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Chapter 2: Freedom and the Planned Economy

A false and undeliberated conception of what man is lies at the bottom, I think, of the whole bubble-castle of socialist theory. Although few seem to realize it, Marxism rests on the romantic notion of Rousseau that nature endows men with the qualities necessary to a free, equal, fraternal, family-like living together, and our sole problem is to fix up the external conditions. All Marx did about this with his dialectic philosophy was to change the tenses in the romance: Nature will endow men with these qualities as soon as the conditions are fixed up. Because of his stress upon economic conditions, Marx is commonly credited with the cynical opinion that economic self-interest is dominant in human nature. Marx was far from a cynic about human nature. He believed that human nature is a function of the economic conditions, completely variable and capable of operating, once these conditions are “ripe,” on the divinely rational and benign principle: “From each according to his abilities, to each according to his needs.” It was to protect this optimistic dogma about human nature that the Stalin government felt obliged to stamp out the true science of genetics. According to that science, traits acquired during the lifetime of an organism are not appreciably transmitted in heredity. Only by selective breeding, whether artificial or natural, can profound changes be made in the nature of any species. While men’s acquired characters may, and undoubtedly do, change with changing economic (and other) conditions, the underlying traits of human nature remain the same. There is little doubt that the Marxian bigots in the Kremlin were moved by this consideration in liquidating the world-famous geneticist, Avilov, and supporting the charlatan, Lysenko, in popularizing a belief in the wholesale heredity of acquired characteristics. Without such belief, the whole Marxian myth that economic evolution will bring us to the millennium falls to the ground.1

Once we have abandoned this myth, we can give heed to the real contribution of Karl Marx: his sense of the great part played by economic relations in determining political and cultural ways of life. His own sagacity will conduct us, then, to a genuinely scientific study of the economic foundations of political freedom. This study has been made by various economists of the “neo-liberal” school—Wilhelm Roepke, F. A. Hayek, Ludwig von Mises and others. Taking human nature as it functions in average life, they have shown that the competitive market and the price system are the basis of whatever real political freedom exists, or can be imagined to exist, where there is an elaborate division of labor.

I am not an economist, but I have watched with some care the destinies of these men’s earnest writings. There has been no answer, and I don’t see how there can be an answer, to their assertion that mankind is confronted with a choice between two and only two business systems—a choice which involves the fate of democratic civilization. We can choose a system in which the amount and kind of goods produced is determined by the impersonal mechanism of the market, issuing its decrees in the form of fluctuating prices. Or we can choose a system in which this is determined by commands issuing from a personal authority backed by armed force. You cannot dodge this issue by talking about a “mixed economy.” The economy is inevitably mixed; nobody in his right mind proposes a total abandonment of government enterprise. You can not dodge it by insisting the state must regulate the market or intervene in its operations. If carefully defined, that statement is obvious. The question is whether the economy is mixed to the point of destroying the essential directing function of the market, whether the regulations are a substitute for the market or a framework within which it shall operate, whether intervention is compatible or incompatible with the general control of the economy by the whole people as consumers of goods. That is the difference between collectivism and the market economy. That is the alternative with which mankind is confronted. You can not dodge it, or pray it away, or hide it from yourself with smokescreens of ideas. It is a fact, not an idea. We have to choose. And the choice is between freedom and tyranny.

There is no conflict between freedom so conditioned and a humane regard on the part of the state for people who fail utterly in the competitive struggle. No one need starve, no one need be destitute, in order to preserve the sovereignty of the market. The principle of collective responsibility for those actually in want can be maintained without violating the principle of competition. But we need no longer deceive ourselves that liberty in a human world is compatible with economic equality. Liberty means absence of external restraint. To democrats, it meant absence of arbitrary governmental restraint, and was to a degree synonymous with equality before the law. But to the Socialists it meant absence of all governmental restraint, and also of those more subtle restraints imposed by a minority who own the land and the wealth-producing machinery. Who, in the absence of these restraints, is going to impose equality? What is to bring it about that men, once granted leave to behave as they please, will behave as though the whole human race were a loving family? We have to make up our minds, if we are going to defend this free world against an oncreeping totalitarian state control, whether, in fact, our primary interest is in freedom from state control, or in an attempt at economic equality enforced by a controlling state. We have to accept such inequalities as are presumed by, and result from, economic competition.

Equality apart, however, there is something vitally democratic, as well as impersonal, in the control exercised by the market. When a man buys something on a free market, he is casting his vote as a citizen of the national economy. He is making a choice which, by influencing prices, will enter into the decision as to how, and toward what ends, the economy shall be conducted. His choice may be outweighed by others who buy more; that is inevitably true. But in placing the major economic decisions in the hands of the whole people as consumers, recording these decisions automatically through the mechanism of price, the market makes freedom possible in a complex industrial society. It is the only thing that makes it possible.

Strangely enough Marx himself as a historian was the first to perceive this. Looking backward, he observed that all our freedoms had evolved together with, and in dependence upon, private capitalism with its free competitive market. Had he been a man of science instead of a mystic believer in the inevitability of a millennium, he might have guessed at what is so clearly obvious now: that this dependence of other freedoms upon the free market extends into the future also. It is a brief step indeed from Marxism—once the Hegelian wishful thinking is weeded out of it—to such a passage as this from Wilhelm Roepke:

It is hardly forgivable naïveté to believe that a state can be all-powerful in the economic sphere without also being autocratic in the political and intellectual domain and vice versa. . . . It therefore makes no sense to reject collectivism politically, if one does not at the same time propose a decidedly non-socialist solution of the problems of economic and social reform. If we are not in earnest with this relentless logic, we have vainly gone through a unique and costly historical object-lesson.

The failure of the Social Democrats, and still more in America of the “left” liberals, to learn this lesson is now a major threat to freedom in the western world.2 I am not sure it is always a failure to learn. I think a good number of these Fabians and crypto-socialists—a new breed to which political expediency under the New Deal gave rise—have a suspicion that freedom will go down the drain. Travers Clement, one of the old-timers, has explicitly proposed hauling down the watchwords: “Liberty, Equality, Fraternity,” and running up: “Cradle-to-grave Security, Full Employment and Sixty Million Jobs.”3 It was no accident of old age that both Sidney and Beatrice Webb and their brilliant colleague and co-evangelist in Fabian socialism, Bernard Shaw, ended their careers as loyal defenders of the most complete and ruthless tyranny mankind has known.

However, our American creepers toward socialism are most of them less bold and forthright than that. Often they don’t even know where they are creeping. They see with the tail of an eye that political liberty is incompatible with economic subjection, but they refuse to look straight in the face of this fact. They refuse to learn the lesson that the history of these last thirty years has been spread out on the table, it almost seems, to teach them. They remain indecisive, equivocal—lured by the idea of security, orderly production, and universal welfare under a planning state, yet not quite ready to renounce in behalf of it those rights and liberties of the individual which stand or fall with the free market economy.

An ironical truth is that these socializers will not achieve security, orderly production, or the prosperity that makes universal welfare possible, by sacrificing freedom. They will be duped and defeated on all fronts. For me that also is proven by the history of the last three decades. But that is not the theme of this chapter.

Its theme is that our progress in democracy is endangered by democratic enthusiasts who imagine that they can preserve freedom politically while hacking away at its economic foundations. More even than the fellow travelers with their vicarious flair for violent revolution, or the Communists with their courageous belief in it, these piously aspiring reformers are undermining our hopes. Yearning to do good and obsessed by the power of the state to do it, relieved by this power of their age-old feeling of futility, they are destroying in the name of social welfare the foundations of freedom.

Arthur Koestler warned us some years ago against the “men of good will with strong frustrations and feeble brains, the wishful thinkers and idealistic moral cowards, the fellow-travelers of the death train.” We have accepted his warning. At least we have learned the meaning of the word fellow traveler, and are no longer falling in droves for these unlovely accomplices of the tyrant. We must arm our minds now against the less obvious, the more strong and plausible and patriotic enemies of freedom, the advocates of a state-planned economy. They are not on the train and have no thought of getting on, but they are laying the tracks along which another death train will travel.

  • 1. I pointed out this vital conflict between Marxism and modern science in my early book Marx and Lenin, the Science of Revolution in 1925, anticipating by twenty years—although far indeed from expecting—the physical liquidation of the scientists. The passage will be found unchanged in Marxism Is It Science (pp. 267–89).
         The question of Marxism and the present conception of man is more fully discussed in my last chapter: “Socialism and Human Nature.”
  • 2. Sadly enough, the Social Democrats, though trained in “economic interpretation,” are least of all able to learn this lesson. Even those emerging from their imprisonment in Marxian dogma take the wrong road. They reject what was sagacious and scientific about the master, his insistence on the importance of economic relations, and cling to his wishful dream, contradicted by all we now know about economics, of freedom under the planning state. Instead of going forward from their pseudo-scientific socialism to an expert, modern attempt to create a better society, they shrink back, clinging to a word and an emotion, into an attitude hardly distinguishable from that of the utopian socialists whom Marx superseded.
  • 3. In the New Leader for August 4, 1945, answering my argument that democratic socialism is impossible.
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