Property, Contract, Aggression, Capitalism, Socialism

Because the concept of property, for instance, is so basic that everyone seems to have some immediate understanding of it, most people never think about it carefully and can, as a consequence, produce at best a very vague definition. But starting from imprecisely stated or assumed definitions and building a complex network of thought upon them can lead only to intellectual disaster. For the original imprecisions and loopholes will then pervade and distort everything derived from them. To avoid this, the concept of property must first be clarified.

Next to the concept of action, property is the most basic category in the social sciences. As a matter of fact, all other concepts to be introduced in this chapter—aggression, contract, capitalism and socialism—are definable in terms of property: aggression being aggression against property, contract being a nonaggressive relationship between property owners, socialism being an institutionalized policy of aggression against property, and capitalism being an institutionalized policy of the recognition of property and contractualism.

Let us start with an elucidation of the precondition necessary for the concept of property to emerge.4 For a concept of property to arise, there must be a scarcity of goods. Should there be no scarcity, and should all goods be so-called “free goods” whose use by any one person for any one purpose would not in any way exclude (or interfere with or restrict) its use by any other person or for any other purpose, then there would be no need for property. If, let us say, due to some paradisiac superabundance of bananas, my present consumption of bananas does not in any way reduce my own future supply (possible consumption) of bananas, nor the present or the future supply of bananas for any other person, then the assignment of property rights, here with respect to bananas, would be superfluous. To develop the concept of property, it is necessary for goods to be scarce, so that conflicts over the use of these goods can possibly arise. It is the function of property rights to avoid such possible Clashes over the use of scarce resources by assigning rights of exclusive ownership. Property is thus a normative concept: a concept designed to make a conflict-free interaction possible by stipulating mutually binding rules of conduct (norms) regarding scarce resources. It does not need much comment to see that there is indeed scarcity of goods, of all sorts of goods, everywhere, and the need for property rights is thus evident. As a matter of fact, even if we were to assume that we lived in the Garden of Eden, where there was a superabundance of everything needed not only to sustain one’s life but to indulge in every possible comfort by simply stretching out one’s hand, the concept of property would necessarily have to evolve. For even under these “ideal” circumstances, every person’s physical body would still be a scarce resource and thus the need for the establishment of property rules, i.e., rules regarding people’s bodies, would exist. One is not used to thinking of one’s own body in terms of a scarce good, but in imagining the most ideal situation one could ever hope for, the Garden of Eden, it becomes possible to realize that one’s body is indeed the prototype of a scarce good for the use of which property rights, i.e., rights of exclusive ownership, somehow have to be established, in order to avoid clashes.

As a matter of fact, as long as a person acts, i.e., as long as a person intentionally tries to change a state of affairs that is subjectively perceived and evaluated as less satisfactory into a state that appears more rewarding, this action necessarily involves a choice regarding the use of this person’s body. And choosing, preferring one thing or state over another, evidently implies that not everything, not all possible pleasures or satisfactions, can be had at one and the same time, but rather that something considered less valuable must be given up in order to attain something else considered to be more valuable. Thus choosing always implies the incurrence of costs: foregoing possible enjoyments because the means needed to attain them are scarce and are bound up in some alternative use which promises returns valued more highly than the opportunities forfeited. Even in the Garden of Eden I could not simultaneously eat an apple, smoke a cigarette, have a drink, climb up a tree, read a book, build a house, play with my cat, drive a car, etc. I would have to make choices and could do things only sequentially. And this would be so because there is only one body that I can use to do these things and enjoy the satisfaction derived from doing them. I do not have a superabundance of bodies which would allow me to enjoy all possible satisfactions simultaneously, in one single bliss. And I would be restrained by scarcity in another respect as well: as long as this scarce resource “body” is not indestructible and is not equipped with eternal health and energy, but rather is an organism with only a limited life span, time is scarce, too. The time used up in pursuing goal A reduces the time left to pursue other goals. And the longer it takes to reach a desired result, the higher the costs involved in waiting will be, and the higher the expected satisfaction must be in order to justify these costs.

Thus, because of the scarcity of body and time, even in the Garden of Eden property regulations would have to be established. Without them, and assuming now that more than one person exists, that their range of action overlaps, and that there is no pre-established harmony and synchronization of interests among these persons, conflicts over the use of one’s own body would be unavoidable. I might, for instance, want to use my body to enjoy drinking a cup of tea, while someone else might want to start a love affair with it, thus preventing me from having my tea and also reducing the time left to pursue my own goals by means of this body. In order to avoid such possible clashes, rules of exclusive ownership must be formulated. In fact, so long as there is action, there is a necessity for the establishment of property norms.

To keep things simple and free of distracting details let us continue to assume, for another stretch of analysis, that we indeed inhabit a Garden of Eden, where exclusively one’s body, its standing room, and time are scarce resources. What can the prototype of a scarce good, a person’s body, tell us about property and its conceptual derivatives?

While even in a world with only one type of scarce resource all sorts of norms regulating exclusive ownership with respect to scarce means are conceivable in principle (for example, a rule such as “On Mondays I determine to which uses our bodies can be put, on Tuesdays you determine their use,” etc.), it is certain that not all of them would in fact have the same chance of being proposed and accepted. It then seems to be best to start one’s analysis with the property norm, which would most likely be accepted by the inhabitants of Eden as the “natural position” regarding the assignment of rights of exclusive ownership in bodies. To be sure, at this stage of the argument we are not yet concerned with ethics, with the problem of the moral justification of norms. Thus, while it can well be admitted from the very outset that I am indeed going to argue later on that the natural position is the only morally defendable one, and while I am also convinced that it is the natural one because it is morally defendable, at this stage, natural does not imply any moral connotation. It is simply meant to be a socio-psychological category used to indicate that this position would probably find the most support in public opinion. Indeed; its naturalness is reflected by the very fact that in talking about bodies, it is almost impossible to avoid using possessive (possession-indicating) expressions as well. A body is normally referred to as a specific person’s body: my body, yours, his, etc. (and, incidentally, the same is done whenever one speaks of actions!); and one does not have the slightest problem distinguishing what is mine, yours, etc.; clearly, in doing so, one is assigning property-titles and distinguishing between proper owners of scarce resources.

What, then, is the natural position regarding property implicit in one’s natural way of speaking about bodies? Every person has the exclusive right of ownership of his body within the boundaries of its surface. Every person can put his body to those uses that he thinks best for his immediate or long-run interest, well-being, or satisfaction, as long as he does not interfere with another person’s rights to control the use of his/her respective body. This “ownership” of one’s own body implies one’s right to invite (agree to) another person’s doing something with (to) one’s own body: my right to do with my body whatever I want, that is, includes the right to ask and let someone else use my body, love it, examine it, inject medicines or drugs into it, change its physical appearance and even beat, damage, or kill it, if that should be what I like and agree to. Interpersonal relationships of this sort are and will be called contractual exchanges. They are characterized by the fact that an agreement on the use of scarce resources is reached, which is based on mutual respect and recognition of each and all of the exchanging partners’ domain of exclusive control over their respective bodies. By definition, such contractual exchanges, while not necessarily advantageous for each and all of the exchanging partners in retrospect (I might not like my looks afterwards, even though the surgeon did exactly what I told him to do to my face), are always, and necessarily so, mutually advantageous for every participant ex ante, otherwise the exchange simply would not take place.

If, on the other hand, an action is performed that uninvitedly invades or changes the physical integrity of another person’s body and puts this body to a use that is not to this very person’s own liking, this action, according to the natural position regarding property, is called aggression. It would be aggression if a person tried to satisfy his sexual or sadistic desires by raping or beating another person’s body without having this person’s explicit consent. And it would be aggression as well, if a person were physically stopped from performing certain actions with his body which might not be to someone else’s liking, such as wearing pink socks or curly hair, or getting drunk every day, or first sleeping and then philosophizing instead of doing it the other way around, but which, if indeed performed, would not in itself cause a change in the physical integrity of any other person’s body. By definition, then, an aggressive act always and necessarily implies that a person, by performing it, increases his/her satisfaction at the expense of a decrease in the satisfaction of another person.

What is the underlying rationale of this natural position regarding property? At the bottom of the natural property theory lies the idea of basing the assignment of an exclusive ownership right on the existence of an objective, intersubjectively ascertainable link between owner and the property owned and, mutatis mutandis, of calling all property claims that can only invoke purely subjective evidence in their favor aggressive. While I can cite in favor of my property claim regarding my body the objective fact that I was the body’s first occupant—its first user—anyone else who claims to have the right to control this body can cite nothing of the sort. No one could call my body a product of his will, as I could claim it to be the product of mine; such a claim to the right to determine the use of the scarce resource “my body” would be a claim of nonusers, of nonproducers, and would be based exclusively on subjective opinion, i.e., on a merely verbal declaration that things should be this or that way. Of course, such verbal claims could (and very likely always will) point to certain facts, too (“I am bigger, I am smarter, I am poorer or I am very special, etc.!”), and could thereby try to legitimize themselves. But facts such as these do not (and cannot) establish any objective link between a given scarce resource and any particular person(s). Everyone’s ownership of every particular resource can equally well be established or excluded on such grounds. It is such property claims, derived from thin air, with purely verbal links between owners and things owned, which, according to the natural theory of property, are called aggressive. As compared with this, my property claim regarding my body can point to a determinate natural link; and it can do so because my body has been produced, and everything produced (as contrasted with things “given”), logically, has a determinate connection with some definite individual producer(s); it has been produced by me. To avoid any misunderstanding, ‘to produce” is not to say “to create out of nothing” (after all, my body is also a naturally given thing); it means to change a naturally given thing according to a plan, to transform nature. It is also not to say “to transform each and every part of it” (after all, my body has lots of parts with respect to which I never did anything!); it means instead to transform a thing within (including/excluding) borders, or, even more precisely, to produce borderlines for things. And finally, “to produce” also is not to say that the process of production must go on indefinitely (after all, I am sleeping sometimes, and my body is certainly not a product of my actions right then]), it simply means that it was produced in the past and can be recognized as such. It is such property claims, then, which can be derived from past, embordering productive efforts and which can be tied to specific individuals as producers, which recalled “natural” or “nonaggressive.”12
The ideas of capitalism and socialism should be almost clear at this point. But before leaving the Garden of Eden once and for all, a look at the consequences of the introduction of elements of aggressively founded ownership into paradise should be taken, as this will help elucidate, purely and simply, the central economic and social problem of every type of real socialism, i.e., of socialism in a world of all-around scarcity, the detailed analysis of which then is the concern of the following chapters.

Even in the land of milk and honey, people evidently could choose different lifestyles, set different goals for themselves, have different standards as to what kind of personality they want to develop and what achievements to strive for. True, one would not need to work in order to make a living as there would be a superabundance of everything. But, put drastically, one could still choose to become a drunk or a philosopher, which is to say, more technically, one could choose to put one’s body to uses that would be more or less immediately rewarding from the point of view of the acting person, or one could put one’s body to such uses which would only bear fruit in a more or less distant future. Decisions of the afore-mentioned type might be called “consumption decisions.” Decisions, on the other hand, to put one’s body to a use that only pays later, i.e., choices induced by some reward or satisfaction anticipated in a more or less distant future requiring the actor to overcome disutility of waiting (time is scarce!), might be called “investment” decisions—decisions, that is, to invest in “human capital,” in the capital embodied in one’s own physical body. Now assume that aggressively founded ownership is introduced. Whereas before every person was the exclusive owner of his body and could decide on his own whether to become a drunk or a philosopher, now a system is established in which a person’s right to determine how to use his body is curtailed or completely eliminated, and instead, this right is partly or fully delegated to another person who is not naturally linked to the respective body as its producer. What would be the consequence of this? The abolition of private ownership of one’s body can be far-reaching: the nonproducers can have the right to determine all of the uses of “my” body all of the time, or their right to do so can be restricted with respect to time and/or domains, and these restrictions again can be flexible (with the nonproducers having the right to change the restrictive definitions according to their own taste) or fixed once and for all, and so the effects can, of course, be more or less drastic! But whatever the degree, socialization of ownership always, and necessarily so, produces two types of effects. The first effect, “economic” in the narrower sense of the term, is a reduction in the amount of investment in human capital as defined above. The natural owner of a body cannot help but make decisions regarding that body as long as he does not commit suicide and decides to stay alive, however restricted his ownership rights might be. But since he can no longer decide on his own, undisturbed by others, to what uses to put his body, the value attached to it by him is now lower; the wanted satisfaction, the psychic income, that is to say, which he can derive from his body by putting it to certain uses is reduced because the range of options available to him has been limited. But then, with every action necessarily implying costs (as explained above), and with a given inclination to overcome costs in exchange for expected rewards or profits, the natural owner is faced with a situation in which the costs of action must be reduced in order to bring them back in line with the reduced expected income. In the Garden of Eden, there is only one way left to do this: by shortening the waiting time, reducing the disutility of waiting, and choosing a course of action that promises earlier returns. Thus, the introduction of aggressively founded ownership leads to a tendency to reduce investment decisions and favors consumption decisions. Put drastically, it leads to a tendency to turn philosophers into drunks. This tendency is permanent and more pronounced when the threat of intervention with the natural owner’s rights is permanent, and it is less so to the degree that the threat is restricted to certain times or domains. In any case, though, the rate of investment in human capital is lower than it would be with the right of exclusive control of natural owners over their bodies being untouched and absolute.

The second effect might be called social. The introduction of elements of aggressively founded ownership implies a change in the social structure, a change in the composition of society with respect to personality or character types. Abandoning the natural theory of property evidently implies a redistribution of income. The psychic income of persons in their capacity as users of their “own” natural body, as persons expressing themselves in this body and deriving satisfaction from doing so, is reduced at the expense of an increase in the psychic income of persons in their capacity as invaders of other peoples’ bodies. It has become relatively more difficult and costly to derive satisfaction from using one’s body without invading that of others, and relatively less difficult and costly to gain satisfaction by using other peoples’ bodies for one’s own purposes. This fact alone does not imply any social change, but once a single empirical assumption is made, it does: Assuming that the desire to gain satisfaction at the expense of a loss in satisfaction available to others by instrumentalizing another person’s body exists as a human desire, that it may not be instilled in everybody and to the same extent, but that it exists in some people sometimes to some degree and so conceivably can be suppressed or encouraged and favored by some given institutional arrangement, consequences are imminent. And surely, this assumption is true. Then, the redistribution of chances for income acquisition must result in more people using aggression to gain personal satisfaction and/or more people becoming more aggressive, i.e., shifting increasingly from nonaggressive to aggressive roles, and slowly changing their personality as a consequence of this; and this change in the character structure, in the moral composition of society, in turn leads to another reduction in the level of investment in human capital.

In short, with these two effects we have already pinpointed the most fundamental reasons for socialism’s being an economically inferior system of property arrangements. Indeed, both effects will reappear again and again in the course of the following analyses of socialist policy schemes. All that is left now is to explain the natural theory of property as regards the real world of all around scarcity, for this is the point of departure for all forms of real socialism.

Notwithstanding some evident differences between bodies and all other scarce resources, all conceptual distinctions can be made and applied again without difficulties: Unlike bodies, which are never “unowned” but always have a natural owner, all other scarce resources can indeed be unowned. This is the case as long as they remain in their natural state, unused by anyone. They only become someone’s property once they are treated as scarce means, that is, as soon as they are occupied in some objective borders and put to some specific use by someone. This act of acquiring previously unowned resources is called “original appropriation.”14 Once unowned resources are appropriated it becomes an aggression to uninvitedly change their physical characteristics or to restrict the owner’s range of uses to which he can put these resources, as long as a particular use does not affect the physical characteristics of anyone else’s property—just as in the case of bodies. Only in the course of a contractual relationship, i.e., when the natural owner of a scarce means explicitly agrees, is it possible for someone else to utilize and change previously acquired things. And only if the original or previous owner deliberately transfers his property title to someone else, either in exchange for something or as a free gift, can this other person himself become the owner of such things. Unlike bodies, though, which for the same “natural” reason can never be unowned and also can never be parted with by the natural owner completely but only be “lent out” as long as the owners’ agreement lasts, naturally all other scarce resources can be “alienated” and a property title for them can be relinquished once and for all.

A social system based on this natural position regarding the assignment of property rights is, and will from now on be called pure capitalist. And since its ideas can also be discerned as the dominating ideas of private law, i.e., of the norms regulating relations between private persons, it might also be termed a pure private law system.16 This system is based on the idea that to be nonaggressive, claims to property must be backed by the “objective” fact of an act of original appropriation, of previous ownership, or by a mutually beneficial contractual relationship. This relationship can either be a deliberate cooperation between property owners or the deliberate transfer of property titles from one owner to another. If this system is altered and instead a policy is instituted that assigns rights of exclusive control over scarce means, however partial, to persons or groups of persons that can point neither to an act of previous usership of the things concerned, nor to a contractual relation with some previous user-owner, then this will be called (partial) socialism.

It will be the task of the next four chapters to explain how different ways of deviating from a pure capitalist system, different ways of redistributing property titles away from natural owners of things (i.e., from people who have put some particular resources to a specific use and so are naturally linked to them, and onto people who have not yet done anything with the resources but who have simply made a verbal, declarative claim regarding them) lowers investment and increases consumption, and in addition causes a change in the composition of the population by favoring nonproductive over productive people.

-Hans-Hermann Hoppe

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Freedom, Reason, and Tradition

Though freedom is not a state of nature but an artifact of civilization, it did not arise from design. The institutions of freedom, like everything freedom has created, were not established because people foresaw the benefits they would bring. But, once its advantages were recognized, men began to perfect and extend the reign of freedom and, for that purpose, to inquire how a free society worked. This development of a theory of liberty took place mainly in the eighteenth century. It began in two countries, England and France. The first of these knew liberty; the second did not.

As a result, we have had to the present day two different traditions in the theory of liberty: one empirical and unsystematic, the other speculative and rationalistic –the first based on an interpretation of traditions and institutions which had spontaneously grown up and were but imperfectly understood, the second aiming at the construction of a utopia, which has often been tried but never successfully. Nevertheless, it has been the rationalistic, plausible, and apparently logical argument of the French tradition, with its flattering assumptions about the unlimited powers of human reason, that has progressively gained influence, while the less articulate and less explicit tradition of English freedom has been on the decline.

This distinction is obscured by the fact that what we have called the “French tradition” of liberty arose largely from an attempt to interpret British institutions and that the conceptions which other countries formed of British institutions were based mainly on their descriptions by French writers. The two traditions became finally confused when they merged in the liberal movement of the nineteenth century and when even leading British liberals drew as much on the French as on the British tradition. It was, in the end, the victory of the Benthamite Philosophical Radicals over the Whigs in England that concealed the fundamental difference which in more recent years has reappeared as the conflict between liberal democracy and “social” or totalitarian democracy.

This difference was better understood a hundred years ago than it is today. In the year of the European revolutions in which the two traditions merged, the contract between “Anglican” and “Gallican” liberty was still clearly described by an eminent German-American political philosopher. “Gallican Liberty,” wrote Francis Lieber in 1848, “is sought in the government, and according to an Anglican point of view, it is looked for in the wrong place, where it cannot be found. Necessary consequences of the Gallican view are, that the French look for the highest degree of political civilization in organization, that is, in the highest degree of interference by public power. The question whether this interference be despotism or liberty is decided solely by the fact who interferes, and for the benefit of which class the interference takes place, while according to the Anglican view this interference would always be either absolutism or aristocracy, and the present dictatorship of the ouvriers would appear to us an uncompromising aristocracy of the ouvriers.”

Since this was written, the French tradition has everywhere progressively displaced the English. To disentangle the two traditions it is necessary to look at the relatively pure forms in which they appeared in the eighteenth century. What we have called the “British Tradition” was made explicit mainly by a group of Scottish moral philosophers led by David Hume, Adam Smith and Adam Ferguson, seconded by their English contemporaries Josiah Tucker, Edmund Burke and William Paley, and drawing largely on a tradition rooted in the jurisprudent of the common law. Opposed to them was the tradition of the French Enlightenment, deeply imbued with Cartesian rationalism: the Encyclopedists and Rousseau, the Physiocrats and Condorcet, are their best know representatives. Of course, the division does not fully coincide with national boundaries. Frenchmen, like Montesquieu and, later, Benjamin Constant and, above all, Alexis de Tocqueville are probably nearer to what we have called the “British” than to the “French” tradition. And in Thomas Hobbes, Britain as provided at least on e of the founders of rationalist tradition, not to speak of a whole generation of enthusiasts for the French Revolution, like Godwin, Priestly, Price, and Paine, who (like Jefferson after his stay in France) belong entirely to it.
2. Though these two groups are now commonly lumped together as ancestors of modern liberalism, there is hardly a greater contrast imaginable than that between their respective conceptions of the evolution and functioning of a social order and the role played in it by liberty. The difference is directly traceable to the predominance of an essentially empiricist view of the world in England and a rationalist approach in France. The main contrast in the practical conclusions to which these approaches led has recently been put, as follows: “One finds the essence of freedom in spontaneity and the absence of coercion, the other believes it to be realized only in the pursuit and attainment of an absolute collective purpose”, and “one stands for organic, slow, half-conscious growth, the other for doctrinaire deliberativeness; one for trail and error procedure, the other for an enforced solely valid pattern.” It is the second view, as J. L. Talmon has shown in an important book from which this description is taken, that has become the origin of totalitarian democracy.

The sweeping success of the political doctrines that stem from the French tradition is probably due to their great appeal to human pride and ambition. But we must not forget that the political conclusions of the two schools derive from the different conceptions of how society works. In this respect, the British philosophers laid the foundations of a profound and essentially valid theory, while the rationalist school was simply and completely wrong.

Those British philosophers have given us an interpretation of the growth of civilization that is still the indispensable foundation of the argument for liberty. They find the origin of institutions, not in contrivance or design, but in the survival of the successful. Their view is expressed in terms of “how nations stumble upon establishments which are indeed the result of human action but not the execution of human design.” It stresses that what we call political order is much less the product of our ordering intelligence than is commonly imagined. As their immediate successors saw it, what Adam Smith and his contemporaries did was “to resolve almost all that has been ascribed to positive institution into the spontaneous and irresistible development of certain obvious principles—and to show how little contrivance or political wisdom the most complicated and apparently artificial schemes of policy might have been erected.”

This “anti-rationalistic insight into historical happenings that Adam Smith shares with Hume, Adam Ferguson, and others” enabled them for the first time to comprehend how institutions and morals, language and law, have evolved by a process of cumulative growth and that it is only with and within this framework that human reason has grown and can successfully operate. Their argument is directed throughout against the Cartesian conception of an independently and antecedently existing human reason that invented these institutions and against the conception that civil society formed by some wise original legislator or an original “social contract.” The latter idea of intelligent men coming together for deliberation about how to make the world anew is perhaps the most characteristic outcome of thos design theories. It found its perfect expression when the leading theorist of the French Revolution, Abbe Sieyes, exhorted the revolutionary assembly “to act like men just emerging from the state of nature and coming together for the purpose of signing a social contract.”

The ancients understood the conditions of liberty better than that. Cicero quotes Cato as saying that the Roman constitution was superior to that of other states because it “was based upon the genius, not of one man, but of many: it was founded, not in one generation, but in a long period of several centuries and many ages of men. For, said he, there never has lived a man possessed of so great a genius that nothing could escape him, nor could the combined powers of all men living at one time possibly make all the necessary provisions for the future without the aid of actual experience and the test of time.” Neither republican Rome not Athens – the tow free nations of the ancient world—could thus serve as and example for rationalists. For Descartes, the fountainhead of the rationalist tradition, it was indeed Sparta that provided the model; for her greatness “was due not the pre-eminence of each of its laws in particular…but to the circumstance that, originated by a single individual, they all tended to the same end.” And it was Sparta which became the ideal of liberty for Rousseau as well as for Robespierre and Saint-Just and for most of the later advocates of “social” or totalitarian democracy.


Like the ancient, the modern British conception of liberty grew against the background of a comprehension, first achieved by the lawyers, of how institutions had developed. “There are many things specifically in laws and governments,” wrote Chief Justice Hale in the seventeenth century in a critique of Hobbes, “that mediately, remotely and consequentially are reasonable to be approved, though the reason of the party does not presently or immediately and distinctly see its reasonableness…Long experience makes more discoveries touching conveniences or inconveniences of laws than is possible for the wisest council of men at first to foresee. And that those amendments and supplements that through the various experiences of wise and knowing men have been applied to any law must needs be better suited to the convenience of laws, than the best invention of the most pregnant wits not aided by such a series and tract of experience…This add to the difficulty of the present fathoming of the reason of laws, which, though it commonly be called the mistress of fools, yet certainly it is the wisest expedient among mankind, and discovers those defects and supplies which no wit of man could either at once foresee or aptly remedy…It is not necessary that the reasons of the institution should be evident unto us. It is sufficient that they are instituted laws that give a certainty to us, and it is reasonable to observe them though the particular reason of the institution appear not.”


3. From these conceptions gradually grew a body of social theory that showed how, in the relations among men, complex and orderly and, in a very definite sense, purposive institutions might grow up which owed little to design, which were not invented but arose from the separate action of many men who did nto know what they were doing. This demonstration that something greater than man’s individual mind may grow from men’s fumbling efforts represented in some ways an even greater challenge to all design theories than even the later theory of biological evolution. For the first time it was shown that an evident order which was not the product of designing human intelligence, but that there was a third possibility—the emergence of order as the result of adaptive evolution.

Since the emphasis we shall have to place on the role that selection plays in this process of social evolution today is likely to create the impression that we are borrowing the idea from biology, it is worth stressing that it was from the theories of social evolution that Darwin and his contemporaries derived the suggestion for their theories. Indeed, one of those Scottish philosophers who first developed these ideas anticipated Darwin even in the biological field, and later application of these conceptions by the various “historical schools” in law and language rendered the idea that similarity of structure might be accounted for by a common origin a common place in the study of social phenomena long before it was applied to biology. It is unfortunate that at a later date the social sciences, instead of building on these beginnings in their own field, re-imported some of these ideas from biology and with them brought in such conceptions as “natural selection,” “struggle for existence,” and “survival of the fittest,’ which are not appropriate in their field; for in social evolution, the decisive factor is not the selection of the physical and inherited properties of the individuals but the selection by imitation of successful institutions and habits. Though this operates also through the success of individuals and groups, what emerges is not an inheritable attribute of individuals, but ideas and skills – in short, the whole cultural inheritance which is passed on by learning and imitation.

4. A detailed comparison of the two traditions would require a separate book; here we can merely single out a few of the crucial points on which they differ.

While the rationalist tradition assumes that man was originally endowed with both the intellectual and moral attributes that enabled him to fashion civilization deliberately, the evolutionists made it clear that civilization was the accumulated hard-earned result of trial and error; that it was the sum of experience, in part handed from generation to generation as explicit knowledge, but to a larger extent embodied in tools and institutions which had proved themselves superior—institutions whose significance we might discover by analysis, but which will also serve men’s ends without men’s understanding them. The Scottish theorists were very much aware of how delicate this artificial structure of civilization was which rested upon man’s more primitive and ferocious instincts being tamed and checked by institutions that he neither had designed not could control. They were very far from holding such naïve views, later unjustly laid at the door of their liberalism, as the “natural goodness of man,” the existence of “a natural harmony of interests,” or the beneficent effects of “natural liberty” (even though they did sometimes use the last phrase). They knew that it required the artifices of institutions and traditions to reconcile the conflicts of interest. Their problem was “that universal mover in human nature, self love, may receive such direction in this case (as in all others) as to promote the public interest by those efforts it shall make towards pursuing its own.” It was not “natural liberty” in any literal sense, but the institutions evolved to secure “life, liberty, and property,” which made these individual efforts beneficial. Not Locke, nor Hume, nor Smith, nor Burke, could have argued, as Bentham did, that “every law is an evil for every law is an infraction of liberty.” Their argument was never a complete laissez faire argument, which, as the very words show, is also part of the French rationalist tradition and in its literal sense was never defended by any of the English classical economists. They knew better than most of their later critics that it was not some sort of magic, but the evolution of “well constructed institutions,” where the “rules and privileges of contending interests and compromised advantages” would be reconciled, that had successfully channeled individual efforts to socially beneficial aims. In fact, their argument was never antistate as such, or anarchistic, which is the logical outcome of the rationalistic laissez faire doctrine; it was an argument that accounted both for the proper functions of the state and for the limits of state action.


The difference is particularly conspicuous in the respective assumptions of the two schools concerning individual human nature. The rationalistic design theories were necessarily based on the assumption of the individual man’s propensity for rational action and his natural intelligence and goodness. The evolutionary theory, on the contrary, showed how certain institutional arrangements would induce man to use his intelligence to the best effect and how institutions could be framed so that bad people could do least harm. The antirationalist tradition is here closer to the Christian tradition of the fallibility and sinfulness of man, while the perfectionism of the rationalist is in irreconcilable conflict with it. Even such a celebrated figment as the “economic man’ was not an original part of the British evolutionary tradition. It would be only a slight exaggeration to say that, in the view of those British philosophers, man was by nature lazy and indolent, improvident and wasteful, and that it was only by the force of circumstances that he could be made to behave economically or could learn carefully to adjust his means to his ends. The homo oeconomicus was explicitly introduced, with much else that belongs in the rationalist rather than the evolutionary tradition, only by the younger Mill.

5. The greatest difference between the two views, however, is in their respective ideas about the role of traditions and the value of all the other product of unconscious growth proceeding throughout the ages. It would hardly be unjust to say that the rationalistic approach is here opposed to almost all that is the distinct product of liberty and that gives liberty its value. Those who believe that all useful institutions are deliberate contrivances and who cannot conceive of anything serving a human purpose that has not been consciously designed are almost of necessity enemies of freedom. For them freedom means chaos.
To the empiricist evolutionary tradition, on the other hand, the value of freedom consists mainly in the opportunity that it provides for the growth of the undesigned, and the beneficial functioning of a free society rests largely on the existence of such freely grown institutions. There probably never has existed a genuine belief in freedom, and there certainly has been no successful attempt to operate a free society, without a genuine reverence for grown institutions, for customs and habits and “all those securities of liberty which arise from regulation of long prescription and ancient ways.” Paradoxical as it may appear, it is probably true that a successful free society will always in a large measure be a tradition-bound society.

This esteem for tradition and custom, of grown institutions, and of rules whose origins and rationale we do not know does not, of course, mean – as Thomas Jefferson believed with a characteristic rationalist misconception – that we “ascribe to men of preceding age a wisdom more than human, and… suppose what they did beyond amendment.” Far from assuming that those who created the institutions were wiser than we are, the evolutionary view is based on the insight that the result of the experimentation of many generations may embody more experience than any on man possesses.

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The Role of the Price System

It has been shown that the essence of social cooperation is specialization and the division of both labor and knowledge. This fact has two significant implications for the purposes of this study. The first is that social cooperation results in the production of such a wide range of intermediate and final products that calculations in kind will not allocate scarce resources effectively. A common denominator is indispensable. The second is that the concomitance of decentralized decision-making and social cooperation requires a means of coordinating individual plans that are based upon imperfect knowledge and information. These two requirements are fulfilled simultaneously through the price system of the market economy. Detailed treatment of the workings of the price system will be postponed until later. At this point it will be sufficient to discuss the price system in general terms in order to demonstrate its dual function as a means of economic calculation and as a means of coordinative communication. Actually, as will be shown, these two functions are really of a piece; that is, they relate the same problem of resource allocation under an arrangement of social cooperation and a system of market prices.

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The Future of Conservatism

The Real Minimum Wage is Zero -

 E Hobson - Contributing Editor

It is a common fallacy that raising the minimum wage makes people better off. It doe not.  If that were the case, then why not raise it tenfold?  The truth is the minimum wage has consequences. There are winners and losers. 

The minimum wage is inflationary, and the additional cost in wages has to be born by someone--the consumer or future job applicants. The resulting increase in price of the product decreases the ability of the most price sensitive--the poor--to meet their needs. If the employer reduces profits, it decreases the company's ability to create jobs.

The minimum wage decreases employment. Raising the cost of labor makes thousands of business plans non-viable. Jobs that were not created are apart of the unseen cost of such policies. It incentivizes other employers to automate and outsource. It causes other employers to lose business or just close. It deprives the least skilled the opportunity to be productive and serve others. 

Because it makes it harder for youth to find work, the minimum wage is also responsible for increased crime. 95% of minimum wage workers are the young. Raising the minimum wage hurts minority youth disproportionately. It makes that first rung on the economic ladder harder to reach. Entry level jobs are an opportunity to prove to a employer that you are worth more than the minimum wage. Subsequently, if a worker is worth more than the minimum wage, why are they unable to find a employer who agrees?

Furthermore, raising the minimum wage indirectly makes borrowing more expensive. The result of increased inflation is higher interest rates. New loans will require a risk premium due to the fact that they will be paid back with cheeper dollars.

Existing savings are cheapened by the same inflationary effect. Often as a result, thrifty savers move to riskier investments such as stocks. The resulting volatility of savings threatens future fiscal stability.

The winners are people with large existing debts, as well as those low wage earners who manage to keep their jobs. Why government policy chooses to encourage and emulate this behavior at the expense of the responsible is reprehensible. Can you say "moral hazard"?

It is those who end up losing their jobs or perpetually unemployed due to jobs destroyed by such laws that get the real minimum wage: ZERO.

The minimum wage laws, as with all market interventions, make us poorer.

We must plan for individuals—that’s the only kind of people there are

If Socrates were resurrected, I suspect he would call attention again to what was written about 25 centuries ago: Know thyself; if you know a lot about other things and are ignorant of yourself, this is ridiculous.

  We in this advanced and scientific age have never taken Socrates seriously on this point. I maintain that we are being ridiculous; we seek to plan and yet are not informed about ourselves for whom we plan. Of course, we know something about ourselves, but science has never undertaken a serious job of understanding people—a multidisciplinary undertaking. We have not tackled the job of understanding ourselves with one-tenth of the fervor we have shown in our research in outer space.

  One of the most important facts about ourselves we have not grasped: All of us are basically and inevitably individuals in many important and striking ways. Our individuality is as inescapable as our humanity. If we are to plan for people, we must plan for individuals, because that’s the only kind of people there are.

  In what ways are we individuals? First as to our bodies. These ways are tangible and not subject to argument. Each of us has a distinctive stomach, a distinctive heart and circulatory system. Each of us has a distinctive muscular system, distinctive breathing apparatus, and an endocrine system all our own. Most surprising and significant perhaps, each of us has a distinctive set of nerve receptors, trunk nerves, and a brain that is distinctive in structure and not like other brains.

  We are individuals also with respect to our minds. We do not all think with equal facility about the various things that can be thought about. Einstein was an extremely precocious student of mathematics, but on the other hand, he learned language so slowly that his parents were concerned about his learning to talk. William Lyon Phelps, the famous English professor at Yale, on the other hand, confessed that in mathematics he was “slow but not sure.” There are at least forty facets to human minds. Each of us may be keen in some ways and stupid in others.

  The importance of this individuality in minds would be hard to exaggerate. Because of it two or more people agree with each other only in spots, never totally. The grandiose idea that all workers of the world can unite and speak and act as a unit is wholly untenable because of individuality in the minds of the individual workers. Nor can all capitalists unite, and for the same reason. Neither can all Negroes, all Latins, all Chinese, all Jews, all Europeans, or all English-speaking peoples.

  It is often assumed that people disagree only because of self-interest and differences in their education. They also disagree because their minds do not grasp the same ideas with equal facility. Sometimes an individual has a specific idea which seems to him perfectly clear and potent. To him it seems certain that once this idea is expressed it will gain automatic acceptance. Practical trial shows, however, that it does not. To other individuals, because the patterns of their minds are different, this supposedly clear and potent idea may appear foggy, dubious, or even unsound.

  Failure to recognize individuality in minds is widespread and is a revelation of the fact that we are ignorant about the people for whom we plan.

  “Environmental Determinism”

  I do not know that anyone else has ever expressed it this way, but on a long walk with Al-dous Huxley about a year before he died, he decried to me the fact that the prevailing philosophy today may be described as “environmental determinism.” Environment is assumed to be the only factor in our lives; inborn individuality in body and mind are completely neglected. According to this philosophy, every child who is placed in a slum environment becomes a delinquent and a criminal. This, from the work of the Gluecks at Harvard and others, is manifestly untrue. Neither is it true that every child who is furnished with plenty becomes for this reason an honorable and upright citizen.

  Our “social studies” and “social science” teaching in all our schools and universities is permeated with environmental determinism which shows no interest in the crucial facts of individuality and quite inevitably tends to destroy all moral responsibility. A delinquent cannot help being a delinquent, we are told. Society should take all the blame. A criminal is that way because society has made him so, so society is to blame. This is blatant oversimplification in the name of social science! It disregards how human beings are built—their fundamental nature—and can by its short-sightedness lead to a breakdown of our civilization.

  What I have been saying does not in any sense deny the importance of environment. Environments are what we can control, and to study how to improve them is the essence of planning. But we, the people, are not putty; we are individuals, and we need to be understood.

  Individuality is Crucial

  To me it seems certain that the facts of individuality need to be taken into account. There are three areas, related to planning, in which I have some special knowledge. In all these areas individuality is crucial.

  Take for instance the area of nutrition and health. It would be relatively easy to produce economically in factories a “man-chow” which would supposedly be the perfect food for the average man. Laboratory experiences as well as wide observations show, however, that this “man-chow” idea is completely unrealistic. It will not work. Because of biochemical individuality we do not all like the same foods nor can we thrive on the same mixture. Many human beings are so built that they derive a substantial part of the satisfaction of life out of eating. Taking variety and choices from them would be depriving them of their pursuit of happiness. The best food planning devised involves supermarkets where thousands of kinds of foods in great variety are available.

  The Food and Drug Administration in Washington has, at least until very recently, done its planning on the basis of the hypothetical average man and has sought to regulate the marketing of medicinal substances, vitamins, and the like on this basis. This cannot work because of the hard facts of biochemical individuality. Real people—individuals—do not react in a uniform manner either to drugs or to nutritional factors such as amino acids, minerals, and vitamins.

  No planning in the area of nutrition and health can work on a long range basis unless the facts of individuality are taken into account. If we plan for people, we must plan for individuals, because that is the only kind of people there are.

  Another area of planning in which I have some special knowledge is that of education. I have recently completed my fiftieth year as a teacher. While I have in mind no pet schemes for reorganizing schools or universities, I have had for years a growing consciousness that no successful long-range planning can be done unless we recognize fully that every mind is a distinctive one and that every young person is endowed with peculiar aptitudes which need to be recognized, developed, and used. One of the worst lacks in modem education is the failure of youngsters to know themselves and to recognize their own strengths as well as weaknesses. Education for the hypothetical average child is no good. We must plan for individual children; that’s the only kind there are.

  Closely related to the problem of planning education is planning to curb crime, violence, racial hatred, and war. As Clement Attlee aptly pointed out years ago, the roots of war are to be found in the minds and hearts of men. The late Robert Kennedy pointed out when he was Attorney-General that peaceful relations between people cannot be enforced with guns and bayonets.

  In my opinion, we will get nowhere in planning to curb violence by thinking in terms of the city of Dallas killing John F. Kennedy, the city of Memphis killing Martin Luther King, or the city of Los Angeles killing Robert Kennedy. Of course, social factors enter into violence, but there are important individual factors, too.

  No informed person can think that curbing crime and violence is a simple problem. Because it is difficult, it is all the more important that we seek out—thoroughly—the root causes. I maintain that a great weakness which we exhibit in this modem scientific age is ignorance about ourselves.

  Finally, let me say that our love of liberty and freedom is based upon this individuality. If we all had the same kinds of stomachs, the same kinds of muscles, nerves, and endocrine glands, the same kinds of brains, planning would be simple. We would all like exactly the same things. We would all be satisfied to read the same books, have the same amusements, eat the same food, and go to the same church. In short, we would all live happily in the same rut.

  Planning is not that simple. We must plan for individuals—that’s the only kind of people there are.

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PROPERTY RIGHTS AND HUMAN RIGHTS - Paul L. Poirot

It is not the right of property which is protected, but the right to property. Property, per se, has no rights; but the individual—the man—has three great rights, equally sacred from arbitrary interference: the right to his life, the right to his liberty, the right to his property. . . . The three rights are so bound together as to be essentially one right. To give a man his life but deny him his liberty, is to take from him all that makes his life worth living. To give him his liberty but take from him the property which is the fruit and badge of his liberty, is to still leave him a slave.

    U.S. Supreme Court Justice

    GEORGE SUTHERLAND


  Tricky phrases with favorable meanings and emotional appeal are being used today to imply a distinction between property rights and human rights.

  By implication, there are two sets of rights—one belonging to human beings and the other to property. Since human beings are more important, it is natural for the unwary to react in favor of human rights.

  Actually, there is no such distinction between property rights and human rights. The term property has no significance except as it applies to something owned by someone. Property itself has neither rights nor value, save only as human interests are involved. There are no rights but human rights, and what are spoken of as property rights are only the human rights of individuals to property.

  Expressed more accurately, the issue is not one of property rights versus human rights, but of the human rights of one person in the community versus the human rights of another.

  Those who talk about two sets of rights apparently want to discriminate between property income and labor income—with the implication that the rights to rental and investment income are inferior, as a class, to the rights to income from wages and salaries. Actually, this is an unwarranted assumption. It must be evident that all persons have rights which are entitled to respect. Safeguarding such rights is essential to the wellbeing of all. This is the only just principle. Thus, the problem is not to establish priorities on human rights in the community, but rather to determine what the respective rights are in the particular cases under dispute. This is the real problem in human relations, and it is one that calls for the exercise of wisdom, restraint, and true administration of justice under law.

  What Are “Property Rights”?

  What are the property rights thus disparaged by being set apart from human rights? They are among the most ancient and basic of human rights, and among the most essential to freedom and progress. They are the privileges of private ownership, which give meaning to the right to the product of one’s labor—privileges which men have always regarded instinctively as belonging to them almost as intimately and inseparably as their own bodies.

  The ownership of property is the right for which, above all others, the common man has struggled in his slow ascent from serfdom. It is the right for which he struggles today in countries emerging from feudalism. The sense of this right is so deep-rooted in human nature, so essential as a stimulant of productive effort, that even totalitarian regimes have been unable to abolish it entirely.

  It is a mistake to belittle the importance of property rights. Respect for these rights is basic to organized society, and the instinct of individuals to acquire property is at the root of all economic progress. Unless people can feel secure in their ability to retain the fruits of their labor, there is little incentive to save and to expand the fund of capital—the tools and equipment for production and for better living. The industrial development of this country, which has given us the highest standard of living in the world and has made possible a miracle of production in war and peace, is dependent upon the observance of property rights. Who is going to work and save if these rights are not recognized and protected?

  The right to own property means the right to use it, to save it, to invest it for gain, and to transmit it to others. It means freedom from unreasonable search and seizure and from deprivation without due process of law or without just compensation. It might also be fairly taken to imply a limitation upon taxation because “the power to tax involves the power to destroy.” For a like reason, it should imply assurance against governmental dilution of the money whereby the government takes property which otherwise could be claimed by wage and salary checks and other credit instruments. Further, it should insure against other measures so burdensome or restrictive as to prevent the employment of savings in legitimate productive enterprise with a reasonable prospect of gain. Violation of any of these rights can nullify, in whole or in part, the right to property.

  The Bill of Rights in the United States Constitution recognizes no distinction between property rights and other human rights. The ban against unreasonable search and seizure covers “persons, houses, papers, and effects,” without discrimination. No person may, without due process of law, be deprived of “life, liberty, or property”; all are equally inviolable. The right of trial by jury is assured in criminal and civil cases alike. Excessive bail, excessive fines, and cruel and unusual punishments are grouped in a single prohibition. The founding fathers realized what some present-day politicians seem to have forgotten: A man without property rights—without the right to the product of his own labor—is not a free man. He can exist only through the generosity or forbearance of others.

  These constitutional rights all have two characteristics in common. First, they apply equally to all persons. Second, they are, without exception, guarantees of freedom or immunity from governmental interference. They are not assertions of claims against others, individually or collectively. They merely say, in effect, that there are certain human liberties, including some pertaining to property, which are essential to free men and upon which the state shall not infringe. . . .

  What Are “Human Rights”?

  Now what about the so-called human rights that are represented as superior to property rights? What about the “right” to a job, the “right” to a standard of living, the “right” to a minimum wage or a maximum workweek, the “right” to a “fair” price, the “right” to bargain collectively, the “right” to security against the adversities and hazards of life, such as old age and disability?

  The framers of the Constitution would have been astonished to hear these things spoken of as rights. They are not immunities from governmental compulsion; on the contrary, they are demands for new forms of governmental compulsion. They are not claims to the product of one’s own labor; they are, in some if not in most cases, claims to the products of other people’s labor.

  These “human rights” are indeed different from property rights, for they rest on a denial of the basic concept of property rights. They are not freedoms or immunities assured to all persons alike. They are special privileges conferred upon some persons at the expense of others. The real distinction is not between property rights and human rights, but between equality of protection from governmental compulsion on the one hand and demands for the exercise of such compulsion for the benefit of favored groups on the other.

  The “Right” to a Job

  To point out these characteristics of the so-called human rights is not to deny the reality nor belittle the importance of the social problems they represent. Some of these problems are real and important. They are also complex, and in this further respect they are different from the rights guaranteed by the Constitution.

  There is no great difficulty nor danger in declaring that certain individual rights shall not be tampered with by the government—and in adhering to that principle. It is quite another matter to say that the government shall seize the property or curtail the freedom of some of its citizens for the benefit, or the supposed benefit, of others. To adopt this view is to cast both the government and the citizen in radically new roles, with far-reaching effects on economic behavior, political practices, and individual character.

  Consider, for example, the so-called right to a job. This is a fine-sounding phrase that evokes an emotional response. It creates a mental image of an unemployed worker and his family suffering hardship through no fault of their own. No one would deny the reality nor the seriousness of that, especially when the unemployed worker is multiplied by millions. To find the best remedy, however, is a difficult matter, and it is not made easier by the use of such misleading catchwords as the “right” to a job. One man’s “right” to a job implies an obligation on the part of someone else to give him a job. Who has any such obligation?

  An economy of private enterprise functions by means of voluntary contracts entered into for the sake of mutual advantage. Jobs arise from such contracts. The obligation to fulfill his contract is the only right any person can have to a job. Both sides of the contract have to be fulfilled. The employer’s job—his side of the contract—is to anticipate what the consumers will want in the market place. His capacity to offer jobs to employees depends upon how well he understands the market pattern of consumer preferences. He has no right of control over the market. There is a limit to his capacity to provide jobs. And in the final analysis, an employee’s so-called right to a job is determined by what consumers think the product or service is worth to them.

  As with the “right” to a job, so with the other so-called human rights. These are not rights in the constitutional sense of respect for privacy; they are, instead, social programs which the government has undertaken or has been asked to promote. These programs, unlike true rights, are selective, coercive, complex, and experimental. Hence, they need to be carefully considered each on its own merits with due regard to the serious threats they may involve to the real and basic human rights that have enabled free men to build a society with the highest level of material well-being ever achieved anywhere.

  Triple Threats to Private Property

  On the economic side, the gravest threat is that productive enterprise will be so burdened and impeded by high taxes, prohibitions, red tape, and controls that industry will stagnate. Without the products of industry, social programs of any kind become empty promises. New political powers and functions increase the cost of government and drain manpower from farms and factories into administrative bureaus. The great bulk of the money for benefit payments to favored groups must be taken from those who produce by putting forth their own efforts or by investing their savings. Min-imum-wage rates wipe out the entire lower range of job opportunities in the business world. Only the government, with the power to tax, can pay more for labor than it is worth. Maximum-hour laws further limit the opportunity to be productive. Artificially pegged prices and wage rates interfere with the normal market process of gearing production to the maximum satisfaction of consumer wants.

  On the political side, the increase of power multiplies the opportunities for the abuse of power and the harm that can be done by such abuse. High tax rates expose taxpayers and collectors to strong temptations. The disbursement of billions of dollars in public funds opens new avenues for favoritism and corruption. This system of political distribution of the wealth of a nation encourages government by pressure groups, with the favors flowing toward the groups with the most votes. Demands for more liberal benefits on the one hand and for tax relief on the other converge upon the public treasury. Deficit financing and currency depreciation tend to become national habits which feed upon the savings of individuals and wipe out the means of production and progress.

  On the human side, the individual citizen discovers that it is increasingly difficult to get ahead by enterprise and thrift—increasingly profitable to join in the scramble for governmental favors and handouts. The sense of relationship between services rendered and payment received grows weaker. Personal initiative and self-reliance give way to an attitude of: let the government do it. Free citizens tend to degenerate into wards of the state.

  These are not imaginary effects, but real ones. They are visible here and now. They are the consequences of placing social programs, mislabeled “human rights,” above the real human rights, disparagingly called “property rights,” which underlie the productive strength of free men.

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ECONOMICS FOR BOYS AND GIRLS - Leonard E. Read

Train up a child in the way he should go: and when he is old, he will not depart from it.
 Proverbs 22:6


Time and again we have been asked to devise economic instruction for the youngsters, the thought being that it’s the oncoming generation that counts. And, just as often, we have shaken our heads, pleading ignorance of how to go about it.

  Trying to devise economic lessons for grownups has seemed difficult enough, for only now and then is there an adult who shows any interest in or aptitude for the subject. But we have tried, and over the years of trial and error, it has seemed that our best approach to adults is to leave them alone until they seek such instruction or light as we may come to possess. In other words, our job, as we now see it, is to concentrate on improving our own understanding and practice of freedom, with faith that others will be attracted precisely to the extent that we are able to show self-improvement.

  Thus, we are constantly striving to better understand and explain and apply the economics of specialization and the division of labor, freedom in transactions, the marginal utility theory of value, and reliance on the orderliness of the free market as a guide to creativities and exchange.

  Is there a way to present such complex ideas to children so that they might be attracted toward the free market way of social behavior? Perhaps. But first, let us consider our raw material, the youngsters we would teach.

  There are those who contend that every baby starts life as a little savage; that he is equipped, among other things, with organs and muscles over which he has no control, with an urge for self-preservation, with aggressive drives and emotions like anger, fear, and love over which he likewise has practically no control, and that in the process of growing up, it is normal for every child to be dirty, to fight, to talk back, to disobey, to evade. “Every child has to grow out of delinquent behavior.” So runs this argument. For my part, however, I take small comfort in this Freudian view of the genesis of the human race. I would much prefer to think of the child as a budding plant with all the potential for beauty and happiness which such a growing organism portends. In each case, of course, there may be from the adult point of view, apparent disorganization, lack of coordination, and disharmony. Yet, the potential for harmony and beauty is there.

  Whether the child be considered a brutal barbarian or a budding beauty, the challenge is to help him emerge from a state of ignorance as to his relationship with others and into harmony with the universal laws which govern the human situation. The child is an extension of the parent’s responsibility, and that responsibility includes pointing the child in the direction of sound economic understanding. I shall hint at, but by no means exhaust, the possibilities:

  If You Drop Something, Pick it Up

  This is easily taught, especially by parents who observe this dictum themselves. It is elementary training in assuming a responsibility for one’s own actions, that is, of not burdening others with one’s behaviors. A child who takes this simple first step in self-control—should the steps continue and become habitual—will likely, when attaining adulthood, look to himself rather than to the rest of us to bail him out of economic difficulties brought on by his own mistakes. He will, more than likely, not be a burden on society.

  A genuine mastery of self-control tends to develop a rare and valuable faculty: the ability to will one’s own actions. Such a person will not be tempted to shift his position by reason of pressures, fickle opinions, popular notions, and the like. He will become his own man.

  Picking up what you drop has its reward in orderliness of mind. When it becomes second nature, it is a joyous habit and on occasion leads to picking up after others. Projected into adult life, this shows up as a charitable attitude—in the Judeo-Christian sense—one’s personal duty toward the less fortunate.

If You Open a Door, Close It

  This is a sequel to the above; it is merely another practice that confirms the wisdom of completing each of life’s transactions.

  An inevitable dualism bisects nature, so that each thing is a half, and suggests another thing to make it whole; as spirit, matter; man, woman; subjective, objective; in, out; upper, under; motion, rest; yea, nay.

  For child training, I would add: drop, pick up; open, close; and others.

If You Make a Promise, Keep It

  Social chaos has no better ally than broken promises. Children not brought up to keep their word will be the authors of treaties written not to be observed; they’ll run for office on bogus platforms, cancel gold contracts, use the political means to expropriate property; they’ll sell their souls to gain fame or fortune or power. Not only will they fail to be honest with their fellow men; they will not even heed the dictates of their own conscience. On the other hand, children brought up to keep their promises will not go back on their bond, come hell or high water. Integrity will be their mark of distinction!

  Whatever You Borrow, Pay Back

  This is an extension of promise keeping. An adherence to these admonitions develops a respect for private property, a major premise in sound economic doctrine. No person, thus brought up, would think of feathering his own nest at the expense of others. Welfare statists and social planners are not born of this training, that is, if the training really sinks in. True, a socialist will honor debts incurred in his own name but will disregard any indebtedness he sponsors in the name of “the public.” He has not been brought up to understand that the principle of compensation applies “across the board.”

  Play the Thank-You Game

  It will take a brilliant parent and a mighty perceptive child to get anywhere with this one. I can set forth the idea but not how to teach it. The idea, once grasped, is simple enough, yet so evasive that, in spite of the 33,000 years since Cro-Magnon man, it was only discovered a bare century ago: The value of a good or service is determined not objectively by cost of production, but subjectively by what others will give in willing exchange. Economic science has no more important concept than this; the free market has no other economic genesis than this subjective or marginal utility theory of value. Indeed, it is most accurately identified as the free market theory of value.

  To repeat an illustration used earlier: When mother exchanges 30¢ for a can of beans, she values the beans more than the 30¢ and the grocer values the 30¢ more than the beans. If mother valued the 30¢ more than the beans, she wouldn’t trade. If the grocer valued his beans more than the 30¢, he wouldn’t trade. The value of both the 30¢ and the beans (excluding other considerations) is determined by the two subjective judgments. The amount of effort exerted (cost) to obtain the 30¢ or to acquire the beans has nothing to do with the value of either the beans or the 30¢.

  I repeat, the value of any good or service is determined by what it will bring in willing, not forcible or unwilling, exchange.1.2 When the 30¢ is exchanged for the beans, the grocer concludes the transaction with “Thank you,” for, in his judgment, he has gained. There is precisely the same justification for the mother to say, “Thank you,” for, in her judgment, she has gained. It wouldn’t be at all amiss to describe this as “the thank-you way of economic life.”

  This concept of value, be it remembered, was practiced off and on by the common man ages before economic theorists identified it as the efficacious way of mutually advancing economic wellbeing. And, by the same token, the child can be taught to practice it before he can possibly grasp the theory. In exchanging toys or marbles or jacks or whatever with another, can he not play the thank-you game? Can he not be taught to express the same “thank you” himself as he expects from his playmate? That something is wrong with the trade if this is not the case? That both have gained when each says, “Thank you”? Accomplish this with a boy or girl and you have laid the groundwork for sound economic thinking.

  Do Nothing to a Playmate You Wouldn’t Enjoy Having Him Do to You

  Moral philosophy is the investigation into and the study of what’s right and wrong. Economics is a division of this discipline: the study of right and wrong in economic affairs.

  The free market is the Golden Rule in its economic application, thus free market economics is dependent on the practice of the Golden Rule.

  That the Golden Rule can be phrased and taught so as to be completely perceived prior to adolescence is doubtful. Its apprehension requires a moral nature, a faculty rarely acquired earlier than teen-age—in many instances, never!

  But the effort to teach the Golden Rule to boys and girls will, at a minimum, result in a better observation of it on the parent’s part. Children—highly impressionable—are far more guided by parental conduct than by parental admonishments. Thus, the attempt to teach this fundamental principle of morality and justice, resulting in highly exemplary behavior, may lead the child first to imitation and then to habitual observance and practice.

  Writing the above, which only hints at how boys and girls may get off to a good start in economic thinking, has supplied the missing explanation to something I have known for several years: women are more hopeful prospects than men in the contest between free market and authoritarian ideas! In our seminar activities, we have found the distaffers better students than the mill run of males, as well as more idealistic and less compromising. Beyond this, it is the mothers, rather than the fathers, in whose care the citizens of tomorrow are largely committed. It is primarily the mothers who will refine the methods for getting boys and girls on the track of sound thinking.

  But mothers or fathers, it is the parents who are responsible for the generations to come and who also are responsible for the kinds of people who assist in teaching their children.

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