Mises Daily

I Don’t Know

[The Free Market and Its Enemy (1965)]

Any individual who has become aware of the free market and its miraculous performances must realize that its opposite — socialism — is growing by leaps and bounds. This growth, at the moment, is not so much in formal takeover (nationalization of the modes of production) as in political control and the intellectual acceptance of control; socialism, ideologically, is now American doctrine. This is to say that socialism is not yet as thoroughly embedded in practice as it is in theory — but the acceptance of the theory is the preface to inevitable practice. Performance in the world of practical affairs follows on the heels of prevailing ideas.

In any event, socialistic ideas are becoming so popular that countless “free enterprisers” are either “getting on the band wagon” or “running for cover.” But, whichever way — one as pitiful as the other — they are forsaking their role as spokesmen for freedom.

One of the major reasons for this apostasy is clear enough: all too few understand and can make the case for the free market — without which freedom of speech, of the press, of religion are utterly impossible.[1] In the absence of skilled spokesmen, freedom disappears in the United States as elsewhere.

Making the case for the free market requires a great deal of dedicated homework and learning, among other things, how not to give the case away. And unless “I” can everlastingly maintain an awareness of how little “I” know, the chances of becoming an effective expositor of the free market are nil. Here are two tricky and rarely suspected booby traps that victimize many an “I”:

  1. Attempting to explain how socialism, once installed, can be made to work better than at present.

  2. Attempting to explain what would happen to a socialized activity were it desocialized, leaving the activity to the free market.

I shall try to demonstrate not only that each of these is impossible of realization but that the attempts themselves do the libertarian rationale a distinct disservice.

A FEE-seminar team was invited to Venezuela. We gathered with the participants at a plush hotel 60 miles from Caracas — one of a chain of 11 hostelries built, owned, and operated by the national government. The chain has always been deep in the red. A successful businessman (one of our hosts) had once been asked by the government to head this socialized operation. Thinking that socialism might be made to work were he in charge, he accepted the challenge. When he discovered that these hotels required 150 percent occupancy just to break even, he resigned. Had he known that socialism, by its very nature, can never be made to work, he would have been spared that waste of his energies.

Socialism Defined

Socialism may be defined as the state ownership and control of the means of production and exchange and/or the results of production and exchange; but what, really, is it in simple essence? It is a forcible intervention into exchange processes, a power wedge between the willingness of buyers and the willingness of sellers, a coercive interference with what some persons want that other persons are willing to grant. Socialism, in the final analysis, amounts to the frustration of willing exchange by people who are unaware of how little they know.

For example, an American desires to exchange his $20 for an Englishman’s sweater — nothing involved but a willing swap, no one else’s status one whit different after the exchange than before it was made. The know-it-alls, however, with their police force, insist that a social interest is involved, that the exchange cannot be made without a penalty of $5. To the extent that this transaction is socialized — in this case the penalty payment of $5 — to that degree is the will of two peaceful parties frustrated.

How can frustration be made to work? How can frustration be manipulated into harmony and increased production? Can any interference with peaceful, willing exchange, regardless of who does the interfering, do other than wreak havoc?

Many antisocialists, unhappy with the outcome of socialized activities, feel that these could be improved were they, rather than other know-it-alls, in charge. So they seek election or appointment to the government boards of such activities, under the impression that this is one way to strike a blow for freedom. This much I concede: they can, when in charge, do more of what they want done with other people’s money than would be the case were other know-it-alls in charge. But this is no libertarian accomplishment; it’s only a substitution of one group’s know-it-all-ness for another’s.

Further, when those of a libertarian bent set out to make socialism work better, whether by managing the activity or by their endorsement of legislation which would modify the socialistic details, they tacitly approve the socialistic premise and thereby abandon their own case for the free market. They forswear all fundamental argument against the socialistic premise because by their actions they acknowledge that it could be improved were they themselves framing or administering it. “Socialism, were I its manager, wouldn’t be so bad.” That, I submit, is an emanation from the mind of a know-it-all in words loud and clear.

What am I saying? That a libertarian cannot consistently accept the postmaster generalship? Or membership on the municipal power-and-light board, or whatever? Unless he claims to know how to make socialism work, that is precisely what I am saying.[2] What more effective opposition is there than a polite “No, thank you!” And when asked, “Conceding that TVA is with us, how can it be made to work better than it now does?” what more truthful answer than “I don’t know; I never will know; no one will ever know.” There is no right way to implement a wrong premise!

The student of liberty, if he is not to get off the track, must hope and work for the restoration of the free market and a government restored to its principled role of keeping the peace.[3] Then let him peacefully keep in character by leaving socialistic activities to those who aren’t yet aware of how little they know. Left to their own resources, the bungling of their schemes may become apparent even to themselves and, most certainly, to libertarians who have not fallen into this trap. Why should libertarians absolve the socialists by becoming a party to their unworkable measures?

So much for the first booby trap. But what about its twin, the attempt to explain what would happen were the market freed of state interventionism, that is, were the activities desocialized?

What Might Have Been?

Skeptics of the free market are forever asking, “Well, how would the free market attend to mail delivery? Education? Or, whatever?” Satisfactorily answer these questions, they imply, or the free-market case loses by default. And just as often, aspiring libertarians will stumble into the booby trap; they’ll conjure up some sort of an answer.

Now these attempts to answer, regardless of how skilled and ingenious the authors, will have no less than three faults, the least of which is know-it-all-ness. Take the case of mail delivery. A person can no more explain how the free market would attend to mail delivery than his great-grandfather could have explained how television could ever emerge from free-market forces!

A more serious fault is that the listening skeptic will conclude that the know-it-all answer is the free-market answer and, if that’s the best it has to offer, the free market has no valid case. These futile attempts to answer can accomplish no more than to confirm the skeptics in their socialism.

The greatest fault, of course, is that these students of liberty themselves have not yet learned to answer honestly, “I don’t know; I never will know; no one will ever know.” They have not wholly cured themselves of the offending psychosis.

This I-don’t-know answer has the virtue of being intelligent, truthful, properly humble, and novel enough to intrigue any skeptic with a searching mind. Conceded, the answer — by itself — sheds no light. But if the skeptic wishes to learn (it is idle to talk to him if he doesn’t) and if the aspiring libertarians have observed and can report on how miraculously the free market performs when not politically aborted, skepticism concerning the free market will lessen, faith in what man will accomplish when free to try will increase. In short, light will be shed, education will begin.

How would the free market attend to mail delivery were the postal service desocialized? I don’t know! Nor could anyone have known 100 years ago how the free market would develop the means to deliver the human voice from city to city. But take note of these facts: we have maintained mail delivery as a socialized operation; its service is getting worse, not better; its costs and prices are increasing, not decreasing; since 1932 it has accumulated an acknowledged deficit of $10 billion, and the deficits increase annually.[4]

Voice delivery, on the other hand, has been improving. Just a century ago the human voice could be delivered at the speed of sound, but only the distance two people could understand each other’s shouting. Today, the human voice is delivered at the speed of light; and as to distance, it’s any place on earth — you name it! The service has improved enormously; and the cost has decreased steadily.

In human-voice delivery, free-market forces have been more or less operative. No one could have predicted in 1865 what form these forces would take during the next hundred years. Even more remarkable, no one can describe how the miracles were performed after the fact. Once we realize that we cannot explain what has happened, it becomes obvious that we can never explain what will happen.

Nature and Man

The miracles of the market are of a higher and more complex order than the miracles of nature: what emerges from the free market embraces the miracles of nature, plus the miracles of human creativity as well. May I repeat, all the artifacts by which we live are but the application of human creativity to the creativities manifest in nature.

“Once we realize that we cannot explain what has happened, it becomes obvious that we can never explain what will happen.”

Reflect on the simpler of these phenomena, the order of nature. Had you lived on earth before there were any trees, for instance, and been asked, “How can nature ever make a tree?” you would have answered, “I don’t know.” Today, were you asked, “How has Nature made a tree?” you would be forced to reply, “I don’t know.” Yet, you can, with considerable certainty, predict that nature will continue to produce these lovely miracles, provided conditions favorable to their growth are not aborted. You can derive from experience, not a how-to-do-it knowledge, but a soundly based faith in the dependability of the biological order.

Such confident expectation is as close as any man can come to knowing how the free market would attend to an activity, were it desocialized. All about him, in unimaginable profusion, are miracles of the free market, so commonplace that they are taken more for granted than noted and appreciated — like the air we breathe. These, properly apprehended, comprise his experience. But such experience does not give him a how-to-do-it knowledge; it serves only as the basis for a warranted and unshakable faith, a faith in what free men can accomplish — provided conditions favorable to free exchange are not aborted.

The poet who wrote, “Only God can make a tree,” was merely acknowledging a common faith. Know-it-alls are never heard trying to refute this; everyone takes it for granted. Yet, if it be asserted that “only God can make a violin” — portions of nature with human creativity as an added ingredient — the person unaware of how little he knows will have no more hesitancy in subjecting violin production to his masterminding than he has in socializing the airlines, or power and light, or the postal service, or whatever.

Why will people concede that they are unable to mastermind atoms and molecules into the living manifestations of nature, while at the same time acknowledging no shortcomings at all in themselves when it comes to masterminding something we know far less about: human creativity? I don’t know!

Gaining a Faith in Freedom

The aspiring libertarian, if he has made the first important step in progress, understands that he does not know how to mastermind the life of a single human being. He concedes that there is an order of creation over and beyond his own mind, that this order works in diverse and wondrous ways through billions of minds and that he should not in any way abort these miracles. This, however, does not make him a know-nothing. Even though, from his experience, he does not know what will happen, he gains a faith that miracles will happen if creative energies be free to flow.

The accomplished student of liberty acquires a faith that men, when free to try, will perform miracles, a faith extrapolated from experience. But when it comes to predicting the shape of miracles that will show forth from creativity, he takes his place with men, not with clairvoyant demigods. As an aware human being, he must answer, “I don’t know!”


[1] See “Freedom Follows the Free Market” by Dean Russell, the Freeman, January, 1963.

[2] Even accepting such assignments with a clear mandate to plan their undoing would, I believe, be futile. See “Unscrambling Socialism,” Essays on Liberty, Volume XII (Irvington-on-Hudson, New York: Foundation for Economic Education, 1965), p. 433.

[3] Inhibiting and penalizing destructive actions such as fraud, violence, misrepresentation, predation — invoking a common justice, keeping the peace — call for a compulsive agency of society: government. The management of destructive activities cannot properly be left to the free market, the nature of which is voluntary and the scope of which is the productive and creative. See my Government: An Ideal Concept, op. cit.

[4] See “$48,000” by Paul Poirot, the Freeman, February, 1965.

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