The Future of Liberty
The following is the Closing Lecture delivered by Dr. Reisman at the Mises Summer University, Auburn, Alabama, on Saturday, August 11, 2001
I’m honored to have been asked to give this closing talk on the subject of the future of liberty, at the very end of this highly intensive week of classes you’ve just been through—classes that all relate to this vital subject.
I’m sure you all realize how unusual this week has been. What you may be used to, if you attend an American college or university that is committed to "multiculturalism" and "diversity," is, it’s been said, being exposed to the "multiculturalism" of experiencing what it’s like to live in the culture of a totalitarian country—on your own campus!—and to the "diversity" of being taught by Marxists of all races and subcultures.
That is, an environment in which no views are tolerated but those deemed to be "politically correct"—correct by people who don’t know the difference between true and false or right and wrong and often attack the very existence of these concepts, and who are thus the last people in the world to be in a position to judge the actual correctness of anything.
So it is certainly rare enough in today’s educational world to encounter a single pro-capitalist professor here or there. But to have an entire faculty of fourteen pro-capitalist professors, offering so many classes that you actually have to choose which ones to take—that’s altogether unheard of, at least outside the Mises Institute. The existence of this program—The Mises Summer University—itself signifies a major milestone in the struggle for liberty and is a really huge accomplishment of the Mises Institute. In fact, in a very real sense, this program can be viewed as the beginning of the future of liberty from this point forward.
I want to explain why I think so.
Liberty should be understood as freedom from the government, specifically, freedom from the initiation of physical force by the government. The existence of a government has the potential to secure the individual’s freedom from the initiation of physical force by other private individuals. It actually does so insofar as the government enacts and enforces laws against such acts as murder, robbery, rape, assault and battery, and fraud.
However, the existence of government, as we know all too well, itself poses the greatest potential threat to freedom. The Gestapo and the KGB, for example, make private criminal gangs like the Mafia or the Capone mob look not only tame by comparison, but almost kind and friendly—so utterly and massively vicious can governments be. So the real issue in freedom is freedom from the government—that is, liberty.
For many years, freedom and liberty have been in great peril in the United States. To gauge their present state, it is perhaps sufficient to realize that today the average successful businessman probably has more to fear from the government than does the average mugger. Again and again, the muggers and other violent criminals either are not apprehended or are quickly turned loose in revolving-door justice. At the same time, again and again, successful businessmen are prey to an army of government agencies enforcing arbitrary, unintelligible, and contradictory rules and regulations.
There has been a thorough perversion of government. It has more and more stopped doing what it should be doing—namely, protecting its citizens from the initiation of physical force—and at the same time has more and more been doing what it should not be doing—namely, itself initiating physical force against its citizens. In other words, the government has more and more failed in securing the individual’s freedom against violation by other private individuals and has itself more and more violated his freedom.
How did this happen? It was not always this way, at least not to anywhere near the present extent.
The Founding Fathers of the United States understood very well the nature of freedom and liberty and the enormous threat posed to them by government. In the strongest possible terms, the Declaration of Independence upholds the principle of inalienable individual rights and the proposition that governments are created for no other purpose than to secure the rights of the individual and, indeed, are to be overthrown when they become destructive of that end.
The Constitution of the United States and its Bill of Rights are to be understood as an attempt to control and regulate government—to chain and cage it, in order to stop a vicious beast from being unleashed on the citizens. It is to protect the citizens from their government that the Constitution provides for a division of powers and system of checks and balances between three distinct branches of government and two distinct levels of government, and that it contains the series of amendments known as the Bill of Rights that makes whole categories of legislation flatly illegal.
And on the foundation of its Constitution, for most of its history, the United States really was a free country—of course, by no means completely or perfectly, and certainly not for everyone. Negro slavery was a blatant contradiction of the principle that the individual has the right to the pursuit of his own happiness. And women lived under major legal disabilities, such as being denied the right to own property. But for the white male population, there was far more liberty than there is now.
For example, other than in the Civil War, there was no income tax before 1913 and, before 1887, not a single federal regulatory agency. The way things should have developed was that the freedoms and liberty enjoyed by white males should have been fully extended to blacks and to women and, at the same time, the extent of liberty and freedom should have been enlarged for everyone.
It certainly did not happen this way. Why?
The reason things have worked out so differently than they should have is that, from the beginning, there was a fundamental weakness—a major gap—in the case for liberty that became increasingly apparent over the course of the nineteenth and twentieth centuries, and that ultimately served to marginalize and trivialize it.
The nature of the gap is indicated in such beliefs as that the Jeffersonian concept of liberty applies only to a society made up mainly of small, independent farmers and does not apply to a modern, industrial society. Indeed, Jefferson himself appears to have believed this, and for this very reason to have feared the United States ever becoming an industrial country, such as England had already become.
A modern, industrial society is allegedly governed by different natural laws than those which apply in the Jeffersonian world. What causes the alleged difference is that the Jeffersonian world is comprised essentially of equals, whereas the modern industrial world is comprised of unequals: On the one side, there is a small minority that owns the great bulk of the means of production—i.e., the capitalists. On the other side, there is the great majority of the population—the wage earners—who own little or none of the means of production.
In this state of affairs, it is held, the capitalist minority is in a position systematically to exploit the great wage-earning majority, and would, if left free, drive wage rates down to, or even below, the level of minimum subsistence while at the same time lengthening the hours of work and worsening the conditions of work to the maximum extent possible. This, of course, is the substance of the Marxian exploitation theory.
On the basis of such beliefs, freedom can easily be ridiculed as "the freedom to starve" and free wage earners can be made to appear as slaves—"wage slaves," by whose employment the capitalists allegedly earn profit on precisely the same foundation as slave owners gain from the ownership of slaves, namely, the fact that workers can work more hours than are required to produce their means of subsistence. The extra hours they work over and above the hours necessary to produce their means of subsistence, or its equivalent, is held to be "surplus labor time," which is supposed to be the foundation of "surplus value"—Marx’s catchall expression for profits, interest, and land rent.
Despite the overthrow of socialism in many countries, the Marxian exploitation theory is as influential in the United States today as it has ever been. It is the lens through which the great majority of people, and probably an even greater majority of intellectuals, see laissez-faire capitalism. It is what terrifies people of the very prospect of laissez-faire capitalism.
Just consider, what do most people believe would happen if pro-union and minimum-wage legislation were repealed? What do they believe would happen if maximum-hours laws and child-labor legislation were repealed? They believe that then the capitalists would proceed to drive down wage rates all the way to the minimum subsistence level, if not lower, and that the hours and conditions of work would worsen to or beyond the point of horror, including small children working once again in the mines.
The Marxian exploitation theory permeates people’s beliefs concerning modern economic history. It leads them to believe that the reason for the miserably bad economic conditions that existed in the early years of capitalism, in the late eighteenth and early nineteenth centuries, was precisely that then the capitalists had economic freedom; they had liberty; and what they did with it was cause poverty and misery for everyone else. It leads people also to believe that what improved conditions later in the nineteenth century and in the twentieth century was government intervention, most notably, labor legislation.
The Marxian exploitation theory has permeated the legislative agenda of the so-called liberals for over a century. It underlies not only all of the labor laws but also the whole program of confiscatory income and inheritance taxation on the one side and welfare-state spending on the other. These measures are perceived merely as the government taking back from the capitalist exploiters some of their ill-gotten gains and then expending the proceeds for the benefit of the capitalists’ victims, in such forms as public education, public housing, social security, socialized medicine, and so forth.
As I wrote in my book, ". . . the validity of the exploitation theory is so taken for granted that 'liberal' politicians routinely campaign on the assumption that no possible basis can exist for opposing their allegedly humanitarian projects except membership in the class of the 'rich'—that is, of the capitalist exploiters—or else some utterly perverse desire to prevent the great mass of people from being benefited at no cost to themselves."
Allow me to say a little bit more about this last point, concerning the allegedly costless benefits of interventionism to the wage earners. According to the exploitation theory, if wages are increased because of government intervention, the effect is essentially the same as if the labor time needed to produce the wage earners’ necessities had increased. Namely, the wage earners will then receive the benefit of a larger portion of their labor, and surplus labor time and profits will be correspondingly reduced. It is believed that the intervention has absolutely no negative effect of any kind on the wage earners. The only negative effect, allegedly, is on the profits of the exploiters, and that, of course, is a negative that no one but the capitalists need be concerned with.
Similarly, if the hours of work are shortened, or child labor is abolished, the only parties that allegedly lose are the capitalists. All that’s happened allegedly is that, once again, surplus labor time and surplus value have been reduced, while the wage earners get the benefit of shorter hours and having their children at home or in school. In the same way, any costs imposed on business for the purpose of improving working conditions, or anything else of general benefit, allegedly comes out of surplus labor time and profit, and not at all out of wages.
Now public opinion, of course, does not think explicitly in terms of necessary labor time and surplus labor time, but it comes to conclusions identical to those reached by the leftist intellectuals who do think in such terms. It thinks that the cost of government intervention is at the expense of the capitalist exploiters and that the intervention thus represents an unadulterated benefit to the wage-earning masses. This mindset applies to all government intervention, including such things as environmental legislation and consumer product safety legislation. It’s almost universally assumed that the cost of such measures simply comes out of profits, and, as far as the wage-earning masses are concerned, the measures represent pure benefit.
The influence of the exploitation theory even serves to corrupt criminal law. Poor criminals are perceived as not really being criminals but merely helpless victims responding to the social injustices that surround them. This, of course, weakens all efforts to punish and restrain them.
To sum all this up, what has made history take a dreadfully wrong turn and destroy liberty is the triumph of the Marxian view of the nature of laissez-faire capitalism and of the consequences of government intervention. Marxism has caused a complete distortion in how liberty and its violation are perceived. It has caused liberty to be perceived as the means whereby a handful of capitalist exploiters impoverish the wage-earning masses, and the violation of liberty to be perceived as the means whereby the state enriches the wage-earning masses at the expense of their exploiters.
In the face of the influence of the exploitation theory, liberty could not help but be destroyed. The remarkable thing is that its destruction has not gone even further than it has.
It should be obvious that an essential prerequisite for the restoration of liberty is a thorough refutation of Marxism.
Only one man has accomplished this. And that is Ludwig von Mises. He has demolished the entire Marxian worldview. He has pursued it up every intellectual alley and into every hiding place, and has demonstrated its utter fallaciousness. In its stead, he has presented a radically different view of the nature of laissez-faire capitalism and of the modern economic world—one that demonstrates that it is precisely economic freedom that both brings about a modern, industrial society and is necessary to its maintenance and flourishing, to the benefit of all.
As just one major example (which in the highly compressed form in which I give it cannot begin to do him justice), he shows that in a market economy, privately owned means of production operate to the benefit of everyone, including the nonowners, who, in fact, obtain the far greater part of the benefit. The nonowners benefit from the means of production owned by the capitalists whenever they sell their labor that is used in conjunction with those means of production or buy products produced with the aid of those means of production. In other words, the nonowners of the means of production benefit from the means of production owned by others, insofar as those means of production are the source of the demand for the labor they sell and of the supply of the products that they buy.
Nothing could be more obvious, once it is named, than that in order to benefit from an automobile factory or an oil refinery, one does not have to own that automobile factory or oil refinery but simply be in a position to buy its products. Amazingly, this is something that hardly anyone but Mises actually realizes. According to the views of most people, expressed countless times over, the only ones who benefit from the means of production are the owners, and the only ones who suffer as the result of their destruction are the owners.
In total opposition to the prevailing ignorance, Mises shows that, in fact, thanks to the freedoms of initiative and competition and the profit-and-loss incentives of capitalism, the benefits going to the nonowners of the means of production not only are immense and constitute the far greater part of the benefits provided by the privately owned means of production, but become progressively greater and greater as businessmen and capitalists bring about ever better products and more efficient methods of production.
Precisely for these reasons, he shows, the average wage earner in any modern capitalist country is able to enjoy a material standard of living greater than that of kings and emperors of former times, even including great monarchs as recent as Queen Victoria. In other words, he demonstrates why it is incomparably better to be a nonowner of means of production under capitalism than an alleged equal owner under socialism. Capitalism and economic freedom, he shows, instead of being a system operating only in the interest of a small minority, is a system that operates in the interest of everyone. Thus, Mises demolishes the doctrines of class interest and class warfare along with the exploitation theory.
I certainly do not wish to imply that Mises’s work is limited to the overcoming of Marxism, though that is certainly an enormously important part of it. His writings deal with every significant aspect of economics and decisively answer virtually every economic fallacy that stands in the way of economic freedom. Only lack of time prevents me from elaborating further.
The restoration of liberty must begin with the reading and study of Mises. This is by far the most important single point I have to make. And that, of course, is what I hope all of you will do when you return to your various colleges and universities. That is what is essential if the prevailing Marxian worldview is ever to be overthrown. The restoration of liberty will be on a sure path only when the influence of Mises replaces the influence of Marx.
If any of you personally, and I want to speak to each of you now as an individual, wants someday to make an important contribution to the cause of liberty, the most important single thing you can do is read and study the works of von Mises. In my judgment, no advocate of liberty can consider himself truly educated if he has not done this. (And even if you do not consider yourself an advocate of liberty, and want to oppose it, but to do so honestly and fairly, it is the ideas of Mises that you must study. Either way, Mises is the man to study.)
You may want to start with some of Mises’s smaller books, like Planning for Freedom, Bureaucracy, Omnipotent Government, and Liberalism (also titled The Free and Prosperous Commonwealth). But, as soon as possible, you should also go on to read his major works: Socialism, Human Action, The Theory of Money and Credit, and Theory and History. Get a copy of Mises Made Easier by Percy Greaves. It’s an extensive glossary and will help with many of the historical references and foreign-language quotations. And for similar reasons, use the Liberty Fund edition of Socialism.
Now I know that reading Mises’s major works is not easy, but believe me, it will have major benefits for you even beyond the enormous knowledge and sense of personal enlightenment you will acquire by doing so. While the human brain is not a muscle, I know from my own experience that its powers can definitely be increased by reading and studying his books and making the effort required to grasp the vitally important connections he makes.
Now I do not say that Mises is the only author you should read, even in economics. But I do say that for several years at least, his writings should constitute the main core of your studies, if your goal is real understanding of the world and to be able to advance the cause of liberty in a significant way.
There are some excellent books by Henry Hazlitt, notably Economics in One Lesson and The Great Idea (also titled Time Will Run Back). They should be read very early on, since they’re in the nature of brilliant introductions. The same is true of Bastiat’s Economic Sophisms and The Law. Ayn Rand’s Atlas Shrugged and many of her essays should also be read. Böhm-Bawerk’s three-volume Capital and Interest is a vitally important advanced book, which Mises himself strongly recommended.
There are numerous other books as well, some of them by our very own faculty at this Mises Summer University, and you will have no trouble finding many of them in the Catalog of the Mises Institute. And you should also be sure to read the books of the British classical economists, from whom there is actually a great deal to learn, and even those of the major enemies of capitalism, such as Marx and Keynes, if you want to be really confident of your ability to make the case for liberty.
And I have to say to all the undergraduates who are present that your studies should not be limited even to the fields of economics and political philosophy as a whole. Mises himself never tired of insisting on the importance of a knowledge of history, literature, and philosophy, and of science and mathematics.
We live in an age of educational disintegration and chaos, but that need not stop you from obtaining a serious education. The earlier you are in your college career, the more you have the ability to see to it that you nevertheless actually learn something. Take courses that will require you to read the great literary classics of Greece, Rome, the Renaissance, and the Enlightenment. Take courses in mathematics and natural science (though be sure to stay away from any that may advertise themselves as having any kind of environmentalist application). If you fear you are not yet sufficiently proficient in writing, by all means take a course or two in English composition.
Whenever possible, wherever it can be fitted into the subject matter of a course, choose term-paper topics that will require you to read Mises and/or apply the knowledge you have already learned from him. Thesis topics along these lines are exceptionally valuable.
Now let me to try to project what might happen someday if there were thousands or tens of thousands of bright, articulate men and women who had seriously studied and understood Mises, along the lines I have just recommended to you. If that happened, the intellectual influence of Mises would in fact come to rival that of Marx today. And the result would be that our culture would be very different from what it is today. There would be major changes not only in economics texts, but in history and philosophy books, in newspapers and magazines, in novels and plays, in movies and television shows. A major fundamental development would undoubtedly also be the emergence of a substantial group of people seriously dedicated to working for the long-range goal of the actual establishment of laissez-faire capitalism.
And now allow me briefly to project the ultimate success of this imagined cultural-political movement.
The achievement of the goal of laissez-faire capitalism, if and when it occurred, would mean the reduction of government to the purely defensive role of protecting the individual citizen from the initiation of physical force, whether by common criminals or by foreign, aggressor governments. It would make possible a reduction in government spending, at all levels, on the order of 90 percent, and an even more substantial reduction in the government’s influence on people’s lives. For example, the abolition of the Environmental Protection Agency would result in the elimination of the government’s ability to dictate the spending of hundreds of billions or even trillions of dollars of private funds, which is the situation that now exists. And similarly for all other administrative agencies.
The personal and corporate income taxes would be abolished, along with the inheritance and capital gains taxes. Social security, medicare, and medicaid would be abolished, along with the special taxes to pay for them. The great majority of today’s cabinet departments and all of the administrative agencies would disappear. Even those cabinet departments that survived would do so only in a substantially reduced form. For example, the Department of Justice would be shorn of its Antitrust Division, which would be abolished, and, of course, the Treasury Department would lose the IRS, which would be abolished.
In effect, the government would be reduced to the role of a night watchman, and the honest, peaceful citizen would hardly be aware of its existence.
The possession of this ultimate goal would serve as a guide and standard for the political action leading to its achievement. Those who held this goal would be motivated to advocate specific measures moving the country in its direction. They would systematically and repeatedly introduce proposals designed to reduce the power of the state and increase liberty. In so doing, they would seize the political initiative from the left, which even now never tires of advocating measures leading in the direction of socialism and does not rest until they become law. Just so, the advocates of laissez-faire capitalism would not give up in the face of political setbacks, but would continue with the advocacy of all essential features of their program for however long it might take for them to be enacted.
Given the necessary change in the intellectual-cultural environment that I have depicted, the time required to effect major political change might not be all that long. This is because the intellectual opposition to liberty has already largely collapsed and is able to continue only on the strength of inertia and the absence of any widespread educated support for liberty. Consider: In little more than a generation, the left has abandoned its previous claims to represent reason and science and has now openly degenerated to the point where its attitude toward reason and science is indistinguishable from that of a mob of torch-bearing, terrified Transylvanian peasants, such as depicted in an old Boris Karloff or Bela Lugosi movie, gathered outside Frankenstein’s castle to denounce the frightening "experiments" going on there. That is the left today. That is its view of science. A future generation of new, Misesian intellectuals, just a few thousand strong, should certainly be able to overcome such opposition and ultimately succeed not only in restoring liberty but in bringing it to its full and consistent flourishing.
Now in my account of the future of liberty, there are two major gaps. One concerns the specific course of action to be followed by a movement aiming at the establishment of laissez-faire. I have some things to say about this in the final chapter of my book Capitalism. I will say nothing further about it here. The other, and far more immediate gap, is how to proceed from where we are now to the point of the advocacy of liberty becoming a major cultural-political movement in the first place.
I believe that somewhere along the way, programs such as this will have to expand into summer-long programs and then into full-year and multi-year programs, and be replicated in many different places. In other words, the advocates of liberty will need to become an important part of the system of higher education, exerting a major influence on their students, who will carry on the struggle in the next generation in a wide variety of forms. The program of study that I’ve urged you to follow is aimed at making you qualified to participate in that process.
Austrian economics’ concept of the period of production is very apt here. The struggle for liberty, especially to the point of achieving the necessary number of educated, articulate intellectual supporters, represents a very long, roundabout process of production. That is in the nature of what is required to change the outlook of a whole society. There simply is no shortcut method, at least none that I can see.
This raises a problem of motivation. On the one hand, as I’ve shown, there is a huge amount of demanding intellectual work to be done by everyone who wants to meaningfully contribute to the cause of liberty. On the other hand, it will probably be many, many years before visible change will appear in the intellectual state of our society and culture.
Fortunately, I believe that whoever takes up the work of seriously advancing the cause of liberty will quickly find great personal reward in it and will continue to do so throughout the years he devotes to it. For it has truly been said that "he who fights for the future, lives in it." This, I think, is merely another way of saying that there is great reward in the pursuit of truth and justice, which, in the last analysis, is what making the case for liberty is all about. For it is right that men be free, and true that they must be free if they are to prosper.
Concerning this subject, Mises himself wrote:
The great social discussion cannot proceed otherwise than by means of the thought, will, and action of individuals. Society lives and acts only in individuals; it is nothing more than a certain attitude on their part. Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way out for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle into which our epoch has plunged us.