Mises Daily Articles
Human Nature and the "Perfect" Society
Anyone who speculates on man's ability to put his social life in perfect order must take into account the biological fact of longevity. Man seeks to satisfy his desires while he lives, not when death has cut short his appetites, and actuarial figures tell him just about how long he may expect to live.
His pattern of behavior is necessarily determined by his expectancy. Which is to say that in the nature of things his is a short-run view, although his perspective may be lengthened by a concern for the welfare of his immediate posterity, his children and grandchildren in being. Beyond that there is the "future of his country," a speculative interest that can have little bearing on his day-to-day chores.
The banker knows full well that the State's bonds in his vaults do not represent goods produced but are merely claims on production; the "interest" they yield is taxes, draughts on the marketplace, and he is in fact a tax collector once removed. Nor is he unaware of the inflationary character of these pieces of paper: that in the long run they depreciate the value of all his assets as well as those of his depositors, that the marketplace is indeed impoverished by his holdings.
What's more, if he stops to think about it, he must know that the more of these bonds he holds the more he must support the fiscal activities of the State, for depreciation of the value of these bonds could put him out of business. Prudence compels him to disregard such considerations; he cooperates with the State's financing schemes, even if he suspects that in doing so he will gradually be downgraded to a secretarial position. In his need for showing a profit this year he puts aside whatever scruples he may have about buying the State's bonds. The future must take care of itself.
The corporation president has become accustomed to a standard of living calling for a certain income. He likes it and so does his wife. It is true that he has earned three times that amount and that the State has confiscated two thirds of his earnings. He resents the confiscation, wishes he could retain more and thus improve his standard, but finds it convenient to go along with the State for good reason.
Perhaps his corporation is wholly or partly in the employ of the State; in that case, his income is actually derived from the taxes he is forced to pay. It is true that his employees in the aggregate pay more than he does and, though he has not figured it out, the probability is that he senses a profit in this allocation of taxes.
Perhaps, if they were not taxed, his employees would buy the corporation's products as liberally as does the tax collector, but selling to a multitude of buyers would entail more sales and credit problems, and for the time being (which is all he is interested in) he finds it easier to do business with the One Big Buyer. He hires a lobbyist to do his selling.
Continuing with the corporation president, if the sales of his product drop to a point where his accustomed profits are threatened — say because taxes have deprived his prospective customers of purchasing power — he is inclined to look with favor on the State's inflationary activities. The distribution of more money, even though slightly counterfeit, will temporarily enrich the populace and enable them to make his sales chart good to look at.
That the infusion of new money into the marketplace will have the effect of depreciating the value of his eroding plant, possibly to the extent of putting his business in an insolvent condition, no matter how much he may put aside for replacement, is a consideration, to be sure; but that is something for the next president and the stockholders of the future to worry about. This year he must pay dividends.1
It would be a stupid farmer indeed who did not realize that being paid for not producing is an anomaly; it would be an insensitive one who did not resent the regulations that accompany the largess. Yet the immediate need for a tractor or television set obliterates such considerations, including the probability that his son will never be an independent farmer.
The subsidized renter may see some connection between his privilege and the deductions from his pay envelope; even so, it is nice to know that his quarters cost him less than does the comparable habitation of his nonsubsidized neighbor.
The old lady living on "social security" remittances, the veteran whose doctor bill is taken care of by the State, and the malingerer receiving unemployment gratuities are not in the least concerned with the future. Even the philosopher who sees dire forebodings in the trend makes peace with it, if necessity demands, and in the comfort of an unearned grant finds solace for his misgivings. We are condemned to live in the present.
It is this biological necessity that robs the long-term point of view of reality and facilitates the operations of the State. The need of living now bends the will to live to the conditions under which living is possible; just as a man patterns his life in the wilderness to primitive conditions, so does he make adjustment to the rules, regulations, controls, confiscations, and interventions imposed on him by political power.
If these restraints on his aspirations are regularized, so that his "way of life" achieves a semblance of stability, he soon loses consciousness of restraint; what he may have resented at the beginning is not only accepted but also defended. For such is the composition of man that his adjustment to environment is not confined to mere physical, insensate accommodation; it must include a conscious acceptance, a justification, a moral support. He cannot live comfortably without giving his blessing to the conditions under which he lives.
His competence with words aids the process of accommodation; with words he develops an ideology that satisfies his mind as to the correctness and even righteousness of his "way of life." This is the secret ally of the State — the inclination of the human to adore the conditions that have been imposed on him and under which he has found a comfortable adjustment.
Its propaganda machinery, by constant reiteration, turns the ideological phrases into a liturgy; its bureaucracy, which regularizes the cherished "way of life," acquires the glory of a priesthood; its buildings, even its prisons, are covered with a distinctive aura; its formalism becomes ritualistic, its utterances oracular.
":::"Social power is measurable by the amount of property the individual producer is able to retain and dispose of as he sees fit."
Only the theoretician, the economist and the historian, concerns himself with the long-term consequences of the State's interventions. In the meantime one must live, and in the meantime "long live the king."
In these circumstances, the long-termer, the prophet who harps on first principles and the ultimate consequences of violation, is a dealer in unreality and an unwanted disturber of the adjustment. His vagaries may be remembered and his prophecy recalled when at long last his forebodings have come to pass. That is, when the restraints multiply to the point where adjustment leaves little area for living, when a miserable existence is all that one can get out of one's efforts.
It is then that the primordial instinct for freedom looms larger than the instinct for life itself and there is nothing left to do but to throw off the shackles of the State. But that, for the present, is in the unrealistic realm of the long-term.
The instinct for freedom, the yearning for self-expression without let or hindrance, is the stuff of which utopia is made. Were it not for that element in inscrutable man's makeup he would never be involved in political matters and his history would be like unto a history of the jungle.
Man the producer must have freedom, while man the predator puts limitations on freedom, and this inner dichotomy is the plot of his life story. His search for the "good society" is his search for a denouement. Whether or not it is in the nature of things that the struggle should go on indefinitely, he cannot help trying his hand at fashioning a happy ending. And what follows herewith is simply another attempt at the same thing.
The principal ingredient in any formula for the "good society" must be a preventive. How can Society protect itself against the tendency of political power to encroach upon and liquidate social power? This has been the continuing problem of social integrations, and the only solution human ingenuity has hit upon is surveillance and supervision.
Society must always keep its eyes on and, when need be, lay its hands on political power. In practice, surveillance and supervision take the form of constitutionalism, or written limitations on political power, with popular suffrage the enforcement agency. Experience shows, however, that constitutions and suffrage only delay, do not prevent, the fermentation of political power; men can and do vote themselves into its clutches under the promise of an unearned advantage, and constitutions are not written in the indelible ink of natural law.
The fallibility of constitutionalism lies in the fact that as political power extends its area of operations it is able to play one group against another, catering to their diverse cupidities, and under cover of such intrasocial conflicts (class struggles) its inherent proclivity for expansion breaks through the constitutional bounds.
There is the further fact that production, not surveillance and supervision of political power, is the first business of Society, and that this ancillary occupation is likely to be overlooked; particularly so when those who exercise power are beyond the personal purview of those upon whom it is exercised. As a practical matter, therefore, surveillance and supervision are an effective restraint only when the political unit is small, so small that the political personnel cannot escape social pressures. That is, the town-hall type of Government.
We are speaking of the political, not the economic, unit. The size of the economic unit is always determined by the radius of exchanges, and is always regulated by the human sense of value. Buyer and seller, regardless of the distance between them, either in space or culture, become members of the marketplace by the act of exchange.
The marketplace is self-regulatory, operating under laws that are self-enforcing and carry their own sanctions; it is a mechanism that functions without the use of political power and whose efficiency can only be lowered by the injection of that power. It will be as large as customers and sellers want it to be. Without political interference it can be worldwide.
The best that political power can do in the premises is to prevent theft (including the violation of contract), and this it can do only by punishing the thief after the act has been committed, with the hope that such punishment will discourage repetition or emulation. Even in this function it is less effective than social sanctions; exile from the marketplace of a community unable or unwilling to keep its house in order, or of an individual who establishes a reputation for dishonesty, is retribution enough.
If it is in the economic interest of any political unit to maintain police relations with other communities, liaison through representatives can be established, but the powers and functions of these representatives must be held within the purview of their employers, the local town-hall meeting. Political power can and will be put to antisocial practices only when those to whom it is entrusted act as principals, not as agents.
The means by which the political person — "divine right" king or elected official — achieves independent stature is the power to appropriate property. Without appropriation there cannot be a State, and the power of the State is in direct proportion to the amount of property it appropriates.
Contrariwise, social power is measurable by the amount of property the individual producer is able to retain and dispose of as he sees fit. The State thrives on taxation, Society suffers from it. The difference between a free Society and a dominated one is in the percentage of property the State lays its hands on.
All taxes are compulsory exactions — "voluntary taxation" is a contradiction in terms — and the problem that Society must face, if it would retain its freedom, is whether it will keep the compulsory power in its own hands, under strict surveillance, or transfer it to its political agents. Transference carries with it the relinquishment of social power and the enlargement of political power, or the deterioration of the negative Government into the positive State.
Hence, the safeguard of the "good society," or the means by which it can be achieved, is the constant, rigorous, and jealous examination of every tax request, and the careful supervision of the disbursement of the levies. Above all, the politician must never be given blanket authority to impose taxes; each tax proposal must be considered on its own merits, as a temporary levy intended for a specific purpose, even as the individual manages his own economy.
Thus, if a road is to be built, the cost should be provided for by a tax that terminates when the road is completed; if war is forced on a people, the taxing power should be granted for the duration only. The ideal of the "good society" is the abolition of all taxes, but that presupposes the existence of the "perfect" man and a general understanding of how public expense can be met without levying on production; until that time comes, if ever, the best that Society can do to protect itself is to keep a suspicious eye on all taxation.
The proposal to keep political power so decentralized that it cannot escape the vigilance of social power rests its case on the assumption that the highest value in man's hierarchy is freedom. Does he put it above all other desires? Even material satisfactions? If so, what does he mean by freedom? The definition that quickly suggests itself is "absence of restraint."
The lone frontiersman had plenty of that kind of freedom and found it wanting; he was quite willing to part with some of it in exchange for the higher wages that came from cooperation with others. But cooperation entails an obligation, that of shaping one's behavior to the wishes of others, of considering public opinion both in one's occupation and in one's deportment.
So then, freedom in Society is not the absence of restraints, but the management of one's affairs by a code of self-governance. The price of the benefits of cooperation is self-restraint.
In particular, the obligation imposed by freedom in Society is respect for the privacy of property. When the frontiersman worked for himself, directly, he concerned himself with property only when a marauding animal or stray human threatened his ownership. He had a keen interest in holding on to the things he produced — because of his labor investment — and kept his firearm ready to assure him of possession.
But the concept of property rights assumed significant meaning when through the mechanism of the marketplace abundances and accumulations made their appearance. It is at this point that self-governance is put to the test. Why? Because man seeks to satisfy his desires with the minimum of exertion.
The same urgency was upon him when he worked alone, but the best he could do about it was to devise some rudimentary short cuts or labor-saving instruments. When the cooperative social organism grows up around him and abundances appear, the thought occurs to him that perhaps the satisfaction of desires at no expenditure of labor is an attainable goal. The something-for-nothing impulse that is imbedded in his makeup sometimes gets beyond the bounds of self-restraint.
At this point, or in expectation of its coming, the common concern for property gives rise to a compact among the members of Society; external restraints on the inner urge are set up. Government is an admission that the "absence of restraint" is inconsistent with freedom.
It might be argued that reason should tell the individual there is no such thing as something-for-nothing, that somebody has to labor to provide satisfactions, that the condition necessary for general abundance is security of possession. In fact, reason might put him in the way of a principle: that production alone can raise the level of wages, whereas expropriation tends to lower it.
But, taking him by and large, man does not always act on principle; more often, he acts on considerations of immediate profit and convenience. Reason seems to be less of a guide for human behavior than appetite. His history supplies plenty of support for this opinion. Even in the smallest and most intimate social unit, the family, the predatory impulse finds expression in the Jacob-Esau inheritance swindle, and the use of fraud or force to acquire property without laboring for it is the leitmotiv of the social saga.
Were it not for this dominant element in man's makeup, conquest would never have been practiced, slavery would never have been known, privileged classes would never have made an appearance, monopolies never instituted and the "welfare state" never thought of. Indeed, there never would have been a State, which is merely the organization of force for the transference of property from "one set of pockets to another."
Freedom is not the highest in man's hierarchy of values. He may talk of it in the most laudatory terms, but his behavior belies his protestations. Although at times, when the multiplication of external restraints makes existence unbearable, he does put forth effort to shake off some of the shackles, his overall biography indicates an overpowering passion for something-for-nothing, an inability or unwillingness to hold it in leash, and a readiness to submit to restraints under the promise of loot.
The modern "welfare state" is most illustrative; it is admittedly and boastfully the organization of force for the confiscation and distribution of property. It is the complete antithesis of that "absence of restraint" that is the substance of freedom.
Despite this bald fact, it acquires a reputation for humanitarianism and receives the blessing of all who batten on the production of others as well as of those who hope to: the banker and the industrialist who thrive on the taxes it collects, the farmer who is paid for not farming, the "free lunch" mother, the host of pleaders for special privilege. Is it freedom they want? Hardly. The responsibilities of freedom are in conflict with the law of parsimony.
One last word, for Americans who have a penchant for the long run and hope "to do something about it." Supporting that hope is the still-green memory of a Society that managed its affairs with a minimum of external restraint. Even though the American State has gone a long way toward establishing its dominance over American Society, it is still in contention with the folklore of freedom, and it may be possible to impede the progress of the State by invoking this tradition.
After all, this is a young country; the record of its beginnings is still alive, while living men can recall the struggles of the State to attain its present position. If the original enthusiasm for freedom can be revived, it may be possible to restrain political power before it completely engulfs social power. It is worth a try.
In the tradition, to begin with, there is the doctrine of states' rights. It is a decentralizing doctrine, intended to keep political power contained and off balance. Though it has been only rarely invoked since the formation of the Union, and then only for some specious and temporary purpose, its original idea of keeping political power under close surveillance and supervision has potency.
It is in the interests of the political establishments of the separate states to prevent their engulfment by the central authority, even as in olden times the local chieftains kept a jealous eye on the growing power of the king. If this concern for local autonomy can be revived, the case for freedom will not be completely lost.
The drive toward centralization began long before the American State acquired the power to tax incomes, but this instrument provided the means for reducing the states to mere administrative subdivisions; for it gave the central authority the wherewithal to buy the subservience of local authorities. Hence, nothing can be done about restoring the balance between the two unless the Sixteenth Amendment to the Constitution is repealed.
But, while this political purpose demands repeal of the amendment, a far more fundamental reason calls for it. It is that the power to tax incomes violates the right of property, which underlies the sacred rights of "life, liberty and the pursuit of happiness."
It is silly to talk of freedom as long as the State can and does lay its hands on the earnings of the producer; unless the individual has the prerogative of possession, enjoyment, and disposition of all his produce, without let or hindrance, his status is less than that of a freeman; the more of it that is taken from him the nearer he approaches the status of a slave. It is interesting to note that the amendment puts no limit on the amount the State may confiscate.
Therefore, if the progress of the American State toward the subjugation of American Society is to be stopped, its power to levy on incomes must be abolished. But that can be done only if absence-of-restraint takes precedence over something-for-nothing in the scale of human values. The will for freedom comes before freedom.
- 1. In the classical economic tradition it was always the debtor class who asked for "cheap" money. We now find the industrialist and, at times, the financial crowd who look favorably on "controlled" inflation. This phenomenon is worth exploring.