The Academy Versus The Market Place

That the majority of the workers of America have no appreciation of the operation of the free market is not perhaps very surprising. It is true that compared with workers of every previous century they are astonishingly well off, and that their comparative affluence today is in direct proportion to the freedom with which the market is permitted to operate.

Workers today are all beneficiaries of a system which they barely know exists and which they understand not at all. Yet without its operation, with its marvelous self-correcting system of production and distribution, they would have barely enough to keep body and soul together, as has been the case with workers throughout history—or else they would long since have been dead from disease or starvation, which again was true until the 19th century when the average life- span rose for the first time above 25.

Because creativity and invention was permitted to flourish, and property rights were respected, tools and machines rather than human muscles came to do most of the work. Never until the past century has the general population, even in the most advanced nations, been able to have any leisure or to live in reasonably comfortable houses and apartments. Were it not for the freedom to produce, to profit from the production, to create and tap a mass market, none of these benefits would be possible.

But most people don’t connect their present comparative affluence with the operation of the market. They don’t see the complex chains of causes and effects that make them the beneficiaries of the machine’s productivity. They are like people who have become so accustomed to having electric power that they don’t even think of it. Since it has worked so well, and never needed repair, people have forgotten where the underground conduits are, or how to repair the system if it should fail. Its silent efficiency has led them to take it for granted.

What impresses most people is not how good their lot is compared with workers in previous times (this they have never seen and know nothing about), but rather that some of the people today are better off than they are. They see their employer making more money than they do themselves; what they don’t see are the risks he takes, the skill required to keep the factory humming and the ingenuity required in predicting future markets. They only see that he has more than they do, and they are filled with envy.

This tendency to envy others is, of course, played on to the hilt by government propaganda. The government needs a scapegoat, to divert attention from its own failures; and what more convenient scapegoat is there than the man of ability and independence who expands his plant, provides jobs, and makes profits? Such men are a thorn in the flesh to the state, so the state makes them the villains, thus diverting public attention from the true villain, the state itself. When the government succeeds in this, the people vote to take the successful man’s wealth away from him, and his incentive to produce along with it. In some countries the envy goes so far that workers kidnap plant managers and burn factories, even if it means that they themselves thereby become unemployed.

Businessmen and the Market

Many businessmen are quite conscious of the values of the free market. Only when it operates can they produce, sell, exchange the products of their labor, and distribute these products efficiently. Many of them have started from scratch and become millionaires; others have started and gone bankrupt, either from bad luck or bad management. But they are society’s risk-takers, and millions of them each year, given the opportunity, are willing to take the risk.

Yet the business community has been far from conspicuous in its defense of the free market.

(1) It isn’t just that businessmen are a minority, easily outvoted at the polls—though many of them know what policies will lead to prosperity—but the majority of voters, hostile and envious, vote to put a further ball and chain around them with new taxation and regulation.

(2) It isn’t just that they are inarticulate in defense of the market, though this is also true; to keep one’s business going takes all one’s time and effort, and to them their enterprise doesn’t need defending.

(3) Nor is it simply that they’re scared, though in today’s climate they have every reason to be. If they speak out against the government, the EPA or OSHA or the other agencies that regulate them, these organizations bring the coercive machinery of the law down on them, slapping them with huge fines or closing them down.

The main reason, however, is that many businessmen themselves have sold out to the opposition. The self-made man takes many risks, and may struggle for years before he succeeds; but if he can cash in on the government largesse, taking money earned by other taxpayers to use for his own enterprise, he lessens those risks. So he succumbs to a policy of legalized plunder. Other businessmen, disapproving such practices, see him gaining by his dishonesty; after all they are paying taxes part of which go to keep h/s enterprise going at their expense; so if they can’t lick him they join him, and lobby for special favors along with those they recently condemned for doing the same thing. Once men are permitted by law to stand at the public trough to receive favors, the practice spreads until almost everyone is corrupted; and those who refuse to be corrupted either go under or work at a tremendous disadvantage.

Educators and the Market

The sins of workers and businessmen against the free market system that made their affluence possible are those of omission; those of the educators are sins of commission. They are neither fearful nor indifferent; they are, in general, active enemies of the free market and the system of unimpeded supply and demand called capitalism.

So prevalent is the antimarket mentality among academicians that the results often approach the grotesque. Any young Ph.D. (at least in the humanities) who is a political conservative or libertarian must hide his views from his prospective employers, else he will fail to get the job. And if perchance he was appointed before his views were discovered, the promotions committee of the college or university that employs him is likely to deny him tenure; until that time, he must keep silent about his views. Enthusiasm for a candidate, no matter how intense, quickly palls when the candidate expresses the view that the size of the federal government (particularly the educational establishment) should be curtailed. Indeed, a large percentage of college professors seem to be socialists who wear $500 suits, smoke $100 briar pipes, and rail at capitalism as the source of the evils of the world.

Some even go so far as to recommend the forcible overthrow of capitalism. “The continued existence of capitalism,” writes Prof. Kai Neil-sen, “does cause, and will continue to cause, as long as it is allowed to exist, extensive misery and human degradation . . .”^[1] The replacement of capitalism by socialism is “a necessary condition for the attainment of a just society . . . There is not to be a mixed economy with a private sector and a public sector; the means of production must be publicly owned.” But since capitalists will never voluntarily give up their power over the people they exploit, the only way of bringing about the desired transformation is to initiate armed revolution against the capitalist regime.

A Multitude of Defenses Against Critics of Capitalism

There is an abundance of well-known arguments to refute all of these allegations. That capitalism causes poverty would be a bad joke if it were not taken so seriously by people who ought to know better. The reverse is true: the mass of mankind can escape living on the edge of starvation only to the extent that free enterprise is permitted to flourish: indeed, it is likely that but for the existence of capitalism Professor Neilsen would himself have been one of the millions of casualties of poverty.

Moreover, what kind of “power” do capitalists have? Not the power of the gun, or the power of arrest and trial: only the power to offer goods on the market hoping that enough customers will buy their products or services to make the enterprise worth-while. And how could he sell to them if they were, thanks to his “exploitation,” too poverty-stricken to buy? The whole thing is a hope less tissue of falsehoods and confusions, such as the same teachers would not permit of their own undergraduates in any other area of knowledge.

The vast majority of educators totally misunderstand the nature and functioning of the market. In their hatred of all businessmen (whom they hate far more than they hate even a repressive government, as long as it doesn’t repress them), they fail to distinguish between businessmen who against long odds make it on their own and those who plunder the government (i.e., the tax payer) and succeed only through legalized theft. All are lumped together as scheming rascals, by the educators who enjoy the fruits of those men’s labors. “I want a car; Jones can produce a car; why then should I try to use government to impede Jones’ ability to sell me a car at a competitive price?” I once asked a fellow professor that question, but received no coherent answer.

They consider men like the Rockefellers to be the epitome of capitalism. Perhaps in his early years John D. was, but his successors certainly are not; their main activity is devoted to retaining the political privilege of remaining relatively tax-free (let the peasants pay the taxes) and (in some cases) the privilege of creating money out of nothing as members of the Federal Reserve. In a genuinely free market, Rockefeller’s sons would have had to “shape up or ship out”; their stars would have declined as those of younger and more imaginative businessmen rose. But by tapping the political pipeline, they retained what they would otherwise never have achieved, a continuation of vast wealth which they themselves did nothing to earn and little (at least on the free market) to retain.

Envious Professors

Arousing the academician’s particular hatred is profits. Professors in general consider themselves to be the ablest and most enlightened of human beings; as the elite they should receive the most money, whereas in this corrupt society leaders of businesses and corporations get much more. They are envious and resentful; and possessing much more verbal agility than the businessmen they loathe, they can set forth their views in books and essays which their opponents, busy with their own work, never endeavor to refute.

The result is that the business community gets an extremely bad press, to which it gives very little by way of rational response. That if a company is to remain affluent most of its profits have to be plowed back into the company, creating more products and more jobs, is never mentioned or presumably thought of by the academic critics of business.

One of the most telling cases for the market and against government is William Simon’s memorable chapter on the fiscal history of New York City in his book A Time for Truth. There has been a profusion of books extolling the virtues of the free market, but in general academi cians do not read them and do not even tell their classes of their existence. If students find out about them, they must do it on their own. Those academicians of my acquaintance who do know the story of New York City’s bankruptcy have never made any serious criticism of it.

That for political reasons the city government affords huge perquisites to its own employees (retirement at 80% pay after 20 years for policemen and college professors, for example), thus taxing private enterprise beyond endurance and forcing one business after another out of the city, has gone virtually uncriticized by academicians (perhaps because they are in on the take). The money that went to these municipal era-ployees was badly needed for rebuilding roads, subways, and bridges; no less than $30 billion, it is estimated, is needed in the next decade simply to keep New York’s transport in adequate repair, which cannot be done because the money has gone to overpaid city employees and retirees. One would think that this would be an occasion for moral indignation; but no such indignation is forthcoming on this subject from the academic establishment.

Egalitarianism

The avenue through which most academicians succeed with their students in attacking the free market is not as often a direct frontal attack (“The market is evil”) as a defense of something that is incompatible with it, economic egalitarianism. Indeed, the vast majority of writers on ethics appear to be egalitarians. They usually make some allowances for “special cases,” such as increased benefits to the sick and handicapped, and even an increase of income to some “to provide incentives” (one wonders how they know who is going to be creative or industrious), but for the rest they believe that every person (or every family) should have an equal income. Some are aware, though others are not, of the totalitarian implications of such a system: that the government would have to keep tabs on everyone’s income and force everyone who earned more than X dollars per year to surrender everything earned in excess of that amount to the government, and to pay to those who have less (minus the government’s own quite considerable “handling fee,” which in some cases exceeds 50 per cent).

One of the most distinguished ethical thinkers, R.M. Hare of Oxford University, admits that “removal of incentives to effort may diminish the total stock of goods to be divided up”^[2] and thus recommends that those who start new productive enterprises should receive a bit more from the common pot. But the main assumption, that there is a common pot from which government officials may take from some to give to others, is never questioned—apparently it has never occurred to the author. Yet it is this economic collectivism which passes without criticism by one writer after another.

“It is morally obscene,” wrote Ayn Rand, “to regard wealth as an anonymous tribal product and to talk about ‘redistributing’ it. The view that wealth is the result of some undifferentiated collective process—that we all did something and it’s impossible to tell who did what, therefore some sort of equalitarian ‘distribution’ is necessary—might have been appropriate in a primordial jungle with a savage horde moving boulders by physical labor (though even there someone had to initiate and organize the moving). To hold that view in an industrial society—where individual achievements are a matter of public record—is so crass an evasion that even to give it the benefit of the doubt is an obscenity. Anyone who has ever been an employer or an employee or has observed men working, or has done an honest day’s work himself knows the crucial role of ability, of intelligence, of a focused, competent mind—in any and all lines of work, from the lowest to the highest. He knows that ability or lack of it . . . makes a difference of life or death in any productive process. The evidence is so overwhelming . . .—in the events of history and in anyone’s own daily grind—that no one can claim ignorance of it. Mistakes of this size are not made innocently. When great industrialists made fortunes on a free market (i.e. without the use of force, without government assistance or interference) they created new wealth; they did not take it from those who had not created it. If you doubt it, take a look at the ‘total social product’—and the standard of living—of those countries where such men are not permitted to exist.”^[3]

Variations on Egalitarianism

One of the most influential American writers on ethics, Professor Richard Brandt, believes that everyone’s real income after taxes “should be equal, except for (a) supplements to meet special needs, (b) supplements recompensing services to the extent needed to provide desirable incentive and allocative resources efficiently, and (c) variations to achieve other socially desirable ends such as population control.”^[4] The amount required to provide “incentives” turns out not to be very much, however; apparently producers of products and services are expected to keep on taking risks, expending hours of effort, and producing whether or not they stand to gain anything by doing so. Again there is the collectivistic assumption that it is not the individual who earned the money who has the right to keep it, but the government, which did not produce it, which has the right to take it from him and distribute it at its pleasure.

The catastrophic effect of this policy on production is not so much as hinted at. The only thing that apparently worries the author is that his utilitarian theory has as its goal a life of equal happiness for everyone, not necessarily of money (two people with the same income won’t necessarily be equally happy). But, he says, we don’t know how to allocate equal happiness to everyone; the best we can do is allocate money: “Money is something we can easily hand out in equal amounts . . . . More important, however, is the fact that we are apt to maximize happiness if what we allocate is money.”^[5] That we have no right to “allocate” to Smith the money that was earned by Jones, any more than we have the right to give Smith’s television set to Jones if we have reason to believe that Jones (who doesn’t own it) will enjoy it more than Smith (who does), is a point that is never brought up. The obedient note-taking student is expected not to bring it up either.

Professor Nicholas Rescher, in his books Welfare and Distributive Justice, is somewhat more flexible about the government distribution of money. First, he suggests, a “utility floor” is needed, a level of income below which no person or family should be permitted to go regardless of the type of work the breadwinner does, or indeed whether he chooses to do any work at all.

Having said that, however, he adds that income should have something to do with desert—that a person who works hard or does a kind of job not duplicated by anyone else should be provided (by the government) some more income than the average, so as to keep his enterprise going. Thus, a convicted murderer who has served his sentence should still receive the minimum stipend (the “floor”), but no more than that because his actions have shown that he does not deserve more. The government thus becomes the arbiter and determiner of what each person deserves—an awesome responsibility indeed when added to the enormous enforcement duties that government already has, and already does at minimum efficiency and maximum cost.

In the end, according to Rescher, the following factors merit consideration: people should be treated “(1) as equals (except possibly in the case of certain ‘negative’ distributions such as punishments); (b) according to their needs; (c) according to their ability or merit or achievements; (d) according to their efforts and sacrifices; (e) according to their actual productive contribution; (f) according to the requirements of the common good, or the public interest, or the welfare of mankind, or the greater good of a greater number; (g) according to a valuation of their socially useful services in terms of their scarcity in the essentially economic terms of supply and demand.”^[6]

A Tremendous Calculation

How even an army of bureaucrats armed with computers could determine each person’s deserved income by such a formula (and how much weight each of these factors should receive in the final determination of one’s income) is a matter so complex as to boggle the mind.

Production is important, says Rescher. In order for goods to be distributed, they first must be produced. This was once a problem, he says, because (for example) few persons who wanted cars could have them. But today, owing to mass production, almost every family has one. “The problem of just distribution is less urgent,” he says, “for an abundant good, and simply does not arise with a genuinely superabundant good.”^[7]

But how does it happen that consumer goods are superabundant in the United States and still so scarce in totalitarian countries that one has to stand in line for hours to get them; and so scarce as to be virtually nonexistent in some Third World countries? What is it that has brought about this superabundance? The vital importance of the operation of the free market in the countries with superabundance is never so much as hinted at.

Much more vague is the formula “Everyone (every person? every family?) should receive an equal income unless there is some special reason to make it unequal.” This is a widely accepted maxim in Academia. As it stands, it seems innocent enough: one special reason (or the only one) might be, that one person has earned more than another on the free market. But this is not in gen eral an academically accepted reason. No, the acceptable reasons would be, for example, that one person or family is in greater need (for whatever reason—whether through misfortune or from spendthrift habits apparently makes no difference); or that one person had worked more hours per day than another; or that one couple decided to have more children than another couple did. Market considerations have little place in such theories of academicians. Yet it is only the operation of the market that can create the wealth that they want government to distribute.

A Consumer’s Point of View

The point of view is uniformly that of those who are to receive, not those who have to produce what others will receive. It is tacitly assumed that production will go on, no matter what the conditions; that producers will continue to produce, no matter how much is taken away from them, no matter how they are regulated; as willing pawns they will continue to produce without a murmur and that it will be left to the “humanitarian” distributors to determine who shall receive what.

Nor is there any conception in all this of the enormity of the coercive government machinery that would be required to sustain such equality of income: the waste, the graft, the corruption (getting your friends on the payroll, staying on welfare or disability long after you don’t need it any longer, etc.). All this is ignored or accepted without question. It’s just one of those “practical problems” for omnipotent bureaucrats to solve that should never be permitted to stand in the way of government’s income-distribution policies.

It is no wonder that Academia is not particularly anti-Soviet: the Soviet model appeals to them immensely, and not only because teachers are paid more than doctors in the U.S.S.R. The system may have gone wrong in certain details, to be sure: Stalin was a bit of a tyrant and things shouldn’t go that far (Hitler, whose total slaughter was less than a tenth of Stalin’s, is still considered the arch-villain, 40 years after his deeds are done), but the model itself is not objected to. That is why the academic community is embarrassed at the revelations of Solzhenitsyn, and would prefer that he just keep quiet—Academia is, in fact, giving him the silent treatment, hoping that students will never actually read what he has to say about the Soviet system.

The Nature of the Antipathy

Those who are in the physical sciences are as a rule less enraptured with various kinds of socialist utopias than those who are in the humanities. Training in the “hard sciences” requires one to work with facts of reality that cannot be changed through wishful thinking or personal feelings. “The literary or humanistic intellectual, by contrast, lacks the ballast of empirical verification for his hypotheses . . . If he empathizes with the sufferings of men under the yoke of the market system, he forthwith visualizes a social system in which these sufferings will be removed.”^[8] With no check on his fantasies, he dreams of a society in which all people are some how in a state of blissful harmony with one another, and blames capitalism for whatever evils he may find.

If students had been required to work their way through school, or at least spend summers in their fathers’ business enterprises to see how capitalism actually works in practice, they would have been forced to face reality in another way. “This experience had an important value; it reinforced contact with reality and provided a counterweight against tendencies to social fantasy. The Marxist or Marcusean phrases about work and workingmen ring hollow to those who have worked side by side with them. But the students, now a highly favored stratum, are liberally subsidized and their experience is much more wholly university-centered. Thus, the paradox: at the very time when university students call for a greater involvement with society, they are more isolated from it in an everyday, work-a-day sense than they ever have been in the United States. Together with the direction of their generational revolt, university culture reinforces the anti- capitalist mentality.”^[9]

It has seldom been the workers under capitalism who have demonstrated against the capitalistic economy, and then only when they have been barraged by socialist propaganda from upper-middle-class intellectuals. Workers, particularly those who came from non-capitalist countries, have always been anxious to rise in their trade and change their status (e.g., to foreman and then to manager), which capitalism above all other systems gives them an opportunity to do. It has been the intellectuals, usually the sons and daughters of the affluent, who have been the instigators of foment and revolution against capitalism. They were the students whose parents have profited so much from the capitalistic system that they, the students, took it all for granted and used its benefits as a platform for trying to extirpate it.

“We have seen the highly educated German nation give its allegiance to the most murderously vengeful government in history,” wrote Eric Hoffer. “The bloody-minded professors in the Kremlin, as Churchill called them, liquidated 60 million Russian men, women, and children. We have also seen a band of graduates of the Sorbonne, no less, slaughter and starve millions of in nocents in Cambodia and Vietnam. The murder weapons that may destroy our society are being forged in the work factories of our foremost universities. In many countries, universities have become the chief recruiting ground of mindless terrorists.”^[10]

An Illustrative Example

Several years ago I was asked to address a philosophical conference which by coincidence was being held that year in my home state of Iowa. The main session of the conference consisted of a comparative survey of various minor Marxist thinkers of the U.S.S.R., Poland, and Yugoslavia; all of their views were treated with great deference, the underlying Marxism of them all was never questioned, and the right of the State to own and operate all productive enterprises was taken for granted. As I sat there I could not help wondering: if only the farmers and businessmen and workers who pay taxes to support the state university knew what their taxes were being used to sustain—the undermining and eventual destruction of the economic system which enabled them to be free and prosperous, yes, even prosperous enough to support the state university.

Outside the windows of the auditorium, which was at the edge of town, one could see well- kept houses and yards, and behind these, rolling hills and fields of corn and grain waving brightly in the sunlight. I thought of the pioneers who came from every country in Europe a century or more ago and cleared the forests, built the houses and towns, and cultivated this rich land—and of how these pioneers would have fared if they had been engaged in agriculture in the Soviet Union instead. And the word that kept hammering through my head was “Traitors! traitors!”—addressed, of course, not to the farmers and merchants but to the academicians whose livelihoods were made possible by the labor of these very same farmers and merchants.

That evening I gave an invited address to the Society, in which I took pains to emphasize economic freedom and its close connection with other freedoms. Most of the assembled academicians thought of me not so much as a radical but as a reactionary, a paid hireling of the capitalist exploiters. But though I had completely alienated them, I had the opposite effect on various home-town friends and relatives who had come to hear me, and who then applauded ideas so obviously behind the times.

My relatives were all of Dutch stock whose ancestors had come to Iowa from Holland in the 1840s, when the State Church of Holland led them to seek freedom in the New World. They applauded, not because they were particularly aware of the hostility of the professors, certainly not because they felt threatened by them, but because I was giving voice to the kind of view they had always held but for the most part had never consciously articulated in words; most of them probably felt that the views I was expressing were too obviously true to need reiteration. “It’s all true, and well enough said,” my uncle said to me afterwards, “but does a person need to go to the university to learn that?” I assured him that I hadn’t learned it in any university, but had absorbed it through my pores during all the years of childhood and growing up, thanks in part to him. He assured me that no thanks were due him, for something so plain and obvious. “No thanks,” he said, but I was remembering the years of work and planning which had enabled him to establish a new industry in the town, one that he founded and developed through four decades until today it employs over 1,500 people. “No thanks,” I thought, “for what you have taught me by the conduct of your whole life?”

Whither America?

I left that meeting with very mixed feelings. I had alienated, perhaps forever, the group I had come to address, but had won the respect of the quite different group whose members I hadn’t even suspected would bother to come. For them it had been largely a matter of “finding out whether the home town boy had finally made good.” It may be, I thought, that in the future the influence of the first group (Academia) will win out and no longer permit the existence of the second group (independent farmers and businessmen), and the first group will determine (with the iron fist of the commissar) the course of the lives of the second group, deciding on their work, their income, their education, their profession, leaving them with few responsibilities and decisions not imposed by the State. Perhaps the descendants of the courageous emigrants will be made to labor for the State, or if they dissent will be summarily shot or sent to an American Gulag, and that will be the end of the America that was once the hope of the world. I determined at that moment to work for a free America as if my life and the lives of other Americans depended on it—which indeed they do.

Causes of the Antipathy

As a rule, the wealthier a country becomes, the more its systems of higher education expand, and the more intellectuals become trained in those systems. These men believe they have a worth far greater than the producers on whose bounty they depend. The businessman, in their view, makes far too much money although he is obviously less intelligent, well read, and civilized than the man who spends his life in the ivory tower.

So the intellectual makes others believe that the entrepreneur gets his money by luck, or exploitation, or dishonesty. He also envies the producer of things that yield wealth, and he expresses this envy in cynicism about the whole enterprise of money-making. Besides, the intel lectuals are as a group the camp-fol-lowers of power, and they tend to identify in their imagination not with the producers of wealth but with the government bureaucrats who get it by force and threat of force from producers and distribute it to others—including to the intellectuals themselves.

Why are the intellectuals as a group almost always the most strongly pro-State of any segment of the population? One would think that they would be strong champions of individual liberty, as indeed they are in one matter, the freedom to teach what and how they please.

The question may seem less troublesome if one reads a book (published in 1908) by the German sociologist Franz Oppenheimer, The State. Oppenheimer begins with an apparently obvious distinction. There are, he says, two ways of obtaining the things one needs and wants in this world. The first method is production and exchange—producing something out of nature’s raw materials and transforming it so that it can be used by man, and exchanging this product of one’s labor with the products of the labor of others (the free market). This method of survival, production and exchange, he called the economic means. But there is also another means: not to produce anything at all that others need or want, but simply to seize by force the things that others have produced—the method of plunder. This he called the political means.

Not everyone, of course, can use the second means: you cannot seize anything from others that others have not already created or produced. But some people can do it, siphoning off the fruits of others’ labor for themselves. In the end, the supply is destroyed if this method is used too extensively, since the second method adds nothing to the totality of production but only subtracts from it; the more that’s used up by the predator, the more must be created by others to replenish the supply, and of course the systematic plunder of the goods that someone has produced considerably reduces his motivation for producing any more.

The Political Means

Now the State, said Oppenheimer, is the organization of the political means. It is the systematic use of the predatory process over a given territory. Crimes committed by individuals, such as murder and theft, are sporadic and uncertain in their outcome; the victims may even resist and win. But the State provides a legal, orderly, systematic channel for the seizure of the fruits of other men’s labor. Typically a conquering tribe settles among the conquered as rulers exacting an annual tribute; this provides peace in place of war, and increases the probability that the tribute will continue to flow in.

Still, the problem remains how the king, or tribal chieftain, or emperor, or council of rulers, can continue to get by with this use of naked force against the rest of the population. One way to manage it is for the king to have a group of other men (the nobility of the realm) to whom he grants special privileges in return for his will being done. He makes it worth their while for them to serve him. He gives them land grants, makes them feudal lords, lets them throw their weight around, gives them great power over the masses, including, of course, the power to tax. They like the wealth and power that this position gives them, and have no incentive to change the system. Many nations still have this hereditary nobility based on original grants from a monarch or chieftain.

But if this were all, we would have a monarch and a class of nobles, with a highly discontented population. The upper classes would be in constant danger because the rest of the population are more numerous than they are, and there would always be a considerable chance of open rebel lion. If peace is to be maintained, the masses have to be kept content with their lot. They must somehow be convinced that they are the gainers by the system: that they are getting back more than they’re giving, that they are being protected by the system and that the protection is worth more than the taxes and regulation they have to endure from it.

Teaching Obedience

How is this goal achieved? A morality must be inculcated that justifies in the eyes of the majority the power of the State. People must really believe that their lot is better now, that Caesar is good and wise, that the State really is their servant and not their master, and also of course that it would go badly for them if they tried to rebel. At one time, when church and State were one, the inculcation of this morality was the business of the ecclesiastical authorities. In that way, they could tie the precepts of obedience to Caesar to the eternal welfare of the subjects, and obedience became a virtue rewarded, if not now, at least in the hereafter.

But the principal way in which the State keeps people in line today, even supporting its activities voluntarily, is through a system of universal public education. Such education proceeds with every trapping of objectivity and tolerance, but its effect is to cause the recipients of the “education” to grant entirely too much in the way of State power. How many students ever learn that there are practical alternatives to government operation of the post office, the roads, education, and other essential services? How many students ever read, or learn of, books which describe how such services can be operated privately? It is not to the interest of those in charge to publicize alternatives to the system of which they are a part.

Added Pressures

By the time students reach colleges and universities, their minds have already been strongly disposed in a pro-State direction, and their teachers too have been sustained by “the system.” Lest any educator step out of line, the State makes institutions of higher learning more dependent on it through research grants and countless subsidies, so that the teacher who opposes the State in any fundamental way finds that he cannot exist within the system: he gets no grants (which are controlled by the State or by private foundations whose heads are also powers behind the government), and sometimes he is fired by deans or superintendents who are afraid to jeopardize the source of their income.

With the State holding the purse-strings, whenever it plays the tune the educators dance and their students memorize the tune. And thus in the course of time the population as a whole comes to believe that interference by the State is essential in virtually every sector of their lives. Even when the government becomes a democracy, the people usually vote for legislators who will increase the State’s benefits to them, and with it, inevitably, the State’s power over them.

The State cannot sustain this power without conferring some benefits: it has a police force and an army whose official reason for existing is to protect them, which indeed it sometimes does. But, to amass more votes, it also institutes vast schemes of welfare, including housing and medical care, so that people will think they must be grateful to the benevolent State for its many benefits.

The State, of course, doesn’t tell them that these benefits are dearly bought: that because of inefficiency and corruption it costs more than twice as much for the State to confer the benefits as it would cost insurance companies and other private organizations. It doesn’t tell people that they are gradually trading their liberty for security—or the illusion of security, since there is no security other than making one’s own plans for the future and being sure that the State will not confiscate the fruits of one’s labor. It doesn’t remind people that the governmental handling fee for its services is very high, and that the money the unsuspecting citizen has put into the scheme (e.g., social security) has already been spent, and the system relies for its continued operation on the future taxing powers of the State.

I don’t propose to argue that Oppenheimer’s account of the origin of the State is correct—though surely in most cases, governments have indeed been formed through violence and conquest. Nor do I wish to argue that the State has no useful function at all—for I believe it does (e.g., courts and national defense). All I want to illustrate is that Oppenheimer’s account goes far to explain why, in one country after another and in one age after another, the educational system serves the interests of the State rather than those of the people it is supposed to serve.

Avoiding Competition

Many teachers would not do well in the market place, and being tied to State power gives them position, dignity, an importance and income which they would not otherwise have had. Since they get a better deal from the State than they would in the market place, they naturally want to hold on to the special privileges they have obtained, and they gladly pay the required price: to praise the State, to try to tie the well-being of their subjects to the State, and most important of all, to attack the State’s favorite scapegoat, the businessman, as the source of evil, exploitation, and power-lust, thus diverting the blame for economic woes from the State itself.

As the plot of Ayn Rand’s Atlas Shrugged progresses, the government bureaucrats take over the management of the American economy, and the producers must either work for the government or be put out of business by government regulation and taxation. But the director of economic planning, Wesley Mouch, is worried about whether the public will take it, particularly the principal molders of public opinion, the teachers and the intellectuals. He says,