Don't Throw Out the Baby!

The course we now follow in a careless, thoughtless, and irra­tional manner could destroy a recent and by far the most pro­gressive economic concept ever come upon by mankind! In a blindness brought on by such forces as irritation, covetousness, a false sense of justice, adherence to an outmoded value theory, and a propensity to run other people’s business, we are about to throw a precious human asset — the baby — out with the bath.

The baby? It is the open as distinguished from the closed road to wealth. Were we to collapse recorded history to the average life span of Americans, the baby would be less than two years old. As Ortega points out, it is always the latest and highest acquisitions of the mind that are the least stable and the first to be aban­doned whenever crisis threatens. But before describing the baby, let us reflect upon the bath that is forming and about to be thrown out — the baby with it.

What is the bath? We are pres­ently showered with the outbursts of anticapitalistic mentalities from every quarter: the press, radio, TV, pulpit, classroom, politi­cal chambers. So numerous and overpowering are these shallow fusillades that capitalists them­selves are in retreat. They apolo­gize for profits, take refuge be­hind such nonsensical notions as being in business for "the social good," and they support all kinds of socialistic, anticapitalistic leg­islation. Wealth, which most peo­ple seek for themselves, is being inundated in scorn and obloquy as if it were something evil.

None of us knows all the rea­sons for this anticapitalistic men­tality but one of them, certainly, is the unfavorable effect affluence or wealth has on many citizens.

Never in man’s history have so many individuals experienced af­fluence as in the U.S.A. today. Literally millions of persons can have all of the material embellish­ments their hearts desire, and millionaires all over the place! There are notable exceptions, of course, but not many of us can stand such affluence. Wealth, so easily come by, often tends to turn individuals away from seri­ous, responsible citizenship into do-nothings and "big shots." In­dividuals so afflicted bear little resemblance in character to their struggling ancestors.

Further, our plunge toward all-out statism with its attendant woes and troubles seems to coin­cide with the rapid ascendancy in affluence as if the latter brought on the former. This is not a cause-effect sequence, but it appears to b. So, we are urged, stop this race for the almighty dollar. Cease do­ing the things which lead to wealth, or which depend upon it. To follow this course as I shall try to show, is to throw out the baby with the bath.

As with eating and drinking, discriminately employed wealth serves a life-saving and life-giving purpose. But wealth has built-in temptations, as do food and drink, which can and often do lead to overindulgence. I suspect that the real reason why affluence has such an unsavory reputation is that wealth is used more for self-glorifying than for self-improving ends — a form of gluttony! Ill-used wealth does more to down­grade than to upgrade the people it graces. The noble purposes wealth may serve are rarely un­derstood.

Smothering Poverty

Consider the opposite of wealth: abject poverty, as experienced by, Chinese coolies, for instance. They labor in rice paddies from morn till night to eke out a bare animal existence. These human beings have unique potentialities no less than did our poverty-stricken an­cestors. But note that there is little if any realization of these potentialities among coolies. The good earth is populated with many outstanding musicians, artists, po­ets, philosophers, engineers, archi­tects, scientists, and a thousand and one other specialists. Chinese coolies, be it observed, are seldom numbered among them. Why? Abject poverty!

I devoutly believe that life’s purpose is to grow, emerge, de­velop and that poverty, so long as it persists, subverts this end. As­suming that the evolution of man is our objective, then wealth is the means to rid us of the enslave­ment poverty imposes. Wealth, when employed as a freeing agent, is essential to man’s march toward his destiny. Wealth may be abused and misused, yet it has a role to play in intellectual, moral, and spiritual progress; it is a vital means to these high ends.

The moral or evolutionary pur­pose of wealth is not to free man from life’s struggle — far from that! Its purpose is not that man may retire or allow his faculties to vegetate. And definitely it is not to substitute ease and comfort and ostentation for hard work. Rather, its purpose is to allow us to get ever deeper into life — to work even harder — along the lines of our creative uniqueness. This is how we evolve.

As abject poverty subverts the evolution of man, so does wealth when it is worshiped and used as an end in itself rather than as a means to the higher ends. But to disparage and finally to rid our­selves of this vital tool simply be­cause we have failed to grasp its moral purpose and application is destructive nonsense.

The Closed Society

What I refer to as the closed road to wealth dominated the world economic scene up to the Industrial Revolution. There are exceptions but, for the most part, wealth was reserved for the very few: the Maharaja, the Lord of the Manor, the master of slaves, merchant princes — the "upper crust." Theirs were political con­ferments, instances of special privilege. Wealth was measured in size of estate and castle, jewels, ser­vants, and the like — more an en­slaving than a freeing agent, energy consumed to fend off predators rather than released for individual emergence. It was po­litical, not private, ownership; no respect for each man’s right to the fruits of his own labor! Coercive to the core, the resultant social arrangement assumed various forms: despotism, feudalism, au­tocracy, the guild system, mer­cantilism, wage and price controls, protectionism, and so on. Closed, indeed!

In such a closed society, the mil­lions were essentially serfs; if born a shoemaker, you remained one re­gardless of your talent or poten­tial for any higher calling. You, poor slave, stay put! It is easy to understand why, in that dark age of economics, Saint Thomas Aquin­as argued that these poor people had a right to a minimal standard of living from their lords and mas­ters. Such was the sentiment which Marx later popularized: "From each according to ability, to each according to need." Given a closed — authoritarian — economy, there is no other way to disperse the wealth required to sustain life.

As darkness has no resistance to light, so has ignorance no re­sistance to enlightenment. Igno­rance is always upon us in the absence of enlightenment; it re­treats naturally as enlightenment increases but stands ever ready to descend again upon the blind.

Open Competition

About 200 years ago, a remark­able political and economic en­lightenment substantially removed the barriers— temporarily at least — that had closed the road to wealth. The baby was born: the open road to wealth! And it has been named the Industrial Revolu­tion.¹ Goods and services hence­forth would be produced for the masses and not solely for the po­litical elite.

While the order of the succes­sive steps in this enlightenment might be debated, it is my view that the first step was and had to be a recognition of human dignity. This is to say that each individual is as much a human being as any other; the son of a cobbler is en­titled to opportunity no less than is the Prince; everyone equal be­fore the law as before God — each his own man with a fair field and no favor. Any person, regardless of ancestry, free to rise to any height his energies and talents might take him. The road open!

Implicit in this enlightened rec­ognition is that each and every person has full and exclusive right to the fruits of his own labor. In a word, the acceptance of a moral principle — justice — led logically and positively to the economic tenet on which the open road to wealth is founded: private owner­ship. Not that private ownership displaced political ownership and special privilege entirely — far from it! But the barricades were broken; there was not only the prospect but, far more than ever before, the reality of the open road.

Specialization, as might be ex­pected, became the next step. In­dividuals, as they were freed from the bondage which abject poverty imposes, began to engage in an infinite variety of activities, each according to his unique talents and abilities.

Then came the next flash of en­lightenment: freedom in transac­tions. If a particular good or service is really mine and some other good or service is really yours, there follows logically from this private ownership the right to exchange with whomever one pleases.^² It simply is nobody else’s business. Freedom in transactions tended to become the rule rather than the exception.

Trade Benefits Both Parties

Assuredly, the next most im­portant enlightenment came about 1870 when some economists dis­covered how ordinary people be­have when free from controls. In other words, they discovered or came to understand the subjective theory of value. Until this time, the value of a good or service had been reckoned by cost of produc­tion, that is, by the amount of ex­ertion expended. This false meas­ure of value had been a real hin­drance to private ownership, spe­cialization, and freedom in trans­actions. Following the discovery of the subjective theory, the value of any good or service, instead of being determined by cost of pro­duction or dictated by some cartel, was whatever could be obtained in willing exchange. It is that simple. The market value of my pen? Whatever you or some other cus­tomer will give for it. If there are no willing buyers, its value is zero; if the top bidder offers two dollars, that’s its value.

There’s the baby — this recent flash of light or understanding. Its significance is seen by contrast­ing what has happened in the U.S.A., where this wisdom reached its apex, with what otherwise might have been the situation. Without this economic enlighten­ment, most of us either would not have been born or would have died in early childhood. Adam Smith (1776) observed that the average mother in the Scottish Highlands had to bear twenty children for a reasonable prospect that two might reach adulthood, so great was the infant mortality rate. There simply wasn’t production enough to sustain more than a relatively small population.

Next, had that closed road to wealth persisted, nearly all of us, including our millionaires, would still be in the class of servants, serfs, armed guards, and the like. Even the simple requirements for life—food, clothing, shelter—would be no more than the political hier­archy might see fit to allot to us. Slaves!

And last, born a cobbler, remain a cobbler! The unique potentiali­ties of the individual dead on the vine! The destiny of man—growth, emergence — forever stifled!

Now, look around us: would have-been slaves — millions upon millions of us — in that advanced state of affairs in which each may pursue his unique talent and can receive in willing exchange those goods and services required for well-being. Take, for example, one who specializes in the study and explanation of the freedom philosophy and produces nothing else, nothing whatsoever. If he receives enough for his efforts to defray the costs of shelter, food, heat, light, and countless other desider­ata, he is wealthier than any Lord of the Manor of bygone days. And solely because of a practice of freedom — a baby in the realm of enlightenments — this open road to wealth!

I repeat, affluence has had a disgusting effect on a great num­ber of individuals. Wealth has be­come so much a god that it knows no satiety.^³ Imagine, some of the wealthiest people who ever lived shouldering a debt without histor­ical parallel — the combined in­debtedness of U.S. citizens in ex­cess of a trillion dollars! And more: an enormous siphoning off of accumulated capital assets by diluting the medium of exchange — inflation!

However, we must remember that this affluence exceeds any­thing mankind has heretofore ex­perienced; we are not conditioned to such wealth; it is not in man’s tradition. Thus, we resemble children turned loose in a candy bin; if they make themselves ill, it is not the fault of the sweets or a reason to outlaw candy. It is, in­stead, the occasion for some die­tary sense and self-discipline.

And ours is the occasion for some sense in political economy and morals as related to the evo­lution of man. It is pitiful to observe millions of people enthusi­astically working against their own interests, that is, working their way back to the closed road. And it is easy to tell which way we are heading. Substitutions of political for private ownership, wage and price controls, labor or business cartels, subsidies, infla­tion, or other schemes that feather the nest of some at the expense of others rebuild the barricades. Such hazards preclude the several nec­essary steps to the open road and turn us against, our self-interest!

While I deplore the way many affluent people behave, I trust their wealth to them far more than to politicians or others who had noth­ing whatsoever to do with its acquisition.

Finally, regardless of how un­favorably we may view the way wealth is used by its owners, let us not, under any circumstances, throw out the baby with the bath. This infant enlightenment is one of the most priceless blessings of mankind.

—FOOTNOTES—

¹ For a revisionist view of the Indus­trial Revolution, see Capitalism and the Historians by various authors, edited by F. A. Hayek (Chicago: University of Chicago Press, a Phoenix Book, 1963).

² To deny freedom to exchange is to deny private ownership. One owns only that which he controls.

³ This is no merely modern defection; Plato describes the decay of an oligarchy in Book VIII of The Republic: "And so, as time goes on, and they advance in the pursuit of wealth, the more they hold that in honor the less they honor virtue… From being lovers of victory and lovers of honor they become lovers of gain getting and money."