[This is
Chapter Ten of Murphey’s book Modern Social and
Political Philosophies: Burkean Conservatism and
Classical Liberalism.]
Chapter 10
THE
STRUCTURE OF FREEDOM: THE MARKET ECONOMY
The
"market economy" is a vital part of the free society that classical
liberals envision. It is so closely related, in fact, to the other aspects of
their philosophy that I have necessarily discussed a number of economic issues
while examining those other aspects. In the present chapter I will be more
concerned about integrating the economic features into a single whole than in
introducing additional items for discussion.
Here
are the various economic issues we have discussed:
•
The opposing viewpoints of Thomas Macaulay and Robert Southey
about conditions during the early Industrial Revolution.
•
The opposition by classical liberals historically to aristocratic propertied
interests.
•
The value of having each individual pursue his own
self‑interest ‑‑ and the need for some qualifications about
this pursuit. • The advantages of free trade. (Pages 126‑127)
•
Ludwig von Mises' criticism of socialism for lacking
the system of "economic calculation" that a price system
provides.
•
The belief that governmental intervention into the economy will inevitably lead
to socialism.
•
The concept of "consumer sovereignty."
• Eugen von Bohm‑Bawerk's
unfortunate acceptance of the ethical judgment that all income must go back to
the factors of production.
•
The need to meet certain institutional and legal prerequisites if the market
economy is to provide a sufficient vehicle for everyone who is involved in it
and is thereby to avoid an aspect of being "exploitive."
• Usury
laws.
•
The socialist "exploitation theories."
•
The meaning that a classical liberal gives to the concept of "distributive
justice."
•
The priorities held by classical liberals on the question of how to meet the
problem of poverty.
•
A comparison of the value‑judgments that were made by Richard Cobden and Thorstein Veblen about a
"spirit of emulation."
•
The "time‑preference theory" advocated by Eugen
von Bohm‑Bawerk and Ludwig von Mises.
•
Classical liberal thinking about aggregates and monopoly.
•
The alternative ways ‑‑ i.e., contractual or coercive ‑‑
by which people can join their efforts.
•
The conflict between "contract" and "fairness" as competing
ethical rationales.
•
The role of private property and the advantage of the market economy.
•
The monetary system.
•
Licensure.
•
Taxation.
•
Eminent Domain.
•
Zoning.
The beneficial
role of the market. Today, it is commonplace for Americans to think
of the market with suspicion, as though it is befouled in one way or another. I think that this
suspicion lies behind much of the movement away from the market that we have
seen during my lifetime. It reflects the ascendancy of the Left's general perspective
and is, in fact, a reaction against certain actual conditions ‑‑
but conditions that have been brought about by major deviations in our economy
from the competitive model that classical 'liberalism itself favors. In many
instances, we are moving toward more governmental intervention because we hope
to overcome problems that have resulted precisely from the sort of "vested
interest" protectionism that an interventionist, special interest
politics spawns. Needless to say, the
reformist tradition of classical liberalism would have us respond differently. It would have us reaffirm our adherence to
the competitive market. Instead of moving into one form or another of
"socialized medicine," for example, classical liberals who haven't
lost sight of the reformist thrust of the original philosophy will much prefer
to embrace an alternative that is hardly mentioned today: to open up the
delivery of medical services to greater competition.
In the area of energy, classical liberals
would opt to eliminate price controls and such special tax treatment as the oil
depletion allowance rather than to regulate all aspects of the industry. Some
situations need reforming, others don't. The overriding point is, though, that
if classical liberals have reason to believe that an industry is functioning
competitively, they will be very willing to support it and to see such a
market as a valuable, creative institution. All too frequently, this support is
automatic, with contemporary classical liberals taking it for granted that
whatever status quo exists is worthy of their support as enthusiasts of
the free market. I happen to believe
that this approach is far too unreflective and that it loses sight of the need
for an on‑going reformist classical liberalism to help ensure that the
principles of classical liberalism are actually carried out in the market and
in the socio‑legal framework that exists, at any given time, for the
market.
It is worthwhile to examine in
detail the advantages that the classical liberal sees in the market system.
As, in what follows, I take these up one at a time, it is useful to keep in
mind that he doesn't start with a supposition that most men are
"entrapped" by life. If he agreed with the socialist exploitation
theories which are based on a premise of entrapment, the classical liberal
would necessarily have to be less enthused about these benefits. But, of course, he holds to no such premise,
which is primarily a product of the alienated intellectuals’ ideological
alliance with the have-nots.
. Cooperation. We have to beware of the danger of
oversimplification that exists whenever we make dichotomies, but it is safe to
say that the classical liberal sees two basic alternatives with respect to how
society and an economy can be organized: agreement or force. Ludwig von Mises
wrote that “there are two different kinds of social cooperation: cooperation by
virtue of contract and coordination, and cooperation by virtue of command and
subordination or hegemony.1
People ordinarily think of the
market as involving competition, struggle and rivalry. But to the classical liberal this is just one
side of it, perhaps the less important side.
When economic transactions are based on the voluntary nexus of contract,
innumerable people come together into joint effort in a way that serves the
interests of each one of them, at least as that interest is perceived by the
respective person at the time of contracting.
The act of voluntary exchange deserves the name “cooperation,” with its
favorable connotation, far more than joint effort does
that is born out of a coercive relationship.
There are billions of free transactions daily in a market economy such
as ours; and it is a truism that when we buy a loaf of bread we are buying, in
reality, the cooperation of everyone who joined in producing the wheat, the
farm machinery, the transportation, the milling, the baking, the retailing, and
the countless other processes that have directly or indirectly played a part in
making the bread available to us. Mises said that “social cooperation under a system of
private ownership of the means of production means that within the range of the
market the individual is not bound to obey and to serve an overlord. As far as he gives and serves other people,
he does so of his own accord in order to be rewarded and served by the
receivers. He exchanges
goods and services, he does not do compulsory labor
and does not pay tribute. He is certainly not independent. He depends on the
other members of society. But this dependence is mutual." Significantly,
he added that "the market economy makes peaceful cooperation among people
possible in spite of the fact that they disagree with regard to their value
judgments." The process responds to assorted values and doesn't require
the agreement of a planner to initiate or oversee it.
Since
Adam Smith and David Ricardo, it has been elementary economics that this
interchange leads to a condition that is of major importance and that makes
possible the immense productivity that we know today: the division of labor.
Cobden pointed out that "free trade, in the widest definition of the
term, means only the division of labour, by which the
productive powers of the whole earth are brought into mutual cooperation."2
This is not to say that the
division of labor is impossible in the absence of a market; but the division of
labor is certainly one of the leading characteristics of a market system
itself. Cobden was right when he saw that international free trade is a
worldwide extension of the division of labor. This extension has often been
seriously impeded by the presence of interventionist nation‑states.
Despite the fact that the Left's theories of entrapment and exploitation involve a perspective that mocks such an insight and considers it simplistic, the classical liberal sees the act of exchange as being mutually beneficial to its participants. "Each party gains," according to Leonard Read, "for each desires what he gets more than what he surrenders. In a word, the free market is individual desire speaking in exchange terms."3 This gain has to be understood as being from each participant's own subjective vantage point, since it may be that neither I nor any other third‑party observer of the transaction will agree that each individual made a good choice. We may consider many of the actors' choices improvident or debauched; and even the participant himself may later change his mind and conclude that what he did was unwise. But a philosophy that is centered on freedom welcomes this individually based judgment, since it is the essence of freedom, which is both an end and a vastly important social means.
•
Heightened motivation. To the classical liberal, self‑interested
effort in a free market is the key to a heightened human motivation. In turn,
this is one of the keys to the productivity that we have long‑since come
to associate with capitalism. In everyday life, we see how hard and
conscientiously people will work for their own advancement ‑‑ and
how difficult it is to count on very many of them for dependable effort on
behalf of any "volunteer" organization. The Left will say that this
is a motivational fact that is relative to bourgeois culture, where "of
course they are conditioned to act selfishly." But I share with classical
liberals in general the conviction that it is a phenomenon that goes much
deeper than that. A man is engrossed and moved by his own enterprise. It is an
extension of himself and of his own meaning and fate. Self-interest taps a
reservoir of human energy that must be tapped if mankind is to flourish. Bastiat spoke of "a regard to personal interest"
as "the very mainspring of human action."4 Leonard Read sees self‑interest as a
source of invention: "Nothing more is needed to bring a perfected answer
from obscurity than the economic incentive and prospect of a profit. We should
neither overlook nor deprecate the power of a hoped‑for profit; it is one of the best mothers invention
ever had. Certainly it is not the only source of energy or of inventiveness;
today, for example, we see the need for research and development through sophisticated
and specialized scientific effort; but it assuredly is a major source. History
has known a
number of stagnating, non‑vital societies. [Note in 2003: I should
think the collapse of the
•
Greater productivity. It follows that one of the perceived advantages of
a market economy is its immense productivity. It is so often said that it has
become a cliche to point out that Americans today
live on a scale that far surpasses anything people have ever known before or
that most people know even now. Classical liberals welcome this productivity
and see enormous humanistic value in it. They don't share the anti‑industrial,
anti‑scientific values that have run through the Middle
Ages, the Romantic movement of the early nineteenth century and recently such
New Left authors as Theodore Roszak. Nor do they
think that it is fitting to apologize or feel guilty for our productivity and
well‑being, as the Left would have us do. Ayn
Rand has expressed better than anyone else the understanding that it isn't the
producer who should feel guilty, and that an ideology or ethic that would have
him feel guilty is depraved.
• Dispersal of Economic power.
Henry Simons expressed one of the main advantages that classical liberals see
in the market system when he wrote that "private property in the
instruments of production is an institutional device . . . for dispersing
power."5 Lord Robbins,
too, has emphasized the importance of the fact that a free society spreads the
control of property over a vast and active market; and he cites the dangers
that exist in the collectivist alternative: "It is not true that every
experiment in collectivism is a grave menace to liberty; it is not true that
every country that has nationalized its railways lives under the shadow of
totalitarian tyranny – I speak as one who is opposed to the public ownership of
railways. But broadly and cumulatively Mill was surely right. The concentration
of property under general collectivism must eventually be inimical to freedom
. . . Where there is not dispersion of power, there freedom must be in
perpetual danger ‑‑ or else itself eventually change the system . .
. If freedom is to be preserved and progress assured, we must look outside
collectivism for the answer. We must look to a system in which there is truly
independent initiative and truly dispersed power."
It
is worth noticing how different this view is from the Marxists'. When a
classical liberal sees a healthy market, he perceives a dispersion of property
in the form of a great many firms and individuals with separate holdings. When,
however, the very same economy is seen through the eyes of dogmatic class
theory, the owners are no longer perceived as individuals, but as members of a
rigid and homogeneous class. The class, as a class, is then seen to hold a
monopoly over the means of production. This means that, from this point of
view, there is no dispersion of property at all. The result is that the state
or revolution may be aiding a "true dispersion" by destroying the system
of private property.
To
a classical liberal, it will be an empirical question whether rigid classes
exist. If he concludes that they really are present, he will
strongly oppose them; but he is not about to interpret a competitive economy
as necessarily involving them. If he were to do so, he would be adopting
a mental framework that would militate against a free society and hence would
militate against the system that involves the very opposite of concentrated
economic power. The fact that Marxists (of both the strictly dialectical and
the more empirical sort) invariably interpret the market economy as being
seriously warped by class rigidities
tells us more about their bias, which arises out of their alienation, than about empirical reality. It is their sort of wishful thinking, since
they clearly don't want to see a satisfactory market.
•
An appropriate equality. The classical liberal doesn't want a leveling
sort of economic equality. A forced equality, which is the only way an equality
of outcome ‑‑ i.e., of property and income ‑‑ could be
reached and kept, would cut deeply into liberty and would be inconsistent with
the existence of the market.
In
fact, an inequality of outcome is an inevitable ‑‑ and hence to
the classical liberal a wholesome ‑‑ concomitant of freedom. Lord
Robbins says that "leveling measures as such are not part of the policy
of liberty. The free society is not to be built on envy." Henry Hazlitt writes that "perhaps the most frequent
complaint about capitalism is that it distributes its rewards 'unequally.' But
this really describes one of the system's chief virtues. Though mere luck
always plays a role with each of us, the increasing tendency under capitalism
is that penalties are imposed roughly in proportion to error and neglect and
rewards granted roughly in proportion to effort, ability, and foresight."7 Herbert Hoover explained the role of
equality in classical liberalism well when he wrote that "the tenet of
equality in true Liberalism is a tenet of equality in birth, equality before
the law, and equality of opportunity as distinguished from equality of reward
for services."8 And
according to Ludwig von Mises, "the inequality
of incomes and wealth is an inherent feature of the market economy. Its
elimination would entirely destroy the market economy."
Not
surprisingly, then, classical liberals see the egalitarianism of the Left as a
menace to freedom. Frank Knight refers to "the conflict between freedom
and equalitarian justice."9 Lord Acton observed in connection with the
French Revolution that "the finest opportunity ever given to the world
was thrown away, because the passion for equality made vain the hope of
freedom."10 It has been
said of Alexis de Tocqueville that "he feared that the zest for a literal
equality of condition would sweep away all guarantees of individual personality."11 And in addition to being concerned about the
drive for economic equality, classical liberals have shared with Burkean conservatives a revulsion against the shearing off
of norms, of social variety and of patrician elevation. The Jeffersonian‑Jacksonian, it is true, was enthusiastic for
"republican simplicity"; but in what is often denigrated as
"middle class values" there has always been a significant ingredient
of individual dignity and enhancement that makes the ideal of the classical
liberal as close to that of the aristocrat as to that of the vulgar democrat.
Classical
liberals are consistent with their overall value‑system when they see one
highly desirable egalitarian aspect in the market system: that the society is
perpetually fluid. The owners of property are under an on‑going challenge
to demonstrate their prudence, efficiency and entrepreneurial judgment, or
else they will lose ground to those who do. Bastiat
understood that competition is "democratical in
its essence . . . despite the declamations to which it has given rise,"
and he described it as "progressive and leveling." Bastiat saw that French law even in his own day, which we
think of as having been at the height of classical liberalism, was weighted
heavily against competition and in favor of all sorts of preferential
treatment; and he wrote that "inequality, so far as it is artificial and
unjust, has for foundation conquests, monopolies, restrictions, privileged
offices, functions, and places, ministerial trafficking, public borrowing, ‑‑
all things with which Competition has nothing to do." In the United
States, Theodore Sedgwick passionately favored a more equal outcome, but it was
an integral part of his Jeffersonian philosophy that the equality must be
consistent with classical liberalism: "There is but one certain, proper,
absolute divider of property into natural parts, and this is the virtue, the
economy, the unconquerable resolution of a free people sustained by a
universal system of proper education. This division supposes perfect freedom
and equal laws in the acquisition of property . . . This is an honest,
healthful division that will last; it is not brought about by commotion, riots,
throwing flour into the streets, burning up convents, by agrarian laws, which
other laws will soon repeal, by monopolies hateful in the sight of all
righteous people, but by the power of God in the heart of an industrious,
temperate, painstaking, self‑denying man."12 There is an obvious connection between this
sort of equality and the "vitalist
perspective" held by classical liberals.
[Note in 2003: As readers of
my later book The Emerging Crisis of Economic Displacement know, I am
now concerned that workerless technology and the competition of extremely
low-cost labor in a global economy will pose a massive challenge to free
societies and market systems, both because of the destruction of employment and
the growth of vast disparities of wealth.
Thus, I see a different context for the discussion of inequality,
precisely from a classical liberal point of view, than I did when I wrote the
passages that appear here. It is, therefore,
necessary to read this book and the Emerging Crisis book together for a
complete understanding of my views. The
values and principles that actuate my thinking haven’t changed, but the
circumstances have.]
. Indivisible
from other freedoms. Classical liberals see economic freedom as vital to
the other freedoms. Freedom is seen as indivisible.They
disagree with the Left when they say that "civil
liberties” and political freedom are insecure in the absence of economic
freedom. Bastiat said that "to take away the
liberty of acting is to destroy the possibility, and consequently the power, of
choosing, of judging, of comparing; it is to annihilate intelligence, to
annihilate thought, to annihilate man."13 Within a system of economic freedom,
the individual has great latitude to develop a program for his own life. He
can pour into it the sum total of his talents, intelligence and energy. Despite
the attention the Left has preempted on "civil liberties" issues in
the twentieth century, it is worth realizing that classical liberals are
profoundly "civil libertarian" – and that they have a quarrel with
the depth of the civil libertarianism the Left really represents. Herbert Hoover expressed this exceptionally
well when he wrote that "the other freedoms cannot be maintained if
economic freedom be impaired – not alone because the most insidious mastery of
men's minds and lives is through economic domination, but because the maximum
possible economic freedom is the most nearly universal field for release of
the
creative spirit of men." Earlier I expressed my feeling that this rhetoric
is to some degree overstated, since with Lord Robbins
I am not prepared to argue that interventionism or democratic socialism
inevitably have to move into totalitarianism. This reservation is, however,
less important than my basic agreement that there is a mutual dependence
between economic freedom and all other liberty.
.
_A vehicle for peace. To Marxists, capitalism
is the bourgeois side of class struggle; and it is the source of greed,
colonialism, exploitation ‑- and hence of war. But the classical liberal
has seen capitalism in just the opposite light: as mankind's finest hope for
peace. "If all peoples become liberal and conceive that economic freedom
best serves their own interests," Mises wrote,
"national sovereignty will no longer engender conflict and war . . .
Durable peace can only be the outgrowth of a change in ideologies. As long as
the peoples cling to the Montaigne dogma and think
that they cannot prosper economically except at the expense of other nations,
peace will never be anything other than a period of preparation for the next
war. Economic nationalism is incompatible with durable peace." Frederic Bastiat urged "Let countries be permanent markets for each
other's product; let their reciprocal relations be such that they cannot be
broken without inflicting on each other the double suffering of privation and a
glut of commodities; and they will no longer stand in need of naval armaments,
which ruin them, and overgrown armies, which crush them; the peace of the world
will not then be compromised by the caprice of a Thiers
or of a Palmerston; and war will disappear for want
of what supports it, for want of resources, inducements, pretexts, and popular
sympathy."14
According
to Thomas Neill, "as late as 1871
It was
Richard Cobden who devoted the greatest energy to the peaceful implications of
classical liberalism. The second half of his career, which followed his
successful efforts alongside John Bright for the repeal of the tariff on
grains, was devoted to international free trade and to opposing belligerency
and colonialism. He worked especially hard to negotiate a commercial treaty
between
Cobden's
attitudes were widespread among classical liberals. "Liberals generally
opposed imperialism on the grounds of their laissez‑faire
theory. It was not entirely an accident
that Liberal governments in
Private property. In Chapter 8, I stressed private property's
importance as part of the "private sphere" of the individual. Ludwig
von Mises underscored its significance to classical
liberalism when he said that "private ownership of the means of production
is the fundamental institution of the market economy." "In our
view," Bastiat said, "the terms free
exchange of services, justice, property, liberty, security, all express the
same idea under different aspects . . . In truth, property and liberty are in
our eyes one and the same thing, for that which constitutes a man the
proprietor of his service is his right and power of disposing of it." Lord
Acton added that "a people averse to the institution of
private property is without the first element of freedom."
The
rationale for the private ownership of property has been a heatedly debated subject
in the history of ideas. Even within classical liberal thought there is hardly
a consensus. This becomes understandable when we read Milton Friedman's
observation that "just what constitutes property and what rights the
ownership of property confers are complex social creations rather than self‑evident
propositions."22 In
large measure, the differing views reflect differences in methodology and in
levels of metaphysical abstraction.
John
Locke argued, as did most thinkers in the seventeenth and eighteenth centuries,
from the theoretical vantage point of something's origins in a state of nature:
"Though the earth and all inferior creatures be common to all men, yet
every man has a property in his own person; this nobody has any right to but
himself. The labour of his body and work of his
hands, we may say, are properly his. Whatsoever then
he removes out of the state that nature hath provided and left it in, he hath
mixed his labour with, and joined to it something
that is his own, and thereby makes it his property . . . As much as any one
can make use of to any advantage of life before it spoils, so much he may by
his labour fix a property in; whatever is beyond
this is more than his share, and belongs to others." His discussion of it pretty well ended there,
except to raise the more difficult questions ever so slightly with the
following passage: "But since gold and silver, being little useful to the
life of man in proportion to food, raiment, and carriage, has its value only
from the consent of men, whereof labour yet makes, in
great part, the measure, it is plain that men have agreed to a disproportionate
and unequal possession of the earth, they having, by a tacit and voluntary
consent, found out a way how a man may fairly possess more land than he himself
can use the product of, by receiving in exchange for the overplus
gold and silver which may be hoarded up without injury to any one."23 This is hardly an adequate discussion,
especially in light of the modern forms of property that have mainly evolved
since he wrote. But it is still more profoundly inadequate because of the
artificial nature of his "origins" rationale. What, we should ask, is
the source of his ethical judgment that something is valid because it can be
traced to an origin? His answer would be, I believe, that if something is
ineluctable under the circumstances of a state of nature, then
it must have been intended by God. This sanctifies it as a natural right which
in turn is justified by its theological source. This rationale is
insupportable, though, even if we accept the notion of a Godly judgment: it
means in effect that mankind's original primitive condition is what was rightful (unless the thinker who is contemplating that
condition is selective about what is sanctified), and that human intervention
to change it would be wrong. If the savage nature of that original existence is
seen realistically, this clearly seems a reductio
ad absurdum. Besides, none of the eighteenth century thinkers agreed on the
content of the "state of nature"; nor can we expect that thinkers
ever would agree on it, even if they continued along that line of thought.
Herbert Spencer criticized Locke's rationale for private property by accusing
it of begging the question: "It might be said that the real question is
overlooked, when it is said that, by gathering any natural product, a man 'hath
mixed his labour with it, and joined to it something
that is his own, and thereby made it his property,' for the point to be debated
is, whether he has any right to gather, to mix his labour
with, that which, by the hypothesis, previously belonged to mankind at
large."24 An
inappropriate ethical methodology will always beg the question, because it will
offer an insufficient basis for making the decision. In the three centuries since Locke wrote, some
classical liberals have moved away from the natural law approach and others
haven't. Most recently, the debate within classical liberalism has been between
those who assert an absolute inviolability to private property and make it the
beginning axiom in a deductive system ‑‑ and those who assert that
property finds its justification as part of the overall system of a free
society and is therefore conditioned upon the needs of such a society. I
suspect that there we again confront the methodological difference between
"absolutist" and "weigh‑the‑consequences"
thinkers. Just as I have quoted Lord Robbins in earlier instances on the side
of the method that I myself approve, I find his comments pertinent here:
"I suggest that the conceptions fostered by laissez‑faire,
both in regard to property and of contract, are far too simple ‑‑
indeed, simple is not the word, simpliste is
more appropriate. So far as property is concerned, what are we to regard as
immutable natural rights in regard, for instance, to mining rights, rivers,
inventions, symphonies? The idea does not bear examination."
As
I have indicated before, the issue seems to me to be how we can best establish
a framework for the satisfaction of a very broad range of human values within
the nexus of a free society. This involves no metaphysic, no axiomatic and deductive
straight‑jacket. The rationale for private property, just as for other
things, should be founded on a realistic rationalism. It ought to involve the
formulation of principles in light of a balance of objectives.
In
such a context, private property will be given very substantial weight, far
surpassing what the Left will give it. We will do well even to invest it with a sanctity, a mythos such as I discussed in the
preceding chapter, which will raise our appreciation of it to be something more
significant than "just another instrumentality." It deserves this
weight and this sanctity precisely because of its central importance
to liberty. But even then it won't be identical to an "absolute"
theory of property. Those of us who hold to a "weigh‑the‑consequences"
ethical methodology see that private property has to be subject, as everything
else is, to such definition and limits as from time to time will become
necessary for the enhancement of the overall scheme of an on‑going voluntaristic society.
In
the preceding chapter, I discussed the government's power of eminent domain
from this perspective; but, of course, the point goes far beyond that issue. The
ecology issue, for example, has recently suggested an important question:
whether on classical liberal grounds a landowner has absolute dominion over his
land even to the point of destroying its future usability. Is it a matter of
right to be able, for example, to strip‑mine land without performing the
reclamation that is necessary to rehabilitate it? Do we owe anything to future generations ‑‑ or is everything consumable now
at will? If we answer this last question in the negative, we suggest a substantial
departure from the concept of absolute dominion. But I would consider it
consistent with a free society to adopt a concept of ownership that acknowledges
the right of the majority to impose restraints pursuant to the Rule of Law
that will take into account the obvious fact that our individual lives on this
earth are brief, while the continuity of humanity is perpetual. Individualism
is best served if it is an individualism that in its fundamental theory is
harmonized with this type of legitimate long‑run concern.
My
discussion in the preceding paragraph applies especially to real estate. The
ownership of land has long been the subject of diverse argument. Neill quotes
John Stuart Mill as having said that "when the 'sacredness of property' is
talked of, it should be remembered that any such sacredness does not belong in
the same degree to landed property. No man made the land. It is the original
inheritance of the whole species. Its appropriation is wholly a question of
general expediency." Neill observes that "such a stand was in direct
contradiction to the Liberal drive of Cobden and the
The
view I have expressed is to some extent sympathetic with the point first quoted
above from Mill, but in the overall it is more in line with Cobden's views,
subject to some qualifications. I have
already criticized Mill's "general expediency" position, which is
unacceptably broad; and I am critical, too, of the outlook expressed in the
second quote, since it reflects his method of pulling ethical judgments more
or less out of the air rather than of deriving them consciously through a calculus
of the means and ends of freedom. In my thinking, I would have real estate be
very much a part of the market system for precisely the same reasons that I
support the market economy in general: to diversify power, to provide amply a
medium within which people can live self‑reliantly and under their own
motivation, and to encourage productivity.
I have simply argued against the notion that an owner's dominion is
necessarily absolute and that the body politic has no right to place any
conditions upon it. But my argument is by no means identical to Mill's.
For
the past century, socialist theory, as part of its more general attack on
property, has picked out still another aspect of private property for special
attack: the equity that a stockholder owns in a corporation. Syndicalist and Guild Socialist thought wanted to do away
with the stockholders' control over the modern business firm and to
substitute control by the workers or the state. In the more gradualistic
versions of Fabian Socialism, and in modern American liberalism, which has had
a New Nationalist school of thought that has favored slowly increasing the
governmental presence until the firm would eventually become an instrument of
central policy, it was important to drive a wedge between the stockholders and
the firm itself to weaken the rationale for the stockholders' role. Thomas Kirkup, in his History of Socialism, argued that
"the development of the company in a large degree means that the real
administration of the economic movement is passing out of the hand of the owner
of capital as such. The companies are for the most part managed by paid
officials, who may or may not have a substantial holding in the capital. That
is, the capitalists do not really manage the companies in which their
capital is embarked."26 (Emphasis added) It is quite significant that Kirkup's book was published in 1909, since the same
argument was advanced years later in the United States by Berle
and Means, at which time it was presented as merely a modern liberal
observation that justified greater public control over supposedly irresponsible
managers who lacked accountability to the stockholders.
Although I
don't recall ever having read a classical liberal response to this thesis, it
is certainly not consistent with classical liberal perceptions. It couldn't be:
It is a rationale for governmental control of business and hence for a vastly
significant move away from the market. The thesis sets up a straw man as an
alleged principle of private property. This is that for legitimacy there has to
be a close connection between ownership and management, either through the
owners doing the managing themselves or having close supervision over the
managers. But I doubt whether any classical liberal, in discussing the basis
for the private ownership of business, has ever formed such a principle. I
suspect that it was devised because to men like Kirkup
and Berle and Means (and even to Karl Marx in Das Kapital) it
seemed plausible and convenient -- and because it would be easy to show that
the principle has long since been violated. This wouldn't be the first time a
philosophy, in this case the Left, has misconstrued another philosophy's
principles in order more easily to debunk them.
What
is important to classical liberalism in this connection is that the
relationship of the stockholders and the managers be freely contractual, and
that the actions of the managers be fully subject to the verdict of the
marketplace. If the managers don't perform, it is to be supposed that they will
incur losses, or at a minimum lesser profits, and that both equity and debt
capital will flow away from the firm and toward other uses that appear more
promising. Unless the managers are protected by the type of governmental policy
that cushions so many from competition today, they will be far from
unaccountable. They will be subject to all of the vicissitudes of the market
and of consumer choice. Accordingly, there are forms of
"accountability" other than at stockholders' meetings, although of
course there is some accountability there, too. If the stockholders freely
invest their money, with adequate information and without fraud, the classical
liberal won't ask for more, especially if to do so would be to set up an
unrealizable expectation that would then seem to justify an attack on the
existing market system.
Before
I leave the subject of property, I should emphasize that classical liberalism
differs from most other social systems when it seeks a high degree of security
for its ownership. John Stuart Mill wrote that "where a person known to
possess anything worth taking away, can expect nothing
but to have it torn from him, with every circumstance of tyrannical violence,
by the agents of a rapacious government, it is not likely that many will exert
themselves to produce much more than necessaries. This is the
acknowledged explanation of the poverty of many fertile tracts of
There
are many aspects to providing security for property. Necessarily, it involves
property's having sanctity within the law and within the mores and ethical
system of a people. It also relates to tax policy, as we see when Henry Higgs
tells us that in France in the eighteenth century men "hid their money in
secret hoards; for a man was assessed according to his apparent wealth, and
there was no inducement to stock a farm well or work it to greater advantage
when the rapacity of the tax‑gatherer might confiscate more than the
whole of the increased profit."27 It relates even to such a thing as the
stability of the monetary system. "Erosion of property and erosion of
money go together," according to Wilhelm Roepke.
"In both cases, that which is solid, stable, firmly held, assured and
meant to last is replaced by that which is brittle, precarious, fleeting,
uncertain, and meant for the day."28 And it is in keeping with classical liberal
desiderata that when private property is taken for public use under the power
of eminent domain a just compensation is paid for it. The paying of such a compensation differentiates our society profoundly from
those in which property is seized without compensation.
"Consumer sovereignty." In Chapter
6, I discussed the classical liberal concept of "consumer
sovereignty" in detail. We recall that I agreed that such a juridical
analogy ‑‑ i.e., to the concept of sovereignty ‑‑ is a
good one for describing how the many factors of production in a market economy
respond to consumer choices. But I considered fallacious the argument that says
that consumer choice necessarily leads to "the optimum allocation of
resources." And the view that the making of such an optimum allocation is
"the only rationale for a market system" seemed to me actually
dangerous, since it puts all of our eggs into a basket woven out of the prior
fallacy. I won't repeat at this juncture the argument
I made there with its emphasis on my criticisms. For my present purpose, it is
enough to notice that the market economy is indeed geared to meeting the demand
of consumers. This is itself a reflection of freedom. The fact that the economy
responds to the economic decisions of millions of individuals, each of them
pursuing his own life's course and personal
preferences, makes the market one of the main mechanisms of freedom.
The
Left has often attacked this perception of the market. It has pointed out that
consumer choices are "manipulated" by the barrage of advertising
that the market unleashes upon the public.
It is argued that there is considerable "want creation" by
advertising, rather than advertising and the market's simply responding to
wants that already exist. I don't doubt that this description is accurate. I
take exception, though, to the value judgment that is made by the Left relative
to it. The development of "wants" is, of course, a fluid process, not
a static given. Necessarily, peoples' wants are subject to suggestion. But the
conclusion we are to draw from this depends on our respective views of man, at
least as man exists in our civilization. The Left's point about manipulation
is fully in keeping with its overall view that people are to a high degree
inert, plastic receptors, who are entrapped by
pressures they can't control. This perspective has just enough truth in it to
make it seem plausible. But it conflicts sharply with the classical liberal
view of Western man, which sees him as capable, self-determining in what
interests him, perhaps even wily, and not at all unintelligent. As a consumer,
this man isn't freely manipulable. A new
"want" can be created in him only by striking a responsive chord in
the context of the man's overall values and scheme of things.
Besides,
the classical liberal will add that he has never imagined a sort of abstract
freedom in which the individual is in a vacuum all by himself,
uninfluenced by others, by the culture that surrounds him and by other
impinging factors. The consumer's susceptibility to persuasion isn't
interpreted as involving a limitation of his freedom; it is for him to decide
whether he will let himself be persuaded. No one is more fit
to make that decision than he is himself, unless we are willing, as classical
liberals are not, to turn this function over to a Fuhrer, social planner or
social critic.
Confidence in the process of contractual bargaining. The
classical liberal feels that a freely bargained transaction is an acceptable
and desirable relationship from which both parties benefit ‑‑ and
this is just the opposite of the Left's belief in pervasive exploitation.
Classical liberals have held their opinion even with regard to the free
transaction's role in the controversial area of the labor market. In doing so,
they run counter to the opinion that most people have today that individual
bargaining in the labor market is tainted by exploitation in one or more of the
ways that are spelled out in socialist thought. By not holding to an
exploitation theory, the classical liberal's thinking on this point seems
virtually scandalous in our present mental climate. Nevertheless, he has felt
that neither legislation nor coercive pressures by unions is necessary, or even
useful, to place a prospective employee on a satisfactory footing in his
dealings with an employer.
To
reach this conclusion, a classical liberal doesn't have to be oblivious to the
fact that many people don't do well in life. It is enough for him to realize
that those difficulties aren't the fault of free transactions, but are caused
by other things that don't have anything to do with a supposedly willful lack
of generosity on the part of employers. He also knows that the standard of
living of even the most unfortunate members of our society has been raised
immensely, and is continuing to be raised, by the productivity of a free
economy. Accordingly, he believes that it is destructive demagoguery to try to
force the process by attempting to raise wages by law or coercion, as a restributive device rather than by relying on increased
productivity. He understands that it is overwhelmingly true, with just minor
exceptions, that wages can't be raised above the level that the market would
set in response to supply and demand without causing unemployment. To avoid
unemployment, the minimum wage legislation or the union pressure would also
have to command the employers to hire all of the available workers even if it
weren't profitable to do so at the prevailing wage. The loss of productivity
through strikes, slowdowns and boycotts results, too, in a distinct lowering of
productivity under what it would otherwise be. The result is that such things
have actually lowered rather than raised the "real wages," the
standard of living, of almost everyone in the society, including most
especially the workers themselves. The fact that this line of thinking isn't
the conventional wisdom today and that most people, not having given a moment's
real
thought to it, simply repeat the shibboleths of the Left,
isn't sufficient, of course, to change the classical liberal's perception of
it.
I
agree with the classical liberal viewpoint on this with regard to wages. In my
chapter on the exploitation theories in my book Socialist Thought, I
will explain in detail why I believe the freely bargained individual wage
transaction is often insufficient on the various ancillary features that ultimately
become important to its satisfactoriness to the worker. A failure to address
those ancillary aspects gives rise to damaging situations that can very well
be looked upon as products of "exploitation." Instead, however, of
considering that these befoul a free labor market and justify an abandonment of
it, as the Left has, I would have us solve them in ways that are fundamentally
consistent with classical liberal desiderata. But that's a subject that I will
take up much more fully in my book on socialist thought.
The
perspective I have recited, and with which I basically agree, subject to the
exception I have noted, has frequently been expressed in classical liberal
writing. Both Cobden and Bright opposed
the Ten Hours Bill, which limited factory work to ten hours a day. Referring to the advocates of the bill,
Cobden asked, "have they reflected that if we
surrender into the hands of Government the power to make laws to fix the hours
of labour at all, it has as good a right, upon the
same principle, to make twenty hours the standard as ten? Have they taken into
account that if the spinners and weavers are to be protected by Act of
Parliament, then the thousand other mechanical and laborious trades must in
justice have their claims attended to by the same tribunal? I believe it is
now nearly three hundred years ago since laws were last enforced which
regulated or interfered with the labour of the
working classes. They were the relics of the feudal ages, and to escape from
the operation of such a species of legislation was considered a transition from
a state of slavery to that of freedom. Now it appears to me, however unconscious
the advocates of such a policy may be of such consequences, that if we admit
the right of the Government to settle the hours of labour,
we are in principle going back again to that point from which our ancestors
escaped three centuries ago . . . Am I told that the industrious classes in
Lancashire are incapable of protecting themselves from oppression unless by
the shield of the legislature? I am loath to believe it . . . I yield to no man
in the world (be he ever so stout an advocate of the Ten Hours Bill) in a
hearty good‑will toward the great body of the working classes; but my
sympathy is not of that morbid kind which would lead me to despond over their
future prospects. Nor do I partake of that spurious humanity, which would
indulge
in an unreasoning kind of philanthropy at the expense of the independence of
the great bulk of the community. Mine is that masculine species of charity
which would lead me to inculcate in the minds of the labouring
classes, the love of independence, the privilege of self‑respect,
the disdain of being patronized or petted, the desire to accumulate, and the
ambition to rise . . . Again I say to them, 'Look not to Parliament, look only
to yourselves"'29
Cobden did favor child labor legislation, though, because he felt that
children didn't have true freedom of contract. (And yet, I believe that it is
accurate to say that the abolition of child labor is more correctly to be
considered the result of the long‑term rise in the standard of living
than of legislation. It was only when the standard of living rose to a level
that permitted families to subsist without their children working that it
became economically and politically feasible even to talk about abolishing
child labor. It is a mistake to credit such legislation for its abolition,
other than with regard to the fringe percentage of such labor that would
perhaps have remained even during an age of affluence. It was capitalism,
science and education that, by creating an immense increase in productivity,
presided over its demise.)
Cobden
opposed unions. Morley quoted him as saying: "Depend upon it . . . Nothing
can be got by fraternizing with trades unions. They are founded upon principles
of brutal tyranny and monopoly. I would rather live under a Dey
of Algiers than a Trades Committee." Even though most people have felt
compelled by circumstances and pressures to depart from this position since Cobden's
day, I believe that he expressed the most appropriate classical liberal
position, at least so far as his opposition to unions was an opposition to
their coercive tools: the strike, the boycott and picketing. The economist W.
H. Hutt recently referred to the strike as "a
type of warfare," and argued that "in the 'good society' there is no
substitute for the determination of all prices, of labour
as well as the services of assets and entrepreneurs, under the social discipline
and co‑ordinative pressures of the unrestrained
market."30
Henry
Hazlitt has perceptive chapters on "Minimum Wage
Laws" and "Do Unions Really Raise Wages?" in his book Economics
in One Lesson. He makes the point
that a law that requires a certain level of pay will result in unemployment for
those whose productivity is below that amount. Such a law eliminates the very
job that the employee must have thought was his best available opportunity,
since if he had known of a better alternative he would have taken it. "The
best way to raise wages," according to Hazlitt,
"is to raise labor productivity. This can be done by many methods: by an
increase in capital accumulation ‑‑ i.e., by an increase in the
machines with which the workers are aided; by new inventions and improvements;
by more efficient management on the part of employers; by more industriousness
and efficiency on the part of workers; by better education and training . . .
The more he is worth to employers, the more he will be paid. Real wages come
out of production, not out of government decrees."31 Hazlitt does
find a favorable role for unions in seeing to it that each worker knows of
opportunities so that he doesn't receive less than the market rate, but such a
market-oriented role for unions is clearly at odds with unionism as we have
known it. He knows that any attempt to force wages higher than supply‑and-demand
would set them will produce unemployment.
In
terms of Hazlitt's analysis, it is easy to understand
why
Milton
Friedman has wanted to be consistent in support of freely bargained
transactions by even opposing "right to work laws," which outlaw contracts between employers and unions that require
that all employees join the union. He thinks of such union‑shop contracts
as being the result of free bargaining, and so he sees them as something that
shouldn't be interfered with. But I don't agree, and I also base my thinking on
classical liberal theoretical grounds. A union shop contract is rarely freely
arrived at. It is sought and obtained in a coercive milieu that deviates from
the free market in labor. Even if it were freely arrived at, without the threat
of strikes, picketing or boycotts, it would be a contract in restraint of
trade, since it limits the flow of competition among workers. Here again, we
need to think in terms of the theory of aggregates. Aggregates, even if they
are voluntarily formed, aren't valid in a free society if they are inconsistent
with
a free market and with the goal of minimizing coercion. I think of "right
to work" laws as a sound and liberating form of anti‑trust legislation.
The fact that it applies to an aspect of the labor market rather than to other
relationships in the economy, the way most of our anti‑trust regulation
does, doesn't make any difference.
Free trade; opposition to tariffs and to impediments
on trade. To the classical liberal, the world would ideally be
one large "common market." There would be no impediments to the flow
of goods, services, people or capital investment. This was especially the
outlook held by classical liberals in the nineteenth century, before the
totalitarian ideologies came into being to create military and moral issues
that were certain to raise other desiderata to a relatively higher place.
Richard
Cobden and John Bright were the leaders of the Anti‑Corn Law movement in
|
In the |
of course, the Republican Party, which was mostly an heir to
the Whigs, made a high protective tariff a cornerstone of its policy.
The
basic classical liberal free trade position was spelled out by Adam Smith in The
Wealth of Nations, published in 1776. "It is the maxim of every prudent
master of a family," he said, "never to attempt to make at home what
it will cost him more to make than to buy . . . What is prudence in the conduct
of every private family, can scarce be folly in that of a great kingdom. If a
foreign country can supply us with a commodity cheaper than we ourselves can
make it, better buy it of them with some part of the produce of our own
industry." He denied the Montaigne dogma that
one man's profit is another man's loss: "That trade which, without force
or constraint, is naturally and regularly carried on between any two places, is
always advantageous, though not always equally so, to both." He also
denied the validity of the concept of the "balance of trade," which
saw imports as an evil: "Nothing can be more absurd than this whole
doctrine of the balance of trade, upon which, not only these restraints, but
almost all the other regulations of commerce are founded." Smith favored
removing protective barriers even in cases where the other country doesn't
reciprocate, unless a policy of retaliation would get the other country itself
to adopt free trade: "There may be good policy in retaliations of this
kind, when there is a probability that they will procure the repeal of the high
duties or prohibitions complained of . . . When there is no probability that
any such repeal can be procured, it seems a bad method of compensating the
injury done to certain classes of our people, to do another injury ourselves,
not only to those classes, but to almost all the other classes of them."
He recognized two exceptions to his antitariff
position: Where a given industry is needed for national defense and must be
protected from outside competition so that it will be available in time of war
even though it is less efficient than the same industry run by foreigners; and
to place a tax on incoming goods that is equal to a tax that is being imposed
on local goods, so that the two will be on the same competitive basis without
tax discrimination.32
After
Adam Smith, the argument for free trade was elaborated both by classical
economics in general and by the later neo‑classical economics, both of
which were closely related to classical liberalism. Protectionists raised all
sorts of arguments against the market system, of course. David Ricardo was
responding to one of them when he formulated his "law of comparative
cost" (which is also known as the "law of association"). This
stated that within a system of free trade even those who are less efficient
will have something worthwhile to do, since it will be more profitable to the
more efficient to center on the things that they do best than to compete in
everything. The economist Jean Baptiste Say was also
answering an attack on free trade when he formulated Say's Law, which says
that supply creates its own demand. It had been argued that goods, once
produced, would sit idle, unused, because there wouldn't be anyone to buy them.
But Say observed that the production in each part of the economy serves as the
demand for the produce of the other parts.
In
our own time, such a classical liberal economist as Milton Friedman has
advocated free trade. He has supported the concept of floating exchange rates
to overcome the problem of the "balance of payments" that leads to so
much interventionism: "There are only two mechanisms that are consistent
with a free market and free trade. One is a fully automatic international gold
standard. This is neither feasible nor desirable. In any event, we cannot
adopt it by ourselves. The other is a system of freely floating exchange rates
determined by the market in private transactions without government
intervention."
[Note
in 2003: I have come to think that Friedrich List had a more nuanced
understanding of international trade that did the economists I have just quoted. See Chapter 17 of my later book The
Emerging Crisis of Economic Displacement.]
View of economic history. Nineteenth century capitalism was
attacked savagely by both aristocratic and socialist authors. Emile Zola's Germinal
is a case in point. It painted a graphic picture of miserable working
conditions among French miners, and contrasted this with the amenities enjoyed
in a bourgeois village not far away. Edward Bellamy's Looking Backward compared
a futuristic utopian socialism with the grimy industrialism of the 1880s in
the
This
impression is a perceptual underlay that has pervasive influence today. It
exists as a backdrop for the popular understanding of the supposed need for
the welfare state and perhaps even for socialism; and it acts to remove a freer
capitalism as one of the respectable alternatives that the public will even
consider. "Do you want to return to a twelve‑hour, dollar‑a‑day
existence?" was shouted in my face in 1958 while I was circulating Right
to Work petitions in downtown
The
reader should by this time anticipate that classical liberals don't agree with
this perception of economic history. They consider it the product of a warped
demagoguery, which for a century and a half has conducted one of the worst,
even though unfortunately one of the more successful,
slanders imaginable. Essentially, the classical liberal view contains three
parts:
•
That even during the early Industrial Revolution the condition of the great
run of average people was improved substantially over what it had been at
any earlier time; and that there was the promise, amply fulfilled in the epoch
that followed, of a continuing improvement.
•
That, just the same, conditions were not as good as they could have been; but
that this was caused by several factors that capitalism wasn't responsible for
and that classical liberals were opposing.
•
Finally, that the continued improvement in the condition of the average person
has been caused by the productivity of a combined capitalism and science, and
not by social legislation.
As
to the first of these, we should recall the points that Macaulay made in answer
to Southey (quoted in the Introduction here). He made an empirical case that pointed out
that the poor-rate was lower in the manufacturing towns than in the
agricultural districts; that the mortality rate had fallen quite markedly; and
that the average person was far better fed than he had been in earlier times.
He also observed that "it is indeed a matter about which scarcely any
doubt can exist in the most perverse mind, that the
improvements of machinery have lowered the price of manufactured articles,
and have brought within the reach of the poorest some conveniences which Sir
Thomas More or his master could not have obtained at any price." He said
that this improved well-being "is no reason for tolerating abuses, or for
neglecting any means of ameliorating the condition of our poorer countrymen.
But it is a reason against telling them, as some of our philosophers are constantly
telling them, that they are the most wretched people who ever existed on the
face of the earth." Englishmen certainly weren't wretched in comparison to
anything that had gone before: "The marketplace which the rustic can now
reach with his cart in an hour was, a hundred and sixty years ago, a day's
journey from him. The street which now affords the artisan, during the whole
night,
a secure, a convenient, and a brilliantly lighted walk was, a hundred and sixty
years ago, so dark after sunset that he would not have been able to see his
hand, so ill watched that he would have been in imminent danger of being
knocked down and plundered of his small earnings. Every bricklayer who falls
from a scaffold, every sweeper of a crossing who is run over by a carriage, may
now have his wounds dressed and his limbs set with a skill such as, a hundred
and sixty years ago, all the wealth of a great lord like Ormond, or of a
merchant prince like Clayton, could not have purchased. Some frightful
diseases have been extirpated by science: and some have been banished by
police. The term of human life has been lengthened over the whole kingdom, and
especially in the towns. The year 1685 was not accounted sickly; yet in the
year 1685 more than one in twenty‑three of the inhabitants of the capital
died. At present only one inhabitant of the capital in
forty dies annually."34
It
is fascinating, too, that Macaulay saw a vast increase
in compassion. The thing to notice is that this was present at the very time
that (as we have been told so often by social critics during the past century
and a half) was supposedly one of the most cruel and heartless in history.
Macaulay said: "There is scarcely a page of the history or lighter
literature of the seventeenth century which does not contain some proof that
our ancestors were less humane than their posterity. The discipline of
workshops, of schools, of private families, though not more efficient than at
present, was infinitely harsher." (Today we look back on Macaulay's time,
receive our impressions from the novels of Charles Dickens, and think that the
discipline meted out by schoolmasters was intolerably harsh. It is a shame
that Dickens continues to have an immense audience, while Macaulay has none.)
"Masters, well born and bred, were in the habit of beating their servants.
Pedagogues knew no way of imparting knowledge but by beating their pupils.
Husbands, of decent station, were not ashamed to beat their wives. The
implacability of hostile factions was such as we can scarcely conceive. Whigs
were disposed to murmur because
These
passages from Macaulay are a real eye-opener today, because they give a
totally different perspective than we have received from the alienated
literature of the past century and a half. The Industrial Revolution and early
capitalism constituted an improvement, not a worsening, of the human
condition. In order to appreciate this even more, we should consider some
additional facts:
The
population responded to the improved conditions by growing at an amazing rate.
In The Revolt of the Masses, Jose Ortega y Gasset
cited the statistic that the population of
We
will recall that the second point that was raised by classical liberals was
that conditions were nevertheless not as good as they might have been, and that
the reasons for this lay in factors that were by no means the fault of early
capitalism. Walling says that "Bright thundered night after night against
the needless miseries inflicted upon the artisans of the North by the Corn
Laws" (the tariff on grains); and he points out that the enclosure of land
and the consolidation of farms were causes of serious dislocation among the
poor. Walling referred to "the infamous law of 1815" which
"actually prohibited any importation of foreign corn until the price
reached 80s." He observed: "Thus were the rents of the landlords, the
profits of the farmers, and the starvation of the poor secured at one
stroke." We need to remember that the aristocracy, rooted in the land,
was the opponent rather than the supporter of the classical liberalism of the
day. Still another factor was the immigration of the Irish into the English
factory towns. Trevelyan quotes Bright as having said
that "many of the evils which in times past have been attributed to the
extension of manufactures in
The third point was that the increasing well-being of
the average person during the nineteenth and twentieth centuries hasn't been
due primarily to social legislation, but could only have resulted from the vast
new productivity that made the goods and services available that, taken
together, provide the substance for that higher standard of living. It is a
reversal of cause‑and‑effect to attribute the well-being to child
labor laws, minimum wage laws, and the like, which is what so many people do
today. Such legislation can grab the attention and take the credit, but it
can't do any more than ride the crest of prosperity. It was neither possible nor
beneficial to abolish child labor until modern industry brought the standard of
living of families up to a level at which most of them no longer needed the
children's income to survive. The hours of work could be limited to ten hours
only when doing so wouldn't mean starvation. Trevelyan
made a significant comment that "a very rapid rise in wages from 1850
onwards made smooth any difficulties that might have resulted from the
application of the (ten hours) Act." It wasn't, in the main, the statute
that shortened the work day; the increasing leisure of modern man should more
correctly be attributed to his improved standard of living. The mass‑produced
goods that poured out of the factories were for the ordinary man, not the rich,
since a little thought will remind us that the rich continued to prefer custom‑made
goods to the products of a hurried assembly line. Nor have there ever been
enough of the rich to consume the hundreds of millions of items that have come
from mass production.
Before
I leave this subject, it is worth mentioning the thesis of a large portion of Ayn Rand's writing, which is that the producer has brought
enormous benefit to mankind, but that, as an act of the most outrageous moral
squalor, the whiner, the complainer, the spoiled child, the moral ascetic
(and, I will hasten to add, the alienated intellectual) have poured down upon
him a constant stream of abuse. This abuse has claimed, in what must certainly
be the most perverse distortion of reality imaginable, that the producer is an
exploiter and heartless oppressor. Ayn Rand has seen
the essence of the moral enormity that is involved in the whiners' attack. The
attack needs to be analyzed dispassionately, but that isn't enough. We also
need to judge its morality and to appreciate how perversely it warps history
and social reality.
Attitudes toward "labor." The classical liberal position with respect to what we call the laboring portion of the population can only be understood in the context of the dynamic factors that have been at work in our society during the past century and a half. The various movements of the Left, including modern American liberalism, have sought out and championed the "have‑nots" of various descriptions against the middle class man of business. For much of the past century, these have included the "working man" as such, although in recent years in the