Free Market Economics: A Basic Reader

The Nature of the Individual— Values and Actions

Roger J. Williams

Biologically, each member of the human family possesses inborn differences based on his brain structure and on his vast mosaic of endocrine glands—in fact, on every aspect of his physical being. Each of us has a distinctive set of drives—for physical activity, for food, for sexual expression, for power. Each one has his own mind qualities: abilities, ways of thinking, and patterns of mental conditions. Each one has his own emotional setup and his leanings toward music and art in its various forms, including literature. All these leanings are subject to change and development, but there is certainly no mass movement toward uniformity. No one ever “recovers” from the fact that he was born an individual.

When a husband and wife disagree on the temperature of the soup or on the amount of bed coverings, or if their sleep patterns do not jibe, this is evidence of inborn differences in physiology. If one child loves to read or is interested in science and another has strong likings for sports or for art, this is probably due to inborn differences in makeup. If two people disagree about food or drink, they should not disregard the fact that taste and smell reactions often widely differ and are inherited. If we see a person wearing loud clothing without apparent taste, we need to remember, in line with the investigations of Pickford in England, that each individual has a color vision all his own; some may deviate markedly from the pack.

The inborn leanings of Mozart were evident by age three, and he began composing when he was four. Capablanca was already a good chess player—good enough to beat his father—when at age five he played his first game. For many centuries, Indian philosophers have recognized innate individuality, which they explain on the basis of experience in previous incarnations.

Biology has always recognized inborn individuality. If this inborn distinctiveness had not always been the rule in biology, evolution could never have happened. It is a commonplace fact in biology that every living organism needs a heredity and a suitable environment. Unfortunately, in the minds of most intellectuals biological considerations have been pushed aside.

Professor Jerry Hirsch, a psychologist at the University of Illinois, has protested in Science that “the opinion makers of two generations have literally excommunicated heredity from the behavioral sciences.” This neglect of the study of heredity has effectively produced a wide gap between biology and psychology. Biology deals with living things, and psychology is logically an important phase of biology.

Bernard Rimland, director of the Institute for Child Behavior Research in San Diego, in reviewing my book, You Are Extraordinary in American Psychologist, wrote: “Since between-group differences are commonly a small fraction of the enormous, important, and very interesting within-group (individual) difference, psychology’s focus on average values for heterogeneous groups represents, as Williams indicates, a chronic case of throwing out the babies with the bath water. ‘Throwing out the babies’ is bad enough, but we psychologists have the dubious distinction of making this error not only repeatedly but on purpose.”

Social solidarity exists and social problems are pressing, but we cannot hope to deal with these successfully by considering only generic man, that is, average values for heterogeneous groups. We need a better understanding of men.

A Firm Foundation

The basic problem of generic man is how to achieve “life, liberty, and the pursuit of happiness.” The writers of our Declaration of Independence were on solid ground, biologically speaking, when they took the position that each human being has inalienable rights and that no one has, by virtue of his imagined “royal blood,” the right to rule over another. In their emphasis on mankind as individuals, Jefferson and his co-authors were closer to biological reality than are those of our time who divorce psychology from biology and center their attention on that statistical artifact, the average man.

Because each of us is distinctive, we lean in different directions in achieving life, liberty, and the pursuit of happiness. Happiness may come to individual people in vastly different ways, and so the human problem of achieving life and the pursuit of happiness resolves itself, more than it is comfortable to admit, into a series of highly individual human problems. We need to take this consideration into account in attempting to build an advanced society.

In understanding the scope of human desires, it is worthwhile to consider briefly the problems that real—as opposed to theoretical—people face. These may be grouped under four headings: 1) making a livelihood; 2) maintaining health; 3) getting along with others; and 4) getting along with one’s self. These four categories, singly or in combination, cover most of the familiar human problems—marriage and divorce, crime, disease, war, housing, air and water pollution, urban congestion, race relations, poverty, the population explosion, the all-pervading problem of education, and the building of an abundant life.

The importance of approaching the problem of making a livelihood from the individual’s standpoint lies in the fact that in our complex society a multitude of ways exist—an estimated 23,000—in which people can make a living. People are not by any means interchangeable parts in society. While some might function well in any one of a large number of capacities, many others might be highly restricted in their capabilities and yet be extremely valuable members of society. The idea that it is all a matter of education and training cannot possibly be squared with the hard biological facts of inborn individuality. This perversion of education perpetuates the banishment of heredity—an ever present biological fact—from our thinking. Fitting together people and jobs is just as real and compelling as fitting shoes to people. People sometimes suffer from ill-fitting shoes; they suffer more often from ill-fitting jobs.

The maintenance of health—both physical and mental—involves individual problems to such a degree that it is difficult to exaggerate their role. Ever since the days of Hippocrates it has been known in a vague way that “different sorts of people have different maladies,” but we are only beginning to learn how to sort people on the basis of their inborn individual characteristics. When we have become expert in this area, vast progress will result, particularly in the prevention of metabolic and psychosomatic diseases, i.e., those not resulting from infection. As long as we dodge the biological fact of inborn individuality, we remain relatively impotent in the handling of diseases that arise from within individual constitutions.

The problem of getting along with others is a very broad one, in which individual problems are basic. If husbands and wives and members of the same family always get along well together, we would have some reason to be surprised when squabbles break out within business, religious, or political groups. If all these kinds of squabbles were nonexistent, we would have a basis for being surprised at the phenomenon of war.

Distinctive Qualities

While self-interest and differences in training are vital factors in these common conflicts, another factor should not be overlooked: the inborn individuality of the participants. There is a mass of evidence to support the thesis that every individual, by virtue of his or her unique brain structure and peripheral nervous system, is psychologically conditionable in a distinctive manner. Thus, a person’s unique nervous system picks up distinctive sets of impulses, and because his interpretive apparatus is also unique he learns different things and interprets the world in a distinctive manner. Even if two individuals were to have exactly the same learning opportunities, each would think differently and not quite like anyone else. This is the basis for the observation by Santayana: “Friendship is almost always the union of a part of one mind with another; people are friends in spots.”

In spite of our attempts to do so, individual minds cannot be compared on a quantitative basis. The minds of Shakespeare and Einstein cannot be weighed one against the other; there were many facets to the minds of each. At birth the two minds were equally blank, but as they matured, each saw, perceived, and paid attention to different aspects of the world around it. Each was conditionable in a unique way.

Each Mind Unique

The recognition of the uniqueness of human minds is essential to human understanding. By developing expertness in this area, psychology will eventually become far more valuable. In an advanced society with a growing population and closer associations, it is obviously essential that we learn better how to get along with each other. When we are unaware of the innate differences that reside within each of us, it becomes very easy to think of one who disagrees with us as a “nitwit” or a “jerk,” or perhaps as belonging to the “lunatic fringe.” When we appreciate the existence of innate differences, we are far more likely to be understanding and charitable. Strife will not be automatically eliminated, but tensions can be decreased immeasurably.

Individual problems are at the root of the problem of crime. Many years ago, James Devon placed his finger on the crucial point. “There is only one principle in penology that is worth any consideration: It is to find out why a man does wrong and make it not worth his while.” The question, “Why does a particular man commit crime?” is a cogent one; the question, “Why does man turn to crime?” is relatively nonsensical.

Since all human beings are individual by nature, they do not tick in a uniform way nor for the same reasons. Broadly speaking, however, many doubtless turn to crime because society has not provided other outlets for their energies. If we could find a suitable job for every individual, the problem of crime would largely vanish. The problem of crime is thoroughly permeated with individual problems; it cannot be blamed solely on social conditions, because as the studies of Sheldon and Eleanor Glueck have shown, highly respected citizens may come from areas where these conditions are the worst.

A Race of Individuals

Racial relations would ease tremendously if we faced squarely the biological facts of individuality. If we were all educated to know that all whites are not the same, that all Negroes do not fit in the same pattern, that all Latins are not identical, that all American Indians are individuals, and that all Jews do not fit a stereotype, it would help us to treat every member of the human race as an individual.

It is no denial of the existence of racial problems to assert that individual problems need to be stressed more than they are. For individual Negroes and individual whites, the pursuit of happiness is by no means a uniform pursuit. Doubtless, although there are whites and Negroes who would think they had reached utopia if they had a decent shelter and were assured three meals a day, this would not satisfy millions of others for whom striving and a sense of accomplishment are paramount. “The Negro problem” or “the white problem”—depending on one’s point of view—is shot through with a host of individual problems.

Learning to live with one’s self is certainly an individual problem, and will be greatly eased by recognition of inborn individuality. Much unhappiness and many suicides can be traced to misguided desire to be something other than one’s self. Each of us as an individual has the problem of finding his way through life as best he can. Knowing one’s self as a distinctive individual should be an important goal of education; it will help pave the road each of us travels in his pursuit of happiness.

Dangers of Oversimplification

Why have these facts of individuality not been generally accepted as a backdrop in every consideration of human problems? For one thing, many people, including scholars, like being grandiose and self-inflationary. To make sweeping pronouncements about “man” sounds more impressive than to express more limited concerns. Simplicity, too, has an attractiveness; if life could be made to fit a simple formula, this might be regarded as a happy outcome.

One excuse for excommunicating inheritance from the behavioral sciences for two generations has been the fact that inheritance in mammals is recognized by careful students as being exceedingly complex and difficult to interpret. It is true that some few characteristics may be inherited through the operation of single genes or a few recognizable ones. But other characteristics—those that differ in quantity—are considered to be inherited in obscure and indefinable ways commonly ascribed to multiple genes of indefinite number and character. These multiple-gene characteristics include, to quote the geneticists Snyder and David, “the more deep-seated characters of a race, such as form, yield, intelligence, speed, fertility, strength, development of parts, and so on.” To say that a particular characteristic is inherited through the mediation of multiple genes is to admit that we are largely ignorant of how this inheritance comes about.

Identical Twins?

Recently, some light has been thrown on this problem by experiments carried out in our laboratories. These experiments involved armadillos, which are unusual mammals in that they commonly produce litters of four monozygous (“identical”) quadruplets that are necessarily all males or all females.

By making measurements and studying sixteen sets of these animals at birth, it became evident that although they develop from identical genes, they are not identical at all. Organ weights may differ by as much as twofold, the free amino acids in the brain may vary fivefold, and certain hormone levels may vary as much as seven-, sixteen-, or even thirty-two-fold. These findings clearly suggest that inheritance comes not by genes alone but by cytoplasmic factors that help govern the size of organs (including endocrine glands) and the cellular makeup of the central nervous system. “Identical” twins are not identical except with respect to the genes in the nucleus of the egg cell from which they developed.

One of the most interesting suggestions arising out of this study is the probability that individual brain structures, which have been known to have “enormous” differences since the investigations of Lashley more than twenty years ago, are made distinctive by the same mechanisms that make for differences in organ weights. The size, number, and distributions of neurons in normal brains vary greatly; this is biologically in line with the uniqueness of human minds. The further elucidation of this type of inheritance should help to focus more attention on heredity.

If this line of thought is valid it makes even more ridiculous the invitation issued by the Ford Foundation to the biological sciences to stay out of the precinct of human behavior. The expression “behavioral science” came into being many years ago as a result of the formulation of the Ford Foundation-supported programs. Biochemistry and genetics, for example, were kept apart from the “scientific activities designed to increase knowledge of factors which influence or determine human conduct.”

What can be done to bridge the gap between psychology and biology? More importantly, how can we develop expertise in dealing with the human problems that plague us but at present go unsolved?

Differential Psychology

A broad, long-range, and practical strategy for learning how to deal more effectively with human problems is to explore, problem by problem, the inborn human characteristics that are pertinent to each one. Differential psychology, for example, needs to be intensified and greatly expanded; this can probably be done most effectively in connection with a series of problem-centered explorations.

Some of the specific problem-areas that require study from the standpoint of how inborn characteristics come into play are: delinquency and crime, alcoholism, drug addiction, unemployability, accident proneness, cancer, heart disease, arthritic disease, mental disease, and broadest of all, education. Each of these problems could be vastly better understood as the result of interdisciplinary study of the influences of inborn characteristics. Such study would include differential psychology when applicable, combined with extensive and intensive biochemical and physiological examinations, for example, of blood, saliva, urine, and biopsy materials. To expedite these investigations, automated equipment and computer techniques would be used extensively to help interpret the complex data.

It is not likely that these explorations will find that some individuals are born criminals, others alcoholics, etc. Once we recognize the unique leanings that are a part of each of us, we will see how, by adjusting the environment, these leanings can be turned toward ends that are socially constructive. Every inherited factor can be influenced by an appropriate adjustment of the environment. All this should not be made to sound too easy; it may be more difficult than going to the moon, but it will be far more worthwhile.

One of these specific problems—alcoholism—has been of special interest to me. After about twenty -five years of study, I am convinced that inborn biochemical characteristics are basic to this disease, but that expert application of knowledge about cellular nutrition (which is not far off) will make it scientifically possible to prevent the disease completely and to correct the condition if the application of corrective measures is not too long delayed.

Inborn inherited characteristics have a direct bearing on the current revolt against the Establishment. If biology had not been banished from behavioral science, and if students and other intellectuals were well aware of the biological roots of their existence, it would be taken for granted that conformity is not a rule of life.

If all that we human beings inherit is our humanity, then we all should be reaching for the same uniform goal: becoming a thoroughly representative and respectable specimen of Homo sapiens. There is rebellion against this idea. Revolters want to do “their thing.” The revolt takes on many forms because many unique individuals are involved.

If nonconformity had a better status in the eyes of the Establishment (and it would have if our thinking were more biologically oriented), exhibitionism would be diminished and the desire of each individual to live his own life could be fostered in a natural way.

Human beings are not carbon copies of one another. Students and others who are in revolt have found this out. Perhaps without fully recognizing it, they are pleading for a recognition of inborn individuality. This is essentially a legitimate plea, but it can take the form of disastrous anarchy. A peaceful means of helping resolve the ideological mess we are in is to recognize heredity by having a happy marriage of biology and behavioral science.

Roger J. Williams

If Socrates were resurrected, I suspect he would call attention again to what was written about 25 centuries ago: Know thyself; if you know a lot about other things and are ignorant of yourself, this is ridiculous.

We in this advanced and scientific age have never taken Socrates seriously on this point. I maintain that we are being ridiculous; we seek to plan and yet are not informed about ourselves for whom we plan. Of course, we know something about ourselves, but science has never undertaken a serious job of understanding people—a multidisciplinary undertaking. We have not tackled the job of understanding ourselves with one-tenth of the fervor we have shown in our research in outer space.

One of the most important facts about ourselves we have not grasped: All of us are basically and inevitably individuals in many important and striking ways. Our individuality is as inescapable as our humanity. If we are to plan for people, we must plan for individuals, because that’s the only kind of people there are.

In what ways are we individuals? First as to our bodies. These ways are tangible and not subject to argument. Each of us has a distinctive stomach, a distinctive heart and circulatory system. Each of us has a distinctive muscular system, distinctive breathing apparatus, and an endocrine system all our own. Most surprising and significant perhaps, each of us has a distinctive set of nerve receptors, trunk nerves, and a brain that is distinctive in structure and not like other brains.

We are individuals also with respect to our minds. We do not all think with equal facility about the various things that can be thought about. Einstein was an extremely precocious student of mathematics, but on the other hand, he learned language so slowly that his parents were concerned about his learning to talk. William Lyon Phelps, the famous English professor at Yale, on the other hand, confessed that in mathematics he was “slow but not sure.” There are at least forty facets to human minds. Each of us may be keen in some ways and stupid in others.

The importance of this individuality in minds would be hard to exaggerate. Because of it two or more people agree with each other only in spots, never totally. The grandiose idea that all workers of the world can unite and speak and act as a unit is wholly untenable because of individuality in the minds of the individual workers. Nor can all capitalists unite, and for the same reason. Neither can all Negroes, all Latins, all Chinese, all Jews, all Europeans, or all English-speaking peoples.

It is often assumed that people disagree only because of self-interest and differences in their education. They also disagree because their minds do not grasp the same ideas with equal facility. Sometimes an individual has a specific idea which seems to him perfectly clear and potent. To him it seems certain that once this idea is expressed it will gain automatic acceptance. Practical trial shows, however, that it does not. To other individuals, because the patterns of their minds are different, this supposedly clear and potent idea may appear foggy, dubious, or even unsound.

Failure to recognize individuality in minds is widespread and is a revelation of the fact that we are ignorant about the people for whom we plan.

“Environmental Determinism”

I do not know that anyone else has ever expressed it this way, but on a long walk with Al-dous Huxley about a year before he died, he decried to me the fact that the prevailing philosophy today may be described as “environmental determinism.” Environment is assumed to be the only factor in our lives; inborn individuality in body and mind are completely neglected. According to this philosophy, every child who is placed in a slum environment becomes a delinquent and a criminal. This, from the work of the Gluecks at Harvard and others, is manifestly untrue. Neither is it true that every child who is furnished with plenty becomes for this reason an honorable and upright citizen.

Our “social studies” and “social science” teaching in all our schools and universities is permeated with environmental determinism which shows no interest in the crucial facts of individuality and quite inevitably tends to destroy all moral responsibility. A delinquent cannot help being a delinquent, we are told. Society should take all the blame. A criminal is that way because society has made him so, so society is to blame. This is blatant oversimplification in the name of social science! It disregards how human beings are built—their fundamental nature—and can by its short-sightedness lead to a breakdown of our civilization.

What I have been saying does not in any sense deny the importance of environment. Environments are what we can control, and to study how to improve them is the essence of planning. But we, the people, are not putty; we are individuals, and we need to be understood.

Individuality is Crucial

To me it seems certain that the facts of individuality need to be taken into account. There are three areas, related to planning, in which I have some special knowledge. In all these areas individuality is crucial.

Take for instance the area of nutrition and health. It would be relatively easy to produce economically in factories a “man-chow” which would supposedly be the perfect food for the average man. Laboratory experiences as well as wide observations show, however, that this “man-chow” idea is completely unrealistic. It will not work. Because of biochemical individuality we do not all like the same foods nor can we thrive on the same mixture. Many human beings are so built that they derive a substantial part of the satisfaction of life out of eating. Taking variety and choices from them would be depriving them of their pursuit of happiness. The best food planning devised involves supermarkets where thousands of kinds of foods in great variety are available.

The Food and Drug Administration in Washington has, at least until very recently, done its planning on the basis of the hypothetical average man and has sought to regulate the marketing of medicinal substances, vitamins, and the like on this basis. This cannot work because of the hard facts of biochemical individuality. Real people—individuals—do not react in a uniform manner either to drugs or to nutritional factors such as amino acids, minerals, and vitamins.

No planning in the area of nutrition and health can work on a long range basis unless the facts of individuality are taken into account. If we plan for people, we must plan for individuals, because that is the only kind of people there are.

Another area of planning in which I have some special knowledge is that of education. I have recently completed my fiftieth year as a teacher. While I have in mind no pet schemes for reorganizing schools or universities, I have had for years a growing consciousness that no successful long-range planning can be done unless we recognize fully that every mind is a distinctive one and that every young person is endowed with peculiar aptitudes which need to be recognized, developed, and used. One of the worst lacks in modem education is the failure of youngsters to know themselves and to recognize their own strengths as well as weaknesses. Education for the hypothetical average child is no good. We must plan for individual children; that’s the only kind there are.

Closely related to the problem of planning education is planning to curb crime, violence, racial hatred, and war. As Clement Attlee aptly pointed out years ago, the roots of war are to be found in the minds and hearts of men. The late Robert Kennedy pointed out when he was Attorney-General that peaceful relations between people cannot be enforced with guns and bayonets.

In my opinion, we will get nowhere in planning to curb violence by thinking in terms of the city of Dallas killing John F. Kennedy, the city of Memphis killing Martin Luther King, or the city of Los Angeles killing Robert Kennedy. Of course, social factors enter into violence, but there are important individual factors, too.

No informed person can think that curbing crime and violence is a simple problem. Because it is difficult, it is all the more important that we seek out—thoroughly—the root causes. I maintain that a great weakness which we exhibit in this modem scientific age is ignorance about ourselves.

Finally, let me say that our love of liberty and freedom is based upon this individuality. If we all had the same kinds of stomachs, the same kinds of muscles, nerves, and endocrine glands, the same kinds of brains, planning would be simple. We would all like exactly the same things. We would all be satisfied to read the same books, have the same amusements, eat the same food, and go to the same church. In short, we would all live happily in the same rut.

Planning is not that simple. We must plan for individuals—that’s the only kind of people there are.

Madelyn Shepard Hyde

Perhaps one of the best arguments against attempts to equalize the fruits of human labor under a collectivist society is the infinite variety of human nature. It should be obvious that each person’s desires and aspirations defy measurement—in both quality and quantity—by any other person. And since it is impossible to equate what cannot be measured, the collectivist society must fail in this announced objective.

It is perfectly possible, of course, to divide a pound of steak equally between two persons. That is a task requiring only a pound of steak, a set of scales, and a knife—and someone to do the dividing. It is also possible to decree that the two individuals shall have a certain number of leisure hours each day. But it is quite another matter to measure the relative value that two persons will place upon steak and upon leisure, for one is certain to be more fond of steak—or leisure—than the other. What satisfies the soul of one person may have little or no appeal to another—certainly not to the same degree.

Now suppose the purveyor of equality realizes that equal portions of steak will not accomplish this equality which he has set out to attain. He might then undertake to divide the steak unequally by weight, and to reapportion the total number of leisure hours, so that both individuals would be satisfied to exactly the same degree. By what means could he determine what quantity of leisure for one is equal to a certain quantity of steak for the other? At this point, he will have to abdicate from his collectivist throne, realizing that he has no scale by which he can measure any value for any other person.

If it is impossible for a third party to solve even this one simple equation for two persons, it is fantastic to believe that he could solve the infinitely more complex problem of equally satisfying all the desires of all the people. This egalitarian objective could be attained only if all people wanted the same quantities of all things in life. But they do not. Our forefathers sought to preserve the freedom of each individual to pursue, to the best of his ability, the satisfaction of his own particular set of desires—known only to himself. They had the wisdom to realize that in designing a society in harmony with this variation in human wants they were working with, rather than against, a principle of nature.

Those of us who wish to assist in a reversal of the present trend away from individual liberty must, among other refinements of the mind, understand, believe in, and be able to explain the subjective theory of value, as forbidding as that term sounds. Except as we understand and apply this correct theory of value, individual liberty is out of the question.

Leonard E. Read

The possessions one accumulates are a reflection of his values. What a man owns—what is his own—is what he is. One’s personality and property reflect his subjective values.

But few of us care to live in isolation. We prefer to exchange ideas and goods and services with others. And the problem is to work our strictly personal values into a price or value structure for purposes of peaceful trade. The question to be answered is, how does the subjective theory of value determine the market price?

Here it is: The exchange value of any loaf of bread, of any painting, of any days work, or of any good or service is whatever another or others will offer in willing exchange.

When Mrs. Smith swaps a shawl for Mrs. Jones’ goose, the value of that shawl is that goose and vice versa. Yet, each lady gains in her own (subjective) judgment. Were this not a fact, neither would have willingly exchanged.

Value can make no sense except as it is subjectively determined, that is, as utility or gain is judged by self. Gain or value cannot be determined for anyone by another. What has value for one may have more or less value to someone else: there are those who prefer a chinchilla coat to a college education and vice versa, a freedom library to a vacation and vice versa, the theater to a TV performance and vice versa, ad infinitum.

Assume that I am an artist and do a painting each month. Unfortunately for me, no one wants “a Read.” The value of my work? Zero! Now, assume that a change occurs in the minds of buyers (in each instance, subjective); “Reads” become a popular whim to the point that each will bring $1,000. The value of my work? $1,000! For the sake of this illustration, there was no change in the quality of the paintings. Buyers changed their minds and, thus, the value of my work.

It is perfectly plain that the practice of subjective evaluations is the practice of individual liberty or, if you prefer, personal freedom of choice.

This correct theory of value is opposed by the objective theory, that is, by arrangements where someone else, by some standard of evaluation other than your own, attempts to determine the value of goods and services to you. An understanding of the fallacious objective theory and an ability to identify it in its many manifestations helps to accent the importance and the validity of the subjective theory in practice.

Prior to 1870 no one had formulated the subjective theory. Nor was it invented. Three economists—Menger, Jevons, and Walras—from different countries and without collaboration, formulated the theory almost simultaneously. Their enlightenment came by merely observing how common people behave—produce and exchange—in the absence of governmental or other interference. Thus, before 1870 when there was no understanding of the subjective theory, objective methods of arriving at value predominated.

The classical example of the objective theory of value is the labor theory of value. This theory merely affirms that value is determined by cost of production or, stated another way, by the amount of energy expended. While some classical economists knew the theory to be wrong, they were not certain as to what was right.

Pursuing the labor theory to its logical and absurd conclusion, a mud pie would have the same value as a mince pie, provided that they were produced by equal expenditures of energy. If a pearl diver came up with a pearl in one hand and a pebble in the other, they would be of equal value!

Of course, people will not exchange as much for a mud pie or a pebble as for a mince pie or a pearl. So, how does this theory find expression in practice? Simply use the power of government to take from the mince pie makers and give to the mud pie makers! Karl Marx gave the formula: “from each according to his ability, to each according to his need.”

However, even the Russians no longer are strictly addicted to the labor theory of value. Yet, they largely rely upon objective standards of one kind or another. That is, self-determination is at a minimum; the government arbitrarily prices nearly everything. Willing exchange is not the mode; individual freedom of choice is substantially taboo; the subjective theory is less used in Russia than elsewhere.

Note that there is no freedom of the press, of speech, of religion, of assembly in Russia. It is because economic freedom is denied; and economic freedom is impossible unless subjective value judgments are respected.

One of the most important points to keep in mind is that the amount of effort exerted or the cost of production does not determine exchange value. It is determined by individual evaluations of personal utility. The market price or value is somewhere within the range of these evaluations.

We who are interested in individual liberty and, thus, in the observance of subjective value judgments, must know that the objective theory is antithetical to our welfare, and we should be able to identify its many practices, regardless of how cleverly disguised they are.

Actually, we need only keep our eyes on unwilling as distinguished from willing exchanges. All unwilling exchanges rest on objective and not on subjective value judgments.

It is a gross understatement of the case to say that freedom rests on the practice of the subjective theory; subjective value judgments, when honored, are freedom!

Footnotes

1 From The Freeman, April 1971. Reprinted by permission from Saturday Review, January 30, 1971. Copyright 1971, Saturday Review, Inc.

2 From The Freeman, January 1969. Slightly condensed and published by permission from an address before the American Institute of Planners at Hot Springs, Arkansas, July 12-19, 1968

3 Clipping of Note No. 44 (FEE, 1951)

4 From The Freeman, October 1967

5 See “Freedom Follows the Free Market” by Dean Russell, The Freeman, January, 1963.

6 See Encyclopedia of U.S. Government Benefits (Union City, N. J.: William H. Wise and Co., Inc., 1965). This tome of more than 1,000 pages lists over 10,000 benefits.

• 1THE BIOLOGY OF BEHAVIOR5.*
• 2THE ONLY KIND OF PEOPLE THERE ARE6.*
• 3THE UNKNOWN QUANTITY7.*
• 4FREEDOM’S THEORY OF VALUE8.*
• 5It is also easily demonstrable that freedom of the press, freedom of religion, freedom of speech, freedom of assembly are impossible in the absence of economic freedom.8.1
• 6Would you willingly exchange your income or capital for farmers not to grow tobacco, to rebuild someone else’s downtown, to put men on the moon, to underwrite power and light for the people of the Tennessee Valley, to pay people not to work? If your answers are negative, you can take the political applications of the objective theory from there. Examples abound by the thousands.8.2