Mr. North is a Ph.D. candidate at the University of California, Riverside.
Growth for the sake of growth is the ideology of the cancer cell.
—Edward Abbey
Carl Becker, the late Cornell professor, was once regarded as the "dean of America’s historians." His most famous work, The Heavenly City of the Eighteenth-Century Philosophers (1932), was a literate defense of the idea that the "rationalism" of the Enlightenment was really a religious faith modeled after the thirteenth century’s theological concerns. Enlightenment rationalism is best understood, Becker argued, as secularized theology; its presuppositions were as unprovable as those of the scholastic philosophers. Both systems, in the final analysis, are equally based on faith. While he has been criticized for his handling of particular ideas, most notably by Peter Gay, Becker’s fundamental presentation still holds: the reigning faith of an age — the "climate of opinion" as he called it — is no less a faith just because its devotees like to refer to themselves as rationalists.
Becker believed that certain key terms reveal the true concerns of the Enlightenment: Nature, Reason, and Progress were three of these. These were self-attesting, "self-evident" propositions. Nature, in that confident, post-Newtonian world, was seen as being under the control of universal laws, and these laws are discovered by the operation of the human mind. We can understand the impact of Newton’s law of gravitation on his age; indeed, the impact is with us still. Eugene Wigner, a Nobel prize winner in physics, has pointed to the astounding nature of the discovery:
The law of gravity which Newton reluctantly established and which he could verify with an accuracy of about 4 per cent has been proved to be accurate to less than a ten thousandth of a per cent and became so closely associated with the idea of absolute accuracy that only recently did physicists become again bold enough to inquire into the limitations of its accuracy.¹
Understandably, men were impressed with such a find. Wigner himself concludes his essay by saying that "the miracle of the appropriateness of the language of mathematics for the formulation of the laws of physics is a wonderful gift which we neither understand nor deserve." The vision of a universe totally under the reign of law — mathematical law —captivated social scientists as well, as Louis Bredvold’s book, The Brave New World of the Enlightenment (1961), demonstrates so forcefully. Thomas Hobbes, for example, believed that political affairs could be predicted and controlled if the mathematical laws of politics could be discovered. It was no doubt a dazzling vision.
Coupled to this faith in mathematical law and human reason was the idea of progress. J. B. Bury’s The Idea of Progress surveyed its impact; published at the turn of the century, it still is an important study. More recently, Robert A. Nisbet, the conservative American sociologist, has examined the concept of development in Western thought.2 Society was viewed as an organism by Enlightenment thinkers; if unhampered by "reactionary" human institutions and traditions, societies invariably progress. Social change is therefore "natural"; it is cumulative, irreversible, directional, uniformitarian, and immanent (i.., self-motivated). French Revolutionaries drew the obvious conclusion: since progress is desirable (self-evident truth), such reactionary institutions must be abolished.
Christian culture had to be destroyed. "Crush the accursed thing" was Voltaire’s battle cry.
The Loss of Faith
Two events — possibly three —helped to shatter men’s faith in natural progress. The first was the publication of Darwin’s Origin of the Species in 1859. The immediate response was overwhelmingly favorable; all 1,250 copies of the book were sold out on the first day.3 Marx hailed it as the foundation in natural science of his own scientific socialism.4 R. J. Rushdoony has commented on the intellectual effects of the idea of natural selection:
Darwinism destroyed this faith in nature. The process of nature was now portrayed, not as a perfect working of law, but as a blind, unconscious energy working profligately to express itself. In the struggle for survival, the fittest survive by virtue of their own adaptations, not because of natural law. Nature produces many "mistakes" which fail to survive and become extinct species and fossils. The destiny of the universe is extinction as its energy runs down.5
Social Darwinists like Herbert Spencer and William Graham Sumner tried to apply the principle of natural selection to the social realm, but with little ideological success. Men found its implications too difficult to bear. (Mises has argued that they misused their arguments: capitalism, through its great productivity, has permitted the less fit to survive, i.., those who would have perished in a less productive economic system.6) The Social Darwinists’ defense of capitalism fell on increasingly deaf ears; the idea of natural selection had done its work:
All of this served to shatter the older faith in nature. Nature as the agency of predestination was gone. It became increasingly evident to naturalistic thinkers that man must control his own evolution and also control the evolution of plant and animal life. Moreover, man must create and control his own social order, so that total statism, total socialism, is "scientific socialism," that is, socialism which recognizes that man cannot exist without predestination and therefore provides for the control of process, for total planning and predestination, by the elite men.7
Or, as the late C. S. Lewis has put it, when we hear the phrase "man must take control of man," we should watch out; it means that some men must take control of all the others.8
The second event that broke men’s faith in progress was the First World War. It combined with the third factor, Freudianism, to convince men that the faith in the rationality of mankind was too easy, even naive. Freud’s own pessimism concerning the possibilities of psychoanalysis for curing men’s psychological problems was not adopted by the majority of his followers, but this should not blind us to the fact of Freudian pessimism: long ages of evolution, he believed, would be necessary to separate men from their irrational, bloody antecedents.9 The War seemed to prove Freud’s contention that subrational influences guide men’s decisions.
The faith in inevitable, natural progress has been lost. This loss of faith has been devastating in the historical guild. The triumph of historicism and relativism have emasculated historical studies. J. H. Plumb has bewailed this development:
So the modern historian is crucified by this dilemma: he must act like a scientist although historical objectivity cannot exist. His work can have no validity except for himself, and, perhaps, for fellow historians playing the same game by the same rules or perhaps for those men of his age who think and feel like himself…. The philosophers of history will allow history to be a profession, even admit to its having educational and literary value: what they will not tolerate is the idea that it has a social purpose….¹º
Plumb cries out in horror against what has happened to the writing of history in our time; vainly, he tries to bring new life to a dead idea. Unfortunately for his efforts, there is nothing deader culturally than a dead idea.
So there we have them. The idealists insisting that history is merely a present world, ever changing, never static; the academic positivists burrowing like boll-weevils in the thickets of facts, mindless, deliberately, of purpose and meaning outside the orbit of their own activity; the public prophets using pseudo science to justify a repetitive, cyclical interpretation of history, and the littérateurs preoccupied with evocation and exercise of the imagination. The result is nihilistic and socially impotent.
All are equally guilty I think of willfully rejecting the one certain judgment of value that can be made about history, and that is the idea of progress. If this great human truth were once more to be frankly accepted, the reasons for it, and the consequences of it, consistently and imaginatively explored and taught, history would not only be an infinitely richer education but also play, a much more effective part in the culture of western society.¹¹
It is a bleak, bleak picture that Plumb paints. The halls of ivy have become empty shells—broken shells, like Humpty Dumpty. "History properly so-called can be written only by those who find and accept a sense of direction in history itself," writes E. H. Carr. "The belief that we have come from somewhere is closely linked with the belief that we are going somewhere. A society which has lost belief in its capacity to progress in the future will quickly cease to concern itself with its progress in the past."¹²
The Concept of Economic Growth
The social scientists who have retained their faith in planning have not been hit so hard as those in the humanities by the death of the idea of progress. Economists in recent years have become fascinated with the possibility of continual economic expansion. The first signs of the faltering of this faith have become evident in recent months, specifically with regard to the question of ecology and the pollution problem. Last November, at a meeting of the United States Commission for UNESCO, a call for total stability went forth to the world. The New York Times News Service in late November ran a feature article in which Jerry Mander, a San Francisco advertising man, was quoted as saying, "Beginning now, there should be national preparations toward a no-growth economy." Robert Anderson, board chairman of Atlantic Richfield Oil Company, called for negative population growth. Hal Lehrman, president of the Overseas Press Club, said: "You’ve got to prove growth is evil. How do you do it?" Mander admitted that "at this moment, we are totally unprepared, emotionally, psychologically, and technologically for the emerging facts." The propaganda campaign is beginning. If it takes hold of the outlook of economists, an intellectual revolution will occur in the guild.¹³
Why the fascination with economic growth? Herbert Heaton, one of the founders of the discipline of economic history (and close friend and associate of the late T. S. Ashton), once remarked in a graduate seminar I was attending that this concern with economic growth, especially growth in underdeveloped nations, hit the profession almost overnight. Specifically, it appeared simultaneously with the advent of the Cold War. Certain questions became the chief concerns for academic economists: how to keep growth rates high in the noncommunist societies; how to export growth to underdeveloped (formerly referred to as "backward") nations, thus keeping them loyal to democracy (the theory went)?
The Answers Are Impracticable
The answers to these questions have generally been in the neo-Keynesian framework in theory and virtually inoperable in practice. The programs of foreign aid were supposed to result in industrialization, which in turn would become self-sustaining, leading the underdeveloped countries into the twentieth century economically. What the programs have actually accomplished has been far different: state-to-state aid has strengthened the state-controlled zones of the recipient nations’ economies, making it more difficult for independent firms in the private sector to compete successfully with the underwritten statist projects.¹4 The Soviet Union has been equally inefficient in providing needed aid; "helpful" bureaucrats from both the United States and the Soviet bloc have bungled program after program, as bags of cement get shipped to Southeast Asian countries during the rainy season, and mammoth buildings without air-conditioning get built in African states.¹5 The reports of such projects are legion; if they were not so expensive, they would be much funnier.
The Paranoia of Economic Growth
Naum Jasny, in his book, Soviet Industrialization, 1928-1952 (1961), reveals how Stalin used growth figures as propaganda devices, setting goals for the five-year plans (themselves propaganda devices more than planning tools) so high that no economic system could have produced the anticipated results. It was growth for the sake of growth. The actual per capita output of consumer goods did not significantly increase until the mid-1950′s; only in 1952 did wages reach the level that Czarist Russia had attained in 1913!¹6
Two wars and a revolution obviously were retarding factors in Russian economic expansion. So was the loss of manpower in the famine of the early 1920′s and the collectivization of the farms in the late 1920′s and early 1930′s; at a minimum estimate, five million persons were either executed or deported during collectivization.¹7 A million people starved to death in 1933 alone, during the forced collectivization of the farms, Jasny estimates.¹8
The Soviet Union has experienced a high growth rate of its aggregate output of goods; Berg-son’s estimates put it at 4.5 per cent per annum, 1928-1960, and 5.2 per cent if we exclude the war years.¹9 The rates have tapered off significantly since 1960, but enough people seem to be so impressed that they deliberately ignore the costs of that industrial growth to the Soviet Union in human lives and human freedom (which is almost impossible to deal with statistically, so it is relegated to the background). What did these growth rates actually reflect? Jan Prybyla’s comments are to the point:
What the Russians have shown is that cockeyed economic growth at rapid rates can be achieved without economists and without economic science; but that after the economy outgrows its teen-age crisis, elusive and subtle problems of resource allocation among an increasing number of competing "priority" ends demands an economic science for their solution.²º
Loopholes for Survival
It is this lack of economic science that has created the present crisis in the Soviet economy: constant fluctuations back and forth between regional and national economic planning, constant short‑ages of key production goods, and a full-time quasi-legal network of black market suppliers which keeps the planners’ errors from bringing the whole economy to a grinding halt.²¹ The two factors chiefly responsible for the successes of the Soviet economy, however limited outside of the USSR’s military-industrial complex, have been its own domestic "free" market — the black marketeers (tolkatchi) and the small private garden plots of the peasants — and the productivity of the Canadian wheat farmers. I am reminded of an editorial cartoon I saw years ago (I think Herblock did it), in which we find a Soviet army officer saying to a commissar: "But Comrade, if we win the whole world to communism, where will we buy our wheat?"
Fascinated with the propaganda value of Soviet growth figures (themselves frequently suspect, especially in the "conclusion" sections²²), American economist-propagandists have become obsessed with the task of equaling or exceeding Soviet growth rates. They see this as a necessity, in spite of the obvious mathematical fact that the larger a base figure is, the larger aggregate increases must be to keep it expanding at a constant rat. The Soviets, decades behind the United States in economic output, can more easily enjoy high growth rates, and even they have discovered the difficulty of retaining their high rates as their economy expands (witness their falling off of growth rates since 1960).
Reliance on Mathematics
Why this obsession with aggregate growth? One answer which I have already mentioned is the fact that freedom is difficult to chart statistically. We therefore see our propagandists appealing to other results of the two societies in order to compare them. Another impetus to the "growth game" is the very methodology of contemporary academic economics. Men whose concern for methodological rigor far outweighs any other professional goal in their lives will have a tendency to examine aspects of an economic system that are subject to the "elegance" of mathematics. They will tend to search diligently for "statistical handles" that are nicely "neutral," and therefore acceptable to other professional economists as valid measurements of an economy’s benefits. The economic methodologies of both the Soviets and Keynesians, while differing in detail, still focus on aggregate output figures that are useful in the tasks of centralized planning and prediction. Thus we see the fetish of the GNP — the so-called Gross National Product.
Numerous critiques of GNP figures have been made, but the important one is that the GNP figure would have meaning operationally only as a report of a single firm owned by a single set of owners. This may be the goal of some statist planners, but it is not yet a reality, either in the Soviet Union or in the United States; when it is, we will see true economic chaos.23 The GNP is therefore a propaganda device primarily, a statement of faith in centralized planning secondarily. It is a methodological necessity for those academic economists who have honed their methodological tools to such fine points that the tools are no longer useful for any operation other than splitting academic hairs.
The Exponential Curve
The ancient world possessed no vision of continual economic growth. With the single exception of the Hebrew cosmology, all ancient cosmologies were cyclical with regard to the question of development. Man once lived in an age of gold; he has experienced progressive deterioration since then, and only with some cataclysmic event — the coming of a divine monarch and the imposition of a period of ritual chaos — will man return to paradise, where the cycle will begin once again.²4 The Hebrew and Augustinian cosmology was linear: God created the world out of nothing, giving history meaning in terms of a sovereign plan, and will bring history to a close on the Day of Judgment. Nevertheless, Augustine and other medieval Christians saw no possibility of unlimited economic growth. Human "cities" were seen as being subject to flux, never achieving the permanence of the great City of God; only the spiritual kingdom can in any way be said to develop irreversibly.²5 An earthly pessimism prevailed.
The Renaissance and Enlightenment humanists gave up the idea of God’s spiritual kingdom as a primary object of concern. Enlightenment thinkers in a sense "immanentized" the kingdom concept, bringing it down to earth. This was precisely what medieval thinkers had denied to man. Secular thinkers then gave up the idea of a final judgment. Nisbet comments on this double intellectual revolution:
By the late seventeenth century, Western philosophers, noting that the earth’s frame had still not been consumed by the Augustinian holocaust, took a kind of politician’s courage in the fact, and declared bravely that the world was never going to end (Descartes, it seems, had proved this) and that mankind was going to become ever more knowledgeable and, who knows, progressively happy. Now, of a sudden, the year 2000 became the object of philosophical speculation.²6
The vision of continuous, secular, linear human progress had arrived. The dream of continuous economic growth is the intellectual descendant of this original vision.
The logic of continuous economic growth is the logic of the exponential curve. To produce such a curve, one needs to graph the expansion of a particular base figure over time. A compounding process takes place — positive feedback — as the figure becomes progressively (the language of progress is here inescapable) larger. There are numerous examples of this kind of growth: the compound rate of interest, the rate of economic growth, the rate of the biological reproduction of any species unhampered by a lack of scarce resources (including space) and free of natural predators. We may begin with a very small number of dollars or alligators or human beings, and we may add to them at a tiny compounded rate; but if we continue the process, the figure will get larger and larger until it eventually appears to be infinite. Graphed, the line will remain relatively flat for much of the graph, but eventually it begins to point upward; finally, it curves upward rapidly and then shoots almost straight up, until it goes off the graph paper. The higher the rate of compound growth, the sooner the line will make its sharp curve upward.
There are so many of these curves in operation in our era that ours might reasonably be called the age of the exponential curves. Two rather interesting ones relate to science. The number of scientists in America has been increasing since 1900 at a rate of 6.6 per cent, which means the number of scientists doubles every 10.5 years. The number of scientific periodicals has been increasing at a 4.6 per cent clip since 1750, the number doubling every 15 years.²7 This has led to an output of scientific articles so vast that even the abstracts of them are becoming too numerous to handle in any given discipline (yet the academic disciplines themselves are getting more and more specialized). We can only speculate on the apocalyptic academic vision offered (I believe) by former University of California President, Clark Kerr: "What will happen when the last inch of library shelf is filled with the latest journal?" (More properly, the latest microfilm, since library shelves are already overcrowded with books, and the books themselves are in the process of disintegration; the paper used for book production since 1880 now appears to be self-destructive, a nightmarish prospect for the world’s librarians.²8)
Pollution and Population
Several exponential curves are receiving considerable attention in the popular press. The recent concern over pollution and population can be expressed in terms of such curves. A classic is the population curve since 1770 to a hypothetical 2070. Graphed in Time (Feb. 2, 1970), we are presented with the prospect of an earth filled with 25 billion people in a century. The graph is titled, "Population: the next 100 years," but its subtitle gives the game away: " (assuming current population-growth rates and no natural or man-made catastrophe)." (Indeed, we could advertise the wonderful prospects for economic returns from a chain letter with a similar graph.)
No biologist believes that the subtitle will be historically operative; the graph is used to "document" a coming population catastrophe. Generally, it is a propaganda device calling for planning, especially national or even international planning, to avert the catastrophe. Rushdoony has surveyed much of this propaganda in the popular press and he concludes that socialism makes such population-control proposals inevitable, since population is a factor of production, and the ideology of full socialist planning requires the aggregate planning of all factors of production.²9
Newsweek (Jan. 26, 1970) provides us with another exponential curve, namely, Federal spending on pollution control since 1956. It has increased from virtually zero to a billion dollars (estimated 1970 expenditures). From $50 million in 1960 to a billion dollars in 1970: this is a 20-fold increase. Can we expect this rate to continue through 1980? How about until 1990? If so, in 1990, some $400 billion will be funneled into pollution control. If this takes place, hold on to your wallet; taxes will be going up. I have no specific figures, but I would estimate that if the rate of increase in the number of articles published in American national periodicals since 1965 on the subjects of pollution and population growth continues, by 1990 nothing will be published that does not deal with one or the other subject. Hopefully, the reader is beginning to grasp the implications of the logic of the exponential curve. It cannot go on indefinitely.
A World of Scarcity
Economists who see economic growth as the national goal of economic policy are pursuing a demon. It necessitates demonic means to sustain such growth in the aggregate. Ours is a limited world with limited resources. Aggregate production figures cannot grow indefinitely. (You will notice how the language of material progress and material finitude eventually brings us to an impasse.) In order for exponential growth of aggregate output over long periods of time to occur, the universe would have to be infinite, which it is not. For example, if we were to keep the money supply constant in an economy with a constant increase in the output of goods and services, we either would see the velocity of money increasing wildly (i.., the number of transactions involving money during a fixed period of time), or else prices would approach zero. An economist knows that this is impossible; the very science of economics is based on the assumption that there is such a thing as a scarcity of economic resources. The very definition of scarcity that at zero price, there will be an excess of demand over the supply of all goods — militates against such a vision of constantly expanding output. Nevertheless, present-day Keynesians and semi Keynesians advocate a constant increase in the money supply in order to "stimulate" the aggregate economy into greater output. What is acknowledged to be an impossible goal in theory with the example of the fixed money supply (because of a finite world) is somehow presumed to be possible in practice if the money supply is expanded at a constant rat. In other words, the mere printing of money and/or the creation of credit translates a world of scarcity into a world of total abundance.
Mises is correct: we have here a philosophy of "stones into bread."³º What Christ regarded as a demonic philosophy (Luke 4:3,4), the Keynesians have adopted as gospel truth. (Keynesians may resent my caricature of their position; if so, they will begin to understand my resentment against the use of this very caricature by proponents of Keynesian policies in the popular press: the public has swallowed an academic stone under the impression that it was steak.)
Any increase of the money supply at a rate above zero per cent (yes, even as "low" as 3 to 5 per cent) will eventually create a money supply which will defy calculation, producing what Mises has called the "crack-up boom." Men will abandon the use of the particular currency in favor of another currency or even in favor of barter, just as they did in Germany in the early 1920′s. When I presented this argument recently, it evoked this response:
Compound interest, which has been with us for centuries and forms the mainspring of all savings is an exponential curve. My first admonition as a child was "put your money in a bank and watch it grow."
It is very true that this growth has been interrupted in the past by bank failures and the like, but this has not taken place to a great extent in the last 30 years. Surely every right-thinking person does not want things like that to occur again. Banks must maintain sufficient currency to protect their depositors, and to do so, there must be [a] continually increasing money supply to cover interest accumulations.
The thing which astounded me when I first read this letter was that a man whose instincts are clearly procapitalism argues in favor of inflation because he has been led to believe that the best way to defend capitalism is in terms of the logic of the exponential curve. Yet it is because the exponential curve cannot be sustained over time, since we live in a world of scarcity, that men should make their defense of the free market. If all goods were free, economics as a science would not exist. Men would not then need to economize. Instead of reexamining the philosophy of compound interest, the man I’ve quoted felt compelled to recommend the inflation of the exponential curve.
Usury Deplored
Medieval theologians, who were social and economic thinkers, followed the Old Testament’s provisions against the taking of usury. They saw, in an admittedly obscure fashion, that a man must not demand an automatic payment of interest unless he shares in the risk of the failure of the particular enterprise. Using modern economic categories, we can say that profit, which stems from an accurate forecast of future demand and efficient planning in terms of that forecast, inevitably involves risk.³¹ The fact that loss occurs with at least equal frequency with profit should indicate the impossibility of perpetual, guaranteed compound interest.
All firms cannot make equal profits all of the time; the very nature of profit forbids the possibility of a universal guarantee of returns in the aggregate. The man who expects such a universal compounding of interest payments would have to take seriously the inevitable subtitle: "assuming positive interest rates and no natural or man-made catastrophe." Population growth, if it continues, will create its own catastrophe; the same is true of any policy of inflation used in order to sustain the continuous payment of compound interest. In the short run, an individual can "put his money in a bank and watch it grow." In the long run, a whole ‘population cannot. We must heed the words of the biologist, Garrett Hardin:
Suppose, for example, that the thirty pieces of silver which Judas earned by betraying Jesus had been put out at 3 per cent interest. If we assume these pieces of silver were silver dollars, the savings account would today amount to a bit more than 9 x 10¹4 dollars, or more than $300,000 for every man, woman, and child on the face of the earth. Since the real economic wealth of the world is certainly much less than that amount, it would be quite impossible for Judas’ heirs (all of us, I presume) to close out the account. The balance in the bankbook would be largely fictional.³²
The figure would be fictional in the same way that the GNP figure is fictional: the account could no more be closed out at one time than the total GNP could be sold to a single buyer at one time. If a market for the aggregate figure cannot exist then the "price" of the aggregate goods in either case is fictional.³³ Hardin’s conclusion is relevant to the theology of the exponential curve:
A modern William Paley, contemplating bank failures, embezzlements, business collapses, runaway inflation, and revolutions, might well argue that these catastrophes are examples of "design in Nature," for by their presence the impossible consequences of perpetual positive feedback are avoided.
Government Intervention
Does this mean that those who favor the free market must be in favor of "bank failures, embezzlements, business collapses, runaway inflation, and revolutions"? Absolutely not. The advocate of the free market favors the interaction of acting men in patterns of voluntary exchange precisely because he wishes to avoid such crises. But in order to be consistent with this goal, he is forced, by definition, to give up the philosophy of perpetual economic growth. No firm can continue to expand forever, no national economy can continue to expand forever: here is the essence of the free market position. Private economic competition is to replace aggregate economic collapse. The free market should never be defended, as one captain of American industry tried to defend it, in terms of the slogan, "No limit on tomorrow." In a world of scarce resources there is always a limit on tomorrow. We dare not write, as this man wrote in 1955:
I am convinced that there will be no limit on tomorrow, and that our future will be more exciting, more thrilling than any of the periods of progress we have yet experienced. There will, of course, be peaks and valleys as the forces of supply and demand continue to exert themselves. But I am confident that the American people will never satisfy their desires for better living, and that our technology will never cease to accelerate and expand.
This philosophy is far closer to Hegelianism than it is to the modern defense of the free market. It should be left for Soviet theoreticians to play with; defenders of capitalism, given their presupposition of scarcity, dare not use it. Hardin is correct when he writes that "the myth of inevitable technological progress in a laissez faire world" is fallacious.³4 We must give up the myth of perpetual, irreversible technological progress if we are to preserve the theoretical validity of free market voluntarism.
The theology of the exponential curve has led to what Harlan Cleveland has called the "revolution of rising expectations." Men begin to believe the promises for an expanding utopia, and when the planners cannot deliver, they turn in fury on those who promised too much. They tear down that system which promoted the myth. If we are to avoid this, we must be careful to defend the free market in other terms. First, the market system provides men with a sphere of freedom and personal responsibility in which to exercise their talents, dreams, and faiths. Second, it provides the most eff¹cient mechanism known to man for the production and distribution of wealth, given the limitations of scarcity. Third, by making men responsible as individuals for their actions, and by imposing penalties for failure on individuals rather than on whole economies, the market tends to smooth out crises, thereby enabling more peaceful transitions to newer economic conditions. The market promotes social peace.
Statist propagandists have committed us to the theology of the exponential curve. They are determined to see to it that the economy meets the demand of rising expectations. Political administrations like to take credit for "their" achievements economically; these advances must continue to grow. Therefore, we see the rush into intervention: natural competition is limited by barriers of knowledge and goods; the statist tries to alleviate this, not by expanding the available supply of resources, but by blaming the shortages on the very process of private competition.
In this attempt, the statist planner is aided by the individual entrepreneur who wishes to secure the benefits of an exponential curve for his company by eliminating the competition he receives from other firms, especially newer, more vigorous firms. He calls for statist controls to insure his firm’s position within the market; statist intervention becomes a form of insurance against private failur. And, as I have warned elsewhere: "Remove the right to personal failure, and you dehumanize mankind; a dehumanized mankind cannot hope, as a collective entity, to do anything but fail."³5
The free market must not be proclaimed in the name of continual material progress. Progress may be seen as spiritual and moral, though not infinite, in contrast to the total pessimism of twentieth century philosophy. Progress must not be seen as material and technological, in contrast to twentieth century economic propaganda. We have mixed up our categories, at the peril of our civilization. Short-run material progress, both individual and collective, is possible; go beyond this and you deny the human condition. Man has his limitations. So does his environment.
Conclusion
Men have a tendency to get their religious presuppositions confused with economic analysis. For example, in my own case, I happen to believe that there will be a time of social peace and moral development on earth. This opinion stems from my interpretation of certain passages of the Bibl. I have no illusions that I can derive such an opinion from economic analysis. Therefore, when I see others painting vast pictures of unlimited economic progress for the future, progress somehow self-generated and self-sustained, I become skeptical. That is theology, not economic analysis.
I am always tempted to offer the prophet Isaiah’s ridicule of the idea that material progress, apart from moral progress, is in any way self-sustained: "Come ye, say they, I will fetch wine, and we will fill ourselves with drink; and tomorrow shall be as this day, and much more abundant" (Isa. 56:12). We must drop Rostow’s definition of modern industrial society as one in which "compound interest becomes built… into its habits and institutional structure."³6 Mises points out with regard to the economic contribution of the Austrian economists:
The greatness of the service these three Austrian economists have rendered by maintaining the cause of economics against the vain critique of Historicism cannot be overrated.
They did not infer from their epistemological convictions any optimism concerning mankind’s future evolution. Whatever is to be said in favor of correct logical thinking does not prove that the coming generations of men will surpass their ancestors in intellectual effort and achievements. History shows that again and again periods of marvelous accomplishments were followed by periods of decay and retrogression. We do not know whether the next generation will beget people who are able to continue along the lines of the geniuses who made the last centuries so glorious. We do not know anything about biological conditions that enable man to make one step forward in the march of intellectual development. We cannot preclude the assumption that there may be limits to man’s further intellectual ascent. And certainly we do not know whether in this ascent there is not a point beyond which the intellectual leaders can no longer succeed in convincing the masses and making them follow their lead.³7
In short, do not try to get more out of pure economic analysis than economic analysis can possibly provide. Most of all, when you see presentations of the exponential curve, with extrapolations made into the next century, remember the words of Professor Nisbet with regard to the use of statistical devices in explaining or predicting human affairs:
Here the Random Event, the Maniac, the Prophet, and the Genius have to be reckoned with. We have absolutely no way of escaping them. The future-predictors don’t suggest that we can avoid or escape them —or ever be able to predict or forecast them. What the future-predictors, the change-analysts, and the trend-tenders say in effect is that with the aid of institute resources, computers, linear programming, etc. they will deal with the kinds of change that are not the consequence of the Random Event, the Genius, the Maniac, and the Prophet.
To which I only say: there really aren’t any; not any worth looking at, anyhow.³8
—FOOTNOTES—
¹ Eugene P. Wigner, "The Unreasonable Effectiveness of Mathematics in the Natural Sciences," Communications on Pure and Applied Mathematics (1960), goes into the marvelous correspondence of mathematical reasoning and certain kinds of external, physical events.
2 Robert A. Nisbet, Social Change and History (New York: Oxford University Press, 1969). For a summary and analysis of the book, see my review in Modern Age (Fall, 1969).
³ R. J. Rushdoony, The Mythology of Science (Nutley, New Jersey: Craig Press, 1967), p. 14.
4 "Marx to Engels, Dec. 19, 1860"; in Dona Torr (ed.), Marx-Engels Selected Correspondence (New York: International Publishers, 1935), p. 126. Marx later offered to dedicate Das Kapital to Darwin, but the latter prudently declined the honor.
5 R. J. Rushdoony, The Biblical Philosophy of History (Nutley, N. J.: Craig Press, 1969), p. 7.
6 Ludwig von Mises, Human Action (New Haven: Yale University Press, 1949), Ch. VIII, Sect. 6, pp. 164-65.
7 R. J. Rushdoony, Biblical Philosophy of History, p. 7.
8 C. S. Lewis, That Hideous Strength (New York: Macmillan, 1947), p. 37. The same theme is explored in his Abolition of Man.
9 R. J. Rushdoony, Freud (Philadelphia: Presbyterian & Reformed, 1965), compares "original Freudianism" with later Freudian environmentalism.
¹º J. H. Plumb, "The Historian’s Dilemma," in Plumb (ed.), Crisis in the Humanities (Baltimore: Penguin, 1964), p. 30.
¹¹ Ibid., p. 34.
¹2 E. H. Carr, What Is History?, cited in Rushdoony, Biblical Philosophy of History, pp. 132-33.
¹³ R. J. Rushdoony, The Myth of Over-Population (Nutley, N. J.: Craig Press, 1969). The propaganda aspect of this message is not that the goal of continuous economic growth is unattainable, but rather that the State has an obligation to restrict such growth by actively intervening into the market, or into the family.
¹4 M. A. Thurn-Valsassina, "Foreign Aid as Seen by a Foreigner," Modern Age (Summer, 1959).
¹5 Victor Lasky, The Ugly Russian (New York: Trident, 1965), presents a whole book full of such tidbits of bureaucratic bungling.
Gary North
Dr. North is president of The Institute for Christian Economics in Tyler, Texas. He was FEE’s director of seminars in the early 1970s and has served as a member of the board of trustees.