Anything That’s Peaceful

• CHAPTER 6 •

HOW SOCIALISM HARMS
THE ECONOMY

OUR COUNTRY has stumbled into socialism during the past half century; by now—1964—we have adopted nearly all the things socialists have long urged upon us. A reading of the ten points in the Communist Manifesto confirms this. We who are aware of socialism’s built-in destructiveness have watched this trend with apprehension. Foreseeing the end result, we are forever predicting, or warning against, the impending catastrophe which we think hangs over our economy.

Our dire predictions, however, fail to ring bells with many people. As a rule they are met by the rejoinder, “We never had it so good.” And, so far as statistical measurements of material well-being are concerned, that claim appears to hold water. Prosperity, according to the National Bureau of Economic Research, is reported to have increased as follows:

Today’s national income of $2,300 per capita is double what it was (in constant dollars) forty years ago, and it is higher in the face of a 70 per cent increase in population and a 20 per cent reduction in the hours of paid work per capita.

Output per man hour has grown over the same period at the average annual rate of 2.6 per cent.

Today’s higher income is more evenly distributed than the lower income of earlier years.

The economic difficulties of most everyone have been lessened through the establishment and broadening of various social welfare programs.

The four recessions we have encountered since World War II are among the milder in our history, which means an unusually long period free of serious depressions.1

Now, consider what has happened politically during this period. Statism, measured in terms of governmental expenditures per capita, has advanced from about $80 in the years just after World War I to more than $700 now.2

Small wonder, then, that most people, observing statism and prosperity advancing coincidentally over so long a period, conclude that the growth of statism is the cause of the increased prosperity! But if there is a positive correlation here, why not expand prosperity indefinitely by the mere expedient of increasing governmental expenditures? This absurdity needs no comment.

Nonetheless, it is true that the comeback, “We never had it so good,” cannot easily be proved wrong statistically. A man leaping from an airplane at high altitude will, for a time in his fall, have the feeling of lying on a cloud. For a moment he would be warranted in exclaiming, “I’ve never had it so good!” And only one familiar with physical principles such as the law of gravitation could prove to him that disaster lay ahead. Yet, some of us would believe, by reason of certain knowledge, that the man was not long for this world.

Some of us believe that the chant, “We’ve never had it so good,” is founded on a mistaken correlation. But more significantly, it overlooks moral realities which cannot be measured statistically. It is our conviction:

1. That the practice of dishonesty is evil and that retribution follows the doing of evil. Every evil act commits us to its retribution. The time lag between the committing of an evil act and our awareness that retribution is being visited upon us has nothing to do with the certainty of retribution; it has to do only with our own limited perception.

2. That there is no greater dishonesty than man effecting his own private gains at the expense of others. This is ego gone berserk; it is the coercive assertion of one’s supremacy as he defies and betrays his kind.

3. That statism is but socialized dishonesty; it is feathering the nests of some with feathers coercively plucked from others—on the grand scale. There is no moral—only a legal—distinction between petty thievery and political Robin Hoodism, which is to say, there is no moral difference between the act of a pickpocket and the progressive income tax or any other piece of socialization.

Thus, many of us profoundly believe that we cannot maintain the present degree of statism, let alone drift further toward the omnipotent state, without our great economy flying to pieces. Nevertheless, we find it difficult to do more than express our misgivings and alarm. Why, precisely why, does the present course presage disaster? What will be the nature of that disaster? Perhaps the following explanation may be worth pondering.

A Societal Problem

At the outset, imagine an impossible situation: a population composed of self-sufficient individuals, no exchange of any kind between them—not even conversation. Moral qualities, such as honesty among men and the practice of the Golden Rule, would never be brought into play. Each might be congenitally dishonest and unjust; but with no practice of the evils, what visible difference would it make?

Now, assume the development of specialization and exchange. The greater and more rapid the development, the more dependent would be each individual on all the others. Carried far enough, each person would be completely removed from self-sufficiency and utterly dependent on the free, uninhibited exchanges of the numerous specializations. In this situation, a total failure in exchange would result in everyone’s perishing.

Whenever we become economically dependent on each other—an inescapable consequence of a highly specialized production and exchange economy—we become equally dependent on the moral qualities of the participating individuals. No peaceful or free or willing exchange economy can exist among chronic liars and thieves; no such economy can long endure without a high degree of honesty. This is self-evident.

The degree of specialization in the U.S.A. today is without precedent in all history and, as a consequence, our dependence on each other is beyond the bounds of experience in this or any other country—ever! The question is, are we overly specialized and, thus, dangerously interdependent? I believe we are.

We are dangerously interdependent because so much of our specialization is unsound; it is not economic and natural but, instead, is governmentally forced and artificial. An economy founded on artificialities is in peril.

Economic specialization is the sturdy variety that blooms in the context of the peaceful, free, and unfettered market; it is the natural, technological outcropping of consumer requirements as reflected in voluntary, willing exchanges. Given these postulates, production, regardless of how specialized it is, generates its own purchasing power; balance is one of its built-in features.

Natural Specialization Welcomed

All advances in natural specialization improve the standard of living. It is true that interdependence increases with its growth, but without peril, for economic interdependence is founded on consent; the countless relationships are as firmly rooted in general harmony and acceptance as is the free exchange of 30 cents for a can of beans. In a free market transaction each party chalks up a gain, for each values what he receives more than what he gives; each party is in a thank-you mood. Check this assertion with your own shopping experiences.

Specialization of the free market variety develops an integrated interdependence because each person is his own man—the whole man; all the faculties are called upon in his interrelationships. The premium is on self-responsibility and honesty, these being the cohesive ingredients which make specialization and exchange a workable arrangement. To prove the validity of these affirmations, simply reflect on one’s daily free market experiences with the purveyors of countless specializations: groceries by the hundreds, milk, school supplies, footwear, clothing, gas, electricity, on and on. The natural, peaceful, unfettered free market rewards—and gets—the honesty on which it relies.

Unnatural specialization, on the other hand, decreases rather than increases the standard of living. It does not have its origin in consent but in force. It is not the result of millions upon millions of judgments voluntarily rendered. It is, instead, founded on the whims, caprices—call these judgments, if you choose—of political persons and committees, the few who have gained power over the rest of us. When these political “ins” take over a sector of society, they remove it from the area where free choice may be exercised by the millions of “outs.” Our faculties are less and less called upon; self-responsibility shifts to government or authoritarian responsibility—that of the political “ins.” The premium on honesty disappears as prizes are given more and more for bending to expediency, trading influence and special privileges, log-rolling, and the like. From this turnabout, the individual tends to become someone else’s man; that is, not the whole man but the fragmented man. Having forsworn independence or being deprived of it, men lose the incentive to be honest and self-responsible, and thus become incapable of true interdependence.

As I see it, socialization harms the economy (1) by spawning unnatural specializations and (2) by demoralizing the citizenry. Such moral qualities as self-responsibility and honesty are not exercised under socialism, and thus tend to wither away. And without these qualities, interdependence is unworkable. Moral qualities are gone with the wind when uprooted; it is self-evident that they do not exist except as they are practiced.

Natural specializations emerge from the willing exchange (free) market at work. The unnatural and unhappy alternative is for the government to forcibly collect income from citizens to employ individuals to specialize in occupations the willing exchange market would not support.

Exploring the Moon

Instead of trying to pick the danger point in this situation from the hopeless governmental complex in which it is embedded, let us first examine a single facet.

Take, for example, the moon project. What its ultimate, useful purpose is I cannot imagine. But putting aside personal prejudices against this multibillion dollar project, it is obvious that it would not, at this time, emerge from the free market. Now, consider the countless specializations that this single governmental project calls into existence.

Take only one of them: finding out how to cushion the landing of a TV set on the moon. The specialists who devote themselves to this problem, and all who are dependent on them, have no way of living except as they are able to exchange the income given to them by government for food, clothing, housing, and so on. But this income of theirs is not voluntarily supplied in the market place; government has forcibly taken it from the rest of us. Who would willingly exchange the food he raises for this service to the moon project? This project qualifies as an unnatural specialization; it is not bound into the economy by mutual consent as reflected by willing exchanges in a free market; it is bound into the economy by the exertion of governmental force or coercion.

That some unnatural specializations are economically tolerable is conceded, but this is an exceedingly limited tolerance. Merely imagine everyone specializing in activities for which no one would willingly exchange his income!

All governmental intervention has as its object a forcible altering of what people would do were they unrestrained. To the extent that government intervenes in free action to that extent is unnatural specialization brought into play. While most of us will concede that government should forcibly restrain fraud, violence, and the like, it does not take a skilled sociologist to understand what would happen to the economy were all citizens to specialize in policing. While the proper function of government is to keep the peace, citizens must be on the alert lest the bureaucracy pervert even this laudable objective. Too many soldiers and policemen are possible, as history attests. Not every corner requires a stop light. It is easy to be talked into a battleship or a supersonic bomber binge. If the bureaucracy is not checked, it will tend to build, in the name of peace, a defense against every conceivable contingency—so much “security” that “the secured” are without resources—helpless and hopeless.

However, my aim in this chapter is not to discuss the merit of this or that type of forcible intervention; it is, rather, to suggest that there comes a point in unnatural specializations beyond which extension is impossible without the economy flying to pieces. Suppose that everyone were engaged in one of the nonexchangeable services such as designing and constructing devices to cushion the landing of TV sets on the moon!

Unmarketable Specialties

Regardless of the need some may see for government golf courses or price supports or compulsory education of children or federally financed hospitals or numberless other socializations, the fact is that tens of millions of American citizens in consequence are now engaged in and wholly dependent on unmarketable specializations—and the number grows apace. Increasingly, more and more millions are becoming dependent on such forced exchange of their unwanted specializations for those goods and services without which they cannot live. Even if the personal virtues of honesty and self-responsibility were at their highest state of development, instead of their present eroded state, such a system could not be made to work. Nothing but the total state—the police force in charge of everything—can cause us to exchange with each other goods and services none of us wants. And, the total state, as I have already tried to demonstrate, is noncreative. The possibility of a good economy disappears with the total state.

Bear in mind, when it comes to assessing prosperity and the state of the economy statistically, that dollars exchanged for unnatural specializations are counted as earned income precisely as if exchanged for natural specializations. This is a misleading fiction. For instance, there would be no decline in gross national product (GNP), as presently computed by government, if all of us indulged in unmarketable specializations provided, of course, that the state priced the specializations high enough and forced us to exchange them even while we are slowly starved!

Statistical measurements of economic well-being cannot gauge the honesty and self-responsibility of the citizens, nor can any statistics warn us when unnatural specializations are becoming top heavy; such is beyond the scope of statistical measurement.

If one wishes to know how socialism harms the economy, I suggest that much less attention be given to statistics than to the question: How much immoral action is being introduced into the economy? If socializing the means and the results of production is immoral, as I contend, then socialism harms the economy by introducing immorality into it. In short, watch moral trends, rather than numerical fictions, for danger signals.

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1 See The Fortieth Annual Report (1960), National Bureau of Economic Research, 261 Madison Avenue, New York, N. Y.

2 How closely does this approach what we call the “authoritarian state”? One way to make an estimate is to measure governmental take of earned income. In 1917 it was less than 10 per cent. Today it is 36 per cent. We must keep in mind, however, that a state of dictatorship can exist prior to a 100 per cent take—perhaps at the halfway mark.