This economic circulatory system can be likened, in one respect, to the circulatory system of the body, the blood stream. Among other functions, the blood stream effects numerous exchanges: it picks up oxygen and ingested food, carrying these life givers to some 30 trillion cells of the body, and, at these trillions of points, it picks up carbon dioxide and waste matters, returning these items for disposal. But let someone insert a hypodermic needle into a vein, thin the blood stream—destroy its integrity—and the victim can be referred to in the past tense.
Likewise, one can thin the economic circulatory system by inflating—assured by socialism—and bring on the same catastrophic results; exchange will be impossible with each of us wedded to our specialization but unable to exchange our own for the specializations of others. The integrity of the medium of exchange has to be presupposed to assume that a division-of-labor economy can function for any sustained period of time.
To illustrate: Following the 1918 Armistice, my squadron was sent to Coblenz in the Army of Occupation. The German inflation was under way. I knew no more about inflation then than do most of our citizens now. And like many people, I enjoyed what I experienced: more marks each pay day, but not because of any increase in salary. The government was taking care of my food, shelter, clothing—I had “security.” My marks were used mostly to play games of chance—the more marks the more fun. Why shouldn’t I enjoy inflation?
The German inflation continued with mounting intensity; by 1923 it reached a point where 30 million marks would not buy a loaf of bread.
About the time I arrived in Coblenz (this is fiction, but sound) an elderly German passed on, leaving his fortune to his two sons—500,000 marks each. One was a frugal lad; he never spent a pfennig of it. The other was a playboy; he spent the whole inheritance on champagne parties. When the day came in 1923 that 30 million marks wouldn’t buy a loaf of bread, the lad who had saved everything, had nothing. But the other was able to exchange his empty champagne bottles for a dinner! The economy had been reduced to barter. To fully grasp the present American setting, we must be able to see that this very process is gaining momentum in our own economy. And primarily because we are substituting socialism for the peaceful ways of the free market.
At this point it is appropriate to be hardheaded and ask a practical question: Has there ever been an instance, historically, when a country has been on our kind of a socialistic toboggan and succeeded in reversing herself? There was a 10-year turnabout in the city-state of Lagash circa 2500 B.C., a 2-year reversal in the France of Turgot in the eighteenth century and, perhaps, there have been other minor cases of such political heroism. But, for the most part, the record reads like “the decline and fall of the Roman Empire.”
The only significant turnabout known to me took place in England following the Napoleonic Wars. The nation’s debt, in relation to her resources, must have been greater than ours now is; the taxation was confiscatory; and the restrictions on the peaceful production and exchange of goods and services—along with price controls—were so numerous and inhibitory that had it not been for the smugglers, black marketeers, and breakers of the law, many would have starved.4 Altogether, a bleak economic picture, indeed! Here, assuredly, was a setting worse than ours yet is.
Something happened, unique in history; and it is well that we take cognizance of it. One thing for certain, the change was wrought by a handful of men. We have a good account of the work of Richard Cobden and John Bright in England and of their two French collaborators, a politician named Chevalier, and the political economist and essayist, Frederic Bastiat. Cobden and Bright, having a far better understanding of freedom-in-exchange principles than their contemporaries, went about England speaking and writing on the freedom philosophy. The economy was out of kilter; Members of Parliament listened and, as a consequence, there began the greatest reform movement in English history.
The reform consisted of the repeal of restrictive law; the peaceful ways of the market were made possible by the removal of unpeaceful governmental interventionism. The Corn Laws (tariffs) were repealed outright; the Poor Laws (relief) were greatly curtailed; there were numerous other repeals. And, fortunately for the people, their newly limited government, nominally headed by Queen Victoria, relaxed the authority which the people themselves believed to be implicit in their Sovereign; the government gave the people freedom in the sense that a prisoner on parole is free: he can be yanked back! But the government exercised no such control; Englishmen by the hundreds of thousands roamed over the face of the earth achieving unparalleled prosperity and building a relatively enlightened empire.
This development continued until just before World War I when the same old political disease set in again. What precisely is this disease that must result in inflation and other unpeaceful manifestations? It has many popular names, some already mentioned, such as socialism, communism, the welfare state, government interventionism, authoritarianism. It has other names such as fascism, nazism, Fabianism, the planned economy. It has local names like New Deal, Fair Deal, New Republicanism, New Frontier; and new ones will be contrived to suggest that the identical political arrangement has something novel about it.
Faith in Government Intervention
However, popular names are but generalizations and oversimplifications. What, then, is really the essence of the above-mentioned “progressive ideologies”? Careful scrutiny of their avowed aims will reveal that each has a characteristic common to the others, this characteristic being the cell in the body politic that has the capacity for inordinate growth and from which stems our countless unpeaceful troubles. It is in the form of a belief—a rapidly growing belief—in the use of organized police force (government) not with the emphasis on keeping the peace but on a political manipulation of the peaceful, productive, creative activities of the citizenry. An increased intervention in all markets—commodities, exchange, finance, education, housing, or whatever—is what the proponents of this multi-named system set forth as their promise. I am only repeating the claim they present with pride; check it out for yourself.
To illustrate: I can remember the time when, if a house were wanted, the customer would look to the free market to supply it. The first step involved someone wanting a house in preference to other alternatives; the initiative rested with the desiring consumer. Next, the reliance was on those who wished to compete in the building. Last, we relied on people who thought they saw some advantage to themselves in loaning the money for the tools, labor, and material. With our reliance on the peaceful procedures of the market, we built more square feet of housing per person than was ever built in any other country at any other time.
Yet, despite this remarkable accomplishment, more and more people are coming to believe that the free market should be shelved and that, in its stead, government should use its police force to take the income of some and give it, in the form of housing, to the government’s idea of the needy. In other words, we are now practicing the principle used by the Pilgrim Fathers in 1620-23, and proclaimed as an ideal by Karl Marx in 1848: “from each according to his abilities, to each according to his needs,” and by the use of organized police force! (Keep in mind that I have used housing only as an example; the same policy is being extended to all segments of the economy.)
Here is a crucial, important, and self-evident fact: With increasing belief in police force as a means to productive ends, the belief in men acting freely, competitively, cooperatively, privately, voluntarily must correspondingly diminish. As a reliance on political authoritarianism advances, a faith in free men suffers erosion and, finally, obliteration.
It would seem to follow that there is no remedy for our current devolution except as a faith in free men be restored. The evolution of such a faith, I suspect, will rest as much on an unbelief in authoritarianism as on a belief of what can be wrought by voluntarism. I propose to share and explain my unqualified skepticism of political rigging as well as my faith in the creativity and miraculous performances of free men in an unfettered, peaceful market.
So much for the American setting—past and present!