A Reviewer's Notebook - 1979/2

I haven’t checked through all of Leonard Read’s books, but those that remain in my library after borrowings and the attritions of moving reveal a significant secret: Leonard never mentions contemporary politicians in their roles as such. If he occasionally bows to a statesman of the past, such as Churchill or John Foster Dulles, you may be sure that it is to make a broad philosophical point.

The casual reader might presuppose that Leonard Read’s silence about Jimmy Carter or Jerry Ford or Ronald Reagan in his most recent books proceeds from an indisposition to mix it up in the prize ring. But Leonard, actually, does not mind a fight. His theory of waging political war is to go for the jugular, which happens, as he says in his new book, Liberty: Legacy of Truth (Foundation for Economic Education, $6.00), to be "whatever the preponderant thinking" is at "any given time." It is the theory that makes the politico, not vice versa.

Looking at the kinds of government that prevail in the world today, Leonard Read concludes "that the preponderant thinking is antifreedom—authoritarian." So he goes for the jugular by tackling socialism on the philosophic plane. He opposes bad thinking with good thinking.

If Leonard Read has ever despaired of winning his fight he has never, in the course of writing more than a score of books, ever shown it. A less resilient character would have given up long ago. But now his attack on the philosophical jugular seems to be working. A lot of the same old politicians whom Leonard disdains to mention were returned to office in the last election. But there are new faces showing up on Capitol Hill, and some of them actually believe in liberty.

The important thing, in any case, is not that there is to be a mix of old and new political personalities. What really counts is that a significant number of the traditional high-tax, big-spend crew that has been knocking the stuffings out of the American dollar since the Nineteen Thirties are now lining up for trips to the confessional. They are catching the signal from a shift in the "preponderant thinking" of the moment. If all goes well, the next time Leonard Read writes an essay bearing on the reflection of ideas on the political horizon it will take on a tone that is somewhat different. Instead of saying "Those sanctified ideas and ideals of our Founding Fathers must be born again," Leonard will be substituting the words "are being" for "must be."

The Pleasures of Aging

Leonard Read copyrighted his new book on his 80th birthday in September of 1978, and he concludes it with an essay called "The Pleasures of Aging." But, on Leonard’s own showing, there are no distinct pleasures involved in watching the clock move on. Longevity’s purpose, he says, is "learning, not lengthening." And he quotes an anonymous authority as specifying that "one does not grow old—one becomes old by not growing." All of this puts the stress in continuing with the more pleasurable and profitable things that one has always done. In brief, a non-retirement program. So Leonard Read exults in "no let-up in travel, seminars, and the many chores at FEE." By working—and by treating older hobbies as "mere pastimes"—the non-retired Read frees himself "from all fret about the discouraging prospects that the senior years have a tendency to impose."

At the recent Mont Pelerin Society meeting in Hong Kong, Friedrich Hayek, who is in Leonard Read’s age bracket, was complimented on seeming more youthful and energetic than he seemed ten years back. Hayek’s answer was that he had "tried old age and didn’t like it." Leonard Read has yet to "try it." He quotes the likes of Cervantes, but his own model is Don Marquis’ immortal cat Mehitabel, who always rose to the challenge by saying "there’s a dance in the old dame yet."

In addition to the bigger "dance" of fighting the basic philosophy of socialism, this latest Read book addresses itself to the problems raised by coercive State control of education, to the need to oppose the "strike syndrome" by exposing "the folly of violence," to letting untrammeled human beings find energy sources wherever they exist, and to instigate what seems to me an odd crusade against legalized holidays.

This last must seem a real poser to libertarians. Surely only a workaholic would be willing to give up Christmas, Thanksgiving, the Fourth of July and sundry other holidays. Natural Law would seemingly prescribe the need for periodic breaks, expressed in terms of ritual. If most of us didn’t have them we would go off our rockers.

I would settle with Leonard Read for customary holidays as opposed to legal holidays. After all, Christmas, Thanksgiving and the Fourth of July had customary sanction before they had legal sanction. But the case against the legal holiday is not that it is a "hollow day" in contrast to a "hallow day." It is a "hollow day" if you go and get yourself involved in a car accident or a horrible New Year’s hangover. But what would we tennis players or bike riders or joggers or skaters do if it were not for the week-end? Would Leonard Read say it is "hollow" to go to church of a Sunday morning? If you are going to crusade against the legal holiday, first make sure that custom, in default of law, has a fair chance of taking over.

Compulsory Education

There would be less need of legalized holidays if Leonard Read could first win his battle against the idea of State-controlled compulsory education. If kids are going to be compelled to sit in classrooms for extended periods between their fifth and seventeenth years, they need legalized time off. One State compulsion breeds the necessity for another, if only as countervailing action. The Read essay on "Elementary Education" is a bit of an historical eye-opener to me. I had always supposed that the idea of compulsory State-operated schools came from Prussia via Horace Mann. But Leonard Read traces it to Napoleon, who thought that "public instruction should be the first object of government." "No one," so Napoleon decreed, "may open a school or teach publicly unless he is a member of the imperial university."

It so happened that Thomas Jefferson invited Pierre Samuel du Pont de Nemours, the physiocrat, to recommend an appropriate form of education for the United States. Du Pont wrote a 161-page book advocating the Napoleonic school system. So Jefferson, despite his generally voluntaristic philosophy, was beguiled into accepting the idea of compulsory public education.

It took more than a hundred years to see what a "scraggy bush" (Read’s description) would grow from the roots planted inadvertently by du Pont and Jefferson. During all those years nobody contested the right of people to found private schools and colleges that could compete in performance and ideas with the State-supported public school. But now we can really see the "scraggy bush" for what it is, with the Department of Health, Education and Welfare trying to impose its so-called Affirmative Action programming on private schools whose only connection with government is to accept students who may happen to be the beneficiaries of GI grants and State-guaranteed loans.

Leonard Read opens his book with some heartening essays on faith, hope and charity. We will need all of these to carry through with some of the specific crusades to which he invites us in his later pages.

LIBERALISM

by Ludwig von Mises

Foreword, Louis M. Spadaro

207 pages n $15.00 cloth; $4.95 paper

THE ULTIMATE FOUNDATION OF ECONOMIC SCIENCE

by Ludwig von Mises

Foreword, Israel M. Kirzner

148 pages n $15.00 cloth; $4.95 paper

Both titles available from: Institute for Humane Studies 1177 University Drive

Menlo Park, Calif. 94025

Reviewed by Brian Summers

The great Austrian economist Ludwig von Mises (1881-1973) has invaluable insights for the serious student. But some of his works are much more difficult to grasp than others. Where does one begin?

Liberalism is an excellent introduction to Mises’ thought. This 1927 book was entitled Liberalismus in the German original, and was published in the U.S. in 1962 as The Free and Prosperous Commonwealth. It is a lucid exposition of the principles of classical liberalism—the free enterprise policies which unleashed the productive forces of the nineteenth century and created the capital we are now consuming.

Mises bases his case for the free market on the enormous productivity of the division of labor. When workers, investors, and entrepreneurs are free to specialize in those areas of production for which they are best suited—and are free to exchange their products in an unfettered market—standards of living are infinitely greater than when each family tries to produce its own food, clothing, shelter, fuel, medicine, and all the other essentials of life.

From this fundamental observation, Mises develops the entire liberal program. He champions a completely free market because, as he demonstrates, all government interventions reduce the standard of living by disrupting the division of labor. Similarly, he opposes union monopoly privileges, which restrict labor mobility, raise unemployment, and plunder nonunion workers—the principal victims of union violence and threats of violence.

The popular alternative to interventionism—socialism—is shown by Mises to be intrinsically unworkable. Not only does socialism stifle personal initiative, it destroys the means of economic calculation by placing all factors of production in the hands of the state. With no competitive bidding for labor, capital, and natural resources, the bureaucrats in charge of the state monopolies cannot compare the costs of different methods of production. Socialism is inherently wasteful.

Mises’ foreign policy proposals are in keeping with his domestic program. He favors nonintervention, free immigration, and democratic elections as the only means to further the international division of labor and thus raise the standard of living of all peoples. Tariffs, imperialism, and colonialism are opposed as violent disruptions of peaceful exchange.

In these times of political turmoil, terrorism, and war, one insight of Mises is especially pertinent: without government regulations, trade barriers, special privileges, public services, oppressive taxation, and other restrictions on the free movement of men and goods, it would matter little which government one lived under or what party happened to be in office. Roll back the state, and politically inspired conflicts will tend to disappear. It is a point worth pondering.

The Ultimate Foundation of Economic Science, first published in 1962, is difficult reading for those unfamiliar with Mises. The Ultimate Foundation of Economic Science is a critique of positivism, which has dominated economics for several decades. The positivist paradigm may be summarized as follows, using the example of minimum wage laws:

1.       The positivist observes data. (Increases in the legally mandated minimum wage have been followed by increases in unemployment.)

2.       He constructs a theorem to explain the data. (An increase in the minimum wage, other things being equal, will increase unemployment.)

3.       He "tests" the theorem by further empirical observations. (He observes further instances of increases in the minimum wage and studies unemployment data before and after each increase.) If he believes that the data conform with the theorem (if he observes what he believes to be a convincing number of cases in which increases in the minimum wage are followed by increases in unemployment) he accepts the theorem. If he believes that the data do not conform with the theorem (if he observes what he believes to be significant cases in which increases in the minimum wage are not followed by increases in unemployment) he rejects the theorem.

This paradigm is vitiated by the fact that the data used in steps 1 and 3 cannot derive from controlled experiments. In our example, the legally mandated minimum wage is only one of the many factors that influence unemployment statistics. It is impossible to obtain data in which all the factors except the minimum wage remain constant.

In contrast with positivism, Mises’ methodology does not need controlled experiments because he treats economics as a praxeological science—a science of human action. Mises’ paradigm may be summarized as follows:

1.         The praxeologist postulates that all conscious human action is directed toward goals because it is impossible to conceive of a person consciously acting (trying to do something) without having a goal (the goal being the "something" the person is trying to do).

2.         From the actions of men, the praxeologist deduces their goals. (An employer strives to earn profits. Earning profits is thus one of his goals. Hence, the employer’s utility increases with his profits, and his disutility increases with his losses. Of course, this does not preclude the existence of other goals, such a goal as keeping an employee’s friendship.)

3.         Assuming a given set of actors’ goals, the praxeologist constructs a theory based on the human actions that necessarily follow from the set of goals. (As an increasing minimum wage forces an increase in an employee’s wage rate, other things being equal, the disutility incurred in paying the wage increases. When the disutility involved in employing a person exceeds the utility involved in continuing his employment, the employee will be released. Thus, the praxeologist constructs the theorem: An increase in the minimum wage, other things being equal, will increase unemployment.)

In these difficult days, with mainstream economics in disarray, and freedom under constant attack, we welcome the reappearance of these two books by Ludwig von Mises, and hope that this time their lessons will be heeded.