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The Free Market
The Mises Institute monthly, free with membership


May 1996
Volume 14, Number 5

 

A Fifty-Year Lesson
Jeffrey Tucker

 

It was November 25, 1945, and the overpaid workers at General Motors were striking, again. Their gripe? Company profits were up, but wages were not. They demanded a shorter workweek and higher pay. Then as now, this government-backed union was using its legal privileges to stick it to consumers and employers. But there was one voice of sanity. 

"We must remember," said the New York Times editorial page, "that the automobile workers are among the highest paid in the industry." If the demand that wages rise with profits "is to be taken seriously, it must work both ways." Wages "would have to be cut the moment such profits fell. We may assume that the UAW does not seriously intend such an arrangement." 

Exactly, and the point still applies to today's even-more-absurd strikes. The pen behind the words was journalist Henry Hazlitt. From 1934 onward, Hazlitt--a dear friend of Ludwig von Mises's--dominated economic opinion on the page. His nearly 4,000 articles appeared mostly in the form of unsigned editorials, making Hazlitt one of the great unsung heroes of our century. 

Hazlitt's defense of the free market was relentless and hardcore, even at a time when the intellectual set hated capitalism. He blasted New Deal planning, government debt, unemployment insurance, union privilege, the protective tariff, antitrust law, industrial planning, high taxes, and every other government intervention that was prolonging the depression. 

He resisted the drive for war, and, during wartime, ripped price controls, rationing, and monetary debauchery. He highlighted the stupidity of fighting tyranny abroad while imposing it at home. Thanks to him, the nation's elite was forced to swallow bracing economic logic with its morning coffee. 

Unlike today's pundits, he never courted power or shifted his ground. Tutored by the Austrian School, he understood economic theory and respected economic law. Whether dealing with proposals to impose a five-day work week or pass another destructive public works program, he had the tools to refute them. 

Hazlitt wrote in a time like our own: free enterprise was under heavy attack. The Great Depression had been attributed to the failures of the market, Keynesianism was loose on the land, and New Deal socialism was on the march. 

As bad as that was, the post-war domestic environment was even more precarious. The economy had been nationalized for the war effort. All prices and wages were controlled. Labor had been socialized by the draft and forced unionization, and nearly everything produced outside the home was rationed. The U.S. lived under full-blown (i.e. war) socialism. 

The left wanted to keep it that way. It worked in league with big business and big banks to make sure wartime socialism would never be dismantled. But Hazlitt knew that without free enterprise, liberty and thus civilization would be destroyed, and he became the nation's leading proponent of dismantling the entire planning state. 

For example, Hazlitt wanted the country to return to a true gold standard, not the watered-down version of the Bretton Woods agreement. It allowed dollar-gold convertibility only between nations, but not between banks and their customers. This, said Hazlitt, would only export inflation and lead to a blowup of the entire system. 

Over this issue, Hazlitt was eventually squeezed out of the Times. Despite his talent, the publisher could no longer put the paper's stamp of approval on his opinions. The parting was amicable, but Hazlitt left the Times more committed than ever to countering economic fallacies by every means. 

Out of his experiences at the Times grew what became--much to the horror of a Keynesian-controlled economics profession--the bestselling economics book in the post-war period. It was five decades ago this year that Economics in One Lesson appeared on the scene to demolish the pro-planning orthodoxy. Today, as Rothbard said, "it is still the shortest and best way to learn economics." 

The bottom-line of the "New Economics" was clear for all to see: the government should be in charge of economic decisions, from money to investment to consumption. These were the people who claimed that war, government spending, and industry privileges were great for an economy. 

Hazlitt set out to destroy these ideas. The result was a book that became a bestseller (with four editions in just the first year), has stayed in print for fifty years, and has found an international market in many translations. 

Its thesis: economic forces do not behave like switches that can be turned off or on based on the wishes of politicians. They are always on. We can fight them and pay a huge social price, or understand them, allow the market to work, and experience social peace and prosperity. Before any policy is passed, he urged, consider the long-term economic effect on all groups, not just short-term effects on some groups. 

Fifty years after Economics in One Lesson, the free market still takes it on the chin. Unions, the government, and the central bank still get the kid-glove treatment, while businessmen suffer oppression at the hands of an envious media and intellectual class. Anti-capitalism abounds, from Saturday morning cartoons to the Times bestseller list. 

The lesson has not been learned, but in keeping with the Hazlittian tradition we have to imagine how much worse off we would be without his stupendous efforts on behalf of free enterprise. As he said, "to see the problem as a whole, and not in fragments: that is the goal of free enterprise."

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Jeffrey Tucker edits The Free Market

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