aspects.

Book Reviews: 509"For the Record" by Felix Morley"What Makes You Think We Read the Bills?" by Senator H. L.Richardson

Anyone wishing to communicate with authors may sendfirst-class mail in care of THE FREEMAN for forwarding.

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Brian Summers

The Ethicsof

ProfitMaking

DEFENDERS of profit making almostinvariably use one or more standardarguments. Let us examine thestrengths and weaknesses of thesearguments-and then consider anew approach which throws addi­tional light on the ethics of profitmaking.

A businessman's profits (or losses)are his net revenues minus the mar­ket value of whatever labor he putinto the business and minus what­ever interest he passed up by invest­ing his own capital in the business.Thus, if a businessman could haveearned $20,000 a year doing thesame work for someone else, and ifhe had $50,000 invested in the busi­ness when the market rate of inter­est was 10 per cent, he made a pure(entrepreneurial) profit only if his

Mr. Summers's a member of the staff of The Foun­dation for Economic Education.

net revenues for the year exceeded$25,000.

If a businessman does make aprofit, he may try to justify it bypointing out that he has invested hisown capital in the business and pa­tiently waited for his return. Butimplicit interest (in our example$5,000) is excluded, by definition,from profits. Profits are not a rewardfor waiting; interest is a reward forwaiting.

Or the successful businessmanmay declare that he has workedhard-that his profits are the ufruitof his own labor." But, by definition,implicit wages ($20,000 in ourexample) are excluded from profits.Profits are not a reward for purelabor; wages are a reward for labor.Businessmen who suffer losses de­spite great personal efforts, andbusinessmen who reap profits withno more (Clabor" than a few tele-

451

452 THE FREEMAN August

phone calls, illustrate the differencebetween profits and wages.

Risks

A similar argument asserts thatprofits are a reward for bearingrisks. But businessmen who sufferlosses also take risks. So dogamblers and mountain climbers.Should these people be rewardedjust for bearing risks?

The risk argument is especiallyweak in the case of profits that arecompletely unexpected-windfallprofits. A storm may pollute atown's water supply, enabling theowner of a natural spring to reapwindfall profits. The owner mayhave paid almost nothing for thespring, thus risking very little capi­tal. It is difficult to justify his profitssolely on the basis of his taking arisk.

In fact, the less capital a busi­nessman invests in his business, theless implicit interest he loses and,other things being equal, thegreater his profits. That is, otherthings being equal, the less capitalrisked, the greater the profits. Simi­larly with the businessman's labor.The less effort he risks on a busi­ness, the less his implicit wages and,other things being equal, thegreater his profits. In this sense,profits can result from not riskingtoo much capital or labor.

If profits are not a ttreward" forwaiting, laboring, or bearing risks,

the defender of profits must seekother arguments. He often turns tothe free market economist, whousually provides a utilitarian argu­ment.

Utilitarian Argument

The economist points out thatcompetition leaves businessmen lit­tle choice but to charge whateverprice the market is paying. Thus,the prime way to earn profits in amarket economy is to cut coststhrough the prudent use of scarcefactors of production. The busi­nessman who conserves the mostresources, while giving consumersthe most for their money, earns thegreatest profits. Profits and lossespromote efficient production; freemarket prices eliminate shortagesand surpluses; profits provide theincentive and means to invest inproductive capital goods. Theutilitarian argument can be verycompelling.1

Furthermore, the utilitarian ar­gument offers a defense for windfallprofits and speculative profits. Inthe case of windfall profits, supposea disaster destroys much of a city'shousing. In a free market, rents willrise---encouraging people to take inboarders, share apartments, bringin portable shelters, repair damagedhousing, .and build new dwellings.Thus, profits will encourage peopleto alleviate the housing shortage, sothat rents will soon· fall back to

1979 THE ETHICS OF PROFIT MAKING 453

Hreasonable" levels. Of course, ifrent controls prohibit windfall prof­its, this natural recovery will bestifled.

The utilitarian argument also of­fers a defense for the profits of com­modity speculators and landspeculators.2 Commodity specula­tors buy when they expect a short­age---encouraging increased produc­tion and conservation. They sellwhen they expect a surplus-dis­couraging further production andencouraging increased use of thecommodity. Thus, commodityspeculators tend to smooth out shor­tages and surpluses. In addition,they quote future prices which tendto reduce the uncertainty facingbusinessmen, farmers, and consum­ers.

Land speculators earn profits bybuying property for which no oneelse sees much use, and later sellingit to someone who recognizes theproperty's high yield potential.Thus, land speculators keep prop­erty out of low productive uses andstore it up for high productive uses.

Paul A. Samuelson challengesthis utilitarian approach by point­ing out that a speculator may, forinstance, learn of a crop failure onlya few seconds before his competitorsand thereby reap huge profits. Hefinds it difficult to justify these prof­its solely on the basis of the fewseconds the market gains in adjust­ing to the crop failure.

But Samuelson ignores the role ofincentives. It is true that if the firstspeculator didn't learn of the cropfailure, others might have learned afew seconds later. But it is notnecessarily true that these otherspeculators would have acted asquickly (or acted at all) without theprofits that awaited the uwinning"speculator.3

The utilitarian argument offers aformidable defense for profitsearned in a free market system­based on the economic efficiency ofthe system itself. Yet many peopleare not satisfied by this argument.They may be willing to trade someeconomic efficiency for other goals,such as a proposed ttfairer" distribu­tion of wealth.

Some businessmen try to counterthese proposals by asserting thattheir profits are too small to warrantmuch reduction. This may be true,but the utilitarian argument showsthat the small profits of some are noreason for taxing the large (Uex_cess") profits of others. In fact, otherthings being equal, the maker ofsmall profits has used up morescarce resources than the maker oflarge profits. On utilitariangrounds, large profits are morecommendable than small profits.

Voluntary Transaction Argument

To effectively counter objectionsto the utilitarian argument, defen­ders of profit making may turn to

454 THE FREEMAN August

more philosophical arguments. Theymay, for instance, point out that in afree market all profits and losses arethe results of voluntary transac­tions. In a free society, no one iscoerced into dealing with a particu­lar businessman. Each person en­ters into a transaction expecting toimprove his own condition­otherwise he wouldn't trade.

To the libertarian, this argumentcarries much weight. Who can con­demn a voluntary trade? Yet manypeople do. They point out that pros­titutes, pornographers, and drugdealers often engage' in voluntarytransactions; yet these transactions,for other reasons, are to be con­demned. Until people place a highervalue on freedom, the voluntarytransaction argument will fail tosatisfy many critics of profit mak­ing.

Property Rights Argument

Another philosophical argumentis based on property rights. The busi­nessman either owns a good or hashired the factors of production usedto produce it. Therefore, once hisemployees, suppliers, creditors, andlandlord have been paid, any im­plicit wage, implicit interest, orprofit remaining from the sale of hisgood rightly belongs to him.

This argument can be used to jus­tify any profit made in a free mar­ket. It is, however, based on thesanctity of private property. Those

who use this argument must be pre­pared to defend the right to privateownership.4

Even for those who believe in pri­vate ownership, the property rightsargument creates the impressionthat the businessman purchases fac­tors of production and then just sitsback to (hopefully) collect his prof­its. Many people are dissatisfiedwith this approach because they feelthat a person should actively dosomething to deserve a profit. Thefact that the businessman may havelabored does not overcome this ob­jection because, as we have seen,implicit wages are excluded frompure profits. Something seems to bemissing from the property rights ar­gument.

Creator-Finder-Keeper Argument

What is missing is a recognitionthat the entrepreneur creates the op­portunity to discover his profits. Thisnew approach to the ethics of profitmaking, based on the seminal writ­ings of Israel M. Kirzner,5 does not,of course, claim that the entrepre­neur physically creates his products.Products are physically ttcreated"(transformed from one form intoanother) by workers using the capi­tal goods investors provide them.But workers and investors don't de­cide what prodnct to make andwhich factors of production to use.The entrepreneur makes these deci­sions. His decisions determine

1979 THE ETHICS OF PROFIT MAKING 455

which product will be offered to con­sumers and what the costs of pro­duction will be (calculated from themarket prices of the factors of pro­duction he chooses). The entrepre­neur's decisions make the differencebetween profit and loss.

Thus, although a businessmanmay not physically create his prod­ucts (although by the propertyrights argument he owns them), hedoes create the opportunity to dis­cover if consumers will pay a pricewhich exceeds his costs. An illustra­tive example is the speculator whobuys a good and then sells the physi­cally unchanged good at a profit. Bypurchasing goods and offering themfor sale, speculators create their ownopportunities to discover profits.

This approach casts additionallight on Samuelson's speculator wholearns of a crop failure a few secondsbefore his competitors. Previouslywe saw how his profits can be jus­tified on utilitarian grounds. Theyare also justified by the voluntarytransaction argument and the prop­erty rights argument. But now wesee a new justification for his profits.By placing purchase orders a fewseconds before his competitors, hecreates his opportunity to discoverprofits. He alone creates his oppor­tunity, so any profit or loss is his.

Note that this is not simply aufinder-keeper" argument. The en­trepreneur doesn't merely discoverhis profit, like a child stumbling

across a bright pebble. Even thereaper of windfall profits must firstacquire title to property before hecan sell it at a profit. By acquiringproperty, the entrepreneur createshis opportunity to discover if he cansell it at a profit.

Nor is this a Ucreator-keeper" ar­gument. In a competitive market,with no governmentally imposedbarriers to entry, a businessmancannot set his price by arbitrarilyadding a ((profit" to his costs (as'government-created monopolies andcartels can do). In a competitivemarket businessmen must discoverwhat prices consumers will pay.Thus, this approach to the ethics ofprofit making is perhaps bestlabeled a ((creator-finder-keeper"argument.

So far we have considered theprofits and losses of a businessmanoPerating in a free market. But thereal world contains partnershipsand corporations in addition to soleproprietorships. Also, the real worldis by no means a free market-it is amarket increasingly hampered bygovernment interventions. How dothe various arguments used to jus­tify profits apply to the real world?

Partnerships and Corporations

Partnerships and corporations,historian Robert Hessen has shown,are networks of contractual rela­tionships.6 Thus, the voluntarytransaction argument can be di-

456 THE FREEMAN August

rectly applied to justify the profits ofthese forms of business. The utilitar­ian argument is directly applicableby simply changing the word ((busi­nessman" to ((partnership" or ((cor-poration." For the property rightsargument we change ((businessman"to ((partners" or Ustockholders."

The creator-finder-keeper argu­ment can also be applied to partner­ships and corporations. Somewherein the business organization deci­sions are made as to what to produceand how to produce it. For thecreator-finder-keeper argument itdoesn't matter where in the organi­zation these decisions are made. Itsuffices that·profit opportunities arecreated by the business. Thus, whenit is discovered that consumers willpay a profit-yielding price, the prof­its belong to the partnership or cor­poration and are apportioned amongthe members according to contrac­tual agreements.

Government Intervention

But what about profits earned in amarket hampered by governmentintervention? The arguments wehave considered justify a busi­nessman's profits only to the extentthat his profits do not derive frominterventions. The more the gov­ernment intervenes in the economy,the less likely it is that these argu­ments will apply.

This is clearly the case with thevoluntary transaction argument.

The more the government inter­venes, the more do transactions be­come involuntary. For instance, thebeneficiary of an import quota mayclaim that customers ((voluntarily"patronize him. But they may pa­tronize him only because the quotaprevents them from dealing withforeign businesses.

The utilitarian argument also be­comes less applicable the more thegovernment intervenes. In a freemarket, businessmen earn profitsthrough the efficient use of scarceresources. Their profits are the re­sult of using as little as possible toprovide consumers with as much aspossible. The more the governmentintervenes, however, the less profitsreflect efficiency, and the more they

.reflect politically determined prices.For example, a land speculator mayreap profits, not by finding a buyerwho recognizes the productive po­tential of his land, but through azoning change.

The property rights argument isalso vitiated by government inter­vention. The more the governmentis used as an instrument for violat­ing private property rights, the lessappropriate this argument becomes.For instance, the recipient of a gov­ernment subsidy can hardly justifyhis profits by appealing to privateproperty rights when those aroundhim are paying taxes on their prop­erty to finance his subsidy.

The same holds for the creator-

1979 THE ETHICS OF PROFIT MAKING 457

finder-keeper argument. Thecreator of a profit-yielding opportu­nity cannot use this argument tojustify his profits when the opportu­nity has been politically created.Businessmen who successfully lobbyfor subsidies, tariffs, restrictions oncompetitors, and other governmentfavors create profit opportunities forthemselves by restricting the oppor­tunities of their fellow men.

This brief essay has not, of course,completely spelled out any of thearguments used to justify profits.Nor has it considered all the argu­ments. Left untouched, for instance,are Biblical justifications, profitsfrom immoral and/or illegal ac­tivities, and the basic question ofthemorality of the private property sys­tem.

Nevertheless, we have seen thatstrong arguments can be broughtforth in defense ofprofit making in afree market. The strengths of thesearguments, in fact, suggest thatbusine.ssmen spend less timeapologizing for their profits andspend more time challenging theirtormentors to justify the ethics ofprice controls, cCexcess" profits taxes,

union coercion, and other interfer­ences with the peaceful conduct ofbusiness. @

-FOOTNOTES-

lThe best example is Ludwig von Mises'((Profit and Loss" in Planning for Freedom(Libertarian Press, South Holland, Illinois,1952).

2See ((Why Speculators?" by Percy L.Greaves, Jr. (The Freeman, November 1964)and «Those Fellows with Black Hats-theSpeculators" by John A. Sparks (The Freeman,August 1974).

3Israel M. Kirzner, Competition and Entre­preneurship (University of Chicago Press,1973) pp. 223-225.

4This can be done on several grounds, but isbeyond the scope of this essay. See, for in­stance, Samuel L. Blumenfeld, editor, Propertyin a Humane Economy (Open Court, LaSalle,lllinois, 1974) and Gottfried Dietze, In Defenseof Property (The Johns Hopkins Press, Balti­more, 1971).

5See his Competition and Entrepreneurship(University of Chicago Press, 1973) and Per­ception, Opportunity, and Profit (University ofChicago Press, 1979, forthcoming) especiallychapters 11 and 12 of the latter. There are,however, several points of difference in ouranalyses; any errors in this paper are entirelymy responsibility.

'Robert Hessen, In Defense of the Corpora­tion (Hoover Institution Press, Stanford,California, 1979).

IDEAS ON

UBERTY

Ludwig von Mises

THERE is in the market economy no other means of acquiring andpreserving wealth than by supplying the masses in the best andcheapest way with all the goods they ask for.

Hans F. Sennholz

A SYMBOLOF CHAOS:THE

GASPUMP

UNTIL just a few years ago mostpeople were indifferent to all ques­tions of energy. They were as heed­less of the very industry that pro­duces heat and power as of manyother industries meeting their dailyneeds. Surely they were aware ofbasic materials such as wood, coal,gas or oil burned to produce heatand kinetic energy. But the term~~energyindustry" was yet unknown.Even the dictionaries of economicsdesigned to include the terms com­monly used in college courses listedneither energy nor the energy in­dustry. It was left to the 1970s tocall attention to the industry andbring us the energy crises.

Dr. Sennholz heads the Department of Economics atGrove City College In Pennsylvania and Is a notedwriter and lecturer on monetary and economic af­fairs. His latest book,Age of Inflation, describes ourdilemma and offers recommendations for restoringa sound monetary system.

458

In retrospect there were earlierindications of things to come. By1970 there was a United States De­partment of Transportation, a Fed­eral Power Commission, and anAtomic Energy Commission. In1973 Congress added the FederalEnergy Administration to centralizeall regulatory functions relating tooil. The Energy Research and De­velopment Administration cameinto existence in 1974. In October1977, the Department of Energybrought all these governmentalfunctions together into a single or­ganization under the direction of aSecretary of Energy.

This observation of demonstrablefacts raises. a fundamental question:was the growth of government in­tervention in all matters of energythe cause or effect of the painfulcrises that developed during the

A SYMBOL OF CHAOS: THE GAS PUMP 459

1970s? If it can be proven that gov­ernment intervention brought aboutthe dilemma in which we find our­selves today, the solution can be noother than early reduction and ul­timate abolition of this harmful in­tervention. But if the causes arefound to be elsewhere, and thegrowth of government was merely a.reaction to a new situation, we need.to search for other solutions.

Surpluses and Shortages

Our search for an objective an­swer calls to mind a basic principleof political economy that may beapplicable also to energy problems:whenever unhampered enterpriseprovides products and services, ittends to create surpluses that clearthe market only through major salescampaigns. Its advertising messageto the consuming public is to buyever more and better products.VVherever government providesproducts and services, it invariablycreates shortages that inconveni­ence the public and sometimes bringeconomic crises. VVherever govern­ment is in charge, its advertisingmessage is always the same: con­sume less, eat less, drive less, letthere be austerity! This has notchanged from the wheat and breadshortages of 1918 to the gasolineshortages of 1979.

VVhere government is in chargeand shortages inconvenience thepublic, we can observe yet another

regularity. Through intensive pub­licity campaigns government offi­cials and politicians point the fingerof blame at one or several culpritswho are bitterly denounced for self­ishly causing the shortages. In tele­vised press conferences the Presi­dent of the United States himselfmay make ugly charges against oilproducers, or any other producerswhose regulated services are inshort supply. Or he may point atsome foreigners, e.g., the Arabs, asthe culprits who sinisterly inflictedthe evil on us.

VVhen unhampered individual en­terprise generates surpluses, thereare no press conferences, no head­lines and no charges. The publiclooks at them with indifference in amood of affluence that comes fromchoice and selection. The press ig­nores them although it prospersfrom the paid advertisements thatseek to market the products. Radioand television thrive on advertise­ment campaigns that pay for theamusement and entertainment ofthe public.

But all such reflections may re­veal mere coincidences that have nobearing on the energy crisis.Perhaps the politicians are correctin pointing at the OPEC countriesfor charging too much, at the oilcompanies for seeking ever higherprofits, and at the public for consum­ing too much.

In that direction of deliberation

460 THE FREEMAN August

lies a wide open sea of arbitraryjudgments. What is Htoo much"?Millions of people are giving differ­ent answers to this very questionthroughout their busy days. Theyare making their choices as they areconsuming oil and gas for heat, re­frigeration and air conditioning,turning on electric lights, operatingpower tools, or driving up to theservice station to tank up ongasoline. They are giving vivid an­swers to the question in long lineswaiting to buy more fuel. We mustnot blithely ignore or reject theiranswers, nor those given by the oilcompanies or OPEC spokesmen.

If millions of people are said to bewrong wanting too much, is it notlikely that the critic who is censur­ing them is judging too much? Is heproposing to change human natureby his criticism? Or, is he a would-betyrant who is longing to impose hisjudgment and will on others? Toexplain the energy crisis in terms ofvalue judgments or culprit condem­nations is to open the gates for ar­bitrary judgment and politicalpower.

Is OPEC Causing the Fuel Crunch?

Such an explanation also leads topuzzling conclusions that seem tocontradict human nature. If theArab oil producers are causing ourdilemma, why are they not ac..complishing identical, or at leastsimilar, effects on other nations? It

is an established fact that they aretreating their customers equally,charging identical prices and sur­charges. But we know of no energycrisis other than ours. There are noreports of empty gasoline pumps inEurope, Africa, Asia, or LatinAmerica, no empty oil tanks any­where, except in these Unite,d Statesof America.

This observation is all the morestartling as most of the oil we con­sume comes from wells within ournational borders, while most foreigncountries, such as Germany and Ja­pan, lack any domestic production.And yet, they are prospering al­though the price of Arab oil hassoared in those countries too.Surely, they too feel the pinch ofrising energy costs, which reducestheir productivity and income bycorresponding amounts. Rising oilcosts necessitate many changes ingoods prices and readjustments ofproduction patterns. But they do notbreed an energy crisis thatthreatens to disrupt economic pro­duction and reduces standards ofliv­ing severely.

Our energy crisis is all the moremysterious inasmuch as OPEC isaccepting the United States dollaras its primary medium of exchange.Other buyers of Arab oil mustscramble to earn dollars first beforethey can place oil purchase orders.But Americans can use their owncurrency for any quantity ofArab oil

1979 A SYMBOL OF CHAOS: THE GAS PUMP 461

they may wish to acquire. Ourmonetary authorities may createany amount without cost, and thusfacilitate the payment ofArabs withnewly created money. That is, theycan avail themselves of inflation asa tool of international finance,which partially shifts the burden ofrising oil costs from the energy usersto inflation victims. Thus the UnitedStates can victimize the Arabsthemselves, who own large dollarbalances, by exporting inflation inexchange for Arab oil.

It is obvious that such objection··able devices of international financedo not make for international peaceand harmony. Since the UnitedStates was exporting inflation longbefore the oil producers combined toform an international oil cartel, wemay understand the Arab reactionthat led to OPEC. To them, jointaction afforded the only way to ad··just the price of oil to the ever-risingdemand for oil payable in depreciat··ing dollars. After all, there was nofree and open Arab oil market onwhich the daily demand and supplydetermined the price.

Under Government Managementand Control

The OPEC oil industry is ana··tionalized industry owned and man­aged by the member governments.They legislate every aspect of theindustry from the allowable quota ofproduction to the· price of the pro··

duct, and determine who may buyunder what conditions, and so forth.Theirs is a political process that isvery slow to adjust. When comparedwith the market process that facili­tates adjustments from day to day,yea, minute to minute, the politicalprocess of managing an industryand marketing its products may ap­pear irrational although its politicalplanners are deliberate in devisingtheir plans and adopting theirpolicies.

In such a world of politics thatseeks to manage nationalized indus­tries, there is confusion andchaos-unless the governments asowners agree on a common plan andact jointly to restore somesemblance of order. The interna­tional cartel arrangement is a natu­ral manifestation of a world econ­omy in which export industries aregovernment owned and operated. Italso points up the growing danger ofinternational conflict throughworld-wide socialism.

It is idle speculation to deliberateon the world market of oil if marketforces were unhampered and free todetermine prices. If there were noOPEC, no nationalized oil industry,and no Department 'of Energy reg­ulating and fixing United Statesproduction-just unhampered mar­kets and unrestrained competition­the energy world would be quite dif­ferent. Surely, the price of oil wouldbe much lower without the stagger-

462 THE FREEMAN August

ing costs of politics. And therewould be no energy crisis.

Are the 011 Companies Gougingthe Public?

To many critics, Arab behavioralone does not explain the energycrisis. They are pointing at the oilcompanies whose profits have beenrising in recent years. Most politi­cians and even the President of theUnited States are openly denouncingthe ~~disgraceful" and ~~exorbitant"

profits and are demanding a toughuwindfall profits" tax. Some politi­cians even are clamoring for aspeedy expropriation and nation­alization of the companies.

It is difficult to ignore this cres­cendo of cheap demagoguery, which,when left unanswered, may lead tomost harmful and regrettable legis­lation. Every effort must be made torefute and explode the politicalpropaganda and repel the politicianswho are anxious to extend their in­fluence and power. Their attacks onthe profits of one industry actuallyare attacks on the profits of all in­dustries and on the profit systemitself. Just listen to their chargesagainst the energy industry. Youwill search in vain for a differencebetween those charges and thoseleveled against the private propertyorder by the professional socialistsand communists around the world.

It is rather inconsistent and there­fore most puzzling that American

politicians should be the most vocalcritics of an industry that has beenunder their careful supervision andcontrol. After all, the Nixon pricecontrol edict of August 15, 1971, wasnever lifted from the energy indus­try. Even today the ceiling prices asset by the Department of Energy areposted on every gasoline pump inthe country.

The political attacks on the veryindustry that, under a heavy bar­rage of regulations and denuncia­tions, continues to provide us withenergy remind us of some gruesometales of human behavior during theDark Ages. When the black deathwas stalking Europe, public senti­ment was often aroused againstthose people who bravely sought toalleviate the suffering, comfortingthe dying and healing the sick.Thousands of aging women whosurvived the disaster were accusedof precipitating the disease throughwitchcraft and were put to a crueldeath. Similar forces of darknessnow accuse the American oil indus­try, which provided the people withan abundance of cheap energy formost of this century, of creating theshortage in order to reap ever higherprofits in a moment of nationalcrisis. Surely, no person will be put todeath, merely our economic order.

At the trial of the private propertyorder the defense is pointing outthat the Government of the UnitedStates is enforcing energy prices

1979 A SYMBOL OF CHAOS: THE GAS PUMP 463

that are arbitrary and confiscatory.They are fixed below those pricesfree people would choose to pay ifthere were no mandated ceilings.That is to say, the Government isforcing energy producers to selltheir products and services below'their objective exchange values andthereby causes the producers to begouged on a massive scale. If a com·­pany tires of this legislated plunderand for a moment should ignore theprice edict, it is hauled into courtand charged with consumer goug··ing. That is, the political gougersare taking the victims to court andaccusing them ofthe very crime thatis perpetrated against them. If therewere justice in the court of publicopinion, the charges would bepromptly dismissed and the perse··cutors would be arrested for exprop··riating private property without dueprocess.

Groundless Charges

The charges against the energycompanies are based on the crudeassumption that their profits are theevil fruits of worker exploitationand consumer gouging. Profits arethe scourge of greed .and egotism,which is the charge all socialists andcommunists are making against theprivate property order. A mereglance at the living and workingconditions of the people in capitalis­tic countries vividly disproves thecharges... When compared with the

conditions in the socialistic coun­tries, the American people are livingin a land of milk and honey, enjoy­ing far greater material comfortsand cultural opportunities. Thesteady stream of refugees and im­migrants to American shores is il­lustrating the point.

Blinded by socialistic propaganda,the critics of the profit system fail tosee its inherent benefits and justice.What is a profit, after all? It is theremainder of proceeds after all fac­tors of production have been fullycompensated. Businessmen mayearn it through efficient manage­ment of their resources in the ser­vice of their customers. The mostefficient producer earns the highestprofits, which give him the means toexpand his production and rendereven more services. Surely, the prof­its thus earned benefit the peoplethrough more and better production.Similarly, the workers employed byprofitable enterprises enjoy higherwages and more benefits than othersless fortunate who happen to workfor employers suffering losses.

Exceptionally high profits canonly be reaped through the correctanticipation of changes. When achange in market conditions, e.g., indemand, supply, technology, institu­tional restrictions, internationalsituations, and the like, necessitatesquick readjustments in production,the most alert producer who cor­rectly anticipates the changes and

464 THE FREEMAN August

makes prompt preparations, mayreap high entrepreneurial profits.His alertness and prompt action re­dound to the benefit of the public. Inshort, he who addresses himself tothe most urgent needs of the publictends to earn the greatest rewards,which, as an economic principle ofthe market order, meets our crite­rion of justice. In an energy crisis,we expect the most efficient energyproducer to earn the highest profits,as we would expect physicians andnurses to earn highest incomes in apublic health crisis. To burn them atthe stake ofpolitical demagoguery ispreposterous.

It is so Easy to Create a Shortage

The public hostility against busi­ness profits has brought chaos to thefuel pump. It has given rise to evermore government regulation, whichis the root cause of the energy crisis.Politics has become hopelessly en­tangled in the production and dis­tribution of energy.

In 1954 the Supreme Court set thetone by giving the Federal PowerCommission control over naturalgas prices in interstate commerce.These controls at first did nothamper production because they didnot deviate by much from pricesestablished by the demand and sup­ply forces of the market. But duringthe 1960s, the United States Gov­ernment legislated significant in­creases in demand and boosts in

production costs. Environmental re­strictions and pollution regulationsthat discourage the burning of coal,favoring the use of gas and low­sulfur fuel oil, mandated increases inconsumption and made productionmuch more expensive. In addition,the inflationary policies of the Gov­ernment eroded the purchasingpower of the dollars received byenergy producers.

In 1971, President Nixon placeddomestic crude oil under price con­trol as part of his overall price-stopedict. While many other harmfulcontrols were subsequently lifted,the price fixing of domestic oil andgas was continued. His successorscontinued to fix with vigor and force.

It is always much easier to pre­vent production and create short­ages than to engage in productiveactivity. Every freshman economistknows how to create an energy short­age: impose rigid price ceilings, re­duce the real price through mone­tary depreciation, legislate an in­crease in demand and raise the costsof supply. To make matters worse,he would impose substantiallyhigher taxes on crude oil production,on the use ofnatural gas by industryand utilities, and boost the Federalgasoline tax. To intensify the pain ofshortage and compound the confu­sion, he would entrust governmentofficials with administering a rationcoupon system that would allocatethe scarce supply according to their

1979 A SYMBOL OF CHAOS: THE GAS PUMP 465

rules of ~~fairness." And finally, toprolong the chaos he would createan economic incentive for hoardingthe given supplies. For instance, onevery first day of the month hewould permit gasoline producers toraise their prices by less than theyanticipate earning through storingtheir supplies until the controls arelifted. He would openly announcehis program and pursue it for 28months in order to assure maximumhoarding for 28 months. If it werenot for the limitations of storagefacilities he would cause all produc­tion to be withheld from the market.

Unfortunately, this is not just a

theoretical exercise for freshmaneconomists. This is the official policyof the United States Government, orat least the loudly touted program ofthe present administration. Ittouches 200 million Americans andthreatens their way of life. It is anefficient policy in creating short­ages, as our experience at thegasoline pumps so clearly demon­strates. As a policy designed to im­prove economic conditions it iscounterproductive. The resultantchaos and damage is just as real,whether the policy is the poisonousfruit of socialistic thinking, or just·arelic of the Dark Ages. @

IDEAS ON

UBERTY

The History of Price Fixing

ONE of the most frequent methods of control used has been thelimitation of prices by legal enactment. The results have been astonish­ingly uniform considering the variety of conditions and circumstancesunder which the experiments have taken place....

The history of government limitation ofprice seems to teach one clearlesson: That in attempting to ease the burdens of the people in a time ofhigh prices by artificially setting a limit to them, the people are notrelieved but only exchange one set of ills for another which is greater.Among these ills are: (1) the withholding of goods from the market,because consumers being in the majority, price fixing is usually in theirinterest; (2) the dividing of the community into two hostile camps, oneonly of which considers that the government acts in its interest; (3) thepractical difficulties of enforcing such limitation in prices which in thevery nature of the case requires the cooperation of both producer andconsumer to make it effective.

MARY G. LACY, Food Control During Forty-Six Centuries

Gary North

"Sorry,No FurtherBids!"

AUCTION PRICES are still front-pagenews in my city, Durham, NorthCarolina. Anyway, tobacco auctionprices are. You can still go down tothe tobacco warehouses and listen tothe incredible sound of thestaccato-voiced auctioneers, just likethe fellow on the old Lucky Strikeradio commercials. It's a heck of alot more interesting than readingcomputerized signals on somecathode ray tube.

The auction process seems to meto be the quintessence of marketexchange. An economy really is agiant auction,with buyers and sell­ers assembled together in order tosee who is willing to pay the highest

Dr. North is editor of Biblical Economics Today,available free on request: P.O. Box 8567, Durham,N.C. 27707.

This article is reprinted by permission from theApril 1979 Issue of Commodities magazine, CedarFalls, Iowa.

466

price (or offer the most goods) to getwhat he wants. The fact we alwaystend to forget in a supermarket isdriven home to us on the floor of anauction: buyers compete againstbuyers, not against the sellers. Andsince people can always go toanother auction, sellers competeagainst sellers. Only insofar as theauctioneer succeeds in getting thehighest bid from a buyer can he besaid to be a competitor to a buyer­and then only to the next-to-the-lastbuyer. The seller is the spinner ofdreams, the master in presentingthe vision of previously ignored op­portunities, and the buyers alwayshave the option of foregoing yetanother dream or potential opportu­nity.

As you may infer, I like auctions.They fascinate me.

I suppose this fascination with auc-

((SORRY, NO FURTHER BIDS!" 467

tions led me to the following fan­tasy. Imagine the floor of some coun­try auction. Fifteen enthusiasticbidders are standing in front of theauctioneer's booth, and he has justbrought forth some splendid exam­ple of a previously ignored opportu­nity. The bidders begin to drool.Each one knows that he just has tohave it. Today.

Imagine also that the rules of theauction are simple. Each bidder hasa can full of money behind him, andin order to make his bid, he has toreach into the can, pull out a quanti­ty ofpaper bills equal to his bid, raisethem into the air, and call out hisbid. No cash-no bid.

The bidding begins. Everyonemeets the opening price of $95 sug­gested by the auctIoneer. He knowsnow that he has a hot one on hishands. Upward climb the bids, withall 15 participants staying in thecompetition.

Enter the Money Man

Then a most peculiar thing takesplace. A man with a uniform beginsto dart behind one or another of theshouting bidders, almost at random(yet not quite), depositing newlyprinted currency in their moneycans. Each participant smiles whenhis refill comes. The bids continueupward. Noone leaves the floor.

Mter the price has climbed stead­ily to $250, the participants begin toworry. The highest bid ever offered

for one of these was $198, back in1974. Yet the bidding is only warm­ing up. The uniformed man scurriesfaster, shelling out the cash. Up anddown the bidders go, like drunkenmarionettes, leaning over to grabmore cash, standing up again towave ever-fatter fistsful of money atthe auctioneer.

At $275, some of the bidders startdropping out, grumbling aboutthe insanity shown by the others.They start calling for some sort ofgovernment regulation of bidding.This panic has to be stopped before itgets out of hand, they say. Yet theunifonned man keeps scurrying, andthe others continue on, undaunted:$300, $350, $475. It's pandemoniumon the floor.

Even those still bidding startgrumbling. Maybe the governmentreally ought to do something dra­'matic, to bring people (other bid­ders) to their senses. But not one ofthem thinks to tell the franticallyscrambling man with the money tostop putting new cash in his bucket.After all, that fellow represents thegovernment, or a properly charteredagency of the government. He's sup­posed to know what he's doing. Be­sides, each person thinks to himself,((maybe-just maybe-that guy willstop right after he makes his finaldeposit in my bucket." But hedoesn't stop.

Finally, only eight people are lefton the floor. With one breath they

468 THE FREEMAN August

cry out a bid, and with the otherthey call for some sort of Federalintervention, such as controls onpanic-induced prices. It's up to $750.How long can this go on, anyway?(The answer is fairly simple: aboutas long as the fellow in the uniformkeeps on passing out the papermoney, plus a few more bids. Whenthe cans are empty, this auction isover.)

By Order of the GovernmentMarket Closed

Finally, in response to tremen­dous political pressure from the bid­ders, a second government officialsteps onto the floor. This one iswearing a badge. Under his coatthere is a bulge, and it doesn't ap­pear to be a wallet. ttThat's it, ladiesand gentlemen," he announces. ttNofurther bids."

At last, the government has acteddecisively. The participants are re­lieved. The insanity-their in­sanity-has been officially called toa halt. HThe auction has beensaved," announces a high-level gov­ernment official, ttfrom itself."

There is a problem still remain­ing, however. Eight people are stillwaiting on the floor, and each one isas convinced as before that the itemin question ought to be his. Each oneknows in his heart that his next bidwould have been the final one, theone which would have driven hiscompetitors from the floor. Now the

bids are legally frozen. Each one feelscheated out of what was almostrightfully his.

Question: Who gets to take ithome? Another question: Whatcriteria should be used, not to men­tion will be used, to determine whotakes it home?

There are several possibilities.There is ttfirst come, first served."Who made that first high bid in theround immediately preceding thefreeze? Who was quickest? (Had heguessed that a freeze was imminent?Had be been tipped off?)

Another possibility: Who has beencoming to this auctioneer's auctionsthe longest, spending the mostmoney over the years? Who deservesa favor? ttBuddy, you've got it!"

Then, again, there's good old PhilTurner. Sheriff Phil Turner. ttWell,it looks like you've bought it, Phil,"says the auctioneer. t1 sure hope youlike it. Don't forget where you gotit."

Of course, there's the old H39-24­36" method. ttyou, my dear, justbought the prize. Pick it up in myoffice, right after the auction." Atime-honored method, to be sure.

Yet it's altogether possible thatthe auctioneer doesn't regard any ofthese approaches as the best. Maybehe decides that this little gem oughtto be saved to be auctioned off someother day. Why not take it home?Why sell it at a rigged price?

Is this fair? Is anyone of these

1979 ((SORRY, NO FURTHER BIDS!" 469

methods fair? After all, the auc­tioneer is a profit-seeking seller.Why should he be allowed to makethese decisions? The official with thebadge may call over the official withthe cash, peel off a few bills, handthem to the auctioneer, and an­nounce: ((The people need this. Thepeople shall get it." Then he takes itback to the office. Or perhaps to thelocal office of the GSA.

Black Markets

I'll tell you this much. There willbe other auctions. The auctioneerwill be back. But future auctionswill not be advertised openly. ttMid_night auctions" will take the place ofopen ones. Officials will not hearabout many of them in advance. Notthe guys wearing badges, anyway.

The money-providing officials willbe approached by all participantsbeforehand, each one pleading for

The Failure of Controls

his refills before the next auction.Some people will get their money,too, since there's plenty more wherethat came from these days. The bidsat the midnight auctions won't begetting any lower. Count on it.

So ifyou decide to show up, ifonlybecause these will be the auctionswhere the serious bidders and auc­tioneers will gather to auction offthe only goods worth paying for,then make your plans early. Get avery large can, and find you one ofthose money-producing officials. Getyour pitch ready now; you'll need agood one.

And for those of you who plan onsticking with the oPen, buyer-protect­ed auctions approved and licensed bythe government, come early, andbring along a couple of gifts for theauctioneer. In any case, you're onlygoing to get those items left behindby the guys with the badges. @

F. A. HARPER, "Stand-by Controls"

IDEAS ON

UBERTY

FOR those who find the proof of the pudding only in the eating, historyaffords continuous and ample evidence, since the first known pricecontrol laws were enacted in Babylonia 3,800 years ago. They failed oftheir purpose, as has every similar attempt in recorded history sincethat time.

It is ever the same. When a government inflates the money or someother cause pushes prices u.pward, attempts are made to conceal thesymptoms, rather than to attack inflation at its source or otherwise getat the root-cause. The attempt is made to adjust the scale on thethermometer by edict, rather than to cure the fever that causes themercury to rise-so to speak. The treatment applied to the fever victimis to throw him into a deep-freeze.

Henry Hazlltt

THE most persistent and widespreadeconomic myth for nearly the lasttwo centuries is that the mass of theworkers are inexcusably underpaid.This contention was put forth in itsmost extreme and vehement form byKarl Marx and Friedrich Engels inThe Communist Manifesto in 1848.The workers, they tell us, are mere((slaves" of the bourgeois class; theyare systematically uoppressed"; theyare subjected to unaked, shameless,direct, brutal, exploitation."

Insofar as Marx and Engels of-

Henry Hazlltt, noted economist, author, editor, re­viewer and columnist, Is well known to readers ofthe New York Times, Newsweek, The Freeman, Bar­ron's, Human Events and many others. Among themore recent of his numerous books are The InflationCrisis, and How to Resolve It and a revised edition ofEconomics In One Lesson.

470

fered any argument for this accusa­tion, it was based on David Ricardo'sworst mistake, the SubsistenceTheory of Wages, in turn derivedfrom the Malthusian doctrine thatpopulation persistently tends tooutgrow the means of subsistence,and therefore wages tend to fall to orstay at the minimum level at whichworkers can maintain life.

Marx and Engels combined thiswith another false but apparentlyindestructible Ricardian error-thatprices· are determined by costs ofproduction. But· they gave the doc­trine a sinister twist of their own:The cost of production of a worker ismerely the cost of barely keepinghim alive. So: ((The average price ofwage-labor is the minimum wage,i.e., that quantum of the means of

PROFITS AND PAYROLLS 471

subsistence which is absolutely re­quisite to keep the laborer in bareexistence as a laborer. What, there­fore, the wage-laborer appropriatesby means ofhis labor merely sufficesto prolong and reproduce a bareexistence."

This grotesque logic sufficed forMarx and Engels. They never con­descended to consult the facts. Theymade no distinction between the payof unskilled and the most skilledlabor. And for some reason whichthey did not explain, the whole sub­sistence theory would cease to applyonce socialism were adopted.

They admitted that in the preced­ing hundred years, capitalism(which they then called ~~the

bourgeoisie") had ttcreated moremassive and more colossal produc­tive forces than have all precedinggenerations together." But appar­ently none of this went to the work­ers; none of it raised wages. Theyeven argued that increased machin­ery ttnearly everywhere reduceswages to the same low level," andthat the chief effect of ~~the unceas­ing improvement ofmachinery" is tomake the livelihood of the workers(~more and more precarious."

In The Communist Manifesto theexplanation of why the wages oflabor can never rise above a meresubsistence level is given barelyhalf-a-dozen lines. When, years la­ter, Marx attempted to elaboratethis explanation in his three-

volumed Das Kapital (Volume I in1867, and Volumes II and ITI com­pleted by Engels in 1885 and 1894respectively after Marx's death in1883), Marx fell into so many con­tradictions and so much obfuscationthat the· book is all but unreadable.In an analysis published in 1896,the Austrian economist Eugen vonBoehm-Bawerk made mincemeat ofthe whole argument. Yet in spite oftheir flagrant absurdities, Marx'stheories, giving unmatched expres­sion to class hatred, continue towreak increasing devastation in theworld after more than a century.

The most persistent and wide­spread economic myth fornearly the last two centuries isthat the mass of the workersare inexcusably underpaid.

Marx never attempted to stateexactly what percentage labor waspaid of the value of the product ithelped to create. But in 1905 aprominent socialist, Daniel De Leon,misinterpreting some figures in theUnited States Census of Manufac­tures, declared that the Americanworker got only $20 for every $100worth ofgoods that he produced, andthat ~~somebody else" got the other$80. This misstatement was end­lessly repeated-and accepted-bymany politicians and others whoshould have known better.

472 THE FREEMAN August

In spite of their flagrant absur­dities, Marx's theories, givingunmatched expression toclass hatred, continue towreak increasing devastationin the world.

Substantially the same belief per­sists today. Public opinion polling bythe respected Opinion ResearchCorporation has found that the con­sensus of most Americans is that inthe two-way division betweenaggregate corporate employee com­pensation and the net profit aftertaxes left for the stockholders, thelatter get about 75 per cent and only25 per cent goes to the employees.

The truth is the exact contrary­and even more than that. Prelimi­nary figures for the calendar year1978 show that the employees of allthe corporations of the country re­ceived 89 per cent of the two-waysplit and the stockholders were cred­ited with net· profits after taxes ofonly 11 per cent. For the last yearfor which final figures are available,1977, the employees got 89.4 percent of the division and the ownerswere credited with net profits aftertaxes of only 10.7 per cent. They didnot actually receive that much, butdividends amounting to only 4.5 percent of the combined total.

In the whole thirty-year periodfrom 1949 through 1978 inclusive,

the employees received an averageof 88.1 per cent of the two-way divi­sion, the stockholders were creditedwith an average of11.9 per cent, andthe actual dividends they receivedcame to only 5.3 per cent.

These are official figures. In Table1 at the end of this article, I presentthe dollar figures for each of the lastthirty calendar years-of total em­ployee compensation for all of thecountry's corporations, of profitsafter taxes, of the sum of these two,and of the amount of dividends paid.In Table 2, I show how these sumscompare with each other when con­verted into percentages.

Before going on to point out someof the crucially important conclu­sions to be drawn from these figures,I should like to say a few wordsabout the figures themselves. Theyhave been compiled by the Bureau ofEconomic Analysis of the UnitedStates Department of Commercesince the early 1930s. They exist forevery year since 1929. Yet they areone of the world's best-kepteconomic secrets.

The reason for this is that untilvery recently these annual figureswere published only in the Julyissue each year of the Department ofCommerce monthly Survey of Cur­rent Business. This document pub­lishes each month some 40 pages ofstatistical tables. There are an av­erage of 70 lines to a page, and about16 columns of figures, making about

1979 PROFITS AND PAYROLLS 473

1120 separate figures on each page,about 44,800 figures per issue, and.537,600 figures per year. Out of thishuge total there are about 40 figureseach year-confined to the Julyissue-summing up the results forthe preceding year of the total andthe distribution of corporate earn..ings. This means that these corpo··rate statistics are found in barelyone figure in 10,000-and all in thesame tiny type as all the rest.

For the last thirty years theemployees of this country'scorporations have been re­ceiving an average of eighttimes as much from them ashas been cred ited to thestockholders.

It is not surprising that they haveescaped general attention, or appar­ently ev~n the attention of the greatmajority of statisticians andeconomists.

But at this point I should like topay tribute to two publicizers-onean institution, the other an individ­ual. The institution is the AmericanEconomic Foundation, whichstarted to call attention to thesepayroll-and-profit-division figuressometime in the early forties. Theindividual is John Q. Jennings, whostarted to emphasize them in 1939,and who in recent years has con­ducted practically a one-man cam.-

paign in reiterating, promulgating,and pounding in these distributionfigures and their implications. Forthe most part he has met with littlesuccess, but he recently found a re­ceptive hearing in Australia. At hissuggestion, Australia's Prime Min­ister Fraser prevailed upon employ­ers to publish and give prominenceto this percentage distribution intheir own companies. More than 200corporations complied. This seemsto have had a real effect in limitingunion demands and reducing thenumber of strikes in that country.

Now, when nearly half (46 percent) ofnet corporation profits of thelarger corporations in the UnitedStates are seized for taxes, when ontop of this a so-called ((windfall prof-its" tax is being proposed on oil com­panies, when the public is being toldfrom all sides that corporate profitsare Hdisastrously" high and even((obscene," it is time some of the restof us started calling more attentionto the real facts.

Let us begin with a closer exami­nation of the figures showing thedivision of corporate earnings be­tween employees and stockholders.

If the reader compares the figuresin the thirty-year tables year byyear, he will fmd that in every year,with the sole exception of 1958, totaldollar payrolls exceeded those in theyear preceding. This is not true ofprofits after taxes. In eleven out ofthe thirty years, dollar profits failed

474 THE FREEMAN August

to rise over the preceding year.(Both of these results might bechanged somewhat if allowancewere made both for the decliningpurchasing power of the dollar andfor corresponding accounting adjust­ments.) But the figures do em­phasize that payrolls and profitstend to rise and fall together. This,of course, is· because corporateemployment and payrolls are de­termined by present profits and theprospect of future profits. Any gov­er.nment action that seriously re­duces profits must diminish employ­ment and payrolls as well.

We also find a striking differencewhen we compare the division be­tween payrolls and profits-after­taxes in the first ten years of thethirty-year period with the divisionin the last ten years. In the last tenyears, employees have been gettingan average of 90.2 per cent of thecombined total available for divisionbetween the two groups, and stock­holders an average of only 9.8 percent. But in the first ten years in thetable-1949 to 1958 inclusive­employees were getting an averageof 85.9 per cent and the stockholdersof 14.1 per cent. The difference ismainly owing to the higher rates ofcorporate taxation now imposed.

The contrast remains sharp if wecarry our comparisons back even alittle further. The figures in my ta­bles have been compiled from thosethat have appeared over the years in

the Survey ofCurrent Business. Butat least in the last few years, it isreassuring to report, a table contain­ing similar figures has been appear­ing in the annual Economic Reportof the President. This is a real gain;but the statistical secret has beenstill pretty well kept because thefigures appear on merely one out of124 tables in the Report, and eventhat table contains five times asmany annual figures·as the three weare comparing.

Any government action thatseriously reduces profits mustdiminish employment andpayrolls as well.

The statistics presented in theReport are not the totals for all cor­porations but merely for ((nonfinan­cial" corporate business. This fortu­nately turns out to make little prac­tical difference. In 1977, for exam­ple, the combined sum available tothe nonfinancial corporations fordistribution between employees andstockholders was 94 per cent of thatfor all corporations. The nonfinan­cial corporations paid 89.7 per centof this sum to their employees ascompared with 89.4 per cent paid byall corporations.

The Economic Report carriesthese nonfinancial corporation fig­ures back to 1929. There is an in­structive comparison between what

1979 PROFITS AND PAYROLLS 475

happened in 1929 and in 1933. In.1929, 81.6 per cent of the totalavailable for both employees andstockholders went for payrolls; 18.4:per cen.t remain.ed for profits aftertaxes. In 1933, 99.4 per cent of thecombined sum available went toemployees; only six-tenths of 1 percent was left for profits after taxes..A union leader who knew nothingmore about the facts than this mightconclude that in 1933 labor was atlast getting its Hfair share." Butwhen we compare dollar totals, wefind that nonfinancial corporationemployees received $32.3 billion in1929, but only $16.7 billion-barelymore than half as much-in 1933.The reason is that corporation prof­its after taxes in 1929 came to$7,300 million, while in 1933 two­thirds of the corporations lostmoney, and the total net profits leftafter taxes were only about $100million. In recent years 35 to 40 percent of all corporations have annual­ly been reporting losses. Corpora.­tions losing money cannot long pro­vide jobs. Employment, payrolls,and profits rise and fall together.

Even if this statistical series ofthe division of corporate earningswere not available to us, other fig­ures have long shown that employ­ees get the lion's share of the na.­tional income. The Survey of Cur­rent Business for March 1979 placesthe national income for 1978 at$1,703.8 billion, of which $1,301.4

billion, or 76.4 per cent, went incompensation to employees. Thisdoes not mean, of course, that theother 23.6 per cent represented prof­its. Most of it went to millions offarmers and independent proprie­tors, owners of small stores-gro­cers, butchers, bakers, druggists,stationers, barbers, tailors-as well,of course, as to doctors, lawyers, orprofessional prize fighters.

The truth is that-when recal­culated to allow for the dis­tortions of inflation----corporateprofits are still far too low forthe health of the Americaneconomy.

Corporate profits after taxes nom­inally came in 1978 to $118.2 bil­lion, but after the Department ofCommerce had made realistic ac­counting deductions from this in­flated figure for ((inventory valua­tion and capital consumption ad­justments," these profits after taxescame to only $75.6 billion, or 4.4 percent of the national income. It isthese profits that one high Federalofficial recently denounced as~~catastrophic."

The truth is that-when re­calculated to allow for the distor­tions of inflation--corporate profitsare still far too low for the health ofthe American economy. As GeorgeTerborgh, economist for the

476 THE FREEMAN August

Machinery and Allied Products In­stitute, has pointed out (April 1979bulletin) real corporate profits in­creased in 1978 only 11 per cent­less than the 13 per cent rise in theGNP. He went on to point out thatadjusted after-tax profits of all cor­porations, as calculated by the U.S.Department ofCommerce, were only5 per cent of their gross product in1978, and only 5.3 per cent of theirgross product even in the fourthquarter of that year, compared withan average of8.6 per cent during thepre-inflationary period 1947-1965.In short, because of insufficient al­lowance for inflation, American cor­porations have been reporting phan­tom profits. HWhat inflation hasdone," concludes Mr. Terborgh, ((isto devastate real profits."

This conclusion is confirmed bythe recent slowdown in the Ameri­can rate of productivity improve­ment. Measured against 1967, ourproductivity growth has been sharp­ly below that of Canada, WestGermany, Japan and other nations.According to figures compiled by theCouncil of Economic Advisers in theJanuary 1979 Economic Report,productivity was increasing be­tween 1948 and 1955 by 3.4 per centa y~ar. In the period from 1965 to19,73 this fell to 2.3 per cent, from1973 to 1977 to 1 per cent, and from1977 to 1978 to four-tenths of 1 percent (p. 68). The main reason for thisis a falling off in capital investment

caused by insufficient real profitsand a dismal outlook for such prof­its.

The present political antagonismto profits is in large part the resultof the public's ignorance of the realfacts about profits, and particularlyits ignorance ofthe close dependenceof employment, productivity, andwage-rates on profits. But the man­agers of American business, I amsorry to report, have been in largepart responsible for this public igno­rance. There is scarcely a big corpo­ration anywhere whose total payrollis not many times as large as its netprofits after taxes. But I doubt thatthere is one big corporation in tenthat makes this fact clear in itsannual report to stockholders-orbothers to call attention to the com­parison. And there are probablyeven fewer that call attention to thecomparison in special reports totheir own employees.

The top managers of our bigcorporations have been in­credibly shortsighted in failingto reveal to their own employ­ees and to the general publicthe incomparably greatersums they are paying to theiremployees than to theirowners.

Calling attention systematicallyto these figures would help the cor­porations immensely in their labor

1979 PROFITS AND PAYROLLS 477

relations-and help them to reducestrikes. Their failure to emphasizeor even to make the comparisonclear is puzzling. I suspect that thetypical management, in preparingits annual report, thinks solely ofimpressing the stockholders. In itsconcern to show how well manage­ment has done, it tries to show themost favorable profits possible. Itseems reluctant to show the stock­holders how much more it is payingits employees than it is them. It isnot too upset at being compelled byvarious Federal agencies-­including the IRS-to report phan­tom earnings-to fail to make suffi.­cient deductions, in an inflationaryperiod, from apparent inventoryprofits and for depreciation and re­placement.

Whatever their reasons, the topmanagers of our big corporationshave been incredibly shortsighted infailing to reveal to their own em­ployees and to the general public theincomparably greater sums they areannually and daily paying to theiremployees than to their owners.

The distributive share betweenthe workers and the owners of bigbusinesses was probably not toomuch different in earlier genera­tions than it is today. The real dif­ference is that we-at least some ofus-now know what the actual fig­ures are. There is no longer anyexcuse for the rest of us not know­ing. For the last thirty years the

employees of this country's corpora­tions have been receiving an averageofeight times as much from them ashas been credited to the stockholders,and an average of sixteen times asmuch as the stockholders have actu­ally been paid in dividends. And inthe most recent years of that period,the division in favor of the employ­ees has been even more favorable.

This is the exact contrary of theimpression we have been receivingduring these thirty years, and arestill receiving today, from thousandsof books, tracts, ((studies," histories,novels, and hundreds of thousandsof ((news" broadcasts, pamphlets andeditorials. As a result of this falseimpression, this constantly incul­cated myth, the politicians in nearlyall countries are daily burdening,shackling and sabotaging capital­ism, and trying to substitute asocialism that would tend only touniversalize poverty. It is the dutyof all of us who are aware of thecritical facts to try to make themsufficiently known before it is toolate. ®

See tables 1 and 2 on the following pages.

Reprints available, The Foun­dation for Economic Education,Irvington-on-Hudson, N. Y.10533.

10 copies $2.00100 or more, 15¢ each

478 THE FREEMAN August

TABLE 1(Billions of Dollars)

Compensation Profits CombinedYear of Employees After Taxes Sum Dividends

1978* $ 896.3 $ 110.5 $1006.8 $ 44.31977 776.3 92.5 868.8 . 39.01976 690.2 83.4 773.6 33.91975 612.9 67.2 680.1 29.41974 585.9 65.0 650.9 26.2

1973 533.3 60.2 593.5 24.61972 470.6 49.8 520.4 21.71971 423.8 39.7 463.5 20.31970 399.3 33.2 432.5 20.71969 377.7 40.1 417.8 20.7

1968 340.0 42.9 382.9 20.51967 308.3 41.8 350.1 18.71966 288.3 44.3 332.6 18.11965 259.7 41.1 300.8 17.61964 239.1 33.6 272.7 16.0

1963 222.6 28.9 251.5 14.51962 211.0 27.0 238.0 13.31961 195.6 23.5 219.1 12.31960 190.8 23.9 214.7 12.01959 180.7 26.2 206.9 11.3

1958 164.1 20.4 184.5 10.6·1957 166.7 23.6 190.3 10.9

1956 158.4 24.8 183.2 10.51955 144.9 24.8 169.7 9.81954 132.4 19.1 151.5 8.7

1953 134.2 19.1 153.3 8.51952 123.2 18.4 141.6 8.21951 114.7 20.2 134.9 8.11950 98.8 23.7 122.5 8.41949 89.0 17.9 106.9 6.9

*Third quarter annual rate seasonally atijusted.

1979 PROFITS AND PAYROLLS 479

TABLE 2(Per~entageDivision)

Compensation ProfitsYear of Employees After Taxes Dividends

1978* 89.0% 11.0% 4.4%1977 89.4 10.6 4.51976 89.2 10.8 4.41975 90.1 9.9 4.31974 90.0 10.0 4.0

1973 89.9 10.1 4.11972 90.4 9.6 4.21971 91.4 8.6 4.41970 92.3 7.7 4.81969 90.4 9.6 5.0

1968 88.8 11.2 5.41967 88.1 11.9 5.31966 86.7 13.3 5.41965 86.3 13.7 5.91964 87.7 12.3 5.9

1963 88.5 11.5 5.81962 88.7 11.3 5.61961 89.3 10.7 5.61960 88.9 11.1 5.61959 87.3 12.7 5.5

1958 88.9 11.1 5.71957 87.6 12.4 5.71956 86.5 13.5 5.71955 85.4 14.6 5.81954 87.4 12.6 5.7

1953 87.5 12.5 5.51952 87.0 13.0 5.81951 85.0 15.0 6.01950 80.7 19.3 6.91949 83.3 16.7 6.5

*Third·quarter annual rate·seasonally adjusted.

Ed Grady

Agriculture and the Survivalof Private

Enterprise

ONE of the most compelling prob­lems we face, as a nation and as apeople, is embodied in the question,~~Can private enterprise survive inAmerica?"

And my answer to that question isa qualified one: ~~Yes, private enter­prise can, and shall, survive inAmerica ... providing":

• providing that as Americans wequit taking it for granted

• providing we understand whatmakes our system tick

• providing we learn how to makeboth an emotional and intellec­tual sale in behalf of freedom

• providing we care enough to makethe good fight.

Mr. Grady, now manager of the Information divisionof the Minnesota Farm Bureau Federation. has formore than 30 years been professionally telling thestory of freedom.

480

And what is agriculture's role inthe survival of free enterprise inAmerica? Simply put, it is to demon­strate our ability, and our willing­ness, to measure up to the test pro­vided by each of these provisos. Thiswe are determined, and dedicated, todo.

If we demonstrate as much integ­rity in organizing support for free­dom as its opponents have demon­strated in attacking it, then no ques­tion but that we shall win the battle.

If there is one lesson that historytells us again and again it is thatconcentration of power and author­ity in ~~big government" is, eventu-ally and certainly, followed by theloss of personal freedom. And let usnever forget that no man's future issafe in the hands of a political phi­losophy that is willing to buy today'spopularity with tomorrow's agony.

AGRICULTURE AND THE SURVIVAL OF PRIVATE ENTERPRISE 481

Economic freedom is the founda­tion ofpolitical freedom. The two areinseparable.

Make no mistake about it; everytime we transfer reponsibility andpower to a central government, wetransfer responsibility and poweraway from the people.

All of us-the businessman onMain Street and the businessman onthe farm included.....;..need a basic un­derstanding of what it is that makesprivate competitive enterprise go.

The mainsprings ofthe system arefour in number:

(a) Most property privately owned;(b) Most property privately man­

aged;(c) Most property operated for a

profit, not necessarily at a profit;and .

(d) All this under circumstances inwhich competition prevails.

All production-all civilization, infact-rests on a recognition of andrespect for property rights. A pri­vate enterprise system is impossiblewithout security of property; it ispossible only within a framework oflaw and order and morality.

When a man's property rights areprotected, he is able to retain andenjoy in peace the fruits ofhis labor.This security is his main incentive,if not his only incentive, to laborcreatively. If anyone were free toconfiscate what the farmer hadsown, fertilized, cultivated· and

raised, he would no longer have anyincentive to sow or to reap.

Profit is the life blood of a freeeconomy. The opportunity to make aprofit (or the opposite, the disciplineof possible loss) is the invisiblehand, as it were, that guides produc­tion and distribution. And in guid­ing the economy to the satisfactionof society's needs, the profit systemdoes what no central authority iscapable of doing as well-evengranting that the authority mightbe staffed by the most brilliantplanners and the best able manag­ers among us.

It is said at times that many arewilling to trade freedom for security.Even if they were to receive that forwhich they traded, it would be a badbargain. But the sad and frighten­ing fact is that when a people seek toobtain security by turning overpower and responsibility to govern­ment, they lose both freedom andsecurity.

What we must recognize, ofcourse, is that there simply is noreal security in any form of soci­ety that rests upon centralized polit­ical and economic control.

Life in such societies is grim anddrab and desperate. The opportu­nity of the individual to better him­self is hamstrung by restrictions andfrustrations and limitations whichstifle initiative and suffocate prog­ress. The individual in this kind ofsituation becomes a mere cog in a

482 THE FREEMAN August

rusty, creaking, poorly-functioningmachine.

Our form of society is being bat­tered today by the most subtle andmost dangerous threat possible-thedestruction of the competitive mar­ket system. It is most subtle andmost dangerous because it always isdone with the avowed purpose ofbenefiting or protecting some seg­ment of our population.

A Flexible Price System

In our economy, it is a flexibleprice system that serves as the ba­lance wheel for the whole structure.The price system determines howmuch of any product we should pro­duce; it adjusts consumption to usewhat is produced; and it guides theflow of investment to insure the pro­duction of what is needed.

Now, if we don't permit the pricesystem to perform these functions,we strike deep into the very lifeline,at the very heart, of our competitiveeconomic system. And if the capac­ity of the price system to perform itsfunction is destroyed, there remainsonly one alternative: assign the au­thority to fix prices to governmentor, put another way, to politicalmanagement.

Political management of our pricesystem is inevitably inefficient,cumbersome, backward-looking andcostly. Even though the appointedfixers were all-intelligent super­men, it would be impossible for them

to operate effectively in a situationin which every decision is affectedby political considerations and polit­ical pressures. Personal ambitionsand bureaucratic policies becomemajor factors influencing every de­cision.

For a physician, the least profit­able patient is a dead one. The nextleast profitable is the well one. Thegold mine is the patient who con­tinues sick, or continues to thinkhimself sick. The nobility of themedical profession is the fact thatfew of us have ever had an en­counter with doctors who exploitthis obvious truth.

But not always so with politicians.Many of them parade as physiciansto doctor the economic ills of theirconstituents. Our need for protec­tion from exploitation in this in­stance is less obvious-but far morenecessary.

Government farm policy datingback some 40 years has been so longon promises and so lean on perfor­mance because it is borrowed fromthe strategy and tactics of the coer­cive society and its centrally­directed and centrally-controlledeconomy. It serves well neither pro­ducers nor consumers.

Thus the all-consuming impor­tance of choices, and how it is thatone of our continuing challenges isto discover in advance the eventualconsequences of the choices we arecalled upon to make. This is an abso-

1979 AGRICULTURE AND THE SURVIVAL OF PRIVATE ENTERPRISE 483

lute prerequisite not only of success­ful self-government but essentialalso to the survival of private enter­prise.

The discussion over the years withregard to compensatory payments(target prices, in the current gov­ernment farm program. glossary) il­lustrates well what it is one oranother choice involves.

Basically, what is wrong with thepayment approach?

It is not, as advocates even todayclaim, a device to control production;it is a scheme to control farmers.Nor is it, as some contend, a plan toestablish a free market; it is a pro­posal to wreck markets. Simply put,it provides an engraved invitationfor politically-determined limita­tions on the farm incomes of indi­vidual producers-and it's ideallysuited to implement the concept ofrationing the right to earn on thebasis of the politics of equal shares.Instead of easing the cost-pricesqueeze which plagues fanners inMinnesota and throughout thecountry, it makes matters worse.

Some years ago, the late AneurinBevan and his British Labor Partycolleagues published in a pamphletthe basic tenets of their politicalphilosophy. If there is one phrasemore than any other that appearstime and again in this document, itis the term ««fair shares."

Reduced to its most common de­nominator, fair shares is nothing

more and nothing less than a politi­cal device for leveling and putting aceiling on opportunity. This is notthe American way; this is the otherway!

A moment's reflection on thefair-shares doctrine should make usaware that it is time for individualcitizens to reaffirm their faith incapitalism, American style.

Curbing the Intervention

Authoritarian liberals deludethemselves into believing they arechampions of liberty while favoringcreeping coercion as long as they canbe authors of the coercion. Whilethey are trying to cure injustice bypiling on more government, theylose sight of the fact that all thegreat struggles for freedom havebeen directed against the overblownforce of government.

There isn't a one ofus-in town orin the country-who isn't a target ofthe propaganda campaign beingwaged by what I call the ««cult of thepositive." The conviction of peoplewho make up this breed is that youdon't have a npositive" program forsolving problems unless you have aprogram that calls for governmentintervention, or government in­volvement-preferably national­and the more widespread the better.These economic meddlers and polit­ical peddlers are determined to bepositive-even if it means beingpositively wrong.

484 THE FREEMAN

All of which causes me to suggestthat if you really know what you'refor you won't hesitate to be againstanything that is inconsistent withit. If you're for good, solid, juicycrunchy apples, you just have to beagainst worms. The chaos and con­fusion arises when people don'tknow what they're for.

So if you're for the private com­petitive enterprise system, it won'tdisturb you to oppose proposals thatwould wreck the market system. Ifyou're for the voluntary method ofsolving problems, you'll not hesitateto fight efforts to substitute compul­sion or coercion. And if you're forindividual responsibility, freedomand opportunity, you'll forthrightlyand vigorously oppose anything in­consistent with this fundamentalconcept.

That's the logic, and the rationale,of liberty.

Dr. Norman Vincent Peale didn'tallow himself to be pressed intoserving the positive cult. He saysthat he is a firm believer in affirma­tive attitudes and is convinced thatthey are ttsupremely important in

James Mussatti

successful living." But he is quick toadd: ttAffirmatives alone are notenough. This world is full of hopeand joy, but it is also beset by evil,immorality and sin. You can't saytYes' to these things, or eventMaybe.' You have to say tNo!' andyou have to make it stick."

Happily, most farmers-and mostrural Americans-haven't suc­cumbed to the myth that there is amagical way by which governmentscan create prosperity and high stan­dards of living by either ignoring orflouting economic laws.

Instead of embarking on a politi­cal safari in search of the pot of goldthat is supposed to be found at theend of the socialist rainbow, wefavor building a greater nation, amore appreciative and productivepeople, and a more responsive com­munity on the rock-ribbed founda­tion ofunparalleled success thus far.

And we do so with an abidingfaith that God didn't intend the lightof human freedom, nor the privateenterprise system so much a part ofit, to perish from the earth. ,

IDEAS ON

UBERTY

OUR most formidable fortress of defense in time of stress still remainsthe Constitution of the United States. But it is only as good as ourunderstanding and defense of the purpose for which it was drafted.Eternal vigilance and personal responsibility are still the price ofhuman liberty.

W)rldin th8J

grfR9fanIoe(L

Clarence B. Carson

32. The Restoration of the IndividualTHERE is a logic in thought that weordinarily see but dimly, if at all.Because we can state ideas sepa­rately from one another, it may ap­pear to us that our belief in thevalidity of a given idea is indepen­dent of others. That is not how it isgenerally, however. The structurethat undergirds our beliefs is muchbroader and more interconnectedthan we are apt to suppose. It can beljkened to the framework of a house.Remove any load-bearing portion ofIn this series, Dr. Carson examines the connectionbetween Ideology and the revolutions of our timeand traces the Impact on several major countriesand the spread of the Ideas and practices aroundthe world.

the framework, and the whole housewill begin to sag, shift, and settle.Remove the foundation and thewhole structure will crumble andfall. This is so for ideas as well. Inthe thought of an individual thisprocess may occur rapidly. For asociety, when it occurs it will takeplace more slowly, and for an exten­sive civilization slower still. Evenso, the undergirding ideas are asessential to the beliefs of a people asis the foundation to a house. Tamperwith them, remove them, and thesurface beliefs will no •. longer havesupport.

It has been observed that each

485

486 THE FREEMAN August

succeeding century is the product ofthe thought of the leading thinkersof the century just past. Such ajudgment is gross and imprecise, ofcourse. A century is an arbitrarydivision of time, and some ideashave much more immediate impactthan that, while others may havemuch longer duration. Nonetheless,the observation has some validity, atleast for recent centuries in WesternCivilization. In important ways, it isvalid to say that the nineteenth cen­tury was the product of eighteenth­century thought, and the twentiethof the nineteenth. Not only do ideasspread and get accepted ratherslowly but also there is a time lagbetween acceptance, exploring theirdimensions, and applying them.

Testing Man's Endurance

The idea that now has the worldin its grip was shaped and set forthin the nineteenth century. Its appli­cation has been in the twentiethcentury. In its application, it hasbeen a broad and expansive experi­ment in exercising power over andcontrolling man. Its experimentalcharacter is most apparent in thetesting of man's adaptability andendurance. How much can he stand?How much will he take beforebreaking or resisting? In what wayscan he be changed, and how rapidly?The Nazis carried out such experi­ments most directly in concentra­tion camps. Physicians and scien-

tists conducted experiments withhuman beings to determine, forexample, how much heat or coldthey could endure, and for how long.The whole concentration camp ex­perience was an experiment inhuman alteration and adaptability.

The Soviet Communists were lessscientific than the Germans but noless barbaric. Interrogation prisonswere testing grounds for human en­durance. The Slave Labor Campswere, from one angle, economic ex­periments to determine how muchwork could be obtained for the smal­lest expenditures. The Nazis didthis, too, with the workers broughtin from surrounding countries. Asone historian says, (COnce in Ger­many, they were housed and fed onthe general principle ofcexploitationto the highest possible extent at thelowest conceivable degree of ex­penditure.' "1

It is easy to see that those whogave the orders for such undertak­ings had devalued man, and thatthose who carried them out weredegrading men. It requires only alittle greater imagination to graspthat the whole revolutionarysocialist effort springs from a de­valuation of man and an attempt toreduce him to the point where he isthe willing instrument of others. Ittakes considerably more insight,however, to discern a similaranimus behind democratic orevolutionary socialism. The animus

1979 THE RESTORATION OF THE INDIVIDUAL 487

is often obscured because thesegradualists may· work •within theframework of venerable institu­tions, proclaim their belief inhuman dignity and freedom, andmove slowly.

Yet, democratic socialism is anexperiment, too, an experimentaimed at devaluing man by takingfrom him control over his affairs. Itevinces itself as an experiment todetermine how much control overtheir affairs people will yield up atany given time and how much theywill change under the goad of com­pulsion. The limit at any given timeis not so much human endurance asit is how much the electorate willtake before they throw .out theirrulers. The tacit premise of theseefforts is that man's value consistsin the extent to which he is broughtunder the control and direction forthe use of others.

Bold Experiments

The idea that has the world in itsgrip did not originate as a consciousdevaluation of man nor as an explicitintention to subdue him. On thecontrary, it arose at a time whenhuman dignity was held in thehighest esteem and when freedomwas oft proclaimed as the highestend of man. The nineteenth centurywas a seedbed of bold and daringconceptions of human freedom. One .of the great thrusts going on in thatcentury was the establishment of

individual liberty. The animus be­hind this and the ideas on whichthey were operating can be traced toeighteenth-century forebears (andfurther back to Greco-Roman -andJudeo-Christian antecedents). Butnineteenth-century .thinkers· pressedon, or so they thought, to some­thing much beyond political liberty.The boldest of them reached forwhat they conceived to be ultimatefreedom-freedom from all restraintand limitation, freedom from God.

Friedrich Nietzsche, the madGerman philosopher,proclaimedthat God was dead, writing in 1882.In consequence, he said, u wephilosophers and tfree spirits' feelourselves irradiated as by a newrosy dawn by the report that tthe oldGod is dead'; our hearts therebyoverflow with gratitude, astonish­ment, presentiment and expecta­tion." All things now become possi­ble, or so he seemed to be saying. ttAtlast the horizon seems once moreunobstructed ...; our ships can atlast start on their voyages once more...; the sea, our sea, again lies openbefore us; perhaps there never wassuch an open sea."2

Not all who denied the existenceof God did so with human freedom inview, so far as we can tell. For some,it was a position arrived at fromtheir philosophy, science, psychol­ogy, or what not. Ludwig Feuerbach,who is supposed to have confirmedMarx in his atheism, declared in

488 THE FREEMAN August

1841 that what men conceive of asGod is in reality only themselves.cCThe divine being is nothing elsethan the human being, or, rather,the human nature purified, freedfrom the limits of the individualman, made objective-i.e., con­templated and revered as another,a distinct being. All the attributes ofthe divine nature are, therefore, at­tributes of the human nature. . . ."Feuerbach, too, saw what he took tobe the implications of freedom inthis view. cCGod is pure absolute sub­jectivity released from all naturallimits; he is what individuals oughtto be and will be; faith in God istherefore the faith of man in theinfinitude and truth of his own na­ture; the Divine Being is the subjec­tive human being in his absolutefreedom and unlimitedness."3

Ernst Haeckel asserted in 1899that the sciences no longer neededthe hypothesis of God to solve cCTheRiddle of the Universe." cCThrough­out the whole of astronomy, geology,physics, and chemistry there is noquestion to-day of a cmoral order,' ora personal God, whose Chand hathdisposed all things in wisdom andunderstanding.' And the same must

. be said of the entire field of biology,the whole constitution and history oforganic nature...."4

Outspoken atheism never becamea popular pastime in the Westernworld. T. H. Huxley's contemptuousterm, agnosticism (contemptuous

because he attributed a Ugnostic"view to believers) had considerablymore success. What happened, how­ever, was not that unbelieverssported such labels ordinarily;rather, theism and Christianitywere pushed aside and made inap­propriate to intellectual activity.Eugen Weber, an historian ofEurope, notes that UBy 1939, whenthe Times Literary Supplement re­viewed T. S. Eliot's Idea ora Chris­tian Society . .., it had to remarkthat intelligent men seldom admiteven the possibility that Chris­tianity Cis a system of truth fromwhich flow inexhaustible principles inmetaphysics, ethics and politics.'Hardly anyone would have doubtedthe thought half a century earlier.. . . But the half century had seengreat change."5

Removing the ReligiousFoundations of Western Thought

By 1929, Sigmund Freud coulddescribe religious belief as a kind ofdistemper of the masses. He said ofsuch belief, cCThe whole thing is sopatently infantile, so foreign to real­ity, that to anyone with a friendlyattitude to humanity it is painful tothink that the great majority ofmortals will never be able to riseabove this view oflife. It is still morehumiliating to discover how large anumber of people living to-day, whocannot but see that this religion isuntenable, nevertheless try to de-

1979 THE RESTORATION OF THE INDIVIDUAL 489

fend it piece by piece in a series ofpitiful rearguard actions."6

The impact of this development isnot to be understood at all in termsof militant atheism. That, after all,is relatively rare in the Westernworld. The significance lies in re­moving God from His place as prem­ise of Western thought. Religiousbelief is tolerated generally in thenon-communist parts of the world.Sometimes, it even has official en­couragement, though that is rarernowadays. But it must exist in at­tenuated form, as private beliefwhich presumably has some impacton private morals. It has beenlargely removed as the generalfoundation of thought and belief.

Without God, no system ofthought is or can be complete. Itlacks a foundation. It lacks, at theleast, a Prime Mover, something toset the whole into motion and giveimpetus to it. Without God, it isnecessary to posit a universe whichis a perpetual motion machine and,in addition to that, one that waseither self-starting or was alwaysrunning. Scientists usually deny thepossibility of a perpetual motionmachine on this planet; such a no­tion runs counter to all experience.But if a perpetual motion machinewere possible, it would still have tohave an initial impetus. WithoutGod, much more would be lacking aswell. There would be no final valida­tion of either reason or fact, no sup-

port for a premised order which isessential to make reason of someaccount. Without God, value andpurpose would be downgraded tosuch values and whatever purposesmen might have.

Of course, men do not make dowithout a god, or gods, of some sort.Certainly, those who would be think­ers and have some following can­not. G. K. Chesterton put it well,uWhen people cease to believe inGod, they don't believe in nothing,but-what's far worse-in any­thing."7 In the private realm, thosewho do not believe in a transcendentGod tend to turn to the occult formeaning and purpose. Weber says ofthe European situation in recentyears: ((Today there are a thousandprofessional astrologers in Parisalone, some 50,000 in all of France,counting seers, cards, coffee, andcrystal ball gazers; there is a unionof 120,000 occultists in Italy; 60 percent of French people read astrologyforecasts regularly . . . , and oneEnglish astrologer counts amongher regular clients fifty British andforty-nine foreign firms."8

A Mechanical Universe

In the public realm, most of theplace once occupied by religion hasbeen taken over by ideology. Theidea that has the world in its grip isa god-supplement, god-substitute, orgod supplier. (It tends to produce apersonal god, even, the leader.) This

490 THE FREEMAN August

ideology locates meaning and valuein the collectiv.e, the mass, or thedemos, however, not in the individ­ual.· The individual ceases to· haveany.discrete meaningful existence,aside from his own awareness· of it.Waldo Frank traces this ((deper­sonalization," back to Descartes anddown through Hegel, Marx, Lenin,and Hitler to Mao Tse-tung.

Descartes provided themathematical foundation for amechanical view of the universe. Byhis approach to knowledge, Franksays that for Descartes ((Man is leftoutside the cosmos, of whichonly asperson is he integer and focus. Thusstripped, he coalesces into themass-man of Hitler...." Not, how­ever, before much else has happenedin thought. G. W. F. Hegel was yetanother crucial figure in the de­velopment of ideas. ((Hegel's Abso­lute works through history but ig­nores the individual, the potentialperson; acts indeed, in Hegel's wordsas if the individual did not exist.Without this Hegelian premise, it isalso impossible to understand Marx.•.•"9 ((In neither Hegel nor Marx,"he says elsewhere, ((is there placefor the person."lO

Lenin reduced the individual toan integer of ((the proletariat" or((the people," whose active arm wasthe Party, whose guide is the leader.((The leader is the symbol of thetruth in the workers; he is stability,he is orthodox knowledge incarnate.

He is not, in the Western sense, aperson at all. He bears· the samerelation to the Party as the Party tothe people." That is, he is an extractof ((the people." This depersonaliza­tion has reached its peak, thus far,with the Chinese and Mao Tse-tung,Waldo Frank believes. When Maospeaks, ((One feels. the half billionChinese become one figure, waking,rubbing his eyes, shrewdlyapprais­ing the situation, getting his legsunder his body to hoist himself up onhis feet." Perhaps this is overdrawn,but it does suggest the end towardwhich communism moves. l1

Downgrading the Individualto Upgrade Collectivism

In the West, man is drawn intothe maws of collectivism by thesense of his smallness, his unimpor­tance, and futility as an individual.It has been by no means easy toexorcise from the West the belief inthe value of individual man. (In theEast, it was much easier, becauseBuddhism had always emphasizedthe suppression of the self.) Demo­cratic socialism continues to pro­claim this value in its rhetoric. Butthe foundation has been cut away,and the structure is crumbling. Byorganization and numbers the indi­vidual is being overawed and madeto feel impotent unless he join him­self to some group or collective.

Viewed naturally, man is indeed apuny creature. He is exceedingly

1979 THE RESTORATION OF THE INDIVIDUAL 491

fragile, weighing ordinarily no morethan a hundred or so pounds even inmaturity, and that but some fleshand muscles surrounding a bonystructure. He is born of woman inlabor, flourishes for a short time inmaturity, if he is fortunate, andthen is no more. Even the smallestaccident can wipe him out, shouldsome vital organ be severed fromhim or irreparably injured. He canbleed to death in minutes from asevered artery. He is vulnerable,usually rather easily intimidated,and tends to feel helpless when con­fronted by organizations and num­bers. Viewing himself so, he seekscomfort and safety in the warmsmell of the herd, as H. L. Menckensaid. Alone, he is drawn almost ir­resistibly to some sort of collec­tivism.

Make no mistake about it, either,to the extent that force is the arbiterin this world the individual islargely helpless alone. An organiza­tion is incomparably more effectivein exerting force than many indi­viduals acting independently. Theincreasingly pervasive relianceupon force which is entailed in theidea of using government to concertall efforts means that force is thearbiter. It is not difficult for theindividual to believe that this worldis in the domain of force, and he ishelpless.

Even so, the case for and positionof individual man is not so hopeless

as this may imply, even when thematter is viewed naturally. Groups,collectives, and organizations arenot themselves independent beings.They are contingent things. They de­rive every ounce of their energyfrom individual men. They deriveall their initiative, all their force,and all their direction from individ­ual men. Their purposes, too, arisefrom men. Organizations cannotthink, imagine, will, or act; onlyindividuals can do these things.Groups, even organized groups, arenot at bottom superior to individualmen; they are creatures of men.And, in constructive action, they areinferior in potentiality to a likenumber ofindividuals outside them.

Numbers and OrganizationsWeaken Self-Reliance

Collectivism does not draw meninto it because of its naturalsuperiority, however. It does so be­cause the devaluation of man hassapped the confidence of the indi­vidual in his powers. Man can think,but unless there is substantiationfor reason, his conclusions carry noweight. They can only be givenweight by numbers and organiza­tion. If right is only what the posi­tive law of government proclaimsthen the ground beneath his claimto right is slippery indeed. Individ­ual man cannot establish his ownvalue. That must be transcenden­tally or collectively done.

492 THE FREEMAN August

Strive as he will, natural mancannot devise an answer that willovercome the demanding spirit thatnow overwhelms him. The religionsof statism and collectivism do notyield ground to no religion. The onlyeffective answer to low religions is ahigh and noble religion. The onlyway to avoid the worship of numer­ous idols is to worship the one God.The only way to transcend the sub­jectivity of values and the relativityof all knowledge is to go to thesource of value and knowledge. Ifthis world is all there is, force doesindeed rule, and some sort of collec­tivism is the appropriate answer.

There is Good News for any andall who will hear it. It is electrify­ing news. It is not news addressed toany group, team, class, race, or or­ganization; it is news for individualsalone. It is news beside whichDas Kapital is a mishmash ofhistory laced with hatred. It is newsbeside which Mein Kampf is the dis­torted assertions of an egomaniac. Itis of something which we would notdare hope for did we not know italready. It is news which confirms,vivifies, animates, and restoresman. The primary source of thisnews is the Bible. It is vouched forby the death and resurrection of itsbearer. Its truth is confirmed by thetestimony of the saints downthrough the ages. If it come not fromGod, then whence came it? Surely,it is not of this world.

The Good News, first, is not thatman is the origin of values butsomething much more: he is a value.He is valuable because God places ahigh value upon him. Contemplatethe words of Jesus:

UAre not two sparrows sold for a farth­ing? and one of them shall not fall to theground without your Father.

UBut the very hairs of your head arenumbered.

ttFear ye not therefore, ye are of morevalue than many sparrows."12

And again:And, behold, there was a man which

had his hand withered. And they askedhim saying, Is it lawful to heal on thesabbath days? ...

And he said unto them, UWhat manshall there be among 'you, that shallhave one sheep, and if it fall into a pit onthe sabbath day, will he not lay hold onit, and lift it out?

ttHow much then is a man better thana sheep? Wherefore it is lawful to do wellon the sabbath days."Matthew 12:10-12.

Promise of Immortality

There is more, however; theseverses tell us that man is valuable,but they do not suggest the extent.The greatness of his value is indi­cated in the following verse. Jesussaid,

UFor God so loved the world that hegave his only begotten Son, thatwhosoever believeth in him should notperish, but have everlasting life."

John 3:16.

1979 THE RESTORATION OF THE INDIVIDUAL 493

This tells us much more besides. Ittells us that man is immortal, thathe is a creature chosen for eternity.The ((whosoever" in the sentencetells us that only individual humanbeings may have that promise ofimmortality. The magnitude of mancompared to organizations begins toappear. All organizations are buttemporary things, destined it maybe to flourish for a time and then beno more. The record of history isreplete with instances of kingdoms,nations, empires, cities, and all sortsof organizations which once wereand are no more. They lasted only solong as they were sustained by indi­viduals; then they disappeared,things dependent finally upon thememory of men. Man, by contrast,has a future ofwhich this life is onlythe beginning.

There is a way to test the qualityof a religion. It is in that to which itappeals. Does it appeal to the basermotives? Or does it appeal to thehighest and best? Socialism is amean, low, and vulgar religion, andit is as a religion that it finallystands or falls. It appeals to greed, toavarice, to popularity with thecrowd, to the desire to get somethingfor nothing, to envy, to jealousy, toclass hatred, to the lust for power, tothe lowest common denominator, tothe will to be free of responsibility,to the urge to destroy, and to thelonging to crush that with which onedisagrees. The mainspring of

socialism is the fear of individualman, and a loathing for him as he is.Socialism incarnates force, and wor­ships the state as the embodiment ofit.

By contrast, Christianity appealsto the highest and noblest in man.The God revealed by Jesus Christdoes not use force and power uponmen in this world. God is love, we aretold; He woos man by sacrifice, bycoming in lowly guise, havingnaught of the things of this world bywhich to awe man. He comes not asan earthly conqueror with force,terror, and violence to destroy menbut in boundless love to redeemthem. The virtues He commends arehigher than any man can conceive.But let them speak for themselves.First, from the Sermon on theMount:

UBlessed are the poor in spirit: fortheirs is the kingdom of heaven.

((Blessed are they that mourn: for theyshall be comforted.

uBlessed are the meek: for they shallinherit the earth.

cCBlessed are they which do hunger andthirst after righteousness: for they shallbe filled.

uBlessed are the merciful: for theyshall obtain mercy.

uBlessed are the pure in heart: for theyshall see God.

UBlessed are the peacemakers: for theyshall be called the children of God.

C(Blessed are they which are perse­cuted for righteousness' sake: for theirs isthe kingdom ofheaven."Matthew 5:3-10.

494 THE FREEMAN August

What should stand out in all of thisis that there is nothing commendedto which any should take offense.

There is a marvelous congruitypermeating the New Testament inthe virtues commended. Here is anexample from the writings of Paulthe Apostle:

Let love be without dissimulation.Abhor that which is evil; cleave to thatwhich is good.

Be kindly affectioned one to anotherwith brotherly love; in honour preferringone another.

Not slothful in business; fervent inspirit; serving the Lord;

Rejoicing in hope; patient in tribula­tion; continuing instant in prayer;

Distributing to the necessity of thesaints; given to hospitality.

Bless them which persecute you; bless,and curse not.

Be ofthe same mind one toward another.Mind not high things, but condescend tomen of low estate. Be not wise in yourown conceits.

Recompense to no man evil for evil.Provide things honest in the sight of allmen.

If it be possible, as much as lieth inyou, live peaceably with all men.

Dearly beloved, avenge not yourselves,but rather give place unto wrath: for it iswritten, Vengeance is mine; I will repay,saith the Lord.

Therefore, if thine enemy hunger, feedhim; ifhe thirst, give him drink: for in sodoing thou shalt heap coals of fire on hishead.

Be not overcome of evil, but overcomeevil with good. Romans 12:9-21.

The Apostle Peter summarizedthe great virtues this way:

and beside this, giving all diligence,add to your faith virtue; and to virtueknowledge;

and to knowledge temperance; and totemperance patience; and to patiencegodliness;

and to godliness brotherly kindness;and to brotherly kindness charity.

II Peter 1:5-7.

And from Paul again:Finally, brethren, whatsoever things

are true, whatsoever things are just,whatsoever things are pure, whatsoeverthings are lovely, whatsoever things areof good report; if there be any virtue, andif there be any praise, think on thesethings. Philippians 4:8.

Jesus Christ was God Incarnate;He was the Word made flesh. Hecame to reveal God's ways to men.The beauty of what He taught andwas has brought forth singularwords of praise. He has been de­scribed as the Lily of the Valley, theRose of Sharon, the Pearl beyondPrice, and in Isaiah, as prophecy:UFor unto us a child is born, unto usa son is given: and the governmentshall be upon his shoulder: and hisname shall be called Wonderful,Counsellor, the mighty God, theeverlasting Father, the Prince ofPeace." (Isaiah 9:6)

This aspect of him has tended toshield us from understanding anequally important truth: JesusChrist was man incarnate. He re-

1979 THE RESTORATION OF THE INDIVIDUAL 495

vealed to men their full poten­tialities and possibilities; he livedand taught-was the embodimentof-not a religion, as we understandsuch things, but a way of life. Heshowed that the individual person isofgreat and momentous account. Herestored man the individual to hiscentral place in all of creation. Theway of the world is wrong, he said; itis the way of death. The way of theworld is to use force, coercion, toattempt to control men to the pur­poses ofothers, to use them. There isanother way: the way of love, ofservice, of persuasion, of influence,of kindliness, of giving, and of be­coming. It is the way of life.

Ancient Pagans believed thatman was a plaything of the gods.Modern Pagans believe that he is aninstrument of the organization to beintimidated by numbers. ttEn_lightened" Greeks and Romans be­lieved that man is either a comic ortragic figure. Contemporary intel­lectuals incline to view man as asensual being, caught in the grip ofpassions and desires which rendhim.

Man without God is indeed capa­ble of every debasement that can beimaged. He is comic or tragic as youwill, a creature of the senses, a play­thing, an instrument, an object, abelly, a power monger, or whatever.If proof were needed, this centuryoffers enough for all time. WithoutGod, values are subjective;· no judg-

ment can be made. Man is a buffoon;and television offers continuousprograms which prove it. WithoutGod, reason is a· blunt instrument,for there is no truth. Without God,there are no rights; there are onlysuch perquisites as those who oc­cupy the leverage points over theexercise of power permit. WithoutGod, life is a situation comedy, andthe idols provide the canned laugh­ter at man's antics. Without God,life is a tragedy for those whoaspire to something better. WithoutGod, individual man is but a dot inthe scheme of things, and those whocontrol the organizations work outthe puzzle by drawing lines fromttdot to dot."

Man's Support from God

With God, the perspectivechanges dramatically. .Individualman acquires leverage with whichto deal with the world. The basis ofthat leverage is reason and right.Individual man can think; no groupor organization can do that. If thereis a God, there is truth, for He knowsit. If a tree falls, and no man hear it,it still makes a sound, for God hearsit. Man's special means for discern­ing truth is reason. Reason providestruth before which organizations,numbers, and machines must bow,else they proclaim their own futility.

The other lever is right. The indi­vidual in the right, and secure inthe knowledge of right, is formida-

496 THE FREEMAN August

hIe. The most fundamental right ofthe individual is his right to hisproperty. That right is affirmed overand over in Scripture. uThou shaltnot steal" is an ancient command­ment, as is cCThou shalt not covet."The Apostle Paul put the most basicprinciple this way:

Let him that stole steal no more: butrather let him labour, working with hishands the thing which is good....

Ephesians 4:28.

Since all other rights stem from ordepend upon the right to property,all just rights of the individual havetranscendent support.

Jesus demonstrated what an indi­vidual man can be and do; in this, hewas man incarnate. The bare detailsof his life show that this was whathe demonstrated. Of· the things ofthe world, he had none of any conse­quence. He was born in a stable, in atrough from which the animals ate.His parents were people of low es­tate. He must have had very little offormal education or training.Legend has it that when he reachedan age to work and provide for him­self, he learned and practiced thetrade of carpentry. No organizationeyer set its seal of approval uponhim. He lamented the fact that hewas without honor even in his owncommunity. He had for support onlytwelve men; they were such as hegathered about him in his wander­ings, and of uncertain loyalty. Hebecame what we would call an itin-

erant preacher, traveling here andthere, speaking to such as wouldhear him.

True, there were some who heardhim gladly. There were even thosewho said that he spoke with suchauthority as no man ever had before.But the rich young man turnedaway from him sorrowfully, andpeople of prestige, if they came atall, came in secret, as Nicodemusdid. In all those things which a manis supposed to have in order to makean impact, he had none. Organiza­tions and men of authority sus­pected him of sedition. The Sanhe­drin condemned him and turned himover to the civil authorities of Rome~o be tried. He was condemned by athrong of accusers and, though Pon­tius Pilate, the judge for Rome,found no fault in him, he was con­demned to be crucified to please thecrowd. At the last, the authoritiesoffered to release him, or such as thecrowd might choose. They chose anotorious thief instead.

The Confrontation betweenMight and Right

Why were the Jewish rulers sofearful of this man? Why did thepillars of Rome tremble in his pre­sence? Why was the crowd so deter­mined to see him put to death? Weare not told. Yet we know. He hadflung no challenges, broken no laws,formed no revolutionary party. Hewas innocence personified. But he

1979 THE RESTORATION OF THE INDIVIDUAL 497

had taught a way of life which un­dermined the way of the world, away so superior to the way of theworld that no comparison is possi­ble. Organizations had to show theirpowers; numbers (the throngs) hadto intimidate else they must yield;force must be triumphant. If mightdid not silence him, it would givetacit approval to right, the verymeans by which it is constrainedand limited.

But force was not triumphant. Herose again from the dead; many wit­nesses testified to the fact. Nor didputting him to death put an end tohis teachings. God used even thisgreat wrong to bring about good, asHe had purposed. Jesus had said,((And I, if I be lifted up from theearth [crucified], will draw all menunto me." And so it has been. TheGood News has been told from oneend of the earth to the other. Whereonce there were only twelve disci­ples, and they not firmly planted,there have since been millionsmoved to follow him. True, manywrongs have been done in the nameof Christ, but every one of them waswithout warrant. Unable to stiflethe message, the world has oftenenough done the next best thing:adopted it and adapted it to its ownpurposes, even to the use of force forsupposedly good and constructivepurposes. These actions have donemuch damage to the name of Chris­tian, but to those who will hear the

message, it still shines through un­dimmed. To those who would take itto their hearts and study it withunderstanding there has been giventhe gift of a new birth of the spirit.Everywhere that the message oflove, sacrifice, and concern has gonein the world it has gentled hearts,produced works of charity, freedslaves, buttressed responsibility,and begun its work of liberation. Allthis has come about, ((Not by might,nor by power, but by my spirit, saiththe Lord of Hosts." It is a testamentto the influence of example and tothe potentiality of man-with God.

Individual man without God isvery little. Man with God is inanother dimension; he is man as hemay be. Lest it be thought thatwhat Jesus did does not tell us any­thing of the possibilities ofmen gen­erally, Jesus made it clear that itdoes:

uVerily, verily, I say unto you, He thatbelieveth on me, the works that I do shallhe do also; and greater works than theseshall he do; because I go unto my Father."

John 14:12.

Man the individual begins to comeinto focus with all his potentialities.t(Ye are the salt of the earth," Jesussaid. ttYe are the light of the world."(Matthew 5:13,14)

Moreover,uAsk, and it shall be given you; seek,

and ye shall find; knock, and it shall beopened to you.

498 THE FREEMAN

ttFor everyone that asketh receiveth;and he that seeketh findeth; and to himthat knocketh it shall be opened."

Matthew 7:7-8.

What emerges from this is a vis­ion of a man who can stand againstthe might of this world. How canthis be? Paul says that to do so oneshould ttput on the whole armour ofGod."

For we wrestle not against flesh andblood; but against principalities, againstpowers, against the rulers of the dark­ness of this world, against spiritual wick­edness in high places.

Wherefore take unto you the wholearmour of God, that ye may be able towithstand in the evil day, and havingdone all, to stand.

Stand, therefore, having your loinsgirt about with truth, and having on thebreastplate of righteousness;

And your feet shod with the prepara­tion of the gospel of peace;

Above all, taking the shield offaith ...;

And take the helmet of salvation andthe sword of the Spirit, which is the wordof God. . . . Ephesians 6:11-17.

Men who are thus prepared canstand. They have stood in the past,and they may stand again in thefuture.

Man is a whole potentially muchgreater than the sum of his parts.Far from being a mere zero, a cog, anobject or thing of use, individualman is valuable beyond compare. Heis a living, breathing being with asoul, mind, and body. He is touched

by the Divine. Each child that isborn is a miracle, and every fullgrown person potent with pos­sibilities beyond our dreams. He is acreature worthy to put in theirplaces principalities, powers, rulersof darkness, and the wicked in highplaces. They are, after all, but gos­samer, deriving all their strengthfrom his flesh and blood. God hasplac.ed a value on man; he has puthim in an high place. None mayreduce that value with impunity.

Restored man, confident of hisplace, can loosen the grip of theidea. i

Next: 33. Conclusion: Loosening theGrip of the Idea.

-FOOTNOTES-IFrank P. Chambers, This Age of Conflict

(New York: Harcourt, Brace & World, 1962,3rd ed.), p. 575.

2Eugen Weber, ed., The Western Tradition(Boston: D. C. Heath, 1959), p. 673.

3Franklin L. Baumer, ed., Main Currents ofWestern Thought (New York: Alfred A. Knopf,1967, 2nd ed.), pp. 570-71.

4Jbid., pp. 578-79.5Eugen Weber, A Modern History ofEurope

(New York: W. W. Norton, 1971), p. 1016.6Sigmund Freud, Civilization and Its Dis­

contents, trans. James Strachey (New York:W. W. Norton, 1962), p. 21.

7Quoted in Weber, op. cit., p. 1019.8Ibid.9Waldo Frank, The Rediscovery of Man

(New York: George Braziller, 1958), p. 215.lOIbid., p. 164.llIbid., p. 165.12Matthew 10:29-31. (All quotations below

are from the King James Version ofthe Bible.)

Ronald F. Cooney

NOCK:An Appreciation

The wise social philosophers werethose who merely hung up their ideasand left them hanging, for men tolook at or to pass by, as they chose.Jesus and Socrates did not eventrouble to write theirs out, and Mar­cus Aurelius wrote his only incrabbed memoranda for his own use,never thinking anyone else would seethem.

* * *The above quotation is from A

Journal ofThese Days by Albert JayNock. It is revealing because it de­scribes precisely the way Nock's ownthoughts were presented to theworld, a world-to judge by Nock'swritings-in which he was not oftencomfortably at home. Yet there was,so little intellectual vanity in himthat he could not, one feels, have

Mr. Cooney Is a free·lance writer In Berkeley,California.

been terribly desolated by theknowledge that his ideas wereneither widely endorsed noradopted. The fact that those ideaswere not (and are not) instantlypopular may indeed be proof of theirbasic soundness. But for Nock, itwas enough to be able to offer hisopinions, not caring a fig if peopleliked them or agreed with him. Itwas the search for truth which ledhim to the ideas, and not the fruitsof acceptance or approval, that mat­tered to him.

Nock was far from the dogmatistwho, besides believing passionatelyin something, is only really contentwhen he can hammer his convic­tions into as many ears as he canfind and drag his hearers-willingor not-around to his point of view.He was a man of strong beliefs, buthe lacked the missionary zeal to

499

500 THE FREEMAN August

force them on others. He, as he says,((left them hanging." The point re­mains that Nock, like his spiritualmentor Montaigne, was animatedby and built his thought upon aflinty skepticism. Like Socrates andJesus, he was a gadfly, a man whostood apart from the prevailing wis­dom of the time and tendered hisdoubts, whatever the consequences.

As a social critic, Nock wrote upona variety of subjects. I mean toconcentrate mainly on his politicalwriting for it seems to contain thetrue essence of his thought. Theworth of any philosopher can bejudged by the extent to which theissues he raises still live in the con­temporary age. In the area of therelationship between the state andsociety, Nock made a lasting andunique contribution-one which isas relevant today as when he lived.Such, however, is the unity ofNock'swork that one may, by examining apart,come to comprehend the whole.

State vs. Society

For Nock, the conflict betweenstate and society arises from theirdifferent and incompatible sources.An individualist to the core, he wasnever able, he admits, to conceive ofsociety as more than ((a concourse ofvarious individuals." Society is bestserved when its members are left totheir own devices, when each indi­vidual pursues his own interests ac­cording to· his lights.

The state, on the other hand, hasinterests of its own, which Nock in­sists are not synonymous with thoseof society:

The interests of society and of theState do not coincide; any pretense thatthey can be made to coincide is sheernonsense. Society gets on best when peo­ple are most happy and contented,which they are when freest to do as theyplease and what they please; hence soci­ety's interest is in having as little gov­ernment as possible, and in keeping it asdecentralized as possible. The State, onthe other hand, is administered by job­holders; hence its interest is in having asmuch government as possible.

Nock does not hold with the viewthat the state represents society, andthat it came into being for the pur­pose of accomplishing those thingswhich people cannot do for them­selves. He draws a distinction be­tween the state and government.The former is distinguished by thefact that it is not limited (as is meregovernment) to negative interven­tions into the lives of society's mem­bers (e.g., providing a free and ac­cessible system ofjustice), but inter­venes daily in a positive, which is tosay active, way (e.g., enacting ironi­cally misnamed ((social" legislation).

Nock makes the point again andagain that increases in state powerbeyond the boundaries of negativeintervention are made always at theexpense of social power-the purelyvoluntary reflexes of free people.

1979 NOCK: AN APPRECIATION 501

Editor's Note: Anyone furtherinterested in the ideas andwritings of Albert Jay Nockmay wish to contact:

THE NOCKIAN SOCIETY30 South BroadwayIrvington, New York 10533

This is a ((no officers, no dues,no meetings" society occasion­ally contacted by The Rever­end Mr. Edmund A. Opitz ofthe staffofThe Foundation forEconomic Education.

Available from The NockianSociety at $1.00 is a 91-pagecollection of Cogitations fromAlbert Jay Nock selected andarranged by Robert M.Thornton.

Each incursion by the. state into therealm of social power leads to acorresponding diminution of socialpower and a resulting decline inindividual liberty. What happens, ineffect, is that society either willinglyabrogates its responsibilities or hasthem usurped by the state.

Collectivists and those similarlyinclined like to speak with grandvagueness about the C«larger good"and about putting the interest ofsociety before personal-and theyalways assume, base-interests.The implication, of course, is thatsociety's needs are not only differ­rent from. but greater and more

noble than those of a single person.Nock would scoffat any such notion.What, he would ask, is a society butthe individuals who make it up? Inhis mind, the distinction has nomeaning. A society is not somethingbeyond individuals but is individ­uals.

Up to this point Nock's ideas areclose to or even derived from those ofHerbert Spencer. But Nock was, ifthat is possible, more critical of thestate-both of its nature and of itseffects-than Spencer. The Englishphilosopher, great libertarian thathe was, wrote little about theeconomic exploitation that is found

502 THE FREEMAN August

under a statist regime. The subjectwas of fundamental importance toNock, and in fact he traces the an­cestry of the state to that veryexploitation:

The positive testimony of history isthat the State invariably had its originin conquest and confiscation. No primi­tive State known to history originated inany other manner. On the negative side,it has been proved peradventure that noprimitive State could possibly have hadany other origin. Moreover, the sole in­variable characteristic of the State is theeconomic exploitation of one class byanother.

The modem state, argues Nock,pursues identical ends of confisca­tion through different and moresophisticated means. This exploita­tion may be disguised and carriedout for ttgood" purposes but is notbeneficial to society. It is part of theinstinct of self-perpetuation withinthe nature of the state. Economicfreedom is a Nockian first princi­ple.

Nock understands that modernman is an economic creature andthat power-social or state-residesto a large degree in economic fac­tors. He sees quite clearly that anindividual's social liberty is boundindivisibly to his economic liberty.And as men and women should beable to associate, to speak, and toexchange ideas freely, so theyshould enjoy a like freedom in theireconomic associations. The advent of

economic freedom would, Nock feels,deal a grievous wound to statepower, and the political freedomwhich followed as a natural conse­quence would supply the coup degrace. It is impossible to envisionthe state allowing either, for thatwould mean that it would be signingits own death warrant.

Two Kinds of Power

Nock's views on economic tyrannyform a powerful rebuttal to thecharge that capitalism-the freest ofall economic systems-is intrinsi­cally exploitative. They are also of apiece. with his insightful criticismthat the state, whatever its pre­tenses to the contrary, lacks thenecessary quality of disinterested­ness. He recognizes that the peoplewho are employed in administeringthe state's every whim, the job­holders and bureaucrats, have noreason to cut down the state's sphereof influence but an active interest inseeing that it is expanded. Living ashe did at the high tide of the NewDeal, Nock was ideally situated toobserve how those elected to powerutilized for political gain the variousapparatus they controlled.

He was less than sanguine aboutthe social order being ushered in bythe Roosevelt administration. Hebelieved that the state could have aninfluence on society but he was con­vinced that that influence was in­evitably malign. He saw the effects

1979 NOCK: AN APPRECIATION 503

on society-once again-as effectson individuals. As state power in­creases, moral judgment and indi­vidual responsibility decline, self­reliance weakens, and independentthought, never very hearty, dies of awasting disease.

Reading Nock on these matterscan be a bracing and tonic experi­ence' but it can prove depressing,especially when one sees how closelyevents have paralleled Nock's warn­ings. One wants to ask: was Nock acomplete pessimist, a man who sawthe people of the world sliding intosome modern statist barbarism?Certainly he was too clear-sighted toexude, in defiance of all the evidencearound him, a hollow optimismabout the future. But neither was hea resigned monger of gloom, blindlyraging against the march of history.

Ambrose Bierce, himself the ar­chetypal bitter cynic-once defineda conservative as a man enamored ofpresent evils in contrast to a liberalwho wants to replace them withothers. Nock, true to his nature,cannot be safely lodged in eitherhalfofBierce's definition. He did notpine for some mythical golden. age,but he found in the present verylittle that was to his liking.

One might assume then that Nockwas in accord with the various re­form movements that took placeduring his lifetime. Nock was notthe sort of man to remain uncriticalor to wrap complacency around him

like a shroud. He regarded reformmovements as ill-starred and inef­fectual. He had observed many suchmovements and the vast majorityhad failed ttdue to their incorrigiblesuperficiality." Reforms, to his mind,do not attack the problems of societyat their source. Reform movementssymbolize action without thought.They are conceived in impatienceand reared in haste. They are basedon an insufficient understanding ofinstitutions and human beings.They represent a cosmetic solutionof any problem, and ignore com­pletely the factor-humannature-that is the source of most ofthem.

True Reform Begins withSelf-Improvement

Nock knew that the great appealof reforming movements is theirpromise of an instantaneous and ob­servable improvement in conditions.People are drawn to them becausethey hold out the hope, howeverslight, of the quick and easy allevia­tion of social problems by modifyingwhat Nock called the ttmechanics" ofsociety. But he knew also that theonly reform worth the effort, and theonly one with any chance of finaland lasting success, was the difficultand painful task of each person tofirst reform himself:

The only thing that the psychically­human being can do to improve society isto present society with one improved

504 THE FREEMAN

unit. In a word ages of experience testifythat the only way society can be im­proved is by the individualist methodwhich Jesus apparently regarded as theonly one whereby the kingdom ofHeaven can be established as a goingconcern; that is, the method of each onedoing his very best to improve one.

That statement sums up ratherneatly the Nockian philosophy as awhole. I suppose that, in strictlyacademic terms, Nock would not beconsidered a philosopher at all. Hedidn't construct any complicatedsystem which proposed to answer allthe universal questions. He would,no doubt, be thought of as toocommonsensical. The strange thingabout common sense, however, is itsever-increasing rarity. It is a com­pliment to Nock to say that he pos­sessed common sense to a quite un­common degree. His sharp anddiamond-like prose refracted his

How Ideas Grow

thought to a high brilliance. In hisworks, one finds a great amount ofheat, but no less amount of light.

One finds also a complete absenceof what Mencken called the ((mes­sianic delusion." Nock wrote onlywith the aim of saying what hethought, and not swaying greatmasses of people or bludgeoningthem into believing as he did. Therewas a serene integrity in Nock'scharacter which shows throughevery word he wrote. Nock wrote ofUthe remnant," a group of peoplebound together by nothing morethan their desire to achieve self­reformation, and practice of inde­pendent and disinterested thought.Nock would not have sought to bethe remnant's uleader" but the titlebelongs to him nonetheless. For hislife and work embodied the admoni­tion that must stand as the rem­nant's motto: ((Know thyself." ,

IDEAS ON

UBERTY

WE can all no doubt remember having found ourselves suddenlyunder the influence of an idea, the source of which we cannot possiblyidentify. ult came to us afterward," as we say; that is, we are aware of itonly after it has shot up full-grown in our minds, leaving us quiteignorant of how and when and by what agency it was planted there andleft to germinate....

For some time it is inert; then it begins to fret and fester untilpresently it invades the man's conscious mind and, as one might say,corrupts it. Meanwhile, he has quite forgotten how he came by the ideain the first instance, and even perhaps thinks he has invented it; and inthose circumstances, the most interesting thing of all is that you neverknow what the pressure of that idea will make him do.

ALBERT JAY NOCK, "Isaiah's Job"

Paul L. Poirot

The Writings ofF. A. Harper­

A Review

WHAT was written as ((Introduction"to The Writings ofF. A. Harper mayalso serve as a review of this two~

volume memorial edition just pub­lished by The Institute for HumaneStudies, Inc., 1177 University Drive,Menlo Park, California 94025.

Dr. F. A. (Baldy) Harper left aposition as Professor of Marketingat Cornell University to join thestaff of The Foundation forEconomic Education from 1946through 1958. He helped to foundand served as Executive Directorand then as President of The Insti­tute for Humane Studies until hisdeath in 1973.

I would not push the illiberal no­tion than any individual is like anyother. It is because ofour differencesthat liberty is so vital. But Baldy didadhere to· the guiding rule of Soc­rates, ~(Know thyself." He believedwith Socrates that goodness is basedon knowledge, wickedness on igno­rance. Like Socrates, he sought

truth all his life, in ways that at­tracted young scholars. By the So­cratic method of a series of carefullydirected questions, he would en­courage the other person to find outthe truth for himself.

In these collected writings ofF. A.Harper, concerned with liberty inthe broadest sense, are to be foundsome of his conclusions. But thereader will also find throughout hisworks a series of carefully directedquestions. For as Judge LearnedHand observed, ((The spirit of libertyis the spirit which is not too surethat it is right." I believe that is thespirit in which Baldy would have uspursue his search-a never-endingsearch for the truth about liberty.

How does that search begin?Perhaps best with his premise as tothe nature and destiny of man:

In the design of the universe, every­thing is subject to certain natural laws.... A person's capacity to perceive thenature of these natural laws, which rule

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506 THE FREEMAN August

his being, is limited by his intelligence orpowers of instinctive conduct; his beliefs,in this respect, are both his privilege andhis responsibility; he is free to choose hissources of information as guides in hissearch for truth, and he is personallyresponsible for the wisdom of that choiceand for the resulting conclusions; he willknow that no person, not even himself,has any direct and certain line of com­munication with the sources of truth; allconclusions carry a corresponding uncer­tainty no matter who holds them; heknows that while he cannot avoid actingon the basis of some belief, these beliefsmust ever be held subject to change asfurther evidence or new reasoning be­comes available; but always he is obli­gated, by honesty, to believe and act inaccordance with truth as he then sees it.

That premise as to the truth aboutliberty is broad enough to encom­pass a lifetime search in any direc­tion. And this list of some of histitles illustrates Baldy's wide rangeinto the moral, social, political andother aspects of the subject:

USociety under God"((Morals and Liberty"t(In Search of Peace"t(The Disharmony of World

Unity"(tFruits of Intolerance"((Blessings of Discrimination"

However, his specialty was thesearch for and promotion of agreater understanding of free mar­keteconomics and its importance tothe individual who would be free.uEconomic liberty pervades· the en-

tire problem of liberty and is anabsolute requisite to liberty in gen­eral."

Textbooks may help us, but few ofus come by our discoveries of truthsin anything like a logical textbookarrangement. At some moment, abetter idea displaces an assumptionor a myth that had formerly oc­cupied one's mind. And many of theshorter articles assembled here areshots fired at popular myths. Butthey are shots from the orderly andwell-disciplined mind of a scholarand teacher. Let me share, then, thesteps that I believe Baldy may havetaken-the points he seemed tostress as most important-in hisstudy and exposition of free marketeconomics.

Undoubtedly of first importance isthe concept of private property­t(the economic extension of the per­son." The point is stressed through­out his writings, but comes mostclearly, as it should, in his latestdiscussion, ttProperty and Its Pri­mary Form":

As I now see the matter of propertyand ownership, the first person singularis the primary form from which all otherforms ofproperty arise. It is the prior andsuperior form. . . . This view of self­ownership as primary property, fromwhich all other property arises as deriva­tives ... rests on the subjective evalua­tion of worth, with all market pricesdetermined in the market as with otherthings of worth.

So, in economics, one starts with

1979 THE WRITINGS OF F. A. HARPER 507

the freedom and dignity of the indi­vidual human being and his naturalright to his own decisions and theirconsequences. Because he is his ownman, the fruits of his peaceful ac­tions are his property-and his re­sponsibility. With that as theirpremise, competing individuals canpeacefully determine ((what is mineand what is thine."

Once the concept or institution ofprivate property is accepted, humanbeings in their infinite variability,and with their respective degrees ofskill and talent, are in position forthe next step of specialization invarious productive efforts. Until aman can own what he produces, heis unlikely to produce much beyondhis immediate needs. But if the prod­uct is his property, then he willstrive to produce enough to meetfuture needs and begin to think howhe might trade some of those sav­ings for other goods or services.

So begins another step in freemarket economics, the process ofcompetition and cooperationthrough voluntary exchange of pri­vate property. Exchange, yes, but atwhat rate of exchange, how much ofmine for thine, at whose price? Atthe market price, suggests Baldy, ifthe objectives of the participants areto maintain peaceful relations andto maximize productivity in thelight of the always scarce and lim­ited resources available.

What a man brings with him to

market as his own property affectswhat he will be able to bid for theproperty of others. Some have theirskills or their productive labor tosell, some have tools or land orbuildings or other savings to offer,some have new and better ideas forcombining labor and tools and otherscarce resources more efficiently toserve consumers.

Where more than two or three aregathered together in a market place,each interested in selling one ormany items and in buying one ormany items, some one or more ofthose items of commerce will be putto use as money to get away from thelimitations of barter-to facilitateexchange. How much money, ofwhat size or shape or other condi­tion? Leave such matters to themarket-to the willing buyers andsellers in the market.

Once traders have found a satis­factory medium of exchange, thenmarket exchange rates will be ex­pressed in money prices, and thesemarket prices afford businessmen ameans of economic calculation orbusiness accounting-a way ofknowing their profit or loss.

Out ofthis seeming bedlam ofbidsand offers, from individuals withvarious and ever-changing suppliesof goods and services and demandsfor other things, emerges a series ofmarket prices. Workers competingfor jobs and employers competing forlaborers set the pattern of wages for

508 THE FREEMAN

different kinds of work. Savers andborrowers compete and cooperate tofmd the rate of interest that willbest serve their more urgent re­quirements. Market prices help in­dividuals decide how much of whatto consume and how much to saveand invest in tools and raw mate­rials and other factors of furtherproduction. Profits and losses ulti­mately disclose which competitorshave succeeded or failed and guidethem and others into the most fruit­ful and efficient lines of productiv­ity.

Finally, but by no means the leastof the services the market affords, iseducation. It affords a measure ofthe worth of experience, of school­ing, of learning. It tells the cost ofbuildings, of books, of hired teach­ers, of various educational facilities.It lets the individual (the parent ofthe child) choose what he can affordto spend for greater wisdom in rela­tion to his other needs.

some of that procedure from him.But, hopefully, the attempt mayhelp alert the present and futurestudents of F. A. Harper to some ofthe main points of his free marketphilosophy.

Unfortunately, ours is not anideal free market economy. Not allmen are always peaceful, tolerantand wise, however good their inten­tions. Some will resort to coercion togain advantage and to rule overothers. They will turn to govern­ment to tax some and subsidizeothers, to regulate and control peo­ple ((for their own good," to dispense(charity," to prevent failure, topenalize success, to invent a magicmoney machine, to apply rent andwage and price supports or ceilingsand thus refute the vital signals ofmarket pricing, to manage the rear­ing and the education of the young,to interfere with the free trade offree men in countless other ways.

Much of Baldy's life was devotedto exposure of these frustrations of

Were Baldy to survey this humble the free market economy and theseattempt to outline his views of the limitations on freedom. And that isfree market economy, he might con- a never-ending task. Fortunately forclude that the attempt has raised us, we have his record and examplemore questions than it answers. And of the ideal of a free man towardI could only answer that I learned which to strive. @

Volume I (453 pages) and Volume II (611 pages) ofThe WritingsofF. A. Harper list at $10.00 each volume, but also are availableas a set at $16.00 from:

The Foundation for Economic Education, Inc.Irvington-on-Hudson, New York 10533

A REVIEWER'S NOTEBOOK

FOR THERECORD

JOHN CHAMBERLAIN

WHEN in 1940, Felix Morley decidedto leave a prestigious and influen­tial position as editor of EugeneMeyer's Washington Post to becomepresident of Quaker-supportedHaverford College, he did it in allhumility. Rufus Jones, who hadtaught him philosophy at Haverfordin the early part of the century, saidhe should take the job ((not becausethee is a good Quaker but becausefurther exposure to Quakerism willdo thee good." Felix Morley acceptedthe kindly admonition in good grace.((I was," he said, ((indeed alreadykeenly aware that my life was defi­cient in spiritual values and that Ihad need of them."

Felix Morley's recollection of hisconversation with his old professorcomes on page 347 of his fascinatingmemoirs, For the Record (Regnery­Gateway, Inc., South Bend,Indiana,472 pages, $15.00), and it strikesone with considerable surprise. The

truth is that Morley seldom did any­thing in his life for a purelymaterialistic advantage. He wasborn practically on the Haverfordcampus, where his father, a gifted:mathematician from East Anglia inEngland, had settled with a su­preme indifference to anything buthis scientific specialty.

There were three Morley sons­the eldest was Christopher, the poet.Felix, the middle one, became ajournalist and educator, and Frank,the youngest, had a triple career asmathematician, historian and pub­lisher. Not a single member of thefamily ever seemed to care particu­larly for what ordinarily passed forsuccess in materialist circles, yet,in following their various bents, allof the Morleys did well enough in aworldly way. The point is that theycared more for the doing than for therewards thereof. That, in itself, is akind ofspirituality, whether Quaker

509

510 THE FREEMAN August

or not. The whole of For the Recordis about such spirituality.

Seeing and Knowing

The young Felix made some ten­tative gestures toward becoming animaginative writer in the mode ofhis brother Christopher, but it soonbecame apparent to him that hismain interest was in seeing andknowing as a prelude to philosophi­cal understanding. For a moment hethought he might become a marinearchitect (he loved the graceful linesof ships), but, as he confesses, henever did understand the calculushe studied in deference to his father.By necessity he gave up engineeringaspirations. Like John Dos Passos,he had a fling with an ambulancecorps in the early years of WorldWar I. Europe was as much home tohim as America-his family, alwaysmore English than American, hadtaken Kit and Felix abroad for aparticularly long sabbatical in Eng­land and at Gottingen in Germany,where Felix developed his naturalear for his first foreign language.

Coming home to America after hisexperience with the Quaker ambu­lance service, Felix tried to becomean officer once Woodrow Wilson hadelected to take us into a war that theQuakers deplored. He didn't make itas cCofficer material" because his CCat_titude," which included a sarcasticview of bayonet drill as sticking ef­figies that would be using revolvers

if alive, was deemed deficient.Again, one is struck by the parallelto John Dos Passos' experience­cCDos" got into trouble as a prospec­tive soldier because he couldn't hatehis enemy as an all-inclusiveabstraction.

A Rhodes Scholar

Felix Morley did his cub news­paper work in Philadelphia and inWashington, but he yearned forwider horizons. Like both of hisbrothers, he managed to get aRhodes scholarship to Oxford. Be­cause of wartime mixups, theRhodes authorities waived the pro­vision that only bachelors were eli­gible to accept appointments, and soFelix and his wife Isabel were off fora long sojourn in Europe that in­cluded much incidental journalismin Ireland, Germany, France andBritain as well as a period of studyat the London School of Economics.During this period Felix made him­self an authority on the Britishlabor movement.

Curiously, it was through Englisheditors that he was recommended asan editorial writer to John HaslupAdams at the Baltimore Sun. SinceIsabel was pregnant, and Baltimorewas home to all the Morleys aftertheir mathematician father hadtransferred from Haverford to JohnsHopkins, Felix jumped at the oppor­tunity that was offered to him tobecome assistant to a great editor.

1979 FOR THE RECORD 511

But, as always, the Morley interestwas philosophical-he wanted towrite about foreign affairs with ahope that he might be contributingto the understanding of the pre­requisites to peace, which was cer­tainlya Quaker objective.

International Assignments

In the back of his mind, FelixMorley hoped he might become theBaltimore Sun correspondent inLondon. But his new employers hadother ideas. They sent him off to theFar East to learn something aboutJapan, China and the Philippines inthe yeasty period in which ChiangKai-shek was endeavoring to pushthe Communists north of the Yang­ste and consolidate his position asthe successor to Sun Vat-sen.Morley took all this as experience.The Asian interlude made him avidfor an international listening post,so, after publication of his book, OurFar Eastern Assignment, he was offto Geneva, where he proposed tocombine newspaper correspondencewith writing a study of the Leagueof Nations. The Brookings Institu­tion eventually brought the studyout as The Society ofNations.

Morley liked Herbert Hoover, whohad a Quaker viewpoint. EugeneMeyer, who had bought the thenmoribund Washington Post in theearly Thirties, had worked forHoover. So it was perhaps by a natu­ral affinity that Felix Morley be-

came Meyer's editor for the period ofthe New Deal. As always, Morleytried to be the practical philosopherof peace. No isolationist, he wantedto use power to the ends of justice,employing League of Nationsmachinery to take the sting out ofthe inept and inequitable VersaillesTreaty. Of course, it didn't work: thepunitive victors of Versailles haddone their work too well. They hadbrought Hitler upon themselves,and neither Hitler nor the Nazis'were amenable to belated blan­dishments.

World War II, and After

The war came, and Felix Morleyhad no desire to write editorialsthat could not be sharply critical ofnational policy if the occasion forsuch criticism arose. So it was off toHaverford, to keep liberal educationalive in a period of war stringenciesthat threatened to turn all our cam­puses into vocational arms of thePentagon. It was at Haverford, inhis seminar on cCThe Development ofPolitical Ideas," that Morley gavepointed shape to the convictions of alifetime. He was obsessed with thedilemma of the modern republics:how to maintain individual freedomwhen the necessity to arm againstbarbarians in the technological agedemanded a centralization of powerthat cut across a traditional separa­tion of the powers.

Nevertheless, despite the di:-

512 THE FREEMAN

lemma, the duty to fight for bothfreedom and federalism remained.Morley's post-Haverford books,Freedom and Federalism and ThePower in the People, are yeomanattempts to fight the drift to a cen­tralization of power that Morleyfears ((will eventually destroy ourfederal republic, if it has not alreadydone so." Most important of all,Felix Morley was a co-founder, withFrank Hanighen, ofHuman Events,the Washington weekly that tries tobalance the claims of a libertarianconservatism with the need for eter­nal wariness against the totali­tarians. Morley differed withHanighen on emphases, and with­drew from the enterprise, butHuman Events is perhaps his mostenduring monument. ®

WHAT MAKES YOU THINK WEREAD THE BILLS?by Senator H. L. Richardson(Caroline House Books, P.O. Box 978Edison, N.J. 08817)136 pages. $7.95 cloth; $2.95 paper

Reviewed by Tom Starkweather

A politico who writes with candor,humor and simplicity? The Ameri­can public can't accept such acreature-blame it on conditioning,cynicism, sophistication, idealism,pampering, realism or whatever.This national frame of mind will

make it difficult to seriously con­sider What Makes You Think WeRead the Bills?

The author of this little gem is aCalifornia legislator who has servedin the State Senate for 12 years. Heis obviously a keen observer andanalyst of the political scene. Hisbook is funny. Indeed, it is hilarious.It is educational. Mr. Richardsondescribes what really happens whenour elected representatives get to­gether to spend our money and writeour laws.

This book is frightening, for thecharacter traits, the situations, thepressures, the psychology and theneuroses described therein are notpeculiar to the Gllden State. Theyare universal in our political envi­ronment. The book is also entertain­ing and that's appropriate since themedia have made politics a branchof show business in recent years.

Those who would complain aboutgovernment should first be requiredto memorize Chapter six, nWhat's ASeat Worth?" or at the minimumdetennine their contribution to theproblem based on this chapter. Thisbook should be mandatory readingfor all who seek public office or exer­cise their heritage at the ballot box.What Makes You Think We Read theBills? calls to mind the statementattributed to the 1866 New YorkCircuit Court: ((No man's life, lib­erty, or property are safe while thelegislature is in session." ®